THE Department of Agriculture is expected to do a last minute deal with the European Commission in Brussels today to save farmers between £5 million and £30 million.
The Minister for Agriculture, Mr Yates, has reached agreement with EU Agriculture Commissioner, Mr Franz Fischler, on the revaluation of the green pound, which would cut the value of intervention payments to farmers.
Under the deal negotiated by Mr Yates, the revaluation and subsequent cut in intervention payments is likely to be about 1.8 per cent. The exact figure will be finalised at a meeting of the agri monetary management committee in Brussels today.
Under EU rules, farmers would have faced a revaluation of around 3.5 per cent, cutting many of their subsidies by the same amount.
According to the IFA's figures, the deal will result in savings to farmers of around £30 million, while the Department (is claiming a more modest £5 million. How% ever, economists have warned that the deal could mean a further revaluation hitting farmers in the New Year.
According to the IFA and the Irish Co Operative Organisation Society, the full 3 per cent plus revaluation could have meant losses to Irish farmers of over £60 million. But the Department disputes these figures, saying that even the full evaluation would only result in losses of around £10 million for the sector.
That should now be cut to £5 million, a spokesman said.
"It doesn't affect the £800 million going straight to the farmers," he explained. "It is just the intervention and market rates. This new deal should save the day."
Mr Oliver Mangan, an economist at Davy stockbrokers, said the deal meant that a move into a fresh 50 day monitoring period was more likely. "If sterling continues to be strong, the gap will widen above 5 per cent and we will be into a fresh monitoring period," he warned. "We could be looking at a fresh revaluation early in the New Year."
The green pound is being revalued because the Irish pound has been so strong in the European Monetary System. That puts a wider gap between the green rate, which is set only periodically, and the real rate. Under EU rules, the two rates are only allowed to differ by 5 per cent.
Last September, the rates diverged and a revaluation was triggered. The authorities then had five 10 day periods to try and bring the two rates back in line. Despite Central Bank intervention to bring down the level of the pound, they failed and a revaluation was set for next Monday.
Under the rules, the green rate should have been revalued by exactly half the difference between the two rates.
