Yates hints EU's cereals budget may be raided for beef payouts

THE Minister for Agriculture hinted yesterday that the EU budget for cereals would almost certainly have to be raided to pay for the BSE crisis.

The admission led to a strong, response from the Irish Farmers Association whose president, Mr John Donnelly also in Brussels said farmers would not tolerate such practice.

Trying to dump the entire cost of BSE cuts on the CAP budget would penalise farmers for a crisis not of their making."

Mr Yates was here for his first meeting in the chair of the EU Farm Council which last night backed in principle further proposals from the Farm Commissioner, Mr Franz Fischler, to exclude potentially infectious animal matter from the food chain.

Mr Fischler told ministers that new standards proposed by the French to the EU's Scientific Veterinary Committee last week would be supplemented. This meant that as well as nervous tissue and spinal matter, the spleens of sheep and goats would also be prohibited from food and feed stuff use.

Ireland does not feed bone meal to sheep, and would have no problem implementing such a regulation, Mr Yates said.

The proposals now go to the appropriate Standing Veterinary Committee for enactment.

The meeting dealt with several minor matters before discussing Mr Fischler's proposals for rebalancing the beef market.

Over the next few two or three days, it will tackle the thorny interconnected issues of the 1997 price package and fruit and vegetable market reform. Agreement is also expected on a reduction in set aside to 5 per cent.

Mr Yates said a debate on the rebalancing was inevitable given the fall in consumption and price, and the prospect of more than a million tonnes of intervention by next year.

An immediate decision was needed from the Commission, he said, on raising the ceiling for intervention this year. The September meeting of farm ministers would have to take medium term decisions about rebalancing.

Mr Yates was cautious about his response to the Commission's proposal to extend the scheme to slaughter seven day old bull calves in dairy herds, the so called "Hero option. During its presidency Ireland had to broker the deal and take a neutral view between different forms of bull and cow use but he did not anticipate the scheme being made compulsory.

On the cost of the BSE crisis, Mr Yates said the total CAP budget is about £35 billion. "Well over half of it is parable aid. As part of the CAP reform, set prices were fixed for grain. Prices have not fallen and therefore there is the question of over compensation." With member states unwilling to contribute more to the budget, savings would have to be found within the Feoga fund. Obviously the arable aid is a prime candidate".

With prices in the cereals market buoyant, and likely to be so for some time, there is no doubt that savings can be made, but farmers are likely to be worried that in the longer term, once lost from the budget, such funding will be hard to find again.

But with 40 per cent of Irish farming tied in to beef and only 5 per cent to cereals, a switch at EU level from cereal to beef subsidies will inevitably benefit Irish farmers proportionately more than those elsewhere.