Compensation payments face drastic cuts

The European Commission is currently consulting across the EU on proposals that Defra says would reduce compensation for diseases like bovine TB, avian flu and foot-and-mouth to 75 per cent of market value in most cases. Farmers in Less Favoured Areas would get 80 per cent.

Compensation would only be paid where disease outbreaks resulted in a 30 per cent production loss on the holding concerned. This would mean many farms hit by bTB would be denied any compensation at all.

The proposals also limit compensation to small and medium-sized businesses. The cut-off point is 250 employees, so most farms would be unaffected, but this would hit processors who rear their own animals, of which there are a number in the pig sector.

According to Defra, the changes would cover all animal and plant diseases where compensation is payable.

The potentially devastating proposals are contained in a far-reaching consultation on EU state aid rules for agriculture that also includes potential new restrictions on the use of public money to promote national brands.

The consultation is proving hugely controversial, not least because of the timing and the lack of publicity accompanying it.

It began on August 18 and closes on Sunday, September 17. Its implications have only very recently become apparent to industry stakeholders, after Defra officials mentioned it at recent foot-and-mouth, CSF and avian flu meetings.

Yet the Commission could make a final decision by the end of this month, and any changes will come in on January 1, 2007.

Defra is objecting to the proposals, which it feels go too far, too fast, despite its own plans to transfer more of the disease cost burden on to farmers.

The department has told Brussels that any discussions about disease compensation should be put on hold until the review of the EU Animal Health Policy, which covers issues like disease cost-sharing, is complete.

“We are attempting to persuade the Commission that this is not the right way to go,” a Defra spokesman said.

“While we are in favour of the principle of cost-sharing, we feel that this is not the right way forward, or that people have been given enough time to discuss it.”

He said most members states agreed and ‘the indications were’ that the Commission was listening.

However, the Commission is under no obligation to follow such advice as state aid is what is known as a Commission ‘competence’.

This means Brussels has sole power to decide which form of aid is to be allowed under what conditions. Once the consultation is closed, there will be no further negotiation and no vote by member states.

“We are in the process of consulting on how we should do things differently, but the final decision rests with us. I believe the final adoption is this month or next month,” said a spokesman for EU Agriculture Commissioner Mariann Fischer Boel.

NFU livestock chairman Thomas Binns said the Commission’s proposals were ‘totally unacceptable’. “With exotic diseases, in particular, the weak point is Europe’s and member states’ control of disease getting into the country. Therefore it will be totally and fundamentally unacceptable for them to limit the aid to 75 per cent of market value.”

Stewart Houston, National Pig Association chairman and chairman of the Joint Industry Government Working Group on cost-sharing, said the Commission was ‘moving ahead at an unhealthy pace’.

“It is really crass to give an issue as big as this only one month’s consultation.

“All of this should be put in abeyance until the UK and EU discussions on sharing costs come to some conclusion.”

There is still just time to send comments to: European Commission Directorate General for Agriculture, Unit H.2, Office Loi 130 05/126, B-1049 Brussels, fax (32-2) 296 76 72, or E-mail: Agri-State-Aids@ec.europa.