As a result of exceptional circumstances last year when Scottish beef producers faced a 30 per cent scaleback under a beef subsidy scheme, the European Commission has agreed to the principle of an aid package. However, the details of its value and what it will mean for individual farmers remains unclear and will be subject to further discussions.

As a result of the introduction of the new Single Farm Payment from 2005, there were an exceptionally high number of claims in the last year of the Beef Special Premium Scheme, which breached the UK ceiling on claims. A scaleback of 29.74 per cent was announced in April this year and applied to any farmer claiming over 30 animals.

The Commission had previously committed to ensuring that producers were not financially disadvantaged as a result of the introduction of the Single Farm Payment. Therefore, it agreed that if a member state met the following three criteria it would be eligible for funds:

1. It has adopted a fully decoupled system of support

2. It paid the second premium under the scheme

3. It exceeded its ceiling in 2004

Only Ireland (subject to a 23% scaleback) and the UK meet the three conditions. Last week, the Irish Government announced that it had agreed with the Commission a €17.9 million package to alleviate the losses, with half of the funds coming from the Commission and half from the Irish Government budget. NFUS raised this issue with the Scottish Executive to ensure that Scottish producers were treated equally given they faced a worse situation than their Irish counterparts. A proposal was tabled at yesterday's (Thursday's) EU Milk Management Committee, where the principle of support was agreed.

NFUS President John Kinnaird said:

“It is important that beef producers in Scotland and across the UK are treated in the same way as their Irish counterparts. The very large scaleback in the UK was a result of one-off circumstances. I am pleased that the Commission has agreed to the principle of support, but obviously we must remain cautious until we see exactly what it means for the thousands of farmers hit by the scaleback.

“The beef sector is under tremendous pressure at the moment with farmgate prices getting hammered. We are in discussions with our sister farm unions across the UK on this. A combination of increased Irish imports, South American imports and domestic beef coming onto the market earlier is badly hitting the market price. Whilst this Brussels package may provide some small consolation to last year's scaleback, the bigger issue facing the industry is the current market situation and that will be a priority in the coming weeks.”

**As an example, if a farmer claimed 100 Steer BSPS payments, he would have expected to receive £10,157.59. However, as a result of the scaleback he was only paid for 70.26 claims amounting to £7,136.73. Until the details of the financial package are agreed, it unclear how much of that £3,020.86 loss will now be alleviated.