The Rural Payments Agency has announced that it will start to make modulation refunds to farmers in England.

Under EU rules, 3% modulation is automatically deducted from all EU direct payments made to farmers. 

But member states are then required to refund this money in respect of the first €5000 (£3410) of direct payment made in the scheme year.
 
A reduction will be applied to all refunds because the national ceiling in the UK has been exceeded. But the total amount to be refunded in England is £6.74 million.

Refund payments will be calculated as follows:
 
1. If the total amount received under 2005 direct aid schemes is above €5,000 (£3,410), the refund is calculated on the €5000 figure and a 5.52% reduction has been applied. This means their refund at €5,000 X 3% = €150 less 5.52% scale back, resulting in a payment of €141.72 (£96.65).
 
2. If the total payment received is below €5,000 (£3,410) they will receive a refund comprising the gross value of their claim X 3% less 5.52% scale back.
 
Customers whose claims are not yet fully validated will receive their modulation refund at the same time as their full SPS payment.

The RPA is expected to release updated SPS figures for the 2005 scheme year on Wednesday (27 Sept).

Single Farm Payment Scheme special report