Scots producers horrified by 22% modulation hint

Scotland’s farmers will know on Thursday (31 May) how much of their single farm payment will be deducted under new modulation rates.

As Farmers Weekly went to press, rural affairs minister Richard Lochhead was still to reveal the rate, but figures as high as 22% were being mooted by civil servants.

The figure was first mentioned publicly in a speech by Scottish Executive chief policy adviser David Henderson-Howat. He told the annual meeting of the Scottish Rural Property and Business Association that civil servants had pressed for the 22% rate as the only way to plug a funding gap in the Rural Development Programme proposals, which have to be submitted to Brussels by 12 June.

If confirmed, the 22% would be broken down – 6% compulsory and 16% voluntary – giving Scotland the highest rate of modulation in the UK. The rate for England has been fixed at 17% and in Northern Ireland at 15%.

Farmers north of the border reacted with horror to the civil servants’ proposals, and NFU Scotland warned that net farm income could be virtually wiped out.

Every 5% of modulation reduces net farm income by 19% due to the fact that many farms make less than they receive in SFP.

“If a 20% rate of modulation were to be applied, a horrifying 80% would be knocked off net farm incomes,” said NFUS head of rural policy Jonnie Hall. “This would put many out of business and unable to deliver the environmental benefits required of them.”

The union says a voluntary modulation rate of only 5% or less would be adequate to finance a more extensive RDP than the existing programme.

“Any suggestion that 5% modulation is inadequate is unfounded,” said Mr Hall. “The last RDP delivered just over £800m, while a new programme based on 5% voluntary modulation would deliver over £1400m. This is an enormous increase in spending which would keep farmers in business and allow them to deliver for the environment.”

Mr Lochhead was expected to announce the rate to the Scottish Parliament yesterday (Thursday) morning during the new Parliament’s first debate on rural affairs.

A rate of 22%, if confirmed, flies in the face of the SNP’s election manifesto which stated that voluntary modulation would only be used as a last resort and should not disadvantage farmers.