28 November 1997

Modulation set

to drop from EU

reforms – Sewel

By Allan Wright

MODULATION is likely to be dropped from CAP reform, and may well have disappeared from the negotiating table by the time formal EU Commission proposals come before farm ministers in the new year.

Scottish farm minister Lord Sewel believes that the final thrust of Agenda 2000 reforms will concentrate on allowing unsubsidised exports of beef and cereals by replacing price support with direct payments. Reforms not likely to win majority approval, like modulation, will be dropped.

Asked about modulation, or capping support payments, during the Crops Scottish conference on Tuesday in Perth, Lord Sewel said he thought EU farm commissioner Franz Fischler was moving away from the idea.

"Our support for Agenda 2000 will not be unequivocal. Above all, we will resist any proposal which would discriminate against British farmers.

That includes modulation. The UK would bear a disproportionate cost of such a system and it would penalise the efficient throughout Europe," he said.

A key to having modulation thrown out of the final reform package could be Germany where, having embraced former East Germany, average farm business size is now much larger. The combined opposition of the UK, France, and Germany, each with 10 votes, would give modulation no chance of winning a qualified majority from the EUs council of farm ministers.

FW understands that at last weeks council meeting in Brussels there were signs that Mr Fischler will drop modulation if it threatens his main aim, which is to meet the GATT demands on subsidised EU exports of beef and cereals.

In his Perth speech, Lord Sewel said: "This is the key to his package. He has understood all the pressures which face the CAP. But he has also looked at the agriculture council and has made his calculations accordingly. Member states, he has judged, are not ready to accept radical reform.

He has, therefore, designed a reform package which will address the most pressing and unavoidable pressures and not much else."

The Agenda 2000 proposal to allow member state discretion and targeting of some CAP spend will be promoted by the UK. It is seen as a useful route to get out of the tight tramlines which govern present subsidy packages. It is even being suggested that this little bit of renationalisation would allow extra money to be channelled into HLCAs.

Lord Sewel believes Franz Fischler is moving away from the idea of modula-

tion.