Replacing lost cash: can it really be done?
MAFF has said repeatedly that it
will shift subsidies from production
to environment. But can such
grants ever make up for the lower
prices caused by 2.5% modulation?
Helen Briscoe from Strutt and
Parker looks at the maths
ON Dec 8 1999, farm minister Nick Brown announced that flat rate modulation would be applied to all direct subsidies starting at 2.5% in 2001. This continues the move away from direct support under Agenda 2000 and links subsidies to environmental benefit.
The money raised by this modulation (£140m in 2001) will contribute towards implementing the EU Rural Development Regulations in the UK. Along with the UK government top-up (£140m in 2001) and the existing budget for environmental schemes, the total money available for such schemes over the next seven years will be around £1.6bn.
Farmers must claw back subsidies lost through modulation to maintain their future profitability. They must move with the times, consider these agri-environmental schemes, provide the environmental benefit the public and EU want and reclaim their subsidies. They ignore these schemes at their peril!
How can farmers gain compensation for the loss of income brought about by modulation? Below are case studies of how farmers have achieved this.
My advice to farmers, particularly those with large subsidy cheques who will be hit hardest by modulation, is to act now to preserve your subsidies.
As the modulation rate increases in the future and the downward pressure on farm profitability continues, it will become increasingly more important to find alternative sources of income. The environmental option is financially and environmentally attractive.