14 January 2000

Scots embrace

modulation soon

By Shelley Wright

AN early retirement scheme and grants to help young people start farming are just two of the options being considered in Scotland after the Scottish Executives acceptance that modulation will be applied north of the border from next year.

Although Scottish farm minister, Ross Finnie, was initially opposed to the idea of cutting farmers direct payments and recycling the money to rural development projects, a consultation document released on Monday made clear there had been a change of heart.

"In recent weeks… it has been agreed that the UK government will match £ for £ any money generated through modulation," the document states. "This adds significantly to the funds available to Scotland, while maintaining a low level of modulation."

It adds: "As a result of this agreement, the executive is now proposing the introduction of a limited rate of modulation, applying to all direct EU subsidy payments made to Scottish farmers."

Schemes affected by the cuts would be sheep annual premium, suckler cow premium, beef special premium, and arable aid.

The proposed modulation rates are the same as those announced in England before Christmas: 2.5% in 2001/02, rising to 4.5% by 2006/07.

Over the six years, that would raise a total of £97m from Scotlands farmers. Treasury match-funding would result in a total budget of £194m for rural development projects.

Having decided that modulation will be introduced, the executive is now seeking views, by Feb 21, on how the money should be spent.

Early retirement and new entrants schemes are listed as possible candidates, alongside investment in agricultural holdings, training, agri-environment, processing and marketing aid, and forestry.

Under EU rules, the early retirement option would be available to farmers aged between 55 and 65 who had farmed for at least 10 years. Land would have to be transferred to another farmer or to non-agricultural use. Payments of up to k(euro)15,000 (about £10,000) a year for up to 10 years could be available.

But, although asking for the industrys views, the executive questions how effective early retirement would be in helping make the industry more sustainable.

Aid for young (under 40) farmers could be either a single payment of up to k(euro)25,000 (£16,500), or an interest subsidy on loans taken out to cover the cost of establishing a viable farm business.

Under the title Promoting the adaptation and development of rural areas, the executive outlines other projects that could be adopted, such as land improvement, diversification, environmental protection, and conservation.

Schemes that result in better animal welfare and environmental improvement are also possible. The executive has already indicated that it would be keen to introduce a national collection service to end on-farm burial of dead stock.

The Scottish NFU, still opposed to the principle of modulation, is planning to consult its members on the various options in the coming month.