23 November 2001

Time to reform modulation

MODULATION of direct income aids should be made compulsory for all member states as part of next years mid-term review of Agenda 2000.

Addressing a European Parliament public hearing in Brussels this week, EU farm commissioner Franz Fischler said the current voluntary system was not working as intended.

Only three member states – the UK, France and Portugal -were using it to divert direct aids into the rural development policy, though Germany plans to apply it soon.

Next years mid-term review would provide an opportunity to improve the system, said Dr Fischler.

"More member states are supporting modulation, so long as it applies to everyone." This was in contrast to their positions in the run-up to Agenda 2000, when farm ministers insisted it should be voluntary.

But other improvements were needed to make modulation more attractive.

The uses to which the money could be used should be broadened beyond just agriculture, for example to take in infrastructure improvements.

There was also a problem in that the current rules only allowed modulated cash to go towards new projects, not existing ones.

And the fact that it required match-funding from national governments was a disincentive for some member states.

Dr Fischler also noted that rural development only accounted for 10% of the total farm budget. Strengthening this "second pillar" of farm support was a priority for the mid-term review and modulation would play a part.

Austrian farm minister Wilhelm Molterer agreed with the commissioner, though he told the parliament that the expectations of farmers should not be overlooked when reviewing Agenda 2000.

In particular, farmers wanted stability to help them plan, rewards for producing higher quality food and payment for maintaining the environment, said Mr Molterer. &#42