The Welsh government has warned farmers they are unlikely to see a significant reduction in modulation, if any, when it unveils how Wales’ share of CAP payments will be distributed.
Welsh farm minister Alun Davies will make a decision in January on how much money will be transferred from the Pillar 1 single farm payment to rural development and agri-environmental schemes through Pillar 2.
But, speaking at the NFU Cymru conference in Builth Wells on 7 November, he said: “I don’t know where I am eventually going to go on this but it is unlikely that we will see a significant reduction in the current 11.5%.
“We need to make decisions on new rates for the next seven years and that involves a great deal of thinking. We need to invest in agriculture and in individual businesses but we also need to make Pillar 2 investments.”
The modulation rate for Wales is currently set at 6.5% for payments up to €5,000 and 11.5% for sums paid above this level.
Carmarthenshire farmer Rhys Jones warned that a drop in income from the single payment would cut production efficiency. He suggested there should be reverse modulation from rural development to direct support aimed at increasing production efficiency.
But the minister said there was no prospect of that happening and suggested that increasing direct subsidy to farming would have a detrimental effect on efficiency.
“I don’t believe that subsidy does lead to efficiency, you don’t increase efficiency by increasing the subsidy level, you do this through the method by which you do business,” said Mr Davies.
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