The full effect of modulation has hit Welsh farmers, who have been notified that their single farm payments will be cut by nearly one-quarter this year.
Rural Payments Wales has written to farm businesses informing them that their entitlements will be slashed by up to 23.4%.
The significant reduction is a direct result of the almost 10% cut in the overall CAP budget for Wales’ Pillar 1 funding. The remainder of the direct payment entitlement is then subjected to the 15% transfer rate to the rural development fund – the highest modulation rate in Europe. That adds up to a 23.4% slice off the farmers’ entitlement. It has come as a shock to many farmers, who had not expected the new rate to be applied to their 2014 payments, believing the change would take effect next year.
Farmers’ Union of Wales policy director Nick Fenwick said the figures reflected why the FUW was angered by the decision to increase modulation.
“There seems to me an extreme view that taking more money away from an industry already reeling from a collapse in incomes will make it more resilient and competitive,” he said.
“This just does not stack up when you consider we operate in a common market and our main competitors will not have their incomes reduced in this way.” Twenty member states did not notify Brussels of their transfer rates by the 31 December deadline, so will not face cuts until 2015, he said.
Dr Fenwick urged farmers to focus on clawing back as much money as possible from Pillar 2.
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