The Welsh government is to introduce the maximum 15% rate of modulation in the new Common Agricultural Policy (CAP) regime.
Wales’ farm minister Alun Davies made the announcement on 18 December, insisting that the Pillar 1 direct payment could not be a “never ending subsidy”.
He also suggested that the direct payment stifled “modernisation and innovation”.
Transferring the full 15% will result in an extra £286m to support rural activity in Wales but it won’t be a popular decision with Welsh farmers.
Mr Davies insisted that both pillars were crucial to the future development of Welsh agriculture and should therefore be treated as a single package.
“Single payments are an important part of the support given to farmers but they are complemented and enhanced by the Rural Development Programme, which provides farmers with essential business support and underpins vital programmes for people living and working in rural Wales,’’ he said. “I want to build on Pillar 2 and make further investments in the future of our agricultural industry and the wider Welsh economy.’’
Mr Davies believed his decision would prepare Welsh farmers for a long-term decline in direct European support.
“I am determined that Wales will use the period up to 2019 to put its farming industry on the best possible footing so it is equipped to cope when financial support from the public sector is reduced further,’’ he said. “Pillar 2 allows for effective and targeted support for our agricultural sector and rural communities, and as such provides a better return for public expenditure than Pillar 1.’’
The minister acknowledged that Pillar 1 was an income support safety net for a farming industry that had to cope with risk, but that it could not be a never-ending subsidy.