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Excessive Modulation Deductions Will Harm Food Production
28/10/08

There is no case for Defra to raise its “voluntary” modulation deductions from English Single Farm Payments (SFP) after the CAP Health Check talks are completed - and every reason for them to be scrapped altogether, according to the National Beef Association.

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Its conclusion, which will no doubt please farmers but upset government, follows its initial exploration into the spending of the £3.9 billion marked down to be stripped from English farmers and re-distributed through the Rural Development Programme (RDPE) budget between 2008 and 2012.

20 per cent, or £600 million, of cash raised through the modulation tax will be channelled through English Regional Development Agencies (RDAs) to fund schemes aimed at improving agricultural competitiveness, and diversification or raising the breadth and quality of rural life.

However 80 per cent, or a massive £3.3 billion, is to be siphoned off for Natural England (formerly English Nature) to fund the environmentally focussed stewardship schemes.

But the NBA has already discovered that a worrying level of funding will be absorbed by advisory staff employed by distributive organisations and a complex application process is blocking farmer involvement and possibly access to funds, that farmers alone should have first call on.

“Everyone involved has to be seriously concerned that much of the modulation money earmarked will never percolate through complex administrative systems and could end up being lifted by hard-up sections of central government to ease the credit crunch,” said the Association’s Director, Kim Haywood.

“We have spoken to one regional agency which has had £156 million available to it since February but has spent less than 1% of the funding available. A £50,000 project funded under axis one modulation was approved to set up a series of workshops and literature on Bluetongue Virus, work which the NBA is doing for farmers in England, Wales and Scotland for far less and at no cost to Government or farmers.”

“If English farmers want to secure funding for projects that fit in with RDA ambitions they will have to arm themselves with an infinity of patience and be prepared for a tortuous application process which may in the end be unsuccessful because of strict eligibility requirements and could also result in them wasting a good deal of their own money as well as time.”

This is because each of the eight English RDAs establishes its own Regional Implementation Plan and there is further fragmentation because some funding is passed on to Local Action Groups (LAG), under the LEADER scheme, which then set up implementation plans of their own – and applicants have to join their nearest LAG to set the ball rolling.

For farmers to access modulation funding, they first must contact their local business gateway link advisor. To avoid conflicts of interest a separate local project business advisor is appointed to work with the applicant to gather data and develop the application at local level. This plan is then passed to the business link advisor to broker the application with the RDA.

Further complications could arise if the funding for the project is above a certain level because the application would then have to pass through the EU procurement process of tendering etc.

“Our fear is that even the keenest applicant, with a first class project in mind, will be put off by this complex process and decide not to bother,” said Ms Haywood.

“It is already impossible to deny that the biggest beneficiaries of voluntary modulation are going to be advisory staff and consultants used by the RDAs and Natural England and there is no case whatsoever for any increases in modulation percentages.”

“Indeed there are overwhelming arguments in favour of scrapping the special and excessive English modulation altogether. Funds generated through compulsory modulation, if used effectively, should meet targets set for the Rural Development Programme, as it is in other Member States. English farmers, in particular, have the greatest percentage removed from their single farm payment cheques, and this constant drain of farmers’ funds is putting them at a huge disadvantage to farmers in other countries in Britain as well as the EU.”

“In England the modulation deduction for 2008/09 is 13 per cent, compared to Scotland at 8 per cent, Northern Ireland at 6 per cent and Wales at 2.5 per cent. These differences highlight, and further exaggerate, the disparity between the economics of beef production in England under Mrs Beckett’s “hybrid” SFP of a net £168/ha in the lowlands and £141/ha in the hills compared to the historic SFP paid to beef farmers in the other 3 counties of Britain, in many cases over £400/ha, and who supply the same market.”

“The NBA’s very clear view is that as much SFP as possible should be left with English farmers who would then use it as capital to realign their businesses so they can survive independently when direct, Pillar One, payments are no longer approved through the CAP in 2013.”

“Excessive modulation deductions are preventing them from doing this and food production will suffer,” Ms Haywood added.

link UK Slaughter Cattle Prices Fall Amid Slow-Down Fears
link Beef Farmers May Have to Pay for New BSE Brainstem Tests
link The Single Farm Payment is Not a Charity Fund for Desk Workers

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