The Tenant Farmers Association has reacted angrily to the news that Defra has decided to siphon off up to 19% of funds earmarked for the farming community to pay for its other policy goals.

The siphon, known as modulation, has two elements; a compulsory element of 5% which is set by the European Union and an additional discretionary element which can be set by Member States up to an additional 15%. In England, Ministers have decided to set the discretionary rate at 12% in 2007 rising to 14% by 2009 which is far in excess of any other Member State of the European Union.

George Dunn, Chief Executive of the Tenant Farmers Association said “It is particularly galling that Defra Ministers have made this decision since we are meant to be operating with other EU Member States within a common framework. Defra's decision means that English farmers will be penalised more heavily than others throughout Europe”.

Most other Member States of the Union have indicated that they will only use the compulsory element of the modulation at 5%. The only other Member State likely to use the discretionary element is Portugal where over 90% of its farms are exempt from modulation due to their small size. Northern Ireland has announced a modulation rate of 10% by 2010.

“Even within the UK, English farmers will be at a competitive disadvantage. Defra will claim that the money will be recycled within the farming community through its suite of rural development schemes. However, these schemes are increasingly difficult to get into and are not cost-free to the farmer. Participants in the Higher Level Stewardship Scheme, for example, are finding that in many cases the cost of being within the Scheme outweighs the benefits of the payments received. On top of that, as tenant farmers are required to have their landlord's consent before entering the Higher Level Stewardship Scheme, there is no guarantee that they will be able to participate. I can only see that English farmers will lose out here” said Mr Dunn.

“The transition from farm based payments to more environmental based payments was meant to be gradual. Defra has chosen to speed up the process unnecessarily and coupled with its inability to deliver farm payments on an efficient basis, will simply add further pain to an already hurting farm community” said Mr Dunn.

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