Farmers need to become aware of the increasing likelihood that up to 40% of their Single Payment could be lost to them thanks to changes to the CAP rules that allows individual EU Member States to impose a “Voluntary National Modulation (VNM)” on their payments, says George Chichester farm business consultant of Strutt & Parker. This concept was introduced by Tony Blair as part of the EU budget negotiations in December, and is particularly significant for English farmers as it is unlikely that other Member States will impose it.

The issue has recently gained national press publicity, and Mr Chichester is keen to seize on that to make sure that farmers, advisors, and politicians understand the impact of what is being proposed so they can unite to send a resounding “hands off’ message to Government. “The industry cannot afford another 20% modulation cut,” he insists.

While it has been known for some time that farmers will lose some of their Single Payment money through general modulation, national reserve, and financial discipline, it was generally assumed that cuts, in total, would be around 25% by 2012. However 15 to 20% of those deductions would be reclaimable by joining an agri-environmental scheme like the Entry Level Scheme. The introduction of a VNM could easily take cuts up to 40% by potentially taxing English farmers an additional 20%.

“Tony Blair volunteered to give up a significant part of the UK’s Thatcher negotiated rebate to secure a deal, which is a loss of £10bn over the next seven years to the Exchequer. But now he wants some of that money back,” adds Mr XXXX. “One of the easiest routes is to impose the VNM and knock at the door of English farming plc to collect it”.

Another reason for the modulation increase is that the EU’s budget is now fixed from 2007 to 2013, and thus there will be no additional funds with which to pay for the integration of new member states such as Romania and Bulgaria next year. This cost must again be borne by the farming community, through “financial discipline”.

“UK farmers have become well accustomed to farming on an un-level playing field in the international business of food production, but the recent EU budget negotiations and concept of VNM will steepen the slope further. This would be extremely unfair and harmful to our competitive position,” he concludes.