Originally published in Agricultural Bulletin, 2007
The four devolved governments have announced their VM rates for 2007 and are all lower than forecast.
The UK’s devolved regions have announced their voluntary modulation (VM) rates. The Welsh, surprisingly, have come in with the lowest rates and, in a further twist, the levels of deductions that were previously fixed in Northern Ireland have been reduced by the new power-sharing executive.
All four administrations have opted for lower rates than expected. This will please farmers, but will reduce additional Government funding for rural areas via the match funding of modulation.
These VM rates are in addition to the 5% compulsory modulation imposed on all EU farmers. EU modulation has a €5,000 exemption, and deductions are not levied below this level. However, all the UK regions have chosen to impose their VM rate across the whole Single Payment.
The announcement clears up some uncertainty about future deductions from the Standard of Good Farming Practice, and should make entitlements easier to value.
However, future income streams remain uncertain. Financial Discipline will take a further percentage from Single Payments if the CAP budget is overspent. Decisions on these cuts will be taken on a year-byyear basis so can’t be accurately predicted. Such deductions are unlikely for the 2007 year, although levels of 5-6% may not be unrealistic by 2012. Furthermore, currency fluctuations must also be added into the equation, unless farmers opt to take their SPS in euros.
Single Payment Update
The Government plans to have threequarters of the value of 2007’s English Single Payments distributed by the end of March 2008 and 90% by the end of May.
These are the targets that junior minister Jeff Rooker has set the Rural Payments Agency based on the assumption that no interim payments will be made for the 2007 year.
This decision will be revisited in the autumn – presumably having progessed the processing of 2007 claims and reviewing more than 20,000 doubtful allocations from 2005.
