Despite the increase in modulation rates, NFU Scotland has broadly welcomed the main thrust of today’s announcement by Cabinet Secretary, Richard Lochhead on rural development spending for the period up until 2013.

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The Scottish Rural Development Programme includes a wide range of measures that will benefit farm businesses and the wider rural economy - in particular a commitment to support for hill and upland farms in Scotland's Less Favoured Areas, increased funding for environmental schemes and measures to improve the competitiveness and profitability of farm businesses.

The voluntary modulation rate of 5% in 2007 rising to 9% in 2012 is considerably lower than the rates previously trailed by Scottish Executive officials and the equivalent rates already announced in England and Northern Ireland. NFU Scotland has argued for as low a rate as possible that will provide sufficient funding for a meaningful rural development programme without, at the same time, putting farm incomes at risk. A £1,598m programme is almost double the £811m spent over the previous 7 years and contains measures that will help farm businesses, the environment and rural communities.

Reacting to the announcement, NFU Scotland President Jim McLaren said:

“We have made it very clear to the new Scottish Executive that we expected a rural development programme that will meet the needs of Scotland's farming businesses and rural communities. Our calculations showed that this could be achieved without swingeing increases in the rate of voluntary modulation, which would have undermined the viability of individual businesses. While the eventual rates of voluntary modulation will be higher than the current 5%, which we believe could still have delivered a meaningful programme, they average out at 8% over the period up until 2013 and are boosted by a significant increase in Scottish Executive funding to £1,113m, compared to £552m in the previous programme.

“At this time the thing that farmers need most of all is stability. That is why we have been impressing on the Scottish Executive the need to keep modulation rates to the absolute minimum required. While an average modulation rate of 8% will put pressure on farm incomes, the programme includes a number of measures, such as farm restructuring, co-operation and animal health and welfare, that will help businesses adapt to the last CAP reform by cutting costs and adding value to what they produce. We also welcome the inclusion of a young farmers scheme, which will help bring new blood into the industry. Additional funding will allow more farmers and crofters into agri-environmnent schemes and the continuing commitment to supporting the Less Favoured Areas has addressed our top priority.”

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