The impact of decoupling will depend on the form of decoupling to be implemented. As the agreement reached by the Council of Ministers provides for the option of full decoupling and for various partial decoupling options, I will shortly commence a process of consultation with the social partners and any other interested groups and individuals before deciding on which option to implement.
The Commission's proposals on digression of direct payments, which would have reduced direct payments to Irish farmers by €56 million annually, have been withdrawn. The proposals have been replaced by a mechanism, to commence in 2007, whereby the Council will decide what adjustments may be necessary to ensure that the annual expenditure ceilings are respected.
The agreement reached on modulation of direct payments provides for a modulation rate of 3% in 2005, 4% in 2006 and 5% in subsequent years. The first €5,000 per year of a farmer's direct payments will not be affected. Ireland will effectively retain about 85% of modulated funds for use for on-farm rural development measures.