The European Commission's proposal on voluntary modulation is currently being debated by the European Parliament. Last week the parliament's agriculture committee rejected the Commission's rules for voluntary modulation.

Although there are many elements of the proposal I'm concerned about and would vote against, the problem with rejecting it is that it threatens to delay the start of the new rural development programmes and their funding. They should be up and running from January 2007 but without finalising and getting Commission approval for the programmes we won't see the money. This would not be a good start for the programme and could exacerbate the historical problem of underspend later on.

Modulation was put in place in the UK in the first place because of a lack of money provided for rural development. The amount of EU funds secured by successive Westminster Governments for the UK has historically been low as its based on how much was spent by each Member State in the mid 90s. This problem will continue in spite of my attempts in the parliament to change it. So the UK will continue to get around 3.5% of the EU's funding despite having 12% of the agricultural land.

This is made worse by the budget deal made by the UK Government last December - and their stubborn defence of its budget rebate - which severly cut the Commission and Parliament's proposals for funding rural development.

This combined means that Wales won't get a fair deal on rural development funding and as a result of this failure by governmnet; Ministers will look to modulation to top up this fund.

The most important issue we need assurance on is that the decision on the future level of voluntary modulation is made on a Wales level. The proposal at the moment is to have one level for every EU member state. This is totally unacceptable and Plaid will oppose it. The current rate varies from 0.5% to 6% in the different countries of the UK which shows the wide difference in approach. We have a distinctive farming industry and rural communities in Wales and we certainly don't want to be tied to the same decision as England, Scotland and Northern Ireland.

We fought and won the right for rural development plans to be made in Wales, and it makes no sense whatsoever if the decisions following on from the plan are not.

The second crucial issue is match funding. It is up to the Labour Government in Westminster if and how they provide match funding for the modulation. A decision is expected in the next month. This is meant to be additional money and should not be taken from Wales's existing agriculture or rural development budget. Ceredigion AM Elin Jones has recently revealed that this year money meant for Tir Mynydd has been 're-allocated' as match funding for Tir Cynnal. This is a disgrace and cannot happen in future. It must be clear that match funding comes from the Treasury as additional money.

The bottom line is that we need decent EU funding and UK match funding for rural development rather than more voluntary modulation. Farmers and rural communities shouldn't be doubly punished for the Labour Government negotiating a bad budget deal and putting other interests first.