WALES is 'standing out like a sore thumb' in Europe as the full implication of the decision to transfer 15% funding away from direct payments to Welsh farmers hits home.

Farmers across Wales have been receiving letters informing them of a whopping 23.4% cut to their entitlement values, made up of a fall in the total pillar 1 budget of around 10% for the whole of the UK, followed by the 15% per cent pillar transfer rate decided by natural resources and food minister Alun Davies.

In previous years the rate of modulation was lower for the first 5,000 Euros, but the 23.4% reduction will be taken off every Euro, meaning payments will be between 12 and 18% lower.

FUW president Emyr Jones said: "Wales will have the single highest rate of pillar transfer in 2014 not only in the UK, but in the whole of Europe, while the rate in the vast majority of EU countries will be zero. "We have gone from having the lowest rate in the UK to the highest rate in Europe at a time when Welsh farm incomes have collapsed and people are struggling to pay the bills.

"We all understand and support the principle of using the Rural Development Plan to help businesses restructure and be more competitive, but the approach adopted feels more like a direct attack on the industry."

FUW policy director Nick Fenwick said that the impact the cuts would have in Wales highlighted failures at an EU level to prevent significant renationalisation of CAP policies.

"Previously the EU was extremely protective of common rules, but in the last rounds of negotiations huge flexibility was introduced in terms of pillar transfers without the quid pro quo of co-funding.

"There now seems to be some sort of extreme view that taking more money away from an industry already reeling from a collapse in incomes will make it more resilient and competitive - this just doesn't stack up when you consider we operate in a common market and that our main competitors will not have their incomes reduced in this way."

Mr Fenwick said the only option was to focus on getting money back to the industry from pillar 2 in a meaningful way.