In addition, the proposed rate of modulation has been reduced from 6% to 5% when fully operational and we also have the retention of the €5,000 franchise or exemption which will ensure that almost half of Irish farmers will not have modulation applied to them. My objective in ensuring that modulated funds are retained in Ireland for rural development measures has also largely been achieved. Modulation will commence in 2005 at a rate of 3%, rise to 4% in 2006 and continue thereafter at 5%. Ireland will retain 85% of modulated funds and, of the €40 million modulated, €34 million will stay in Ireland. The resultant net reduction of €6 million per annum represents only 0.5% of the €l.3 billion in direct payments which are currently paid annually to Irish farmers.