The current debate on convergence reminds me of the George Bernard Shaw quote that if all the economists were laid end to end, they’d never reach a conclusion writes Director of Policy Jonnie Hall.
He adds: “Those words could equally apply to politicians and, dare I say it, farmers and crofters.
“Why is this relevant? Well, let’s first assume we do see the £160 million convergence cheque arrive in the post. If so, then we already know that everyone has a view on just how that money should be spent. And amongst farmers and crofters there is absolutely no unanimity. There’s no unanimity within regions or sectors either.
“Scotland’s original Pillar 1 budget was derived from production-related support. It was fossilised in Single Farm Payments in 2005. And then flattened across Payment Regions in the Basic Payment Scheme from 2015. Net result…money has moved between regions and within regions, and between sectors and within sectors.
“How this additional windfall money, that the Union has fought hard for six years to secure, is distributed will continue to cause disagreement.
(And with no commitment from UK Government on future farm funding beyond 2022 or the lifetime of this parliament – which could mean weeks – then Scottish agriculture should be alive to the very real risks of future cuts to agricultural support. So, thank goodness it’s not a £160 million cut…yet!)
“The reality is that, at about a third of the annual direct support spend on Scottish agriculture, the £160 million is potentially not much more than a temporary sticking plaster. And it must be used wisely.
“Of itself, the additional funding is not going to secure a viable or prosperous future for the whole of Scottish agriculture, and everything it then underpins.
“We need to look at securing a better return from the supply chain, we need to drive down costs, and we need a future agricultural support system that focuses an effective budget on actions that build resilience and productivity whilst tackling significant environmental challenges such as climate change. And let’s not lose sight of that.
“Right now, I don’t see any sector or any region of Scottish agriculture as the land of milk and honey. They all face severe challenges. Brexit uncertainty aside, there are financial, physical and political challenges facing our industry at every turn.
“And at every turn, the inter-dependent nature of Scottish agriculture, where sectors rely on other sectors and regions depend on other regions, becomes ever more apparent.
“But the additional £160 million may offer a degree of short-term comfort through what will inevitably be a turbulent and uncertain time.
“Right now, without question, the best use of the £160 million windfall is to ensure every active farm and croft gets a much-needed shot in the arm – and that’s exactly what NFU Scotland’s proposals would do.
“NFU Scotland’s proposed approach would be sector neutral and would provide additional support that could be delivered via 2019 claims and be paid in Spring 2020 as a valuable cash injection for the whole of Scottish agriculture at a time of increasing uncertainty and financial challenges.
“By focusing on 2019 claims, the Union’s policy position excludes retrospective claims on the additional funding. This funding must be allocated to today’s active farmers and crofters.
“To maximise impact, and be deliverable, the allocation of the additional £160 million must be essentially treated as if it had been received as Pillar 1 funding from 2015 and distributed within Pillar 1 to fulfil existing policy decisions through Scotland’s established direct support schemes – targeted to currently active farmers and crofters.
“The vast majority of the additional funding should be allocated through; the Basic Payment Scheme (BPS), including the Greening and Young Farmer Payments (YFP) components; the Scottish Suckler Beef Support Scheme (SSBSS), both Mainland and Islands, and; the Scottish Upland Sheep Support Scheme (SUSSS).
“Moreover, none of the £160 million additional Pillar 1 support should be used to address the shortfall in Less Favoured Areas Support Scheme (LFASS) funding in 2019 (or 2020). LFASS is a Pillar 2 scheme and resolving the LFASS issue should not be reliant on the additional Pillar 1 funding coming to Scotland.
“Given the current vulnerability of hill farming, not least because of significant LFASS uncertainties, extra weighted support should be provided to the existing Region 2 and Region 3 budgets of the BPS – and that’s exactly what the NFU Scotland proposal does.
“The current budget split between the three BPS Payment Regions should be adjusted to enable some the additional funding to be targeted at Regions 2 and 3.
“Getting the balance right is always difficult. The balance in the NFU Scotland proposal will maximise the impact of the cash injection. But will also maintain the balance of Scottish agriculture itself – fuelling the interactions between farm businesses, sectors and regions. That balance will also maximise the impact that active farming and crofting has across Scotland – economically, environmentally and socially.
“Any imbalanced approach would only result in a much less effective and shorter-lived impact – and exposing all Scottish agriculture to immediate risks and future uncertainties.
“Perhaps it’s because NFU Scotland’s Board is not made up of economists that it was able to reach a conclusion?”