Modulation reduction could fund SBS uplift and benefit all

NFU Scotland has asked the Scottish Government to lift support to the Scottish beef industry in 2014 by adopting measures that could benefit almost every Scottish farming business.

Although Scotland will face a new CAP support regime in 2015, the transition arrangements for 2014 allows coupled support to increase to 6.5 percent of the budget. Currently, around 4.5 percent of the budget is spent on the Scottish Beef Scheme (SBS), which is worth around €29.8m to our beef sector.

The transition arrangements to the new CAP allow for the funding of SBS to be increased, but does not allow for any of the mechanics, weighting of payments, or eligibility associated with the current scheme to be altered.  

The NFUS letter to the Scottish Government asks it to increase the spending on coupled payments in 2014, as this could help slow the decline in the national suckler cow herd.  It would also provide a stepping stone to new support arrangements in 2015, when there is potential for coupled support to increase to a maximum of 8 percent of the budget.

As Scotland’s rural development programme will be operating on a limited basis in 2014, NFU Scotland believes that reducing the modulation rates on support payments used to fund rural development measures could fund the desired uplift in SBS.  Such a move would not only inject more cash into the SBS, but would push support back into all farm businesses at a time when many have had a very challenging few years.

NFU Scotland President, Nigel Miller said:

“In the beef sector, the evidence from our recent survey is clear.  Many producers consider that current levels of coupled support are insufficient to maintain current levels of production and, unless these change, the decline in our beef herd will continue.
 
“However, the challenges faced by beef farmers are far from unique. Better weather since May has started to repair the damage of the past two years but farm businesses in all sectors are still clawing their way back to profitability but many are still fragile.

“The transition regulations emerging from Europe offer clear scope to help address the issues in the beef sector in 2014 as a stepping stone to a new CAP regime from 2015. The possibility of using up to 6.5 percent of an as yet unknown budget could certainly add substantially to the SBS budget and its payment rates on beef calves.

“Such a shot in the arm could go a long way to slowing the decline in the national suckler cow herd, and provide a bridge to the possible 8 percent voluntary coupled support option from 2015.

“We also have to be very mindful of the pressures that exist on all sectors of Scottish agriculture. The transition arrangements for Pillar 1 in 2014 can target much needed support to the specialist beef sector, but cutting basic support to all other sectors to fund such a move can and must be avoided.

“We believe that funding for the desired uplift in SBS can be achieved by cutting some or all of the voluntary modulation levied on all SFP payments in the transition year of 2014.  This can be justified as rural development measures that year will operate on a skeleton basis covering LFASS and existing agri-environment commitments.
 
“There is a precedent from near neighbours in terms of elements of this proposed package for Scotland. In Northern Ireland, a modulation holiday is already being applied for 2013 and in the Republic of Ireland, it is evident that their beef sector will be underpinned through a package of support fuelled by funding from both Pillar 1 and Pillar 2.”   

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Contact Bob Carruth on 0134 472 4006