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CAP Statement Signals Way Ahead for Support

Scottish system to make most of flexibilities to support activity

NFU Scotland believes today’s announcement on how CAP support will be delivered to Scottish agriculture in the future makes use of crucial flexibilities to ensure Scotland’s limited budget best targets active producers.

As Scotland moves towards an area-based payment system, key elements in the statement made by Cabinet Secretary Richard Lochhead in the Scottish Parliament today (11 June) are:

  • Strict activity requirements
  • Three region approach
  • National Reserve for new entrants and developing businesses
  • Transition arrangements for established businesses
  • Robust negative list
  • Basic payments capped at £400,000 after labour costs
  • Coupled support for the hill sheep and beef sectors
  • Eligibility for future entitlements based on area farmed in 2013
  • A new £45 million beef improvement scheme
  • A separate capital grant scheme for crofters

With the announcement now made, there is a significant amount of work now required to ensure the details on implementation and eligibility are available to the industry as soon as possible.  

Speaking from the Scottish Parliament, NFU Scotland President Nigel Miller said:
“This was always going to be a tough package for Scottish agriculture.  Without pushing rules to the limit, the thin budget would leave real gaps when compared to the existing support system.   For established businesses, whether in cropping or livestock, the reality is many face a steep reduction in support levels. For new entrants and developers, we welcome that they will be brought immediately into the support system and, through an ongoing national reserve, that we will not create the problems of the past for a new generation of farmers.   

“While few farming businesses may be celebrating, credit is due to the Scottish Government for securing additional tools and devices from Europe to try and make our budget achieve as much as possible.  Working with the Commission and the UK Government, it won flexibilities that go beyond the base CAP agreement and these have been taken up by Richard Lochhead to the benefit of Scottish agriculture.

“The Cabinet Secretary has kept a focus on production with a package that looks to underpin that in future. He has sought to address the real sores caused by the historic system of payment that has been with us since 2004/05 and he has made special efforts in sectors and regions which are vulnerable to the area system.

“He looks to have created a meaningful gateway to the support system, which uses the Scottish clause on activity, and operates a negative list to ensure non-farm land doesn’t creep into eligibility.   Without that, there was the potential to draw in more than half a million additional hectares.   This approach was vital to protect the budget, safeguard public money and use it in meaningful way.

“A key barrier against ‘slipper’ farming is supported by a new approach to our rough grazing region (RGR).  More challenging regions of rough grazing will see a lower area payment – estimated by the Scottish Government at around €10 per ha including greening - but will be underpinned by sheep coupled support worth around €25 per ewe to ensure that those actively keeping ewes within that region receive an appropriate level of support.  That targeted system means that low intensity land will have a low per ha rate but on more favoured hills, where sheep stocks are higher, support will rise to safeguard the vulnerable hill sheep sector.

“Moving away from a flat rate RGR payment, and a more targeted approach on high hill land, means that the area rate on upland RGR, according to the Scottish Government, will be around €35 per ha with support following genuine activity.

“As part of the focus on vulnerable regions, budget efficiency also frees up money for an enhanced calf scheme to help producers in the Scottish islands, where costs of production run well ahead of the mainland and reductions in support ran the risk of producing a crash in agricultural activity in these parts.”

Speaking on transition arrangements, Mr Miller added:
“Transition to the new arrangements has been a battleground over last few weeks with those recently entering into industry wanting an overnight move for all claimants to full area support in 2015 while many established business a wanted transition period to manage change.

“This has been a difficult area for Scottish Government and the Union and Richard Lochhead has opted to go down a compromise two speed approach that we support.

“In keeping with one of our priorities, that will see the introduction of a comprehensive National Reserve to deliver full area payments for the cluster of important producers who have entered the industry during the period covered by the last reform.  By bringing in this wide sweep of disadvantaged farms, a level of unfairness has been taken out of the system.  This has a cost and it is likely that the projected three percent top slice needed for National Reserve will be exceeded, impacting on the area payments for all producers in all regions.

“With our new entrant requirement addressed, a step transition to 2019 will be put in place to allow established businesses to move to area payments  We are convinced that that period of adaptation is needed to sustain production, jobs and the wider rural economy.  

“On entitlements, the run in towards the 2015 deadline has seen farmers and landowners position themselves with a view to maximising claims and securing entitlements.  This has been unhelpful to tenant farmers, new entrants and established businesses that rely on short term lets.  To address this, in line with industry requests, allocation of entitlements will reflect the area farmed in 2013. This will have a stabilising effect on this area of land.

Commenting on the non-RGR area, Vice President Allan Bowie said:
“The area payment on non-RGR land and the arable sector has been sheltered from any reductions during the negotiations on RGR.  Scottish Government has estimates rates at €200 to €220 per ha but that includes taking on the challenge of greening so this is a mixed package.  

“There is work going on with equivalences which are looking at getting Scotland out of the grip of the three-crop rule.  A programme of stubble management and catch crops to allow more traditional spring barley cropping to continue, would allow farms to respond to the growing demand for malting barley. That work is not complete and may not kick in for two seasons, meaning many growers face the nonsensical three crop rule in 2015.

“EFA requirements as mapped out by Europe are unnecessarily complex.  Scottish proposals could allow producers and farmers to use fallow, field margins including hedges and ditches and buffer strips.  This must move us out of complex mapping but will mean variable weightings and coefficients are unlikely to be achievable.

“On EFA requirements, other options of catch and cover crops and nitrogen-fixing crops will provide some flexibility for farms that don’t fit well with field margin or buffer strip approach. The flexibility to use catch crops or legumes to count towards EFA can deliver real environmental benefits on soil structure, water quality and support pollinators and insect life.  To help growers to plan, decisions on the detail by August would be a huge help.”

Looking specifically at the beef sector, Vice President Rob Livesey said:
“The beef sector has grabbed headlines in last few weeks with a significant crash in returns after a period of unprecedented high prices – those volatile market signals combined with the impact that the change to area support could have on the sector has focussed minds on the future. The Scottish Government has put together a package of measures to underpin production and clearly transition for established businesses is a significant component of that.

“However, it also confirmed that an eight percent coupled beef scheme will deliver significant extra support into the sector.  Compared to our existing calf scheme, the profile of payment will change to double the rate on the first ten calves and the single payment rate on the remainder.  This is to support crofters, small farmers and new entrants at the higher rate but will stretch support into all beef calf producers.

“Within rural development, a new scheme for cattle will also be introduced to drive efficiency and improvement in margins as well as addressing climate change targets. The new money being provided by Scottish Government to support this scheme is most welcome, will help take our cattle sector forward and will offer a route to producers to help fill the funding gap as we move into the area payments era.

“When you add in the enhanced calf scheme for island producers, I believe this is a sound deal given the restrictions that this CAP Reform delivers.”

Ends

Contact Bob Carruth on 0131 472 4006
 

Date Published:

News Article No.: 112/14


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