Transition and national reserve thinking must be shared

Scottish Government decisions on introducing new support arrangements for Scottish farmers are a leap in the dark according to NFU Scotland.

The Union believes that the new CAP schemes being introduced will push many established businesses over a cliff edge on support levels and fail to recognise, through a national reserve, the case of many who are new to the sector.

Earlier indications of a ‘soft landing’ transition to new scheme rules for those businesses currently claiming support have frittered away.  Scottish Government has failed to share its thinking with producers, and it now appears that Scotland will move into the new era of CAP in 2015 with a jolt.  That will be most acutely felt by those most productive units currently on higher support levels.

It is a second blow for Scottish farmers as a combination of lower CAP budgets, exchange rates and financial discipline saw CAP scheme receipts fall on average by 12 percent this year.  Some businesses will face further substantial reductions in direct support in 2015.

Scotland’s approach to transition is in stark contrast to that being introduced for producers in several other member states in Europe, where they will be cushioned based mainly on the ‘Irish tunnel’ model on introducing the new CAP.

NFU Scotland is also concerned that plans for introducing a national reserve to cater for new or developing businesses will see some who merit immediate support missing out.

Speaking after the Union’s final Board of Directors meeting for 2014, NFU Scotland’s President Nigel Miller said:

“Cabinet Secretary Richard Lochhead has taken a leap in the dark by pushing through a transition model that will see support levels plunge on many productive units while also excluding some developing businesses from the national reserve.  That is a far cry from indications of a soft landing given when Scotland’s CAP announcement was made last June.

“Scottish Government’s eyes are firmly fixed on having schemes and systems in place to deliver payments under the new CAP on time in December 2015.  While that is laudable, the cost has been that decisions taken on delivering transition and the national reserve have been made with this timetable in mind, rather than what may be best for Scottish farming.

“In driving forward the payment system, CAP implementation in Scotland appears to have been shaped by what suits software designers rather than being defined by Scottish policy requirements.   That may be the right priority for Scottish Government officials but the stakes are high and we would want Cabinet Secretary Richard Lochhead to acknowledge that there will be collateral damage to some Scottish farming businesses by focusing solely on what fits computer systems and the payment date.

“In discussions with NFU Scotland, Scottish Government recognise that both the national reserve and the new transition model that are being adopted are flawed and, despite the potential dangers to production and employment, they are unable to quantify the impact of their plans.  

“As a Union, we have our own models but these are not an adequate base for businesses to project business changes, cash flows or likely borrowing levels. Although Scottish Government plans to furnish producers with individual support profiles that is only a medium term goal, leaving a short-term information void for Scottish farmers.  That is unacceptable.
                                                              
“The Cabinet Secretary owes producers an immediate independent analysis of the transition systems he plans to introduce, underpinned by robust modelling and an easy-to-use ready reckoner. This must be a fast track process as the industry is now less than 12 months from the start of a new payment window.

“For those famers that will have to live and work with this Scotland-only approach to transition, independent analysis should also be produced to demonstrate the cost benefit of Scottish Government’s transition leap against an immediate change in 2015.

“Producers have a right to be angry with Scottish Government over this frustrating and drawn out process and that message emerged loud and clear at our final Board meeting of the year yesterday.

“The basic evidence base for these decisions should have been shared openly with Scottish farmers before Scottish Government’s implementation plans changed track rather than having NFU Scotland constantly trying to flush out information on what is planned.

“Scottish Government direct communication with farmers on CAP throughout 2014 has, too often, been slow to emerge and incomplete. This information fog has masked some of the difficult or unpopular decisions that have been made.   That approach must change as hard information is crucial to important business decisions.

“This is a period when Scotland farming must plan its way out of problems.  The national reserve and transition are examples of what can emerge when decision-making is not openly shared and communicated.  A more open and transparent approach must be part of the mind set in 2015.”   

Ends

Contact Bob Carruth on 0131 472 4006 or Ruth McClean on 0131 472 4108