I am pleased to update the Parliament on our progress towards making 2015 payments under pillar 1 of the new common agricultural policy. However, before I do so, I will touch briefly on two immediate issues that are affecting farmers in Scotland.
First, the Forth road bridge closure is having an impact on some farmers and on the wider food and drink sector. The Government was quick to contact the animal feed sector, the whisky sector and other relevant sectors. As members are aware, we secured an immediate relaxation of driver hours, which has been helpful to those sectors.
We have also been working with the industry to help to improve contingency planning. For example, we understand that some livestock units get feed deliveries only when stocks get low, with no contingency in place. That is clearly too risky, so we have been working with stakeholders to help to ensure that they are better prepared.
We will keep in touch with the industry to monitor the impact of the situation and we will seek to resolve as quickly as possible any problems that arise.
The second immediate issue is the flooding that followed storm Desmond over last weekend. Naturally, the Government’s immediate focus was on the families and businesses who were flooded out, and my colleague Aileen McLeod has had an intense focus on the issues in that regard.
We must also be conscious of the impact on our farming sector. I have had a full update from our agricultural offices, who have told me that so far the impact on the sector has, fortunately, been minimal. That has been confirmed by NFU Scotland. I will continue to pay attention to the situation.
As well as those challenges, our farmers and crofters have been facing the unfavourable market conditions with which we are all familiar and an unhelpful exchange rate during 2015. This has been a challenging year for all farmers and crofters, which is why we have known for some time how important it is to implement the new CAP as quickly as possible.
We are talking about more than £400 million in the new basic and greening payments, coupled support schemes of £45 million for beef and £8 million for sheep, and—later on—more than £60 million that will be issued through less favoured area support scheme payments. That represents substantial support for the sector.
We knew that getting that cash out of the door would be an unprecedented task for the Government. This is the biggest CAP reform for a generation. It is the first time ever that pillars 1 and 2 have been reformed in the same year. In 2015, we will have launched nearly 20 schemes across both pillars. Nearly all those schemes are either brand new or significantly changed from the old CAP. In pillar 1, in particular, the changes are enormous.
Some changes were imposed on us by Europe, such as greening, which is proving to be a major challenge for all member states. There are also changes that we successfully negotiated with Europe, such as the Scottish clause to tackle what is known as slipper farming and fair treatment for new entrants.
There were also policy choices that we made here in Scotland, through Government and industry working closely together, with the support of most if not all parties in this Parliament. Those include the three payment regions, the five-year transition and new coupled support schemes for the beef and sheep sectors.
However, there were always going to be consequences of the decisions. In the old CAP, we had two schemes in pillar 1—the single farm payment and the Scottish beef scheme—both of which applied uniformly across the whole country. Today, we have six schemes in pillar 1—basic payment, greening, younger farmers top-up, mainland beef, island beef and upland sheep—every one of which involves geographic targeting. That targeting is done in three different ways across the six schemes.
We made those policy changes to tailor the new CAP to Scotland’s needs. We had meeting after meeting after meeting with industry leaders. The discussions were often intense but the decisions were right and strongly supported by the industry and the Parliament. We all made those choices with our eyes wide open. It was always made clear to the industry that more complexity would have an impact on the timetable. NFU Scotland confirmed that it knew about that and accepted it.
We now have to calculate around 4 million hectares-worth of new payment entitlements, not just for 2015, but for the whole transition period up to 2019. Some administrations will not need to do that if they made different policy choices in the past. In England, the Department for Environment, Food and Rural Affairs decided to adopt area-based payments from 2005 after the last CAP reform. That means that calculating payments in England is much easier and the English do not have to define new regions or issue new entitlements. Despite that, they still face challenges.
Here in Scotland, we have to allocate around 400,000 fields into the three payment regions for the basic payment part of pillar 1. Thankfully that work is virtually complete, but it has been a major undertaking. Meanwhile, our information technology teams have been writing millions of lines of new computer code to implement this complex new policy within the tight timetable imposed by the EU.
So where are we, as of today? On 17 November, I gave the Rural Affairs, Climate Change and Environment Committee a written update. I said that we aim to start payments with a first payment run that should cover around a quarter of claimants. I said that the first payments should begin arriving by the end of December, the majority will arrive in January and all farmers should receive their first instalment in March and the balance in April. I also said that the first instalment payment would be at least 70 per cent. I confirm today that we are on track for that start date for payments.
The first payment run to approximately 25 per cent of farmers will get under way before Christmas, with payments beginning to arrive in farmers’ accounts before the new year.
I know that everyone will be keen to know when his or her payment will be made. The answer to this is the same under the new CAP as it was under the old CAP because it depends on each individual case. Straightforward cases, where there has been little or no change from last year, should need less processing than others. If a case is more complex, or if it is one of the small percentage that we have had to inspect, processing will take longer. In some cases, the European rules require us to contact the farmer for more information. In that scenario, I urge farmers to respond quickly, so that we can get on with processing their claim. I have heard stories about how we have written to farmers two or three times and are yet to hear back so that we can get on with processing their claim and ensuring that we have accurate information.
Farmers and crofters are also keen to know the value of their entitlements under the new CAP. As required by Europe, by the end of the year we will issue to farmers illustration letters, setting out the number and value of claimed entitlements for every year from 2015 to 2019. I must emphasise that this will only be an illustration, as required by Europe, and will not necessarily be the actual payments. Under EU rules we must then confirm the final value of entitlements, after all claims have been processed and by 1 April. In other words, the illustrations that Europe requires will be out by the end of this year and the final values will be out by 1 April, so that farmers will have full visibility of their five-year transition. I know that people are keen to get this information but, here too, the more complex cases might have to wait a little longer than others. If that causes problems for any individual farmer or crofter, they should contact their area office, or they can call our new helpline—0300 300 2222—which opened last week and will be open office hours. Alex Johnstone need not worry; it is now part of the Official Report. It will help customers get to grips with the complexities of new CAP.
We also sent an explanatory leaflet to all farmers in early December, so that they know what to expect over coming months. We have also been in contact with the banks—I have met them all personally—to encourage them to help the industry through the coming months.
This is undoubtedly a difficult time and I thank all our farmers and crofters for their patience. We know how important these payments are. Although, as I said, it is an unprecedented task for the Government, we must make every effort to ensure that we get it right. We cannot have Scottish farmers facing the chaos of incorrect payments or the loss of funding through EU disallowance that their counterparts elsewhere have faced in the past.
In previous years, the Scottish Government has had an exceptional record of making CAP payments, but 2015 was always going to be different. However, no one should doubt the Government’s determination to deliver for the agricultural community.
The £440 million of support that will be issued in the coming months through pillar 1 of the new CAP alone is vital to food production, our environment, our rural communities and the Scottish economy. I believe that most, if not all, parties in this Parliament agree with me and the industry that, even if it meant a different timetable, it was a price worth paying to ensure that payments are as targeted and effective as we can make them.
On that note, I urge the Parliament to support the Government’s work to make these much-needed payments, under this jointly-designed policy, as quickly as we can.