Agriculture (Retained EU Law and Data) (Scotland) Bill

The Convener (Edward Mountain)

Good morning and welcome to the 33rd meeting in 2019 of the Rural Economy and Connectivity Committee. I remind everyone to make sure that their mobile phones are on silent.

The first agenda item is the Agriculture (Retained EU Law and Data) (Scotland) Bill. Before we go into that agenda item, I invite members to declare interests. I declare that I have an interest in a farming partnership.

Peter Chapman (North East Scotland) (Con)

I declare an interest as a partner in a farming business in the north-east.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I have a very small registered agricultural holding, from which I derive no income.

The Convener

Thank you. This is our second evidence session on the bill. Today, we will take evidence from data and research organisations. I welcome the panellists: Maureen Falconer is the regional manager for Scotland for the Information Commissioner’s Office; Steven Thomson is a senior agricultural economist and policy adviser at Scotland’s Rural College; Professor Julie Fitzpatrick is the chief executive officer of the Moredun Foundation and scientific director of the Moredun Research Institute; and Ellen Wilson is chair of the Scottish biodiversity information forum.

The first question is from John Finnie.

John Finnie (Highlands and Islands) (Green)

Good morning. There are quite a number of questions coming up, as ever. However, will the panel members give their initial reflections on the bill, and on whether it meets their expectations and aspirations about how we go forward?

Professor Julie Fitzpatrick (Moredun Research Institute)

I think that the bill reads very well indeed. The retained European Union law is, in general, highly relevant to the Scottish position. I think that the objectives of the common agricultural policy well meet Scotland’s needs, as defined many years ago when the CAP was set up.

I think that the two acts on rural development, the three acts on direct payments and other aspects broadly fit with what Scotland will require. It is also important that we have the ability to make regional and national decisions about CAP reform, and that, too, is described well in the bill.

On data, I consider that the bill is correctly focused on the agri-food-chain aspects of agriculture, and that the regulation to compel supply, handling and processing of data is appropriate. There are different categories of data requirement: they are all-encompassing and cover many of the different areas of data requirement. I will not say much about data regulation and processing because that is not my area of expertise. The reasons for the data are clear and appropriate.

In the general provisions in the bill, I like the idea of the power to operate CAP regulation beyond 2020.

My thoughts on the bill, from a data-processing and data information perspective, are generally positive.

John Finnie

If other panel members have general comments, those would be appreciated. There are quite a number of specific questions to come, but I would like to hear your initial thoughts.

Steven Thomson (Scotland’s Rural College)

It is welcome that we have a bill in situ, because we need it if we are going to take agriculture forward and take payments beyond the end of 2020 when the current CAP ends. We need provision either to be able to maintain the existing regulations or to amend them as Scottish ministers and the Scottish Parliament see fit. That flexibility is important because there have always been concerns that we are overregulated. Some schemes might not be nuanced enough for the Scottish situation and, as Julie Fitzpatrick mentioned, the bill includes flexibility to ensure that we deliver policy in the right areas.

Some issues around governance remain. When the Brexit process started, I had concerns about who would act as the European Commission, the European Parliament and all the other EU institutions, because they are currently the legislators: member states have to apply to them for permission to make changes. It is important that we still have in place a check and balance. Quite a lot of it what happens will be dealt with under affirmative procedure, which is good. Ministers need the flexibility to make minor amendments without changing the nature of the legislation.

The update on data is welcome, because it explains explicitly why data is being collected and for what purposes, and it will enable the Government to share data with institutions such as ours, and to help them to analyse data in order to understand better how policy is performing and how the sector is performing. The provisions are welcome.

Maureen Falconer (Information Commissioner’s Office)

I suppose that everyone is looking to the ICO and asking, “Can they do this?”

The Convener

I should have said at the beginning of the session that if a question is not directed at you but you wish to speak, just indicate that and I will bring you in. If you all look away at the wrong moment because no one wishes to answer, one member of the panel will be nominated.

I am sorry for interrupting, Maureen.

Maureen Falconer

That is okay.

Under article 36(4) of the Regulation (EU) 2016/679 (General Data Protection Regulation), when draft legislation is proposed that involves the processing of personal information, policy makers are required to consult the ICO. The Scottish Government did that at the appropriate time.

The only issue about the content of the draft legislation on which I wanted to engage with the Government was the part about relying on consent for research purposes. That was not because we were going to tell it that it could not do that. Actually, as a matter of fact, it was—we wanted to suggest that it should not rely on consent, because the research that was going to be done, such as gathering information to better determine future policy, is in the legitimate interests of the policy makers. From a research perspective, consent is very difficult, because it skews results; therefore, legitimate interest is the more appropriate legal basis on which to rely.

From the regulatory perspective, the ICO had no issues with what was proposed in the bill at that time. The bill has since changed slightly, and I still have no issues. I told colleagues earlier that I was going to email to say that I did not think that you needed me to come along and speak to you, setting out the reasons why. However, the email got so convoluted that I thought that I might as well come along in person to tell you. I appreciate that data protection legislation is not the easiest legislation to get one’s head around.

Ellen Wilson (Scottish Biodiversity Information Forum)

I am not a policy expert, so I do not usually comment on bills. However, overall I welcome the opportunity that the bill provides to improve and simplify matters. That said, the simplification element brings concerns about whether it would allow us to understand the impacts for biodiversity and for the sustainable development goals. That might be getting into a bit too much detail. Broadly, I welcome the opportunity that the bill brings.

Stewart Stevenson

I seek clarification on what Julie Fitzpatrick said about the CAP meeting Scotland’s needs. I think that I heard some support for that in what Steven Thomson said about the support regime, but there was perhaps less support in relation to regulation. I am thinking of the three-crop rule, which dealt with a Mediterranean issue and did not suit Scotland for a second. Julie Fitzpatrick might want to say whether she was talking about support functions rather than regulations, or otherwise.

Professor Fitzpatrick

I mentioned support functions, but some of those come from the regulations, and that link is important. I am not a lawyer, but having read the bill and the supporting notes, I consider that the proposal covers that link. It allows for interpretation of Scotland-specific payments and for other regulatory issues to be covered under the bill. It is less about the regulations and more about the policy.

Stewart Stevenson

Thank you.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

Good morning, panel. The consultation document “Stability and Simplicity: proposals for a rural funding transition period” asked for views on changes that might be made to schemes and policies in the transition period to a new rural policy in 2024. To what extent is the bill fit for purpose in delivering the changes that will be required for that transition period?

Steven Thomson

That is quite challenging, because a consultation is a consultation. In the consultation that you are asking about, hugely disparate views and opinions were given.

There has to be scope to amend what we are doing in terms of the policy. Pilot schemes are very important: if we are to deliver policies, we must be able to test them at small or regional pilot scale, to see whether they work.

In the bill documents, I kept reading the phrase “Less Favoured Area”. That relates to legislation that has not so far been amended and which the Government wants to maintain while it considers a new scheme or delimitation for areas that face natural constraints.

The bill allows for straightforward roll-over of the legislation. Whether Parliament or society would want us to move faster, given the climate emergency and the need to take action more quickly in relation to our new net zero emissions targets, is something that the Government and Parliament will have to consider. In the bounds of what the stability and simplicity approach is set up to achieve, I think that the bill covers that.

Maureen Watt

Would you recommend that the date be brought forward, or does it have to be 2024?

Steven Thomson

The date does not have to be 2024. That is an arbitrary date that the Government has included in the bill because, post-Brexit, it wants to provide stability and clarity that will allow farmers and land managers a degree of certainty in developing and investing in their businesses.

If we need to move faster because of other factors, such as the climate emergency, or, equally, the biodiversity emergency that we face, we might want to move the industry forward faster. Generally, farmers to whom I have spoken think that three or four years is enough of a horizon for change. They had the same concept of change during the CAP reforms of 2015, when the talk was of a five-year transition. Some farmers wanted a faster transition, so that they would far more quickly reach a point of clarity that would allow them to make decisions.

10:15  

Peter Chapman

I will follow up on that. You have spoken about “a degree of certainty”. The people in the agricultural industry and the farmers to whom I have been speaking are desperate for some certainty.

According to the policy memorandum, the bill allows for pilot schemes, which you mentioned. When I questioned officials last week about what ideas they have on what those might look like, I got no answer. There seems to be no idea of what any of the pilot schemes will look like. That will be a huge problem for the industry, which is desperate for ideas about where we are headed. There is a complete vacuum that the bill does nothing to fill. I would welcome your comments on that.

Steven Thomson

The bill does not address what the concepts or the construct of the pilots would be. From my understanding, however, there has been discussion in Government about pilots. I am not party to where any of those discussions are going, but I imagine that the farming and food production future policy group is considering some things. It is meant to be making recommendations in the early or middle part of next year, so those will be progressed thereafter. Until we see what the pilots look like, we cannot really make progress.

Peter Chapman

No, we cannot.

Steven Thomson

That is the reality. The stability aspect gives some certainty in that payments to farmers will continue for a period. Of course, the bill also contains a capping element, as was mentioned in the consultation exercise. Currently, the cap is €600,000. It is suggested—according to the consultation, the figures got favourable mention, at least in their reporting—that the cap would be between £50,000 and £75,000. That would be a huge reduction for some farmers. I have always said that in setting a cap, one must be very careful not to cap the wrong people—that is, the linchpins in an agriculture or food system. Some of the biggest potential recipients are among the biggest agribusinesses. Adversely affecting them could have a knock-on effect on wider industries.

Professor Fitzpatrick

For the sake of simplicity, one of the things that we could do more quickly, in order to benefit many stakeholders, is ensure access to data that is available for research, analysis and synthesis. It is difficult to get information in a number of areas due to data protection. Sometimes, data is relatively easy to get—for example, in an emergency. Better access to some of the data that is held by farmers would be very beneficial. That could be implemented quickly, and it would go some way towards addressing Peter Chapman’s question.

At the moment, there are many discussions about pilot schemes—for example, about how we could ensure use of data in sustainable agriculture in order to measure productivity, which we need to do, animal welfare and health benefits. That data needs to be released in order that we can make that synthesis and make pilots interpretable.

There are substantial discussions about how that would fit in with CAP payments, whereby some of the moneys that might currently be under pillar 2—although I know that it will not be called that in the future—could be used flexibly to give targets to pilot schemes in order to ensure that they are appropriate for wider aspects of agriculture.

The Convener

Do you want to come in on that point, Ellen?

Ellen Wilson

I do not want to come in particularly on that point, but on the point about open data. Open data is critical; I would make data open by default. It is essential that all stakeholders can access, question, analyse and play with the information from the farmer and his neighbours—all the way through to the Government and non-governmental organisations. It is essential that policy lets us access data.

Maureen Watt

What is hindering that sharing of data? Is it GDPR?

Ellen Wilson

I think that there is poor understanding of GDPR. It is probably used in defence when it could be used as an opportunity. It should not be preventing or inhibiting data from being used for appropriate purposes. Examining environmental impacts, for example, is a recognised purpose, but GDPR gets in the way. It is very difficult to acquire data fast, openly or with fair presumptions.

Professor Fitzpatrick

Another issue concerns data that is collected for specific purposes. If we want to use that data for a different purpose, which might or might not be aligned with the original purpose, we need to get permission to do so. That is certainly the case across the animal health sector, and I imagine that the approach applies more widely.

The Convener

I see that Maureen Falconer wants to come in. In responding, can somebody say whether commerciality aspects in respect of data collection from neighbouring farms need to be considered? Perhaps Maureen can pick that up.

Maureen Falconer

I cannot speak about commerciality, but I will pick up on what has been said about use of data, including big data.

I bring to the committee’s attention what is in the preamble to the GDPR—these aspects are also in the preamble to the 1995 data protection directive, from whence derived our previous regime. The former talks about data protection as the purpose of the GDPR, but people forget that it also refers to the free movement of data. It talks about protecting personal data, but one of the big purposes behind data protection legislation is to allow free movement of that data. As I said, people often get caught up in the first part of the GDPR, on protection, and forget about the second part.

In addition, people look at the articles in the GDPR but not at the recitals. We are fortunate in having the recitals in that piece of legislation because, in addition to the letter of the law as set out in the articles, they provide us with the spirit of the law. Recital 4 states that

“personal data should be”

used

“to serve mankind.”

That is what the GDPR actually says.

Again, people do not realise that the whole point of data protection is to provide a framework for safe and secure use of personal information. That includes data sharing. The legislation is set up not to be obstructive, but to provide a good framework for use of personal information.

For many years, the ICO has been trying to encourage use of open data in order that data is freely available for people to use. It is absolutely within the legitimate interests of a Government that is making policy decisions to gather as much data as it can so that it can create evidence-based policy, which is what people want. From a data protection perspective, and from my perspective—I know that it is easy for me to say this—that is not an issue. However, it absolutely is an issue for individuals who get caught up in it.

Steven Thomson told me about the issues that he has had recently. There is a lack of understanding that relates to the myths that surround data protection, just as myths surround health and safety legislation. If people would only realise that data protection legislation is an enabler rather than an obstacle, data sharing would be so much easier.

Richard Lyle (Uddingston and Bellshill) (SNP)

I return to Steven Thomson’s point. If there is a vacuum in the UK Government, how can the Scottish Government or the bill team know what to do? They are not being told how much money they will get or what systems are going to be used. That is the point. Do you agree? If there is a vacuum, how can we make a plan?

The Convener

Perhaps Ellen Wilson can reply, without being overtly political in her answer.

Ellen Wilson

Actually, I would like to return to John Finnie’s question. He asked whether the legislation is fit for purpose with regard to the transition from what we have now. I am not able to comment so much on the detail of the legislation, but I can come at the issue with a fresh pair of eyes from the biodiversity data angle.

I do not know whether the committee is familiar with the report of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, a summary of which was published recently. The report makes it clear that, without a transformative change in these types of policies, there is no policy scenario under which we will reverse the declines in biodiversity. That is not writ large in the bill, which does not really reflect the contribution of the agricultural sector to those biodiversity declines. It does not bring to life the opportunities to respond to those declines—it could go further in that regard.

The Convener

Emma Harper has a supplementary question, and then we will move on to the next topic.

Emma Harper (South Scotland) (SNP)

My question is about data. We have been trying to find out how many dairy farm workers are from European countries. Across my region and in north-east Scotland, there are many dairy farm workers from European Union countries, but we have been unable to find out which countries they are from and where they are working. That information is directly related to Brexit and the freedom of movement of people in the future, but we cannot make policy for the future if we do not have that data in the first place. People are not asking for the names, addresses and ages of those European workers; we just want the basic figures so that we can move forward and plan our policies for the future. Is there a misunderstanding here? How can we get that data?

The Convener

When panel members answer, they should bear it in mind that farmers will be listening in order to know how many pages they will have to complete in the survey.

It is a genuine question, in the sense that a lot of data is collected. It is about how we use the correct data.

Maureen Falconer

From what Emma Harper said, I think that she is talking about aggregate data. It is not personal data; it is anonymised, so the data protection legislation does not kick in. I do not know why you are not getting the data, if that is all that you are asking for. If there is no compulsion to provide that information, it might be that people—farmers or whoever—are just not willing to take the time to provide it.

Steven Thomson

I can answer the question from a data perspective, having done the migrant labour survey, in which we used the official databases to try to work out how many European migrant workers are working in Scottish agriculture. There were no questions about which countries people come from in any of the official documentation, so we had to go back and survey them. We found that some of the bigger producers that have traditionally not been in the CAP had not been returning their census forms. The bill tries to overcome that issue by giving the Government some powers to take action against them.

As the convener pointed out, there is a challenge in that agriculture is heavily surveyed. We probably know more about the agricultural sector than we know about any other sector, because of the CAP payments. I always have concerns that, as we are dealing with commercial enterprises, some of the data might include sensitive business information. We have to take cognisance of that when we look at statistical data and data sources. Not all of the data should be open, and not all of it can be.

It is up to the individual to make a commercial decision on whether they are going to use the various tools that are in the public domain in order to help them to make decisions. Some of the data might be provided by Government or by research organisations, and there will be conditions attached to its use. We have to be careful about that.

One condition that always applies when we get access to data is about disclosure. When we gather data on farmers, we are careful, and we have to follow pretty strict procedures as to how we report that data.

The biggest concern for Government is probably that some of the data that it collects is provided by farmers on a voluntary basis. Farmers volunteer to help the industry to better understand what is happening in the industry. If we suddenly decide that the data should be open and we should know who these people are and so on, those farmers might choose—legitimately—not to provide it. In some instances, we have to take an awful lot of care with the data that we are talking about.

Stewart Stevenson

This question is for the ICO, once again. It is about anonymised data. I understand that there are some constraints to prevent anonymised data from revealing personal data. In particular, where the count of personal data in a category is five or less, the information is not disclosed. Most farms will have fewer than five people on them so, in many cases, anonymised data is not a magic bullet. I wanted to get that on the record.

Maureen Falconer

Stewart Stevenson is absolutely correct. That is more to do with statistical matters. I cannot remember the actual word—I am not a statistician—but there are rules and regulations, or understandings, around the use of statistics. Where there are small numbers in a population, someone could be identified even though only the figures are being used. For example, thinking of disability, if there is one person in a wheelchair in a small population, it is likely that people will know who that person is even if their name is not mentioned. We have to be careful and think about how the statistics might be perceived.

10:30  

There is also an issue in respect of anonymised data. Some people think that, if the data that is in their hands is anonymised, it is no longer personal data, but that is not necessarily the case. When anonymous information is published and I access it from my side of the fence, it is anonymous, because I will not know who the individuals are, as long as statistical controls—that is the term that I was looking for earlier—have been applied.

However, on the other side of the fence, if I have the anonymised data and the key to unlock it and apply it to an individual, it is personal data that I have in my hands. That does not mean that I cannot publish it and use it. I can do that, but if I have the key to unlock it, there needs to be that realisation that what I have is personal data.

The Convener

We will move on to the next question. I apologise to Steven Thomson, as the previous area of questioning took quite a long time. You will probably get a chance to come in in a moment, Steven.

Mike Rumbles (North East Scotland) (LD)

Good morning, panel. I am interested in making sure that the intention in the Scottish Government’s policy memorandum is reflected in the bill. The policy memorandum says that the bill is intended to legislate for changes up to 2024. However, section 3(1) of the bill states:

“The Scottish Ministers may by regulations modify the main CAP legislation for the purpose of securing that the provisions of the legislation continue to operate in relation to Scotland for one or more years beyond 2020.”

I raise that because section 2 gives the Scottish ministers powers to

“simplify or improve the operation of”

CAP legislation, but one person’s modification of the main CAP legislation could be somebody else’s improvement and major change.

I am certain that the Government’s intention is to legislate to implement the future rural policy that it is working on now for 2024. However, I see a problem in the way that the bill is written. After 2021, we might have a different Government that will look at the powers provided through the bill and decide that it does not need to introduce a bill on policy for post-2024. Do you have any comments on that?

Steven Thomson

You are right about modification, in the sense that one person’s improvement could be to somebody else’s detriment.

I think that the terminology of improvement is used in a general sense. In my work with Brian Pack on red tape and the regulation of farming, we identified a number of possible simplifications, but we were told that we could not have them because of the EU rules—the EU would not accept them. I think that simplification in those areas would make life easier for people on the ground.

I cannot speak for the Scottish Government because I am not part of it or party to its thought processes on the issue. The “one year and thereafter” approach seems logical, given that the Government proposes to introduce a new bill. I get the point that a new Scottish Government in 2021 might not need or want to introduce a bill and that there is nothing to compel it to do so.

I think that you are asking whether the power needs to be time bound in order to force a future Government to introduce a bill, so that the power does not roll over in perpetuity. I cannot answer that.

Mike Rumbles

Do you think that we need a new bill for 2024 onwards that relates to the policy that the Government is working on at the moment?

Steven Thomson

If we do not have one, we will still be in our present path dependency and will potentially not deliver the outcomes that society, the Government, the Parliament and—probably—farmers want. We are stuck in a path-dependent agricultural policy, but we have an opportunity to break that path dependency by coming up with something slightly different. That is not to say that we could not have lots of winners and lots of losers, but we should start to focus on the outcomes that we want to achieve. I think that that is what the Government is looking to do, but I am not part of the futures group, so I cannot comment on that. We should be looking afresh for something new.

Richard Lyle

Mr Thomson has said what I believe: we need to look for something new. I said in my previous question, which was not answered, that the vacuum in the UK Government is spilling over to the Scottish Government, which does not know what we should do. We need to have a plan and to ensure that it suits everybody. As Mr Thomson rightly says, there is an opportunity to look at the issue.

The bill gives the Scottish ministers powers to modify the financial provision in the CAP legislation, for example to ensure that there is a legal basis for setting a maximum spend for agricultural support and to amend how funds are spent, who gets the funds and how much individual recipients get. What are your views on the changes that need to be made? Do you have any concerns about what Scottish ministers might or might not do? What do you recommend? I will be interested to hear your answer, Mr Thomson.

The Convener

It sounds as though that question is for you, Steven.

Steven Thomson

Have you got a week? [Laughter.]

The Convener

It would also be helpful to hear from other members of the panel.

Richard Lyle

I am sorry that I gave a long preamble. We do not know yet what money will be available, but the main question is about how we should spend whatever money is available. Should the jam be spread out more to reach people who did not get enough in the past? Should we try to help everybody or just a section of people? I am interested in the panel’s views.

Steven Thomson

Those are challenging questions. A lot of people have mulled over where we need to go with agricultural policy. The bill’s provisions are quite strong in that they allow ministers to amend—under the affirmative procedure, I think—how much we transfer between pillar 1 and pillar 2. The provisions would allow us to change the national ceiling, which is the budgetary constraint. As Richard Lyle rightly said, we do not know what that constraint will be. The decision on what the budgetary ceiling for agriculture will be is for this Parliament to make, as well as for the United Kingdom Parliament. The Scottish Parliament has not made that decision, never mind the UK Parliament, and one has to follow the other.

On priorities and whether we should change the way in which things have been done, we need to determine the outcomes that we are trying to achieve. We are trying to achieve lots of different things through agricultural policy. When we look at the principles of the CAP that are listed, I think, in the explanatory note, we realise that we are dealing with a really broad-brush policy. We are trying to deal with biodiversity, climate change and farm and rural incomes. We are trying to achieve an awful lot. We cannot target our policy unless we better understand the outcomes and the geography of the outcomes.

Food is fundamental to agricultural policy so, at some point, we need to support food production. We need to support marginal areas where there is extensive food production, but we also need to think about trees, for example, and whatever else we are doing in relation to land management. We need to take a step back from the broad-brush approach that is being taken through non-targeted area-based payments. What are they rewarding? They are rewarding minimal activity in some areas. We need to look again at that whole process.

Richard Lyle’s point about those who did not have funding highlights the path-dependent nature of agricultural policy. We always revert to saying that we do not want to have too many losers, but we often forget about the people who came in later and did not have funding in the first instance.

As an aside, I note that I gave evidence yesterday to the just transition commission, which has been set up to provide advice to the Scottish Government. I think that it will come back with recommendations on where our policy on agriculture and land management might need to go in order to accelerate things towards achieving the target for net zero emissions.

Given all the objectives that the Government is trying to achieve, we must be careful about how we target such support in the future. Our approach does not need to be the same for the whole of Scotland. We have been very critical of the EU for apparently having a one-size-fits-all policy, but that accusation is not really true. If we look at agricultural policies across Europe, we see that they are entirely different, although their bases under the EU framework might be the same. We need to do the same thing in Scotland. What works in Lothian might not work in Shetland or the Western Isles, so we need to have the flexibility to have a more place-based or regional understanding of our policy.

Professor Fitzpatrick

I reiterate what I said at the beginning of the meeting. I like the bill because its approach is generally positive. It is good that we are aiming to retain EU laws where appropriate, but the bill allows us to refocus on Scottish issues and have the flexibility to support the appropriate sectors in Scotland. As Steven Thomson described, agricultural payments can be made in all sorts of ways, but the main point is that they have to drive beneficial changes in Scotland, which might well differ from the changes in other parts of the UK.

The payments need to be based on productivity. I am a firm believer that food production is an essential aspect of the Scottish economy, and it is also important for Scottish people to be able to eat our regional and national foods. For the first time, we have an opportunity to combine food production with sustainable metrics—for example, with food production that also addresses the target of having zero carbon by 2045. We could do that in different ways in different food production sectors such as lowland, upland, hill and moorland, and crofting. However, in order to do that, we need to develop methods of measuring sustainable production and apply them to the right areas. A considerable amount of work is being done on that. A key aspect is regional benchmarking, which involves setting out what we expect Scottish farming to do in each region.

That brings me back to data. The relevant data is there, but we need to benchmark it and use it regionally if we are to drive improvement and change. For me, the CAP repayments should be used to drive beneficial change and hold recipients to improving their management of agricultural land. We could argue that such an approach could be used in other parts of the UK, but there are specific issues in Scotland that we need to address in that way.

Richard Lyle

Basically, we should target the money towards achieving better outcomes and better food production.

Professor Fitzpatrick

Yes.

Richard Lyle

People would then have an incentive because, if they wanted a wee bit more money, they would have to do better.

Professor Fitzpatrick

Absolutely. Such incentives could be set in areas such as quality food production and animal welfare. In areas where we want to promote sustainability, they could be set in environmental schemes that protect biodiversity and allow farming to go hand in hand with it. I could give lots of other examples in the environmental area, but the idea is that, in the various sectors, there should be targets for each person to do better than they are currently doing, for the benefit of the whole of mankind.

Ellen Wilson

I echo the comments of Steven Thomson and Professor Fitzpatrick, but I want to make a point of my own. If the division of money across the UK came down to application of the Barnett formula, that would not be great for biodiversity. Scotland holds more and richer populations of important threatened species, so it has many more of them to conserve and many more are left here than exist in other parts of the UK. It is therefore crucial that Scotland receives sufficient funding to honour the value that such species have for biodiversity, in which regard Scotland punches at a level way above those of the other UK countries.

10:45  

Mike Rumbles

Steven Thomson and Julie Fitzpatrick have made it clear that they think that the bill is comprehensive legislation that could change policy. That brings me to the point that I want to make. If we give that power to a future minister, post-2021, under this primary legislation he will be able to bring forward new policy and all that the committee will be able to do is say yea or nay. We will not be able to change anything that the Scottish Government brings forward.

Earlier, I asked whether you thought that, post-2024, it will be more appropriate to have a policy bill—which the Scottish Government tells us it wants, and I support that view—so that we can get our teeth into it and improve it. Whatever colour we are, we know that all Government bills can be improved. My worry is that, if we pass this bill in its current form, the Scottish ministers will not need to bring forward a policy bill. What do you think?

The Convener

Who wants to reassure Mike Rumbles?

Steven Thomson

If the Scottish ministers wanted to make fundamental changes to the current agricultural policy, that would need to be done in the form of a new bill. They could amend how much is going in from pillar 1, but remember that we will still be bound by the EU in all of that. If we want to trade with the EU, under the terms of the withdrawal agreement—whether we agree with it or not—we will still be bound by ceilings and certain percentages that can be paid under different aspects. International trade will determine future agricultural policy needs as much as we think it should, and, until we start going down that route, we cannot design a future agricultural policy. Our trading partners will be important in dictating or bounding what we can put into future bills.

Nevertheless, your point is clear: the question is whether, under the bill as it stands, the Scottish ministers can change materially the principles of the existing legislation enough that we would not recognise the agricultural policy. I do not think that they could do that under this bill. For example, I do not think that they could get rid of the basic payment. I am not a legal expert; the committee members know the law better than I do. However, I suggest that, if the Government were trying to make such changes, it should do that through a bill.

Mike Rumbles

You said that we could transfer funding from one pillar to another.

Steven Thomson

We can do that now under EU rules. We have been able to transfer from pillar 1 to pillar 2, and we chose to do that from 2007 onwards. We were one of the few states that made voluntary transfers from pillar 1 into pillar 2—there were also the compulsory EU transfers. That is where the measure is. If a top-up is needed in pillar 2, we would take some money out of pillar 1 and top up pillar 2, in order to have pilot schemes. That is my understanding of what ministers are trying to achieve.

The Convener

My understanding of the bill is that they could take all of the pillar 1 funding and put it into pillar 2. At the moment, there is a modulated bit that goes across. Is that your understanding or is that wrong?

Steven Thomson

As I keep saying, I ain’t a legal expert.

The Convener

Okay. Maybe we need to ask the minister about that.

Steven Thomson

Maybe there needs to be a restriction on the amount that can be moved between pillars.

Professor Fitzpatrick

I understand the question but I cannot answer it, because there are complexities in the wording of the bill that need to be looked at by lawyers. We are suggesting that everything looks as if it is there; the timing and the issues of other policy bills are a matter for the Government and the lawyers. However, the principle is that we retain flexibility so that, over time, we can make adjustments as and when our farming systems change.

Jamie Greene (West Scotland) (Con)

We could spend a lot of time discussing the future of the policy and what it should look like. The panel will be aware that the current UK Government has committed to the same levels of funding that exist under the CAP until 2024. However, that is obviously a financial amount; there is not necessarily a policy behind it, and there is divergence of policy across the four nations, which have produced separate papers and which are very much looking at that issue.

Going back to what the bill is or is not, does the panel think that the intention of the bill is simply to allow the Scottish ministers to continue to pay under the current scheme, or is it to diverge from the current scheme or to simplify or improve it in some way? Indeed, is it to go beyond that—as do parts of the bill, such as sections 7, 8 and 10—and allow us to make regulatory and marketing standards changes, as well as changes to the financial method of paying farmers?

Steven Thomson

My understanding is that the UK Government had committed only up to 2022 because that was going to be the end of the parliamentary session; it cannot not commit up to 2024.

Jamie Greene

That depends on what happens in two weeks’ time and who the Government of the day is.

Steven Thomson

Yes. We will not know the date that any commitments will be made up to until the next Parliament comes in. As I mentioned, the policy will then have to come through this Parliament. Although the UK Government may give the Scottish Government money at the existing levels, this Parliament will have to allocate that money to agriculture. My understanding, from speaking to Treasury colleagues, is that they will not ring fence the money and that, potentially, it will come in the Scottish allocation.

On the other provisions, from reading between the lines and speaking to policy colleagues, I believe that the bill is meant to allow the Government to deliver existing policy as it is and make amendments that are beneficial to the farming population and perhaps society, as we move towards climate change targets and improve biodiversity, through the principle of the new policy development process. The bill clearly talks about enabling future policy development; it does not talk about wholesale changes in policy at this moment in time. Added up, all the different parts of the bill suggest that it is interested only in trialling new aspects that would come forward in a future bill or policy.

On European marketing, if we are no longer going to be part of the collective, we would want to be able to withdraw from collective initiatives. For example, there was an initiative whereby the European Union was trying to promote lamb consumption across European Union markets collectively—not Scottish, British or Spanish lamb specifically, but just lamb. We would probably automatically not want to be part of such initiatives, so we would need to withdraw that part of the bill.

There also needs to be scope to maintain intervention. The EU has that potential, and America uses it in emergencies. We need to have the scope for storage and intervention in the markets in exceptional circumstances. A hard Brexit or a no-deal Brexit may be such an exceptional circumstance in which we might need scope for that far sooner than we think.

Jamie Greene

I have a brief supplementary question. If there were to be not just simplifications or improvements but substantial changes to the way in which we support farmers, through a new system that came off the back of whatever policy the Government of the day introduced, would you prefer such changes to require a substantial piece of legislation that went through this Parliament? Would that be a better approach than using this bill to make those sweeping changes?

Steven Thomson

If the system was substantially different, it would need pretty strong scrutiny not just by this Parliament but by stakeholders, the wider public and the people who would be affected by it. If there were to be substantial changes to the way that we support the land-based sector through agricultural policy, I would want parliamentary scrutiny of them.

Peter Chapman

I ask Steven Thomson to clarify something that he mentioned in his previous answer. Is it his understanding that any money that comes from the Westminster Government to support agriculture in Scotland will not necessarily be ring fenced and that that money could be siphoned off for other things once it arrives in Edinburgh? If that is his understanding, that is a huge worry for me and for agriculture in general.

Steven Thomson

My understanding is that we would be given the Scottish allocation, of which agriculture funding would be just one part, and that it would be for the Scottish Parliament to determine how that money was spent. That is my understanding—I might be wrong—from various discussions at Westminster and up here.

Jamie Greene

I will move away from payments and turn to standards.

I do not know whether any panel member watched, or has read the Official Report of, last week’s evidence session. I asked, if there was a divergence in direction of travel between the EU and the Department of Environment, Food and Rural Affairs on matters of marketing or regulatory standards, what effect the bill would have on the Scottish Government’s ability to choose between them. The answer that I received from Dr George Burgess was:

“If standards diverge because of decisions taken either at European level or by DEFRA and we have to decide which way to go, the bill will give us the flexibility to do it ... we would look at whether the balance of advantage would be for us to retain alignment with England or with the EU.”—[Official Report, Rural Economy and Connectivity Committee, 20 November 2019; c 25.]

Do panel members have any views on that? Does the bill bring any benefits, advantages or problems in terms of regulatory divergence?

Professor Fitzpatrick

It would be beneficial to have the option of following both. Again, that would allow a Scottish interpretation to be applied to the comparison of regulatory decisions made by the EU and by the UK. The regulations might change because of our different farming systems—our continuing focus on sustainable productivity, for example. Animal welfare is another really important issue on which we need to be able to compare what the EU decides to do and what the UK does. I think that the bill covers that, through the agricultural activities and areas defined within it.

Steven Thomson

A concern that I have always had about putting the EU acquis into UK legislation is that, if we are to trade with the European Union going forward, we will need to comply with its rules and regulations anyway; therefore we cannot be too divergent. We need the flexibility to deal with its changes and regulations, otherwise we might not be able to sell product to it. We also need the flexibility to relabel things as Scottish or British when labelling standards are slightly different.

Standards need to be set in the frameworks and the regulations that surround agriculture. We do not just talk about agricultural policies as being payments, remember: there is a whole series of legislation surrounding things such as traceability and pesticides. We need commonality on those standards across the UK, and we will probably need quite a lot of similarity with the EU. I think that the bill allows for that. When I read the bill, at first, I was slightly confused as to its wording, but then I came to understand what the Scottish Government officials intended in terms of their ability to adapt to whatever Westminster might choose to do.

Stewart Stevenson

I will move on to the collection and processing of data—we have covered quite a bit of that subject en route.

My main question is probably for the Information Commissioner’s Office. In the current context, what is the legal need for us to update how we acquire, process and use data?

11:00  

Maureen Falconer

Where do I begin? I feel a bit like Steven Thomson felt earlier.

I will talk through the basics of data protection. In the processing of personal information, processing is anything that can be done with a piece of personal data. That is set out in the bill, and it simply mirrors what is already set out in the GDPR and the Data Protection Act 2018. We have to work within six data protection principles, which form the framework for the lawful processing of personal information. The first two principles are the most important, because they provide the foundation for any processing of personal information. You could get the rest right, but if you do not get the first two right, you are building on sand.

Stewart Stevenson

Fascinating as that it is—it is necessary that we understand it—I wonder whether I might ask a narrower question. Why are we doing anything with data in relation to this relatively narrow bill? What is driving that?

Maureen Falconer

The current data protection legislation allows us to share information, so why is that addressed in the bill? Is that your question?

Stewart Stevenson

Yes.

Maureen Falconer

It is in the bill for the sake of clarity and to ensure that there is an unambiguous legal gateway to allow for information sharing. I looked at the Scottish Parliament information centre briefing on the bill and saw that alternatives had been thought about. You could have relied on the Agriculture Bill that is going through Westminster, but you would have been trying to fit the processing activity into something that was not specific to that activity, so you would have had to use broad terms. Instead, the bill breaks it down into specific terms. It sets out the purposes, which is the second data protection principle; the lawful processing, which is the first principle; the issues of fairness and transparency, simply by being here; and the regulations that have to follow in relation to the information.

Stewart Stevenson

One of my colleagues will talk a bit more about the purposes section of the bill—section 16—so I will not open a discussion on that at this stage.

It is simply about using the existing powers and, in a bill that is about agriculture, stating them in relation to agriculture. That is the purpose, rather than the creation of any new powers.

Maureen Falconer

Indeed.

Angus MacDonald (Falkirk East) (SNP)

We discussed data collection earlier, but I am keen to hear the panel’s views and reflections on the way in which Scotland collects and uses agricultural data. What types of data that is currently collected by the Scottish Government do your organisations rely on?

Steven Thomson

We rely on it all. Our research, which is funded significantly by the Scottish Government, makes heavy use of some of the Scottish Government data sets. In particular, we use the farm business survey, which is the financial data that is currently gathered under an EU regulation, to understand the financial performance of agriculture.

We use data such as the June agricultural census and the December agricultural survey. Colleagues in other institutes make heavy use of the agri-environment climate scheme—AECS—application system data, which allows us to look at what is happening in farms at field and more nuanced levels. We use data from the cattle tracing system and the ScotEID data sets. We use data from a wide ambit to portray a picture of agriculture in Scotland and to look at whether policy interventions are having an effect—whether that is the desired effect or otherwise.

There are a host of other biodiversity data sets that are perhaps more in the public domain, but they are not really part of the data collection exercise that the Scottish Government is talking about. Under the bill, pretty much all those data sets will be used for research purposes, where appropriate.

Professor Fitzpatrick

I will not repeat what has been said, but I agree with what Steven Thomson said about all the data types that he described.

Moredun works mainly on animal health, so we are interested in farm productivity levels, which allow for the benchmarking of different quartiles of production; animal health and welfare data, which we get from Food Standards Scotland disease data; data on soil types and animal movements, including cattle movements; and data that is held by organisations such as Quality Meat Scotland, which receives funding from the Scottish Government.

I emphasise that the data types that are collected in Scotland will change in the future, because we are using big data much more and our understanding is evolving incredibly rapidly. The data types in Scotland that will link to the CAP and to the Scottish Government will differ from those in other parts of the UK. That is really important. I now better understand that the sections on data have been included because there will be different types of data in our systems.

Ellen Wilson

The biodiversity sector uses lots of data sets from agricultural information. In particular, the agri-environment climate scheme field boundaries are critical but are often difficult to get hold of. Having things set out spatially is relevant and important for us.

Our contribution will be the other way around: we might be involved in collecting many of the biodiversity data sets on which the Government will rely to understand responses to particular prescriptions and interventions. It is particularly important to us that we understand exactly what intervention has happened, so that we can look at the impact and value of the scheme and at whether it is appropriately targeted.

Angus MacDonald

Are your organisations in a position to collect or process agricultural data on behalf of the Scottish Government?

Steven Thomson

Yes. Our colleagues are contracted to collect the data for the farm business survey. The Government does not go out into the fields and deal with the farmers. It is likely that there are other instances in which the Government uses contractors to collect such data. Part of our organisation knows the identity of such individuals, but that data goes to the Government, which anonymises it, and then I get the anonymised data sets.

There is real complexity to understanding data. We have not mentioned data linkage, but one of the powers of research is being able to link different data sets together to enhance our understanding. Under the GDPR, we are allowed to do that, but it now involves a slightly more complex process. We have to be robust and explicit in how we do things.

People collect data for the Government in various ways. I probably could not list them all just now, but I could ask our colleagues which governmental data sets we collect.

Angus MacDonald

That would be helpful.

Ellen Wilson

The biodiversity sector, for all taxonomic groups, relies on volunteer data collectors, who come from all walks of life and from all locations in Scotland. Their work culminates in the “State of Nature” reports, which are the flagship reports in which the Scottish Government has an interest. The reports set out the declines and the impacts in relation to the industry that we are talking about.

I am a member of RSPB Scotland, and we collect lots of data from long-term bird monitoring schemes. However, the wider Scottish biodiversity information forum community will collect all sorts of taxonomic information and provide some of the expertise that is needed to verify data sets. We are instrumental in some of the verification processes that support biodiversity.

Steven Thomson

We collect a lot of survey data through either the strategic research programme or contract research. Generally, that information does not go to the Scottish Government. We hold it, control it and analyse it, and then we delete it when we are finished with it. Although the Government pays us to do those things, those are not the official data sets that we have been talking about in relation to the bill. The Government needs explicit data sets to help us to best understand agriculture.

Emma Harper

Steven Thomson talked earlier about collecting lots of data in agriculture and there are obviously important reasons why we do that. We look at agri-food supply chains and the health and wellbeing of plants, animals and people, and there are issues around soil, biodiversity and climate change. Section 16 of the bill has multiple lists of what we are looking at when we collect data. I will not read them all out, but do you think that anything is missing or that the bill will cause any problems for collecting the data?

Professor Fitzpatrick

The lists are pretty inclusive from an agricultural point of view. I will leave biodiversity to Ellen Wilson. From my point of view, the bill makes good provision for data to be collected and it clarifies many of the issues. Some of the definitions of animals and so on are quite broad so that lots of things will fit into them; otherwise, the list would be incredibly long. The broad definitions cover the types of data sets that we would wish to use.

Ellen Wilson

Broadly, the lists are about right. My concern would be that if simplification drives the collection of less data it would mean that we could less effectively ascertain impact and value. We must continue to collect sufficient information around impact and value so that we can target and understand the impact of the system.

Emma Harper

There are climatic risks and risks from disease and pollution, so it is obviously really important that data is collected and managed.

Ellen Wilson

Very much so. All sectors can contribute to that. The offering from the citizen science side of things is collecting information over and above what the monitoring schemes currently provide. It can detect early arrivals and help with identifying particular diseases and understanding their ecology. There is a whole thing in support of collecting data that makes it possible to extend the evidence base and to verify and have early warning of invasive species.

The Convener

Does Steven Thomson want to add anything?

Steven Thomson

No. I was going to say that the bill is not specific on the social dimension—employment and the people engaged in the sector—but then I found it. It is important that we understand the challenges, but the bill mentions

“the health and welfare of people or animals”,

so there is a social dynamic in it.

Stewart Stevenson

I want to ask specifically about section 16(4)(g), which says

“monitoring or analysing markets connected with agri-food supply chains or agricultural activities”.

I am interested in the supply chain, because it is clear from the definitions that the supply chain is essentially everything from the cauliflower being in the ground to it appearing on my plate. It is acknowledged that supermarkets have a quasi—or perhaps actual—monopoly power in relation to farmers. Might we be able to gather data on that to offset the acknowledged weaknesses of the Groceries Code Adjudicator? Part of the adjudicator’s brief is to ensure that direct suppliers are treated fairly, but there is a widespread view that they are not. Is that your understanding of what that provision would enable? Are you aware of any Scottish Government activity on that at the moment? It clearly crosses the legislative boundary between Westminster and Scotland.

The Convener

I said at the beginning of the meeting that if everyone looks away at the same time, I will have to nominate somebody to answer. You all looked away but Steven Thomson put his hand up, which was lucky because he was going to be nominated anyway.

Steven Thomson

Such an exercise would involve the collection of market data on the prices that farmers get at various stages of the process. I understand that it would also collect data from abattoirs, on throughput and so on.

11:15  

I am not sure that that has always been the intention. When the UK Agriculture Bill was introduced I thought, “Wow. How are they going to achieve that through the entire food chain?” It could be a real challenge to obtain that level of data throughout the process—from the ground to the plate, as Stewart Stevenson put it. The rationale behind the UK Agriculture Bill was to have fairness across the supply chain and to require data in order to determine that. That places a heavy burden on us to conduct a new data exercise that we do not currently do.

Data sets such as those produced by Kantar Worldpanel and dunnhumby mean that we can understand prices at the retail end. However, we do not know what the price differentials are between processors and retailers. The Agriculture and Horticulture Development Board collected some data that showed that it was possible to calculate the spread from farmer to retailer so that we could understand how much differential there was between the consumer price and the farmer price. The food processing element was the 50 per cent or so in between those prices.

I do not really know what the exact purpose of section 16 is, but it would be useful for us to understand better where the margins are. I know that there are very tight margins in the abattoir and food processing sectors, but that data is not publicly available.

Stewart Stevenson

You are not disagreeing—although you are not necessarily agreeing—with the proposition in section 16 that

“analysing markets connected with agri-food supply chains”

could confer a power to collect data from supermarkets. When that section is read with section 13, which is about requirements to provide information, that could require supermarkets to provide such data. I see that you are nodding your head, so I take it that you are reading it in that way.

Steven Thomson

That is how it reads. Again, though, as I am not in the Government I cannot tell the committee what the thought process behind the section is. If it is as Mr Stevenson suggests, that might mean that we would also have to collect data from distillers, millers and similar producers.

Stewart Stevenson

In fairness, I am only dealing with what is in the bill. I do not actually care what the Government thinks; I care only about what it writes in the bill.

The Convener

I am afraid that Stewart Stevenson’s questions have prompted a whole lot more. I will take questions from Emma Harper, followed by Maureen Watt, before I come to Colin Smyth, who will therefore have a bit of a pause before asking his question.

Emma Harper

My question is just a wee supplementary on that point. It is important that we look at such markets, because we do have challenges in the sheep sector. Our sheep meat goes to other places, because Scottish folk do not eat it. There is also volatility in the milk market or dairy sector, which means that we have a supply chain that might or might not be interrupted. Would that be part of this analysis of markets, so that we can look at where our supply chain is broken or fails to support the producers rather than the processors and then the retail giants such as Tesco?

Professor Fitzpatrick

Those are questions for legal advisers. I can see that we cannot just force companies or organisations that claim commercial interest to provide information unless they are in direct receipt of Government funding in some way. Although I agree with the principle that it would be nice to have data—and it is very important for the future of all our different food chains—I just cannot see that the bill would allow that to happen.

Maureen Watt

Given the answers to that question, and what Julie Fitzpatrick said earlier about biodiversity and climate change, in the future will supermarkets have to change their view of what is provided by farmers and not be so prescriptive about the fat content of beef or whatever?

Professor Fitzpatrick

In an ideal situation everyone down the food chain would have discussions on such issues. However, given the realities of data protection requirements and companies having to produce data, I cannot see that the bill would allow that to happen. However, I agree that, in principle, it would be very nice indeed if we could have such a situation.

The Convener

We will leave the matter there and move on to a question from Colin Smyth.

Colin Smyth (South Scotland) (Lab)

We have touched on this issue quite a lot. For the avoidance of doubt, the policy memorandum states:

“The data collected is used to analyse economic output”

and performance

“and the effectiveness of policies”,

and to help

“Scotland provide information in the Sustainable Development Goals.”

Are we currently collecting the right data for those purposes? Given the impact of coming political change and climate change, and the subsequent pressures on rural business, will we have to collect additional data in the future? Does the bill allow for that?

Ellen Wilson

We probably do not collect sufficient data; we would require an assessment to find out what we need to do to remedy that. The effects of climate change and biodiversity crises are coming up—indeed, they are with us now—and we need to ensure that agricultural policy and the bill support our ability to respond to those challenges. There is much to do.

Colin Smyth

Under the bill, will we be able to collect the data that will be required in the future? Will any restrictions result from the bill?

Ellen Wilson

The bill might permit more collection of data—the issues relate more to design and efficacy, and the purpose for which we would use the data. Some rigorous scientific design is needed in order to ensure that the criteria are met and that the data really does explain the impacts that are being felt.

Steven Thomson

At some stage, we will have to work out the extent of the data burden on people, because it should not be excessive. The Government does not ask for data on everything. Otherwise, farmers would be doing paperwork all the time—some of them already think that that is the case.

I will make a point about supermarkets, because they get a hard time. Some of the people who are on aligned contracts with the supermarkets are jumping through incredible hoops in order to get premiums, so the supermarkets are driving private delivery of public goods and environmental benefits.

Professor Fitzpatrick

With regard to data collection in the future, changes in the trading arrangements for animals, plants and food products might pose additional risks in all parts of the UK, including Scotland. I hope that that does not happen. We always need to be prepared to start data collection at the very last minute where there might be, for example, an incursion by an exotic disease—or even by a new and emerging disease, because genetic mutations mean that new organisms can appear. There always has to be provision for the unknown unknowns.

Colin Smyth

Does the bill make provision for the unknown unknowns?

Professor Fitzpatrick

I think that it does. The list in the bill is not exhaustive, but it is broad enough to include almost everything that I can think of, without being too prescriptive.

Maureen Falconer

Section 16 sets out a list of very broad purposes. The Data Protection Act 2018’s second data protection principle refers to “specified” lawful purposes. However, there is absolutely no problem with further processing under the data protection legislation as long as that processing is for a purpose that is not incompatible with the original purpose. Some of the purposes in section 16 are so broad that I could well imagine the data being used for further purposes that are aligned with the purposes in the bill. From a data protection perspective, that would be fine.

The Convener

Before we go on to the next question, Emma Harper wants to follow up on her earlier question.

Emma Harper

I just want to clarify that I meant to say that Scottish folk do not eat enough sheep meat—I was wanting to say, “Let’s all eat more and support our local farmers.”

The Convener

I was sure that that was what you meant in the first place. The next question is from Peter Chapman.

Peter Chapman

The Scottish Government states that there will be no additional requirements placed on farmers and crofters to collect additional data, which is very welcome. As Steven Thomson mentioned, farmers are out there to produce food—they do not want to be sitting in offices all day collecting data.

The Scottish Government also says that it is exploring new technologies including satellite mapping. How useful is satellite mapping? Is it available now, and is it used? Are there new technologies coming down the road that would help us to collect data without placing additional burdens on the producers who are at the sharp end?

Ellen Wilson

Everything from drone imagery through to artificial intelligence will really help, but it still has to be tailored. There is no substitute for checking what is happening on the ground and training the computer to understand what it is seeing and interpreting. That comes back to design, which needs to be based on why we are collecting the data and what we will get from it, so that we can take advantage of technologies. There are huge opportunities.

Professor Fitzpatrick

I agree. The opportunities to make data collection easier are numerous. There are good examples including smart farming and targeted pesticide applications for crops, as well as sensors on animals that measure their wellbeing and temperature, how they are moving around, and the onset of disease. The bill has to be able to cope with new technologies, which we hope will reduce the burden of data collection on farmers while still ensuring that the data is collected.

Steven Thomson

We are discussing two elements here. One concerns private data, which involves the farmer buying a piece of tech: in general, data from that will not make its way into the public domain, whether we like it or not. As researchers, we might get access to such data through collaborations.

With regard to Peter Chapman’s question on satellite imagery, the answer is yes—it might provide scope for farmers not to have to declare information in their June census form or AECS form. The technology can be used to see which crops are growing, which would save time and effort.

On bovine electronic identification, there have been a lot of discussions with ScotEID on whether a new tagging system could replicate or get rid of the passport, which places another data burden on farmers. There are opportunities in lots of areas for removing, through technology, the regulatory data burden. I know that the Scottish Government is trying to minimise the amount of effort that goes into filling in forms for the June census and the December survey. I understand it that the Scottish Government is looking at all opportunities.

The Convener

We have nearly finished questions—I have just one more. That last answer has made me feel slightly better; I know how much farmers across Scotland look forward to getting their census forms when they come out. [Laughter.]

Farmers are asked a list of questions, many of which could be self-populated in forms by information that the Scottish Government already holds—for example, on numbers of stock on a holding. All that information is already recorded. It also includes information on cropping and the age of the grass, from the previous agricultural census form that was filled out.

Some farmers will get more than one agricultural census form, because fields can form different holdings. Is there any chance that the data provisions in the bill will make the process easier? I hope that farmers will not have a book to fill in, and that the Government forms will be self-populated with some answers that it already holds. Who would like to answer that? Perhaps Steven Thomson can go first. It would be a nice Christmas present for farmers if he can tell them that that is the case.

Steven Thomson

You have just told them that, convener.

The Convener

No—I am asking whether you think that that will be the case.

Steven Thomson

All right. I think that the Government has been trying to do that. You are quite right that because we collect data for official purposes at business level, and data at holding level for other purposes, those cross-purposes are leading to confusion.

I often hear that there are 54,000 farmers in Scotland. I know that there are 54,000 holdings, however, which is totally different from the number of farmers as business units. That is the issue—there is a technical difficulty. The Government has used the CTS data, where it has that information, to populate the survey. It is probably not using the sheep inventory, because that is done at a different point in the year and it needs to understand the number of lambs. There are challenges. I understand the frustrations, but the data is useful.

The Convener

Does anyone else want to comment?

Ellen Wilson

It should not take a bill to enable us to make the process easier. We should be continually improving how we hold, collect and store data. There is endless opportunity, and it would be great fun to do that. Wouldn’t it be wonderful if we could continually improve every single aspect of data collection? Improvement should be perennial, and the process should become more and more wonderful. There is so much public good coming from the sector that it really merits investment in monitoring and in the service design side of things. If the bill can make provision for a proportion of the available funds to go into that side, it would help everybody.

Professor Fitzpatrick

My final view is that, because of the lack of time for data issues, it is really important that we focus on the most important data, and that we use that data in the most important and beneficial ways in order to drive the country to achieve the many outputs that we want. If we combine the datasets that we have, and if we get even better datasets in the future, we will have a great opportunity for science, farming and the countryside to come together and produce excellent outputs.

The Convener

That is a positive note on which to end. I thank all members of the panel for coming this morning. Your evidence has been extremely helpful.

11:30 Meeting suspended.  

11:36 On resuming—  

The Convener (Edward Mountain)

Good morning and welcome to the 34th meeting in 2019 of the Rural Economy and Connectivity Committee. I remind everyone to make sure that their mobile phones are on silent.

The first agenda item is the Agriculture (Retained EU Law and Data) (Scotland) Bill. Before we go into that agenda item, I invite members to declare interests. I declare that I have an interest in a farming partnership.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

Jointly with my wife, I have a very small registered agricultural holding, from which I derive no income.

Peter Chapman (North East Scotland) (Con)

I declare an interest as a partner in a farming business.

The Convener

Thank you. This agenda item is our third and fourth evidence sessions on the bill. Today, we will take evidence from two panels. The committee will take evidence, first, from the rural policy interest and, secondly, from the supply chain interest.

I welcome the panellists: on behalf of Scottish Environment LINK, Pete Ritchie, executive director of Nourish Scotland, and Vicki Swales, head of land use policy at RSPB Scotland; Nigel Miller, co-chair of the farming for 1.5 degrees group; Professor Michael Keating, fellow of the Royal Society of Edinburgh; and Rachel Hunter, director of service delivery at Highlands and Islands Enterprise.

The first question is from John Finnie.

John Finnie (Highlands and Islands) (Green)

Good morning, panel. My question, which is in three parts, is about the scope of the bill. Most people would understand the need to have a transition period between the two systems in this context. Do you support the idea of having a transition period for agricultural policy until 2024? Will you comment on the approach to such a transition period that was set out in the Scottish Government’s consultation document “Stability and Simplicity: proposals for a rural funding transition period”? Do you feel that the legislation reflects that approach?

The Convener

I am not sure which of the panellists might want to go first. If you all look away at the same time, I have a very simple policy: the last person to look away will be the one I ask to answer first. If you want to come straight in, please raise your hand and I will bring you in. I thought that Pete Ritchie had offered to begin, but it seems not. Perhaps Vicki Swales could start things off.

Vicki Swales (Scottish Environment LINK)

Scottish Environment LINK sees the need for a transition period until 2024. It is clear that we need to change how we deal with agricultural policy in order better to secure the outcomes that our society is looking for. That is true irrespective of whether we remain part of the European Union—in which case, we might want to think about changes being made to the common agricultural policy—or we come out of the EU, in which case we will have to think about the greater scope that Scotland will have for deciding its own policy.

We feel that the imperatives of climate change and the nature emergency that we face mean that we need to get on and make changes very quickly, because the matter is urgent. The climate targets for 2030 are very ambitious and raise significant issues for the agriculture sector. Therefore, we would say yes to there being a transition period. However, we suggest that it should not be extended beyond 2024. If we have left the EU by that point, we should get on and commit to having a new policy in place.

The “Stability and Simplicity” consultation suggested that we would, in essence, continue with the CAP in such a transition period but would then have scope for making changes to it that would move us towards having something different in the long term. We do not know—because, collectively, Scotland, its stakeholders and the Scottish Parliament have not yet made such decisions—what that new future will look like and what our new policy will be. We have a stakeholder group that is focusing on that right now. That is helpful, but we need to get on and decide our direction of travel.

Although the consultation suggested that we will have scope for changing things in the short term, the problem is that the legislation does not specify what those changes might be—it leaves an open goal. The bill says that its purposes are the simplification and improvement of the CAP legislation, but, arguably, one person’s definition of simplification and improvement might be another’s nightmare. Therefore, we need to be clearer about why we want to change things and the direction of travel that we will take.

The Convener

I am sure that that will be picked up on later in the meeting.

I think that Nigel Miller wants to come in. [Interruption.] I say to all panel members that they should not worry about pushing any buttons to operate the microphones. That will all be done for you—even if there should come a point when I need to cut you off.

Nigel Miller (Farming for 1.5 Degrees)

Having some level of stability over the next few years, when we are likely to be in a very uncertain economic climate, seems to make sense. Given the possible economic pressures on the agriculture industry, that will be important.

We try to create consensus in our group, but some members are looking for early changes that will move us towards our climate change targets. A step-by-step approach would be helpful for everyone. The devices that the consultation proposes, such as piloting innovative schemes, look quite useful. We would also like to see a focus on soil carbons and having new soil testing standards so that we can create a bank of information on carbon that can act as a baseline for future activity. There are also technical issues on genetics and waste management that could be piloted. Beyond that—perhaps not within the proposals, but in the existing CAP scheme—there is a greening element that is, frankly, pretty unpopular and appears to be badly focused as far as Scotland is concerned.

If we come out of the EU, there will be an opportunity to create a mitigation menu that fits with Scottish farm systems and allows land managers to draw down climate change measures, mitigation measures or efficiency measures that suit their system. If they scored to a high enough level, they would qualify for a Scottish greening payment that would actually be effective and fit the industry. In the present model, there is scope for change.

Rachel Hunter (Highlands and Islands Enterprise)

HIE’s view is that the “Stability and Simplicity” approach is a pragmatic one that enables the continuation of current policy and payments. As other members of the panel have alluded to, there is an opportunity to pilot new approaches, which is welcome, and communities and industry need to be involved.

Moving forward, we should use this period to think about what rural policy will look like in the future. HIE’s view is that we should take thinking from the Organisation for Economic Co-operation and Development on best practice for rural development. We are looking at moving away from subsidising disadvantage to maximising opportunities and considering a triple bottom line with regard to economic, social and environmental objectives. Shall I go on?

The Convener

No, that is fine. I have members who want to come in. I am looking at John Finnie to see whether he wants to develop the point further or whether I should bring in other members.

John Finnie

There will be opportunities to do so with some of the subsequent questions.

Peter Chapman

Both Vicki Swales and Nigel Miller mentioned the climate change targets. The one that worries me more than most is the target to reduce emissions by 75 per cent by 2030. If nothing really changes in agriculture until 2024, that leaves us six years, which, to me, is far too short a timescale to even consider getting to the target. Is the virtual standstill in support for agriculture until 2024 realistic, given the climate change target for 2030?

Pete Ritchie (Scottish Environment LINK)

We very much agree with that point. The bill is a contingency bill—we do not know what is going to happen, so the bill will give powers. We have been using the analogy that it is a bit like going on a journey: you need to pack a toothbrush, and we are packing a toothbrush for the ministers so that they can be flexible in the future. We have also packed a spare shirt for the fruit and vegetables scheme and some clean underwear for the carcass classification, but we still do not have any idea where we are going.

Peter Chapman is absolutely right: we need to use the period from 2020 to 2024 to put some pilots in place, as Nigel Miller said, to try not only new technical measures but new ways of delivering money in terms of paying by results and using co-operative approaches to payments. We need to get all those schemes up and running and the new payments arrangement watertight by 2024. We do not have a minute to waste.

I take Rachel Hunter’s point that we need to think about it, but we have been thinking about it for a number of years and we have not actually made any significant changes. We need to decisively move away from the current pattern to a pattern of support for agriculture that helps people to thrive and that also tackles the climate and nature emergency.

We need a sense of urgency here, whether or not we stay in the CAP, and I do not think that the bill has any sense of urgency.

Stewart Stevenson

I want to go back to Nigel Miller’s comments and probe what he means about the things that we need to do and whether the CAP inhibits our ability to do them.

We know that the three-crop rule that the CAP sought to introduce was targeted at Mediterranean issues, whereas northern European issues are fundamentally different. Is that the territory that you were referring to, or do you have other examples of things that would properly fall in the area of perhaps not simplification but certainly improvement? Are there any examples in your group’s mind?

Nigel Miller

There is a whole list of measures that could improve the efficiency and the carbon impact of existing systems. The Republic of Ireland is looking at a mitigation menu, from which we have stolen some ideas. That portfolio of measures is calculated to reduce the carbon impact of Irish agriculture by 30 per cent. That may be optimistic, but it is a significant move.

09:15  

The sorts of things that the Republic of Ireland thought about were precision farming techniques and soil and crop mapping so that inputs are used more accurately and less wastefully. Autosteer can reduce inputs by something like 8 per cent. We can look at waste management; fertiliser use; using protected forms of nitrogen rather than normal urea; introducing clover into swards; maintaining permanent pasture for seven years or more rather than breaking it up; avoiding any regeneration of permanent pasture with no-till techniques; sexed semen; and using trailling shoes and injection techniques for slurry, which can reduce emissions by between 40 and 60 per cent in spreading.

Farmers can select from a range of practical farming measures to sit alongside hedge and tree planting on farms, the use of break crops and the incorporation of carbon in the ground. All farmers can buy into and contribute to a whole series of measures.

Stewart Stevenson

That is helpful.

The Convener

I can confirm that a lot of farmers in Scotland already use the techniques that you have mentioned.

Nigel Miller

Absolutely, but not all do—some do not use them at all. That proposal should be seen alongside the view that we should carbon map all Scottish farms.

Professor Michael Keating (Royal Society of Edinburgh)

I agree with my colleagues that we should make some progress in that area, but I will say a little about why that is proving to be difficult.

One issue is the question of Scotland’s future relationship with the European Union—whether we are in it, aligned with it or whatever. Powers will be taken to align Scotland with EU regulations on certain things, which might include agriculture.

Another issue is funding. We know nothing whatever about the funding, but we know that the United Kingdom Government pledged to provide funding to the end of the previous parliamentary term. That was supposed to be 2022, but that date has now fallen aside, of course. The Bew report on funding is pending. We do not know what that report will say, but we know that the UK Parliament’s Agriculture Bill proposes to end direct payments in England and Wales, which means that the overall funding will go.

There is also the discussion about frameworks in agriculture. We do not know quite where that is.

Those processes should be speeded up a little bit, so that we have some certainty in Scotland about what kind of policy leeway we have and what resources there will be.

The Convener

I know that Vicki Swales could add to that, but I think that Mike Rumbles has questions that might enable her to do so.

Mike Rumbles (North East Scotland) (LD)

I am going to focus on the situation post-2024. The policy memorandum that accompanies the bill rightly says that the Government wants a new policy in place by that date and that the bill is not a policy bill but simply a transition bill to get us to post-2024.

Section 3 concerns me. It says:

“The Scottish Ministers may by regulations modify the main CAP legislation for the purpose of securing that the provisions of the legislation continue to operate”—

that is absolutely right—

“in relation to Scotland for one or more years beyond 2020.”

What is the danger of leaving that ability to operate payments open ended? If the Government’s intention is to have a new policy in place with a new bill, why did it write that? Do the witnesses see a danger?

Vicki Swales

I think that there is a danger. There is always a danger of things being kicked into the long grass and of our just continuing with a CAP-lite or CAP-modified version for many years to come. We would recommend a sunset clause, so that the bill refers to one or more years after 2020 and not the period beyond 2024. Subsequent legislation would then need to be introduced and would perhaps focus minds on the date for coming up with a new policy.

The Convener

Everyone else is looking down. Does Nigel Miller want to add to that?

Nigel Miller

Maybe it is unpolitic to remind members of this, but the problems of producing new administration and auditing software and computer systems are quite large, so radical changes in the system will be quite challenging for the rural payments and inspections division and may be quite costly. Some flexibility on the date might be required in respect of that.

There is a real urgency to change. We will want to have good indicators of where we are going fairly quickly. Farming takes time to adapt, so we need to know now where we are going to be in two or three years’ time. There is real pressure to know that.

In the current CAP framework, there are things that can be done in relation to greening in the context of compliance and cross-compliance. It may well be that pillar 2 plays a bigger role in driving the changes.

Mike Rumbles

My next question follows on from that. Section 2 says:

“The Scottish Ministers may by regulations modify the main CAP legislation”.

I will ask the same question that I have put to other witnesses. What does modification of the main CAP legislation mean to you? Does it mean tinkering, as is implied, or could it mean making quite radical changes without the need to draft a new bill?

Nigel Miller

I have a view on that. No one could disagree that to improve and simplify things is good. However, in reality, we could spend an awful lot of time modifying and simplifying what we have got, rather than just designing a new programme. That is a real danger.

When we consider simplification, the main area to consider is how we audit the system—how RPID and the penalty system work—on the ground. We should create a more proportionate penalty system and a new culture to support farmers, perhaps using an official advisory service. The current system is not the problem; the issue is in creating a new culture in farming whereby sequestration and land management priorities are part of the farming portfolio, and RPID should play a really big role in facilitating and supporting that. We need to change the enforcement culture.

The Convener

I am going to bring in Pete Ritchie. Other members have questions on funding and how that is allocated, so a good line to follow would be the modification part of the question.

Pete Ritchie

I want to pick up on the idea that we cannot leave it to one person to decide whether something is an improvement. We have a historical scheme of funding for farming in Scotland that is not fit for purpose: most of the £500 million that we spend is deadweight in that there are no purposes for that spending and we have no means of telling whether we are spending it effectively. In contrast to all the other public spending that is scrutinised by the Parliament, we do not know what we are doing with that money.

The bill should have a purposes clause that lists the purposes for which ministers may make grants. As Nigel Miller says, the purposes should be about supporting a change in culture and helping farmers to do different things. That should be explicit in the bill. It should not just be implicit in that someone can decide that something is an improvement. As Vicki Swales said, we could end up with CAP lite, having made a few tweaks to a scheme that is fundamentally not fit for purpose.

Vicki Swales

There is scope for regression. For all its flaws, there are important principles in the CAP, such as 30 per cent of the pillar 1 budget being for greening, cross-compliance—Nigel Miller has mentioned several instances of that—and, under pillar 2, having a rural development programme that includes an agri-environment scheme. Ministers recently announced that the agri-environment scheme is, in effect, being closed from next year. There is potential for some of the modifications that are made in the interim to be regressive, so it is important that we set the purpose, which is that we want the bill to be progressive, and that we prevent anyone from going back on the protections—particularly around environmental issues—that are already in the CAP.

The Convener

That leads us neatly on to Richard Lyle’s question.

Richard Lyle (Uddingston and Bellshill) (SNP)

I was struck by Pete Ritchie’s comments. In the past three years, the phrase that has often been used is, “Let’s take back control.” If we want to take back control, let us forget CAP’s pillar 1 and pillar 2 and move to a new system, called the food production scheme. Under that scheme, we would pay farmers to produce food. Farmers have been getting subsidies since well before I was born—and that is quite right.

Some people say that we cannot change the bill; some people say that we can. The bill gives Scottish ministers powers to modify the financial provision in CAP legislation to, for example, ensure that there is a legal basis for setting a maximum spend for agricultural support, amend how funds are spent, or cap how much money can be paid to an individual recipient. That latter aspect is worrying people—they are asking whether they will get the same amount that they get now. I do not think that they will. I think that we want to consider something new in order to spread the jam, so that everyone is paid based on food production and not because they have 10 acres of land, for example.

The Convener

Can I push you towards asking a question?

Richard Lyle

Should payments be made based on food production, rather than how they are made in the current system? We are lingering on pillar 1 and pillar 2. Can we not develop a new system that is fair to everybody and produces food for the benefit of Scotland?

The Convener

Who would like to kick off? Who is the slowest person to look away? Vicki Swales wants to speak—I am conscious that you are getting quite a lot of airtime at the moment. I am also keen to bring in Michael Keating and Rachel Hunter on some of these questions.

Vicki Swales

I do not think that the focus should be on food production per se. In fact, every reform of the CAP has been trying to move us away from a system that subsidises food production. Under World Trade Organization rules, we will not be able to do that; indeed, we cannot do that now.

It is also clear that, given the climate and nature emergencies, we need to refocus how we think about using this very large amount of public money to support farming. Please do not misconstrue what I am saying: I am not saying that farming is not about food production. Of course it is, but the issue is what we pay farmers for and what outcomes we are asking them to deliver.

Farmers produce market goods, such as food. They also produce a lot of other goods and services that are not rewarded by the market but which are incredibly important—I would argue that they underpin food production and its viability in terms of healthy soils, a stable climate, nature, pollinators and all those things. Therefore, we have to refocus how we think about how we spend money. However, the issue is about supporting farmers and land management in a way that delivers the broad suite of outcomes that we want.

Richard Lyle

Are we actually going to be paying farmers to make their fields greener?

Vicki Swales

I do not think that that is necessarily what we are talking about either, in terms of future policy.

Richard Lyle

Should we not be paying farmers to produce food?

Vicki Swales

Perhaps you can get that through the WTO and its subsidised food production rules. That would be very challenging. We are trying—and have had—to move away from that in the CAP.

Richard Lyle

I would be interested to hear Mr Ritchie’s comments on my points.

The Convener

I have members stacking up like aeroplanes to ask supplementary questions.

I will bring in Michael Keating and Pete Ritchie, then Jamie Greene.

Professor Keating

As Vicki Swales has just said, the CAP has moved from production-linked payments—Scotland is the only place in the United Kingdom that retains some of those—towards payments on the basis of acreage. The idea is then to move away from that approach towards something else. The problem is agreeing what the broader goals should be.

In England, people are talking about public goods, but they never define what those mean, other than to say that they include environmental aspects. In Scotland, and maybe Wales, there might be a broader agenda. In those countries, it is about maintaining the population, fragile communities and remoteness. It is also about the concept of rural policies and rural communities, and the needs of Scotland and England might be different in those areas. I think that that is where the agenda is now.

Of course, there will be less money—I think that we will come on to that issue—so it will be important to get the priorities right. I cannot see that there will be a move back to production-linked support for farmers.

Pete Ritchie

Historically, we do not have a shortage of production in Scotland—we are a food exporter. The danger of any system of payments linked to food production, even if it was legal, is that it would generate huge amounts of perverse incentives for people to import soya from Brazil and Argentina in order to feed cows here to produce a glut of milk, when we already have milk. There is a danger that, even if we were allowed to go down that production road, it would not achieve the social, environmental and economic goals that we want to.

To pick up on Michael Keating’s point, even if we stay in or align with the CAP, we can be much clearer about the purposes that we are supporting farmers to achieve. France is a good example. Through its agri-ecology law, it has made it very clear that it is supporting farmers to farm in an agri-ecological way, and the changes there in the past five years have been dramatic as a result of that clarity over what farmers will be funded to do.

09:30  

Jamie Greene (West Scotland) (Con)

I thank the convener for letting me come in at this point. I would like to bring the discussion back to the bill that is before us. For a number of years, we have been talking in this room with multiple stakeholders about the future direction of farming subsidies, and the conversation often seems to go round in circles. This is the only bill in front of us that deals with Brexit and the future of farming subsidies. It is either a technical bill that simply allows ministers to move in the transition period, a bill that points in the direction of future farming subsidies, or a halfway house. It is unclear which of those options the bill is. What does the bill do and not do? What would you prefer it to do?

Rachel Hunter

From HIE’s point of view, the rural economy is wider than just agriculture. As well as land-based businesses, there is a marine-based economy around our rural areas. Going back to my earlier point, I think that the bill needs to be broader and cover wider rural economic developments. It should take a more balanced approach across economic, social and environmental objectives. Professor Michael Keating talked about addressing demographic challenges, such as depopulation, in rural areas. We also need to lift productivity, add value to economic activities and generate high-value employment in rural areas.

Ultimately, we need to look at the opportunities in migrating to a climate-neutral economy. That should not be seen as a burden, because there are so many amazing opportunities in moving to net zero emissions for businesses and communities across the rural economy.

We should look at international best practice in rural economic thinking, including from the OECD’s “Rural 3.0” report, as well as looking at the principles and recommendations that have been provided by the National Council of Rural Advisers. That will be very important in moving forward. I know that the bill is very much an agricultural bill, but HIE would like it to look at wider issues, not just at agriculture.

Vicki Swales

In a sense, we are hoping for a hybrid bill that points to the direction of travel in the future—without spelling out all the details, because work is still to be done—and which creates the powers that allow some of those changes to be made, in order to take us in that direction. At the moment, the bill simply creates powers to make changes, without setting out for what purpose we would want to make such changes and in what direction they would take us. None of that is spelled out. If it was possible to amend the bill to include more about the purpose, that would be helpful.

Jamie Greene

Is your preference that we should amend the bill to do that, or should the bill be followed by a more comprehensive and robust rural economy and agriculture bill?

Vicki Swales

Inevitably, a second bill will be required, which is why it is really important that we put a timeline on this bill, so that its powers do not continue to roll forward for five, six, seven or eight years.

The Convener

By “timeline”, do you mean a time limit?

Vicki Swales

Yes—I am sorry.

Emma Harper (South Scotland) (SNP)

I will pick up on Richard Lyle’s point about food production. One thing that we need to look at in this process is land use, including peatland restoration, tree planting and putting sheep and trees together in the right places. For example, Sitka spruce are being planted in certain areas in the Borders. Perhaps a more considered approach should be taken. Should the bill incorporate a bolder approach to agri-environment schemes?

Nigel Miller

We would like to see a bolder approach. There is a section on data that looks at the food chain, but it does not look at the environment. There is work on land use and catchments from the Scottish Environment Protection Agency and there are habitat maps from Scottish Natural Heritage. However, most of that work is not complete and it is not tied together. We need a backdrop that focuses on types of trees and where they should and should not be. As Emma Harper said, a lot of Sitka spruce is being dumped in the Borders because it is near pulping plants. In the Highlands, a lot of deciduous trees are being planted. Those things are happening not because of habitats, the environment or landscaping, but for economic reasons.

If we are moving into an era in which agri-environment measures will be more important and there will be pressure on land for various purposes—forestry will be a key part of that, as will food production—we will need to have robust ways of directing that in order to make sure that public money supports the right developments in the right places. We will also need to look at multiple uses so that we open up our forestry support to things such as agroforestry, which locks farming and forestry together. Emma Harper’s point is therefore well made and important.

The Convener

To clarify that, are you suggesting a move back to zoning based on local biodiversity action plans?

Nigel Miller

I do not know what we would want to call it, but the answer is basically yes. We should use them as a backdrop for decision making.

The Convener

Should we therefore go back to the plan that we had 10 years ago, which never came to anything?

Vicki Swales

There is a perfect link that we should make to the land use strategy and the commitments that have been made to establish regional partnerships and produce regional land use frameworks, which do all those things: they look more broadly at land use in the round and at all the outputs that we want land to provide. The strategic planning aspect is important for progressing those things as it will help us to identify what we need land to deliver. The bill says that we must have regard to the land use strategy objectives and principles, and those frameworks would be a helpful connection to that broader agenda.

Pete Ritchie

There is a direct follow-on from the Climate Change (Emissions Reduction Targets) (Scotland) Bill, which the Parliament has just passed. It clearly sets out ideas about whole-farm planning and the integrated functions that farming can perform, including in agriforestry and agri-ecology. All those things are in the legislation, along with reasonable land use frameworks. The bill that we are discussing needs to refer back to the new climate change act and continue its work. At the moment, this is landing in a policy vacuum, whereas we have some policy on climate change that we have just agreed.

The Convener

Emma Harper has some other questions.

Emma Harper

We have already covered a lot of the environment implications of the bill.

The Convener

You indicated that you might want to ask about carcase classification.

Emma Harper

Yes. The bill gives the Scottish ministers powers to amend a number of elements of the EU common organisation of markets regulations, including marketing standards. I will not go into detail on carcase classification, because other members might want to ask you about that, but there are issues to do with EU food promotion and aid to fruit and vegetable producer organisations to protect against competition law. How do we support the farmers and fruit and vegetable producers to work together? There might even be issues with the dairy producer organisations. For example, we already have issues with milk pricing. How does the bill support and protect the fruit and veg growers and the dairy producers?

Nigel Miller

I will have a stab at answering that. We have failed on the issue of producer organisations. There is potential to bring producers together for development and to market their products. As we move into a situation in which the world is not in synchrony, that will get more important. All sorts of member states or states throughout the world will move at different paces on climate change. If we move ahead quickly on that, our producers will be operating to different standards, and probably to different welfare standards as well. Producer organisations—certainly for milk and the livestock sector—might be an umbrella that allows those differentiated standards to be demonstrated, quantified and marketed.

There are some real dangers here. We have talked about food and food production, which looks pretty robust at the moment. In reality, however, in this new world where we might be out of the EU, countries will be moving at different rates on climate change and there might be new international obligations and trade agreements, probably with cheap food coming in from the US, South America and Australia, so we will need to have mechanisms under which producers can market their products. Support for food production could well be an issue in that we will be high-cost producers and we will have to reduce emissions in various ways.

Carcase classification is not a sexy subject, but there are issues in that regard around efficiencies. Our present classification system does not necessarily produce carcases that are ideal for the consumer and the retailer. The higher-cost grades of sheep do not fit with supermarket specifications. Reviewing that classification makes sense, and reviewing the classification of veal and young bulls is important if we are to have efficiency in our livestock systems and to produce a pathway for bull dairy calves to be fed. At the moment, we have real restrictions through the EU on how those products are marketed.

The Convener

Do you want to comment on that, Pete?

Pete Ritchie

No. Nigel Miller has covered it.

Emma Harper

When it comes to marketing standards and American trade deals, do our protected geographical indications for our beef, salmon and lamb remain protected under the bill?

Nigel Miller

I honestly do not know. I hope that they will remain protected. There is real concern in the industry that those PGIs will disappear or not be recognised.

Pete Ritchie

My understanding is that the bill cannot specifically protect them, although it brings retained EU law into Scots law. Michael Keating will probably know more than I do about the current state of negotiations under the common framework on PGIs between the UK and the Scottish Government.

The Convener

I am not sure whether you have passed the question with sloped shoulders to Michael Keating. I do not think that he wants to answer it.

Professor Keating

We do not know exactly what the state of play is regarding the framework discussions.

The Convener

We will move on with some questions from Jamie Greene.

Jamie Greene

I am going to cover common frameworks and the constitutional considerations of devolved legislation with regard to future policy. There is clearly an acceptance that, where regulations are currently maintained at the EU level, the repatriation of those provisions to either Westminster or the devolved Parliaments once the UK has left the EU will be a matter for discussion and perhaps even disagreement among the various Governments. What will be the effect of that on our ability to introduce legislation here that is fit for purpose, given the potential context of disagreement on where the powers that currently lie with the EU should go to when they come back to this island?

Professor Keating

That discussion has pretty much terminated, because the UK Government has not taken back any powers, and I cannot see any sign that it intends to do so. It got its fingers burned when it tried to do that with the initial European Union (Withdrawal) Bill.

Framework discussions are going on, and the indications are that they will mostly be non-legislative, for practical reasons. There are detailed discussions on agriculture and other matters, and there is a separate discussion regarding what the UK internal market involves, which could include agriculture. Surprisingly, those discussions are going on in parallel rather than coming together, and it seems that no decisions have been made.

We then have the question that has just been raised, which is about what will happen if there are international trade deals, as that is clearly a reserved matter. What will happen if there are implications for agriculture, which is devolved? We do not know the answer. A further discussion is going on about the participation—“consultation” would probably be a better word—of the devolved Governments in international trade deals, including a future one with the EU as well as those with third countries. Again, we do not know where that is going.

09:45  

There is then the big question of money. Lord Bew’s report on agricultural funding is pending. Funding will be earmarked for agriculture, but we do not know how much detail there will be in that. It is really open. There are also questions about the WTO. In the Agriculture Bill, there is a power to determine how WTO rules will apply across the UK. The explanatory notes for that bill say that the UK Government is not too worried about what the Scottish Government is doing at the moment. However, that power is there.

I wish that I could give you a clear answer. All that I can say is that we thought that things would be clear by now but, as with so much concerning Brexit, we really do not know. That is why it is important that the committee and other Scottish interests keep an eye on the discussions as they go along. We do not know where the decisions will be made or what the implications will be.

Jamie Greene

Previously, we have heard evidence that the bill gives the Scottish Government the power to decide which regulatory environment it wants to align with if it is faced with a choice between that of the UK and that of the EU. Other witnesses have said that that flexibility is helpful. However, might that create a divergence of regulatory alignment within the UK internal market? If so, would that pose an issue for the internal market?

Professor Keating

If the Scottish Government takes powers to monitor and shadow EU regulations on agriculture and other matters—that is clearly the intention, because those powers were in the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill, which has been abandoned—the question that immediately arises is how that will tie in with UK frameworks and what will happen if those frameworks are non-legislative. We just do not know how that is going to work out.

That is part of a bigger question about how far the UK will diverge from EU regulations. The bigger that divergence, the more of a problem there will be in the UK. My centre has been looking at that issue for three years. We thought that we would be able to tell you the answer to the question by now, but the fact is that we cannot.

The Convener

A few other members have questions on that, so I will bring them in now and I will then come back to Jamie Greene if he has a follow-up question.

Mike Rumbles

My question is for Professor Keating. There seems to be a little confusion here. As far as I understand it, the UK Agriculture Bill has fallen, and the bill that we are considering, which deals with the entirely devolved matter of agriculture, gives the power to take back to the Scottish Parliament and the Scottish Government everything that is currently under EU control in that regard. I do not think that a UK framework to help UK agriculture will be contained in legislation. If it happens—I hope that it does—there will have to be an agreement between the Administrations. Is my reading correct?

Professor Keating

That appears to be the case, although the European Union (Withdrawal) Act 2018 contains a power to take the powers back to Westminster, and there is the possibility of legislative frameworks, which would be subject to the Sewel convention. We do not know how that will work, but my reading of the situation is that there would probably be very few of those, if any, and that things will be done by agreement among the Governments. That is certainly the intention of all the Governments at the moment. However, if there is a conflict, we do not know how it would be resolved.

Mike Rumbles

The bill gives the Scottish Government legislative authority to do what it wants to do in the agricultural field.

Professor Keating

That is the intention for the next couple of years, pending a new bill that would set out agricultural policy for Scotland, as we have talked about.

Stewart Stevenson

I have a question to which I want a really short answer, if possible. We have heard a few references to the WTO. I read recently that, under President Trump, the US is not nominating somebody to the WTO, which might make the whole thing inquorate. Have I picked that up wrongly? Professor Keating might know about that.

The Convener

I am not sure that that is within the scope of the bill.

Stewart Stevenson

It is not, which is why I asked for a brief answer.

Professor Keating

Mr Stevenson is correct.

Stewart Stevenson

So it is a problem.

Professor Keating

Yes.

Stewart Stevenson

The WTO might collapse.

Professor Keating

I doubt that it would collapse, but its operation would become more and more difficult. We should remember that the WTO is not a court, in any case.

Stewart Stevenson

That is all that I wanted to get on the record.

The Convener

I will stop that discussion there, because the WTO and whether it will be quorate or not is definitely not within the scope of the bill.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

My question is also about the WTO, which has been mentioned several times. Are the current WTO rules compatible with what we need to do on climate change or do they need to change?

Nigel Miller

I would say that they are not compatible.

Professor Keating

I have not thought that one through—I will leave it to Nigel.

Richard Lyle

We have been told that the power in section 3 is restricted to modifying the existing common agricultural policy legislation—that is, the CAP law that will become retained EU law if we leave the EU—and that it is not a power to completely rewrite the common agricultural policy. That means that there is immediately a substantial restriction on the scope of the power. Do you agree with that view?

Professor Keating

It also allows for pilot projects and so on to prepare the way for a new agriculture policy. We do not know what the policy will be, but pilots and so on can be undertaken in order to test things out, pending the new policy.

Richard Lyle

We do not know what money we will get, what powers we will get or what will come from the UK Government—we just do not know those things. It is like the story that was mentioned earlier about taking your toothbrush when you go on a journey, but the problem is that we have no toothpaste.

Professor Keating

That is true, and that is why it would be difficult to have a bill that contained all of that. It is important that we have a discussion about the issues and that the Government makes a policy statement about where it wants to go with the bill.

Jamie Greene

That leads nicely to my final question. Given the diverse nature of the UK, even if a sum of money was in the public domain with information on how much will be available to each of the devolved nations for farming support, would it be the responsibility of the devolved nations to decide what that support should look like and what the rules should be for support being given?

Vicki Swales

It is devolved policy, so it is within the gift of the Scottish Government and the Scottish Parliament to determine how any such money should be spent and for what purposes. Under EU retained law, there are lots of controls and constraints around that, as we have discussed, and the bill creates powers to deviate and move away from that. As I understand it, it is essentially a Scottish decision.

Pete Ritchie

On a more general point, it seems to me that, right now, when people are finding a lot of money trees to shake, farming and land use measures have huge potential to deliver on our climate and nature emergency. They are the best hope that we have. The idea that we will end up with much less money is counterintuitive. We should be investing heavily in the transition to a climate and nature-friendly farming and land management system, because we can get a lot of traction in terms of climate change and biodiversity from doing that. We need to be bold about that. We need to set the direction of travel and say that that is where we want to go.

Angus MacDonald (Falkirk East) (SNP)

The “Stability and Simplicity” consultation stated the need for rural policy to better take account of the needs of the environment. We touched on those issues earlier this morning. Will you expand on your thoughts on the environmental implications of the bill, including its ability to support Scotland’s approach to tackling climate change and addressing environmental concerns? Is there anything that has not already been covered this morning on that subject that you think that we should have on the record?

The Convener

I do not think that that needs to be a 20-page document.

Vicki Swales

There is scope to improve some of the environmental or greening elements in the CAP. We need to think about the proportion of funding that is allocated to nature and climate-friendly farming. The greening policy has its faults, but it means that 30 per cent of the pillar 1 budget is spent on measures that should be delivering in terms of climate and biodiversity.

We could improve on that and think about the share of money going into such measures. We have talked today about improving advice, which there is scope to do.

We need to look at pillar 2. We are very concerned about the agri-environment climate scheme. As I said earlier, it has been closed to applications from next year, although people with contracts will have a one-year extension. That scheme is one of the main funds in the CAP that delivers on the environmental front. We are stopping that and there is no certainty as to what will happen in the 2021-24 transition period, so that needs to be looked at.

We have not really covered cross-compliance, although Nigel Miller mentioned it earlier. There is a sanction mechanism in the CAP relating to compliance with existing environmental, animal welfare and food safety legislation that protects the public interest. The simplification task force, which is largely made up of agricultural interests and representatives, has been looking, with the Government, at what simplifications could be made.

There have been discussions about reducing penalties, but I would argue that we should maintain that kind of sanction mechanism, not go back on it—that is a no-regression point. There are also ways that we could improve cross-compliance by ensuring that farmers understand what they should be doing by dint of regulation, which sets the baseline, and that everything else goes above and beyond that and takes us forward to deliver against our environmental objectives in a better way.

The Convener

Does Nigel Miller want to come in on that issue?

Nigel Miller

I have probably mapped out my vision on innovation, which is two stranded. One strand is about revolutionising greening with a menu system, which is based on the likelihood that we will be out of the EU. If we are not, we probably have less wiggle room in the present structure. An immediate priority is to look at new environmental and sequestration measures that might come into pillar 2, and at how they might be funded. That will be important when we get to the next support system.

We want to move quickly on that development work and make sure that we have a more robust and deeper portfolio of measures to change our landscape and our carbon balance. I reiterate that we need to do that against the backdrop of something like regional land use maps, planning or some other mechanism. We need some sort of objective assessment of environment and habitat so that we do the right things in the right places.

Pete Ritchie

The idea of capping the largest payments and using some of that money to support pilot schemes has been floated. We would like to see that in the bill. As Peter Chapman said, if we wait until 2024 to make changes to the payment regime, we might see a cliff edge that is more problematic for businesses than the idea that those changes will come in over the next three years. We certainly need to allocate resources to the sort of ambitious pilots that Nigel Miller is talking about.

Colin Smyth (South Scotland) (Lab)

I turn to consideration of the wider rural interest. There is a danger that we think that the bill is entirely about agricultural support, but support through the Scottish rural development programme includes schemes such as the LEADER programme and forestry grants. There is a lot more to support than just agriculture. To what extent do you think that the bill adequately provides for wider rural needs beyond agriculture?

Nigel Miller

I have no expertise on the LEADER programme; it is too difficult for me, so I will not comment on that. In forestry, there is real scope for reviewing how we plant trees. At the moment, money is allocated without regard to other priorities. SEPA comes up with flood mitigation strategies and looks at trees in riparian woodlands, but those programmes are not necessarily prioritised for grants. At the moment, we allocate money to planting for commercial reasons.

We really have to get away from that and look at appropriate planting, with the right planting in the right places, different planting designs and different densities of trees. We also need to look at the fringes, as the Irish are doing. We still see planting with high densities up to the margins. In larger plantings, maybe we should have light densities near the edges for biodiversity reasons, or even for agricultural reasons, in order to use that land.

We need to have multipurpose forestry as well as agroforestry, with new designs that are available being supported. In some ways, we need to ensure that the money is spread in a more strategic way, which might well involve having ring-fenced budgets for different types of forestry and maybe for forestry and agricultural holdings, in order to ensure that we have those levels of planting.

10:00  

Vicki Swales

Both the bill and the policy memorandum that accompanies it are pretty silent on many aspects of pillar 2. There is reference to the less favoured area support scheme and to changes in that regard, but otherwise they say little about the intentions. If we were to remain part of the EU, we would need to think about producing a plan not just for pillar 2 and the rural development aspects but for the whole CAP. I understand that that is the direction that the reforms are taking. However, we do not really have a clear sense of what the Scottish Government’s thinking is on the future of all those other schemes, including LEADER and the forestry and agri-environment schemes. The bill says nothing about that; it just creates powers to change those schemes if the Scottish Government decides to do so. The bill is not very helpful in that regard.

Rachel Hunter

We have spoken about the uncertainty in the wider environment for businesses and communities, but there is also uncertainty about where the pillar 2 programmes will sit in the future. I know that a consultation is running on post-Brexit regional funding and the shared prosperity fund, and I suppose that whether LEADER and other rural development programmes sit within that or within the bill is open to debate. My role in HIE is about service delivery and meeting the needs of clients and communities, and I believe that we should ensure that their needs are at the heart of that. We also need to ensure that there is no duplication and that there is alignment across all the programmes and other initiatives to support the rural economy, such as the work of the enterprise agencies and the regional deals that are emerging across Scotland.

Colin Smyth

The clock is ticking. For example, we are coming to the end of the LEADER programme, which will run out in months. The bill stresses stability until 2024, but we do not have until 2024 to replace LEADER. Likewise, the panel’s view seems to be that we need to make changes in a host of areas a lot more quickly, rather than simply waiting until 2025, whether that is around forestry grants or other matters. Do we need the Government to set that out or can the committee do something practical and amend the bill to ensure that we make the necessary changes much more quickly?

Professor Keating

Picking up on Rachel Hunter’s point, I note that we have a proliferation of rather small-scale initiatives that scatter money around. We have the city deals, we will have the shared prosperity fund to replace the cohesion funds, we will probably have ring-fenced agricultural spending from Westminster and we have environmental policy, but those things do not all fit together. The danger is that we waste money, with things cutting across one another and inconsistent priorities coming from different levels. We need a more strategic take on all of this.

I am very worried, not just because things are coming from different bits of Government but because things are coming at different times. We have initiatives piled on one another and we are going to lose any sense of strategic priority.

Colin Smyth

Ultimately, we need to determine what should be in the bill. You mentioned many other issues that need to be determined through what we do in Parliament, but is there something in the bill that needs to be changed in order to allow us to get a bit more direction and clarity on those things?

Professor Keating

The bill is a symptom of the tendency to fix little bits and pieces, rather than bringing together the big picture to see how environment, agriculture and rural development fit together.

Pete Ritchie

We can do some of that work with a purposes clause. The EU sets out the purposes of the common agricultural policy and those are being revised. We need the bill to state the purposes for which ministers make grants. As Michael Keating said, powers within the bill should include tackling rural depopulation, decarbonising rural areas and even tackling rural poverty. We need to be very clear about why we are making such grants and how we will measure success.

We would argue that a minimum percentage of the grants for 2021-24 should be specifically allocated to the climate and nature emergency. That would not answer the detail of whether we have LEADER but would set out why we are making grants.

Peter Chapman

We have already agreed today that the “Stability and Simplicity” document, which sets out very little change between now and 2024, is too timid and lacks clarity. We have settled that point.

Does the bill enable the Scottish Government to support land managers in the transition period, for example through advice, training and other support to help the industry to move forward, even in the context of the overarching stability and simplicity agenda? What other things can we do? Nigel Miller spoke about many of those issues earlier on.

Nigel Miller

Advice was a bit of a flagship in the previous CAP reform. That has been rolled out at several levels for agriculture. However, the real failure there is that we tend to hit the same people all the time and a large part of the sector is untouched. It has not been successful as a tool for driving change. We must look at that money in new ways.

Our first priority is to look at soil carbons and to change the soil analysis system so that we have a baseline for where agriculture is today. It appears from headline figures that we are in quite a good place, but we could be better. Unless we know what our baseline is, we cannot know how to improve on it.

A one-to-one advisory service that is linked to that would be very helpful in enabling farmers to understand the results and how to manage their situation. Maintaining and building up soil carbon may be a key way in which to access funding in the future. That is important.

An official advisory service was ditched in the previous CAP reform. If we are going to move to a new type of support system that considers efficiencies and multifunctional farming, we need an RPID that is light on its feet and can facilitate some of that change. I would like to see some of the money going into that.

We also want to look at funding for efficiency and sequestration on a one-to-one level, so that it is based on a whole-farm plan. That would mean that people could sit down and redesign their systems, perhaps looking at their land use pattern to see whether they could modify it to reach a better solution. I am proposing a totally different form of advisory service.

Peter Chapman

I am a big fan of monitor farms, for example, although they are not part of a one-to-one system such as Nigel Miller is proposing. However, the problem with them is that the guys who come are ones who are keen to learn and the people who really need the help are the ones who never turn up. A one-to-one system would obviously be better, but would it not be hugely expensive?

The Convener

I am sorry, but I am not sure that the bill goes down the route of monitor farms, although I appreciate that you may have views on that. I want to bring Vicki Swales in on the issue of advice.

Vicki Swales

I echo Nigel Miller’s comments. Scottish Environment LINK is a central part of a new system and there is scope within the transition period to improve the advisory services. There are already measures in the CAP.

The budget for advisory services has been cut in recent years, rather than increased. That is an issue that could be addressed.

We know from the work that RSPB Scotland does with farmers on greening, which has had a lot of criticism, that when farmers get good advice on how to use ecological focus areas, they can deliver some really great things for some of our species that are in trouble. It is absolutely fundamental.

There is also scope for co-operation and collaboration and doing things at landscape scale with farmers that could be part of pilots. Under EU rules, we could have had what was going to be called the environmental co-operation action fund—ECAF. We made a mess of the proposals and the EU ruled it out, so it has not happened. We could go back and do something like that in the interim and it would also be helpful.

Peter Chapman

Does the bill have any implications for food safety and animal welfare issues that we need to think about?

Vicki Swales

That takes us to cross-compliance and the whole system of EU regulation on environment, food safety, animal welfare, and phytosanitary standards.

Cross-compliance was introduced as a sanction mechanism because compliance with those laws and regulations across Europe was not deemed to be adequate. One mechanism to deal with that was to tell farmers that they would face penalties if they did not comply with them and that an inspection system would be introduced. I am not saying that that system is perfect, but the principle is quite important. If ministers have the powers to change some of these systems, there will be some pressure to reduce things. The simplification task force has already been looking at penalties and inspections. Some of those things might be really helpful, such as not penalising someone whose cow has just lost an ear tag. It needs to be replaced, of course, but in the grand scheme of things, it is not the end of the world. However, there are other aspects of the legislation that need to be enforced, so we need to be careful not to let that system go backwards. We need to take it forward and improve on it.

SEPA, for example, has done a lot of catchment walking, particularly looking at breaches of the general binding rules where there is some crossover with cross-compliance. It has found out what the breach per kilometre is. Some of the breaches were relatively minor, and some were much more serious. SEPA had been taking a light-touch approach to penalties but now, as I understand it, it is reviewing that approach and ramping it up because it has not seen compliance at the level that it needs to. We need to watch that.

Maureen Watt

When we had the bill team here, they suggested that they might want to make changes to the less favoured area support scheme, and they indicated that they are still working on a new areas of natural constraint approach. Is that change appropriate or are you expecting other changes to LFASS under the bill?

The Convener

Who wants to dive into this difficult area?

Nigel Miller

Given my previous role, it would be inappropriate for me to comment on LFASS. It is a key area and, given the current economic pressure on these sectors, it is absolutely crucial that the issue is resolved in some way.

Vicki Swales

I do not want to take up lots of air time, but we have been involved in discussions about LFASS for a number of years.

It is important to recognise that farmers who are farming in difficult circumstances on marginal land with some of our more uneconomic farming systems need support. We are not arguing against that. We have, however, always argued that LFASS is not delivering the best support to the farmers who most need it, and there is quite an overlap of those areas with some of our most important environmental areas—what we call our high nature value farming areas. All assessments of the scheme show that the money goes to the wrong places and that most of the funding from that £65 million pot—as it was until relatively recently—goes to the better-quality land in the LFA and not to the most disadvantaged land, because of the grazing categories and the weighting system.

The EU proposed making the change to an areas of natural constraint scheme, but that is still not the best way of supporting farmers and crofters in those areas. The situation is tricky if we are in a transition period. Do we move to something completely new, or do we think about how better to support farmers in those areas in the longer term and continue with a system that is imperfect but gets money to certain places? I am not sure that we have the answer to that question. However, there is a need to look at the system quickly and to take some decisions about how we best deliver the money to the places, farmers and crofters that most need support while ensuring that any approach ties in with the environmental and climate emergency issues that we face.

10:15  

Maureen Watt

Have you been formally or informally consulted on potential changes to LFASS or any of the pilot schemes that are on the go at the moment, and on what might or should happen? What consultation has there been with farming organisations?

The Convener

Vicky Swales can answer those questions. For the record, she was shaking her head.

Vicki Swales

The consultation has been partial and incomplete. On certain issues concerning some of the changes that the bill would potentially allow, the consultation of and engagement with the broad range of stakeholders that need to be engaged with have been pretty poor. On quite a number of fronts, the message is that the Scottish Government could do better and that discussions on what the changes should be must not take place behind closed doors or with only certain parties.

The Convener

Rachel Hunter is next. Does Nigel Miller want to come in? No—he is staying out of this matter.

Rachel Hunter

HIE works with clients in some of the most remote, rural and fragile areas in Scotland, and there can be cross-over into areas that are supported through the less favoured area support scheme. I return to my earlier point that, moving forward, we need to think about the wider opportunities in those areas. In 16 years at HIE, I have worked with a lot of businesses. The most transformational intervention that the public sector can make is to support collaboration, leadership, personal development and investment in human capital. We should think about entrepreneurship, how we can do things differently and what opportunities there are. It is about looking not just at the land but at the community and the place in the round, as well as at opportunities to support, develop and grow a particular community, croft or business.

Richard Lyle

I am interested in what Vicki Swales said. I come back to what I asked earlier: in order to improve matters, do we need to devise a system that takes in climate change, forestry, all types of farming and greening?

Vicki Swales

Broadly, yes.

Richard Lyle

That is fine.

Pete Ritchie

We need to be clear about what we count and measure when we are trying to work out whether any of these policies are effective. Until now, we have had a system of reporting back to the EU on what we are doing with the money and where it is going. If we leave the EU and implement our own policies and support mechanisms, we need to be much clearer about what we are spending the money on and what the performance indicators are. We need to know how well we are doing and, as Rachel Hunter says, how many farmers have had some kind of continuing professional development in the past year. We do not have a lot of those numbers to hand, and we do not agree on what we are trying to measure or what counts as success. I am making a general point on measurement and monitoring.

I also want to comment on Maureen Watt’s point on consultation. I am not saying that the Department for Environment, Food and Rural Affairs has been great at consulting, but there has been a much more open process of asking what it should pilot over the next couple of years and a lot of conversation about piloting. In contrast, the environmental organisations have not had a lot of contact from the Scottish Government to ask us what we think it should be piloting from 2021 to 2024, and time is marching on.

Nigel Miller

I support Richard Lyle’s concisely put view on the need for a multifunctional support system for land use or farming that delivers across multiple objectives. However, it is worth remembering that income support is part of that approach. That is one of the reasons why the CAP was originally developed. Scottish statistics show that only 30 per cent of farms can make a profit without direct support. At the moment, hill sheep farmers are probably losing £3 a head on sheep, and the most recently published average income for them is £11,000.

Richard Lyle

We are losing farmers hand over fist, so we have to support them.

Nigel Miller

Yes, and that number may well increase over the next few years, so there is a real challenge in creating a future for farming.

Maureen Watt

I assume that you all welcome the women in agriculture task force, which is focusing on such things as leadership, CPD and new entrants. That is just a comment.

The Convener

That is definitely outside the scope of the bill.

Emma Harper

I will pick up on Pete Ritchie’s point. In Scotland, 85 per cent of the land is eligible for LFASS, whereas the opposite is the case in England. We have pilot schemes that need to be hurried along, and we need to get on with that. Does the bill enable pilots of whatever schemes we choose to support the production environment for farmers in the worst areas? I know a tattie farmer in the Scottish Borders who is an LFASS farmer. How does that work? It may be a wee bit of a tangent, but we really need to get going with those schemes and pilots.

Pete Ritchie

I completely agree, and the bill enables ministers to get on with them. However, the bill does not direct ministers to get on with the schemes or explain what it is that ministers should get on with. Picking up Jamie Greene’s point, there is an opportunity for a hybrid bill that, at the very least, sets out a clear process for the 2021 to 2024 period.

John Finnie

The definition of “agricultural activity” that is used at the moment was set by the European Parliament. I will not read it out—I am sure that the panel is familiar with it. The bill gives the Scottish Government the power to amend that definition, but the bill team tell us that there are no plans to do so. What are your thoughts on that power? Do you feel that the definition should be changed? Is there scope for a broader or alternative definition?

Vicki Swales

That is worth looking at. The power to amend the definition is probably appropriate. There has been some contention around the definition in the context of trying to exclude certain people from claiming CAP payments who were not legitimate farmers and to tie the payments to agricultural activity as far as possible. However, as we have just discussed, pillar 2 of the CAP leaves open the ability for payments to be made to other land managers: it includes forestry, environmental and other payments that do not necessarily go only to farmers. Given the multifunctional land use in agriculture that we are looking for in the future, it will be important to think about who the beneficiaries are and who is eligible to make claims for payments. That goes back to the definition of what we mean by agriculture or related land use.

Nigel Miller

My position is not far away from Vicki Swales’s. Trying to ensure that money is not siphoned off into land that is as good as abandoned was a contentious issue in the most recent CAP reform. There is still a real risk of that happening, so we need an even more robust definition of agricultural activity with a threshold in it so that people cannot ghost farm. Vicki Swales is also right in saying that, whether in agri-environment, special conservation areas or forestry, the payments would come out of that budget and someone who was not a farmer could draw them down. It would make perfect sense for people to do that, even if they were outwith eligibility for core agricultural support. That would facilitate the sort of multi-use countryside that we want to see.

Rachel Hunter

For a funding body, the list of agricultural product definitions can be quite restrictive. In HIE, we try to look at socioeconomic outcomes. We are sometimes presented with a good business case for an added-value food product, but, because it does not fit a criterion or list, it is knocked out of certain support schemes.

Going back to the general point that the panel is making, we need to focus on where we are going and what the outcomes and priorities are moving forward, as opposed to having lists that define agricultural products. We need to look at the wider outcomes for our rural economy across Scotland.

Pete Ritchie

I agree with the earlier point. I do not think that narrowing down or changing the definition in the short term is what we need to do. We need to think about how we produce high-quality food while supporting nature and tackling climate change—that is our goal. As John Finnie said, we need a multipurpose scheme. The scheme already includes things such as the food processing marketing grant, which is not about primary production. We would also like to see more support for urban agriculture, which has big social outcomes as well as some environmental outcomes.

As we develop a bill for the next stage, we want to have a discussion about what we are trying to achieve with agriculture and food production in Scotland and what it is all for. We want the second bill to be as good as we can make it, but we are probably not in the right space to do that now. We need to get a good hybrid bill now and then spend time on the 2024 bill.

The Convener

I think that we have dealt with all the committee’s questions, so I will ask a question to summarise the session, which has been very interesting.

We have talked about the need to deal with environmental issues and climate change, the need for food production and the need to encourage the shift of money from food production to the environment, although there will be some implications of our doing so—in fact, it may well increase the price of food. Am I right in thinking that you are saying that the bill gives a whole suite of options to the Government but you are concerned that the Government may use those options and not go to the next stage, which is to come up with an agricultural policy for Scotland? Should we, as a committee, be making sure that the bill is limited, so that we get on with coming up with that policy?

Professor Keating

That is a fair summary.

Nigel Miller

I certainly would not want the bill to stall progress in any way. The next stage will be absolutely crucial, but there are devices in the bill to do meaningful pilot work and make meaningful changes that could set us on the right trajectory, and those should not be ignored.

The bill should have an associated framework for change, by way of an annexe to the bill or a new document.

Vicki Swales

As Nigel Miller said, it is about making sure that we do not create powers for things to be done—either inadvertently or on purpose—that take us backwards rather than forwards. We need to watch that as well.

The Convener

Pete Ritchie, do you want to add anything?

Pete Ritchie

I support the framework for change and having a process by which the Government reports back on progress over the next three years, so that we know that we are moving forwards.

Rachel Hunter

As I said at the beginning of this session, the bill is a pragmatic approach because it will provide some certainty for a period of time, but there are bigger fish to fry with regard to the macro rural economic development policy for Scotland. Generally, I agree with the rest of the panel.

The Convener

I thank the panel for coming along today and giving evidence. I will suspend the meeting briefly to allow them to depart.

10:28 Meeting suspended.  

10:35 On resuming—  

The Convener

I welcome our second panel of witnesses. Martin Morgan is the executive manager of the Scottish Association of Meat Wholesalers, David Michie is deputy director at the Soil Association Scotland, and Sarah Millar is head of industry development at Quality Meat Scotland. We have some questions for you.

John Finnie

Good morning, panel. My question, which I asked the previous panel, is in three parts. Do you support the need for a transition period for agricultural policy until 2024, do you have any comments on the approach that was taken by the Scottish Government in its “Stability and Simplicity” consultation, and do you feel that the bill reflects that approach?

The Convener

If witnesses were watching the start of the previous panel session, you will already know this. If you want to leap in and answer a question, please indicate that to me. If you all look the other way, the last person to look away will be the one who answers the question.

David Michie (Soil Association Scotland)

We need a transition period because there are some big challenges ahead. The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 commits us to emissions reduction of 75 per cent by 2030. We also know that farming is not very profitable and that there is a wildlife crisis. There are many issues. Farming needs a transition period because what is required is quite a long game that involves planning. It will all take a while.

I welcome the transition, but it is very important that we know where we are transitioning to. It is also important that the transition has an end date; we can transition to 2024, but we need to go somewhere after that.

The “Stability and Simplicity” consultation analysis noted:

“multiple answers stressed the need to have a clear and coherent vision and strategy of what the end of the transition phase will look like in order to avoid using the transition as a means to stall decision making”.

We need the transition, but we need to know where we are going, so we should not be kicking the can down the road to 2030.

Martin Morgan (Scottish Association of Meat Wholesalers)

I agree that we need a transition period and that we should have a plan for where we want to get to. We would have liked the Scottish Government to take a more ambitious approach in the bill to revamping the current rural development programme and the many schemes that sit within that, in order to reflect better what Scottish agriculture in its totality needs today.

John Finnie

I would also like to hear from Sarah Millar. I would particularly like to hear whether the bill reflects the approach of the “Stability and Simplicity” consultation.

Sarah Millar (Quality Meat Scotland)

Like the rest of the panel, I support the need for a transition period. As David Michie said, farming is a long game: when we put a cow in calf it is two years or so until that calf enters the food-supply chain. Decision making does not happen overnight and we need to think long term.

The name of the consultation was “Stability and Simplicity”. The other major driver on farms that is often not talked about, and which is linked to that long-term game, is cash flow—the cash that comes into farmers’ bank accounts at certain points during the year, because they sell the majority of their lambs, calves and cereals at those times. Stability in that cash flow and certainty about receiving it gives farmers confidence and it gives lenders confidence in the farming industry. Legislation that would enable that would be hugely beneficial for the farming industry.

That said, I agree with what Martin Morgan and David Michie said about the need for a forward look post 2024. Plans to take that forward and to look at the longer-term challenges within it are afoot with the farming and food production future policy group.

Apart from that, the bill does what the consultation set out to do, which was to give stability to farmers and to simplify some legislation that comes from Europe.

David Michie

I understand the importance of stability and simplicity, but farming in Scotland is quite fragile at the moment and we do not want fragile stability. We should use the transition period to build more resilience in the sector, and farmers should use it to achieve the outcomes that are needed, which includes producing food and a whole suite of other things.

I have the consultation summary in front of me. It says that

“Continuing with the old EU approach is mostly disfavoured”,

but the approach is a cut and paste of the old EU one. We cannot let the wheels come off the bus: we need to enable payments being made to farm businesses, because that is essential, but with the scope to simplify and improve, we should be able to move away from the current situation towards something else. The danger is that we do not know what the intention is, so we have to be clear about why we are simplifying and improving, and about what we are transitioning to.

Mike Rumbles

I will ask questions that are similar to those that I asked the previous panel. We know that the bill is enabling legislation, and that the intention is that it will cover the transition period until 2024. However, the wording in section 3 of the bill says that ministers may use regulations to

“modify the main CAP legislation ... in ... Scotland for one or more years beyond 2020”.

David Michie mentioned kicking the can down the road. The intention of the Government is to introduce a new bill by 2024, but it does not have to, according to that provision. What are your views on that?

David Michie

There needs to be an end date. When I finished agricultural college and went to work on the farm, production was decoupled from subsidy support and we completely changed our business: we got rid of all of the cattle and I had to get a job. Agriculture has not really changed since then—there has been stasis. The EU has been kicking the can down the road. There is a danger that the same thing will happen if it is said that farmers are having a hard time, that things are difficult and that there needs to be stability. What is being stabilised? Will that stability be fragile? How the industry can move forward needs to be thought about.

Sarah Millar

The pragmatic part of me says that we cannot kick the can down the road. However, we have seen legislative and political changes in Scotland and the United Kingdom over the past three years. The bill would give us certainty that there is legislation in place that will prevent the wheels from coming off, should circumstances change again. That is my pragmatic view. As long as a new bill comes in 2024—I am confident that one will come—the bill is justified.

Martin Morgan

I take on board what David Michie has said. There has been a lack of change in farming and there is a need to modify that. There is a need to speed up the process of change. Adoption of new technologies and practices on the farm could make farming operations far more efficient than they are now. I think that I heard Nigel Miller say in the previous session that only about one third of farmers are making a profit without support—we need to up that number, big time.

We need primary production—if we do not have primary production then we do not have processing or an end product. Farming is primarily about food. Obviously, that has an environmental dimension that needs to be protected and enhanced. As I have said, we need the Scottish Government to be a little bit more ambitious in modifying what we have at the moment and then to put in place something even better in the next bill.

10:45  

Sarah Millar

I agree with Martin Morgan. However, on whether the legislation should allow ministers to make that modification for one year or more, I think that that would give us flexibility.

Mike Rumbles

There is no question—the bill will give us flexibility. That is the whole point of it. We know that the Government’s policy is to have in place a new policy by 2024, and it has set up a group to develop new food and farm policies. That group’s report next June will, I hope, enable the minister to produce a new bespoke agricultural policy.

The bill is not to establish new policy: it is a transition bill. Some of us are concerned that, although it will give flexibility, the bill does not insist that the Government—by the way, after 2021, it could be any colour of Government—cannot say that it does not need to produce a new bill because it can operate using regulations. Are there any thoughts on that point?

David Michie

I completely agree that there needs to be a sunset clause—an end date. If Brexit is not done by then and another bill is needed or legislation needs to be amended, that would be fine, but it is very important that there is an end point.

Jamie Greene

I will follow on from Mike Rumbles’s points. I am not sure how many of you heard the previous evidence-taking session, but it was suggested that the committee could, by adding policy objectives, strengthen the bill by making it a hybrid bill that sits somewhere between a technical transition bill and a future long-term agriculture policy bill. Would that be wise, or would it be better to deal with matters in separate legislation—one bill to deal with the transition period, and a demand placed on the Government for a future long-term policy bill?

Sarah Millar

I understand why a hybrid bill would be welcome. In order to have a transition, we need to know what we are transitioning to, so I completely agree with that sentiment.

David Michie

I might be wrong, but my understanding is that the committee can simplify and improve the bill. I think that there is scope to change quite a lot, but we need to know what we are going to do to simplify and improve it.

At the moment, my idea of an improvement is probably quite different to Sarah Millar’s idea of an improvement. It is clear that the legislation must take into account the wider policy outcomes that the Government wants to achieve, including the 75 per cent emissions reduction by 2030 in the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019.

To return to the point about kicking the can down the road, my concern is that we are at this level in terms of emissions in farming, and we need to be up here or here in 2030. There is a danger that the bill will just keep us on an even keel, which will leave farmers with a huge mountain to climb in the last few years leading up to that. The intention—where we are going—must allow simplifications and improvements to be made in the right way, so that we can do the right things.

Jamie Greene

For the benefit of the Official Report, you were pointing upwards when you said “here or here” in speaking about the improvements that have to be made.

David Michie

Yes—I am sorry about that. We want emissions reduction, but I like the analogy of farmers having a mountain to climb.

The Convener

We will move on. Peter Chapman has the next question.

Peter Chapman

My question is on the same subject. We are told that the intention is to make minor changes through the bill, and that long-term rural policy changes will be made via new primary legislation. Do the witnesses have any views or concerns about the extent of the policy changes that the Government might introduce using the secondary legislation powers in the bill? We have explored that a bit. Is there anything to add to what has been said?

Martin Morgan

Last week, I attended a stakeholder meeting with Government officials, which included the people who drafted the bill, and who have—I think—appeared before the committee. They alluded to development of proposals internally to revamp some schemes and to modify them in line with the powers. However, no detail whatever was given on what the changes might be. It was indicated that stakeholders will be informed in due course, but no timetable was provided. Obviously, we know the main group—the farming and food production future policy group—is due to report by the time of the Royal Highland Show next year, so there is a very small window of opportunity for stakeholder groups to offer meaningful comments on proposed modifications.

Peter Chapman

During the consultation on stability and simplification many comments were made about preparing for longer-term changes up to 2024. Where do you expect rural policy to be at the end of the transition period? What changes do you expect will have been introduced by then? Following on from what we were just speaking about, what should we do in the meantime to move the industry forward, up to the 2024 deadline, and to set the scene for going further?

The Convener

Martin Morgan suggested that farmers need to become profitable. Do you want to develop that?

Martin Morgan

Certainly. There are plenty tools that farmers can deploy to improve their operations. We see in Quality Meat Scotland’s “Cattle and Sheep Enterprise Profitability in Scotland” that the top performers are much more adept and up to speed on technical aspects of their farming operations. That needs to be rolled out across the entire industry. Monitoring of key performance indicators has to be embedded in every farm, so that farmers adopt best practice and are innovative in taking what is happening in research studies into their farming enterprises in order to improve overall economic and environmental performance.

David Michie

I agree: the current CAP focuses a lot on advice; you can give people lots of advice but they do not have to take it. There should be work on capacity building—on enabling and empowering people to figure out their own solutions to problems and to make the transformational change that is required. It should not be about maintaining a fragile stability, but about building resilience within the sector.

We do not know what will happen with common frameworks, budget allocations and all those things, but whatever happens, we need to get folk ready for a world in which the current support is not there. They should know how to be profitable and how to use diagnostics. They should be financially literate and know about minimising fixed costs and all the other things that good farmers should be doing.

It is also about increasing output, which does not necessarily have to be food: it can be carbon or clean water. There are wider ecosystem services and social value that our land can provide. There should be a move towards that, as well.

Sarah Millar

Profitability and communication within the supply chain are key, not just at farm level, but all the way through. Without actors within the supply chain—processors and so on—there will not be demand at the farm gate for what is produced. The big thing that we have been talking about quite a lot recently at QMS is communication within the supply chain and how, for example, the data revolution, and artificial intelligence in particular, could give farmers an evidence base on which to make informed decisions more quickly. In the livestock sector there is fragmentation between the store calf or store lamb producer and the finisher. Anything that we can do to get data and information back to the farm gate is beneficial—that is an area that is accelerating very fast. That could set us up to meet the challenges of the climate emergency and the wildlife crisis. Datasets on farms could be transformational. That is the key.

Maureen Watt

In our session with the previous panel we asked whether WTO rules are compatible with tackling climate change. Are the demands of supermarkets compatible with tackling climate change? They want fat content to be this or that, and they want the age of meat to be this or that. Might supermarket demands have to change in order to help to tackle climate change?

David Michie

There is definitely something to be done in that respect. There was a question for the previous panel about food production and whether we should be paying farmers to produce food. I think that the market should pay farmers fairly to produce food. All sorts of policy levers can be pulled to enable that, so that multiple retailers perhaps pay a better price or there are more co-operatives. There are ways of addressing the very asymmetric supply chain in Scotland and the UK.

The supermarkets could also do more on climate change. We need to think about how we support land and rural areas and what wider outcomes we get from that—outcomes for which there is, perhaps, no market at the moment. Where there is a market, such as for food, we should ensure that farmers are getting fair payment.

Martin Morgan

The supermarkets are often portrayed as the villains of the piece, but they just reflect what consumers demand. They pass that demand back to their suppliers. It is really a question of educating the consumers, rather than the retailers.

Maureen Watt

You are surely not telling me that supermarkets cannot manipulate consumer demand.

Martin Morgan

I could not possibly comment on that.

Sarah Millar

I agree with Martin Morgan; in my experience, supermarkets reflect what consumers are looking for. On the connection between farms and what supermarkets do, we have not spoken about the fact that farmers in the beef sector are paid according to the EUROP grid, which is a grading mechanism. Legislation will enable us to change that. There is also reference to the potential for bringing in carcase grading for lamb.

Those factors are reflected in payments to farmers. If we can manipulate them, we can produce the products that will go to supermarkets and other routes to market and influence what people do on farms. There is, therefore, a mechanism and an opportunity to look at what to do next, which we definitely welcome.

The Convener

That is very annoying, Sarah. I wanted to ask about carcase grading later.

Sarah Millar

I read your mind.

The Convener

Because Sarah Millar has brought it up, I feel that now is the time to talk about carcase grading. She mentioned its importance, and farmers know how important it is to get an animal ready for slaughterers as quickly as possible and to get the right balance between fat and meat content. Martin Morgan mentioned the importance of supermarkets demanding what they need. If animals have more meat and less fat, that sometimes gives less flavour and requires a higher energy and protein mix, which affects the environment. Sarah Millar suggested that carcase grading needs to change. If the Government wants to do that, how can it make sure that the system works for everyone involved?

Sarah Millar

For me, it is a question of communication throughout the supply chain. QMS did a piece of work called the integrated measurement of eating quality, or IMEQ, project, which I think was completed in 2013. I am getting confirmation from Martin Morgan, because it was before my time. There is a huge amount of data out there. At the time, Scotland led the world in producing that but, since then, there has been a lot of movement in this area around the world in the past few years. Automation of algorithms and artificial intelligence have enabled other pieces of technology to come in that can make good use of that data.

It is a case of looking at other examples from around the world. Meat & Livestock Australia has developed an innovative model, Wales is currently going down the same route and, in Scotland, we probably did 70 per cent of the work years ago. We want to get to the metrics of what consumers want in terms of red meat proteins, and to find out what that approach has done for the climate and for eating quality, and whether it is resulting in a food product that consumers want to eat and driving demand from the sector.

It is a question of communicating with the supply chain so that we all take that forward step together, rather than of the system saying what is right for farmers, which might not be what is right for processors.

The Convener

Indeed. It is a knotty problem to get the right balance between what the end producer thinks is the best margin for them and what is best for the primary producer from the point of view of what is right for the animal, the environment and the time to slaughter. It is interesting that carcase classification is dealt with in the bill, but we will leave that there and move on to the next question.

11:00  

Richard Lyle

I should maybe make a declaration of interests: I am not a farmer but I was a grocer, so I know about the problems that are faced in grocery shops.

Farming is about food production; I thank Martin Morgan, because he has restored my faith in that view. It is also about improving the environment by planting trees and going greener to alleviate climate change. The bill gives the Scottish ministers powers to modify the financial provision in the CAP legislation. Earlier, I talked about doing away with pillar 1 and pillar 2 and looking at the problem as a whole to see how we can resolve it and help farmers and so on.

The bill gives ministers a legal basis for setting the maximum spend on agricultural support; it also enables them to amend how funds are spent or to cap how much money can be paid to an individual recipient. Do you have any suggestions about how the financial provisions in the bill could be amended?

The Convener

Who wants to head off on that? Martin, you are definitely looking the other way.

Martin Morgan

Yes, I am.

The Convener

David Michie was the slowest to look away, so he can answer first.

David Michie

Are you asking about capping?

Richard Lyle

We have a system. Now that we are taking back control—I love that; I laugh every time I say it—what are we going to do? Should we change the system? Should we keep it the same? Will the law allow us to change the system or will we still operate under the EU system? I want you to tell me what we should do.

David Michie

We definitely need to change, but it is very difficult to impose dramatic change in farming. There needs to be a transition, an end point and a clear set of directions.

Given that it is the stated intention of the Scottish Government not to leave the EU and, if we do leave the EU, to rejoin, we should not move too far away from the EU’s common agricultural policy.

The bill enables the current CAP to continue, but it is important to keep an eye on the future CAP, which has subsidiarity built into it. As I understand it, each region or member state will have quite a bit of freedom and flexibility to do what they want, so we will be able to move in our own direction to an extent. There is also much more focus on the environment.

There are nine objectives in the future CAP. Climate change action, environmental care and preserving landscapes and biodiversity are biggies, and it will have higher ambition on environmental and climate action through preserving carbon-rich soils, obligatory nutrient management tools and crop rotation instead of diversification, which, under the EFA and the greening rules, was not perfect.

Richard Lyle

Basically, you are saying that we should make minimal amendments. Has the Government taken on board your views in any way? Have you had discussions with the Government?

David Michie

We can make amendments because of the subsidiarity that is built into the future CAP. If we rejoin the EU, that will allow people to do their own things.

In response to the second part of your question, the answer is yes. We made a written submission to the “Stability and Simplicity” consultation, but I cannot remember having specific conversations with ministers about the stability and simplicity period.

Martin Morgan

I agree that we need to continue the provision of support in the short term. We need a phased approach to a new support model that better incentivises farmers to do what is best for their enterprise and for the environment.

The totality of support is an issue for the Scottish Government as regards what it chooses to spend on all its various priorities, which, in addition to rural issues, include health, education and so on. I imagine that that is a debate for the Cabinet to have.

However, we cannot ignore the fact that farming in rural Scotland is an important part of the overall economy, and it needs an injection of public support to keep it going. We need to think about designing a new system that better delivers real value for money from the support that is directed to the agricultural sector.

The Convener

Richard, do you have any more questions on that?

Richard Lyle

I feel that the excellent witnesses have fully answered my questions.

The Convener

In that case, Angus MacDonald will ask the next question.

Angus MacDonald

Are you sure, convener?

The Convener

Hold on—the clerks tell me that I am mistaken. This is the second time that the clerks have had to pick me up for being wrong. Luckily, it does not happen often in a meeting. I think that I missed out Peter Chapman.

Peter Chapman

I rolled up my question in the previous exchange, so it has been answered.

The Convener

So I was indeed correct—I will accept apologies from the clerks later. The next question is from Angus MacDonald.

Angus MacDonald

I would like to ask about the provisions relating to the common organisation of the markets. Section 5 covers the modification of the CAP legislation on public intervention and private storage aid. It gives the Scottish ministers the power to modify that legislation, which would allow the Government to intervene to support agricultural producers in exceptional circumstances. Of course, we have recently had warnings of the possibility of a collapse in the sheep or lamb market in the event of a no-deal Brexit, which is still on the cards, so intervention might be required sooner than we think. There is therefore concern about those provisions ceasing in Scotland, particularly with regard to any potential volatility as a result of Brexit.

Do you have any thoughts on the provision in the bill that allows the Scottish ministers to modify the legislation on public intervention and private storage aid, including by making it cease to have effect?

Martin Morgan

It is an important tool to have at your disposal in circumstances in which you are required to exercise it. However, it should be exercised only in exceptional circumstances, when there is significant market failure. If we had left the EU at the end of October, the Scottish sheep trade would have been decimated. Fortunately, we did not, so that did not happen, but the threat to the industry is still there. That means that it is wise to have those powers.

Sarah Millar

The other element is that Scotland is part of the wider UK, and what happens in England, Wales and Northern Ireland in terms of private storage aid would impact on Scottish farmers. Therefore, I agree with Martin Morgan that we need to have that provision to enable the Government to intervene, should those circumstances occur—I hope that they do not, touch wood. We also need the ability to work with other parts of the UK to ensure that a Scottish farmer in Dumfries is not disadvantaged in relation to an English farmer just over the border.

The Convener

Before we move on, I have a general question. Do you think that the bill sufficiently covers food safety, animal welfare and environmental standards? Is there a danger that some issues will slip between the two jurisdictions when the bill comes into effect, or are you confident that the high standards that I hope we have at the moment in all those areas will be maintained?

Martin Morgan

In Scotland, we have regulatory frameworks that mirror EU provisions in relation to public health, animal health and so on. I do not think that the bill detracts from the efficiency of those controls, as they are currently applied.

The Convener

You are talking about the industry at the processor end. Are you confident that the producers will continue to meet the standards that the processors require?

Martin Morgan

Yes. These days, primary producers are regarded in law as food business operators, and they have certain legal requirements on them: they must present their stock in a state that is fit for slaughter, the animals must be clean and healthy and so on. If those requirements are not met, a raft of enforcement officials wait to take action. We have the pleasure of having them in our plants every day—which is not the case in other parts of the food supply chain, I might add. We in the red meat processing sector regard ourselves as being highly regulated.

The Convener

David Michie, are you happy with the position?

David Michie

I will talk about the environment. At farm level, there is perhaps a danger of things slipping through. I go back to the intent of the bill and the simplifications and improvements that could be made to get us to where we need to be. The simplification task force put forward some really sensible proposals about having more proportionate penalties when it comes to ear tags and decimal points in land parcel identification, but there is a risk that, if we reduce penalties or change aspects of cross-compliance, that might set a precedent for some of the important environmental cross-compliance that we have. Whichever party is in power or whoever the minister is in 2021, 2022 or 2023 could use that precedent to reduce some of the environmental penalties.

Sarah Millar

I am looking at some of the detail in the bill and there is one provision that I would question. In section 9, “Marketing standards: agricultural sectors”, a number of different sectors are listed, but pig meat and sheep meat have not been included. The list of sectors is referred to in section 8(1)(a), which relates to the requirement to provide information. Going back to the issue of data and the ability to enforce and maintain standards, if we do not have information coming through because pig meat and sheep meat are not included in the list, that is a concern for us at Quality Meat Scotland, because we cover beef, lamb and pork. I picked up on that issue when I was going through the bill.

The Convener

That is useful, thank you. I am sure that we will follow up on that point. The next question is from Emma Harper.

Emma Harper

Section 6 is about the “Power to simplify or improve CAP legislation on aid for fruit and vegetable producer organisations”. Angus Growers Ltd responded to the “Stability and Simplicity” consultation as follows:

“The Fresh Fruit and Vegetable Scheme for horticultural Producer Organisations is a good model to encourage increased farm business involvement in the food chain; it could be extended to other enterprises.”

In its response, the Scottish Agricultural Organisations Association proposed that,

“in the transition period, a new grant scheme is designed, and tested on a pilot basis, which grant aids ‘innovation through collaboration’.”

Do the witnesses have any thoughts on the provisions in the bill that deal with simplifying and improving CAP legislation for fruit and vegetable producer organisations? In your view, what might simplifying and improving the scheme look like?

The Convener

David Michie nodded and then stopped nodding.

David Michie

I can definitely answer a bit of the question. I do not have the technical detail, but I think that, for producer organisations, collaboration and co-operation are incredibly important. I made a point about the price of food and the supply chain asymmetry that we have in Scotland, and there is something really valuable in having that collective power. That should be enabled where possible, as collaborative innovation is a really good thing.

I do not know the answer to the question about the technical changes that could be made to the bill.

The Convener

Sarah Millar also nodded.

Sarah Millar

I completely agree with David Michie. I think that producer organisations could definitely help with some of the challenges that we have seen in the red meat supply chain, and ensuring that the technical legislation is right in that regard is key. At the moment, I think that the legislation sits with DEFRA, although I could be totally wrong, as I am not well versed in that area—Martin Morgan may know more. However, I agree with any approach that increases collaboration and communication in the supply chain.

The Convener

Martin Morgan nodded as well.

Martin Morgan

We are also in favour of greater collaboration in supply chains, not only horizontally, but vertically. We would like assistance to be made available to support the links in the supply chain—feeding up from the primary producer to the processor, the manufacturer and the retailer—which would help to drive out inefficiencies.

Emma Harper

That brings me to a quick supplementary question, which is on the back of Maureen Watt’s comments about supermarkets. We are talking about producers, processors and retailers. Milk is a loss leader, and it has been suggested to me that if we put 3p on a litre, one penny could go to the farmer, one penny to the producer and one penny to the supermarket. Right now, dairy farmers are really challenged by the volatility in the milk market. Forty-eight per cent of dairy farmers are in the south-west of Scotland. If we looked at taking a co-operative approach, could the bill help to support those farmers and stabilise the market?

11:15  

Martin Morgan

Yes, it could. I am aware that, three or four years ago, the SAOS helped to set up a new producer group in the south-west, which has been a great success in improving things. Ordinary dairy farmers are doing what we have talked about already—sharing information and best practice, learning from one another and making their businesses more profitable. They are also able to negotiate with the dairy company from a position of strength, rather than individually. That has been a great success—we need to see more of it throughout Scotland.

The Convener

I will bring in David Michie to answer briefly, because it was quite a specific question.

David Michie

I am not sure, but perhaps the legislation in other EU countries is easier. In France, for example, there are incredibly powerful co-ops and the price of milk is much higher than it is here and much more stable—it does not have that volatility. France is part of the EU and the CAP, so whether legislation is needed to do that is questionable.

Maureen Watt

I have a follow-up question. The Scottish Government has stated that the bill provides powers to revoke the EU food promotion scheme following EU exit because the Scottish Government can provide the same support via domestic means. What are your thoughts on the potential revocation of that scheme? Do you agree that the support can be provided by other means? That question is probably for QMS.

Sarah Millar

The nuance of the current situation is that only member states can apply to the EU food promotion scheme, so, as I understand it, Scotland cannot apply directly to the scheme at the moment. However, QMS, alongside other organisations, has previously benefited from those moneys. The Scottish Government has supported us over the past few years, particularly in relation to our marketing activities. For example, £200,000 was announced this year to supplement the hugely successful “Scotch Lamb, Naturally” campaign—I do not know whether anyone was in Glasgow on Saturday and saw samples being given to thousands of Argyle Street shoppers. The evidence suggests that support can be provided without that EU scheme.

The Convener

Perfect. Does Martin Morgan want to come in on that?

Martin Morgan

Yes. Support for promotion is obviously a good thing, particularly if you have a brand such as “Scotch” to promote and protect. It is a very competitive market out there, so anything that a business can do to raise its profile with the consumer is beneficial.

Jamie Greene

I was on the Isle of Cumbrae on Saturday. If I had known that they were giving away free lamb in Glasgow, I would have moved my street stall there.

I will ask about marketing standards. Sarah Millar alluded briefly to the absence of certain categories, but section 8 of the bill allows Scottish ministers to amend the marketing standards for products that are sold in Scotland. That needs to be considered in the context of the UK Agriculture Bill, which may or may not be re-presented when a new Government takes office. Do the witnesses have any concerns about, or comments on, the potential divergence between marketing standards in Scotland and those in the rest of the UK, if the Scottish Government chooses to align with EU standards rather than any divergent UK standards?

The Convener

That is probably for Martin Morgan or Sarah Millar. Who would like to go first?

Martin Morgan

It could be a double-edged sword. Marketing standards can become too prescriptive and introduce extra costs for no real benefit. The other side of that coin is that they give uniformity, so businesses are matching up to the same standards as their competitors—they are competing on a level playing field.

Sarah Millar

On what the technical detail means in reality, I referred earlier to the ability to amend the EUROP grid and bring in specific carcase-grading specifications. In Scotland, we are looking to produce products that suit our Scottish consumers or for which we have identified that we have an export market.

The ability to not utilise genetically modified organism technology is implied in section 8(2)(f). Wherever anyone sits on the two sides of the debate on that, if there was divergence from the UK approach, that could cause issues for Scottish consumers. That goes back to the supply chain and looking at where inputs come in. For example, if a cattle farmer in Aberdeenshire bought in feed that included wheat that was grown south of the border, where a different policy or legislative base allowed GMO production, there could be a cost to the Scottish farmer. There needs to be a bit of thought about that specific issue and how those areas interact.

Jamie Greene

How much Scottish red meat is sold in Scotland versus the amount that is sold in the rest of the UK and Europe? Will you give us some context, as it is quite hard to picture how a policy misalignment would affect the market?

Martin Morgan

I do not have the statistics on that, but perhaps Sarah Millar does.

Sarah Millar

They are not in my brain at the moment, so I cannot give the committee an honest answer. I could come back to the committee on that, although it is not my specific area of expertise. From memory, I think that around 80 per cent of produce remains within the United Kingdom, but I could not say what the split is between—

The Convener

It would be helpful if you could let the clerks have those figures in due course.

Martin Morgan

More lamb than beef certainly goes to Europe. I think that around 30 per cent of our lamb output goes to mainland Europe and that 80-plus per cent of our beef stays within the UK market.

The Convener

Figures from Sarah Millar would be useful.

Jamie Greene

I asked that question to give us some context. We are looking at the powers that the bill confers on the Scottish ministers to go in a different direction or to align with standards that are different from those of the UK Government, and it would be helpful to know whether that would have an effect on the ability of Scottish red meat producers to sell into the internal market, which seems to be the largest market currently.

Was the industry consulted on the provisions in that part of the bill? If not, how would you like to be consulted on the regulations if the Government wanted to make such changes?

Martin Morgan

We were asked to respond to the first consultation and we did so. Obviously, we have seen the bill, and we are involved in a variety of stakeholder groups that the Scottish Government has organised in which such issues are discussed. Those groups meet regularly. The level of Scottish Government engagement and consultation that we have experienced has been satisfactory.

Sarah Millar

I agree with Martin Morgan. QMS is a non-departmental public body, so we are at arm’s length from the Government, but we have been involved in multiple stakeholder groups. We also work directly with ministers at times. The consultation has been adequate, and we will feed into the consultation that is live at the moment.

The Convener

Does David Michie want to add anything about the consultation stage?

David Michie

No.

Stewart Stevenson

I have a very small question. I want to put it on the record that we thought that section 8 sets minimum standards and that, because we as a country essentially produce products that compete on quality and not on price, minimum standards help the industry as a whole. In particular, I point to—as I have done elsewhere—the Immature Spirits (Restriction) Act 1915, which eliminated from the market whisky that was less than three years old and set an international understanding of our quality product. Is that section taking us in that general direction?

Martin Morgan

It certainly looks like it.

The Convener

I see the witnesses nodding.

John Finnie

I have a couple of questions, the first of which is for David Michie. Do the provisions on marketing standards—or any of the other provisions—have implications for organic production, processing and marketing?

David Michie

I do not know. All our organic standards are based on an EU regulation. I guess that it comes down to the trade agreement and the common framework arrangements. Things are just uncertain at the moment.

John Finnie

My second question is for the whole panel. What are the implications for consumers of the power that the bill would grant Scottish ministers to change marketing standards?

Sarah Millar

As Martin Morgan mentioned, there are regulations that specifically relate to food safety, so I have no concerns about consumers in that regard. Given changes to carcase and market classifications in particular, the proposal gives us a greater ability to produce products that consumers value.

The Convener

I do not see any violent disagreement with that view. Colin Smyth will ask the next question.

Colin Smyth

Part 2 of the bill includes provisions on the collection and processing of agricultural data. Do the witnesses have any reflections on that part of the bill? Will it mean that the right data is collected? Is it future-proofed?

Martin Morgan

The objective is laudable, but what is going to be done with the data? What is the purpose of collecting it? What benefit will collecting it bring? Could it be shared with the wider industry so that people are able to pick up on best practice?

A key feature of the beef efficiency scheme, which is part of the current rural development programme, is the collection of data on DNA, genetics and so on. As far as I am aware, that data is currently being analysed, and the intention is to cascade it. Obviously, that would be a good thing, but it does not seem to be happening quickly.

David Michie

It is perhaps a question of getting the balance right. Data needs to be collected so that we know what is happening, but we do not want to overburden the industry. Thought must be given to the questions that you ask so that you can be sure that the information that you get will help to inform decision making in the right way.

Sarah Millar

I will mention something that I have already talked about—I apologise if I sound like a broken record. There is an issue with communication throughout the supply chain. QMS makes use of the statutory price reporting and puts that information out to the industry. It would be helpful if we were able to collect other market information, such as data relating to carcase weights and fat grades. If we had that information, we could work with organisations such as ScotEID, which is the Scottish farm data centre—that is a simplification of its role—to improve supply chain communication in a way that would be valuable to farmers and processors.

The bill provides for the provision of information to someone

“who may be a person other than the Scottish Ministers”.

I think that that makes that clear.

The Convener

“The Farm Management Handbook” is a useful guide to what the best and the worst are doing across Scotland. That seems to be a good way for farmers and producers to see what is going on. Are such books a useful way forward, and would you promote them?

Sarah Millar

Absolutely. QMS provides enterprise costings every year. That involves providing datasets on different enterprises at different levels, which consultants and farmers can use as a benchmarking tool. I would like to see that become more of an automated process. You do not need to legislate for that information to be provided—we can work with individuals and organisations on that, as we already do. However, it would make things simpler, at a macro scale, if we could get some automation around those data pieces. We talk about automated benchmarking, which would enable us to compare farms of similar types, even if they are in different regions or locations—as we all know, no two farms, even if they are in the same area, will be the same. It would be useful to be able to compare apples with apples, and introducing the automation that I am talking about would enable that, as long as it was used in the correct way.

David Michie

Benchmarking is important, and it fits into enabling change. With regard to where we want to be at the end of 2024, we absolutely want to build resilience in the sector. There needs to be an improvement in financial literacy, and what we are discussing is a key part of that. We need to know where the industry is at the moment.

As an adviser, I used to collect enterprise costings for the QMS booklet. That was probably not the best way of doing things, and I think that there is probably something that we could do through the provision of data to get a good picture of where farmers are at the moment, which would help us to enable them to build in the resilience that they need in order to get to where we need to be. Benchmarking also includes environmental benchmarking. We should not think only about the economics; we must think about the wider context, too.

Martin Morgan

I am a city boy born and bred, so I really do not know much about farming. However, I am told that farmers are naturally inquisitive about what their neighbours are up to. Any tool that enables them to find out how they can get better is to be commended.

The Convener

I am sure that farmers are not competitive and would never try to outdo their neighbours. That might be a good point on which to draw this session to a close. I thank our witnesses for giving evidence. We will now move into private session to consider what we have heard today.

11:31 Meeting continued in private until 11:50.  

The Convener (Edward Mountain)

Good morning, and welcome to the 35th meeting in 2019 of the Rural Economy and Connectivity Committee. I ask everyone to ensure that their mobile phones are on silent.

The first item on the agenda is consideration of the Agriculture (Retained EU Law and Data) (Scotland) Bill at stage 1. Before we go any further, I invite members to declare any relevant interests. I declare that I am a member of a family farming partnership.

Peter Chapman (North East Scotland) (Con)

Likewise, I am a member of a farming partnership.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I am a joint holder of a very small agricultural holding, from which I derive no income.

The Convener

This is the committee’s fifth evidence session on the bill. Today, we will take evidence from representatives of the agriculture industry. I welcome Jonnie Hall, the director of policy at the National Farmers Union Scotland; Lizzy Baxter, an NFU Scotland next generation representative, who sits on the NFUS next generation committee; Yvonne White, the chair of the Scottish Crofting Federation; Christopher Nicholson, the chairman of the Scottish Tenant Farmers Association; and Eleanor Kay, the policy adviser on agriculture and forestry for Scottish Land & Estates.

I know that you are all practised at giving evidence, and that you have been told that the microphones will come on automatically without you having to push the buttons. I usually say that if a question is asked and everyone looks away, the last person who looks away will be the person who has to answer the question. However, there is no point saying that today, because Jonnie Hall never looks away and always tries to get in first, so everyone is quite safe. If you want to speak, just try to catch my eye and I will bring you in. Once you start speaking, do not look away, because there might come a time when I am trying to bring someone else in and will need to indicate to you that you are coming to the end of your time.

Peter Chapman will ask the first question.

Peter Chapman

The Scottish Government’s position is that there should be a period of stability and simplicity running to 2024, during which not a lot will change, although there might be some minor changes. Is that the correct way forward? Does the legislation reflect that approach?

The Convener

Who would like to lead off on that? I see that Jonnie Hall is indicating that he would like to speak. There is a surprise.

Jonnie Hall (NFU Scotland)

I would not like to disappoint you, convener.

The Convener

You never do.

Jonnie Hall

First and foremost, the bill is absolutely necessary. That is widely accepted. We need the bill in order to provide the continuity element of the stability and simplicity agenda that the Scottish Government has set out, so we welcome the bill. It will provide a degree of certainty in the short to medium term.

The bill is enabling legislation—it is all about providing powers to the Scottish ministers. In itself, it does not set policy. That is where there is a bit of a grey area between the bill and what future policy should look like. Although the bill is an important stepping stone in the interim, it is not where we finally need to be. That is particularly the case now that it would appear to be almost certain that we will leave the European Union on 31 January, with an increasing likelihood of an implementation or transition period until the end of next year. Therefore, from January 2021, we absolutely need legislation in place that will enable the Scottish Government to continue to do the things that it currently does in terms of the current payments under the common agricultural policy while it tweaks those procedures and rules in order to provide some simplification and starts the process of developing future policy through the pilot schemes up to 2024.

Peter Chapman’s question relates to the question of whether the Government is moving fast enough and going far enough in terms of the policies that the industry requires. We have serious concerns that it is not, because we view the next decade as being extremely challenging for Scottish agriculture, not only in terms of underpinning the growing food and drink sector, but, equally and importantly, in terms of tackling major issues such as climate change and what Scottish agriculture will be requested or required to do over the next decade. There is a strong argument that things need to happen sooner rather than later, in terms of delivering a fundamental change in how we underpin farming and crofting in Scotland. Therefore, there is a debate to be had about whether the Government is moving fast enough.

Peter Chapman

The question is exactly as you put it. There is a danger that, if we do not change much more quickly between now and 2024, the industry could be in quite a difficult position with regard to the major change that is coming down the road because of Brexit and climate change, to name just two issues.

Eleanor Kay (Scottish Land & Estates)

The bill certainly provides the ability to deliver stability and simplicity, but it is right to say that the point of the transition period is that we know what we are moving towards. Although we know that the bill enables pilot schemes to be run, we have no clear, defining guide to what it is that we need to be testing and trying out, and we do not know where we are going. We probably have a bit more certainty because we now know that we are almost certainly going to leave the EU, and we have some pretty strong campaign promises from the current Government around future funding guarantees. That means that we have more certainty than we did when the bill was written.

We are in a slightly different situation from where we were when “Stability and Simplicity: proposals for a rural funding transition period” was published. For example, the climate emergency had not been declared, so we had not started that conversation. However, that situation has moved on extremely quickly and the bill perhaps needs to be considered again in that regard. Equally, we do not know what the simplifications will be. We have not yet had a report from the simplification task force, which means that it is tricky to know what the modifications that are now possible under the bill could be.

Christopher Nicholson (Scottish Tenant Farmers Association)

The bill appears to be fit for purpose, and it is necessary that it be passed to enable the continuation of EU law and to ensure that that law can be maintained and amended. As Jonnie Hall said, there is a lack of clarity about future policy, but I think that at this stage it might be difficult to decide future policy, given that there is not yet a United Kingdom-wide framework and we do not yet know the nature of the trade deals that the UK will have with the EU and other trading partners, which might well set standards and affect how future policy might be implemented. However, it is vital to have this legislation in place for the transition period, and it looks as though it is sufficient for that.

There are some questions and concerns about the extent to which the bill might be used to make significant changes to policy without scrutiny by Parliament or wider stakeholders, but I do not think that that is what it is meant to do.

The Convener

We will address that specific point later.

Peter Chapman

Is the proposal that nothing much should change until 2024 the correct way forward, or do you agree with me that we need to move much more quickly than that?

Christopher Nicholson

My understanding is that the date of 2024 is not set in stone. We need a transition period, but 2024 is five years away, and I agree that we may need to move more quickly than that with the new policy. Perhaps some of that change can be achieved through the bill.

Yvonne White (Scottish Crofting Federation)

The bill appears to be a bridge to bring back the EU legislation and hold it in the Scottish Government. It is the next step that will be the most interesting one. We need the bill in order to get a fit-for-purpose agriculture policy.

On Peter Chapman’s point about stability and simplicity, that appears to be a contradiction in terms. How can we make something simple yet have stability? I do not know; perhaps someone, somewhere can throw light on that and help me to understand it.

Mr Chapman mentioned timeframes. It is imperative that the Scottish Government is fleet of foot. Anything that is put in place needs to be robust. Eleanor Kay asked whether the “Stability and Simplicity” document is robust enough. A lot of work needs to be done quite quickly, although I appreciate that civil servants are probably up to and over their ears in work because of this Brexit business. There is a danger, but there are also opportunities to carve out something that is more progressive, modern and up to date and that fits the constituent agricultural parts of Scotland. On the one hand, we have a great opportunity if people are brave and creative enough to take it but, on the other hand, there are the threats that Christopher Nicholson mentioned about trading terms and so on.

Lizzy Baxter (NFU Scotland Next Generation Committee)

I completely concur with everything that the panel members have said. I pretty much concur with everything that Jonnie Hall said.

The Convener

I think that one of the points that has been raised might relate to Mike Rumbles’s question.

Mike Rumbles (North East Scotland) (LD)

I am supportive of the bill, as I think everybody is. However, it is about a transition period, until we get to the meat of the new bespoke policy for Scotland. Our job is to interrogate the bill, and I want to focus on section 3, which says:

“The Scottish Ministers may by regulations”—

so not through primary legislation—

“modify the main CAP legislation for the purpose of securing that the provisions of the legislation continue to operate in relation to Scotland for one or more years beyond 2020.”

John Kerr, the head of agriculture policy for the Scottish Government, told us in evidence:

“We have not ... included an end date because we do not yet know when we will be in a position to have our new primary legislation in place.”—[Official Report, Rural Economy and Connectivity Committee, 20 November 2019; c 7.]

My concern, and that of other witnesses in previous sessions, as I am sure that you have seen, is that, if we do not modify section 3 and include an end date, because the wheels of Government and Parliament move slowly, we could go for years in a transition period, and the bill would allow that. What do you think of that?

Christopher Nicholson

I can see that the bill could be misused—for want of a better word—for that purpose and that policy changes could continue to be made for a long period without consultation. However, I do not think that that is the purpose of the bill. The purpose is to allow continuation for the transition period. However, I imagine that stakeholders may want reassurance. To give just one example, from reading the bill, I am not sure whether there is any limit on the transfer of funding from pillar 1 to pillar 2. If significant funds were transferred from pillar 1 to pillar 2, that would be a massive change in policy. I am not a lawyer, so I do not know whether there is a limit on that in the bill.

10:15  

The Convener

Christopher, you seem to be very good at picking up points that other people are going to raise. We will leave pillar 1 and 2 payments for the time being.

Eleanor Kay

Mr Rumbles is absolutely right. We share other stakeholders’ concerns about the bill’s unlimited duration. The ability to continue essentially papering over the cracks is quite a concern. The Committee on Climate Change recently said that we need to move quickly to implement transformational change, but continuing to make minor modifications to retained law does not really allow us to do that. I am not sure whether you would want to commit to a five-year timescale and put 2024 in the bill, but it would definitely be welcome if there were an end point or a point of review.

Jonnie Hall

Some sort of sunset clause, which is what we are talking about here, would be advantageous, but the time limit needs to be thought out very carefully. If you put a limit on the powers in the bill, say to the end of 2022, significant work would require to be done to ensure not only that a policy direction for Scottish agriculture had been agreed by then, but that the measures and administration systems around that were in place so that that policy direction was effective.

We all aspire to a new agriculture policy. We are all hungry for that change to happen in order to meet the challenges that we face over the next decade, but we need to be careful to ensure that the implementation of that policy is, to use Christopher Nicholson’s expression, fit for purpose. We would not want the continuity and certainty of the bill’s provisions to end and find that future schemes and so on are not ready to operate in practice. That would leave us in a very tricky situation indeed. We would very much support it if something were put in place that would require change sooner rather than later, rather than an open-ended situation.

In my opening comments, I questioned whether the bill goes far enough. Equally, though, does it go fast enough? My biggest concern is 2030. It is a decade away, but we all know that, in farming and crofting terms, a decade is nothing at all. If we are going to address the challenges that we have to address, we need to be given the tools to do so, and that requires a significant change from the current policy regime that we operate under.

Mike Rumbles

We have touched on the fact that the bill gives the Scottish ministers powers to simplify and improve the operation of the CAP, which is what we are all interested in seeing. The point is that one person’s idea of simplification and improvement may not be somebody else’s idea of simplification and improvement. The bill says:

“The Scottish Ministers may by regulations modify the main CAP legislation”.

What does that enable the Scottish ministers to do? That is the worry that I am articulating. The next elections are in 2021. I very much support the bill and the policy intention, but the law that we are about to pass may allow any future Government to operate a new system. That is my concern. Is it shared by the panel?

The Convener

Yvonne, do you want to go first? You wanted to answer the previous question, too, so I will let you tie them together.

Yvonne White

As Mr Rumbles points out, as it stands, the power in section 3 of the bill will be available in perpetuity. There is a fine line. The bill is necessary, but there are concerns about the CAP legislation continuing to operate in perpetuity. However, I recognise that it is difficult to specify a date, because there are so many external factors in play. It is possible that there are constitutional lawyers who could insert some clever caveats that would give comfort to people with regard to an expiry date.

Mike Rumbles

I want to ensure that there is no misunderstanding about what we are talking about in legislative terms. If the minister or anybody else came up with an amendment that would limit the operation of the CAP legislation to 2024, that would not limit the policy to 2024; it would simply say that the Government had to legislate for a new system by 2024. Jonnie Hall mentioned a period of 10 years, but we are talking about the view that the date of 2024 should be in the bill so that the Government of the day can say, “We are consulting stakeholders and Parliament on legislation for the new system,” which we hope that everyone will agree to. That is the point. Such a provision would not say that the new system had to be in place by 2024.

Yvonne White

There needs to be a timetable—a timetable is necessary for anything to be delivered and to be effective. The bill needs to be delivered so that we can get to the next stage of creating a new agricultural policy for Scotland.

Jonnie Hall

If we are talking about introducing legislation by such a date and enacting legislation by such a date, it would be clear what was required, but my concern is about how that legislation would be implemented and any potential gaps that we might expose ourselves to. A policy can be agreed and we can pass legislation, but recent history tells us that the implementation of that, along with all the systems that would be required, remains a risk. I am not saying that it is a probable risk, but it is a risk, and we need to be cautious about that.

I want to come back to the question about simplification and improvement. For my sins, I sat on the Scottish Government’s simplification task force. I think that the bill, which will give the Scottish ministers powers to tweak some of the CAP legislation from 2021, can be used to everybody’s advantage so that Governments, Government agencies and farmers and crofters will benefit. We can have simplification on things such as mapping, penalties and inspection processes, but the move from simplification to improvement is a slightly grey area. I agree that the interpretation of “improvement” involves looking at policy rather than operation. Simplification is all about the operation of existing schemes—that is what we are talking about when we talk about simplification. We are looking at the current CAP rules and how they can be made to work better in Scotland through the bill; we are not necessarily looking at how we can change policy to use taxpayers’ funding to deliver different things and achieve different outcomes. There is a difference between simplification and improvement.

Jamie Greene (West Scotland) (Con)

I have a quick follow-up question for Mr Hall.

At the moment, section 2 of the bill, which is on “Power to simplify or improve CAP legislation”, is very short. It consists of three simple sentences, the second of which says that ministers can make modifications

“that they consider would simplify or improve the operation of the provisions of the legislation.”

Will you be suggesting alternative wording, if you think that that is inappropriate? Subsection (3) says:

“Regulations under this section are subject to the negative procedure.”

Do you think that that provides for enough parliamentary scrutiny of such changes?

Jonnie Hall

That is an important point. In our written submission, we raised the difference between negative and affirmative resolutions. It is about how ministerial powers are exercised.

We are talking about a significant number of potential simplifications of mapping rules, inspections and penalties in the short term, and they probably require wider consultation before decisions are made rather than decisions being made unilaterally by ministers. Scrutiny by the likes of this committee is then required to ensure that the objective of improving the situation for farmers and crofters as the claimants and recipients under the schemes that we currently have will be delivered.

I am concerned about the procedural side of what the bill implies.

Eleanor Kay

The issue has been pretty well covered by Jonnie Hall and by Jamie Greene’s question. I wonder whether the negative procedure is sufficient for the scrutiny of things such as improvements and even for some of the simplifications.

The Convener

We will come on to that in a minute.

Mike Rumbles

I have one final point. My concern about regulations rather than primary legislation is not to do with parliamentary scrutiny. We can have as much parliamentary scrutiny of regulations as we can of primary legislation. The issue with regulations is that the minister of the day decides what the system and the rules will be. They will bring regulations to Parliament, members can say only yes or no, and the pressure to say yes is incredible.

Stewart Stevenson

That is my question.

Mike Rumbles

I am sorry; I was following on from Jamie Greene’s question.

The Convener

Does Stewart Stevenson want to follow that up with his question? I know that he is also concerned about the level of scrutiny.

Stewart Stevenson

Colleagues are beginning to make the point, and I think that we have a shared view. I have heard Eleanor Kay and Christopher Nicholson say that the negative procedure does not permit scrutiny, and paragraph 14 of the NFUS’s submission says that the bill

“does not allow scope for parliamentary scrutiny.”

I invite colleagues on the panel to look at the second item on today’s agenda, which is scrutiny of a negative instrument. I wonder where the idea that there is no scrutiny of negative instruments comes from. I have just heard Jonnie Hall say that ministers can unilaterally change the law. I do not know where that comes from. I am sure that it comes from somewhere, and I would like to know where, because there is no secondary legislation in the policy area that will not come to the committee for scrutiny. I wonder where colleagues at the other end of the table get that idea from.

Eleanor Kay

Mike Rumbles made the point that members can say only yes or no. You can debate regulations and point out where you disagree but, ultimately, it is a yes or a no. We can get involved with a lack of scrutiny and say what we think needs to happen. That is much harder under the negative procedure.

Stewart Stevenson

Why?

Eleanor Kay

It just seems to be much harder for us to scrutinise—

Stewart Stevenson

It should not be. There are consultations on secondary legislation that can change policy, just as there are on primary legislation.

If our witnesses are saying that there is a problem, I am trying to understand what it is. Is there a problem because the way in which the Government interacts with stakeholders in making secondary legislation is not fit for purpose?

The Convener

To clarify, the Government is supposed to consult on negative instruments before they come to the committee, and the industry can feed in to the Government as part of that process. It is up to members to lodge motions to annul if they are not happy with instruments. The point that Stewart Stevenson is making is that you are suggesting that the Government is not consulting sufficiently prior to instruments being lodged. Is that right, Stewart?

Stewart Stevenson

My point is drawn a bit more broadly but, in essence, that is what it concerns. I should also say that there is no legal requirement to consult, even on primary legislation, where there is no policy change. Indeed, the instrument that we are to consider has not been consulted on because it involves no policy change.

The Convener

In fairness, when other panel members are answering, it is up to them to say whether they would be happier with the other system.

10:30  

Stewart Stevenson

I want to be clear about the point that I am pursuing. I think that I am hearing panel members say that the present system for creating secondary legislation does not provide adequate opportunity for stakeholders to come in. I just want to tease out a bit more what creates that feeling, so that we can say to the Government, “Here is something that you need to do.” I do not think that the issue is one of scrutiny as such.

Jonnie Hall

I suspect that that is a grey area. That takes us back to Mike Rumbles’s point about the definition of what would be a simplification in everybody’s interests and what might be assumed to be an improvement.

It is clear that the Scottish Government is—quite rightly, I think—looking to move from simplification to improvement. That is the language that it uses in that context all the time. However, we must ask: improvement in what sense? As stakeholders, we want to be absolutely involved in the process from the outset. What instigates that? Is it an improvement that is to the benefit of administrators or to the benefit of farmers and crofters—or both, ideally?

Stewart Stevenson

So the process that concerns you is the consultation process.

Jonnie Hall

Yes.

Stewart Stevenson

I think that we can lay the question of the scrutiny process to rest. All legislation—whether negative, positive, primary or secondary—is scrutinised.

Jonnie Hall

That is the function of the institution that is the Scottish Parliament.

Stewart Stevenson

Yes—sure.

Mike Rumbles

I just want to add something. I gave way earlier to Stewart Stevenson, because it was his question. The important point is that we are not worried about there not being enough scrutiny. If the committee decides that it wants to scrutinise regulations, it can do so—that is not a problem. To go back to my question, we can change what the Government wants to do only if we are dealing with primary legislation. There must be hundreds of regulations that go through basically on the nod, even if we have scrutinised them. No one wants to prevent something from happening if there is tremendous pressure for change and, if the Government says that something needs to be done, we tend to support that.

For me—and, I am sure, some other committee members—the issue is section 3, which goes down the route of changes being made by regulation rather than by primary legislation. I go back to the point that I made at the start of the meeting. Perhaps you would confirm whether my understanding of your position is correct. I am glad to hear that you support putting in a date for primary legislation to be introduced. Otherwise, the bill would allow whichever Government was in power in the future to continue to go down the regulation route for as many years as it wanted to, as opposed to introducing primary legislation.

The Convener

I noticed a few panel members nodding their heads. Does anyone disagree with that? I say that so that your positions are clear. A nod of the head cannot easily be put on the record.

Jonnie Hall

I absolutely agree with Mike Rumbles’s last point.

The Convener

Does anyone else want to say yea or nay to that?

Eleanor Kay

I agree.

Christopher Nicholson

Yes, I agree. For future policy, after the transition period, we need primary legislation.

Colin Smyth (South Scotland) (Lab)

I simply want to check that panel members do not disagree that the improvements need to start happening between now and the next round of legislation coming through in 2020. We cannot simply wait until then. The improvements need to happen—it is just a case of having a process for ensuring that there is proper consultation on them. Is everyone agreed that they need to start happening now? We cannot say that the issue is purely one of stability and then have a new policy in 2024.

Jonnie Hall

Absolutely. The whole process needs to be—

The Convener

Hold on, Jonnie. Yvonne White indicated to me first that she wanted to come in.

Yvonne White

I think that we all agree that the improvements would need to be agreed. That can be quite a long process, and the changes have to be implemented correctly and efficiently. I note that any changes or improvements—those are not defined in the bill, and that is making people a bit nervous—would need to be subject to legislation. My experience is that, even for small things, that can take a long time.

The Convener

As no one is indicating that they disagree with Yvonne White, we will move on to the next part of Stewart Stevenson’s question.

Stewart Stevenson

My question is on a different subject. We will move on.

Where will we go in future? Clearly, the policy is aligned in a single EU framework. To what extent should we retain that position once we are outside the EU? There might be reasons for doing that.

We do not know about the overarching framework for the UK and the different Administrations of the UK. To what extent does the bill enable or inhibit areas where implementation may be different in different jurisdictions? What do people think about whether the bill—that is our sole concern today—will enable or inhibit proper differences between the Administrations and whether it will enable our working in a common framework, given that that is what we will have to do?

Jonnie Hall

That is an incredibly important question. Fundamentally, agricultural policy is devolved. As you know, we have four different CAP settlements across the four devolved Administrations of the UK. That is quite right, because it reflects the different agricultural profiles and needs of the devolved nations. However, we also operate in an internal UK market and, currently, an internal EU market. Therefore, the standards that underpin agriculture practice are common. There is a grey area between, on the one hand, the delivery of agricultural policy and the means and tools by which farmers and crofters are incentivised to do certain things in order to achieve certain outcomes and, on the other hand, maintaining a standard of operation—the rule book—in order to prevent any destabilising of the internal market. That aspect will be very important.

With the UK leaving the EU, it is imperative that we have commonly agreed—it is really important that things are agreed in this context—regulatory frameworks on agricultural operations, issues such as pesticide use and environmental standards, and animal health and welfare issues. Those areas must be regulated on a UK-wide basis. Thereafter, it is about how different devolved Administrations implement measures to support or incentivise farmers and crofters to do different things in different places. Clearly, we have seen a different trajectory from the Department for Environment, Food and Rural Affairs for England, and we also know that the Welsh Assembly Government and the Northern Irish are doing very different things. Scotland must have an ability to develop and implement its own agricultural policy, but that has to be in a common framework.

The bill potentially undermines some of that by giving powers to ministers to set different rules on, for example, carcase classification and marketing standards. That concern is almost the polar opposite of our concerns about the UK Agriculture Bill. Under that bill, which was introduced at Westminster in September 2018, there is the potential—I am not saying that this power would be used—to operate in a different fashion in Scotland as opposed to the rest of the UK. I think that other committees in the Parliament have raised that point.

Stewart Stevenson

May I tease that out? We will come back to carcases; the convener will quiz you on them.

On standards, you referred mostly to standards for how we do things. The example that I wrote down before you gave your list was slurry, on which there are standards. However, there are also standards for the outcomes that we deliver, such as standards that need to be met with the products that we produce. I take it that, when you mentioned standards, you were talking about both kinds.

Jonnie Hall

Yes. I meant both standards for agricultural activity or production methods and standards that are attached to the products that are then sold into the market.

Stewart Stevenson

However, you are looking for policy and practice that reflect the different geographies and the different agricultural products that are produced in the various jurisdictions. You are saying that we must retain that flexibility.

Jonnie Hall

We need the flexibility to deliver schemes that enable farmers and crofters to do things differently in Scotland. That is not about the practice or the rules by which people operate, but how they are supported should absolutely be devolved, as it is currently.

Yvonne White

I echo that. It is important that agriculture in Scotland continues to be devolved.

Christopher Nicholson

I reiterate that. Scotland is always going to be better off with its own unique policy. Within Scotland, there are different regions with different requirements, and we need to keep that flexibility. Scotland should not have a one-size-fits-all agricultural policy.

The Convener

The deputy convener, Maureen Watt, has a question.

Maureen Watt (Aberdeen South and North Kincardine) (SNP)

Good morning. I want to pick up Jonnie Hall’s point about the importance of UK-wide standards. Scotland relies on high standards in order to sell its quality products. Let us say that, for whatever reason—to please the Americans, perhaps—one of the four nations decided that standards should be lowered. You are not saying that we should go down that route, are you?

Jonnie Hall

Absolutely not. That takes us into the argument that we have been making for the past three years. Any agricultural framework in the UK post our departure from the EU must be commonly agreed, and the governance of those standards cannot rest with the secretary of state at DEFRA. We have said that time and again.

On standards and imports, we have also said time and time again that, if we are talking about new trading arrangements with non-EU countries, which I think is what you inferred, nothing that it is currently illegal to produce here should be allowed to come into this country. We need to maintain our standards at the threshold that they are at now, if not improve them, because that is what sells our product.

The Convener

Lizzie, you are nodding. Do you want to add to that?

Lizzy Baxter

I work pretty much on the ground—I am a farm secretary and I also work at home on the farm. From that perspective, I agree with what Jonnie Hall said. We need the same standards to be met across the board, but if they were to be lowered in other countries, we would still want to have those high standards through the Scottish labels for beef, lamb and pork. We have those labels and the standards that are attached to them, and farmers understand those standards because they have been working with them for so long. Keeping things simple and having that continuity is the best option.

Stewart Stevenson

I have a final question on that. We could probably discuss the subject for another two hours, but I think that one-sentence answers would be desirable. The NFUS submission does not say to what extent we will need to remain aligned with the EU rules. If we are going to export to the EU, we will have to conform to its rules. To what extent will it be useful to retain alignment with those, or have we identified areas where it would be useful to diverge? Given that we are discussing the bill, to what extent does it either inhibit or aid our doing that?

10:45  

Yvonne White

My one-word reply to that is totally. My three-word reply is totally and utterly. [Laughter.]

Jonnie Hall

I will use slightly more than three words. The question was raised directly with NFU Scotland. As we have said throughout the piece, if we wish to retain our trading arrangements under whatever agreement we get with the EU, we will almost certainly have to operate to the same standard or to an equivalent standard that is agreed by both parties. That will be absolutely necessary. I echo what Yvonne White just said—we must not erode that in any way.

The Convener

Before we move on, I have a question, to which you can give a simple answer.

I have yet to meet a farmer who wants to reduce the current high standards of production; I have certainly not met any such farmer when going around Scotland. I assume that the general feeling of the panel is that we have very good standards and that it is imperative that we keep them. Everyone is nodding.

Jonnie Hall

I put one rider on that. Nobody wants to erode the standards, but there is scope in the bill to address how we manage those standards when it comes to the inspection process, the proportionality of penalties and the mapping issues, which we have concerns about. There is absolutely no problem with the standards themselves, but how they are enforced and regulated is another matter entirely. That is where the bill could add value.

Richard Lyle (Uddingston and Bellshill) (SNP)

Our paper contains a number of quotes on rural policy development. For example, the NFUS said:

“NFU Scotland considers that the Scottish Government’s ambitions do not go far enough. Stability and simplicity in the here and now are important. But it is vital that the opportunity is grasped to take Scottish agriculture beyond transition and into a new Scottish agricultural policy that is bold and carries the clear intent of providing financial support as the emphasis shifts to supporting those driving productivity gains and delivering desired environmental outcomes.”

Is the bill bold? Does it provide clarity on the priorities and objectives for rural policy in Scotland during the transition period from now until 2024?

Eleanor Kay

You quoted the NFUS but, as stakeholders, we are all quite aligned in thinking that we need to be more ambitious and that we need to move. The bill is designed to keep things the same and tide us over for the transition; it does not set out plans for the future. Plans for where we are moving to and what needs to change in the transition period have not been put to us yet. We set out ideas in our report, “#Route2050: A direction of travel for Scottish land management to 2050”, and the NFUS published “Steps to Change: A New Agricultural Policy For Scotland”. As a sector, we have been clear that we know that we need to change and we know what we need, but the bill does not deliver that. It is not intended to do so.

Jonnie Hall

The bill does not go anywhere near far enough, but it is a necessary stepping stone. The here and now of the Brexit challenges will be small beer in comparison with the other challenges that the industry will face over the next decade. The Parliament has set a target of a 75 per cent reduction in emissions by 2030 and agriculture will have to play a huge role in delivering that. However, it cannot do so with the tools that are currently in the toolbox, so we need a new agriculture policy beyond this continuity bill to enable farmers and crofters to do far more. I rigidly agree with the NFUS quote that Richard Lyle just cited.

Richard Lyle

I do not want to stray into other members’ questions. I just want to say that the one thing that I would like to see is everybody in Scotland—the industry, the Government and the relevant organisations—sitting down and agreeing what will be required after Brexit.

I will move on to my second question.

The Convener

Before you ask your second question, I think that Christopher Nicholson wants to come in.

Christopher Nicholson

I just want to reiterate what others have said. To my mind, the bill is for one purpose only, which is the transition period, and we need to look at policy going forward. Agriculture faces huge challenges over the next decade, so the sooner we come up with policies and joined-up thinking, not just for agriculture but for rural issues as a whole, the better—that is missing at the moment.

Richard Lyle

There will be major changes. Once the bill comes into force and after Brexit, everybody has to sit down and basically agree. There will be winners and losers. It is not fair that the Government is continually blamed. I believe that you have the opportunity to sit down and agree a policy before we implement it.

Moving on, how do you expect rural policy in Scotland to change during the transition period? What are your priorities for that period and what would you prefer to be included?

The Convener

That is a massive question, and it could allow all our witnesses to go off on massive answers.

Richard Lyle

Perhaps we could just have one item from each witness then.

The Convener

Everyone will get a chance.

Yvonne White

My priorities would be the environment, retaining population, accessibility for the public and the production of high-quality vegetables, grains and meat. There are lots of things that we need to do. A good and fit-for-purpose agriculture policy can help to underpin all that, encourage it and allow the sector to flourish, if we involve the right people and if we have the will and the pragmatism that are needed. We have an opportunity, although there are a lot of threats.

Lizzy Baxter

I pretty much agree with what Yvonne White said. The current data collection lets us see exactly what is happening in Scotland and across the UK. The paperwork that we currently do gives us a good indication of what is happening. I would pretty much reiterate exactly what Yvonne said.

Jonnie Hall

The current CAP under which we operate is fundamentally flawed, because 90 per cent of all the support payments that go to farmers and crofters are based on declaring an area of land and are no reflection of how the land is managed. We therefore need to move swiftly to an action-based approach, with actions around improving productivity and delivering on the environment. We set out those actions in our document “Steps to Change: A New Agricultural Policy For Scotland”. Fundamentally, the biggest change that we can make is to break away from area-based payments and move to action-based payments so that we can see real outcomes and achieve fundamental objectives on climate change, productivity, food production, rural communities, population and so on.

Richard Lyle

I totally agree with that statement. I do not want to veer into anyone else’s questions, but that is refreshing, and I agree.

The Convener

I would like to hear what Eleanor Kay and Christopher Nicholson have to say as well.

Eleanor Kay

I will be a bit lazy and refer you to our “#Route2050” document, which sets out that, within the transition, we want the integrated land management approach to be embraced. That approach looks at business efficiency and improving resilience so that we can make the most of the opportunities that are to come and weather the inevitable storms. It will also enable us to focus on our environmental credentials, including the climate change targets that we have set ourselves. Those credentials are fantastic, but we can build on them.

Christopher Nicholson

The current support framework, which is based on area payments, is not helpful for the tenanted sector. At the moment, a landowner can access area payments with very little activity. We would like a change so that there is a focus on activity rather than on area payments. At the moment, the tenanted sector is hamstrung by a taxation framework that works against the sector. There is nothing that we can do about that here, because that is not a devolved issue, but the support framework should be changed to move away from area-based payments and towards activity, as that would help the tenanted sector.

The Convener

I find it interesting that no one has used the term “food security”, which used to be bandied about quite a lot. We have been talking about high-quality food production, but is there a need to ensure that sufficient food is produced in Scotland for people to eat? Is that part of the picture?

Eleanor Kay

It is absolutely the case that there is such a need, but I do not think that environmental considerations and food production are at odds with each other. Producing high-quality food sustainably and efficiently goes hand in hand with good environmental practice.

Jonnie Hall

In an increasingly unstable world, food security must be an issue for any Government. Food price inflation is the last thing that any Government wants to see anywhere, but we live in a trading world. We will never be self-sufficient in Scotland—or, indeed, in the United Kingdom—so let us drop any notion of that. We need to focus on what we do and to do it very well, in the most effective manner. We need to utilise what we do not only in providing food but, equally, in driving the rural economy and the food and drink sector, which is a major sector of the Scottish economy.

Jamie Greene

I had my first bag of crickets the other day as part of my efforts to expand my protein sources, so it is absolutely right to say that the way in which we consume is changing by the day.

I want to bring the discussion back to what the bill does and does not do and to how we move forward. We have had a few evidence sessions on the bill. I was quite struck by a point that Michael Keating of the Royal Society of Edinburgh made. He said:

“The bill is a symptom of the tendency to fix little bits and pieces, rather than bringing together the big picture to see how environment, agriculture and rural development fit together.”—[Official Report, Rural Economy and Connectivity Committee, 4 December 2019; c 22.]

Other witnesses said that they would have preferred a hybrid bill that catered for the transition and gave the Government the ability to manage that, but which also pointed in the general direction of what should happen next. That would lie somewhere between what we have here, which is a fairly simple transition bill, and a new piece of legislation for rural policy. Would you like the bill to become more of a hybrid bill? Would you prefer a new bill or a more sweeping and comprehensive piece of legislation?

Eleanor Kay

That is a really good question. It is clearly a bridging bill—it does not do anything beyond that. Although the UK Agriculture Bill was not perfect, it set out the direction for England, and Wales quickly followed suit. That has meant that pilots have started and that people have started to look at the new environmental land management system that will be used. That is the key thing that we are missing. I am not sure whether the Agriculture (Retained EU Law and Data) (Scotland) Bill needs to be amended to reflect that, or whether it needs to be quickly followed by an additional piece of legislation. However, it would be fantastic to get that direction very quickly.

Jamie Greene

Pete Ritchie from Nourish Scotland said:

“The bill should have a purposes clause that lists the purposes for which ministers may make grants.”—[Official Report, Rural Economy and Connectivity Committee, 4 December 2019; c 8.]

Others have called for additional wording to be included on the purpose of the future direction of policy. Maybe witnesses can reflect on that in their answers.

Eleanor Kay

I agree. That would help to settle some of our concerns about what changes could be made if we were encouraged to follow a more environmental or climate change-focused agenda. We lack information on the intention as to what changes will be made.

Jonnie Hall

The real answer is that we are where we are. In an ideal world, we would have something that is far more progressive, but we need the bill for the short to medium term, given that it looks certain that we will leave the EU by the end of 2020. We need the bill to provide continuity.

The problem that we have in Scotland—it is not just our problem or the Government’s; it is a shared problem, because we all have a responsibility—is that there has been lots of talk about change from everywhere, but we have not yet agreed on where the change should take us.

If we cannot agree on what the landing space should be for agriculture in Scotland, and on what the roles, responsibilities and purpose should be, we cannot agree on how we get there. Fundamentally, the problem is that we cannot put it in the bill that we will have schemes to do X, Y and Z without knowing where we want to get to. The committee obviously has an interest in the recently established farming and food production future policy group. I know that some members take a serious interest in the deliberations of that group. However, we really need that group and other governmental processes to come out with a clear statement as soon as possible about where we want to get to, and when. Then we can decide how we get there.

11:00  

The Convener

If witnesses want to speak, they should try to catch my eye. I am fishing around to see whether people want to come in. I do not want to embarrass anybody if they do not want to come in, so please give me a wave and I will bring you in if I can.

Christopher Nicholson

I agree with Jonnie Hall. We are where we are. The current bill covers the short-term period, as is necessary, but I imagine that, for policy going forward, we will need another bill.

My feeling is that we should not focus only on agricultural policy; the approach should be more joined up with other rural policy. The convener mentioned food security, which has competing interests with forestry, energy, biomass, anaerobic digestion and so on. Some of those interests are competing against one another, and there are winners and losers. As far as I can see, in the past, we have looked at those different rural issues in their own silos rather than jointly. A future rural policy needs to look at the bigger picture of how all those interests compete against one another.

Jamie Greene

The committee is scrutinising the bill and, after we have heard the evidence, we will report back to the Government on what we think should happen next. Should the bill have a specific purpose that covers only transition? Should it have an end date and mandate the Government to introduce a new bill that does some of the things that you are talking about? If so, when should that new bill be brought forward within the transition period?

Jonnie Hall

Is that essentially the same question that Mike Rumbles asked?

Jamie Greene

Yes.

Jonnie Hall

In that case, I absolutely think that that should happen. We could probably discuss actual timings in detail, but there should be some sort of mandate on the Government to deliver the next phase of the process.

Christopher Nicholson

Work on new policies needs to start now. My understanding is that it has started through the future policy group. I imagine that the timing will be dependent on how Brexit works out and the arrangements with trading partners, but the bigger-picture thinking for new policy needs to start now. We cannot expect the bill to do that—it merely covers a gap.

Emma Harper (South Scotland) (SNP)

I have a supplementary question. Page 1 of the policy memorandum states that the bill is

“intended to provide the Scottish Ministers with regulation-making powers to amend or replace the European Union (EU) Common Agricultural Policy (CAP)”.

Bullet point 2 talks about enabling

“pilot projects to be run in order to test out new policy approaches, so as to inform the development of longer term future rural policy.”

Would that wording not enable tests of change to be implemented and progressed pretty quickly?

In previous evidence, the committee heard about the environment, biodiversity and wider land use strategy. The bullet point that I quoted would enable pilot projects that could be delivered under a wider land use strategy and could support testing and getting on with the job faster.

Eleanor Kay

I agree that nothing in the bill would prevent pilots from being undertaken. That is exactly what we need. However, we do not have any steer on what the pilots would be for. The farming and food production future policy group is looking at that, but the timescale in which we are getting information is not as quick as we would like it to be. We have had reports from the agriculture champions and the National Council of Rural Advisers. Various inquiries have highlighted where we need to go. We have another task force and another review, but surely we know enough to start consulting with stakeholders on ideas about what pilots could be done and how we could tender for them.

The pilots in Wales and England have got under way remarkably quickly, so the work can be turned around swiftly. The bill allows for pilots, but it does not give us any idea of what they would be for.

Yvonne White

Some pilots are going on now, funded by Scottish Natural Heritage. They are in four areas of Scotland, which are Skye, Argyll and—

Jonnie Hall

East Lothian and Strathspey.

Yvonne White

Those are looking for a replacement for CAP. CAP is very prescriptive, so they are looking for a more pragmatic system, which is good. Little things are happening, but they are not widely promoted.

There might be concerns over the funding of the pilots. They are based on projects that have happened in the Burren area in Ireland, which have been remarkably successful in generating more hen harriers and getting better results with cattle. The projects are based on traditional methods but are not old-fashioned. They tick a lot of boxes.

Jonnie Hall

To follow up on what Yvonne White said, the pilot projects that SNH is running are about the bottom-up approach, but they look only at agri-environment measures and how we might replace our current agri-environment climate scheme. They do not look at things such as productivity or the performance of the agricultural business.

To address Emma Harper’s point, pilots are great and tell us lots of things. However, to get the significant outcomes that we want, it would be too little, too late to roll out the pilots on a wider scale from 2024 onwards. We need to put in place a suite of measures that every farmer and crofter can do now. I cannot emphasise enough the expediency of 2030. If every farm and croft in Scotland did soil testing and a carbon audit and was a member of a benchmarking group, they would tick three important boxes around input efficiency, climate change and financial performance.

Other than financial resources, it would not take much to put that in place. That would fundamentally change the performance of Scottish agriculture, in terms of how farms and crofts operate as businesses and what they deliver on climate change. Those things are not mutually exclusive. We drive efficiencies at a business level. Nutrient management, soil testing and carbon audits are pretty much one and the same. Therefore, that would make those businesses more resilient, more market focused and, at the same time, they would deliver on a wider public agenda. I do not understand why we are not getting on with that sooner rather than later.

The Convener

You have made that point clearly.

Angus MacDonald (Falkirk East) (SNP)

I turn to the less favoured area support scheme and issues around areas of natural constraint. There is a majority of opinion among stakeholders that the LFASS-style lifeline support for farmers and crofters must continue. In fact, the 2016 independent evaluation concluded that many LFA farm enterprises would not be sustainable in the absence of support payment. The bill team suggested that it may wish to make changes to the LFAS scheme, and has indicated to the committee previously that it is still working on the new areas of natural constraint approach. Is that change appropriate, and were you expecting any other changes to less favoured area support as a result of the bill?

The Convener

A lot of people are leaning forward. I will start with Jonnie Hall. I suspect that Yvonne White and Christopher Nicholson may have comments, too.

Jonnie Hall

The current LFA support scheme is vital for farmers and crofters in Scotland. It is fundamentally business defining in some situations. However, along with the basic payment scheme, it is an area-based payment, and it is blunt. It does not necessarily deliver on its objectives of retaining grazing management in our hills and uplands, retaining populations, avoiding agricultural land abandonment and all the rest of it.

As such, we need to move away from the current LFA support scheme and find something to replace it that delivers on the requirements of our less favoured areas. That will be easier said than done. The reason why the Scottish Government cites the issue is because we already know that we have a challenge with the existing European regulations, which force us down the so-called parachute payments route whereby payments under LFASS have been reduced this year—2019—and will be reduced significantly again in 2020. There is a real urgency about reforming LFASS or, in fact, replacing it with something completely new.

To go back to the point that I made to Richard Lyle, we need to use that as an opportunity to move away from blunt area-based payments—we can throw as much money as we like at those without necessarily changing what happens on the ground—to something that supports activity, particularly through livestock grazing management and all the associated social, economic and environmental benefits.

Yvonne White

I broadly agree with Jonnie Hall that some support is vital to keep rural communities in the Highlands and Islands going. If we did not have LFASS, those communities would be in danger of collapsing, and the look of the landscape and the population would change considerably. The scheme can be improved in that it can be much better tailored and less prescriptive. We need parts of the scheme to be less prescriptive to better support the areas that really are less favoured. I understand that about 70 per cent of Scotland’s land is considered less favoured.

Jonnie Hall

It is 85 per cent.

Yvonne White

So nearly the whole of Scotland—85 per cent—is less favoured area. However, there are huge differences within that. There is good farmland in Nairn and Inverness-shire, but bog on Uist. As such, the scheme does not fit and there is no value from public money, because there is a blanket approach. We have the opportunity to change that and to support productivity and balance that with environmental concerns. At present, it is either one thing or the other, and that has not worked. We need a balance.

The Convener

Just to clarify, the question was whether you expect changes as a result of the bill. Christopher Nicholson probably has comments. Will you answer the second part of the question, Christopher?

Christopher Nicholson

Do you mean whether we expect changes with LFASS?

The Convener

Yes.

Christopher Nicholson

The answer is yes, and we hope for a replacement for LFASS. That is vital for the disadvantaged areas of Scotland, and we would look for a strong link with activity. LFASS takes a broadbrush approach, but certain areas need more specific help.

11:15  

Angus MacDonald

I will finish with what may be a daft laddie question. Is there an argument to return to supporting a headage basis in regional areas?

Lizzy Baxter

I was actually going to suggest that it should be done on the basis of stocking density or headage, purely because that is based on actual activity, which goes back to what Jonnie Hall was intimating. That would certainly help, given that the vast majority of Scotland—85 per cent—is LFA, and we need to help that sector. A payment rate that is on the basis of headage or stocking density would be the best option.

The Convener

I ask Jonnie Hall, in answering that question, to say whether there are implications for World Trade Organization rules if the scheme is done on a headage basis.

Jonnie Hall

I do not agree that we should do it on a headage basis but, as I have just said, I do not agree that we should do it on an area basis. We need a hybrid of the two. Lizzy Baxter touched on that in talking about stocking density rather than a payment per skull, which is what we had prior to 2005 under the direct support payments and prior to 2001 under the HLCAs—hill livestock compensatory allowances—which preceded LFASS and were a payment on suckler cows and breeding ewes. We ended up with a very inefficient agricultural system in which we just kept livestock—the scheme was not based on how the livestock were managed. We do not want to go back to that.

On the WTO, there is more than enough scope in the UK’s headroom in that regard for there not to be an issue. If we started to use headage payment again, just as we currently do under the ewe hogg scheme and the calf scheme in pillar 1, we would not distort trade on a global scale by any stretch of the imagination. Our “Steps to Change” document sets out proposals for a hybrid approach involving stocking density—that is, livestock—and area. Those two things come together to be a measure of activity. It is not one or the other; it is somewhere in the middle.

Yvonne White

This is where a prescribed approach does not work because, as we have all pointed out, the solution is probably a mixture of everything. With stocking density, if you run a hill flock of sheep on common grazings that are poor land and in region 3, you get £5 subsidy per hectare. In our sheep stock club, there are more than 1,000 ewes and we lose 200 to 300 lambs a year to predation, which could be to foxes or sea eagles. We are getting into trouble because, no matter what we do, we cannot maintain the number of sheep that the department says that we should have on the hill on the Trotternish ridge. The money and the subsidies go to local labour to support the rural area, which is termed as economically deprived. The subsidies do not just go into the pockets of hill farmers or crofters; they are spread out.

The Convener

We are almost getting into the process of redesigning the LFA support scheme. I am going to be very mean and drag us back to the bill.

Colin Smyth

I will move on to financial aspects. The bill gives ministers powers to modify the financial provisions in CAP legislation, which could mean moving money between pillars and different schemes. It also suggests a cap on individual payments. What are the panel’s views on those powers and how they should be used?

Jonnie Hall

The power to transfer money between pillar 1 and pillar 2 already exists under EU legislation. Currently in Scotland, 9.5 per cent can be transferred from pillar 1 to pillar 2; Richard Lochhead took that decision in 2013-14.

It is absolutely right that we retain that power, but the power could be adjusted, given that, under EU law, the percentage that is transferred can only go up, from 9.5 per cent to a maximum of 15 per cent. There is an argument for having the flexibility for the percentage to go down, if required, as well. Future funding when we are outwith the CAP remains a relative unknown, so it is important to retain the flexibility to move money from pillar 1 to pillar 2, but we want maximum flexibility, so that money can be moved back from pillar 2 to pillar 1 if need be.

That said, in the longer term we need to get rid of pillar 1 and pillar 2. They are a European construct. In future policy, we do not have to have pillar 1 and pillar 2. We have to underpin agricultural businesses and so on. That is our approach.

Capping already exists, too, but the cap is based only on the basic payment and it is set at such a high threshold—€600,000—that it touches nobody. Having the power to cap payments to individual recipients is probably important; the policy question is how such a power would be used. Beyond that, how would the yield from any cap be recycled and reused to underpin other actions that were required?

Yvonne White

I agree with capping, but policy makers need to look carefully and thoroughly at the detail, so that they do not end up doing something that they did not set out to do. We are talking about the use of public money, which needs to be scrutinised.

Christopher Nicholson

We support capping. There might be an opportunity to use the surplus or excess that was generated from capping to help genuine new entrants into farming, because such people are disadvantaged when they are competing with established businesses to get in.

Eleanor Kay

Capping is an interesting issue. Should a cap apply at claimant level or at holding level? Should pillar 1 or pillar 2 payments be capped? In considering the need for capping, it would be valuable for us to know what would happen to the revenue from it and whether that would be used for climate change or environmental issues, or for the pilots.

We need to take a step back and consider the purpose of the capping. What is it supposed to do? What is it targeted at? Are we talking about capping pillar 2 money? Are we talking about open-ended capping or setting a ceiling? It is currently possible to set a ceiling. At individual holding level, it is important that there should be no unintended consequences that put land managers off doing good things.

Peter Chapman

Jonnie Hall made the point that there is currently a cap, but it is at a very high level. When I speak to farmers, I find that they are all in favour of capping, as long as the cap is just above what they receive. That is the issue. It is easy to say, “My payment is £30,000, so capping payments at £35,000 would work.” If we are going down the road of capping, we need some idea of a fair level for the cap. I do not expect anyone here to come up with a fair level; I just make the point that that is the problem. A cap will hurt businesses. It will hurt big businesses, and it is often big businesses that are good at delivering on environmental issues.

Jonnie Hall

To follow on from that, there is more than one way to skin a rabbit when it comes to capping. You can set an absolute limit or you can apply degressive payments, whereby you start to scale back.

I draw the committee’s attention to what is happening in Europe right now on proposals for the next CAP. The proposal that is on the table from the European Commission is that businesses would start to have their payments reduced when the level went above €60,000 and would receive nothing above €100,000. That might seem like quite a high amount of money and, in a European context, it would probably not affect a huge number of people, but if that was applied in Scotland, it would affect a significant number of businesses that employ a lot of people and which are responsible for driving a lot of the food production in Scotland.

The point that I am making is that, although we often cite the fact that Scotland has the lowest payment rate per hectare in the EU, we have the highest payment rate per business, because we operate on a big scale. Our landscape is such that we have to operate on a big scale. In Scotland, the payments per business are very high on average. To go back to Peter Chapman’s point, the issue is about where we would pitch an absolute cap. We could also apply degressive payments and then have a final cap.

Larger businesses can operate with economies of scale. They generate lots of multipliers in local economies, they employ people and they keep people in remoter rural areas. The notion that big is bad and small is beautiful is often misplaced. The management of a cap, where that cap would be set and how the funding from capping would be recycled would have to be handled extremely carefully. The bill does not talk about that; it enables ministers to do something, but it does not set a policy agenda for what should be done or how it should be done.

Colin Smyth

I would like to turn that back on the panel. What do you think should be capped? What should that funding be used for? The “Stability and Simplicity” consultation talks about capping direct payments under pillar 1 and using the money for pilot schemes, for example. Do you support that?

The Convener

That is an interesting subject, but it takes us into the designing of the scheme again, so I ask people to keep their answers short.

Yvonne White

We could start by capping big estates that cover huge areas where production is not high, which might be owned by Saudi people or other people from the middle east. Public ground that was not used for agriculture used to be included, but I think that that was sorted the last time round. I think that airports were getting money through the CAP. There could probably be some quick wins in areas like that, but whether there would be the political will to do that is a different matter.

I agree with Jonnie Hall’s view that small is not always beautiful. Scotland’s agriculture is so diverse in terms of the land and the output that we need bespoke support for the different areas. What is right for a large farm on the east coast that produces lots of fruit will not be fit for crofts on the machair—those are totally different areas.

Christopher Nicholson

Jonnie Hall was correct to mention that Scotland has the highest average payment per business. That is a function not just of bigger businesses but of the concentrated pattern of land ownership in Scotland. Capping needs to fit in with the land reform aims. If we continue to reward very large holdings with uncapped funds, that will have a big influence on the size of holdings.

Eleanor Kay

I am going to skirt the issue slightly. If we are looking at having a landscape-scale approach and using the land use strategy in the context of the climate change ambition and the targets that are set in the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019, it is worth noting that such an approach would include quite a few landowners. As those landowners are delivering a lot, it is important to consider where the cap would be put and what impact any sort of payment ceiling or degressive reduction would have. The impact of making such a change on the local economy and jobs could be quite significant. Although I understand that there is an appetite for introducing such things, it is not something that we should do quickly or without consideration.

11:30  

The Convener

Something else to bear in mind is that some of the big organisations that do huge amounts for conservation are also in receipt of very large grants. The RSPB, for example, gets large farming grants and uses them very effectively, in some cases, for good conservation. Would a cap concern such organisations?

Jonnie Hall

It probably would if they are in receipt of direct support payments, rather than just pillar 2 agri-environment payments.

The point that I was going to make—and it is a fundamental one about future policy—is that, if we move away from an area-based payment to an action and activity-based payment, capping will no longer be an issue. Capping becomes a non-issue if we are focusing on actions on the ground, rather than the areas that people declare.

The Convener

The next series of questions are for specific members of the panel. Time is creeping on, so short, focused answers to short, focused questions would work very well.

Angus MacDonald

This question is for Yvonne White. Will you expand on your earlier response to Richard Lyle? Do you have any views on the implications of the bill for the Scottish crofting sector? Will the plans for the rural policy transition period deliver benefits specifically for crofting?

Yvonne White

We see the bill very much as a bridging bill rather than something that will make much difference. We hope that it will give some necessary continuity for the period before a new agriculture bill comes in. It is important that we have a timetable for a new agriculture bill that is more tailored to the specific needs of crofting areas, as well as those of farming generally. We all know that crofting is unique to Scotland. It is unique in Europe and many people from outwith the UK reference crofting as an excellent type of small-scale agriculture on marginal land. However, a lot of the time we do not quite appreciate crofting and the culture that is attached to it. Being optimistic, we have big hopes that a much better agricultural policy will come out of this, which will help us to retain people on the land in our marginal areas.

Angus MacDonald

Thanks for putting that on the record.

Emma Harper

I have a similar question, probably for Chris Nicholson, about tenant farming. Does the bill have any specific implications for tenant farmers? Do the plans that have been developed for the rural policy transition period address the specific needs of tenant farmers?

Christopher Nicholson

There are measures in the bill that could benefit the tenanted sector. We have already covered some—for example, moving from area-based payments to activity-based payments. If capping is introduced at a level that will result in a saving, that saving could be used to institute a support system for new entrants, who get very limited support at the moment. The bill has measures that could help the tenanted sector, but I hope that a further bill looking at future policy might give more consideration to that sector.

Emma Harper

It is probably also a question for Lizzy Baxter, as new entrants will be a specific issue for the next generation of young farmers.

Lizzy Baxter

As has been mentioned, there is no timescale. The bill is a bridging bill to cover the period until we get something more set in stone. If legislation and policy are put in place more quickly and farmers know about it, they can adapt to change if they need to. As Jonnie Hall keeps saying, 2030 is not far away, and for farmers to adapt to change, it needs to be implemented sooner. I am already involved in farming, so I am not a new entrant as such. The bill is just a bridging bill at the moment.

Maureen Watt

My question is for Eleanor Kay. Do you think that the bill adequately provides for wider rural needs beyond agriculture, such as forestry, the sustainability of rural communities and the other aspects of rural development that we talk about?

Eleanor Kay

The bill does not change what is currently provided. It could go further to highlight how those things will continue to be provided for in the future. A common criticism of the bill is that it is about what we currently do, and doing that for the rest of time. There is a question about forestry and whether the ability to make changes to some definitions could impact on how we address the forestry question and achieve the increase that we need to achieve. Again, we need to consider what will happen to the LEADER funding and the various other schemes that we have had and how we change them and make them better.

John Finnie (Highlands and Islands) (Green)

A number of the responses have referred to the environment. The Scottish Government has declared that there is a climate emergency, and colleagues round the table now agree that there is such an emergency. We have heard from earlier panels about the agri-environment climate scheme, which closes for new applicants next year, and about potential changes to the CAP, and how, when combined, those could be a retrograde step for environmental protection. Can I have your thoughts on that, please?

Jonnie Hall

Everything that I have said this morning has referenced climate change as a very important, if not the most important, thing that is faced by society, let alone agriculture. Enabling farmers and crofters to contribute positively to tackling and addressing those issues remains paramount to us. We therefore need the bill to provide continuity, in the first place, but then, as we have discussed, we need something beyond that to set the direction of policy and implementation thereafter.

Your question refers to the continuity of schemes such as the agri-environment schemes. As things stand, in 2020, there will be no new applications to the existing agri-environment climate scheme. There will be a rollover for those schemes that will be coming to an end, but I think that it is critical—and we have seen this in previous years: every time there has been a change in the CAP, a transition has usually been required—to ensure that there is continuity. In a way, the bill should allow that work to continue in a Scottish context, rather than in a European context under the CAP.

That is critical because, whether it be biodiversity, water quality or climate change issues in the environment, farming and crofting account for 70-plus per cent of Scotland’s land mass under management, so we have a ridiculously important role to play in safeguarding and enhancing our environmental assets. Continuity is important, so the bill is important in that sense. It is not just about support payments for farm businesses; it is about ensuring the continuity of management under those agreements.

John Finnie

You say that the bill “should” allow the agri-environment work to continue, but does it do that?

Jonnie Hall

I am no lawyer, and to avoid the risk of using a non sequitur—that is, of saying that it will—I will say that we do not know. The hope is that it will, if the wording in the bill is drafted as it should be and if the bill is enacted as it should be. It all depends on what ministers do with the powers that are conferred on them. They might sit on their hands and do nothing, which would be a concern. The powers in the bill need to be used in the most positive and effective way.

Yvonne White

John Finnie asked whether the agri-environmental climate schemes are good—or words to that effect—and my response is no. Many people who would like to croft extensively—it is an extensive system—cannot get into the schemes. They are doing everything that the schemes aspire to, but it is almost as though the schemes are some sort of foil or take a cosmetic approach. They lack meaning because they do not get to everybody in the areas where they need uptake to come from. There are lots of reasons for that, and I know that this is not the place to discuss the ins and outs of the situation. It is disappointing. Uptake could be much better, which would benefit Scotland generally.

Christopher Nicholson

It is important that the AECS can continue. There will be plenty of examples across Scotland of environmental measures that are in place under that scheme and which have been continued from previous schemes, going all the way back to the Scottish rural development programme and the previous scheme, whose name I have forgotten. The schemes have had largely the same measures in them, they are continuing and I hope that they can continue in future.

One of the problems with the AECS, which Yvonne White touched on, is that entry into it has been competitive, so it has not reached everybody.

On the bigger picture going forward, as farmers and land managers, we are responsible for the management of the world’s biggest carbon sink—the soil, and the organic matter and carbon that are in the soil. To my mind, farmers could be taking a lot of measures to improve carbon capture in the soil. Other countries have schemes to ensure that farmers farm in a way that puts carbon into the soil, and we need to look at that issue for the future.

As many people have said, rather than being the problem, agriculture can be the solution to climate change.

Eleanor Kay

The bill would allow current schemes to continue once we are outside the EU. I imagine that one possible modification could be made to eligibility in order to widen the scope of uptake. The competitive approach of the schemes could also be tweaked.

We need to be aware of how the issue sits with the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019. There are some significant commitments on land use in the 2019 act, such as whole-farm action plans, nitrogen accounts and improvements to the land use strategy. We need to consider further whether the ambition in the 2019 act and parts of the climate change plan sit comfortably with the bill, as well as how we can move quicker.

John Finnie

A couple of the witnesses have touched on the way in which the bill could deliver simplifications and improvements for land managers while maintaining environmental, animal welfare and food standards. That is about the bill’s relationship with other legislation—after all, it is an enabling piece of legislation. Do the witnesses have any suggestions on how the bill could deliver simplifications and improvements with regard to environmental, animal welfare and safety standards?

The Convener

Who would like to start off on that? As I said, if you all look away, the danger is that I will pick the one who looked away last. Would Eleanor Kay like to start off?

Eleanor Kay

I would probably wait for the simplification task force to report on what it thinks is possible, but the speeding up of the process seems to be mostly down to inspection and the handling of the paperwork behind such things. I would not want to hedge my bets.

11:45  

Jonnie Hall

This addresses Yvonne White’s point, to a degree, but it would be of great benefit if the bill could shift some resources from the competitive elements of the current agri-environment schemes to non-competitive things, so that there is a greater uptake across a greater swathe of individuals. I go back to the point that I made earlier. There are certain measures that, on a non-competitive basis—

John Finnie

I am sorry to interrupt, but could you explain the competitive element?

Jonnie Hall

The current agri-environment climate scheme is part of pillar 2 and the Scottish rural development programme, and its funding is available to all. However, because the funding is limited, applications are assessed on a points basis, and points mean prizes. As a rule, if applicants are big enough and in the right place, they get enough points. If they are not big enough and in the wrong place, they do not get the right number of points, so it does not matter how good their application is. There is not enough funding to go around, so the Scottish Government and other organisations have difficult decisions to take. The participation rate in the agri-environment climate scheme is nowhere near as high as we would all like it to be.

An alternative approach would be to take some funding out of that scheme, or provide additional funding, to operate a non-competitive approach whereby every farm and croft could choose activities from a list of options, such as soil testing and nutrient management work to help to improve carbon storage, nutrient budgeting or producing extensive grazing management plans for common grazing and upland areas, which would benefit habitats and biodiversity, and carbon storage. We used to have the land managers options scheme, which was the same in essence. Before that, we had environmentally sensitive areas, through which there was geographically targeted funding that did pretty much the same thing. It is like “Back to the Future”, in some ways.

We need to put in some practical, effective measures that farmers and crofters can work with, and which will fit with their aspirations for operating their businesses, will not cost a heap of money—because we are talking about an allocation per farm business—and will not only add value to their businesses through how they operate and manage their land, but add an environmental bonus. That is exactly our argument in “Steps to Change”.

That would require a change to what we currently do. Would the bill enable that? It would probably start the piloting process for the change, because that is in the bill, but it would not provide for its roll-out. If the agriculture sector is to achieve its climate change plan targets, it is quite clear that every farmer and crofter will have to do everything everywhere. That will soak up a lot of resources, so we will need that funding if we are to play our part.

The Convener

Does John Finnie have a brief follow-up question?

John Finnie

No—I just want to thank Jonnie Hall for that comprehensive explanation.

Emma Harper

The bill proposes a power to modify CAP legislation on public intervention and private storage aid. Do the witnesses have any thoughts on that?

I have another question, which is about fruit and vegetable producer organisations. During our previous evidence session, Nigel Miller said:

“We have failed on the issue of producer organisations. There is potential to bring producers together for development and to market their products.”—[Official Report, Rural Economy and Connectivity Committee, 4 December 2019; c 13.]

The issues are public intervention and private storage, and how we simplify and improve the situation for fruit and vegetable producer organisations.

The Convener

Who wants to start off on private storage?

Christopher Nicholson

It is good that the intervention option is in the bill. It might never be needed but, given the uncertainties that we face, the means to intervene should be there.

Jonnie Hall

I agree with Christopher Nicholson. We probably still need that in our armoury for extreme circumstances.

The Convener

The second question was on producer groups.

Jonnie Hall

Producer organisations are currently covered by European legislation, and it is imperative that we are able to continue to operate them. They have worked well in certain sectors, such as the soft fruit sector. They allow for collective action by a number of growers, so that individual growers do not get picked off.

NFU Scotland would like producer organisations to be developed in other sectors, such as the beef sector, which is facing challenges. We argue strongly for more formal collaboration, so that the primary producers have a bit more power in the supply chain. At the moment, the primary producers are price takers, and individuals get picked off. With a supply chain that is less than transparent, to say the least, and with big processors and retailers to deal with, the primary producer is the whipping boy or girl at the end of the supply chain. Producer organisations have the potential to strengthen the primary producer’s role in the supply chain. Having that power and developing it in sectors other than fruit and veg—which is where it has operated so far—is important.

Emma Harper

Dairy producers need support, too.

Jonnie Hall

Yes. Producer groups come into the realms of dairy contracts and so on.

Peter Chapman

My question is on sections 8 and 9, which are on marketing standards. Those provisions are quite a big part of the bill—they deal with classification criteria, labelling and various production methods. We have already touched on the potential for there to be an effect on the UK single market, so we will park that.

In a previous session, the Scottish Government outlined that it would amend marketing standards “case by case”, and that the bill would provide the flexibility for Scotland to align standards with either the UK or the EU. What are your thoughts on that?

Eleanor Kay

It is important to consider the primary markets for our produce. I do not have the exact figures to hand, but I know that a lot of our beef and sheep meat ends up in England. It is not that we cannot diverge from UK and EU standards, and there will probably be some similarity in relation to the standards that are set out in trade agreements, but it is important that we do not end up distorting the UK market. That is not to say that we cannot be slightly different, but we must not change standards for the sake of changing them.

Jonnie Hall

We want differentiation, because we want to be able to sell our products as Scotch—we want them to be recognisable as such—so we have to operate at that production standard. However, marketing is another element, and it needs to be consistent across the UK if we are to protect the internal UK market.

I can see the logic behind the Scottish Government line that Peter Chapman just quoted, but I am concerned about how it would work in practice. Operating different standards for different markets—whether the European market or the UK market is seen as more important—might end up being a bit messy. However, the principle is sound.

Peter Chapman

If we go down different routes and have different standards, there will be an attached cost for the industry. To give just one example, we could have costly labelling issues if we have different standards.

Jonnie Hall

We also need to be careful to differentiate between production standards and marketing standards, which is a point that Stewart Stevenson raised earlier.

Jamie Greene

We are not talking about differentiating between production standards and marketing standards in the bill. Section 8 says that

“The Scottish Ministers may by regulations make provision about ... products”

that

“are marketed in Scotland.”

It does not have a provision on products that are produced in Scotland.

Section 9 lists the sectors that are referred to in section 8. They include olive oil and wine, which are products that we do not make a lot of in Scotland. Interestingly, pork and lamb are omitted. Does anyone have a view on why they are omitted?

As a direct result of the powers that are listed in section 8, which includes powers to dictate presentation, labelling and packaging, could we end up with products that we import from the EU or elsewhere needing different labelling in order to be sold in Scotland? More important, what effect would that have on the market?

Eleanor Kay

That is already the case when a food product is exported to the US, where different labelling is required. You are right to say that the bill is more about how products are marketed in Scotland. It would depend on different things. Some label changes can be so detailed that it is almost too expensive for a small producer ever to consider changing what they do.

The provisions might have an impact on products that are currently sold in Scotland. If the bulk of a domestic company’s product is exported, it could be cheaper to export it, because it would already meet the labelling requirements for that. It would depend on the level of change.

The Convener

I will throw in a question. The bill would allow Scottish ministers to change carcase classifications, so we could end up with classifications in Scotland that are different from those in the rest of the UK and, indeed, Europe. Would that be beneficial? Is that a sensible provision to have in the bill? Do we need it?

Jonnie Hall

That is obviously part of the approach to retained EU law. Carcase classification rules are set at a European level and we have to absorb those into Scots law. The bill would enable the rules to be changed—that is the whole point of the bill, essentially—and doing that would then become a policy choice. If the ability to do that is not included, the European standard would become frozen.

The Convener

So it is not an issue for common frameworks for trade.

Christopher Nicholson

At the moment, we do not know the details of any trade deals post-Brexit. This important part of the bill will allow flexibility for a future situation.

The Convener

We will have to wait and see.

I am conscious of the time, so I will ask the final question. As everyone knows, the current system collects a lot of data about the management of agricultural holdings. It has been argued that, as the public give money to that end through taxation, it is right that that data is collected and made available to the Scottish Government and to other people. Are the data provisions, including those on the collection of data, reasonable? A yes or no answer, if anyone wants to give one, would be helpful.

Jonnie Hall

Yes.

Lizzy Baxter

Yes.

Yvonne White

Yes.

Christopher Nicholson

Yes.

Eleanor Kay

Yes.

The Convener

I love ending on a note of consensus—that is great.

I thank you all for giving evidence. I would usually suspend the meeting at this point, in order to allow our witnesses to depart, but I ask that you stay seated for the next item. Given some of your comments this morning, I am sure that you will find it interesting.

The Convener

We move to agenda item 2. I remind people that three members of the committee made declarations of interest at the beginning of the meeting, which remain extant.

This is the committee’s final evidence panel on the bill. Today, we will take evidence from the cabinet secretary and Scottish Government officials. I welcome Fergus Ewing, Cabinet Secretary for the Rural Economy; John Kerr, head of the agricultural policy division; George Burgess, deputy director, food and drink; Ally McAlpine, senior statistician, rural and environment science and analytical services; Vicky Dunlop, bill team leader; and David Maclennan, legal directorate. The cabinet secretary will make a brief opening statement.

Fergus Ewing

Thank you for the opportunity to give evidence on the Agriculture (Retained EU Law and Data) (Scotland) Bill. There is lots to say on the bill, and I will cover as much as possible.

The context of the bill is the UK’s decision to withdraw from the European Union. That decision does not have the support of the people of Scotland; nonetheless, as a responsible Government, we must prepare to take the necessary powers to continue to support our farmers and crofters. For that reason, we are bringing forward this bill at this time.

The Scottish Government could have opted to take powers for Scotland through the UK Agriculture Bill. However, agriculture is devolved, and the Scottish Government believes that legislation for devolved policy is a matter for this Parliament. I note from previous evidence sessions the discussion about future long-term agriculture policy. However, in our view, that is not the purpose of this bill or a relevant part of the discussion today. A lot of work is being done on future policy, which will obviously form part of future discussions, but officials are preparing for the immediate future. The committee will be aware of the “Report of the Simplification Taskforce”, which was published yesterday. I have a copy here.

Previous evidence sessions considered whether the powers in part 1 of the bill could be used to completely replace or radically change the retained CAP legislation if the Government saw fit. That is not the case. It is clear that the scope limits changes to simplification or improvements. Let me be clear: the Scottish Government’s intention is to use the powers in part 1 to ensure that the CAP can continue after 2020; to make the CAP easier to understand and use by simplifying and improving CAP rules; and to adapt marketing and classification rules as required. That is all set out in the bill. In addition, ministers are already, rightly, bound by the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 and the Nature Conservation (Scotland) Act 2004. In short, ministers could not use the bill to legislate in a way that circumvented or that was incompatible with key legislation that protects the environment.

Part 2 includes powers that relate to the collection and processing of data, which are important and necessary in regulating and developing policy for the agricultural sector. Those powers will ensure that everything that we do is consistent with the principles of the general data protection regulation and the Data Protection Act 2018.

I will stop there, as I believe that the committee has a lot of questions for me.

The Convener

Thank you very much, cabinet secretary. The first questions will come from John Finnie.

John Finnie

Cabinet secretary, will you please outline the simplifications and improvements that the Scottish Government is planning to make as a result of section 2 of the bill?

Fergus Ewing

I refer to the report that was published yesterday. I appreciate that members are unlikely to have had an opportunity to study it, but it sets out a number of areas in which there is a relative consensus among the wider rural community that there is potential for simplification and improvement. I will outline some of those areas and then go back to questions, if that is appropriate. They are: improved mapping; mapping stability during the single application form process; penalties—the issue of penalties is absolutely key to making the system more proportionate and less unduly onerous; an inspections charter; the standardisation of capital grant rates; the improvement of EU, or post-EU, appeals processing performance; and the improvement of understanding, communication and education. The task force set out its initial thoughts on those seven areas, and they are the basis for further policy work and development—they point us in the right direction.

All those things are adjective, not substantive; they are about procedure, not substance. They are about how we implement policies—they are not about the substance of the policies themselves—and are, therefore, germane to the powers in the bill, which are substantially not about what we do and what the policies are for the environment but about how we make sure that the policies are implemented effectively; that they do what they are supposed to do; and that there are checks and balances to make sure that people do not abuse the system but are treated fairly, so that, if they make a mistake, they are not treated as though they are some kind of criminal.

John Finnie

Thank you very much indeed for that, cabinet secretary. As you say, the report is a very recent publication and I have not yet had the opportunity to digest it.

Do you think that the interpretation of the terms “simplification” and “improvement” might be subjective? On whose determination and on what basis would you use those terms?

Fergus Ewing

I think that we all understand the term “simplification”. However, although I am a lawyer, I am not here as a lawyer, so I have the luxury of passing that question to a lawyer to help us out. The words that are used in the legislation are a question of legal draftsmanship. Perhaps Mr Maclennan can add to what I have said.

David Maclennan

I will say only that I agree that those are subjective terms. It is a case of ministerial judgment.

John Finnie

Thank you very much.

The Convener

On the question of simplification and improvement, I was quite taken with the idea of auditing, starting off with self-audit, to make sure that people comply with schemes.

Jamie Greene

I have a supplementary question to John Finnie’s questions.

In his evidence, Jonnie Hall from NFU Scotland made quite an interesting statement about the interpretation of “simplification” and “improvement”. He said that the move from “simplification” to “improvement” is “a slightly grey area”. He agrees that

“the interpretation of ‘improvement’ involves looking at policy rather than operation”,

that

“Simplification is all about the operation of existing schemes”

and that

“that is what we are talking about when we talk about simplification.”—[Official Report, Rural Economy and Connectivity Committee, 18 December 2019; c 7].

There is concern that inclusion of the language of improvement strays into the area of alternative policies, which the cabinet secretary said is not the point of the bill. How will he address that when the bill comes back to the committee?

Fergus Ewing

As Mr Maclennan has said, those terms are subjective—people can see and interpret them differently. That is undoubtedly correct. Then again, it is pretty clear that most people would see liberalising the penalty regime as both a simplification and an improvement. That is my own postulation. However, I seek some legal advice from Mr Maclennan about the use of the word “improvement” in the bill.

David Maclennan

Again, those are drafting points about what the bill is intended to do. The word “improvement” is, we hope, narrow enough to explain the policy intention behind the bill.

11:00  

Jamie Greene

That is clearly not the case, because the legal language that the lawyers have afforded the bill represents the policy intention that the ministers have directed, but the ministers have said that that is not the policy intention of the bill. The legal language therefore does not reflect the policy intention in this instance.

David Maclennan

It might be easier if one of the policy officials spoke to the policy intention behind the bill. I am happy to pass the question over to Mr Kerr.

John Kerr (Scottish Government)

The question of the policy intent is a fair one. The clear intent of the policy, which is set out in the consultation paper “Stability and Simplicity: proposals for a rural funding transition period”, is to have a period in which farmers and crofters in Scotland will have some certainty around what support they will get through continuing with a system that is very much based on the system as they understand it today. Where possible, we will seek to improve that system, in order that the process is conducted as smoothly as possible and to make it as fit for purpose as it can be while we prepare for a future policy.

Mr Hall’s representation to the committee is therefore not quite correct, as we do not intend to introduce any new policy substance but do intend to improve the process. That is particularly the case given that the current legislation is quite broad in scope in terms of the objectives that we seek to achieve. We are therefore providing income support to farmers and, at the same time, trying to derive environmental benefits. We will continue to enact those principles in how we use the legislation that we bring forward under the bill.

Fergus Ewing

I might be able to help Mr Greene out by looking at sections 2 and 6 of the bill. Those are the sections that refer to powers

“to simplify or improve CAP legislation”.

The wording that is deployed in section 2(2)—the section 6 wording is similar—states:

“The Scottish Ministers may only make modifications ... that they consider would simplify or improve the operation of the provisions of the legislation.”

The words “simplify or improve” must be read in the light of the fact that they are qualified by what they are designed to simplify or improve. In this case, it is

“the operation of the provisions of the legislation.”

I placed deliberate emphasis on the word “operation”.

We can discuss the matter at stage 2, if Parliament so wishes, through amendments, which would be right and proper. Perhaps we are starting to move on to a stage 2-type debate—I do not know. However, my reading of the bill’s wording is that Mr Hall’s concerns do not apply, because the particular mode of drafting makes it clear that “improvement” refers to improving how the process works, not what it does.

Moreover, there might be a sub-argument that “simplify” implies “improve”. Some people would say that, if we simplify something that is complex, there is inherently an improvement—I would certainly say that. However, the feeling was that, for the avoidance of doubt, we needed to use both “simplify” and “improve” to signify what we are seeking to do. If there has been any infelicitous draftsmanship, Parliament’s processes allow us to correct that at stage 2—that is what that stage is for. I am very happy to come back to the matter, but I do not think that Mr Hall’s criticism is quite apt in that regard.

Colin Smyth (South Scotland) (Lab)

I want to follow that up. Mr Maclennan has made it clear that whatever term we use—“simplify” or “improve”—will ultimately be subject to ministerial interpretation. Even the smallest changes to operational issues can have a significant impact on farmers. Is the Government satisfied that the bill provides sufficient procedures to allow effective consultation to take place on any simplifications or improvements, however you decide to interpret those words?

Fergus Ewing

Do you have an example in mind?

Colin Smyth

Apart from the document that was published yesterday, there have not been any proposals. Given that we have the bill, I assume that the Government will ultimately put forward proposals for simplifications and improvements, but we do not know what they will be. I am sure that people have questions about the lack of direction so far, but the fundamental question is whether the bill provides for sufficient consultation on whatever proposals you will make for either simplifications or improvements.

Fergus Ewing

We will take steps to make sure that there is sufficient consultation of those who are closely involved. With respect, we have already done that. If you look at annex 1 of the “Report of the Simplification Task Force”, you will see that the members of the task force, which was chaired by Douglas Petrie, who is the head of area offices and the head of agricultural profession at the Scottish Government, included Scotland’s Rural College, NFU Scotland, various solicitors with experience in agricultural law, the Scottish Crofting Federation, Scottish Natural Heritage, monitor farmers and forestry experts. We sought to reach out to rural communities and experts to inform the useful work that has been done in the report.

We will obviously proceed by consultation, including in discussions and debates in Parliament, both in committee and in plenary session. That is something that we do routinely as is appropriate. I do not know that we are really here to discuss the Government’s overall policy on consultation, but basically it is that we work in tandem with stakeholders. Of course, it makes sense to consult properly where that is appropriate.

Colin Smyth

The question was really just about whether the bill contains a legal underpinning to ensure that that happens. I will move on to the direction of potential changes.

A number of stakeholders have said in their evidence that the inclusion in the bill of a statement of purpose section would help to clarify the limit of the powers that it confers, particularly in relation to the powers in section 2 to simplify and improve retained CAP legislation. Will you consider amending the bill along those lines? If not, what reasons do you have for not doing so?

Fergus Ewing

It would be imprudent of me to say whether I approve of an amendment that I have not seen, and I am not going to do that. What I will say is that it is my absolute belief that there is an overwhelming desire among farmers, crofters and the wider rural community for us to simplify and improve the operation of the provisions of the schemes.

I will keep this short, but, in my 20 years as an MSP, some of the penalties that have been imposed on farmers and crofters have been, to me, utterly disproportionate. In some cases, there has been no discretion as to whether to impose penalties under the regime that has been in place. We need to put that right, and I hope that members agree that it is necessary for the Scottish Government to be able to do that as swiftly and simply as possible.

Colin Smyth

I think that the stakeholders’ point is that, if the Government was to set out a purpose for the grants that it provides, that would provide reassurance and direction as to the ultimate policy aims of the bill.

I will move on to another issue that stakeholders have raised in their evidence. I think that you touched on this in your opening statement, cabinet secretary, when you talked about the environment, but it probably goes wider than that. The committee has heard from some stakeholders that adding a no-regression clause to the bill would ensure that any simplification or improvement that is introduced using the powers in section 2 will not have a regressive effect—for example, in relation to the environment or animal welfare. Did the Government consider including a no-regression clause when it developed the bill? If not, will you consider doing that when we look to amend the bill?

Fergus Ewing

In my opening statement, I addressed the fact that Parliament has passed legislation in respect of climate change and the environment, that we are bound by that legislation and that, therefore, nothing in the bill can regress from that. We have to comply with it.

If we get to stage 2, as I hope we will, I will carefully consider the matter further. It is primarily an issue that we might want to take up with the UK Government, because the particular concern at the moment is that, following Brexit, we will depart from the high standards of animal hygiene and welfare that have been in place thanks to the EU law on those matters. We lack an absolute commitment from the UK Government that there will be a sort of equivalence undertaking.

Along with Roseanna Cunningham and Mairi Gougeon, I quizzed Theresa Villiers on the issue on Monday, and Roseanna Cunningham asked whether there will be a specific legislative undertaking that there will be no regression. According to the UK Government’s plans, there will not be; there will simply be a requirement to lay a report before the UK Parliament. Therefore, with respect, the biggest threat of regression is the one that I have outlined.

Colin Smyth

I do not disagree with you, cabinet secretary, that that should be implemented by the UK Government. However, in the absence of that, surely it falls on the Scottish Government to have a no-regression policy on issues such as animal welfare and not to make changes to our payments that in any way adversely impact animal welfare, for example. Surely, there is a debate and discussion to be had on whether that would be helped by having a legal underpinning.

Fergus Ewing

This is a framework bill with a very specific purpose: to allow us to change the operation of current CAP schemes. That will not and does not involve changing the Scottish Government’s policy on environmental or animal welfare standards. Those policies are clear and have been enunciated very clearly by members of the Scottish Government.

There is a risk of conflating the bill, which deals with procedural issues, with the substantive policy issues. I do not accept that the bill carries a risk that there will be any diminution in those standards; nor do I believe that that is the intention of any of my colleagues who have other portfolio responsibilities.

Mike Rumbles

I am fully supportive of the policy intention of the bill. My focus is on the drafting of section 3. I understand why civil servants draft legislation in a way that gives ministers flexibility in implementing policy, but the committee’s role is to look at the possible unintended consequences of legislation. Governments are not here in perpetuity—Governments change—and the policy intention of a future cabinet secretary of a different, or even the same, political persuasion might be different from that of the current cabinet secretary.

Section 3 says:

“The Scottish Ministers may by regulations modify the main CAP legislation for the purpose of securing that the provisions of the legislation continue to operate in relation to Scotland for one or more years beyond 2020.”

I know that the cabinet secretary’s policy intention is to lodge a new bill that will provide a new policy for the future of Scotland’s rural economy post-2024, but the majority of our witnesses have identified a concern about the intention to give ministers a power to use regulations to change things that will last

“for one or more years beyond 2020.”

That power will enable the current cabinet secretary or a future cabinet secretary to not implement a new scheme by 2024. It allows them to continue to use regulations to simplify and modify legislation. Most of our witnesses have suggested that the provision could easily be changed to fit the purposes and intention of the bill by saying that the power could not be used beyond, say, 2024. That would give plenty of time—up to four years—for the transition to take place. A future cabinet secretary might be tempted not to implement a new bespoke policy for Scotland by that date.

Are you with me, cabinet secretary? Do you understand my question?

11:15  

Fergus Ewing

I am trying to understand it, but I am not entirely sure that I do. Maybe that is my fault.

Mike Rumbles

I will rephrase it.

The Convener

Maybe you could reduce the length of it, Mr Rumbles.

Mike Rumbles

I will try to make it shorter. The policy intention of the bill is absolutely correct, but most of our witnesses have expressed concern—and I agree with them—that section 3 is not tight enough on the regulations that it provides for the cabinet secretary and the Scottish Government. There is concern that it will give a get-out clause to any future cabinet secretary—not this one, I am certain—to use the regulations to make changes rather than implement a new policy. The bill gives ministers the power in question for ever. The solution would be to limit it, perhaps to 2024.

Fergus Ewing

I appreciate Mr Rumbles’s support for the bill in principle and his kind remarks about me. I will make a few general remarks before addressing the specific point about a time limit, sunset clause or restriction.

We will not make major changes without appropriate consultation and engagement. We always do that. We come to Parliament and we are constantly held to account by this committee. The Parliament will continue to play a significant role, and that is correct. Section 3 will allow changes to be made to retained EU law by regulations. That would require secondary legislation to be laid before Parliament, which would give MSPs an opportunity to scrutinise and probe the changes and to hold the Scottish Government to account. We are also required to consider a range of impact assessments, including business and regulatory impact assessments, which require us to consult stakeholders about the impact on their business.

I ask members to bear in mind that this is a framework bill: it provides for the possibility of doing something, rather than legislating for change now.

My last point is that Governments must be able to act and respond swiftly. If primary legislation constrains that, we must come back to Parliament to amend that primary legislation. I will put a scenario to Mr Rumbles. Let us say that a future minister decides that they want to drag their feet on climate change. If such a minister had to seek primary legislation to make a change that would improve efforts to tackle climate change, they could say, “It might be difficult to find a slot—it’ll take me three years to tackle this.” If I were such a minister and I was bound by primary legislation instead of being able to make changes swiftly, I could say that.

The issue can be approached from different angles. It can be argued that the need to go back to get primary legislation could be used by a future Government as a pretext for not doing things that some members would like us to do. Such a scenario is not impossible.

I will give Mr Rumbles another example. Although this is not quite the same thing, we have acted swiftly to come up with a scheme for convergence payments. If there were all sorts of restrictions on how Governments could act, would we be in a position, as we now are, to say that the first payment will be made to crofters and farmers by the end of March? No, we would not be. If we developed a new scheme that contained flaws and defects and had unintended consequences—that happens all the time in government—I think that it would be inappropriate if we had to go back to primary legislation to correct it and make changes.

We are not attracted to the arguments that have been put forward. However, I am sure that we will consider the issue further if, as I hope it will, the bill proceeds to stage 2. I am sure that we will have a more focused and detailed debate at that stage. I would not be surprised if Mr Rumbles lodged some amendments. In a sense, I hope that he does, because that might give us an opportunity to consider these serious matters in a bit more detail than we can in the time available today.

Mike Rumbles

I am actually with the cabinet secretary on the points that he has made, but his argument does not address the question that I asked—it answers a different question.

Let me put it this way. I do not in any way doubt the cabinet secretary’s personal integrity or his intentions—he is an honourable individual and his intention is to bring new primary legislation to Parliament by 2024. That is what he wants to do, and I am very supportive of that. However, if there were a change of Government at next year’s election, the way that the bill is written means that it would allow any new Government that came in in 2021 to continue to modify and improve the CAP legislation by regulation, and not introduce a bespoke policy for post-2024. Regardless of whether members think that that is a realistic prospect, in a democracy, it is certainly a possibility. Our job is to make sure that the legislation that we produce is fit for purpose for any Government.

The cabinet secretary said that the bill would give a future Government an opportunity to drag its feet in implementing a new policy. That is the point that I am making. If we leave section 3 as it is, it will give any future Government—not this one—the opportunity to drag its feet on implementing a bespoke policy. That fear was expressed by many witnesses.

Perhaps we can have discussions about this, but I think that it would be helpful if the Government were to lodge amendments at stage 2 to address issues that we should be able to agree on.

Fergus Ewing

I certainly hope so; I want to be helpful in that respect.

With the convener’s permission, Mr Maclennan would like to make a point about section 3 of the bill.

David Maclennan

I want to clarify the exact purpose of section 3. The CAP legislation, as it exists, does not function properly after 2020. There are some things that it was not intended to do after that time, so the power in section 3 simply allows us to make the modifications that we require to make to make the CAP legislation work after 2020.

I hope that that is a helpful addition.

Mike Rumbles

It is, but my point was that ministers could go on using the power for ever.

If we are to have a new, bespoke policy for the future of Scottish agriculture, we need a new bill, and if we put a limit on the power in question, we will get a new bill, because the Government—regardless of its persuasion—will have to come back to Parliament. That is the point that I was making.

Richard Lyle

Is it not good government to be able to act swiftly and do something rather than have to continually go back to Parliament and change primary legislation every couple of years? Surely it is better to make a piece of legislation that can be amended. People like me get frustrated by how long it takes to do something. As far as I am concerned, it is good government to have the ability to do things swiftly. Do you agree?

Fergus Ewing

I think that Governments need the flexibility to be able to act quickly in some circumstances but, in doing so, we are accountable to Parliament, and we are absolutely sure that we will be held to account.

The essential point is that such flexibility is essential for a Government to carry out its executive functions, but I am very open to having discussions about amendments at stage 2, and I have no doubt that such discussions will take place. We take account of views that are expressed by stakeholders, and we will take account of the evidence that they have given to the committee on those matters.

The Convener

I had intended to question you on the issue of a sunset clause later, but I make the observation that more than half the organisations that have responded to us on the bill, including Scottish Land & Estates, the Law Society of Scotland, WWF Scotland, RSPB Scotland, the Soil Association Scotland and the Scottish Wildlife Trust, said that they believed there was reason to consider a sunset clause.

We were copied in on a letter to you from the Delegated Powers and Law Reform Committee, in which you were asked to consider having a sunset clause. Rather than prolonging the discussion on the issue, I simply ask you to recognise that a significant number of people have made that recommendation to the committee. Will you give an assurance that you will consider it further during the passage of the bill, should it go beyond stage 1? Like you, I hope that it does.

Fergus Ewing

I have already said that we have regard to evidence that is provided, and we will take account of the written and oral evidence that has been provided to the committee.

However, there is considerable uncertainty regarding the post-Brexit landscape, for example in relation to what any future relationship with the EU might look like and the rules that we might have to follow, and that could impact on our ability to introduce a long-term policy and the timing of that.

As a matter of principle, we need to retain flexibility to address those uncertainties, subject to our being accountable to Parliament. That is the democratic system. If we constrain ministers’ ability to act by preventing them from being able to respond swiftly, to act when they are required to or even to act routinely to correct the unintended consequences that arise from policy—new policy, in particular—we risk tying ourselves up in knots. We are trying to do new things, such as improve the way in which farming tackles climate change. I am sure that we will do a lot more in that area and that farmers want to do more. However, if we tie ourselves up in knots so that we have to go back to primary legislation to be able to do the detailed work, I feel instinctively that that would be a retrograde step.

However, I undertake to give such matters serious consideration at stage 2, assuming that members will wish to debate them, as is their right.

Richard Lyle

What modifications, if any, does the Scottish Government intend to make to the financial provisions in the bill?

Fergus Ewing

Again, that is a question about policy, and we are here to discuss process. The bill does not introduce proposals to alter the current financial support payments; rather, it gives us the power to make changes to the existing schemes.

Mr Lyle is right—those matters are extremely important. As mandated by Parliament in the motion on the subject that was amended by Mr Rumbles, the farming and food production advisory group is working hard, and is due to provide us with recommendations in due course. It is right that we should have regard to the work of that group and others before we come forward with proposals.

However, I say with respect to Mr Lyle that that is not the primary purpose of the bill.

Richard Lyle

Therefore, I take it that it is wrong for people to suggest that you are considering proposals to transfer funds between pillars.

Fergus Ewing

That happens at the moment; I think that the transfer from pillar 1 to pillar 2 is 9.5 per cent. Different levels of degression—I think that that is the right word—from pillar 1 to pillar 2 are applicable throughout the UK. That is an area in which flexibility is an advantage, as it allows us to act swiftly.

Richard Lyle

Certain stakeholders have underlined the importance of giving the sector plenty of advance notice of changes that are introduced using the powers that are conferred by sections 3 and 4 of the bill. What level of preparatory consultation do you plan to undertake before exercising those powers?

Fergus Ewing

As a matter of practice, we always wish to have appropriate consultation, depending on how significant what we are proposing is. We always do that, and I undertake that that will continue to be the case.

Peter Chapman

As you know, cabinet secretary, the bill allows for pilot schemes to test new payment regimes. I am sure that you also know that the farming community is desperate for clarity on what is likely to happen. When will the Scottish Government be in a position to share more detail about the types of pilot schemes that it intends to introduce and their intended objectives?

11:30  

Fergus Ewing

We set out our policy in “Stability and Simplicity”, which was published in June 2018. It was designed to provide just that. From my perspective at least, the primary thing that farmers wanted was an element of stability and certainty, particularly in relation to direct income payments.

I am pleased that, overall, we have been able to provide that. That is the pole position for farmers and crofters. There are so many uncertainties about Brexit that they wanted reasonable certainty about money continuing to come in, and I have rightly devoted a lot of effort to that. However, we think that pilots are a useful method of exploring how we can deliver policy changes and improvements in future.

I am sure that Mr Chapman is aware that a whole host of things are already going on—for example, in relation to agronomy and improved culture of grass; the better use of rotations for better production of silage; the use of hydrogen to provide renewable energy on the farm; and different feedstuffs for cattle to reduce methane and improve digestive tracts.

I have spoken to many farmers and monitor farms throughout the country. Last Monday in Aberdeenshire, I visited two farms and ANM Group Ltd.

There are also improvements in electronic identification, and particularly in the opportunities to improve safety through the use of electronic identification and readers to reduce the incidence of injury or worse in close proximity handling of cattle.

I have listed some of the things that are already going on. We want to build on the good work that is being done.

We particularly want to tackle the increasing desire in society as a whole that good practice in farming for climate change be substantially improved. We need to focus on that area, which is ripe for developing potential pilot schemes in in future.

This is the last thing that I will say, convener; I appreciate that the answer is long. I appreciate that Mr Chapman is asking me for the answers but, for me, it is the other way round. I go around the country asking farmers what they think the answer is. I think that that is the best way to come up with policy, and that is how we approach the task of deciding which pilot schemes to pursue and how to spend the valuable time and resource of public officials and public money. That is the approach that we have taken thus far.

I appreciate that that is a general answer, but I hope that it is of some assistance. That was not about the purpose of the bill; those are all substantive policy questions.

Peter Chapman

I hear what the cabinet secretary says, but I believe that the farming industry is desperately looking for some clarity on what the thoughts are going forward. In taking evidence on the bill, the committee has heard a variety of stakeholders arguing for quite radical reform to the way in which farm payments are calculated and allocated—for instance, moving away from an area-based approach towards an activity-based approach. Is the Scottish Government sympathetic to that view? Does it have plans to begin trialling a new approach to the calculation and allocation of farm payments using the powers in the bill in the 2021-24 period? It is desperately important that we get some clarity.

We have a focus on a 75 per cent reduction in CO₂ emissions by 2030. If little changes between now and 2024, that will allow just six years for the industry to make pretty radical changes. I am concerned that we are not moving quickly enough to find a way forward and to allow the industry to see how we plan to go forward or how the Government sees how the industry needs to go forward.

Fergus Ewing

I do not disagree with everything that Mr Chapman has said. Incidentally, the existing direct support payments are conditional on a certain minimum level of activity, so it is not as if the system says that people get the money for not doing anything—it is not as simple as that, as Mr Chapman well knows. However, there is a case for moving to a system in which there is a better linkage between the provision of direct financial support and outcomes.

I always like to defend farmers here, because I think that they already provide public goods. There is a narrative down south that we need to get out of the EU for farmers to do good things. No. Farmers already do good things. They already provide our food and look after the landscape, and they are pillars of rural communities. They already provide public goods. However, I agree that more can be done. In particular, we want to focus on how farming can adapt to meet the challenges of climate change. I assure Mr Chapman that we are looking very closely at that.

Peter Chapman

Can you give me any timescale for when we are likely to see what the pilots might look like? I know that they will not be the end product, because pilots involve trial and error.

Fergus Ewing

I am happy to come back to the committee and discuss that matter when it is the topic for discussion. Frankly, that is not the topic for discussion today; the topic for discussion is a bill and a mechanism.

At the moment, it would be imprudent to come up with a series of finalised post-Brexit policies, because we do not know what Brexit will do. We do not know whether there will be 50 per cent tariffs on sheep meat. Some 88 per cent of our sheep meat exports go to the EU. What will we do if there are tariffs because there is no effective trade deal by the end of December? What support would we need to provide to our sheep farmers? We also do not know whether there will be equivalence for imported beef from the Americas, which, as we see it, is reared without any regard for animal welfare and proper regulation, never mind provenance.

With respect, until those big macro issues relating to trade, exports and economics are sorted, it would be imprudent for any Government to finalise a set of policies. We do not know the factual scenario that the policies would have to address, and we will not do so until the end of December. However, that is not stopping us doing the work. We are carrying on the preparatory work, and I am delighted that the “Report of the Simplification Taskforce”, which is the relevant report for today, has already pointed us in the right direction on matters that are germane to the bill.

The Convener

Cabinet secretary, I may have misunderstood, but the bill is largely about process—you have made that entirely clear—and I think that committee members are trying to find out what the processes will be used for. Peter Chapman has another question; there will then be a few supplementaries.

Peter Chapman

I have one more question, which is about funding. My understanding is that the UK Government has guaranteed the same level of funding for the lifetime of the current Westminster Parliament—I assume that you accept that, too. Is the Scottish Government committed to co-financing at the same level that is currently provided? As you well know, pillar 2 schemes are co-financed by the EU and the Scottish Government. Is there a commitment from the Scottish Government to continue the co-financing of pillar 2 schemes at the same level that there is now?

Fergus Ewing

That is a complex area, on which I am happy to provide more detail to the committee. Recently, the Scottish Government received a letter from the Treasury—Mr Mackay received it—that says that funding will be provided at a certain specific level this year, but it does not, for example, confirm or make any reference to the convergence money. Therefore, we need to sort that out. The letter says that we must absorb and accept the fixing of the budget at a certain exchange rate. It is not clear to us whether that will result in a possible diminution of funds. We are not certain about that, and we are probing the matter with the UK Government. That raises other questions about the wording that is used in the letter.

Although I welcome any further clarity and accept that there has been some movement towards that, it would be wrong for me to give an unqualified acceptance to your proposition, because I cannot do so, and the facts do not support that at the moment. However, we want to get to that situation.

Moreover, the letter says that the assurances apply for this financial year, but expressly do not cover future financial years. I have heard that the intention is to do that, but that is different from an absolute assurance. We have to pursue the matter in a forensic way. That is the way to do it.

That said, there is probably nobody on the planet who has directly probed Michael Gove, who was secretary of state at DEFRA for most of the past three years, on exactly that question more than I have. For the past three years since the Brexit referendum, I have asked him, face to face, whether he will match EU funds post-Brexit, as he promised before the referendum—yes or no. Frankly, for three years, we did not get an answer to that question in full. If the UK Government is now finally getting around to giving us that belated assurance, no one will be happier than me.

Peter Chapman

My specific question was about whether the Scottish Government is committed to co-financing pillar 2 schemes. That is a decision for the Scottish Government rather than for the Westminster Government.

Fergus Ewing

We have no intention at all of ceasing to co-finance Government schemes in general. I have had nothing but complete support from Mr Mackay. We should bear in mind that it is prudent for ministers to be careful about the demands that they make of a finance secretary in order that they act maturely and responsibly. I was delighted that Mr Mackay agreed that the convergence moneys should be used entirely for agriculture. In August, when I was at the Lochaber agricultural show, some crofters said that we would siphon off the money for the health service, but Mr Mackay did not do that. He gave me a copperplate assurance, and he is delivering on it. I have every faith in Mr Mackay and that he will continue to support rural communities in the future, as he has done in the past.

Stewart Stevenson

There are probably short answers to my two questions.

First, is it the intention—I presume that it is—that many, if not necessarily all, of the pilots are a necessary precursor to the development of a future agriculture bill that will start to change policy?

Secondly, are you able to tell the committee, as a matter of fact, how long it took to develop the current CAP scheme? That will give us some understanding of the scale of effort that is involved in producing new agricultural support schemes. It is pretty clear that we do not want to create a new scheme in a very short period only to find that we have not taken the time to think through the issues.

Fergus Ewing

How long has it taken to formulate the CAP? I think that we are talking about multiple decades. Without being frivolous, I think that there is a serious point to be made. One reason why it is sensible to proceed by way of pilots is that it allows us to try things out properly and carefully in a controlled fashion, to monitor their efficacy, and to do so on a relatively limited basis. Usually, those who are most enthusiastic about something try it out and see whether they can make it work. If they can make it work, that is all well and good; if they cannot, who can?

The second benefit of running a pilot as opposed to introducing a brand-new scheme is that, if you get something wrong, you have tried it but found that it does not work. If you introduce a brand-new scheme without trying it out first, you will have a much bigger problem.

The third benefit of pilots relates to the lead-in time for substantially changing a policy or for a brand-new policy being long. That is because one has to formulate the policy; consult stakeholders, as we have agreed to do; determine the policy, which is a difficult process; proof check it to ensure that it will work okay; and commission work on information technology so that the policy can operate on the CAP payment system. Frankly, all that has to be done before the policy can be implemented. Forms need to be designed and must be comprehensible, as simple as possible, and compatible with the computer system. In most cases, the policy would probably need to be compatible with the land parcel identification system.

All that means that one must devise new policy with great care. I think that we are talking about it taking a minimum of a year or so to bring in new policies. The risk is that, because of enthusiasm to do the right thing or stakeholder pressure to do the right thing, Governments are tempted to try to do the right thing but too quickly before being ready to implement the policy. I am not willing to expose the rural community to those risks. That is why, in my work as the cabinet secretary, particularly in relation to “Stability and Simplicity”, I have made it clear that we need to approach with care—in short, the approach is festina lente.

11:45  

Mike Rumbles

I want to follow on from the point that Stewart Stevenson made, based on Peter Chapman’s point about pilot schemes, and the cabinet secretary’s response to it. I believe that it is important to manage expectations here. The cabinet secretary said that it would take “a year or so” to introduce new policies. However, if we think through the process, surely the future farm policy group will need to report on that to the cabinet secretary and the report will then surely need to be interrogated before anybody can start thinking of pilot schemes. A year or so is quite short term. Are we not working towards 2024 for the implementation of a new policy? If people expect a new policy to be implemented before that date, managing that expectation will be difficult.

Fergus Ewing

Spoken like a potential Government minister, I may say.

Mike Rumbles

I do not think that there is any chance of that.

Fergus Ewing

Who knows? To be serious, Mr Rumbles makes a perfectly valid point, but I believe that we are able to go ahead with some pilots to try things out. Indeed, it has just been brought to my attention that there are examples of pilot schemes that have been undertaken. For example, with POBAS—piloting an outcome-based approach in Scotland—Scottish Natural Heritage is exploring a payment-by-results approach to delivering agri-environment schemes with groups of farmers in Skye, Strathspey, Argyll and East Lothian.

It is probably possible for pilots to be done without having the farming and food production future policy group’s report. I agree that we cannot finalise policy until that group has opined, but it is not possible to finalise a policy anyway, given the tariff and trade issues that remain unresolved. If they are not resolved in an acceptable way, that might lead us to having to think radically about how we tackle an entirely different situation. The world has taken free trade and frictionless trade for granted for decades, but the USA, for example, now imposes a 25 per cent tax on imports of whisky, cashmere and shortbread, which are three iconic Scottish products. Given what might happen in respect of Brexit—I hope that it will not—we have to tak tent.

The Convener

Before we move to the next question, I will make a plea to committee members and to the cabinet secretary. My job as convener is to try to ensure that everyone has a chance to ask all the questions that they want to ask and that the cabinet secretary can answer as fully as possible. Short questions and answers help me to ensure that no committee member has to come and complain to me at the end of the meeting that I have ignored them. I just make that plea and I am sure that you will all take it to heart.

Angus MacDonald (Falkirk East) (SNP)

Cabinet secretary, you announced on 24 October last year that the agri-environment climate scheme would not be open to new applicants from 2020. We are interested to hear whether other schemes will also be affected. Does the Scottish Government intend to use the powers in the bill to ensure that funding is available beyond 2020 for the AEC scheme and all other current schemes?

Fergus Ewing

We have supported environmental schemes in a variety of ways. The fact is sometimes neglected that the greening element in the pillar 1 payment is designed to do that, as indeed are some of the rules that are applicable in respect of the direct payments schemes. My officials will cover the specific detail about the AEC scheme, but I do not know whether it is Mr Kerr or Mr Burgess who will do so.

John Kerr

We have an issue with that support because contracts that are issued under the AEC scheme are multiannual and we have no certainty about the funding beyond 2020, as the cabinet secretary has said. Decisions about further AECS rounds will have to be taken once we have a clearer sense of the financial picture and support—the quantum of the sum that will be available and the means by which that support will be delivered—after we have left the European Union.

Angus MacDonald

What is the position with regard to any other current schemes?

John Kerr

As we discussed with the committee late last year, we have set out our plans for the pillar 2 elements of the funding for the remaining part of the programme. There are no other particular changes of the nature that you suggested.

Angus MacDonald

Is it still the Scottish Government’s intention to use capping of individual payments as a mechanism for funding pilot schemes to be introduced using the powers in the bill? If so, how far has the Scottish Government developed its thinking in that area and when will it be able to reveal a finalised policy on capping?

Fergus Ewing

We are looking to cap payments; Mr MacDonald and other members will know that that was stated in the “Stability and Simplicity” consultation, and there is a reasonable amount of detail in that document thereanent. We confirmed it again in the programme for government by saying that we would develop substantive measures to be ready for implementation in 2021. That will include the level at which the largest direct payments to individual recipients will be capped in order to redistribute the funds within the CAP support.

By way of background, there are a large number of diverse views on capping and its pros and cons. It is a controversial topic—let us make no bones about that. There is a strong view that moneys that are freed up by capping should be directed to other positive schemes. I will not suggest schemes now, because that is policy not process. I think that the majority view is that there should be a cap in one form or another.

There is a cap in place for basic payments in pillar 1. It is at a pretty high level at the moment, and I think that the majority view is that it requires to be looked at. There are also technical issues about avoidance and anti-avoidance measures, such as whether a group of businesses are controlled by one business. Governments have to bear in mind such things when looking at an issue that is inherently complex and controversial but, nonetheless, we have given a clear direction of travel and an indication of when we hope we will be able to take a different approach.

Angus MacDonald

Do you have a timeline for the finalised policy?

Fergus Ewing

Our commitment in the programme for government is to develop substantive measures to be ready for implementation in 2021.

Maureen Watt

I will move on to section 5, which is about the power to modify CAP legislation on public intervention and private storage aid, and wrap two questions into one. Is the Scottish Government planning to make any changes to the ability of the Scottish Government to intervene in exceptional circumstances? How do you respond to the assertion from some stakeholders that the Brexit process in itself constitutes an “exceptional circumstance”, during which Governments may need to intervene? We have discussed possible tariffs that sheep farmers may face—would that be an exceptional circumstance?

Fergus Ewing

In response to the first question about whether we would intervene in exceptional circumstances, we are not planning to make any such changes. I am told that the purpose of section 5 is to prevent the Scottish ministers from being obliged to intervene in a market in Scotland when the secretary of state is not obliged to do so in England or elsewhere in the UK, so there is a somewhat technical reason behind the provision.

On the argument that Brexit in itself constitutes exceptional circumstances, I have alluded to the market dislocation that Brexit could lead to. We hope that that will not happen, but we agree that that could amount to exceptional circumstances. Most people would think that the examples that I have given, which I will not rehash, would be exceptional circumstances.

In our no-deal Brexit preparations, we looked at a compensation scheme for sheep meat in the event of tariffs at 40 or 50 per cent being imposed on lamb. The Scottish Government, the National Farmers Union and NFU Scotland have pressed the UK Government on such matters since the autumn of 2017. We had worked out in principle a scheme that would apply. That is an example of a response that would have been appropriate, albeit that many people think that compensation schemes have two facets—too little and too late.

Emma Harper (South Scotland) (SNP)

I am almost able to say good afternoon to everybody.

I am interested in section 6, which gives the Scottish ministers powers, by regulations, to make modifications to the conditions for aid to fruit and vegetable producer organisations that they consider would simplify or improve the legislation. We need to give producers a strong voice; sometimes, they are at the bottom end of the supply chain when it comes to decisions. What is the Scottish Government’s overall approach to producer organisations? Will you confirm what changes the Scottish Government might be planning to make to the conditions for aid to fruit and vegetable producers?

Fergus Ewing

We support producer organisations, which do a good job for many sectors of the Scottish rural economy. I have had the opportunity to visit several POs and see at first hand the good work that they do in specialist areas. Three POs—Angus Growers Ltd, East of Scotland Growers Ltd and Scottish Borders Produce Ltd—receive funding through a funding scheme.

The EU’s fruit and vegetables aid scheme, which was formed following an initiative by a group of growers to receive financial assistance, officially recognises POs and was designed to increase competitiveness in the supply chain. For example, Highland Grain Ltd, which I have visited, has developed a very efficient system for storing barley at the correct temperature to meet the needs of whisky consumers. It would probably have been beyond the financial capability of individual barley farmers to do that. We wish to support producers in clubbing together for a common purpose.

In the UK Agriculture Bill, the UK Government asserts that the fundamental recognition of POs is a reserved matter. However, as we set out in the legislative consent memorandum that the Scottish Government produced when the previous UK Agriculture Bill was introduced, we do not agree with that position. Despite repeatedly pressing Michael Gove, Theresa Villiers and George Eustice on the matter, we have not been able to resolve that fundamental difference between the Scottish and UK Governments. That is very unfortunate, because we think that we are better placed here to help POs to develop further and, possibly, to create new POs in areas of the rural sector in which there is not currently a service of POs.

Emma Harper

On that topic, we took evidence that supported the creation of a producer organisation for beef, for example. We already have dairy producer organisations and, as the cabinet secretary will be well aware, dairy farming is extremely important to the economy of the south-west of Scotland. Does the Government have plans to expand the producer organisation model into other areas and sectors?

Fergus Ewing

It is not for us to impose such organisations, but we are keen for them to be used when there is a desire and a demand among the grass roots for POs. The dairy sector is very important to the Scottish Government, the south of Scotland and other parts of Scotland. We are happy to work with the farming community and others to explore whether we should pursue such a model. If so, we would start off with a favourable approach to that, and we would desire to be helpful as far as possible.

Jamie Greene

Good afternoon, everyone.

The Convener

It is not quite the afternoon yet.

12:00  

Jamie Greene

It is now.

I have some fairly simple questions on marketing standards. Why would the Government like to include powers to amend marketing standards for products sold in Scotland? Why is the power for products that are sold in Scotland and not products that originate in Scotland?

Fergus Ewing

First, it is not our intention to make any radical changes to marketing standards, and maybe it is helpful if I start by saying that. The power that is being taken here is to make sure that we have the ability to replicate changes that are made elsewhere in the UK, in order to avoid barriers to the movement and sale of goods within the UK after EU exit. Such decisions regarding whether to follow any changes that are made by a UK bill or whether to retain alignment with EU standards can be taken on a case-by-case basis. Again, the provision in the bill was designed to ensure that there is an ability to do something, rather than to decide policy.

Jamie Greene

So you could not give us an example of a product that is currently sold in Scotland for which there may be a divergence in marketing standards between the rest of the UK and Scotland. Have any scenarios been worked up to illustrate why the power is needed?

That question is open to any of the panel.

The Convener

George is keen to come in.

George Burgess (Scottish Government)

“Keen” might be an exaggeration, convener.

At the moment, of course, because the standards are determined at European level, and indeed, as we discussed previously, some of them are developed at an international level, there is no divergence. What we are doing here is taking the powers that will protect us against a situation where, under the UK Government’s previous Agriculture Bill, which we expect to be reintroduced anytime now, powers to alter marketing standards are introduced that open the prospect of divergence within the UK, because changes might have been made in other parts of the UK that we were not able to replicate. The measures here are about avoiding unintended divergence within the UK.

To pick up on your initial question about why the provision is about products that are marketed rather than produced in Scotland, obviously the marketing standards apply at the point of marketing. Any producer has to produce to the standards that are appropriate to the jurisdiction where their products are going to be sold. A Scottish producer selling to the United States markets and labels its products according to standards in the United States and not just to UK standards. The same approach can be seen in the UK Government’s previous Agriculture Bill; the marketing standards apply in the jurisdiction where the products are being marketed.

Jamie Greene

I am struggling to understand the point. I was hoping to keep this brief but, in light of your answer, I have doubt in my mind as to why the intention is to avoid a divergence of standards, when actually all, or the majority of, the evidence that the committee has received expresses concern that the provision would create divergence. On a technical level, could you explain why this would avoid divergence across different parts of the UK when, in effect, if you have the power to regulate for the divergence of standards in Scotland versus other parts of the UK, you will create divergence?

George Burgess

If the UK bill, as previously proposed and as likely to be reintroduced, passes and becomes law, that will create the power for marketing standards to be changed in England, Wales and Northern Ireland. If there were no equivalent provision in Scotland, it would be possible for marketing standards in those other parts of the UK to be changed in a way that we could not replicate. Without any action on the part of the Scottish ministers, that would lead to a divergence. This allows us to play catch-up with other parts of the UK. Without these provisions, we get divergence; with them, we can avoid divergence. There is an opportunity for ministers in each jurisdiction to decide what to do.

You have seen the views from stakeholders about the importance of convergence and maintaining alignment. However, if other parts of the UK and DEFRA have signalled their intentions to change marketing standards, which might diverge from the European standards, that—not any action that we propose to take—will create the divergence.

Jamie Greene

The obvious solution would be Scotland being included in the UK Agriculture Bill, as opposed to having separate legislation.

George Burgess

Not necessarily. The previous UK Agriculture Bill was framed in such a way that there was not a single, unified marketing standards power, but three separate sets of standards, and we expect the same approach to reappear. For Wales and Northern Ireland, the UK Agriculture Bill recognises the devolved nature of the matter and seeks to enshrine that in legislation. The approach that has been taken is that, because marketing standards are a devolved matter, it is appropriate for this Parliament to consider them, rather than that being delegated to Westminster.

Jamie Greene

I am sure that the matter will arise as the bill progresses, so I will not labour the point. As we approach the drafting of our stage 1 report, it is worth noting that stakeholders raised genuine concerns that there should be no inconsistency in standards, given that the UK is the largest market for the majority of Scottish products. However, that is being addressed.

I have a technical question about the Agriculture (Retained EU Law and Data) (Scotland) Bill. Will somebody on the panel explain why pig and sheep meat have been excluded from section 9? That was noted a few times in evidence sessions.

Fergus Ewing

I am told that the list in section 9(1) reflects what is currently in the EU common organisation of the markets regulation.

Now that George Burgess has broken his duck, as it were, does he want to come in again? [Laughter.]

The Convener

He certainly looks enthusiastic.

George Burgess

I do not think that duck is covered by the standards. Perhaps it is under poultry meat.

As the cabinet secretary said, the coverage for our provisions and indeed the similar provisions in the UK Agriculture Bill directly mirror the coverage of the existing EU standards. There is a power in section 9(2) for the list of sectors to be expanded. However, as per previous discussions, it would be a matter for consultation with stakeholders as to whether there was a desire for any other sector to come in under the marketing standards provisions.

Jamie Greene

That does not necessarily explain why they are omitted, but it explains their omission. Thank you.

Angus MacDonald

Certain stakeholders have suggested to us that the powers in section 10 offer a good opportunity to revise carcase classification following EU exit to better meet the specific needs of the Scottish and UK marketplace. Is the Scottish Government planning to make any changes to Scottish carcase classifications using the powers that are conferred in the bill? If so, what will the changes look like?

Fergus Ewing

The power will enable us to make changes to the scales for carcase classification after EU exit and, if we wish, to ensure that they are harmonised with those elsewhere in the UK. We ran a consultation in 2018 regarding mandatory sheep carcase classification. Further industry consultation is needed but, if we decide to make a change, the power will enable us to do that.

Angus MacDonald

To clarify, are you saying that consultation has taken place but you plan further consultations?

Fergus Ewing

We have not specifically consulted on the provisions. They are really a response to the provisions that the UK Government has included in its Agriculture Bill. As we set out in the policy memorandum, the risk is that, if those provisions proceed for England, Wales and Northern Ireland, Scotland could be left adrift. It is better to take a matching set of powers here so that, if the need arises, we can make those changes.

Angus MacDonald

That also applies vice versa, of course. We have heard concerns in some of the evidence that we have taken that, if the classification was changed here, it would not be on a par with that in the rest of the UK.

Fergus Ewing

That would be a matter for internal discussion and deliberation. I do not know whether George Burgess has anything to add.

George Burgess

The point that I made in the previous discussion on wider marketing standards also applies here. Taking those powers will allow us to remain on all fours with the rest of the UK, if that is what is wanted. Otherwise, there would be a risk that we would not be able to follow changes that were made elsewhere in the UK.

I stress that we are not aware of any active plan by another part of the UK, including by DEFRA, for a specific change to the carcase classification standards. They are of pretty long standing in Europe and it is not immediately obvious that we need to change them.

Richard Lyle

The bill’s policy memorandum mentions that the Scottish Government is already looking at reducing the existing burden through the use of new technology such as earth observation data from satellites. I will run my two questions together in order to cut down the time. Is the Scottish Government planning to make any practical changes to the way that data is collected and processed? Will you elaborate on the Scottish Government’s plans to introduce new technology for data collection and processing, such as satellite mapping?

Fergus Ewing

The bill gives us a mechanism by which we can develop different routes. That does not have to mean new technologies or data collection methods; it could mean a change in data processing methods.

I emphasise that the general approach that we want to take is to be open and transparent in relation to data. That should be said as a matter of principle and for the avoidance of any doubt. I think that I alluded to that in my opening statement.

The bill will, for example, enable data that is provided by the farmer to be reused, as long as the use is within the scope of the purposes that are listed in the bill, rather than our having to ask the farmer multiple times for the same piece of data. I think that, at a practical level, that entitlement is a matter of common sense and will be desirable for most farmers, who probably think that the Government asks them too many questions for too much of the time, anyway.

Richard Lyle

That is fine—thanks.

Peter Chapman

When I asked about the subject, the Scottish Government bill team outlined that the data collection avenues that the Scottish Government currently uses, including the June and December censuses and the farm business survey, will continue. Is the data that is currently collected sufficient? In response to the call for views on the bill, some stakeholders highlighted that there are gaps in the data that is collected and said that there might be a need to collect other data to address challenges such as climate change. Do we collect the right data, and enough data? Do we need other data streams to address the issues, and particularly climate change?

Fergus Ewing

The data that we collect at present is provided through Eurostat, but Mr Chapman raises a perfectly reasonable point. We need to ensure that, if our sustainable development goals change in future, we will have the power to require and compel the gathering of data that is germane to the pursuit of those objectives. As a general principle, I agree that that might require further attention in future. Although we do not intend to change the data that we collect at present, the powers that are set out in the bill are important because they will allow us to respond to and meet potential changes in international requirements. Without those powers, we might not be able to do that.

I believe that Mr McAlpine is keen to add to that.

Ally McAlpine (Scottish Government)

When we spoke about part 2 of the bill previously, we said that it is about personal data, which is where we go out with surveys. Some of the data streams that Peter Chapman asked about would not necessarily include personal data, so they do not need to be covered by part 2 of the bill.

In the unit that I manage in the Scottish Government, there are some teams that work specifically on the survey, and this part of the bill will help them. Other people look at things such as earth observation and other sources of data provision that we will have to look at to address some of the issues that have been highlighted, such as climate change and environmental concerns.

To be clear, I note that part 2 of the bill will enable us to go and ask farmers for their data. Things such as soil and earth observation are outwith the scope of the bill. We can do that through other routes.

Peter Chapman

Okay—thank you.

12:15  

Colin Smyth

A number of stakeholders have pointed out that the bill does not have an overarching policy direction. That view has been reinforced today by the comment that any changes that are made by it are likely to be quite limited. Stakeholders clearly feel that changes need to be made to our rural policy—for example, to achieve a reduction in our carbon emissions and significant growth in our food and drink sectors. However, that will not happen through the bill, which is clearly an interim measure. What are your thoughts on the likely timetable for future legislation that will set out our wider rural policy for the longer term?

Fergus Ewing

We have broadly covered that already, but I am happy to answer the question, as you have asked it. The bill is not intended to set out future policy. As I have said on numerous occasions, its function is to set out our ability to make changes to our existing policy and thereby develop our future policy. Without it, we would not be able to do that.

If I might correct you, Mr Smyth, I have not said that any changes that we make will necessarily be limited. I have not said what the changes will be because, as I have argued hitherto, we have not yet reached the point where it would be appropriate for me to do so. The farming and food production future policy group is working on our future direction. It consists of external stakeholders, is well supported by an academic advisory panel and has been properly resourced—it has shown respect for Parliament in asking that it be provided with that resource. It is due to report this summer.

Our present focus is on continuing wider engagement with stakeholders, which might lead us to do further work if that is required—especially to ensure that we will be in a position promptly to meet the climate change challenge. We are looking at that issue in relation to any additional work that we might require to do, as stakeholders have expressed the desire that we should. We therefore need, perhaps, to consider supplementing the work of the farming and food production future policy group.

As a matter of fact and practice, and as it is right for me to do so, I constantly and regularly engage with stakeholders throughout the country, including individual farmers, crofters and businesses in rural Scotland—as I did at the excellent reception for Quality Meat Scotland that was held here yesterday evening, which I and other members attended.

Colin Smyth

It is not entirely clear, though, what your preferred timetable would be for introducing any future legislation. Do you have one? We must also bear in mind that we will leave the EU on 31 January and will enter a post-exit transition period that will finish at the end of the year. If you have a timetable in mind, will you be able to reduce it should the 2021 to 2024 transition period for agriculture be shortened?

Fergus Ewing

On timetabling for the bill, we have to take things sequentially. I am reminded that our aim is that it should come into force in the summer. At that point, we will possess the powers that we require to move forward to the next stage. For the reasons of Brexit uncertainty that I mentioned earlier, it would be imprudent and wrong for us to seek to implement sets of new policies when we do not know what the facts are. However, our preparatory work continues, and it will inform the timetable for any future legislative measures that are necessary, be they in primary or secondary legislation or an admixture of the two.

The Convener

Cabinet secretary, I mentioned earlier that the DPLR Committee has written to you, and one of the subjects that it has raised is periodic reporting to Parliament. The bill is a process bill, but it will allow things to change. Are there appropriate reporting provisions or will we work on the principle that, when something happens, the Government will get back to us?

Fergus Ewing

I do not know whether any of my officials wants to answer that in relation to the provisions of the bill. In general, we try to update the committee on matters of importance, and I hope that I stick to that. As I wait for my officials to find the answer to your question, I note that, with regard to the performance of the CAP payment system, we provide regular reports but we have not actually heard much back from the committee as to how well the system is going. Maybe the letter is in the post—I do not know.

To be serious, I note that, as a matter of general practice, we are happy to continue to provide the committee with regular reports on all matters of importance as they develop. When something important happens, after deciding how to tackle the matter, one of our first questions is, “Should we inform the REC Committee out of respect for Parliament and, if so, when and how?” That is a general duty and we take it very seriously. Maybe that is the answer.

I think that my officials have looked in vain for a specific answer in relation to the bill.

The Convener

I am conscious of your answers on that matter, cabinet secretary. The bill will probably last beyond the next election and my comment is about ensuring that the bill allows for a correct reporting procedure.

Vicky Dunlop (Scottish Government)

I can confirm that there is no such provision in the bill. I think that we responded on that matter in writing in our evidence to this committee or in our response to the Delegated Powers and Law Reform Committee—I am trying to find the letter.

The Convener

I do not think that you responded to this committee. Maybe you responded to the DPLR Committee.

Cabinet secretary, given the time, it would be extremely helpful if you could provide a written response on that reporting.

Fergus Ewing

I have just checked and, as far as I know, we are under no legal obligation to do much of the reporting that we currently do. The committee should be aware of what it seeks. If it wants to have statutory provisions for reporting on everything then, by definition, a future minister might take the view that, on certain areas, they will not be statutorily obliged to report the information that I currently provide to the committee gratis, out of the goodness of my heart, in a desire to show respect to Parliament. It is a two-edged sword. However, if you wish me to write to the committee, I will do so.

The Convener

In fairness, I know that you provide a lot of things out of the goodness of your heart, cabinet secretary, but it is the committee’s responsibility to look at legislation and hold the Government to account, and that is why we ask you to answer questions. As you will, no doubt, respond in detail to the DPLR Committee’s letter with regard to the points that it has raised about procedural issues, sunset clauses and periodical reporting to Parliament, perhaps it is sufficient for me to ask you to copy us in on your response.

John Finnie

I will indulge that big heart of yours again, cabinet secretary. I have a question about another letter. We understand that the Environment, Climate Change and Land Reform Committee has written to you and Ms Cunningham to request clarification on a number of points, including on the impact of the bill on environmental policy. I am conscious of what you said about future policy, but what is the Scottish Government’s position on the impact that the bill should have on the environment?

Fergus Ewing

The bill will not have any impact on the environment per se. I tried to make it clear in my opening statement that we are—rightly—bound by existing environmental legislation, and I think that you have taken that point. That is the legal framework. The bill allows us to make changes, but there is no way that such changes would be used to diminish the environmental standards that apply. That is our general approach, and I thought that I had already made that clear. If I am missing something, Mr Finnie should ask me to deal with it now.

John Finnie

I will mention a selection of the matters that we understand that the ECCLR Committee has raised in its letter. They include

“Whether the bill will enable the continuation of environmental incentives”;

“The impact of a 5-year transition period on environmental policy, and whether the Scottish Government have considered a more ambitious approach”;

and

“Whether powers exercised under the Bill could have a negative impact on environmental policy.”

Fergus Ewing

It is difficult to answer the question, as those are perhaps more policy questions. We have the ability to exercise all the powers in the bill, but the reality of the Brexit situation is that the legal backdrop—at the UK and international levels—against which we will operate remains unclear. I made that point earlier. There is also still some uncertainty about what future funding we will receive. We require clarity on the grey areas that we alluded to earlier, which I will not repeat. I assure Mr Finnie that the bill is in no way intended to downgrade our commitment to high environmental standards—quite the opposite.

John Finnie

I do not know the protocol for this, cabinet secretary, but given that that committee has asked you the question—I think that the letter is to both you and Ms Cunningham—would it be possible for any reply to be copied to this committee?

Fergus Ewing

Yes, of course. I think that that is something that we can agree to.

John Finnie

Thank you. The ECCLR Committee has also questioned the limitations on exercising the powers in the bill as a result of future arrangements with the UK Government on funding, trade and post-Brexit arrangements, and intra-UK common frameworks. Is the ability to exercise powers under the bill uncertain? What is the Scottish Government’s position on those constraints?

Fergus Ewing

I do not think that there is uncertainty about the powers that will be conferred on the Scottish Government should the bill be passed. I think that that is pretty clear. Where there is uncertainty, it is, I am afraid, about future funding post-Brexit. Even if, as Mr Chapman says, it turns out that the UK Government maintains funding at EU levels until 2024, EU policy was on a seven-year basis and it is currently deliberating on the policy that will apply to 2027. My understanding is that, in the previous session of the UK Parliament, the UK Treasury said that all direct payments would cease by 2027.

My point is that, even if there is some assurance about funding from the UK to 2024 and we assume for the purposes of this discussion that that funding will continue—for farming, food production, the environment, forestry and so on—to 2024, a question still lingers about what will happen between 2024 and 2027, because the previous Chancellor of the Exchequer said that there would be no more direct payments from 2027, and, indeed, direct payments are reducing fairly sharply in England in accordance with the plans of Theresa Villiers. I think that the NFU has challenged that.

With respect, I think that the uncertainty therefore arises from questions about funding from the UK, rather than from the EU—which, for all the frustrating nature of its stipulations, regulations and rules, and penalties, was a fairly good financial friend to rural Scotland and, I would say, to rural Britain.

John Finnie

Thank you.

The Convener

Cabinet secretary, a couple of members have kindly given me the nod that they are happy to have their questions asked by letter given the time constraints that we are facing, so there will be a follow-up letter on a couple of matters.

That only leaves me to thank the cabinet secretary and the other witnesses for coming to the meeting.

That concludes the committee’s evidence-taking sessions on the bill. We will consider our draft stage 1 report in the coming weeks.

Fergus Ewing

Convener, may I make a small point of clarification regarding a previous answer that I gave?

The Convener

Yes, but please be brief.

Fergus Ewing

You asked me to write to the committee about reportage on use of the powers and periodic reporting to Parliament. I have since been shown a copy of the letter that Vicky Dunlop sent to the clerk of the DPLR Committee on 19 December, in which that question is answered. I will provide a copy of that letter to you, because the question has already been answered—the answer is given in the letter. I thought that I should clarify that. We all want to be as co-operative as we can be.

The Convener

Thank you, cabinet secretary. We look forward to receiving that letter.