Rural Affairs, Climate Change and Environment Committee

Meeting date: Wednesday, November 12, 2014

Official Report 531KB pdf

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Draft Budget Scrutiny 2015-16

Agenda item 2 is consideration of the Scottish Government’s 2015-16 draft budget. As we planned, we will take evidence on the theme of Scotland rural development programme climate measures.

This is the committee’s second evidence session with stakeholders on the draft budget. Following today’s session, the committee will hear from the Minister for Environment and Climate Change and the Cabinet Secretary for Rural Affairs and the Environment on 19 November and 26 November.

We welcome the witnesses. Andrew Bauer is deputy director of policy at the National Farmers Union Scotland; Alan Hampson is programme manager, land and freshwater, at Scottish Natural Heritage; Lyn White is agricultural development manager at the Soil Association Scotland; Davy McCracken is professor of agricultural ecology and head of the hill and mountain research centre at Scotland’s Rural College; and Vicki Swales is head of land use policy at RSPB Scotland.

I will kick off with the first question, which is about the legacy payments from the previous SRDP. How do you think the agri-environment measures budget line will deliver for climate targets, given that the Scottish Government has said that there is no funding for the new agri-environment climate scheme in 2015-16?

You do not all have to answer that question. Please just indicate that you want to speak, and I will call you to do so.

The delay that there will inevitably be will be unfortunate. It has been indicated to us that, once the scheme is up and running, there will be good items in it. A lot of the measures to tackle diffuse pollution in particular will be beneficial for the water environment, climate change and farm businesses. We think that that is a really good multiple benefit, but there are very tight constraints. Obviously, that will mean that many people will be disappointed, because there will be fairly strict targeting. It will be interesting to see how the process rolls out.

Money has been identified for peatland restoration.

We will come to that.

Do you want me to leave that issue for now if we are to come to it?

I think so.

Okay.

There are things in the legacy agreements that will be of benefit to the climate—for example, many of the habitat measures are positive, particularly in respect of climate adaptation or helping species to adapt—and other measures will lead to carbon reductions. However, the pot of money is obviously quite limited, and that has been more focused historically—we think quite rightly—on biodiversity measures. Therefore, the gap year is problematic.

From reading the budget figures, it is very difficult to understand that it did not include agri-environment spend under the new programme for 2015-16. That was not entirely clear from the presented figures. I understand that the peatland restoration money, the beef pot, some other things, and the legacy spend have been put forward. It would help if the figures were better presented in the future so that we can understand what the expenditure relates to.

At least the farming for a better climate programme will run throughout 2015-16. That money is a very small proportion of the overall pot, but from a farm point of view, it has shown proven benefits from a financial and an environmental perspective. Therefore, there is some small consolation there from a climate measure aspect, as well as the peatland action once it gets up and running.

We note that the farming for a better climate budget is £0.4 million, not £0.3 million.

It is actually £373,000. It is a question of whether you round up or down.

That sounds like “up” to me.

On the legacy side of things, it was very good to see that our organic farmers were given the option to take on transition money for a five-year contract. Obviously, organic farming provides quite a few multiple benefits, so we are thankful that farmers can get their maintenance payments for another five years.

Thank you. Perhaps I should declare an interest at this stage: I am a member of the Soil Association. I declare that interest in case further questions later on might be seen as partial. They will not be; I am trying to be as impartial as possible, as we have to quiz the ministers after this meeting and we want to get the best picture across the way.

In oral evidence to the committee on 5 November, Willie McGhee of the forest policy group highlighted the need to increase the level of payment that land managers receive for carrying out forestry measures so that more land managers take up forestry schemes. How did the level of payments to land managers for measures under the previous SRDP agri-environment scheme affect the uptake at that time and what can be learned from that for the funding of the forthcoming agri-environment climate scheme?

10:15  

I will not answer your question directly, but there is a bigger question there about the extent to which we keep activity polarised on farms. To address climate change and biodiversity issues, there is a need for much more integration between woodland management and farming on farms. Certainly, the relatively small proportion of funding that is available in the pot for farm woodland creation does not reflect that direction of travel and the potential benefits that could be achieved if more was done on farms. I do not mean replacing farms with woodland; I mean integrating woodland much more closely on farms.

When you have the opportunity to read the Official Report of the committee’s meeting last week, you will see a lot of discussion about that. Once you have perhaps reflected on that and we have done so, we might be able to take up those questions a good deal more.

The payment rates are a critical factor in uptake and whether somebody goes into a scheme, and that has been the case historically. However, there are bigger issues to do with the accessibility of the scheme and how easy, or not, it is for farmers or other land managers to get into. We all know about the challenges that we had historically when the rural priorities scheme was brought in. A great deal is being done for the new schemes to improve accessibility and put in place a process that makes it possible for farmers and land managers to get into agreements. That will go right from an audit at the beginning and will take people through a process so that they understand what they are signing up to.

Payment rates are important, but the whole package of the scheme matters, too.

We hope that modernised and computerised schemes make things easier. Inevitably, people have to learn as they go along. We will ask the ministers about that, too, for sure.

On the practical side, I run the future proofing Scotland’s farming programme, which has events on woodland management and biomass. Those have been among the most popular events, and we have been asked how we get farmers along to them. Obviously, payment rates are important, but we also need to look at the practical side and consider what someone can do with what they have on their farm, such as where they plant, why they want to plant and what their overall objective is.

Obviously, the new scheme has agroforestry in it. There is no more money for that, but there is potential to increase farm efficiency, productivity and resilience through agroforestry. We have already run two events on agroforestry, at which we had good attendance, too. Again, they were on a practical level—we brought somebody up from England who is actually doing it and who got their experience across. We did a good farm visit in the afternoon, which involved looking at an orchard and other woodland that could be adapted.

Payments are important, but we also need to get the practicality across. We need to ensure that people engage with the fact that the approach is about not just what they plant but what they utilise on their farm, and that they see the benefit all round.

We may well come on to those issues later.

I emphasise that the advisory service will be crucial in getting farmers to look at the holding as a whole and, as others have said, deliver multiple benefits. Of the 22 needs that have been identified for the new SRDP, 18 have been identified as contributing to the cross-cutting theme of climate change. We need the advisory service to help farmers to take that more integrated view of the farm.

On facilitation, there is an issue about co-operation. Very often, benefits are gained when lots of neighbours pursue a similar objective. That is particularly the case with woodland, especially if that woodland is, say, to restore a flood plain. The facilitation money that will come through the co-operative action fund will be important.

I echo that. Facilitation is key. When we look at the activity across the SRDP, we should not think that only one type of programme will make a difference for farmers. Farmers are conservative—as we all are—and have a tendency to wait to hear what is being said by a number of different organisations and agencies before they will take the plunge and go in the right direction. Key to our getting the biggest bang for our buck in the next SRDP will be having joined-up messages coming from different directions about what farmers can do on the ground.

We will probably talk about interactivity later. That is a good start. Claudia Beamish has a question on the forthcoming agri-environment climate scheme.

Good morning. As you know, land managers will be able to apply for funding for annual management and capital projects for a wide range of environmental purposes, but there is not much detail about the measures that will be funded under the future scheme for 2016-17. The Scottish Wildlife Trust is not on the panel today, but it states in its written submission that

“this round of spend lacks ambition (in terms of funding) to truly deliver a carbon sequestering landscape that would help re-balance Scotland’s carbon budget”.

The Soil Association has commented on that issue as well, and it agrees with Scottish Environment LINK that

“a minimum of £60m per year is needed to adequately meet the objectives and aims of the scheme.”

Funding is obviously not the only issue and there must be a balancing of the different funds, but I would appreciate your comments on that. Also, what are your views on the effectiveness of the spend from the outgoing SRDP agri-environment scheme in creating carbon-sequestering landscapes? What lessons can be learned for the forthcoming scheme?

It is argued that the current scheme potentially lacks ambition. I was involved in a panel that looked at the agri-environment scheme over the past 12 to 18 months and how the new scheme could operate. It is accepted that funding will be limited but that we should try to benefit as much as we can from any action. A lot of activity has gone into finding where best we can target such measures and what multiple benefits can arise from them. The devil will be in the detail of how the scheme is applied, and those of us who will be involved in that process are still in the dark about how effectively it will operate on the ground. However, it comes back to the information technology scheme that was mentioned earlier and how it is capable of highlighting to farmers and landowners what things are possible.

On the effectiveness of spend from the outgoing SRDP, we put such a focus on trying to target things better in the new SRDP in order to reflect not solely the reduction in funding levels but the fact that there has been—not just in the previous SRDP but over a number of years—a scattergun approach to what happens and where in the landscape. In order to address many environmental and climate change issues, there needs to be a much more collaborative or focused attempt to get a number of farmers in a particular area doing things that complement each other. That is the aspiration for the new scheme; whether it works in practice depends on what happens, but it is at least a move in the right direction.

The new programme—particularly the agri-environment climate scheme—lacks ambition. It also lacks funding, as £355 million—27 per cent of the budget—really is not sufficient according to some of the estimates and given what the scheme is trying to deliver. We have designated sites and priority species and habitats in the wider countryside; the Scottish Environment Protection Agency has been pushing hard for options that will help to deliver against the water framework directive objectives and address water quality issues; and we have added climate objectives to the new measure. When all those things are stacked up, it is a pretty big challenge.

Obviously, there are opportunities to do things that will deliver multiple benefits and win-win situations, and we very much hope that that is what comes out of the new scheme. Additional funding for the sorts of things that Davy McCracken has mentioned such as co-operational collaboration at landscape scale will also bring benefits, and the enhancement of the funding for advisory services—even though, in our view, that money is probably still not enough—will help us get more bangs for our buck in delivering against our environmental objectives. However, the big challenge facing us is that the SRDP is severely underfunded.

As for the effectiveness of current spending, the very big problem is poor monitoring, evaluation and data to tell us the outputs and outcomes of our spend. Some of that is down to European Union rules and the monitoring and evaluation framework that has been handed down, which contains some fairly crude indicators and measures such as the amount of land that went into agri-environment schemes. None of that tells us whether the spend delivered any climate benefits, delivered for biodiversity and so on, and this time we must look hard at putting in place proper monitoring and evaluation, which might mean finding some funding outwith the SRDP and its limited monitoring and evaluation budget. We need to boost that work and get a better picture of whether we are truly delivering value for public money.

There were two demands for money there: for more money from outwith the SRDP and for some rejigging of its budget. Where should the money come from in the SRDP to deliver on the priorities that you have highlighted?

With regard to the SRDP, we have previously raised concerns to the committee about the amount of money that is being spent on the less favoured area support scheme. That is not to say that we do not think that money should be going to support agriculture in Scotland’s more disadvantaged areas, but as it stands the scheme is poorly targeted. The bulk of the money goes to the more productive or more intensively managed parts of the less favoured area, and it does not support the high nature value farmers in the north and west of Scotland.

The question is whether the spend on LFASS—which, at 35 per cent of the budget, is a big-ticket item—is at the right level. Indeed, the European Commission has raised questions about the scheme, and we need to take a hard look at it and think about whether some of that money could be better targeted in order to free up money for other measures.

Are we not in a transitional period up to 2018, after which many more of these things will be better focused? After all, we are talking about many communities that are extremely fragile; they might not have a high environmental status, but, given Scotland’s northerly latitude and so on, they desperately need that support.

But I would argue that if you looked at the distribution of LFASS spend you would find that the bulk of the support was not going to those vulnerable communities.

What about the new LFASS?

Nothing changed in the new LFASS. As a result, we have to move by 2018 to the area of natural constraint designation, which, as I understand it, will actually increase the amount of land that will be designated. We had the opportunity—as, indeed, we have now—to come up with a whole new scheme, but the Government has decided to continue the current scheme up to the point where things will be redelineated under the area of natural constraint designation.

You are absolutely right to say that we are in a transitional period, and we have seen big changes to pillar 1. However, a lot of the money in pillar 1 has not gone to those vulnerable communities and the crofters and high nature value farmers in the north and west of Scotland who farm in difficult conditions. The bulk of the support is going to the more intensive arable and dairy sectors and the more intensive end of the beef sector. I accept that there has been some redistribution, but if you were to map the distribution of funds, you would see that most of them were going to the east and south and west Scotland, rather than the north and west.

I would love you to come and give a lecture on that basis in Dumfries and Galloway, which is the area that I represent. The fact is that, over the next common agricultural policy period, many farmers will have their single farm payment reduced by 50 per cent and more, and that money will largely be redistributed to the north and west of the country. There is some discussion to be had about the points that you have just made—full stop.

I call Dave Thompson.

If Andrew Bauer wants to answer that before I—

There are several people to come in—Andrew Bauer and Alan Hampson first of all—but it is important that we deal with this element of the discussion. Claudia, do you have any final points to make in relation to your question?

I want to listen to the responses.

Okay. We will hear from Andrew then Alan.

10:30  

We have a transition with this round of CAP reform, but we are really in a decade-long—if not longer—process of reform and refocus. It would be a bit churlish if anyone on the panel said that the SRDP lacked ambition. We are all operating under severe budget constraints. Farming broadly accepts the SRDP settlement. We would have wanted to see what happened in other EU member states where there has been a much stronger focus on research and innovation and knowledge transfer in order to move agriculture forward and bring about a step change in practice, but that is not what we have; rather, we have money going into LFASS and we have large budgets for agri-environment and climate.

We need to be mindful. It would be nice to carry out monitoring and evaluation and other such work, but there would be a lot of transaction costs in doing so. Part of the problem with the previous CAP, which will remain with the next CAP, is the audit risk. Everyone is tying themselves in knots to create a system that is bomb-proof for when the EU auditors arrive. That builds in huge complexity. If we build in more complexity, with more monitoring and evaluation, we would start to lose the spend on the ground that brings about the change.

I return to Claudia Beamish’s point about sequestration. Although important, sequestration is only part of the picture. Emissions reduction is the bigger and longer-term game, so there is a danger in focusing on sequestration in the short term and not addressing the longer-term behavioural changes. Therefore, we are looking for a package that delivers multiple benefits; we are aiming to achieve a landscape that not only emits far less greenhouse gas, but helps to sequester it.

On sequestration, we will come on to the money in the budget for peatland restoration, and money was and is being spent on forestry in that regard.

We need to make sure that we are not overlooking the behavioural change needed for emissions reduction and, on sequestration, that we look beyond the SRDP. Market mechanisms are emerging that are encouraging that approach, so part of the behavioural change is to encourage land managers to look more broadly beyond the support that is available through the SRDP.

Before the rest of the panel speak, Jim Hume and Dave Thompson have supplementary questions on similar topics.

My question is on the agri-environment schemes and measures. In the draft budget, the figure for agri-environment measures is £46.8 million, which is up by about 7.1 per cent in real terms, but the payments and inspections administration costs increase to a similar amount, £45.4 million, which is almost a 30 per cent increase. I note from its submission that the NFUS is a little frustrated that the Government has changed its mind about smaller schemes being assessed locally and continually. It looks at first glance as if more is being done centrally, resulting in more admin costs and taking a lot of money away from delivery on the ground to go to, I suppose, civil servants.

The Scottish Government and all of Scotland have suffered because of past disallowances due to problems with audits. The figure is high. European Commission officials have admitted that they have succeeded in only two out of their three ambitions. They were trying to make the next CAP greener, fairer and simpler. By their account, they have made it greener and fairer, but they are quite willing to put up their hands and say that they have completely failed to make it simpler.

You will see a significant budget increase there because vast amounts of new mapping, administration and work on IT systems are going on behind the scenes to ensure that we will deliver to a standard that the European Commission will accept. That has led to some unfortunate consequences, one of which is the loss of continuous local assessment of projects. As we understand it, we will move to a one-month assessment window, certainly in year 1, and we will potentially not see spending on the ground until 2016, which is deeply regrettable.

I note that the month that has been chosen is March, which is probably one of the busiest times.

Unless they are rolling over or reapplying for a scheme that they have been in previously, such as a management scheme, I cannot see how somebody doing a capital project will be able to get their application in on time to meet the window next year. I foresee no great degree of capital spend until 2016, which will perhaps mean that projects will not happen until late in 2016.

I want to give a general reaction to that. One of the frustrations of sitting on this committee is that we start off with the CAP process and everybody talks about the need to simplify the CAP and make it nice and easy and much better than it has been in the past, then every vested interest comes along and comes up with all sorts of clever ideas to try to protect their funding streams and get what they want, which means that we end up with a very complex CAP. Is it any wonder that it becomes bureaucratic, with the costs that relate to that?

Was that a rhetorical question? [Laughter.]

I was hoping to get an answer from somebody.

Andrew Bauer had better come in.

Some of the successful arguments that we put forward in the early stages of the negotiation in Brussels were about simplification. For example, on the use of coefficients, we wanted to ensure that the risk of inspection and the complexity around that were reduced. We threw that in not to muddy the waters but to try to clear them up. However, I agree that it is an incredible process from a distance, given the tens of thousands of amendments that go into the CAP regulations. It is no wonder that we have arrived at where we are.

Okay. I hope that the witnesses are bearing in mind the original question that they were asked, but I will bring in Dave Thompson just now as well.

Convener, should I develop the point about the less favoured area scheme, which Vicki Swales and others mentioned, or would you rather I left that just now and picked it up afterwards?

Perhaps you can pick it up afterwards, because you are going to deal with LFASS in particular. However, it has been teed up—that is for sure.

On the legacy side of things, the SRDP has supported organic conversion and maintenance, and we are looking at multiple benefits in environmental outcomes and protecting and enhancing ecosystems. Organic farming covers a multitude of issues including water quality and soil fertility.

Going back to Claudia Beamish’s question about carbon sequestration, I add that research has shown that adoption of organic farming in the United Kingdom would offset 23 per cent of agricultural emissions through soil carbon sequestration alone. On what Vicki Swales said about evaluation of the benefits of biodiversity and so on, I note that figures already show that organic farming gives 34 per cent more plants, insects and animal species and 50 per cent higher numbers of wildlife. There could be evaluation, but research has already shown the benefits of organic farming. We whole-heartedly welcome the fact that organic farming will be considered a national priority.

I return to the question about administrative costs. We should ask what we get for that level of admin spend. Compliance and the risk of non-compliance is a huge issue, but if we are only getting compliance for that spend, it is quite a high figure. If, by 2018 or 2020, we can get better mapping of our agricultural land and a large number of other things associated with it, that information will be an important resource—and not just from a CAP or SRDP management perspective—that will help to guide future actions, whether they are climate actions or wider environment and biodiversity actions, and show where it is best to target them.

Graeme Dey has a follow-up question.

At the same time as achieving climate benefits, we need to address biodiversity and water quality issues, for example. Is there a risk, as I think the SRUC suggests in its written submission, that the increased focus on climate change mitigation and adaptation in the forthcoming scheme will have a detrimental impact on other environmental issues such as biodiversity and water quality?

It goes back to the issue of multiple benefits. I do not think that we recognised previously as explicitly as we do now the contribution that a lot of environmental and biodiversity measures make to climate change. Part of the issue is about better capturing of such benefits.

As I said, mitigation and adaptation are identified as cross-cutting themes in climate change. We are at a learning stage in capturing what contribution other measures make.

I am fairly relaxed that the climate change push will not detract from efforts on biodiversity. For example, there has been a focus on pursuing the idea of irrigation and storage to take water during the summer. That is great for adapting to climate change and it maintains the flows in the rivers, so it has benefits for biodiversity. We are getting indications that that will be funded.

Rather than look at things in silos and say, for example, “This is about biodiversity and that is about climate change”, we and the farmers we represent say that it is all one system out there. To an extent, we have to slice it up into separate parts for administrative purposes, but that is a bit artificial. If we can get away from that view and accept that things can deliver multiple benefits, we will spend our money more wisely in the future.

As Graeme Dey said, we raised a concern in our written evidence about the risk of focusing on climate change mitigation and adaptation, and I still have that concern. Vicki Swales mentioned the constraints and the big calls on the budget. We recognise that climate change is important and needs to be addressed, that water quality needs to be addressed and that, given the European directives, biodiversity within protected areas needs to be addressed. However, my concern is about biodiversity, particularly in the 80 per cent—that is a huge percentage—of Scotland that is outwith the protected areas. When we step back and look at how things have happened in the past, we see that biodiversity outwith protected areas has not had a fair shake of the stick.

There is plenty for all of us to do, then. Claudia Beamish has a supplementary question.

In view of the complexity of the multiple benefits that the scheme is looking for, I am interested to know whether panel members—not everyone has to comment, of course—have concerns about the ability of assessors on schemes to assess the benefits of particular outcomes. I will come to the issue of monitoring later, in another question. If we try to be positive about it, are there any suggestions about the development of training for assessors, if that is needed?

That is a really important point. As we understand it, there will be a two-track process whereby agreements below £75,000 will go through the local Scottish Government rural payments and inspections directorate area office and larger agreements will go to some kind of central panel. We have been seeking reassurances that appropriate experts or authorities will be involved in assessing applications. It should be done by those people from SNH, SEPA or elsewhere who have the environmental knowledge to determine whether an agreement will deliver against its objectives. I mean no disrespect to some of the area officers who work for SGRPID, but I am not sure that they always have the level of environmental knowledge to allow them to make some judgments.

The process that is being put in place will help. As we understand it, farmers will have to produce an audit. A lot of work has been done on targeting to ensure that farmers and land managers can select only the right options. They have to be in the right place to select certain options that have been based on good environmental knowledge. They then put the application together and there is some level of scrutiny by—we hope—the right competent authority. There was a discussion about whether other organisations such as non-governmental organisations should play a role in that. We were quite supportive of that, but I understand that it is not going to be the case. After that, there will be a pre-assessment visit before the agreement is given.

That might be where some of the costs come from. It might explain why the costs of delivery have gone up, but I argue that that could be a good thing as it will ensure that we get the right agreements that will deliver things. Equally, we should be looking for things that result in a win-win situation, and there are plenty of options that can deliver for water quality and biodiversity and against climate objectives. However, that is not always the case and there are some conflicts, which is why knowledge is required. For example, there is a big push for riparian planting, but if that happens on open ground that is habitat for wading birds such as lapwing and curlew, there can be a conflict. People need knowledge to know which things need to go in which places.

10:45  

All large organisations know that the more complex things are, the more bureaucracy is required, even in NGOs.

I want to pick up on something that Davy McCracken said about history having shown that, outwith protected areas, biodiversity can suffer in those circumstances. Can you give some examples of what has happened in the past, to illustrate that point?

It is clear from all the monitoring that has been done—not SRDP monitoring, but general biodiversity monitoring through the countryside survey scheme and so on—that we are seeing big declines in biodiversity largely, but not solely, on farmland, particularly outwith protected areas. There are huge declines in bird numbers. I cannot remember the figures off the top of my head, but there is something like a 50 per cent decline in kestrels and more than a 50 per cent decline in curlews and waders. Surveys of hedgerows show that they are not achieving their best condition. There is an increasingly wide range of evidence highlighting the fact that biodiversity in the wider countryside is not as good as it could be. That has implications, and not just for what is happening there, because we cannot separate protected areas from what surrounds them.

I take that point, but I return to the conflict that we talked about at the start. Are there any examples currently or from the recent past of situations in which pursuit of climate change mitigation and adaptation measures has had a detrimental impact on biodiversity?

There is none that I can think of. The reason is that climate change measures will largely be effective for climate change mitigation or adaptation irrespective of where they are applied, whereas biodiversity measures are quite spatially oriented, and that can determine whether they are effective and whether they are beneficial or detrimental, as Vicki Swales said about the examples that she gave.

That is something to watch, especially as the question of whether salmon can spawn in warmer waters has been raised by other people. The arguments for planting to provide dappled shade represent another point of view, but we do not know which is correct or whether they are both correct.

Davy McCracken raised the important point that we must not forget the rest of the country. That is quite right, but that country is not operating in a wild west situation. We have greening coming down the tracks quickly, which will likely result in significant areas of farmland being taken out of production, buffer strips being put in, more land being left fallow and nitrogen-fixing crops being planted. That will deliver for biodiversity via pillar 1.

The general binding rules are protecting water quality in many areas and ensuring that pesticides and fertilisers are not getting near watercourses. Cross-compliance is doing similar things, and the regulations on sustaining animal health and food safety in organic farming regulate slurry storage and agricultural fuel oil storage. Recently, NFU Scotland also proposed the formation of something called the Scottish farmed environment forum, which is in its early stages and which we hope will be an industry initiative to resolve some of the conflicts before they become conflicts.

Via a voluntary, industry-led initiative, working in partnership with the organisations round the table and others, can we come up with things that farmers can do to address the decline in farmland birds? There are regulatory things, such as greening in pillar 1 of the common agricultural policy, and voluntary industry initiatives that will apply across the whole country. It is not the case that if somewhere is not in a protected area and not covered by the SRDP, it is a disaster area—far from it.

We will pursue that a little further.

Depending on what the assessment criteria are, the inspectors’ knowledge of organic farming might be quite important. As we have said previously, there has been good documentation of things like that. The Soil Association has previously said that we are happy to speak to inspectors, Government advisers and so on to get across the benefits—which we have discussed—of water quality, soil fertility and achieving the multiple overall objectives.

Coming back to water, woodland and things like that, I add that we have run a couple of events. We ran one up in Aviemore with the fishery board up there, a local estate and the Woodland Trust, which came together to benefit the whole community by planting woodland. The fishery board was there to look at the value of the salmon to the community—seemingly it was £4,000 or £5,000 a fish—and ensure that the trees would not be in a position that would affect the fish.

That project is a good example of people working together. Such an approach could perhaps be rolled out in other places. We held another event in Ayrshire, where people including the fishery board, the farmer, the land managers and those who wanted to plant trees—in the right places—worked together.

We will park that for the moment and assess the situation in due course, but you make a good point about working together.

We move on to peatland restoration. The SRDP is the delivery mechanism, but the report on proposals and policies 2 states:

“the cost of an enhanced peatland restoration programme of 6,500 hectares a year is estimated at approximately £5 million per year ... if this was to be tripled to some 20,000 hectares a year, the cost would be around £15 million per year.”

The draft budget for 2014-15 allocates £10 million to peatland restoration. A number of other aspects show the disconnect between the size of the issue and the money that is available at present. Are you confident that the funding allocations for peatland restoration will deliver the emission reductions that the RPP2 attributes to the proposal? Would Alan Hampson like to lead on that question?

The initiative was started last year with the peatland action fund, which SNH has been running. By March, it will have spent £5.7 million and restored about 6,000 hectares of peatland. We are keen to ensure that the momentum is not lost in the transition of the funding over to the SRDP, so we will retain the project team that has been delivering peatland action to ensure that we continue to develop the demonstration projects and provide advice.

Going back to the previous question, I note that it is about not only assessing the application but providing good advice and ensuring that the research efforts that have been set up continue and that we continue to innovate and find new methods of delivery. We are confident that we can ensure that the £10 million that has been set aside for the new SRDP programme is spent to the best effect to deliver carbon sequestration along with a wide range of other benefits. During the peatland action, we have been particularly taken with the extent to which there has been recognition of benefits for not only biodiversity but water quality and flood risk management.

Indeed. The Scottish Wildlife Trust’s submission refers to the statement in the national peatland action plan that there is

“an estimated 600,000 hectares of restorable peatland”

and that

“we need a step change in action.”

What is your response to that?

Money is possibly only part of the issue. We need to build up capacity. We have managed to spend all the money this year, but we need to make sure that we continue to build on that because there is little point in offering the money if we are not getting the uptake. We also need to learn about the techniques and make sure that the ones that are being developed are as efficient as possible and that we are buying more for that money than just the carbon sequestration that is aspired to. Moreover—and the peatland code is just starting to explore this—there is scope to use other mechanisms to help with funding. Given the other pressures on the SRDP, we are pleased that £10 million has been targeted at continuing peatland restoration work.

Am I correct in saying that some of those schemes take more than a year to work up?

There is certainly a lead time, which is partly why we will maintain the project team. If we suddenly stopped, there could be quite a lag before we built up momentum again under the new SRDP. There is a big knowledge transfer issue in there. We need to make sure that people who have expressed an interest have the opportunity to follow it up quickly rather than having to wait.

Just before I bring in Vicki Swales, Graeme Dey will ask a small supplementary.

Going back to the figures that you quoted, I believe that you said that £5.7 million delivered 6,000 hectares of peatland restoration. RPP2 talks about delivering 6,500 hectares for £5 million a year, and if that figure were tripled to 20,000 hectares, it would be around £15 million a year. The disconnect between those two figures suggests that the figures in RPP2 are inadequate.

Part of that is about the range of restoration techniques that are deployed. We cannot be very precise about this; on the one hand, we have relatively straightforward activities such as drain blocking and restoring water levels while, at the other end of the cost spectrum, there is the removal of trees. We are trying to find an average in there, and we are building up experience in order to get if not more precise then more accurate estimates as time goes on.

It is clear that the potential for peatland restoration is fairly significant in Scotland. However, one of the issues is maintenance and persuading landowners to do this with their land to ensure that we maintain peatland in a functioning state, ideally in perpetuity. One of the challenges is that land that has been restored to peatland sometimes falls foul of the requirements for on-going maintenance payments because it does not meet the minimum activity requirements, and that might make it unattractive for landowners to consider doing that with land in the long term. That is a big challenge for us, and I am not sure that we necessarily have any solutions to it. Unless we find funding streams through CAP mechanisms or from elsewhere to maintain land in that state, the situation will be difficult in future.

Is that one of the potential barriers to utilising peatland funds? The committee has heard evidence of such funds being underspent to an extent. Do we have to find some criteria for maintenance? I know that you have just made the case for it, but is it one of the barriers to land managers coming in? Are they seeing far enough ahead to know what will happen after the restoration and maintenance cycles?

I do not have any evidence that that is categorically the case, but I would not be surprised if it was a factor in the minds of some landowners.

It is a good point to raise.

Vicki Swales said that it might not be attractive for landowners to do the work that they need to do because they might lose future funding. What would be her view and indeed that of the rest of the panel of a system in which we tax those who do not maintain the land they own in the way that we need them to for environmental purposes? If they own the land and have a duty to look after it, should we not, instead of giving them money to maintain their land, consider taxation as a weapon to make them look after it?

11:00  

Does anyone want to tackle that one?

Dare I?

Dare you?

Yes. A lot of thinking is going into land ownership and land reform issues at the moment, and I am sure that such ideas are in the minds of many of the people involved in that work. However, the devil is in the detail. For example, how would you assess what was appropriate maintenance? What would be the appeals mechanism? It is difficult to say whether such an approach would work because there are so many unanswered questions.

Our gut feeling is that, under the next CAP, you will not see a lot of people being paid a lot of money to do nothing. The money comes with strings, and it is for delivering outcomes that society wants. If society wants those outcomes—those public goods—they tend to come at private cost. Helping farmers and other land managers meet some of that private cost is a reasonable bargain, but it is a bit unreasonable to expect them to deliver all these public goods for nothing. A lot of the detail about what you are describing is unknown.

Is there any concern about underspends in relation to raised peat bogs? As far as the SRDP is concerned, is there any possibility of involving communities in central and other parts of Scotland in this issue?

I do not know so much about involving communities, but the example that you have raised in your question is a good one. I mentioned targeting earlier, and lowland raised bogs are not targeted at all well in the next SRDP. The bogs themselves are very small while the area in which the measure will be available is very large. Whether or not there is community action, a lot of local knowledge will be needed to advise farmers and other landowners of the opportunity to take advantage of the funding. I do not see any reason why there should not be some level of community action in the next SRDP, but it all depends on access to and eligibility for the funding.

It also depends on the co-operation of the farmers, which is where the co-operative action fund could be helpful. We need some incentive to get the farmers round the table. Indeed, that might also help to bring the community in.

We are quite interested in exploring the issue of funding a little further. The International Union for Conservation of Nature has stated:

“In the original announcement of funding for peatland restoration by the Scottish Government, it was made clear that this was new and additional money for the environment. With the transfer to the SRDP budget it is important that peatland work remains as additional and does not compromise spend on other environmental priorities.”

Is peatland work “additional”? Does it

“compromise spend on other environmental priorities”?

We understand it to be additional money. As I have said, we have an opportunity to deliver far more than just the carbon sequestration objectives through peatland restoration. For example, water quality has been quite a significant issue in the peatland action project, and there could be a big tourism spin-off from attracting visitors to quite remote areas. A visitor centre is being established—

In a war zone, as far as the one in my constituency is concerned.

But it partly brings us back to the previous question about how we maintain peatlands once they have been restored and are sequestering carbon. We need to look beyond the mainstream government support mechanisms, which is where the whole notion of carbon trading comes into play. The peatlands are certainly as significant as woodland in that regard. There has already been significant progress on the woodland side, and the international year of soils in 2015 will, I hope, draw attention to the significance of soils as a carbon store and as a means of sequestering carbon.

Earlier, I made a point about the transparency of the figures in the budgets, and I have to say that I have difficulties with this particular issue. I hope that the money for peatland is new and additional, but it is difficult to tell from the presentation of the figures and the conversations that we have had with officials.

If we look back at budgets from a number of years ago, we will see that the annual budget for agri-environment schemes was, I think, about £48 million in 2010-11. That budget was cut the following year, and we are now at roughly the original figure again. Given all the new added priorities, how is this additional money or new spend? We have budgets for the beef scheme, peatlands, water quality and combating climate change, and it is difficult to see they all stack up from what does not look like an increased pot of money.

It is difficult for a layperson to know that, given the way in which the figures are presented in the budget process and by whatever will replace the programme monitoring committee, which was supposed to report on progress on the SRDP and for which there are now new arrangements. I hope that some of those things improve, and that we get a bit more transparency about what money is being spent on what.

Are you happy that the money is there?

I do not know. I hope that the money is there, and I hope that there is new and additional money for peatland. We have made our commitment; this is an important thing to do, and it can deliver. Arguably, we should be spending a lot more on it, because the scale of what we can do in Scotland is so much bigger.

I do not think that we could disagree.

We should consider further what the IUCN has said. Given that, as we have been discussing, the spend in the SRDP is limited, from where else in the rural affairs and environment portfolio could peatland-related activities be funded? It is always useful for us to get hints from people at the peat face—so to speak—given that we are not normally out there cutting the stuff or sequestering carbon in it. We would also like to ask the minister about it. Do any of you have any suggestions?

This is not my suggestion—and I have to say that it is a pity that Clifton Bain was unable to take up the opportunity to be here. His written evidence puts a lot of focus on the need for the kind of long-term funding commitment that Vicki Swales has mentioned, with consideration given to public-private initiatives in order to achieve that. Clifton Bain is more knowledgeable about how that could happen in practice than I could ever be.

It relates to public-private initiatives, in any case.

Yes.

That raises a specific question about the rural affairs and environment portfolio budget.

I am not sure where Scottish Water sits within all that, but there is certainly a strong link with water quality, particularly with regard to colour. When we were setting up the peatland action project, Scottish Water was initiating its own programme to incentivise land managers to manage peatland better.

We have been able to build a partnership with Scottish Water. Although we come at water quality issues from a very different angle, we have managed to work in partnership with it to deliver peatland restoration, and that work has delivered water quality, carbon sequestration, wider biodiversity and other benefits that I mentioned earlier.

We have discussed a fair round of issues. There has been progress in this area, but we are just beginning to tease out a good deal more detail about how things could be more effective.

Jim Hume has a small supplementary question.

Convener, I have a supplementary to your supplementary about where funds come from and the capping of payments.

That was question 8. It was not a supplementary.

On transparency and capping payments to CAP recipients, would a ledger of who gets what from CAP payments be useful in seeing where funds come from?

I am not an expert on the hierarchy of who gets what, but my understanding is that only a tiny number of CAP payment recipients in Scotland get anywhere near the level of payment that the European Commission was minded to consider. I do not think that a ledger would yield anything significant.

In discussions at CAP stakeholder meetings a while back, the Government presented some figures for the money that would be raised by capping. However, I cannot remember them off the top of my head. The amount is relatively small, but I understand that it has to go into pillar 2 in the member state. I would argue, however, that it should go into the agri-environment climate measure. Even if it is only a few millions, it could make a difference.

Indeed. Thank you very much. Jim Hume will follow on with questions about the beef scheme.

I refer people to my register of interests.

The Scottish beef package under the SRDP has been allocated £45 million between 2014 and 2020. In 2015-16, it has a budget of £15 million. Is that a good bang for the buck or should the money be focused somewhere else?

We are strongly supportive of the beef package. The beef sector is one of the key agricultural sectors, if not the key one. We accept the need to transform it and push it on to a new level of efficiency so that it can reduce its emissions per unit of production and deliver more for biodiversity or water quality. It is different from the arable sector, in which there has already been high uptake of some of the measures. In general, we are dealing with smaller businesses that are perhaps less attuned to some of the things that are going on elsewhere, so the money is necessary to bring about behaviour change.

We accept that, with the package, the Scottish Government and others have given us a fantastic opportunity, and we are committed to making it work. We certainly do not want the money to do anything other than bring about significant change in practice. It is well worth the investment. We know that others will disagree, but it is not possible to bring about behaviour change on thousands of farms without making some kind of reasonable investment, and we think that the package has huge potential.

We asked the Government for details of what will be in the beef package, but things are not entirely clear at the moment. Although “Beef 2020 Report: A vision for the beef industry in Scotland” talks about wanting more efficient production, which will improve carbon efficiency, it also talks about

“A market led growth in production and sales from the Scottish beef industry”,

and it is difficult to square that circle. If production is more carbon-efficient but increases, the beef sector will be doing little to reduce its overall greenhouse gas emissions.

The “Beef 2020 Report” does not say much about practical steps to contribute towards climate change objectives. We are not arguing against spending the money as such; it is a question of what exactly it will be spent on and what it will deliver against climate change objectives. That is not clear at the moment.

11:15  

Incentivisation to meet climate change targets is imperative. In response to questions earlier this morning, Vicki Swales mentioned the need for proper monitoring and evaluation. There has been some discussion of the possibility of introducing a compulsory carbon audit for farms—that was discussed during the committee’s visit to the green cow facility in Penicuik. What is the panel’s view on the possibility of the introduction of compulsory carbon audits?

Please relate your answers to the beef package, as we are talking about that just now.

A number of tools such as PLANET—planning land applications of nutrients for efficiency and the environment—may mirror in some way what compulsory carbon audits would look like. There are always issues with the complexity of such tools. PLANET was designed for land managers, but it has been accepted that it is too complicated for the livestock sector. That is not to besmirch our livestock sector members; it is just that their systems do not require such a level of complexity. Something called MANNER-NPK, which has been developed in England and is now available in Scotland, is particularly aimed at the livestock sector. There are things that are the beginnings of the audit that Angus MacDonald describes.

The audit will be helpful if it is proportionate and delivers results in a way that the farmer can use to change practice on the farm. If it delivers a report to a farmer that says that he needs to cut his emissions by 10 per cent and gives a few vague recommendations about how he might do it, that will be problematic.

SEPA is going out to catchments to say, “Here’s where there’s a problem and here’s what you can do to sort it. We’ll be back in a year to see how you’ve got on.” SEPA is enforcing regulation, but it does that in a positive way, by trying to show the farmer how to make changes. It would be helpful if the audit could do that; it would be helpful if it could say to farmers that it had identified some inefficiencies—I hate to use that word, because when I use it in front of farmers, they usually try to lynch me—in their system and show how they might tackle them. If it simply gave high-level messages and some nice carbon accounting, it probably would not be a good use of money.

As Andrew Bauer said, there is a variety of carbon audits out there of things such as feed coming in and other inputs, depending on where you draw the farm gate. One of the main things to consider when doing a carbon audit is how much fertiliser and that kind of thing is used. Obviously, that is prohibited in an organic system. We use green manures, crop rotation, legumes and things like that. Carbon audits are very important on that front, because they are a look at the overall business, not just one part of it, as we discussed earlier. They look at the farm holistically, which is important.

To go back to what Andrew Bauer said, it depends on how carbon audits are sold to farmers. We have a carbon audit that is fairly straightforward. It asks about electricity use, stock, ploughing and minimum tillage and things like that. Rather than returning information about thousands of tonnes of carbon, it gives a bar chart that says, “You can maybe look at this, or you could look at that.” It is very positive in that sense. It gives two or three things that farmers can look at, rather than saying that they are absolutely horrendous at everything. It gives a bar chart and technical advice that farmers can look at. Farmers can play with it themselves. Rather than getting a consultant in to do it, they can manage it themselves.

Is “absolutely horrendous at everything” the technical definition of inefficiencies?

I echo much of what has been said. My colleagues who are helping to deliver the farming for a better climate programme would say that carbon audits are key to that process. There has to be facilitation and interpretation with the farmer and landowner in terms of what a carbon audit means, where the main areas are where savings could be made and how they could be made. Carbon audits are not a one-size-fits-all solution. Facilitation is key to the process.

We think that we should be moving to a system of compulsory nutrient management carbon auditing. It is clear that fertiliser reductions and efficiency measures on farms are one of the things that can do most to reduce greenhouse gas emissions.

We accept that farmers need some advice, help and support, but the farming for a better climate initiative is a voluntary measure at the moment. The figures suggest that we need uptake by 80 to 90 per cent of farmers if we are to deliver our climate change targets. It seems to me that we should be progressing towards a compulsory system. It is worth pointing out that most of the requirements save farmers money—they are just common sense. Some of the figures that have been presented suggest that the farming for a better climate initiative could bring savings of more than £30,000 to a fairly substantial dairy farm, although the savings would be lower for a smaller farm.

At the end of the day, the initiative is good sense. It saves money and it helps to save the planet. Why would you not want to do it?

We will ask questions about farming for a better climate soon, but I will let Jim Hume come back in first.

Thanks for all those answers, which were interesting.

I want to ask about the beef fund and the use of money towards meeting climate change targets. Last week, the committee spoke to Nigel Miller, who was talking about whether forestry spending represented a good bang for the Government’s buck with regard to climate change. He said that he did not think that we have enough science about pasture. Obviously, when pasture is grazed, it grows faster and therefore sequesters carbon. Where are we with the science on the carbon sequestration role of grazed pasture?

I think that the SRUC said something specific about that in its submission.

Yes. That relates to Graeme Dey’s earlier question. We should not forget that there is a wide range of grassland and other habitats that have an important role to play in carbon sequestration, particularly underground. There is an increasing knowledge base about the importance of those habitats. There are still question marks around how those habitats should be managed but, at least within the scientific community, there is an acknowledgment that there are ways of achieving carbon sequestration other than by planting trees, because other habitats have a role to play.

Lyn White and others have touched on specific possibilities for the reduction of carbon emissions from the Scottish beef package. I certainly welcome the measures that have been added in very much at the last minute. Could Andrew Bauer and others suggest some specific measures that farmers could implement to reduce the carbon footprint of units of beef?

Within the proposed beef scheme, or in general?

In the beef scheme.

I am not directly involved in the thinking around the scheme, but colleagues are. Some excellent work that is being done in Ireland might serve as a model for us. In Ireland, there is a comprehensive system of data collection and analysis, and farmers report the performance of their herd—the sires and so on—which allows management decisions to be made at a farm level and a macro level.

Big data is very much of the moment, and I think that that will be a major plank of the new scheme. Obviously, there are others who would advocate things such as nutrient budgeting and the kind of carbon audits that have been described today. However, I think that it is fair to say that the work is being done, although we do not have the final detail yet.

It would be encouraging to hear more about that.

Yes. I suspect that the “Beef 2020 Report” involved a visit to Ireland by a number of people. It might include the detail that we are looking for. Perhaps Andrew Bauer could write to us with a little more information on the point that Claudia Beamish asked about.

I certainly could.

That would be helpful.

The cabinet secretary has announced that there will be scope for voluntary uptake of carbon audit. That being the case, I ask Andrew Bauer to what extent the NFUS will encourage and facilitate its members’ participation in that.

If the tool is practical and workable, as everyone here seems to broadly agree it will be, we will be full square behind it. We would have no reason not to be. We see no threat to farming from doing this; it is a positive thing that is good for the environment and farming. Vicki Swales made the point that we should be doing it already. We could all look at our lives and see examples of where we may not be being as climate friendly as we could be. It is about helping people to take steps to change behaviour. We will totally encourage our members to do that and we will promote it via every channel that we can use.

I welcome most of your comments. We encourage and expect the public to recycle and we encourage them to take decisions about changing the type of vehicle that they drive. The difference here is that the industry gets substantial sums of public money—for perfectly valid reasons—so is it not perfectly reasonable for society to expect a growing contribution to tackling climate change from the sector?

Absolutely. There is no such thing as a free lunch. Farming gets a lot of money. Like you, we would absolutely defend that, but it is quite reasonable to expect something in return.

Others might say that it is not enough, but what farmers are already doing is pretty significant. We will obviously need to do more, but what is already being done is probably in excess of what the average Joe member of the public is doing. A lot of what farmers are doing is in the interests of their business, but a lot of it involves extra work, extra recording and extra effort on their part. We need to be able to demonstrate to them that this is not just a box-ticking exercise and that it is going to deliver for the environment, for them and for wider society.

That leads us to questions on farming for a better climate from Alex Fergusson.

Davy McCracken mentioned the farming for a better climate initiative a couple of times and reminded us that the budget for 2015-16 is £373,000. Linking that to RPP2 and the carbon savings that are expected, my question is simple: is that enough to deliver the expected carbon saving?

It is simply a step on the way. The initial farming for a better climate programme showed that we could engage with farmers—a relatively small number, in that case—and that financial and environmental benefits would accrue from that. The expansion of the programme in the new funding round to create a large number of focus farms and a greater aspiration for them to work with a greater number of farmers in the area can only be a good thing.

Is the funding enough? Off the top of my head, I think that it is less than 2 per cent of the overall budget, so the initiative is quite a small approach, but evidence is starting to accumulate that it can have an effect. I hope that, under the next programme, the message will get out there more widely, but we are only at the start of the new phase. It will be a lot easier to tell you halfway through it.

As part of my job at the Soil Association Scotland, I run the future proofing Scotland’s farming programme, which will come to an end soon. The last event will be in a couple of weeks’ time in Newton Stewart. We work closely alongside the farming for a better climate initiative to ensure that there is synergy and that we are not running similar events in similar areas. The difference with our events is that we cover the whole of Scotland. Farming for a better climate has focus farms. We also have the Scottish farming innovation network, which will run until August next year. It is similar, although it runs half-day events rather than whole-day ones.

It is important to say that those programmes run alongside each other. Future proofing Scotland’s farming is funded by the Government and Quality Meat Scotland, and we thank them very much for that. We will be applying for new money in the new year, so I put my hat in the ring for that. As I said, we like to work alongside each other and I have a close working relationship with Rebecca Audsley to make sure that the programmes work together.

11:30  

It is a very helpful initiative but—to answer your question—I do not think that it is enough. There is not very good evidence that voluntary approaches deliver the step change or transformational change that we need to make in many areas. The figures make it clear that we need about 90 per cent of farmers to take up the various—often quite simple—measures that have been highlighted to benefit the climate, but it is highly unlikely that an initiative with such a budget and running at such a scale will secure that uptake across the industry. How do we get the vast majority of farmers to perform and behave as the top 10 per cent of farmers perform? That is a big challenge and we have, up to now, underinvested in that. We are not giving farmers enough support and advice, getting the research out into the farming community through knowledge transfer or helping people to understand how they can change their businesses both for their own benefit and profit and for the public benefit.

We need a step change that involves moving towards compulsion in relation to some of these measures, for exactly the reasons that Graeme Dey has highlighted. An industry that receives a huge amount of public support has to do a bit more than it is currently doing to help us to meet our objectives.

Do you have any international examples of countries that are doing that just now? If not, can you find us some?

I was not talking specifically about the international situation, but I can have a look. There has been a withdrawal of advice and support across the board in many countries throughout Europe. There used to be a huge amount of agricultural advice extended on a range of issues, mostly about how to increase production, but the same investment is not being made—either here, in Scotland and the UK, or in other European countries—in farming and managing our land according to the new agenda and the new imperatives that we face. I can have a look to see whether there are examples of other countries doing that better.

That would be very helpful.

Lyn White set out quite well how the farming for a better climate initiative works closely with the future proofing Scotland’s farming programme. It was remiss of me not to say that, even within the SRUC, the schemes do not work in isolation. Many of my SAC Consulting colleagues run farmer-based events—at the moment, there are two or three a week and it is difficult to keep on top of them—but I cannot think of any over the past month that has not had a farming for a better climate aspect to it. There is another range of those events coming up soon. To go back to Claudia Beamish’s question, my beef research centre colleagues will hold a farmer-oriented open day at the end of the month to highlight the techniques that could and should be implemented on farms to help that process.

On farmer uptake, we carry out an evaluation on the day and go back to as many farmers as we can six months afterwards to see what they are doing. We have good reporting on that and get comments on what they have done and how they have worked with their neighbours to buy bits of kit and so on.

Going back to Claudia Beamish’s question about specific things that we might do, I would challenge every farmer to be organic. On a practical level, at our events we look at farmers’ soil. We have talked about greenhouse gas emissions, but it is important that farmers look at their soil and know what they have got. Over the past six years in which we have been running our events, we have been amazed at the number of farmers who do not carry out soil analysis. If we are asking farmers to do carbon audits, we should also encourage soil analysis. If a farmer’s soil pH is 0.5 out of the optimum, the yield from their spring barley crop will be 15 per cent down. It is simple in economic terms: they will lose 15 per cent of their yield because they have not got the pH of their soil right. I invite you all to attend the Scottish organic forum’s soils conference on 10 March in Stirling, so that you can find out more about that.

We also held an event in Durness with farming for a better climate, and a week later I got an email from the SRUC, linked to farming for a better climate, saying, “You had a great event in Durness. Can you come to Caithness?” Six or eight weeks later, we held an event in Caithness. That shows the synergy between the programmes and the benefit of working together. That is the kind of practical, on-the-ground thinking that we want to encourage so that everybody gets better value for money.

I am very glad that you visited two places in my constituency; I hope that you had a good time.

In reply to the question about whether the funding for the farming for a better climate initiative is enough, I say that it would be nice to have more but we have a very tight budget.

If we look at the £45 million that has been allocated for the beef package, we see that there is a bit of crossover. In effect, £32.5 million of new money is being provided: there is the £10 million for the knowledge transfer and innovation fund and the £20 million for the advisory service’s budget. I assume—I would be amazed if this were not the case—that a large percentage of that money will deliver on farming for a better climate-type objectives.

Therefore, although the initiative might receive only £400,000 or so, tens of millions of pounds’ worth of funding is being provided for advice, innovation, knowledge transfer and practical measures on the ground that should bring about change. We should not be too down about the fact that the allocation is £400,000, as there is an awful lot more lurking elsewhere in the budget.

We will explore that a little further but, before we do, Dave Thompson has a question on LFASS.

As has been said, a lot of change is taking place at the moment, and that will continue to be the case over the next few years as we move into the new system. We must bear in mind that a quarter of the budget that we are talking about comes from the Scottish Government. That share will be under ever more severe pressure, given the reports from Westminster that there is to be almost a doubling of the cuts that we were expecting to come down the line as a result of the austerity budget. We are already talking about what it is best to spend the money on, because we do not have enough, and there will probably be even less money in the future. We will have to fight hard to maintain the share that is currently provided directly by the Scottish Government. I think that people should take note of the fact that that will be extremely difficult to do.

On LFASS, SRUC stated in its submission:

“there are also elements within the SRDP (such as the Less Favoured Area Support Scheme) where one could argue that climate and other environmental benefits could be more explicitly linked to the level of support being provided.”

The Scottish Wildlife Trust made a similar point. We are trying to achieve many different things. High nature value farming is extremely important, as are food security and maintaining communities in rural areas. What do the witnesses think about the weighting that is currently given to high nature value farming? Should we be giving more consideration to that? There are many crofts in the west and the north of my constituency. Given that the resources are reducing and that that will probably be the case to an even greater extent, what is more important for us: climate and environmental benefits or food production benefits? Do you have a view on that?

I had the pleasure of speaking to Pete Smith, who is a climate change expert from the University of Aberdeen and who many members will know. I will tread carefully so that I do not misrepresent what he said when we interviewed him. His general view was that, when it comes to food production, the most efficient thing that we can do, by one measure, is grow everything as intensively as we can, but that is a very narrow way of looking at things. Extensive sheep and beef farming is very efficient, because the ratio of human edible input to human edible output is most advantageous in that system. Such systems also lock up a huge amount of carbon. Therefore, it would be wrong to say that, because—in global terms—they deliver a relatively small amount of food, those more extensive systems are not that important.

As the south—if you want to call it that—becomes hotter and more arid, there will be greater emphasis on the north. Pete Smith’s analysis is that we are eating too much meat here in the west but they are not eating enough in the developing world. In future, there will probably be a greater focus on us to produce the meat that the developing world wants to eat. I therefore do not think that the answer is one or the other—it is both, or all of these things, and we have to try to balance them.

It would be wrong to say that, because more extensive systems do not deliver much food, they are not that important and we should focus on other things. You would lose the carbon sequestration benefits and you would take away one of the more efficient ways of producing food, strange though it may seem. In addition, you would not really be putting us in a very good position—if we were to be selfish about it—to capitalise on the difficulties elsewhere in the world. That is what we will be doing: other nations will look to us to provide the food that they can no longer produce.

I was going to make a similar point, in that I do not think that the farming systems are mutually exclusive.

We are very supportive of high nature value farming. Those farms are often in fragile areas that can be more susceptible to the impacts of climate change. High nature value farming, by its very nature, tends to be lower input and it tends to lock up carbon. However, it also tends to be more resilient to the impacts of climate change and is, potentially, more sustainable in the longer term, as our climate and other aspects of the environment change, because such farms are able to continue to produce food.

We recognise in our written submission that the LFASS payment is important to farmers, particularly in this period of transition elsewhere in the CAP.

We feel that the transition to the areas of natural constraint system is an excellent opportunity to step back and consider the multiple benefits that we want to achieve from the payments. We do not need to go back that far. The less favoured area support measure was originally designed from a social point of view and not from an agricultural or an environmental point of view. We have a good opportunity now to step back and ask ourselves some questions. What is our situation in Scotland? What do we want to support and maintain in those areas: high nature value farming systems, the wider environment or the production side of things? How best can we do that? What role does areas of natural constraint funding, in future, have to play in that? We need a proper debate on those questions over the next year to 18 months.

We absolutely need to support our high nature value farming areas, for all the reasons that Alan Hampson highlighted, including the multiple benefits that they provide to us. The question is whether historically and now, under the new CAP, we target the money towards those sorts of farming and crofting systems and helping to underpin them and their viability in the long term.

I have made various comments to this committee in relation to pillar 1 and to some of the pillar 2 measures, and LFASS in particular. I am not convinced that the targeting is correct and that high nature value farming areas are not actually getting a pretty poor deal out of the CAP. Those systems look economically vulnerable and they are therefore environmentally vulnerable as we look to the future. Looking ahead, we need to think about how best we can support them, for all the reasons that we want to.

Thank you all for your answers. Three of them did not really give a view on whether we should, as Vicki Swales says, put a bit more support into the high nature value side of farming. Davy McCracken said that it needs to be reviewed over the next few years. We have to accept that we are moving into a situation where, for the next few years, we just have to let things work their way out.

Looking further ahead, do the witnesses have a view about whether high nature value farming and the maintenance of communities should have an extra edge, if you like? Would you like that to be reviewed over the next couple of years so that we can get it right when we move forward after that?

To be clear, I was not suggesting that we should just let things work their way out—if you do that, you will never achieve what you want and there will be a reluctance to change. I was arguing for, as you said, a more fundamental review. That would look at what we want to happen on the ground, what elements of support we want, what we want to support and how much of that needs to go to, for example, high nature value farming systems. Then it would work through how that would be achieved in practice and what role areas of natural constraint payment, for example, could play in that approach and the wider CAP support budget.

11:45  

Organic farming would fit perfectly into the definition of high nature value farming. If such farming is a national priority and you are looking to support it and increase the acreage of organic land, you should be encouraging people to go down that route. You would get your high nature value with that, plus a multitude of other benefits.

I want us to move on rapidly, so I ask that Vicki Swales and Andrew Bauer are quick in their responses.

On having a good, hard look at the rationale for using public money, we argue that public payments are for public goods and for where there is clear market failure. We have become a bit muddled in terms of our agricultural support and what we think we are paying for. We do not need to pay for food production per se: there is a market for food and that market will provide. As I say, there are some examples of market failure in that, but public money should be focused on public goods.

That is a contentious statement in an area of considerable constraint that we are talking about moving into. In the next couple of years, we will no doubt have a lot of discussions about the areas of environmental constraints and the reasons for that. Therefore, if we are going to move in a transition, we must be careful about deciding whether the market works in a fashion that can help. We know that there is plenty of food in the world, but it is not distributed in the right ways in the places that produce it.

That is market failure—

That is not a market factor, but another factor entirely. The issue is complex, and we must be careful about saying that food is market driven and the climate is not and that there are only two parameters to consider. I am sure that there are more than two.

I am not saying that.

Indeed, but it kind of came across that way. Be careful.

I echo what was said. We accept that a lot of our farm businesses are moving—some are there—to the point at which they do not need subsidy. We want to see more people moving in that direction, but the market does not deliver. A lot of the subsidy payments go straight through the farm business into the supermarkets’ and organisations’ pockets.

There are complex issues. I am surprised that, when everyone around us is speaking about food security issues, we are so confident that, if we remove agriculture subsidies, the food will continue to flow. We need to tweak the system, but we have to be careful that we do not lose a fairly fundamental public good—food production.

That is perhaps a bigger subject for another day, when we would hope to involve each different point of view.

We will move on to finding out how we will improve the systems. I hope that we will make sure that that is possible as we move towards the big CAP transition that is taking place.

Good morning, colleagues. We have mentioned monitoring and auditing and the large numbers involved in that. I do not want to go there. I have a supplementary question about research and knowledge transfer, but I will start by returning to the basic issue of measuring things.

I am conscious that farmers and those who work the land have a pretty good idea about tonnes per acre or pounds per tonne. You can measure nitrogen in water one way or another—chemicals can be measured. To what extent do we know how to measure environmental things? I am conscious that bird numbers have been used as a surrogate for biodiversity; I am also conscious that we have talked about carbon sequestration and, obviously, the carbon and nitrogen in the atmosphere will be measurable. Do you or those around you have the tools to put numbers to what we want to measure?

That is an on-going issue: how do we measure environmental good? We have used certain indicators that you mentioned, particularly bird habitat areas. The Scottish biodiversity strategy recognises that those things are part of bigger systems, and it is the bigger systems that we need to monitor and understand better.

SEPA has done a lot of work on water quality at catchment level. The Scottish biodiversity strategy sets out an ambition to develop a suite of ecosystem health indicators that will apply at catchment level. Work is under way on those at the moment, and the aim is to do broad-brush assessments across the country of ecosystem health, which will take into consideration a number of factors, and then use them as the basis for targeting investment in improvement and demonstrating good practice and the links between good ecosystem health, farmer production and the delivery of a wide range of public benefits.

There are particular issues with the management of flood risk and impacts from visitors and recreation. We are still using some quite traditional indicators at the moment, but the aspiration is there and work is on-going to develop a broader set of indicators that will help us target resources in the future.

We know how to measure lots of things, but we do not necessarily make the kind of investment that we need to make to measure those things. One reason why we have reasonably good data on birds is that a system is in place—the breeding bird survey—to monitor bird species. There is a particular interest in the UK in birds, and every year hundreds of volunteers go out, walk their patch and record those birds. We could do that for lots of other taxa, such as butterflies and plants, and help our understanding of habitats.

Sadly we do not make that kind of investment in understanding our basic biological assets. We have a slight concern that there has been a shift to ecosystems services, understanding ecosystems and valuing natural capital. That is not to say that those things are wrong, but we must not lose sight of some of that basic understanding.

I was at an event about the Scottish Government’s research strategy for the next five years. There is a notable lack of basic biological research in that programme to tell us what is happening to species, why they are declining and what the problems are, and to identify the solutions for those problems. We need to watch out for that: there are pots of money that can help us do some of that research, so that we can have that understanding, but sometimes they are pulled off to be used to look at some of the new, attractive and sexier-looking issues. Let us not forget the basics.

To answer Nigel Don’s question, as has been said plenty of metrics are available and being developed at a wider catchment and landscape scale, but we face a challenge in relating them back to the individual farm scale. Individual farm management practices will make a difference. We need simple metrics—not very complicated metrics—that are achievable and deliverable at the farm scale, to allow farmers and land managers to see where they could make a difference, as we talked about earlier, and to show that that would have added value based on what other farmers and landowners are doing in their area. There is a bit of a disconnect there.

I am sorry, but I am going to say it again: what gets measured gets done. Is there a risk that you do the wrong things because they are the things that you can measure?

That is quite an open question. It depends on what you are measuring and what interpretation of that you do. There is always a risk of doing the wrong things. Land management change and what you expect to achieve from that change always carries a risk.

I will interject with a focus on something that the NFU and the Soil Association agree on. The European innovation partnership for agriculture productivity and sustainability is a very good model. The Soil Association’s farmer-led field labs, which are run in Scotland, are cited by the European Union as

“stunning ... exactly what we envisage”

and provide an exemplar for the knowledge transfer and innovation fund. Is that the kind of thing that we should focus on? Does that include a climate element?

Absolutely. The European innovation partnership turns the traditional model on its head. Rather than having researchers going out after they have done their research to do some knowledge transfer and saying, “This is what we’ve done,” and the farmer saying, “That’s very interesting but it’s absolutely no use to me,” we should involve the farmers at the beginning, when they can ask the researchers to help them fix a particular problem. That might be to do with adapting to climate change or it might be an idea for sequestering more carbon that the researchers can help to turn into reality.

We think that there is huge potential, but it involves a change of attitude and a change in working, and we are not yet seeing that coming forward from the Scottish Government in the way that we believe the European Commission intended.

The quotation that you cited comes from one of my colleagues from our Bristol office who went to Europe to discuss the issue. As part of the Scottish farming innovation network—the programme that is funded by the Scottish Government, the Forestry Commission, Zero Waste Scotland and Duchy—we are running a number of field labs on feeding pigs silage, on the use of digestate and on horticulture. In the past week we have been looking at running a national study of the problem of rashes on farms and how to deal with them in a non-chemical way, and there has been a wonderful response from all over the country.

As Andrew Bauer says, studies need to be practical and take place on the farm. We need to go to the farm and speak to the farmers to find out what they would like help with and what projects we can work alongside them on, and we can have a researcher there to take the data and feed it back to a group that might do three or four visits to a specific farm over a year. That approach has been well regarded.

Am I right in thinking that Andrew Bauer asked for the European innovation partnership model approach to be funded through the SRDP?

Our understanding of the European Commission’s vision is that EIPs should be funded via pillar 2 within member states. We are not talking about significant amounts of money. I know that the budget is unlikely to change now, so what we are asking is whether there is a way of embedding the EIP way of working into the things that are already set in stone, such as the knowledge transfer and innovation fund. Can the approach that Lyn White has described be built in so that, rather than being about the white-coated researcher going out and telling the locals what he has found, there is a much more equal relationship?

Could Davy McCracken offer a comment to finish up this line of questioning?

Speaking off the top of my head, which is always dangerous, I would say that the discussion about the multiple benefits that can be achieved from the beef package cries out for a European innovation partnership-type approach so that we can see what can actually be done there.

You have already covered much of the subject that I am about to raise, but are there sufficient funds in the budget that we are interrogating for the things that we are talking about? Can we get scientific understanding—wherever it comes from—to those who are practitioners in the field?

There is a reasonably strong focus in the budget on the knowledge transfer and innovation fund. In the context of a tight budget, a colleague of mine in Brussels describes the EIP as tea and coffee money; it is not a lot of money, but the important thing is getting people together rather than providing millions of pounds’ worth of new research money. Once people get together, they can bid for other pots of money elsewhere in order to make things happen. The EIP would not blow a hole in the budget, which is tight, but there is £10 million for knowledge transfer and innovation funding and £32.5 million of new money in the beef fund, so we understand and accept the constraints that we are operating under.

As Andrew Bauer said, there is money; it is just a case of how the innovation fund is used. The programme that I run is funded through the skills development scheme, and so is the Scottish farming innovation network programme, whose funding we presume will come from the innovation fund in the future. If there was money from the new beef package, we would certainly hope to tap into that on a practical level.

On a point of clarification, I am not quite sure that I understood the point that Vicki Swales made about food production and market failure. Can I check what point you were making?

12:00  

My point followed on from the HNV discussion. It was about what we pay for and where we focus our limited amounts of money. I was trying to say that there is a rationale for Government spending when there is market failure or to deliver public goods because the market does not deliver them. I am thinking in particular about the environment and biodiversity in relation to some of our climate aspirations and objectives and to water quality.

As for food production per se, food is a market commodity and it has a market. There are market failures—I totally accept that and I accept that the food system is extremely complicated. However, if we are to look hard at how we spend public money, perhaps we have to look at where some of the CAP money is going and what type of farming it is supporting. We need to think about the balance of that money in supporting basic farm incomes from certain types of farming versus supporting other types of farming or delivering environmental or other public goods. Does that make sense?

In pillar 1, a large amount of the CAP money is going to arable farmers, dairy producers and the beef sector. They are farming on good-quality land in the Lowlands in good situations, they are close to market and they are not disadvantaged. They are getting the bulk of that support. Some of our farmers and crofters in the Highlands and Islands are getting very limited support. Their agricultural output is limited but what they deliver in terms of public goods is significant. The question is: what do we want to pay for and support in the future? That is the point that I was trying to make.

That is the perennial question.

Several people around the table might be thinking right now about what CAP we are talking about. In the next CAP, such money will not be going to the places that have been mentioned. We are turning the situation on its head. The money will go to the high nature value areas.

That is not the case—10 per cent or less of the budget will go to region 3. The vast majority of money will go to region 1, which covers good-quality agricultural land in the Lowlands. There is redistribution within the regions, but the system has been set up specifically to limit redistribution almost as far as possible. If we were to map where the bulk of money under pillar 1 goes currently, we would see that it does not go to the HNV farming areas. They have had an uplift in money, but we are talking about an uplift of a few hundred pounds in some cases and not an uplift that will underpin and support the viability of some of those farming and crofting systems. When we look at the budget split, we cannot argue that the money is all going to the north and west of Scotland.

The farmers I speak to from Argyll and the north are quietly positive about what is coming. I do not think that they are sitting there getting excited about a few hundred pounds. We will see significant change, and the south-west, the Borders and the north-east will be where the big losers are. Some are coming from high levels of support, but they are coming an awfully long way down, and that money is going somewhere else. We also have a declining budget. I do not recognise the characterisation that has been given.

We will have to agree to differ on the point, which is the nub of part of the problems that we face.

I will back up some of what Andrew Bauer said. Like others, I represent a part of the country where substantial sums of money will disappear from the agricultural sector. When we strip this back to the basics, we see that, until we get to the point where supermarkets pay appropriate prices to farms—which they do not—and where the public can afford to pay appropriate prices, which, especially now, they cannot, surely we need that support to go into the sector. We have to have it, surely?

Can we make that a rhetorical question just now?

Can I make one brief comment?

Yes, because you have not spoken for a wee while.

Indeed. There are differences of opinion here but, next Thursday, we will debate Scotland’s food and drink sector, which I think all members of the Parliament will agree has been a huge success over the past few years. What we have is a question of balance, because such things are always a question of balance. It is clear that everybody wants more money to go into everything, but we have to take all the opinions into account and work out that balance. That is where we are.

I am sure that we will see that in your speech in the debate, but I take your point.

We should wrap up the session at this stage. We have an excellent amount of written material, which is as important to us as the discussions that we have around the table are. The two balance each other in our response to ministers and the questions that we ask them. I thank you all very much for your evidence, which has as ever been interesting, detailed and challenging.

We will take a brief break, because we all need it.

12:06 Meeting suspended.  

12:10 On resuming—