Subordinate Legislation
Pig Industry Restructuring (Capital Grant) (Scotland) Scheme 2002 (SSI 2002/43)
I give a particularly warm welcome to Allan Wilson, the Deputy Minister for Environment and Rural Development. My welcome is particularly warm because I appreciate very much the fact that the minister agreed to come to the committee at such short notice. I also welcome Alison McLure, whom the minister has brought with him.
I remind members that the minister must be away by twenty past two, if at all possible. The instrument that the minister is here to address—the Pig Industry Restructuring (Capital Grant) (Scotland) Scheme 2002 (SSI 2002/43)—is subject to the affirmative procedure. As such, it has been commented on by the Subordinate Legislation Committee. Members have that report in front of them. That committee raised a question regarding state aid, which was answered to its satisfaction.
I invite the minister to make any remarks he would like to make.
It is important to put the application in its historical perspective so that the committee understands what it is being asked to agree to.
As the convener will be particularly aware, the pig industry was in the depths of despair two or three years ago. Then, the price that was paid to farmers for pigmeat was well below the cost of production. In March 2000, the Prime Minister and UK agriculture ministers met farm leaders at 10 Downing Street. The outcome of that meeting was an action plan for farming. The pig industry restructuring scheme was one component of that plan, which recognised that the pig sector had faced considerable difficulties in the previous two years and that those difficulties needed to be addressed.
The restructuring scheme was devised to help the industry through its difficulties, in close consultation with the National Pig Association, the Meat and Livestock Commission, the British Bankers Association and the Central Association of Agricultural Valuers.
Like a number of other components of the action plan, the pig industry restructuring scheme is a state aid. Formal clearance by the European Commission was therefore required before it could be introduced. After lengthy negotiations, clearance was secured from the Commission in December 2000.
The pig industry restructuring scheme consists of two main elements. Before restructuring aid could be made available to producers who wished to stay in production, the Commission required the United Kingdom to cut its pig breeding capacity by 16 per cent, which represented about 124,000 sow places. That led to the introduction of the outgoers element of the restructuring scheme, which was aimed at those pig producers who wished to end their involvement with pig production.
The second phase of the restructuring scheme, the ongoers element, was opened for application on 22 January last year. The payment of aid under the ongoers scheme is the reason why I am here today. The ongoers scheme is aimed at helping pig producers who are committed to remaining in the industry to restructure their businesses in order to secure a viable long-term future. Market conditions improved for a time, but prices have subsequently decreased again. It is clear that the high level of debt that has been incurred by producers over the past few years will prove to be a major obstacle to the industry. The ongoers scheme is designed specifically to offer aid to producers who wish to restructure their business to make them more viable in the longer term.
The aid will take the form of an interest rate rebate on term loans, which are linked to an agreed business plan. Payment of aid to successful applicants will be made in annual instalments this year and next, following confirmation of interest paid by the producers during the previous 12 months. There are 134 successful applicants in Scotland under the ongoers scheme, with a total aid payment of just £4.2 million over the next two years. That aid will help to make the businesses more efficient and better placed to meet the challenge of sustaining the recent upturn in the pig industry.
The order that is before the committee will allow for that aid to be paid to any eligible person, towards expenditure incurred for capital projects. A second order is passing through Parliament under the negative procedure. That order will allow for the payment of aid in relation to loans to be used for non-capital expenditure.
Thank you. You mentioned the number of successful applicants under the ongoers scheme. How many unsuccessful applicants were there?
None.
So the amount of money made available will cover the entire needs of the applicants.
Yes.
As I understand it, in the past there has been no subsidy or support for pig producers. My understanding of the aid that is now proposed is that it is simply to meet the interest on loans that pig producers negotiated with banks or other lending institutions. There is no support for the production units.
The aid is in the form of a reduction of 5 per cent in the interest charged over two years on an existing—or perhaps a reworked or new—fixed loan. That is related to pig production and the agreed business plan to which I referred. There were 170 successful applicants under the restructuring scheme, of which 134 were successful under the ongoers scheme.
Of the £4,206,000 over a 24-month period that is being allocated to Scotland, how much will be used? Will it all be used?
The intention is to use it all in order to maximise the benefit of availability of additional facilities for pig producers who wish to stay in pig production and who wish to have the competitive advantage that those facilities might give them.
I have a question on the technicalities of the wording of the order, rather than its substance. I am curious about the structure of the language in article 4, which I do not quite understand. It says:
"The following persons shall be eligible for a grant under this Scheme:-
a natural person … and
(b) a person (other than a natural person)".
When I read that, I thought, "What does that mean?" Could you enlighten me?
Alison McLure (Scottish Executive Environment and Rural Affairs Department):
We had various discussions with the lawyers about that. The idea behind it was that a body, in normal parlance, could own a business. That would not be a natural person. The normal method of pig production would involve a farmer who owns the business, but a body, such as Scottish Natural Heritage, might own the business. The phrase
"a person (other than a natural person)"
is legal parlance to cover that option.
I thank you for that. I just note that I think it strange to say
"a person (other than a natural person)".
In legal terms, a person can be a body or a person, so I am told.
We have now noted how carefully Mr Rumbles reads his papers.
In the early days of the committee, there was considerable trouble in the pig industry. Those of us who were on the committee at that point were moved by the state of many pig producers and would want to encourage any scheme that helps them to play a continuing part in the industry. I am sure that the committee does not want to hold up the scheme.
Does the minister wish to add anything?
Our intention was to have lodged the instrument earlier, but the foot-and-mouth outbreak diverted staff resources elsewhere. We are catching up.
I move,
That the Rural Development Committee recommends that the Pig Industry Restructuring (Capital Grant) (Scotland) Scheme 2002 (SSI 2002/43) be approved.
Motion agreed to.
I thank the deputy minister for attending at such short notice. I hope that he manages to make it to his next appointment on time.
Import and Export Restrictions<br />(Foot-and-Mouth Disease) (Scotland)<br />(No 3) Amendment (No 2) Regulations 2002 (SSI 2002/35)<br />Sheep and Goats Identification (Scotland) Amendment Regulations (SSI 2002/39)
Pig Industry Restructuring<br />(Non-Capital Grant) (Scotland) Scheme 2002 (SSI 2002/44)<br />Sea Fishing (Enforcement of Community Quota and Third Country Fishing Measures) (Scotland) Order 2002<br />(SSI 2002/51)
Sea Fish (Prohibited Methods of Fishing) (Firth of Clyde) Order 2002 (SSI 2002/58)
Item 3 is consideration of five further statutory instruments. Does the committee agree to deal with the instruments en bloc?
Members indicated agreement.
No member has indicated to me that he or she wishes to comment on the instruments. Are members content with the instruments?
Members indicated agreement.