Official Report 198KB pdf
Good morning. I welcome everyone—committee members, witnesses, the press and the public—to the meeting. I have received no formal apologies. Rob Gibson will be late, but he will be here at some point. I remind everyone to turn off their mobile phones.
All the usual ones. I am a farmer and a partner in a farm business that receives subsidy payments.
Thank you. As no one else wants to declare an interest, we can move on and welcome our first panel of witnesses. We have with us John Kinnaird, who is the president of NFU Scotland; Becky Shaw, who is the crofting environment officer for the Scottish Crofting Foundation; and Stewart Jamieson, who is a board member of the Scottish Organic Producers Association. I thank you all for the written evidence that you have sent us, which has been most useful. Because we have your written evidence, we will not be inviting you to make opening statements. That is our usual practice in inquiries. I invite committee members to ask questions based on the written evidence.
This question follows up a point in the submission from the Scottish Crofting Foundation. Becky, you say:
Research that has been carried out by a range of economic analysts—including Peter Cook, who will give evidence to the committee later—shows that, over the longer term, the trend of decoupling will be towards economic rationalisation, which will tend to lead to a decline in livestock numbers in some of the more fragile and peripheral areas. The rate of that decline will depend on a number of factors, many of which are perhaps not economically rational.
You mentioned that the beef national envelope has perhaps been used to support cattle production in some of those areas for environmental as well as agricultural reasons. In that respect, do you see the eventual shift to pillar 2 support as an environmental or rural development measure?
Yes. Many stakeholders, including NFU Scotland, have said that, ideally, targeted support for suckler cow production as an environmental and socioeconomic good should be delivered through pillar 2 support. The systems are quite fragile; indeed, cattle are already leaving the area. The beef national envelope offers an early solution that will allow us to develop in its place an integrated rural development scheme.
Do only suckler cows need support or are other forms of livestock affected?
Research shows that livestock numbers in general are likely to decrease. Our consultation response called for some targeted support for sheep and arable cropping. In Peter Cook's analysis, the correlation between cattle and arable cropping probably already exists and a measure that retains cattle is also likely to lead to the retention of more mixed systems and cropping.
Alasdair, do you want to ask a question on this issue?
Yes. I must apologise for my delayed arrival, convener; I was held up at another meeting. As a result, I might have missed the thread of earlier questioning.
I think that I may have covered what you were asking about in your first question. To reiterate, although we think that a decoupled system has great potential to provide environmental benefit, we also foresee risks to the more fragile areas and to smaller units. Across Europe, small-farm organisations are similarly concerned. Every country seems to have different solutions, but there is a strong feeling that we can do a lot with our rural development measures.
At the outset, I should have declared an interest, as I am a member of the SCF.
It would probably happen in conjunction with the developing scenario. Obviously, the CAP will continue to evolve. We will have to wait and see exactly how it evolves, but, as the emphasis is becoming less on money directly supporting production, we believe that the emphasis has to be on multifunctional farming—on agriculture that produces food and is productive but also rewards land managers for the other non-market goods that are provided by agriculture. The process is evolving. I cannot put a timescale on it, but I think that, as the trends become apparent over the next 10 years, we will see that there has been quite an interesting change.
Perhaps we should move on to the issue of how we get from where we are to where we are going. The NFU Scotland paper talks strikingly about the need for transparency in relation to the purpose of our spending and Becky Shaw's comments about the different types of farming that public policy should support also relate to that question. In theory, the land management contract approach takes us to a more explicit public policy justification for farming, which is different from the approach that has been adopted previously. Perhaps our witnesses would like to comment on how we can move to the land management contract approach.
It is important that we move towards a transparent system. We believe that the land management contract model represents the right way to go in the medium term because it relates not only to production but to social, economic and environmental issues. The important thing about land management contracts is that they would allow businesses to respond to the social, economic and environmental issues, irrespective of where they are, rather than to deal with only one aspect at the expense of another.
We in the organic sector believe that we are already operating under land management contracts. They are part of the organic system, although perhaps not in the way in which the aid schemes were started and the way in which they operate. I agree with John Kinnaird's point about transparency. If we are operating on behalf of the environment, and for social reasons and food production, we have to be quite clear that that is what we are doing. The organic sector does not have an issue about that, because we are very comfortable with the principle of land management contracts.
I want to return to the historic basis for the single farm payment. The submissions from Becky Shaw and John Kinnaird differ on that issue. The impression given in the SCF paper is, "Okay, the initial decision is historic basis, but let's get away from it as quickly as possible." The NFU paper is welcoming of the historic basis and gives the impression that, somewhere in the long grass, there might, at some indeterminate point in the future, be a reason to revisit it. That difference may just be a matter of language or there may be some real divergences between the two organisations in respect of the future. It has been suggested this morning that, given that we are on five-year reviews, the review of the historic basis is likely to take place in 2009. Would you both be happy with that timescale or are there much more deep-seated differences between the two organisations?
Ladies first.
Thank you, John. To be pragmatic, we recognise that a decision has been taken and that it would be silly to review it next year. However, we welcome the fact that the minister has mentioned that the policy will be reviewed at the earliest opportunity and we think that 2008-09 is not too early.
We have to remember that land management contracts are part of the Executive's "A Forward Strategy for Scottish Agriculture". There is an impetus for the minister to introduce them, although there would be no point in doing so before 2007. Historic payments are important to allow stability. If we were going down an area payment route, we would see massive redistribution of money and little economic benefit. There can be no justification for large tracts of land attracting large payments when there is no real benefit to rural communities or to the economy. That is why we welcome the historic payments. One of the review dates appears to be 2009; I would imagine that by that time, or perhaps before then, land management-style contracts will have been introduced.
So you would not want that review unless land management contracts had been introduced and, if that can be done round about 2009, you will be—
We do not need the review to bring in land management contracts.
But you do not want the review unless they have been introduced.
I do not think that that is the case at all. The review is more fundamental than just looking at land management contracts. It will be European Union-wide, not UK or Scottish specific. We have to move away from looking only at 2009, but I think that, come 2009, we will see fundamental changes in how support is delivered.
That raises the question where the debate in Europe will go over the next few years. There is an issue about what member states will argue on the way forward. To what extent are your organisations, as producer organisations, engaging in that debate and to what extent do you want to shape that debate in Scotland?
We definitely want to shape that debate in Scotland. Through the CAP reform agreement in Luxembourg last year, we have already got regionalisation, which allows the Executive to identify specific areas within Scotland. What is important for Scotland is what is delivered for Scottish farming, for Scottish crofters and for the Scottish public.
Obviously, we want to be involved in that debate at the European and Scottish levels. We have regular contact with the European Commission and we will aim to feed our views into the developing European process over the next few years.
We would prefer to keep the regionalisation aspect, which is an important part of any forward strategy, based on a Scottish input. That is the Executive's view in "A Forward Strategy for Scottish Agriculture", and we do not see any reason to change that. The implementation of organic rules and protocols is obviously dealt with on a Europe-wide basis. We believe that that is fine, but economic and social factors will come into play in different situations in different countries. We think that we should keep some Scottish control of social and marketing issues, which might be completely different in Scotland.
There are different ways of implementing CAP reforms in different states and even within the UK, but, if we are to gain public goods out of those reforms, we must be concerned about the tradeability of entitlements, particularly in less favoured areas such as the Highlands and Islands. We do not want a move towards the consolidation of the kind of farms that we would describe at the moment as being intensive. Would you like to comment on that?
Certainly. One reason why we suggested moving away from entirely historic payments was the big disparity in the levels of historic payment in different areas. We are concerned that a similarly difficult situation could arise as that in the housing market. Some land is currently without any entitlement and land may be made available by people deciding to opt out of the system if they are receiving very little from it. We are concerned that people who have to retain, say, 100 hectares with a high entitlement might move that 100 hectares to somewhere in the Highlands and Islands where the minimum requirements for maintenance are fairly low and the land might not require significant input of time or effort. A local person could not afford to compete with that, so there would be an obstacle for young people. That is not a problem only in the Highlands and Islands; the potential obstacles for people coming into agriculture need to be considered.
The young person problem is clearly important, irrespective of where one is. However, we have to remember that, to be able to get their entitlement, people have to abide by stringent cross-compliance regulations. People cannot do nothing; if they do not abide by those cross-compliance regulations, they will not get their payments.
In the short term, the payment will have to be tradeable and there will be winners and losers. In the long term, the CAP reforms will focus our attention much more on the market and, to some extent, on environmental and social effects. They will take our attention away from production. We therefore do not see a long-term role for the trading of entitlement. Such trading should be discouraged. Eventually, given that the reforms will encourage people to become more market oriented, producer support will inevitably disappear. I will not predict how long that will take, but we will be more focused on the market and the environment, rather than just on producer support.
In your submission, you mention the potential danger of the loss of some organic farming because of uncertainty over the current support mechanisms. How can we avoid that loss? You say that
Yes, it will. We have a major problem in keeping the existing producers. Organic farming is a long-term commitment. The aid scheme lasted for five years but, at the end of five years, an organic farm is only just getting going. The Executive has approved some form of continuing payments. That demonstrates a slight recognition that some support is due. However, we in the organic industry do not believe that those levels of support are sufficient to make producers consider continuing with organic farming.
I have a brief question for John Kinnaird, although if he does not want to answer it now, I will talk to him later. We all know that the thrust behind the mid-term review is to break the link between production and support. The widely held view within the farming industry is that that is a good thing. Two of the witnesses today—and others who are not giving evidence—support the principle generally but seek to find ways in which the system can benefit their particular sector, perhaps at the expense of ordinary farmers who are involved in commodity production. Is it important that we defend the rights of non-specialist farmers or commodity producers in Scotland for a number of reasons, but specifically to ensure that Scottish farmers are not subjected to redistribution in the long term, which might put them at a competitive disadvantage with farmers in other European countries who are not subjected to the same redistribution of resources?
I will not dodge the question. Our view on the issue was produced as a result of what was probably the biggest consultation that our organisation has ever undertaken. We represent not only commodity producers but a proportion of crofters. Many of those producers, whether they are crofters or farmers, are also organic producers. We must be careful not to pitch one against the other. In the long term, it is clear that the best answer will be land management contracts, because they will reward every type of production in a way that is specific to individual farms and crofts, irrespective of where they are in Scotland.
To date, we have concentrated on pillar 1, which is concerned with the existing frameworks and how to keep a farming industry while preparing it for change. The other part of our agenda is the rural development angle. All the signs are that pillar 1 is moving towards pillar 2, which will be the European Union's new method of support. To pick up on John Kinnaird's final point, how do the witnesses envisage the new moneys that will come gradually through the rural development plan helping that agenda? All the witnesses talked about the long-term future, and marketing seems to run through everyone's comments, but we have considered other issues, such as rural jobs and facilities. Maureen Macmillan talked about creameries before the meeting, and we have had discussions about abattoirs. How should we manage those aspects of rural development? Do we need different options to allow us to do so? Do the witnesses have views on how we should shift to that side of the equation?
I share many of John Kinnaird's views on land management contracts. It is important for us to move to a system that allows different priorities to be recognised in different parts of the country. We need a national framework with regional options to allow the priorities of different areas to be taken into account in different ways. We are sure that the priorities in Skye are different from the priorities in Fife. It is important for there to be enough flexibility in the land management contract system to deal with the priorities that are identified at local or sub-regional level.
The NFUS referred to land management contracts in its written submission, but is not the whole issue of rural development additional to those contracts?
We must consider what we are trying to achieve. There is a great danger that, under the rural development regulation, we will go down a predominantly environmental route that will be far too narrow. No one, including the NFUS, would disagree that the environment is important. However, we must first consider how the funding will be delivered and how it will benefit all aspects of the food chain, if you like, such as marketing, abattoirs and processing—the whole gamut. It is important that, rather than be specific about raising certain sums of money, we consider the delivery routes for the funding. We should all be involved in doing that because it is important that the funding benefits all rather than a few. Pillar 1 direct payments will gradually disappear and we will increasingly move towards pillar 2 arrangements.
I agree with John Kinnaird and Becky Shaw about the importance of local processing facilities and support for them. I am an organic milk producer. I would be delighted if we had in Wigtownshire a local organic creamery making organic cheese. However, the Executive cannot lead people; it can only put measures in place. The onus is on us, as farmers and producers, to take advantage of what is available.
We have seen the adverts.
That is just an example. It is important that the Executive takes initiatives such as the development scheme on board. The scheme exists to assist producers who can see the marketing possibilities. We all realise that, whatever food we produce, it is never going to sell itself. There has to be marketing and we have to market the Scottish brand continually. Scottish products should always be seen as quality products, but a quality product is no good unless it is marketed.
In that last set of answers, there seems to be a general acceptance that in years to come there will be a reduction in the significance of direct farm support and an increase in the significance of support that is targeted through the rural development regulation. What part do the members of the panel think that modulation will play in that?
Modulation will play a big part. As organic farmers, we are comfortable with modulation, which is going to be an increasingly important aspect of food production. We are all coming to realise that people in the countryside are not just there for food production; they maintain the countryside and provide lots of the social aspects of life in the countryside. If that is what the countryside is there for, we should say that. We have to go back to John Kinnaird's point about transparency. We are comfortable with modulation and agree that it should be used for the environmental and social aspects of rural development. I hope that, as organic farmers, we can be a part of that to some extent.
Modulation will obviously play a very important part in rural development because it will attract match funding. If there is no match funding, I do not believe that we can progress rural development spending because that would simply create a massive redistribution system. It is important that we set out the objectives before we raise a particular sum of money.
I will have to diverge a little from John Kinnaird's views. The interesting distinction between agriculture and crofting is questionable. We believe that modulation will play an important part in the future of land use in Scotland. The match funding that we can attract into the system, and the renegotiation of the British allocation of European spend, must be looked at, as the NFUS paper mentioned.
What do you think about the proposal from the Scottish Council for Voluntary Organisations that some of the money should be used for village halls and shops, and not necessarily be directed at agriculture-based enterprises or infrastructure? It argues that funding should go into the wider community. Where do you see the balance lying?
We do not dispute that there is a balance to be struck. The reason that match funding is so crucial is that it brings money into Scotland. You refer to exactly the kind of projects that the match funding could be used to fund. The objectives must be clear and should not be based on agriculture alone, but agriculture is the trigger. The £36 million to £40 million is important, and could be spent on a raft of different items, including those that you raise.
In the Highlands and Islands, agriculture plays a key part in maintaining community infrastructure so, in itself, supporting agriculture and continued land management is an important factor in maintaining rural communities. There is scope for a balance to be struck and for modulated funds to be used for other objectives, but in the Highlands and Islands in particular there is a strong connection between agriculture and agricultural communities. It is important that we continue to support agriculture in those areas, because in many remote areas it is the backbone of the rural community. We need to consider making decisions to spend money on other areas, but we must recognise the important role of agriculture in rural development and in maintaining rural populations.
I am happy with that. We have moved from talking about agriculture in isolation to realising, over the past 10 to 15 years, that we are talking about rural issues. I am happy about funds moving in one direction or the other, because we are talking about the rural environment, not farmers in isolation.
I would like John Kinnaird to clarify how we treat the money that we get through modulation. I get the sense that people are seeing it as two distinct parts of a pot. Am I picking that up wrongly?
No. What I am saying is that agriculture and crofting—crofters receive some money as well, through production support—are the trigger for the match funding. There is no way that we would expect not to have to do something under rural development. It is not a case of our having to keep what we have got; we will have to continue to produce public benefits for that funding. However, we must be careful that all that funding does not suddenly disappear out of agriculture and crofting, as that would take it out of rural communities. Farming and crofting are central to rural communities: that is the important aspect. The trigger is agriculture and crofting—it has to be—but the crucial part is the match funding.
I will let Rob Gibson ask a brief question, but I am keen for us to move on to the second panel of witnesses.
In her paper, Becky Shaw states:
The European compulsory modulation has a franchise that operates on the first €5,000 of all European money, which is basically a supporting mechanism for the smaller farmer. We were keen to see some targeted support in recognition of the rural development benefits per se of the smaller farm organisation. We would like to see in pillar 2 some recognition of the fact that the small unit—the small family farm, croft, or whatever—has a strong rural development role and to ensure that a free, decoupled market does not lead to the loss of the smaller unit. Our intention, through rural development mechanisms in pillar 2, is to ensure that the small farm, the family farm or the small unit retains its crucial place and is recognised for what it contributes as a rural development element per se.
We seem to have covered a lot of ground, both in the big-picture sense and in getting down to a very technical level. Thank you for fielding all the questions that we have fired at you. If, on reflection, there is anything that you want to send us, we will be happy to read your supplementary comments. Thank you for coming along this morning and for giving us your written submissions in advance.
Meeting suspended.
On resuming—
I welcome our second panel. We have with us Peter Cook, who is a retained adviser to the Scottish Agricultural College, and Dr Janet Dwyer, who is a reader in rural studies at the University of Gloucestershire. We will not have opening statements from the witnesses, but I thank them for their written submissions. I know from talking to colleagues that they want to raise a number of issues on the back of the submissions.
I thank Peter Cook for his submission, although I found it to be slightly depressing. In the second last paragraph you say:
I am quite positive about the future—you have picked up on particular situations that I mentioned in my submission. Decoupling creates opportunities for some people to make radical changes to their businesses, but the reality in the industry is that most people will not do so because they will want to find a solution in agriculture. I was referring in my submission to people who are looking to retire or semi-retire, or people who need to restructure their businesses. They might have a lot of employed labour and want the opportunity to cut costs. The fact that people can collect quite a large payment without having the same level of agricultural activity as in the past means that they can make radical changes.
I want to look at some of the projected changes. What is driving the fairly radical changes that are proposed for the cropping area and the dairy cow and sheep populations in Scotland?
As an economist, I know that one has to be very careful about anything that is produced using an economic model because such models use particular assumptions at the time. For example, in the model that we used, we used very depressed cereal prices from probably two years ago, and we used the opportunity that people in the marginal cropping areas of Scotland had to reduce their cropping while still receiving area payments. If we subtract the area payment from the margins that people make in the marginal cropping areas of Aberdeenshire, upland Perthshire and upland Borders, very little margin is left.
Will cropping areas in Scotland become very reactive to world market conditions?
Yes. That is a feature of every activity. I think that we will probably see more fluctuation; indeed, we have already seen it happen in grain and milk prices. The industry is much more volatile and there will be more volatility in the cropping area. With the positive trend in prices, the amount of cropping will rise; however, that will decline as we go into a negative price trend. The area payments system has given much more stability because it provides a basic level of income. There will be much more volatility. As prices have improved this year and in light of the prospects for next year, we will probably revise our figures a little. However, we still expect a decline in cropping in Scotland.
Behind all that lies the assumption that taking the subsidy element out of the profitability calculation might cause commodity values to react and beef, lamb and milk prices to rise. Have you taken that into account or could that aspect influence the figures over a 10-year period?
Small rises of between 5 and 10 per cent in beef and lamb prices have been built into the figures. I cannot for the life of me remember the exact percentages, but I think that the figure for beef prices is 8 per cent or thereabout. We have based those increases on modelling that has been carried out by many different organisations including the European Union, which assumes that, although European beef production could be significantly reduced, the effect on prices will be limited by the fact that we will be more open to third-world imports. The world beef-supply situation will be just as important a factor and will keep the price lower than we might have expected with the reduction in production. An awful lot of assumptions were made about the world beef supply, but the fact is that we do not know what prices will be like. Any substantial price increases would blow huge holes in the forecasts, which are extremely sensitive to prices. However, our assumption is that there will be a small price increase.
You have gone into some detail about how you expect farmers to react to the change in circumstances. In my experience, they tend to be slow to react initially, but as time goes by they become very keen to react to the marketplace. Is five years adequate for the introduction of market-driven changes or do we need longer, perhaps five to 10 years?
Once again, that depends on prices. If they change markedly from our assumptions, people will react faster. However, if our price assumptions are right, we will need a 10-year horizon before people make substantial changes.
Dr Dwyer emphasises the fact that in the changeover from the current system to one that is fully decoupled, there is a need for a lot of training, reassessment and so on in relation to areas such as how to conform with the good agricultural and environmental condition policy. What would you recommend to the minister in respect of the Government being proactive in that area?
I suggest that that issue has not been sufficiently thought about and planned for in preparation for the major reforms that, in the medium to long term, will make a big difference to the way in which people think about their farm businesses and their future in rural areas.
Presumably the SAC is in pole position to assist in some of that transitional work.
I am not an employee of the SAC, except as a contractor, so I had better not comment on that.
Generally, what needs to be done?
It is a big task, but we are lucky in that there is throughout Scotland a network of SAC offices and a tremendous programme of information meetings that is run by the National Farmers Union and other organisations. To be honest, farmers are at the moment absolutely plastered with mid-term review information. There are meetings all over the place. In a way, we have an extremely good information system. That does not relate to training or to strategic thinking, however. On that, I point out that the Scottish Executive's farm review pilot scheme is a grand programme that brings in the environmental aspects of farming as well as the business aspects. The only problem with it is that it only reviews the business; it does not consider future options. I understand that it could be argued that, in doing that first piece of work, it is doing enough and that farmers should carry out options appraisals. However, I think that it is more important to support people in considering their options in the light of the major change that they face than it is to review history, which is totally irrelevant.
As a result of the overall reform timetable in Europe, we are thinking about replacing the current structure with the single rural fund after 2007. How will farmers adapt to a single rural fund, which will have big environmental and social implications, unless specific training is provided for them?
That is an important point. We say to farmers, "Given that the modulation rate is 10 per cent and perhaps another 3 per cent might be available from the national reserve, the payment that you have received in the past will reduce by that amount. For goodness' sake, do not think that the world will be that way forever".
As someone who has come up here and is not Scottish, I might be being a little controversial. I understand entirely the view that the money for rural development must remain in agriculture, and the reasons why that strong view is taken in Scotland, given the structure of your rural areas and the heavy dependence on agriculture.
Perhaps we should send the Executive to school, first.
During the past year, we have picked up the point about diversification of agriculture so that it includes, for example, small-scale forestry initiatives and tourism initiatives and how we could provide support for that. I think that Dr Dwyer is saying that it is not good enough to think about diversification in a couple of years' time when change is imminent; it has to be done now. That comes across loud and clear.
You seem both to be sceptical about the use of a national envelope. From my discussions with farmers I have found that they share that scepticism. Will you expand on where that scepticism comes from and tell us what other measures could be better employed?
I was part of a team that evaluated the options for use of the national envelope in England. We presented many suggestions to ministers, which they decided not to implement. However, we looked in particular at the option of having some kind of targeted support for suckler assistance as a result of the arguments that were made—from the economic modelling work—about the need to protect suckler production in particular.
I agree totally with that analysis.
That takes us to the fundamental question about what targets we want to hit, which was raised by our previous witnesses. The producers want to be told what the objectives are, because they need to know that before they start shifting production. The comment was made that people will follow the money. Do either of the witnesses have views on what objectives the Scottish Executive should have as it moves ahead with the process? We have talked about the need for provision of more environmental farming and rural diversification, as opposed to just traditional intensive support. In preparing to come and speak to us today, was either of you able to think about how we should flesh out the objectives?
I cannot say that I have given much thought to changing the partnership agreement's existing admirable objectives, which have much consistency with the objectives that were agreed at the meeting on rural development that Commissioner Fischler held in Salzburg in November. However, there are perhaps two main differences of emphasis in the European focus that might be equally relevant to Scotland.
That certainly tunes in with the big debates that we have had on nature conservation in the past three months, involving the rural communities. I invite Peter Cook to add something about objectives.
I am sure that members realise that there is a terrible problem in Scotland because of its diversity. The first important target is a competitive food industry. Scotland has a large food industry—the committee will know all the figures. A higher proportion of jobs in Scotland than in the rest of the UK and many other European countries are in food manufacturing. The sector is important in adding value and is part of all our strategies for the future. There will be competitiveness only if there is a competitive agricultural industry that can supply, at reasonable cost, quality beef products, lamb products, malting barley and many other niche products. The industry must be allowed to be competitive and people must be allowed to make competitive decisions.
I do not know about other members, but I have received serious food for thought from those two answers, which seem to take us to the heart of the challenge. In a sense, they show why we wanted to do the inquiry in the first place. We know about the huge shift, but we must get into all the background issues to begin to have clarity of focus. The points about training, and raising people's awareness and their ability to engage fully in the challenges and—we hope—come out on the side of the opportunities, were well made.
My point follows on from what Peter Cook has just said. I would like an opinion on one of the stark assumptions that is made by many people in the farming industry in Scotland—that Scotland cannot compete at commodity level in respect of grain, beef and meat production in general. Is that argument justified, or is there a route down which Scotland could go so that our better farms could be competitive on a world-market scale?
The honest answer to that question is that we do not know, because we have not been asked to do that. We will find out in the next 10 years. We can do lots of academic studies and say that, theoretically, farms can produce beef at such a price; however, if you want my hunch, I would say that, in beef, our future is probably as a quality, high-priced producer. The problem in Scotland is that we have a six-month winter, which creates costs.
In Aberdeenshire, winter lasts for seven months.
That is if you are lucky. The snow melts in July.
It could be argued that perhaps that indicates that it takes two acres to do what could be done with one acre in another part of the country or another country. At the end of the day, if someone is organised efficiently and they have that additional area of land, it is possible to compete.
That is right. It could be argued that a model for the future of Scottish agriculture could involve having 2,000-acre farms on the east coast that could compete with anyone. That might be the case, but it would take an awful long time to get there. There are many impediments to the implementation of such a model. The Parliament will probably put some impediments in place, because members will not want the possible environmental consequences of such 2,000-acre farms; they might not want the social consequences, either.
You have pointed me in the right direction.
As far as the niche markets are concerned, it is clear that the consumer is a big part of the issue. We have been driven by what the supermarkets have been prepared to pay for beef and other things, but, in terms of labelling and so on, do you have any views about how our policies ought to be developed to ensure that our ability to find niche markets—which is the result of the developed stage of our agriculture—can benefit from the new system? Should those aspects be part of pillar 2 as well?
It is important that pillar 2 should include support for developments in marketing—niche marketing, in particular. I echo much of what Peter Cook said about competitiveness. It is all about the kind of countryside and the kind of environment that one wants and how many people one wants in the countryside. In a sense, those issues set limits on the sort of production systems that are acceptable and appropriate for Scotland. If we say that there are certain environmental standards that we want to be maintained, resources that we want to be protected and communities that we want to support, we need to become competitive through added value, quality marketing and branding.
That issue was mentioned earlier, when the organic producers were talking about how they got together as a co-operative to deal with milk, so that we could have specifically Scottish organic milk on the supermarket shelves. We would be quite interested in following up that point, because the issue arose in our previous discussions on the budget.
Yes. A lot of the questions to the previous panel focused on decoupling decisions and the impact on the land management contract plans for Scotland. I have not spent a lot of time considering that, but, having read the papers to get up to speed on where we are with the land management contract proposals for Scotland, I have a couple of concerns about providing the finance to ensure that those things become a reality and do not just stay on the drawing board.
Now is the time to identify the different objectives and diversification opportunities that we want to come out of the process. That is a useful point and I see a general nodding of heads round the table.
Meeting suspended.
On resuming—