Plenary, 06 Apr 2000

Meeting date: Thursday, April 6, 2000

Official Report 676KB pdf

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Agriculture Strategy

The next item of business is a statement by the Minister for Rural Affairs on the forward strategy for agriculture. The minister will take questions after the statement, so there should be no interventions during it.

As both Alasdair Morgan and Alex Johnstone know, following recent developments I was anxious to report to Parliament. It can be difficult to get the right timing for matters done on a devolved basis.

I am grateful for the opportunity to inform members about the outcome of the UK aid package that was agreed last week and to explain my thinking on how I want to move forward to tackle the underlying issues that face the industry. I will describe the approach I intend to take and touch on the content of a discussion document that I published today, copies of which were put in the Parliament information centre this morning. The aid package and the strategic discussion are inextricably linked. The former was an attempt to deal, in a small way, with the problem our industry faces, while the new strategy debate looks further ahead.

As part of a UK package amounting to some £200 million, which gives Scotland some 20 per cent of the UK total, I announced a £39 million support package for Scottish farmers last Thursday. I saw that as a very fair settlement and I hope it was welcome news for the industry. The details of the package are as follows: more than £20 million for less favoured areas in 2001; £12 million for dairy, beef and sheep farmers in the form of agrimonetary compensation; £2 million for a pig restructuring scheme; and around £3 million for an increase in the maximum weight of cattle under the over-30-months scheme. The latter two are subject to European Commission approval. Additionally, some £2 million is for measures to assist with marketing, business support and some of the costs borne by farm businesses.

The package has been the subject of quite difficult negotiation for some months. I made clear that my priorities for Scotland were the less favoured areas, agrimonetary compensation and the pig sector. I am therefore pleased to report that those priorities were well reflected in the final settlement. While the arable sector was, unfortunately, not included in the package, I am pleased that I have at least been able to secure for specialist cereal producers a further £2.5 million as a result of my recent decision to alter the base area for Scotland.

Overall, we secured a very fair share of the UK package. I make no attempt to conceal the fact that it will not solve the problems, but it will, I believe, provide an important psychological boost to the industry as well as a valuable cash injection.

The £39 million package grabbed the headlines, but I also announced a wide range of additional measures intended to help farmers in the short term. They include help for farmers in complying with some very necessary pollution controls, including a sympathetic approach to implementation of the EC nitrates directive to help minimise the burden on farmers and to give grant assistance to those in the designated nitrate vulnerable zone.

The details of the proposed scheme will be discussed with the industry, but the aim will be to fund 40 per cent of eligible costs. In addition, we will defer introduction of the new integrated pollution prevention and control system for existing pig and poultry units by three years to help keep down costs. We also have plans to simplify the rules for registration of agricultural waste and licensing exemptions for the reuse and recycling of such waste and for simplification of the rules relating to the groundwater regulations.

I also announced initiatives aimed at controlling the costs associated with the processing of meat and confirmed that any increase in Meat Hygiene Service charges would be capped at the rate of inflation for 2000-01. There will also be an independent review of the efficiency of the Meat Hygiene Service and an examination of the current BSE protection strategy, to be carried out by the new Food Standards Agency.

Work is also under way to help the farming industry improve its returns from the market and increase income from other sources. My officials will discuss with industry representatives and enterprise bodies how support can best be provided to farmers wishing to exploit the potential benefits of information technology. As was mentioned in this morning's debate, we are already working with organisations in Dumfries and Galloway to examine the viability of developing local markets for local produce.

That represents a broadly based package of measures that is designed to help all sectors of the farming industry. It provides direct financial assistance and aims to reduce the burden of regulation, keep down costs, encourage new IT initiatives and stimulate marketing opportunities. None of the measures, on its own, will turn around the fortunes of the industry, but I believe that with the wide range of other work that is taking place, these measures represent a firm commitment by the Executive to the future of this important industry.

That is only a starting point, rather than the end of the process. It is generally accepted that short-term measures can never provide the answers for the industry. We have known for some time that it will take more to secure a long-term sustainable future—a future in which, we hope, emergency aid packages will become the exception rather than the norm. That is why today I have launched a debate on the future strategic approach for Scottish agriculture.

My aim is to stimulate a wide-ranging debate on the creation of a strategy that will assist our agriculture industry to fulfil its potential as a viable and sustainable component of rural Scotland. I know that many in the chamber will take a keen interest in that debate. We all know that 75 per cent of our land area is given over to agricultural production. Few, if any, of us are not in some measure affected by the state of our farming industry. That is particularly true of those who live in rural communities, where agriculture is a major employer and creator of wealth. The future of agriculture is also important for other reasons, such as its influence on the environment and the contribution it makes to leisure and tourism. It also contributes a social dimension to many of our remote rural areas.

It is well established that agriculture is a cyclical business in which development has often been punctuated by alternating highs and lows. That is not peculiar to the industry in this country—the same kind of patterns can be seen to varying degrees throughout the world. Clearly, there are some factors over which we have little control—factors such as weather, widespread economic downturns, over-production and changing consumption patterns—but it is equally clear that we need not be totally unprepared for bad times. Indeed, if our agriculture industry is to survive in any meaningful form, we must create a more robust structure that can cope with the inevitable downturns.

I have, therefore, issued a discussion document, in which I ask all concerned to take time to consider the issues that it raises. My aim is to work towards a final strategy by the end of the year. I hope that in due course time will be available for a proper debate on the document, which members received only today. I hope that, after reflecting on it, members will have an opportunity to contribute to such a debate.

There can be no doubt but that the last few years have been deeply traumatic and damaging for our farming industry, as it has been hit by one problem after another. Additional financial aid has been provided, but welcome though it has been, even the National Farmers Union in Scotland has recognised that a sticking-plaster approach is not sufficient in the long run. It is not the way in which the Executive wishes to operate, nor is it the way in which the industry wishes to operate. That has been made clear to me by the many people in the industry whom I have met since I took office. They want to be in a position to earn a decent return from their efforts. The Executive is committed to helping farmers to do that, and this strategy is designed to facilitate it.

In any discussion, we need to begin with the facts. For that reason, the document sets out the background to the situation in which rural Scotland finds itself and outlines the contribution that agriculture makes to rural society. It touches on factors such as rural employment, economic and social contributions and environmental factors. It also describes recent trends in agriculture, exchange rate movements, the impact of World Trade Organisation negotiations, the prospect of EU enlargement and the wider opportunities and difficulties of world prices. All those factors must be taken into consideration.

Of course, it is the way ahead that is important. I do not want to give a set of answers. It is not for the Executive to impose a solution or a strategy on this most valuable industry. We must arrive at the solution from a bottom-up approach, in which we are all involved. We also need to assess constraints on progress, how they might be overcome, what the industry might look like in the future and how our policies and support might be fashioned to deliver optimum benefits.

That is nothing more than a quick snapshot of the approach that I am now taking. It is my intention to do all I can to ensure that this is a broadly based discussion, representing the views of all interested parties. My time scale of producing a final strategy around the end of this year will allow for discussion to take place throughout the summer and the autumn.

I hope that the Rural Affairs Committee will make a singular contribution. An important part of the process will be the discussion opportunities that my officials and I will arrange in various parts of the country so that we can hear at first hand from those who are engaged in agriculture. As part of that we propose to organise a major conference in Edinburgh immediately before the Royal Highland Show, which will give people who are at the show an opportunity to participate that they might not otherwise have had.

To help the whole process along, I intend to create a steering group that will oversee the development of the strategy and ensure that we keep to time. I am anxious that this should not drift on as an endless discussion. I want the steering group to give focus to the discussion and to move the various parts of the discussion forward so that we will meet the target of the end of the year.

That is a brief summary of two important developments that have taken place in the past week. The first addresses some of the difficult, and far from solved, shortterm issues; the other begins the debate on how we achieve longerterm aims. Both are important components of the Executive's commitment to create a viable and sustainable agriculture industry for the wider benefit of rural communities and Scotland as a whole. I hope that members have found this statement helpful.

I thank the minister for providing a copy of his statement in advance.

It is hard to disagree with much of the strategy document, because it contains some fairly obvious questions, such as

"What are the strengths of the Scottish agriculture industry?"

and

"Should the new strategy say anything about the likely future shape of the industry?"

I suspect that the answer to the second question might be yes.

It occurred to me to ask why those questions had not been asked immediately after the general election three years ago. Of course, then I remembered that the agriculture section of the discussion paper, "Towards a Development Strategy for Rural Scotland", which was published in October 1997, did ask some of those questions, and that the framework paper that was published a year later gave some of the answers to those questions. I suspect that some people will treat another document with a degree of cynicism. However, I do not want to be too cynical, as this is too important to ping-pong between political parties.

I will confine myself to two questions. I acknowledge what the minister said about a timetable and his wish to be finished by the end of the year, but I know how timetables tend to spin out. Will the minister give an assurance that this strategy development will be pursued with a degree of urgency and that there will be no slippage? Secondly, will he guarantee that the Executive will implement whatever recommendations emerge from this review?

As I said to Alasdair Morgan before making the statement, having to deliver a statement following a debate on what, I understand, was called the Sewel principle, filled me with a degree of nervousness. The reference by Alasdair Morgan to a document that was issued in that name increased my nervousness. However, I am grateful to Alasdair Morgan for his constructive comments. It is true that the questions that are asked in the document have been asked before.

There is a serious point. I assure the member that I am determined that this strategy should be in place by the end of the year. The reason why some of these questions are repeated is that an open debate can be started with no agenda. However, I am sure that everyone in the chamber who has ever gone to a meeting where there is no agenda knows that it is an absolute shambles; therefore, I do not apologise for repeating some questions that have been asked already. The document gives a framework that will be greatly beneficial in trying to structure that debate and will enable me to follow through on the assurance that I have just given the member.

In implementing the strategy, I shall not shilly-shally if clear changes in policy direction are required and it is within my powers to make them. The purpose of producing this strategy document is so that we can begin to shape our policies to meet the genuine needs and requirements of the Scottish agriculture industry, not just for today, not just for tomorrow, but over a much longer period. In that way, we will engage in a process that the farming community itself has bought into, and everybody—the Scottish Executive, the parties and all people who are interested in farming—will be moving in the same direction, for the benefit of Scottish agriculture and for the benefit of Scotland.

I thank the minister for publishing this document and praise the intent that lies behind it. I am sure that the Rural Affairs Committee will wish to become involved in the process and that it will have a great deal to contribute. As some members know, the committee has an extremely busy schedule, but I am sure that we will be prepared to put time aside to ensure that the document is dealt with in the constructive manner in which it has been introduced.

I welcome the aid package that the minister announced last week. However, my main question is on a specific issue in connection with that—the £20 million that has been allocated to less favoured areas for 2001. Is it fair to ask the minister whether it is simply an extension of the hill livestock compensatory allowance—or additional HLCA payment—that has been paid in recent weeks and was initially introduced by his predecessor, Lord Sewel? If it is an extension of that payment, which was also made in the previous two years, can it still be defined as new money? If that payment is to be made as part of the HLCA for 2001, the payment is still almost 12 months away. If that is the case, is it fair to include the £20 million as part of the aid package that the minister has announced?

I am pleased at Mr Johnstone's positive and constructive position in saying that the Rural Affairs Committee will play an important part in the deliberations and in the formulation of the response to the discussion document.

As to his question, one of the serious problems that I faced when negotiating this package was a very real concern that if agriculture ministers in the United Kingdom were approaching the Treasury for financial assistance now, the Treasury might take a very obdurate view of matters later in the year. It seemed to me, therefore, that I should try to negotiate a situation that had not been offered. Mr Johnstone is right—it is a similar form of aid. However, I remind him that when the payment was first announced by the UK Government three years ago, it was clearly stated that it was a one-off payment, which was not to be repeated.

Given that 85 per cent of Scotland's agricultural land consists of LFAs, I was deeply concerned that if I did not secure aid for LFAs as part of this package, the package would be seriously flawed in relation to Scotland. That was my priority. It was a difficult balancing act; at times I felt like one of those chaps with a stick with a plate on top. I can see Mr Johnstone's point; however, the payment was a one-off. We have now secured it for the third year, which is enormously helpful, given the preponderance of our farmers who operate in LFAs.

As to the payment being a little time away, regrettably, even these elements of agrimoney will take some months to filter through. However, I hope the fact that this package has been announced now will be hugely helpful to people who are trying to make arrangements for meeting their obligations, especially in terms of what—if I may be so blunt—their bank managers take off their future income stream.

From the Liberal Democrat benches, I welcome the statement and the aid package. I associate myself, and the Liberal Democrats, with the remarks made by Alex Johnstone. I also welcome the minister's announcement that he will hold a conference before the Royal Highland Show rather than after it; that is eminently sensible.

I have two questions on the principles that the minister outlined. Does he accept that there is concern about the complexity of the LFA payment system that is being considered? Annexe C of the discussion document makes a point about reducing bureaucracy, and it is important that we do not have conflict between those two objectives.

Secondly, on the review of the Meat Hygiene Service, does the minister accept that there is a need to look at small, low-throughput slaughterhouses in particular, because the MHS charges there are that bit higher per animal? We need to focus on that, and I hope that the minister will do so, in the context of his strategy.

Again, those were constructive comments, for which I thank Tavish Scott. I am glad he agrees that having a conference before, instead of after, the Royal Highland Show is perhaps more advisable.

Comparisons of LFA payments are indeed confused by the move from the present system of headage payments to a land-based system. From the consultation that we had even on that process, I certainly accept that there is a need to try to simplify the process. That point is well made.

I accept fully the point about the Meat Hygiene Service charges. Some of those issues were drawn to our attention in the Pooley report, which dealt with a range of such issues. I think that the Pooley report made 25 recommendations, only two of which could not be considered because they were not lawful under European directives. I met the Scottish Association of Meat Wholesalers yesterday, and the very point that Tavish Scott made on introducing a degree of derogation and relaxation to help the small processor is at the top of our agenda in trying to push forward all those Pooley recommendations.

Ten members hope to be called. There is no chance of that, but short questions and answers will allow most of them in.

Is the minister convinced that farmers who are still reeling from the crises that have beset them for months will recognise the document as an accurate appraisal of the state of Scottish agriculture? The document describes issues that have put people out of work and out of business as "challenges". Does he feel that social, economic and environmental development, which has been in decline, will be adequately promoted by the measures that he outlined?

I do not think that anyone in the chamber can try to claim otherwise. In trying to secure short-term financial measures, I have never claimed, and I do not claim, that achievement of those measures should be projected in a triumphalist way, nor have I ever suggested that it will overcome some of the serious problems.

I hope that people will recognise the document as an accurate appraisal. It includes, for example, statistics that indicate clearly the absolutely appalling total income from farming figures, of which Irene McGugan is well aware.

There is a real difficulty here. When is the right time to start talking about a forward strategy? The present circumstances may be right, although Irene McGugan suggested that they are not; perhaps she feels that this is the wrong time. The situation is enormously difficult, and I know that it will be difficult for people in the farming communities to engage in the process. However, I believe firmly that the situation is so serious that we simply have to start somewhere. I also believe that we have to start now. We cannot go on, lurching from one crisis to another. We must have a far more coherent and cohesive strategy for Scottish agriculture. I recognise the difficulties, and the fact that people will find it difficult to engage, but we have to work co-operatively and collaboratively to try to make that happen.

I thank the minister for his statement. Does he agree with the principles of the common agricultural policy? In particular, does he agree with article 39(b) of the Treaty of Rome, which states:

"to ensure thereby a fair standard of living for the agricultural population, particularly by raising the individual earnings of persons engaged in agriculture"?

Does the minister view £1,700 a year as a fair standard of living? Does he view Scottish agriculture as one of the dying communities that he has no intention of propping up?

I had no idea that Mr McGrigor was such an avid reader of the Daily Mail. I am sorry that he was not present at the meeting and that he did not hear all of the speech. I am also sorry that he believes everything that he reads in the press, because I did not say what he suggests I said.

I take the opportunity of informing the chamber that the remark that Mr McGrigor mentions was made when I was referring to criticism that I got over the Balmacara estate. I was asked by a radio commentator whether that was not just another example of money going to a lost cause. I said that I did not agree, and that I did not think that anything that I did was done simply to prop up dying industries. I said that what I was doing was trying to give support so that rural Scotland could survive. I hope that Mr McGrigor will accept that reassurance.

The article in the Treaty of Rome expresses a very fine sentiment. However, it is clear that the present CAP regime, and the way in which it operates, hopelessly fail the industry in its efforts to meet the treaty's objective. There will be enormous changes to the support regime in the next round of CAP reform. We have to have a strategy that, among its other objectives, tries to increase the income in the hands of our primary producers. That will be a hugely difficult exercise. Part of the value added must go up the food chain and be placed in the hands of the primary producers.

I would like to thank the minister for his statement, which was most welcome. I hope that his heart will not sink too much if I briefly touch on pigs. The £2 million restructuring is a move in the right direction, but I hope that the minister will recognise that the pig industry is still in tremendous trouble, and that very efficient producers—two of which live in my constituency—are considering going out of business altogether. That would kill the goose that lays the golden egg. How does the minister propose to address that? Will the minister also touch on his ideas on how to get Scottish pig products into Scottish supermarkets?

I recognise that the pig sector remains in great difficulties, although we can be thankful that the price of pigmeat, which at its lowest was around 60p a kilo, is now up at around 80p or 85p. I also saw a price of 87p last week. That still does not bring the pig sector into profit, nor does it help the sector to overcome its difficulties of the past two years.

The structure of the package that was submitted to the European Commission was largely drawn up by the National Pig Association in conjunction with the Meat and Livestock Commission. It was drawn up in recognition of the fact that approaches to Europe and the Commission had, I regret, made it clear that the Commission would not permit the payment of the costs associated with BSE.

I have reported to the chamber repeatedly on that issue. The package is intended to assist those who wish to reconstruct their business. If they are able to produce a business plan that involves some degree of borrowing from their bank, the intention is that they should receive a 5 per cent reduction in their interest rate to assistance them in their reconstruction.

Mr Stone asked about getting Scottish product into Scottish stores. The Scottish pig industry initiative aims to do just that, and we are in constant discussion on the matter. The Executive financially supports the SPI initiative.

I welcome the minister's statement, which showed an awareness of some of the wider issues that we have to deal with. It also showed an awareness of the importance of the consultation process. He mentioned that agriculture is a substantial component of the rural structure, and that it impinges on the environment and hence on tourism, which is another big industry.

Does the minister agree that we need to take an holistic approach to rural society? Does he feel that more cross-working between ministers and committees would help? Will the steering committee or other structures help in developing that holistic approach?

I want to address the specific problems that are unique to the agricultural sector. Together with my colleagues on the Ministerial Committee on Rural Development, I am coming to the final stages of producing an overarching strategy that addresses the broad question of rural development in Scotland. I hope that it will achieve a more holistic approach. All strategies will have to be integrated. If we are to address many of the difficulties that affect rural Scotland, it is imperative that all parts of the Executive can work together, and get away from the silo mentality.

Annexe C of "A Forward Strategy for Scottish Agriculture" mentions

"Reviews of Red Tape in respect of IACS"

and other matters. Does the minister acknowledge that the way in which the rural affairs department interprets the European regulations governing the implementation of the various schemes can only be described as overzealous?

The mode of interpretation that the department has adopted treats honest mistakes as though they were crimes. At any agricultural show or farmers market one will hear farmers say that they feel as if they are being treated worse than criminals. If the review creates an appeal mechanism, it is to be welcomed, although it will not alter the problem of the overzealous method of interpretation that the minister has adopted, no doubt on the advice of his civil servants.

As Fergus Ewing knows, I have been engaged in protracted correspondence. As I have said to the industry and several members, I am not happy that the way in which the present European directive is framed allows those who are implementing it almost no discretion at all. I remind members that only three years ago, following an audit of UK agricultural processing of integrated administration and control system claims where discretion had been exercised, the Commission said that we had been wrong and it surcharged the UK around £30 million. I have raised the issue as have other ministers across Europe. I am pleased to be able to say that members of the Commission are now beginning to understand that minor errors ought to be permitted and officials should be able to exercise discretion.

The second point to which Fergus Ewing did not refer, but which is close to being addressed, is that the penalty should be proportionate to what happens. I am seized of that and am anxious to continue to apply pressure in order to secure movement on that. I agree that the appeals mechanism will be welcomed, but without that proportionality and degree of discretion, it will not make the difference that we are all hoping that it will achieve.

I welcome the minister's commitment to a long-term sustainable future for Scottish agriculture. I trust that he means by that the same as I do. In view of the fact that 40 members have signed my proposal for an organic targets bill, will he include on his steering group a member of that lobby?

I will certainly consider that in trying to achieve a reasonable balance. I cannot agree with Mr Harper on the long-term view because even I do not know whether organic farming will be more economically viable than any other method.

The question in relation to setting targets is interesting. If we were to set targets that do not reflect market trends, we would be embarking on a very dangerous course of action. However, Mr Harper is entitled to make such representations in the course of the debate.

I welcome the document, which represents a step forward in the short term. I want to draw the minister's attention to two issues: the enlargement of the European Union and the decisions of the World Trade Organisation. Currently, agriculture is absolutely and utterly dependent on production-linked subsidies, which are vital to every farming business in Scotland. However, under the current WTO agreement, the peace clause that allows the subsidies to continue to be paid runs out in 2003. Those issues mean that we will need a significant reshaping of the CAP. Does the minister agree that we need to enter into discussion about the longer-term future of agriculture support in Scotland to ensure that the Scottish farming industry has a sustainable future?

I could not agree more with Mr Lyon. In my response to Jamie McGrigor, I highlighted the fact that EU enlargement could have serious consequences for the shaping of the CAP. I am aware that there is only a short time before the Uruguay round settlement expires and that we will need to move from the so-called blue box to the green box. Those pressures mean that we must address this matter urgently, which is a reassurance that Alasdair Morgan sought from me. External factors such as potential EU enlargement and the WTO's attempts to move us into the green box are serious threats to the way we currently operate. That is why we must have this discussion and a strategy that takes us beyond the next CAP settlement.

As we began rather late, I will take one more question.

I welcome the new aid measures and the commitment to a strategic approach.

In the light of comments that were made during the dairy industry debate this morning, will the minister broaden the proposed opportunities for discussion around Scotland? We must include the views not only of farmers and crofters but of other industries within the supply chain in the agricultural sector and others with a stake in the future of rural Scotland such as the farmworkers union and the Transport and General Workers Union.

I am sorry that Lewis Macdonald got the impression that the issue would be debated only between farmers. I want to engage with a broad spectrum of interests, including others with landholding interests and people involved in all aspects of the food industry. We need a very broad spectrum of such people to inject their views into the process in order to understand the dynamics of this industry from the primary producer through to the consumer. All of those people must contribute to the shaping of our forward strategy.