The next item of business is a statement by Richard Lochhead on an update on common agricultural policy payments. The cabinet secretary will take questions at the end of his statement. There should therefore be no interventions or interruptions.
14:31
I am pleased to update the Parliament on our progress towards making 2015 payments under pillar 1 of the new common agricultural policy. However, before I do so, I will touch briefly on two immediate issues that are affecting farmers in Scotland.
First, the Forth road bridge closure is having an impact on some farmers and on the wider food and drink sector. The Government was quick to contact the animal feed sector, the whisky sector and other relevant sectors. As members are aware, we secured an immediate relaxation of driver hours, which has been helpful to those sectors.
We have also been working with the industry to help to improve contingency planning. For example, we understand that some livestock units get feed deliveries only when stocks get low, with no contingency in place. That is clearly too risky, so we have been working with stakeholders to help to ensure that they are better prepared.
We will keep in touch with the industry to monitor the impact of the situation and we will seek to resolve as quickly as possible any problems that arise.
The second immediate issue is the flooding that followed storm Desmond over last weekend. Naturally, the Government’s immediate focus was on the families and businesses who were flooded out, and my colleague Aileen McLeod has had an intense focus on the issues in that regard.
We must also be conscious of the impact on our farming sector. I have had a full update from our agricultural offices, who have told me that so far the impact on the sector has, fortunately, been minimal. That has been confirmed by NFU Scotland. I will continue to pay attention to the situation.
As well as those challenges, our farmers and crofters have been facing the unfavourable market conditions with which we are all familiar and an unhelpful exchange rate during 2015. This has been a challenging year for all farmers and crofters, which is why we have known for some time how important it is to implement the new CAP as quickly as possible.
We are talking about more than £400 million in the new basic and greening payments, coupled support schemes of £45 million for beef and £8 million for sheep, and—later on—more than £60 million that will be issued through less favoured area support scheme payments. That represents substantial support for the sector.
We knew that getting that cash out of the door would be an unprecedented task for the Government. This is the biggest CAP reform for a generation. It is the first time ever that pillars 1 and 2 have been reformed in the same year. In 2015, we will have launched nearly 20 schemes across both pillars. Nearly all those schemes are either brand new or significantly changed from the old CAP. In pillar 1, in particular, the changes are enormous.
Some changes were imposed on us by Europe, such as greening, which is proving to be a major challenge for all member states. There are also changes that we successfully negotiated with Europe, such as the Scottish clause to tackle what is known as slipper farming and fair treatment for new entrants.
There were also policy choices that we made here in Scotland, through Government and industry working closely together, with the support of most if not all parties in this Parliament. Those include the three payment regions, the five-year transition and new coupled support schemes for the beef and sheep sectors.
However, there were always going to be consequences of the decisions. In the old CAP, we had two schemes in pillar 1—the single farm payment and the Scottish beef scheme—both of which applied uniformly across the whole country. Today, we have six schemes in pillar 1—basic payment, greening, younger farmers top-up, mainland beef, island beef and upland sheep—every one of which involves geographic targeting. That targeting is done in three different ways across the six schemes.
We made those policy changes to tailor the new CAP to Scotland’s needs. We had meeting after meeting after meeting with industry leaders. The discussions were often intense but the decisions were right and strongly supported by the industry and the Parliament. We all made those choices with our eyes wide open. It was always made clear to the industry that more complexity would have an impact on the timetable. NFU Scotland confirmed that it knew about that and accepted it.
We now have to calculate around 4 million hectares-worth of new payment entitlements, not just for 2015, but for the whole transition period up to 2019. Some administrations will not need to do that if they made different policy choices in the past. In England, the Department for Environment, Food and Rural Affairs decided to adopt area-based payments from 2005 after the last CAP reform. That means that calculating payments in England is much easier and the English do not have to define new regions or issue new entitlements. Despite that, they still face challenges.
Here in Scotland, we have to allocate around 400,000 fields into the three payment regions for the basic payment part of pillar 1. Thankfully that work is virtually complete, but it has been a major undertaking. Meanwhile, our information technology teams have been writing millions of lines of new computer code to implement this complex new policy within the tight timetable imposed by the EU.
So where are we, as of today? On 17 November, I gave the Rural Affairs, Climate Change and Environment Committee a written update. I said that we aim to start payments with a first payment run that should cover around a quarter of claimants. I said that the first payments should begin arriving by the end of December, the majority will arrive in January and all farmers should receive their first instalment in March and the balance in April. I also said that the first instalment payment would be at least 70 per cent. I confirm today that we are on track for that start date for payments.
The first payment run to approximately 25 per cent of farmers will get under way before Christmas, with payments beginning to arrive in farmers’ accounts before the new year.
I know that everyone will be keen to know when his or her payment will be made. The answer to this is the same under the new CAP as it was under the old CAP because it depends on each individual case. Straightforward cases, where there has been little or no change from last year, should need less processing than others. If a case is more complex, or if it is one of the small percentage that we have had to inspect, processing will take longer. In some cases, the European rules require us to contact the farmer for more information. In that scenario, I urge farmers to respond quickly, so that we can get on with processing their claim. I have heard stories about how we have written to farmers two or three times and are yet to hear back so that we can get on with processing their claim and ensuring that we have accurate information.
Farmers and crofters are also keen to know the value of their entitlements under the new CAP. As required by Europe, by the end of the year we will issue to farmers illustration letters, setting out the number and value of claimed entitlements for every year from 2015 to 2019. I must emphasise that this will only be an illustration, as required by Europe, and will not necessarily be the actual payments. Under EU rules we must then confirm the final value of entitlements, after all claims have been processed and by 1 April. In other words, the illustrations that Europe requires will be out by the end of this year and the final values will be out by 1 April, so that farmers will have full visibility of their five-year transition. I know that people are keen to get this information but, here too, the more complex cases might have to wait a little longer than others. If that causes problems for any individual farmer or crofter, they should contact their area office, or they can call our new helpline—0300 300 2222—which opened last week and will be open office hours. Alex Johnstone need not worry; it is now part of the Official Report. It will help customers get to grips with the complexities of new CAP.
We also sent an explanatory leaflet to all farmers in early December, so that they know what to expect over coming months. We have also been in contact with the banks—I have met them all personally—to encourage them to help the industry through the coming months.
This is undoubtedly a difficult time and I thank all our farmers and crofters for their patience. We know how important these payments are. Although, as I said, it is an unprecedented task for the Government, we must make every effort to ensure that we get it right. We cannot have Scottish farmers facing the chaos of incorrect payments or the loss of funding through EU disallowance that their counterparts elsewhere have faced in the past.
In previous years, the Scottish Government has had an exceptional record of making CAP payments, but 2015 was always going to be different. However, no one should doubt the Government’s determination to deliver for the agricultural community.
The £440 million of support that will be issued in the coming months through pillar 1 of the new CAP alone is vital to food production, our environment, our rural communities and the Scottish economy. I believe that most, if not all, parties in this Parliament agree with me and the industry that, even if it meant a different timetable, it was a price worth paying to ensure that payments are as targeted and effective as we can make them.
On that note, I urge the Parliament to support the Government’s work to make these much-needed payments, under this jointly-designed policy, as quickly as we can.
The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions, after which we will need to move to the next item of business.
I thank the cabinet secretary for notice of his statement. I agree that we all knew that CAP payments would be complex, but the cabinet secretary’s job is to provide leadership to his department to ensure that the system works. He made no reference to the fact that the computer system that was used was spectacularly overcomplex and overdesigned and completely unreliable. There was systemic failure, which has contributed to delays. Farmers, and the thousands of rural jobs and communities that rely on them, deserve better. From repeated freedom of information requests, I know just how chaotic the whole system has been.
I previously asked the cabinet secretary the following questions. How many farms are still to be visited? When will individual farmers know how much they can expect to receive? When will they get those payments? That is still not clear from the statement.
We are well into the payment window and it is three years since the Scottish Government designed its business case. Will farmers know, intuitively, whether their case is straightforward or complex? When will they find out when they will get their payments? Will the cabinet secretary compensate those farmers for the cost of loans taken out as a direct result of the administrative failure of the cabinet secretary and his department?
It feels as if there has been an abdication of responsibility today, and the cabinet secretary’s statement disappoints once again. There is still uncertainty and not even a hint of an apology. Our farmers and those whose livelihoods depend on them deserve better.
I say to Sarah Boyack that we are not well into the payment window. This is 10 December and the payment window is several months long.
We had an excellent payment record under the previous CAP. The payment window opened on 1 December and we managed to get the majority of payments out pretty quickly after that. However, the old policy is radically different from the policy that we are dealing with at the moment.
I am happy to acknowledge that there have been issues with the IT system. The system is very complex, but it is dealing with a very complex policy. If we had a simple policy, the IT system would be simpler and we would perhaps not have had as many difficulties as we have had. However, because we have an extremely complex policy, it has led to issues with the IT system. If there are lessons to be learned, we will have to learn them.
Sarah Boyack and others will have seen what other Administrations went through when they had to deal with similar challenges and a similar transitional period. That was particularly the case for the United Kingdom Government; when it moved from historical payments to area payments in 2005, I think that only 24 per cent of recipients in England had their payment by April.
In 2015, Scotland is not only moving from historical to area payments. It is introducing three payment regions, new coupled schemes and various other new measures—all at the same time and at the request of many political parties in the chamber and the wider agricultural sector.
I thank the industry for its forbearance and patience. I have met many farmers over the past two or three weeks alone, including 70 on Monday evening in my constituency, and I assure members that the vast majority of farmers who I have spoken to are very reasonable about this. We have to accept the key point, which is that hundreds of millions of pounds of support will make its way to Scotland’s farming community in the coming weeks and months.
I thank the cabinet secretary for advance sight of his statement. In October 2014, the NFUS issued a press release that welcomed the fact that the Scottish Government had made the growing of nitrogen-fixing crops a viable option for Scottish farmers. It said:
“Importantly, the rules will now allow producers to grow only one crop, rather than two, in 2015 to qualify”.
Now, just 14 months later, the NFUS is—with considerable justification—accusing the Scottish Government of gold plating greening proposals, including an insistence that two nitrogen-fixing crops be grown in an ecological focus area.
Why is the cabinet secretary gold plating so much in the greening proposals, to the ultimate detriment of Scotland’s arable sector? What action is he taking to address the concerns that have been raised, as he has pledged to do?
I have no doubt that the rural payments and inspections division staff are doing everything possible to get basic payments out as soon as possible, but what impact will that human resource effort have on the timing of future payments under schemes such as the less favoured area support scheme, the beef calf scheme and the agri-environment scheme? Can the cabinet secretary also confirm that, despite a 1 January deadline for SRDP applications to be approved, not one application has yet been approved?
Alex Fergusson asked a number of questions. First, I will touch on the nitrogen-fixing crops issue, which is topical, as he rightly said. The greening measures were largely imposed on Scotland through the new common agricultural policy and Scotland had to take some decisions on them.
One of the decisions that we had to take was to define what would be allowed in the ecological focus areas, where 5 per cent of the land is put aside for environmental purposes. Many stakeholders wanted no nitrogen-fixing crops to be allowed as part of that, whereas the NFUS and some others wanted all nitrogen-fixing crops to be allowed as part of it. The compromise that I proposed—and which was agreed to—was that nitrogen-fixing crops could be allowed, but with certain management conditions to contribute to and protect the environment. That is where we are with that.
However, Alex Fergusson is right that there are wider issues with the greening measures in the new policy. Over the past year or two, the Government has been calling loudly for a review of greening to take place at the European level. That review will take place in 2016 and we will contribute to it to ensure that the greening measures are appropriate to Scottish circumstances.
There will be an impact on other payments, because the priority has been to get the basic payments out of the door. That is what we agreed with the industry. The timetable for the other payments was always going to be different, as some of them are new. We did not have a coupled support scheme for sheep before—that will happen for the first time in 2016—so we have to get that right and get it out of the door.
I will keep Parliament informed about those timetables. I want to minimise the impact on them and, if the member has any other questions—he asked a lot of questions—he should write to me.
I have a number of requests to speak. Unless questions are short, with answers to match, I am afraid that we will not get everyone in.
When the cabinet secretary addressed the subject at topical question time on 24 November, he indicated that about 1,300 farm inspections were still to be carried out. Will he update members on what subsequent progress has been made and indicate when the process is expected to be concluded?
One of the EU’s bureaucratic demands is that we have to start all 1,300 inspections across all parts of Scotland before we can make any payments to any farmers. We are on the brink of having achieved that and that will be the case before the end of the year, which will be helpful. That is the feedback that we are receiving from area offices around the country, so I hope that, in a matter of days, all 1,300 inspections will have started, which will enable next year’s payments to get under way in full. We hope to achieve that as quickly as possible.
In his statement, the cabinet secretary said:
“We all made those choices with our eyes wide open”
and added:
“I urge the Parliament to support the Government’s work to make these much-needed payments, under this jointly-designed policy, as quickly as we can.”
Those remarks signal to me something of an abnegation of responsibility. He has listed some of the many complexities but, complexities or not, the delivery of payments is the sole responsibility of the Scottish Government and his department.
I need a question.
The cabinet secretary has known about the need to play catch-up for many months but has not caught up with things. Does he have any comments?
Yes—I have plenty of comments in response to Claudia Beamish’s question. First, I am just imagining what would have happened and what the conversation would have been today in the chamber if I had not taken measures to tackle slipper farming and if our vital resources were going to those who are not genuinely active farmers. The whole purpose of some of the measures that we have adopted is to suit the European framework to Scottish circumstances, because we have hill farming, lowland farming, island farming and mainland farming. If we had not tailored the system and taken advantage of the flexibility that we had to have three payment rates—three payment regions—I am sure that the other political parties would be standing up today to complain that the Scottish Government had taken the wrong decisions and that we should have taken a bit longer to get them right.
As the cabinet secretary said, it has been a difficult year for agriculture, with problems in milk, beef, the weather and transport. However, it should have been a good year for barley growing, given the demand in the whisky industry.
When the cabinet secretary is in Europe next week to talk about greening, will he impress on the European Commission the importance of the greening issue and its impact on barley growing in my constituency? For example, on the island of Islay, there is a genuine problem in growing the small amount of barley that is required for the organic distillery, because of the new regulations. It would be immensely helpful to my constituents—and, I believe, to the cabinet secretary’s constituents, as he represents even more distilleries than I do—to make sure that that situation is changed and that the gold plating is dropped.
Without opening up a debate as to which part of Scotland produces the best whisky, I am happy to say that I very much recognise the burden on our arable sector, and particularly the parts of it that grow barley for our Scotch whisky sector, be that in Islay, Speyside or elsewhere in Scotland. That is why I am meeting the European Commission next week to ask for further consideration to be given to the equivalence measures that we are putting forward to replace the three-crop rule as part of greening. The European Commission is saying that we can do that only if the proposal is shaped in a particular way, but that makes it completely unworkable and unattractive to the arable sector in Scotland. We would therefore be stuck with the three-crop rule, which is largely designed for the monoculture in eastern Europe and elsewhere, not Scottish circumstances.
I note the cabinet secretary’s comments about the impact of flooding being minimal, but many Borders farms have been affected, which will simply compound the impact of the news that they will not receive full payments until April. Will the Scottish Government prioritise payments to farmers in my constituency who have suffered as a result of flood damage?
If the member could pass me details of farmers who are affected by flooding, I would very much appreciate that. In the past couple of days, we have been doing our best to speak to local representatives and to people through the NFU, and we will continue to do that this week. If any other member has examples like Mr Lamont’s, they should contact us with the details.
As for whether we can give those farmers extra help, I urge them all to contact their regional offices, but I will certainly give that some thought. I am doing that already, but John Lamont has raised a fair point. The position will all depend on the individual circumstances of the farms.
I draw members’ attention to the fact that I have a very small registered agricultural holding, but I receive no public funding for it.
The basic and greening payments process has been at the heart of what the cabinet secretary has said today, but farmers also wish to be assured that coupled support for beef and sheep and, indeed, the £60 million for less favoured areas are also on schedule to be paid in a reasonable time.
Stewart Stevenson is right that we have to recognise the importance of the payments other than the basic payments that will happen in the coming months. Normally, we pay the beef calf scheme in April and the less favoured area support scheme payments go out around March. I have said publicly already that some of those payments could be delayed by a few weeks, because the message that we have had from the industry is that all our efforts and resources should be focused on the basic and greening payments. However, clearly I am keen to minimise any impact on the other payments, given the fragility of some of the sectors involved and the cash-flow issues that they face.
The cabinet secretary mentioned in his statement speaking with the banks and encouraging them to help farmers through the coming months. We hear it reported that at least one bank has agreed to waive arrangement fees on bridging loans that farmers require because of late payments. Will he consider a scheme to compensate farmers for interest payments incurred in such circumstances?
Every farming business in Scotland has its own business plan and business practices. I have spoken to the banks and they are relatively relaxed about the impact of the timetable for payments in Scotland. They are willing and keen to speak to any farmer who has cash-flow difficulties and they will be sympathetic. I will continue to focus my efforts on ensuring that the banks are being as co-operative as possible.
I ask the cabinet secretary whether the lowest payments to region 3 applicants, who are mainly crofters, have been complicated due to the time that has been taken to process their claims following the NFUS’s insistence on a three-region model instead of a two-region model. Has that disadvantage for crofters been added to where their inby land goes along with their portion of common grazing, which has meant more inspections of their claims?
I thank Rob Gibson for highlighting the issues facing crofting. There are some issues, which I am currently investigating. I point out that our modelling estimates that, under the new policy, the amount that crofters receive in direct payments is likely to increase from about £20 million in 2013 to about £33 million by 2019. Overall, the changes should bring a beneficial boost to payments to our crofting counties.
The reason why I support the three-region model is that crofters and farmers in general asked for measures to tackle slipper farming. I think that we all agree that those who have the least activity should get the lowest payments and should get less than those who are more active farmers. I will continue to pay close attention to the impact on crofters in Rob Gibson’s constituency and elsewhere in Scotland.
I am grateful for advance sight of the cabinet secretary’s statement. I remind members of my entry in the register of members’ interests.
We have been waiting for months for clarity on CAP distribution. There has been frustration and worry in rural Scotland, and there is no doubt that the Government’s delay in payments will have serious repercussions for agriculture in Scotland.
The cabinet secretary noted in his statement that the new helpline was launched last week to help farmers to get to grips with the reformed CAP, but I have been informed that some farmers who have called it have found it to be of little use.
Mr Hume, I need a question.
Will the cabinet secretary say more about who is staffing the line and what information they can provide? Will he ensure that they have the expertise that is needed to help farmers at this critical time?
We are urging any crofter or farmer who has an issue to visit their regional office, and the feedback that I have had is that they find that immensely helpful. I hope that the helpline has been helpful. If it has not, I ask Jim Hume or anyone else to send me the details of the specific circumstances and I will certainly look into that.
I could gently remind Jim Hume that the Conservatives and the Liberal Democrats were in coalition for a few years, and at that point they were arguing for scrapping pillar 1 of the common agricultural policy. If it was up to them and they had got their way, we would not be discussing direct payments, because there would not be any.
Given the tremendous problems that farmers and land agents have had to face because of the uncertainties surrounding payment amounts and times, what does the cabinet secretary commit to do in the future to help farmers to submit forms or access their payment information when they may not have consistent broadband connections?
The Government is engaged in rolling out broadband across Scotland, which is a big priority, particularly for my colleague who is sitting on my right-hand side, John Swinney, the Deputy First Minister. Huge sums are being invested in ensuring that our rural communities have access to online application forms. If people are unable to access them, again, they should visit their local office, where they will get assistance with that.
I remind the Parliament that, despite all the publicity about the online issues, 65 per cent of applications for the new common agricultural policy were made online compared with 35 per cent on paper. An increasing number of applicants are using the online service, but we will certainly continue to pay close attention to that and support it.
In the reforms, the Scottish Government has put a high priority on the involvement of new entrants and those who are in farming without a subsidy. What stage is the Scottish Government at with processing the new entrant grant applications?
Different parts of the SRDP are at different stages. The agri-environment schemes are now in and they will be taken to the next stage in January. Other parts of the capital schemes, particularly that for new entrants, are under way as well. I am happy to send Liz Smith a proper update if she is looking for specific figures.
I remind the Parliament that a decision that we took in Scotland that added to the complex mix was to ensure that the new policy in Scotland catered for new entrants. One of the big flaws in the previous common agricultural policy was that new entrants were largely excluded from getting support while, ironically, inactive farmers were getting support. That was wholly unacceptable and we have managed to change it.
Reference has been made to discussions with the banks, and I know that the cabinet secretary met bank representatives on 19 December. Will he tell members anything further about those discussions?
I can only reiterate what I said already. I met the banks personally. Stakeholders, particularly the NFUS, also met the banks. The banks are being very co-operative. If there are issues where that is not the cases, I ask members to let me know. We can all take responsibility to urge our constituents who face cash-flow problems to notify their banks as soon as possible, because the banks are keen to hear from them and to help.
Is the cabinet secretary aware that the Scottish Crofting Federation is warning that delays in payments to crofters could prove ruinous? What is his response to those crofters?
My response is that the new CAP will, as I indicated, deliver a greater amount of the direct payments to our crofters, as the new system is phased in between now and 2019. We will continue to work flat out. We have hundreds of Scottish Government officials working flat out, round the clock, to ensure that we can get the payments out as quickly as possible.
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