The next item of business is a debate on motion S4M-08857, in the name of Richard Lochhead, on the common agricultural policy.
I call Mr Lochhead to speak to and move the motion. Cabinet secretary, you have 14 minutes.
14:44
Thank you, Presiding Officer. It is, of course, appropriate that we have a farmer in the chair for this debate.
This morning, the Government published interim figures for the total income from farming in Scotland for 2013. As the chamber might be aware, total income went up by £128 million, although the picture varies between sectors and, in some respects, the increase represents a bounce-back from the very difficult year that we had last year. Nevertheless, the figures confirm the common agricultural policy’s importance to farmers and crofters. Given that £561.9 million of the total net income of £828.6 million came from grants and European support, this debate is on a topic of great importance for the sector.
In 2011, the European Commission published its proposals. Following on from the MacSharry and Fischler reforms, those proposals represented not only the biggest changes to the CAP in a decade but Europe’s first-ever attempt to redistribute CAP payments, basing them on fairness rather than history. The Commission said that the new CAP must be
“greener, fairer, more efficient, and more effective ... moving away from income support and market measures and focusing on environmental and climate change objectives.”
Europe wanted its farms to become greener and more market focused; they would be supported with CAP payments but not driven by them.
Here in Scotland, the Government and indeed many people in this chamber supported the general thrust of the reforms, and Brian Pack’s inquiry confirmed that the CAP had to deliver clearer benefits for the public purse. However, we also insisted that Europe should not lose sight of the policy’s primary purpose of supporting viable food production and we had specific negotiating objectives on slipper farming, coupled support, new entrants and so on.
It is therefore worth reminding ourselves how the Scottish Government’s objectives differed from the United Kingdom Government’s. Although the fear that the EU might make a massive cut to the CAP budget thankfully evaporated, the UK still wanted a substantial reduction in CAP spending, especially in pillar 1 or direct payments to Scottish farms, and wanted to abolish coupled support and phase out pillar 1 payments completely.
The EU negotiations finished last autumn. As always, the final compromise was far from perfect but Scotland scored some negotiating successes. We secured the Scottish clause to combat slipper farming; ensured that new entrants can be treated fairly under the new policy; and changed the details of greening to ensure that they fit better with real farming practices. We also fought off the risk that heather would be ineligible, whether or not it is genuinely farmed; ensured a realistic timetable for changing the less favoured area system; secured more flexibility; and removed the worst of the bureaucracy in the original proposals.
However, I think that I speak for many people in Scotland when I say that, alongside such successes, there were some disappointments. For example, coupled support is now pillar 1’s only remaining tool for directly supporting production. Moreover, Scotland is limited to 8 per cent coupled support when other member states can have 13 per cent.
Does the cabinet secretary concede that the UK Government was totally opposed to any coupled support and negotiated that position only because of the influence of the Scottish input?
I hope that we influenced the UK Government in that respect. However, the fundamental point to bear in mind is that the UK Government wanted zero coupled support, which, given the disproportionate importance of the livestock sector to Scotland, would have been grave news indeed for our economy and our various sectors.
As I have said, Scotland is getting only 8 per cent coupled support while other countries are getting 13 per cent. The UK Government has generously said that it is prepared to discuss letting us go a bit higher, although that offer is hedged round with conditions.
It all reminds us that, as with the budget, the UK Government failed to negotiate what Scotland needed in the first place. We entered the negotiations with the worst budget deal in Europe on pillar 2 rural development and Europe’s third-worst settlement on pillar 1. Although the UK had the opportunity to get us a fairer deal, it did not lift a finger to do so. Moreover, to add insult to injury, when it divided the budget within the UK, it spread the so-called convergence money that Europe had intended for Scotland over the sectors across the whole of the UK, leaving us with the worst per-hectare budgets in Europe for both the direct payment and rural development budget pillars.
I have said it before and I say it again: had we been an independent country, we would have got an extra €1 billion under that formula for pillar 1 alone, which we estimate could have generated 2,500 new jobs. We would also have been able to negotiate a better deal under pillar 2, the rural development budgets, where, ironically, it is easier than in pillar 1 to target support at active farmers.
Faced with a pretty difficult—indeed, impossible—situation, I had to make a decision in December on transferring funds between the two pillars. Our pillar 2 budget is so poor that without a transfer we would have been unable to meet our rural development commitments, such as our legal requirements on the environment, and protect our less favoured area support scheme payments, which alone account for about a third of the pillar 2 budget.
After taking stakeholders’ views, I decided that limiting the transfer to 9.5 per cent would strike the right balance, limiting the impact on pillar 1 while allowing a reasonable pillar 2 programme. Even with the transfer, our budget for the Scotland rural development programme is extremely low and tough decisions about prioritisation are required within that programme. I continue to look with envy at other member states, which are deciding what to spend their budget increases on while we are debating how to deal with our decreases. I would love to be able to fund a big beef sector improvement programme in pillar 2, as Ireland has done with its large budgets, but Scotland’s budget is tiny in comparison with those of many other countries.
My proposals for the rural development programme will protect LFASS payments and will increase agri-environment schemes by more than £10 million a year. However, we are having to squeeze the budgets in other areas. In particular, farm capital grants will have to be a lot more focused on new entrants, for instance. Those proposals are set out in a Scottish Government consultation document that was published in December, and we are conducting a separate consultation on pillar 1, on direct payments, which will finish in mid-March. To complement the consultation exercises, I will shortly write to all farmers in Scotland who receive CAP payments about the time that remains for them to participate in the consultations, reminding them to submit their views if they can.
The cabinet secretary will be aware that in my constituency, where agriculture is exceptionally important but also quite intensive, there are specific issues. I have received a briefing from the local NFU Scotland branch suggesting that one of the outer isles, Westray, which is particularly dependent on agriculture, could be set to lose around £330,000 as a result of the proposals. I know that the cabinet secretary is sceptical about using areas of natural constraint payments under pillar 1, but has he had time to reflect on what interventions might be possible to redress that?
I recognise the specific issues in the islands, and I will discuss some of the wider issues that are similar to the situation in Liam McArthur’s constituency. That is one reason why we were keen to protect the LFASS payments, which account for a third of the pillar 2 budget and will benefit Mr McArthur’s constituents.
The consultations are generating a lot of interest, as members are already indicating, and the Government will not make any decisions until they are over. Nevertheless, some key themes are emerging, one of which is slipper farming. We worked hard to ensure that the new CAP would end slipper farming, and we were pleased when the so-called Scottish clause was included in the CAP regulations. However, we were disappointed with the European Commission’s first draft of the implementing rules, which did not accommodate the Scottish clause in the way that we had envisaged. If that renders the Scottish clause toothless, payments to slipper farmers might continue and everyone else’s payments will be diluted. However, I am pleased to say that we think that there is a way forward and the Government believes that such fears are unfounded. We have proposals that we want to discuss with the industry, and we are meeting the stakeholders and others to address the matter next week.
Another emerging issue is greening. We must deliver more environmental benefit from the policy, but the risk of red tape is high and getting the right balance will be crucial. Concerns are being expressed about the impact on beef producers, in particular, some of whom fear reductions in their payments—in some cases, massive reductions. I very much understand their concerns and greatly sympathise with them for the reductions that they face, particularly those who are genuinely still active beef producers and who face significant reductions in their payments. However, that is a crucial area of new policy and it is important that we understand the detail of it.
First, some people are implying that the impact on beef farmers’ payments is entirely due to Scotland’s plans for regionalisation and transition, but that is not the case. There is a general downward pressure on the basic payments budget and everyone’s payments will be smaller than they would have been if Scotland had got a fairer budget deal. Mandatory deductions are also imposed by Europe, so some reduction is inevitable for many producers.
Secondly, some people think that the deal breaks a link between activity and payment levels. However, we must remember that the link between the size of a farmer’s payment and the size of his herd or flock was broken back in the 2003 reform. I recognise that there is a contradiction here in EU policy. Europe wants to support food production, as we in Scotland do, but for a decade it has operated a policy that limits our ability as countries to do that when it comes to issuing the payments. That is in no way a logical position for Europe to adopt, but we are where we are and Europe will not shift its direction of travel.
It is therefore true that some farmers who are highly active and who have been getting high payments may see their payments go down, significantly so in some cases, as we move from historical to area-based payments. I understand why some people are attracted to an alternative to what is in the consultation document: the so-called tunnel approach, which would maintain historical-based elements from the single farm payment. I know that NFU Scotland sees potential merit in that option. However, in considering options we have to be very careful, because there is a dilemma here. Using the tunnel, farms would get payments in 2019 or 2020, based on their activity back in 2000. It would protect payments to farmers who used to be very active but now are not. In one example, a farmer contacted me and said that his payments were going to be halved, but when we checked his actual activity over the period of the current policy we found that his activity levels had also halved.
The tunnel approach could prolong the disadvantage that is suffered by new entrants. A new entrant who started in 2000, aged 35, would perhaps not be on a fully level playing field till 2025, by which time he would be 60 years of age. Some people say that the Government’s approach would move Scottish farmers more quickly to area-based payments than would be the case in other countries. That is another argument that I am listening to. Again, 15 years will have passed between the decoupling of headage payments and full area-based payments. The tunnel option has attractions, but of course we must go in with our eyes open and recognise that it has very serious downsides as well.
I understand the real concerns that are being expressed by many sectors in the industry. However, we must not let our farm sector tear itself apart over this CAP reform. Of course, every group has the right to argue for its interests, and I will listen to each and every individual case. However, we must focus on overall solutions that are best for Scottish agriculture as a whole, and look at that very closely. I want to avoid partial solutions that pit farmer against farmer, young against old, beef against arable and hill against lowland. That is what lies behind the Government’s proposals that are on the table at the moment: the big picture.
We believe that our transition plans give established businesses time to adjust and new entrants fair treatment, and will get the whole sector on to a level playing field by 2020. Our activity rules will ensure that no payments go to land where there is no activity or just token activity, leaving more investment to spread over the real farming community in Scotland.
We will target the beef sector with coupled support. Modelling shows that the impact of reform is complex. Overall, over 50 per cent of farmers would get higher payments under the new policy and only 47 per cent would get lower, although that is of course a substantial number of farmers in Scotland. Even within the beef sector, over 40 per cent would receive increased payments. However, I recognise that the most productive beef farmers will actually receive the biggest reductions, which is an issue. We acknowledge the impact on the beef sector specifically, which is why we have said that we will use the maximum coupled support available for the beef sector, unless we are persuaded otherwise by the result of the consultation exercise. We have set up a group under Jim McLaren of Quality Meat Scotland to look at the beef sector and its future.
Some people have said that our approach to the reform is guided by keeping the deliverability of the policy simple and easy, but that is not what is guiding our approach to the reform process. We are doing what is best for Scottish agriculture and food production, and for our wider rural economy. However, the more complex we make the solutions to some of the issues that have been brought to our attention, the more difficult it will be to deliver the policy in Scotland. We do not want to go through the experience that other countries have had when they have simply been unable to make the payments because of lack of preparation or because the system is so complex. Because we have diverse farming systems in Scotland, there is a temptation to have a really diverse, complex policy. However, doing that would lead only to bigger problems in the future and we would regret choosing the solutions we did. We must be very careful and try to strike the right balance.
We will look at the responses to the consultation exercises very carefully and closely. We will continue our very close, intense work with the stakeholders in the coming weeks and months. Of course, the purpose of today’s debate is to hear the views at this stage in the consultation process—there will be more opportunities in the future—of each political party and MSPs who represent our farming sectors. I very much look forward to hearing members’ views today as we collectively, I hope, try to get the best solution for Scottish agriculture through the new CAP reform process.
I move,
That the Parliament notes the importance of the new EU common agricultural policy to Scotland in helping to deliver viable food production and sustainable management of natural resources; welcomes the publication of two Scottish Government consultation documents on its implementation and notes that these are based on detailed and extensive discussions with stakeholders; recognises the complexity in implementing the policy changes adopted by the EU; supports the Scottish Government’s determination to ensure that future farm payments are made on the basis of active land; agrees that the options available to the Scottish Government to implement the proposals are further limited due to the poor budget settlement from the UK Government, which failed to recognise Scotland’s distinct needs and confines it to the lowest per-hectare funding in Europe for both direct funding and rural development, and welcomes the Scottish Government’s commitment to seriously consider issues raised during the consultations and to take the right decisions for the future of Scottish agriculture prior to the final implementation.
15:00
As we all recognise, farming plays an important role in Scotland’s economy, society and wellbeing. Our agricultural sector not only produces food for our country and beyond but contributes to the vitality of our rural communities. With CAP reform, we have an opportunity before us to ensure that the support, which is public money, is directed to areas where it will deliver the widest public benefit. That must be at the centre of the Scottish Government’s deliberations as it comes to decisions about how the resources are allocated in Scotland.
When we consider what happens with some of the current subsidies—subsidy being given to land that is not actively being used; highly profitable businesses receiving significant sums of public money while others receive no or little support even though it could be argued that they provide as much if not greater community and social benefit; and new entrants being excluded from support even though they are the future of the sector—we can see that we have an opportunity to deliver a fairer system that is clear about what it values.
Of course, that is not easy. A good case can always be made on why a business or an organisation should receive subsidy and what the impact of any changes to its subsidy would be, but choices will have to be made. However, we must remember that this is public investment and that we are facing significant challenges in ensuring the viability of some rural communities, tackling food poverty and achieving our environmental targets for the climate, water and biodiversity. We need meaningful reform.
I turn to Labour’s amendment. During our previous debate on the common agricultural policy, the Parliament was united on the issue of convergence uplift. As one of the four signatories to the cross-party letter to Owen Paterson, I will not defend the coalition Government’s decision. It was the wrong decision. However, I cannot take the cabinet secretary’s view that separation is the answer and that, until then, any attempt to hold a review within the UK is futile. Within the EU, Scotland has a low per-hectare average. If payments are calculated by different measures such as per farm unit or per employee, Scotland compares far better. However, per hectare is the accepted, chosen measurement, and Scotland’s calculation is the reason for the UK’s additional support.
During the previous debate on the CAP, we all agreed that the UK Government should recognise the challenge of Scotland’s distinct and diverse agricultural needs and transfer the full convergence uplift to Scotland. That it did not do so was a great disappointment not just to everybody here in the Parliament but to the farmers and rural communities across the country that will miss out. However, as we enter today’s debate, it would be a mistake to look back at that decision and use it to further political agendas, particularly around the constitution. We owe it to our rural communities to look forward and not just have an open and frank discussion on how we implement this CAP, but take a longer-term approach. For that reason, we should not be dismissive of any potential review that the UK Government proposes.
NFU Scotland has a written commitment from Owen Paterson that a review of the internal allocation of CAP funds will be concluded by 2017. That the review will not change the current budget is regrettable, but it is perhaps understandable given the changes in funding arrangements that may have to take place at its conclusion. The cabinet secretary is mistaken simply to dismiss the review. He may be sceptical that such a review will take place—certain farmers might be, too—but we cannot put our agricultural sector on pause and just hope that everything works and sorts itself out. The Government must start working towards a review, complete the move from historical to area-based payments and hold the UK Government to undertaking its promised review.
This area is not a political football to be used during a debate on the constitution. It is about the future of the livelihoods of farmers and rural communities the length and breadth of Scotland. The onus is now on the Scottish Government to make the change from historical to area-based payments. The current consultation on direct payments represents a significant step forward, and that is to be welcomed.
I understand why the member is focusing on the move from historical to area-based payments, but is she also cognisant of the need to support production?
I am sure that the member’s point, which is about the importance of activity, will be focused on during the debate. I will come on to make some comments on that.
The movement from historical to area-based payments can deliver a fairer distribution between large farms, which are often our most economically viable farms, and those that need the subsidies to survive and contribute to their local economy. To have a thriving farming sector, the sector must be varied and must include smaller farms and high nature value farming. We need appropriate timescales for that. I was pleased to hear the cabinet secretary’s comments about the Irish tunnel model. That model would result in entitlements from historical funding being retained decades after allocations were announced, which would be unacceptable.
The Scottish Government has argued for convergence across the EU and the UK. We need such principles to be applied to the distribution of funds in Scotland. I welcome the consultation that is taking place, but the cabinet secretary must hear a broad range of views. NFU Scotland will have legitimate concerns about how changes are implemented, but there is an appetite for redistribution to areas that need support most and where evidence shows that that would provide the greatest public benefit.
For payment regions, we need something that is as simple as possible and is fair. Guarding too much against maps being too complex runs the risk of maps being simplistic and possibly less effective.
We have the opportunity to address slipper farming, which has for too long been a negative aspect of CAP payments. It is vital to end that practice as soon as possible and to take all appropriate action to ensure that no further loopholes can be exploited. It is important that all CAP payments are as transparent and accountable as possible.
We are not talking just about farming businesses and food production. Agriculture is one of Scotland’s biggest sectors for carbon emissions. In 2011, agricultural and rural land use accounted for 20 per cent of Scotland’s total emissions. The agricultural sector can do more to contribute to meeting our climate change targets, along with our biodiversity targets. A stronger move must be made towards sustainable farming, which will benefit not just our farmers but our rural communities and the wider population.
The CAP was supposed to deliver for the environment, but it is agreed that it has been disappointing on that so far. Greening is the key policy that is designed to deliver for the environment and we have opportunities to maximise what it can deliver. There is the prospect of equivalent practices for meeting greening targets, which could lead to the use of practices that suit Scotland’s needs and priorities. Which of the equivalent practices does the cabinet secretary believe would best achieve those priorities? Is he minded to allow greening requirements to be met through the three standard greening measures or equivalent practices?
We need greater environmental effort. Some may point to the greening aspect of pillar 1, which is welcome, but as arable farming makes up only 18 per cent of our agricultural area it is clear that the benefits from greening will be limited.
The transfer between pillars 1 and 2 is therefore important. NFU Scotland called for a 5 per cent transfer, but Scottish Environment LINK and others called for the full 15 per cent. The advantages of a boosted pillar 2 are clear. I appreciate that the cabinet secretary was pulled in two directions, but there are benefits for the farming sector in a boosted pillar 2. Pillar 2 funding largely stays in the agricultural sector, but the money is more targeted and objective focused. The LEADER programme for rural communities also gets a small share of the funds, but it can deliver so much for community sustainability and it provides a clear public benefit. We should see more support for that.
It was disappointing that the Government decided on a 9.5 per cent transfer between pillars 1 and 2, in comparison with 12 per cent in England and 15 per cent in Wales. Given the Government’s commitment to climate change and biodiversity targets and to delivering sustainable development for rural communities, I was disappointed that we did not go beyond 9.5 per cent.
How will the cabinet secretary use degressivity and capping—if he is minded to use them—to ensure further funds for pillar 2? As the consultation document says, that could provide anything upwards of €1 million per year and potentially between €5 million and €10 million per year. I am interested in hearing further comments from the cabinet secretary on that.
We languish close to the bottom of the list for spending on agri-environment schemes, as we spend only €39.90 per hectare, in comparison with the EU 27 average of €235 per hectare. That is partly because of the overall amount that Scotland receives from the UK and because of Scotland’s slower response to the programme and to engaging in the agenda, but it is also because of decisions that the Scottish Government has taken on how to cut the cake. Comparable countries such as Ireland, Slovenia and Finland, which also have large areas of low-intensity land, spend significantly higher amounts on agri-environment schemes, while spending similar amounts on less favoured areas.
The cabinet secretary has difficult decisions to make, and it will not be possible to please everyone as he seeks to strike the right balance. However, this is an opportunity. We want reform; we do not want to end up with the status quo. We must set realistic timescales, which prioritise the benefits that can come from change.
I move amendment S4M-08857.2, to leave out from “agrees” to end and insert:
“acknowledges cross-party representations to the Department for Environment, Food and Rural Affairs for the full convergence uplift to come to Scotland and expresses deep disappointment at the UK Government’s final decision on budget allocations; notes the proposed commitment from the UK Government to conduct a review of budget allocations throughout the UK; believes that this review must be transparent and based on objective analysis; notes that, while the Welsh Government transferred 15% and the UK Government transferred 12% of pillar 1 funds to pillar 2, the Scottish Government transferred 9.5%; believes that this limits the potential for delivery of the Scotland Rural Development Programme and targeted agri-environmental initiatives and is significantly below the 15% maximum called for by environmental organisations, and supports the ongoing consultation process that must result in the implementation of reform that best suits the needs of farmers, rural communities and the environment.”
15:10
This is a debate in which I wish it were possible for Parliament to speak with one voice. We have often managed to do so on this topic in the past, but I regret that it seems unlikely that that will be the case at decision time this evening. That is not just a great shame, but a missed opportunity on the part of the Government, because there is a lot in the debate around which I genuinely believe we could all have agreed. Surely even this Government would agree that a unanimous vote from this Parliament would carry a much stronger message to both the UK Government and the EU than will the fragmented result that I fear we are likely to see this afternoon.
Those are pretty much the exact words with which I began the most recent CAP debate, on 3 October 2013. I am sorry to say that there seems to be little, if any, reason to change them, given that the Scottish Government’s approach since then—certainly in the public domain—appears to have been simply to try to whip up more and more enmity towards the UK Government through the somewhat vitriolic language that it has deployed.
I hear what Alex Fergusson says, but does he accept that when Parliament showed unanimity about the convergence uplift, the UK Government ignored us?
That is not, in my book, a reason to discontinue the unanimity of the Parliament. End of story.
I think that all members agree—I absolutely know that farmers agree—that we would have preferred an increased budget with which the Scottish Government could implement the reformed CAP support system. Of course we would have preferred that; it should go without saying. However, we have not had that—end of story—so it is time to put the lid on the divisive rhetoric that diverts attention from the issues. It is time to concentrate on the very real concerns that are increasingly troubling Scotland’s farmers as they face the uncertainties over the impact of reforms that are beginning to haunt them.
I met a group of influential farmers in my constituency on Monday—I say “influential” because they all play major parts in the activities of the NFUS at local and national levels. They made it quite clear that they are fed up with the political argy-bargy that has been dominating the debate and simply want to be able to start planning their futures. It is impossible not to sympathise with them. We sit or stand here, arguing the toss about the political and, too often, constitutional aspects. Their feelings are vividly summed up in an emotive email that a constituent of mine sent to the cabinet secretary last week and copied to me. It reads:
“I farm 28 ha of permanent grass and 375 ha of rough grazing, with a stocking rate of 0.3 livestock units/ha. Under the present proposals for Pillar 1 my SFP will drop by £21,000”.
Last year’s payment was £34,000. My constituent went on to say:
“If that amount of money is taken out of my business, I will obviously not have a viable business. How is this fair?”
The question, “How is this fair?” lies at the heart of the dilemma that the cabinet secretary faces in delivering a CAP that is tailor made for Scotland—I note that his ability to do so was negotiated for him by the UK Government. The question also lies at the heart of NFUS president Nigel Miller’s letter to the cabinet secretary on Monday. Nigel Miller promotes a four-pronged package, which he thinks would result in a fairer transition to area-based payments. I do not agree with everything in the letter, but I have considerable sympathy with much of it.
Principally, as my amendment suggests, I am concerned by rumours that the Scottish Government is edging towards a system of two payment regions for Scotland. All the evidence points towards having more regions rather than fewer; it is fairly obvious that the more regions there are, the better targeted payments can be. However, I accept that the number of regions has to be limited by the practicalities of implementation, as the cabinet secretary said, so I am drawn to the NFUS argument that there must be an alternative to the single-payment approach across the rough-grazing region: that is what is causing much of the problem, that is what is so diluting the pot of CAP funding, and that is where the lack of fairness is most obvious.
It is good news that the so-called Scottish clause might not be as toothless as we first thought it would be, but we still do not know what level of activity will trigger access to CAP support. I fear that the level might not be high enough, so other measures will have to be pursued. The NFUS has suggested possible solutions that are surely worthy of further consideration, but it cannot be beyond the capabilities of the army of civil servants who are at the Government’s disposal to devise a system that does not reward—
Will Alex Fergusson take an intervention?
I do not think that I have time—unless the Presiding Officer is willing to make allowances.
I will make allowances.
The Bank of Scotland’s survey that was published yesterday suggests that farmers are, in essence, looking for three areas. How many does Alex Fergusson think there should be?
I would be content with three areas—with the important proviso that it cannot be impossible to devise a system that does not reward 100 hectares of rock in the north-west of Scotland, and which produces little other than—admittedly—stunning scenery, with the same level of financial support as 100 hectares of hill in the south of Scotland that might well support a flock of 100 ewes, preferably blackfaces. I hope that the cabinet secretary was correct to stress that that will not be the case, because if that problem can be solved, many of the other concerns can be addressed, at least in part.
A possible solution lies in increasing the percentage of the budget that we could use for coupled payments, as the cabinet secretary mentioned, above and beyond the agreed 8 per cent. I am not aware of any moves by the cabinet secretary to take up the UK Government’s offer of talks to utilise unused UK coupling capacity to increase the percentage at his disposal, but were he to do so, he would certainly have our active support. Perhaps he could address that matter when summing up.
I am also disappointed—Claire Baker touched on this—that the cabinet secretary continues to glibly dismiss the secretary of state’s proposed review of allocations, which is to report by 2017. I repeat that that is an opportunity that we should grasp. Indeed, we could implement its recommendation mid-term rather than wait until 2020.
In view of the time, I will close by saying that the two consultations that were somewhat belatedly launched are in midstream, which slightly begs the question why we are having the debate now. I have no doubt that there will be a further debate post-consultation when we can, I hope, concentrate less on the rhetoric and more on a meaningful and fair CAP support system for Scottish farmers. That is the cabinet secretary’s challenge. I do not envy him the decisions that he has to take, but take them he must. The future of Scottish agriculture rests on his shoulders.
We cannot support Labour’s amendment because the cabinet secretary was right to hold the amount of transfer from pillar 1 to 2 at 9.5 per cent.
I move amendment S4M-08857, to leave out from “agrees” to end and insert:
“encourages the Scottish Government to focus on implementing a common agricultural policy (CAP) support system that is tailored to Scotland’s needs, avoiding any solution that is based solely on simplicity of implementation, and urges the Scottish Government to announce the final shape of CAP support as soon as possible after the conclusion of the consultations to allow Scotland’s farmers to plan for the future.”
15:17
On afternoons such as these, there is little that is worse for the members who come after than when the person who kicks off the open debate tries to cover every aspect of the subject under consideration. In the case of the common agricultural policy, that would be impossible, so colleagues will be relieved to learn that I will not attempt to do so. Instead, I will focus on just a couple of aspects of the CAP.
NFUS, as any such representative body should, is lobbying hard on behalf of its members. There is nothing wrong with that; indeed, there would be something wrong if it did not do it. To be fair to NFUS, it is advancing some seemingly reasonable arguments and, to some degree, it is indicating that it recognises the realities of the situation in which Scotland finds itself.
As Nigel Miller acknowledged in The Courier last week:
“The move to area payments was never going to be easy for Scotland with a limited budget and a variable jigsaw of land types and farm systems.
Area payments systems will always move support away from units where historic production has been intense.”
Even in extolling the virtues of the northern and, in particular, southern Irish farming approaches as alternatives to what is being proposed, Mr Miller accepted that they have
“budgets that are more than double that of Scotland.”
The concerns that have been articulated by NFUS about the possible implications of funding the vulnerable beef and sheep sectors are not to be dismissed lightly, although it was intriguing to note the apparent disconnect in the newly released annual Bank of Scotland survey, which showed that 51 per cent of respondents expressed the view that they anticipated being worse off under CAP reform, although a third of beef farmers and 29 per cent of sheep farmers plan to increase the size of their herds. As Ewan Pate, the farming editor of The Courier, observed today, that appears to show a
“massive contradiction between what farmers think privately and what they are saying in public.”
The shaping of the CAP arrangements in Scotland is still a work in progress, but we are not at the endgame yet, as the cabinet secretary has made clear.
I have something of a difficulty with NFUS’s position when it talks of minimising modulation and utilising pillar 2 to
“top up funding of the beef cow coupled support”
and, as it has done on a couple of occasions in front of the Rural Affairs, Climate Change and Environment Committee, come up with other agriculture-inclined spends that would further test the elasticity of pillar 2.
Jonathan Hall, the director of policy and regions, has called for the establishment of an advisory service for Scottish agriculture, farmers and crofters. In addition, Andrew Bauer of NFUS has suggested that we need knowledge transfer and financial incentives to bring about widespread use of better farming practices in response to the impacts of climate change. Both might well be worthy proposals, but underlying them is NFUS’s belief that CAP funding belongs—if not entirely then, certainly, largely—to the farming sector. Indeed, in the article to which I referred earlier, Mr Miller admitted that he is looking for investment in infrastructure and innovation, among other things,
“even if that means scaling down forestry targets.”
The cabinet secretary must strike a responsible balance; he cannot simply grant every item on agriculture’s CAP wish list when he is under the current financial constraints. He needs to balance the competing demands of land use for food production and protection of valuable habitats and, within the industry, he must address the interests of key sectors, including less favoured areas, at the same time as mitigating the impact on other parts of the industry. He must also balance allowing farmers to adjust to the changes with providing a fair deal for new entrants as quickly as he can. The NFUS must surely understand the challenge of striking those balances, because it has members who will be winners and losers under the new CAP, however it pans out.
Pillar 2 has to cater for a wide range of interests and needs across our rural areas. The Scottish Government has to find a way to build on the success story of Scottish food and drink while protecting the natural environment, not least from the impacts of climate change, and all the time it is being held back by what is, by any judgment, a poor financial settlement.
Let us look at the balance that is intended to be struck under the Government’s provisional draft proposals for the new SRDP, with a likely budget of approximately £1.35 billion between 2014 and 2020. There will be £459 million for less favoured area support and areas of natural constraint, with further funding for food and drink, crofting grants, grants for small farmers, and new entrant support. I calculate that the total will be around £570 million, or 43 per cent of the entire pillar 2 budget allocation. That is without even considering the degree of access to the £365 million that has been earmarked for agri-environment and climate change, which the sector also covers.
What would NFUS have us cut to ensure a bigger funding pot for agriculture? We know that planting trees is considered to be expendable—Nigel Miller told us that—regardless of how it might impact on the environment. What else? Do we eat into the £66 million for LEADER, which has served rural communities so well, or the £20 million to support small rural businesses that helps our young people to stay in their rural communities, or the £9 million for broadband infrastructure in our rural parts? I am anything but anti-agriculture—I represent an area that is rich in farming—but Angus and wider rural Scotland also need and have enjoyed the support of pillar 2 in other ways in recent years. We need to continue managing those often competing pressures.
Of course, we really ought to be better placed financially, even if Alex Fergusson and Claire Baker would prefer that we drew a line under the issue. We could and should have had another €230 million from the convergence uplift but, of course, Owen Paterson said no. Is that an example of what “better together” means? Well, yes it is. Mr Paterson could have looked at the Estonians, the Latvians and the Romanians and thought, “We can’t have part of the UK lagging behind those countries when it comes to pillar 1 hectare averages” and he could have done something about it, but he did not. He does not believe in direct payments and, in any case, it would have been a bit awkward arguing for a fair deal for Scotland when we are the poor relation within the UK as well as broader Europe.
Owen Paterson also says that he is an enthusiast for the benefits that the pillar 2 scheme brings, but he stands by while 16 other countries secure an uplift in their payments, leaving Scotland to prop up the league table. Even when a pot of money comes the UK’s way, purely because Scotland is so poorly treated, he tells us that it belongs to every part of the UK. That is a disgrace. Unlike the unionists in this Parliament and their better together buddy Mr Paterson, we will stand up for Scotland and its interests and argue the undeniable case for independence and the benefits of full member status within the EU. Things can be better than what better together is offering. All it takes is for Scotland on 18 September to replace Owen Paterson’s “no” with a simple “yes”.
We are short of time today, so I would be grateful if members could adhere to their allocated time of up to six minutes in the open debate.
15:23
My speech is definitely shorter than six minutes.
I welcome the opportunity to speak in support of the amendment in the name of Claire Baker. The issue will impact on many of our rural communities and is of great importance to the farming industry in Scotland.
European politics can seem to be very remote from our daily lives, and when we look at some of the complex language that is used in the debate about the common agricultural policy, it is no surprise that people are turned off. However, getting CAP reform right is absolutely vital—and long overdue. It offers us the opportunity to put Scottish agriculture on a more sustainable and progressive footing, and to adapt to meet the many inevitable changes that lie ahead.
The Scottish Government has the power to secure a good and fair deal for Scottish farmers, so I welcome the consultation that has been launched on how direct CAP payments should be implemented in Scotland.
Clare Baker mentioned slipper farming. It is vital that that practice is ended and that CAP funding goes where it is needed most, which is in genuinely active farming businesses. There is a world of difference between land that can be grazed and land that is grazed, and that needs to be recognised and reflected in how direct payments are made. NFUS pointed out in its briefing, which was circulated yesterday, that
“Scotland cannot afford to drain its limited budget to empty hillsides”.
I welcome the minister’s assurance that he is working with stakeholders to address that issue.
It is vital that the limited funds that are available are targeted at the most productive land. However, how we measure a productive farm varies; it is not as simple as measuring the density of the stock. The Scottish Government must take into account the varied nature of farming in Scotland and look at funding that supports sustainable farming practices. It must ensure that remote fragile farms are supported, too. It is also vital that the Scottish Government reach as soon as possible a decision on a new payment scheme: one that ensures that funds are divided as fairly and equitably as they can be.
We recently debated the Scottish Government’s draft climate change adaption programme, and CAP reform offers significant opportunities to advance our climate change objectives. The proposals allow for a transfer of up to 15 per cent from pillar 1 to pillar 2 rural development funds, yet the Scottish Government has proposed to transfer just 9.5 per cent. That falls far short of the 15 per cent that has been agreed to by the Welsh Government and which has been called for by environmental campaigners, and of the 12 per cent that has been agreed to by the UK Government. Given our failure to achieve our climate change targets in each of the past 2 years, it is a shame that the Scottish Government is not grasping the opportunity to be a bit bolder.
We have the opportunity now to use CAP funds to support farming practices that protect and restore our natural environment, and support rural communities and landscapes. It is an opportunity to make Scotland’s farms more sustainable and more environmentally friendly, which must be a priority if we are to create the right conditions to sustain long-term agricultural production in Scotland.
Ultimately, CAP reform is about delivering better value for farmers, taxpayers, consumers and the environment. Although all of us would like to see Scotland secure a better share of CAP funding from the UK Government, we are where we are—as the minister said—and we need to work now to ensure that the funds that Scotland has are targeted as effectively and fairly as possible, in order to ensure a sustainable long-term future for our rural communities, our farmers and our environment.
15:27
This debate has already proved to be lively and diverse because—as is usual with discussions over CAP—nothing is simple or straightforward. Indeed, the cabinet secretary and his staff have an impossible task in reconciling all the competing interests. I am glad that we are having the debate now, as part of the consultation stage, because from some of the frankly hysterical correspondence that I have had from NFUS in the north-east, members might think that everything was done and dusted, and that everything was doom and gloom as far as farmers were concerned. However, the overreaction of NFUS office bearers in the north-east does not seem to have been replicated among the wider farming community, which is evidenced by the optimism of the Bank of Scotland survey and the reporting in The Press and Journal—a newspaper that has its finger on the pulse of the rural community throughout Scotland. Its headline states that “Survey results are at odds with leader’s claims over CAP”.
Let me return to the straitjacket in which the cabinet secretary finds himself operating. Europe broke the link between payment and production, so as a result the Scottish Government is trying to support production while being barred from doing so by the EU. We also have the Conservatives and their coalition partners arguing in EU negotiations for single farm payments to be phased out altogether, so I find Alex Fergusson’s words a bit hollow. Things could be so much worse if Scottish farmers were left to the UK Government. That is on top of the UK Government’s refusal to pass on the full convergence uplift: refusal that all parties in this Parliament have agreed is unacceptable. Perhaps some of farmers’ concerns would be overcome if we were arguing about how to divide a much bigger cake, rather than just a slice. It would be helpful if NFUS in Grampian put more of its energies into lobbying the Westminster Government on that.
As my colleague Christian Allard has said, if the French Government treated its farmers in that way, seriously obnoxious-smelling material would be dumped in front of the French Parliament and the Élysée palace.
I note that the suggested modulation rate of 9.5 per cent is lower than the rates for England, at 12 per cent, or Wales, at 15 per cent. It is also, of course, lower than that which has been proposed by the Labour Party in Scotland, which proposes the full 15 per cent, as in Wales. We have a situation in which Scotland is discussing cuts when other countries throughout Europe are deciding how to invest their increases. It is little wonder then, that support among farmers for independence and a yes vote is moving in the right direction, as they see the unfairness of the Westminster Government withholding funding and showing little support for the agriculture sector.
In contrast, we have the Scottish Government’s active promotion of Scotland’s food and drink sector, which now accounts for 18 per cent of Scotland’s overseas exports, compared with a figure of less than 1.5 per cent for the UK as a whole. We know that Scotland can sell all the beef and lamb that it produces, whether it is sold at home or abroad, and we have the capacity to process all the product. Farmers who continue to strive to produce a premium product are rewarded with higher prices and a ready market for their products.
The cabinet secretary has a difficult job to do in encouraging our hill farmers to increase their cattle heads and sheep flocks to meet demand, which will only increase rather than decrease. I am heartened by the recent Bank of Scotland survey that showed that 32 per cent of farmers believe that they will increase their beef operation and only 12 per cent will decrease it, and that 29 per cent of sheep farmers anticipate increasing their operations. Of course, the demand for barley increases as the whisky industry surges forward.
Although I did not agree with much of what Claire Baker said, I agree with her that the farming sector could make much better use of pillar 2 and SRDP money. We must increase headage and carry out more land improvement to compensate for the fact that far too much prime agricultural land has been sold off at high prices to developers for housing. I commend the cabinet secretary for his work, and I know that he will find the best way forward for the whole of Scotland.
Many thanks for your brevity.
15:32
Agriculture is vital to Scotland. Three quarters of Scotland’s landmass is used for agricultural ends and the sector directly employs about 65,000 people. According to the NFUS, one in 10 Scottish jobs—that is a quarter of a million—depends on agriculture in one way or another. Therefore, it is difficult to overstate the importance of getting CAP reform right for Scotland. We know that the cabinet secretary, Richard Lochhead, works extremely hard within the current framework to protect Scotland’s interests, but we also know that, within the constraints of devolution, Scotland’s interests are not always put first. Within the UK, Scotland plays second fiddle to the interests of the whole.
That is why, last year, there was anger and disappointment when Scotland did not receive its proper share of the convergence uplift, which was funding that the UK would not have received at all had it not been for Scotland’s low average level of pillar 1 per hectare payments. It is also why Scottish farmers have, by a wide margin, the lowest per hectare pillar 2 payments of any member state, big or small, in the European Union. The EU average pillar 2 funding per hectare is €76, whereas Scotland’s rate is just €11. Of course, pillar 1 payments in Scotland are €100 lower than the UK average. Let us not forget Ireland, which has a comparatively sized area of eligible pillar 1 land but which receives double Scotland’s rate.
In my view, the UK Government has at times tended to take a somewhat patronising and top-down approach in its dealings with the Scottish Government. Last year, Owen Paterson told the Rural Affairs, Climate Change and Environment Committee:
“You must not underestimate the trouble to which I go to keep Richard Lochhead informed.”—[Official Report, Rural Affairs, Climate Change and Environment Committee, 12 June 2013; c 2383.]
That just serves to highlight the fact that we need more than information—we need a more participative approach towards CAP at all levels and not just at the implementation stage.
Speaking of participation, I welcome the two consultations that the Scottish Government has published. The new model for the Scotland rural development programme will, I hope, be welcomed for its relative simplicity and accessibility, which are things that the existing programme lacks.
As to the rate of modulation, in an ideal world we would have wanted to wait until the consultation was complete before deciding on that, but I accept that the cabinet secretary had no choice in the matter; it was unavoidable.
I understand that a wide range of views were expressed in the initial consultation as to the scale of the transfer. Some argued for more pillar 2 funding and others argued for a greater retention of funds under pillar 1. However, the agreed transfer of 9.5 per cent, which will deliver a rural development budget of more than £1.3 billion up to 2020, is a fair and balanced decision in the circumstances. I hope that the cabinet secretary recognises the need to spend those funds efficiently, and that he will take on board the results of the current consultation.
I say to the Labour Party that, although that agreed transfer is less than the transfers in Wales and England, it takes account of the overall settlement to Scotland. What would the Labour Party prefer—a bigger cut to pillar 1 and all that that entails? Claire Baker rightly suggested at the end of her speech that the cabinet secretary has difficult decisions to make.
Does the member accept that, if there were to be greater transfer between pillar 1 and pillar 2, the funds available in pillar 2 would be largely available to the farming sector, which would be the main beneficiary of that funding?
I would not accept that fully. I accept Claire Baker’s final point that there are difficult decisions to make, but I believe that, overall, 9.5 per cent is a reasonable figure in the circumstances.
Today’s Government motion implicitly recognises concerns surrounding farm payments and land use. People are right to be concerned about slipper farming. The practice of purchasing the right to claim farm payments on land that is not in production has been around for almost nine years and is totally contrary to what ought to be the purpose of the payments, which is to support farmers who often work long, hard hours to earn their livelihood from productive farms. Slipper farming has been widely condemned by the NFUS, the Scottish Government and members across the chamber, not only because it unfairly rewards inactivity but because it does so at the expense of genuine agriculture.
Let us not forget that the change to a single farm payment and the decoupling from production were widely supported in 2003 and that, although the so-called Scottish clause would have helped to eliminate the practice, the Commission has ruled out a link between payment and production. So where do we go now? I heard what Alex Fergusson said about the Scottish clause, and it would help if the cabinet secretary could expand further in his closing remarks on where we could go with a Scottish clause.
Another important point on which the Scottish Government is consulting is the division of land into two regions. Is it sufficient to have one for arable farming and permanent and temporary pasture, and one for rough grazing? Is it not a better idea to consider having three, as some, including the NFUS, have suggested? The consultation provides that third option, and I hope that the cabinet secretary will take on board the division of opinion on that point when he looks at the results of the consultation.
It is clear that any single payment rate will inevitably benefit low-intensity areas disproportionately, but no matter how Scotland’s agricultural land is categorised by the Government, the total sum available to us does not change. The fact remains that the CAP budget is being reduced. That is where the convergence uplift would have made a difference had the UK Government taken into account Scotland’s interests. I pointed out in October that assigning new categories to different areas of land leaves Scotland with little real choice, given the extent of less favoured area land and the amount of rough grazing. As others have suggested, the slower the transition to a level playing field in 2019, the more protected less active farmers will be in the interim.
In conclusion, there is no doubt in my mind that difficult decisions need to be made, and the cabinet secretary has by no means an easy task. However, it is reassuring to note that, at least according to the Scottish agricultural survey, to which Maureen Watt referred, 34 per cent of respondents rate the Scottish Government as good or very good on agricultural issues, which is up from 31 per cent last year.
15:38
I share the disappointment expressed by others that Scotland’s share of pillar 1 direct support has decreased and that the convergence uplift has not been passed on to Scotland, as it was our low level of payment per hectare that enabled the UK as a whole to qualify through averaging less than the 90 per cent threshold. As has been said already, there was unanimity last October across the parties that Scotland should receive the entirety of that funding, and it is regrettable that the UK Government failed to listen even to its own party colleagues in Scotland on the issue, even if it was not prepared to listen to the Scottish Government or indeed to the Scottish Labour Party.
Although the payment per hectare in Scotland in 2019 will be less than half the UK average, it is important, as Claire Baker has said, to remember that, although those payments are low, the average payment per farmer is £25,751 per annum. That is five times the EU average and some £8,000 higher than the average in England.
Did the member, in reading the Bank of Scotland report, note that less than one third of farmers would be able to trade profitably without support from CAP?
If the member listens to how I develop this argument, he may be more in agreement with me than he thinks he is at the moment. The disparity arises because we have some very large landowners in Scotland. Indeed, I know that the environment minister has commented recently on the need for further land reform. The spread of funding shows a huge increase between the ninth and 10th deciles of about £200,000, with the 10th decile—that is, the top 10 per cent—being awarded more than twice the amount that the second-top decile receives.
Andy Wightman has estimated that the top 10 per cent of farmers received almost 49 per cent of the total subsidy in 2011. More than two thirds of the subsidy has gone to the top 20 per cent of farmers. There is clearly a considerable imbalance, with large landowners receiving large amounts of subsidy.
I know that many farmers support a cap on payments. The NFUS is strongly opposed to it, but a cap would provide a mechanism to release funding for rural development. I am interested in the cabinet secretary’s views on that matter because, as colleagues have already said, environmental organisations feel that the cabinet secretary has been a little timid in his proposed transfer of 9.5 per cent to pillar 2, given that a maximum of 15 per cent is permitted. Pillar 2 can support measures to combat and mitigate climate change, to address loss of biodiversity—which is a problem in Scotland, as it is across Europe—to improve water and soil quality, and to invest in community development.
Although I think that I can understand the Government’s argument that the low payment per hectare to Scotland by the UK Government made it more difficult for the Scottish Government to match the commitment to pillar 2 that was shown, for example, by the Welsh Government, capping the funds that are received by Scotland’s largest landowners could have released funds for other measures.
Will Dr Murray take an intervention?
Sorry. We are tight for time and I have already taken an intervention.
I would also welcome the cabinet secretary’s view on another issue that I raised at the last CAP reform debate—I do not think that he answered me at the time. At its convention on 28 June last year, the Convention of Scottish Local Authorities took the view that at least one third of the EU funding in the 2014 to 2019 period, including our SRDP and maritime programmes in Scotland, should be allocated to local authorities for distribution—I stress that it would be for distribution, not for the local authorities to keep for themselves.
COSLA made that request in anticipation of the possibility that direct payments would decrease—quite rightly as it happens. Clearly, it would have the greatest impact on rural areas. If the SRDP were sufficiently flexible, local councils and others—through a community planning mechanism—would be able to mitigate the effects of pillar 1 reductions by supporting local economic and social programmes tailored to the needs, priorities and opportunities of specific areas.
I am a passionate supporter of devolution—as many in the chamber will know—but, for me, devolution is not simply about the appropriate powers being passed from Westminster to Edinburgh; it is also about passing powers from Edinburgh to more local levels when that enables decisions to be made that are more sensitive to local needs and priorities. Scotland’s rural and coastal communities are diverse. Even within a region such as Dumfries and Galloway, the challenges and opportunities vary between areas. Langholm’s issues are different from those of upper Nithsdale or Eskdalemuir or the Mull of Galloway.
The rules around the allocation of funding from national organisations cannot always be flexible enough to reflect those differences, whereas allowing local authorities and others to use a community planning approach to a basket of EU funds that might include structural, rural and maritime funding streams has the potential to ensure that those funds are used to complement each other and to achieve maximum value for money.
Community-led development, skills and needs training, business support and measures to tackle deprivation could be co-ordinated to complement each other and to deliver maximum effect where that is required. As I said earlier, I raised COSLA’s proposal in the CAP reform debate on 3 October last year—I do not know whether there have been any meetings between local and national Government since then to further explore the possibilities.
I reiterate that I am not suggesting that local authorities should hang on to those funds—rather that they should be enabled to distribute a portion of the EU funding streams, which could operate alongside their own community grant schemes and reinforce those schemes. However, I note that the current consultation SRDP has a number of elements along those lines. We know, for example, that LEADER has always been intended to be bottom up and partnership based, and I note that it is suggested in the consultation document that rural and coastal areas will be invited to submit a local development strategy and that partnerships—including larger towns with a local rural hinterland—are also being encouraged to do so.
Finally, as other members have done, I reject the notion that Scotland would automatically receive a better deal as an independent nation. The CAP receipts to Scotland would have to be renegotiated and agreed by all 28 member states if Scotland becomes independent. It is true that Scotland has lost out on pillar 1 support, but a yes vote this year will not change that one little bit.
15:45
I remind members of my registered agricultural holding, although it covers 3 acres and I receive no money—public or private—as a result of owning it, so it probably does not matter very much.
The Bank of Scotland carries out an annual survey of agriculture, the most recent of which it published at 11 o’clock yesterday morning. The survey contains a number of interesting points. The number of responses rating the Scottish Government as “good” or “very good” has risen, as has been mentioned, but, more critically for this debate, it shows that 89 per cent of farmers are against single farm payments going to inactive farmers. That view commands pretty broad support in the chamber in principle, if we acknowledge the diverse views on the different ways of moving from the current position to one that is more appropriate.
As I said in my intervention on Elaine Murray, only about a third of farms report that they would be profitable without single farm payments. However, with regard to the Government’s proposals, two thirds of respondents to the survey said that they were in favour of calf subsidy payments.
It is interesting to turn to that indispensable guide to all things farming, Private Eye. This week’s issue praises our Cabinet Secretary for Rural Affairs and the Environment to the skies, stating:
“At least in Scotland politicians seem determined to ... extract some food production from farmers in exchange for taxpayer cash.”
It goes on to say:
“If Lochhead’s initiative succeeds in starting to revive Scottish beef farming, maybe Paterson will have to consider a similar scheme for England? For that to happen he would first have to brave the howls of well-orchestrated protest from English farmers ... used to being paid £3bn a year without having to produce a thing.”
Will Stewart Stevenson acknowledge, for those who do not know, that Private Eye is essentially a satirical magazine?
I will bear that in mind next time it makes reference to my perorations here and elsewhere. However, I think that Bio-Waste Spreader—for that is the pseudonym under which “The Agri Brigade” column is written—is someone who writes with genuine and informed views on the agricultural sector. One can play it both ways, but I think that he has at least captured the essence of the debate.
On pillar 2, the Government proposes quite a lot of interesting things. They include £459 million for less favoured areas support; £355 million for the agri-environment climate scheme; £252 million for forestry; and £20 million for new entrants—an area in which there is a fairly widespread view that we need to do more—covering farmers up to the age of 40, which is an EU constraint. There is also £20 million for crofting and small farms, and £10 million for co-operative ventures.
The stakeholders have responded in a variety of ways. The NFUS focuses on the theme that is running through this debate in contributions from members on all sides of the chamber, which is the imbalance between the EU’s objectives in providing money to the UK and where the UK has delivered that money.
As the Scottish Parliament information centre briefing tells us, the NFUS says that it would, in essence, be inequitable for arable farmers in Berwickshire to receive a different amount from farmers in Norfolk, and for hill farmers in the Highlands to receive a different amount from those in the lake district. It is quite easy to agree with that observation.
Claire Baker referred to Finland, saying how much better it was doing on environmental issues. Let us examine the numbers. In 2019, Finland will get €230 in direct payments per hectare while Scotland will get €120—just over half. Further, rural development funding per hectare in Finland will be €148 while in Scotland it will be €12. It is easier to do better if you have more to do better with. That is the fundamental failure of the present arrangements whereby our interests are represented by ministers not from this Parliament but from elsewhere.
Will the member give way?
I no longer have time. Please forgive me; I am in my last 45 seconds.
The amendments before us are well and good. I can certainly agree that the cross-party representations were useful, but I think that, in aiming for 9.5 per cent, the cabinet secretary has got it just about right.
Roderick Campbell, like me, focused on the number of areas that we should consider. Farmers are, essentially, saying that it has got to be two, three or four, with the option of three aggregating as much support as two and four. We ought to consider that again, because that is where farmers are coming from.
Let us not throw out forestry. It is an important contributor to our efforts to deal with climate change, and I cannot help but notice that this evening’s members’ business debate is on Scotland’s national tree.
15:51
I remind the chamber of my entry in the register of members’ interests.
I think that there is no doubt across the chamber about the importance of agriculture to Scotland. Scottish food and drink is, generally, a success story and an area that we all want to encourage to grow. However, last month, The Scottish Farmer reported that Scottish beef prices are becoming the most expensive in the world, at around 430p per dead-weight kilo, due to the severe shortage of the product and the high demand for it. That might sound like good news for some, but that shortage is worrying for the long-term sustainability of the industry. We have seen the closure of abattoirs due to lack of throughput. The Scottish Association of Meat Wholesalers reckons that the number of Scottish suckler cows has reduced by 60,000, down to 450,000, in only nine years—that is a 12 per cent reduction and represents a decline that I think that we would all want to tackle. We want an increase in the number of cattle, not a decrease. Of course, the UK is now reliant on imports to meet the demand for beef.
Land that is classified as rough grazing is the breeding ground for beef and lamb, and is where we find our most fragile communities. My amendment, which unfortunately was not selected for debate, suggested that the uniform approach that is being taken to the issue of rough grazing is flawed. That is not my word but the word that was used by the NFU. In fact, the NFU went further, stating that the approach is
“fundamentally flawed and risks production, communities and infrastructure in our largest and most fragile region.”
It goes on to state that the most intensively stocked hills will be subject to heavy cuts that will trigger accelerated de-stocking.
I have seen evidence from my region to back that view. It comes not from me or from my sons, who farm the home farm, but from a tenant farmer who has given me figures. He would be happy to share them with the cabinet secretary—or the minister, who also represents the area. They show that his farm would lose 50 per cent of support. That is a farm that rises to more than 2,000 feet, and on which there is no option of growing different crops. It is a farm like many across Scotland that are the breeding places for Scottish beef and lamb, of which we can all be proud. It is an active farm that has as many sheep and cattle as it did at the point 14 years ago to which the historic payments relate.
Would the cabinet secretary or the minister agree to meet me and that farmer, or other farmers I could bring along, to discuss the consequences of a uniform payment regime for rough grazing land? That uniform scheme would, bizarrely, hit the active farms worst, while at the same time benefiting the extensive hill lands on which there is little activity and which are run by people whom some of us would recognise as slipper farmers.
Will the cabinet secretary examine the possibility of applying different payment rates for rough grazing land, on objective criteria, as the NFU strongly suggests?
In my unselected amendment, I also mentioned the importance of the UK home market of 60 million people. I recently visited a successful farming and food business that employs 230 people and turns over around £52 million a year. It is, of course, not a typical farm business, but it is an important driver of a rural economy. It sells 25 per cent of its product—with the saltire stamped on it—to our home market and 75 per of it, which also has the union jack stamped on it, south of the border. The English are as conscious of buying local as we are. Unprovoked, that business said that it would have to move production south of the border to retain the ability to sell its product as local, which would take jobs and money away from Scotland. I think that, currently, we have the best of three worlds: we can sell products as produce of the UK, produce of Scotland and produce of the EU. The EU market is one of some 500 million potential customers, which is about 7 per cent of the world’s population. Why risk that?
Does Jim Hume accept that Ireland exports as much as, if not more than Scotland does per head of population to the English market? Why is it okay for independent Ireland to be able to export its food and drink to England, whereas our constitutional status would somehow have a bearing on the choice of consumers south of the border?
I recognise the Irish situation; I was just quoting what a business that employs some 230 people told me.
The EU has been the subject of debate in another place. I know that the Tories would like a referendum on EU membership. For the record, Lib Dems are fully in favour of staying in the EU. If the Tories are ever in a position to deliver their referendum, I will campaign for us to stay in the EU, not only because it is important for Scottish agriculture by virtue of the support that it gives the farming world and the environment through the CAP; it is also a free market that we can access without boundaries. Furthermore, demand for Scotch lamb is driven by the European demand for that product. I do not want to see a time when that is put at risk by the UK separating from the EU or by Scotland separating from the UK and—potentially—Europe at the same time.
The fact that the Scottish Liberal Democrats backed the Scottish Government in its call for the convergence uplift to come to Scotland highlights the unanimous view that Scottish agriculture is a priority. I again offer the Lib Dems the chance to join the cabinet secretary in meetings to further that and hope that he does not use them as a tool to create differences between north and south.
The industry is aware that if Scotland were to become independent, there is no guarantee that it would automatically gain access to the EU without negotiation and no knowledge of whether the rebate would be transferred automatically to Scotland or whether there would be a CAP at all.
You must conclude, please.
In his closing remarks, I would like the minister to address the uniform treatment of rough grazing. I welcome the consultation and encourage other members to input into it.
15:57
My regional office is in Dumfries and Galloway, which is one of the reasons why CAP funding is of particular interest to me. The region of Dumfries and Galloway has roughly 40 per cent of Scotland’s dairy herd, 19 per cent of its beef cattle and 15 per cent of its sheep, but only 3 per cent of Scotland’s people. In 2011, according to research by the Crichton Institute, approximately 10 per cent of the working population of Dumfries and Galloway worked on farms and 8 per cent of Scottish holdings were located in the region.
For those stark reasons, the new EU common agricultural policy is vital. There is absolutely no doubt that Dumfries and Galloway—which, despite the vital contribution that it makes to our agricultural sector, faces economic challenges—would benefit substantially from a yes vote this September. An area that accounts for a well-above-average share of Scotland’s dairy and beef herds and agricultural holdings would surely be at the front of the queue for an improved CAP.
The EU table that breaks down pillar 1 and pillar 2 payments per hectare is nothing short of a scandal for Scotland and for our rural economy, which has such an influence on the lives and opportunities of my constituents. As other members have pointed out, the UK has failed to negotiate an acceptable agricultural budget allocation. That is an understatement. We are now bottom of the funding tables for pillar 1 and pillar 2. The UK Government has let Scotland down badly. Unlike 16 other member states, it did not negotiate extra resources for rural development. Those funds underpin a vital range of projects and services in my constituency, which include everything from encouraging diversification into tourism to providing training for young people.
It is simply beyond comprehension that Ireland will receive twice as much pillar 1 funding and a staggering seven times as much pillar 2 funding as Scotland. The Czech Republic’s pillar 1-eligible area might be smaller than Scotland’s but it still gets one and a half times as much pillar 1 funding as Scotland. Moreover, although Denmark’s agricultural area is less than two thirds that of Scotland’s, its average per hectare pillar 2 rate is, at €31, more than two and a half times as high as that for Scotland, which gets €11.
If Scotland had been an independent country at the start of negotiations for the 2014 to 2019 EU agricultural budget, Scotland’s farmers and rural areas would, under the formula that was agreed and which applies to all member states, be €1 billion better off. Although a detailed breakdown is not available, it stands to reason that my Dumfries and Galloway constituents would be well placed to benefit from a substantial proportion of that €1 billion uplift and an above-average percentage of the 2,500 rural jobs that the Scottish Government has calculated the extra billion would create.
What a missed opportunity—and I cannot emphasise enough that it is not only farmers who are missing out. The Dumfries and Galloway local development plan states:
“Agriculture is integral to many tourism enterprises and has a major impact on food and drink both in terms of food processing and direct sales.”
Just this month, The Scottish Farmer published a poll that showed that 47 per cent of respondents will vote yes this September. Given the UK Government’s failures in this regard, that is really no surprise.
I will finish by quoting a South Scotland farmer who, far from regarding the constitutional debate as marginal to her business, considers it to be central. Carol Douglas from Roxburghshire has said:
“Westminster Governments have argued for a significant reduction in farming payments, despite the fact we already get the worst farming deal as part of the UK.”
That constituent has now joined the farming for yes campaign.
Although the situation right now is poor, there is also the prospect of a complete cut in agricultural support if Scotland remains in the political union with England and England votes to leave the EU in an in/out referendum. Scottish agriculture and our rural industries will be in the hands of a Westminster Government with a stated policy of drastically reducing or even ending farm payments altogether. That would be a disaster.
16:02
I am very glad to support the Government’s motion and believe that we should dig down into views on farming and how farming sees itself to understand the pressures on it.
Just recently, the NFU leadership met the UK farm minister George Eustice. As Nigel Miller made clear in the Burns night edition of The Scottish Farmer,
“our main competitors in Northern and Southern Ireland both have budgets that are more than double that of Scotland ... per hectare ... and a focus on production”.
As members have pointed out, that is a stunning figure. Mr Miller went on to say that the UK has the ability to open the door for coupled area top-up support to be used in Scotland’s huge rough grazing areas and that, as far as help in that respect is concerned, the ball is in the UK’s court.
The UK played a limited role in Scotland’s CAP reform implementation, but the fact is that it controlled the foundation of support—the budget—and, with coupling, held a vital lever to allow support to be targeted at production. One can therefore understand why farmers such as Jim Brown of Gaindykehead farm near Airdrie have said:
“As we have seen from DEFRA Minister Owen Paterson and the UK Government’s actions over the recent debacle of CAP convergence funding—they do not have Scottish farming’s interests at heart, and indeed are taking decisions which remove vital funding from Scotland.”
Will the member give way?
The amendments do not take that into account—and I am not taking an intervention because I want to go on and look at the three-crop rule, which has not yet been mentioned in the debate.
I should let the chamber know that we have a slight bit of extra time.
Thank you. I might take interventions later but at the moment I want to make some progress.
The three-crop rule relates to 800 to 900 farmers in the north-east and Highlands of Scotland whose key crop is malting barley. The EU has insisted that monoculture must be reduced but these farmers are attempting to meet the market demand for their product. There are constraints on what they can produce because it has been said that 40 per cent of spring barley might be unsuitable for malting; however, any interruption in the crops that they grow might reduce the availability of Scottish barley for Scotch malt whisky. It is important for us to try to find some way to help those farms, which are mostly well over 75 acres and require our support. I hope that the cabinet secretary will say something about that.
I am aware that spring barley is only one aspect and that some of those farmers also grow wheat, but there have been problems with the price of maize and wheat. Because grain prices around the world are going up, the maize that is used in grain distilleries may well become too expensive, so it is important that we are growing the correct kind of wheat to help those farmers.
I was pretty appalled by the remarks of the Conservative spokesman, Alex Fergusson, who is a renowned member of our Rural Affairs, Climate Change and Environment Committee. I must take him to task for talking about 100 hectares of rock in the north getting support for what it produces. For a start, such farms often produce the biodiversity that this country requires, which is paid for as a public good—they do not undermine it, like certain intensive practices in other parts of the country. Also, the carrying capacity of such land is much lower and it would be foolish to have a large number of cattle or sheep on it. That, too, must be taken into account. They are the least-favoured areas; therefore, to keep the people, the biodiversity and the scenery, it is important that we ensure that there is proper support for those areas in the CAP.
I accept the member’s remarks. I hope that he accepts that I was not trying to denigrate those acres, but was simply—perhaps in overflowery language—referring to the unacceptable situation of rewarding ground that produces absolutely nothing at all, such as we find with slipper farming and non-active farming.
I accept that. However, the fact that few Tories are elected in the Highlands and Islands may reflect the fact that people do not share the views that the member originally expressed.
Talking about slipper farmers, I see, from an advert for CKD Galbraith, Scotland’s leading single farm payment broker, that the trading season is now open for single farm payment entitlements for sale and wanted. However, in the Bank of Scotland survey, 89 per cent of farmers said that they are against single farm payments going to inactive farmers. When will we expose the people who are buying and selling? It is essential that the CAP reveals that. At present, there is far too much of a cover up regarding payments as a whole. Those are businesses, and whether or not they are in the name of an individual they should not be protected.
The Scottish Government’s performance has, overall, been positive in paying single farm payments, supporting renewables and so on. However, there is considerable concern about change, about the way in which the reform of the CAP is being handled and about how new entrants are being supported—or not. We must balance those issues. It is a very difficult job, and I hope that the cabinet secretary gets all our support to ensure that we get the best deal for Scottish rural areas and farmers.
I have a few minutes in hand and can compensate for interventions if members choose to take them.
16:08
I welcome the consultation, but we have been here before during previous CAP reforms and no changes have been made that support crofting and farming in the Highlands and Islands. Every time, the whole reform is skewed wildly out of shape to ensure that to he who hath, it shall be given—and we can be sure that he or she never lived in the Highlands and Islands.
We now come to the crunch moment for the new CAP, when the European Commission has made it possible—I should say, made it almost compulsory—to have a fairer division of CAP. We wait to see what the Scottish Government makes of these policies and how they will impact on Scotland.
At the moment, it is nothing short of scandalous that, as Elaine Murray pointed out, two thirds of payments go to 20 per cent of farmers, who take in hundreds of thousands of pounds each. Some of them are slipper farmers, and limited companies are among them as well. At the other end of the scale, we see crofters and farmers on the periphery struggling to keep going while they receive a pittance in CAP payments. The current allocation of funding does nothing to encourage farming and crofting in disadvantaged areas, and the consultation does not seem to want to right that wrong at all.
The James Hutton Institute did modelling across Scotland, and areas within the Highlands and Islands seemed likely to come out quite well from those dispassionate calculations. The Highlands and Islands agricultural support group, which is made up of all the local authorities from Argyll to Shetland, worked in a spirit of openness and trust with the Scottish Government to test the modelling on which the payments could be based. However, at the last minute, all that seems to have vanished and we are presented with a consultation that is cynically designed to keep the money where it has always been. As usual, nothing changes and the Highlands and Islands look like being left out in the cold. Unless there is a public commitment from the cabinet secretary to the region, over half the land area of Scotland will be disadvantaged again.
The consultation proposes a payment of €20 to €25 for the area, but that figure is far too low and is not justified by any of the detailed work that has been done. The figure could damage crofting and farming in the Highland and Islands, and it appears to ignore completely the work of the groups that I mentioned. We even hear rumours that still lower rough grazing region payments are being considered. I hope that the cabinet secretary will deny that when winding up and give a commitment that that will not happen.
We saw previously the environmental impact that decoupling payments from production had on sheep farming in the Highlands and Islands. It was close to impossible back then to make a living, with many in the industry working elsewhere to subsidise their farming activities. When production was no longer required, sheep came off the hills in their millions, which led to the devastation of the support industries downstream from the sheep farming, destabilising communities and making it even more difficult for those who remained in the area to make a living. The environmental damage caused by the lack of land management and grazing was on a scale that we had never thought possible. If the cabinet secretary implements a payment of €25 or less, it will be equally catastrophic for our communities and the environment. It will make it very difficult to support those communities that depend on agricultural activity. That is neither greener nor fairer.
In addition, the cabinet secretary has deferred any changes to LFASS until 2017, way beyond the referendum. There is no other mechanism available for us to support crofting and farming in my region. The current LFASS payments are applied in exactly the opposite way to how they were intended—the richer someone is, the more they get—and are not used to address disadvantage. The Scottish Government can implement changes to the scheme at any time that it likes—it is the cabinet secretary’s choice.
I fear that the consultation is more about trying to win the votes of large farmers for independence than courting those of small crofters and farmers in my area. I say to the cabinet secretary that the large farmers might get the lion’s share of the funding, but they only have one vote each, as do the people whom he disregards in his consultation. I ask that the cabinet secretary speak up for the Highlands and Islands for a change.
16:13
We have heard this afternoon a number of arguments for where specific payments should be made within the CAP framework, so at the outset I will make a specific plea and give an example of my own of some issues that I am aware of that are affecting the Western Isles, before I move on to the substance of the debate.
Clearly, the continuation of LFASS support in 2014 and, I hope, 2015 is imperative for the survival of the economies of rural and remote communities throughout Scotland and to avoid uncertainty in those areas. However, any future move to ANC—areas facing natural constraints—will have to be handled extremely carefully if we are not to see more stock disappearing from the common grazings and our hills.
Let me say at this point that Alex Fergusson’s comment earlier about 100 acres of black rock in north-west Scotland producing nothing is extremely offensive to farmers and crofters in that area who are struggling to make a living. I know that he has since clarified his point, but I am sure that his comments have been noted up in north-west Scotland.
I also have to question Rhoda Grant’s comments just moments ago about the consultation being cynical. I suggest to her—through the chair—that she should perhaps speak to some of the members of the crofters for yes and farmers for yes campaigns who come from the Western Isles and the north-west of Scotland.
I am still looking for them.
Order.
They could perhaps put her more in the picture with regard to their input to the consultation.
I will give the Parliament some examples of the challenges that Western Isles farmers and crofters are facing. A round bale of hay that costs between £12 and £15 in Aberdeen is being sold in Stornoway for £46, and a round bale of straw that costs £8 in Aberdeen is selling in Stornoway for £30. Animal feed is an extra £70 per tonne and fertiliser is between £140 and £160 dearer in Stornoway than in Inverness.
With added costs such as that, it is welcome news that the CAP consultation includes proposals for a crofting and small farms support scheme that is designed to deliver enhanced environmental and business benefits. That will go some way towards mitigating the crippling costs of transporting any animal feed or fertiliser to the Outer Hebrides and other islands.
Over the past few months, we have heard numerous calls from industry bodies such as NFUS for the best possible budget deal in order to meet the challenges of moving forward from a historical to an area-based system. With a proactive approach, we can help to manage change and support agricultural businesses in the period beyond 2015.
The situation is not helped by poor representation at the UK level when negotiations are under way in Europe. As we have seen recently, the debate on the CAP convergence uplift is a prime example of how Scotland’s farmers and crofters would be better served by an independent Scotland with a seat at the top table. Scotland’s farmers and crofters have lost out to the tune of €223 million thanks to the retention—some would call it theft—by the UK Government of convergence uplift allocated to the UK because of the situation in Scotland.
Will the member take an intervention?
I am sorry, but I am already halfway through my time, so I need to get on.
As if that was not bad enough, we have to endure the fact that, if Scotland was currently independent, our farmers and crofters would have gained an additional €1 billion of support through pillar 1 of the CAP, based on the principle that no member state would receive less than the average of €196 per hectare. That support would have been of massive benefit to rural businesses the length and breadth of Scotland.
To add insult to injury, because we are not yet independent, we have lost out on the opportunity to join 16 other EU countries in negotiating hundreds of millions of euros more in rural development funding—money that could have boosted investment in rural tourism, environmental protection, broadband roll-out and renewables, not to mention more start-up assistance for young farmers.
Will the member take an intervention?
Okay—on you go.
I thank the member for taking the intervention. He is going on about how terrible Westminster is, but what is his view on the SNP MPs at Westminster who voted to slash the EU budget that CAP support comes from?
Mr MacDonald, I will reimburse you for the intervention.
Okay.
Of course, we have other issues with the Lib Dems not following the line that their party professes to take with regard to fishing policy in Europe.
We also have the outrageous situation of the UK Government’s refusal to return the red meat levy from south of the border, which could be used to promote our premium products of Scotch beef and lamb more widely rather than, as is currently the case, it helping to promote the produce of our competitors.
Not only has Westminster failed to negotiate a better deal for Scotland, but our position is getting comparatively worse. When the next round of CAP negotiations commences around 2018, an independent Scotland will be in a strong position to negotiate a much better deal for our farmers and crofters. If Scotland votes no on 18 September and we are still in the United Kingdom, there will be a strong likelihood of agricultural support being cut completely if Westminster’s planned in/out European referendum results in us leaving the EU. My colleague Joan McAlpine mentioned that earlier.
In that situation, Scottish agriculture and our rural industries would no longer be part of the CAP and we would be at the mercy of a Westminster Government that was committed to drastically reducing or even ending farm payments. I suspect that not many members would welcome that prospect, although I guess that one or two members in the chamber would. In contrast, with independence, Scotland will qualify for future member state funding increases.
I remind the Parliament that, as recently as just a few months back, the Lib Dems, the Tories and Labour, in the guise of Tavish Scott, Alex Fergusson and Claudia Beamish, stood here promising to join the cabinet secretary in standing up to the UK Government on behalf of Scotland. Tavish Scott committed to doing that because, as he said,
“There is no question but that the minister’s argument in relation to the funds coming to Scotland based on equal payment share is the right argument”.
Alex Fergusson reiterated his previously stated commitment to this cause, saying:
“I accept the case for the external convergence uplift largely to come to Scotland ... There is a perfectly logical case to be made. I will do so”.
Claudia Beamish pledged:
“There is a strong case for the uplift to come here, and we in Scottish Labour will work with the cabinet secretary ... to try to achieve that.”—[Official Report, 3 October 2013; c 23346, 23316, 23355.]
To be fair, the members did what they said. They all signed a joint letter on the subject, clearly unaware that Owen Paterson had every intention of saying no, and that was that—end of story.
Do I have some extra time, Presiding Officer?
I have given you a minute extra and I have told the closing speakers that they can have extra time, but I can give you a few more seconds.
The unionist parties like to say that the SNP promises that the grass will be greener with independence, and of course it will be. Let us consider the alternative to independence, within or without the EU.
Labour betrays its underlying attitude to agriculture in its amendment, which compares a 9.5 per cent modulation in Scotland with a 15 per cent modulation in Wales. Following the Welsh example would leave even less funding in pillar 1, which is not exactly what the NFUS or the Scottish Beef Association wants to hear.
The Tories are committed firmly to chipping away at pillar 1 until it is gone. If the Conservatives succeed in leading the UK out of the EU, we can be sure that the market will be left to decide.
It is becoming increasingly clear that there is only one way to save Scottish agriculture, which is to vote yes on 18 September.
We move to closing speeches. A little time is in hand, because some members did not use their full allocations.
16:21
I refer members to my agricultural interests in the register of members’ interests.
I am pleased to close the debate for the Scottish Conservatives. I agree with those who have spoken about the importance of the two consultations that are under way, and I encourage farming and crofting constituents to take part. If they disagree with the rough grazing region payment options that the NFU suggests, they should suggest alternatives.
I am very aware that there are strongly held views about the available options and that there is anxiety in the farming sector—particularly in the beef sector, as Jim Hume explained, and among the genuine hill livestock farmers—about the future. I started farming in Argyllshire on severely disadvantaged land in the 1970s. We had the hill livestock compensatory allowance then, which was a headage payment, so we did not have to worry about slipper farmers.
That made me aware of the importance of the thread of agriculture through many ancillary industries, such as livestock markets, livestock haulage and the feed and fertiliser businesses. The regular sheep and cattle sales at local markets throughout the Highlands and Islands play a huge part in inhabitants’ social life. It is sad that that important element has diminished as farming has become more difficult.
Has the member noticed in the Bank of Scotland survey a prospective rise in the amount of cattle that farmers expect to have? Does he welcome the proposals to provide support for smaller farmers in less advantaged areas to take cattle, which will feed through to the finishing sector in other parts of the industry?
Absolutely—I agree with that. Such areas are the seedcorn for the rest of the industry.
The subsidy element is vital, but farmers would also like less bureaucracy, fewer complicated compliance penalties and a more can-do attitude, which used to exist among Government agricultural departments. They used to be helpful to farmers, but they are now sometimes feared by those who work the land. The amount of paperwork that is required is making farming less productive and less profitable than it could be. Fewer people and—more important—fewer young people are therefore being employed in farming.
When a storm occurs in a rural area with single-track roads and trees block the roads or drains and culverts are blocked, it is always farmers who come out with their tractors to clear the blockage. If the farmers were not there, they would be sadly missed.
SNP members have—predictably—used much of their time in the debate to attack the UK Government, but they have conveniently ignored the feeling that the Scottish Government appears to have been outmanoeuvred—or, should I say, outlobbied—in negotiations by the Welsh, the Northern Irish and the English NFU. SNP members and the cabinet secretary might be better employed in engaging with the UK Government in its review of allocations. That is something that the NFUS is keen to do.
The immediate priority is, of course, for the Scottish Government to come forward with the best possible new scheme. Much concern has been voiced to me by farmers in my region, the Highlands and Islands, especially by hill sheep producers, including representatives of the National Sheep Association and the Blackface Sheep Breeders Association. As the NFUS said in its letter to the cabinet secretary on Monday this week:
“the core implementation programme for CAP, as outlined in the Scottish Government’s current consultation, fails to provide a viable support framework for a significant part of Scottish farming. If unchanged, these proposals will exert a downward pressure on production across a number of key sectors”.
There has been significant criticism of a decision to have only two payment regions in Scotland. A single rough grazing region, based on a flat rate of euros per hectare, would inevitably penalise the more intensively stocked hills, which in turn would accelerate de-stocking. It is about numbers. I have talked about the need to retain sheep and cattle on our hills on many occasions in the Parliament and I emphasise that. The farming of sheep and cattle in our hills is fundamental to retaining the population and underpinning the economies of remote rural and island communities, which are often fragile.
We all accept that splitting the rough grazing region into two or more regions on objective criteria might be difficult, but getting that aspect of the reform right is vital and is more important than having a simple system, as our amendment makes clear. The NFUS briefing gives the example of the Orkney beef and sheep family farm with 100 cows and 130 sheep, which currently receives support payments of around €60,000 on 110 hectares of land, inclusive of the beef calf scheme, but which, under the Government’s proposals, would receive about €32,000, inclusive of the beef calf scheme. That is an indication of the scale of the challenge that some producers will face.
Some people will say that Orkney is fertile compared with Shetland or the Western Isles, which are all in my region. That is true, but much of Orkney’s economy depends on agriculture and the islands’ reputation for high-quality livestock is second to none, as anyone who cares to visit the annual Orkney show will see for themselves. Agriculture on Orkney is sustainable, but it will not be if it is drawn down to the levels that I have just outlined.
On areas that are seriously disadvantaged, it is vital that the rough grazing figure is high enough to restore traditional hill farming to a healthy state. Over the past three decades, employment in Highland agriculture has declined because the outputs have consistently outweighed the inputs, despite subsidies. The new CAP must offer and be seen to offer a chance to reverse that.
Rob Gibson talked about the public good that comes from rocks. He probably meant peatlands, which have been much discussed in the Parliament and are a carbon sink, so they produce a lot of public good. I hope that measures in CAP pillar 2 will acknowledge that and offer opportunities to restore peatlands. That might help areas such as Sutherland, Wester Ross and Argyllshire.
Alex Fergusson was absolutely right to say that farmers need clarity and certainty about the new support regime. Only then can plans be made for the future. The cabinet secretary, God bless him—
Members: Hear, hear.
The cabinet secretary must ensure that final decisions are made as quickly as possible after the consultations close.
We support calls from the NFUS for appropriate transitional measures, which are available to the Scottish Government.
You must conclude, please.
I am just about to, Presiding Officer.
As the NFUS said, to ignore a more managed approach up to 2019
“would be an abdication of responsibility.”
I support the amendment in the name of my esteemed and respected colleague Alex Fergusson.
16:29
I am not sure whether I can live up to those blessings and all that esteem. Nevertheless, I will proceed.
The debate on the implementation of CAP reform comes at an important time for rural Scotland, as we explore and expose, particularly through the two consultations, the preferred options on issues where choices are to be made.
After today, the Rural Affairs, Climate Change and Environment Committee’s scrutiny will be key to ensuring that what is proposed works for farmers and the wider rural community. Subject to deciding our work programme on 5 February, we will hold evidence sessions with stakeholders after the close of the two consultations, and with the UK Secretary of State for Environment, Food and Rural Affairs and the cabinet secretary.
I speak in support of the Labour amendment. It raises issues that were not addressed in the Scottish Government’s motion. For example, although we agree that UK Government budget decisions limit the decisions that the Scottish Government can take, it is still responsible for making those decisions, which is a matter that the motion does not recognise fully.
I ask the cabinet secretary to tell us in his closing remarks something about the contribution of the future CAP stakeholder group and how that is developing.
The consultation on pillar 1 ends on 17 March. How the future basic payments should be made, including the 30 per cent for greening and the national reserve, is a fundamental issue; the range of other issues that members raised are also fundamental.
The Scottish Government has, according to its website,
“lobbied hard to ensure Scotland’s diverse farming needs were well represented in the reformed policy”.
It went on to say that it was
“involved in helping to shape solutions which will deliver for Scotland’s farmers. Work is continuing on the fine detail of the system”.
The Scottish Government also stated that
“The consultation seeks views on the 4 optional types of future direct support: voluntary coupled support, redistributive payments, Pillar 1 ANC payments and the Small Farmer Scheme.”
I will focus briefly on the small farmer scheme, which would protect many farm businesses from cuts in support. It may also protect many ancillary businesses in the Lanarkshire, Ayrshire and Dumfriesshire communities in my region, according to Tom French, who is a Crawfordjohn farmer and a regional NUFS rep.
I understand that more than 70 per cent of Scottish farm holdings are smaller than 50 hectares, although many farm businesses hold more than one holding. I make a plea for small farmers and for support for the proposal that the higher rate of subsidy be applied to the first 50 hectares. Small family farms can—and do—play an important part in the local economy and social fabric, and that additional financial support may make the difference between keeping going and giving up.
As the Nourish Scotland briefing highlighted, such a move would be supported by a number of things. For example, value is created by direct selling and shorter supply chains, and research shows that higher biodiversity can be combined with higher productivity. The responses to the consultation on redistributive payments must be carefully analysed, as farms on rough grazing land could lose out.
Rhoda Grant mentioned the capping of basic payments. Scottish Labour believes that it is right that there should be a cap. In spite of the argument sometimes made by large farm businesses about the employment benefit that they provide to the local economy, we do not agree that there should be a public subsidy beyond a cap. There are other, more direct, ways to support the rural economy through pillar 2, and I understand that capping the amount could release funds.
How much money would be put back into the system if there was such a cap?
I do not know the exact amount of money that would be transferred to pillar 2, but I understand that it would be substantial. That money could be used to help agri-environment schemes; indeed, it could be used to help farmers in other ways as well as being used to help the local economy.
Rhoda Grant made a plea for a careful assessment of her Highlands and Islands region. I ask the cabinet secretary to refer to the new crofting scheme and to comment on what will happen with the important issue of support for transport costs, which Angus MacDonald mentioned. Will the cabinet secretary also tell us whether the ready reckoner that is included in the consultation has been used and about the degree to which it has been found to be helpful? It seems to be a good option for helping farmers to assess their future.
There seems to be no dissent from the view that slipper farmers must be excluded. I asked the cabinet secretary whether the measures are robust enough yet, and his explanation—that there will be a meeting next week—was positive. Nigel Miller stressed:
“We need the Government to look at a suite of measures to lock out the misuse of money”,
and Rob Gibson expressed concern about buying and selling, which must be stopped.
The pillar 2 consultation ends at the end of February and it is encouraging to see that the Scottish Government is committed to a simpler process, which should make grants more accessible. The new SRDP needs to be simple, straightforward, effective, customer focused and accessible. It must not be created as a package that only fits computer and audit systems; some members have highlighted that as a risk. It must be simple and, along with any new advisory service, it must be people centred.
Cara Hilton highlighted the disappointment of a range of environment groups that the Scottish Government has not followed the Welsh example and transferred the full 15 per cent from pillar 1 to pillar 2. We support that transfer, but acknowledge that there is a strong tension pulling in different directions. The cabinet secretary has to decide.
Graeme Dey covered the range of vital services that are supported by pillar 2. I will highlight a few sections of the SRDP consultation in more detail.
The agri-environment climate scheme is essential for our way forward in rural Scotland, and it is right that 27 per cent of the future budget should be allocated to that, with an increasing number of studies confirming
“the effectiveness”
of such measures
“in addressing public objectives for water quality, climate change & biodiversity.”
However, I ask the cabinet secretary to reassess access to that option. It has been highlighted to me that some small farmers believe that it is inaccessible to them, partly because of the challenges posed by the paperwork.
There is also to be a focus on co-operative action to secure landscape-scale improvements to the natural environment. That could be an opportunity for farmers to work in partnership with the wider rural community to strengthen rural resilience. As a Scottish Co-operative Party MSP, I think that it is a good step to put in a new section with £10 million of support. The minister will know about the Eddleston water project, which was led by the Tweed Forum and is a timely example. The SRDP consultation said:
“This project co-ordinated a number of partners to develop a restoration strategy to both restore natural habitats and help reduce the risk of flooding”.
On the basis of the evidence that was taken at the committee, I am also pleased to see that agroforestry has gained support. The consultation refers to
“an integrated approach to land management where trees and domestic livestock can co-exist”.
That can bring multiple benefits, which we must always look for.
I repeat a plea in the Archaeology Scotland briefing that, as they are part of our heritage, sites should be enhanced and protected in the CAP process.
Elaine Murray talked about devolution and, in particular, the benefits of further localism within Scotland rather than between the countries of the UK. That would allow more specific solutions to local rural issues, and I agree that there is value in adopting that approach.
Finally, the inclusive measures for new entrants are welcome. However, in the words of Clydesdale farmer Tom French,
“The biggest obstacle to new entrants gaining a start in the industry is the availability of land. Without some measures to encourage letting and deter in-hand farming and land grabbers, any new entrant scheme will be doomed to failure.”
How starkly that reminds us all that getting the details of CAP reform right is only part of the puzzle for rural Scotland.
If we are to have vibrant rural communities in which we produce more of our own food while caring for our land for future generations, the cabinet secretary is right to say that it is fairness, not history, that will count. We must all work together on that.
16:39
The debate has been good. It has been helpful to hear MSPs highlight some of the key issues for their constituents and parties.
Yesterday, I had the privilege of attending the Cabinet meeting in Bathgate, after which we had a question-and-answer session with the public. I then had the opportunity to visit a local food business, Findlater’s Fine Foods. That reminded me that the debate is about not just the primary producers but the whole supply chain and the wider impact on the rural and national economy. Farmers and crofters in Scotland produce some of the best raw materials to be had anywhere on the planet, underpinning our fantastically successful food and drink industry, as I was able to witness at first hand when I visited Findlater’s.
On the subject of fine Scottish foods, does the cabinet secretary agree that venison is one of the finest Scottish foods, and can he clarify the position of deer farmers in Scotland vis-à-vis subsidy?
I can clarify that venison is one of Scotland’s finest foods. I will come to the wider issue of deer farmers shortly.
Our farmers and crofters produce for our food and drink industry, which reminds us that much of our activity must be guided towards the demands of the markets. Our income and the profitability of Scotland’s agriculture are very much dependent on being market focused, as well as on our getting the right support mechanisms in place. It is a good, healthy sign that demand from the marketplace, not just in this country but throughout the world, for Scottish produce is on the up. We have to focus much of the debate on that opportunity and on the opportunity to get the right financial support mechanisms in place.
Yesterday I also visited one of Scotland’s biggest livestock hauliers. That is another example of other sectors’ dependency on agriculture—the debate is not just about one particular sector. We have the beef sector, the sheep sector, the pig sector, the poultry sector, the dairy sector and indeed the venison and deer sector, as Jamie McGrigor mentioned. All those sectors contribute hugely to the Scottish economy in their own ways. The debate is about ensuring that we get the right mechanisms in place in the years ahead to support their fantastic contribution to not just Scotland’s tables but our wider economy.
We should avoid scaremongering. It was ironic that Jim Hume said in one breath that he hoped that the Scottish Government would not use the debate to make any constitutional points and then proceeded to lay down at least four scaremongering arguments about what would happen to various sectors if Scotland were to vote to be a normal country in September. That was sheer hypocrisy from Jim Hume, but I guess that we just have to get used to that. The biggest threat to the livelihoods and future of most farmers and, in particular, most of the people in the food and drink sector whom I speak to is the idea that the UK might pull Scotland out of Europe. Excluding our food and drink industry from half a billion consumers in Europe is the biggest threat to the industry.
This is a very anxious time for our farmers and our rural communities, with on-going discussions over the next common agricultural policy. Where we are now and the consultations that we have discussed today follow a couple of years of very close, detailed work with our stakeholders in this country. What members see in the consultations are not ideas off the top of the heads of Scottish Government officials or my ideas alone; they are the result of that detailed partnership working with Scottish industry, which has been the subject of very detailed modelling over the past year or so. However, in a consultation we listen closely to what people say.
I think that perhaps Rhoda Grant has been taking part in a different debate in the past couple of years. She said that the changes taking place in the common agricultural policy will disadvantage the Highlands and Islands, but that is far from being the case. Of course individual producers in the Highlands and Islands might see a big reduction in their payments—I will come to the reason for that shortly—but Argyll and Bute, the Western Isles, Highlands and Shetland will see their payments increase under the shift to the new payment system, in which we are moving from historic payments to area payments. It is not right for her to stand up in the chamber and say that, for the reasons that she outlined, the reforms will disadvantage the Highlands and Islands.
I am grateful to the cabinet secretary for taking a further intervention. The area that is conspicuous by its absence from that list is obviously the constituency of Orkney. Given the detailed modelling that the cabinet secretary has been doing with his officials, can he shed any light on the interventions that can be made to support production of the kind that has been characteristic of Orkney over a number of decades?
Liam McArthur’s question gets to the heart of much of the debate. We are going through what is going to be the first massive redistribution of funds across Scottish agriculture as a result of a new common agricultural policy.
Will the cabinet secretary confirm that the rumours that the €25 figure will decrease are wrong, and will he give a commitment to ensure that the figure increases in line with the recommendation in the James Hutton Institute report that I mentioned?
After Rhoda Grant’s speech and that intervention, I ask her to raise the standard of the debate and not to refer to rumours in the chamber. We are in the middle of a consultation and we are listening to different views from all sectors and all parties in every part of Scotland. We will listen closely to what people say; we have not taken any decisions on what we will change or not change from the proposals in the consultation. No doubt there will be changes and I will shortly talk about some of the areas that people have highlighted. However, to talk about rumours lowers the tone of the debate overall.
We are going through a major change with the new common agricultural policy. We are moving from historic payments to area payments. That is why many producers in Orkney and elsewhere will be calculating—using our ready reckoner, which many farmers in Scotland have used and which gives an estimate of the likely outcome under one particular scenario—that they will see big reductions in their payments. The background is that, in the 1990s, we had headage payments, which then determined, under the most recent reforms, the single farm payments, which people got from the 2000s up to the current day. Therefore, those payments were based on activity from back in the 1990s or before. We are now breaking the link between payments and production, as agreed by Europe, and moving to area payments. Those who face the prospect of a big reduction in payments are those who benefited from the payments that they received previously under the 1990s regime or before that.
Now, in 2014, we face a change from historic payments to area payments, but Europe will not allow a link between area payments and production. Therefore, the size of herds or activity on a farm will not relate directly to the size of the area payment. That is the crux of the debate. The major dilemma that we have is that we are trying to support activity and production, but the rules that have been agreed under the common agricultural policy as a condition of getting the budget do not allow that to happen, other than through the limited coupled support scheme that we have secured for Scotland during the negotiations.
That is the situation at the moment—we have the limited coupled scheme. When we started the negotiations, Owen Paterson said that he did not want to use such a scheme at all, so we would have been able to use 0 per cent of our budget for such a scheme and there would have been no link whatsoever with production. He then moved to his position of 5 per cent—that was an apparent concession to Scotland, although it was obvious that he moved because he was going to lose a vote in the Council of Ministers. Then, of course, Europe finally decided that one tier of countries would be able to use 13 per cent of their budget for coupled payments and another tier of countries could use 8 per cent. Unfortunately, Owen Paterson and the UK Government decided that we would be in the 8 per cent category.
As I asked in my speech, can the cabinet secretary say whether he has taken up offers to discuss an increase in such payments and, if so, does he expect a successful outcome?
As I said in my opening speech, we now have the option of increasing the 8 per cent to perhaps around 10 per cent. That is being discussed with the UK Government, but there are many different conditions attached. We are working with the UK Government to iron out the strings that are attached to that generous extra 2 per cent for coupled payments in Scotland. I will keep Parliament updated on progress on that.
Will the cabinet secretary give way?
Sorry, but I really have to move on in my remaining three minutes.
We have a smaller budget for Scotland, new entrants coming into the payments system and mandatory deductions from the pot of money that we have been allocated, because money for young farmers and for the national reserve has to be deducted. Against that backdrop, it follows that there will be reductions in payments for many farm businesses throughout Scotland. As far as possible, we are trying to link the area payments to activity. We cannot link them to production, but we can link them to activity. That is what we want to do, because it is not in Scotland’s interests or in the interests of the public purse to use vital investment for food production and looking after our environment to pay businesses that are inactive. That is why it was important to secure the Scottish clause.
Although Europe says that we cannot use a minimum stocking density because, under World Trade Organization rules, that is linked to production, we are confident that there are other ways of tying that Scottish clause to activity in Scotland. The more we can do that, the more we can take payment away from inactive businesses and up the payments for active businesses. Clearly, that is an important point in the debate.
When we talk about reform of the common agricultural policy, we should not talk only about livestock, because in some cases the arable sector faces difficult challenges as a result of the greening proposals, which were largely designed for the monoculture that we see in eastern Europe and not for the diverse agriculture sector in Scotland. Nevertheless, at least the current proposals are a lot better than the proposals of a year ago, which would have been really impossible to implement in Scotland. At least we now have a set of greening proposals that can be implemented in the Scottish context.
I will answer some of the questions that members have raised. We are working closely with the arable sector to consider how we can mitigate the impact on the production of malt and barley, which is so important to the Scotch whisky industry.
In addressing some of these important issues, there will be changes to the proposals in the consultation—I think that I can say that fair and square. However, we are in the middle of the consultation and although I do not know what changes will be made, we will have to go into any changes with our eyes open to the consequences and to the knock-on impact on other sectors if we help one particular sector. There are difficult dilemmas and difficult circumstances.
The number of payment regions, which Jim Hume and others raised, is an issue that we are watching closely. We may divide grazing into two regions or whatever. There are a number of suggestions out there about how to make the system more fair and equitable and how to protect genuine activity. However, we could have a situation in which there are three categories of field on one farm, and although we are genuinely considering that option it clearly brings a price with it, and we have to ensure that we can cope with such a system when it comes to implementation. I am confident that by working closely with the industry we can find a way forward on many of these important issues.
There are two more issues that I would like to mention quickly in the final couple of minutes of my speech. First, pillar 2 is crucial to the debate, and many members have mentioned its importance. Within that, we have protected the less favoured areas scheme, which is worth between £60 million and £65 million a year. The scheme is absolutely crucial to the outlying areas of Scotland and to those areas where the land is of poorer quality and presents extra challenges in farming, producing food and looking after the environment. Its importance justifies the 9.5 per cent transfer from one pillar of the policy to the other pillars. I understand the arguments for using the full 15 per cent and those for using 0 per cent and not doing any transfer. I think that we achieved a fair compromise.
Finally, the decisions are all underpinned by the size of Scotland’s budgets. I do not believe that there will be any review that will deliver results for Scotland in 2016 onwards in terms of the convergence uplift. We are likely to have a new secretary of state in DEFRA in 2016, which is after the next UK elections, and I hope that Scotland will not even have to bother listening to what DEFRA has to say, because we will be an independent country by then. I will come back to that. Of course, there may even be a referendum on the rest of the UK leaving Europe then, because by the time the results of a 2016 review are available it will be 2017 or 2018.
Scotland was not a member state in Europe in its own right during the recent CAP negotiations, which has cost us a €1 billion uplift. It has cost us a €220 million uplift that we should have got, which came to the UK because of Scotland’s lower payments as some kind of concession for not getting the €1 billion. Not getting that extra €1 billion that belongs to Scotland has cost us 2,500 jobs that could have been created between 2014 and 2019 in Scotland’s rural communities and the £500 million that would have been added on to Scottish gross national product because of those 2,500 jobs and the extra €1 billion that would have been pumped into farming businesses the length and breadth of Scotland.
I have to say in closing that I will work with the industry and with all parties to get the best common agricultural policy as we go through the difficult and challenging but important process for the new policy. If Scotland had been an independent country, many of the difficult issues that we are wrestling with would have been a lot easier. With independence, our farmers and crofters will be wealthier, Scotland will be an even bigger food-producing nation, our rural economy will be prosperous and we will have a bright future for Scotland’s farmers and crofters.
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Portfolio Question Time