The Scottish Government

This item was published during the term of a previous administration that ended in April 2007

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Common Agricultural Policy

12/02/2004

The Executive today announced its key decisions on how the Common Agricultural Policy (CAP) Reform will be implemented in Scotland.

Ministers describe the proposed changes as the most radical reforms to agricultural policy for more than a generation that will place the future back in the hands of farmers, reduce the reliance on subsidy and reduce the bureaucracy.

The decisions follow a comprehensive consultation process with a wide range of interests involved in the future development of agriculture and land use in Scotland.

These decisions will lead to farmers making decisions based on demand for their produce not the need for subsidy, position agriculture as a lead player in the protection and enhancement of our environment, reduce the time spent on form-filling and bureaucracy, and foster a spirit of partnership involving all key stakeholders.

There are four key decisions:-

1. FULL DECOUPLING - removing all existing support schemes allowing producers to make decisions in response to the market and not in response to subsidy scheme rules or incentives.
2. HISTORIC BASED PAYMENTS - a new single farm payment will be introduced based on the 'historic' subsidy receipts from 2000 to 2002.
3. NATIONAL ENVELOPE - which allows payments to be top sliced and used for specific types of farming will apply to the beef sector only.
4. MODULATION - will be moved to a combined rate (EU and National) of at least 10 per cent by the end of 2007. This will ensure that enhanced resources can be used to invest in the environment and in sustainable development. Our intentions, including the possibility of a higher rate, will be clarified after the outcome of the 2004 Spending Review.

Deputy Rural Development MInister Allan Wilson told the Parliament:

"For the first time in more than a generation we here in Scotland are able to influence the future direction of agricultural policy and tailor the support arrangements to meet our own circumstances and strategic objectives.

"The essence of CAP Reform Agreement is decoupling - the separation between the receipt of subsidy and the need to produce. In Scotland the decision is for full decoupling. This means that we will not be taking up any of the options to retain the existing support schemes.

"Full decoupling will allow producers to make decisions in response to the market and not in response to subsidy scheme rules or incentives. The introduction of a single farm payment will also reduce the form-filling and bureaucracy associated with the existing six main current schemes.

"The single farm payment will be based on subsidy recipients during 2000 to 2002 - the so called 'historic' basis. This provides vital stability for farmers to adapt to the major changes which full decoupling will bring.

"Payments will be conditional on receipts adhering to environmental standards and sustainable farming practices including the requirement to maintain land in good agricultural and environmental condition.

"The increase in modulation in 2007, subject to decisions on match funding, represents more than a doubling of the modulation funds currently available."

Further industry consultation based on suggestions for a variety of measures and priorities for rural development spending and the use of additional modulation monies will take place quickly with key stakeholders. This stakeholder engagement will also develop work already undertaken on land management contracts.

The CAP Agreement of June 2003 provided flexibility for member states to devise policy specific to their needs.

The national envelope allows payments to be top sliced and used for specific types of farming important to the environment or for improving the quality and marketing of agricultural products and will be used in the beef sector only. Further industry discussions will take place before this provision in finalised.

National modulation allows Executive and EU match-funded resources to be used to invest in environmental and sustainable development schemes. This will ensure Scotland builds an environmentally and financially sustainable farming industry which contributes to the wider rural economy.

It is intended to move to a combined modulation rate of at least 10 per cent by 2007. This figure includes both EU compulsory modulation, which will reach five per cent by 2007, and additional national modulation.