Richard Lochhead MSP
Cabinet Secretary for Rural Affairsand Environment
Remarks at QMS breakfast event
Royal Highland Show
Thursday, June 21, 2012
It’s a great pleasure to be at the Royal Highland Show, as your Cabinet Secretary, as Minister for Agriculture, the Countryside, and Food, Minister for bacon rolls, and kicking things off once again at my 6th QMS breakfast, the best possible way to this major Scottish event.
Earlier this year, it was voted the ‘Best Event in Scotland’ – the Show, not the QMS breakfast, the but is the best breakfast in Scotland!
It’s easy to see why. It’s our chance to come together, to celebrate our farming industry, our food and drink, and our rural way of life.
I think everyone here now will recognise that the recent success of the Show owes a lot to David Dunsmuir, who is standing down as show manager after this year.
The show has gone from strength to strength under his stewardship in the last fifteen years. I wish him well for the future.
And just as this show continue to go from strength to strength, so does our red meat sector.
A sector’s whose produce represents quality, provenance, the skills of the whole supply chain, and that represents Scotland.
And not just in our home market, but across these islands, Europe and throughout the world.
As I have certainly found out this year, like when I supported the industry in Dubai for Gulfoods, and Cologne for the Anuga food fair.
My aim here is not to make you jealous of these exhausting and arduous Ministerial trips. Instead I want to tell you all what I saw in everywhere I went. What I saw was a massive demand for Scottish food from around the world.
The chefs of the seven-star hotels of Dubai were literally begging me for Scotch Beef to be given the export green light – something which has now happened.
That worldwide demand for our food and drink has seen exports grow more than sixty per cent since 2007, smashing our targets for 2017 five years early.
You, our red meat sector, are in a fantastic position to capitalise on this global interest in our products.
Value added by QMS
Our beef and lamb exports, supported by the QMS export strategy and by Scottish Government funding, are worth over £100 million a year.
And QMS are capitalising on this – using Government support to put in export agents in new European markets such as Germany.
But I do appreciate that as we focus on European markets, at the same we are all acutely aware of the Eurozone crisis, which, along with the future of CAP, has raised some uncertainty within the industry.
And that’s why I asked QMS for a report on the state of the beef sector, at this challenging time.
I don’t want to play down the challenges the sector’s facing. But I deliberately asked QMS to look at opportunities as well. Because there’s a positive mood in the red meat sector. I saw it at the round table discussion I held with beef sector stakeholders last week. And I saw it at Scotsheep, which was a great event!
Demand and market opportunities
You’re right to feel positive. Prices have reached unprecedented levels in the last couple of years.
Lamb prices may have eased back recently, but all the forecasts say that prices will remain firm for the foreseeable future.
Demand for red meat is on the up, and is predicted to grow further in the years ahead. So there are great opportunities out there.
At last week’s beef round table I was assured by some that the growing market could in time easily soak up to twenty per cent more cattle.
So, QMS has a big role to play, and I’m fully behind what they are trying to achieve.
There’s a role as well for farmers’ organisations, like the SBCA and the NBA – who I’m visiting tomorrow, to help celebrate their coming together as a single beef sector body.
Production and challenges
In fact, the whole supply chain needs to be ready to take full advantage of these opportunities. With Scotland Food and Drink we are working hard to open up new markets.
But it’s no good opening new markets if we don’t have the additional product available to make a positive and lasting impact.
Scotland’s farmers are the foundations of our red meat industry. Without you continuing to produce your livestock, preferably in a clean, efficient and profitable way, then that industry will crumble.
Producers are naturally attracted by the short term opportunities, but I urge you to position yourselves for the long term opportunities as well.
Of course, to be profitable, there are two important aspects: the market, and a helpful Common Agricultural Policy. As I have outlined, the market is strong and will stay strong.
Role of CAP
And I see our role in government being to deliver a policy framework that will help the industry, not hinder it. As you all know, we’re at a pivotal point in negotiations on the new CAP. You’re all well aware of the key issues on the table.
I support the principle of greening the CAP, an issue that dominated much of the discussion so far.
And as Jim McLaren quite rightly never tires of telling us, our biodiversity is enhanced by livestock, a point also made by the RSPB and other organisations.
So we are already someway along the road but we must have a greening regime that’s sensible, fair, and gives credit where it’s due.
We must be given the policy tools to ensure payments only go to farmers that produce - active farmers! – an area where Scottish lobbying has paid off.
And we must have the option to use up to ten per cent coupled support at least, if we so choose.
Remember Brian Pack said Scotland needs the option to go to ten or even fifteen per cent. I agree. And we must have a new CAP that caters for new entrants fairly from day one.
I’m pleased that Commission officials are visiting Scotland next week, with Alyn Smith MEP, to talk with Scottish new entrants.
In fact, in the election last year, we gave a commitment to set up a New Entrant Panel, to advise government on these issues. I’m pleased to announce that the Panel will be launched at a New Entrant summit on 12 September.
Across all parts of the CAP, we’re continuing our intensive stakeholder engagement. For example, we now have eight working groups up and running, to look at what should be in the next SRDP.
Today we’re publishing a pocket-sized handy guide on the CAP negotiations so far.
And this afternoon, in the Government pavilion, two of our officials are holding a CAP surgery, where you can drop in and ask questions about the reforms.
Differences with the UK
Of course, we’re also working closely with Jim Paice and the UK government team. In many areas we’re in agreement – such as on simplification, and the need for penalties to be proportionate. In other areas, we see things differently but there’s scope to find solutions.
However, there are some fundamental points on which I’m deeply concerned by the UK government’s position. One is the future of Direct Payments the position in Scotland is clear. I cannot accept a vision of the future that removes Pillar 1 support for Scottish farming at some arbitrary time in the future.
Whatever might be said about timescales, for me this is a fundamental point of principle. And it’s linked to the other big issue: the CAP budget and Scotland’s share of it. We’re all well aware of the pressure on public spending across Europe.
But the bottom line is that Scotland has a pitiful share of the CAP budget, in both Pillars. Previous UK governments have let us down I hope that this government will work with us to ensure that doesn’t happen again. We must get a better deal.
The UK government accepts that Member States like Latvia deserve a higher share of the budget. Scotland’s situation is just as bad. We have the fourth lowest Pillar 1 and the lowest Pillar 2 payments per hectare in the whole of Europe. And these payments are vital to farmers, who face rising input costs.
Statistics from last year show Scotland’s farmers delivered a fantastic increase in output. But net income only crept up, because the cost of inputs rose by fifteen per cent - which is more than fifty per cent higher than the average rise across the UK.
So it’s incumbent on UK Ministers to help us negotiate a better deal for Scotland. I don’t want to see members using the Eurozone crisis to cut CAP budgets.
But I share the worries expressed by farming stakeholders about the UK position. We know Defra wants to focus on Pillar 2 at the expense of Pillar 1. A smaller budget with a smaller splice of what’s left going to Pillar 1 - a double whammy Scotland must avoid.
That’s not acceptable to us. It’s no substitute for getting a fair budget deal in the first place. I call on Jim Paice and Caroline Spelman not to let us down.
So as a Scottish Government, we’ll continue to do all in our power, working with the Commission, with the European Parliament, and with other Member States.
And we’re always keen to work with the industry, and to pick up on positive ideas: Like developing the evidence base on which to seek changes on sheep EID. Like working up our agri-renewables strategy. And like setting up a supermarket adjudicator, and a dairy sector code of practice. We’ve seen progress on both those fronts, at last, although not enough yet.
But with this collaborative spirit, between industry and government, Scotland’s food and drink sector is going from strength to strength. That success is something to be hugely proud of.
We can be confident of our nation, as we look outwards to Europe and the world. And the world is interested in what is happening in Scotland and in our Food and Drink sector.
It’s not by accident that the World Potato Congress came to Scotland.
It’s not by accident that the Charolais cattle world congress is here now, and the European grain trade congress is coming in the autumn. The world is looking at us.
And in the coming years, Scotland will be at the centre of the world stage – the Commonwealth Games, Ryder Cup, next Year of Homecoming and of course the eyes of the world of the world will be on Scotland in Autumn 2014 as we decide whether we want a new and I believe better direction for our country and your industry
What an exciting time this is - for our nation, and for your sector.
So as we look forward to the next four days, we can be more confident and positive than ever.
Thank you to QMS for kicking it off in fine style. I wish you all a fantastic Show.