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PART 2: STRATEGIC PRIORITIES FOR RURAL SCOTLAND

14. The Rural Development Strategy for Scotland will be developed and implemented in the wider context of policy set by the Scottish Executive. The Executive recognises that meeting the needs of rural areas requires concerted action from a wide range of agencies, stakeholders and practitioners. Strategic documents on economic development, the natural heritage and the delivery of public services, and many other areas, are all, therefore, relevant to the future of Scotland's rural communities and provide the context for developing this rural strategy.

15. The Partnership Agreement published in 2003 provides the most recent overall framework for policy development by the Scottish Executive. It touches all areas of life in Scotland and emphasises the importance of rural areas and communities. It commits the Executive to maintaining strong, prosperous and growing communities in rural Scotland and to working to ensure that the rural economy continues to provide jobs and opportunities. It identifies the key priorities of economic development, sustainable development and the delivery of public services, all of which are of fundamental importance to rural Scotland.

16. The current approach to rural policies in Scotland is set out in Rural Scotland - A New Approach which identifies four high-level outcomes to guide rural policy development and delivery across the Scottish Executive. Rural Scotland should:

i. be integral to Scotland's success, dynamic in harnessing its traditional strengths, and with an appetite for change;

ii. provide opportunity for young people - so that they do not have to leave rural areas to progress;

iii. offer a high quality of life to all its citizens, with access to quality services; and,

iv. sustain and make the most of its natural and cultural heritage.

It also emphasises the contribution of many policy areas to the achievement of these outcomes and provides a framework to ensure that the needs of rural areas are properly reflected in policy development. The general framework established in the document is effective and Ministers wish it to continue. However, it will be refreshed this year to reflect developments since its publication in 2000 and to ensure that it continues to provide the basis for the future development of Scotland's rural areas.

17. Sustainable development is fundamental to the Executive's objectives for rural Scotland. Choosing Our Future - Scotland's Sustainable Development Strategy, published in 2005, sets out a vision for Scotland based on achieving a strong economy while maintaining our rich natural resources and sustaining thriving communities.

18. For management reasons, the Executive's Environment and Rural Affairs Department has been presenting its activities under a strategic set of outcomes headings. These make clear the need to have competitive agriculture, food and forestry sectors that provide quality products; to sustain and make the most of our natural and cultural heritage; to maintain sustainable communities; to improve access to high-quality public services; and to support economic development that does not undermine environmental goals.

19 . Scotland's major land uses are central to the Executive's vision for rural development . A Forward Strategy for Scottish Agriculture (currently being updated) sets out objectives for a prosperous farming industry based on strong environmental performance, high animal health and welfare standards (as set out in the Animal Health and Welfare Strategy for Great Britain), and an integral role in rural development. In the Highlands and Islands, crofting activities occupy a pivotal role in the agricultural, social and cultural heritage. Forests for Scotland - The Scottish Forest Strategy (currently under review) emphasises the role of woodlands in the economy, the natural environment, public enjoyment and local communities. The Biodiversity Strategy for Scotland maps a 25-year framework of action to conserve and enhance biodiversity for the health and well-being of people in Scotland, including an Implementation Plan for rural biodiversity.

20. Promoting a strong and sustainable economy is critical. Smart Successful Scotland provides a strategic direction for the Enterprise Network in Scotland based on business growth and improving skills. It is underpinned by the Framework for Economic Development in Scotland which provides our overarching economic development strategy in which economic development can complement environmental stewardship.

21. Rural Scotland is also facing new challenges in achieving a sustainable future. The Scottish Climate Change Programme will be published in early 2006. The Scottish Executive is committed to ensuring that agriculture and forestry play a key role in mitigating climate change and that 'food miles' are reduced through a greater proportion of Scottish products being processed and marketed locally. Other environmental challenges, including minimising diffuse pollution, were highlighted in the Custodians of Change report in 2002. The EU Water Framework Directive will place considerable pressure on the land-use sector to meet water quality objectives.

Themes for the Strategy

22. EU guidelines require the National Strategic Plan to set out an approach to each Axis. Building on the strategic priorities reviewed in paragraphs 14 to 21, we propose that the Rural Development Strategy for Scotland be structured around three themes that reflect the EU axes but which address priorities and challenges facing rural Scotland. We propose that these themes be linked to a series of outcomes for rural areas, and that a series of priority actions be identified to achieve these outcomes. This is set out below.

23. The three themes that we propose for the strategy are:

Theme 1 Underpinning performance and quality in the agriculture, food processing and forestry sectors.

Theme 2 Enhancing rural landscapes and the natural heritage.

Theme 3 Promoting a more diverse rural economy and thriving rural communities.

24. We propose that the following cross-cutting principles guide our approach to the strategy and the Programme itself:

• an integrated approach to policy delivery that combines economic, social and environmental actions;
• flexibility to meet diversity and local distinctiveness across rural Scotland; and,
• promotion of sustainability, resilience and vigour in the rural economy, communities and natural heritage.

Theme 1 Underpinning performance and quality in the agriculture, food processing and forestry sectors.

Challenges and opportunities

25. Farming and forestry retain a significant role in the rural economy of Scotland. Both industries face major challenges in maintaining profitability in highly competitive international markets while meeting growing expectations by society about the role of land-use in the countryside. The food and drink industry is one of Scotland's strengths and has internationally renowned products. A major challenge is to develop further opportunities for the processing and marketing of Scottish products. Producers and consumers have a key role in ensuring that land-based products and services respect the natural and cultural environment. The high quality of Scotland's natural heritage provides proven market opportunities for distinctive, quality products. The health and welfare of Scottish livestock are also key factors in such success. Entrepreneurship, co-operation and innovation will be critical in securing prosperous farming, food and forestry industries that embrace market opportunities.

26. The EU Strategic Guidelines for Rural Development state that the resources devoted to Axis 1 should contribute to the following priority areas; "knowledge transfer, modernisation, innovation and quality in the food chain, and priority sectors for investment in physical and human capital"

Strategic outcomes

27. We propose that Actions under Theme 1 contribute to the following outcomes:

• agriculture, forestry and agrifood sectors that are competitive in international markets and that meet the needs of rural Scotland;
• exploitation of market opportunities and provision of quality products from sustainable, traceable sources;
• an integrated supply chain that adds maximum value and quality to Scottish products;
• a land-use sector that is environmentally sensitive and that capitalises on local distinctiveness and "sense of place", by developing new markets for both food and non-food products and services;
• effective product development and promotion through quality branding and assurance; and,
• a skilled and confident workforce that embraces new opportunities.

Our priorities are to:

a. Enhance the competitive performance of producers by

• supporting adaptation to the changing regime of support for the land-based sector and to more competition in the market place;
• providing investment support, advice and training to businesses to help them meet the challenges facing this sector in a sustainable way;
• supporting farmer groups, co-operation and knowledge sharing, including the use of monitor farms;
• encouraging proactive animal health and welfare measures to reduce production costs; and,
• supporting innovation and competitiveness in forestry, including co-operation, knowledge sharing and joint marketing.

b. Develop market focus by

• enabling businesses to respond effectively to changing demands;
• Enhancing the Scottish reputation for quality food, drink and rural products, including the development of local/niche brands;
• ensuring that the agri-food chain focuses on meeting the needs of the market for quality products;
• developing product quality based on the traditional strengths of Scottish produce; and,
• encouraging and supporting the development of biomass and markets for energy crops.

c. Add value and improve supply chain linkages by

• facilitating collaboration and integration across the supply chain to enable the agri-food sector to develop efficiently and effectively; and,
• increasing the proportion of Scottish products that are processed in Scotland.

d. Improve the performance of processors by

• investing in the development of an efficient, innovative processing sector that is able to adapt quickly and provide quality Scottish-grown food and forestry products into the market place.

e. Promote an environmentally sustainable industry by

• targeting capital investment to mitigate farm pollution and secure environmental improvement;
• developing products that reflect the high quality of the natural and cultural heritage; and,
• supporting the production of feedstock for renewable energy production.

Balance between priorities

28. We propose that the key priority under this theme is to increase the financial viability and market focus of the primary land-use sectors in Scotland. We believe that this will be achieved most effectively through support for investment and enhancement of product quality, promotion of collaborative supply chains and knowledge transfer.

Theme 2 Enhancing rural landscapes and the natural heritage

Challenges and Opportunities

29. There are major challenges to meet over the coming years. We will continue to develop and integrate approaches to land management that maintain and enhance the quality of our natural heritage and that meet animal health and welfare standards. We must meet international commitments including halting biodiversity loss as part of the EU Habitats Directive, implementing the EU Water Framework Directive and contributing to UK commitments under the Kyoto climate change agreement (and associated commitments under the Scottish Climate Change Programme).

30. Scotland's natural resources are key assets. They provide an infrastructure for rural development that we must sustain. Scotland's biodiversity and landscape are main drivers behind our successful and growing tourism industry.

Strategic Outcomes

31. We propose that actions under Theme 2 contribute to the following outcomes:

• Scotland's natural resources (including farmland and forestry) conserved or enhanced for the long term, with biodiversity as an integral component of actions across rural Scotland;
• well maintained landscapes benefiting people and business;
• land management practices that protect and enhance water and soil quality;
• well treated and healthy farm animals; and,
• climate change mitigation and protection of communities from other environmental hazards.

32. The EU Strategic Guidelines for Rural Development state that the resources devoted to Axis 2 should contribute to the following priority areas; biodiversity, preservation and development of high nature value farming and forestry systems and traditional agricultural landscapes; water; and climate change.

Our priorities are to:

a. Maintain traditional agricultural landscapes in less favoured areas by

• ensuring continued use of land for agriculture and crofting;
• monitoring and promoting sustainable farming systems; and,
• encouraging livestock and cultivation practices that conserve soils as landscape and conservation assets, and that encourage high standards in animal health and welfare.

b. Protect and enhance wildlife/biodiversity by

• supporting and developing high nature value farming, crofting and forestry, and other environmentally friendly land-use practices such as organic farming;
• achieving and maintaining favourable condition of designated sites ( SSSIs, Natura, Ramsar) and undertaking targeted actions elsewhere (particularly Biodiversity Action Plan priorities);
• improving habitat networks among designated sites and in the wider countryside; and,
• addressing threats to biodiversity from climate change and invasive non-native species.

c. Promote sustainable forest management by

• enhancing management of woodlands for biodiversity, landscape and other environmental objectives in accordance with the UK Forestry Standard; and,
• supporting the multifunctional role of forestry through its integration with other land-uses.

d. Reduce water pollution, support good quality water and achieve effective management of water resources in and around Scotland by

• reducing diffuse pollution from agriculture and forestry, and achieving and maintaining water quality in accordance with the Water Framework Directive, Bathing Waters Directive and Nitrates Directive; and,
• using natural systems and appropriate land management practices (soft engineering techniques) as means of achieving sustainable flood management.

e. Tackling climate change and meeting relevant international and UK commitments on air quality by

• reducing gaseous emissions from the management and use of rural land in ways which have an impact on climate change and air quality;
• enhancing the significant role played by carbon sinks in Scotland ( e.g. peat bogs and woodland planting);
• conserving soil organic matter and encouraging targeted fertiliser applications to reduce emissions to air in addition to climate change mitigation; and,
• adapting to the impacts of climate change, considering the effects on flood risk and biodiversity in particular.

f. Safeguard and enhance landscapes and the historic environment by

• conserving and enhancing the distinct identity, the diverse character and special qualities of Scotland's landscapes; and,

• safeguarding and enhancing the distinct cultural and historic identity of each area, as represented by its significant sites, ancient woodlands, monuments and rural buildings ("heritage assets").

Balance between priorities

33. The essence of Theme 2 is to support land management that maintains the distinctive natural heritage of Scotland and that achieves integration between land-uses. Specific priorities will vary in different areas but will be weighted towards meeting international commitments on biodiversity and water quality and on maintaining and enhancing attractive rural landscapes that benefit the tourism industry. In many instances, the priorities set out above will complement each other (rather than involving trade-offs) and so can be delivered jointly.

Theme 3 Promoting a more diverse rural economy and thriving rural communities

Challenges and Opportunities

34. Creating the right conditions for rural businesses and communities to flourish is a major challenge. Accessible areas benefit from economic opportunities provided by their proximity to Scotland's towns and cities. Remote areas - especially in the uplands and islands - face difficulties in stimulating locally-driven business activity, attracting inward investment and supplying distant markets. Many areas are sparsely populated and do not enjoy levels of access to service provision found elsewhere in Scotland. Major tasks exist in building capacity in local communities to remove barriers to development and in adding value locally. At the same time, the high quality of the landscapes and natural resources across rural Scotland offer significant opportunities in the food and drink and tourism sector and provide attractive environments in which to live and work. Recent land reform legislation has increased the potential for local communities to engage in development opportunities and develop effective approaches to locally based activity.

Strategic Outcomes

35. We propose that actions under Theme 3 contribute to the following outcomes:

• a progressive rural economy characterised by a culture of learning and skills to encourage entrepreneurship;
• rural enterprise benefiting from diversification of agriculture and forestry, and capitalising on local assets;
• businesses deriving added value from the distinctive natural and cultural resources of rural Scotland, through local markets and further afield;
• access to outdoor recreation for local populations and those living in towns and cities;
• tourism businesses profiting from well maintained landscapes and Scottish food and woodland products; and,
• thriving rural communities underpinned by a rich and secure cultural heritage.

36. The EU Strategic Guidelines for Rural Development state that the resources devoted to Axis 3 should contribute to the overarching priority of creating employment opportunities and should in particular be used to promote; capacity building, skills acquisition, and organisation for local strategy development.

Our priorities are to:

a. Achieve a thriving and growing business community by

• increasing collaboration and integration between land-based and other businesses;
• supporting innovative diversification of land-based businesses;
• adding value to rural goods and services, including those in the primary (agriculture, forestry), manufacturing and processing, and tourism sectors; and,
• supporting activities that strengthen the value and duration of the tourism season, including support for craft activities.

b. Promote public access and understanding of the countryside by

• increasing people's quality of life through participation in and enjoyment of access to the countryside;
• encouraging land managers to deliver, individually and collectively, outdoor access and community involvement opportunities integrated with their other land management operations;
• raising awareness, respect and understanding of our countryside, food, farming and forestry through "first hand" experience; and,
• using environmental heritage assets and the historic environment sustainably to promote appropriate economic, recreational and educational objectives.

c. Building capacity in rural communities by

• addressing gaps in skills provision and non-mainstream training, complementing the work of local enterprise agencies; and,
• establishing and/or expanding community-led initiatives including building capacity within local groups and structures, including essential skills for group management.

d. Develop the social and environmental performance of rural businesses by

• development and increased local use of renewable energy, e.g. wood fuel;
• resource and waste management improvements;
• more targeted research and development with improved dissemination and transfer of information; and,
• encouraging the development of products and activities that make sustainable use of natural resources, including new energy production methods and using local ecology, habitats, biodiversity and the historic environment as tourism attractions.

e. Supporting rural services and infrastructure by

• improving the physical environment of villages and conserving the rural heritage;
• local scale provision of affordable housing; and,
• developing improvements in storage and distribution to local markets.

Balance between priorities

37. We propose that actions under Theme 3 focus on diversifying the rural economy, adding value locally to the products of land-use and others sectors, and enhancing opportunities for public access and involvement in the countryside. Resources will also be provided for measures to benefit the wider rural economy. Specific types of actions that will be supported include small-scale infrastructure and small/micro-business projects, particularly ventures that build on the assets and primary products ( e.g. agriculture, forestry, food and the natural heritage) of rural Scotland. A further feature of this theme will be the promotion of locally driven projects that build capacity and enhance infrastructure in local communities, using the LEADER approach.

Balance between the themes

38. Each of the themes described above is critical to achieving an integrated approach to development that generates benefits for the rural environment, local communities and the economy. Inter-theme working and implementation of the LEADER approach will be a significant part of the new SRDP. However, we will need to allocate a greater proportion of funding to Theme 2 in order to honour existing commitments and to reflect the critical role of land managers in the quality of our countryside and environment.

39. We propose that approximately equal weight will be attached to Themes 1 and 3. Actions under Theme 1 will tackle important tasks set out for the agriculture, forestry and agrifood sectors, including those identified in their respective strategies. A fundamental objective under Theme 1 will be to enhance farm competitiveness while respecting the use of natural resources. Theme 3 will address broader rural development issues affecting rural communities, and that impinge on the attractiveness of rural environments as places to live and work and the ability of such communities to be dynamic and prosperous.

40. It is important to note that many measures in the Programme will contribute to more than one theme. Therefore, although measures are allocated to a particular theme, they may contribute to objectives across other themes.

The LEADER approach in the new Programme

41. LEADER is a bottom-up, community based approach to rural development that allows local partnerships to identify their needs and channel support for suitable projects proposed in the local area. Innovation, new ideas, co-operation and capacity-building are the central principles behind the LEADER approach, as is improving local governance.

42. LEADER will cease to operate as a separate Structural Fund programme from the beginning of 2007. It will become an integrated component of the new SRDP and the LEADER approach can be applied to any of the three axes of rural development.

43. We propose that a locally driven approach is adopted in which innovation is a fundamental principle in the allocation of LEADER grants. LEADER is a cross-cutting Axis and, therefore, has potential to contribute to outcomes and priorities across the three themes.

44. The LEADER+ programme in 2000-6 is operated through 13 Local Action Group ( LAGs) that covered the large majority but not all of rural Scotland. Bringing it within the remit of the RDR points to the need to engage communities in all rural Scotland. The coverage of LEADER should be extended in the next Programme. The implementation of LEADER will be foremost about building capacity, quality local products and administrative effectiveness in rural development.

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