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4. Rural development
Goal
A Forward Strategy for Scottish Agriculture stressed the need to treat agriculture as a part of wider rural development. The increasing importance of this is recognised in the new EU Rural Development Regulation and will be reflected in the forthcoming Scottish Rural Development Strategy and Plan. Scotland's farming industry should be a major driver in sustaining rural development, helping rural communities prosper and contributing to the growth of the rural economy.
Our second goal, therefore, is that:
Scottish agriculture should contribute fully towards vibrant rural communities and stronger rural economies through sustainable diversification and continued engagement with the broad spectrum of local communities.
Progress
As a result of action identified in A Forward Strategy for Scottish Agriculture, land use planning guidelines now underline the importance of helping farm businesses to adapt and diversify. There is a 50% mandatory rate relief scheme for agricultural land and buildings used for non-agricultural purposes and agricultural exemption from non-domestic rates has been extended to certain farm buildings used for machinery rings and share farming enterprises.
In addition, over 2,000 farmers and crofters have been awarded some £30 million under the Agricultural Business Development Scheme (Highlands and Islands) and Farm Business Development Scheme (Lowland Scotland). Business advice linkages have been formed with the Enterprise Networks and Business Gateways.
The action plan for promoting and developing the use of biomass technologies, published by the Forum for Renewable Energy Development in Scotland ( FREDS), is being implemented. Good progress has been made in wind power development. By-products from the agriculture and food industries are being used to create bio-diesel. Pilot projects, addressing key areas of A Forward Strategy for Scottish Agriculture, include Farm Venture Groups, Rural Leadership and Planning to Succeed (the Scottish Enterprise funded initiative to help develop business skills in young farmers). While this activity has been useful, we need to strengthen further the links between farm businesses and wider rural development to achieve our goal.
Maintaining momentum
CAP reform has decoupled direct support, given farmers "freedom to farm" and an incentive to become more market-orientated. But they will often need a catalyst for change. Axis 1 of the new EU Rural Development Regulation can be such a catalyst since it focuses on improving the competitiveness of agriculture. We need to take full advantage of this. The development of farm businesses, including successful diversification, will depend upon identifying and exploiting business and market opportunities. As well as maximising returns from traditional farming, opportunities for generating income include processing farm produce, retailing (for example through farm shops, farmers' markets and mail order) and entry into markets such as tourism, commercial recreation, forestry and energy crops - all key priority industries for Scotland.
The choice of diversification venture depends on local circumstances. While there is good general information available (for example in the Executive's strategies for tourism and forestry), specific business information is needed to help farmers understand these opportunities, explore various options and make informed business decisions. The Less Favoured Area support scheme also plays a critical part in maintaining farming's role in many rural communities. The Monitor Farm approach should be adopted as a means of helping to promote ideas and develop thinking about diversification.
Successful diversification also depends upon people having the necessary skills so that they can assess opportunities and risk, and develop and implement business plans. Those running farm businesses also need a better understanding of risk and risk management so that they can select the right mix of enterprises and a management strategy which balances their risk tolerance with the need for a sustainable return. Entrepreneurship and innovation are vital ingredients for successful diversification so it is important to retain talented young people within the farming community and to attract enterprising new entrants. Diversification will not be for everyone, but owners can use appropriate mechanisms (such as leases or less formal agreements) that allow others to make use of farm assets that are ripe for diversification projects. At the same time, there is a need to help farmers address the question of farm succession, especially now that decoupling under CAP reform has created new opportunities for tackling some of the difficult financial issues that arise in this context.
Farm businesses contribute to rural development and rural communities by generating economic activity and providing facilities which help to maintain and enhance the social fabric. In parts of rural Scotland there are also significant interactions with the urban economy, with people who work in cities living in, visiting, or retiring to the countryside - and spending money there. Access for recreation is often a key element here. Such linkages are frequently reflected in the work of community forums such as community planning partnerships and local rural partnerships (including LEADER+ local action groups). There is a need to ensure that the agricultural community is represented in such discussions so that the potential contribution of farm businesses to rural development is recognised in developing local/regional strategies and measures for stimulating innovative action. Likewise, local communities need to engage in farm development ideas.
Actions
- Commission case studies of diversification projects to identify critical success factors; publicise success stories; highlight available funding sources and promote the benefits of co-operation in diversification.
- Promote research into the commercial viability of alternative crops and biomass.
- Make business information on emerging and other opportunities (including energy crops/biomass, tourism, commercial recreation and forestry - at local, regional and national level) widely available to farm businesses.
- Use the Business Advice/Whole Farm Review package to identify and develop diversification opportunities (ensuring advisers have access to information on the full range of opportunities) and to identify related training needs.
- Expand the geographical spread of the Scottish Enterprise Planning to Succeed programme to deliver business skills training for young farmers' groups across Scotland, and exploit other opportunities to ensure support for new entrants.
- Develop and publish guidance on farm succession planning, focusing on the need to address legal, financial, management and training issues.
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