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RESTRUCTURING OF AGRICULTURAL BUSINESSES (Rural Priorities)
Article 20(b)(i)
Measure code (121)
Rationale for Intervention
There are a number of major factors which have discouraged primary producers in the agriculture sector from making significant investment in recent years, including CAP reform and Foot and Mouth Disease. By sharing the cost of the capital investments, targeted at business restructuring, we aim to pump-prime businesses to become more market orientated, improve their income stream from their agricultural activities and also to encourage wider benefits such as improvements in animal health and welfare, environmental management and health and safety for those involved with the agricultural business.
Expansion, refocusing, changing sector, improving efficiency and diversification within agriculture are all ways in which agricultural businesses can restructure, improve their competitiveness and financial performance.
Objectives
To encourage land managers to invest in their existing businesses, in order to improve viability, increase market orientation and/or to achieve other benefits such as improved animal health and welfare or reduced impact on the historic or natural environment.
The measure will contribute to many of the strategic aims of the Scottish Executive and its partners incorporated in the recently refreshed 'Forward Strategy for Scottish Agriculture', including:
- Complementary or supplementary sources of income to the farm business;
- Sustainable alternative land use;
- Sharing resources and experience to control costs and increase incomes;
- Added benefits to the wider rural/local community; and
- Introduction of novel and/or niche products.
Scope and actions
Under this measure, eligible land managers will be provided with a variable percentage of eligible costs of restructuring and/or diversification of a land-based business.
Eligible costs include providing or upgrading buildings and associated structures, necessary equipment, infrastructure or information technology as well as associated fees, where it can be shown that these investments:
- are an essential part of the restructuring or re-orientation of the business; and
- this restructuring will result in improvements in business viability, environmental management, health and safety and/or animal health and welfare.
Support will be available for collaborative projects between agricultural holdings as well as for individual holdings.
Restructuring is taken to mean changes to the scale or nature of the agricultural business as a whole or of specified elements of the overall business and/or significant changes to existing business practices.
Diversification refers to undertaking alternative forms of agricultural production. Consideration for funding will be dependent on demonstration of a market opportunity and demand for the service, product or facility to be provided.
Given the range of potential enterprises, it is not possible to provide an exhaustive list of the types of enterprises considered as alternative agriculture, but it may include:
- Soft fruit
- Vegetables
- Mushrooms
- Deer
- Fibre Goats/Sheep
- Rabbits
- Wild flower seed production and use
- Worms
- Herbs
- Horticulture
- Wild Boar
- Bees/honey
- Snails
- Free range poultry or livestock
- Biomass
Potential beneficiaries will have to produce evidence to demonstrate that an overview has been taken of the operation of the business, its strengths and weaknesses and options for change and to show that the proposed investments are part of a longer term process of improving viability and competitiveness.
Definition of beneficiaries
Agricultural businesses
Description of performance requirements and targets
As a minimum, all potential beneficiaries will be expected to achieve compliance with existing Community standards applicable to any new type of activity to be introduced.
Potential beneficiaries will identify the expected improvements in performance of the business, as a result of the planned investment, against the criteria identified above i.e. business viability, animal health and welfare, environmental management or health and safety. These expected benefits will be used as part of the competitive process for assessing applications. They will also form the basis of future monitoring of successful projects.
Type of investments
The capital investments eligible for funding will include tangible or intangible costs related to:
- new or upgraded buildings or structures;
- the development or upgrading of services or other infrastructural elements;
- new machinery or equipment for improving efficiency or adding value to products or processes;
- the acquisition or development of information technology to assist restructuring; and
- fees associated with the acquisition of planning consent or other statutory approvals.
Designation of newly introduced Community Standards
None.
Type of aid
Capital grant.
Aid intensity
Variable, dependent on requirement to allow the project to go ahead, with ceilings of 40% of eligible costs (non Less Favoured Areas) and 50% (Less Favoured Areas) with a 10% premium on the ceilings for investments undertaken by young farmers.
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