The Scottish Government

« Previous | Contents | Next »

Listen

3 A MOVE TOWARDS FLAT-RATE PAYMENTS

3.1 The European Commission ( EC) has said that regional flat-rate payments provide more equitable support to farmers than the SFP which is based on the historic reference period 2002 to 2003. The variation in the quality of agricultural land in Scotland means that a simple flat-rate, where the value of the SFP is divided by the area of land, would be hard to justify; the best arable land and poor quality grazing land would receive the same payment. Differentiating payments according to land quality could help overcome this problem and the Macaulay Land Use Research Institute ( MLURI) land capability classifications for agriculture could be used as a starting point.

3.2 The consultation asked respondents the following questions:

"Assuming Pillar 1 type support remains, do you agree that there should be a move away from the historic model of Single Farm Payments ( SFP) towards flat-rate payments?

If Yes, what are your views on

(i) the rationale for flat-rate payments,

(ii) the basis for determining payments, and

(iii) the time-scale for change?"

3.3 Sixteen respondents agreed that there should be a move away from the historic model of SFP, with a further 15 calling the historic model irrelevant or hard to justify. Only one farming organisation answered no, that there should not be a move away from the historic model.

3.4 In total 35 out of the 43 respondents who replied to this question specifically commented against a simple flat-rate payment system.

3.5 One local authority reported that in their island area payments are £130, with smaller units getting even more, as opposed to the £70 per hectare which would result from a simple flat-rate calculation; this respondent said this would mean that many would go out of production. Another commented "Moving to a flat-rate payment system would be a disaster for agriculture in the south of Scotland".

Redistribution

3.6 Ten respondents noted that a flat-rate area payment would lead to a significant redistribution of funds across Scotland with funds moving to the North West, a farming organisation said this would be unacceptable to the North East and an environment stakeholder said that this would have serious impacts particularly on livestock farming, along with downstream impacts in the North East and South West, unless measures are taken to mitigate against this.

3.7 A special interest stakeholder pointed out that redistribution would "bear little relation to the capacity of that land to contribute to food supplies" while a wider interest stakeholder said funds would move away from "areas that have critical mass in food production, areas where farmers are in full time farming and depend totally on agriculture for income and areas where real and opportunity costs of providing environmental benefits are greater". They pointed out that introducing this uncertainty could undermine efforts towards growth in some regions' gross value added ( GVA) and could have a serious impact on lowland economies which depend on farming.

3.8 The need to guard against large estates, not previously eligible, receiving large amounts of funding was mentioned by two environment stakeholders and a special interest organisation. The stakeholders said "there are legitimate concerns that a flat-rate could lead to large estates, previously ineligible for payments and not engaged in active agricultural production receiving large amounts of funding". An agribusiness organisation wanted to see consideration given regarding how best to balance support between small producers and large concerns.

Payments

3.9 There were various suggestions, from amongst 38 respondents, for the basis of payments and these included:

• payments only for land that is actively farmed or for a minimum level of agricultural activity (10 respondents);
• payments must be linked to agricultural potential (eight respondents);
• payments must be linked to cross-compliance measures (six respondents including three environment stakeholders);
• payments must be linked to the provision, cost and value of public goods (six respondents including farming and two environment stakeholders);
• need for clear definitions and a justifiable basis for payments (four respondents);
• need to allow access to support for excluded businesses - deer farmers (three respondents) and nurseries (1 respondent). One farming stakeholder did not think that SFP should be paid to those farming feral animals (including deer) as this could lead to large estates becoming eligible for support even though they are not in active agricultural production;
• payments should be based on a hybrid of historic and area-based (three respondents);
• payments should only be made to genuine, active farmers (two respondents);
• payments should be linked to Pillar 1 objectives (1 respondent) and these objectives should be clarified (1 respondent);
• clarification of entitlement ownership, especially in relation to tenant farmers (two respondents), keep entitlements with the land (two respondents).

3.10 Three environment respondents felt there was a case for making payments to all farmers "for a basic level of active environmental stewardship".

3.11 One research/ education organisation suggested exploring other options for managing Pillar 1 post-2014 and suggested a bond scheme.

MLURI land capability classifications

3.12 Twenty respondents discussed the MLURI land capability classifications. Eight respondents said that the Macaulay classifications should be used as a starting point or foundation, with a local authority and a wider interest organisation suggesting that HNV maps be used alongside. An individual felt Macaulay should be referred to but suggested that Scottish Government records of agricultural activity may be more meaningful. An environment stakeholder agreed that initial payments could be based on land capability but felt that these should move towards a classification based on land characteristics.

3.13 In relation to regional flat-rate payments, the consultation document stated that since regions are likely to have to cover at least three million hectares, there would probably be only two to three regions in Scotland. Seven respondents said they felt this number would not be sufficient; a farming stakeholder said that three regionally based payment levels would not adequately reflect the variation across Scotland, although they felt it could be a starting point.

3.14 The MLURI in its response:

"questioned the requirement that 'regions are likely to have to cover at least 3 million hectares'. Scotland's agricultural potential is highly skewed towards extensive management systems based on rough grazing. LCA [Land Capability for Agriculture] Classes 5 and 6 (land suited only to grassland production and rough grazing with the latter dominant) combined cover over 3 million hectares. However classes 1-4 (land suited to varying degrees of arable cropping), effectively land that has been cultivated, cover only approximately 25% of Scotland's agricultural land, considerably less than 3 million hectares."

3.15 An individual suggested there should be four or five levels due to the wide range of land quality and agricultural activity in Scotland while a farming organisation suggested there should be seven levels.

3.16 An environment stakeholder felt that work would be needed to ensure that the proposed regions will be able to meet the aims of sustainable farming and environmental benefits.

3.17 A special interest organisation wanted to see weighting applied to payments for those farming difficult terrain or in remote areas, as in the LFASS, this respondent wanted to see a basic payment along with " additional payments where more significant landscape and environmental features are being protected".

Timescales

3.18 Twenty-seven respondents suggested a timescale for phasing in changes and the main suggestions included:

• general need to phase in changes (six respondents);
• move to flat-rate before 2013 to enable a transition period (four respondents);
• phase in gradually with a target of 50% by 2013 (two respondents) or by 2012 (1 respondent);
• phase in between 2014 and 2017 (two respondents);
• pre 2014 evaluate and develop system (two respondents);
• issue is not how long it takes to phase in but what the economic impact is (two respondents).

« Previous | Contents | Next »