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6 DECOUPLING

6.1 Although Scotland fully decoupled support payments from production in 2003, other Member States retained a degree of coupling in some sectors. The principle of decoupling, aimed at encouraging greater market orientation by decoupling payments from production, is continued in the draft new legislation.

6.2 Respondents were asked "What are your views on proposals for further decoupling of support?" and 31 gave their opinions with two merely stating that they agreed with the proposals and one local authority saying this would have little impact in their area.

In favour of decoupling

6.3 Five respondents gave brief responses voicing their support for continued decoupling and/ or movement towards fully decoupled support. In total, 18 out of the 31 who responded to this question supported the proposals for decoupling.

6.4 Further decoupling was welcomed by two respondents who felt it would provide a level playing field across the EU. A wider interest organisation commented that it was vital that Scottish farmers are not disadvantaged by decoupling happening less quickly elsewhere. A farming organisation would support decoupling as long as a realistic level of targeted support can be implemented through the National Envelope.

6.5 An agribusiness organisation, while in favour of decoupling, stressed the importance of protecting the needs of vulnerable groups like crofters. Another organisation from the same sector welcomed decoupling which, they felt, enhances the ability of crop farmers to respond to consumer needs and to grow appropriate crops and appropriate levels of crops.

6.6 A respondent from the supply chain/ livestock group commented that deer farming is effectively coupled in the way the industry is dealt with in comparison with more traditional production systems. This respondent did not wish to see any further extension of support to non-agriculture sectors.

Concerns over decoupling

6.7 Three farming organisations were not in favour of decoupling and another cautioned there should be more decoupling "only with extreme caution", this respondent wanted to see a suitable alternative system that encourages farmers to keep livestock.

6.8 A local authority pointed out that, in countries which have retained coupled support, suckler cow numbers have remained stable and added that if recoupling is an option it should be looked at. On the same subject a supply chain/ livestock organisation noted that countries which have kept coupling show smaller reductions in livestock and suggested that, to be fair, either they have to decouple or Scotland should recouple.

6.9 The need to retain coupled support in some areas was mentioned by three organisations; two expressed concern over the drop in number of suckler cows and sheep, especially in hill and upland areas. One also felt support might occasionally be needed to ensure food supplies or to help sectors in periods of transition. A farming organisation, while agreeing with the principle of decoupling, felt that coupled support should be considered where the market fails, for example to ensure the retention of a grazing sector on arable land.

Environmental benefits of grazing

6.10 Issues of biodiversity and the environmental importance of grazing were raised in four responses; respondents were concerned over the possible loss of this sector, especially as the arable sector increases, and stressed the need for support, perhaps through environmental payments.

6.11 An organisation from the supply chain/ livestock group felt that the CAP and Rural Development Policy have a significant role to play in securing profitability as well as environmental and socio-economic benefits from livestock grazing. This would include jobs in both the primary and associated sectors. Another respondent from this group also commented on the consequences that the failure of the grazing sector would have in terms of land abandonment, biodiversity and the impact on sheep and cattle producing areas.

6.12 One respondent, from the environment group, felt there should be alternative methods of payment to farmers for environmental goods and suggested that SFPs might be redistributed on a flat-rate basis. They felt that a new, better targeted National Envelope with links to livestock activity within the Less Favoured Areas Support Scheme ( LFASS) would provide a better package of support.

Hill and upland farmers

6.13 One farming organisation, while supporting decoupled payments and agreeing that decoupling has brought benefits to farming in Scotland, pointed out that it has also caused problems for hill and upland livestock farmers; in these areas farmers have seen their margins eroded and many face a serious risk of going out of production.

6.14 An environment stakeholder, while supportive of full decoupling, was also concerned about hill and upland livestock farmers and saw the need for replacement Pillar 1 payments for these businesses. Another, from the supply chain/ livestock group, commented on the need to recognise the climatic and geographic limitations on Scottish livestock production.

6.15 Coupled support for hill and upland farmers was addressed in another four responses with one farming organisation suggesting that payments could be made through Article 68 or Rural Development measures and another suggesting that the Scottish Beef Calf Scheme ( SBCS) should be retained under Article 69 to address concerns over dwindling stocks in upland and hill areas.

Scottish Beef Calf Scheme ( SBCS)

6.16 The SBCS was mentioned in two responses from the supply chain/ livestock group. This scheme, they commented, has not reduced the decline in numbers of suckler cows; the payments were seen as insufficient; and one suggested these should be replaced by adequate headage payments and a better targeted scheme because the SBCS provides more incentive to small herds than large ones. This stakeholder suggested a minimum £100 payment (perhaps under Article 68) with a single flat-rate payment for all cattle in order to remedy livestock shortages.

6.17 An individual respondent wanted to see more direct support than that provided through the SBCS. Comments from two local authorities and one farming organisation indicated that the SBCS has not been effective and does not provide enough confidence to the sector to maintain production.

6.18 The SBCS is discussed more widely in chapter nine on National Envelope provisions.

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