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7 NEW ENTRANTS

7.1 One of the priorities for the Scottish Government is helping new entrants into farming. A recent report by the Tenant Farming Forum recommended ensuring access to SFPs (or any replacement) in order to help new entrants. While it is proposed that this be done under the National Reserve, it will be important to first put in place an agreed definition of new entrants.

7.2 The consultation document asked respondents "What are your views on using the National Reserve to give new entrants access to SFP? How should "new entrant" be defined?" and 35 respondents commented; two of these were brief responses agreeing with the proposal to use the National Reserve to give new entrants access to SFPs, while 10 voiced agreement alongside other comments. A further five respondents stressed the need for new entrants to have access to SFP with one, an individual, commenting on the importance of equal treatment for new entrants.

National Reserve

7.3 The need to weigh up whether it is worth introducing the use of the National Reserve against the fact that an area-based system is proposed for 2014 was mentioned in four responses; three others suggested this could be an interim 'bridging' measure until area-based payments are introduced, with a special interest organisation commenting that it could be used "to iron out differences between land blocks, such as land that could not qualify for SFP in the qualifying period because an ineligible crop was grown or because the land was not IACS registered" .

7.4 There were a number of other comments relating to the National Reserve and these included:

• that the use of the National Reserve should be a leg up and not an ongoing payment (farming);
• appreciation of the difficulty in using the National Reserve while moving to area-based payments with a suggestion that funds released from non-compliance could be used (farming);
• "a time frame for return of the Reserve Allocation could be anything between 5 and 10 years or even on a sliding scale over that time period" (farming);
• the need for an agreement with other Member States on the splitting of a National Reserve so that any SFP scale-back from Scotland remains in Scotland (farming);
• that the size of the National Reserve needs careful assessment but must be sufficient to give new entrants the competitive advantage needed to establish a new business (farming);
• that the National Reserve should be used to stimulate actual production (supply chain/ livestock).

7.5 Eleven respondents mentioned the need to move away from SFP or towards area-based payments. An environment organisation felt that a move to area-based payments, where payments are tied to land, would reduce the need for a National Reserve and reduce any barriers to new entrants accessing payments. Another environment organisation agreed that moving to area-based payments would mitigate the need for a National Reserve; this organisation also wanted to see awards linked to agricultural and environmental qualifications and to commitments to ongoing training in business, technical and environmental skills.

Funding

7.6 Comments on funding the National Reserve included:

• that disallowed entitlements should return to the National Reserve (farming);
• the need to introduce a siphon on any future transfers and the need for the National Reserve to be maintained by use of siphons on transfer of entitlements (two farming and one local authority);
• that SFPs should only be top-sliced to create new entitlements if demands on the National Reserve exceed supply (farming).

Concerns

7.7 One stakeholder, from the wider interest group commented that one policy instrument is not enough, due to the capital intensive nature of the agricultural sector. They suggested using the National Reserve in conjunction with interest support rates and an extension of the Small Firms Loan Guarantee Scheme. They also commented that the nature of the National Reserve needs to be considered in tandem with any changes to the method of calculating SFP entitlements.

7.8 A local authority felt access to SFPs may not significantly reduce barriers to entry and saw changes to taxation as a possible alternative, while another local authority suggested that the availability of land and profitability were the main incentives to new entrants. This respondent saw commercial loans as a better means of funding than grants from public money. An agribusiness organisation wanted to see a supply of smallholdings at affordable rent or buying price, which come with SFPs, made available to new entrants.

7.9 A farming stakeholder did not agree with the suggested method of funding the National Reserve and felt a better way would be to apply a siphon to any sales of entitlements and/ or to remove entitlements from those not actively farming.

7.10 There was also disagreement over the proposed funding mechanism from a supply chain/ livestock organisation who suggested revising the existing SRDP or, again, using entitlements from non-active farmers. Another from the same sector stressed their strong resistance to deducting SFP from existing farmers in order to fund new entrants, they considered the SRDP facility sufficient and saw no need for change. The need to ensure proposals do not impinge on current SFP recipients, was also mentioned by one organisation from the wider interest group.

Level of support

7.11 Four respondents felt that the suggested £4,000 was too low to be effective, a farming organisation suggested that the scheme should aim to deliver payments equivalent to an average SFP.

7.12 There was support, from five organisations, for new entrants to be given access to SFPs as soon as possible. One farming organisation felt that assistance to new entrants should be means tested. An environment organisation cautioned that new entrants need to be made aware of the financial risks involved in farming and to be made aware that support will change after 2013.

7.13 The need to make agriculture an attractive proposition for new entrants was mentioned by an organisation from the wider interest group; this respondent pointed out that a business might not have much appeal to new entrants if they knew it had to be subsidised. They also cautioned on the need to ensure that any new initiative does not introduce new institutional barriers to market entry in itself.

7.14 The attraction of newer enterprises such as deer farming was highlighted by one supply chain/ livestock organisation; both existing and new deer farmers should be given access to SFPs.

Genuine active farmers

7.15 Ensuring support is targeted at active farmers only was raised by most of the stakeholder organisations; a farming organisation suggested that a stricter interpretation of active agriculture is required.

7.16 One supply chain/ livestock organisation commented that revising the definition of an active farmer may actually mitigate the need for a new entrant scheme; but they acknowledged there would still be a need for support towards working capital costs. Another cautioned on the need to avoid damaging the public perception of farming through a repetition of the situation where payments were made to retired farmers.

7.17 A faming organisation stressed that payments to new entrants should not be allowed to be used to expand existing businesses.

Definition

7.18 Suggestions made by more than one respondent include:

• the need for a clear definition (wider interest and local authority);
• that the definition presents a challenge to ensure new entrants are genuine (wider interest and local authority);
• that sons and daughters starting up a new business/ trading independently should be considered new entrants (two farming, one supply chain/ livestock);
• that the age limit of 40 is too low (two farming organisations), the new entrant should not just be 'young people' (local authority) and the limit should be raised to 45 (one farming);
• that lack of qualifications should not be a barrier as experience is more relevant (farming, local authority and wider interest).

7.19 One possible definition, suggested by a supply chain/ livestock organisation, was that of a newly established business where no owner or partner has farmed before. A farming organisation suggested it should be first time occupiers who provide plans for the development of their unit. Another possible definition, from an individual, was that new entrants should have experience or show a proven attempt at getting started.

7.20 A farming organisation commented on possible problems which could arise if inherited farms have had their entitlements sold, this respondent wondered whether the inheritor would be able to apply to the National Reserve for new SFP entitlements; the respondent felt this would be wrong.

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