Scottish Government

Appendix C Agriculture, Forestry and Aquaculture

C.1 Overview of Scottish Rural Areas

Around 54% of Scotland's territory is predominantly rural and in addition there are many areas which are remote ( SRDP, 2007).

Scotland's rural areas are experiencing major structural changes with the continuing decline of farming and fishing accompanied by an expansion of the service sector, diversification into new activities and the growth of the leisure economy ( NPFS, 2004). A significant part of the population lives in the central belt which, whilst it is densely populated, still retains extensive areas of agriculture and forestry. Most of the remainder of rural Scotland is relatively unpopulated. It is estimated that about a million people, 19% of Scotland's total, live in rural areas ( SPP 15, 2005).

Agricultural land covers 6.12 million hectares or almost 80% of Scotland, however due to physical and climatic conditions most agricultural land is rough grazing, and 85% is classified as Less Favoured Areas. The area of land used for crops, fallow and set-aside represents only about 10% of the total agricultural area. The livestock sector is of particular significance to Scottish agriculture, including a significant area of dairying in south-west Scotland ( SRDP, 2007).

In terms of the output, agricultural sector in Scotland accounts for 1.3% of Gross Value Added ( GVA), although its importance is much greater in some regions of rural Scotland. The sector employs around 45,000 people, which represents 2.2% of the total workforce, or 5% of the rural workforce (A Forward Strategy for Scottish Agriculture, 2006). Since 1998, the number of full-time employees has fallen significantly and employment of part-time and casual/seasonal employees has increased. Furthermore, the workforce is agricultural sector is ageing, with 51% of working occupiers aged over 55 years (of which 24% are over 65 years) in 2005 ( SRDP, 2007).

Agricultural output forms a vital input to the wider food and drink industry, which represents one of the largest manufacturing sectors, accounting for about one-fifth of gross value added and one-fifth of employment in Scottish manufacturing (A Forward Strategy for Scottish Agriculture, 2006).

Small firms are characteristic of rural Scotland, particularly in remote rural areas where they support 84% of employment (2004 figures) ( SRDP, 2007).

There have been some positive developments between 2000 and 2005 such as a 54% increase in Total Income from Farming, but the industry is undoubtedly still facing significant challenges through continuing pressure on output prices as well as increases in some critical input costs (A Forward Strategy for Scottish Agriculture, 2006).

Agriculture is a key contributor to the wider rural economy in Scotland which comprises a broad range of activities. There has been diversification away from the primary industries of agriculture, forestry, fishing and energy, and growth in the contribution of other activities, particularly in the service sector (A Forward Strategy for Scottish Agriculture, 2006; SRDP, 2007).

In terms of income, 69% of GVA in rural areas is derived from the tertiary sector and 4% is derived from the primary sector. The tertiary sector also accounts for a substantial proportion of rural employment, supporting 43% of jobs compared to 11% in the primary sector and 30% in the secondary sector.

However, levels of on-farm diversification are relatively low in Scotland. In 2005, nearly a quarter of farms engaged in some form of on-farm diversification activity. Of these, tourism accommodation and leisure, equine activities and shooting were the most common activities (6% each), and renewable energy was the least common activity (1%) ( SRDP, 2007).

There are over 200,000 tourism-related jobs in Scotland (almost 9% of total employment), and many of these are in rural areas. Moreover, the Rural Development Programme suggests that further opportunities exist to develop the tourism sector and bring added value to the rural economy ( SRDP, 2007).

C.2 A Forward Strategy for Scottish Agriculture (2006)⁵⁶

The Strategy highlights such major themes as sustainable development, market orientation of the sector, climate change, health and well-being, environmental protection and rural development. It builds on the principles identified in the Scotland's Sustainable Development Strategy and defines the following vision for the Scottish Agriculture:

"It should be:

• Focused on producing food and other products for the market;
• A major driver in sustaining rural development, helping rural communities prosper;
• A leading player in the protection and enhancement of the environment;
• A major contributor to key objectives on animal health and welfare and human health and well-being;
• Keen to embrace change and market opportunities".

Furthermore, the Strategy sets out actions which will help to ensure that the Scottish farming industry is: competitive in markets; a driver of rural development; and renowned for its high environmental standards.

The Strategy aims to build on the achievements in animal health and welfare, diversification and environment. Furthermore it highlights the importance of key Scottish industry sectors, such as food and drink and tourism.

The Strategy addresses business opportunities for the Scottish agriculture. While stressing that global competition will always be a challenge for Scottish producers, the Strategy recognises that Scotland can build on its tradition and quality of agricultural products, as well as on its good record on livestock health and welfare. Re-opening of the beef export markets and production of energy crops offer market opportunities as well.

The Strategy stresses that agriculture is a part of wider rural development and suggests that the farming industry should be a major driver in sustaining rural development. It does however recognise and highlight the need and importance of diversification. While the choice of an activity for diversification depends on local circumstances, tourism, commercial recreation, forestry and energy crops are seen as key priority industries. Furthermore, referring to the permanent disadvantage of some of the rural areas, the Strategy highlights the critical role of the Less Favoured Area support scheme in maintaining farming's role in rural communities.

Given, that agricultural land accounts for almost 80% of the land area of Scotland, the way this land is farmed has a significant effect on Scotland's (water) environment. The Strategy recognises that while farmers have reduced the number of serious pollution incidents through better storage of slurry and silage effluent, diffuse pollution from agriculture remains a threat to the achievement of a good water environment. Decoupling of farm subsidies from production and introduction of the cross-compliance requirements are seen as important contributors to the more environmentally sensitive farming (Scottish Executive, 2006a).

Land-use planning policy

The draft National Planning Framework (2008) highlights the role of Planning in the rural development, which is to enhance the value of rural resources and help create development opportunities at sustainable locations. Scottish Planning Policy on Rural Development ( SPP 15) further sets the approach to the planning and defines objectives for development of rural areas.

The aim of the Framework is to reverse the declining trend in the population in rural areas, recognising that many rural areas in Scotland can absorb more people without losing their environmental quality. High quality natural surroundings offer opportunities for a wide range of activities while modern communications technologies make dispersed economic activity feasible. It highlights the potential for the development of creative and knowledge-based businesses as opposed to the traditional primary industries. According to the Framework document, the future of rural areas in Scotland lies in economic diversification and environmental stewardship.

The Scottish Government has developed a number of national strategies for agriculture, forestry and aquaculture to promote rural development and sustainable resource management.

In the most peripheral rural areas of Scotland cultural and environmental resources are the assets with enormous potential as there are large markets for Celtic culture, built heritage and environmental tourism.

C.3 SRDP Agri- environment scheme options related to the water environment

Full List of Options related to Agri-environment Payments (Articles 36(A)(Iv))

WILDLIFE ON FARMLAND AND OTHER TYPES OF LAND

(a) Wild Bird Seed Mix/Unharvested Crop (Tier 2 and Tier 3)

(b) Management of Mown Grassland for Wildlife (Tier 3)

(c) Management of Mown Grassland for Corn Buntings (Tier 3)

(d) Management of Mown Grassland for Corncrakes (Tier 3)

(e) Management of Grazed Grassland for Corncrakes (Tier 3)

(t) Creation and Management of Early and Late Cover for Corncrakes (Tier 3)

(g) Management of Early and Late Cover for Corncrakes (Tier 3)

(h) Management of Open Grazed or Wet Grassland for Wildlife (Tier 3)

(i) Mammal and Bird Control (Tier 3)

• Predator control
• Crow control.
• Predator control for black grouse and capercaillie

(j) Supplementary Food Provision for Raptors (Tier 3)

(k) Wardening for Golden Eagles (Tier 3)

(I) Control of invasive non-native species

MANAGEMENT OF SPECIES RICH AREAS

(a) Management of Species Rich Grassland (Tier 3)

(b) Bracken Management Programme for Habitat Enhancement (Tier 3)

(c) Creation and Management of Species Rich Grassland (Tier 3)

(d) Management of Habitat Mosaics (Tier 3)

WETLAND FEATURES

(a) Improvement of Rush Pasture for Wildlife (Tier 2)

(b) Management of Wetland (Tier 3)

(c) Creation, Restoration and Management of Wetland (Tier 3)

(d) Management and Restoration of Lowland Raised Bogs (Tier 3)

(e) Creation and Management of Water Margins and Enhanced Riparian Buffer Areas (Tier 3)

(t) Management of Flood Plains (Tier 3)

(g) Management of Buffer Areas for Fens and Lowland Raised Bogs (Tier 3)

MOORLANDS

(a) Summer cattle grazing (Tier 2)

(b) Management of Coastal or Serpentine Heath (Tier 3)

(c) Management of Lowland Heath (Tier 3)

(d) Wildlife Management on Upland and Peatland Sites (Tier 3)

(e) Management of Moorland Grazing (Tier 2 and Tier 3)

(t) Management of Moorland Grazings on Sites Designated for Their Uplands and Peatlands (Tier 3)

(g) Moorland - Stock Disposal (Tier 3)

(h) Away-Wintering of Sheep (Tier 3)

(i) Off-Wintering of Sheep (Tier 3)

(j) Muirburn and Heather Swiping (Tier 3)

FIELD MARGINS AND BOUNDARIES

(a) Management of Linear Features (Tier 2)

• Hedgerows and hedgerow trees
• Dykes

(b) Management of Hedgerows (Tier 3)

(c) Management of extended hedges (Tier 3)

(d) Management of Grass Margins and Beetlebanks in Arable Fields (Tier 2 and Tier 3)

ARABLE FIELDS

(a) Biodiversity Cropping on In-Bye (Tier 2 and Tier 3)

(b) Management of Cropped Machair (Tier 3)

(c) Management of Conservation Headlands (Tier 2)

(d) Retention of Winter Stubbles (Tier 2)

WOODLAND AND SCRUB

(a) Management of Ancient Wood Pasture (Tier 3)

(b) Management of Scrub and Tall Herb Communities (Tier 3)

WATER QUALITY

(a) Nutrient Management Plan (Tier 2)

(b) Soil and Water Management Programme (Tier 3)

(c) Arable reversion to grassland unfertilised grassland (Tier 3)

Livestock tracks gates and river crossings (Tier 3)

Manure/slurry storage and treatment (Tier 3)

Treatment of run-off of nutrients and other pollutants (Tier 3):

(Tier 3) Construction of biobeds (Tier 3)

Constructed farm wetlands ( CFWs)

Provision and upgrading of infrastructure related to access to farm and forest land, energy supplies and water management (investment can include water storage reservoirs) (Axis 1, tier 3)

Rural infrastructure, which can include reducing bacterial contamination (Axis 3, tier 3)

SMALL UNITS

(a) Conservation Management Plan with Special Measures for Small Units (Tier 3)

(b) Retention or introduction of cattle of native or traditional breeds (Tier 3)

C4 Projections of Agricultural Activities

A number of forecasts of agricultural activities have been elaborated so far. While Business as Usual projections ( BAU III) developed jointly by the University of Cambridge and Scottish Agricultural College are the most relevant as they were elaborated purposefully for the WFD, they did not take into account implications of the trade liberalisation. This issue has been addressed in the FAPRI- UK project while developing projections for agricultural activities taking into account elimination of export subsidies and reduction of import tariffs. Table D.1 summarises BAU III projections and alternative projections which take into account trade liberalisation.

Table C.10 BAU III and alternative projections of agricultural activities

Inclusion of the trade liberalisation considerations in the projections result in greater reduction in the livestock numbers. Number of sheep, beef cows and dairy cows are projected to fall significantly ⁵⁷.

C.5 Details on Timber Production and Employment

Private sector investment in the forestry industry has continued at about £60 million each year over the last 15 years. However, according to the Scotland Rural Development Programme many woodland owners struggle to obtain sufficient direct returns from their woodlands which in turn affect their ability to undertake desirable silvicultural operations, such as thinning. Management of the state woodland is primarily based on a clear felling ( RDR, 2007, Scottish Executive, 2006b).

Currently over 70% of the timber is processed in Scotland, with the resultant sawn wood and wood products finding ready markets within the UK and abroad (Forestry commission Scotland, 2007). This is in line with the long-term vision set in the Scottish Forestry Strategy which is a local timber processing based on softwoods and hardwoods and new value-adding enterprises. However limited information exists on levels of diversification in forestry ( RDR, 2007; Scottish Executive, 2006b).

Despite the growth in the timber production, the Forestry Commission stresses that UK will continue to import a very large proportion of its timber and timber product needs, intensifying the challenge for Scottish forestry industry to minimise costs and to maximise efficiency (Forestry Commission Scotland, 2007).

The vision set in the Scottish Forestry Strategy is a competitive timber production of about 8.5 million m ³ per year with further growth potential. Forecasts indicate the potential for a continued rise in timber production from the current level of almost 7 million m ³, to a peak availability of about 10 million m ³ in the mid-2020s (see Figure C.1).

Figure C.1 Long-term forecasts of the timber production in Scotland⁵⁸

Employment in the forestry and wood processing

More than 10,000 people directly employed in forestry, wood processing and allied businesses in Scotland. About 7,600 jobs are provided directly by forestry and another 3,100 in the primary wood processing industry (Forestry Commission Scotland, 2007; Scottish Executive, 2006b).

There were 19,000 employees in the manufacturing in the forestry sector in Scotland in 2003. This figure becomes twice as hire if employment associated with the manufacturing of wood products and of pulp/paper products are taken into account ( RDR, 2007).

Forestry schemes

Creation of the new non-state woodland and management of the existing woodland is supported by a range of grants. The Woodland Grant Scheme ( WGS) introduced in 1988 was the main support mechanism for forestry, which has been later replaced. The new mechanism - Scottish Forestry Grants Scheme ( SFGS) was introduced in 2003 (Forestry Commission Scotland, 2008; RDR, 2007) (see Figure C.2).

Figure C.2 Grant money paid in 2006-2007 (£ million) per grant scheme⁵⁹

Support (the Farmland Premium) is also available to encourage the creation of new woodlands on agricultural land by offering annual payments for a period of up to 15 years from the time trees are planted to compensate for agricultural income foregone ( RDR, 2007).

Overall, forestry schemes have led to an increase in wooded area and wood production, and have retained employment in rural areas (see Figure C.3).

Figure C.3 Past trends in new planting and restocking in Scotland⁶⁰

However, according to the Scottish Rural Development Programme targeted support for processing would further improve the benefits that are generated by forestry schemes ( RDR, 2007).