EXECUTIVE SUMMARY
Introduction
Support to farmers in Less Favoured Areas ( LFAs) within the European Union ( EU) is a long-standing measure of the Common Agricultural Policy ( CAP). Since 1975 it has provided a fairly broad mechanism for maintaining farming activity in areas facing disadvantages for agricultural production. Within Scotland, the Less Favoured Area Support Scheme ( LFASS) is a significant component of the Scotland Rural Development Programme ( SRDP), 2007-13. The LFASS is designed to sustain active farming and crofting in these areas, and it aims to improve the environment and the countryside. It is also important for the vitality of local communities and for food production, with Scotland's livestock finishing and processing industry depending heavily on animals from the LFA.
Land management in Scotland's LFA faces particularly difficult physical and climatic conditions and, to compensate for these natural challenges, LFASS provides around £61 million each year to over 12,500 farmers and crofters. Changes to the European regulations on LFA schemes could have significant implications for the classification of Scotland's LFA and for the basis for payments.
From September to December 2008, the Scottish Government ran a consultation exercise entitled, "The Less Favoured Area Support Scheme in Scotland, 2010-2013". This aimed to gather views on the future role of the LFASS in Scotland, as the first interim scheme (2007-09) was coming to an end, and in the light of the European regulatory changes.
The consultation document sought responses to ten open questions. Seventy-seven responses were received, and for the purposes of analysis, the respondents were grouped into categories. These aimed to reflect the main stakeholder interests, differentiate between public sector bodies and industry bodies, and acknowledge the strong environmental and crofting interests in the LFA. The categories were:
- Local Authorities, Economic Development and National Parks
- Individuals
- Crofters' Commission and Common Grazings
- Industry bodies
- Environmental bodies
- Land-based or regionally-defined associations
- Food Industry
- Other
- Research Institutes and Colleges.
The responses have been analysed using a structured approach to help identify concepts and ranges of views. The key findings are summarised below.
Consultation questions
Question 1 asked for respondents' views on the use of a 'mountain area' designation and a 'specific handicap' designation for islands. The possible use of these designations anticipates changes that are likely to be made at the EU level to the criteria by which LFAs are demarcated.
The possible use of the designations enjoyed very strong support. Sixty-nine respondents contributed their views and 87% of these were in full or qualified agreement with the proposal. The main reason given for supporting the new approach was a perception that this could increase payments to more disadvantaged areas. Among those who expressed qualified agreement, a preference for the status quo was noted unless change was driven by the EU.
Question 2 outlined possible modifications to the calculation of LFASS payments and asked for respondents' views on these proposals. Option A links support to current levels of production by basing payments on current stocking density. Option B is decoupled from current levels of production and calculates payments based on the agricultural capability of the land. Both options would be subject to a 'hectare adjustment' to avoid over-payment to land with low levels of livestock activity. Respondents were also asked whether they had alternative suggestions.
Seventy-three responses were received. There was more support for Option B (36%) than for Option A (14%). Supporters of Option B cited an objective system, the use of existing information, better targeting of disadvantaged areas, and a better fit with EU/ WTO rules because the system would not be linked to production. Those supporting Option A noted its emphasis on active land management, agricultural activity or production volume. Although Option B attracted more than twice as much support as Option A, the largest share of respondents (41%) expressed no preference, and 10% supported neither Option A nor B. Alternative suggestions were made by 53% of respondents to this question, and the most common alternative proposed was to increase payments to remote or peripheral areas. 19% of respondents to this question were critical of the hectare adjustment.
Question 3 sought respondents' views on a rationale for LFASS based on the inter-dependence between support payments, land management and rural development, and on objectives of delivering social, economic and environmental benefits.
Sixty-nine responses were received for this question. The rationale and objectives received strong support, with 86% of the responses giving full or qualified agreement. Agreement was qualified by respondents who wished to add their own emphases or supplementary aims, the most common of which was a perceived need for more effective targeting of support on the more disadvantaged areas. Other respondents called for clearer definition of the scheme's aims, or proposed alternative aims.
Question 4 asked whether respondents would be in favour of continuing the current interim scheme, with no significant changes, during the period 2010-2013.
There were 74 responses to the question, but it received little support: 83% of respondents disagreed with the proposal. The most common reason for this was the fear that failure to change would result in further decline in livestock numbers. Another common reason was an objection to the continued use of historic data as a basis for payment, which excludes new entrants from LFASS whilst continuing to make reduced payment to farmers who have significantly reduced their stocks.
Question 5 asked whether respondents would be in favour of continuing the current interim scheme, but with some redistribution of payments to more disadvantaged holdings. A consequence of this proposal is that payments would be decreased in other holdings to ensure budget neutrality. Respondents were also asked whether they had alternative suggestions.
There were 67 responses to this question, with slightly more against this proposal (55%) than for it (45%). Respondents agreed if they wished to see more funds directed to the more disadvantaged areas, and disagreed if they felt that the priority should be more fundamental change, more emphasis on environmental protection, or avoidance of the payment cuts that would be necessary to balance out the increases. The most common alternative suggestion was concerned with increasing the value of the minimum payment that is made to all LFASS recipients.
Question 6/ 7i asked for respondents' views on reinstating a closer link with livestock-related activity. At present, LFASS payments are related to the livestock declared in 2004. This meets EU requirements for the decoupling of payments from production, but has meant that farmers and crofters could have changed their stocking levels whilst continuing to receive payments.
There were 69 responses, of which all but three agreed with this proposal. This very strong agreement was driven by concerns including the support of active farming or land management, the maintenance of stock or production volumes, and the environmental benefits of grazing. Some respondents suggested making LFASS payment conditional on stock density, but others tempered their agreement with concerns including the method of measuring stock density, the need to avoid administrative complexity, and the continued use of historic (although updated) livestock data.
Question 7ii asked for respondents' views on helping new entrants to farming since 2006, who are ineligible for LFASS payments. The proposal was to update the 2004 livestock data that is currently used, to data updated for 2008, which would make those who entered farming between 2006 and 2008 eligible.
This proposal enjoyed support from all 64 respondents to this question, because new entrants were seen as critical to a sector whose workforce and production are in decline. However, 34% of these respondents disagreed with the proposed use of livestock data from 2008 instead of 2004, on the grounds that this would not solve the issue in the future. Many respondents suggested the use of annual data instead.
Question 7iii concerned the proposed reintroduction of a supplementary payment related to the ratio of cattle to sheep, which was terminated in 2008 to comply with EU requirements to decouple payments from current production.
There were 53 responses to this question, of which 89% gave full or qualified agreement to the proposal. Those who agreed had common aims of promoting the environmental benefits of mixed grazing, or of maintaining stock numbers, or both. The reasons for disagreement indicated dissatisfaction with both the current scheme and with the proposed changes that still retain a link to production.
Question 8 asked respondents to suggest ways of maximising the potentially beneficial effect of livestock farming on the upland environment, and how the scheme could be adjusted to provide a greater incentive for environmentally-beneficial farming practices.
Sixty-five responses were received. The most common response (46%) was that no adjustments to the scheme were necessary, because environmental benefits are intrinsic to good farming practice. The other respondents suggested additional environmental measures, but their views were fairly evenly spread between those feeling that such measures should become a condition for LFASS payment, and those preferring that they should be optional and merit additional payment.
Question 9 sought respondents' views on adjusting the balance of funding between LFASS, and the wider Scottish Rural Development Programme ( SRDP) of which it is a constituent part. The proposal was to reallocate a proportion of LFASS funds to other measures in the SRDP.
There were 62 responses to this question, showing very weak support for this proposal. 92% of the respondents disagreed, either with the proposal in principle, or with its introduction in the current economic climate. Common reasons given for disagreement included a lack of confidence in the SRDP, and a fear of reduced support payments. Even where respondents agreed to reallocation, opinion was split regarding whether the destination measures within the SRDP should be of an environmental nature or not.
Question 10 asked whether respondents had any other suggestions for the scheme to 2013.
Thirty-eight respondents made suggestions, the most common of which (made by 21% of the respondents) was a complete reform of LFASS in lieu of a second interim scheme. This was followed by a suggestion made by 11% of respondents, for increasing LFASS payments to holdings in remote areas.
Concluding comment
The responses reflect a very wide range of views, from across the many sectors represented by the respondent categorisation. It should be noted, however, that the following categories were particularly strongly represented with a high number of responses: Local Authorities, Economic Development and National Parks; Individuals; Crofters' Commission and Common Grazings; and Land-based or regionally-defined associations. Furthermore, the responses from the Crofters' Commission and Common Grazings and Individuals often expressed similar views, reinforcing the strength of opinion in relation to these views.