Scottish Government

8 FINDINGS FOR QUESTIONS 6/ 7(I): CREATING A CLOSER LINK WITH LIVESTOCK-RELATED ACTIVITY

8.1 This section concerns the possibility of reinstating a link between the level of LFASS payments, and agricultural activity that is related to livestock.

8.2 Paragraph 6.4 of the consultation document explained that it would be possible to link payments to livestock-related activity, but without linking payments to current levels of production (which would go against the WTO/ EU principle of decoupling payments from production). It listed the potential advantages of this change including environmental benefits, provision for new entrants to farming, and a replacement for the former cattle top-up scheme; these were countered by increased complexity and administrative costs.

8.3 The mechanism for certifying livestock-related activity described in paragraph 6.5 was the livestock data entered on each holding's Single Application Form in 2008 ( SAF08). This would be a one-off update of the livestock data that is currently used as the basis for payments, which was taken from the 2005 SAF ( SAF05) and which was verified in 2004.

8.4 Paragraph 6.6 summarised the advantages of this proposed change as the admittance into LFASS of new entrants between 2005 and 2008, and the use of livestock data that are updated but also historic - avoiding a direct link to current production. The highlighted disadvantages were the cost (to the Scottish Government and to industry) of verifying the SAF08 livestock data, possible EC penalties for over-declaration of livestock, and the failure of this one-off update to cater for future new entrants after 2008.

8.5 The consultation question under consideration is Question 6/ 7i:

"What are your views on the approach set out in paragraphs 6.4 - 6.6 on creating a closer link with livestock-related activity?"

Note that the analysis, and most of the responses, group together questions 6 and 7i due to repetition in the consultation questions - 69 responses were received for these two questions together.

8.6 The main points emerging in the responses to question 6/ 7i were:

• Almost all responses were in favour of this, but many added the proviso that the link should be to current data to avoid perpetuating the anomalies arising from the historic data used at present.
• The few respondents who disagreed cited an expected increase in administrative complexity, and a need to first quantify the expected environmental benefit yielded by livestock before then linking it to payment.

8.7 Table 7 shows the responses to this question, split by respondent category. The responses were simply divided between agreement (66 responses, or 96%) and disagreement (3 responses, or 4%).

Table 7: Number of responses to Question 6/ 7i

8.8 The following paragraphs analyse agreement and disagreement split by respondent category, based on the data in Table 7. Where respondents in agreement with the closer link have offered further suggestions or modifications, this is subsequently discussed.

Agreement

8.9 Sixty-six respondents agreed with the proposal. Agreement was unanimous for respondent categories C (Crofters' Commission and Common Grazings), D (Industry bodies), E (Environmental bodies), F (Land-based or regionally-defined associations), G (Food Industry), H (Other) and I (Research Institutes and Colleges). In categories A (Local Authorities, Economic Development and National Parks) and B (Individuals), many more respondents agreed than disagreed. Where these respondents gave reasons for their agreement, this is presented below.

8.10 Fifteen (23%) category C (Crofters' Commission and Common Grazings) respondents agreed, and where they explained why, they expressed a wish to maintain or increase livestock numbers in fragile areas, and to encourage the continuation of active farming. A typical response follows:

We are of the opinion that there should be a clear link with livestock-related activity… those crofters who have livestock should receive assistance towards maintaining and possibly increasing livestock levels in the most fragile and disadvantaged areas.

8.11 The general aim of the 11 (17%) category F (Land-based or regionally-defined associations) respondents was to avoid cessation of land management and reduction of stock. For example:

We feel that the principle of creating a closer link with livestock-related activity is a good one since it tends to sustain active crofting and farming and retains land managers in the less favoured areas.

8.12 Ten (15%) category A (Local Authorities, Economic Development and National Parks) respondents agreed, and some of these sought effective support for agriculture, and for the premium beef and lamb markets.

8.13 Support for active farming was commonly emphasised. Eight responses by category B (Individuals) included support for active farming and maintenance of stocks. The responses in agreement from eight category D (Industry bodies) respondents and two category G (Food Industry) specified support for active farming and volume of production. The two category H (Other) responses saw the link as a way of excluding inactive farmers from payment.

8.14 The common thread of the seven category E (Environmental bodies) responses was that they supported the link because both the level of grazing, and the mix (the proportion of cattle to sheep), affect the degree of environmental benefit that can be derived from grazing. One of the three category I (Research Institutes and Colleges) respondents agreed with this use of density as a measure for achieving environmental benefits. The other two, however, questioned its validity as it does not address mix, and is a broad-brush approach to the complex relationship between livestock and environment which might fail to identify the benefits.

Alternatives and limitations

8.15 A considerable proportion of the respondents in agreement offered alternatives to some areas of the proposal, or limited their agreement in highlighted areas of concern.

Conditionality

8.16 The view that stock density should not only vary the level of payment, but also that it should become a fundamental condition for the LFASS payment, was explicitly stated in half of the category E (Environmental bodies) and H (Other) responses, approximately one third of responses in categories A (Local Authorities, Economic Development and National Parks), C (Crofters' Commission and Common Grazings), and F (Land-based or regionally-defined associations), and a quarter of category D (Industry bodies) responses.

Current production

8.17 Many respondents were not satisfied by the proposal to make a single update of livestock figures from 2004 to SAF08, and instead proposed that the link should be to lcurrent production data, updated annually from each year's SAF.

8.18 Those expressing dissatisfaction included nearly half of the category A (Local Authorities, Economic Development and National Parks) responses, approximately a quarter of the category B (Individuals), C (Crofters' Commission and Common Grazings), E (Environmental bodies) and F (Land-based or regionally-defined associations) responses, and one of the eight category D responses.

Stocking density measurement

8.19 In Annex 4 of the consultation document, stocking density is expressed in banded ranges of livestock units per hectare (lu/ ha) in Table 5 (Option A, hectare adjustment by stocking density), and as an average value for lu/ ha in Table 6 (Option B, hectare adjustment by LCA class).

8.20 Four responses from categories C, D and F made a similar proposal, that the density values for the bands should be calculated at the level of each holding as opposed to the proposed nationwide values. They also suggested that the scheme should allow flexibility for the needs of individual businesses, such that the density could fluctuate between the minimum and maximum values for the applicable band, with a penalty incurred for falling below the minimum value.

8.21 The category E responses also called for site-specific density values, and also proposed non-stock indicators (eg. production of hay) and emphasised the need to incorporate grazing mix into the incentives.

8.22 Other caveats included a view that only the minimum density was justifiable and that higher bands would serve only to divert funds to less disadvantaged areas, and a view that there would be no incentive to stock towards the higher end of each band.

Simplicity

8.23 Eight respondents (from multiple categories) expressed concern that the procedures around reintroduction of the livestock link should be as uncomplicated and inexpensive as possible, and one questioned the need for additional inspections given their understanding that the SAF data is prepared at ear-tag level and is legally binding.

WTO arguments

8.24 Some respondents offered suggestions as how the livestock link that they support could be favourably presented to the WTO.

8.25 A suggestion common to two category A (Local Authorities, Economic Development and National Parks) and one category C (Crofters' Commission and Common Grazings) responses was to present this as environmental aim, in the form of a conditional payment for livestock density kept within a maximum - minimum range appropriate to the land.

8.26 A view shared by one respondent each from categories D (Industry bodies) and F (Land-based or regionally-defined associations) was that it could be argued that the minimum density does not contravene the principle of decoupled payments, but is in fact a means to achieve the minimum required maintenance of the land.

8.27 The suggestion from category E (Environmental bodies) was to point out that the aim of this link is not to increase production or reward such an increase, but rather to offer an incentive for the provision of a discernible public benefit in the form of environmentally appropriate levels of mixed grazing. Two category I (Research Institutes and Colleges) respondents, however, sought a closer specification of the connection between grazing and environmental benefit.

Disagreement

8.28 Three respondents disagreed with linking payment to livestock activity. The category B (Individuals) respondent preferred that the scheme should continue in its present form. The two category A (Local Authorities, Economic Development and National Parks) respondents gave reasons which were also expressed as concerns by respondents in agreement: one cited an expected increase in administrative complexity, and the other a need to first quantify the expected environmental benefit yielded by livestock before offering payment, and also to tailor the grazing bands more closely to the land in question.

Summary of the 69 responses to question 6/ 7i:

• The strong agreement (96%) expressed by all respondent categories 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 agreed so strongly that they suggested stock density should become a condition for LFASS payment, 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 (if updated) livestock data. This last issue continues into question 7ii.
• These same concerns were expressed by the three respondents disagreeing with the proposed change.
• A number of respondents engaged with the issue of WTO compliance, by suggesting ways of presenting the livestock link in a positive light.