1. Introduction
Scottish agriculture is at a crossroads. The current European Union financial period comes to an end in 2013 and debates about the size of the agricultural support budget and the future of agricultural policy are already well advanced. On the one hand, we face significant global challenges-such as food security, water scarcity, energy security, biodiversity decline and climate change-which agriculture is well placed to help tackle. Yet, on the other hand, the total agricultural budget is expected to fall. Debates about the future of agricultural support therefore revolve around how best to achieve our goals. Some argue for a continuation of the reform process that is shifting the sector towards a much more market-led approach in which direct support for farmers has no role. Others want agricultural policy to focus on the delivery of public goods, while still others want agricultural policy to remain the same. But, as is clear from the fact that we continue to debate agricultural policy, there are no easy answers: each approach has its benefits and its drawbacks. So we, as a society, and Scottish Government in particular, face some difficult decisions.
To ensure that the Scottish Government received considered advice prior to making these difficult decisions, Richard Lochhead, Cabinet Secretary for Rural Affairs and Environment, asked that I undertake an Inquiry into the future of agricultural support in Scotland, reporting in April 2010.
On the basis of the evidence received to date, this interim report sets out some of the issues that we must consider in thinking about the future of support for agriculture and highlights some emerging ideas. The purpose of producing an interim report part way through the Inquiry is to stimulate further discussion about potential ways forward. It will hopefully provide a grounding for further engagement with interested parties in a series of public meetings and for a second consultation on specific policy options. This introductory section sets out some background on the Inquiry remit, the process and committee.
Remit of the Inquiry
Richard Lochhead asked that the Inquiry make recommendations to the Scottish Government on how financial support to agriculture and rural development can best be tailored to deliver the Scottish Government's purpose of sustainable economic growth.
The specific remit of the Inquiry is to examine and provide recommendations on the following areas:
- how Pillar 1 funds (i.e. the Single Farm Payment in Scotland) might be best distributed in future, for example between regions of Scotland and/or land types, in order to contribute to the Government's purpose and vision;.
- the conditions to be attached to Pillar 1 payments in the future to secure public benefits commensurate with those payments, and the relationship with the Less Favoured Area Support Scheme;
- the link between payment levels and farming activity;
- the situation of agricultural holdings currently outside the Single Farm Payment system, and new entrants to farming;
- how to address the risk of a smaller Single Farm Payment budget for Scotland after 2013, taking into account the generally-held expectation of severe pressure on that part of the EU budget;
- the future balance between Pillar 1 and Pillar 2 of the CAP in Scotland, including the role of support for transformational change to agricultural businesses, for collaboration, and for engagement between businesses in the different stages of the production chain;
- Scottish priorities in future negotiations with the United Kingdom authorities and at EU level.
The purpose of the Inquiry is therefore not to rethink the Common Agricultural Policy. Rather, the Inquiry should identify the key issues that we face in Scotland and consider the sort of support that might be appropriate to help us address these issues. It should also consider how best to implement the CAP, what direction we should be travelling in within the confines of the options allowable under the CAP Health Check, and, given our preferred direction, what we should be arguing for in European debates about the future of the CAP.
Inquiry Committee
Brian Pack chairs the Inquiry. Brian receives assistance and advice from several other key figures with expertise in a range of sectors.
Brian Pack OBE
Brian is the former Chief Executive of ANM Group Ltd, Chairman of the Board of Governors of the Rowett Institute of Nutrition and Health, a member of the Aberdeen University Court and the Operating Board, Managing Director of Farmdata Ltd, an agricultural software house and director of Financial Control Services Ltd, (a farmers' co-op which offers a budgeting and financial control service to farmers). Brian is a Fellow of the Royal Agricultural Society and an Honorary Member of the Institute of Auctioneers. He was awarded an OBE for services to agriculture, food and marketing in 1999.
Advisors
In addition to the Chair, several other members were appointed to the Inquiry committee to act as advisors. These advisors were asked to advise and support the Inquiry Chair by attending meetings and participating in discussions; contributing their own experiences to the evaluation of agricultural support policies; facilitating the development of alternative agriculture support models available under the CAP through analysis of evidence; and by offering comment on the drafting of written submissions including the final report of the Inquiry's findings. The advisors are:
Wilma Finlay MBE
Wilma is the Managing Director of Cream O'Galloway, a farm diversification business employing 19 full-time staff and 35 seasonal staff. The farming business managed by Wilma's husband is an 830 acre tenanted dairy and livestock organic farm.
Professor John Grace
John is Professor of Environmental Biology at the School of Geosciences in the University of Edinburgh.
Johnny Mackey
Johnny is a relatively new entrant to farming and is building up a cattle and sheep business. He is breed Secretary for Luing Cattle Society Ltd.
David MacLeod
Dave manages the family farm in Skye, is an Independent Rural Consultant and a member of the Board of the Crofters Commission.
Steve McLean
Steve is the Agriculture Manager for Marks and Spencer plc, responsible for M&S livestock supply chains and for interaction between the retailer and its Farmer producers.
The committee has met six times since September 2009.
Activities to date
The Inquiry began in June 2009 and will report by April 2010. The initial phases have included gathering evidence from a variety of sources, consulting the public and interested stakeholders and visiting key people in Brussels.
Evidence gathering
The Inquiry has gathered evidence on the current state and importance of the agricultural industry in Scotland and on the current implementation of agricultural policy and the possible options open to us in the short and medium term. This evidence has been gathered through meetings with a range of people including Scottish Government staff (primarily in the Rural and the Rural Payments and Inspections Directorates), researchers based in the Scottish Government's Main Research Providers, in particular technical support and discussions with the Macaulay Institute, representatives from the industry and from government agencies such as the Forestry Commission and Scottish Natural Heritage.
Several evidence papers have also been produced and placed (or will shortly be placed) on the Inquiry web pages ( www.scotland.gov.uk/BrianPackInquiry). There are papers on:
- Economic trends in Scottish agriculture (produced by Scottish Government)
- The importance of livestock production to the Scottish economy (produced by QMS)
- The Scottish arable sector (produced by Scottish Government)
- Farming and the natural environment (produced by SNH)
- Evidence from Forestry Commission Scotland
- Commissioned work on public goods and decoupling (undertaken by SAC)
- United States support (produced by Scottish Government economists)
- Retailers perspective on climate change
- Rural Payments and Inspections Directorate - IT issues
The purpose of these papers is to ensure that everyone has the same information on where the industry and rural areas are now, to inform discussions about how best to implement agricultural support and about future direction.
Fact finding trip to Brussels
A visit to Brussels included meetings with Marian Fisher Boel (Commissioner for Agriculture and Rural Development), Paulo deCastro (Chair of the European Parliament Agriculture Committee), Tassos Haniotis (Head of Agricultural Policy Analysis and Perspectives, DG Agri), Tim Render ( UK Representative), Alec Page (Defra expert seconded to the European Commission), Andreas Lillig (Single Farm Payment Implementation, DG Agri) and Maeve Whyte (Director, British Agricultural Bureau). This trip facilitated insight into the debates taking place in Brussels on the future direction of the CAP. This was particularly useful in providing the context within which debates in Scotland will take place.
Initial consultation
An initial consultation ran from September to the end of October 2009. This initial consultation was structured around the remit of the Inquiry to canvass opinions about the broad issues under consideration. A total of 105 responses were received, comprising 58 responses from individuals and 47 from organisations. The responses have been analysed and an overview of these is included as an annex to this report.
Structure of this report
This interim report has been informed by the evidence received to date, and the responses to the initial consultation, and highlights the issues that we must consider in thinking about the future of support for agriculture in Scotland. It begins by briefly examining some of the context. As many of the respondents to the initial consultation pointed out, we face some major global challenges that we must consider as we think about how best to design agricultural support. We cannot develop an approach to agricultural support that ignores these challenges, not least because EU policy is increasingly focusing on these big issues. The report then looks at some of the issues at the level of the European Union that are changing the debates about agriculture, before looking at what Scotland has to offer and what we need to consider in thinking about how support should be delivered in future. The report then puts forward some principles and objectives of future support, together with a proposed structure for support under a reformed regime. These ideas are included at this stage to prompt debate and discussion among stakeholders and to provide the basis for a much more focused consultation on specific options. The report ends with some ideas for how the current support regime might be changed in the short-term to address the specific challenges that we face today.