Rural Exchange

Agricultural Policy and the Cha-Cha-Cha

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Agricultural Policy and the Cha-Cha-Cha

I have been contributing to SRUC’s response to the Scottish Parliament’s Rural Affairs and Islands Committee’s call for evidence on the new Agriculture and Rural Communities (Scotland) Bill and thought it worthwhile sharing some of my thoughts with you.  In my world, and that of your membership organisations, we are likely to be entering a prolonged policy change period where patience and capacity are likely to be stretched.  Agriculture, environment and land use policy changes are like the proverbial buses – none come for ages and then two or three arrive at the same time!  Currently the Scottish Government are running a consultation on biodiversity at the same time as the Scottish Parliament are calling for evidence on the Agriculture etc. Bill.  More Bills are in the pipeline on Natural Environment, Land Reform, and Biodiversity that will take time and effort to consider.

I have previously discussed the declining budget in real terms as inflation erodes the support payments that industry receives.  With public funding appearing to be in a crisis, Shona Robinson (Deputy FM and Cabinet Secretary for Finance) acknowledged that the Government’s programmes have “seen high inflation erode our buying power”.  On top of £14m of budget savings previously identified for agriculture this year further “reprioritisation of spending plans” will see an additional £17.1m ‘saved’ from this year’s agriculture budget.  Whilst some of the savings are deferred – to be returned to the portfolio later – it is unclear where the savings in Pillar 1, AECS and the Agriculture Reform Programme are coming from.

At AgriScot the Cabinet Secretary re-emphasised that “we will expect you to do more in the future in return for your funding”, yet the budget is under pressure and inflation is significantly eroding its buying power. Other sectors appear to get new funds to help them decarbonise (e.g. offshore wind’s 66% price rise in November 2023 after the previous auction failure), yet agriculture is expected to do it, and restore nature, from the existing pot whilst still producing food.  It is vital that the industry remind Ministers and Government officials (UK and Scottish) about the limits of what the current budget can be expected to realistically deliver, as new conditions start to stack-up on payments.  

We are just over a year away from 2025 when new BPS and SSBSS conditions are meant to come into force.  The Cabinet Secretary also announced at AgriScot that those conditions will be detailed in “the first quarter” of 2024.  Bulling decisions and plans for 2025 will be getting made early in the spring, so it is vital that the new rules about support are communicated soon, along with details of the ‘whole farm plan’ – particularly what is expected in terms of frequency and details of carbon audits, soil sampling, animal health and welfare plans and biodiversity audits.  Again, for farmers it will feel like it is slow, slow, quick, quick, slow as these details come out at once after a long period of “stability”.

Before setting about reviewing the Bill text and associated ‘memorandum and notes’ I was prompted to go back to the Agriculture Champions’ report from 2018 after seeing John Kinnaird in the audience at an SAC Consulting subscriber meeting where I was presenting an update on agricultural policy with the good Dr Moxey.  Over 5 years ago the Agriculture Champions wrote “No change is not an option…After the transition period, we recommend that there continue to be an element of basic income support, but at much lower levels. Future farm funding must go on a menu of schemes to boost production efficiency, improve skills and training, and enhance natural capital and biodiversity”.  We are only starting that ‘transition period’ in 2025 (7 years after the Agriculture Champions made their recommendations).  

Much of this new Agriculture & Rural Communities Bill is creating powers to establish a legislative framework against which that vision can be delivered - but it has been slow, slow in coming.  I will not bore you with the legal text, but essentially the Bill, if passed, will give the Scottish Government new powers to amend existing, and adopt new, support measures.  

There are provisions to introduce welcomed powers for the Government to provide emergency support in exceptional market conditions (such as those witnessed in the pig and poultry sector in recent years).  However, somewhat bizarrely, poultry, pigs and farmed deer are not included in the Schedule that lists eligible agricultural activities – that would appear a significant oversight as ‘support’ includes technical and advisory support as well as support for Producer Organisations. 

I frequently have to remind people that the language used is important when discussing agricultural policy - and the Bill is no different.  For example, the Bill discusses financial support through “grant, loan or guarantee”, yet to most working in agriculture ‘grants’ are normally training or capital contributions, rather than on-going revenue support that the sector receives. Further, in the associated notes the phrase “there is a need to ensure a just transition to net zero farming” is used, despite it being a technical impossibility in national greenhouse gas inventory ‘agricultural envelope’ terms.  Even when any net sequestration that sits within the LULUCF ‘envelope’ is brought into the mix, then carbon sequestered in forests, and emissions from peatlands with no agricultural activity are wrongly stacked onto agriculture.  Scotland plc. has a net zero target enshrined in law – but there are no such targets (yet) for the sector.

There was likely a missed opportunity to include in the Bill a minimum spend for each of the proposed ‘tiers’ of support, and likewise to commit to forms of support such as a replacement to LFASS, new entrants, coupled support etc.  As far as I am aware those policy decisions are still being made, part of the slow, slow characteristic of policy that is ‘co-designed’.   There is a long list of provisions that enable the Scottish Government to make changes through Statutory Instruments that may limit the time that Parliamentary Committees, and stakeholders, will have to scrutinise the detail to 40 days.  With a significant volume of legislative changes required to deliver a new support regime, I imagine that once the Bill is passed then there will be a period of ‘quick, quick’ legislative changes – the volume of which could challenge stakeholder and Parliamentary Committee capacity unless care is taken.

On a positive note, the Bill aims to continue to support agriculture and food production.  The proposed “Rural Support Plan” provide 5 year planning that gets laid before the Scottish Parliament.  It is important that the Scottish Parliament use that plan to monitor progress, budget spend and allocations and to assess value for money.  Talking of money, the associated Bill text states “in broad terms, the government intends to maintain underpinning support …and to do so at similar levels to current direct support” a position reiterated by the Cabinet Secretary at the NFUS Autumn conference: “Direct payments will continue in Tier 1 and Tier 2. The envelope in Tiers 1 and 2 will take up by far the majority of our available funding. There will also be no cliff edge between the current system”.

Like learning the cha-cha-cha in Highland Dancing PE classes around this time of year many (many) moons ago, there are many moving parts to control as we navigate through new legislation.  Like those dancing classes in my youth, things will go wrong, toes will get trod on, tempers will get stretched and some may end up in tears. But as Stephen Good in the Just Transition Commission reminded me recently “the status quo no longer has any status” but we must support people and industries during transition.

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