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CAP Clarity Needed to Curb Uncertainty

09 September 2013

SCOTLAND, UK - Positive developments include the flexibility available to deliver support to new entrants, pragmatic ‘greening’ options for grassland farmers, the potential to couple support to vulnerable sectors and modelling on the options available to move existing businesses to an area-based support system.

Although budgets are becoming clearer, uncertainty still surrounds the level that base area payment rates are likely to be set at and whether the Scottish Government will opt to transfer more of the direct support (Pillar One) funding pot to rural development measures (Pillar Two) than is currently transferred through modulation.

There are also worries about the impact that the three-crop rule and requirements around environmental focus areas could have on our arable sector.

Through ongoing dialogue with its membership, NFUS is aware that the level of uncertainty across all sectors is contributing to a number of Scottish farmers considering changes to their farming set-up or postponing business decisions that would they would normally make in a more stable operating environment.

The Scottish Government’s planned consultation on CAP Reform implementation is expected soon and NFU Scotland has already been speaking to members round the country on what their priorities are. On beef production, NFUS is undertaking an intentions survey to establish what beef producers need from the CAP in order to halt falling production levels and stabilise these. On Friday, the Union’s Livestock and Less Favoured Areas Committees will sit down together to examine CAP implementation.

NFU Scotland’s Director of Policy Jonnie Hall said: “Detail on CAP implementation in Scotland is firming up but we need that process to gather momentum, bring an end to uncertainty and allow businesses – both new and established – to make plans for the future.

“Our priorities on CAP reform from day one remain solid. Direct support has to be targeted at active farming and productive farm businesses. That means Scotland has to implement the move to area-based support in a way that recognises the productivity of Scotland’s wide and varied agricultural land.

“For new entrants, the good news is that our priority of having mechanisms to put them on an equal support footing with established businesses from the start of the new arrangements is in place. The CAP political agreement mapped out two ways for new businesses to get into the new system and gain full area support from the outset. There is a further safety net through an on going national reserve. That provides for a comprehensive deal for new entrants.

“For existing businesses, we are minded to support options on a transition period to area-based support to allow these businesses time to adjust.

“On the greening element to support payments, grassland farmers should have little to fear from the CAP deal but there is still a lot to do in establishing practical and sensible equivalence measures acceptable to those who grow crops in Scotland.

“With a limited budget, it's also essential to look at tools to target support to active but vulnerable producers. Coupled payments for beef calves, including beef cross calves, draws funding to those largely farming on improved and improvable grassland but helps protect the area payments on our better land.

"Given the huge area of rough grazing in Scotland, and it's own inherent variability, it's also pretty clear we need apply a low area payment to such land to avoid blowing the budget, with farming activity supported through coupled beef and/or sheep payments in order to target limited funds. Again, that would also protect area payments going to arable land and help meet our priority on ensuring area based payments on this ground are as close to the rates paid on similar land elsewhere in the UK.

“That said, budget and the level that area-based payments will be pitched at are creating uncertainty at farm level. We know there will be a cut to the overall budget but the biggest decision will revolve around how much the Scottish Government opts to transfer from the Pillar One direct support pot to rural development measures in Pillar Two and whether this will exceed what currently shifts through modulation.

“With no requirement to match fund, that has the potential to leave a sizeable hole in the funding left for direct support and a speedy decision from Scottish Government on this element would help the decision-making process for farmers.” 

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