So much at stake with the new CAP arrival

Here we are, more than three years since negotiations on reform of the EU’s Common Agricultural Policy started and almost a year since the political agreement was reached in Brussels, and we are still trying to work out how the new CAP will be applied in Scotland when it comes into force on January 1, 2015.

The formal consultation with stakeholders has been completed and Scotland’s Cabinet Secretary for Rural Affairs, Richard Lochhead, has promised an announcement next month.

Little wonder that three of NFU Scotland’s hierarchy from Edinburgh, including national president, Nigel Miller, hot-footed it to Inverurie last Friday to meet Mr Lochhead and emphasise yet again the urgency of the situation and the need to come up with the right decisions for Scotland.

Admittedly, the situation has not been helped by the prevarication of the European Commission and the UK Government who have been playing ducks and drakes with the negotiations.

Even the vexed question of ensuring that the anomaly of slipper farming, which everyone agrees must be ruled out under the new CAP, is in the balance. It will be a travesty which will cause outrage if a formula is not found to rule out slipper farmers from being able to make claims for Single Farm Payment without doing much in the way of farming.

While time is of the essence, the union delegation warned Mr Lochhead that detailed decisions should not be rushed through to the detriment of active farmers.

Key to the outcome of the negotiations is finding a solution to how support for livestock producers in Scotland’s Rough Grazing Region (RGR) – which accounts for close to three million hectares of the country – is to be allocated.

The union is concerned that a flat-rate payment across the RGR, which would appear to be the favoured option of the Scottish Government because a graded system would be administratively difficult and would entail new software having to be written, could decimate genuinely active businesses while redirecting money to non-active farms and opening up a new generation of slipper farmers.

The solution, the union has suggested, is for the Government to recognise the hugely diverse nature of the region and enforce a robust activity requirement to ensure that only genuine active farmers are rewarded, with a safety net for active farmers falling below this level.

“As we move into the end game, we need to stay focused and prioritise outcomes despite CAP fatigue,” said Mr Miller.

“The outcomes must reward active producers, avoid potentially damaging redistribution of support and must not drag new money into the hills from lowground regions where budgets are already cut.”

Much is at stake with a budget of £70 million allocated for support in the RGR. The easy answer would be a flat rate payment, which would work out at around 25 euros per hectare, but, says Mr Miller, would create “brutal” redistribution of support with extreme winners and losers.

For example, farms carrying a significant stock of ewes and stocking rates of two ewes per hectare could see historic support on a flat rate system cut by more than half to a meagre 12.50 euros per ewe which would almost certainly trigger a new cycle of destocking.

The other side of the coin is that low intensity claimants (i.e. slipper farmers) activating big tracts of land could finish up with 75 euros per ewe on RGR land. An estate comprising 90% RGR with the benefit of in bye land or lambing parks, stocking at 0.5 livestock units perhectare, would have the potential to secure more than 130 euros per ewe.

“Multiply these numbers over thousands of low intensity hectares in Scotland’s RGR and a new madness will bleed money away from productive farmers,” Mr Miller has warned.

“The creation of a system which allows extreme over-compensation over large areas of low intensity grazing is unacceptable, especially when many active hill farmers will also be big losers.”

Increased coupled payments linked to livestock could be an option and would open up a powerful targeting tool. But it would require co-operation from the UK Government to utilise unused UK coupled support and, with relationships terse, the Scottish Government may walk away from this route to avoid politics and complexity.

“Coupling remains the most accurate technique,” Mr Miller says. “It will create fewer anomalies and generate the highest level of budget efficiency. But it is also the most intensely political option.”

The final outcome, Mr Miler insists, must provide sustainable support for active farmers in the RGR (equivalent to 30 euros per ewe or more, avoid the creation of a new era of support for slipper farming by over-compensating low intensity grazing and ensuring support for beef suckler herds, including an enhanced beef scheme for the fragile area and the islands.

“Securing these three RGR targets can enable active farming and communities in the hills and islands to have a future and underpin the rural economy,” he says. “Failure will open up a new era of slipper farming, lost opportunities and reduced production.”

Following a meeting with UK Environment Minister, Owen Paterson, in Edinburgh last week, the union is supporting the efforts of DEFRA in England to have the damaging “three crop rule” dropped.

The rule is being introduced by Brussels to combat monoculture and increase crop diversification. It is not an issue in Scotland and could have an impact on farmers specialising in the growing of malting barley for the whisky industry.

“We have consistently highlighted the damage that crop diversification requirements could wreak on arable production in Scotland and we fully support moves to have this nonsensical element of CAP reform reviewed at the earliest opportunity,” says Mr Miller.

“The proposed “three crop rule” will force Scottish growers away from established markets and instead of being market-focussed in the crops they grow, look to grow other crops simply to secure the greening element of the support available.”

Many environmentalists agree that the three-crop requirement, when compared to more traditional crop rotations, will not add diversity to an already mixed landscape.

There is still much to play for as negotiations on the implementation of the new CAP in Scotland reach a conclusion.

Let’s hope common sense prevails.