Bull Hire Scheme

– in the Scottish Parliament at 5:00 pm on 15th January 2009.

Alert me about debates like this

Photo of Trish Godman Trish Godman Labour 5:00 pm, 15th January 2009

The final item of business is a members' business debate on motion S3M-2932, in the name of Jamie McGrigor, on the future of the bull hire scheme. The debate will be concluded without any question being put.

Motion debated,

That the Parliament notes the proposals to abolish the current Bull Hire Scheme for crofters; is aware of genuinely felt concerns among crofters over this proposal and the potentially more costly and inconvenient options that might replace the scheme; believes that the current Bull Hire Scheme has widespread support within the crofting sector and has played an extremely important part in maintaining the quality of cattle stock in the crofting counties, and further believes that some form of bull hire scheme is in the best interests of crofters and stock quality in the crofting counties.

Photo of Jamie McGrigor Jamie McGrigor Conservative 5:06 pm, 15th January 2009

Little did I think, in 2004, when I secured a debate on a similar motion, that I would be required to seek another debate on the subject less than five years later. I thank members of all parties for supporting my motion on a scheme that virtually all of us still know as the bull hire scheme, which has been around since 1897. Peter Peacock has lodged a similar, useful motion on the issue, which I have supported.

As a Highlands and Islands MSP, it is my job to speak out about the concerns of my constituents, so I make no apology for seeking a debate on an issue that is legitimately of great concern to many hundreds of my crofting constituents. A crucial point that I want to emphasise to the minister is that the current bull hire scheme has helped greatly to maintain stock quality and health in the Highlands and Islands.

The debate is not just about animals; it is about helping people to stay in remote areas. The former chairman of the Scottish Crofting Foundation, Norman Leask, who comes from Shetland, impressed that point on me, and Jim Lugton from the Scottish Council for Voluntary Organisations said that a lack of quality improvement would lead to a fall in numbers, which would result in a smaller gene pool and a drop in future quality.

The future of crofting depends on having the best possible produce for the marketplace. Rather than diminish that aim, the Government should do all in its power to support it. Many crofters say that sheep quality has suffered since the tup hire scheme came to an end. We cannot allow that experience to be repeated in the beef sector, especially when the reports of the Scottish Agricultural College and the Royal Society of Edinburgh both highlight the worrying decline in stock numbers. Why does the Government want to withdraw a proven and successful scheme?

The scheme does not benefit crofters alone. Many of the female calves of well-bred bulls in crofting communities go on to supplement the breeding herds of farmers across Scotland, thus ensuring quality from a clean, disease-free source. Many arable farmers fatten the crofters' bullock calves. Cattle enhance the rural habitat and environment and enable crofters to enter environmental schemes to maximise income; under the less favoured areas scheme, mixed livestock units are favoured.

Ministers seem to think that some sort of private hire scheme will replace the current scheme, but my crofting constituents are certainly not convinced and have legitimate fears about the future, which I share. As the Lewis and Harris cattle producers group has pointed out, there is no feasible private hire provision for Lewis and Harris. The alternative, which would result in crofters having to buy bulls and to provide winter housing facilities for them, is cost prohibitive for most crofters, even with the grants that may or may not be forthcoming through the highly competitive Scottish rural development programme.

The Lewis and Harris group suggests that a typical 30ft by 40ft shed would cost about £25,000 without pens. The cost of buying bedding and feed to winter bulls on Lewis and Harris is at least 25 per cent higher than it is in Inverness. Does the minister know how much bales of straw and hay cost on Lewis and Harris? A bale of straw costs £25 and a bale of hay costs £35.

Ministers seem to use two reasons—jointly or singly, depending on the spokesman—for justifying their plan to abolish the scheme: its cost and its legality under European Union rules. I would like briefly to deal with those two points, and I hope that other members will expand on them.

The 2007-08 annual report of the Crofters Commission shows an overall loss of £140,000. That is £100,000 less than the loss in 2006-07, and it was achieved through increased receipts and lower running costs. Many crofters have suggested to me that receipts could have been even greater if more flexibility had been allowed in relation to the timescale for crofters applying to the scheme.

The scheme makes a small loss each year, but I ask the minister to tell us what percentage of overall support to the crofting sector it amounts to. Would not most sensible people think that it is a small price worth paying to ensure that healthy and quality cattle thrive throughout the Highlands and Islands? I would be amazed if the minister can guarantee that his alternatives will not inconvenience crofters, and that they will cost the taxpayer less.

The Crofters Commission's website makes it clear that the scheme is permissible under de minimus state aid. What has changed? Has the legal advice that was given to the previous Scottish Executive, which specifically said that the scheme could continue perfectly well under those rules, suddenly altered? If so, will the minister publish it? I asked my colleague Struan Stevenson MEP about it. He was very clear: in that regard, nothing has changed since 2004.

I ask the minister whether he agrees with this quotation from a previous debate on the matter:

"In similar situations, other Governments, such as those in Ireland or France, would fight tooth and nail for their producers, especially when the case is there to be made."—[Official Report, 19 May 2004; c 8572.]

Those are not my words, but the words of Mr Russell's now fellow minister, Argyll and Bute MSP Jim Mather, in the 2004 debate. Mr Mather also argued that the treaty of Rome allowed the scheme to continue, as it promoted the economic development of the Highlands and Islands.

Surely what was good enough for the Lib-Lab goose in 2004 is just as good for the Scottish National Party gander now. Speaking of geese, it is considered worthwhile—rightly—to spend many hundreds of thousands of pounds on a goose project, so surely £140,000 on improving the bull hire scheme is money well spent.

Mr Mather made a key point in 2004: the issue is about fighting for our producers, as every other country in Europe does. There is a strong case to be made for that. The minister has a reputation for being clever, which I agree with, and politics is the art of the possible. It cannot be beyond his and his officials' abilities to come up with some form of continued centrally run bull hire scheme that meets any EU objections—assuming any exist—maintains stock quality and retains the support of the vast majority of crofters, the Scottish Crofting Foundation and environmental organisations such as the Royal Society for the Protection of Birds. If the minister is not able to do that, many of my constituents will, I fear, continue to suspect that some ulterior motive is involved, perhaps to do with how much money might be released from the sale of the two remaining stud farms.

I look forward to the minister's response to this important debate. I am sure that he will know that this is the Chinese year of the ox; it should also be the Scottish year of the bull. The eyes of crofters from Argyll to Wester Ross and from the Western Isles to Shetland are on him now, and I ask him not to let them down.

Photo of Alasdair Allan Alasdair Allan Scottish National Party 5:13 pm, 15th January 2009

I congratulate Jamie McGrigor on lodging his motion. As members know, crofting is the most marginal of all marginal agricultural activities, to the point where I have seen puzzled looks when it is explained to people from outside the crofting counties what crofting actually involves and how little financial return can be expected from it. The future of livestock in the crofting counties is, as Jamie McGrigor said, crucial to those communities. Lamb prices are often prone to collapse, so the future of cattle is particularly vital if we are to attract new entrants to crofting.

I have made representations to ministers, asking them to consider the retention of the bull hire scheme in its present form, but I recognise that we should start from our current position. The challenge now is different: it is to ensure that whatever replaces the old scheme meets crofters' needs.

I welcome the reassurances that the Government has already been able to give: that there will be Government assistance to meet the needs of communities that require to keep a bull; that the Government will be sympathetic to providing the buildings and overwintering costs for that to be achieved; and that the existing stock in Inverness might be disposed of at minimal cost. The question is how we can ensure that all those positive ends are met. This evening's debate provides a useful opportunity to consider that. Crofters who used the old scheme are keen to engage constructively.

One thing is certain: it is beyond the powers of most crofting townships to keep a bull. In addition to the scale of the financial undertaking, there is the risk. People face the prospect of going all the way to a mart in Perth and, on the basis of a few seconds' inspection, making a judgment that will determine the stock quality of future generations of cattle. There are also practical questions. Where would the bull be overwintered? Who would maintain the buildings? In these days when crofters have other jobs, who would tend to the animal during the day?

We must also consider—shall I put it this way?—the importance of maintaining harmony within crofting communities. I know that the minister understands what is involved in a crofting dispute. I have examples in my live constituency files that have their origins in the 1920s. For that reason, we should, if possible, avoid any situation that leads to debates within townships about which croft should have the bull when.

There is little to be gained if we do not turn our attention to positive solutions. There is no doubt in my mind that those solutions, albeit that they might not involve a centralised stud in Inverness, will have to involve units bigger than individual townships. That means that we will need a continuing Government involvement in some shape or form, if only to allow bigger local units to build up the infrastructure that is needed to find such solutions. In the islands, because of the lack of any viable commercial alternative, there must be continuing Government involvement in the provision of advice on and assistance with the keeping of bulls.

When I met local crofters to discuss the matter, they raised various questions, including how we can ensure that the state aid rules do not hinder Government assistance and how we can ensure that the resources that the Government allocates to the provision of bulls through the SRDP are, to use an appropriate phrase, ring fenced. If the minister addresses those questions tonight, he will bring us much closer to the solution that we all seek. He will also go a long way to reassure the crofting community and ensure that it remains viable to keep cattle in our most fragile communities.

Photo of Rhoda Grant Rhoda Grant Labour 5:17 pm, 15th January 2009

I, too, congratulate Jamie McGrigor on securing this important debate.

The bull hire scheme ensures that there is cattle production in the crofting counties, but one of its other main benefits is that it improves herd quality and health. The Crofters Commission buys good- quality bulls and ensures that they are of HI Health status. To maintain that status, the animals need regular health checks. The standards ensure that a premium is achieved when the calves are sold. Crofters who buy their own bulls cannot afford the checks that are required to maintain HI Health status, so those who remain in cattle production will not achieve the same price for their stock and will have a much greater financial outlay.

The Minister for Environment has said that crofters will receive bulls free at the end of the scheme, but it is unlikely that HI Health status will be maintained from that point on, due to the cost. That will lead to an immediate economic impact, and in addition the cost of buying a replacement bull will have to be met in three years' time. Based on this year's prices for bulls, the cost could be £3,000 to £4,000.

The Crofters Commission guarantees a replacement bull if there is a problem with the original one. If the crofter owns their own bull, there is no back-up and their whole breeding system could be lost. By the time they realise that there is a problem, it will be impossible to buy or rent a replacement.

The Crofters Commission changes the bull that is provided to each crofter every three years, thereby avoiding genetic problems. Crofters who own their bull but cannot afford to replace it every three years will encounter genetic problems due to interbreeding. That will be detrimental to the entire cattle breeding industry in the crofting counties because inconsistent quality reflects not just on the individual crofter but on the whole industry.

There are also health and safety issues and concerns about the cost of safe transportation. There are problems throughout the crofting counties with the initial transportation of new bulls, but they are magnified hugely in the case of the islands. Sometimes, several ferry journeys are required in vehicles that are not suitable for the purpose. There are also overwintering costs to consider where the land and facilities are not suitable for the keeping of a bull. When a crofter wants to keep a bull locally, they will need to build new facilities and pay for winter feed, as Jamie McGrigor pointed out.

Bulls are dangerous animals and need to be housed and handled properly. Failure to do that raises animal welfare concerns. Those are real issues that are pertinent to the debate. Unfortunately, I do not have time to go into them in detail, but I hope that the minister examined them carefully before he made his decision.

The bull hire scheme is an example of good practical help that can sustain farm enterprises in our most remote and rural areas. The cost of the scheme is the same everywhere—in Shetland or in the inner Moray Firth. It breaks down geographical barriers and provides a level playing field. I fear that without it we will see a rapid decline in cattle numbers and further economic and environmental damage. The affected communities are interdependent, and the policy has the potential to have a serious knock-on effect on their sustainability. I make a plea to the minister to listen to the real concerns that have been expressed and to reconsider his decision.

Photo of Rob Gibson Rob Gibson Scottish National Party 5:21 pm, 15th January 2009

I, too, am a veteran of the previous debate on the issue in 2004. I am sorry that in 2009 we have not solved the problem; indeed, the costs of the bull hire scheme have dropped since 2004, because the scheme has been used by fewer people. The uncertainty that has been created in the past four and half years is unfortunate. As a member of the Scottish Crofting Foundation—I refer the chamber to my entry in the register of members' interests—I believe in the value of sustainable communities. As I said in 2004, Government can achieve such communities if it manages to find a way through the maze that is thrown up by the way in which state aids kick in.

In 2004, Allan Wilson, the Deputy Minister for Environment and Rural Development, stated:

"The trading accounts are available for everyone to see and for the EC state-aid units to inspect. It is what they think that matters. DEFRA's legal advice in this respect is categorical—as is our own. As a result, we will move forward in the way that we said we would."—[Official Report, 19 May 2004; c 8580.]

The legal advice to the Scottish Executive at that time was that state aid rules kicked in, so the scheme had to be changed.

The Scottish Government has inherited a tighter financial situation and a drop in the number of people who are keeping cattle. According to Allan Wilson, the scheme cost about £600,000 a year, but Mike Russell estimates that, in its present form, it costs between £300,000 and £400,000 a year.

The order of the day is that we must find means within the law of continuing and developing the scheme. I am interested in hearing how the Minister for Environment thinks that he can integrate such means into the package. I understand that it is possible to provide money for overwintering under the SRDP. I believe that the Government is considering providing further help on transport in the next spending round. That would be useful in respect of hired bulls, although obviously not those that have been bought.

The cost of modernised stud farms is an area of contention about which there have been various rumours. In 2004, there were rumours that ministers wanted to sell off the farms. Today, the minister should make a definitive statement on the issue in his response. The Cook report suggests that there are major problems with all the options that were considered in September last year. The report states:

"Among the stud options renovating and simplifying the existing site, or a new Greenfield stud farm, are the most financially attractive, but they rely on development land sales to become truly attractive."

That is okay if the money is available but, at a time when property sales are declining, it is a double bind to have to sell one bit of land to buy another. The report concludes:

"They have potentially serious market distorting effects which could threaten their State Aids position and close them down in future."

Photo of John Scott John Scott Conservative

Does the member accept that the logic of his argument is that the existing site should be redeveloped if its development land value is non-existent?

Photo of Rob Gibson Rob Gibson Scottish National Party

I will finish on this point and let others take it on from there. If stud farm facilities are renovated on the existing site and brought up to modern standards, the scheme could cost in the region of £290,000 a year to run after capital expenditure. That is why we need a new way of making progress.

Photo of Liam McArthur Liam McArthur Liberal Democrat 5:25 pm, 15th January 2009

Like others, I too congratulate Jamie McGrigor on securing the debate. His motion, on which he sought views from across the parties, reflects a measured and sensible response to the Government's insistence that the bull hire scheme be scrapped.

Of course, Mr McGrigor has previous in lodging motions on the bull hire scheme; members have referred to the similar debate in 2004. The issues with which the minister is now wrestling are not new, and I am sure that in his closing remarks he will remind us of that with his customary delicacy and diplomacy.

The 2004 debate is also a reminder of the voyage undertaken by the SNP from Opposition to Government. In that debate, SNP speakers showed little of Mr Russell's trademark diplomacy. I am aware of the dangers of attempting to quote the current Minister for Enterprise, Energy and Tourism, but Mr Mather opined in 2004:

"Given the popularity of the scheme and its undoubted effectiveness, it is hard to understand how downgrading a livestock quality improvement scheme conforms with common agricultural policy reform, which emphasises the need to improve farm product quality."—[Official Report, 19 May 2004; c 8571.]

What Mr Mather lacks in pith, he makes up for in sincerity. His point was well made.

In the same debate in 2004, Fergus Ewing, who is now Mr Mather's ministerial colleague, quoted the then president of NFU Scotland, John Kinnaird, as saying that the changes to the bull hire scheme were "a draconian step". Mr Ewing went on to note, with obvious disdain:

"Mr Kinnaird is not a man given to hyperbole."—[Official Report, 19 May 2004; c 8564.]

That is not an accusation that could be levelled against the minister for first ministerial apologies and getting things resolved.

The Government's dilemma with the current bull hire scheme appears to be based on both cost and state aid rules. However, both the Scottish Crofting Foundation and NFUS have sought advice on state aid rules that would appear to call into question the assertions that the minister and his officials have made. NFUS has been in direct contact with European Commission officials. A detailed response is awaited, but Commission officials have made it clear that they see no inherent difficulty with a bull hire scheme.

In relation to cost, there appears to be scope for efficiencies. However, abandoning the scheme altogether would result in a reduction in livestock numbers, quality and health. The implications of that for those living in crofting counties are extremely serious. As both the SCF and NFUS make clear, smaller producers cannot afford the cost of quality bulls. Overwintering proves especially problematic, and the risk to smaller herds is acute. As most members and the mover of the motion would accept, some change from the status quo may be inevitable—and possibly even desirable—but complete abandonment should not be an option.

This morning, I spoke to a constituent of mine—Michael Cursiter of HI Health Ltd, which has offered to run a successor scheme. HI Health is a not-for-profit, farmer-led and health-accredited operation. That is encouraging, as it suggests that HI Health has the requisite expertise in managing stock and the requisite credibility within the agricultural community to make a success of a scheme.

Mr Cursiter says that, although subsidy would still be required, costs could be reduced. Purpose-built sheds—accessible by tractor and with bedded pens and bull-handling facilities—would obviously be required. That could allow the sale of the current prime site, but would require an alternative, relatively central site. I am told that Dingwall, whose mart is enjoying some success at present, might be a sensible option worth considering.

Retention of the bull hire scheme is not the sole answer to retaining livestock in our remote areas. However, its removal will certainly exacerbate the already serious decline. I hope that the proposals submitted on behalf of HI Health will be given full, urgent and constructive consideration by the minister and his officials.

The message from the chamber this evening has been clear. What the Government is proposing is wrong-headed and will be opposed strongly. However, there are options that the minister can take forward, and I urge him to do so.

Photo of Sarah Boyack Sarah Boyack Labour 5:29 pm, 15th January 2009

I, too, welcome the debate and congratulate Jamie McGrigor on his success in securing it. As he observed, he and Peter Peacock had complementary motions that we wanted to sign. We wanted a proper discussion in the chamber, and we wanted to show crofters that we were listening to their concerns and wanted to support them.

We have debated before the economic benefits of crofting and the need to consider crofting as a way of life that is important to Scotland because it sustains the population in some of our most fragile rural communities. We have also discussed the importance of crofters' cattle in sustaining the quality of our environment, our unique wildlife and our landscapes. Powerful arguments for a bull hire scheme have been made by crofters, by RSPB Scotland and by NFUS—and they do not always argue the same position. For both those organisations to brief us in advance of tonight's debate and to come up with broadly the same proposals says a lot. I hope that the minister listens to them as they urge us to ensure that the scheme is saved.

Does the Government have a legitimate role in running a bull hire scheme? I believe absolutely that the answer is yes. It is a pragmatic and sensible solution to the genuine problems that crofters have of operating in marginal areas. As other members have said, the scheme has lasted for more than 100 years. Every Government since the turn of the previous century has concluded that it is a worthwhile role for it to take on. If government is about anything, it is about achieving collectively what we cannot achieve individually, and there could be no better example of that. I would be interested to hear, in the minister's concluding remarks, whether he agrees that it is a legitimate role for the Government.

Even if the minister argues that that is not a legitimate role for the Government, he cannot simply wash his hands and walk away from the current arrangements. It is up to him to find an alternative collective arrangement. For the Scottish Government to abandon the scheme would be for it to say that market forces should prevail, although the evidence shows that they simply cannot for our most remote crofters and those in rural areas where there are no economies of scale.

The minister's stated objective is to see cattle numbers maintained in hill and island areas. We agree completely with that objective. Sadly, we are currently seeing a decline in those numbers, and ending the scheme could only speed up that decline. It may even mean the end of cattle breeding on some of our islands. I listened carefully to the comments of Alasdair Allan, who had some important points to make in the debate.

There would be negative wider economic effects, but ending the scheme would also have environmental effects. That is why RSPB Scotland gave us such a strong briefing before the debate. We often take the landscape of our crofting communities for granted, but it is the result of many years of stewardship and extensively based farming and crofting in areas that are hard to farm. There are difficult weather and soil conditions to deal with and none of the economies of scale that many of our other farming communities are able to deliver. Let us not make things harder for our rural and crofting communities.

The minister has previously cited the Shucksmith report and its recommendation as his reason for acting. However, Shucksmith made his recommendations before the Cook report revealed that the alternative of a decentralised scheme would be more expensive and that private hire would be unlikely to work because there is no private market. That is particularly an issue in our island communities. If anything, the evidence is that the number of private hires is declining for health reasons. The minister did not accept other Shucksmith recommendations; he does not have to accept that one.

I hope that the minister will listen to the good arguments that have been put in the chamber and outside it, as the previous minister did when we debated the issue four years ago. I urge the minister not to proceed with his plans and to acknowledge the importance of retaining cattle numbers to the protection of some of our most important rural landscapes and wildlife. I urge a rethink. He should look at the current scheme, survey cattle numbers and consider the potential environmental impact before acting. He should listen to the suggestions of crofters, RSPB Scotland and NFUS. Our crofting communities need certainty, confidence and our support—they do not need to be fobbed off to the SRDP, in which we know that they have no confidence.

Photo of John Scott John Scott Conservative 5:33 pm, 15th January 2009

I declare an interest as a farmer and member of NFUS, although I have not benefited from the bull hire scheme. I, too, congratulate Jamie McGrigor on securing his second debate on the retention of the bull hire scheme.

In our previous debate on the bull hire scheme, almost every member who spoke noted that the scheme played an important role in improving the quality of livestock and in supporting the viability of crofting in the Highlands and Islands. Fergus Ewing hoped that there would be cross-party support for Mr McGrigor's message, which he endorsed. In support of Mr McGrigor's motion, Roseanna Cunningham urged the minister to

"listen to the people whose livelihoods and very way of life will be seriously and negatively affected by the proposed changes."—[Official Report, 19 May 2004; c 8567.]

Rob Gibson and Jim Mather both offered their support. Jamie McGrigor and Liam McArthur have already alluded to Mr Mather's previous enthusiasm for the scheme. They were right then, and if they were offering the same support tonight they would be right now. Sadly, only Rob Gibson is in the chamber, and I have to say that I was disappointed by his remarks and change of tone.

The bull hire scheme is vital for a number of reasons. First, as Rhoda Grant noted, it aids the improvement of store and breeding cattle in the Highlands and Islands. Store and breeding cattle off the superior sires that are available under the scheme fetch higher prices for producers, and the price differential between good and poor-quality stock might mean the difference between profit and loss for and the viability and non-viability of small farming and crofting enterprises.

In environmental terms, keeping cattle on the hills and uplands significantly supports biodiversity in general and upland bird life in particular. In that respect, I note the RSPB's well founded concern about the loss of the bull hire scheme and the danger that it will lead to further destocking in those areas.

However, the concerns that have been expressed by the RSPB and me relate to more than the bull hire scheme. Not for nothing are these remote areas of Scotland designated by Europe as fragile areas. Peripherality, high rainfall levels, distance from markets and cost of production make it harder to produce food there than elsewhere in Scotland, the rest of the United Kingdom and Europe. At stake is the viability of communities that produce food and support the environment and biodiversity.

For me, the food production aspect of farming and crofting in the Highlands and Islands is most important. As far as food production, food security and self-sufficiency are concerned, we must stop the exodus of farmers and crofters, their families and their animals from large parts of rural Scotland. In the past year alone, we have lost thousands of cattle and tens of thousands of sheep from Scotland's fragile food-producing areas. We have all seen the Royal Society of Edinburgh's report on the future of Scotland's hills and islands and the Scottish Agricultural College's report "Farming's Retreat from the Hills", and we in the Parliament must take action now to stop this dangerous loss of food-producing capability.

That is why the scheme is, in a way, iconic. Keeping it would send out the message that our Government cares about people, food production and food security. Although the alternative of allowing the scheme to end will not stop beef production in these remote and fragile areas, it will be another nail in the coffin of quality food production in them.

Today, the minister must either reverse his decision to scrap the bull hire scheme or at least put something similar in its place. Although delivering the scheme costs buttons in terms of the overall Scottish Government budget, it is a symbol of the Government's commitment to the continuation of food production and environmental enhancement in the north and west of Scotland and elsewhere.

Photo of Trish Godman Trish Godman Labour

Given the number of members who wish to speak, I am minded to accept a motion under rule 8.14.3 that the debate be extended by up to 30 minutes.

Motion moved,

That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Jamie McGrigor.]

Motion agreed to.

Photo of Dave Thompson Dave Thompson Scottish National Party 5:38 pm, 15th January 2009

I, too, congratulate Jamie McGrigor on securing this important debate.

There is no doubt that the bull hire scheme has had a positive effect on the maintenance of cattle quality and numbers, provided environmental and agricultural benefits, and, over the past 100 years, encouraged local economic activity. Those points are not contested. The scheme's demise has caused serious concern, which I am sure the minister will address. However, the fact is that the scheme is neither economically viable nor allowable under state aid rules. The important point is to implement its replacement as soon as possible. The Shucksmith report said that there was no justification for the scheme's continued existence, and the SAC found it poor value for money, even in terms of genetic improvements to crofters' cattle. Moreover, to comply with state aid rules, the charge for hiring a single bull would have to be increased 150 per cent, from £500 to £1,250.

Photo of Jamie McGrigor Jamie McGrigor Conservative

The member said that the scheme was no longer viable, but it has always been subsidised and has always been part of a subsidy to crofters. Why should things be so different now?

Photo of Dave Thompson Dave Thompson Scottish National Party

The scheme is not viable. I am going to talk about that.

As I said, to comply with state aid rules, the charge for hiring a single bull would have to be increased by 150 per cent, from £500 to £1,250, which is beyond the means of crofters and would make the scheme financially unviable for them and the Government. Indeed, the Cook report suggested that

"only unsubsidised private hire, AI and/or away-wintering are fully State Aid compliant."

Some people say, incorrectly, that the Scottish Government has totally underestimated the importance of the bull hire scheme, and claim that it is determined to undermine it. Coincidentally, they are the same people who began the review of the scheme under the previous Administration and oversaw its rundown while in power. The SNP Government is producing a viable alternative that will meet crofters' needs while being economically justifiable. I look forward to hearing the minister's comments on that.

Of course the crofting community is right: cattle numbers must be maintained in the Highlands and Islands. It is true that agriculture in the Highlands and Islands needs access to good bulls. I back the NFUS vice-president Stewart Wood, who stated to the committee of inquiry on crofting on 3 April 2008:

"It is essential that crofting remains a vibrant and viable sector as it plays a very important part in Scottish agriculture and makes a large contribution in providing good quality breeding stock to the wider industry."

To that end, I am sure that the Scottish Government is determined to replace the old scheme with a modern solution that maintains the quality, health and sourcing of stock at a reasonable cost to the crofter and the Government. I am sure that the new scheme will bring benefits to the crofting community at large through overwintering and sourcing bulls as well as through mitigating the transport costs in remote areas to ensure that those areas are not disadvantaged.

It is obvious that the current scheme has become financially and economically impossible to maintain. Recently, only 430 crofters have utilised it. However, with those 430 crofters in mind, I urge the minister to ensure that the replacement scheme has the same health and quality standards and accessibility as the old scheme, and that, most important of all, it is operational by the time that the current scheme closes.

Photo of John Farquhar Munro John Farquhar Munro Liberal Democrat 5:42 pm, 15th January 2009

Like other members, I congratulate Jamie McGrigor on securing this debate. Like me, he is a poor crofter from the west of Scotland.

As many members have said, the Crofters Commission's bull hire scheme has made a tremendous contribution over many years to the improvement of crofting cattle quality throughout the Highlands and Islands. There is evidence of that.

I pay tribute to the late Alistair Coutts, who was the manager of the bull stud farm at Inverness. Sadly, he passed away last year. The current chief executive of the Crofters Commission, Nick Reiter, described his death as a great blow to crofting in light of his tremendous contribution over 20 years to improving cattle quality and crofters' knowledge of and skills in professional animal husbandry. He did indeed make a great contribution. Nick Reiter said:

"Wherever you travel in the crofting counties, if you see a herd of fine quality cattle, I would wager that Alistair and his team would have played a major hand in making it so: that is as fine a legacy as anyone could wish for."

I thank Alistair for all his efforts.

The effort that has been made over many years to improve the quality of crofting cattle goes to the heart of the reason why the bull hire scheme is so important. As everybody knows, we live in a competitive market. Crofting counties cattle can remain competitive in the marketplace only by continuous efforts to improve them. If the bull hire scheme goes, it is likely that we will lose the improvements in cattle that have been worked for and gained over the past few years. We will lose the quality and health of the animals and we will lose our place in the market, which the crofting community has been very proud of, because it has been able to compete with the best of them over the years.

I understand the economic case for selling the 669 acres on the edge of Inverness where the bull stud was established. Despite the economic downturn, it must still be worth a great deal of money. I understand that one of the farms is earmarked to be the site of the new university of the Highlands campus. If the sell-off is inevitable, the proceeds must be kept in trust for future crofting projects, particularly the bull hire scheme.

The state aid rules were mentioned. In our previous debates, it was always suggested that the scheme was illegal under the current state aid rules. I do not think that that is correct: I understand that it has been determined that it is quite legal to run such a scheme. Perhaps the department wants to get rid of the responsibility. If so, any money gained from the sale of the properties should be directed towards establishing a private stud bull hire scheme, which might be better value for money.

Photo of Peter Peacock Peter Peacock Labour 5:46 pm, 15th January 2009

Like others, I welcome the fact that Jamie McGrigor has secured tonight's debate and I was happy to sign his motion. I was also happy to see that he signed my complementary motion.

There is widespread concern among crofters about the decision that the Government has taken. However, concern is widespread not just among crofters. As Sarah Boyack mentioned, RSPB Scotland has expressed real concern, as has the North West Cattle Producers Association. Buyers in the south are expressing concern about the impact on them and the stock that they will be able to purchase. The NFUS briefing for tonight's debate is an excellent summary of all the scheme's benefits and makes an excellent case for keeping the scheme in some form.

The office in Inverness that Rhoda Grant, David Stewart and I use has received more than 400 contacts from crofters about the matter. They express genuine, not contrived, anxiety about the future. They are concerned about the potential end to cattle production on some of our islands and in some of our most remote communities. They are also concerned about the threat to the quality of stock, and to the health of cattle; that brings a threat to the reputation of Highland stock, and with that comes a threat to the price. That is all hugely important to crofters. There is also a threat to habitats in which cattle have a helping role. In that regard, closing the scheme goes against the Government's objectives on the matters that I have mentioned. As others have said, the scheme is pragmatic and practical, which is why it has lasted for more than 100 years.

I note that state aids have crept into the argument in recent times, although the minister did not mention state aid rules as a reason for ending the scheme when he made his announcement last October. I have been exploring this matter, using the Scottish Parliament information centre to help, and I can find no reason not to continue under the current de minimis limits. Recent currency fluctuations support that argument and make it more certain that the scheme would meet the de minimis limits. That conclusion is supported by the views of NFUS, which has researched the matter, and those of the Scottish Crofting Foundation. If the minister has reasons for arguing that the scheme does not qualify under the de minimis limits, will he please set them out in great detail so that we can scrutinise them adequately?

Even if there are challenges in the future, or if the scheme were ever to get above de minimis in meeting EU rules, surely it would be worth negotiating with the EU in an attempt to find an accommodation that would allow the scheme to continue. I have no doubt that the EU is not out to get the west Highlands of Scotland, which will be affected most, although many other parts of the Highlands and Islands will be affected too. The EU is not made up of unreasonable people, despite what the popular press write about it, and there is a case to be made to keep this excellent scheme. Jim Mather and Fergus Ewing made those points only a few years ago.

Dave Thompson referred to the costs of the scheme, as did the minister in his October statement and subsequent press comments. The costs that Dave Thompson quoted include assumptions about investments, but we should be clear that those investments have not been made.

There is therefore no major cost difference between the year that we have just entered and the previous year, or indeed next year, if current projections are carried forward. Possible changes to capital charges covering accounting rules for Government might make the scheme even more secure as a proposition.

Since the costs were published, the Cook report has shown that, whatever the costs of the current bull hire scheme, the alternatives are either more expensive or problematic. The decentralised scheme that Shucksmith wanted would be much more expensive. Private hire arrangements, which are part of the minister's solution, are not a runner because there is no real private market. Private hire people are getting out of the market because of health concerns. In a private market, there would be no guarantee that people could get a bull and there would be no guarantee of its health or quality. That is not a viable alternative.

As others have said, the bull hire scheme is a good scheme. Crofters are reasonable people who are very concerned about the decision. Their simple request to the Government is to reconsider and reverse the decision that it has taken.

Photo of Michael Russell Michael Russell Scottish National Party 5:50 pm, 15th January 2009

I, too, congratulate Jamie McGrigor on securing tonight's debate. I was not present at the previous debate—I was detained elsewhere for a number of years so was unable to attend—but I am sure that that debate also exposed strongly held views and was thoughtful, as tonight's debate has been. Having read that debate, I do not think that it was quite as free of political invective as tonight's debate will be, because I will make a single political point—Liam McArthur anticipated it, so I shall make it—before addressing the substance of the debate.

The important political point that I will make at the beginning is this: whatever Government was in office at this time—whether it was this Government or that of our predecessors, who might have limped on—it would have reached this point. This point has perhaps been exacerbated and come a little sooner by the failure of our predecessors to invest in the scheme. Indeed, our predecessors negotiated the sale of one of the main farms. However, any Government would have got here for a range of reasons. I am glad to say that this Government is producing a range of new possibilities. Having shown the reasons why we have got here, I will go on to talk about the new possibilities that exist.

Not only one but two independent reports have questioned the benefits of the bull hire scheme. I am surprised that no one has mentioned the 2003 report—undertaken for a previous Government—in which the Scottish Agricultural College concluded that the scheme did not represent value for money in terms of genetic improvement of crofters' cattle.

Photo of Michael Russell Michael Russell Scottish National Party

No, I want to make a little progress. I know that the member will dispute the report.

That report was unequivocal in suggesting that the scheme did not do what members have claimed for it. That is not to say that the scheme did not do that in the past—John Farquhar Munro was absolutely right to pay tribute to the work of Alastair Coutts—but, by this decade, the scheme was not delivering those advantages.

Secondly, I specifically asked members of the Shucksmith inquiry to consider how the bull hire scheme should go forward. Without demur, they said that the scheme needs to be replaced. Therefore, the decision has not been a whim of this Government or of this minister but has been subject to consideration over a period of time. I believe that that consideration would have been reported in the same way to any other Government, which would have found itself in the same position.

I will take Liam McArthur's intervention.

Photo of Liam McArthur Liam McArthur Liberal Democrat

Will the minister confirm that the SAC report was the same report that his ministerial colleague, Fergus Ewing, denounced as having an ulterior motive behind it?

Photo of Michael Russell Michael Russell Scottish National Party

I cannot deny the truth, but I am not Fergus Ewing. I was not present at that debate. I regard that report as being part of the mosaic of evidence. Who knows what individuals will say in the heat of debate that might later be quoted against them? I am sure that even Mr McArthur will find himself in that position in future.

There are strong reasons why independent advisers have said that the scheme has come to the end of its useful life. Those assessments include problems that exist with state aid. I have not said—and do not say—that the scheme could not continue to run under state aid de minimis arrangements but, as I shall show in a moment, the risk that is run is becoming commensurately greater the more that the scheme costs in terms of individuals. That is a problem. However, the central problem is that a lot of money is being spent on very few people. Only 433 of the 13,000 crofters benefit from the scheme. That is low by anyone's reckoning.

We have not only independent advice that the scheme is not producing the right genetic results, but the Shucksmith committee's consideration of the scheme in the widest context. There is also the basic issue of affordability.

Photo of Michael Russell Michael Russell Scottish National Party

Let me first finish the point, Mr McGrigor.

In those circumstances, it is absolutely right for us to ask whether the scheme is the best way in which to spend public money. In September 2007, I raised the issue with the Scottish Crofting Foundation at its annual general meeting and asked it to consider the point. As a Government and a people, we spend something close to £43 million on crofting. It is entirely legitimate for us to do that—the spend is about £1,300 per man, woman and child—but we must constantly ask whether the money is targeted in the right way and whether it is producing the right result. Regrettably, in this case, it is not. However, there are alternatives.

Photo of Jamie McGrigor Jamie McGrigor Conservative

The minister made the point that only 433 crofters benefited from the scheme. Does he accept that several thousand cows benefited?

Photo of Michael Russell Michael Russell Scottish National Party

I am afraid that the productivity of individual bulls is a matter on which I am not nearly as well briefed as Mr McGrigor is. I take his word for it.

In 2004, when the cost per hire rose to £500, there was a decline in take-up. If the scheme were to continue into the future, the cost would have to rise to £1,250. That near 150 per cent increase in charges would result in yet lower take-up. There is no doubt that take-up is cost sensitive. In those circumstances, the economics and benefits of the scheme would no longer stack up. It does no service to either crofting or crofting interests in Scotland to deny that. The important thing is to find alternatives.

Photo of Michael Russell Michael Russell Scottish National Party

No. I want to make progress. Indeed, I need to; I have only two minutes remaining and I want to lay out some alternatives.

First, as we have said, stud farm bulls will be offered to ex-hire groups at a set cost. That will allow appropriate groups the opportunity to adjust to the ending of the hire scheme and to set up their own hire operations, should they wish to do so. Alasdair Allan pointed to the difficulties in doing that, but there are circumstances in which it will be appropriate.

We have made it clear that the crofting counties agricultural grant scheme can provide assistance with building overwintering facilities and for the transportation costs that are involved in overwintering on the mainland. SRDP money will be made available for alternatives. Of course, there is always the alternative of artificial insemination.

I am pleased to say that I can add to the package. I want to ensure that crofters get independent advice. People fear that they do not know enough to be in this market. That is a problem. I encourage any organisation that has experience to come forward and make a proposal to offer targeted, individual advice to crofters on bull hire, the use of artificial insemination and other methods. I am certain that that could be assisted under the SRDP and in other ways. Indeed, I imagine that bodies such as the Scottish Agricultural College and possibly even the Scottish Crofting Foundation would find it useful to offer such services. Liam McArthur spoke of emerging alternatives. If people have a scheme that they want to bring about, I am happy to sit down with them and discuss the matter. All that I am saying is that the current scheme does not, cannot and will not work.

I have overrun my time, Presiding Officer, and I am aware that you are keen to conclude the debate. My final point is this: I want the resources that are tied up in the scheme to be liberated for the benefit of crofting. I have said a number of times that I want the benefit that will accrue from the sale of stud farms to be applied to crofting. I want to ensure that we take no money out of crofting.

I am repeating myself, but I say again: it does no benefit to crofting to carry on with things that do not work. We have to find things that work. That is what I am devoted to doing.

Meeting closed at 17:58.