Common Agricultural Policy Health Check

Part of the debate – in the Scottish Parliament at 3:04 pm on 21 January 2009.

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Photo of Richard Lochhead Richard Lochhead Scottish National Party 3:04, 21 January 2009

We will respond further on that. I assure Alasdair Allan and other members who represent constituencies in the Highlands and Islands that we are committed to supporting our crofting communities and that we are working hard to replace the current bull hire scheme—which does not provide value for money—with successor arrangements. I would be delighted to have my colleague Michael Russell, who is taking a close interest in the issue, contact interested members with more details over the next few days.

Quality food that is produced in Scotland often commands a market premium. Producers need to continue to deliver products that fit niche markets, as we simply do not have the capacity to compete in major commodity markets. Scottish production benefits from an emphasis on quality rather than just quantity. It is that quality that has earned Scotland a reputation throughout the world for food and drink that bring economic benefits to the tune of £410 million for Scottish food exports and £3.3 billion for Scottish spirits exports. The spirits industry is, of course, underpinned by raw materials that are produced by agriculture in Scotland.

Over the festive period, Scots certainly enjoyed local produce. The Scotch Butchers Club reported increased meat sales, which in one case went up by more than 20 per cent. However, producers must not take their eye off the ball. There is a constant need to monitor the market and to adjust production to meet consumer needs. That is why the Scotland rural development programme funds schemes such as the skills development scheme and whole-farm reviews, which help farmers to develop their businesses and make the most of their assets. In addition, there are monitor farms, which are a great example of the industry helping itself through group discussions and sharing of information. Recent analysis shows that every £1 that was spent in a monitor farm resulted in a return of £6.50 in increased productivity and improved efficiency.

Just like many other sectors, farming needs to adapt and evolve to respond to the market. Farmers continue to face significant challenges, which some people say are all the greater because the CAP has failed to modernise quickly enough by moving from production-based to market-oriented support. Although the decline in livestock production on our hills is perhaps an inevitable result of the decoupling of support from production, it is nevertheless a cause for concern among all members.

2009 will be an extremely important year. There are major policy decisions to make on the key resources that can help agriculture to meet the challenges ahead: the CAP, the LFASS and the SRDP. When times are hard and resources tight, it becomes even more important to be absolutely certain that we use the considerable sums that are already available to achieve the best possible outcomes for rural Scotland.

As far as the CAP is concerned, even though the health check was not a major reform, it represented a good deal for Scotland—we achieved our key objectives and did not cross any of our red lines. In particular, we secured flexibility over the Scottish beef calf scheme and secured the right to continue the scheme; we made the playing field more level right across Europe and we ensured that any changes from the health check did not disrupt our options here in Scotland. As NFU Scotland said, the health check agreement is

"a positive way forward for Scotland's farming industry".

The primary legislation has been finalised, but we need to wait for the European Commission to publish detailed implementation rules. However, we must start to consider how to use our hard-won flexibilities. We will need to make several key decisions in partnership with the industry. In each case, the conflicting priorities will need to be weighed up to ensure that a solution is found that meets Scottish needs.

The decision on article 68, which funds the Scottish beef calf scheme, will be crucial as it could offer a means to maintain livestock numbers. Any form of top-slicing creates losers as well as winners—it would be foolish for any of us in the chamber to ignore that. I hope that our debate today will help to inform the debate about the balance of advantages. With stakeholders, we will consider whether the scheme should continue and, if so, in what form. We must be clear about the outputs that we want to achieve, and we must ensure that the industry can deliver what the people of Scotland want.

The SRDP is providing social, economic and environmental benefits across Scotland. However, given the current economic climate, I have said that I am committed to a swift but thorough review of the SRDP to consider whether changes are needed so that we can be certain that the programme's priorities are fit for purpose in 2009 and beyond. I will be discussing the details of the review when I meet the programme's monitoring committee next week. We will learn the lessons that have to be learned from the first year of operation of the SRDP. Let us not forget that the SRDP is hugely valuable for Scotland—the rural priorities scheme alone has approved nearly £60 million-worth of projects before the first full year of the programme is complete.

Looking to the future, it is imperative that we give our farmers clarity on the direction of travel and on the timing of any changes. Any changes that we make now must be in tune with our longer-term vision for agriculture in Scotland. At the recent Oxford farming conference, I set out my vision for Scottish agriculture. The Scottish Government is developing a clear vision for Scottish agriculture that reflects Scotland's distinctive characteristics and needs. We want a vision that involves on-going direct support for farming.

It is sometimes hard for people who are not linked with farming to understand why Government support is still necessary. However, the Scottish Government simply does not buy into the United Kingdom policy of removing direct CAP support for farming and food production in Scotland. Removing direct support would halt farming in many parts of Scotland. We believe that food production and the capacity to produce food are in the national interest and should be supported as long as that is necessary.

The vision of the Department for Environment, Food and Rural Affairs seems a long way from the multifunctional type of agriculture that is described in the European model for agriculture, which has the support of much of Europe. Scotland can be proud to count itself in with the majority view rather than the minority UK view.

My firm view is that what we need is, in effect, a new updated contract between farmers and society, through which our Scottish vision can be delivered. The contract should be clear about the outcomes that are expected in return for direct financial support. It should recognise the importance of food production but it should also require delivery of other public goods. The contract should deliver a Scottish agricultural industry that produces for the market, whether that means the food or energy markets or other markets such as tourism—an industry that gains recognition for the public goods that it provides, whether economic, social or environmental, and that is appropriately regulated, rather than overregulated. We could call that a vision based on natural resource productivity that ensures that Scotland makes the best use of a very valuable resource—our land.

We must also consider the basis of future single farm payments. It is clear to me that the historical model for the SFP is increasingly untenable, especially given the understandable calls for greater linkage with activity. I believe that stakeholders agree with me, and I want to address these difficult choices sooner rather than later. Some people argue for support to be focused on the most productive farming, but others suggest that those areas already get too much support and that future support should be targeted at remote and fragile areas where the challenges and the need are greatest.

The health check broadened out the options for starting to move towards a flatter rate for single farm payments. Industry's input will be crucial as we consider what approach will be best for Scotland as we face up to challenges and try to avoid unintended consequences.

The health check focused on the CAP from now until 2013. There will be discussion in the European Union budget review on the post-2013 direction of the CAP. However, some things are fairly predictable: for example, there is unlikely to be more money for the CAP in the future. In fact, there may be less.

We need to start firming up our options for 2010 onwards. We will need to make tough decisions with stakeholders on how we should use the flexibilities to deliver the farming that Scotland needs. We will also need to think ahead to the post-2013 period. Scottish farming is distinctive because of its land, climate and population, including its remote and fragile areas. Those are things to consider as the Government delivers its vision.

In conclusion, 2009 is a pivotal year for Scottish agriculture. I am very keen to hear Parliament's views on some of the key decisions that we, as a nation, must take. I hope that we can all agree that we must support active farming—farming that produces food for our tables, that safeguards and enhances our spectacular landscapes and natural environment and which continues to sustain our rural economy.

I move,

That the Parliament, noting the recent agreement in the Council of Ministers on the European Commission's legislative proposals for the Health Check of the Common Agricultural Policy (CAP), acknowledges the Scottish Government's commitment to work with stakeholders on how key aspects of the proposals should be implemented in Scotland and on the longer-term implementation of CAP in Scotland and believes that future decisions must reflect the distinctiveness of agriculture in Scotland and support a dynamic and competitive industry with farmers playing their full part in achieving the Scottish Government's purpose of sustainable economic growth through food production and the environmental management of our agricultural land, combined with the delivery of other economic and social public goods.