Last updated Monday 19th June 2023.
Changes in Agricultural Support and Funding in Scotland
The agricultural show season is underway, and the future of Scottish Governments agricultural policy is a hot topic of discussion. With the end of the Common Agricultural Policy (CAP) in Scotland, many are curious about the level of future direct support and how it will be delivered.
Background: What is the Common Agricultural Policy?
The Common Agricultural Policy (CAP) is a policy of the European Union that provides financial support to farmers and rural communities. In Scotland, the CAP has been the primary source of income for most farms and rural businesses for many years. It has helped to support agricultural production, improve food security, and promote sustainable farming practices. However, with the UK's exit from the European Union, the CAP will no longer be available in Scotland. This means that the Scottish Government needs to develop a new policy to support farmers and rural communities. The new policy will likely be focused on promoting sustainable farming practices and improving the environment, but the details are still being worked out.
Future Support: How will the Common Agricultural Policy change?
There will be a transition period until 2025, and direct support in 2023 and 2024 will remain at the levels seen under the CAP. From 2025 onwards, a tiered system will be implemented:
Tier 1 Base Payment: Main support for active farming. From 2025, various conditions will be attached.
Tier 2 Enhanced: From 2026, additional support will be available to businesses that are farming and crofting for a better climate and for nature restoration. Evidence to demonstrate efficiencies, reduction of greenhouse gases, and works or practices that improve nature or demonstrate regenerative farming practices will likely be required as part of the application process.
Tier 3 Elective: From 2027, specific, targeted support payments to facilitate nature restoration, innovation, and supply chain improvement will be available.
Tier 4 Complementary: From 2027, complementary funding to undertake continuous professional development to develop skills and provide advice relative to new practices and innovation will be available. Demonstration of CPD may be a requirement to access public funding.
As mentioned, from 2025 being eligible to receive Tier 1 payments will require meeting “essential standards”. Agricultural activity; climate response; biodiversity gain; business efficiency outcomes; safeguarding animal health and welfare; worker rights; continuing with Greening, Cross Compliance requirements (Good Agricultural and Environmental Conditions (GAECs) and Statutory Management Requirements (SMRs)); and possibly the completion of a Whole Farm Plan are currently being considered, but no decisions have been taken on what will be included in the list of essential standards.
The requirements for Tiers 2, 3, and 4 are not clear, making it difficult to consider what actions or evidence will be required to support any claim under these Tiers. It is also unclear how much of the overall Scottish Government budget will be divided amongst the four proposed Tiers.
How can you plan for changes to the Common Agricultural Policy?
Baseline data collections may be required to demonstrate the meeting of essential standards under Tier 1, and it seems likely that they will be required under Tiers 2, 3, or 4. Businesses are encouraged to explore available funding to make a start on baseline data collection and consider current farming practices and any changes which can be identified and where improvements in efficiencies can be quantified.
Food Production or Environmental Stewardship?
There is a tension between agricultural production, food and supply chain security, and environmental benefits that does not appear to be easy to resolve.
What Happens Next?
The full transition plan will not be published until 2024, and the Scottish Government has already indicated that much of the detail may be provided under secondary legislation to be produced at a later date. With the policy behind the new support scheme not yet fully formulated, it is difficult for any land-based business to plan and budget for changes to business practices.
There is an inherent difficulty for any business in setting any budget where the income to be received by that business is not clear. There is also a risk that the focus on the main reason for providing direct support gets lost with such a broad program. More information is likely to be made available in Summer 2023.
Further updates to come, stay tuned. For more information on how to manage the challenges associated with a rural business, visit our web page here.
Last updated Monday 19th June 2023.