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Farm funding update

Published: 23 Mar 2016 16:11

First national LFASS payments authorised.

The first nationally-funded farm support payments have now been authorised, Rural Affairs Secretary Richard Lochhead has announced.

The Scottish Government has earmarked more than £250 million from national funds to provide cash support while Common Agricultural Policy (CAP) claims are being processed.

In an update today, Mr Lochhead confirmed:

  • National Less Favoured Area Support Scheme (LFASS) payments have now started, meaning almost 11,500 farming businesses in Scotland's most remote and rural areas will receive around £55 million in the coming weeks
  • More than 63 per cent of farmers and crofters have now had a first instalment of their EU CAP subsidy worth about 80 per cent of their basic and greening claim
  • The Scottish Government is on track to provide in April up to £200 million of nationally-funded payments to any eligible farmer or crofter who has not received an EU Basic Payment instalment by the end of March. Letters will be going out shortly with more information about the national support that will be paid and the small print legal terms and conditions the Scottish Government needs to provide.
  • The Single Application Form (SAF) online application window opened on March 15 as scheduled, and early feedback about system performance has so far been positive
  • Scotland's new £45 million Beef Efficiency Scheme is set to open for applications in April
  • More than 100 young farmers and new entrants have been allocated start-up grants from the Scottish Rural Development Programme, worth a total of more than £5 million.

The Cabinet Secretary said:

"We are continuing to do all we can to make support payments to Scottish farmers and crofters as quickly as possible. Around 63 per cent of CAP claimants have now had a first instalment of EU support that is worth about 80 per cent of their basic and greening claim.

"We know that, given the tough market conditions and extreme weather that affected many in recent months, some farmers are facing cash flow issues which is why the Scottish Government is using national funds to ensure farmers and crofters will receive support totalling hundreds of millions of pounds over the coming weeks.

"We have begun authorising nationally-funded LFASS payments and will shortly write to farmers and crofters who've not yet received a basic and greening first instalment with more information about how national support will be paid, and the small print legal terms and conditions that we need to provide.

"I fully accept that the IT system is not enabling us to process claims as quickly as we want. We are continually working to improve that, and this year's SAF window has opened as planned with positive feedback so far."

Commenting specifically on the launch of the £45 million Beef Efficiency Scheme, Mr Lochhead said:

"Beef is the powerhouse of Scottish agriculture, and this is a massive investment that has the potential to revolutionise the sector. Collecting and monitoring key information about cattle, including genetic data, will enable farmers to implement changes to improve the management and quality of their herd.

"In return, producers will receive financial support equivalent to about £32 per calf and, more importantly, be ideally placed to reap huge rewards in the longer term – namely, improving the quality, efficiency and sustainability of Scotland's beef herd, leading to higher profits and lower greenhouse gases.

"I urge all eligible breeders to apply for this unprecedented support when the scheme opens in April as I am keen to maximise the number of farmers who will benefit. We will be closely monitoring the number of applications later in the year to see if further action is needed to increase participation."

Jim McLaren, Chairman of Quality Meat Scotland who also chaired the Beef 2020 industry working group, said:

"The scheme was developed on the back of the last beef price downturn, and as prices and margins again come under pressure, the BES is a great opportunity to examine aspects of our businesses which can be trickier to get a handle on. This is a unique chance for Scottish Beef calf producers to improve their business efficiency with the aid of some very welcome financial support from Scottish Government. I urge producers to look at the scheme from that perspective and utilise the crucial extra management information which will be available to them as participants."

Chairman of NFU Scotland's Livestock Committee, Charlie Adam, said:

"We are delighted that £45 million has been committed towards further improving the efficiency of the Scottish beef herd. As an industry, we have never stood still and I hope this scheme sets some strong foundations for us to keep getting better. We welcome Scottish Government's commitment to fully explain the terms and conditions for the scheme before the application window opens in April. Over the next few weeks the industry is looking forward to finding out all the detail and obligations on the scheme and how it has the potential to transform their beef businesses."

Notes to editors

As of Tuesday March 22, 2016, 11,433 first instalments worth about 80 per cent of basic and greening payments had been made, which equates to 63 per cent of eligible claims.

Under the nationally-funded Scottish Government Basic Payment scheme any eligible farmers and crofters who have not yet received a first instalment by the end of March will receive a cash advance worth 80 per cent of their CAP claim unless they specifically opt out. Support under this scheme would be offset against the claimant's CAP payment. De minimis state aid rules will apply. See http://news.scotland.gov.uk/News/Farm-payment-advance-2389.aspx

The Rural Affairs Secretary announced details of the National LFASS Scheme on March 3, 2016: http://news.scotland.gov.uk/News/LFASS-cash-support-235b.aspx

Farmers and crofters who have submitted a basic, greening or LFASS application in 2015 will be sent a letter explaining what we plan to do and what it means for them. There is no need for them to apply but they should read the terms and conditions carefully. Any queries should be directed to the RPID customer helpline on 0300 300 2222.

EU rules expressly prohibit using EU funds to pay out on claims during the December 1 to June 30 payment window until they have been fully processed – and the extreme complexity of the policy in Scotland means it is taking longer than expected to process applications. The nationally-funded Basic Payment scheme and National LFASS Scheme draw on Scottish funds.

Scotland is required by Europe to this year move to a whole new basis for allocating funds based on area of land as well as implementing new greening measures and an overhaul of the rural development programme. In addition, at industry's request, the policy has been further tailored to Scotland's needs, including replacing two Scotland-wide direct income support schemes with six regionalised schemes – a huge administrative task which involves allocating almost half a million fields to one of the three new payment regions.

Other EU administrations, including England, Wales and Northern Ireland, are also making payments later than usual as a result of the new CAP, many of which are implementing reforms far less radical than Scotland's.

The Beef Efficiency Scheme and Young Farmer and New Entrants Start Up Grants are part of the Scottish Rural Development Programme, which is part funded by the European Agricultural Fund for Rural Development.

The Rural Affairs Secretary has previously announced the Beef Efficiency Scheme will be supported with £45 million over three years: http://news.scotland.gov.uk/News/Beefing-up-the-herd-17e9.aspx

Eligible breeders are being asked to gather and input information about their animals, including size and family lines, into a new national database using ScotEID which will be assessed along with genomic data. On the basis of this analysis, participating farmers will be required to identify three actions they will take to improve the management and selection of their herd. Under the scheme farmers will receive financial support which is likely to be in the region of approximately £32 per calf. Calving diaries were sent to beef farmers earlier this year: http://news.scotland.gov.uk/News/Beef-Efficiency-Scheme-20d5.aspx

More details of the Beef Efficiency Scheme, including terms and conditions, will be available ahead of the scheme launch in April. Farmers seeking support under the Beef Efficiency Scheme will be able to apply through the ScotEID website which will utilise existing cattle data systems to operate the scheme. In addition, claimants will need to submit a 2016 Single Application Form which is now available and can be completed online or by using a paper copy. https://www.ruralpayments.org

A total of 90 Young Farmer Start Up Grants and 14 New Entrant Start Up Grants have been approved.