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LFASS cash support

Published: 3 Mar 2016 17:07

Payments for most vulnerable farmers and crofters.

Payments under the Less Favoured Area Support Scheme (LFASS) will be made by the end of March.

In a meeting with industry representatives, Rural Affairs Secretary Richard Lochhead confirmed the Scottish Government will provide cash support within weeks to almost 11,500 farming businesses in Scotland's most remote and rural areas whilst basic payments are being processed.

Mr Lochhead also reaffirmed that the Scottish Government is doing everything in its power to make as many farm payments as quickly as possible within the EU payment window which runs until June 30. As of Wednesday, almost 10,000 first instalments worth about 80 per cent of basic and greening payments have been made – which equates to almost 55 per cent of eligible claims.

Mr Lochhead said:

"I recognise that farmers and crofters in Scotland's very remote and rural areas are particularly vulnerable to the tough market conditions and extreme weather that have been exacerbating cash flow issues in the industry. For them, LFASS can be a lifeline.

"LFASS payments have always started in March and, to avoid delays, the Scottish Government is taking action using national funds to ensure the vast majority of claimants will receive payments in March as usual.

"Given the importance of LFASS to Scottish agriculture, the Scottish Government's view – which was supported by industry – is that this should be a priority.

"Our nationally-funded scheme for LFASS claimants will see almost 11,500 farm businesses in Scotland's most remote and fragile areas automatically get a payment, injecting almost £55 million more into Scotland's rural economy over the coming weeks.

"This is the first year of a radically reformed and exceptionally complex Common Agricultural Policy (CAP) which has had a knock-on effect on payment schedules here in Scotland and elsewhere in Europe. Whilst I have always been clear that decisions taken with the industry on the complexity of the new policy would prove extremely challenging to implement, it is taking far longer to make payments than we had hoped.

"The majority of Scottish farmers and crofters have now received a direct payment worth about 80 per cent of their basic and greening claim and the Scottish Government is applying every measure to ensure the IT system is able to make speedier payments.

"For farmers and crofters still waiting for their basic and greening payment who may be facing financial hardship, the Scottish Government has earmarked £20 million to provide a safety net for the sector at this difficult time. I recently announced details of the new scheme and it is still open for applications."

The Cabinet Secretary also gave an undertaking to continue examining options to help any farmers or crofters whose applications are not processed by the end of March.

Scottish Crofting Federation Chief Executive Patrick Krause said:

"The Scottish Crofting Federation very much welcomes this initiative. A lot of crofters will be really pleased to hear payments will be made by the end of March, as LFASS is so important to us. It is great to see the Scottish Government is being so creative in finding ways to ease crofters' cash flow concerns during this difficult time."

Following the meeting, Scottish Tenant Farmers Association (STFA) Chairman Christopher Nicholson commented:

"Farmers across Scotland will be pleased to hear that the Scottish Government is making plans to ensure that the vast majority of LFASS claims will receive a payment by the end of March with most getting 90% of the previous year's claim. This will provide vital liquidity to Scottish agriculture at a time when farm cashflows are under pressure."

Notes to editors

The £65.5 million Less Favoured Area Support Scheme (LFASS) provides essential income support to farming businesses in remote and constrained rural areas. Payments last year started in the middle of March. The Scottish Government has received more than 12,200 claims for this year's LFASS scheme.

Under the Scottish Government's National LFASS Scheme, around 8,000 farmers will receive a payment worth 90 per cent of last year's claim, while another 1,400 crofters and small farmers who are eligible for the minimum LFASS payment of £385 will receive that in full. The level of payment to the remainder of eligible claimants will depend on various factors including changes to their land since 2014. Support under this scheme would be offset against the claimant's final LFASS payment. De minimis state aid rules will apply.

Most farmers and crofters who have submitted a 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 or do anything until they get their letter. Any queries should be directed to the RPID customer helpline on 0300 300 2222.

As of Wednesday March 2, 2016, 9,755 first instalments worth about 80 per cent of basic and greening payments had been made, which equates to almost 55 per cent of eligible claims.

Farmers and crofters who have not yet received a first instalment on their Basic and Greening payment and cannot access support from their bank are still able to apply to the Scottish Government for an interest-free cash advance worth 60 per cent of their CAP claim, up to a maximum of £20,000. A formal letter from the bank declining support will be required to support applications. Application forms are available from the Rural Payments and Services website, or by calling 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 National LFASS Scheme draws 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.