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10/12/15 15:25

Parliamentary Statement on CAP Payments

Cabinet Secretary for Rural Affairs, Food and the Environment Richard Lochhead
Scottish Parliament
10 December 2015

I’m pleased to update Parliament on our progress towards making 2015 payments under Pillar 1 of the new Common Agricultural Policy.

However before I do, I want to touch briefly on two immediate issues affecting farmers.

First, the Forth Road Bridge closure, which is having an impact on some farmers - and on the wider food and drink sector.

The Government was quickly in contact with the animal feed sector, the whisky sector and others. As members are aware, we secured an immediate relaxation of driver hours.

We’ve also been working with the industry to help improve contingency planning.

We understand some livestock units only get feed deliveries once stock gets low - with no contingency.

Clearly that’s too risky, and so we’ve been working with stakeholders to help them be better prepared.

We’ll keep in touch with the industry to monitor the impact of the Forth Bridge situation. And, of course, we’ll seek to resolve the problem as quickly as possible.

The second immediate issue is the flooding that followed storm Desmond over last weekend.

Naturally the Government’s immediate focus was on families and businesses who were flooded out.

But we also must be conscious of any impact on our farming sector.

I’ve now had a full update from our agricultural offices who have told me that the impact so far on the sector has, fortunately, been minimal.

This has been confirmed by NFU Scotland.

But we will continue to monitor the situation.

As well as those challenges, our farmers and crofters have also been facing unfavourable market conditions, and an unhelpful exchange rate.

So, this has certainly been a challenging year for them.

Which is why we’ve known for some time how important it was to get the new CAP implemented as quickly as possible.

We’re talking about nearly £400m in the new Basic and Greening payments; £45m in the coupled support schemes for beef, and £8m for sheep; and, later on, over £60m in LFASS.

That represents substantial support for the sector.

But we also knew that this would be an unprecedented task for the Government.

This is the biggest CAP reform for a generation.

It’s the first time ever that Pillar 1 and Pillar 2 have been reformed in the same year.

In 2015, we will have launched nearly 20 schemes across both Pillars. Nearly all of those schemes are either brand new or significantly changed from the old CAP.

In Pillar 1 in particular, the changes are huge.

Some of those changes were imposed on us by Europe – like Greening, which is proving a major challenge for all member states.

There are also things we successfully negotiated with Europe, such as the Scottish Clause to tackle slipper farming and fair treatment for new entrants.

And there were policy choices we made here in Scotland – government and industry together, with the support of Parliament.

For example, having 3 payment regions, a 5-year transition from historic to area payments, and new coupled support schemes for the beef and sheep sectors.

There were consequences of this.

In the old CAP, we had two schemes in Pillar 1 [Single Farm Payment and Scottish Beef Scheme], both of which applied uniformly across the whole country.

Today, we have 6 schemes in Pillar 1 [Basic, Greening, Young Farmer top-up, Mainland Beef, Island Beef, Upland Sheep]. Every one of them involves geographic targeting.

That targeting is done in three different ways across the 6 schemes.

Now, we made those policy choices in order to tailor the new CAP to Scotland’s needs.

We had meeting and after meeting with industry leaders – discussions were intense but the decisions were right and strongly supported by the industry and Parliament.

We all made those choices with our eyes open.

And it was always made clear to the industry that more complexity would have an impact on the timetable. NFU Scotland have confirmed they knew about that, and accepted it.

We have to calculate around 4 million hectares-worth of new payment entitlements – not just for 2015, but for the whole transition period up to 2019.

Some administrations don’t need to do that, if they made different policy choices in the past.

In England, DEFRA decided to adopt area-based payments from 2005 after the last CAP reform – this means calculating payments in England is much easier, and they don’t have to define new regions or issue new entitlements. Despite this, they still face challenges.

Here in Scotland, we have to allocate around 400,000 fields into the three payment regions for Basic Payment.

That work is virtually complete, but it’s been a major undertaking.

Meanwhile our IT teams have been writing millions of lines of new computer code, to implement this complex new policy within the tight timetable imposed by the EU.

So where are we, as of today?

On 17 November, I gave the Rural Affairs Committee a written update.

I said we aimed to start payments with a first payment run that should cover around a quarter of claimants.

I said that the first payments should begin arriving by the end of December, the majority in January, and all farmers should get their first instalment in March – and the balance in April.

I also said last month that the first instalment payment would be at least 70%.

I can confirm today that we are on track for that start date for payments.

The first payment run to around 25% of farmers will get underway before Christmas with payments beginning to arrive in farmers accounts before the New Year.

I know also that everyone will be keen to know when his or her payment will be made.

The answer to this is the same under the new CAP as it was for the old one. It depends on the individual case.

Straightforward cases, perhaps where there has been little or no change from last year, should need less processing than others.

If the case is more complex – or if it’s one of the small percentage we have to inspect - then processing takes longer.

In some cases, the European rules require us to contact the farmer for more information. In that scenario, I would urge farmers to respond quickly, so that we can get on with processing their claim.

Farmers and crofters are also keen to know the value of their entitlements under the new CAP.

As required by Europe, we will by the end of the year issue to farmers illustration letters, setting out the number and value of claimed entitlements for every year from 2015 to 2019.

I have to emphasise that this will only be an illustration and is a European requirement and will not be actual payment.

Under EU rules, we must then confirm the final value of entitlements, after all claims have been processed, by 1 April.

So farmers will have full visibility of their 5-year transition.

I know people are looking forward keenly to getting this information. Here too the more complex cases may take a little longer than others.

If this causes problems for any individuals, they should contact their area office.

Or they can call our new helpline 0300 300 2222 which opened last week, to help customers get to grips with the complexities of new CAP.

We also sent an explanatory leaflet to all farmers in early December so that they know what to expect over coming months.

And we’ve been in contact with the banks, and I indeed I have met them personally, to encourage them to help the industry through the coming months.

This is undoubtedly a difficult time and I’d like to thank farmers for their patience.

We know how important these payments are. It’s an unprecedented task for the Government but we must get it right.

We cannot have Scottish farmers facing the chaos of incorrect payments, or the loss of funding through EU disallowance, that their counterparts elsewhere faced in the past.

The Scottish Government has an exceptional record of making CAP payments in previous years.

2015 was always going to be different. But no-one should doubt the government’s determination to deliver for the farming community.

The £440m of support that will be issued in the coming months through Pillar 1 of the new CAP alone is vital to support food production, our environment, and our rural communities.

Both the industry and myself, and I believe most parties in Parliament, agreed that even if it meant a different timetable, it was a price worth paying to ensure payments are as targeted and as effective as we can make them.

I urge Parliament to support the government’s work to make these much-needed payments, under this jointly-designed policy, as quickly as we can.