Royal Highland Show
Thursday 19 June, 2014
I want to start by noting that this is the first Royal Highland Show since the death in March of Joe Watson, the farming editor of the Press and Journal. At events such as this – where he was a fixture for so many years - he is much missed.
When the first Royal Highland Show was held, on Boxing Day in 1822, approximately 65 cattle were exhibited on an acre of ground - the prize money totalled £75.
Now, it is the biggest event of the agricultural year in Scotland. There are 5,000 sheep, cattle and horses, across 110 acres of land, with total prize money of £200,000. It is a perfect showcase for the quality of our farming and food and drink sectors. It’s a pleasure to be here.
This has already been a big week for food and drink in Scotland. Yesterday Richard Lochhead launched the next phase of the Scottish Government’s food and drink strategy.
Richard Lochhead, of course, is now Cabinet Secretary for Rural Affairs, Food, and the Environment– it’s a change in job title which highlights this Government’s determination to provide the leadership and support this great industry deserves.
The document we published yesterday proposes a new aspiration for Scotland – Becoming a Good Food Nation. The quality of our natural ingredients is a selling point in countries around the world. But we need to be a land of food and drink - not only in what we produce, but also in what we eat, sell and serve on a daily basis.
When you consider the scale of some of Scotland’s public health challenges, that’s a hugely important task. For example we know that bad diet contributes significantly to conditions such as heart disease and diabetes. And so our vision of a good food nation recognises that food and drink is central to our collective wellbeing, as well as our economic prosperity.
The excellence of our food and drink industry provides a good basis for achieving our aspiration. In recent years, the sector has enjoyed huge success.
Food manufacturing in Scotland has grown three times more quickly than in the rest of the UK – by 13% rather than 4%. Since 2007, retail sales of Scottish food and drink brands in the UK have risen by approximately 30%; overseas exports have risen by 50%.
Some of these exports are traditional – Scottish beef and salmon, or Malt Whisky. Others are more innovative. Yesterday I spoke at a National Economic forum meeting with James Watt, who runs the Brewdog Brewery. Brewdog began with two friends selling beer out of the back of a truck. Last year, it had exports of £18 million. It now sells to 42 countries, and runs a network of bars in cities such as Tokyo in Japan, Gothenburg in Sweden, and Sao Paulo in Brazil.
It gives me great pleasure to know that if their teams have lost, distressed football supporters from around the world, gathered in Brazil, will be able to drown their sorrows with a beer brewed in Aberdeenshire! And it gives me even greater pleasure to know that Scotland, in some way, is being represented at the World Cup!
These success stories are largely due to our fantastic natural resources, and the skills of those in the sector. But devolution has also helped. It’s created a government and a parliament with the ability to give Scotland’s food and drink industry the importance it deserves- prioritising food grants for 175 projects; promoting the industry overseas; and establishing a highly successful industry partnership under Scotland Food and Drink.
The point I’m going to make this afternoon is that although devolution has been good for farming, food and rural Scotland - independence would be even better.
It would be better in terms of domestic policy, since we would have the full range of powers we need to support those sectors - and it would also be better for us in international negotiations.
I’ll start with a very straightforward example about support for the red meat sector. Last August I wrote to David Cameron about the red meat levy, which is used by Quality Meat Scotland to promote Scottish beef, lamb and pork.
Nine years ago, the Radcliffe Review of Agricultural Levy Bodies recommended that livestock levies which are collected at abattoirs, should be returned to promotional bodies based in the animal's country of birth. That’s an important issue here, since a large number of Scottish lambs, pigs and cattle go through English and Welsh abattoirs.
But the Radcliffe Review’s simple solution still hasn’t been implemented. David Cameron made it clear – in his reply to me - that it won’t be, any time soon, under his Government. As a result Quality Meat Scotland lost out on £1.6 million last year, which went to the levy bodies down south.
Money taken from Scottish farmers, which should have been used to market our livestock, is instead being used to promote meat from elsewhere on these islands. It’s a ridiculous situation. It should have been addressed under devolution; it will be resolved with independence.
Even more importantly, independence will ensure that Scotland can represent ourselves on the international stage.
At the moment, the UK Government speaks for us in all international negotiations with our key third country export markets.
I was amused to find Owen Paterson this morning claiming that Scotch Whisky sales in China were a great success for UK diplomacy, and that Scotland “will just never have that reach it just doesn’t have the personnel” to work with China to clamp down on counterfeit Scotch.
I was amused first, because it’s a reminder of one of the more absurd scare stories to come from the UK Government. They claimed that a major risk of independence was that UK embassies would no longer promote whisky. I’m sure that our multi-billion pound whisky industry could probably get by in any event…
Besides, as the Scottish Government knows to its cost, embassies already charge us for the receptions to promote Scotch whisky!
But also, Mr Paterson’s claim suggests that I must have been imagining things when I thought I was in the meeting in July 2010 when Zhi Shuping, the then Deputy Minister of AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine), made the commitment to grant Geographical Indicator of Origin status to Scotch Whisky. I was maybe also imagining things, when I led an earlier delegation in China in 2009, which made progress on the issue.
Of course, Owen Paterson wasn’t in office when the agreement with China was signed, so he might not have been aware of the Scottish Government’s role. Just as he doesn’t seem to be aware that the first developed country to negotiate a trade deal on food with China was New Zealand – a nation of 4.5 million people - back in 2008. New Zealand has been able to sell lamb to China for several years. Scotland is still waiting for that opportunity.
The Scottish Government, working with industry, has helped to deliver major successes – such as opening up the USA and EU markets to our beef, and the Chinese market to our salmon. However we’re still losing tens of millions of pounds each year by not being able to sell lamb to China, beef to Japan or whisky to India in its proper form. Opening up those markets requires focussed attention by a sovereign government. That rarely happens at present - Richard Lochhead was told by the Foreign Office, during his mission to the Far East, that beef exports to Japan were not on their list of priorities. With independence, food and drink would be a key priority for Scotland’s network of overseas offices. The negotiations we need, would be likely to happen, much, much, more quickly.
Scotland would also benefit hugely from being able to represent ourselves in the European Union. First, we would be free from any threat of being forced out against our will, if the rest of the UK votes to leave in the planned referendum in 2017.
Secondly, we currently suffer in terms of Common Agricultural Policy payments. In fact, we can actually quantify how much we lose out, by not having a seat at the top table.
Last week, Richard Lochhead announced the CAP allocations for Scotland between now and 2020. It’s a package which provides important support for farmers –especially for productive land – and whose rural development allocations provide significant further funding for forestry, environmental protection and rural broadband. It involved some very tough decisions, and we recognise that not everyone can benefit – but it’s been widely regarded as a fair allocation made under difficult circumstances.
I know there was a particular welcome for the £45m of new money we have set aside for improvements to the beef industry and its supply chain. I’m very grateful for the tireless work of Jim McLaren and his Beef 2020 Group, who gave us their recommendations today on how to use that funding.
The frustrating thing about last week’s CAP announcement is that it could and should have been so much better for Scotland’s farmers.
For pillar 1 of CAP – direct farming support - Scotland currently receives the third lowest rate of payment per hectare of any country in the EU. By 2020, under the deal negotiated by the UK Government, we will receive the lowest rate in the entire EU. Not only will we be bottom of the table, but the gap between Scotland and the rest is widening. We will get 68 Euros per hectare less than the second lowest country.
An independent Scotland could have benefited from a rule that by 2019 no member state would receive less than 196 euros per hectare in direct payments to farmers. Instead of a 12% real terms cut to our budget, we would have had a 34% rise. That in itself would have resulted in payments to our farmers worth an additional billion Euros - £850 million - in the period to 2020.
Now, as many of you know, two years ago, the EU partially recognised how bad a deal Scotland gets. As a result, it awarded the UK Government an uplift of more than 200 million Euros. The increase was solely a result of low payments here in Scotland. But the funding didn’t come to Holyrood, it went to the Treasury; only 16% was then passed on to Scotland.
The UK Government’s argument for withholding the money was that many Scottish farms are very large. And so Scotland gets more money per farmer than the rest of the UK, even if we get much less money per hectare.
However, at exactly the same time as the UK Government made this argument, it changed its own rules. Producers with less than 5 hectares of land don’t count as farms any more – a move which significantly reduces the number of eligible farms in England. Payments per farm in England will go up substantially as a result – and that removes most of the differential with Scotland. So the UK Government’s only argument doesn’t hold water. It is shortchanging Scotland – not just according to our arguments, but also according to its own logic.
And it’s not just direct payments to farmers where we get a bad deal – it’s also rural development funding, pillar 2 of CAP. Scotland gets the lowest rate of support for rural development anywhere in the EU.
If we had been able to secure a similar deal to Ireland, in terms of funding per hectare for the period to 2020, this would have given us about 3 billion euros. Instead, we received half a billion euros.
An extra €2.5 billion is a huge sum of money. Indeed, the Government economists have calculated that this entire additional subsidy would support an additional 5,500 jobs.
For example, we could have quadrupled the budget for helping the food and drink sector. We could have trebled both our support for new entrant farmers and our funding to enhance Scotland’s protected sites. And we could have doubled our support for farmers in the most remote areas.
The consequences of this are far-reaching. To give just one example, I spoke about Scotland’s food and drink industry earlier. It’s entering a golden age. It’s actually so successful that we’re starting to encounter limitations of product – we could sell even more beef and dairy if we had more farming activity in those sectors.
We need to be able to support existing producers and encourage new entrant farmers. Our CAP settlement makes that much harder. So the UK’s negotiating position on CAP is potentially highly damaging to one of Scotland’s great economic success stories.
It is incomprehensible that Scotland is losing out - and by Scotland, I don’t mean the Scottish Government. It is our farmers, crofters and land managers – the stewards of natural Scotland. It is our rural businesses, the agricultural supply chain, families and communities who are missing out because we have no direct representation in Europe.
There’s something puzzling about all of this. We were told today – in fact we’re often told - how much we benefit from the UK Government’s expertise, its size, its “clout” in international representation. So the obvious question is – why does Scotland get such a bad deal?
At heart, this isn’t about mistakes – although the UK Government makes a fair number of those. And it’s not about bad intentions. It’s about priorities. It is a fundamental and inevitable consequence of the fact that decisions about Scotland are being taken, by a parliament where Scotland only has 9% of the MPs.
At Westminster, none of the three largest parties are in favour of production-related income support for farmers. And so inevitably, no UK Government argues at all for better levels of support.
At Holyrood, there is a different view – it’s not just held by this Government, but by all of the major parties.
I often talk about the profound democratic deficit in Scotland.
I’m 59 years old. For more than half of my life, Scotland has been ruled by parties with no majority. At the last four UK elections, the Conservatives in Scotland have won 0, 1, 1, and 1 seat respectively.
But what we can see with income support for farmers, is something even more striking – it’s not just voters who make different choices in Scotland, it’s the parties themselves. The same political parties hold different views, depending on whether they are speaking in the Scottish Parliament or at Westminster!
That’s not surprising. Food and drink is five times more important to Scotland’s economy than to the rest of the UK. Many parts of Scotland depend on the food and agriculture industries. Nowhere in Scotland is far from rural or agricultural land. And so all political parties want to ensure the sustainability of rural and remote communities. It’s an issue where there’s a fundamental divergence of priorities between the two parliaments. And the consequence is that farmers in Scotland are unlikely ever to get the deal they deserve, under the current constitutional arrangements.
That question of priorities goes beyond farming and agriculture. It’s apparent across our society and our economy; and it directly affects the wider sustainability and prosperity of rural Scotland.
Let’s take, for example, digital connectivity.
The Scottish Government’s Highland and Islands contract with BT is one of the biggest engineering projects anywhere in Europe. It involves 800km of fibre on land, and 400 km on the sea bed.
Last year, fewer than 4% of premises in the Highland local authority area had access to next generation broadband. By March 2016, 84% will – that’s more than 170,000 homes and businesses. And we will ensure that progress continues after 2016. We’ve reversed every previous decision on investment.
But we still face constraints. Spectrum auctions are designed at a UK level. That’s a major reason why third generation mobile coverage in Scotland lagged more than six years behind Sweden’s.
The 4G mobile auction took more account of rural needs, but several Scottish Government proposals were ignored – for example we suggested setting coverage requirements for each local authority area, to ensure fair treatment of different parts of the country.
With independence, we could use spectrum licensing – together with regulatory and tax powers - to develop the communications infrastructure Scotland needs. It’s a good example of an area where independence would make a big difference to rural and remote communities. Because with independence, we could design policies which match the very topography of our priorities.
You can already see some of the ways in which an independent Scotland will give new powers and a new voice to rural and remote areas.
On Monday, I launched “Empowering Our Island Communities”, which promised steps to recognise the unique status of our islands in the constitutional framework of an independent Scotland. It also made a number of practical proposals to give new responsibilities and rights to the island communities.
In November, the first ever rural parliament will meet in Oban. It will emulate successful models established in countries such as Sweden, the Netherlands and Hungary. It will provide a forum to ensure that the needs of rural and remote communities are given the importance that they deserve. It’s a further demonstration of our commitment to rural Scotland.
Ladies and gentlemen, the fundamental argument for independence is that the people who will take the best decisions about Scotland’s future, are the people who live and work in our country. Nobody will do a better job than we can, of reflecting our own priorities and values, of creating the sort of country we wish to see. And one of those priorities, one of those values, is a sense of cohesion – a view that no region, area or community should be neglected or denied the ability to flourish.
Independence gives us the powers we need to create sustainable prosperity in every part of the country. More effective support for the food and drink industry, for agriculture, and for rural areas is one part – a very important part - of that wider ambition.
That sustainable prosperity, and that cohesion, will need to be worked for. Independence isn’t about thinking that everything will be delivered to us on a plate; it’s not about thinking that we will wake up one day with three taps – whisky, oil and water – and things will be handed down to us; it’s not about thinking it will all be easy. It’s about taking the powers we need, using them well, and working hard over a period of time.
It’s about having the ability to empower local communities, to support industry more effectively, and to represent Scotland’s interests in international organisations. It’s about using our natural resources properly, responsibly, to enable our human resources to flourish. It’s about choosing to work together to become a more prosperous country - and also, a fairer society. That will be good for rural Scotland – and good for the whole of Scotland.
It’s about making resources work for the people, not just the people for the resources.