Speech to NFUS AGM
Rural Affairs Secretary Richard Lochhead
11 February 2014
As ever it’s a pleasure to be here.
Congratulations to Alan and Rob on their re-election as vice–Presidents.
My kind of democracy!
But very much an endorsement of their good work.
As always we had a good time last night.
And a plethora of Scottish & UK Ministers!
Is there something happening in 2014 I should know about?
But I am sorry Owen Paterson was unable to join us and I would like to wish him a speedy recovery from his eye surgery.
Last year’s AGM marked the launch of NFU Scotland’s centenary.
That was a time for reflection – to stand back and remind ourselves of the significant impact of farming on Scotland.
Agriculture has shaped our nation – our culture, landscapes, and society.
It has always been, and remains, the backbone of our rural economy. And is vital to all of Scotland.
Down the ages, institutions and beliefs have come and gone, and our country has evolved and developed.
Often, it was the men and women that tended our land that were most affected by these changes.
The formation of the National Farmers Union of Scotland in 1913 gave you a strong, collective voice.
So, as your centenary year draws to a close and a new chapter opens, it’s appropriate to turn to the future.
What better place to do that than St Andrews?
Near to where we meet today, many famous events and people influenced history.
And now the St Andrew’s Cross endures as our nation’s emblem and symbolises the crossroads we face in 2014 when you all have the opportunity to write the next chapter in your story.
There are big choices to make.
Choices about the future of farming.
And about the kind of country we want to live in.
On both of these, we can choose two possible futures.
Do we struggle to hang on to the old ways or do we seek to take advantage of the new?
For example, in relation to the CAP, we are now on the brink of the biggest change in a decade.
For the first time ever, Europe has deliberately set out to redistribute payments. As foreseen in Brian Pack’s inquiry a few years ago, major change is coming.
All of us are facing this together.
I am absolutely determined to do everything in my power to help Scottish farmers make these changes work, to keep the industry strong to face the future in good health.
Each and every sector is confronting the future constructively and with determination.
To illustrate this, I need look no further than last night’s spectacular menu – a reminder of how lucky we are to have so many fine food producers representing quality and excellence even in the face of unexpected challenges.
Take the pig sector. Our pig farmers have reacted superbly to the closure of Halls of Broxburn last year.
The way in which Gordon McKen, and colleagues like Sandy Howie, have turned the situation around is a tribute to their firm and visionary leadership - and to the close collaboration between the sector and government.
And I was delighted to see Sandy presented with the Ed Rainey Brown Award at the SAOS Conference this month.
And their hard work has delivered real results.
And today I am delighted to announce a £2.7 million grant to create a vastly expanded state of the art processing plant in Brechin.
This will almost double capacity to 7,500 pigs per week.
It was difficult chapter but we have laid the foundation for better times in the pig sector.
Another vital sector is beef, the engine room of Scottish farming - and I will have more to say about that later.
I know that many are anxious but with record prices, a huge and growing market and highly skilled stockmen, this is sector that can have a big future.
Turning to the horticulture sector, after some difficult growing seasons, it was great to see output up by 15% in 2013.
And in the potato sector, output in 2013 rose to £287 million, a 72% increase on 2012 - with exports rising to 49,000 tonnes.
In the cereals sector, last year was something of a relief after the dreadful harvest of 2012. Spring barley production reached its highest in 20 years.
And the fantastic growth in whisky production means a huge opportunity for growers – and it was great to see the Banffshire branch producing their own whisky with their blended malt celebrating 100 years of the NFU Scotland.
Despite the involvement of a young apprentice blender named Lochhead, it’s a splendid dram.
This was also the year our eyes were opened to the opportunities ahead for dairy.
James Withers’ ground breaking report, “Ambition 2025”, set out the kind of exciting future which is within our grasp.
That future is already taking shape.
I can confirm today that the Dairy Bureau is to be headed up by a full time manager and will open for business in April.
The bureau will provide dairy farmers with quick access to expert advice, to help them improve their businesses.
But the rest of the supply chain has to match the ambition of our dairy farmers.
That’s why I’m delighted that Paul Grant has agreed to bring his vast experience to the role of chairing the Growth Board.
Last autumn our poultry farmers were faced with unexpected bad news, with the loss of many jobs flowing from Two Sisters’ restructuring.
By mid November things looked bleak indeed.
But we chose to work for a better future.
We are certainly not out of the woods yet.
But thanks in part to the good work of the new growers’ association – and I pay tribute to Nigel and to Philip Hopley on this – we are beginning to see light at the end of the tunnel.
The poultry plan we have drawn up together brings real prospects for this sector.
I have already received responses from retailers and food service companies indicating a willingness to source more Scottish product .
And it would be a travesty if any producer was put out of business against this backdrop.
Turning to lamb, this year I was really pleased to see two initiatives designed to secure a better future for the sector: Wham Bam Thank You Lamb and Adding Value to the Scottish Sheep Sector.
These were in part funded out of the £1 million we gave QMS after the horse meat scandal, to ensure our world class red meat sector emerges even stronger.
These diverse sectors are all key parts of the huge success story which is Scotland’s food and drink.
Since we last met here, the industry has smashed its records in terms of both turnover and exports. It’s done so well, it’s had to revise it’s targets upwards.
This is what you have achieved.
So I pay tribute to your contribution to that success.
You supply quality local food for our tables.
Consumers are proud of your success and want to support you.
Let me give you some newly published figures to back this up.
A survey last month of 1,000 Scots showed that for 94% of people it is important to have access to local red meat.
Almost 55% of people say they would pay more for Scottish branded produce.
Over 14% say they would pay more than 10% extra.
What a huge endorsement!
But, of course, we have to make it easier for consumers to identify the Scottish products they want.
And that’s we need to make sure we have clear and accurate labelling.
I will ensure that improving labelling is a priority for Scotland’s new food body, when it is established next year.
In the meantime, I am launching a Clear Labelling initiative.
I have asked my officials to work with the Food Standards Agency, the industry and, importantly, consumers to drive improvement.
So the fact that consumers actively want Scottish product is encouraging.
However, we still need to be vigilant.
For example, I am wary of excessive consolidation in the supply chain.
We need to ensure policy discourages monopoly situations and empowers all parts of the supply chain.
Resilience is an issue right along our food supply chain – and that’s why it is absolutely vital that we get the right support mechanisms in place.
That’s why the implementation of the Common Agriculture Policy is pivotal.
The MacSharry and Fischler reforms radically changed the focus of the CAP - from market intervention to direct support for farmers, and then from coupled support to decoupled.
When decoupling was decided in 2003, many parts of Europe did the same as Scotland.
They used a historic basis to begin the transition towards area-based payments.
But it was always clear that historic-based payments couldn’t last forever.
Moving away from them is the big change that will begin in 2015 .
Europe has made us take some decisions already – like on transferring funds between Pillars.
I know many of you would have liked a smaller transfer – or no transfer at all.
But I believe my decision - to limit the transfer to 9 and a half percent - struck the right balance in the circumstances.
And your sector will receive far more from Pillar 2, in total, than the amount taken from Pillar 1.
With that key decision behind us, we now need to look forward to 2015 and beyond. To decide the details of how to implement the new CAP.
Scottish Government consultations are currently live on both Pillar 1 and Pillar 2.
I will be writing to farmers later this month reminding them there is only a few weeks left to submit their views.
Because there are many important issues covered by the consultations, on which decisions will be needed.
For example, I know the arable sector was deeply worried about the impact of greening.
Even though we were successful in negotiations in getting major changes to the rules, to make them much more compatible with farming practices, there are still important decisions to be taken.
We are paying close attention to what farmers tell us.
Wherever possible we’ll be looking for win-win solutions for the environment and the farming sector.
There are many other issues but I’ll focus on four areas of particular concern that your President highlighted to me in his recent letter.
Here, government and industry are on the same page.
Where there’s no activity, or just token activity, there must be no payments.
Getting the ‘Scottish Clause’ in the CAP regulations was a major step forward.
But we need to get the implementing rules right.
And we now have detailed plans on how to clamp down on inactivity which we shared with stakeholders last week.
Because the European Commission is crucial to all this, I've requested a personal meeting with Commissioner Cioloș in Brussels to put our plans to him.
Believe me, I know this is key to the successful implementation of the new CAP, and that’s why I’m launching a full frontal assault on inactivity.
We need a CAP that supports dirty wellies, not comfy slippers!
Another point Nigel raised was the Basic Payment regions and their budgets.
It’s clear that treating Scotland as a single payment region wouldn’t work.
Equally, too many regions, or badly designed regions, could mean an impossible level of complexity.
And the size of the budget for each region is, of course, crucial.
This was always going to be a difficult area. So I am genuinely open-minded. We will look very seriously at all sensible suggestions including for example, splitting Rough Grazing into two regions.
Our view at the time was that dividing rough grazing into different types, in a way that every farmer could do, would be challenging. But we’ll look at all of this again once we have had everyone’s views.
The third issue in the letter related to transition.
Some farmers say to me that a quick transition would be the fairest.
They say – if my neighbour and I are doing the same thing in 2020, how can you pay us different amounts because of what we were doing in 2000? And they say how can you justify maintaining high payments for people who have reduced activity?
Other farmers take a different view.
They got high payments by being highly active; they say they’re just as active as they have always been but they face reduced payments over the next six years.
I have great sympathy with that view too.
We are on the horns of a dilemma here because the CAP, which I always thought was about supporting food production, does not actually allow us to link support to production, other than by using limited coupled schemes.
However, I treat your representations on this very seriously indeed.
I don’t underestimate for a moment, the potential impact of this issue on farming in general, or the beef sector in particular.
That’s why, for example, I’ve already signalled that beef will be at the front of the queue for the limited amount of coupled support in the new CAP.
And I have asked DEFRA for the ability to use up to 13% coupled support, in line with what other countries with significant livestock sectors have secured.
I am pleased that George Eustice seemed to be open minded on this yesterday and I’ll push that door open as far as it will go.
But it’s certainly a complicated picture.
Many farmers might see their payments go down. But many others will receive higher payments.
And of course those currently frozen out of CAP support will be included for the first time. And we have a smaller budget and other mandatory deductions to make.
Even within the beef sector there will be those who gain.
But this is about more than individual winners and losers.
It's about the future of Scottish agriculture as a whole.
It's about helping farmers to be driven by the market and supported by CAP payments - and not the other way around.
Every farmer or crofter will respond to the changes in his or her own way.
Talking to farmers around the country I find that some are planning to expand. But others warn they may de-stock.
Many are finding ways to diversify, such as those I met at Loch Leven Larder last Friday at an agri-tourism conference – it was a room full of optimism.
Again, I'm listening to what all farmers are telling me and take their views seriously.
The final issue in Nigel’s letter was the role of Pillar 2 in helping farmers cope with change.
Here too I’m very open.
I’d be delighted to get your views on this. Farms have to evolve, like all businesses, and I’m keen for Pillar 2 to help.
In fact, I specifically included the role of Pillar 2 in the terms of reference for the beef review group led by Jim McLaren of QMS.
I am under no illusions about the challenges for our beef sector and the seriousness of what is at stake.
But I am confident that together we can achieve a solution which:
• Supports those who inevitably face change;
• keeps Scotland’s pastures in production; and, crucially,
• sustains our production of prime beef that’s unequalled anywhere.
The European agreement we now have to implement is far better than what was originally proposed, even if it is far from perfect.
Now we must focus on achieving a better future.
We will do that through a combination of:
• Cracking down vigorously on inactivity;
• Using coupled support to benefit the beef sector; and
• Devising a package of measures to underpin a beef and sheep industry able to compete with all-comers .
• Measures such as industry benchmarking, so that every producer can measure his or her technical performance and take steps towards higher profitability.
However, we are constrained by the very poor budget settlement.
UK Ministers negotiated Scotland to rock bottom of the league tables for both Pillars of the CAP.
Not one Ministerial finger in Whitehall including the Scotland Office was lifted to secure a fairer budget for Scotland.
We didn’t think it was possible, but we actually emerged even worse off than before the negotiations thanks to the UK’s policy.
This tight budget means we have to focus on top priorities such as new entrants.
Encouraging the next generation is absolutely crucial for the future.
New entrants are the industry’s lifeblood.
Government is doing everything we can to help.
For example, the Forestry Commission Scotland's Starter Farm programme continues to grow and generate interest.
We now have seven Limited Duration Tenancies in place, across the country – and have invested over £1 million in improvements to the farms.
I was delighted to meet Richard O’Rourke last week, along with wife and his wee baby boy – a real new entrant - who recently took on Falgunzeon Farm near Dalbeattie.
Richard wasn’t handed that farm – he had to compete.
In fact, the latest farm to be let attracted over 50 interested parties.
That’s a positive signal that where we can find fresh ways to address the barriers to new entrants, there is real appetite out there.
I am totally committed to ensuring that wherever there is potential for publically owned land to be farmed that every effort is made to make that land available to new entrants.
But I am the first to accept that we must to do more to enable tenant farming to fulfil its potential.
My Agricultural Holdings Review Group will be working hard over the coming year to bring forward the right solutions for the industry.
These might range from industry led initiatives to new laws.
But I will not shy away from taking radical action where necessary.
And we need to make it easier for all farmers – not just new entrants.
That’s why I’m also determined to act upon the 72 recommendations that Brian Pack made in December in his interim report Doing Better, targeting ways to minimise regulatory burdens across the whole industry.
I am looking forward to providing a formal response to the recommendations when Brian’s final report is launched at the Turriff show in August.
One area Brian has specifically looked at is environmental regulations.
I know they can feel like just a lot of red tape. But we have a responsibility to safeguard the land on which we all depend.
As we seek to produce food for a growing world population, agriculture has a key role to play on biodiversity, water quality and climate change.
We need to have healthy soils and clean water for agriculture to prosper.
But there’s a win-win here.
The health of our natural environment is key to Scotland’s hard-won reputation as a producer of high quality food.
Much of the confidence customers have in our produce is because of that reputation.
It's no accident that the latest branding from Scotland Food and Drink emphasises our fantastic landscapes and pristine countryside.
So the environment isn’t just a set of rules farmers have to follow. It’s also a commercial asset on which our brand depends.
I’m determined to work with you to develop our green brand for farming and not let other countries get ahead of us.
I could say the same about animal and plant health, and food safety.
High health status is crucial to our commercial success in international markets.
But we suffer from a big disadvantage.
I hear Alistair Carmichael boasted yesterday about what the UK does for Scotland. He emphasised how many embassies they have around the world.
But this is not just about numbers. It’s about priorities.
I was appalled to learn recently that despite the Scottish Government’s pleas following our trade mission to Japan in 2012, the UK only submitted the paperwork in December 2013 to put the case for getting Scotch beef into that vital market.
The excuse was that that market was not a priority.
Sorting out other issues to help us capture new markets is also a low priority for the UK.
For instance, we should not tolerate the farcical situation where our industry pays levies to UK or GB bodies, who are either prevented from promoting Scottish produce or choose to give us only a very small piece of the cake!
Thankfully we will soon have the opportunity to take more responsibility for our own affairs.
There are now less than eight months to go until the independence referendum.
The nation is now debating the kind of country we want to live in.
I urge your industry to have its voice heard, to have your say.
I have spoken many times about the distinctive nature of Scottish agriculture, where about 85 per cent of our land has “less favoured area” status compared with just over 15 per cent in England.
About the disproportionate importance of our livestock sector.
And our need to ensure we support activity on our islands as well as on our mainland, and in our uplands as well as our lowlands.
These unique circumstances, and the challenges that they pose, are best addressed by the people who have the largest stake in the outcome – the people of Scotland.
I’m honoured to have been Farming Minister since 2007 and to make the powers of devolution work for you.
But when it comes to many of the really big decisions – the sorts of things that could make the difference between farm businesses surviving and thriving, issues such as :
• Taxation -
o So we can give incentives to create new tenancies;
• EU representation –
o so we can pursue our priorities and secure better budgets;
• export promotion – so we can target key markets;
• food promotion levies – so we can keep farmers’ cash here in Scotland to promote our own products;
• regulation of rural services such as post and broadband – so we can help our rural industries connect to the modern world…
On all of those things, the real power lies with a Westminster Government that simply has other priorities.
In Scotland, when we agree what needs to be done, we often need UK Ministers to act either in Brussels or Whitehall.
But too often, in my experience, everything is met with a no:
• No, you can’t.
• No, we won’t.
• No, we’re keeping it.
• And no, that’s not a priority for the UK Government.
Now Scotland can exercise our democratic right to decide our own future.
UK Ministers come to St Andrews to sow seeds of uncertainty. Well they would do that wouldn’t they?
Take EU membership.
Scotland has been a member of the EU for more than 40 years. It’s in no-one’s interest for Scotland to be outside of Europe for one second.
The terms of membership will be negotiated between 18th September and the date of independence in 2016. We will still be part of the UK and in the EU for the duration of these talks.
Our EU membership is secure.
If only we could say the same if we remain governed by Westminster.
If the UK takes Scotland out of the EU and out of the CAP, our industry will be at the mercy of UK Ministers who don’t believe in supporting agriculture and whose track record is woeful.
And with a vote for independence your CAP payments will be secure.
Scotland pays it’s own way and will be one of the wealthiest countries in the developed world – even the Financial Times said so this month.
We are likely to be a net contributor to the EU.
So, the budgets are there.
And this Scottish Government will ensure your CAP payments are maintained and delivered on time.
And in pounds if you so choose!
Scotland is the rest of the UK’s second biggest market – when the dust settles after the vote, common sense will support the currency union that people and businesses throughout these islands want to see maintained.
After all, even Alistair Darling says that it is “logical” and “desirable”.
I believe, and my experience in this job tells me, that Independence will be truly transformational for Scottish agriculture.
The negotiations for the post-2020 CAP will likely begin as early as 2017.
Who would you rather have speaking up for Scotland at the top table?
A UK Government will a track record of letting down Scotland’s farmers?
Or a Scottish Government with a track record of standing by Scotland’s farmers?
During the last CAP negotiations, the UK’s priorities were to phase out direct payments and remove coupled support entirely.
And I recall one of the issues raised most often by UK Ministers during the CAP talks was the impact of the new regime on a sugar refinery in London!
Yet, Scotland’s priorities were to secure a fair share of the budgets, secure more coupled support for our livestock sector and tackle slipper farming.
I will never forget Owen Paterson describing our priorities as, and I quote, “itty bitty issues that can be sorted out in the margins.”
Scotland’s key priorities described as “itty bitty” issues!
And when Mr Paterson returned home with an extra 223 million euros of CAP convergence money, provided to the UK in recognition of Scotland’s low payments, he delivered another slap in the face to our farmers when he decided to keep it.
A vote for independence in 2014 will come at a critical time for the farming industry.
That CAP convergence money will start arriving in the UK in 2015.
But with a vote for independence, it will be completely unjustifiable for the UK to retain this money. Without Scotland, they’ll no longer meet Europe’s criteria for getting that money.
But we will.
So we’ll be in a very strong place to demand its return as part of the independence negotiations.
With the only remaining figleaf of an excuse for keeping the convergence monies – that they were paid to the UK as a whole – no longer relevant, the moral argument for returning these vital funds to you, Scotland’s farmers, will be unassailable.
So that’s one benefit we can get immediately, without having to wait for the next CAP negotiations.
And there will be a longer term dividend because the EU is on the path to convergence – we lost out on 1 billion euros this time because the funding formula only applied to member states.
But with a vote for independence, next time we’ll automatically qualify for a budget uplift under any new formula.
But the biggest benefit will be that we can sit down together and decide how to use the powers of an independent country to build a better future for farming and food.
I opened this speech talking about the choices that we face in 2014.
I understand when many of you tell me that these feel like uncertain times, particularly as we transition to the new CAP.
Getting it right is a challenge - the biggest I’ve faced since taking office.
I will strain every sinew to implement the new CAP in a fair and effective way.
These are challenging times, but also exciting times.
You have much to look forward to.
Your produce is in demand.
Scotland’s food and drink exports have grown 52% since 2007.
And these are historic times.
On September the 18th, the people of Scotland will be asked the question ‘Should Scotland be an independent country?’
I ask you to consider the choice between two futures – one where our future is in our own hands; and one where our future is in the hands of others.
Only independence will mean Scotland can move from the bottom of the funding tables to a seat at the top table.
Scottish farming has helped to shape the country that we live in today.
The choice we all make in September will shape our nation’s future.
Friends, I hope I can join you again next year and look back on a 2014 where Scottish farming built on its strengths – its resilience; its innovation and its determination.
And grasped the once in a lifetime chance to harvest the opportunities before us.