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10/02/15 17:09

Speech to NFUS AGM 2015

Rural Affairs Secretary Richard Lochhead
St Andrews
10 February 2015

As ever, it is a pleasure to be here.

I’d like to begin by congratulating Allan Bowie on his election as the new President of NFU Scotland.

Congratulations, too, to Rob Livesey and Andrew McCornick on their elections as Vice Presidents.

Nigel Miller certainly leaves big boots to fill but your members can be confident that the NFUS is in good hands.

Over the last four years, as NFUS President, and for four years before that as vice president, Nigel has worked tirelessly in the interests of Scotland’s farmers.

Believe me, my bulging in-tray is testament to how Nigel has tenaciously pursued your interests in recent times.

But every step of the way, I have welcomed Nigel’s passionate advocacy and thoughtful council.
He really has achieved much and it is in no small part due to Nigel’s input that we have been able to develop a new CAP package that is tailored to Scotland’s needs.

As I say “thank you” to Nigel for all that he has done as President, I’m also glad that he is not departing the national stage completely.

We all know that animal health is a subject close to Nigel’s heart and a cause he has supported with vigour and enthusiasm throughout his career.

One example of this is how he has been a crucial player in Scotland’s approach to tackling the BVD in our cattle herd – with the number of holdings exposed to BVD down from 40% to 18% since the eradication scheme got underway.

So I am delighted that Nigel will be soon be taking on the role as Chair of Livestock Health Scotland.

This new industry initiative will help to promote further improvements to animal health in Scotland.

I look forward very much to working with him in his new role and wish him well for the future.

And of course he’ll can use his spare time to learn how to bake cheese scones as I know a low point of his career was losing the cheese scone bake off to myself at last year’s Royal Highland Show!

But we have now a new President in a new era.

Allan’s election is just one of a number of major changes in the past year.

Nationally, we also have a new First Minister in Nicola Sturgeon and a new-look gender balanced Scottish Cabinet in a new post-referendum Scotland.

Mostly new Cabinet!

I’m proud to still be here as your farming and food minister serving the men and women who put food on our tables – and as I found last night, farmers can sing as well!

The Scottish Government has also set three new overarching priorities for Government, all of which are at the heart of what matters in farming and in rural Scotland.

We want:
1. To create more, better paid jobs in a strong sustainable economy.
2. To build a fairer Scotland and tackle inequality.
3. To continue public service reform so we can deliver these objectives

And Scottish agriculture will make an important contribution to all three priorities.

And now we have a new Common Agriculture Policy.

And we now look to a new future.

The decisions we take now – together - will shape this industry for decades to come.

As the last year has shown, there are always unexpected challenges around the corner for farming.

We produce in Scotland but operate in a global market

The Russian trade embargo, or the actions of a few powerful players, have impacted on your livelihoods, and on markets, at home and abroad, many markets still recovering from the effects of the recession.

Our beef farmers have certainly felt the effects of this turbulence, as has the poultry sector.

But the sheep and pig sectors have both fared a bit better as output values rose by more than 10% over the previous year.

Seed potato exports remain strong and market prices held up fairly well for fresh fruit and vegetables.

However, it has been more difficult and volatile for cereals and on the ware potato side.

When there are difficulties, the Scottish Government stands shoulder to shoulder with Scotland's farmers – investing in the future, working with you through the challenges.

We supported the transfer of the Brechin pig processing plant to a farmer owned co-operative which is now making a major upgrade which we also helped to fund.

The poultry sector, is going through a similar period of restructuring and adapting to new ownership, and I want to see that emerge far stronger as soon as possible.

And particularly in these past few months our dairy farmers have come under severe pressure.
Parliament’s committees are examining the milk price crisis and I will shortly be publishing a robust action plan that takes account of their findings.

But it’s my strong view that when we deal with short term challenges in key sectors we must be really careful not to get distracted from our long term objectives.

That way we can ensure we build resilience into food production in this country.

So our response to the dairy issue is two-fold:

First short term help, such as:
• capital investment or practical support for First Milk;
• work on new overseas markets
• and having robust dialogue with retailers and food service companies at home.

Second, we keep our eye on Ambition 2025.

By adding value, marketing well at home and abroad and being efficient, our dairy sector can grow and thrive.

We are delivering this by:
• launching a Scottish dairy brand in October of this year;
• encouraging investment in processing in dairy;
• and keeping ourselves and Brussels focussed on the sector’s needs.

However, if we are to build resilience into our food supply chains we need everyone to play their part.

It has been absolutely fascinating watching the Parliament’s rural affairs committee shining the spotlight on our supermarkets.

It is encouraging to hear publicly from the new supermarket adjudicator, Christine Tacon, and shocking if not surprising to hear her list of horrific accusations about the ugly behaviour of certain retailers.

What we see is not all bad.

There are pockets of good practice. For example several retailers have run excellent supplier development schemes.

And let’s not forget that the UK retail sector sells around £4 billion of Scotland's food and drink.
By working together sales of Scottish brands in UK retail have risen by 35% since 2007.

But there remains far too much poor practice.

Any reasonable person will conclude that something needs to be done to protect food production and the public interest.

For too long, the UK Government under-resourced Christine Tacon’s office and failed to give her the powers she needs.

I am delighted finally she is getting more power, which she intends to put to good use.

But our retailers shouldn’t need the adjudicator to force them to do the right thing.

Our retailers need to show more loyalty to the countries in which their stores are based.

I will be in talks with the retailers in coming days to agree the steps they will take to transform their approach to local sourcing in 2015, Scotland's Year of Food and Drink.

But 2015 should just be a start.

Let me lay down one clear challenge to our retailers today.

Do some soul searching.

Ask yourselves if there is more you should be doing to back the Scottish economy and secure food production in this country.

Take dairy. The best-selling cheeses, yoghurts and butters in your Scottish stores are imported.

So I ask our retailers to work with us in Government, our producers and processers to turn that around.

My challenge is this.

Let’s set ourselves a target of say five years and make sure that by then that for our key products, it’s Scottish that dominate Scottish shelves!

If we can do it for red meat – why not elsewhere?

By 2020 let’s make sure we can celebrate the fact that the biggest selling products in Scottish stores are from Scotland!

But let’s not stop there. Retailers have a role to play in promoting local food but so do many others.

That’s why we have Taste our Best scheme to reward hotels that serve local food, that’s why we are driving up use of local food in schools and hospitals, that’s why we are spreading far and wide the use of the Food Charter in this country which was such a triumph at the Commonwealth Games and Ryder Cup.

But we need to up the pace.

That’s why I am announcing today a new campaign which will take action to help Scots, in this Year of Food and Drink, to enjoy the delights of local food you produce.

A campaign that encourages all of us when it comes to food to Look for Local.

To kick this off:

• We will be running a nation-wide marketing campaign from 24 February to encourage consumers to think about where their food comes from and to eat local.

• We are allocating half a million pounds to measures to help Scottish producers access retailers and other key players in the Scottish and wider UK markets.

It’s time to take local food to the next level.

Above all, this Look for Local campaign needs our voices. We should shout from the rooftops about our great produce and expect all parts of the supply chain to do likewise.

After all, our food and drink industry that our farmers underpin is a fantastic success story.

Annual turnover in the sector has shot up to £14 billion.

Our story is about our superb beef, lamb, pork, tatties, berries and so on but it’s also about the whisky we enjoyed last night – in fact that your outgoing president poured me a rather huge glass of Bowmore –commonly referred to as a Nigel Miller measure!

Whisky producers spend £1.4 billion each year with Scottish suppliers.

Scotch is a global leader built on the cereals grown by your members.

And like you, I want Scottish barley to meet the growing demand for whisky.

That’s why the Scottish Government is backing the creation of a barley research hub, led by the James Hutton Institute.

This will bring together scientific expertise to improve crop yield and quality, with the aim of making Scotland a world leader in this field.

Whisky is growing and so is food.

Turnover in food has increased by an impressive 30% between 2008 and 2012, with exports to the rest of the UK and overseas increasing by over 50% since 2007!

Outperforming the rest of the UK!

And there are still other big opportunities to seize, such as the steps being taken this year to return Scotch Beef to the US market.

We are also putting in place a world-wide team of experts to take Scotland’s fantastic food to important international markets.

The first two are in place already in Canada and Japan, with more in the pipeline.

But again we could do so much more.

We may have increased sales of our brands in British retail from £1.4 billion in 2007 to £1.9 billion in 2013; but the UK grocery market as a whole is worth more than £170 billion, and is expected to top £200 billion by 2018.

We may have increased food exports by 52% since 2007 to £1.1 billion; but the Chinese dairy market alone is estimated to double in size to £43 billion by 2019.

So in both in our home, UK and overseas markets we are only scratching the surface!

The time is ripe for moving the sector to the next level and I will be devoting huge energy to doing that this year.

Successful farming needs a successful food and drink industry.

And a successful food and drink industry needs successful farming.

Without your effort, your expertise, the long hours you work, the standards you set, and the care that you take, we would not have the first class products that have given us a first class food and drink industry.

Nor would we have the superb landscapes and rural communities which form the crucial back story to the reputation which underpins the success of Scotland’s food and drink.

Farming has been the heartbeat of rural Scotland for hundreds of years.

And as we look to the future, some themes will continue to endure.

One of the most fundamental themes is your sustainable stewardship of the countryside.

We are dismantling the old preconceptions that environmental sustainability is a burden on profitable farming.

The Scottish Government’s Farming for a Better Climate initiative has been running since 2010.

On average, our climate change focus farmers reduced their carbon footprint by 10% with no loss of production. Financial savings ranged from £11,000 to £37,000 over a three year period.

By farming more sustainability we can help tackle a wide range of environmental challenges - not only agriculture’s contribution to climate change, but also the declines in pollinators and farmland birds and the diffuse pollution of water courses.

The decisions I announced last year on Greening and cross-compliance will result in the greenest CAP ever for Scotland.

I know Greening has been causing anxiety for the arable sector in particular. But the final guidance is now out, and I will work closely with your new President to provide any further clarity as and when required.

I have also commissioned the James Hutton Institute to review the ‘equivalence’ rules to improve Greening in Scotland from 2016 onwards.

I do hope we can introduce more flexibility within the EU rules but we mustn’t lose sight of their environmental purpose.

On a practical level, farming depends on the services that nature provides: healthy soils, clean water, flood management and pollination – all of these rely on a healthy environment.

And I think we can do more to build on the value of Scotland’s natural assets.

So I will establish a new Environment Forum later this year – a concept supported by the outgoing President - so that we can work together to do just that.

Of course, the natural challenges posed by so much of our land means that the right support structure must be in place for our farmers to thrive.

That is why the new CAP, of which greening is but one part, is so important.

The move to area-based payments puts farmers in a position where they can still get substantial income support from the EU but their business decisions can be driven by the market, not by the CAP.

However, with 85% of our farmland in this country being “less favoured area”, a market-only approach would not work in Scotland.

That is why we have worked so hard to tailor EU Policy to our needs.

With a ludicrously tight budget, we’ve all worked together to target activity, tackle inactivity and do our best to design a system that takes into account the diversity in Scottish farming.

I can’t promise a policy that’s perfect.

Far from it, we’ll no doubt still encounter anomalies and difficulties.

But given what we were facing when we started out on this journey a few years ago, we’ve worked hard together to deliver results where we’ve had the ability to do so.

On:
• payment regions;
• slipper farming;
• flexibility for coupled support;
• funding for new entrants;
• simplifying cross-compliance and Greening;
• and a lot more besides.

But the important task now is implementation.

Introducing the new CAP payment system is one of the biggest single projects within the Scottish Government.

Last month, the first phase of the new IT system went live.

https://www.ruralpayments.org is clear, easy to use and enables farmers to register on the new system and view their maps.

Don’t forget that if you want to claim payments in 2015, whether you’re a new business or an existing claimant, you must register for the new CAP.

I know many of you took advantage of the demo sessions we ran here at the AGM yesterday afternoon. A dozen of you successfully registered there and then.

And I know there have been some teething problems, which can be immensely frustrating, and our IT team is working hard to fix them.

But in only the first month, over 4,600 farmers have already successfully registered and been approved.

The next step is the Single Application Form (SAF).

RPID staff are making sure there will be excellent customer support in place for when the SAF comes out. Staff in area offices will be trained to help over the phone, or in person if you prefer to come to the office.

We are working hard to be ready for payments as soon as possible.

Scotland has an excellent record of making payments at the start of the payment window, and we’re aiming for a similar performance again.

Of course there’s a great deal to do between now and then.

But as of today the transition is on schedule.

But the fact that everyone is having to work so hard on the CAP betrays the fact that it isn’t really fit for purpose.

One hard lesson I have learnt is that far too much time and money is spent on implementation instead of going into more productive things.

As some have said: one man’s complexity is another man’s “sophisticated targeting mechanism”.

But surely it’s not beyond the wit of man to get things right while still keeping them simple.

That has to start at the top.

Commissioner Hogan has stated that CAP simplification is one of his priorities and I welcome that.

When it comes to helping Scotland implement the new CAP in ways that suit us, we need the Commission to take its foot off the brakes and put it on the gas instead!

He needs to drive forward the early review of CAP and tackle issues like the absolutely crazy EU auditing regime.

And I will send the Commissioner a copy of Brian Pack’s Red Tape review to help persuade him that Europe needs to be more outcome focussed rather than process obsessed.

But I’m the first to recognise that the responsibility doesn’t lie solely with Europe.

We can do more here at home.

Brian Pack’s review has pointed to how we should streamline and simplify our guidance, grants and regulations here in Scotland.

One example where we have already made progress is the Futures programme where form filling for farmers is being reduced and data sharing between delivery bodies increased.

In fact, we are already in a position to accept almost three quarters of Brian’s recommendations.

And I’m pleased to announce today the formation of the Rural Affairs, Food and Environment Delivery Board in line with one of Brian’s key recommendations.

The Board, which I have decided to Chair personally, will include the senior Scottish Government officials, alongside the relevant Chief Executives of my public bodies and agencies.

I will also be inviting several independent members onto the Board to challenge conventional thinking.

I am pleased to be able to confirm that Brian Pack will be one such member and I expect my new group to play a role in taking forward the findings of his Red Tape Review.

The Board will challenge officials and organisations to work more creatively, more jointly and more efficiently.

And by doing that, we can help communities, nature and our economy thrive together.

We need to get the CAP right for decades to come – and we need to strip away unnecessary red tape wherever we can – so we can ensure farming remains an attractive career.

When I spoke at the Oxford Farming Conference last month, I highlighted attracting new entrants in this country and across Europe is one of the biggest challenges facing all farm ministers.

After all, it’s in the public interest that we retain the skills to grow our own food.

But to do that we need men and women willing and able to farm.

In an industry where half of farmers are aged 55 or over we need to develop the next generation of farmers.

Firstly, we certainly need a profitable sector to do that.

The recent farm income figures for 2014 may have shown a disappointing 18% drop following a 29% increase in the previous year.

But we mustn’t lose sight of the bigger picture.

Total income from farming more than doubled in real terms between 1998 and 2013.

This is still a great business to be in.

And nothing gives me more hope for the future than visiting young farmers and their families who have taken up tenancies on the Scottish Government and Forestry Commission starter farms.

I visited Douglas and Grace-Ann Bennie with their three young children at Balrobert farm near Inverness last October and was delighted at the progress that young family is making in their tenancy.

And I am pleased to announce today that the latest starter farm tenants, Sandy and Kirsteen Douglas, have just been appointed for Achnamoine farm in Caithness.

And two further sites – at Rothiemay, near Huntly; and Gourdie, near Dundee – are open for new applications from today.

These will bring the number of starter farms to 11 since the pilot began in 2012. And we are looking for opportunities to develop many more sites.

But, again, we need to do more.

That’s why the Agricultural Holding Legislation Review Group has proposed a range of measures to encourage more young people into farming – and to help older farmers retire with dignity.

I’m particularly proud of the proposals for apprenticeship tenancies and many other recommendations which will open up opportunities for new entrants too.

Together with the SRDP new entrant support and improvements to Direct Payments, the proposals have the potential to be game changers for the industry - delivering greater equality and diversity.

Helping new entrants is an important factor in tenant farming, but it’s not the only factor.

Tenanted land makes up a quarter of Scotland’s agricultural land and is a cornerstone of the industry.

However, the amount of tenanted land in Scotland is down by 42% since 1982 and Scotland now has one of the lowest proportions in the whole of Europe.

The Review made a range of recommendations that should build stronger relationships between landlords and tenants, and address the right to buy debate.

We will establish a Tenant Farming Commissioner, draw up robust codes of practice and design a clearer, fairer process for setting rents that will minimise disputes.

And we’ll introduce enforced sales where landlords fail to meet their obligations.

These radical proposals will enable tenants to bring irresponsible landlords to task; but they pose no threat to the vast majority of landlords who have good relationships with their tenants.

The Review Group also identified a number of ways that current national taxes, reliefs and exemptions can act as a disincentive to let land.

The Scottish Government is considering how best to address this, including how to encourage greater letting of agricultural land.

Of course, I would love to be standing here today outlining plans to use a full set of tax powers.

Since we met here last year, Scotland has emerged from the biggest ever democratic experience in living memory – and Scotland has changed forever.

Even after the no vote at the referendum there was an opportunity through the Smith Commission to give Scotland and our farmers the powers we need to move forward.

My officials and I are working hard to make sure there is no backtracking on the very few recommendations specific to agriculture.

For example, talks are underway with Defra to stop Scottish red meat levy leaking south of the border.

And I have written to the Defra Secretary of State to emphasise how important it is to make sure Scotland is allowed the stronger representation in Europe that Lord Smith called for.

Nigel wrote in similar terms and I thank him for that –I agree with him that we have to work hard to keep up the momentum built up last year.

We need to keep battling to maintain Westminster’s focus on Scotland – and it’s always a battle!

You know, when I spoke at the Oxford Farming Conference, I felt as though I could have been on another planet.

The debate at the conference was driven almost entirely from the viewpoint of those who farm mostly on good, productive land.

There was little recognition of the challenges that face farmers in Scotland.

Instead, the UK establishment and UK Ministers view the world of agriculture through the eyes of the East Anglian agribusiness.

Farmers for whom CAP payments are nice to have but not necessarily critical to their businesses, let alone their communities.

Scotland is starved of funds when scarce public money is wasted on highly productive farms south of the border!

Yet in Scotland, without appropriate support, many parts of Scottish farming would be unviable, leading to land being abandoned and depopulation of already fragile communities.

Although agriculture policy is devolved to Scotland, the UK Government is still responsible for making many important decisions that affect Scottish farmers.

Not least, on the level of CAP funding you receive.

It’s my job, and that of the NFUS and others, to make sure that the voice of Scottish farmers is heard loud, clear and often.

And let me assure you that if, as many predict, in May my colleagues are in a strong position to influence Westminster, we will seek a better deal for Scotland’s farmers.

And top of our list of demands will be the immediate renegotiation of the UK agricultural budget to reverse past decisions that short-changed Scotland.

And we’ll do our utmost to stop the UK taking Scotland, and Scotland’s farmers, out of Europe, which means out of CAP and out of work for many Scots farming families.

So, we are indeed in a new era redolent with possibilities, exciting possibilities and opportunities.

There’s much unfinished business but it’s also time to move on.

The debate over CAP has dominated our thinking on farming policy.

And as we look to the future, it’s now time to think about what kind of future we want for Scottish farming.

For that reason, I will be publishing a discussion paper at the Royal Highland Show to kick off a new debate in Scotland about how agriculture can better deliver sustainable economic growth.

Let’s have that debate in 2015 and decide what we want agriculture to look like in 2025 and that will also help us inform the debate over the next CAP.

In the meantime, there’s much to get on with.

Journey into the new era with pride in what you do – producing food for our tables, caring for our landscapes, driving our rural economy, promoting innovation and excellence.

And under your new leadership, shape your own future, your industry’s future and your country’s future.

The new era is exciting and the future is bright.

Thank you.