APPENDIX 4: NOTE OF A MEETING WITH
THE SCOTTISH EXECUTIVE
JANUARY 9 2008
Cameron of Dillington, L
Sewel, L (Chairman)
Witnesses: RICHARD LOCHHEAD, Scottish Cabinet Secretary
for Rural Affairs; PETER RUSSELL, Rural Director, Scottish Executive;
CORNILIUS CHIKWAMA, Economic AdviserAgriculture, Scottish
Executive; and DR ROSI WATERHOUSE, Head of CAP Reform and Crop
Policy, Scottish Executive.
1. Lord Cameron of Dillington: Noted that
the Health Check is designed to review the implementation and
effectiveness of the 2003 CAP reforms. Asked how Scotland had
put those reforms into practice, and what their impact had been.
- Stated that he was very keen to
ensure that Scotland's voice is heard.
- Mentioned that the Scottish Government is about
to embark on a series of meetings with industry on this subject.
- Suggested that the 2003 CAP reforms are viewed
as having been implemented quite effectively in Scotland, and
that Scottish rural interests are content with the historical
basis adopted for the allocation of Single Farm Payments.
- Noted that there were some small issues about
access still to be dealt with.
2. Lord Cameron of Dillington: Noted that
Scotland has chosen to allocate Single Farm Payments on an historic
basis. Asked whether the Scottish Executive welcomes the suggestion
in the Commission's Communication that there should be moves towards
a 'flatter' system of payment, and if so, what such a system might
look like in Scotland.
- Noted that this proposal causes
anxiety in terms of how quickly such a change might be implemented,
but recognized that there will come a time when 2002the
approximate reference period for the allocation of Single Farm
Paymentsis a long time away, and it would therefore perhaps
not be sensible to keep allocating payments on this basis.
- Stressed that the transition would be important,
and that it would take time to get there, not least because Scotland's
geography and topography are very disparate, so that a flat-rate
payment would be unpopular and difficult to justify. Any solution
would thus have to take these factors into account.
3. Lord Cameron of Dillington: Asked whether
the Scottish Executive envisaged introducing any reform in this
regard before 2013.
- Stated that the Scottish Government's
preference is for reform later rather than sooner.
- Pointed out that the language in the Health Check
Communication is permissive, and that the Scottish Government
would like to keep it that way, with no element of compulsion.
4. Viscount Ullswater: Asked whether if
keeping the current system until 2013 won't mean introducing a
really big change after that date, rather than phasing it in slowly.
- Accepted that this was a fair
comment, and suggested that he will have to try and think about
how Scotland might get there. This is an issue that needs to be
discussed with industry.
5. Viscount Ullswater: Asked whether,
if funds are moved from Pillar 1 to Pillar 2, this would make
it more difficult to implement any change.
- Stressed that he would not want
to introduce two massive changes at the same time.
6. Lord Cameron of Dillington: Asked whether
there isn't a danger that rural development cannot by carried
out by farms alone, and that therefore more money is needed in
- Suggested that it was fair to
say that we are already quite far along the road of changing the
emphasis of the CAP.
- Pointed out that Scotland's proposed Rural Development
Programme is radically different, with a much bigger budget (£1.6
billion over 7 years). Added that the Scottish Government's contribution
will be 70 per cent, higher than elsewhere, and that this was
a sign of its commitment to rural development.
- Concluded that there is already a huge emphasis
on rural development.
- Mentioned that farmers now say that there is
too much money going into rural development, but pointed out that
they too can apply for rural development funding, so that money
is not being taken away from them.
7. Viscount Brookeborough: Noted that
European funds are rarely taken up in their entirety, and asked
whether the Scottish Executive was placing an emphasis on this.
- Accepted that under-spending was
- Pointed out that the Scottish Government was
changing the way in which it would deliver schemes. It is introducing
a system of regional priorities.
- Explained that the schemes that were oversubscribed
last time around were agri-environment schemes. This time, pre-application
advice will be available, so that applicants can check whether
they are likely to qualify for assistance and don't waste time.
In consultation with a government advisor, applicants will be
able to choose among schemes, and a tailor-made package can be
put together for them.
8. Lord Cameron of Dillington: Asked about
the diversification of Scottish farming businesses, and whether
the planning system ever posed obstacles to this.
- Responded that farmers in Scotland
have been very successful at diversifying, such as into biogas
and farm shops.
9. Lord Cameron: Asked how the Less Favoured
Areas scheme works.
- Noted that one of the distinctive
messages the Scottish Government wants to get across with respect
to the Health Check is the ongoing need for support for Less Favoured
Areas. Such support delivers social benefits and wider public
benefits, and is thus not just about food production.
- Stressed that the Scottish Government was fighting
to maintain that kind of support, and hoping to promote links
to environmental benefits. Explained that it was under pressure
from the EU to show that environmental benefits could be secured
in this way.
10. Lord Cameron of Dillington: Asked
whether LEADER projects are also carried out on a regional basis.
- Explained that these are carried
out by LEADER action groups, and that there is a single payment
agency for the whole of Scotland.
11. Viscount Ullswater: Asked whether
there had been any problems with the implementation of cross compliance.
- Noted that there is always some
low-level rumbling, but that there has been no huge outcry. On
the whole, the Health Check is seen as taking cross-compliance
in the right direction by addressing, among other things, disproportionate
penaltiese.g. for mistakes when completing forms.
12. Viscount Ullswater: Asked whether
cross compliance was delivering the intended environmental benefits?
- Responded that from the Scottish
Government's perspective, it was doing so.
- Added that cross compliance was
extremely popular with NGOs, who have put a lot of effort into
measuring its benefits.
13. Viscount Ullswater: Asked whether
the witnesses could say more about the concept of Land Management
Contracts, and the respects in which they have been more and less
- Explained that they are now called
Rural Development Contracts. Whereas previously, separate schemes
were available, the Scottish Government is now trying to offer
a single framework that is as open-ended as possible.
- Stressed that the term 'contract' is not accidental,
and that there is no question of an entitlement. Instead, the
idea is to invite proposals. The Scottish Government will then
enter into a contract with the bidder if their proposal provides
them with more public benefits than alternative, competing proposals.
14. Lord Cameron of Dillington: Asked
how this might be measured.
- Suggested that the administration
had sought to learn lessons from the schemes previously in place.
After one year, budgets can be changed if a particular scheme
has proved too popular.
15. Viscount Ullswater: Asked whether
the Scottish Executive views these Rural Development Contracts
as a substitute for Pillar 1 in the long term?
- Replied that it does not.
16. Lord Cameron of Dillington: Asked
how Rural Development Contracts are funded.
- Explained that 70 per cent of
funding came from the Scottish Government, 6 per cent from the
EU, and the rest from voluntary modulation.
17. Viscount Brookeborough: Asked whether
the 70 per cent figure was ring-fenced?
- Explained that is committed as
part of the overall spending review, and is thus ring-fenced as
far as the overall rural development programme is.
18. Viscount Ullswater: Drew attention
to the Commission's proposals to end all sorts of 'partial' coupling
so that aids meet WTO rules, and asked how Scotland was planning
to deal with this, referring specifically to its Beef Calf Scheme.
- Explained that he agrees that
legacy schemes should end, but stressed that some kind of flexibility
for coupling is something the Scottish Government would like to
retain. It wishes to protect at least part of the livestock, and
in particular the beef sector, and doesn't want to see that sectoror
the associated processing industrydisappear.
- Suggested that national envelopes might provide
a way of securing these aims and therefore supported the proposal
in the Health Check that the system of national envelopes be continued.
19. Viscount Ullswater: Asked whether
Pillar 2 might allow Scotland to continue to protect its livestock
- Stressed that Pillar 1 is important
in giving confidence to livestock producers.
- Noted that sheep have been disappearing, and
that this has prompted concern over declining livestock numbers.
- Noted that he is keen to explore how Scotland
can retain some flexibility to protect these sectors under Pillar
- Suggested that the pendulum of opinion was now
swinging back, as a consequence of the realization that with decoupling,
some sectors could be more fragile than had been anticipated.
- Stressed that cattle grazing preserves
the Scottish landscape, and that it was a question of whether
capital can be made out of that, the answer to which was yes,
by producing quality beef.
- Recognized that Scotland couldn't win a head-on
battle with Argentine or Brazilian beef, but that is could preserve
its market niche for high-quality produce.
20. Lord Cameron: Pointed out that on
most measures, quality of life in rural Scotland is infinitely
better than in urban areas, and asked how this might develop in
the long term.
- Suggested that agriculture plays
a vital role in Scotland, and not just rural Scotland. The Scottish
Government wants to protect that, and promote the notion of farmers
as food producers, so that Scotland is well placed to benefit
from future changes in food supply.
- Identified a number of challenges
for the future. A first set of challenges are short-term issues
that can sap confidence, such as disease, or concerns over anti-competitive
practices in the food chain. A second challenge is the age profile
of the sector. On paper, the opportunities for young people are
few, but Mr Lochhead stressed that he had met more young
people than the statistics would tell you were there in the farming
sectors. He drew attention to the new entrants scheme that formed
part of Scotland's rural development programme.
- Among other challenges, he cited market returns
for products, while noting that some farmers were doing very well
in this respect at the moment.
21. Viscount Brookeborough: Asked about
the Commission's proposal to end compulsory set-aside and phase
out milk quotas, and whether these changes would be welcomed in
the relaxation of set-aside, while noting that its environmental
benefits might be lost.
welcomed the phasing out of milk quotas, which have outlived their
usefulness. Added that dairy farmers were on the whole of the
22. Lord Sewel: Asked how Scottish agriculture
might adapt to, and help address the challenges posed by climate
- Emphasised that there is a lot
more work to be done on this, and that the agriculture sector
needed to be brought into the climate change debate.
- Noted that Scotland's Rural Development Programme
includes support for renewable energy, including biomass and biogas
projects. From the energy side, there is thus rising interest.
- As regards forestry, he explained that the Scottish
Government wants to take forestry cover to 25 per cent, up from
17 per cent.
- With respect to soil use, he noted that carbon
is wrapped up in soils, and that land use in Scotland is the second
biggest sector in accounting for carbon emissions.
23. Lord Sewel: Asked whether the Scottish
Executive envisaged Pillar 1 funding remaining at the same level,
or was anticipating a progressive transfer of funds to Pillar
- Noted that the administration
saw benefits in increasing the level of funding for Pillar 2,
but given Scottish circumstances, want Pillar 1 to continue to
provide support in the short- to medium-term.
24. Lord Sewel: Pointed out that there
were pressures on the CAP budget, and that it might thus be expected
to fall over time, raising the issue of where cuts were going
to come from.
- Recognized that it was inevitable
that the funding available under Pillar 1 would decrease over
time, but emphasized that the Scottish Government's concern was
over the pace at which that happens.
25. Lord Sewel: Asked whether there were
any aspects of the Lisbon Treaty relating to agriculture, fisheries
or the environment that posed particular concerns for the Scottish
Executive, or that it particularly welcomed.
- Explained that the Scottish Government
had not really debated this issue.
- Argued with respect to co-decision
that the relevant changes were a strong motivation to get the
Health Check sorted before they come into effect.
26. Lord Sewel: Asked about the Farm Business
- Explained that the scheme was
- Pointed out that the separateness
of the scheme had been done away with, and that it is now part
of the Rural Development Contracts. Noted that the old scheme
was considered to have been successful and had led to some very
innovative developments in areas such as tourism, and local, healthy
27. Lord Cameron: Enquired about the percentage
of rural development funding that the witnesses envisaged going
into on-farm activity.
- Suggested that this would depend
on the energy and imagination shown by farmers themselves. Explained
that farmers were being asked to see themselves as part of a bigger
picture. They could apply for support for land-management activities
only, but were being encouraged to take a wider, more ambitious
perspective and consider doing other things too.
28. Lord Sewel: Asked how support could
be made available to people living in council housesin
other words, the off-farm component of rural development.
that the Scottish Government was hoping to encourage more collaboration
and integration, for example with respect to flood risk management.
- Suggested that regional priorities
were expected to reflect the government's national priorities,
such as climate change, the promotion of local food, etc. and
that increasingly addressing these issues would deliver off-farm
- Pointed out that Scotland had
placed a particular emphasis on Axis 3 of the EAFRD, and thus
on addressing social objectives in rural areas.
29. Lord Sewel: Asked what the witnesses
would make of the proposal to keep only a minimalist Pillar 1,
and to move everything else into Pillar 2, where more imaginative
and comprehensive projects could be supported.
- Suggested that the crux of the
debate was to address the concerns of those who question why money
needs to be taken away from land managers and food producers in
order to achieve these wider goals.