The transfer of funds from farm payments to rural development will be limited to 9.5 per cent in Scotland, Rural Affairs Secretary Richard Lochhead confirmed today.
The decision will apply to farming budgets from 2015 - 2020 and follows a short consultation on the Scottish Government’s proposals. The budget transfer from Pillar One (direct payments) to Pillar Two (rural development) is known as ‘flexibility’ and is permitted under European Common Agricultural Policy (CAP) regulations.
Mr Lochhead said:
“I have carefully considered all my options in light of the consultation responses received, which reflected an extremely wide range of views – with some respondents wanting a much lower transfer rate to protect direct payments to farmers, and many calling for a bigger transfer to increase support for environmental schemes.
“However, I believe the right thing to do is to stick to my original proposal and limit the Pillar-to-Pillar transfer at 9.5 per cent - a rate which I believe strikes the right balance of support for our farmers and rural development. This will deliver a rural development budget of over £1.3 billion over the next seven years, much of which is invested in improving or sustaining farming – including essential Less Favoured Area support (LFASS).
“I have already said that I am minded to increase funding for agri-environment schemes by more than £350 million over the seven year budget period, and I intend to allocate these funds – subject to consultation - without having to increase the Pillar One transfer, in order to protect farm payments during what will be a crucial time for farming. We are also consulting on how the next CAP will includes measures to ensure greener farming practices.
“Concerns about LFASS were expressed in the consultation and the Scottish Government will undertake a review of this scheme as we move to a system of support for Areas facing Natural Constraints (ANC) by 2018 in line with European regulations. I will also respond to the other issues raised during this short consultation.
“It is ridiculous that we have to notify Europe of our Pillar-to-Pillar transfer rate while we are still consulting on our implementation proposals. Ideally, I would have liked to have taken this decision at the same time as deciding how the money will be spent.
“Of course, if Scotland had a half decent budget we would be able to do much, much more. Instead, the UK Government has negotiated Scotland to the very bottom of the European league tables for CAP payments which means we have much smaller budgets.
“We are still pushing the UK Government to pass on the full €223 million convergence uplift that rightfully belongs to Scotland but it now appears there is no prospect of an extra penny being returned to Scotland in the next CAP whether or not they expect review ever actually happens. This is a huge sum of money that could be going direct to farmers or invested in priority rural development schemes as highlighted in the consultation responses.
“And if Scotland had been independent during the most recent EU farming talks, we would have qualified for an additional €1 billion in direct payments and had the opportunity to join 16 other EU countries in negotiating hundreds of millions of euros more in rural development funding.
"I thank everyone for taking the time to respond to the consultation during the past fortnight."
Notes to editors
A transfer of 9.5 per cent of Scotland’s Pillar One ceiling would mean transferring around £46 million per annum into Pillar Two on average (using a conversion rate from € to £ of 1.2). A total budget of £1.3 billion represents annual funding similar to the level of annual spend in the final years of the 2007-13 programme.
The Scottish Government Consultation on future CAP direct payments in Scotland from 2015 (Pillar One) http://www.scotland.gov.uk/Topics/farmingrural/Agriculture/CAP will close on March 17, 2013.
The consultation on Scotland Rural Development Programme (SRDP 2014-2020) Stage 2: Final Proposals (Pillar Two) http://www.scotland.gov.uk/Publications/2013/12/7550 will close on February 28, 2013.