Agribusiness News June 2024 – Sector Focus: Agricultural Support

Direction of travel for agricultural support

Since leaving the EU in 2020, each of the UK’s four nations have been working to develop their own systems of agricultural support to replace the CAP (Common Agricultural Policy). The direction of travel for Scottish policy is laid out in the Vision for Agriculture with four key objectives of:

• Supporting food production
• Enhancing biodiversity
• Adapting to climate change
• Ensuring a Just Transition.

The Agriculture and Rural Communities Bill is now at Stage 3 of the consultation process, having incorporated amendments from farming bodies in Scotland. At Stage 3, MSPs can propose further “amendments” before votes are cast on whether or not the Bill should be passed. However, while the Bill forms a framework of principles under which agricultural and rural support will be developed; details of scheme design and implementation are still in progress.

Included in this policy formulation is consideration of the suitability of continuing to use the three region system in allocating Tier 1 payments, given the evolved priorities of targeting payments since the existing model was developed. While food production is still a key outcome of Tier 1, revision or reform might be considered more appropriate for reflecting farming’s contribution to other policy outcomes, such as climate and biodiversity management.

New payment structure & allocations

The system will move from two to four tiers of payments (Figure 1). Tier 1 replacing the existing Basic Payments (including conditionality), and Tier 2 providing ‘enhanced’ payments for climate, nature, and other benefits. These will comprise of at least 70% of future support, with the remaining amount allocated to Tiers 3 and 4 for additional and targeted environmental, social, and business initiatives.

While the decision to retain a similar and equivalent Basic Payment Scheme beyond 2026 is welcomed by the farming sector especially given that Tiers 3 and 4 will open up funding for the historically less supported but important sectors in Scotland such as pigs, poultry, horticulture, and potatoes; environmental groups argue that a greater share of payments should be designated to climate and nature outcomes.  However, the degree of environmental conditionality across tiers and schemes is yet to be determined and could still reflect this ambition.

Figure 1: Tiers of future agricultural support in Scotland

Outstanding concerns and issues

One of the biggest concerns around future support is how the details of schemes and applications will affect producers, particularly smaller producers where it may create a disproportionate burden for implementation.

Another key concern is the risk of green investment encouraging agriculture to sell carbon assets and/or data, particularly with increasing pressure from supply chains for Scope 3 emissions reporting. With technology essential to create an enabling environment for innovations and reporting on biodiversity and environmental impacts for the sector, it could be argued that private investment would be better channelled to technological transformation opportunities.

Lastly, in the consultation stage of the Agricultural & Rural Communities Bill, there was also division in respondents as to whether non-agricultural practices on agricultural land (e.g. woodland, peatland management) should receive support or not.

Anna Sellars, anna.sellars@sac.co.uk