THE strained cash flow of the agricultural industry, especially in the livestock sector, received a welcome boost following the announcement yesterday that the Scottish government expects to meet the claims of around 90 per cent of applicants for the single farm payment (SFP) before the end of December. This will involve around 18,000 farmers and crofters. Payments are expected to be in the region of £330 million.
The SFP was introduced as an integral component of the reforms of the Common Agricultural Policy CAP which became operative from 1 January 2005. It replaced a wide range of different support measures, and entitlement is based on the average level of
subsidies received by individual businesses in the reference years of 2000-2. The payment window opens on Saturday and cheques will be sent out as from next Monday.
Richard Lochhead, the Cabinet secretary for rural affairs, said: "Scottish farmers have had a tough time of it this summer, with the foot-and-mouth outbreak in Surrey having a serious effect on the industry throughout Scotland. Today, I am pleased to bring better news. We pledged to pay at least 65 per cent of eligible SFP claims on the earliest possible date, 3 December.
"We have managed to exceed that target and I am sure farmers and crofters will welcome a considerable improvement on last year's performance. The SFP is an important part of the mix of measures this government is putting in place to deliver strong sustainable growth that will be enjoyed by communities in all parts of Scotland.
"Our priority now will be to work with producers to resolve any outstanding problems and I would urge all concerned to ensure that they respond promptly to any requests that will assist us to settle their claims."
The system in Scotland is much simpler than that in England, where there have been horrendous problems. Some farmers south of the Border have, in previous years, had to wait for as long as six months before their claims were met. This delay resulted in the European Commission imposing a hefty fine on the Department of the Environment, Food and Rural Affairs.
In 2005 and 2006, the then Scottish Executive achieved 59 per cent and 70 per cent respectively of payments by its target date of 31 December. Farmers with outstanding SFP queries concerning eligibility cannot receive payment until these have been resolved.
However, the SFP cheque will be subject to 10 per cent rate of modulation - 5 per cent under EU rules and 5 per cent under Scottish conditions. This is the top-slicing of payments with the funds being redirected to a range of environmental measures and is, in effect, a progressive tax.
Jim McLaren, the president of NFU Scotland, was clearly delighted. He said: "This is excellent news and will be a boost to farmers in the livestock sector who have had a pretty horrendous few months. The Executive performed well in the last two years, but the new government has improved on that, for which they should be congratulated.
"This money is critical not just for farmers, but to the whole rural economy. The benefits of this support are seen throughout the downstream industries that rely on agricultural production. There will be some farmers who won't be paid in the next month and we will certainly be pressing to ensure all payments are cleared as soon as possible."
However, the SFP regime will come under close scrutiny next year as part of the "health check" on the CAP. There are some member states who which to see payments capped, or subject to a sliding scale of deductions. Any proposals on this front are likely to be strenuously opposed by both the UK and Germany.
