FM’s announcement on farm payments

It has been nearly ten years since the referendum on leaving the European Union, and it will be six years in March since the UK formally left the bloc. In that time, there has been a huge amount of discussion about replacing the EU Common Agricultural Policy (CAP) with a system better suited to Scottish farming and crofting.

A big part of that debate surrounded how best to use the roughly £600m annual budget to support food production, but also to tackle the climate and nature emergencies.

In the SNP manifesto for the last Scottish election in 2021, it was promised that by 2025, half of all funding for farmers and crofters would come with “green strings”. It went on to say that 50% would go from “unconditional to conditional support” with “targeted outcomes for biodiversity gain and a drive towards low carbon approaches”.

These themes were developed further with the 2022 Vision for Agriculture, which said the government would “transform” support for farming and food production, aiming to become “a global leader in sustainable and regenerative agriculture”. Again, it was promised that 50% of direct payments would be subject to “enhanced conditionality”.

However, when First Minister John Swinney got to his feet to address the 2025 NFU Scotland conference in Glasgow on 7 February, it became clear that the ‘new’ system – at least in the short-term – will look an awful lot like the old one.

What has been announced?

The government had previously announced that 70% of the overall budget would sit in direct payments – across Tiers 1 and 2 of a new four-tier system of support.

The remaining question was how that direct payment budget would be split, and Mr Swinney confirmed that the split would be 70/30. The bulk will sit in the new ‘base payment’ and be distributed on the same basis as the CAP’s Basic Payment Scheme (BPS), per area of land. The remaining 30% will be in the ‘enhanced’ tier 2, which for the early years at least will only mean minor changes to the existing ‘Greening’ payment.

From this year, the base payment (Tier 1) will be subject to some new conditions, for example the phased introduction of the Whole Farm Plan requirement. As of 2026, tweaks to greening requirements under the enhanced (Tier 2) payment will be introduced.

While we have welcomed the focus on whole farm planning, and very much agree that a process of baselining is required so that improvements over time in soils, carbon, biodiversity and water quality can be measured, this all falls far short of what was promised.

What does the evidence say?

This policy choice also contradicts the government’s own analysis of the previous CAP system.

In documents published when the Agriculture and Rural Communities Bill was introduced in 2023, the supporting evidence paper said analysis of the 2014–20 CAP round showed that direct payments did not deliver the intended benefits and were not targeted or means tested. Furthermore, the benefits did not necessarily go directly to the farmer, the payments reduced innovation, structural development and productivity growth and had little environmental benefit (and in some cases had a negative impact).

In addition, Greening and the Less Favoured Area Support Scheme were found not to deliver as effectively as possible on their stated objectives.

The decision to stick with these legacy CAP schemes therefore flies in the face of the available evidence.

So why has the government gone down this road?

There are two main reasons, I would suggest – one political and one practical – for the government to have made these decisions. The political angle is straightforward – we have an election next year, and the Labour government in Westminster has driven farmers to mass protest at changes to inheritance tax rules. By agreeing to the demands of NFU Scotland, the SNP aims to keep the rural vote on side.

The practical answer is a bit more complicated. Ministers have publicly acknowledged in responses to parliamentary questions and in evidence to the Rural Affairs and Islands Committee that there are restrictions with the current IT system for delivery of payments.

Essentially, the system we have was built for the CAP, and works in terms of getting money out of the door through the various existing schemes, BPS, Greening, LFASS etc.
However, it appears that it does not have the flexibility to adapt to what the government wanted to do with the new four-tier system. The original ambition of Tier 2 was to provide payments based on uptake of a List of Measures – a draft version of which was published in February 2023. This included lots of actions that we have supported, such as reducing the usage of inorganic fertilisers and synthetic pesticides, diversifying crop rotations, using nitrogen fixing legumes, integrating trees and regenerative grazing.

Encouraging uptake of these measures would help farmers and crofters across the country deliver on the government’s commitments around climate mitigation and adaptation and nature restoration.

These points were made by many organisations during the consultation process before the Agriculture and Rural Communities Bill was introduced, and throughout the passage of the Bill through parliament.

It is hard to see how the “transformation” promised in the government’s Vision for Agriculture will be delivered by maintaining the status quo on payments.