Agricultural transition - first steps towards our national policy: consultation

Section 3 – Key issues emerging from Farmer Led Group process

Baselining

All the groups recognised the starting position for the sector in terms of greenhouse gas emissions was clearly understood as part of the National Greenhouse Gas Inventory and that the sector as a whole had a defined target.

• The groups recognised that for individual businesses to make progress and to understand and be recognised for the progress made, then baseline data at sub sector level was required. There was also a shared desire that this information could be used to improve the quality of information in the UK Green House Gas Inventory and to make it more relevant to Scottish Agriculture.
• There was broad agreement for universally adopted methodologies for the collection, analysis, application and sharing of data to inform decision making/actions on farm. There was less agreement, however, on the potential for further use of data and who might use it e.g. underpinning future support, or business to business, and business to consumer assurance. There is also a question around where baselining as a measurement tool crosses into conditionality, and links to continuous improvement.
• The Suckler Beef report identified a number of baseline requirements that businesses should adopt (in effect minimum good practice requirement for receipt of payments). These included completing a farm business carbon audit, a breeding and marketing plan, a nutrient management plan and carrying out soil, forage and manure analysis as well as farmers undertaking continuing professional development and committing to data sharing.
• The Arable Group stated that the establishment of baseline measurements at individual farm level are integral to their recommendations.

A challenge therefore for government and the sector is to ensure that if baseline data is being gathered it has a value at the farm level in terms of driving business improvements (profitability, productivity and efficiency) =, and more broadly value for money to the taxpayer where the collection and sharing of data underpins payments to businesses..

The Scottish Government currently provides fully funded Carbon Audits through the Farm Advisory Service (FAS) as well as being a mandatory element of the Beef Efficiency scheme and as a result has supported 3,150 carbon audits since 2016. The FAS Carbon Audit also provides benchmarking which enables businesses to compare their enterprise's carbon footprint and resource use against similar farms and identifies the areas of greatest opportunity for improvement. The carbon audit report provides a bespoke action plan to support the business to take steps to improve its efficiency and sustainability.

The Scottish Government will continue the work already started to develop understanding of stakeholder experience, including current gaps in measuring capability, use of the data generated and likely future needs to meet climate change and biodiversity targets

In taking this forward, we will work with ARIOB and a broad range of stakeholder groups to develop our combined understanding of baselining needs for businesses.

This will also include baseline and ongoing data collection and measures of progress such as:

• carbon audits
• biodiversity scoring and monitoring

The Farmer Led Groups have identified baselining as a key element of driving emissions and environmental, technical and economic progress on Scottish farms and crofts.

Should agricultural businesses receiving support be required to undertake a level of baseline data collection?

Should collected data be submitted for national collation?

If yes, what information should be collated nationally?

What are the next steps that can be taken to commit businesses to continuous improvement utilising the information presented by carbon, soil, biodiversity auditing?

How can baselining activities be incorporated in to common business practices
across all farm types?

Capital Funding

Farmers, crofters and growers have often remarked on the challenges of investing in an industry where profits can be marginal. In order to allow farm businesses to invest in capital items, which can aid emissions reduction, the Farmer Led Groups called for varying degrees of capital funding.

While some calls were specific in terms of the capital that required funding, others were more general in their recommendations. All groups were of the view that capital funding is going to be a key element of support for transformational change within each agricultural sector.

• Support called for was often first and foremost related to production. Some was related to purchasing capital equipment for improving animal feeding and health, others to improve performance grassland or crops for grazing.
• Use of smart farming/precision farming technologies in the arable and livestock sectors were called for to increase production efficiency and minimise inputs.
• Many recommendations and associated improvements to production would likely reduce greenhouse gas emissions intensity as a secondary outcome.
• Other calls for capital funding were directly related to greenhouse gas emission reduction such as those relating to slurry storage, slurry spreading and anaerobic digestion.
• There was less of a call for capital funding directly related to biodiversity or wider environmental improvements although some of the capital items e.g. those relating to slurry storage and spreading, would have environmental benefits in areas such as water and air quality as well as greenhouse gas emissions reduction.

The pilot Sustainable Agriculture Capital Grant Scheme (SACGS) has covered a number of the capital items that were recommended in the Farmer Led Group reports and the Scottish Government is considering how SACGS might be developed to assist agricultural transformation in the future.

Capital funding has also been provided through the Agri-Environment Climate Scheme (AECS) and further consideration is being given as to what funding might be provided in the shorter term until longer term support outcomes and delivery mechanisms are established.

Should capital funding be limited to only providing support for capital items that have a clear link to reducing greenhouse gas emissions? If not, why not?

What role should match funding have in any capital funding?

What capital funding should be provided to the sector to assist in transformational change, particularly given that in many instances the support called for was directly related productivity or efficiency, that should improve financial returns of the business concerned?

Biodiversity

It is recognised that we are facing not just a climate emergency, but also a biodiversity crisis. The Farmer Led Groups were therefore asked to take account of improving biodiversity and wider environmental benefits in their work.

• The Hill, Upland and Crofting Group in particular, had an enhanced requirement in its remit to consider biodiversity given the importance of High Nature Value farming in those areas.
• A number of the Groups worked with NatureScot and supported a baseline environmental audit. This could be a valuable tool if integrated with broader conditionality requirements, to ensure all farmers and crofters consider biodiversity within their management, potentially as part of a whole farm plan.
• Water quality and reducing diffuse pollution was a key area raised, as well as the biodiversity benefits on animal health and welfare.
• Other suggestions included emphasising the importance of appropriate grazing management, soil health, creation of connected field margin corridors, future support being linked to delivering biodiversity benefits and environmental enhancements and the gains that might be achieved from agro-forestry. The group did, however, highlight the potential conflict between GHG emission measures conflicting with improving biodiversity e.g. a focus on energy crops may have the potential to impact on biodiversity. It will be important to take account of consequences across the whole range of outcomes under consideration.
• The Arable Group provided a proposal for development of a whole farm approach similar to the LEAF Marque assurance scheme that delivers biodiversity improvements and wider environmental benefits.

A range of CAP schemes including Greening and the Forestry Grant Scheme provide funding in this area, with £214 million committed through the Agri-Environment Climate Scheme (AECS) since 2015. We are seeking to improve and simplify these measures in the short-term, while piloting new approaches through NatureScot between 2021 and 2024.

Should all farm and crofting businesses be incentivised to undertake actions which enhance biodiversity?

What actions would be required by the farming and crofting sectors to deliver a significant increase in biodiversity and wider-environmental benefits to address the biodiversity crisis?

Just transition

All the groups understood the need for a Just Transition, where , farmers and crofters played their part in reducing carbon emissions, improving efficiencies, and being more innovative, including through diversification of activities.

• There was a prevailing view from most groups that maintaining sustainable food production and income support is essential to future of some aspects of the sector, albeit with conditionality attached.
• A key theme of the groups was the importance of skills and knowledge transfer for a Just Transition (as discussed below). The Dairy Group also reported that to deliver change there needs to be capability, opportunity and motivation.
• The groups considered integrated land uses and the issues and opportunities that may arise from these, including woodland on agricultural land, peatland and biochar.
• A number of the groups noted the aspiration for the financial benefits of land-use change to be retained in land-based businesses and the rural economy.
• Concerns were raised in the tenanted sector of land use change being potentially imposed on tenants who might not then benefit from any of the financial benefits that might be available.
• It was acknowledged that when considering a Just Transition to recognise the complexity of issues of land use change and the potential for trade-offs and the impact on all concerned.

Partnership is key to achieving a fair transition. We are committed to working with the sector to ensure farmers crofters and land managers, as well as wider rural and island communities, share the benefits that come from these opportunities.

Scottish Forestry for example, is working with the Scottish Government, the Scottish Tenant Farmers Association and others to encourage more tenant farmers to get involved in planting woodlands, to better understand the barriers, and to identify from case studies what would make tree planting more attractive for farmers.

We will continue to work with a wide range of stakeholders to consider the complex issues around achieving our multiple objectives and identify the best way to ensure delivery of these outcomes in line with Just Transition principles.

What do you see as the main opportunities for farmers and land managers in a Just Transition to a net zero economy?

What do you see as the main barriers for farmers, crofters and land managers in a just transition to a net zero economy?

Sequestration

Carbon sequestration is the process whereby carbon is removed from the atmosphere and stored in soil and vegetation.

Noting the importance of sequestration there was a call from the Farmer Led Groups for an increased role for woodlands/agro-forestry/hedgerows alongside peatland/wetland restoration.

• There was general acknowledgement that increasing soil carbon sequestration should be promoted. This will benefit climate change and will lead to wider ecosystem and biodiversity enhancements by the provision of suitable habitats and soil improvements, while reducing soil erosion and nutrient losses.
• The importance of planting the right types of trees in the right environment was identified as key, with priority given to the restoration and management of existing woodland together with appropriate enhancement where possible to deliver the widest range of benefits. It was noted that any land use change should not be seen as a single approach but encouraged as collaborative ventures that will not be detrimental to the tenanted farming and crofting sectors.
• The Hill Upland and Crofting Group recommended that a review of all future support for the hill, upland and crofting sector be carried out to better recognise the role that this sector can play to help increase total woodland cover without compromising agricultural activity, sustainability and production levels, soil carbon stores (particularly on peaty soils), and the biodiversity benefits that this sector supports.
• Peatland restoration was seen a priority with a view that support should be available for the removal of woodland on these areas, and prevention of any woodland planting in future. Furthermore there was a view that peatland management guidance should be reviewed and that support should not be lost when the activity centres on maintenance.
• The Hill Upland and Crofting Group also noted the negative impact of high deer numbers on different key and fragile habitats, adding that addressing this will require a collaborative approach given the competing land use impacts and associated economic implications.

The Scottish Government has provided support through the Agri-Environment Climate Scheme^[11] (AECS) and SACGS to assist in delivering climate related benefits. Restoration of peatland is also being supported through a multi-million pound package.

Forestry Scotland is also supporting carbon sequestration activity, providing ring fenced support for small scale, woodland creation and processing schemes, as well as supporting larger scale forestry projects.

The Scottish Government is exploring potential opportunities for woodland creation and peatland restoration on Crofting common grazing land^[12].

How best can land use change be encouraged on the scale required for Scottish Government to meet its climate change targets?

Productivity

The opportunity to reduce GHG emissions through improvements in on-farm productivity levels was highlighted by all of the Farmer Led Groups. They emphasised the importance of improving efficiency in productivity across all sectors in order to ensure the sustainability of the industry, protecting rural jobs, and also to meet net zero climate targets.

• It was recognised that farmers could target the use of inputs more effectively to boost productivity whilst reducing emissions with the aid of analysis. Recommendations were made on forage analysis and manure/slurry analysis, with some reports looking to make these a conditionality of future support.
• The role of breeding decisions and genetic potential in reducing emissions and improving productivity was outlined by all groups, with calls for optional funding which would target the improvement of overall productivity, through fertility, health, welfare, rearing & finishing percentages, using data recording to assess regular and continuous progress.
• It was suggested that targeted support to encourage farm businesses to undertake planning around feed, breeding, livestock health, soil health, grassland management and nutrient management could result in enhanced productivity on farms and crofts.

Scottish agricultural businesses need to be resilient to meet the challenges of reducing overall emissions and enhancing biodiversity. Measures may be needed which can improve business resilience and productivity and can complement the need to enhance the natural world.

Would incentives for farm plans specifically targeting flock/herd heath, soil health, & crop health (for example) demonstrate real improvements in productivity over time?

Should future support be dependent on demonstration of improvements in productivity levels on farm? If so how would this be measured?

Research & Development

The groups made numerous suggestions for research and development to be undertaken in order to help the farming sector meets its climate change targets. They also highlighted the importance of improving knowledge transfer and ensuring research outcomes are applied.

• Key suggested research areas included: soil carbon measurements; grassland management best practice; on-farm carbon capture and storage technologies; carbon audit systems; whole supply chain emissions analysis; breeding and genetics for livestock (including genetic profiling and investigation into naturally low methane emitters); breeding and genetics for crops (including novel crops and Scottish legumes); feed additives and methane inhibitors; crop nutrient use efficiency; nitrogen inhibitors and slow release fertilisers; and alternative feed proteins.
• A common theme emerging was around data for baseline measurements. The Dairy group suggested the creation of an Agricultural Climate Change Centre of Excellence for scientific research and innovation with knowledge transfer at its core.

The Scottish Government currently supports a wide range of relevant research and development. RESAS, the Rural and Environmental Science and Analytical Services division of the Scottish Government, recently ran a consultation and in March 2021 published its strategy for research into the environment, natural resources, and agriculture^[13] establishing research priorities, with approximately £250 million in spending across 2022-2027. Furthermore, Scottish Government supports centres of expertise on climate change, knowledge exchange, plant health, biodiversity, and other areas of agriculture in addition to our established and internationally renowned research institutes.

The Scottish research consortium SEFARI^[14] offers the SEFARI Gateway, a knowledge exchange and impact hub to improve the flow of research, knowledge and expertise to and from policy, industry and the public.

In light of ongoing research activities supported by the Scottish Government and the 2022-2027 research strategy, are additional measures needed to ensure research is supporting the agriculture sector to meet its climate change targets? (If yes, please specify.)

Knowledge & skills

All the Groups recognised the importance of a robust agricultural knowledge and innovation system (AKIS^[15]) that enables businesses to prosper and meet their environmental and climate change goals. There was also a recognition that improvements to productivity would be greatly enhanced through upskilling and acknowledgment that a strategic approach (alongside funding akin to KTIF^[16]) to support knowledge exchange, training and innovation was necessary to maximise the opportunities for co-ordinated engagement and action across the supply chain.

Suggestions included:

• Appropriate training to existing business employees
• Apprenticeship programmes, to enable businesses to take on apprentices, trainees and new employees
• Support for Continuous Personal Development (CPD)
• CPD a minimum requirement for accessing public funding.
• A supportive advisory network (multiple issues/pan sectoral)
• Peer-to-peer learning and knowledge exchange to deliver tangible and lasting change, e.g. through monitor farms, innovation brokerage

There is no doubt of the importance of a well-functioning AKIS as part of a broader innovation pipeline. We need to learn from and build upon the successes of Scottish Government funded programmes such as Farming for a Better Climate^[17], Rural Innovation Support Service^[18], Farm Advisory Service^[19] and the Rural Leadership Programme^[20] alongside other initiatives as we look to the future. A future AKIS may also be informed through the work of the recently announced Commission for the Land Based Learning Review^[21].

The sharing and building of knowledge and skills in an open way that creates space to develop ideas will be essential to business innovation where end user needs are better understood and interactive collaboration between parties is the norm for delivering desired outcomes. Achieving this will rely on a combination of education providers, trainers, policy makers, farmers, entrepreneurs, researchers, advisors, funders and others.

What importance do you attach to knowledge exchange, skills development and innovation in business?

What form should tailored, targeted action take to help businesses succeed?

Should continuing professional development be mandatory for businesses receiving public support funding?

Supply Chains

While the Farmer Led Groups focused primarily on on-farm actions to deliver emissions reduction and biodiversity enhancement, there were comments and suggestions about the role that supply chain initiatives could play in supporting improvement. Recommendations were made that supply chain partners and government work to explore the opportunities for low emission logistics and food processing opportunities.

• Support for co-operatives, producer organisations and greater collaboration was noted as an area of interest for delivering greater efficiencies, with calls for more exploration of public and private partnerships through supply chain collaboration. There was a call for the extension of investment schemes to allow vertical investments across the supply chain.
• There were calls for government facilitation to provide greater transparency in order to bolster the sharing of best practice to deliver improved carbon efficiency.
• The Suckler Beef Climate Group called for the development of a new 'quality standard trademark' to reassure consumers that Scottish beef is produced sustainably. The Arable Group called for something in a similar vein, linked to an integrated whole farm management approach based on LEAF principles.
• There were calls for continued support for food processing and manufacturing with ongoing support delivered via the Food Processing, Marketing and Co-operation (FPMC) Scheme^[22] noted.

The primary role of most farming businesses is to produce for the food supply chain. The challenge of reducing emissions and enhancing biodiversity is a challenge that needs to be recognised by the whole food supply chain, not just by primary producers and actions need to be identified that will help whole supply chains meet these challenges.

We have recently launched a consultation on local food strategy^[23] which is seeking views on how supply chains can be strengthened and in particular identify actions to foster short and circular supply chains.

How can the green credentials of Scottish produce be further developed and enhanced to provide reassurance to both businesses and consumers?

Should farm assurance be linked to requirements for future support?

How can ongoing data capture and utilisation be enhanced on Scottish farms and crofts?