Agriculture Reform Implementation Oversight Board minutes: 2 June 2023

Attendees and apologies

Cabinet Secretary for Rural Affairs, Land Reform and Islands, Mairi Gougeon (Co-Chair)

Martin Kennedy (Co-Chair) 

Items and actions

Welcome and Papers for noting and sign off (agenda item 1)

The Cabinet Secretary (Chair) welcomed members to the twentieth meeting of the Board, and its fifth in-person gathering. Before moving to the first order of business, Chair made members aware of the recent resignations of Alison Milne and Louise Welsh from the Board, noting her gratitude to them for their work as part of the ARIOB.

Chair referenced the papers supplied in advance for information and for any comments on them to be made via correspondence as no hands were raised in the room when asked. In relation to previous actions, these had been addressed with the provision of a revised Biodiversity Audit update paper and the establishment of a Whole Farm Plans steering group (agenda item 7).

Ahead of the first substantive item of the day, Chair invited the Chief Scientific Advisor (CSA) to provide a short update on the work of the Academic Advisory Panel (AAP). The CSA confirmed that the next AAP meeting would focus on food security and biodiversity, respectively.

Delivering the Route Map (agenda item 2)

In order to set the scene for the day ahead, officials sought to put later agenda items in context. Presentations today will look to encourage discussion on Conditionality and Regionalisation options as well as Scottish Government plans to engage more directly with the sector on the revised Route Map and the Agriculture Reform Programme more widely.  Officials also stressed that they are keen to reflect Board comments and ideas in their advice to Ministers and, as such, nothing is yet finalised.

 Comments from ARIOB members

• there was some concern expressed about the realism of a reduction in emissions as well as a potential announcement around the Royal Highland Show on new conditions when many of the questions on the Basic Payment Scheme (BPS) and Whole Farm Plans (WFPs) remain unanswered – although the Board were reminded of the WFP and conditionality item later in the agenda
• members repeated a point previously raised that any amendments to the current Regionalisation model would have an inevitable impact on future budget splits
• the money allocated to Tier 1 will then determine what can be delivered as part of Tier 2
• Tier 1 must be sorted before scoping the approach for higher tiers and not doing so would be a waste of Scottish Government resource and ultimately be “nonsensical”. In other words, what is proposed could be argued as a “cart before horse” approach
• in response, officials attempted to reassure members that they are looking at how Tier 1 will interact with other tiers and would test membership thoughts on that later in the agenda
• 2025 has been identified as the starting point for this meeting is because of the immediate timescales and in order to shape priorities and associated resources
• base is not being left behind, but officials acknowledged that enhanced is further ahead in development due to the existing resource deployment and this will be the focus of the next in-person meeting
• there was a plea to ensure that a communications update shouldn’t be forgotten and chair shared frustrations that many people are unaware of what information is already available, and that would be covered as part of the allotted comms agenda item

Conditionality (agenda item 3) 

Chair asked officials to present to the Board on the proposed approach leading to 2025, including conditional aspects of existing schemes, as well as new requirements – an opportunity to provide clarity on the SG’s more immediate delivery aims.

The Board were presented with a high level foundations of the approach to 2025 and some of the main considerations beyond that period, namely:

• budget planning
• capping and degressivity
• cross-compliance
• greening
• LFASS
• national reserve
• payment regions
• VCS (Beef)
• VCS (Sheep)
• WFP
• young farmer

Comments from ARIOB members:

Greening

• in relation to Greening, there was a query as to why more isn’t being done on that now considering its already in operation, would be part of the base tier and has existing conditions attached
• under current greening rules many businesses don’t have an EFA requirement because they don’t have arable land or qualify for exemptions and a  broader take coould seek to protect a wider range of land types

Cross-compliance

• on cross-compliance, officials noted that the outcome of the recent Agri Bill consultation demonstrated a misunderstanding of what it is amongst many respondents.
• it’s been in place in Scotland since 2005, as part of the GAECs framework set by the EU, but in future will be determined by what is best for Scotland
• it was acknowledged that cross-compliance was introduced as a mechanism to withdraw subsidy from non-compliant claimants of public money, although an imperfect system which can be improved upon. It was argued that improving this could strengthen the foundational requirements of the new support framework through a rigorous inspection regime which could lead to initial warnings, leading to funding loss, for proven non-compliance
• similar to points made in relation to Tier 1 and 2 above, clarity over what is a legal requirement and what is best farming practice must be made crystal clear
• officials noted that the eventual method of validation will be dovetailed with advice to great increase the understanding of users
• eu divergence was highlighted, both from trade and potential future membership viewpoints, but acknowledgement that the Scottish Government has committed to maintaining and enhancing EU standards
• in terms of the overall legislative picture, in response to a query, officials hoped that existing provisions within retained EU law will enable the SG to make the necessary changes
• SMRs and GAECs
• officials hoped to stimulate discussion as to how existing SMRs and GAECs are shaped by priorities going forward, hoping to obtain an idea of what’s actually there and what it delivers against
• if isn’t contributing to climate and biodiversity goals then can it be adapted to do so? Will legislative change be required?
• on the topic of GAECs, members discussed the current effectiveness of it, or otherwise, reflecting that we should be examining what elements of it work better than others if we are to move to a GAEC 2 or 8 – especially as, it was voiced, arable farms have done much of the  heavy lifting on greening and GAEC 8 may allow for a wider range of land types tier to contribute
• there was a view offered that GAEC doesn’t help enough with conversation of wild birds, flora and fauna and unanimous agreement among members that GAEC measures should not be decreased under any circumstances
• what might a new GAEC look like? Could Space for Nature be akin to EFA requirements but apply across the whole holding? What actions would be required to deliver against Space for Nature objectives?
• it was hoped there would be scope to think about Space for Nature and ensuring what might be included eligible for BPS areas, thereby ensuring it could be seen in future as a basic standard, in the same way it is hoped sustainable farming will be
• officials added that there are similarities between Space for Nature in a broader context than EFA, as we understand it and any GAEC 8 may incorporate EFA principles – which can’t be anywhere other than Tier 1
• there will be further debate on the detail but, in terms of the overarching principle, the point was made that nature and farming go together and communicating that through Space for Nature idea is critical, especially demonstrating that to new adopters through a solid evidence-base.

Funding

• a note of caution was expressed that we must not lose leverage over how farmers use their land, with counterproductive results seen in England where direct support has been phased out, meaning farmers are farming harder, to the edge
• perhaps incentivising good behaviours and regulating against bad. The SG must be clear about what is standard in Tier 1 and management practice in Tier 2
• further to that, others opined that Government should not have to pay for everything and, as far as compliance goes, increase support and guidance, but funding may be best directed elsewhere
• the overarching question was asked as to what is meant be 50% conditionality? If not, how are Government going to proceed when farmers and crofters have made assumptions on this basis
• officials retorted that this wasn’t the purpose of this particular meeting but budget setting will clearly determine future splits
• officials clarified that there is a Programme for Government commitment that by 2025 at least 50% of payments will be conditional, even though all funding should be considered as such, and that is what Government has signalled to industry
• today’s discussions will shape advice to the Cabinet Secretary on what could be added to BPS payments
• with regard to 2026 onwards and the enhanced payment mechanism, officials reiterated that no decision has yet been taken on budget splits
• finally, one member hoped that an action would be taken for the SG to present a form of words that clarifies the position on conditionality for the next meeting

Messaging

• members expressed a desire to use consistent language in terms the majority of farmers and crofters understand, particularly in relation to common used terms like conditionality
• officials agreed, particularly around current perceptions of existing schemes. People need to understand what the terminology means in the context of their own businesses, how they can meet the agreed standards – shaping the language to ensure as universal understanding as possible
• the Board were also aligned on offering recognition to currently ineligible land that is being farmed sustainably but isn’t being recorded

Next steps

Chair asked members where they were in agreement with Government continuing to work on the three fundamental questions on cross-compliance and greening within the associated paper:

1. Review parameters (exemptions) for Greening with a view to potentially include more claimants and land?
2. Introduce a new GAEC for protection of peatland and wetlands (2025)?
3. Consider a new GAEC, which could include some or all of current EFA requirements and relationship from 2026?

Again, agreement was unanimous among the Board, Chair and Co-chair, as long as communication of how we are tackling the twin crises is fit for purpose – a reasoned, concise, business case. Chair agreed that this need to be built into the process, that any and all future work is being carried out to deliver on intended outcomes relating to the crises. Co-chair pointed to engaging industry as more important than achieving immediate perfection.

Officials made members aware that a proposed package will be created internally on policy changes in a delivery and legislative context and following review and decision by the Cabinet Secretary it will be brought back to ARIOB for discussion. In terms of timescales and further co-development.

VCS (Beef)

Turning to Voluntary Coupled Support, officials reminded members of the February paper authored by Matthews, Moxey and Thomson on implementing conditions, notably shortening calving intervals from 2025. It is viewed as the most appropriate place to discuss enhanced conditionality in a beef scheme context.

With a view to receiving Board feedback, questions were posed on potential impacts to payment rates and eligibility (island and mainland), support requirements and legislative considerations. Government is mindful that if the direction of travel is 2025 implementation, some sort of announcement in June (including thresholds) would be beneficial to beef farmers making breeding decisions right now. In terms of support, MyHerdStats will be utilised, perhaps being able to break down data to individual IDs.

Comments from ARIOB members:

• the first response was from a member who had gathered information from peers and offered to submit written feedback on the topic.
• however, in the immediate term, warned of the varying gestation periods of different breeds, the difficulty in capturing calf at foot and whether  farms that scan “empty” cows will drag down the overall herd? Ultimately, while this was welcomed by the member, had officials considered the practicalities?
• empty cows won’t affect every individual’s calving interval as the relationship is assessed based on the bull herd on average; not an average of a herd but linked to the dam
• the overall aim is that instead of marginal gains, thresholds will enable the type of step change required. With regard to the point on breed differentials, such variables are hugely important and the system can be customised and conditioned per breed gestation period
• others also backed the idea, including the Chief Veterinary Officer, with many of those hoping it could start immediately, that it was time for Government to deliver on promises to industry and help people move forward by pushing boundaries such as this.
• another member welcomed this as a great opportunity to start substantive change towards sustainable beef production with a lower carbon footprint, promoting the message of overall efficiency while offering an incentive for “doing the right thing”. There are already over 3000 farmers registered with MyHerdStats so its usage in this work can only help
• there was some discussion on the origins of VCS and that the suckler herd remains critical in providing economic driver in remote areas of Scotland as well as our food production aims – and that the dairy sector’s contribution towards beef production should not be forgotten
• co-chair added to this point, that VCS is delivering on other fronts and hopes to avoid offshoring and importation of beef from parts of the world where welfare standards are lower
• an alternative view was offered, noting that it has not been established whether this would be a conditional element or act as a future support system for beef production
• in addition, it was put forward that these plans may reduce intensity but not emissions. Market considerations must also be considered in terms of valuations and another member referenced that the Republic of Ireland are limiting funding to a certain number of calves per cow

Next steps

Officials welcomed the positive response but signalled the challenges of delivery ahead of the Route Map timeline, particularly with regard to legal and delivery aspects. However, Government can work on what is achievable and early signalling, as suggested earlier, will be possible.

Regionalisation ( agenda item 3)

Officials reminded the Board that a key part of the Route Map’s setting out the transition to the new agricultural support framework commits to a review of the 3 region model by 2027. The current focus of this work at the moment is on the necessary technical requirements to enable such change, conscious of ensuring those most in need will be assisted. Officials working in this area are assessing what can be done in terms of natural policy changes aligned to outcomes, what can be done within the current system and any limitations as we transition.

Board members had previously shown support for reviewing and identifying an improved region model including options for LFASS and the SUSSS budget, with the most popular models as follows:

0: Current 3 Payment Region Model

2: 1 Payment Region AFHA

4: 2 payment region model where current R2 and R3 are merged

6: 3 Region – Merge R2 & R3, split R1 into rotational cropland (R1) permanent grass (R2)

7: 3 Region – Option 6 +SUSSS

These models must be considered in the context of our intended policy outcome, notably delivering against all tiers and include conditionality.

Comments from ARIOB members

• co-chair began by asking whether frontloading or a smallholders scheme were under consideration?
• noting that smaller units may not be at an advantage with respect to climate and biodiversity gains, but do provide invaluable socio-economic benefits
• officials said that no position had been taken on either at this stage but any model will have the flexibility to include such features
• others were keen to understand what problem Government is trying to solve with regionalisation, that more understanding of the options presented was required. Ultimately, whose income needs supporting to help us meet our targets? Officials replied that the predominant reason is that the current system is delivering against a different set of criteria
• this is a technical means by which to distribute payments and Tier 1 is intended to help food producers with a basic income support and Tier 2 will drive that production to be more sustainable while bringing more equity to funding
• another member warned that sorting this issue before moving on to the higher Tiers would be crucial
• some discussion followed on the benefits of a single payment, including the loading of funding, weighted to encourage sustainable practices
• however, others argued that a more nuanced approach is required when you have tiered conditionality, you have to differentiate – either through systems of regions, because a flat rate across the country may not work
• again, the point was raised about how difficult it was to “square the circle” with regard to the best way to split direct payments into what is income support and what will deliver for climate an nature, especially when farming and food production are intrinsically linked
• wasn’t the whole point of payments to keep people working the land in less desirable areas?
• yet arguably most of the money goes towards those with the best land and who don’t need it for production purposes
• a counterpoint was made that although the land may be perceived as better that those businesses may not show bigger profits, and it is often dependent on the managerial skills of those running businesses
• there was some frustration expressed that the Board had been presented with these options previously and it appeared that little had been made in the way of progress as we get closer to 2025
• in response to a query on IT, officials said they’d assess on a cost-benefit basis in the context of practical implementation and eventual delivery
• there was a suggestion that the previous deficiency payments model be revived but that may be counter to World Trade Organisation rules
• in terms of a Just Transition, it was put, that farming shouldn’t be considered unique as other sectors look to bring about wholesale change
• there needs to be a long-term assessment of food production to build resilience and improve efficiency

Next steps

Officials acknowledged that the chosen model must be clearly communicated, factoring in deliverability and cost. Officials also agreed that work needs to be done on Tier 1 and specifically how it will interact with Tier 2. In terms of timescales, similar to as set out under the previous item, sooner than a year.

Design Authority (agenda item 4)

As the Board had not yet heard from the Design Authority (DA), officials provided an overview of their work in this area. The DA is the recognised body that will ensure that the Operating Model is achievable and is the overall authority of all design decisions and the operating model for the Agriculture Reform Programme and that it is deliverable and meets the needs of end users, meeting Scottish digital standards.

The current model is being assessed with a view to simplifying as we progress to ensure its sustainable. The DA is keen to ensure that farmers and crofters become familiar with the service so that they know what they are entitled to, how they can apply and take advantage of further opportunities and learning. The service needs to be useable and add value.

Comments from ARIOB members:

• asked about lead-in time, with the topical example of potential calving interval conditionality used, officials cited resource requirements and the priority of continuing current payments
• it could be a quick process but will be determined by ambition and scope as large-scale systems take a long time to develop - monitoring and evaluation will change as we previously met European requirements and this will be made clear at outset
• in terms of the cost of existing platform, is this flexible enough going forward or will it have to be brand new? Officials indicated it would likely be the latter as the CAP system is not hugely flexible, but that the DA wants to reduce duplication of requests and overall bureaucracy
• on the CAP, the DA learned lessons from the last update. Additionally, there will be no set deadline to implement certain things, while delivering outcomes quickly as possible. Part of the modelling being done with the DA is establishing what can be repurposed from our existing service needs to be useable and add value

Whole Farm Plan, steering group update (agenda item 5)

Officials gave a summary of the inaugural Whole Farm Plan (WFP) steering group meeting (24 May 2023). The Group were provided with the robust feedback and key takeaways from the ARIOB discussion on the topic, particularly around baseline audits, frequency and differentiation.The group discussed the potential sequencing of WFP rollout and felt the term ‘plan’ could be misleading, which would need to be addressed in any comms. However, the key point of the discussion was to establish the ethos of and the  intent behind what a WFP is. Put very simply, there was agreement that the plan should enable and support holistic planning across all considerations of the business and the effective use of public support across all tiers.

The group will meet monthly, providing advice to the Cabinet Secretary and ARIOB, making links with the DA on delivery requirements where necessary.

Comments from ARIOB members

• co-chair reiterated his point from the last meeting – that the WFP shouldn’t be complicated, carried out as part of a SAF as a tool to support farmers and crofters during the transitional period
• there was agreement, with others stating that there would be no need to “reinvent the wheel” when the Arable Group put forward this idea in their report
• in terms of consultation feedback – one member noted that, broadly, feedback was supportive of the WFP concept. However, they believed that most respondents thought the way ARIOB did and what is proposed doesn’t align with expectations
• some people will need advice and support and that shouldn’t be shied away from. Processes must be put in place to enable understanding and to better help businesses, especially if expectations are different, to help deliver outcomes
• asked whether the steering group were asked for their view on proposed business baselines and inspections/audits, officials confirmed that they discussed all elements

Next steps

Officials sought to reassure the Board that their feedback on this issue has been heard clearly and that has been captured in advice provided to the Cabinet Secretary. Chair added that the SG will be as transparent as possible throughout the process and ensure simplicity is at the heart of WFP development.

Communications (agenda item 6)

Officials were conscious of the comms point made earlier in the day and made immediately clear that their intention was to follow-up on this meeting with a paper for the Board based on feedback from members on the day, leading into a subsequent standalone, online comms meeting for interested members.

Officials are mindful that while the detail is being worked on, as others have outlined earlier, where the SG can go further in terms of engagement is on the Programme itself and accompanying Route Map to make sure there is a baseline of knowledge amongst industry partners. Feedback from members has been consistent that Government must do better in reaching all farmers and crofters, helping them prepare for the coming changes – why, what and how it’s likely to impact on them and their businesses.

As indicated in February, the Route Map is the foundational building block to provide further information, key dates and the plan is to update it over time as the finer detail emerges. However, officials recognise the gap that exists between the information published and a wider knowledge and understanding. There will be more creativity in reaching a wider audience, for example, people have been asked where they get their news from to attempt to plug the gaps and officials are trying to make the case to reach out to those who have opted out of Government messaging, making the case that this information is more than a mere circular. There will also be a wider piece of work carried out on behavioural change but for now the comms focus will squarely be on what practical support there is in advance of changes.

The planned pilot roadshows are primarily a way to have a visible presence across the country and with a story to tell. The next iteration of the Route Map will include:

• plainer, simpler language and in a more concise way
• information on 2025 conditions
• glossary, in particular a Plain English accessible definition of Regenerative Agriculture
• case Study examples of people who are applying sustainable and regenerative agriculture practices as well as Animal Health Welfare
• preparing for Sustainable Farming Case Studies and ‘How to’ guides, e.g. soil analysis
• information on pilot roadshows at marts, area offices and agri shows which will be geographically spread
• information on how we will be developing the framework and how users can participate in the design

Comments from ARIOB members

• in terms of case studies, one member was keen to see these before publication and this was agreed to by officials, adding that the aim is to go to industry partners to ask for such example. But others were frustrated that given the array of case studies already available online, time shouldn’t be wasted creating new versions. Boiling it down, farmers and crofters want to know what it all means to them at a micro-level and are less interested in the policy discussion, i.e., what money is available to me and what do I have to do to get it?
• farmers and crofters, by and large, know that subsidy is changing but little more than that and it was opined that the SG comms approach so far has been distinctly lacking in meaningful sectoral engagement – that vacuum is in danger of being filled with misinformation
• the difficulties of the SG position were widely acknowledged as many farmers and crofters, understandably, won’t be satisfied until payment rates are confirmed and that may not be in the immediate future
• however, SG should reinforce decisions made on Stability and Simplicity and honesty in the of direction of travel and when decisions will come – perhaps some of the messaging could be more blunt, that some of the changes will be difficult
• in response to the perception of a heavily digital focus, officials concurred that flyers and leaflets would be advantageous through a local area poster campaign at obvious postings such as surgeries and libraries and a budget has been allocated to help achieve this
• co-chair expressed concern over the terminology of behaviour or behavioural change, as this tends to rattle people, and recommended a rethink on the language
• on language, another member added that this can’t be underplayed. A good starting point might be to improve upon the relations between claimants and area offices, which have been affected by closures due to Covid
• the glossary of terms was welcomed, particularly in relation to regenerative agriculture, which the Board has called for previously
• the proposed simpler version of the Route Map was also well received, with one member saying that the current version is not at all user-friendly and another imploring officials to condense the main infographic to one page, if possible
• while the roadshows were broadly welcomed in the sense of pro-active engagement, officials should note the risk of going out and about only with high level information and principles when most will want to know final details on schemes, budget splits and dates
• plenty of notice should also be given ahead of such events
• in addition, rather than being in broadcast mode, attending SG staff should be encouraged to make connections with farmers and crofters, and the example was given of collaborating with people on the day in actioning a carbon audit via a laptop – walk them through the process, taking down barriers
• monitor farms and the FAST group were also suggested as good vehicles to increasing awareness and engagement

Next steps

Officials hoped to reassure members that contact had been made with wider groups of stakeholders but welcomed the various points on improving messaging and engagement and looked forward to discussing further at the proposed online comms session in the near future.

Summing up and Any Other Business (agenda item 7)

Officials quickly summed up the day, citing the real progress and consensus on aspects of conditionality, including calving intervals, and regionalisation and would provide the Board with dial-in details for the proposed comms meeting

Chair thanked members for attending, looked forward to seeing them at the next Board meeting at a date to be confirmed and formally closed the meeting