Agriculture Reform Implementation Oversight Board minutes: 29 September 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 previous minutes (agenda item 1)

The Cabinet Secretary (Chair) welcomed members to the twenty-second meeting of the Board, and its sixth in-person gathering. Chair referenced the papers supplied in advance for information and for any feedback to be sent via correspondence by 6 October as no immediate comments when made when raised.

Agricultural Reform Programme (agenda item 2)

Overview:

In order to provide context, Scottish Government (SG) officials provided a high level overview, including Route Map tweaks ahead of the next substantive version in the new year. The Route Map will continue to be the tool in which information for farmers and crofters is readily available, in other words a “one stop shop”. Officials reiterated the role of the Board in helping inform advice to Ministers and that many of the topics tabled for discussion were done so as a pre-cursor to help inform such advice.

The last substantive meeting of the Board (June 2023) featured an introduction to the Design Authority which aims to pull internal components together on technical and operational delivery and this work continues apace.

Comments from ARIOB members

• the timeline is helpful for the wider sector but it would be equally so for the Board if a forward workplan aligning their agendas to the milestones could be provided, what needs to be looked at and when, an action point was taken
• the close working relationship across Government departments was welcomed but the absence of the Good Food Nation Act from the slides covering the wider strategic context was noted
• officials were clear that  the presentation featured documents for illustrative purposes only and that it was not an exhaustive list but noted the feedback of including good food nation in future
• a question was raised around the placement of the Forestry Grants Scheme (and the importance of trees to the overall programme of reform). Officials confirmed that it was being considered how tress on farms connected to the Framework but the immediate focus on preparing for 2025
• it was raised by the Board that decisions may be taken on mechanisms of delivery before budgets are known – and that will have implications on claimants being asked to take important decisions without sufficient clarity on the details, not to mention if budgets are cut
• officials concurred but noted that the timetable within the Route Map reflects the reality of the current budget setting process

2025 Changes - Cross Compliance: Peatland and Wetland

Officials gave an overview of the proposed introduction of new protections for peatlands and wetlands and are working to define both terms from the very start and with the help of the project working group (containing representation from a number of SG core and agencies who have expertise in this area). Peatlands are wetlands and predominant type of wetland in Scotland and those definitions will be important going forward to determine who may be affected by any changes and, as a result, work is being carried out on mapping given the linkage. The headline figures show a significant amount of peatland is already degraded (more than 74%) and that has obvious implications in terms of GHG emissions. Ideally, farmers and crofters will use the agreed definitions to assess their land and associated conditions on it. Consideration must be given to what we can do to reduce emissions but avoid significant business impact and that may very likely be within the remit of Tiers 2 and 3.

Cross Compliance will continue to seek adherence to baseline standards but is separate to improving, enhancing and restoring and therefore not the only intervention as part of the future Framework and the current ‘Discovery’ phase of the Programme will not purely focus on soil.

In terms of working baseline protections, key activities identified which require restriction that lead to the loss or severely damage carbon rich soils include ploughing, cultivation and draining (including installation of new drains or further drainage), planting of trees, fertiliser, herbicide and pesticide application, poaching that will erode/damage soil cover and any peat cutting should involve best practice. Officials were clear that grazing restrictions (farmed livestock), wild deer and tracks covered by permitted development are not currently proposed within working baseline protections.

In terms of next steps, Government will seek advice from advisory bodies and are in direct and regular contact with farmers and crofters and this will again shape advice to the Cabinet Secretary.

Comments from ARIOB members:

• members broadly welcomed the protections but warned about the definition of what is deemed as degraded to avoid unintended consequences – it needs to be crystal clear for farmers and crofters. There is a methodology of generating estimates through field surveys an a robust approach to mapping (UN frameworks) but work being done to improve estimates
• in terms of areas covered under baseline protections, it can be difficult to avoid poaching in areas of feeding, especially when the areas in question often change annually and restrictions could mean further unintended consequences. Livestock will often use the same path so minor poaching can occur in these areas but they can be in good condition
• however, deer control for tenant farmers is difficult – especially from neighbouring estates, so deer management groups should be consulted
• the appropriate grazing of the appropriate livestock (including sheep) in the right areas must be paramount and that’s where mapping will be critical – otherwise vulnerable to legal challenge
• some members pointed out the inaccuracies of mapping as part of POBAS and stated that farmers must know what’s on their farms before this launches
• how much of this land is under agricultural management and how do you address the fact that a substantial amount of land sits outwith the current framework? Chair referenced a specific piece of work being carried out by the James Hutton Institute in relation to this and an action point was taken to share the report with the group when published
• officials added that this feedback would help develop the detail and that hearing practical evidence will help balance requirements, moving towards 10 metre peatland mapping in the next year or so
• cross Compliance should complement rather than complicate existing requirements, such as EIA regulations, to avoid confusion
• it was argued that as EIA regulations are not monitored and enforced sufficiently, is the EIA process being widely adhered to? Where is the public register to help establish this?
• officials hope that thorough user research will identify any areas of overlap and how these can be avoided in practical terms
• one member felt there was probably an element missing on proportion of species where, in many cases, they will be more present in intensively managed areas and shouldn’t fall within a Cross Compliance boundary
• there was some discussion on peat cutting, the merits of its inclusion giving its declining prevalence in the Highlands and Islands, with acknowledgement of its cultural history and perhaps more of a focus on mechanical rather than hand
• a query was posed about how this work was interacting with the work that NatureScot are carrying out on biodiversity scorecards and POBAS? Officials mentioned that this point hadn’t been raised within the project group but will be followed up on and an action point was taken
• a further action point was taken after Chair asked if there was any official monitoring which had picked up on the anecdotal view of a reduction on peat cutting and officials committed to raising with RESAS
• there is evidence that grazing and burning are implicated in peatland degradation
• the role of grazing itself removes the inputs of fresh peat material into long-term carbon stores, altering the ecosystem
• it was opined that by keeping pace with new CAP condition, it was a way of the SG reminding people that it will apply environmental principles from the EU
• the science is moving more towards a precautionary principle because of scale of emissions from peat and agricultural landscapes and if farmers are obtaining maps of their land and associated conditions through biodiversity audits, peatland should be integral to that
• it was hoped that by ensuring the messaging is correct, highlighting the cost effective nature of these steps, it will increase uptake on a wider scale and GAEC is but a small element of the process
• there was some debate on the merits of different peat depth levels in relation to tree planting, but wide agreement that there is no pathway to net zero without forestry expansion and peatland restoration
• finally in this segment, there was a request to use the International Union for Conservation of Nature’s peatland programme for insights ahead of the SG’s user research, which will include experience of compatibility with existing agricultural practices

2025 Changes - Voluntary Coupled Support (VCS)

Officials updated the Board on work commencing in this area since the Royal Highland Show announcement around reforming the suckler beef support scheme through conditionality, namely improving calving intervals to tackle GHG contributions of animals not producing calves. This is a clear mitigation measure which simultaneously supports business efficiency.

Officials have undertaken stakeholder engagement since June, including the Scottish Beef Association, NFU Scotland and Livestock Health. This has now progressed to a formal stakeholder group which is able to assist with questions and focus on simplicity of messaging. The Group held their second meeting at the end of September and discussed delivery of split payments and smaller herd sizes. In terms of the calving threshold itself, this is still to be determined but officials will ensure a pragmatic approach is taken and done so through appropriate legislation.

Comments from ARIOB members:

• members discussed when we might see evidential outcomes from this work and there was consensus that it would be in the medium to long-term, taking a number of years to feed through
• discussions turned to whether this would be incentivised, with uncertainty over budgets a continuing common thread and a hope that this policy wouldn’t be abandoned because of a perceived lack of short-term results
• the rationale behind it must be explained in clear terms with an explanation of what calving intervals actually are and that payments are for calves rather than herd averages
• on the back of that, the Board talked about linguistic choices when presenting this – will it be a bonus, top-up, split payment, new money or simply part of VCS? Officials said that there will be an underlying set of requirements which determine eligibility under VCS but this is part of the bigger picture, an evaluation to get the sector to begin the transition, delivering both increased business efficiency and emissions reductions
• members referenced equivalent work in Northern Ireland and Republic of Ireland where the SG could learn from, particularly around training, comms and calving metric results so far
• the working group will consider smaller holdings and herds as well as mixed systems to allow for equity, which may include derogations, though this must be balanced against the potential complexity
• a representative of the working group committee agreed to presenting numbers to the group, with help from ScotEID
• a member raised the idea of a working group to examine the future of SUSSS and while Chair welcomed the suggestion, she was keen to ensure the changes to VCS revolve around beef calving and that SUSSS should be considered within the context of regions

2025 Changes – Whole Farm Plans (WFPs)

As with VCS changes, officials reminded the Board that Whole Farm Plans (WFPs) formed part of the Royal Highland Show announcements where the SG committed to introducing productivity baselines (or audits), comprised of soil testing, an  animal health and welfare declaration, carbon and biodiversity audits, which will provide business planning assurance.

The working group has now met on four occasions and the Design Authority are now assessing delivering the operational element of the policy as part of a co-design approach. The group has debated a range of issues but their key finding so far is that, in terms of support from 2025, many farm businesses are already undertaking activities that align to the core audits mentioned above but that sequencing will be crucial to the success of WFPs.

While initially focussing on the aforementioned baselines, there is a recognition that these will be broadened in the future and the level of importance attached to each is likely to change over time. Some questions were posed to the Board that the group are also considering, including:

• in terms of targeting funding, should that continue for the audits or move towards a future farm advisory service to have a standardisation of quality?
• what should be supported in 2025 and could that change thereafter?
• what would just sequencing mean for businesses?
• at what point should Government expect that businesses are completing all four audits?

 

Comments from ARIOB members:

• members broadly welcomed the progress of the work, welcoming the changes since it was first brought to them in July 2022 with one commenting that it is now much closer, conceptually, to the Board’s original vision
• there were differing views offered on sequencing with the hope that farmers and crofters would have access to accurate information to allow them to be aware of some of the trade-offs required to achieve intended, holistic outcomes, with the recently published State of Nature Scotland Repor referenced
• the data baseline must be robust from the first day to ensure farmers and crofters are well informed and have a pathway to move through the tiers rather than see this as another compliance obligation – we cannot lose sight of tier progression
• storage of data would be very helpful for a collective understanding across the sector with no overarching database at present – could ScotEID help? Otherwise, we may be at risk of farmers being forced to use consultants given the dearth of qualified people
• capacity concerns were raised and whether there is enough expertise available to deliver en masse with a NatureScot biodiversity audit on a monitor farm given as an example of an invaluable but unavoidably time consuming piece of work
• following some discussion of POBAS and the accuracy of Biodiversity Audits, co-chair suggested that a representative of NatureScot attend a future ARIOB meeting to discuss in more detail. In addition, officials offered to have a fuller discussion at the next meeting or via a standalone online WFP gathering and an action point was taken
• in relation to standardisation, there was agreement that this would be very difficult without a mandated carbon tool, especially when many in the sector are already engaged in this using different methodologies. We should be ensuring that all audits are ready from the start, otherwise it will undermine the whole process and turn people away from making changes
• officials interjected to add that they are cautious about what they do with data given what has been raised, however, there is already a national baseline through the inventory as well as biodiversity report so they know what’s going on at the top level, albeit imperfectly
• how often will the baseline standards need to be reviewed in order to remain relevant and useable? Officials agreed that the rate of review is an important consideration and one the working group will give thought to, but the main aim is to bring forward this strand of work as soon as possible, on as many farms as possible, supported by the four tiers
• one member of the working group referenced a helpful diagram they had discussed and it was agreed that the schematic, when updated, should be shared with the ARIOB for comment and an action point was taken
• we must remain vigilant of some of the potential pitfalls as discussed back in July 2022, going back to differing interpretations of what business planning entails and some stakeholders continuing to see this as government overreach, although a counter point was made that the messaging has to ensure that business planning isn’t necessarily financial planning
• it was agreed that the language around this needed to be clear so that there was not confusion
• quality food production was felt to be missing and that, by introducing such an element, it could be used as a census mechanism to demonstrate what you’re planning to produce and avoid an additional burden
• it may also be helpful to include and build up intelligent supply chain planning as the WFP evolves
• one member opined that there is evidence that presenting data to farmers and crofters helps enable behavioural change, with Northern Ireland cited as an example with high participation rates – adding that SG officials may wish to engage with their Northern Irish counterparts to seek any lessons learned
• the need to be realistic about what is deliverable within the current timescale was reiterated and that, counter to some points made about incentivising, there was a plea not to dilute the process to get to where we want to be, i.e. Net Zero
• with a view to crofting, we may wish to reflect on the value of making individual businesses with 5-10 hectares go through a potentially overly burdensome process when it could be actioned on a common grazing level basis and this may be the appropriate scale in order to deliver results, particularly for smaller businesses

2026 Enhance Support Measures

Officials began by thanking the Board for their previous feedback on this part of the Framework, the development of which has been driven by user engagement. The evolution of Enhanced continues as the mechanism to deliver the Vision for Agriculture, focussing on delivering biodiversity, climate mitigation and quality food production – something that will only be aided by the launch of the Agriculture and Rural Communities Bill.

Government’s focus will now turn to the customer, engaging with farmers and crofters to help meet their requirements with a Framework that is practical and goals that are achievable. In terms of paperwork, officials are looking to develop a document that fits in with the SAF form, in other words, something easily recognisable. Payments could be delivered through the SAF as an enhanced top-up for maintenance and improvement.

There will be no double funding. There may be incentivised elements if there is a robust case for doing so, as woodland. The Enhanced tier will be available to all claimants but some might choose not to participate. In terms of the SG budgetary control, there may be creative flexibility and the example was given that some claimants may be eligible for more than 100% of what they are currently entitled to if others choose to do less, but that is still under development.

With regard to monitoring and evaluation on outcomes and actions, officials are keen to work with people on the journey and changing mindsets, not about penalising or enforcing sanctions.

Comments from ARIOB members:

• members would like SG messaging to be clearer on the differences between Tiers 1 and 2
• in respect of AECS and potential double-funding through an overlap, this transitional issue would be examined by officials. There will be legacy issues and Government will look to avoid unintended consequences, but, in the longer-term, Tier 3 will be discretionary to encourage change but ongoing payments may move back to Tier 2 in time
• if farmers and crofters are already growing organically, are they going to meet a ceiling of 50%? Again, officials will assess incentives based on contributing to the policy goals
• does Government incentivise people to be organic by giving to those who already are? Wil there be a transitional arrangement? Will only people doing it afresh be eligible? This is all under review but officials pointed out that each applicant will be given flexibility wherever possible to achieve their enhanced payment
• if the enhanced payment is subject to base entitlement (as confirmed by officials), is enhanced only paid on parts of hill ground as well? Officials confirmed a simplified approach, that it will be based on the value of entitlements (as the easiest way to establish), not number of hectares
• if farmers and crofters are fulfilling activities anywhere on their land they will need to demonstrate how it contributes to the aims of the Enhanced tier – the contribution depends on where that work is carried out and that’s where the weighting comes from. Ultimately, Government wants to highlight a range of activities (list won’t be static to build-in future flexibility) that farmers and crofters can undertake, reward good practice and incentivise land use change
• members highlighted again the peer-to-peer benefits
• officials are aiming to ensure the framework is sufficiently flexible and resilient to allow for future changes as opposed to creating new IT systems in the future
• approximately 7000 SAF form claimants received less than 5% of the overall funding pot so proportionality is also being considered
• a word of warning was sounded about being too flexible to avoid “cherry picking” of particular activities
• in terms of weightings, these are likely to change over time based on a number of different criteria which will be set against a cost-benefit analysis
• in response to a query about system complexity, officials noted the problems down south where many aren’t participating and some of those who are find themselves ineligible for funding after beginning work
• the threshold will change through time, it won’t be fixed
• the Board discussed the merits of land use change, with some believing that Tier 2 should evolve around maintaining and improving, with an eye kept on those who may wish to game the system. Ultimately, land use change should be pivotal a the need for it communicated correctly
• biodiversity Audits were raised again with the thinking that the elective tier might require a more detailed Biodiversity Audit given the 19,000 claimants will likely be applying for Tier 1
• it was hoped that the use of technology, such as precision equipment, would help alleviate some of the burden on farmers and crofters
• officials agreed that they would examine the use of technology within the development of Enhanced)
• involving monitor farms at an early stage could prove mutually beneficial to avoid the coalescence around the same measures – allowing farmers and crofters to choose could mean slower delivery
• there was some debate around the likelihood of private finance but agreement that certainty over funding overall is imperative to the success of the Framework. On finance, the price of food needs to match sustainability

Region review

Finally within this section, officials brought the Board up to speed on the work being done on Regionalisation – a desk-based internal review, technical feasibility study and further research from the review. The model as originally presented to members in July 2022 has been narrowed down to four options. This won’t be a change from 2025 but the SG has committed to providing further information by then and that’s what’s being worked towards.

The current region model is difficult to embed LFASS type support and that would be a potential inclusion – it shouldn’t be a standalone mode but come together as a cohesive mix, with options 4 and 6 having the capability to do that. Payment regions in themselves do not deliver measures, however, they are an essential financial budgeting tool and aligned to the Vision for Agriculture.

Other considerations include the entitlement allocations, LFASS, SUSSS and redistribution, with the view to ensuring equity and parity – that everyone has an equal opportunity to obtain funding as part of a Just Transition

Comments from ARIOB members:

• co-chair referenced the need to be adaptable against the backdrop of uncertain world events and officials replied that the adaptability is linked to the budget, as the current model is, at least in part
• co-chair also hoped to see a light touch approach for smaller farmers and crofters but looks forward to the next stage of development
• frontloading or redistribution within Tier 1 was mentioned as a possibility, as was LFASS and the opportunities in relation to its budget not being tied to the regions system
• high Nature Value farming was discussed as a potential way to ensure equity and parity, taking it out of the regional system to avoid a “winners and losers” scenario – perhaps using the LFASS budget to do so. However, officials warned that that would require a new delivery mechanism and/or scheme but instead it could be achieved through applying the budget to Tier 2
• mention of new entrants was welcomed as a step in the right direction
• redistribution may be viewed as a “double whammy” for some farmers and crofters in terms of funding loss but officials may look to some form of equitable payment in those instances
• however, the opposing view was offered that many will soon have access to funding for the first time
• others warned against stretching resources too thinly and that an “all at once” approach may counteract a Just Transition
• entitlements were discussed with some hoping for their removal entirely, particularly private entitlement trading. It was noted that entitlements have been phased out entirely in the USA, that all land matters and entitlements could be seen to be irrelevant other than a means to ring-fence parts of the budget
• rough grazing was given as an example of unsuitable going forward with grazing densities set decades ago and it can be very difficult to determine activity in some areas – the money should go to those farming efficiently and sustainably
• officials sought to clarify that when assessing models, the baseline assumption is not changing to change regions as they currently stand
• if Region 3 land is given an uplift, is the money coming from elsewhere?

Food security

Officials gave a short overview of the new Food Security Unit, set-up as a recommendation from the Food Security and Supply Taskforce, emphasising that we are food secure but that the Unit is establishing monitoring mechanisms and engaging with other policy areas to encourage consideration of the issue – particularly with a view to diet and nutrition.

Officials mentioned the balancing act of an efficient system and providing healthy and affordable food.

Comments from ARIOB members:

• the Board were broadly receptive, highlighting the need to consider food security as intrinsically linked to climate change, nature loss and economic security rather than being mutually exclusive

• there was a plea to continue to monitor the global impacts given our dependency on imports as, after all, global food security is the biggest driver of Scottish food security as well as exporting protein to other countries
• the need for balance was reiterated by one member who highlighted that food security and self-sufficiency are different entities but the work of the unit will help provide focus on the immediate term
• economic security was discussed, in parallel with how agri policy relates to food and drink strategy. Agriculture should be viewed as the fuel which drives the growth of the food and drink industry
• food security is an essential function of trade and one member extolled the benefits of reducing our impacts on the food system through fewer imports and recognising what we’re good at and making it sustainable

Food production

The Chief Scientific Adviser provided a quick run through of the latest Academic Advisory Panel meeting on food production challenges in a Scottish context, with four questions (and answers) as considered by the Panel, as well as highlighting associated RESAS evidence published today (29 September)

Ultimately, and as mentioned above, the UK produces 60% of its required food so while being food secure, we are not self-sufficient – as was alluded to above.

Food production should be factored alongside nature loss, climate change, and social justice – with limited land resources and global events alongside.

Comments from ARIOB members:

• the Board were conscious of the balancing act of delivering Net Zero without damaging economic activity (with the economic benefits of whisky being offered as an example of that difficulty, although by-products do help)
• that includes tourism and socio-economic factors, the latter of which can be hard to measure but the downstream effect maintains people in rural areas that may otherwise be abandoned
• if the policy is created as intended, farmers will be encouraged to produce food in a more sustainable and efficient manner, in which both the environment and their respective businesses can thrive
• there was some debate about the inclusion of a food production commitment within the Paris Agreement
• for the benefit of the record, Article 2(b) of the Agreement commits to, “increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production”
• intervention logic was raised – to put in place policy solutions to combine with market forces, consumer wishes and challenges to demonstrate best use of public money. Land use change was again debated in this context, with a note of caution that any change must take into account existing employment that may be lost as a result, as well as the spread of urbanisation and associated risk of soil loss
• members agreed that through Tier 2 options, or the “engine room”, this is where we are more likely to see change
• food production and security should be about helping the poorest in society and the speed of change is vital

Agriculture and Rural Communities Bill

In light of time considerations, this agenda item was shortened. However, officials reminded the Board that the Bill had now been introduced to the Scottish Parliament as part of the SG’s rural support plan and containing the powers and mechanisms to prepare for agricultural change. Parliament will now decide on the relevant committee with Stage 1 likely to conclude by Spring 2024.

Secondary legislation will follow and the Board will be consulted as part of the SG’s co-development approach. Chair added that the agri tenancy provisions which were previously slated to be included in this Bill are now in the Land Reform Bill.

AOB

In response to a request from a member on the current activities of the various sub-groups, Chair agreement to provide a rolling update to the Board and a final action point was taken.

Chair thanked members for their time and looked forward to welcoming to the Board’s next meeting towards the end of the year.