Beef 2020: review report

Annex 1

Beef 2020 group response to Scottish Government consultation on the Scotland Rural Development Programme ( SRDP) 2014-2020 Stage 2: Final Proposals

The potential for SRDP to support the development of a sustainable and resilient Scottish beef industry

SRDP options

The 2014 SRDP Consultation document lists 13 schemes for consideration. Some have only minimal potential to be of value to the beef industry, for example the Forestry Grant Scheme and LEADER. Some have overarching value, for example, Less Favoured Area Support, Broadband and Advice. Others have the potential to allow targeted assistance for the beef industry, for example, Food and Drink Support, Knowledge Transfer and Innovation Fund, New Entrants Scheme, Support for Co-operative action and Agri-Environment-Climate Scheme.

Although the SRDP budget is limited, the Beef 2020 group is clear that the proportion of the budgeting going to agriculture must not diminish and that the contribution to targeted measures for the beef industry must reflect, first, the sector's contribution to the wider agricultural and food economy and, second, the uncertainty it now faces.

Targeted assistance for the beef sector

Our priority has been to explore how the funds allocated within the SRDP to the areas of most interest to the beef sector can best be used to further the changes we are seeking.

Developing a resilient and sustainable beef sector will require businesses to achieve the highest levels of technical performance but also to deliver against market expectation. These gains can be achieved from a number of areas or actions including:

• Access to industry benchmark performance indicators;
• Use of high quality genetics;
• Reduction of on farm losses through high health standards and bio-security;
• Grassland maintenance and improvement;
• Crop and animal nutrition;
• Provision of equipment for example weigh crates and digital technology;
• Increased horizontal and/or vertical co-operation in the supply chain.

However, because of the low levels of return from the enterprises and the time taken for actions to deliver through the biological process of cattle breeding and rearing many businesses find it difficult to access the physical and intellectual capital needed to kick start a development programme incorporating the elements listed above. The group believe that three schemes within the SRDP offer potential to target support to encourage business advancement by offering seed corn funding namely:

• Knowledge Transfer and Innovation Fund ( KTIF)
• Agri-Environment-Climate Scheme
• Co-operative Action

The key starting point for any business seeking to develop is to have access to key performance indicators at business and sector level to allow benchmarking of a business.

The Beef 2020 group believes that Scot EID can offer the basic infrastructure for a number of benchmarking databases to be established and accessed.

Consequently the group considers that the Agri-Environment-Climate Scheme could be used to develop innovative recording packages and provide incentives for beef farmers to deliver information to these physical benchmarking packages. Annex 2 describes one vision of what such a database should include. Such a package would have the objective of establishing industry benchmarks for physical performance which individual businesses could then access to better inform their decision making in relation to, for example, genetic selection.

While necessary actions can be identified from the databases and the knowledge exchange required to interpret and plan required actions could be supported by the KTIF fund described below, delivery of the actions could also be supported through the Agri-Environment-Climate Scheme. High levels of technical performance should also deliver not only against improved profitability and hence economic sustainability and resilience but also, in association with carcase and market feedback, improved market orientation.

The group considers that a suite of support designed to encourage genetic improvement, the use of animal health monitoring programmes, grassland renewal incorporating high sugar grasses and legumes, and capital investment could be provided under the Agri-Environment-Climate Scheme. We believe that support of this kind, along with an industry database will not only deliver against improved business profitability and hence economic sustainability and resilience but also help the beef industry to make a meaningful contribution towards the Scottish Government's climate change targets and obligations.

Although the group recognises the need for support to be paid on the evidence of action and outcomes, it would also urge a proportion of the support being made as seed capital. For example, staged payments could be used to support the use of improved genetics, some when the genetics are purchased and some when the product of that genetic is born or integrated into the herd.

To gain maximum benefit from the database would require knowledge exchange in respect of the science and technology of actions needed to improve performance. The KTIF could again play a significant part in this by supporting business improvement through help to facilitate groups of farmers working together to gain knowledge through, for example, the Monitor Farm model.

Physical benchmarking provides a significant starting point for business improvement; a second stage is to consider financial benchmarking. Levy bodies and government have limited resources to expand the coverage they currently have. However, suitably designed knowledge exchange programmes, for example of a monitor farm style, could be used to enhance the impact of financial benchmarking and depth of data available. We consider an indicative annual budget of £0.75m should be provided to support a beef sector development knowledge exchange programme with 1000 beneficiaries.

Other measures

The group has identified a further challenge of the beef supply chain as that of encouraging new entrants; both new farmers and new beef enterprises. In this regard the group supports the New Entrants Scheme, provided that a proportion of the funding available can be used to purchase livestock.

Much of Beef 2020's vision of the future is built on rapid access to information, advice and databases. This will be maximised by access to high speed digital communications and the group strongly supports the commitment of the SRDP to support high speed broadband access across the whole of the rural economy. Equally the group recognises the value of access to good quality Advice.

The success of a whole beef supply chain will also be influenced by innovation, efficiency and product development among the abattoir and processing sector. While several of the larger processors may not be eligible for support under the Small Rural Business Scheme on the grounds of scale, the group recognises that Food and Drink Support for processing, marketing and co-operation for food and drink can play a significant part in supporting innovation among meat businesses and help secure demand for beef animals and is supportive of the indicative budget allocation in the consultation document.

Co-operative action by groups of farmers, or innovation by farming accountants/consultants to benchmark groups of clients could also play a role in our vision. The Beef 2020 group therefore find it disappointing that the scheme identified in the SRDP consultation as Support for Co-operative Action appears to be targeted purely at "landscape scale projects" as we believe co-operative actions in support of business efficiency should also be recognised. Support for co-operative action would also be valuable seed corn funding to develop improved horizontal and/or vertical integration in the supply chain.

The Scottish beef industry is driven by production from suckler herds. Over 80% of suckler cows are found in the Less Favoured Areas and the group is fully supportive of the continuance of the LFASS programme and the budget proposed.

If these targeted and more general measures are to have maximum effect in achieving the transformational changes required they will need to be pulled together into a coherent and persuasive scheme for the sector. It will need to combine sufficiently attractive rates of support - ideally including both ring-fenced elements of the SRDP scheme listed above and additional support for the establishment of the crucial database - and a very clear understanding that we are looking to secure transformational change not a status quo.

The latter could mean two things; first, farmers will need to go beyond understanding their performance to taking tangible steps to improve it and second this support will only be available to those farmers - of whatever size - who by meeting some entry level requirements show they are committed to change. Other indispensable factors for the success of the package would be sufficient skilled facilitators/advisers to drive the change and the alignment behind the process of other funds such as Food Processing Marketing and Cooperation, Resource Efficient Scotland, European Structural Investment Funds. The group will report by June on these wider points.

Conclusion

In respect of the SRDP, the group:

• Notes the opportunity to introduce measures with help to both stem the decline in the herd and take the sector's performance to the next level in terms of resilience and sustainability;
• Believes that a key measure will be to make effective, carefully designed use in the beef sector of the Knowledge Transfer and Innovation Fund, the Agri-Environment_ Climate scheme and the support for co-operative action;
• Recommends that Scottish Government indicates that of these schemes the beef sector will benefit from a proportion of the funds which reflects the sector's contribution to the wider agricultural and food economy;
• Believes that a beef improvement database along the lines of annex 2 is a necessary first step;
• Recommends that the new entrants scheme should allow funding for the purchase of livestock.