Sustainable and integrated farming and crofting activity in the hills and uplands of Scotland: blueprint - report

4. Key messages

The following points outline some general comments that the HUCG wishes to put forward:

• Agricultural support payments going forward must be linked to the delivery of adequate agricultural activity.
• Previous and current support systems have distorted land values and artificially inflated or restricted the financial viability and competitiveness of different types of land uses and production systems. This has not only caused a competitive disadvantage for certain land-based industries, including upland and hill farming, but it is also creating significant barriers for new entrants to agriculture whilst creating challenges for existing tenant farmers and crofters wishing to remain within the industry. This has a direct impact on rural employment opportunities and rural communities and is already affecting the critical mass required to sustain many upstream and downstream subsidiary industries. The HUCG notes that agricultural support payments will likely have to continue on an area basis in order to be deemed an environmental rather than production payment, but it is absolutely crucial to link these payments to adequate agricultural activity carried out by the claimant.
• Regulation should always be preceded by a period of voluntary uptake. There are many excellent examples of Estates, farms and crofts that are willing and ready to improve their land management in line with environmental interests and best practice, and in many cases they have already taken the lead. These businesses must be given an opportunity to adjust their management system which can often be a multi-annual transition, and this needs to be recognised and reflected within any changes to policy. Thereafter, regulation provides an important tool to ensure that beneficial land management and land use systems are adopted more widely to deliver climate and environmental benefits and to ensure that potential impacts on neighbours and tenants from insufficient management or engagement are minimised.
• A focus on meeting climate targets should not come at a cost to management which specifically targets biodiversity. Many opportunities to benefit one also deliver outcomes for the other, but beyond that, care must be taken to carefully balance trade-offs between these equally important priorities.
• The HUCG stresses that whatever policy will be designed as basis for future agricultural support, that it must not be aimed at artificially restricting or culling livestock numbers in an attempt to gain quick wins with regards to emissions reductions on paper. A reduction in (ruminant) livestock would have far-reaching consequences that cannot yet be adequately captured on paper and within any inventories and modelling, and such a drastic move must therefore not happen. It should also be noted that ruminant livestock per se does not add to the total emissions, it merely forms part of the natural carbon cycle. Additional emissions do arise from livestock systems where added inputs are being supplied which rely on fossil fuel for instance. Methane emissions arising from natural ruminant livestock activities should therefore be considered within the context of the wider carbon cycle by taking a whole-systems approach rather than looking at different sources of emissions in isolation.
• Within the chapter on agriculture, the most recent Climate Change Plan Update for Scotland makes the following statements:

The trees planted in the years since 2011 will have matured and be sequestering carbon at scale. Productive timber harvesting will be followed by restocking to begin repeating the process, where appropriate. Farmers and crofters will have facilitated peatland restoration and management along with the growth of crops for biomass at scale.

As outlined in the LULUCF chapter, land use will provide green economic and employment opportunities, offer public health benefits, help to address rural depopulation and provide social benefits to communities across Scotland. We will have ensured that farmers and crofters are benefitting from these opportunities with new, additional sources of income and investment in these land use changes.

Whilst the HUCG does not object to or disagree with the above statements, it is important to note that within the national emissions inventory, these proposed achievements would not be recognised as an emissions reduction achieved by agriculture and their benefits would instead be attributed to other sectors including LULUCF and energy. The HUCG disagrees with the way in which different sectors within the emissions inventory are considered within silos when in reality they are all interlinked and interdependent. A management or land use change that is carried out by an agricultural business, including carbon sequestration opportunities, should be reflected within the agricultural emissions envelope, or else the emissions reductions achieved by agriculture are lost to the industry and the sector appears to not be sufficiently engaged and committed.

In addition, the HUCG is also concerned about the structure of carbon markets because the private sector assumes offset credits to sit with a third party, i.e. the financer, even though any issues that may arise would have to be rectified through remedial actions having to be taken by the risk taker, i.e. the farmer or land manager, at their own cost. There needs to be a better way of allocating some of the carbon credits back to the risk taker.

• Although the HUCG appreciates that carbon credit trading offers an attractive means to generate an additional income stream for landowners, it questions the concept and meaningfulness of cross-sector carbon credit trading given that the purchasing sector uses financial capital as a means to appear more climate friendly on paper without actually having to take action to reduce its own emissions. As long as the agriculture and LULUCF sectors are deemed to be net emitter, any carbon credits generated from works and management changes within these sectors should be retained within and be used to offset their net emissions.
• Consideration should be given to front-loading payments across all support scheme to recognise the distinct socio-economic benefits associated with and challenges such as proportionately higher transaction costs faced by smaller units.
• The HUCG would like to see the current emissions modelling tool GWP100 replaced with the recently developed GWP* so that the atmospheric half-life of methane is captured more accurately. The HUCG notes that the decision to replace GWP100 with GWP* does not lie with Scottish Government but stresses the importance of industry feedback so that government can take this request to the appropriate bodies.
• In order to provide opportunities for crofters to adopt best practice with regards to improved livestock efficiencies and sustainable land management, and enable participation in future agricultural support schemes which will likely feature some form of baseline conditionality element, it is imperative that the challenges and limitations associated with decision making and management on common grazings are addressed and resolved, or else many active crofters that are genuinely trying to achieve outcomes may be put at a disadvantage and unable to access full levels of funding going forward.
• The HUCG proposes that budgets for different funding streams and schemes are reviewed in conjunction with each other on a regular basis to identify whether monies are being prioritised towards areas that show the greatest potential to deliver public benefits. This could, for example, include a review of the annual emissions from peatlands and the annual sequestration rates from new forestry projects, followed by a comparison and review of the budgets made available to both activities and the outcomes achieved. This approach should be used as basis for budgetary adjustments to ensure that budgets reflect priority areas requiring immediate focus.
• Farm carbon auditing tools must become more accurate to reflect the true climate efficiency of a business. This is of particular relevance for extensive upland and hill systems which usually appear to have a greater emissions intensity than their lowland counterparts because the latter are able to better target inputs and resources within a more controlled environment using machinery and infrastructure including housing facilities. Because the carbon cost of that infrastructure is not captured within carbon auditing tools, they typically tend to generate superior efficiency results to extensive systems. If presented without the aforementioned crucial context, carbon auditing results for different types of production systems could therefore potentially bear significant risks, especially where these results are wrongly used to argue for lesser support levels for hill and upland systems.

There is also an issue in that businesses delivering a significant level of biodiversity benefits may not be able to be as 'efficient' in terms of input utilisation as a similar business focusing solely on production maximisation with little or no biodiversity enhancement management. Biodiversity outcomes should therefore be considered as an actual output that is generated by the business, or else these businesses look poorly both from a production performance and climate efficiency point of view.