Rural budget: Letter to National Farmers Union President

To: NFUS President Martin Kennedy
From: Deputy First Minister Shona Robison

I’d like to extend my thanks to you and members of NFU Scotland for meeting with me last week and for subsequently so clearly expressing your views in your letter.

First, I would like to address your letter. As I set out in Parliament, the 2023-24 budget position remains extremely challenging – this is due to high inflation, increased pay expectations, economic uncertainty and the on-going cost of living crisis. It is right that uncommitted spend deferred from the rural support budget is used to ensure that we are able to continue to mitigate this context.

During the meeting I sought to further reassure you that the ring fenced funds will return to the portfolio in future years, as I set out in my statement. I am happy to reiterate that commitment here. The timing of the return of the funding will form part of future budget discussions, ensuring we meet our obligations as custodians of public money and recognise the challenges and transformation facing the sector.

Indeed, the NFUS have rightly and repeatedly raised the need to make the most effective use of the rural support budget in order to support our producers to actively transition to the new ways of working. That has included indicating that your preference for this funding and Bew monies was for these to go into capital to be used at the right time for specific measures that will help the reform and transformation of Scotland’s farming and food production industry.

This means support that delivers a real and just transition and enables Scotland, through the efforts of our producers, to be recognised as a world leader in sustainable and regenerative farming. The funding to be returned to the RALRI portfolio amounts to £61m, made up of £33m given up by the portfolio in 2022-23 as a contribution to the Emergency Budget, and £28m from 2023-24 allocations, as described in Annex A attached. We will continue to work with you, and indeed, with all our farmers, crofters, land managers and rural partners, to ensure that, as this budget returns to the portfolio, it is used most appropriately.

A one-off uplift might be welcomed by some, but it would not serve the long-term interests of Scotland’s producers and enable them to be ready for future markets. Indeed, you will recall how challenging it was to provide an uplift through the historic conversion funding that ensured a reasonable and fair allocation to those who arguably needed such an uplift the most.

Turning to our discussion last week, I set out in my letter of 21 November that I recognise the key role of agriculture to our economy and in delivering the Scottish Government’s Vision for Agriculture through high quality food production; climate mitigation and adaptation; nature restoration; and wider rural development. The 2023-24 budget adjustments are subject to stringent budget monitoring processes and have arisen primarily as a result of reduced demand in various schemes, which in turn enables a revised forecast. Please see the detailed table outlining the adjustments in Annex A.

The Cabinet Secretary for Rural Affairs, Land Reform and Islands undertook to maintain the payment schedule and performance of last year, helping people with cashflow and to make investment decisions that benefit the whole rural economy. We delivered on that - Basic and Greening payments started two weeks ahead of the 2022 start date, with money hitting bank accounts from 12 September 2023. To date, BPS and Greening 2023 payments worth over £397 million have been paid to 16,874 businesses. This means 97% of eligible businesses have been paid, and just over 95% of anticipated expenditure issued.

Young Farmers and LFASS payments will also start, as planned, in December and we also intend to start this year’s AECS, Rural Priorities and Forestry Grant Scheme payments early, to release more money into the rural economy.

We also spoke about the extent to which the conditions attached to our grants might be hindering take-up of schemes. I would be grateful if you could liaise with agriculture officials to explore what scope there might be for change.

I would also like to take this opportunity to reiterate that I will continue to support the Cabinet Secretary for Rural Affairs, Land Reform and Islands to work with our partners and colleagues across government to support the resilience, strength and fortitude of our rural, island and coastal communities and businesses.