Economic Report on Scottish Agriculture 2015

6. Payments and Subsidies (Tables A1, A12)

In 2014, total payments and subsidies included in the TIFF figure were £511 million. Table A12(i) provides a breakdown of this total, with Single Farm Payments at £382 million accounting for the majority (75 per cent), followed by Less-Favoured Area Support Scheme (LFASS) payments at £66 million (13 per cent). The next largest amounts were for payments under Rural Priorities (£35 million or seven per cent) and the Scottish Beef Scheme (£21 million or four per cent).

2014 saw the completion of details of the new Common Agricultural Policy (CAP) regime for Scotland, leading to the implementation of the new regulations from the start of 2015.

Not all payments and subsidies made to farmers are included in the TIFF total. Table A12(ii) shows a further £23 million (provisional figure) paid to farmers in 2014, mostly under Rural Priorities (£14 million) and the FEOGA Processing and Marketing Scheme (£6 million). These payments were primarily for capital improvements and for non-agricultural activities, which fall outwith the scope of the TIFF definition.

It should be noted that the totals under various schemes shown in Tables A12(i) and A12(ii) only represent payments made to the agriculture sector, so exclude any payments to other sectors such as forestry. They also exclude broader non-agricultural payments under the Scottish Rural Development Programme.

Chart 6.1 illustrates trends in payments and subsidies, included within the TIFF total, since 2004. In 2005, de-coupling of payments and subsidies took place under reforms of the CAP. Payments previously tied directly to crop and livestock production were mostly consolidated into the Single Farm Payment. Since 2005, coupled cattle subsidies have included payments under the Scottish Beef Calf Scheme, ranging between £18 million and £24 million, which was replaced in 2013 with the Scottish Beef Scheme. There were also payments under the 'Over 30 Month Scheme' (up to 2006) and 'Older Cattle Disposal Scheme' (up to 2008), related to the disposal of older cattle which were prevented from entering the food chain, in order to minimise the risk to public health related to BSE.

Chart 6.1: Grants and subsidies 2004-2014

Total payments and subsidies included in TIFF have decreased by £30 million (six per cent) between 2004 and 2014. The sterling value of Single Farm Payments decreased to £382 million in 2014, due to a less favourable exchange rate and a reduction in the original amount due to changes in the EU budget.

Chart 6.2 also shows that since 2010, the total value of TIFF has been higher than the value of total payments and subsidies. Years where TIFF was lower suggest that without these payments and subsidies, the net income to farmers would have been negative. (See section 3.3 for a contradictory finding from the Farm Accounts Survey.)

Chart 6.2: Payments and subsidies compared with TIFF, 2004 to 2014