Economic Report on Scottish Agriculture, 2016

6. Payments and Subsidies (Tables A1, A12)

The Common Agricultural Policy ( CAP) regime saw a major change in 2015, with Single Farm Payments ( SFP) being replaced by the Basic Payment Scheme ( BPS), Greening Payments and the Young Farmer Payment.

In 2015, total payments and subsidies included in the TIFF figure were £490 million. Table A12(i) provides a breakdown of this total, with Basic Payment Scheme at £219 million accounting for the largest part (45 per cent), followed by the Greening Payment at £115 million (24 per cent) and Less-Favoured Area Support Scheme ( LFASS) payments at £66 million (13 per cent). The next largest amounts were for coupled support, including both Beef and Sheep Schemes, at £38 million (eight per cent) and payments under Rural Priorities (£28 million or six per cent).

Not all payments and subsidies made to farmers are included in the TIFF total. Table A12(ii) shows a further £10 million (provisional figure) paid to farmers in 2015, mostly under the European Agricultural Guidance & Guarantee Fund ( FEOGA) Processing and Marketing Scheme (£6 million) and Rural Priorities (£3 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 2005. Coupled cattle subsidies have included payments under the Scottish Beef Calf Scheme, which was replaced in 2013 with the Scottish Beef Scheme. In 2015 this was then replaced by the Scottish Suckler Beef Support Schemes (Mainland and Island). 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 2005-2015

In 2015, cattle payments have also been joined by coupled support for sheep, with the £6 million Scottish Upland Sheep Support Scheme.

Total payments and subsidies included in TIFF have decreased by £68 million (12 per cent) between 2005 and 2015, although the decrease is larger (£155 million or 24 per cent) comparing with their highest level in 2009. The sterling value of Basic Payment Scheme, Greening and the Young Farmer Payment decreased to £336 million in 2015, 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 an apparently contradictory finding from the Farm Accounts Survey)

Chart 6.2: Payments and subsidies compared with TIFF, 2005 to 2015