Estimation of sectoral CAP payment 'envelopes' 2019

Methodology

4. The methodological approach developed by Thomson and Moxey (2020)^[3] in their considerations of payment allocations to the beef sector has been further evolved to take account of all June Agricultural Census (JAC) items that contribute towards all 'direct' support receipts in Scotland (See Annex 1). Thomson and Moxey (2020) used the approach of multiplying each JAC item type by the appropriate Standard Output (SO) value and then summed across a business (BRN)^[4] into enterprise groupings (beef, dairy, sheep, etc). During this update process it was revealed that the SO methodology used across the UK utilises context-specific parameters, meaning a series of conditional statements had to be utilised in deriving estimates of sectoral activities.^[5]

5. These conditionalities primarily impact on the SOs associated with breeding livestock and their offspring, as well as small scale field vegetable production. This updated methodology, therefore, excludes calves under 1 year of age unless there are more calves of that age bracket than breeding beef and dairy cows on the businesses. Further if there are breeding pigs, sheep or goats on a holding then there is no standard output allocated to 'other' livestock of that species – including lambs and piglets. This updated methodology therefore mirrors the approach used by the Scottish Government (and other administrations) in their statistical outputs, but it does mean there will be some variance in the 'envelope' figures calculated by Thomson and Moxey (2020).

6. In this analysis we were required to take a pragmatic approach to allocating cattle to dairy activities (milk-output) and beef activities (from suckler and dairy sectors). As most of the male calves reared in the dairy sector enter the beef supply chain they were allocated to the "beef envelope" particularly since most calves under 1 year old do not contribute to the SO which is instead allocated to the cow. A further pragmatic approach to dealing with smaller mixed dairy and suckler herds (or indeed very small dairy-bred herd) was required since it was considered that most of these dairy-breed animals were not used commercially for milk production. Therefore, where the number of dairy cows was less than 50 the cows and offspring were allocated to the "beef envelope" and the suckler cow SO coefficient was used rather than the higher dairy cow SO coefficient (a cross check of the data revealed most of the businesses with fewer than 50 dairy cows also have beef breed animals, or the number of dairy cows was minimal).