Evaluation of less favoured area support scheme

4. Payments distribution

Introduction

31. The principal underlying questions with regard to the distribution of LFASS payments are first, whether or not changes in the distribution have impacted on stock numbers and land use and, second, impacted significantly on farm household incomes or more generally farm household wellbeing and longer-term business viability.

32. There are five circumstances which could lead to a change in the level of LFASS receipts at parish level between 2013-2017.

• Increases in per ha subsidy levels which will increase parish level receipts.
• Increases in the area paid outwith the parish of residence of the BRN will increase reported parish subsidy levels.
• Increases in subsidy payment will arise where land which on appeal receives LFASS payments when previously no claims were made.
• Decreases will arise because of land abandonment where land is no longer claimed for.
• Decreases will arise where there is a shift from livestock to arable farming on part of the area.

33. Establishing causality with respect to impacts of LFASS payments on destocking, abandonment or declining farm incomes is extremely difficult. Identifying the impact of relatively small (and in this case) generally positive changes in one part of the overall policy mix on stocking, incomes and longer-term business viability is fraught with difficulty. Changes in markets, as well as bigger changes in the Pillar I payments are likely to produce more significant impacts on income change and strategic decisions to change stocking. Family life cycle and succession factors are also likely to shape decisions. LFASS is one factor among many that will influence stocking decisions and resultant farm incomes.

34. It is beyond the scope of this study either to engage in detailed econometric analysis or to engage in complementary in-depth qualitative or quantitative analysis of farm businesses and their decision making with respect to major or minor adjustment decisions. Instead, we describe the observed and changes in LFASS payments over the period from 2007-2013 and contextualise these in a wider analysis of anticipated ^[8] spatial changes in Pillar I payments under the new Basic Payments Scheme ( BPS).

Data

35. The SG data were presented by parish and by agricultural administrative region. Both of these spatial entities raise challenges when interpreting data and generally it is more useful to look at per hectare figures as these afford a greater degree of comparability over space and between farm types. Parishes often contain a mix of land quality but it is the subtler variations in the distribution of land quality within and between farms that are likely to frame the individual farmer's room for manoeuvre with respect to enterprises, stock numbers and business trajectory. Agricultural administrative regions are even more diverse entities with respect to land quality, which means that only coarse-grained analysis and interpretation is possible at such a scale. The inherent characteristics of the land, combined with farmer skills, and (whole family) off-farm earnings, will shape the subsidy dependence of the farm household. The capacity to produce sufficient winter keep, and depending on systems, bedding, on the holding is a key factor, especially in island and remote situations because of the high cost of importing fodder.

36. Between 2007 and 2013 LFASS payments increased by 10% overall. ^[9] A breakdown of this figure by previous intensity of support on a per ha basis shows that the parishes with the greatest increase between 2007 and 2013 were the areas with lower average rates of payment per ha, with the smallest increases in areas with higher per ha payments at the start of the period. Changes were thus redistributive with respect to prior LFASS receipts at per ha levels, particularly by rewarding the remoter districts where there is an abundance of poor quality land. This reflects the deliberate raising of headline payment rates per ha in the Fragile and Very Fragile regions, where poorer land is more common.

37. However, even in the low payment per ha LFASS parish cohort which on average experienced the greatest gains in subsidy, there were parishes where overall subsidy receipt went down. The proportion of parishes with decreases ranges from 8% in parishes with less than £10 per ha receipts in 2007, to 31% and 30% respectively in parishes with subsidy receipts of between £30 and 40 per ha and over £40 ha (Table C). Thus the most negative change at parish level in overall subsidy receipt is associated with parishes receiving higher initial receipts on a per ha basis; that is the better quality land in the LFA. However, with the exception of parishes in receipt of zero subsidy in 2007, in all subsidy per ha categories, over two thirds of all parishes received increased subsidy over the period. This reflects the increase in the overall LFASS budget between 2007 and 2013.

Table C: No of parishes with changing LFASS payments 2007 to 2013, by 2007 payment band

2007 £/ha	Number of Parishes	Parishes increasing	Parishes decreasing	No change	% increasing	% decreasing	% no change
£0	128	8	0	120	6%	0%	94%
£0 - £10	74	68	6	0	92%	8%	0%
£10 - £20	143	124	19	0	87%	13%	0%
£20 - £30	190	142	48	0	75%	25%	0%
£30 - £40	221	152	69	0	69%	31%	0%
>£40	137	96	41	0	70%	30%	0%

Source: Table 1 in SG's Project 2 Summary report LFASS payment distributions.

38. A notable characteristic of these data is the degree of churn (movement up and down) within particular subsidy receipt per ha categories. This suggests that other causal forces, or at least other causal forces in tandem with subsidy change, are determining the subsidy receipt changes. That there are parishes in one subsidy receipt group (of the four groups from lowest to highest) that are gaining subsidy when others in the same group are losing subsidy suggests multi-causality. When aggregate receipts in a class are increasing on average, but some parishes in that class are receiving less LFASS per ha, land may have been destocked and therefore subsidy is not claimed or land previously claimed may be under another type of production. The exact cause of variation within classes cannot be deduced from the available data. Over the period 2007-2013 the livestock sector in terms of cattle and sheep numbers declined in Scotland as a whole, but the area of cereals increased. Consequently, a decline in LFASS payments in better land areas is more likely to be associated with a reorientation of farm businesses towards cereal production rather than abandonment of farming activity. ^[10]

39. Poorer land types as judged by prevalent enterprises receive the highest subsidy per farm as a percentage of income (but less per ha), while the highest per ha receipts of LFASS are on lowland cattle and sheep farms, specialist beef and mixed farms (Table D). This information reveals nothing about the influence of LFASS on farm profitability because all sources of subsidy are bundled in the table. This can be appraised by considering the relative contributions of the Basic Payments Scheme and LFASS at parish level.

Table D: Average LFASS payments (£/ha) farm income, by farm type.

Farm Type	2007 LFASS £/Ha	2013 LFASS £/Ha	Change	% Change
Cereals	£15.43	£26.14	£10.72	69.5%
General Cropping	£12.84	£12.47	-£0.38	-2.9%
Specialist beef ( SDA)	£28.48	£34.96	£6.48	22.8%
Specialist sheep ( SDA)	£9.53	£12.70	£3.17	33.2%
Mixed Cattle and sheep ( LFA)	£15.98	£21.19	£5.21	32.6%
Dairy	£21.20	£27.02	£5.82	27.5%
Cattle & Sheep (Lowland)	£30.74	£34.90	£4.15	13.5%
Mixed	£27.33	£30.93	£3.59	13.2%
Horticulture	£16.80	£22.38	£5.58	33.2%
Specialist Pigs	£28.78	£21.85	-£6.93	-24.1%
Specialist Poultry	£7.19	£20.23	£13.04	181.4%
Other	£8.89	£13.69	£4.80	54.0%
Unknown	£11.36	£12.25	£0.89	7.8%
Total (Average)	£17.53	£22.35	£4.82	27.5%

Source: Table 7 in SG summary report on LFASS payment distribution (Project 2)

40. Using as illustrative examples (from detailed parish-level data supplied by the SG) four extensive and relatively remote parishes in different parts of Scotland (Farr, Sutherland; Crathie and Braemar, Aberdeenshire; Ardchattan and Muckain (Glen Etive) Argyll; and Morebattle, Borders), the relative contribution of LFASS to BPS payments is highest in Braemar and Crathie with LFASS receipts in 2013 comprising 46% of the estimated BPS in 2019 and lowest in Farr at only 14% of the estimated BPS in 2019. In three of these four parishes BPS payments were predicted to rise significantly over 2011 levels of SFP (Farr, +124%; Braemar and Crathie, +75%; and Ardchattan and Muckain, +44%). Morebattle was estimated to lose 25% of its 2011 SPS under the new BPS by 2019. Thus the geography of anticipated BPS changes indicates that parishes with least-favoured land will generally be net beneficiaries, while parishes in better quality upland farming areas will lose BPS. However, the degree of benefit is quite variable from place to place.

41. Table B (see above) reported changes in the area on which claims are made with respect to four categories of grazing land from worst quality to best. Between 2007 and 2013 there was a 20% drop in the area for which subsidy was received in the poorest quality land. In the other three land categories, the area in receipt of subsidy dropped by between 6.0 and 7.0%. Some poorer quality land has almost certainly ceased to be actively farmed, but whether this comprised whole farms or part of farms cannot be deduced from the data available.

42. Yet Table C (see above) shows that subsidy rates have increased by most where subsidy receipts were previously lowest. Hence, all we can conclude is that in spite of subsidy increases per ha on poorer quality land, a disproportionate amount of destocking or at least non-claiming was taking place on the poorer quality land. Although this may reflect the low (absolute) base of previous LFASS payments, it also suggests other causal forces at work other than LFASS.

43. A further breakdown (Table E) of the data shows that in over 25% of the poorer land grade parishes there was an increase in LFASS area claimed (and thus of payments). The proportion of parishes with a net increase in LFASS payments increases with land quality with nearly 36% of the best quality parishes (category D) showing an increase in total subsidy receipts. Table E also shows that in spite of the higher increase in LFASS payments on poorer land, stock numbers and claimed area has declined faster than elsewhere. It also shows that there is a significant proportion of parishes which apparently 'buck the trend' and have expanded their LFASS-subsidised activity.

Table E: No. of parishes with Increased or Decreased LFASS Area Claims, by Grazing Category

Category	Increases		Decreases
	Count	Area	Count	Area
A	143	88,135	409	-341,161
B	190	40,382	368	-70,802
C	204	23,678	392	-37,824
D	259	27,503	462	-51,892

Source: Updated (pers. comm, SG) Table 4 in SG summary report on land abandonment (Project 1)

44. Table F shows the receipts per agricultural administrative area. Seven areas show a change of over 10% over the time period 2007-2013 but only one of these (Fife) is negative and the overall amount of LFASS receipts in this case is fairly low.

Table F: LFASS funding 2007 & 2013, by agricultural region

	Total LFASS payment £			Mean LFASS payment £/ha
Ag Region	2007	2013	% Change	2007	2013	% Change
Argyll & Bute	£5,796,177	£7,224,639	24.6%	£17.46	£24.21	38.7%
Ayrshire	£3,492,140	£3,768,779	7.9%	£23.70	£27.17	14.6%
Clyde Valley	£3,451,878	£3,495,659	1.3%	£24.81	£26.39	6.4%
Dum' & Galloway	£8,765,887	£9,137,924	4.2%	£29.00	£31.50	8.6%
East Central	£1,690,166	£1,805,588	6.8%	£15.29	£18.50	21.0%
Eileanan an Iar	£1,594,171	£1,809,670	13.5%	£12.08	£16.67	38.0%
Fife	£433,445	£344,795	-20.5%	£31.63	£32.86	3.9%
Highland	£9,578,218	£12,181,637	27.2%	£10.00	£14.53	45.3%
Lothian	£1,200,334	£1,184,230	-1.3%	£23.77	£26.54	11.6%
NE Scotland	£5,947,773	£6,330,923	6.4%	£26.58	£32.62	22.8%
Orkney	£3,237,696	£4,029,316	24.5%	£47.42	£62.92	32.7%
Scottish Borders	£5,788,337	£6,156,963	6.4%	£24.31	£26.04	7.1%
Shetland	£2,148,061	£2,560,243	19.2%	£18.40	£25.18	36.8%
Tayside	£3,932,310	£4,499,333	14.4%	£11.04	£14.46	31.1%
Unknown	£2,164,418	£628,600	-71.0%	£11.36	£12.25	7.8%
Overall	£59,221,012	£65,158,299	10.0%	£17.53	£22.35	27.5%

Source: Tables 4&5 in SG summary report on LFASS payment distribution (Project 2)

45. Table F also shows that subsidy receipt increases of over 30% between 2007-2013 occurred in six agricultural administrative regions (broadly but not wholly matching council areas). These comprised Argyll and Bute, Western Isles, Highland, Orkney, Shetland and Tayside. These areas include some of the most extensively farmed areas (Western Isles) but also one of the most intensively farmed areas (Orkney) and show no consistent pattern with respect to type or intensity of predominant farming system. On a per ha basis, it is again impossible to draw conclusions about the causal nature of the patterns of change, but LFASS levels would not appear to be a critical factor. No agricultural administrative regions showed a decline in per ha LFASS receipts. Table G indicates that forecast changes to the distribution of Pillar I funding will lead to significant regional shifts, favouring the West and North.

Table G: SFP funding 2011 & forecast BPS funding 2019, by agricultural region

	No.of Businesses	2011 Total	2019 Total	% change
Argyll & Bute	1070	£17,409,253	£21,518,121	23.6%
Ayrshire	1175	£28,407,826	£26,437,237	-6.9%
Clyde Valley	1060	£25,585,563	£24,227,546	-5.3%
Dumfries & Galloway	2013	£70,227,556	£56,297,198	-19.8%
East Central	603	£15,580,772	£14,582,852	-6.4%
Elieanan an Iar	1983	£3,018,110	£7,783,103	157.9%
Fife	526	£20,019,157	£15,543,120	-22.4%
Highland	4248	£58,894,276	£63,518,502	7.9%
Lothian	521	£19,509,844	£16,497,683	-15.4%
North East Scotland	3559	£103,035,493	£79,661,427	-22.7%
Orkney	731	£13,919,025	£13,930,468	0.1%
Scottish Borders	1171	£49,581,968	£43,628,565	-12.0%
Shetland	1006	£4,623,347	£7,442,353	61.0%
Tayside	1674	£51,692,511	£48,360,303	-6.4%
Total	21340	£481,504,698	£439,428,478	-8.7%

Source: Derived from Illustrative Pillar I payment distribution by parish (Project 3).

46. Table H shows changes in LFASS receipt by farm type, both in terms of total receipt by farm type and on a per ha basis. The biggest increases were on enterprise types with very low figures (pigs and specialist crops) but no significance can be attached to these. Both Severely Disadvantaged Area ( SDA) classes of farm type ( SDA specialist cattle and SDA specialist sheep) showed aggregate increases in subsidy receipt in excess of 10%, whereas that for mixed cattle and sheep LFA farms exhibited a lower increase of LFASS receipt of 7.9%.

Table H: LFASS funding 2007 & 2013, by farm type

	Total LFASS payment £			LFASS payment £/ha
Farm Type	2007	2013	% Change	2007	2013	% Change
Cereals	£633,527	£587,537	-7.3%	£15.43	£26.14	69.5%
General Cropping	£846,164	£1,079,317	27.6%	£12.84	£12.47	-2.9%
Sp. beef ( SDA)	£22,883,220	£25,581,987	11.8%	£28.48	£34.96	22.8%
Sp. sheep ( SDA)	£9,195,148	£11,221,259	22.0%	£9.53	£12.70	33.2%
Cattle and sheep ( LFA)	£17,998,064	£19,413,101	7.9%	£15.98	£21.19	32.6%
Dairy	£1,371,070	£1,467,162	7.0%	£21.20	£27.02	27.5%
Cattle & Sheep (Lowland)	£325,657	£226,514	-30.4%	£30.74	£34.90	13.5%
Mixed	£4,552,953	£4,630,865	1.7%	£27.33	£30.93	13.2%
Horticulture	£35,262	£143,169	306.0%	£16.80	£22.38	33.2%
Sp. Pigs	£9,909	£3,978	-59.9%	£28.78	£21.85	-24.1%
Sp. Poultry	£120,635	£191,171	58.5%	£7.19	£20.23	181.4%
Other	£230,612	£213,519	-7.4%	£8.89	£13.69	54.0%
Unknown	£1,018,793	£398,720	-60.9%	£11.36	£12.25	7.8%
Overall	£59,221,012	£65,158,299	10.0%	£17.53	£22.35	27.5%

Source: Tables 6&7 in SG summary report on LFASS payment distribution (Project 2)

47. The two biggest losses were in lowland cattle and sheep farms (30.4% reduction) and cereals (7.3% reduction). The greatest losses of subsidy receipt were usually associated with the farming systems associated with better land, which may imply an adjustment of farming system towards arable and therefore a shift to LFASS-ineligible activity (registering as abandonment) and/or a loss of the cattle uplift. Equally, the greatest gains were in the most biophysically constrained farming systems in SDAs.

48. On the basis of per ha receipt of LFASS support by farm type, the three dominant Less Favoured Area farm types, Specialist Sheep, Specialist Cattle and LFA Cattle and Sheep all received more support in 2013 than in 2007. The only negative changes were in General Cropping and Specialist Pig farms. Table I shows forecast changes to Pillar I funding, with total payments to LFA sheep and LFA cattle and sheep farms again increasing (against an overall national decline).

Table I: SFP funding 2011 & forecast BPS funding 2019, by farm type

Sector	Number of Businesses	2011 Total	2019 Total	% change
Cereals	2280	£69,827,323	£54,067,952	-22.6%
General Cropping	1565	£69,260,027	£55,697,104	-19.6%
Specialist beef ( SDA)	4390	£111,363,811	£102,038,442	-8.4%
Specialist sheep ( SDA)	4145	£28,030,140	£43,959,313	56.8%
Mixed Cattle & sheep ( LFA)	2005	£61,705,409	£68,222,137	10.6%
Dairy	1083	£44,366,213	£31,389,568	-29.2%
Cattle & Sheep (Lowland)	285	£2,802,590	£2,969,741	6.0%
Mixed	1736	£73,875,784	£58,903,500	-20.3%
Horticulture	163	£1,152,110	£1,281,841	11.3%
Specialist Pigs	47	£504,700	£309,814	-38.6%
Specialist Poultry	268	£1,106,695	£1,301,043	17.6%
Other	3373	£17,509,896	£19,288,025	10.2%
Total	21340	£481,504,698	£439,428,478	-8.7%

Source: Derived from Illustrative Pillar I payment distribution by parish (Project 3).

49. The parish-based mapping is more revealing of the micro-geographical distribution of LFASS support, but large differentials in parish size still make it more meaningful to explore per ha receipts at parish level. There are three main concentrations of LFASS support at per ha level: the north coast of Aberdeenshire and Moray (i.e. the southern shore of the Moray Firth as far east as Fraserburgh; Black Isle and Easter Ross; and Orkney. There are several smaller concentrations: in the Rhinns of Galloway; the Whithorn peninsula; Bute, the Cambeltown peninsula; and Thurso-Dunnet in Caithness. Most of the island parishes received relatively high rates of payment per ha, with Jura and parts of Mull providing an exception to this general rule. The causes of these high per ha rates is likely to be historically high concentrations of livestock within relatively favoured LFAs.

50. The main areas with low LFASS receipts per ha at parish level include the Grampian mountain core north of Perthshire, the Ross-shire and Inverness-shire high mountain areas and the far north west coast of Sutherland. These are areas where hill farming and sporting land use overlap significantly and include large areas where little active farming takes place; or where it does it is characteristically very extensive. This represents no more than the legacy of low payments to lightly stocked areas from the time when the area-based payments were first introduced based largely on the principle of minimum redistribution. There is also a significant number of parishes with no LFASS receipt in the better land and urban and peri-urban areas.

Figure A: Map of changes in parish-average LFASS payments per ha, 2007 to 2013

Source: Map 5 in in SG summary report on LFASS payment distribution (Project 2)

51. Two general observable trends are apparent from Figure A of the parish level changes in per ha payments of LFASS support First, the least intensive farming areas have received a substantial boost in per ha payments at parish level. These include the core highland areas, the Hebridean islands and Shetland. Second, there are two major areas where there are many parishes with a per ha reduction of LFASS receipts: many parts of the Southern Uplands and of the North East of Scotland. These are where the land quality is on average better and livestock systems are more likely to be mixed.

Illustrative local insights

52. In addition to these aggregate trends, there are also enormous intra-regional variations, with contiguous parishes that show hugely different rates of change. For example, in the Tarland, Coull, Logie Coldstone area of Aberdeenshire (see Figure B below), we find the highest per ha increases and greatest decreases in contiguous parishes.

Figure B: Aerial photo of Logie Coldstone, Tarland and Coull showing similarity of farming system

53. In the Inverness area and about a dozen other parts of Scotland, all in the area both south and east of the Great Glen there are contiguous parishes with the highest rates of increase alongside the greatest falls. These differences do not appear to be premised on farm type differences, tenure differences or farm size or farming system differences. Often the adjacent parishes have rather similar land type and farming system characteristics. These profound differences in changes in subsidy receipt at parish level could be cross tabulated against other data, if available.

54. A likely reason, based on a discussion with a key informant in one of these areas, is that parishes with high levels of change include several significant farmers with farming enterprises who manage land holdings in several parishes but the stock of which is attributed to one parish which is the main address of the BRN. Given the relatively small size of many parishes there may well be only a handful of significant farm holdings and their stocking decisions will shape the trend for the parish as a whole. If there is a cluster of hub holdings in a parish it will have large increases, but in the case of a parish which contains many holdings with 'hubs' outwith that parish, we might anticipate a steep downward trend in stock numbers which is of course illusory rather than real; an artefact of the way data are collected and reported.

Figure C: Aerial photo of Upper Strathdon

55. We consider upper Donside as a microcosm of the situation in Scotland with a range of land uses from intensive mixed farming to very extensive hill farms. Upper Donside, for our purposes, comprises the Don catchment above Lords Throat and Bennachie, including the Vale of Alford westwards. As can be seen from Figure C, the land extends from mixed farmland on gently undulating terrain at c. 150 metres in the Vale of Alford to high moorlands at just over 800 metres at the Don-Avon watershed in the west of the area. Alford is a mixed farming parish with a significant arable area located in the lowland basin of the Howe of Alford. Predicted changes in Pillar I payments will result in a reduction in BPS of just over 30%. Changes in LFASS payments will result in a 32.5% drop in LFASS payments. However, as LFASS in 2013 is equivalent to only 4% of the Pillar I payments BPS changes will drive future farm viability in this parish.

56. Between Mossat and the higher reaches of the Don, there are extensive mixed farms in the parishes of Kildrummy and Towie, some with relatively large areas of hill land with others entirely of enclosed land. These are parishes where individual farm type and enterprise mix will be configured to a large degree by the quality of land overall and the farm-specific mix. Mixed farms with cattle and cropping are the norm with sheep occupying higher pastures and open moor. In these parishes LFASS is not a major contributor to overall subsidy receipt.

57. Glenbuchat, a tributary valley coming off the Ladder Hills in Upper Strathdon is the most LFASS dominated parish in the study area and its LFASS payments in 2013 were equivalent to 21% of the SFP in 2011 and were the highest in Upper Strathdon. However, the roll out of the new BPS will result in an estimated increase in BPS of 64.4% in this parish. This will mean that if LFASS rates remained unchanged at 2013 levels, the share of LFASS as a proportion of BPS would be only 12.6%. Even though the LFASS payment rose by 52.8 % between 2007-2013, the impact of this on the longer term viability of hill and upland farms in the most disadvantaged parish in Upper Donside is relatively unimportant. The BPS is overwhelmingly more important as a determinant of future business viability.

58. There is a great deal of churn in farming systems in North-east Scotland and a clear pattern of growth in both the largest farm categories in terms of farm physical area and business size (Cook et al. 2016). At the same time, the number of very small farms has grown, with the majority being part time or hobby farms. The distinct 'hollowing out of the middle' of the farm structure revealed by census data (Cook et al., 2016) suggests that the number of medium sized farms is reducing whilst numbers of smaller and larger farms increase. We might speculate that changes in farming activity on these farms are driving at least some of the observable changes in subsidy payments distribution.

59. Overall, the relationship with respect to the changes in payments and stock numbers suggests no significant effect, either of payments rate increase in remoter hill and upland areas or of the reduction (or lower increase in payments) in what might be thought of as better land quality areas of the LFA. The insights offered by grounding the data in an area known to the consultancy team assist interpretation. They also enable the degree of change in quite a small area to be scrutinised in more detail.

Summary

60. In spite of a significant boost in LFASS payments between 2007 and 2013 and expectations of even more significant BPS payments increases in the next few years, attritional reduction in farming intensity has taken place on many livestock farms on poorer quality land, more especially in the north and west. Elsewhere, parishes comprising generally better quality mixed farming have often seen their total LFASS payments fall over the period, almost certainly because the claimed area has fallen and/or loss of the cattle uplift (enterprise mix), which implies reduced size and reduced hectarage of livestock enterprises and, as is evident from both Scotland-wide and regional figures, an increase in the barley cropping area. On this better quality land the reduction in LFASS payments is unlikely to be associated with significant land abandonment, although individual fields of poor land quality or open hill within generally better quality land areas may be less utilised. Abandonment of such areas may well provide areas of enhanced environmental interest or have potential for carbon sequestration through colonisation by natural revegetation with trees and shrubs.

61. In remoter areas on poorer quality land in the north and west of Scotland significant livestock density reductions have taken place. Here it is reasonable to assume that a degree of abandonment of farming activity has taken place in spite of increases in LFASS receipts per ha over the period 2007-2013. It is not known whether farmers in these remoter areas are aware of the impending increases in BPS, which have the capacity to fundamentally alter both the gross output and the profitability of their holdings. It seems unlikely, in that the evidence of redistribution under the new BPS is only just becoming available.

62. The strongest characteristic of the subsidy redistribution/change data-set is that no consistent patterns of LFASS receipt change emerge other than the tendency for the parishes with the poorest quality land to experience the greatest reduction in aggregate receipt of LFASS payments: payments rate per ha have risen for poorer quality land, but if land is no longer claimed because of abandonment and/or reduced cattle numbers have removed the cattle uplift, overall LFASS receipts to some farms and parishes declines anyway. Within individual categories of LFASS 'intensity' (i.e. average per ha payments of LFASS) there are parishes with increases in receipts and parishes with decreases in receipts. Often there are neighbouring parishes with similar farming systems but with markedly dissimilar trends in subsidy receipts. This suggests other drivers than LFASS receipts are driving business adjustment strategies and livestock numbers.

63. The Land Abandonment evidence shows that the overwhelming majority of farms in western Scotland (including the South West and the North West) reduced their livestock units between 1992 and 2014. Indeed, only five parishes west of a line from Dumfries to Inverness showed an increase in livestock units over this period. To the east of the Dumfries-Inverness axis, there is a much more mixed pattern of change, with more parishes experiencing reductions in livestock numbers but with a significant minority of parishes (between 70 and 100 out of 800 in Scotland) experiencing a growth in livestock units over the period. We conclude that some of this churn is real, but most is an artefact of the way data are collected for businesses with holdings located in more than one parish.

64. In the recent past, uncertainty of how the new BPS will impact upon farm profitability in different regions and the uncertainty associated with the obligatory changes from the SFP to BPS may have led some farmers to reduce enterprise intensity in remoter regions and on poorer quality land, but the out-turn of the new BPS system will almost certainly raise the incomes of less intensive farms significantly. Even if LFASS payment rates per hectare remain slightly higher than BPS rates (see Appendix C), the scale of future BPS changes will further reduce the significance of LFASS for farms in more remote locations.