New Rural Support Scheme development - evidence: outputs summary

W2 BPS regionalisation options – some conceptual considerations

Authors: Steven Thomson, Keith Matthews and Andrew Moxey

Ref: RESAS/005/21 – W2

The Report is available in the supporting documents of this publication.

Key Points

From 2014, most Pillar I support under the Common Agricultural Policy had to move towards a regional flat-rate basis for payments. This meant that Scotland had to transition away from the historic basis used since 2005 for the decoupled Single Farm Payment Scheme (SFPS) and which had deliberately largely preserved the distribution of funding seen under previous coupled support schemes.

Unlike some other countries, Scotland did not adopt a single, uniform flat-rate for all land under the new Basic Payment Scheme (BPS) and Greening payments. Rather, after considerable analysis and deliberation of options, a 3-region model with tiered payments was adopted.

Land previously used for arable or improved grassland was classified as Region 1 and received the highest payment rate per hectare. Land previously used for rough grazing was classified as either Region 2 or Region 3 depending on how intensively stocked it was and received lower payments. An additional activity requirement was also imposed.

The 3-region model was chosen because of concerns about other models' practical data requirements but also their potential to redistribute funding – in particular moving support away from areas producing significant agricultural output to those not doing so.

Specifically, very low payment rates for Region 3 were designed to counter the possibility of large areas of land on sporting estates being drawn into the payments system for the first time, thereby diluting funding for existing claimed land.

Coupled payments for sheep and beef activities were introduced and intended to boost support for active farmers/crofters with Region 2 and 3 land, but only partially compensate for low area payments.

Alternative payment models (e.g., different criteria, different payment rates) can, of course, be revisited. However, as evident from previous rounds of policy reform (i.e., introduction of LFASS, SFPS, BPS), choice of payment categories (e.g., regions, business types and sizes) are not made independently from choices on the gradient of payment rates across them (e.g., do rates slope up or down across categories), nor from practical implementation considerations.

A number of different regionalisation options, each with pros and cons, are summarised in tabular form below. These include: the incumbent 3-Region model; 2 Regions, with a single rough grazing category; 3 Regions - rough grazing delimited by environmental designation; 2 region model– with stocking density delimitations; 3 Regions with land in LCA7 or above a specific elevation excluded; 3 regions with redistributive payments for rough grazing; 3 Region model – with separate small holder scheme; 3 regions with disadvantage uplift embedded in direct support; 3 regional model with coupled support embedded; Single region scheme.

However, unless and until some clarity is achieved with respect to policy objectives and priorities, there is a risk that different options will once again be viewed narrowly through the lens of redistribution, as about winners-and-losers rather than wider outcomes.

For example, Region 1 currently accounts for c.42% of claimed land, but 80% of support payments. Regions 2 and 3 account, respectively, for c.22% and 36% of land but c.8% and 4% of support. Yet whilst this may reflect the distribution of agricultural production, it does not necessarily reflect the distribution of other ecosystem services required to meet policy objectives relating to climate change and biodiversity.