AgriScot 2024: First Minister's speech

Thank you very much, Robert, and you'll not be surprised to hear that I'm standing in front of you just now thinking, well, where on Earth to start after that long list of priorities. So Martin… but I'll start in the proper place, which is to thank you, Robert, for your leadership of AgriScot.

As you said earlier on, it's the first time I've been to this event. I'm delighted to be the first First Minister to come to this event, and I can see readily the significance of this as a gathering place of the agricultural sector, but also a place where much business can be done to support and enhance the development of Scottish agriculture.

So thank you very much for your leadership in developing and strengthening this event over the years and my good wishes to Gilmour in the leadership that he takes forward as well.

It’s wonderful to be with you today, and it’s a welcome opportunity to express my warmest thanks to Martin Kennedy for his leadership of the National Farmers Union, and I intend to be at the NFUS Conference in the spring at which Martin will stand down and I’ll have an opportunity to reflect on his leadership – but from my perspective it’s been a real pleasure working with Martin over many years, as his Member of Parliament for the last 27 years, but then also to see at first hand the leadership he’s been able to deliver to farming in Scotland. I’ve greatly valued the advice and the counsel that Martin has given to me over the years and the deep understanding of the questions that are before us today.

Before I move on from talking about presidents of the National Farmers Union - it's an absolute delight to see John Cameron of Balbuthie here, a previous serving President of the National Farmers Union, and John, it's absolutely a delight to see here today, and I hope I can catch a word with you before I leave this morning.

As Martin said and as I've commented I have been a member of parliament, representing Perthshire for 27 years and in those 27 years I have learnt at first hand and listened carefully to the challenges and the issues that face the farming industry in my community, and then tried to reflect that in the priorities I have taken forward – either as an MP arguing the case for farming, or alternatively to take those decisions supportively within government over the years I have had the privilege to serve.

So when I spoke to the QMS breakfast gathering at the Highland Show in June, I made a point that I hope was reassuring to the industry: when I walked in the door of Bute House, 27 years of experience of representing farming communities walked in with me, and influences the decision making I take forward.

That will not mean that I can do everything you would want me to do, but I do give you the assurance that I recognise the importance of a sustainable future for agriculture in Scotland, because so much of the future in Scotland and the way in which we steward and utilise our land depends on there being a sustainable future for farming within Scotland.   

That approach underpins the approach taken forward by me as First Minister but also by my Cabinet Secretary for Rural Affairs Mairi Gougeon and my Minister for Agriculture Jim Fairlie. And it shapes the way in which we take forward the priorities of the of the Scottish Government in relation to farming. So what I want to do at the outset of my comments is to make clear to you the significance I attach to the work of the farming industry within Scotland, you are significant players in delivering economic growth.

You are the foundations of some of our greatest export success stories as a country, our land. And that has to be reflected in the approach that is taken forward in public policy, and it will be the approach that is taken forward in the priorities of my government.

I'm going to come on to talk in a moment about the implications of the autumn budget that Martin referred to, but I want to set the role of Scottish agriculture within the wider priorities of my government.

In September, I set out my Programme for Government and my priorities to eradicate child poverty and to raise living standards by growing the Scottish economy. I want to grow the Scottish economy while we take action to protect the planet through our action on climate change, and I want to do all of that to improve our vital public services.

So when you hear me talking about the work to eradicate child poverty as the focal point of the government's agenda, I don't want you to think of that as some compartmentalized policy commitment. It's at the heart of growing our economy, of ensuring that we generate the wealth in our society to support the public services that will enable us to eradicate child poverty and to take the measures necessary to invest to support climate action within our society, an action that is absolutely essential given the challenges that we face.

So agriculture has an essential role to play in realizing those priorities, particularly when it comes to producing high quality food sustainably, to growing our economy and to protecting our planet. Agriculture is, after all, at the heart of the rural economy. You operate businesses that contribute to one of our most successful sectors, food and drink, and we must cherish and nurture that in the years that lie ahead. But I also acknowledge that the challenges facing the industry are incredibly significant. At this particular moment, we face a twin nature and climate crisis. The 2023 state of nature Scotland report found that monitored species have declined on average, by 15 per cent over the last 30 years.

Last year, a study by the James Hutton Institute found that Scotland's climate is changing faster than anticipated, and you know better than me what that means from working on the front line of mitigating and adapting to climate change on your land.

Martin made reference to some of the challenges that we faced in my own locality, and I met with Martin at the side of a field at Dowally in Perthshire last October, just over a year past October, a field where the River Tay had not burst its banks and had flooded at any moment earlier in recorded history, before December. That field, full of crop that was just about to be harvested, was flooded. The crop was completely destroyed by the flooding of the River Tay in an exceptional weather event on the seventh of October 2023.

One illustration of the breaching of our expectations about the effect of the climate that was illustrated in my own community, which had a huge cost for the farmers that were involved in producing that crop.

So I use that to illustrate the fact that there are issues that we have to confront which are not just about the farming industry there, but wider issues in public policy, where we have to take the action to recognize the effect of climate change in our society and to address those.

But those are not the only pressures and uncertainties that you face - you face uncertainties arising from inflation and higher energy prices. I've been stunned by the effect on livelihoods in the farming sector by the spike in energy prices following the invasion of Ukraine, that has unimaginable proportions, which make the viability of farming enterprises significantly challenging. And all of these contribute to the very real strain on farmers and producers, which is why it's important you hear from me, and you will also hear it from Jim Fairlie regularly, of the appreciation that we have for the excellent work undertaken by RSABI in providing practical, emotional and financial support to people working within Scottish agriculture - which is deeply valued at this time.

Recently, I have been reflecting on many of these challenges which have an effect on our economy, the effect of inflation, higher energy prices, the pressures on cost of living, the challenges of actually being able to support economic activity in our society. And I've reflected in recent weeks that the last few years, the combination of COVID, the effect of inflation, energy prices and all that's gone with it, has had the feeling of being a bit of a long, dark winter.

After nearly two decades of economic volatility, here is one thing that we know - the climate and the economy are not going to remedy themselves. So therefore, what I appeal today for is a spirit of working together between government and the industry to prepare the ground for what I hope is a spring that can emerge from this difficult and challenging, dark winter. And there is so much strength within the agriculture sector in Scotland upon which we can build.

The winners of the Scottish agriculture awards, organized in partnership with AgriScot, demonstrate the wealth of excellence and innovation that farmers and food producers in Scotland offer our nation and the world. You play a huge role in preserving traditional practices in tune with nature, like crofting and organic farming, while leading the way in forging new ones, using technology and innovation to improve your productivity and profitability.

And so much of what the government tries to do through the support that we take forward for institutions that the James Hutton Institute and Moredun is about working with you in creating the new technologies and the advances that can be commercialised to enhance and strengthen the economic prospects and opportunities of the farming industry.

But I do recognize the significant uncertainties that you face up to, and I now want to reflect on those in relation to the challenges arising out of the United Kingdom budget in the autumn.

Funding certainty and market stability for farmers is absolutely crucial in the period that lies ahead, and I want to do all that I can to try to ensure that that is the case in Scotland.  But the implications of the UK budget are very significant for the agricultural industry and very significant for the Scottish Government into the bargain.

Funding for agriculture and marine activity in Scotland, which was previously ring fenced, has now been baselined into the Scottish block of funding. This means that the full amount allocated for 24-25 - £620 million for agriculture and £14 million for marine is to be included in the block grant. Now one of the comments Martin made was that this meant that all of this funding was now firmly and exclusively in Scottish government hands, and to an extent that point is correct.

But what has to be recognized is that the Scottish block grant is significantly affected by decisions that are taken by the United Kingdom Government. So the overall size of the Scottish block grant is a product of changes in public expenditure undertaken by the United Kingdom Government, and that is now going to have an effect on the size of the resources available to the Scottish Government, which includes that funding which was previously ring fenced for agricultural support.

So if there is a decline, for example, in the support available for agricultural support in England that will have a damaging effect and a negative effect on the Scottish block grant as a consequence of the application of the Barnett formula from the United Kingdom government.

Everybody thinks the Barnett formula is a thing that generates, in all circumstances, increases in public expenditure. If a budget is reduced in England, where there is 100% compatibility factors in Scotland, the Scottish budget will go down as a consequence. So there are significant uncertainties that arise as a consequence of the decision that has been taken by the UK Government. And while I of course welcome that funding allocations will be a Scottish Government decision, unfortunately, it's clear this announcement comes with some very big catches that I've set out.

Instead of long term funding certainty that was available during our EU membership, we now have an inadequate settlement within the United Kingdom. The announcement made by the UK Government on the 30th of October was for one year only. So however much I would like to deliver a multi annual settlement, we only have financial information for one financial year. And given the point I've just made about the uncertainty about the implications in our budget - that will constrain the ability of the Scottish Government to set out the multi annual certainty that everyone in the industry would like us to do, because we have no line of sight on any composition of our budget beyond the 31st of March 2026, at this particular stage.

In the spring, there will be a UK Spending Review, which will give us, we think, three years of funding certainty. And obviously, we will provide as much certainty as we possibly can do in ensuring that the industry knows where it stands. In addition to those points, the UK government must provide clarity on the future of financial support for the sector, after confirming in the autumn budget the agricultural funding will be baselined.

Because we are not yet certain what will be the direction of travel on agricultural support in England, and those challenges could have significant implications for Scotland. So as we take forward the work and the dialog in relation to the budget, I assure all of you, National Farmers Union especially, of the willingness of the Scottish Government to engage about the contents of the Scottish Government budget, and to ensure that the issues and the concerns of the agricultural sector are strongly reflected in the budget that we bring forward.

I also make clear to you that the £46 million that the government has utilised for short term purposes to ensure that we could deal with the effects of inflation in other areas of the budget, will be returned to this portfolio for use in the agriculture sector, and I give you that cast iron commitment on behalf of the Scottish Government.

One of the other issues that emerged from the UK Government's budget was the changes to remove exemptions of agricultural property relief for inheritance tax, and I know that this is already having a chilling effect on many businesses within the farming sector in Scotland and the UK Government must urgently commit to undertake and publish impact assessments of its budget proposals on farmers and crofters in Scotland.

Fundamentally, my government would want to see a tax system that supports rather than hinders orderly succession planning and the transfer of land to the next generation of custodians. We are disappointed that the chancellor chose not to work with the Scottish Government before acting on this sensitive matter. This arbitrary decision has led to intolerable levels of stress, worry and uncertainty for you all, which clearly could have been avoided.

And the implications of these changes are very significant for the orderly succession planning within the industry. And what I pledge today, we’ll have a debate in Parliament on the subject this afternoon, which has been called by the Conservatives, and the government will take an approach which will be to work constructively to revise these proposals. Because these proposals cannot be allowed to stand, because of the damaging effect they will have, and the ability of there to be an orderly approach to succession planning within farm family farms within Scotland. This has been ill thought through, and it needs to be reconsidered.

So the implications of the United Kingdom budget do not give us the freedom to act on our own behalf. There are significant and negative implications, and we must work in dialog with the UK Government to address some of those questions.

There are, of course, some specific decisions that we can take in Scotland, the 2024 payment strategy is on track with basic payments and greening payments, having started in September as planned. Over 16,000 businesses have received over 377 million pounds to date, and we are providing as much certainty and confidence as we can, and the Scottish Government will certainly be focused on delivering the four priorities that I set out of eradicating child poverty, growing the economy, protecting the planet and supporting our public services.

And of course, right at the heart of that lies the important contribution that agriculture can make in that respect. Martin, in his speech, set out six questions for us to wrestle with. On the first question about funding, I've set out the challenges we have about line of sight in the future and the cast iron commitment about the return of the 46 million pounds to support the industry. I hope I have demonstrated to you my willingness and my commitment, secondly, to listen to people who work on the land. I have done it for 27 years, and I intend to do it in the future.

On species management. thirdly, we will, of course, engage constructively with the farming sector on these questions, and there are points of statute that have to be followed in all of these processes. But again, we want to have a pragmatic approach to engagement on these questions. On the Bovine EID issue, if Martin will forgive me, I'll take that away, or I might defer it to Jim Fairlie for him to talk about.

On public procurement. Many of these decisions are influenced by public policy choices at a local level that I get a row for interfering in. But I do endorse the sentiment that Martin expresses.  If we've got the highest quality produce in our country or in the world, why on earth is it not on the plates of our school children in our schools? Pretty straightforward to me. So I'll evangelize about that on your behalf, where I possibly can do.

And lastly, on the national park question in Galloway. I know this is sensitive. I know there's different opinions and the government is consulting upon that, and we'll come to conclusions once we've heard all of the impact, the contribution from everyone around the country.

What I hope as we look forward, is that despite all the challenges that we face and across every sector of public policy, there are enormous challenges that we face in a very uncertain and volatile world. What I assure you about it today is that I cherish and value the role of Scottish agriculture. I acknowledge its significance and its centrality in the stewardship and the management of land in our country, in the generation of high quality produce upon which some of the significant taxation strengths of the United Kingdom are based, not least the whisky industry. And we must take steps to ensure that we secure the future of Scottish agriculture, and that will be upper most in my mind as First Minister, as I work with my ministers to deliver the best future I can for Scotland, and for Scottish agriculture. Thank you very much.