Agriculture - national test programme: partial business and regulatory impact assessment

Options

2 options have been considered, and they are described in more detail below:

Option 1 - Do Nothing

The Scottish Government would continue to provide support only under the domestic continuation of previous EU CAP schemes, until such a time as the new Scottish Agriculture Bill comes into force.

Sectors and groups affected

The sectors and groups primarily affected would be the agriculture sector, farmers, crofters, land managers, and government.

Benefits

This option represents a continuation of the status quo, and therefore a known quantity in terms of what support is available to individual farmers, crofters and land managers. The funding that has been identified to be used as part of the National Test Programme could be reallocated to existing support schemes, which would potentially see a small uplift in some of the support payments made to farmers, crofters and land managers. As no new support mechanisms would be introduced, there would be no additional costs or changes in terms of Scottish Government administration and implementation.

Costs

As this option is based on the continuation of the status quo, it should not create any additional monetary costs beyond those normally incurred in the provision of the existing support. It will also be unlikely to produce any savings.

The main costs of this option are non-monetary. By continuing with only the existing CAP support mechanisms, the Scottish Government would fall out of step with the progression on rural support policies elsewhere in the UK and in the EU. The administrations in England, Wales and Northern Ireland have each publicised their plans to move away from the support mechanisms established under the 2014-2020 EU CAP regime, to a greater or lesser extent, with various pilot projects and programmes in the process of being implemented. The EU has also agreed on the next round of the CAP, which will run from 2023 to 2027, and which aims to be fairer, greener, and more performance based, as well as allowing greater flexibility for EU Member States to adapt measures to local needs and conditions through the creation of new national-level Strategic Plans. If the Scottish Government does not take action and begin trialling new mechanisms of support, it risks being perceived as falling behind the progress being made in terms of rural support elsewhere.

A common theme with the progression of all these rural policies is the determined shift towards measures which are intended to address the global climate change and biodiversity emergencies. The Scottish Government has set its own ambitious targets in relation to these emergencies, including specific emissions envelopes for the agriculture sector, and delaying making any changes or trialling new support mechanisms until such a time as the new Scottish Agriculture Bill has been passed would result in an environmental cost, and make the transformations required in the agricultural industry all the more difficult for the businesses involved.

In addition, with the development of a long term future rural support framework continuing apace, waiting until after the new Scottish Agriculture Bill has been passed before any aspect of the framework is tested would risk creating an unhelpful and unnecessary "cliff-edge" change in the support for farmers, crofters and land managers. This would be out of step with the co-development approach being taken as part of a Just Transition, and also be detrimental to the development processes of both the Bill and the future rural support framework, as testing various aspects of potential new support mechanisms before they are implemented in full will enable the Scottish Government to gather data and evidence to further inform their decisions about and make improvements to their proposals. It will provide a clearer picture of which methods are particularly effective and feasible to roll out on a large scale, therefore another cost of not acting now is that any future attempts to implement conditionality into support payments may not be implemented in the most effective, efficient, or practical way.

Option 2 - Implement a National Test Programme

Sectors and groups affected

The sectors and groups primarily affected would be the agriculture sector, farmers, crofters, land managers, and government.

Benefits

The environment can be thought of as a productive resource – it is an amenity to be enjoyed as well as a source of food, raw materials, etc. One of the key purposes of the National Test Programme is to encourage farmers, crofters and land managers to improve their knowledge of their own current environmental performance and efficiency by creating a baseline of information and understanding in sustainable agriculture. This need to establish a baseline was one of the priorities identified by the Farmer Led Groups, the public consultation on 'Agricultural transition – first steps towards our national policy', and subsequent discussions by the ARIOB and the PDG. This is an important step along the road to transitioning towards a more environmentally sustainable agricultural industry, and so in turn towards meeting the ambitious Scottish Government targets for the industry to address the climate change and biodiversity emergencies. The long-term benefits of a healthier environment and increased biodiversity will be coupled with healthier competition, increased levels of innovation and reduced inefficiencies, the benefits of which are likely to compound into the future. Many of the actions can also result in improved efficiency and reduced inputs, for example soil testing could result in more targeted use of fertiliser, therefore resulting in economic benefits and supporting sustainable food production.

The establishment of the Programme in advance of the introduction and implementation of the new Scottish Agriculture Bill and the new future rural support framework also provides two key benefits. The first is that the voluntary nature of the Programme will provide an important stepping stone for farmers, crofters and land managers as part of the transition towards greater mandatory conditionality in this area as part of the new framework for future support. The Programme has been designed to try and make it as attractive as possible for businesses to take part, for example, the entry requirements for Track One are set to be as minimal as possible to maximise the opportunity for businesses to take part, and businesses will be reimbursed for the time taken to complete the initial survey for Track Two.

The second is that the Programme will allow the Scottish Government to gather information and evidence on the outcomes of the two tracks, and their impacts on businesses, as part of the development process for the Bill and the future support framework. This will aid the Scottish Government in further discussions and consultations with stakeholders on how this sort of conditionality might best be included.

Costs

A total of approximately £51 million over three years has been identified to fund the National Test Programme. The precise breakdown of this funding will depend on both the uptake of Track One and the decisions made on the design of Track Two (which are subject to the ongoing co-design process).

Costs to businesses should be minimal as the Scottish Government funding has been designed to cover all costs incurred due to the participation in the Programme.