NFUS conference 2024: First Minister keynote speech - 5 February 2024

Good morning, everybody. Thank you so much for the warm welcome. And we can definitely do a number of the five asks, and maybe one or two maybe a bit challenging for me, but let's, let's get into that. In terms of the conversation. I thank you very much for giving me this opportunity to engage with you as Martin has already referenced.

We have regular engagement with the NFUS as, of course myself and Martin have spoken over the 10 - 11 months almost that I've been, First Minister, but of course more regular engagement. With Mairi who's on the stage with me.

And you may have seen that yesterday was rather eventful in Scottish politics, and I'm very pleased to have also appointed a minister of agriculture and connectivity. That was Jim Fairlie, who's here as well as he tells me he knows a thing or two about farming and agriculture which will be very helpful. There was a bit of a pow-wow between the Perthshire farmers in the green room earlier on today.

Can I also say I really enjoyed being at The Royal Highland Show and I'm grateful to you and the team at NFUS who were very accommodating during my visit, and your wonderful daughter Jillian who took me and the weans around The Royal Highland Show.  I had the opportunity not just to talk to you but also Andrew Connon as well which was which was great.

So I want to touch upon a number of issues that you raised. I suppose before I do, the importance of our agriculture or agri-food businesses, our farming industry, here in Scotland, can't be overstated- it's a way of life. It's part of our heritage and our history. It's part of who we are. I know how important that is from my heritage, I think about my grandfather came here in the 1960s. My maternal grandfather was a farmer. To this day, the family farm in a small village north of Punjab, Pakistan is still there. It is sugar cane that they produce mainly, and it has been passed down from generation to generation to generation.

I'm not saying that to try to get some kind of connection with you - well I am slightly - but the reality is it is actually part of the history of who we are. The phrase they often use in Urdu Punjabi is parasī meaning village, and if you're from there, you're a villager - and you take great pride in being somebody who's connected to land.  So it's a way of life for my family, it's part of who we are, and of course in Scotland it's part of our heritage, it's part of our history. And it's also part of our future. And that is the most important message I want to leave today.

Food also incredibly important in shaping our experiences - for every single person in this room. The good memories you've had in life, the bad memories, the sad memories, many of us can remember the meal that accompanies it - sharing food, breaking bread together. And the world class provenance quality of Scottish food cannot be underestimated.

I was in Dubai for COP28 and we took a number of Scottish food and drink producers with us. During my time at COP28, I hosted a St Andrew's Night celebration, a member of the Royal Family was there and we had the food and drink on display. It was the first time in Dubai that there was Halal Scottish lamb.

This member of the Royal Family had lived his whole life in Dubai, as you can imagine, and was tasting Halal Scottish lamb for the first time. He said to me, "I've been living in Dubai my entire life and I've had lamb from all over the world and I've never tasted anything better than this." I asked him if I could get a testimony from the Royal Family - that may be coming in the post - but he definitely told me the quality of the food. Told me what I already know - the quality of the food is absolutely world class.

I suppose that is the key and central message that I want to leave you with. That producing more of our own food, doing so sustainably, creating of course more resilience in these uncertain times, is absolutely vital to our economic interests - in fact, to all of our interests. What I mean by that is that some people who I talk to suggest that there is a conflict between what we're trying to do in relation to the 'Green agenda' if you call it that, loosely, what we're trying to do around sustainability, what we're trying to do in terms of our journey to net zero, and producing our own food or farming and agriculture. 

My belief is that if we can reduce our emissions, particularly from any wasteful practices, any inefficiencies that there are in farming and agriculture, that is much better for the farmer's bottom line and profitability, and good for the environment. So everybody wins in that regard. And I don't want us to be producing any less - I want us to be producing more good quality Scottish food and drink. 

That's why I'm proud that the Scottish Government was the first in the UK to set up a food security unit. It's also why we put food production, and maintaining that, at the heart of our Vision for Agriculture - making it central to the Agriculture and Communities Bill that is being taken forward. Which I know many people in this room, the NFUS have given their view on and will continue to give their view on as that makes its way through the parliamentary process.

I also want to recognise the help that you give in relation to ensuring that we tackle the climate crisis. Martin has often said that farmers are the original environmentalists. You've  had to be. Again, I go back to the point I'm making - farming is often passed down from generation to generation and you have the biggest vested interest in making sure our land is sustainable. Of course, to ensure you have a livelihood and profitability - but also so you can pass it on to the next generation of farmers.

But also - I know this from being a previous Minister for Transport - often in times of difficult, extreme weather, it's our farmers who often step up and help. Whether it's helping in terms of minor road accidents or helping clear debris off roads using your tractors - I really appreciate that when we have extreme weather, our agriculture community are often the very first to step up.

We know when it comes to that sustainability agenda,  to the impacts of climate change, those impacts are only going to be felt more frequently, not less. They are only going to become more commonplace in terms of the extreme weather than we face. We have seen that already in how many storms we have had in the last few months. We know from a report published yesterday that, just in the last few months, the world got 1.5 degrees warmer. So we're facing an extreme climate crisis, it's undeniable, and I'm certain that there is no-one in this room who denies it. We've all got a job to do to step up and tackle the worst effects of it. 

It of course affects your way of life - and I am very pleased to have had engagement with NFUS Scotland on the Flood Bank Repair Scheme. I'm delighted that we have been able to distribute funding support to 56 affected businesses in five local authority areas to support their recovery from the worst effects of the climate crisis, with a combined value of £1.2 million. So let me say that I recognise the role that you're playing in relation to tackling the climate crisis and being, as Martin terms it, the original environmentalists. 

For me, that commitment to your land, to your businesses and improving that not just for the present but for tomorrow - is a goal that we want to be partners in. Mitigating climate change and protecting nature is increasingly important, but let me be absolutely clear - not at the expense of producing our own food. We believe in producing our own high quality Scottish food and drink, of course, to which your products are so important. 

So yes, we believe in tackling the climate crisis and we have a global leadership responsibility to do that, but not at the expense of producing our own food. It's my genuine heartfelt belief that there doesn't have to be a conflict - if we can deal with some of the inefficiencies that I've talked about we can begin to produce even more food, and that helps you in terms of your bottom line, your balance sheet - and Scotland is better off for it.

That's why I welcome the theme of your conference today - Scotland needs a profitable and sustainable agriculture sector. Now and in the future. Of course the supply chain is a very important part of that, and I welcome the challenge from Martin around what more the Scottish Government can do in relation to procurement. It's a good challenge - I think we have taken some steps but there is definitely more we can do and I am absolutely committed to looking at the legislation we have under our control in relation to procurement and what more we can do to make sure Scottish food is prioritised in the supply chain.

This is an uncertain time for many different reasons - there is no doubt about that. Let me look at the year ahead, 2024. I am pleased to say today that the payment strategy for 2024 will continue to ensure that you get the vast majority of your payments at the earliest point in the year. Last year we began making BPS and Greening payments on the 4th of September - by the 29th of November we had paid out 95% of planned expenditure, putting £398 million into your farm and croft businesses. We intend to do that again this year, to help your financial planning and ensure you know how and when payments will be made I can confirm that the 2024 payment strategy will match the timings that you saw in 2023. So hopefully that gives you a degree of certainty and assurance - that means that the first payments of BPS and Greening will be hitting your bank accounts in September of this year. 

These payments mean that you continue to benefit from the most generous package of support that's available anywhere in the UK. Unlike in other parts of the UK, we will continue to make additional payments to those farming in less favourable areas.

Martin's challenge around the deferred funding - of course, we made a down payment on that in the 2024-2025 budget. But I can say without any equivocation or doubt - the Deputy First Minister made this point in her Budget speech but I will emphasise it as much as I can - the full £61 million will absolutely be returned to the portfolio. It will be fully returned to support you and your members as part of future budgets. I can't deny or pretend that we're not facing the most difficult financial constraints we've ever had to deal with. People think that we take these decisions lightly, but we absolutely don't. We of course are restrained by the budget that we receive from the UK Government - £500 million has been taken out of our budget over the last two years in real terms. That will have an impact. 10% of our capital budget cut over the next five years - that is going to have an impact. 

We will do what we can to mitigate that and be fair in our funding, but there will be challenges given the constraints we operate under.

Let me also give you some assurances in relation to livestock production, through sheep and suckler beef support schemes in 2024. Again, let me try to ensure that I can remove any doubt that you might have and be clear on livestock production in Scotland. I know a lot of people press us to do what other governments are doing, to consider setting targets for livestock production that would see our beef herd reduce significantly. I acknowledge that the ongoing debate no doubt causes you worry and anxiety - let me try to alleviate some of that. 

You know better than I do that Scotland is well placed to produce beef efficiently and sustainably, now and in the future. Healthy, lean beef is a vital source of nutrients and if we can produce it to high-welfare standards and reduce carbon emissions then we should not only be feeding ourselves, but many other nations also. So this SNP government will continue to support and enable the production of high quality beef. 

What we need from you is ensuring that production is sustainable as possible and reducing carbon as much as possible. Everyone who wants to stay involved in beef production in Scotland has to do their bit. The government has to do our bit, and we need you to do yours, which you are doing - but we'll always keep pushing to see what more can be done. So that's why we've been clear that when it comes to support for production, that will come with conditions attached. In the future we'll have discussions and co-design those conditions with you. But unlike other parts of the UK, this SNP government remains absolutely committed to active farming, to providing direct payments for farmers and crofters, and ensuring there are absolutely no cliff-edges as we transition to a different support framework.

Let's be really clear around what the long-term future holds. Suckler beef, producing high-quality beef, livestock farming is absolutely integral to our future in terms of our economic growth, but absolutely key to our way of life in Scotland.

I know that the Cabinet Secretary has been pressed on a number of occasions to provide more detail on what to expect from that new approach that I mentioned in relation to payments.

Farming and crofting are long term ventures in which decisions needs to be made today that will only come to fruition in a few years’ time. You are after all operating businesses.

But it is also important that we take the time – working with you, listening to your views and engaging your experiences – to co-design and co-produce the future framework.

Let me be honest, there are many farmers are crofters who do not feel listened to - and we want to change. Instead of creating policy in our Ministerial towers in Edinburgh and having to retrofit it or bring in amendments, further compromise - much better that we co-design that policy with you. That doesn't mean we will always agree, but I can give you my guarantee - our job is, from inception, to listen to you and engage with you, and where we can to make sure we are meeting your needs.

When it comes to future payments and how schemes will look, you already know that in the future there will be a four-tiered approach to funding, and that there is ongoing engagement with key stakeholder organisations to determine what goes where in each of those tiers.

Part of that depends on how much funding is available in each tier.

And I can announce today that the funding for Tiers 1 and 2 – the tiers that will reflect most closely the direct payment regime, albeit with conditions built in from the start – will constitute at least 70% of the overall funding envelope to support farming, crofting and land management from 2027.

And I can also advise that once we have determined what and how to replace the current Less Favourable Areas Scheme – LFASS – with support for where the greatest need is, that funding will also be made available to the farmers and crofters in our rural and island communities.

This approach is the right one for 2027 – it delivers on our promise not to create cliff edges but to support you to transition to the new support framework.

That is what we mean by a just transition. No cliff ages as we move to that new framework.

But I also want to be clear about it representing the start of doing things differently.

You will be expected to deliver far more for nature and climate in return for this funding. You will challenge us, rightly, to ask us to work with you to help ensure our land is more sustainable. I promise you we will do that. And I will also ensure we will admit when we haven't got things right. Sometimes we will create a policy in one department of government and we haven't fully understood the unintended consequences on your way of life - we are going to change that. 

That is why Mairi will continue to engage and often and as intensely as she has over the years, and Jim of course, supporting on the portfolio, doing the same.

We will also want you to take a whole farm approach to what you do – many of you already are doing so.

The many pioneers in farming that already changing what you do and how you do already know that what is good for the planet is also good for your pocket – climate efficient can also be business efficient.

It is worth pausing to reflect on the contribution you make to our economy. 

In 2021-22, average farm incomes rose to the highest level since 2012.

While you, like many other businesses, faced increased input costs, agricultural output also increased 10%.

Your natural produce is vital to the success of Scotland’s food and drink sector.

The economic output of Scotland’s red meat sector was £2.8 billion in 2020, producing £840 million of GVA to the Scottish economy – up 14.5% from £733 million in 2016.

And there could be significantly more value generated for the Scottish economy if more Scottish livestock was slaughtered and processed in Scotland.

Businesses in the food and drink sector employ around 129,000 people, many in rural and island communities. 

Exports of Scottish food and drink were valued at a record £8.1 billion in 2022.

And of course Scotch Whisky, our leading single food and drink product export, supports agriculture, seed producers, farmers, grain merchants and maltsters – and provides jobs in tourism and hospitality. 

Yet, all of that is precarious – not least in the current climate.

More certainty is needed, and I’ll do what I can to provide that.

There is currently no UK Government funding commitment from 2025.

We need clarity from the UK Government about future of rural funding after 2025 – right now, we have no idea what Labour or the UK Government might do.

That is something that we will continue to press Westminster for, at every opportunity.

Another area where we could all use more certainty in, is of course Brexit.

Eight years on, and still decisions are being made and sprung on us all.

We were pleased to see the restoration of power-sharing in Northern Ireland – but the first that we saw of the command paper was after it had been published.

The fact that there will not be a border post at Cairnryan, the fact that the UK Government was considering not-for-EU labelling across the UK – of course we are trying to get more detail on that, but we are having decisions imposed upon us , questions unanswered and concerns ignored.

When it comes to EU labelling you don’t need to take my word about the damage it’ll do. But to quote Karen Betts, Chief Executive of FDF, who stated that, “The impact and costs of requiring ‘not for EU’ labelling on products sold right across the UK, not only in Northern Ireland, would be significant. We estimate the costs would run into hundreds of millions of pounds. Manufacturers could be forced to reduce the number of products they sell in the UK and food and drink exports are likely to fall, particularly those produced by SMEs.”

And it won’t just be manufacturers bearing those costs – the failure of the market currently to reward you adequately, as primary producers for your contribution to the food and drink supply chain, is something I am sure has featured in your conference discussions. 

I worry too what an open border at Cairnryan with no biosecurity checks in place at all, might result in.

Scotland is rightly proud of its current TB free status in its herds.  But that status is hard to maintain.

How much harder might that be, if we cannot control livestock movements from Northern Ireland, where tuberculosis is sadly rife and devastating farm businesses and families’ livelihoods?

Let me end where I began. The future prosperity of our agriculture community, our farming sector and food and drink industry - is absolutely vital. We don't want you to be reducing, we want you to be producing more and we will help you to do that where we can. 

My central point - I understand you might have concerns about the Bute House Agreement, but even if that agreement didn't exist - let me be absolutely clear on our commitment to ensure we have a sustainable planet, and to show global leadership in relation to tackling the climate crisis. So there's a shared endeavour for all of us.

You are invested in your land, the custodians of that land, so for me - the two go absolutely hand in hand. How can we help to tackle the climate crisis and reduce emissions - particularly to reduce inefficiencies in farming practices. How can we help you with your bottom line and ensure we don't impose any burdens on you. If we do this together, in co-design, listening to each other, then we can have a win-win for everybody. A win for our planet and our agri-food businesses across the country. 

So I'm absolutely delighted to  be here. I hope I've given you a level of assurance and I'm looking forward to engaging with the delegates here. Scotland's brand - Scotland's food, your brand, is known and loved right across the world. I saw that in Dubai a couple of months ago. Your success is the country's success and my job as First Minister is to ensure you continue to flourish.