Scottish Rural Development Programme 2014-2020: Evaluation of Capital Grant Schemes – Main Report

9. Conclusions

Introduction

This chapter draws on the evidence presented in the previous chapters and sets out the evaluation conclusions in line with the research objectives.

Reaching the intended audience

While the grant schemes were similar in many ways, there were also differences in terms of budget allocation, expenditure, and in the volume of applications received and approved.

The evaluation findings confirm that both CAGS and NECGS were popular schemes and supported many new entrants and crofters.

CAGS is a long-established grant scheme and pre-dates the 2014-2020 programme period – it is well-known among the crofting community, and this scheme also had the highest estimated repeat business (that is, multiple awards).

The NECGS was over-subscribed, and in part this reflects the grant scheme was part of a wider SG offer for new entrants (Young Farmers and New Entrants Start-Up Grant Schemes). These other grant schemes provided a potential pipeline of applicants to the NECGS.

On the other hand the SFGS was less successful and has under-performed, largely due to scheme design and eligibility issues (see appropriateness of eligibility criteria below). Scheme under-performance is evidenced by the significant reduction in budget allocation arising from a low volume of applications and approvals. This, however, does not mean that the SFGS and capital grant support for business improvement and modernisation is not needed by small farmers.

A summary overview of reach and engagement by grant scheme is presented in Table 9.1.

Data from the AIR 2023 shows the following progress against the relevant result/target indicator for the three capital grant schemes. It should be noted that some legacy commitments from the 2007-2013 programme contributed to this target:

R1/T4: % of agricultural holdings with RDP support for investment in restructuring or modernisation (FA 2A):

• target value - 16.35%.
• primary contribution 10.05%.

Data from SG shows that the three capital grant schemes contributed 8.92% of the target.^[22]

CAGS contribution to FA 1A and 1B was small:

• FA 1A - £500/€537.85 – less than 0.002% of the combined expenditure under Measures 1, 2 and 16.
• FA 1B – one cooperation project – 2% of all cooperation projects supported.

Note: * Some data are not held electronically so SG estimations are based on incomplete figures and are best estimates based on readily available data.

Appropriateness of the eligibility criteria

To a large extent the eligibility criteria is appropriate – however, there are some exceptions.

Stakeholders consulted hold the view that aspects of the eligibility criteria had a significant negative effect on the reach and engagement and ultimately on the performance of the SFGS.

Stakeholders confirmed that the SFGS supported far fewer small farmers than was anticipated and that uptake was disappointing. While the rationale for the inclusion of the income test (which did not apply to NECGS or CAGS) was understood, its application meant that many small farmers were ineligible while others were reluctant to provide the supporting evidence.

Further, SG recognises that access and eligibility criteria may need amended for CAGS to encourage increased reach and engagement – and SG is considering widening the scope of the CAGS to allow those crofters who are not engaged in agricultural activities to apply for grant funding. This would require a change in the Scottish Statutory Instruments (SSI) that forms the legislative basis for the scheme.

In relation to the NECGS stakeholders felt that most approved applications were from those who had taken over control of an existing business and not from those who were starting an agricultural business for the first time. And that many NECGS applicants (and grant recipients) appeared to have restructured long-established (often large) farming businesses or changed partnership arrangements to become eligible for grant support.

While some felt that this was not a significant issue or concern (succession planning) others felt that the NECGS had possibly missed the mark in terms of supporting its intended audience.

Further, farmers and crofters reported that there can be particular challenges in completing some project types within the specified one financial year timeframe, and that it can be too restrictive in certain circumstances. The data provided by SG confirms that many requested (and got approval) for extensions. This timeframe may, however, be tied to funding parameters.

Taken together, the points above suggest that eligibility criteria could be revisited by SG to help inform any future grant support schemes.

Characteristics of grant recipients

Grant scheme monitoring arrangements were limited (exceptions being financial claim reporting and inspections).

Further, data provided by SG from the APEX IT system was also incomplete – prior to 2019 application data was recorded on spreadsheets at an area office level, and work continues to combine the two data sets. Analysis of (partial/incomplete) grant recipient data provided by SG is presented in the main body of the report.

Some (selected) points to note about the characteristics of grant recipients from the survey undertaken as part of this evaluation include that:

• the vast majority of farmers and crofters were not new to the industry (86%).
• almost all farmers and crofters said that their farm/croft was in a LFA (97%) – and the vast majority were located in the Highlands & Islands (89%).
• a sizeable proportion of farmers and crofters have other forms or part-time or full-time employment (59%) in addition to their farm or croft.
• the most common survey responses were from crofters who were either a tenant of a registered croft (38%) or an owner occupier of a registered croft at the time of applying for their most recent grant funding (34%).
• 35% of farmers and crofters were under the age of 41 year when they applied for the grant – that is, a ‘young farmer’, and 38% were a ‘new entrant’ at the time of submitting their first grant application.
• 68% of farmers and crofters who completed the survey or who were the applicant were male.
• a majority of farmers and crofters (64%) said that there is a female with a controlling interest/right in the decision-making of the business.
• almost all farmers and crofters were from a White ethnic group (99%), predominantly White Scottish.
• a vast majority of farmers and crofters (83%) reported that they did not have any physical or mental health conditions or illnesses lasting or expected to last 12 months or more.

Additionality of the support

Our grant recipient survey found that additionality of the grant support was high.

A total 81% of farmers and crofters who reported outcomes (but not necessarily quantified outcomes) as a direct result of the grant support said that none or less than half of the outcomes would have happened if they did not get the capital grant funding.

Timing and scale additionality were most commonly reported by farmers and crofters – that is, the grant support helped the business outcomes to be achieved sooner and/or helped farmers and crofters to achieve a greater level of impact.

Impact on businesses

As noted above, post project completion monitoring was limited – and could be improved for future grant support schemes. Stakeholders consulted also generally found it difficult to evidence impact, except for anecdotal evidence.

The grant recipient survey helps to provide some evidence on the impact of the grant support on businesses.

Almost all farmers and crofters (95%) who answered the question on business outcomes reported the achievement of at least one outcome as a direct result of the grant support. The main outcomes reported (from a pre-defined list) were:

• reduced livestock mortality (53%).
• extended grazing periods (50%).
• reduced labour input (48%)

The grant support made a quantifiable impact on recipient farms and crofts. The grant support:

• increased annual work units (FTE) employment by 75 (2-years post project completion).
• increased the value of sales by £62.5m (2-years post project completion).
• increased the value of stock by £19.2m (2-years post project completion).

Other benefits

The grant recipient survey also provides further evidence of the benefits for farmers and crofters as a direct result of the grant support.

All farmers and crofters except one who answered the question on benefits (99%) reported at least one benefit achieved as a direct result of the grant support. By far the main benefit reported (from a pre-defined list) was improved stock control (83%) – this was followed by improved hygiene conditions and animal welfare standards (56%), and improved grassland management (52%).

Meeting needs

The grant schemes were universally welcomed and valued by stakeholders and grant recipients alike. Support for industries like farming are considered vitally important given its long history, tradition, and presence at the heart of rural communities.

Small farms and crofting are significant and critical to food production, strengthening local supply chains and playing a major part in Scotland’s food security and enhancing and protecting our biodiversity. For Scotland to make best use of its land to grow food in all parts of Scotland (including LFA seen as only suitable for rough grazing) then small farms and crofting require continued support.

Grant support, including for infrastructure development and modernisation, was seen as crucial to further help develop small agricultural holdings into economically viable businesses and improve their efficiency with respect to mitigating climate change and enhancing the environment.

An ageing workforce coupled with a lack of new entrants are significant challenges facing the sector. Attracting and retaining new entrants is critical – capital grant funding is a good mechanism to help people get started as it can take years to get a farm business going.

Stakeholders and grant recipients confirmed that the grant schemes have broadly supported the right type of project activities (for example, agricultural sheds, fencing, field drainage, land management, equipment for the handling and treatment of livestock), and that they have supported small and large projects alike.

Further, most grant recipients (80%) say they have current/future support need – primarily a need for monetary support, in the form of grant and no-low-cost loans. However, as SG may be constrained in its ability to provide capital grant funding in the future this may result in a mis-match when the identified needs of farmers and crofters are considered.

Farmers and crofters who responded to the survey mainly expressed a requirement for capital investment for similar project activities as those supported by the capital grant schemes.

Further, some demand was also expressed for revenue-based support, for example:

• advice and guidance, including on current methods of improvement and production, livestock treatment and management, climate friendly production, crofting issues, form filling.
• help with route to market.
• training, events, and webinars – for example on modern/regenerative farming practices, animal health and welfare, supply chain support, etc – knowledge and skills development and sharing of experiences.

Experience of applying for and using grant funding

Farmers and crofters’ views on the experience of applying for grant funding was mixed.

Positive findings from the survey include that farmers and crofters’ expressed high levels of satisfaction with their interaction with, and support received from, RPID area office staff. Around three-quarters of farmers and crofters agreed or strongly agreed that area staff teams were helpful, responsive, knowledgeable, and experienced.

Farmers and crofters also found the help and support from agents or organisations they paid to complete the application form on their behalf valuable – they said it was less stressful and some said they do not think they could have done it themselves.

Various other aspects of the application process attracted lower levels of satisfaction, including marketing and promotion of the schemes, maximum individual award size, ease of completing application forms, providing supporting evidence (the required number of quotes), and time taken to receive a decision on application.

Most notably, almost 60% of farmers and crofters disagreed or strongly disagreed that it was easy to source the funding upfront to pay for the capital item before the grant could be claimed. This was considered a particular challenge for new or small farm businesses with limited capital. While SG now encourages interim claims to be submitted, the survey feedback suggests there may be a need to improve messaging around this to further increase awareness. There may, however, be challenges for SG to make advanced payments – this runs contrary to the guidance in the Public Finance Manual which sets out the statutory, parliamentary and administrative requirements on the proper handling and reporting of public funds.

Wider points raised by stakeholders and grant recipients include support for:

• the use of standard costs where appropriate – and work to agree this for CAGS is ongoing.
• an increase in the maximum individual award of £25,000 (or where appropriate) – with the exception of the NECGS demand for the maximum award has been low, however, rising inflation will undoubtedly made some items more expensive.

Similarly, farmers and crofters also felt there could be scope to improve the claims and payment process. For example, the highest level of dissatisfaction was expressed for the time taken to receive payment (27%) and wider challenges for farmers and crofters relate to cash-flow issues and in some case the need for bridging finance. Encouraging more interim claims will help address these issues to a certain extent.

Many farmers and crofters also experienced challenges in project delivery – these factors were often out with their control and delayed projects from completing on time. Challenges included:

• the ability to find suitable contractors – for example, the volume and type of contractor is much more limited in some geographic areas, contractors with a good reputation are often the busiest.
• impact of COVID-19.
• poor weather.
• supply chain issues.
• an increase in project costs (for example, increased cost of materials, equipment) from application stage to when confirmation of application approval was received by farmers and crofters.

Barriers to participation

The main barriers to participation are discussed above, and include:

• the impact of the eligibility criteria on small farmers.
• the ability to source total project cost funding upfront.
• some find the application process complex, and other barriers include the ability to secure the required number of quotes.
• some new entrants, small farmers, and crofters may not be able to afford to pay an external agent to do the application form – or after weighing this up it may not be considered value for money if only a small amount of grant funding is needed.
• the ability of farmers and crofters to secure appropriate contractors, and within the specified timeframe projects require to be completed.

Moving online in future

A majority of farmers and crofters (61%) who responded to the survey said that an online application process for future grant schemes would not make it difficult or prevent them from applying – however, a sizeable proportion either answered ‘don’t know’ or ‘yes, definitely’, Table 9.2.

N=179

Most farmers and crofters, regardless of how they answered the question, caveated their response in some way.

Where support was expressed for an online application process, farmers and crofters outlined the many potential benefits of doing so. However, there was also recognition that an online application system may not suit everyone (for example, older farmers and crofters with less digital skills), and that it also would depend on the quality and functionality of any process.

Farmers and crofters who reported that it would be difficult to apply online or who are unsure raised similar concerns and identified other potential barriers from moving to an online application process. This includes:

• poor, slow, or unreliable internet connectivity could make completing an online application form difficult for some farmers and crofters in certain parts of the country.
• farmers and crofters value speaking with staff in local RPID offices, including in-person and telephone support and advice – it is often easier to speak with someone directly to ask questions or points of clarification.
• not all farmers and crofters will have access to a computer, and wider concerns were raised regarding risks associate with data loss and cyber security.
• some farmers and crofters would like to have a choice around how to apply for grant funding (that is, online or paper-based).

Finally, there were some calls for:

• any new online application process to be refreshed, streamlined, and simplified to help ensure it is accessible to crofters and small farmers, including those who cannot afford to pay for professional support from agents.
• the meaningful involvement of farmers and crofters in the design and testing of any new online application process.