Monday, 8 November 2010

The Pack Inquiry - The NFUS View

I would like to thank Jonnie Hall for providing this summary. 

The final report from the ‘Pack Inquiry’ into the future support for agriculture in Scotland has now been published.   The Inquiry’s key messages to the Scottish Government are contained in two sets of recommendations.   The first set is 18 ‘Negotiating Points’ for the Scottish Government to pursue in its negotiations at UK and EU level regarding the future of agricultural and rural development support.   The second is a set of 22 ‘Recommendations’ providing advice to the Scottish Government on matters where the Inquiry expects that the Scottish Government will have discretion in shaping the future system. 

This business guide update provides a brief summary of the final report.   A full copy of the report can be downloaded.

It must be remembered that we remain several years away from the EU political agreement on CAP reform and while there will be a tendency to concentrate on the detailed proposals of the Pack Inquiry Report, the critical aspect is the direction of travel proposed.   


The Report gives a strong robust defence of why agricultural support is necessary.    It argues that a change from the historic approach to distributing payments will be necessary and that a move away from historic payments should occur one-year post reform with the new schemes adopted in one step.   In the event of a phased transition it is stated that a National Reserve should be created to give payments to new entrants who have started a business since 2003. 

The Inquiry takes the view that future support must be about maintaining a vibrant and productive agricultural sector.   Although the goal should be a simple support regime, the geographical variation in Scotland means that a broad ‘one-size-fits-all’ approach is unlikely to be justifiable and meet the needs of the industry.   Dealing with the different sectoral requirements introduces a layer of complexity and a balance needs to be struck between a regime that is simple but lacks targeting and one that is more complex, but is able to deal specifically with a number of targets for support. 

The Future Support Regime 

The Inquiry suggests that the LFA designation provides one way of distinguishing between types of farming with different needs, opportunities and choices.   The LFA is proposed because it is a recognised designation across Europe and because the area is already mapped and the boundaries already established.   Whilst an European Commission-led review of the LFA area across Europe is to be undertaken in the coming years, it is not expected that Scotland will face significant redesignation. 

The Inquiry believes that dividing Scotland into LFA and Non-LFA land provides an appropriate approach as it recognises the different opportunities, needs and challenges of farmers in these areas.   Due to the dominance of rough grazing and permanent pasture, farmers in the LFA face limited choices about what to produce.   The risk of land abandonment, and associated negative economic, social and environmental consequences, in these areas is high.   The Inquiry believes that farmers in the LFA should be supported by three mechanisms: 
  • An area payment on eligible land (defined by the Inquiry, including land in an approved environmental scheme but not woodland) as a low base payment thus minimising the disruption to the land market.   Extensive grazing is paid on the equivalent area to a stocking rate minimum of 0.12 Livestock Units (LU) per hectare.
  • A Top Up Fund to encourage delivery against the global challenges which recognises the ability of a business to contribute by using Standard Labour Requirements (SLR) to determine the individual fund per business.
  • Headage payments designed to stabilise cow and ewe numbers on this marginal land thereby securing the basis for the provision of public benefits.   Money would be paid out on lambs and beef calves. The annual budget for each would be set at the outset.

The Inquiry proposes that farmers in the Non-LFA land, who have a range of options as to what to produce, will be supported in two ways: 
  • An area payment making up two thirds of support.
  • A Top Up Fund payment making up one third of support, paid on an area basis.

The Future of the Less Favoured Support Scheme 

The Inquiry’s proposed method of delivering direct payments in Scotland in the post-2013 period relies on dividing Scotland into two regions, namely LFA and Non-LFA.   It is not surprising therefore that the Inquiry suggests a radical change to the current LFASS. 

The Inquiry recommends that €45 million of the total LFASS budget is paid as a supplement to the Top Up Fund in the LFA region.   This would add approximately €1,800 to the current Top Up Fund of €6,400 per standard labour unit.   This leaves €25 million to remain in Pillar 2 where it is suggested that it should be directed at the areas suffering extreme handicap and therefore the areas at greatest risk of land abandonment. 

Obviously, there's a lot more to the Report than this brief summary, but this is the main thrust - and remember the health's not Brian Pack that decides the future of the CAP! 

Jonathan R Hall
Head of Rural Policy
NFU Scotland
Rural Centre - West Mains
EH28 8LT
Mobile:  07770 934 898
Direct Line:  0131 472 4002

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