SFMTA response to Pack Inquiry

John Brownlee
Inquiry into the Future Support for Agriculture in Scotland
Room 259
Pentland House
47 Robb's Loan
Edinburgh
EH14 1TY

12 March 2010

Dear Mr Brownlee

Inquiry into future support for agriculture in Scotland
A response to the initial report

The Scottish Federation of Meat Traders Association represent Scottish high street craft butchers and several small abattoir businesses. Many of our members buy cattle and lambs through the auction market system and have seen the number of stock presented through the auction system decline over the past decade and particularly since the move to decoupled payments in 2005. Our members also see a growing interest from their customers in the provenance of their purchases and in buying local produce. Without a successful and profitable livestock sector SFMTA members will find it increasingly difficult to secure supplies without which the viability of their businesses and the jobs they create would be threatened.

In this regard we support the importance that the Inquiry has attached to the need for “future support schemes to have agricultural production at their heart, thereby sustaining agricultural production” and the recognition of the importance of maintaining high levels of food security from domestic sources.

If we are to maintain or increase supplies of livestock we believe that the support paid must go to those who are actively farming the land to produce food. Removing land's capability to produce food, by for example the planting of timber, should lead to that land's exclusion from an area payment system. We also support the channelling of the support through Pillar 1, that is as direct payments, and would not like to see the budget for direct payments reduced. Furthermore, we believe every opportunity should be explored to couple at least some support to secure the first stage in the supply chain namely the calf and the lamb.

We recognise that the current support system, as applied in Scotland, is based on an historic model and is increasingly difficult to justify. However, we are concerned that the scenario described for a future model creates a substantial risk of support moving away from the most productive livestock producers leading to a prospect of a further reduction in stock numbers.

If we are to move to a regional area payment then it has to be based on objective criteria and the Macaulay LCA offers one mechanism. However, grouping land capabilities together could become divisive in that it may divert funds from one agricultural sector to another. This could be minimised by grouping predominantly cropping land, or land of cropping capability, together and allocating that a fund based on historic arable area payments. The remaining, livestock derived payments, would then be allocated to land predominantly capable of being used for livestock production.

Similarly grouping land capabilities together, for example LCAs 3 to 5, leads to the challenge of a wide range of producer efficiencies being standardised and hence redistribution of payments away from the most productive on any land type to the less productive. A suitably designed, and funded, Top-up Fund (TUF), retained within Pillar 1, may offer some mitigation to this and could potentially include some coupled payments to stabilise the beef and sheep sectors. The current constraint of 3.5% of total budget being available for coupled payments would need to be increased to make worthwhile sums available to both cattle and sheep. Consequently we are supportive of the Inquiry's view that Scotland should have a 15% ceiling for trade distorting measures.

We are also supportive of the view of the Inquiry that a proportion of funds under the TUF should be available for supporting particular sectors and in particular the red meat sector. In deed ring fencing in this way would be a mechanism for securing funding for coupled payments.

Scotland has a high reputation for the quality of the livestock it produces. For SFMTA members the quality and provenance of the meat they sell is a key point of distinction in the market place. We would support measures designed to increase the volume of high quality stock available and we are supportive of measures that help the livestock industry to improve its competitiveness through a TUF. Measures could include encouragement to improve animal health, increase the use of stock of a high genetic potential and quality assurance initiatives.

With regard to short term measures we would not like to see any changes. We understand that the Scottish Beef Calf Scheme (SBCS) absorbs more than 3.5% of the budget and only continues through a specific derogation. Any change, without considerable agreement among devolved administrations, would result in less money available for the cattle sector a move we could not support.

Please do not hesitate to contact me if you wish to discuss any of the above points further.

Yours sincerely
Douglas Scott
Chief Executive