Present
Brookeborough, V
Cameron of Dillington, L
Sewel, L (Chairman)
Ullswater, V

Witnesses: JOHN SCOTT, Scottish Conservative Party Spokesperson on Rural Development; MIKE RUMBLES, Scottish Liberal Democrats Spokesperson on Rural Development; SARAH BOYACK, Scottish Labour Party Spokesperson on Rural Development.

1.  Lord Sewel: Asked how the witnesses expected the CAP to develop over the next 10 years or so, and what the impact of the 2003 CAP reforms had been on Scottish agriculture and the Scottish rural economy.

Ms Boyack:

• Stated that while environmental organisations were looking to the future of the CAP with enthusiastic expectations, there was nervousness on the part of the farming community.
• Explained that from the perspective of the Labour Party, the most important issue would be how the transition process is managed.
• The CAP should thus evolve to support communities while also securing public goods and promoting the local procurement of food (within the limits of EU procurement policy).
• Drew attention to the importance of secure food supplies, and suggested that there was huge support for sourcing fresh, and where possible, local food.
• Anticipated that in future there would be less production support.

Mr Scott:

• Noted that the 2003 reforms had been largely beneficial, and had allowed people to seek market solutions while support was still in place.
• Indicated that it would be essential that such support remains in place in Scotland, where 85 per cent of agricultural land has "less favoured area" status, as returns in the marketplace are only now returning to what they were pre-1986.
• Suggested that without that support, agricultural production in Scotland as we've known it for the last 55 years would cease.

Mr Rumbles:

• Described the 2003 reforms as positive and beneficial, having delivered benefits across the board.
• Noted that it had been right to allocate Single Farm Payments on an historic basis at the time, but that this would have to be changed if it were to avoid giving rise to anomalies. A fair transitional system would need to be applied during such a change.
• Considered it right that support should be moving from Pillar 1 to Pillar 2, but deemed it important that support should be maintained in the Highlands and Islands as those regions are special cases.
• Pointed out that the Scottish rural development budget was decreasing by 6.5 per cent over 3 years, and expressed concern that increases in voluntary modulation were being used to make up the difference.
• Stressed that his party did not have a problem with compulsory modulation, however, and that it should be increased.

2.  Lord Sewel: Asked to what extent the Scottish administration shared Mr Rumble's views on modulation.

Mr Rumbles:

• Indicated that he didn't think it did. Noted that Mr Lochhead was responsible for the increase in voluntary modulation.

3.  Lord Sewel: Summarized the responses, asking the witnesses to confirm that the reforms had been broadly welcomed, and that they saw a need to maintain support under Pillar 1, while also recognizing the necessity of increasing the resources available under Pillar 2.

Ms Boyack:

• Pointed out that she disagreed with Mike, and that Labour would have gone further with voluntary modulation, as the party does not view farming as the only industry in the rural sector.
• Emphasised that more expenditure was needed in Pillar 2, including more support for environmental measures.

Mr Scott:

• Noted that if the money taken away from farmers through modulation were given back to them, they wouldn't have a problem with it. It is when the money is allocated to others and they see their standard of living fall further that they oppose voluntary modulation.
• If there were a level playing-field in terms of modulation across Europe, farmers would support the mechanism, he suggested.

Mr Rumbles:

• Stressed that the Scottish Executive had cut its contribution to the rural affairs budget by 6.5 per cent, and compensated for it with voluntary modulation.

4.  Lord Cameron of Dillington: Put it to the witnesses that if one were to start again with the social and economic regeneration of the countryside, one would not start with the CAP.

Mr Scott:

• Insisted that that nobody was opposed to the objectives of Pillar 2, but to where the money comes from.

5.  Lord Sewel: Suggested that there appeared to be a tendency to conflate the rural and the agricultural agendas, when these were in fact different.

Mr Rumbles:

• Stressed that it was nevertheless important not to forget that especially in more remote rural areas, for example in traditional crofting communities, we don't want traditional ways of life turned around. It would have to be a mixture of the two, not all one way.

6.  Lord Sewel: Pointed out that a Pound could only be spent once.

Ms Boyack:

• Noted that it's important to ask what the added value of each pound spent is. Emphasised that her party would be very keen to see more rural development funding, because preserving, say, 4 jobs in a rural community would have many more knock-on effects than preserving the same number of jobs in Edinburgh Central (her constituency).

Mr Rumbles:

• Highlighted the extra transportation costs faced by farmers in Orkney, Shetland and the rest of the Highlands and Islands and that there is therefore certainly a need for some sort of agricultural support to compensate for those extra costs.

Mr Scott:

• Suggested that it was the gold-plating of red tape (regulation) that makes certain rural activities unviable.

7.  Viscount Ullswater: Asked the witnesses how they viewed villages in Scotland—whether populations appeared to be increasing or decreasing, and what the trends were with respect to the value of housing.

Mr Rumbles:

• Pointed out that the Rural Affairs Committee of the Scottish Parliament was launching an inquiry into rural housing, and that there was real concern that people were being driven out of homes (due to affordability issues). He noted by way of example that 50 per cent of houses in Braemar (in his own constituency) are holiday homes.

Mr Scott:

• Explained that whereas in the past, desertification payments focused on keeping people in the hills and glens, this was no longer an issue. People now do want to buy remote cottages and travel long distances and work from home. The issue now is thus instead what the land is used for, if agriculture is no more viable than in the past.

Mr Rumbles:

• Cautioned against falling into the trap of looking at Scotland as a whole. Rural Aberdeenshire and rural Highlands and Islands face different problems. Explained that in his Aberdeenshire constituency, the population was rising, and there was pressure on housing.

8.  Lord Cameron of Dillington: Pointed out that both remote and near countryside appeared to achieve better outcomes on most indicators than did urban areas in Scotland.

Ms Boyack:

• Noted that some work had been done on accessible rural communities last year, and it had been found that there was much less activity on the land than there used to be.
• Pointed out, however, that if climate change resulted in even small increases in temperature, this would dry out peat and increase emissions. Because of this challenge, her party was keen on more rural development.

9.  Lord Sewel: Suggested that wet peatlands were a public good and might thus need some support, but that rural areas in general were doing well.

Mr Scott:

• Agreed that there were great needs in urban areas too.

10.  Lord Sewel: Asked the witnesses where they stood on the abolition of milk quotas and set-aside.

Mr Scott:

• Explained that he did not have much to say on milk quotas, which had become valueless.

Ms Boyack:

• Suggested that thought should be given to how to preserve the environmental benefits of set-aside and that the consequences of its abolishment should be thought through to ensure that none of these were unintended.

Mr Scott:

• Added that the loss of set-aside is about setting priorities for land use, and that it is consequently right and proper that it should be abolished.
• Like Ms Boyack, however, he did not want to see its environmental benefits lost.

11.  Lord Cameron of Dillington: Suggested that one of the few justifications for the SFP was that it may be an 'environmental contract in-waiting'. Asked the witnesses about the extent to which we could be using cross-compliance more.

Mr Rumbles:

• Suggested that any such moves would have to be part of the Land Management Contracts in use in Scotland.
• Cross compliance at the level set now should be regarded as a minimum.

Mr Scott:

• Felt that cross compliance was encouraging travel in the right direction, but expressed concern about the red tape that came with it and the disproportionate penalties associated with the regime.

Ms Boyack:

• Suggested that cross compliance had raised the bar, and that it could be used to secure other public goods, such as biodiversity. Farmers needed to be incentivised to adopt farming practices that create habitats.

12.  Lord Sewel: Asked whether all this could be included Rural Development Contracts.

Ms Boyack:

• Suggested that it was to early to say how those contracts were working, but that they had been designed intelligently, with a menu of options.
• Felt that more articulation with climate change issues was necessary as climate change is a key priority for Scotland, and that more incentives for appropriate activities and behaviour needed to be provided.

13.  Lord Sewel: Noted that agriculture emissions were contributing to climate change, but that the sector was also in a position to make a contribution society's adaptation to it. Asked what the government could do to promote such a contribution.

Ms Boyack:

• Suggested that Rural Development Contracts would create incentives.
• She identified several areas where agriculture could make a contribution, listing among others flood management, forestry, biomass (including supply chains—not just biomass boilers), wind farms and a sensible approach to biofuels, as well as food security.
• Pointed out that advice to the farming community would be important, for example if a given area was expected to suffer more droughts.

14.  Lord Cameron of Dillington: Asked what capacity there was for R&D into these issues.

Ms Boyack:

• Noted that Scotland has the Macaulay Institute as well as the Scottish Agricultural Research College.

Mr Scott:

• Suggested that researchers would look at anything provided that they are funded.
• Added that climate change would necessitate that more of Scotland's land be used for food production.
• Noted that while he agreed with the proposed increase in forestry, it was not the answer, as land would come under pressure, with competing uses for it, such as public access, tourism and flood management.
• Added that tourism is by far Scotland's biggest industry, and much of it is linked to scenery—a public benefit that is delivered by Scottish land managers.

Mr Rumbles:

• Noted that the key to improving the competitiveness of Scotland's agriculture would be market forces, with the proviso that the most vulnerable communities were protected.

Ms Boyack:

• Stressed that there was no need to see forests in opposition to tourism issues, and that it was important to look for opportunities rather than viewing everything as a threat.

15.  Lord Sewel: Asked what one thing the witnesses would say to the Agriculture Commissioner if they had the opportunity.

Mr Rumbles:

• Said he would ask her to get rid of voluntary modulation and increase compulsory modulation.

Mr Scott:

• Said he would tell her to wake up and smell the coffee about food security and consider how, in a globally warmed world, Europe would be able to feed itself and others who can no longer produce.

Ms Boyack:

• Said she would urge her to focus on where we want to be in five to ten years' time rather than fighting the battles of the past.