Royal Highland Show 2017: First Minister's speech

I want to begin by congratulating the Royal Highland Agricultural Society of Scotland for yet again organising such a fantastic event. It's always a pleasure to be here and I'm delighted to be back this morning.

The Royal Highland Show is, of course, one of the great occasions in Scotland's farming calendar – it's a wonderful showcase for the quality of our livestock, food and drink and farm produce.

I'm told that Fergus Ewing, Cabinet Secretary, actually turned into an exhibitor yesterday, where he was asking people to sample his homemade gingerbread. I'm not sure if anybody here got the opportunity to do so but I can tell you, he's never given me the opportunity to sample his homemade gingerbread. That's perhaps a pleasure that I still have to come.

But one of the things I think is worth emphasising about the show is that 30,000 schoolchildren are expected to attend this year's event absolutely free of charge, and I think that's really important because it makes sure that all children – regardless of where they come from in Scotland – get to understand a bit more about farming, about rural life more generally, and also about where the food that they eat actually comes from. I remember coming here on a school trip myself, and having my eyes opened to those things back then, so to give so many children that opportunity is fantastic. And if they can do that in an environment which – as well as being educational – also gives them a great day out, it makes that an even more special occasion. So I certainly want today to welcome the real importance that the Royal Highland Show attaches to education.

Now of course we've already heard that today's event is being held exactly one year after the referendum on EU membership was held.

So on the equivalent Friday at last year's show – the day after the referendum – I'm sure there was an atmosphere of political drama and probably some shock and disbelief at what had just happened.

Back then we were just, all of us, beginning to grapple with the questions that, a year on, we are still discussing now: what does Brexit mean for Europe, for the UK and for Scotland, and what, very specifically, does it mean for the livelihoods of people in the agricultural sector?

So I'm going to focus today on the Scottish Government's approach to Brexit – how we will try to influence the forthcoming negotiations that of course got underway earlier this week, and the priorities that we'll seek to pursue in relation to agriculture.

But I want to put that approach, firstly, into context. The Scottish Government is committed to doing all we can to ensure that all parts of Scotland can succeed and flourish, and by definition, we cannot and will not achieve that unless rural Scotland prospers.

That's why we work hard to support the rural economy. Our investment in broadband, for example, is one example of that – by the end of this Parliament, superfast broadband will be available to every home, every business in every part of Scotland.

We've also invested heavily in rural transport links – from the dualling of the A9 that is now underway to the re-establishment of the Borders railway. And we are supporting sectors – from food and drink and tourism to life sciences and renewable energy – which are important to a strong rural economy.

We also believe that land reform can bring economic benefits, together with social and environmental benefits.

As part of that, we're encouraging more diversity of land ownership and tenure. Through initiatives such as the Scottish Land Fund, we are supporting more opportunities for communities to own, lease or use land and buildings, and that's an important way of enabling assets to be used in a way that promotes social justice, creates better local amenities and supports local economic development.

And earlier this year, of course, we consulted on a draft statement of land rights and responsibilities, and that statement will be laid before Parliament probably in October.

And among other things, it recognises the importance of good stewardship. And many of you here, whether as landowners or tenant farmers, I know see yourselves as stewards. You need to derive benefit from your land now – for yourself and the public – but also to protect and enhance it, to ensure that it is in a good state for future generations. And that's why good stewardship is one of the key principles that will be reflected in that statement. We want to ensure that the good practice which so many landowners – the vast majority of landowners, including many farmers – exemplify, becomes universal for all.

And of course an absolutely key part of building a prosperous rural economy is to ensure that we have a strong farming and forestry sector.

I know that Raymond (Henderson, Forestry Partner, Bidwells) will speak at more length about forestry later, so I won't go into huge detail this morning. But again, I want to stress, it's an area where we are making important progress.

We have now introduced the first ever forestry bill into the Scottish Parliament. That bill will effectively complete the devolution of forestry in Scotland. And in particular, it will create a new executive agency – Forestry and Land Scotland.

Forestry in Scotland is already worth around a billion pounds per year. It supports more than 25,000 jobs, helps us to meet our climate change targets and contributes to the wellbeing of communities across the country.

And it's also part of our ambitious plans for the future – more than three quarters of the new woodlands created in the UK last year were planted here in Scotland. And we want to do even more to meet the targets that we have set ourselves.

The new legislation provides a framework which will help us do that, and it is a further sign of that commitment to forestry, and our determination to ensure that it delivers economic, environmental and social benefits to the country.

In relation to farming, we're developing an agriculture strategy. We want farmers and the Government to agree together our key priorities.

As part of that, we're looking at issues such as ensuring that farming benefits fully from the huge success of the food and drink sector. We are also taking steps to encourage new entrants into farming – for example, funding a special scheme for young farmers.

In fact, just after this event, I'm visiting a session to launch a report on the contribution women make to the agriculture industry in Scotland. One that for obvious reasons is close to my heart, but also hugely important for the future of farming: we will be better at attracting new farmers if we reach out to all potential young farmers, rather than 50% of them.

And of course in order to secure the best possible future for farming, we need to gain the best outcome from Brexit negotiations.

Now I mentioned earlier that this is the first anniversary of the referendum. And after 12 months, I think is it the case that almost everything that was uncertain this time last year remains uncertain today. Earlier this week saw the start of the most important negotiations in the recent history of the UK. And the UK Government got those negotiations underway without a clear plan or a consensus around what is being sought. And that situation, and I don't say this lightly, is deeply unsatisfactory.

Before the general election, the UK Government appeared intent on pursuing a hard Brexit removal from the single market, not just the EU, and that approach was prioritising control of immigration over free trade. Now I think there is an important chance to reconsider.

And as part of that, I think it's important there's genuine consultation and a truly inclusive approach that takes into account all of the parties and all of the nations of the UK, in an attempt to develop an approach to negotiation that is founded on consensus and a rational view of what is best for the economy.

And the Scottish Government's proposals – which we set out last December – seem to me to provide a possible blueprint which nations and parties could unite around.

We believe that remaining within the European Economic Area (EEA) – the single market – is the least damaging possible outcome for Brexit for the whole of the UK. It would limit economic damage, and it perhaps is the obvious compromise solution in a UK where 48% voted to remain, where two out of four nations of the UK voted to remain as well. And these are proposals that we as an immediate priority will seek to work with anyone and everyone at the UK Government, other political parties, sectors across the economy, to try to get traction to ensure that we have an approach to Brexit that prioritises the interests of the economy.

And of course in doing that, we know that there are particular issues and complexities relating to farming.

For example, membership of the EEA, the European Economic Area, would guarantee free trade in most sectors of the economy. But it doesn't cover agriculture.

And it matters hugely to Scotland. Four fifths of Scotland's international exports of beef and lamb go to other EU nations. And Quality Meat Scotland has highlighted that meat exports could be hit by tariffs of more than 50% unless we're able negotiate a tariff-free deal.

And that's why, again, the proposals we published in December proposed that the UK negotiate, as a priority, tariff-free access to the single market for products such as beef, lamb, cereals and vegetables.

And that's an issue we will continue to pursue because we know it's hugely important to farmers, and it could have a direct impact on the prosperity and sustainability of rural communities right across the country.

The second issue I want to touch on is freedom of movement. EU workers are important, vital indeed, to almost every part of the modern farming industry – from the laboratories of our research institutes to the fields of our fruit farms.

The UK Government – certainly in its rhetoric before the election – placed a great deal of emphasis on restricting freedom of movement. And that seems to be the key reason why it is not pursuing single market membership.

But Scottish agriculture, indeed Scotland more generally, has benefitted from freedom of movement. So as things stand, there is still a real danger that we will abandon something which is good for Scotland – membership of the single market – in order to restrict something else that is good for Scotland – which is freedom of movement.

And I think that's an example of the absurdity of a hard Brexit approach, and is a good demonstration of why it makes so much sense now to find a different and more rational approach.

The final issue relating to Brexit that I want to deal with this morning is the issue of farm payments.

I'll talk about the future of Common Agricultural Policy (CAP) in a moment, but I want to begin with an update on the position in relation to this year's farm payments.

We have made a clear commitment to do all we can to make the 2016 Pillar One payments by the end of next week –the set payment period. Although we have discussed the contingency of an extension to that with the European Commission, at present, we've made more than £249.7 million of these payments and, of course, farmers have been given access to loans pending the delivery of their actual payments. We are making significant progress now on payments and on resolving the remaining issues in the system. For example, the application process for 2017 payments worked well, with more people – including, I hope, some of you – opting to apply online.

But I want to assure you today, and Fergus here would absolutely echo these comments, there is no complacency on the Scottish Government's part about this matter. We have already apologised, and we do so again today, to farmers for the failures that have been experienced in the system. And I can guarantee that we will continue to give the matter our full focus and attention to ensure that farmers get the service that they deserve.

Of course, the reason why this is so important is that payments through CAP are vital to farmers and rural communities throughout Scotland. They're currently worth a total of around £500 million a year. So the future of these payments is a matter of such great concern.

For many farmers across the country – especially hill farmers – CAP payments literally mean the difference in ensuring that their businesses are viable. And, of course, Scotland has far more hill farmers than other parts of the UK. So a loss of CAP payments would be deeply damaging not just to the farmers, but to our rural economy more generally.

Now, there is a commitment to protect the budget for CAP payments up until 2022.

But the long-term future is not yet clear. For some time at the UK Government there's been a view that income support payments for farmers should be phased out, and steps in that direction have already been taken with the abolition of England's equivalent of the Less Favoured Area Support (LFAS) Scheme several years ago.

That's why we think it is vital we do get a longer-term commitment to farming support.

The best solution, in my view, for Scotland would be for the funding which currently goes to Scottish agriculture to be allocated to the Scottish Parliament, so that we can take decisions on how best to support farmers in the future.

As yet, we do not have clarity about what will happen to powers as they are repatriated from Brussels, and I do not think it would be acceptable for those to go to Westminster rather than the Scottish Parliament in areas which are currently a responsibility of our Parliament, and that's an issue we will continue to prioritise in discussions with the UK Government.

Just to conclude, because I want to make sure that we have time for questions this morning, we will, as the Scottish Government, do everything we can to work with others to promote the best possible outcome to Brexit. And that is something that Fergus and Roseanna Cunningham said to Michael Gove when they met yesterday.

We want to play as constructive a role as possible to make sure that the needs of our economy generally, and our rural economy in particular, are absolutely prioritised. More widely, we need to work with you, all of you, to make sure that in our own policies we are prioritising the needs of the rural community.

So thank you very much again for giving me the opportunity to be here and I look forward now to answering some of your questions.