Fruit and Vegetables Aid Scheme in Scotland: call for input

Section A: Proposals for immediate changes to legislation

Context

The Scottish Government is fully supportive of the current scheme funding model. Harnessing the benefits of cooperative working, the scheme allows growers to come together to have security in the market, and share costs, and benefits, of pulling together resources for knowledge and capital purchases.

Producer organisations have the right to receive funding, where they meet the eligibility criteria, without the Scottish Government applying any restrictions. Without any restrictions permitted in legislation, funding the scheme has the potential to be higher than the Scottish budget can afford.

Whilst it is our intention to fund anyone in Scotland who meets the criteria, the source of funding for the scheme has changed. When the UK was in the EU, the scheme was funded by the European Commission and there was no limit to the number of UK producer organisations that could form nor the total amount of funding that could be claimed for under the scheme. However, now, funding for agricultural support is allocated from central Scottish Government funding, which is determined on an annual basis, and must compete with other devolved areas including for example health, education and justice.

The scheme operates on a multi-year model and we are not proposing that the Scheme moves away from the multi-year funding model. However, now that the scheme is funded directly by the Scottish Government, and there is a finite overarching budget to work within, it is considered necessary that Scottish Ministers have greater flexibility over the total funding allocated to the Fruit and Vegetables Aid Scheme in Scotland for future years.

By allowing the scheme to operate with a limitless budget year on year, we risk that it becomes too large for the Scottish Government to continue to fund. Therefore to protect the scheme, we must allow for permitted discretion in our funding allocation.

Proposal (i): Provide aid based on Scottish production

There are not currently any restrictions on growers based in other parts of the UK being members of a producer organisation with a Head Office in Scotland. While ‘cross border’ producer organisations have been supported under the existing scheme to date, this is not considered sustainable nor appropriate going forward now that there is no longer a UK-wide approach to the Scheme.

Whilst we recognise the strength a producer organisation can have with growers from outside Scotland, we must protect Scottish growers from the risk that significant budget is taken to benefit growers from outside of Scotland and who may be able to access other forms of horticultural support in their nations.

It is proposed that a legislative change is introduced so that the funding provided is based on production grown only in Scotland. This could be delivered either by not funding producer organisations with members based in other parts of the UK, or by only considering the value of marketed production (VMP) of members in Scotland. The VMP is the figure that is used to calculate the maximum amount of funding payable to the producer organisation.

A transitional provision to allow existing POs with members with production not based in Scotland would allow those POs time to adapt during 2026-2028 operational programmes.

Questions

1. Do you agree that aid provided by the Scottish Government should be based on production grown only in Scotland? Yes/No

2. Do you have a preference on approach, either (a) funding producer organisations with only Scottish growers, or (b) allowing producer organisations with members based in other parts of the UK to be funded, but not including their value in the calculation determining aid.

3. What, if any, are the benefits to your producer organisation of having members based in other parts of the UK?

Proposal (ii): Introduce discretion on levels of financial assistance

Although it is proposed that a legislative change would be made in 2025, this change would not come into effect until operational programmes beginning in 2029.

Currently a producer organisation can claim financial assistance of up to 4.1% of its value of marketed production (VMP). This figure was set by the EU and brought into domestic law when the UK left the EU. An increasing number of producer organisations claiming through the scheme, or an increase in the VMP of those producer organisations, would increase the amount of financial assistance that Scottish Ministers need to make available. As set out previously, mitigations to ensure there is some control over the total budget are required.

One option for managing this would be a legislative change to provide Scottish Ministers with powers to determine what the cap on financial assistance would be, rather than it being set specifically at 4.1% of a producer organisation’s VMP. For example, Scottish Ministers could cap the maximum level of financial assistance at a different VMP percentage for all operational programmes (e.g. 4% of a producer organisation’s VMP). This would allow the overall Fruit and Vegetables Aid Scheme budget to remain roughly the same (as it has done over recent years), and each producer organisation would continue to receive a portion of the overall funding, proportionate to the value of their business.

Producer organisations require certainty on what level of financial assistance they can claim for in order to draw up and implement operational programmes effectively. The intention is that recognised producer organisations would be made aware of the maximum level of financial assistance available to them (as a percentage of their VMP) in advance of submitting a new operational programme. This would remain constant throughout the life of that multi-year programme. However the cap may differ in a future round of operational programmes.

Questions

4. Do you agree that Scottish Ministers should have discretion over the total budget for the Fruit and Vegetables Aid Scheme in Scotland? Yes/No

5. Do you support the potential approach of the funding cap being set at a percentage, determined by Scottish Ministers, of a producer organisation’s value of marketed production (VMP)? Please explain the reason for your answer.

6. Is it important that Producer Organisations are made aware of what the funding cap would be set at in advance of submitting an operational programme? If yes, please provide an indication of how far in advance that information is required.

7. Do you have other suggestions that would enable a fair and sustainable way for the Fruit and Vegetables Aid Scheme to be funded in Scotland? If yes, please provide more information.

8. Are there other factors that Scottish Ministers should take into consideration when determining how discretion should be applied? If yes, please provide more information.

Proposal (iii): Open the application window for new operational programmes every three years

Since leaving the EU, agriculture budgets are set on an annual basis and providing multi-annual funding, which this scheme relies on, has become significantly more challenging. Single-year funding for the Fruit and Vegetables Aid Scheme compromises the intention of the scheme and the benefits of secure longer-term investment. However any pre-commitment to multi-year funding from the Scottish Government needs additional levels of clearance and means that Scottish Ministers must commit to prioritising this funding in future years at a stage when there is no certainty of what those budgets may be.

In order to provide a greater indication of what the Fruit and Vegetables Aid Scheme budget would be for up to three years in advance, we propose that the application window to submit a new operational programme for approval be opened only every three years, rather than there being an annual deadline. For example, we expect that existing producer organisations will apply for new three-year operational programmes, by the regulatory deadline of 15 September 2025, to begin in January 2026 and end on 31 December 2028. In line with this proposal, a further round of operational programmes would be approved to begin not before 1 January 2029.

This proposal would see continued alignment of operational programme start and end dates. The existing producer organisations claiming funding under this scheme all have operational programmes that run until the end of 2025. This is considered beneficial from an administrative perspective for officials reviewing/approving applications and with regards to the Scottish Government process that is required to secure multi-annual funding.

Restricting the application window to every three years would also allow proposal (ii) above to be effectively applied.

If necessary, a transitional provision could enable two-year operational programmes to be approved in 2026 (to begin on 1 January 2027). This would allow for potential groups of growers going through the recognition process, or thinking about applying for recognition, that will miss the deadline for applications this year, to apply next year instead of having to wait for three years.

Questions

9. Would restricting applications for new operational programmes to every three years have an impact on your business? If yes, please provide more information.

10. Do you, or the organisation you represent, intend to apply for funding through the Fruit and Vegetables Aid Scheme in the future?

11. Would a transitional provision be beneficial to you/your organisation?

Proposal (iv): Amend the duration of operational programmes

Existing Fruit and Vegetables Aid Scheme legislation for Scotland permits an operational programme to be either two or three years in duration. In line with the proposals set out above, in order to be able to provide more certainty to growers and the Scottish Government, as well as enabling all operational programmes to be on the same schedule, we propose to amend legislation so that the duration of an operational programme is fixed at three years.

Questions

12. Would removing the option of a two-year operational programme have an impact on your business? If yes, please provide additional information.

Proposal (v): Include right to appeal in legislation

A gap has been identified around the statutory right to appeal for Scottish producer organisations involved in the Fruit and Vegetables Aid Scheme. As is stands, there is currently no route for a Scottish business that feels they are adversely affected by a decision taken in relation to scheme activities to have that decision reviewed.

The Common Agricultural Policy Non-IACS Support Schemes (Appeals) (Scotland) Regulations 2004, as amended, sets out the process for review and appeals of decisions under various Common Market Organisation (CMO) support schemes. However it doesn’t include relevant Fruit and Vegetables Aid Scheme legislation. It is proposed that these regulations are updated to provide a route for appeal with regards to the Fruit and Vegetables Aid Scheme.

Questions

13. Do you agree that there should be a statutory right to appeal for Producer Organisations under the Fruit and Vegetables Aid Scheme? If no, please provide additional information .

14. Please provide any further comments on the proposals set out in this consultation.