Rural Support (Improvement) (Miscellaneous Amendment) (Scotland) Regulations 2024: Fairer Scotland Duty impact assessment

The Scottish Government is bringing forward the commitment in the Agricultural Reform Programme to introduce new conditions for the Scottish Suckler Beef Support Scheme in 2025, linked to calving interval performance, which aims to encourage beef farmers to undertake steps that will help to reduce the emissions' intensity of their cattle production systems and make them more financially efficient.

Calving interval is a key efficiency measurement for beef production. Longer calving intervals mean not only longer periods when a cow is incurring costs (e.g. feed, veterinary care) but also emitting greenhouse gases without contributing to beef production.

The Scottish Government announced in an update to the Agricultural Route Map in March 2024 that, from 2025 onwards, a new condition incorporating a calving interval threshold of 410 days will be introduced to the SSBSS.

The new condition will be measured on an individual animal basis, rather than herd averages and will apply to the offspring of cattle with an established calving interval of 410 days or less. The first calves registered will be exempt from the calving interval threshold, and will remain eligible for payment provided that all other scheme conditions are met.

Policy officials commissioned a desktop literature review from Rural and Environment Science and Analytical Services (RESAS) on equalities which could affect producers within the beef industry as the primary group affected by the reform.

While evidence was found in relation to gender and socio-economic inequality, no evidence was found in the literature review relating specifically to beef producers. The Agriculture and Rural Communities (Scotland) Bill EQIA contains evidence on the wider agricultural and rural population, which will be included in the EQIA for the 2025 changes.

According to Scottish Government research into Scottish farm business income: annual estimates 2021-2022, the average farm income in 2021-2022 is around £50,000. This is the highest estimate since 2012-13, the earliest year for which comparable data exists. Average income increased around £11,000, from £38,900 in the previous year.

Farms received around £44,800 in support payments and grants, an increase of six percent from 2020-21. The average business made a profit of around £5,100 without support. This is the first time in the last ten years that average income is profitable without support.

Average livestock farms continue to make a loss without support. Livestock farms in less favoured areas (LFA) have low but stable incomes compared to other farm types. Increased livestock output mainly drove small increases in income across all livestock farm types in 2021-22. Whilst they increased from the previous year, average incomes for LFA livestock farm types were still typical when compared to the previous ten years, as in the below table which illustrates average farm business incomes in 2020-21 and 2021-22 for livestock farms:

The policy could be adjusted to address inequalities by raising the calving interval, thus lowering the payment per calf but ensuring that more producers receive payments. However, this must be balanced against SG’s commitment to reducing emissions in the livestock sector by reducing the calving threshold.

No changes to our proposals are therefore considered necessary at present .

Name: John Kerr

Job title: Head of Agricultural Policy Division

Date: 17th October 2024

Cross Compliance and is a set of mandatory requirements that farmers and crofters have to comply with in return for receiving support scheme payments. One of the requirements Good Agricultural and Environmental Condition no. 6 (GAEC 6) relates to soil organic matter.

New Peatlands and Wetlands requirements will be implemented from 2025 under existing GAEC 6 to limit further greenhouse gas emissions by restricting certain damaging agricultural activities.

If a farmer/crofter breaches any of the requirements a penalty, expressed as a percentage reduction is applied to the payments they are due to receive.

This means that farmers/crofters who receive the least money also receive the lowest payment reductions for any given penalty.

Analysis of the 2023 calendar shows that of the 643 farmers and crofters who breached the requirements 427 (66%) received a Warning Letter and no related financial reduction. The balance breached the requirements in a more serious way and as a result the payments they received were reduced by varying degrees.

The new Peatlands and Wetlands requirements are based on good agricultural and environments practice. Therefore, it should be well within the capability of all support scheme claimants to meet the requirements and limit further greenhouse gas emissions of these types of land.

The ‘Ending the sale of peat consultation’ gathered views on the sale of peat for the horticulture sector. Several responses also referenced fuel poverty, peat being the only source of fuel and burning peat being part of Scotland’s cultural heritage.

To reflect the importance of burning peat in some remote rural communities cutting of peat for domestic use won’t be damaging activity in the context of the new requirements.

No changes are considered necessary for the following reasons –

• If there any breaches of the new requirements the payment reduction for any given % penalty will be lower for farmers and crofters who receive the lowest payments.
• The level of penalties for any breaches of the new requirements are expected to follow the same split as the other requirements with the majority resulting in a Warning letter (0% penalty).

Cutting peat for domestic use won’t be considered to be a damaging activity.

Name: John Kerr

Job title: Head of Agricultural Policy Division

Date : 17th October 2024