Not many subsidy mechanisms are as complex as the Less Favoured Area Support Scheme (LFASS).
At the same time few are as important to those farming in the more fragile areas of the UK. That is especially so in Scotland, with 85% of the farmed area classified as “less favoured”.
LFASS delivers around £65 million annually from Pillar Two (rural development) of the CAP and is seen as a vital source of income for hill farmers, not to be tampered with.
NFU Scotland and other bodies have had to keep a close eye on the future of the scheme during CAP reform talks.
There was a collective sigh of relief then when it was announced LFASS would continue until 2017, some two years after the rest of the reformed CAP becomes a reality.
After 2017 there will be less certainty, with the Less Favoured Areas redesignated as Areas of National Constraint (ANCs) and new criteria being used to decide which farms or parts of farms will be included.
NFUS and its members do not like the uncertainty the changes might bring, but at the same time there is an awareness that as time marches on anomalies are being created within the old scheme.
Eligibility for LFASS was defined in 2009 and depended on the number of sheep and cattle kept.
Since then some farmers have given up keeping livestock while others, including new entrants, have expanded operations or started new herds and flocks.
This has put NFUS in the delicate position of asking for a rebasing of LFASS while desperately wanting the scheme to continue.
Union president Nigel Miller has written to the European Commission seeking clarification over what can be done.
NFUS has already asked Scottish Government to re-base the scheme to allow those locked out of LFASS to gain earlier access to the funds in return for keeping breeding stock in the more difficult areas of the country.
In his letter Mr Miller said: “There are two spin-off benefits in the potential delay until 2017 of changing from the current LFAs designation to ANCs.
“Firstly, the continuity of retaining the existing support measures is welcome. Many Scottish farmers are comfortable with these, and they will provide a level of certainty at a time when producers will also have to adapt to new area-based Single Farm Payment and a reduced Pillar One budget to accompany it.
“Secondly, there is a window in which to re-base the scheme so that we capture those active livestock keepers who merit inclusion but are currently locked out of LFASS.
“The present scheme has a historic basis, with eligibility being defined by keeping suckler herds or breeding sheep during the 2009 base year.
“That historic gateway to support has created anomalies that lock out new entrants from receiving LFASS payments and also excludes farm businesses which operated non-eligible enterprises during 2009 but now keep suckler cows or keep breeding sheep.
“A significant number of farmers in Scotland’s LFAs now operate identical farming systems and face the same identical physical disadvantages as their neighbours, but they cannot access vital rural development support because of the historic anchor within the LFA Support Scheme.
“That group of excluded businesses could become eligible for LFASS payments by moving to a new base year of 2012, and looking at the livestock kept by all farmers in the LFAs that year.
“With the extension of the present LFASS arrangements to perhaps 2017, the injustices of historic eligibility have become more acute and require an urgent solution.
“We have already approached the Scottish Government on this issue and we are now seeking confirmation from the European Commission that a re-basing of Scotland’s LFASS is allowable under the present regulatory framework. We hope it agrees that identifying a process that will allow disadvantaged producers to gain LFASS payments in some of our most challenging regions is of real value.”
In response a Scottish Government spokeswoman said: “Work on the design of the new Scottish Rural Development Programme, which includes LFASS, is well under way and we look forward to receiving views when we consult on the details later this year.
“On the issue of farmers being excluded from LFASS, in recent years the Scottish Government has amended the scheme rules specifically to address this issue. This work was carried out in close collaboration with NFUS.
“If there remains a significant number of excluded farmers, then the Government would of course want to be aware so that we can consider whether further action is needed.”