Rural Affairs Secretary Richard Lochhead has plenty difficult decisions to make in coming months as he sets about implementing the new Common Agricultural Policy.
So far he has played his cards close to his chest, but on Thursday he made a significant announcement regarding allocation of funds between Pillar One (direct payments to farmers) and Pillar Two (rural development and the environment).
His proposal is to move 9.5% of Pillar One funding into Pillar Two. Essentially this will take £46 million annually between 2015 and 2020 from the Single Farm Payment pot into the rural development fund.
He could under CAP rules have moved 15% of the budget either way between the pillars, but this was never likely.
On such a controversial matter he was never going to please everybody and could only hope to displease everyone equally. The conflicting responses detailed below from NFU Scotland and RSPB show that he may have succeeded.
Mr Lochhead, with some justification, has been complaining for months that Scotland has been dealt a poor hand in the CAP budget allocation.
Of course he blames Defra Secretary Owen Paterson and his predecessors for not arguing Scotland’s case with sufficient fervour and much of his statement on Thursday centred on that, as might be expected with the Scottish independence debate warming up.
The reality, however, is that Mr Lochhead has to find enough Pillar Two money to increase funding for agri-environment schemes while also safeguarding the Less Favoured Area Support Scheme.
The forestry sector is also crying out for an increased share of Pillar Two. Support for crofting, new entrants to farming, food and drink, and rural community development all has to be found, too.
All these sectors will want to make their case, but time is short.
The Scottish Government has asked for views on the proposed transfer rate by December 16 so that the EU can be informed of the decision by the December 31 deadline.
Mr Lochhead said: “European rules allow up to 15% to be transferred between budgets.
“I have said all along that I will not transfer money away from rural development as Scotland has the lowest payment rates in Europe just one-sixth of the EU average.
“I also want to protect food production in this country, and direct payments to Scottish farmers and crofters have already been cut twice: once at European level, and again by the UK Government.
“Owen Paterson argued for a ‘substantial reduction’ and phasing out of Pillar One payments, but thankfully he did not succeed and we secured much-needed continued support for Scottish agriculture.
“That is why in this programme I am minded to limit the transfer from Pillar One to Pillar Two to 9.5%, a rate which I believe strikes the best possible balance between providing a rural development budget that allows us to address our obligations and supporting priority areas of the agricultural sector.
“This will deliver a rural development budget of over £1.3 billion over the next seven years, a level of annual funding similar to that of the final years of the current programme.
“I am also minded to allocate more of Scotland’s rural development budget to agri-environment schemes to help protect our natural environment, especially our biodiversity and water quality.
“While subject to consultation, my proposals would see funding for agri-environment schemes increase by more than £10m per year to over £350m over the seven-year CAP period.
“Crucially, I intend to maintain essential support of £65.5m per year for LFASS.
NFU Scotland president Nigel Miller said: “We will use this consultation phase to impress upon the Scottish Government that retaining as much of our precious Pillar One budget for active producers across all land types will deliver on our rural development goals, be they economic, environmental or social.
“Shifting significant funds to Pillar Two and potentially holing our Pillar One budget below the waterline risks further undermining our vulnerable farming sectors.
“Our members will view the proposed modulation rate of 9.5% as too high and are unlikely to accept any transfer between pillars that is higher than the existing voluntary modulation rate. We will be urging Scottish Government to adopt a transfer rate closer to 7.5% and make use of the option to review the rate in 2017.”
RSPB Scotland director Stuart Housden took a different view, saying: “RSPB Scotland is very disappointed that out of a possible 15% modulation, the Scottish Government has chosen to shift only 9.5% of the budget.
“It is especially disappointing given that the Scottish Government is failing to meet its own national performance indicators for both farmland birds and for wildlife sites.
“Farming is the key influence on this, and by starving agri-environment programmes of funds they will not reverse the fortunes of wildlife in Scotland any time soon. Over the lifetime of the SRDP programmes Mr Lochhead’s decision has cost the environment £220m.”