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PAYMENTS FROM a loan scheme designed to help the most vulnerable farmers and crofters in Scotland will soon be going out to eligible applicants – but there is still tension between the industry and government over ongoing problems with the administration of Scottish farm support.

More than 7400 payments worth over £45 million have been processed and will be paid next week, Rural Economy Secretary Fergus Ewing announced on Tuesday. Further payments are likely to follow as a total of 11,000 letters have been issued offering eligible businesses the opportunity to benefit from the 2016 National Less Favoured Areas Support Scheme.

These loan payments will then be automatically deducted from the mainstream EU payments once the LFASS 2016 applications are fully processed by the ScotGov rural payments computer.

Mr Ewing said: “I understand how important these payments are for farmers, crofters and the wider rural economy, so I’m delighted to see the money being released to those that require this much needed financial security.

"This scheme will pump millions into the rural economy at an important time enabling farmers and crofters to get on with purchases and investments for the crucial summer and autumn months.

“Farmers and crofters who accept the offer, but have missed the May 5 deadline, will still receive the full payment to which they are entitled, and will receive it as soon as possible. I'd encourage anyone yet to apply for an LFASS loan to do so."

Commenting, NFU Scotland vice president Martin Kennedy, who farms in Highland Perthshire, said: “It’s good news that some 7400 farmers and crofters will receive payments totalling £45 million by next week. That gets a huge chunk of the £65.5 million LFASS budget into the rural economy and filtering down to the many businesses that service our sector.

“While the weather has been kind, leading to good lambing and calving for most, this time of year is always the most challenging financially for beef and sheep producers in more disadvantaged areas," said Mr Kennedy. "There are lots of costs and bills to settle at a time when little or no revenue is coming in and that severely tests the cash flow of even the most prudent farmer or crofter. It’s the timing of this LFASS cash injection that makes it of real value, rather than the sums involved."

But Mr Kennedy noted that, welcome though it was, the loan scheme was an emergency measure that the union had been obliged to lobby for because of the continuing problems with ScotGov's Rural Payments computer.

“With an IT payment system that is not yet fit for purpose, our call for this LFASS loan scheme was a timely and necessary intervention," he said. "Given the importance of LFASS support to hill farmers and crofters, we will continue to push Scottish Government for clear timelines on delivery in the future so that these businesses can plan ahead.

“And it’s important to remember that those not in this first round of payments will not be overlooked," he added. "Further loan scheme letters have been issued in recent weeks and we’ll be pressing Scottish Government to ensure that all those eligible and who have opted in get their loan amount as soon as possible.”