CONVERGENCE FUNDING will be ‘returning to the hills’ over the course of the next two years – as revealed this week by Cabinet Secretary Fergus Ewing, who made clear his commitment to supporting ‘active farming in marginal areas’ – with part of the payment plugging the shortfall in funding for the Less Favoured Areas Support Scheme.

After the SF went to press, Mr Ewing released his monetary breakdown proposal for the convergence cash pot, with the bulk of the funding to be distributed on an area basis, with a proportion being applied across the three basic payment regions. An additional component of the payment will be used to support businesses farming Scotland’s most constrained land (LFASS £13m).

Region 1 will receive 50% of the spend which the Government feels reflects the strength of feeling within the industry that the money should predominantly be distributed to regions 2 and 3. Going lower than 50% for region 1 could result in disproportionately large payments to those with large holdings of region 2 and 3 land.

A breakdown of the funding as follows: -

  • LFASS top up - £13m
  • Region 1 - £26.2m
  • Region 2 - £18.4m
  • Region 3 - £7.9m
  • Voluntary Coupled Support - £15m

After weeks of contention over how the £160m lump sum should be spent, Mr Ewing has acknowledged that his decision to allocate the monies is ‘more generous to region 2 and 3 farmers and crofters’ than NFU Scotland’s proposal, but has assured that all farmers will benefit in some way.

“I want to remain true to the principles of convergence,” stated Mr Ewing. “So those farming on marginal land are the ones who should primarily benefit. That was the intended purpose of convergence, to narrow the gap up to the EU average, but we also want to help most those who need most help.”

Making the statement in advance of the general election announcement – which will put a stop to policy statements during the purdah period – he explained he didn’t want to be seen as ‘dragging his heels’ and that it was vital that he gave confidence to the sector as soon as possible. “I have made this decision within six weeks, when frankly the Tories have held on to this money for six years,” he added.

The full convergence pot will be delivered by the Scottish Treasury in two lots of £80m over two years, with the first tranche guaranteed to arrive in individuals’ bank accounts by the end of this financial year. This first £80m will include the £13m shortfall in LFASS funding and the latter payment will top up around £35m of the deficit expected for the year 2020/2021, leaving a much smaller pot to be divvied up.

Mr Ewing has stressed that there will be no backtracking in payments to farmers or crofters who have retired or passed away since 2015 and insisted that the money will only go to active farmers: “In the modelling we have looked at, we have examined outliers and the system we have come up with will reduce the result of what might be seen as unfairly low or unfairly high payments.”

NFU Scotland president, Andrew McCornick, though, raised concerns with the proposal: “We cannot agree with the Scottish Government’s proposition to use any of the £160m to address the budget shortfall that exists in the Less Favoured Area Support Scheme for 2019 and 2020 scheme years.

“Using this money, rather than finding the LFASS funding shortfall from usual budgetary sources is a blow to all active Scottish farmers and crofters and dilutes what this funding could have achieved.”

Mr McCornick continued: “While we await details, we do support using the funds to increase the basic payment scheme rates in Regions 1, 2 and 3 with extra weighted support to the Region 2 and Region 3 budgets. We also support top ups to the coupled beef and sheep schemes. Our proposal to Scottish Government would deliver one-off uplifts for Region 3, Region 2 and Region 1, but we wait to see what model the Scottish Government adopts,” he explained.

“Unfortunately, by funding LFASS through stripping the £160 million as Scottish Government intends to do, it will immediately lower what all three regional payments could have been and that will have a significant impact on the arable sector and the livestock sectors which are predominantly underpinned by Region 1 permanent pastures and grassland,” he warned.

Scottish Tenant Farmers Association executive director Angus McCall welcomed the proposal for an LFASS boost in the first tranche of payments: “Although there are concerns about using the convergence money to plug the LFASS shortfall, our understanding is that only £13m will be used for this purpose with the LFASS mechanism being used to distribute funding towards the more marginal areas. We regard this as a sensible use of the first tranche of convergence money which will have the added benefit of ensuring payments are not made to undeserving slipper farmers, to those who have left the industry or to those who have opted to grow trees rather than produce livestock," he explained.

“We are still in the dark as to how the rest of the current funding is to be distributed and welcome the chance to discuss with government how the second payment of £80 million should be spent and whether or not putting £35m into topping up LFASS is the best way to deliver support to those in most need, especially with the current state of uncertainty and flux in agricultural policy. The Cabinet Secretary is to be commended, however, in putting the interests of farmers and crofters farming in the most fragile areas at the heart of government policy,” he concluded.

The Scottish Crofting Federation has hailed the allocation of funding to less favoured areas as a victory: “Convergence is about raising the income of the lowest paid producers towards the EU average,” said SCF chair, Yvonne White. “In Scotland these producers are crofters and hill farmers, many of whom are barely surviving – not helped by the very low payments for rough grazing. The bulk of the money should therefore rightfully go to regions 2 and 3.”

However, Ms White went on stress that the convergence uplift should not be a means of making up for the LFASS reduction which she states was caused by the Scottish Government ‘failing to join the new European scheme for constrained areas’: “Taking the money owed to poorly paid producers to make up a budget deficit of Scottish Government’s own making would be wrong,” she said.