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Chamber

Meeting of the Parliament 23 September 2015

23 Sep 2015 · S4 · Meeting of the Parliament
Item of business
Agriculture (Challenges and Opportunities)

I am aware of some of the challenges that are facing many of the farmers in Orkney. I simply assure Liam McArthur that my officials are working on the transportation issues that he has mentioned and on other matters where the Government can help out. Those talks are on-going, and I have asked for an urgent report back on the progress that is being made. Some practical issues have to be ironed out, but I assure Mr McArthur that we are looking closely at the issues.

As Liam McArthur has suggested, the effect of continuous rainfall can be profound: the ground becomes saturated; the grass does not grow; and farmers have to buy in extra feed and straw for their stock. Harvests have been delayed, and we are waiting to see what yields are like and whether the drying costs for wet grain will be higher this year. As I have said, we are working closely with the industry to identify what can be done to help those who have been affected most by the heavy rainfall in Orkney and elsewhere.

Other challenges include the euro-sterling exchange rate, which affects the value of farm payments. In recent years, the exchange rate has resulted in higher payments, which have helped to buffer the impact of additional costs. Last year, however, a combination of the exchange rate and a smaller common agricultural policy budget overall led to support falling by around 12 per cent or £70 million.

We are also having to cope with the wider international economic backdrop. For example, we have heard of the economic challenges in China that might slow down growth. Given that China is a big barometer for world trade conditions as well as a potentially huge market for Scotland, its economic prospects are very relevant to the debate. Moreover, the Russian ban on imports from Europe is having both a direct and an indirect effect on our sectors, including dairy, with produce that normally leaves the EU now remaining in European markets.

Of course, the challenges facing the dairy sector have very much occupied the headlines in recent months. Some of our producers are now receiving some of the lowest prices anywhere for their milk. Efficiency improvements have allowed the sector to increase total milk production by 97 million litres since 2004; unfortunately, however, that has coincided with a global oversupply of milk, and the price for many dairy farmers both in Scotland and elsewhere in Europe has plummeted. The situation here has been compounded by our overdependency on liquid milk rather than added-value products. There are some small signs that international dairy prices may be improving, and Europe has made some extra funding available for milk and meat producers. I will come back to that later.

Times are tough for many other livestock producers; it is not just a dairy issue. Beef prices this year are sluggish, and rising costs in the beef sector over the past 10 years have led to a real-terms fall in the average net farm income of more than £6,000. Early analysis by one group of economists suggests that the decisions that the Scottish Government took to have three payments regions under the new common agricultural policy and to use the maximum amount of coupled support available under the policy will help to keep beef cow numbers up. Therefore, there are some bright spots.

I turn to the sheep sector. At the start of the season, lamb prices were again disappointingly low, partly because of slow growth as a result of poor grass, but there are now some signs of improvement in that sector, too.

On arable land, we will have to wait and see what this year’s harvest will yield and how much that contrasts with last year’s harvest, when the amount of arable land was the highest since 1994 and Scottish farmers produced more than 2 million tonnes of barley and 1 million tonnes of wheat.

With the poor market situation, many farmers face cash-flow problems, so the direct payments that are issued to us every year through the common agricultural policy are particularly important this year. However, as members are well aware, we have to implement the first year of the new common agricultural policy this year, with the biggest reforms in a generation.

In the same item of business

The Deputy Presiding Officer (Elaine Smith) Lab
The next item of business is a debate on motion S4M-14327, in the name of Richard Lochhead, on agriculture, current challenges facing the sector and opportun...
The Cabinet Secretary for Rural Affairs, Food and Environment (Richard Lochhead) SNP
I am very pleased to open this important debate on the opportunities and current challenges facing Scottish agriculture. As we are all aware, agriculture mat...
Liam McArthur (Orkney Islands) (LD) LD
Will the cabinet secretary give way?
Richard Lochhead SNP
I will take an intervention on the subject of Orkney.
Liam McArthur LD
I thank the cabinet secretary for teeing me up so expertly. He will be aware of the on-going discussions between his officials and local representatives in O...
Richard Lochhead SNP
I am aware of some of the challenges that are facing many of the farmers in Orkney. I simply assure Liam McArthur that my officials are working on the transp...
Sarah Boyack (Lothian) (Lab) Lab
Given the huge uncertainty that exists about the payment schedule, can the cabinet secretary confirm the timetable for the delivery of those payments?
Richard Lochhead SNP
If Sarah Boyack will bear with me, I am just coming on to that. By the end of this year, we will have launched or relaunched between 15 and 20 schemes, each...
Alex Fergusson (Galloway and West Dumfries) (Con) Con
The cabinet secretary mentioned the convergence uplift. Does he accept that the UK Government is, as I understand it, still committed to undertaking the revi...
Richard Lochhead SNP
Yes, but my concern remains that that review will take place in 2016-17, which is already too late, and that once it is completed and implemented, we will be...
The Deputy Presiding Officer Lab
I advise members that they must take interventions within their time, because we really are tight for time. 14:55
Sarah Boyack (Lothian) (Lab) Lab
I definitely agree with the cabinet secretary that this has been an incredibly difficult year for our farming communities. The NFUS describes it as a “crisis...
Alex Fergusson (Galloway and West Dumfries) (Con) Con
Like other members, I very much welcome the debate. It is needed, if for no other reason than that I have never known so many farmers in my part of Scotland ...
Claudia Beamish (South Scotland) (Lab) Lab
If Alex Fergusson is concerned about the Scottish Government not waiting for scientific advice, how can he be so positive about the biotechnology industry? G...
Alex Fergusson Con
I want the scientific evidence on the table to back up the ban that has been put in place by the cabinet secretary. We have no such evidence. GM crops have ...
Tavish Scott (Shetland Islands) (LD) LD
It would be unfair to blame Mr Lochhead for the rain, and nor could he in any way be blamed for global weather. However, if the sun had been shining all summ...
Bruce Crawford (Stirling) (SNP) SNP
Will the member give way?
The Deputy Presiding Officer Lab
Very briefly, please.
Bruce Crawford SNP
Does Tavish Scott accept that the European auditors have said exactly the same about almost every country in Europe? There is a common denominator here regar...
The Deputy Presiding Officer Lab
I am afraid that you must close, Mr Scott.
Tavish Scott LD
I agree with that to an extent, but I am concerned about how the approach that the European Commission takes when it meets farming ministers in Brussels is i...
The Deputy Presiding Officer Lab
We come to the open debate. I am afraid that we are extremely short of time. Speeches should be of less than six minutes. 15:18
Rob Gibson (Caithness, Sutherland and Ross) (SNP) SNP
What is agriculture for? Well, we must try to feed Scots. It has been suggested that we must have an agriculture that tries to feed the world, but the world ...
Rhoda Grant (Highlands and Islands) (Lab) Lab
I think that we all agree that the agricultural sector is facing extremely challenging times. Crofters and farmers in the Highlands and Islands were already ...
Richard Lochhead SNP
Does the member accept that one of the reasons—in fact, the key reason—why farmers elsewhere in the UK receive much more per hectare in farm payments than th...
Rhoda Grant Lab
I would always argue for more money to come to Scotland. However, I am talking about the Scottish Government’s distribution of the money. I am asking for tha...
The Deputy Presiding Officer Lab
Order, please.
Rhoda Grant Lab
It is really disappointing that the current consultation on the Scottish Agricultural Wages Board does not allow for the status quo. All the options would wa...
Angus MacDonald (Falkirk East) (SNP) SNP
We have just to take a quick flick through the farming press to see a mixture of headlines: some good, some bad, some dramatic and some extremely worrying. T...
Malcolm Chisholm (Edinburgh Northern and Leith) (Lab) Lab
As a novice in agriculture debates, I found it particularly useful to read “The Future of Scottish Agriculture: a Discussion Document”, which addresses some ...