Hansard

I welcome the opportunity to speak in the debate on rural affairs. I will use my time to discuss the CAP payments situation and the plight of dairy farmers.

The current situation with CAP payments combined with the spiralling costs of the IT system is nothing short of scandalous. The new IT system was meant to make the process easier and more efficient. Instead, there have been significant delays and a massive increase in cost. It is now expected that the total cost of the system will be around £178 million, which is 74 per cent higher than originally forecast.

The delays have had far-reaching consequences, with many farmers still waiting on their CAP payments. To date, only £100 million has been paid out of the £400 million. The most recent figures tell us that only 7,887 out of a total of 18,300 farmers have received their basic payment. The NFUS states that there is a £365 million financial black hole in Scotland’s rural economy.

A cash-flow crisis for farmers does not just affect farmers but has ramifications for businesses across Scotland. If one part of the chain stops working, the whole of Scotland’s rural economy could grind to a halt, which could have long-term effects on the sector. That is why I support Labour’s call for farmers to be paid as soon as possible. Although I welcome the Scottish Government’s announcement yesterday that it is going to pay out £200 million of Scottish Government funds to ensure farmers get some payments, in my view it is too little too late and, as always, the devil will be in the detail.

The IT problems and delays have been pointed out to the Government time and again, yet nothing was done until yesterday. The situation was entirely avoidable and we need to hear a statement from Richard Lochhead before dissolution, setting out clearly how he will ensure that payments are made on time in 2016-17 and assuring us that the situation will never be repeated. There has been a complete lack of action by the cabinet secretary until, it seems, his hand was forced by today’s debate. He should have been more proactive on the issue and he should have done everything possible to support farmers who are suffering because of this Government’s failure.

Another part of Scotland’s rural economy that is facing an uncertain future is that of the dairy industry. Having spoken about the industry before in the chamber, I will revisit it today as it will be my last chance before I stand down.

Last summer, I saw dairy farmers in Ayrshire protesting in local supermarkets over the price of milk, because they felt that no one was listening to them. When I spoke to dairy farmers in North Ayrshire, they told me that, at present, producing milk is a loss-making business. The situation does not seem to have improved; in fact, it is getting worse.

Yesterday, at a meeting with dairy farmers, we heard that the industry has been in free-fall over the past 12 months. Those who do not have a contract with a big supermarket are forced to sell milk at 14p per litre, with the threat of the price falling even further to 12p in spring. That has already had a huge effect on the 55 dairy farmers in Ayrshire, 15 of whom are looking to sell. Their yearly turnover has been halved and up to £11 million lost from the local economy. The situation needs direct intervention now. The current position is simply untenable, and the industry needs greater support to secure a long-term sustainable future.

The Scottish Government’s dairy action plan was launched last March and predicts that, by 2025, the industry will have increased by 50 per cent. That will not happen unless we get action now. Whoever is in government after the election needs to tackle that head on. For example, a regulatory body could be established for the dairy industry. Further direct intervention by the Government is needed and there has to be greater transparency across the sector. For example, why have milk prices fallen for farmers, yet supermarkets have not reduced the price of milk? We also need to look into the prospect of longer contracts for farmers and retailers to increase security in the industry.

Dairy farmers clearly face cash-flow problems and are at risk of losing their businesses and livelihoods. Given that we are at risk of losing the dairy industry in Scotland, it is time that they were given a helping hand.

That situation, combined with the CAP payment delays and IT issues, has the potential to bring Scotland’s rural economy to its knees, which would have massive consequences, not just for farmers but for all Scottish businesses that depend on the rural sector.

It is time that the Scottish Government stops playing catch-up, admits that mistakes have been made and lays out a plan to make it right. Anything less is a disservice to struggling farmers, not only in Ayrshire but across Scotland.