Submission

Date                                          : 3 September 2014

To                                          : Scottish Affairs Committee – Our Borderlands - Our Future inquiry

From                                          : NFU Scotland

Direct dial                            : 0131 472 4182

E-mail address                            : clare.slipper@nfus.org.uk

OUR BORDERLANDS – OUR FUTURE

NFU SCOTLAND RESPONSE

Introduction

1. NFU Scotland welcomes the Scottish Affairs Committee’s inquiry looking into local democracy, livelihoods and economies of the South of Scotland.

2. As Scotland’s premier farming lobby, NFU Scotland represents over 8,500 farmers and crofters across the country. Nearly 2,000 of our members are from the South Scotland regions of Dumfries and Galloway and Lothian and Borders.

3. Rather than giving recommendations on how changes to devolved functions might impact the South of Scotland, NFU Scotland’s response to the Committee’s inquiry focuses primarily on the key challenges and opportunities facing our members in the South Scotland region who are working in the agricultural sector.

Context

4. Some 75% of Scotland’s land mass is under agricultural production, making the industry the single biggest determinant of the landscape we see around us. Scotland’s farmers, crofters and growers produce output worth around £2.3 billion a year, and are responsible for much of Scotland’s £400 million food exports, rising to £2.4 billion if whisky exports are included.

5. Around 65,000 people are directly employed in agriculture in Scotland – this represents around 8% of the rural workforce and means that agriculture is the third largest employer in rural Scotland after the service and public sectors. It is estimated that a further 250,000 jobs (1 in 10 of all Scottish jobs) are dependent on agriculture.

6. In Dumfries and Galloway, around 12 per cent of the region’s workforce are employed in agriculture, and in the Scottish Borders the figure is around 8 per cent[1]. However, the supportive industries related to agriculture account for significant amounts of upstream and downstream jobs due to these region’s reliance on agriculture as a primary industry.

7. Overall, the agricultural industry contributes 1.4 per cent to Scotland’s annual GDP. In Dumfries and Galloway, the agricultural sector makes up 23 per cent of the region’s GDP. In addition to this, the food and drink sector accounts for 34 per cent of regional exports. These figures emphasise the importance of agriculture and associated industries to the regional economy.

8. In the Scottish Borders, 80 per cent of the land is used for agricultural purposes. The region is home to 2,511 agricultural holdings, which contain 132,000 cattle – 7 per cent of Scotland’s cattle population, and 1.13 million sheep – the highest population of sheep within the regions of Scotland. In addition, Scottish Borders farms produce 21 per cent of the national wheat output, and 8.5 per cent of beef cattle.

9. Since 2010, the European Commission has negotiated major reforms to the system for agricultural support, the Common Agricultural Policy. The culmination of these reforms has seen the movement of support payments away from production to an area-based system which is based upon land classifications. This new system will be implemented from 2015 through to 2019. These changes to the system of agricultural support will have ramifications for NFU Scotland members across the Borderlands who are facing significant cuts to their levels of direct support.

10. It has been largely acknowledged that the many millions of pounds that will no longer enter the region’s economy from 2015 will have significant implications for the economy of South Scotland. Loss of investment in the region will impinge upon the business of tradesmen, shopkeepers and cooperatives in business, and threaten the viability of lively market towns – not to mention upstream and downstream agricultural employment such as abattoirs, markets, haulage businesses and consultancy businesses, to name a few.

11. It is understood that net losses in regional income following the recent round of CAP reforms will amount to €18.1 million in Dumfries and Galloway and €8.1 million in the Scottish Borders, from the period 2011-2019[2].

Issues to overcome

12. The inquiry document asks how the UK Government can work with Scottish and EU counterparts in order to benefit the south of Scotland. From an agricultural perspective, a key concession from the UK Government would be to re-assess recent decision-making within Defra on the allocation of CAP budget convergence monies.

13. If Scotland had been awarded 100 per cent of the €230 million convergence monies in the UK Government decision at the end of 2013, it would have allowed Scotland access to an extra €11 million in 2014, rising to an extra €64 million in 2019. Clearly, this would go some distance in making up some of the significant losses that will be incurred by the regions detailed above.

14. Abattoir closures, in the Scottish Border region in particular, have also had concerning impacts on the agricultural industry in the region. As well as exacerbating rural unemployment, local closures significantly increase the distance farmers have to travel to abattoirs. Clearly, this results in an increase in food miles which also has implications for animal welfare and the environment.

15. Similarly, in the Scottish Borders, there is now just one auction mart (John Swan, Newton St Boswells). Butchers have to pay a higher cost to stock local produce and this in-turn is passed on to the consumer, who may choose to shop at larger supermarkets to the detriment of local butchers as well as regional livestock producers.

16. Rural youth unemployment is not a problem unique to the Scottish Borders and Dumfries and Galloway, although is relatively higher in relation to the urbanised local authority regions in the central belt. Unemployment amongst young people aged 16-24 is 1.4 per cent and 1.25 per cent in Dumfries and Galloway and the Scottish Borders respectively[3]. Issues of rural unemployment are intensified by poor transport links East to West across the region. There is very little or no public transport linking rural locations such as farms to towns and urban centres which makes it virtually impossible to take on a young apprentice unless they can drive themselves. Improved road and transport links could also assist trade between the two regions.

Looking ahead

17. It is essential that agriculture’s pivotal and sustainable role in the regions of South Scotland is recognised by all the legislative structures; the UK and Scottish Governments as well as local authorities and local bodies. Investment in productive agriculture creates jobs and supports incomes, and as a consequence sustains rural communities as well as Scotland’s beautiful and unique landscapes and environments. NFU Scotland welcomes any opportunity to work with these bodies to find and suggest ways new revenue streams could be opened up in the region to better support the agricultural industry and agricultural workers as the ‘custodians of the countryside’.

18. Direct investment (Pillar 2) and support (Pillar 1) into agriculture, with links to food processing and marketing, can give the South of Scotland a real platform for prosperity, with other sectors – tourism, to give one example – benefitting as a result.