Scotland’s national ceiling (100%) (eg €600m) Flexibility – can transfer up to 15% P1 to P2 and review decision in 2017 but can then only increase the percentage transfer (eg 15% = €90m) Revised Scottish national ceiling (85%) (eg €510m) Mandatory 30% deduction for Greening (eg €153m) Up to 2% mandatory deduction for YF scheme (eg €10.2m) Up to 8% optional deduction for VCS (eg €40.8m) Up to 30% optional French Redistribution Payment. Value depends on other options used. May use 5% for optional P1 ANC support (eg €25.5m) May use up to 10% for small farmer scheme (eg €51m) So 68% of revised Scottish ceiling left for Basic Payments (eg €346.8m) 3% (more if needed) of Basic Payment ceiling for National Reserve (eg €10.4m) €336.4m left for the new Basic Payments Therefore a regional average flat rate in Scotland would be €73.8/ha. If budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG Then final regional flat rates would be: arable = €170.7/ha and RG rate = €12.1/ha Not used Option 1 - mandatory payments only These deductions account for 32% of the revised Scottish national ceiling 90:10 budget split

If BP budget is €336.4m and if budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG, then final regional flat rates would be: arable = €170.7/ha and RG rate = €12.1/ha Farm A (region 1): a 150ha arable farm would get: Basic Payment 150 x = €25,610 (68.7%) Greening payment 150 x 77.7 = €11,648 (31.3%) So total direct payments = €37,258 If Greening budget is €153m and if Greening budget is split 90:10 then Greening regional rate in arable region = €77.7/ha and Greening regional rate in RG region is €5.5/ha At full convergence, using just the mandatory options: Farm B (region 1): a 150ha livestock farm with 50 cattle would get: Basic Payment 150 x = €25,610 (68.7%) Greening payment 150 x 77.7 = €11,648 (31.3%) So total direct payments = €37,258 Farm E (region 2): a 300ha extensive livestock with 50 calves farm would get Basic payment 300 x 12.1 = €3,623 (68.7%) Greening payment 300 x 5.5 = €1,648 (31.3%) So total direct payments = €5,271 Option 1 – At full convergence, mandatory payments only – general effect Farm C (region 1): a 100ha farm with 50 calves would get: Basic payment 100 x = €17,073 (68.7%) Greening payment 100 x 77.7 = €7,765 (31.3%) So total direct payments = €24,839 Farm F (region 2): a 5000ha very extensive sheep farm would get: Basic payment of 5000 x 12.1 = €60,380 (68.7%) Greening payment of 5000 x 5.5 = €27,462 (31.3%) So total direct payments = €87,842 Farm D (region 1): a 50ha farm with 50 calves would get: Basic payment 50 x = €8,537 (68.7%) Greening payment 50 x 77.7 = €3,883 (31.3%) So total direct payments = €12,419

Scotland’s national ceiling (100%) (eg €600m) Flexibility – can transfer up to 15% P1 to P2 and review decision in 2017 but can then only increase the percentage transfer (eg 15% = €90m) Revised Scottish national ceiling (85%) (eg €510m) Mandatory 30% deduction for Greening (eg €153m) Up to 2% mandatory deduction for YF scheme (eg €10.2m) Up to 8% optional deduction for VCS (eg €40.8m) Up to 30% optional French Redistribution Payment. Value depends on other options used. May use 5% for optional P1 ANC support (eg €25.5m) May use up to 10% for small farmer scheme (eg €51m) So 60% of revised Scottish ceiling left for Basic Payments (eg €306m) 3% (more if needed) of Basic Payment ceiling for National Reserve (eg €9.2m) €296.8m left for the new Basic Payments Therefore a regional average flat rate in Scotland would be €65.1/ha. If budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG Then final regional flat rates would be: arable = €150.6/ha and RG rate = €10.7/ha Not used Option 2: Mandatory payments plus VCS These deductions account for 40% of the revised Scottish national ceiling

If €296.8m left for the new Basic Payments and if budgets were split 80:20 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG, then final regional flat rates would be: arable = €150.6/ha and RG rate = €10.7/ha. At full convergence using mandatory options plus VCS option Farm A (region 1): a 150ha arable farm would get: Basic Payment 150 x = €22,597 (66.0%) Greening payment 150 x 77.7 = €11,648 (27.1%) So total direct payments = €34,245 Farm B (region 1): a 150ha livestock farm with 50 cattle would get Basic Payment 150 x = €22,597 (52.6%) Greening payment 150 x 77.7 = €11,648 (27.1%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (20.3%) So total direct payments = €42,945 Farm E (region 2): a 300ha extensive livestock with 50 calves farm would get Basic payment 300 x 10.7 = €3,197 (23.6%) Greening payment 300 x 5.5 = €1,648 (12.2%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (64.2%) So total direct payments = €13,544 VCS front loaded on first 40 calves so €200/calf for first 40 and then €70/calf for subsequent calves. Option 2: At full convergence, mandatory payments plus VCS – general effect Farm C (region 1): a 100ha farm with 50 calves would get: Basic payment 100 x = €15,064 (47.8%) Greening payment 100 x 77.7 = €7,765 (24.6%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (27.6%) So total direct payments = €31,530 Farm F (region 2): a 5000ha very extensive sheep farm would get: Basic payment of 5000 x 10.7 = €53,277 (66.0%) Greening payment of 5000 x 5.5 = €27,432 (34.0%) So total direct payments = €80,739 If Greening budget is €153m and if Greening budget is split 80:20 then Greening regional rate in arable region = €77.7/ha and Greening regional rate in RG region is €5.5/ha Farm D (region 1): a 50ha farm with 50 calves would get: Basic payment 50 x = €7,532 (37.4%) Greening payment 50 x 77.7 = €3,883 (19.3%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (43.3%) So total direct payments = €20,115

Scotland’s national ceiling (100%) (eg €600m) Flexibility – can transfer up to 15% P1 to P2 and review decision in 2017 but can then only increase the percentage transfer (eg 15% = €90m) Revised Scottish national ceiling (85%) (eg €510m) Mandatory 30% deduction for Greening (eg €153m) Up to 2% mandatory deduction for YF scheme (eg €10.2m) Up to 8% optional deduction for VCS (eg €40.8m) Up to 30% optional French Redistribution Payment. Value depends on other options used. (In this instance : €54.1m) These deductions could account for 50.6% of the revised Scottish national ceiling. (50.6% deductions = €258.1m) So 49.4% of revised Scottish ceiling left for Basic Payments (eg €251.8m) 3% (more if needed) of Basic Payment ceiling for National Reserve (eg €7.55m) €244.3m left for the new Basic Payments Therefore a regional average flat rate in Scotland would be €53.6/ha. If budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG Then final regional flat rates would be: arable = €124.0/ha and RG rate = €8.8/ha May use 5% for optional P1 ANC support (eg €25.5m) May use up to 10% for small farmer scheme (eg €51m) Not used Option 3: Mandatory payments plus VCS plus Redistributive payments

€248.2m left for the new Basic Payments. If budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG Then final regional flat rates would be: Arable = €124.0/ha and RG rate = €8.8/ha If Greening budget is €153m and if Greening budget is split 80:20 then Greening regional rate in arable region = €77.7/ha and Greening regional rate in RG region is €5.5/ha VCS front loaded on first 40 calves so €200/calf for first 40 and then €70/calf for subsequent calves. At full convergence using mandatory options plus VCS plus redistributive option French redistributive payment 65% top up of regional average on first 54 hectares, so Arable Region top up = €80.6/ha and RG region top up is €5.7/ha Farm A (region 1): a 150ha arable farm would get: Basic Payment 150 x = €18,598 (53.8%) Greening payment 150 x 8.8 = €11,648 (33.7%) Redistributive payment = 54 x 80.6 = €4,352 (12.6%) So total direct payments = €34,597 Farm B (region 1): a 150ha livestock farm with 50 cattle would get Basic Payment 150 x = €18,498 (43.0%) Greening payment 150 x 8.8 = €11,648 (27.0%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (20.1%) Redistributive payment = 54 x 80.6 = €4,352 (13.1%) So total direct payments = €43,297 Farm E (region 2): a 300ha extensive livestock with 50 calves farm would get Basic payment 300 x 8.8 = €2,631 (19.8%) Greening payment 300 x 5.5 = €1,648 (12.4%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (65.5%) Redistributive payment = 54 x 5.7 = €308 (2.3%) So total direct payments = €13,286 Option 3: At full convergence, mandatory payments plus VCS plus Redistributive payments – general effects Farm C (region 1): a 100ha farm with 50 calves would get Basic payment 100 x = €12,398 (37.3%) Greening payment 100 x 8.8 = €7,765 (23.4%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (26.2%) Redistributive payment = 54 x 80.6 = €4352 (13.1%) So total direct payments = €33,216 Farm F (region 2): a 5000ha very extensive sheep farm would get: Basic payment of 5000 x 8.8 = €43,847 (61.2%) Greening payment of 5000 x 5.5 = €27,462 (38.3%) redistributive payment = 54 x 5.7 = €308 (0.4%) So total direct payments = €71,616 Farm D (region 1): a 50ha farm with 50 calves would get: Basic payment 50 x = €6,199 (27.2%) Greening payment 50 x 8.8 = €3,883 (17.0%) VCS = 40 x €200/calf + 10 x €70/calf = €8,700 (38.1%) Redistributive payment = 50 x 80.6 = €4,029 (17.7%) So total direct payments = €22,811

Scotland’s national ceiling (100%) (eg €600m) Flexibility – can transfer up to 15% P1 to P2 and review decision in 2017 but can then only increase the percentage transfer (eg 15% = €90m) Revised Scottish national ceiling (85%) (eg €510m) Mandatory 30% deduction for Greening (eg €153m) Up to 2% mandatory deduction for YF scheme (eg €10.2m) Up to 30% optional French Redistribution Payment. Value depends on other options used. (In this instance : €61.3m) Option 4: Mandatory payments plus Redistributive payments (no VCS) May use 5% for optional P1 ANC support (eg €25.5m) May use up to 10% for small farmer scheme (eg €51m) Not used Up to 8% optional deduction for VCS (eg €40.8m) These deductions come to 44% of the revised Scottish ceiling So 56% of the revised Scottish ceiling left for basic payments (eg €285.4m) 3% (more if needed) of Basic Payment ceiling for National Reserve (eg €8.6m) €276.9m left for Basic Payments Therefore a regional average flat rate in Scotland would be €60.7/ha. If budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG Then final regional flat rates would be: arable = €140.5/ha and RG rate = €9.9/ha

Option 4: Mandatory payments plus Redistributive payments (no VCS) general effects €276.9m left for the new Basic Payments. If budgets were split 90:10 arable:RG with 1.77m ha of arable/TG/PG and 2.78m ha RG Then final regional flat rates would be: arable = €140.5ha and RG rate = €9.9ha French redistributive payment 65% top up of regional average on first 54 hectares, so Arable Region top up = €91.3/ha and RG region top up is €6.5/ha At full convergence using mandatory options plus redistributive option (no VCS) Farm A (region 1): a 150ha arable farm would get: Basic Payment 150 x = €21,077 (56.0%) Greening payment 150 x 77.7 = €11,648 (30.9%) Redistributive payment = 54 x 91.3 = €4,932 (13.1%) So total direct payments = €37,657 Farm B (region 1): a 150ha livestock farm with 50 cattle would get Basic Payment 150 x = €21,077 (56.0%) Greening payment 150 x 77.7 = €11,648 (30.9%) Redistributive payment = 54 x 91.3 = €4,932 (13.1%) So total direct payments = €37,657 Farm E (region 2): a 300ha extensive livestock with 50 calves farm would get Basic payment 300 x 9.9 = €2,982 (59.9%) Greening payment 300 x 5.5 = €1,648 (33.1%) Redistributive payment = 54 x 6.5= €349 (7.0%) So total direct payments = €4,978 Farm C (region 1): a 100ha farm with 50 calves would get Basic payment 100 x = €14,051 (52.5%) Greening payment 100 x 77.7 = €7,765 (29.0%) Redistributive payment = 54 x 91.3 = €4,932 (18.4%) So total direct payments = €26,749 Farm F (region 2): a 5000ha very extensive sheep farm would get: Basic payment of 5000 x 9.9 = €49,693 (64.1%) Greening payment of 5000 x 5.5 = €27,462 (35.4%) redistributive payment = 54 x 6.5 = €349 (0.5%) So total direct payments = €77,504 If Greening budget is €153m and if Greening budget is split 80:20 then Greening regional rate in arable region = €77.7/ha and Greening regional rate in RG region is €5.5/ha Farm D (region 1): a 50ha farm with 50 calves would get: Basic payment 50 x = €7,026 (45.4%) Greening payment 50 x 77.7 = €3,883 (25.1%) Redistributive payment = 50 x 91.3 = €4,567 (29.5%) So total direct payments = €15,475

Farm A (region 1) : a 150ha arable farm Option 1 Mandatory payments only Option 2 Mandatory payments + VCS Option 3 Mandatory + VCS + Redistributive Farm B (region 1): a 150ha livestock farm with 50 calves Farm C (region 1): a 100ha livestock farm with 50 calves Farm E (region 2): a a 300ha extensive livestock with 50 calves Farm F (region 2): a 5000ha very extensive sheep farm €37,258 (248.4/Ha) €24,839 (248.4/Ha) €5,271 (17.6/Ha) €87,842 (17.6/Ha) €34,245 (228.3/Ha) €42,945 (286.3/Ha) €31,530 (315.3/Ha) €13,544 (45.1/Ha) €80,739 (16.1/Ha) €34,597 (230.6/Ha) €43,297 (288.6/Ha) €33,216 (332.1/Ha) €13,286 (44.3/Ha) €71,616 (14.3/Ha) Comparison of relative positions at full convergence (based on 90:10) assumptions set out in earlier diagrams) Opt 4: Mandatory + Redistributive €37,657 (251/Ha) €4,978 (16.6/Ha) €77,504 (15.5/Ha) Farm D (region 1): a 50 ha livestock farm with 50 calves €15,475 (309.5/Ha) €22,811 (456.2/Ha)€20,115 (402.3/Ha) €12,419 (248.4/Ha) €37,657 (251.0/Ha) €26,749 (267.5/Ha)

Farm A (arable region) : 150ha Arable farm: does best under mandatory payments only because it receives share of largest possible pot before optional deductions French is less good than VCS option because deduction is higher Does worst under French plus VCS because its 150ha means it loses more than it gains from French redistributive payment Farm B (arable region): 150ha livestock farm with 50 calves: Does best under mandatory plus VCS because it is maximising return from the VCS deduction Next best under mandatory plus French. Note its 150ha means it loses more than it gains from the French redistributive payment Worst under mandatory payments only because it doesn’t get any top ups Farm C (arable region): 100ha livestock farm with 50 calves: Does best under mandatory plus French redistributive payment (despite being over 54ha it still gains overall from the redistribution) Next best is mandatory plus VCS Does worst under mandatory payments only because it doesn’t get any top ups Farm E (RG region): extensive sheep farm: Does best under mandatory payments only because it receives share of largest possible pot before optional deductions Does least well under the mandatory plus VCS plus French redistributive because it is losing funding to the deductions and loses more than it gains from the redistribution Farm F: (RG region): very extensive sheep farm: Does best under mandatory payments only because it receives large share of the biggest possible pot before the deductions for optional schemes Does least well under the mandatory plus VCS plus French redistributive because it is losing funding to the deductions and loses more than it gains from the redistribution Note Greening payment to farm E is in most options, more than total payment to Farms A-D What does it all mean (80:20)? Greening: Greening Lowest percentage of total payments for Farm D under mandatory + VCS and under mandatory + VCS + French Greening highest percentage of total payments for Farm F under mandatory + VCS + French