CAP conference – Interpretation and Thematic Analysis 17 April 2013 RURAL AND ENVIRONMENT SCIENCE AND ANALYTICAL SERVICES (RESAS)

Contents: 1.Introduction and Definitions 2.Interpreting the summary slides 3.Thematic Analysis – Initial Findings 4.Next Steps

Section 1: Introduction and Definitions

Introduction - Ceilings / Budgets Basic Payment Ceiling + Greening Regional CeilingsLand in RegionRegional Rate /ha

Definitions – Regions (1) Farm Level vs Parish Level Arable Permanent Grass Rough Grazing

Definitions – Regions (2) Farm Level vs Parish Level Parish A Parish B

Definitions – Land Land = total eligible area held by farmers activating 2011 SFPS entitlements (just under 4.6m hectares)

Assumptions Direct payments ceiling is total value of all entitlements used in 2011 plus the Scottish Beef Calf Scheme (671m) Greening payments are on the same regional area basis as the Basic Payment Scheme - all farms get the full Greening payment Zero-sum game – total amount of money stays the same but is paid on area basis –trade-offs are therefore inevitable.

Summary of Scenarios: Regions Criteria for Setting Ceilings HistoricEconomic Weighted Land 90:10 Production Weight Environmental Weight 1Farm Level LCA 1a n/a 2Farm Level LCA 1b n/a 3Farm Level LCA 1c n/a 4Farm Level LFA n/a 5Farm Level Land Type n/a 6Parish LCA 1a n/a 7Parish LCA 1b n/a 8Parish Historical SFPS n/a 9Parish Land Type n/a

Keiths presentation: Regions Criteria for Setting Ceilings HistoricEconomic Weighted Land 90:10 Production Weight Environmental Weight 1Farm Level LCA 1a n/a 2Farm Level LCA 1b n/a 3Farm Level LCA 1c n/a 4Farm Level LFA n/a 5Farm Level Land Type n/a 6Parish LCA 1a n/a 7Parish LCA 1b n/a 8Parish Historical SFPS n/a 9Parish Land Type n/a

Summary Pack/ Thematic Analysis: Regions Criteria for Setting Ceilings HistoricEconomic Weighted Land 90:10 Production Weight Environmental Weight 1Farm Level LCA 1a n/a 2Farm Level LCA 1b n/a 3Farm Level LCA 1c n/a 4Farm Level LFA n/a 5Farm Level Land Type n/a 6Parish LCA 1a n/a 7Parish LCA 1b n/a 8Parish Historical SFPS n/a 9Parish Land Type n/a

Section 2: Interpreting the Summary Packs

Regions and Scenario Rates (1)Shows the regions (2)Shows an illustrative rate that would be paid in the region (3)We do not yet know the total budget for direct payments in Scotland so rates will change (4)It is the difference between the rates that is important for considering regions Interpreting the summary pack (1) Commentary Presents : (1)total gains and losses compared to current payment (2) if the gains and losses tend to be large (>20%) or small (<20%) for individual businesses (3)how the scenario compares against the other sectors/ regions in Scottish agriculture

Interpreting the summary pack (2) Count of businesses within a size band are shown on the left The total increases and decreases (m) for business in size band are shown on the right Number of businesses in a size band remains the same – it is the difference between the increases and decreases that matters

Interpreting the summary pack (3)

Interpreting the summary pack (4) Charts show counts/amounts (m) of increases and decreases for Farm Types and Agricultural Regions The sector/region with the largest net increase is shown at the top of the chart down to the sector/ region with the biggest net decrease at the bottom We havent shown % changes – be aware that results for smaller regions/ sectors may look less significant than they are

Section 3: Thematic Analysis – Initial Findings

Thematic Analysis – Initial Findings Draws out some initial findings/ common themes across the 30 scenarios Results have been broken down by: 1.Farm Types (23) 2.Size class (ha) 3.Agricultural Regions (14) 4.High Nature Value farms

Defining Farm Types Farm Type rules - (>2/3rds Gross Margins from relevant set of agricultural activities) HNVF indicator (LFA Cattle and Sheep Farms with >70% Rough Grazing stocked at <0.5 LSU/ha)

Farm Types with net increases Compared to 2011 all 30 scenarios give more money to the following farm types: – Specialist Sheep (SDA); – Cattle and Sheep (Lowland); – Specialist Poultry; and – Horticulture. All scenarios give more money to farms covered by the HNVF indicator

Farm Types with net decreases Compared to 2011 all 30 scenarios give less money to the following farm types: – Cropping, Cattle and Sheep; – Dairy (LFA & Lowland); – Farms that cannot be classified in a sector (fallow and other); – Mixed Livestock; – Cropping and Dairy; and – Specialist Pigs.

Comparison across two biggest sectors (1) All scenarios give more money to Beef than Sheep (2) Big differences for sheep – the amounts are almost double when comparing best & worst scenarios (3) Balance of money between Beef and Sheep varies widely across the scenarios

Specialist Sheep (SDA) & Mixed Cattle and Sheep (SDA) Compared to 2011 all 30 scenarios give more money to these farm types. The best scenarios for Specialist Sheep and Mixed Cattle and Sheep tend to be the best for HNV farms.

Specialist Sheep Generally large increases for sheep farms across scenarios but … …still some reduction in payments for individual specialist sheep businesses

Specialist Beef (1) Most scenarios allocate less money to this sector Production orientated budget ceilings best Top 3 scenarios for Specialist beef also favour cattle and sheep (DA); dairy farms and smaller sized businesses.

Specialist Beef (2) Compared to 2011 payments all scenarios result in big within sector increases and reductions

Dairy All scenarios give less money to the sector compared to 2011 Reductions tend to be smaller than for the beef sector Top 3 scenarios for Dairy are also good for Dumfries and Galloway, Ayrshire and Orkney.

Cereals Economic (Standard Output) ceilings benefit this sector Top 3 Scenarios for this sector benefit farms under 250ha Scenarios that benefit cereals tend to see more money in North East Scotland; Fife; and Lothian.

Farm Size (Ha) – Small The majority of the scenarios increase total payments to farms <50ha Total changes are relatively small: (Max approx 7m) (Min approx -6m)

Farm Size (Ha) – Medium All scenarios produce net reductions for medium sized farms Individual businesses will face increases or losses

Farm Size (Ha) – Large Large Farms do well under every scenario A lot of money moved to larger farms in most scenarios Individual businesses will face increases or losses

Agricultural Regions Only a few scenarios result in more money going to the North East of Scotland and Dumfries and Galloway Most scenarios are good for Highland, Eileanan an Iar and Tayside Tayside – two main reasons for increases: – gains for Sheep/ Cattle and Sheep businesses; and – additional gains in General Cropping in the economic/ production orientated scenarios

Whats next? Identify front runners (next month) Commence more detailed analysis: – Other aspects of CAP payments (e.g. coupled payments; French redistributive analysis) – Farm business analysis – Farmers response (SRUC/ JHI survey) – Economic & Environmental Impacts