Ross Finnie, the rural development minister with the Scottish Executive, has said 19,279 producers – representing 91% of all claims – have now received their first instalment of their single farm payment.

Mr Finnie was speaking at NFU Scotland’s annual general meeting in St Andrews.

He added to date almost £296 million has been paid, which amounts to over 75% of the funds available, excluding the national reserve.

Mr Finnie, who has been in charge of rural affairs in Scotland for almost seven years, said during that time built up a good rapport with farmers.

“Over the years we have developed a totally different relationship between the industry and the Executive and it is now very much more positive.

“At first I sensed that every farmer thought his neighbour was a competitor, but now they have come to regard Holland, Denmark, New Zealand and other countries as the real opposition.

“The result is that there is now a much more collaborative approach within the industry,” he said.

In his address to the delegates the minister stressed the importance of farming to the Scottish food industry.

He said: “Agriculture remains a traditional cornerstone of the rural economy employing directly nearly 5% of the rural workforce as well as supporting many others.

“Moreover, farming has very important links with two of Scotland’s biggest industries, namely food and drink and tourism. As primary producers, you provide 36% of the total inputs to our food industry.

“As custodians of the countryside, you are responsible for maintaining almost 80% of the land, creating the landscape that is so vital, not least for attracting tourists.”

However, Mr Finnie also pointed out that the differential between the top 25% of producers and the 25% at the bottom end of the scale was increasing.

The fact is that in recent years the net income of the top segment of producers has fallen by 11%, but that incomes for the bottom 25% have declined by 134% leaving those farmers with two options – either they get out while they still have some capital, or take immediate steps to improve their performance.

Five years ago Mr Finnie launched a “Forward Strategy for Scottish Agriculture,” which was well received by the industry and acted upon. Last week he launched an updated version.

“The first goal is to help primary producers to work better and more closely with food processors, retailers and the food service sector to identify, inform and meet market demand.

“This means developing very different relationships up and down the food chain. It means working together, to understand and to meet customer demands – and it means working together to negotiate better deals,” said Mr Finnie.

The minister also announced that he intends to retain the Less Favoured Area Support Scheme (LFASS), which is worth over £60 million annually to Scotland’s hill and upland farmers.