Height of quality
Height of quality
Scotch whisky, Scotch broth and Scotch eggs. Use the Scottish brand as a mark of quality, urged speakers at the SAC conference. Tom Allen-Stevens reports.
THE future for Scottish growers lies in making the most of the Scottish quality brand. This is the firm belief of Ross Finnie, minister for rural affairs in Scotlands new devolved parliament. Addressing the SAC conference, he reminded delegates that Scotland has a reputation for some of the finest produce in the world, backed up by tight quality assurance schemes, naming Scotch beef and whisky as examples. Yet it is rarely the Scottish farmer who cashes in on this.
"All too often we seem content to generate a high-quality primary product and sell that on to the commodity market without regard to the potential for adding value. This can mean that a substantial part of the final value of Scottish produce is realised outside Scotland."
The Scottish Enterprise Food Strategy, launched in June, is aimed at capitalising on the Scotch brand, but the minister believes that farmers also have a part to play. He describes agriculture as "a bit of a curates egg" when it comes to promoting quality; while there are many farmers who actively promote their good practice and are effective at differentiating their produce, he believes there are still many who are unaware of what type of specification they are required to meet.
Another problem is that there is no clear overall strategy to export the surplus. Scotland produces four times domestic demand, resulting in an industry heavily dependant on the value of its exports. This puts Scottish agriculture in a relatively risky position, especially considering the possibility of a trade war with France who are major importers of Scotch lamb and whisky. This sort of diplomatic breakdown would be extremely costly, Mr Finnie believes, and would undermine prices further.
But it is the low prices that are the root of the problem, and the situation could get worse. Peter Cook, from SACs rural business unit, helped explain to delegates how Agenda 2000 will help to decouple aid payments further; in all sectors, lower prices are to be offset by higher direct subsidy. In the short term he points out that this is not the normal way to get closer to the market. In recent years farmers have become more dependent on subsidy, with no prospect for this trend reversing. If other sectors follow the example set by sheep, the very same primary produce that stands for quality may become a by-product of an industry fed by subsidy, he warns.
Oilseed payments in Scotland under Agenda 2000 will again be higher than other arable area aid payments, delegates at the SAC conference were told. "Early fears that a reduction in the area of oilseeds in Scotland might result from the reductions in the area payments may be unfounded," suggested Sandy Ramsay from SACs rural business unit.
Under Agenda 2000, area aid will be set at k63/t across the board to part compensate a drop of about k18/t in the intervention price (apart from proteins which receive an additional k6.5/t). While being a slight rise for cereals, this represents a massive drop for oilseeds and linseed.
High yields
But the reference yields for Scotland are likely to remain high because Scotland historically produces some of the highest rape yields in Europe. This means growers can expect a future support price of k424/ha, significantly higher than the cereal area aid of just k357/ha. The sector would not suffer produce price cuts because there is no intervention system for oilseeds.
Although the oilseed support price still looks meagre compared to the substantial figure of years gone by, the reference system that varies support price with world oilseed price, is to be removed. Also going will be the system of maximum guaranteed area (MGA) reductions which, Mr Ramsay points out, cost the UK grower 30% of his oilseed payment last year. The MGA system is the vastly unpopular part of the Blair House agreement whereby aid is cut by a cumulative amount if Europe plants too large an oilseed area. All of these changes combined will serve to soften the blow of the apparent cut in direct aid.
Non-LFA Scottish growers will also benefit from the decision taken to combine the less favoured area (LFA) and non-LFA base areas when it comes to working out if there has been a base area overshoot. The base area is the amount of land in a region historically in arable production; an overshoot occurs if more than the base area is actually claimed under AAPS; proportional scale-backs of payments then occur. Scotland non-LFA is currently overshooting by over 6%, while 2% less of the Scotland LFA base area is currently under the arable regime. Mr Ramsay believes future combined overshoots will be of the order of 4%.
The effect on an arable business will be to continue the gloomy bottom line figures, however.