Scots independence: Final farming issues answered

There is less than a week to go until Scotland votes on independence and opinion polls suggest the No and Yes campaigns are neck and neck. Farmers Weekly asked both sides of the debate to answer the fundamental questions that will affect farming. Nancy Nicolson reports.

Q How quickly would Scotland be able to negotiate re-entry into Europe in the event of a Yes vote?

George LyonGeorge Lyon
Better Together chose George Lyon, ex-NFU Scotland president

GL It would be a long and difficult negotiation as the other 28 member states who have the final veto on our membership will insist on Scotland signing up to all rules of the EU club and give up the beneficial terms the UK enjoy (opt out of euro, rebate worth £300m/year). That negotiation brings a danger of the EU CAP funding formula used for past 10 countries to join being applied to Scotland, cutting our SFP by £300m/year.

Carol Douglas

CD Following a Yes vote the Scottish government will enter into negotiations with Westminster and EU member states to ensure a smooth transition to independent EU membership. Scotland will negotiate the terms of membership of the EU during the period we are still part of the UK and, therefore, part of the EU. The UK government’s legal adviser, Prof James Crawford has said in February that the Scottish government’s 18-month transition timetable “seems realistic”.

Carol Douglas
YES campaign nominated Carol Douglas, a member of the Farming for Yes team

Q How would CAP payments be affected in the interim period?

GL We have no idea which parties will make up the new government of an independent Scotland in 2016 or whether they would make farmers’ CAP payments a priority over the many other uncosted promises for extra public spending made by the Yes campaign. That leaves huge uncertainty hanging over farmers’ businesses and it is why farmers are better off staying in the UK.

CD As Scotland would negotiate independent membership of the EU while still part of the UK and the EU, CAP payments would be unaffected during the transition period.

Q Given that the UK government might hold a referendum on EU membership in 2017, is there more likelihood that Scotland would stay part of the EU if it became an independent country.

GL Until the 2015 election we have no idea which party will form the next UK government or what its policies on EU will be. What we do know is the two most powerful EU politicians have said if Scotland leaves the UK, we leave the EU and there would be a long and difficult negotiation to get back in with the likelihood that we would have to give more powers to Brussels and pay more for our membership of the club. That is why we are better off staying in the UK.

CD Yes, the only real risk to Scotland’s membership of the EU is the referendum proposed by the prime minister. A Yes vote means that Scotland will become an independent EU member state before the planned in-out referendum on the EU in 2017. However, if we do not become independent, we risk being taken out of the EU against our will.

Q The most significant markets for Scottish beef, pork and lamb are in England. How would these markets be affected if Scotland split from the UK and became a “foreign country”?

GL The vast majority of Scottish beef, lamb and pork is sold to the rest of the UK. In the first quarter of 2014, Scottish beef farmers enjoyed a premium in the UK market of £243 a head compared with Irish producers. Over the past four years that premium was worth more than £200m to Scotland. Turning ourselves into foreign exporters in 90% of our home market is sheer folly and would put at risk that UK dividend.

CD As part of the EU, Scotland will remain part of the EU single market and will continue to trade with the rest of the UK and the rest of the world as we do now. Consumers elsewhere in the UK will continue to be attracted by the world-class quality of Scottish produce. By sharing sterling with the rest of the UK, trade will continue to be underpinned by a common currency.

Q What would be the effect on Scottish farming of having to switch to the euro or another currency if Scotland is unable to persuade Westminster politicians to change their mind on the country using sterling?

GL Currency is central to the Scottish economy and for farmers’ businesses. The failure of Alex Salmond to tell us what currency we would use if he is wrong about a currency union leaves farmers with huge uncertainty about the value of their produce, their SFP, their overdrafts and savings and the interest rates they would pay. Staying in the UK is only way to keep the stability of the pound and continue sharing the risks through a currency union.

CD The Scottish government has no plans to join the euro. In order to be considered for membership of the eurozone, countries need to choose to voluntarily include their currency in the exchange rate mechanism II and there are no plans for Scotland to do this. No country can be forced to join the euro against its will.

Q Does Scotland stand a better chance of getting a fairer deal on issues such as convergence funding if it
is an independent country?

GL Scottish farmers receive identical CAP payments to Irish, French and other EU farmers as they are based on historic production, not area. As we move into the new area payment system the UK government has promised a review of convergence in 2016 to be implemented in 2017. Similar quality land across UK will then receive similar payments giving Scotland a big lift in payments. Richard Lochhead has admitted an independent Scotland cannot negotiate any uplift in farm payments until the EU budget review in 2020.

CD If Scotland was already independent, our farmers would have been entitled to a €1bn bonus. And had an independent Scotland negotiated a deal similar to Ireland’s, it could have secured an extra €2.5bn in rural development funding between 2014 and 2020 – far more than the €0.5bn we will receive now. This is a clear example of why Scotland needs to be able to speak with its own voice in Europe.

Q Many Scottish farmers and landowners have invested in renewable energy developments that rely on UK subsidies and guarantees on Feed-in Tariffs (Fits). What would happen to these in the event of a Yes vote?

GL Currently 30% of all UK consumer green taxes come to Scotland to fund renewables subsidies, yet we are only 8% of the population. Would English and Welsh consumers continue to subsidise renewables in a foreign country? I doubt it. Would five million consumers in Scotland be willing to pay substantially higher energy prices to fund renewables subsidies? By staying in the UK we keep the single energy market and the benefits that flow to Scotland from it.

CD An independent Scotland will honour all Fits obligations in respect of schemes in Scotland. Indeed if necessary we will seek to improve the system following independence.

We will continue to operate within a GB-wide energy market, which will be in the interests of both countries. A new strategic partnership between our nations will ensure continuity, certainty and stability for industry and consumers while protecting security of supply and meeting environmental obligations.

Q Scottish agricultural research institutes are world-renowned. 
How would funding be affected 
in an independent Scotland?

GL Scottish universities and research institutes do very well out of UK funding, with 13% coming to Scotland – nearly twice our population share. Agricultural research institutes such as the Moredun and the John Hutton are major beneficiaries of UK funding and it seems extremely unlikely that funding would continue to flow north into a foreign country after independence. Staying in the UK is the best way to secure the UK research funding dividend.

CD With independence we will seek to maintain a common research area with the rest of the UK, including existing shared research councils.

The Scottish government continues to fund a substantial portfolio of research at our research centres that is of direct relevance to the agricultural industry. This will continue with independence.

Q In one sentence – will farmers be better or worse off in an independent Scotland?

GL If Scottish farmers want to keep the stability and strength of the pound, a farmer-friendly and relatively moderate tax and fiscal policy, a home market of 63 million consumers and an early solution to convergence giving them a substantial lift in CAP payments, they should say No thanks to independence and Yes to staying in the UK.

CD A Yes vote means the opportunity to significantly increase direct farm payments; substantially increase rural development funding; direct representation in the EU and the ability to negotiate Scotland’s priorities; powers to encourage farm tenancies and new entrants, and ensuring agricultural levies support Scottish produce.

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