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Payments row Scottish government minister faces farmers Hardship fund for Scottish farmers hit by CAP funding delays
(about 3 hours later)
Scottish government rural affairs secretary Richard Lochhead is expected to face tough questions about payments to farmers later. Farmers hit by delays to EU payments are to be offered loans from a £20m fund set up by the Scottish government.
The minister is due to address the NFU Scotland annual general meeting in St Andrews. Only about 40% of farmers have received their Common Agricultural Policy (CAP) claims, leading to warnings of a "cash flow crisis" in the industry.
Farmers' representatives have said the industry is facing a cash flow crisis because of delays in the new Basic Payment Scheme (BPS). Rural Affairs Secretary Richard Lochhead announced the fund as he addressed the NFU Scotland annual general meeting in St Andrews.
The government said farmers would be paid as quickly as possible. The union had accused the government of creating a "hole" in the rural economy.
A major change to the EU's Common Agricultural Policy (CAP) meant the Single Farm Payment Scheme was replaced by the BPS. Reforms to the CAP system saw the Single Farm Payment Scheme replaced by the new Basic Payment Scheme (BPS) last year.
IT system Facing hardship
This funding represents the principle EU subsidy to farmers in Scotland and is administered by the Scottish government. But payments have been affected by major issues with the IT system used to administer them, with the Scottish government also saying the challenge of implementing the reforms had been "hugely difficult".
NFU Scotland has said only a third of farmers have been paid. Speaking at the AGM, Mr Lochhead said that more than 7,300 payments had now been authorised, which he said equated to about 40% of the 18,000 eligible claims.
The processing of claims has been affected by major issues with an IT system. He said he recognised that some farmers and crofters were facing hardship as a result of the delays, coupled with bad weather and difficult market conditions.
NFU Scotland president Allan Bowie said: "The worry and stress of not knowing when support streams will start to flow is starting to impact on the health of our hard-working farmers. Mr Lochhead added: "We are making progress. However the extreme complexity of the policy we agreed with industry in Scotland - which is being delivered by a brand new IT system that we are constantly working to improve - means it is taking longer than expected to process applications.
"We need to start seeing movement and delivery before purdah comes into play for May's Scottish Parliamentary elections and the chance to publicly call our politicians to account is lost." "That is why the Scottish government is taking further action to ease cash flow pressures in the sector by earmarking up to £20m to ensure those most in need can access the credit they require until their payments come through.
Answering questions on the issue at Holyrood, First Minister Nicola Sturgeon said: "It is true that processing payments has taken longer than we intended due to the complexities of the new CAP system and we have been open with farmers and with industry about these complexities and what we are doing to address them." "We will work with NFUS, banks and others to finalise the detail of the scheme and ensure it is available as quickly as possible and simple to access."
'Stopped turning'
The BPS is the main EU subsidy available to farmers in Scotland, with the money being allocated by the Scottish government.
The payments are designed to act as a safety net for farmers and crofters by supplementing their main business income.
Scottish Liberal Democrat rural affairs spokesman Tavish Scott said the creation of the hardship fund was an "admission of failure" by the Scottish government.
He said: "Their approach to CAP payments is in utter chaos. Instead of distributing the payments farmers are all due and were promised so long ago, the benevolent cabinet secretary is offering a loan that will have to be repaid.
"Why should farmers take out a government loan when they should be receiving the government farm payment?"
Speaking at the same event on Thursday, NFU Scotland president Allan Bowie said the majority of farmers were still "completely unaware" of when they will receive their CAP payments 20 months on from the cabinet secretary's initial statement on its implementation.
He added: "To date, only a small share of basic payments and greening payments have been made so far and, compared to this time last year, around £440m is outstanding to farmers.
"That is the hole in the Scottish rural economy that Scottish government is responsible for and the reason why the wheels have stopped turning in the Scottish countryside."