Ex-Post Evaluation of the Scottish Rural Development Programme ( ) Prepared for the Scottish Government

Transcription

1 Ex-Post Evaluation of the Scottish Rural Development Programme ( ) Prepared for the Scottish Government Submitted by: SAC Commercial Limited West Mains Road Edinburgh EH9 3JG Telephone: 44 (0) Fax: 44 (0)

2 S1. Executive Summary S1.1. Introduction The Scottish Rural Development Programme (SRDP) (2000 to 2006) was the national manifestation of the EU Rural Development Regulation 1257/1999. This Regulation, together with its subsequent implementing legislation, was a major vehicle for putting into effect the reforms to the Common Agricultural Policy (CAP) flowing from Agenda Under EC Regulation 1257/99 and 817/2004 there is a requirement for reporting expost on the performance of the RDP within candidate countries. In addition, a set of prescribed Common Evaluation Questions (CEQs) need to be answered to fulfil the needs of the evaluation. The Scottish Executive 1 adopted three of the chapters offered by the RDP, namely:- Less Favoured Areas & Areas with Environmental Restrictions (Chapter 5) Agri-environment (Chapter 6) Forestry (Chapter 8) A weakness of the SRDP was its narrowness of scope. The SRDP was developed during the time of Scottish Devolution. Consequently, there were heavy demands on resources at the inception of the SRDP which led to this narrowness. Other chapters have been adopted domestically over the same period. However, this ex-post evaluation has the task of evaluating the three chapters in isolation of other chapters adopted domestically. S1.2. Context Agriculture seems to have benefited the most from the SRDP, with LFA support scheme payments gaining the largest share of monies, of around 60 million annually. Table S1.1 shows the cumulative payments under the main schemes of the SRDP on an annual basis. Table S1.1. Payments for individual schemes within the SRDP, nominal LFASS 61,332,956 63,875,015 62,186,908 60,711,582 60,742,610 60,457,157 CPS 7,789,087 5,651,814 5,041,979 4,203,943 3,931,213 4,052,489 RSS 3,154,566 10,384,478 11,303,540 12,890,442 20,848,230 ESA 7,762 9,271,705 10,755,572 9,634,413 8,059,457 6,235,508 OAS 4,439,810 5,172,395 3,596,974 2,002,523 1,129,392 LMCM 14,581,127 FWPS 3,251,336 5,038,121 5,802,194 5,307,829 5,117,239 5,101,269 FWS 264, , , , , ,185 Source: Scottish IACS Payment Database 1 The Scottish Executive is now commonly known as Scottish Government. However, at the time of the SRDP it was known as the Scottish Executive. 2

3 Clearly, it reveals the bulk of spending that has been directed towards LFASS. In the final year, LFASS constituted around 56% of total agricultural payments, and 54% of total agricultural and forestry payments. The rural economy in Scotland is much broader than the agricultural or forestry sectors. The majority of chapters offered by the EC have an agricultural bias, but some elements of the RDP which were not adopted could have offered more employment and income opportunities in rural areas. Other chapters have been adopted under domestic funds, although these programmes are small compared to the SRDP. Nevertheless, a large part of Scottish agricultural land is composed of rough grazing and, hence, livestock producers in traditionally challenged areas compose a substantial part of Scotland s rural community. This land has non-market benefits worth more than standard market returns. Hence, it provides a basis for meeting agri-environmental goals. The SRDP constitutes a step-change with respect to forestry in that for the first time grant aid was given to forest owners who were not farmers. Until then, the only schemes covered by European support were those relating to farm forestry. S1.3. Methodology A similar methodology to that adopted by DTZ(2003) for the mid-term evaluation (MTE) was used. Information was gathered from contextual statistics, administrative records and from primary sources. Techniques for primary data collection included semi-structured interviews and a web-based survey with stakeholders, as well as focus groups in four Scottish parishes, with different mixes of SRDP scheme payments, to understand responses to the SRDP at a beneficiary level. Evidence collection was organised on a scheme-by-scheme basis, with the case study groups focusing on the interactions between elements of the RDP. The methodologies employed for each element of the research are briefly elaborated below. LFASS This was answered using secondary administrative data sources, namely Integrated Administration and Control System (IACS) Payment Data, and June Agricultural Census (JAC) data and Farm Account Service data. In addition, a survey and results of analysis conducted by Schwarz et al. (2007) was used as a basis to answer several of the CEQs in this section. Agri-Environmental Schemes The evaluation used a number of secondary sources, predominantly IACS management measures data and June Agricultural Census (JAC) data on land use. In addition, SEPA water quality monitoring data and IACS field data were used to establish boundaries and areas under particular designations. The main source for understanding impacts was Boatman et al. (2008), who provide an up to date and comprehensive review of agri-environmental scheme measures. Results were available from monitoring of the ESA scheme, published in However, it is regrettable that monitoring results were not available to the team for RSS and CPS schemes (these will be published in 2009). Forestry Schemes The evaluation used the Forestry Commission s Grants Databases, supplemented where necessary with data from a number of other sources. Carbon sequestration was estimated by reference to 3

4 Dewar and Cannell (1992), Bateman and Lovett (2000) and Broadmeadow and Matthews (2003). Woodland employment was estimated by reference to the most recent census of forest employment. Cross-Cutting Secondary data, mainly population statistics and results from the 2007 EU Farm Structure Survey were used to answer specific questions. In addition, to supplement the use of secondary data some primary data were collected. Focus groups within four diverse parishes were conducted with members of the rural community. In addition, a web-based survey was administered to advisors and consultants to understand how the SRDP process was perceived. S1.4. Conclusions Conclusions can be made both on the individual schemes within the SRDP and the SRDP as a whole. S1.4.1.Conclusions in relation to individual RDP schemes S Main Findings for Less Favoured Area Support Scheme (LFASS) An average of 60 million a year has been paid through LFASS during the 2000 to 2006 period. The belief that LFASS will fund rural development is referenced a number of times in the ex-ante document to the SRDP. Questions from the Commission focus on the extent to which LFASS payments compensate for the higher costs and lower production potential in Less Favoured Areas. This evaluation found no evidence to suggest that LFA farmers have been fully compensated by LFASS payments for these production handicaps. However, this result must be treated with care as it is based on an average LFA farm, when there are high degrees of variability, even within specialist sub-categories, of LFA farming. There is no evidence of land abandonment and the primary data analysis reinforced the belief that LFASS has helped to sustain producers on marginal land. Alterations to the LFASS payment to achieving environmental goals is perhaps an acknowledgement that LFA land offers non-market values, but also encompasses a social dimension, by incorporating a parish fragility index (which indicates peripherality relative to agriculture markets). However, the actions to achieve environmental goals, principally through limits on stocking densities and, hence reducing grazing pressure, may clash with the aims of the agri-environmental schemes, which found mixed results from grazing density restrictions. Consequently, in terms of environmental improvement, the LFASS lacked any regional targeting and did not account for intensity of land cover or richness of vegetation, or sward, within the land to be grazed. 4

5 S Summary of Common Evaluation Questions for Less Favoured Area Support Scheme To what extent has the scheme contributed to: (i) offsetting the natural handicaps in LFAs in terms of high production costs and low production potential, and: (ii) compensating for costs incurred and income foregone in areas with environmental restrictions? Comparing current LFA cattle and sheep farms with their lowground cattle and sheep counterparts indicates some production disadvantage experienced by LFASS farms. LFASS payments seem to be compensating for some of this disadvantage but very few LFA farmers have been fully compensated for the production handicaps they face. To what extent have compensatory allowances helped in ensuring continued agricultural land use? LFASS seems to have contributed to maintaining total agricultural land area and also negated some of the threat of reduced stocking in fragile areas. To what extent have compensatory allowances contributed to the maintenance of a viable rural community? LFA farming provides upstream and downstream benefits. Those LFA farms which are in more remote regions demonstrate closer links with the community than those nearer urban regions, inferring some relationship between LFA farms and the socioeconomic maintenance of rural areas. To what extent have compensatory allowances contributed to the fair standard of living for farmers? There are differences across regions and by farm type when measuring standard of living. However, LFA Cattle and Sheep farm households seem to be at the most disadvantage when compared to average rural family households. To what extent has the scheme contributed to the protection of the environment by maintaining or promoting sustainable farming that takes account of environmental protection requirements in LFAs? The LFA support scheme has changed over the 6-year period to encompass some environmental goals. Setting limits to stocking densities (at 1.4LU/ha) helps to promote biodiversity by reducing grazing pressure. In addition, there is a requirement to agree to good farming practice guidelines. S Main Findings for Agri-Environmental Schemes The main observation is the lack of an approach which considers the wholefarm. Agri-environmental measures funded support on discrete blocks of land, with no consideration towards joining up measures on a whole-farm basis. A very rough average of 14% of a farm s land is dedicated to some agri-environmental measures. Some evidence of a cohesive approach was the requirement to adopt Good Farming Practice guidelines when committing to an agri-environmental scheme. However, this does not directly aim to enhance environmental benefits. It is worth noting that the new SRDP ( ) now has an integrated approach at the 5

6 farm level to achieve some of these synergies, which has been welcomed by policy makers and NGOs. In addition, a growing policy focus towards catchment level management, due to requirements of the Water Framework Directive, would create greater cohesion and provide a cumulative environmental impact beyond those possible by this SRDP. Another comment is related to the approach to monitoring agri-environmental scheme outcomes. Whereas the basic requirements for EU accounting purposes have been maintained from the beginning of the programme, clearly agrienvironmental monitoring requires a more evolved approach to understanding the impacts of these schemes at the ground level. The Environmentally Sensitive Areas (ESA) schemes have a five yearly monitoring requirement, however this, and the mid-term evaluation have been constrained by the lack of outcome monitoring of the Rural Stewardship Scheme (RSS), Countryside Premium Scheme (CPS) and Land Management Contract (LMC) schemes. Only at the end of the mid-term evaluation was there any commitment to monitoring of outcomes from these schemes and it is regrettable that these will only be reported from Hopefully, this will help to inform the mid-term evaluation of the new SRDP. There is some firm evidence from a number of scientific studies (see appendix 2) to suggest that measures within the Rural Stewardship Scheme have had a positive impact on the environment. In particular, options within the RSS directed at ecological diversity have a sound basis for improving the quality of habitats and, hence, increasing species population numbers. This also undoubtedly helped to preserve visual coherence and differentiation within the landscape. However, the lack of cohesion in approvals and no specific regional targeting is likely to dilute the overall impact on the landscape. In addition, the protection of cultural identity of the farmed land is diffused by lack of options for improving access and awareness. Only a small amount of land and capital has been committed to access under the RSS and CPS. Furthermore, problems with funding in the latter part of the programme, which led to higher numbers of unsuccessful applications, may have affected future farmer participation in agri-environmental schemes. Land Management Contracts, also did not have an integrated whole farm approach, however larger parcels of land were committed under the LMC scheme and the lack of a competitive points base created more opportunities for farms to participate in agri-environmental schemes. From a process point of view SEERAD should be commended for producing a new scheme under short deadlines which broadly met its targets. Similarly, it shows responsiveness to the changing policy climate by including measures for bio-security and access. However, the balance towards creating greater opportunities for inclusion within agri-environmental (AE) schemes as opposed to targeting of environmental issues has diffused the overall impact of any overall environmental gains. A number of other agri-environmental schemes were adopted under the umbrella of the SRDP. The Environmentally Sensitive Areas Scheme (ESA) and the Countryside Premium Scheme (CPS) were closed to new entrants at the beginning of the SRDP. However, support was continued to manage land under the options committed over this period. Evidence for benefits of ESA is mixed and depends on habitat type and intensity of grazing, though some measures which restrict 6

7 grazing have led to a loss of diversity of vegetation. The CPS has had some positive impacts, and brought threatened species under protection. In addition, several important measures for protecting biodiversity were adopted as part of the RSS which has had a positive impact on the environmental quality of agricultural land. The Organic Aid Scheme (OAS), introduced in 1994, continued to increase organic land under agreement over the existence of the SRDP. Clearly, other factors such as premiums and market prices, may have influenced the decision to adopt OAS standards. The OAS appears to be the only agri-environment scheme within the SRDP that has an integrated, cohesive approach to farm level agri-environmental management. However, it is not as directly targeted towards species and habitats conservation compared to the other schemes outlined in this section. Consequently, its impact will not be as great as these other schemes. S Summary of Common Evaluation Questions for Agri- Environment Schemes To what extent have natural resources been protected in terms of soil quality, as influenced by agri-environmental measures? The SRDP does not directly target soil erosion and policies and regulations outside of the programme will have more direct impacts. Around 81,177 Ha has been dedicated to land which would have some impact on reducing soil erosion. This equates to 1.4% of total agricultural area. To what extent have natural resources been protected in terms of the quality of ground and surface water, as influenced by agrienvironmental measures? It would be anticipated that any such contribution from the SRDP has been positive. However, there is a lack of information on the siting of water pollution reducing measures due to the SRDP. It is also difficult to disaggregate the impact of the SRDP from direct policies specifically focused on enhancing water quality, such as NVZs and the PEPFA code of best practice. To what extent have natural resources been protected in terms of the quantity of water resources, as influenced by agri-environmental measures? Protection of quantity of water resources has not been a major issue for the SRDP. Only a small proportion of land (0.2% of total agricultural area) has been dedicated to creation of wetlands and ponds, which has a more direct aim of enhancing and maintaining biodiversity. To what extent has biodiversity (species diversity) been maintained or enhanced thanks to agri-environmental measures through the protection of flora and fauna on farmland? Evidence of a positive relationship between AE schemes and enhancing flora and fauna is mixed. The majority of monitoring has occurred on ESA land and has found falling numbers of flora and fauna. This is predominantly linked to stocking densities. The reductions in stocking are primarily caused by Tier 2 measures, along with decoupling of CAP payments. It would be expected that, with reduction of animal 7

8 numbers in hill and upland areas accelerating (SAC,2008), this would impact negatively on species rich grassland. Some positive relationship seems to emerge from wild bird measures for attracting bird species. Some options within the agri-environmental measures have led to a change in cropping patterns. An initiative which has proven beneficial to corncrakes is changes in mowing management which is part of the RSS. However, total area under these measures accounts for less than 2% of agricultural land. There is some evidence to suggest that various species which have been identified needing protection have been brought under management within the SRDP. There is also some evidence of a positive relationship between SRDP AE schemes and biodiversity, however these are dependant on species. Woodland has also been protected and enhanced under the agri-environmental schemes, with specific grants for woodland biodiversity enhancement. Similarly, various measures, such as species rich grassland and conservation headlands can improve the diversity of vegetation on land To what extent has biodiversity been maintained or enhanced thanks to agri-environmental measures through the conservation of high naturevalue farmland habitats, protection or enhancement of environmental infrastructure or the protection of wetland or aquatic habitats adjacent to agricultural land (habitat diversity)? High Nature Value farmland is defined in this report as land under Tier 2 measures. Around 14% of total agricultural area was under these measures by In addition, a large amount of linear features such as dyking, ditching and fencing has been funded under these schemes. Whilst there are a number of studies which find a positive relationship between these measures and protection of aquatic resources, a number of bio-geophysical factors will influence their effectiveness at reducing pollutants. However, under the SRDP, around 5% of total agricultural area has been dedicated to protecting aquatic habitats from harmful water based pollutant impacts. To what extent have landscapes been maintained or enhanced by agrienvironmental measures Most of the AE measures within the SRDP have an element of beneficial landscape change. Creation and maintenance of linear features as well as cropping and grassland measures all contribute to either preserving or enhancing schemes. Some coherence is created by participants agreeing to farming guidelines. Whilst schemes operating within the SRDP do not focus at a whole farm level some coherence is created, as participants agree to farming guidelines which will offer protection of the landscape. Policy and public interest in the amenity value of rural landscapes has grown over the period of the SRDP. Only a small amount of land has been managed under the SRDP to preserve cultural and historical monuments. The LMC offered a number of measures to improve access to the countryside and thus increase social value of the landscape. The various forestry schemes funded under the SRDP offer significant scope for landscape enhancement. In particular, the high proportion of broadleaved woodland planting (about two thirds of the total), suggests landscape enhancement. Various 8

9 measures on woodland management supported e.g. deer management and these might also have enhanced landscape quality indirectly. S Main Findings for Forestry Schemes The outcomes in the forestry schemes did not meet the targets set. Much less new forestry was established than anticipated in spite of a rather high push factor of low agricultural incomes and a change in the nature of land ownership which saw significant amenity purchase of farmland marketed in Scotland over the period of the scheme. This shortfall of hectarage was compensated by the tendency to focus new planting in priority areas with locational supplements. However, it must be noted that the real price of timber outputs declined during this period, so forestry did not look like a desirable proposition for commercial reasons if not for grant aid. The major change in this period was the inclusion of private forestry on rural landholdings other than farms into SRDP-supported activity for the first time. During the course of the scheme major changes in the grant structure to Scottish forestry were introduced which appears to have created a wait and see policy by landowners initially and then a rush to draw down grants before the scheme s closure in 2006, when there were uncertainties as to whether it would be continued, with the overwhelming majority of grant being taken up in the last two years of the scheme. The majority of grants taken up under the SFGS relate to restocking, improvement or rehabilitation rather than new planting. Generally, grant aid under the SRDP to forestry under the scheme is likely to have had a positive environmental effect, almost always with respect to carbon sequestration and usually with respect to biodiversity and landscape enhancement. Some rather rectilinear stands of commercial conifers may deliver carbon sequestration but modest biodiversity and landscape enhancement benefits S Summary of Common Evaluation Questions for Forestry Schemes To what extent are forest resources being maintained and enhanced through the programme particularly by influencing land-use and the structure and quality of growing stock? The SRDP enfolded an existing forestry scheme and did not represent a new initiative. Accordingly, the level of uptake might have been expected to follow the general trend in planting. The expectation was that in the course of the SRDP, grantaided support to afforestation in the private sector would rise to 8000 hectares per annum for the SFGS. In practice, the area of planting was much smaller and the area of woodland renewal rather greater. The principal benefits arising from the SRDP relate to improved woodland management and the much broader range of grants offered under the Scottish Forestry Grant Scheme enabled much improvement of existing woodland management to be effected. About two thirds of planting was of broadleaves, most of which will not have been planted with the intention of producing marketable timber. Only in the as the new Scottish Forestry Grant Schemes were bedding in did the amount of coniferous planting exceed that of broadleaves The total yield from grant aided forestry was greater over the period in the coniferous sector, because of higher growth rates. The total increment in yield is estimated to 9

10 be 202,101 m 3 of timber annually in the period for an area of about 43,000 ha of coniferous and broadleaves. Some new components of the SFGS supported woodland expansion to establish well-designed productive forest. In area terms, and considering just SFGS, this is a significant amount, since it represents about 2,000 ha of the 6,500 ha of new forest planted over the period (c. 32%). SFGS also supported the improvement of existing stands both through restocking to produce well-designed productive forest and stewardship to improve timber quality. Although restocking to produce welldesigned productive forest comprised about 88% of the total restocking activities (about 8,500 ha out of 9,600 ha), stewardship grants to improve timber quality only represented about 2% of the total area covered by all stewardship activities (2,500 ha out of 143,000 ha). For the WGS, under which about 36,500 ha of new forest was planted, there is no information about the area planted with the objective of establishing well-designed productive forest and this also applies for activities to improve timber quality in existing stands. Only circumstantial evidence is available on the quality of timber being produced and the use of improved genetic material. Generally the use of improved genetic material is a prime consideration in replanting situations rather than where motives are less focussed on timber production. Two other components of the new grant scheme- the planting of land for land well suited to timber production for well-designed productive forest and restocking to the same end, as well as stewardship payments for improvements in timber quality, give some indication of the extent to which productive forests were achieved in the SFGS. To what extent are forest resources being maintained and enhanced through the programme particularly by influencing the total carbon storage in forest stands? The development of new woodlands on mineral soils will almost certainly have a beneficial effect on carbon sequestration. Without site specific investigations, it is possible only to approximate carbon yields, as there is limited evidence of tree composition on the predominantly broadleaved plantings. The estimated carbon mass accumulated between 2000 and 2012 thanks to SRDP funding is estimated at c 460,500 tonnes of timber over that period (estimation as per Bateman & Lovett s methodology). The broadleaved sector sequestered just over half of the total (albeit at a much lower rate per hectare than on coniferous forests) and the coniferous sector just under one half. Beyond 2012 the estimated sequestration will be about 70,000 tonnes of carbon per year (estimation as per Bateman & Lovett s methodology). With the passage of time, but contingent on what the timber is used for, some of the carbon can be expected to be released as carbon dioxide, where for example, thinnings are used for fuel. To what extent have the assisted actions enabled forestry to contribute to the economic and social aspects of rural development by maintenance and development of employment and other socioeconomic functions and conditions? There is no direct evidence of activity generated on holdings. Circumstantial evidence indicates that much planting was undertaken by contractors, although in some cases farmers or other landowners and their workforce may have contributed. 10

11 Employment in nurseries, contracting and in house staff over the seven years of the scheme is estimated at 2,780 FTE jobs. It is not possible to estimate accurately the income effects of additional afforestation due to grant aid. It is likely that the net effect is positive. In general, under the farmland schemes, poorer quality land will tend to be taken out of farm production. There is very little evidence of woodland planting on Land Capability for Agriculture (LCA) grade 1 or 2 and very little on Class 3.1. In the period farm incomes have been low and the compensation received for taking land out of production might be expected to have exceeded the income from farming on the planted land. Where afforestation is being undertaken in a non-farmland situation, the grant aid is unlikely to create a positive cash flow to the owner, unless the enhanced cash flow from felling the previous rotation is included, or unless in-house workers undertake grant aided work at zero opportunity cost to the business. The bulk of the grant receipts for the Farm Woodland Premium Scheme will represent an income supplement to farm households. However, the net income gain must be considered as the gross grant income less the opportunity cost of any income foregone - that is the lost income from previous activity on that land. Where poorer land is used for planting the net income gain might easily comprise 50% of the grant received, which over the period comprised c. 30 million. However, this lasts for a maximum of 15 years. Under the Scottish Forestry Grant Scheme, the proportion of grant receipts accruing as additional income is assumed to be negligible. To what extent have the assisted actions contributed to the ecological functions of forests by maintenance, conservation and appropriate enhancement of biological diversity? No information is available from the Forestry Commission or other sources to enable aggregative assessment of the contribution of grant-aided afforestation to the ecological functions of forests. However, a number of indicators can be derived from established data. The area of planting with native species, including native broadleaves, native Scots pine and riparian planting can be drawn from the datasets sent by the Forestry Commission. Under WGS, a small amount of natural regeneration was supported which is most likely to comprise native species. This area represents only about 2.3% of the total area of new planting or natural regeneration. Under the Scottish Forestry Grant Scheme, approximately 48% of new grant-aided planting comprised native species. The categories of assistance such as riparian planting and native woodland almost certainly support additional biodiversity and may create ecological corridors between existing woodland blocks. Where the new planting comprises non-native species in woodland principally for commercial purposes, it is likely that there will be a reduction in biodiversity values, particularly where such planting takes place on semi-natural habitats. SFGS category S4, Improving Woodland Biodiversity, applies only to non-native woodlands. This represented about 7.8% of the total area covered by all the stewardship grants. The range of potential biodiversity interventions is considerable but very few categories, apart from those dealing with fencing for capercaillie and black grouse, address critical sites or species. 11

12 S Conclusions in relation to the RDP as a whole The evidence reviewed seems to show that the SRDP has helped to support employment levels on farm holdings, whilst not encouraging these levels to expand. Similarly, it seems that contractors, in the supply of linear features such as hedgerows and fencing, have been the main non-farm beneficiaries to have benefited from the SRDP. Though there is the suspicion that these non-farming jobs are not sustainable after the period of funding. The SRDP aimed to support farm incomes, especially in areas of greatest disadvantage. However, again, the impact is difficult to establish given changes in other agricultural policies and wider economic trends. Evidence from the secondary and primary data analysis, does indicate some positive relationship. LFASS seems to have helped support incomes and maintain livestock on poor land. But agrienvironmental schemes may have also helped farmers in periods of low cash flow. Generally speaking, there was satisfaction with the process of administration of the SRDP from the beneficiary side. A large number of policy stakeholders, e.g. Scottish National Farmers Union, Scottish Royal Society for the Protection of Birds, were consulted at the inception of the SRDP and schemes favoured by interest groups, such as the RSPB s Corncrake Initiative, were adopted into the Rural Stewardship Scheme. These stakeholders were also consulted at the mid-term evaluation stage, though it has been not possible to determine whether any changes were made after these groups responded to the results of the mid-term evaluation. The administration of the LFASS seems to have run fairly smoothly. Cost per application decreased over the period, indicating increased efficiency in processing. Though some participants had voiced concern with understanding the reasons for the growing complexity in calculating eligibility, such as the parish fragility index etc. The main failure of the SRDP from a process point of view was the over-application of the RSS. Up to 2004, a growing number of applicants were successful under this system. However, the growth in applications and a focus of monies into other areas, led to sharp falls in the success rates of 2005 and 2006 applications. The costs of applying, both in terms of money and time, may have hindered the wider adoption of agri-environmental goals within farming. In addition, some agri-environmental groups were concerned that farmers did not understand the purpose of the agri-environmental schemes within the SRDP and merely saw it as another means of supporting farm incomes. The Land Management Contracts scheme did not serve to promote pro-active agrienvironmental management, as the menu of options was quite broad, to include a wider catchment of farmers. As such, a number of bodies noted that farmers were only committing to options within the LMC that were easy to maintain or required minimal change in farming practices. Finally, the SRDP ran over a period of significant policy change. The Single Payment Scheme was a radical change from previous policies and this could not have been predicted at the start of the SRDP. The decoupling of support from production, in conjunction with low farm incomes, has led to a significant fall in livestock numbers within hill and upland areas of Scotland. The SRDP and, in particular LFASS, with its requirement to a minimum stocking density may have had some impact on decelerating this rate of decline. 12

13 S Summary of Common Evaluation Questions for Cross-Cutting To what extent has the programme helped stabilising the rural population? In order to answer these questions, secondary sources such as the population census were consulted. These were supplemented by focus groups in four Scottish parishes to understand the responses to the SRDP, and a web-based survey to consultants and interest groups to understand their perceptions of the SRDP process (See appendix 5). There is some evidence from the case studies to suggest that SRDP schemes are keeping producers in farming and, in some cases, employing members of the rural community. Over the period rural populations overall were rising but this cannot be attributed to the SRDP. There is little robust evidence to indicate that schemes help to prevent rural depopulation. Anecdotally, the area with high AE payments voiced concern over the level of rural depopulation, whereas in Glenshiel, with low overall public funding, it was felt that many have left agriculture but not the area, reflecting the older age range within the rural community. To what extent has the programme been conducive to securing employment both on and off holdings? The case study parishes provided evidence that some employment has been created through SRDP payments. The SRDP may have helped to maintain rather than create employment on farm holdings. The biggest effect on off farm employment has been on contractors supplying linear features, especially fencing. Anecdotally at least, these suppliers are based locally within the rural community, thus indicating some trickle down impact. To what extent has the programme been conducive to maintaining or improving the income level of the rural community? Evidence varied between parishes over the role of the SRDP in supporting incomes. Generally, the area with high AE payments, saw it as a means of supporting cashflow but also for compensating money spent on suppliers and contractors to meet agrienvironmental options. However, for the other three parishes it was claimed that LFASS was a major means of support for rural incomes. In addition, they claimed the FWPS was very beneficial when times were financially tough. All of the case studies mentioned the benefits of the SRDP on contractors, principally for the creation and maintenance of linear features such as fencing and dyking. This agrees with the findings of the 2003 interviews in the MTE. However, in Yarrow and Glenshiel there was little evidence to suggest that SRDP payments are significantly generating off-farm incomes in the rural population. To what extent has the programme been conducive to the protection and improvement of the environment? The evidence from secondary data (see above) were generally positive of the impact of agri-environmental schemes on the environment. From the focus groups, positive responses were dependant on geographic situation and stocking densities. In the Muirkirk, the focus group found that there was a much greater range of wildlife and biodiversity because of the schemes that have run during this period. In 13

14 addition, they felt the schemes had worked in well with farming systems with particular mention of wildlife conservation and silage cutting. In Lonmay participants relayed anecdotal evidence in respect of more birds In this context the RSS was considered beneficial. They also considered that the RSS was added value in the North East in respect of the income and the environment; in other areas it was perceived to be a boost but perhaps less advantageous to localities because of the farming systems in those areas. In Glenshiel, the focus group was concerned that there was very little livestock left in the area. In addition, they felt any reduction in LFASS would mean a dramatic reduction in stock. They conceded that water margins had helped riverbanks and water quality. In addition, forestry had created the greatest landscape change in the long term. In Yarrow there were some mixed opinions over the benefits of agri-environmental schemes, however there was a consensus that forestry schemes were of benefit to the environment. To what extent have the implementing arrangements contributed to maximising the intended effects of the programme? The SRDP was administered through a number of Local Area Offices. The diversity of the application process of individual schemes hindered any greater synergies to be created. It seems that the schemes operated in isolation, though some effort was directed at centralising the agricultural payments systems through the IACS database. The two organisations involved, RPID and Forestry Commission, have been criticised in the past for lack of communication and the Forestry Grants and Agricultural Grants were very much run as independent streams. The LFASS introduced an environmental element to calculating payments. However, this is in isolation of any agri-environmental schemes that may have been undertaken on the LFA land. The RSS and LMCM can also be criticised for their lack of an integrated farm-level approach. Thus features and enhancements were not assessed in terms of their overall impact at the farm level but compartmentalised to individual blocks of habitats. We note that the new SRDP ( ) has adopted an integrated, whole farm approach. From the focus groups, there was frustration over the process of moving from one scheme to its replacement. An example of this is the movement of members of ESA schemes automatically into the RSS. The implications were that farming systems were in place which, to some extent, were lost by entry into newer schemes. This was echoed both by interviews with NGOs and in the web-based survey. They highlighted the fact that maximising environmental benefits requires land to be under management for more than 5-year periods, whereas farmers are only committed to shorter time scales under the agri-environmental schemes. In addition, the case studies voiced concern that specific dates for scheme operation, e.g. mowing, could be restrictive and a more regionalised operation may have benefited synergies better. 14

15 Table of Contents S1. Executive Summary... 2 S1.1. Introduction... 2 S1.2. Context... 2 S1.3. Methodology... 3 S1.4. Conclusions... 4 S1.4.1.Conclusions in relation to individual RDP schemes... 4 S Conclusions in relation to the RDP as a whole Table of Contents List of Figures List of Tables Introduction Context Scheme Objectives Linkages between Scheme Measures and Priorities Significant developments since the drafting of the RDP New policy and contextual documents Financial and Administrative Inputs LFASS Development of Scheme over the 2000 to 2006 period Payments Data Performance against Targets Rural Stewardship Scheme Development of Scheme over the 2000 to 2006 period Payments data Performance against targets Organic Aid Scheme Development of Scheme over the 2000 to 2006 period Payments Data Performance against targets Land Management Contracts Scheme Development of Scheme over the 2000 to 2006 period Payments Data Performance against targets Forestry Development of the scheme over the period Performance against targets Comparative Expenditures within the SRDP Monitoring Arrangements Methodology Overall approach Data Collection Problems and constraints Common Evaluation Questions LFASS Introduction Methodology Common Evaluation Questions Agri-Environment Introduction Methodology Common Evaluation Questions Forestry

16 Introduction Methodology Common Evaluation Questions Cross Cutting Introduction Methodology Common Evaluation Questions Conclusions Introduction Conclusions in relation to individual RDP schemes LFASS Agri-environmental schemes Rural Stewardship Scheme Land Management Contracts Environmentally Sensitive Areas and the Countryside Premium Scheme Organic Aid Scheme Forestry Schemes Conclusions in relation to the RDP as a whole References Appendix 1. Common Evaluation Questions for Less Favoured Area Support Scheme Appendix 2. Common Evaluation Questions for Agri-Environmental Schemes Appendix 3. Common Evaluation Questions for Forestry Schemes Appendix 4. Common Evaluation Questions for Cross Cutting Appendix 5. Methodology for Primary Data Collection 16

17 List of Figures 3.1. Changes in Scottish Livestock Numbers Number of unique LFASS recipients and average cumulative payment per parish, 2000 to Number of unique RSS recipients and average cumulative payment per parish, 2000 to Number of unique OAS recipients and average cumulative payment per parish, 2000 to Number of unique LMC recipients and average cumulative payment per parish, 2000 to Number of unique FWPS recipients and average cumulative payment per parish, 2000 to

18 List of Tables 3.1. Estimated Targets for LFASS members, (nominal prices) Administration cost per claim for LFASS Predicted and actual numbers of RSS agreements Administration cost per claim for RSS Predicted numbers of agreements and land under conversion, thousands and ha Financial Costs of Delivery Payments for individual schemes within the SRDP Common Evaluation Questions for LFASS Common Evaluation Questions for Agri-Environmental Chapter Average carbon yield tc/ha/year between Average carbon yield tc/ha/year after Common Evaluation Questions for Forestry Schemes Focus group timing and participation Common Evaluation Questions for Cross Cutting Chapter

19 1.0. Introduction The Rural and Environment Research and Analysis Directorate (RERAD) of the Scottish Government, commissioned SAC to carry out the ex-post evaluation of the Scottish Rural Development Programme (SRDP) in accordance with EC Regulation 817/2004. This research was carried out between September and November 2008 and is built on the mid-term evaluation of the SRDP conducted by DTZ Consultants (2003). This document is structured as follows: Introduction. The structure of the report is set out and the contributors are listed. Context. This Chapter sets out the policy and socio-economic changes which have occurred in rural areas since the publication of the mid-term evaluation (DTZ, 2003). It assesses the continuing validity of the SRDP and its place vis-à-vis other policies. Financial and Administrative Inputs. This section details the individual schemes, their costs and performance against stated targets of uptake and area. Methodology. The overall approach to carrying out the ex-post evaluation is elaborated. This includes consideration of our use of secondary data, interviews, web-based surveys, focus groups and case-study parishes. The Chapter concludes with a discussion of the problems and constraints encountered during the research. Commission evaluation questions. This Chapter is divided into sub-sections according to the RDP chapter headings. Each sub-section begins with an introduction to the RDP schemes covered and a description of the methodology specific to the research undertaken in this area. This is followed by concise answers to the questions posed by the EU Commission. Many of these sub-sections are summarised from more detailed Appendices and the reader should refer to these for a full treatment of the issues. Conclusion. Drawing on the evidence collected during the course of the research, conclusions are presented in relation to the individual RDP schemes and to the RDP as a whole. The research was managed and directed, and this report written by, a central team comprising: Dr Andrew Barnes, SAC; Steven Thomson, SAC; Agriculture and Agri-Environmental Schemes: Professor Bill Slee, MLURI; Diana Feliciano, MLURI. Forestry Schemes: Responsibilities were as follows: Dr Andrew Barnes, SAC: LFASS, Agri-Environmental Schemes Steven Thomson, SAC: Agri-Environmental Schemes Professor Bill Slee, MLURI: Forestry Schemes Diana Feliciano, MLURI: Forestry Schemes Dr Fiona Williams, SAC: Cross Cutting Issues Dr Dylan Bradley, Agra CEAS Consulting: Advisor Professor Berkeley Hill, Imperial College: Advisor 19

20 Additional assistance was provided by Dr Alan Renwick, SAC. Focus groups were carried out by Fiona Williams and Sarah Skerratt, SAC The consultants gratefully acknowledge the assistance provided by Paul Teesdale and Michael O Neill at the Scottish Government. We especially thank Paul Gavin and Nils Michael for rapid receipt of data. We also thank participants of stakeholder interviews, the web-based survey and the focus groups. 20

21 2.0. Context This chapter considers the relevance and consistency of the Scottish Rural Development Programme (SRDP) which was initiated under EU Regulation 1257/1999. The stated priorities of the SRDP were: 1) to assist the future viability and sustainability of Scottish farming and forestry; and, 2) to encourage farming and forestry practices which contribute to the economic, social and environmental sustainability of rural areas Scheme Objectives These two priorities were to be achieved by the adoption of three chapters within the Rural Development Regulations, namely: Less Favoured Areas & Areas with Environmental Restrictions (Chapter 5) Agri-environment (Chapter 6) Forestry (Chapter 8) Limited time and resources, principally due to establishing the Scottish Parliament, were cited by SEERAD 2 as the reason why only three of the possible seven chapters were adopted. The SRDP sought to address its priorities through measures with the following aims: Maintenance of employment in less-favoured areas; Measures to improve farming and forestry practice and the environment; and, Measures to address competitiveness and diversity of the agricultural and food sectors 3. Against these priorities and aims, the SRDP consisted of three measures, namely: The Less Favoured Areas Support Scheme, which was initially a modification of the Hill Livestock Compensation Allowance Scheme; Agri-Environmental Schemes, which consisted of a new scheme, the Rural Stewardship Scheme (RSS), maintenance of Countryside Premium Scheme (CPS), Environmentally Sensitive Areas scheme (ESA) and expansion of the Organic Aid Scheme (OAS) and introduced the Land Management Contract Scheme (LMC) in 2005; and, Forestry Schemes, continuation of the Farm Woodland Premium Scheme (FWPS) and the Woodland Grant Scheme (WGS). In 2004 the Scottish Farm and Forest Grant Scheme was introduced. 2 Since 2007 the Scottish Executive has been known as the Scottish Government (SG) but in the period covered by this report it was known as the Scottish Executive 3 including some state-aided measures for processing and marketing and farm diversification that draw on chapters of the RDR but are strictly out with the SRDP. 21

22 2.2. Linkages between Scheme Measures and Priorities Priority 1: To assist the future viability and sustainability of Scottish farming All three measures outlined above were intended to contribute to this priority. According to the SRDP document, the Less Favoured Areas Support Scheme (LFASS) was firmly wedded to this Priority. The LFASS was intended to support vulnerable producers who had few, if any, opportunities for diversification, by protecting them from fluctuating markets. Similarly, support for LFA farms through this measure would, it was argued in the plan, help to avert social and environmental impacts in the wider rural community. The agri-environment and forestry schemes would indirectly support this priority through encouraging diversification on more physically restrictive land and fostering tourism which would contribute to income support. Priority 2: To encourage farming practices which contribute to the economic, social and environmental sustainability of rural areas It is clear from the SRDP that agri-environment schemes were intended to play the most significant role in delivering this priority. The intention was that protection of the environment would preserve Scotland s natural heritage for future generations and attract more tourists. LFASS also played a role in relation to this priority as beneficiaries would have to adhere to Good Farming Practice with consequential environmental benefits. Similarly, forestry schemes were to play a part in this measure as afforestation of agricultural land is governed by environmental safeguards, set out in the UK Forestry Standard and the associated guidelines on nature conservation, landscape design, archaeology, soil and water. Consequently, the LFASS also plays a role in safeguarding Scotland s natural heritage. The adoption of only three of the possible seven chapters led to criticism at the exante evaluation stage for being meagre in its scope, compared to the wide range of activities potentially eligible for support. The Scottish Executive Environment and Rural Affairs Department (SEERAD) said that the narrow focus was due to time constraints, caused primarily by a considerable increase in workload flowing from the establishment of the Scottish Parliament, and in co-ordinating the preparation of EAGGF measures for inclusion in the Structural Funds Plan for the Highlands and Islands of Scotland. Similarly, SEERAD were operating under a reduced budget, caused by the serious shortage of EAGGF Guarantee Funds allocated to the UK, exacerbated by the weakness of the Euro against Sterling. It should be noted in this context that, after the inception of the SRDP, other chapters were funded with state-aid approval using domestic funds to correct the omissions in the original programme. Several annual amendments were made to the SRDP, the most significant being in 2004, to introduce a variety of changes and to add schemes under other, previously unused, chapters of the Rural Development Regulation (1257/1999) including training, quality assurance and the concept of land management planning. However, as these are funded domestically they fall outside 22

23 the remit of this evaluation which is required to focus on measures funded under Regulation (EC) 1257/1999. Accordingly, this report focuses on the schemes developed under the three RDP chapters outlined above Significant developments since the drafting of the RDP This section outlines some significant developments which have occurred since the SRDP was published and which therefore might have a bearing on the continued validity and relevance of the SRDP and its priorities. Farm Incomes During the period farm incomes were affected by an increasing growth in the value of Sterling relative to the Euro, affecting both EU payments and trading from cheaper imports. Similarly, the Foot and Mouth Disease (FMD) outbreak of 2001 affected beef exports in the early period of the SRDP, but these have since recovered. However, rising feed and fuel prices through the later part of the programming period will have squeezed margins for both livestock and cereal producers. This may have influenced entry into agri-environment or forestry schemes in order to supplement these losses in income. Common Agricultural Policy (CAP) Mid-Term Review The CAP mid-term review of 2003 heralded some fundamental changes. Most drastically, payments were decoupled from agricultural production activity from 2005, although it is evident that some farmers began to make changes to their farming systems in advance of this. Evidence of reduced stocking rates 4 suggests issues in the hill and upland areas predominantly due to this decoupling. Figure 3.1 highlights the extent of this decline over the SRDP period. Figure 3.1. Changes in Scottish Livestock Numbers SAC Rural Policy Centre (2008) Farming s Retreat from the Hills 23

24 External Shocks Rural tourism was affected during the programming period by a combination of the 9/11 terrorist attacks in the US and Sterling s growth in value against both the Euro and the Dollar. Similarly, the FMD outbreak in 2001 led to large areas of the countryside with heavy reliance on livestock systems being made essentially out of bounds for tourists. It is clear that one impact of the FMD outbreak was upon the delivery of the RDP itself since, for example, farm visits had to be curtailed. New policy and contextual documents The predominant change in policy context during the SRDP was the publication of the Forward Strategy for Scottish Agriculture in Discussions were underway on this document when the SRDP was drawn up and, indeed, these discussions were mentioned in the SRDP document. The Forward Strategy emphasised multi-functionality by offering a framework for policies which integrate agricultural competitiveness, environmental enhancement and development in rural communities. The Forward Strategy directly led to the development of the Land Management Contracts Scheme as a means of achieving some of these aims. The Scottish Forestry Strategy was launched at about the same time as the SRDP In consequence, it was several years before the recommendations of the strategy (e.g. for a new Scottish-specific grant scheme) were implemented. 24

25 3.0. Financial and Administrative Inputs 3.1. LFASS Development of Scheme over the 2000 to 2006 period The Less Favoured Area Support Scheme emerged as a continuation of the Hill Livestock Compensatory Allowance with the key difference being that payments shifted from a headage basis to an area basis after The calculation of support payments within LFASS changed over the life-time of the SRDP. Eligibility was based on whole or partial past classification of Less Favoured Area and beneficiaries had to subscribe to good farming practice guidelines 5. In 2001, if stocking densities fell below a minimum threshold the hectares for payment for the year in question were restricted to the number required to support actual stock numbers at the minimum stocking density. Changes were made to grazing categories in Categories were based on stocking densities in the 2001 period. Grazing categories were fixed, and allocated at field level. Furthermore, each parish was allocated a fragility index, ranging from standard to very fragile, which affected the rate of payment. In addition, a level of payment was related to maintaining the mix of livestock on the farm. The environmental element was expanded in 2004 as farmers had to adhere to five new environmental conditions, in addition to agreeing to follow good farming practice guidelines. These included protection of rough grazing, repair of drains and to avoid poaching of land arising from intensive grazing activity. Claiming LFASS was a relatively simple procedure for the farmer and entailed relatively low administrative costs for SEERAD (see below for administrative cost estimates). To claim LFASS the farmer had simply to tick a box on the Single Application Form, used for the Single Payment Scheme, which declared their eligibility for LFA payments in the following year. The Integrated Administration and Control System (IACS) database then checked for consistency, i.e. whether the farmer was operating within an LFA, and then calculated payment for those who had ticked the LFASS box. Farmers could query these calculations initially with Local Area Office Staff, but also with SEERAD staff at Pentland House, Edinburgh. However, the majority of LFASS worked smoothly over the period with no major issues raised over its operation Payments Data Analysing the cumulative payments for LFASS over the period 2000 to 2006 gives an understanding of the size and spatial distribution across Scotland. Payments within each parish ranged from a minimum of around 42,000 to a maximum of over 2 million over the period. The parishes of Western Scotland, including the Highlands and Islands, have received total funds of at least 1.5 million over the period Figure 3.2 shows average cumulative payments by parish and the number of unique LFASS beneficiaries by parish.. 5 See: 25

26 Figure 3.2. Number of unique LFASS recipients and average cumulative payment by parish, 2000 to 2006 The North-west Highlands and the Western and Northern Isles generally had low levels of LFASS payment (a), which is due to the small-scale nature of crofting agricultural systems that predominate there and low stocking densities. In these areas (and particularly in the Western Isles) there were large amounts of small beneficiaries (b) as opposed to the Central Highlands and Southern Uplands where there are relatively few holdings receiving considerably larger average LFASS support payments. In total 15,548 Scottish LFA farmers received over 369 million LFASS payments between 2001 and The average cumulative payment that business received during the SRDP period ranged from a 30 one-off payment to 692,962 with an average of 23,752 (although the lower median of 8,513 reflects the large number of small-scale beneficiaries) ranging Performance against Targets Table 3.1. shows the performance of the LFASS against target numbers of beneficiaries and land area set out in the SRDP. Table 3.1. Estimated Targets for LFASS members, thousands Beneficiaries(000s) Predicted Actual n/a Source: SRDP (2004); RERAD (2007) 26

27 The relatively stable nature of LFA land classification seems to have informed the fixed predictions for beneficiaries and land area. Clearly, from the outset the number of beneficiaries claiming LFASS exceeded those expected by around 2,000. The disparity is explained as the estimates were based on forecasts based on the HLCA scheme and, after 2000, there was a switch from a headage to an area basis. In addition, through time larger agricultural holdings are divided into smaller units at point of sale, thus increasing the number of eligible LFASS claimants. Similarly, from 2003 onward changes in calculating eligibility of claim and limits imposed on stocking densities seem to explain the slight fluctuations over this time period. Financial Costs of Delivery Various reviews have been published and undertaken which reveal the cost per claimant on a scheme basis. Table 3.2. Administration cost per claim for LFASS, per claim (nominal prices) LFASS n/a Source: Scottish Executive (2005; 2006) Generally, costs fell from 70 per claim in 2001 to around 50 per claim in The fall in cost in real terms would be more significant, indicating substantial efficiencies in the claiming process; this may reflect the rise in on-line applications over the period. As outlined above, claiming LFASS is a simple process and calculating claims relies on computer based process checks Rural Stewardship Scheme Development of Scheme over the 2000 to 2006 period The Rural Stewardship Scheme (RSS) was introduced in 2001 and replaced the Environmentally Sensitive Areas Scheme (ESA) and the Countryside Premium Scheme (CPS) as the major mechanism for providing agri-environmental benefits. After two years of operation demand outstripped supply and a points-based entry system was introduced. However, those in ESAs whose ten year commitment ended during the period of the SRDP were automatically accepted into the RSS. Applications were scored on merit through the points system and funding awarded accordingly. Awards were largely dependent on the number and diversity of habitats, species and other features (such as ancient monuments) that would be maintained or created. To apply for RSS payment a farmer had to prepare an environmental audit, which recorded habitats and features on the farm. In addition, if the farmer were undertaking the Moorland measures, a moorland management plan would also have to be prepared. From the farmer s perspective this involved walking the land and preparing both a descriptive map of the habitats and features, as well as a management map, showing the sites which would be subject to support under the RSS. Alternatively, the farmer could employ a consultant to prepare the application for them, the costs of which would be reimbursed in part by SEERAD. The application would include a points total encompassing all the measures wishing to be adopted under the RSS. The RSS was designed to operate within the SIACS payments system and applications had to be made to a SEERAD Local Area Office (LAO) by 31 st March 27

28 annually. The LAO s then checked the individual application forms. Then, in autumn, SEERAD would announce the points threshold applications had to exceed to be successful. Successful farmers were paid a year in arrears and all habitats had to be created by the end of the first year. The CPS followed the same process as the RSS but applications were assessed against regional priorities. The ESA process, unlike the RSS, was non-competitive with entry guaranteed on application. Both these schemes closed for new applicants by the end of 2000 but the SRDP continued payments to these legacy schemes. The RSS was a more complex procedure than the LFASS. Complications emerged from the large number of management options and the point scheme itself, which increased administrative costs. A number of NGOs with interests in agrienvironmental schemes have stated that this also damaged relations with farmers and, subsequently, may have had a negative impact on their approach to undertaking agri-environmental work Payments data Figure 3.3 shows the shows average cumulative payments by parish and the number of unique RSS beneficiaries by parish. In total 5,981 Scottish farmers received over 58.5 million RSS payments between 2002 and The average cumulative payment that business received during the SRDP period ranged from a 15 one-off payment to 475,768 with an average of 9,795 (although the lower median of 4,754 reflects the large number of small-scale beneficiaries). The largest concentrations of holdings with RSS agreements occur in the Western Isles and in the North-east (both have a large number of small holdings crofts in the Western Isles). There appears to be no particular trend in the spread of RSS expenditure at parish level, with generally relatively low annual payments across most of Scotland. Patches of higher than average support do, however, appear in the South of Scotland and in some parishes within the North Eastern parts of Scotland. 28

29 Figure 3.3. Number of unique RSS recipients and average cumulative payment by parish, 2000 to Performance against targets The RSS began in 2001 and the number of farmer agreements was expected to increase over the period, as shown by the predictions in Table 3.3. However the number of actual beneficiaries also increased, though at a much higher rate. The RSS greatly exceeded all predictions of agreements and by 2004 successful applicants exceeded those predicted by a ratio of 12 to 1. This led to problems between 2005 and 2006 in terms of the need to ration supply. Table 3.3. Predicted and actual numbers of RSS agreements Beneficiaries Predicted Actual Source: (Scottish Executive, 2005; REAS (2008) RSS payment data request 6 ) Financial Costs of Delivery There was a steep rise in costs per claim between 2002 and However, costs reduced quite substantially in the latter part of the period, perhaps reflecting increased familiarity with the process within the implementing authority. Table 3.4. Administration cost per claim for RSS, (nominal) LFASS n/a Source: Scottish Executive (2005; 2006)

30 3.3. Organic Aid Scheme Development of Scheme over the 2000 to 2006 period The Organic Aid Scheme (OAS) was established in 1994 with the aim of increasing the area of land under organic production. Under the scheme farmers agree to maintain land in organic production for a period of five years at the end of which payments cease. The structure of the scheme was modified in 1999 to fully reflect the nature of the enterprise converting to organic agriculture; and these modifications were carried over to the scheme that formed part of the SRDP. Three categories of land were eligible for organic aid scheme payments, namely: (i) Arable Aid Payment Scheme land; (ii) other cropped land and improved grassland, and; (iii) rough grazing, including unimproved grassland. Considerable changes were made to the scheme in New payments were made for land in fruit and vegetable production and twelve new capital activities were introduced. The five year maintenance scheme was aimed at extending support over the longer-term. These changes were in line with the headline targets of the Scottish Executive s Organic Action Plan. Payment rates were reviewed again in 2005 and payments were increased in Entry to the scheme involved the farmer completing an application form detailing land to be converted and information for calculating ranking points. The application was then point scored, with bonus points for converting better quality land. A date was then set for entry into the scheme. According to the organisations involved in the process of administrating the Organic Aid Scheme it ran reasonably smoothly over the period of the SRDP. Earlier problems, such as uncertainty over the premia on organic produce, which fell from the level at which many early organic farmers based their business plans, seem to have been overcome with consistently increasing numbers of applications for the scheme Payments Data Figure 3.4. shows the average cumulative OAS payments by parish and the number of unique OAS beneficiaries by parish. In total 600 Scottish farmers received over 16.3 million OAS payments between 2002 and The average cumulative payment that business received during the SRDP period ranged from an 88 one-off payment to 156,705 with an average of 27,235 (although the lower median of 19,207 reflects a large number of smaller beneficiaries). Again there is wide geographical variance in the average cumulative payments by parish although central and Southern Scotland appear to have benefited most from this scheme. 30

31 Figure 3.4. Number of unique OAS recipients and average cumulative payment by parish, 2000 to Performance against targets The SRDP set forecasts the level of uptake at the start of the plan, in terms of beneficiaries and the area covered for the OAS. This is compared to actual numbers in Table 3.5. below. Table 3.5. Predicted numbers of agreements and land under conversion, thousands and ha Beneficiaries Predicted Actual Land Ha (000s) Predicted Actual (Source: SRDP, 2004; RERAD, 2007) Like the RSS, there are some wide variations between the predictions for agreement and actual participants. In the early years participation is higher than predicted. However, estimates for 2005 and 2006 show higher figures than in earlier years. Quite why there was an increase from 115 to 925 predicted beneficiaries between 2004 and 2005 has not been explained by the Scottish Government. However, payment rates unexpectedly rose in the latter part of the period and application rates increased substantially as a result. This imposed financial constraints on the OAS and hence approval levels could not be matched in this latter period. 31

32 Table 3.6 shows the financial cost of delivering the OAS over most of the SRDP period. Costs per claim rose quite substantially, peaking at 1,061 per claim in 2004, but then also falls significantly. Table 3.6. Financial Cost per Claim of Delivery, nominal OAS n/a , n/a (Scottish Executive, 2005) 3.4. Land Management Contracts Scheme Development of Scheme over the 2000 to 2006 period The LMC scheme began operating in Unlike the RSS, entry was not points based and farmers were guaranteed payment subject to certain eligibility requirements. Farmers had a maximum allowance, dependant on land claimed under the Single Application Form (SAF), to claim against a menu of options. These options covered agri-environmental aims, but also promoted access and bio-security. The duration of these options varied between one-off payments and five year commitments. To claim under this scheme, the farmer completed an application form which firstly required them to calculate their level of entitlement, based on a declining scale of how much land they wished to enter into the scheme. The farmer could then choose from the menu of options and stated the amount of land or capital measure under management. The LMC was developed after the Forward Strategy of Scottish Agriculture and as such a management system had to be implemented within a short space of time to train Local Area Offices to operate the new scheme. Nevertheless, this study found no reports of delays in payment or administration of the scheme Payments Data Figure 3.5. shows the average cumulative LMC payments by parish and the number of unique OAS beneficiaries by parish. In total 8,894 Scottish holdings received over 14.5 million LMC payments in The average cumulative payment that business received (a) during the SRDP period ranged from a 7 to 7,112 with an average of 1,639 (although the lower median of 1,150 reflects that there are more smaller beneficiaries). There were large concentrations of beneficiaries in parts of the Western Isles, Caithness and parts of the North-east. There was wide geographical variance in the average cumulative payments by parish although generally holdings in Southern Scotland and the central Highlands received the highest average benefit. 32

33 Figure 3.5. Number of unique LMC recipients and average cumulative payment by parish, 2000 to Performance against targets No targets were published for expected take up rates for LMCS. However a total of 17,741,590 was applied for under the Tier 2 Menu Scheme in The smallest total amount ( ) claimed was for option 10B Biodiversity cropping on in-bye ( 2,762). The largest total amount claimed was for option 15A Improving access maintenance ( 6,527,880) Forestry Development of the scheme over the period Private sector afforestation has been supported by the UK government since There is a well-established regional level delivery system for the support of forestry grants. However, as a land using activity, only farm woodland was supported as a forestry activity by the European Union prior to Farm woodland creation had been seen as a way of reducing surplus production of arable crops in the European Union and farm woodland grant schemes have been in place in the UK since In the Scottish Rural Development Programme, private forestry activities as a whole were eligible for support for the first time. Since 1919 when private sector grants for forestry were initiated, the nature of support has changed and the relative support for broadleaves was increased from the 1980s when a more explicitly environmental dimension was promoted. Locational premia have also been used to try to direct forestry to certain areas, both in terms of regions (such as the Grampian Challenge Forest) and into peri-urban forestry for recreational and environmental reasons. 33