Addressing NFU Scotland’s AGM, union president Allan Bowie said the delay to BPS payments had ‘stopped the wheels turning’ in the Scottish countryside.
“Cash flows are under severe pressure, and 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,” said Mr Bowie, urging Holyrood Ministers to ‘step up to the plate’.
“The current cashflow crisis – which has a flawed support delivery system at its core - is not just about farmers, but the knock on effect to auxiliary trades and all those who provide farmers with a service.
“A healthy farming sector is the mainstay of the rural economy and the bedrock of the Scottish food and drink sector - we need the whole industry to work together."
Mr Bowie told the first day of the event in St Andrews that the delay in payments, combined with adverse weather and volatility across all sectors had put the Scottish agricultural industry ‘in a poor place’.
He said that with farmers having done their bit to produce high quality food and drink, ’the Scottish Government now needs to do theirs as a matter of urgency’.
“With only a third of Scottish farmers having received any element of support under new CAP schemes, 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,” Mr Bowie added.
“Initial estimates for the Total Farm Income figure for Scotland in 2015 show a decrease of 15 per cent. This is only the second time this century that incomes have fallen for two consecutive years. And, looking at forecast figures across all sectors, it is a challenge to see farm incomes rally in 2016.
“It should be a concern - not just for every farmer or crofter at this AGM - but everyone with an interest in the wellbeing of Scotland’s economy that the fall in our total farm output is as much to do with decreased production as it is to do with decreased prices.”
Rural Affairs Secretary Richard Lochhead, who is expected to come under fire from farmers when he speaks at the AGM tomorrow (February 12), gave his initial statement on the new CAP in 2014 and promised Holyrood would not make the same mistakes Defra made when it missed the payment deadline in 2006.
Mr Bowie added: “Twenty months on from the Cabinet Secretary’s initial statement on CAP implementation, the majority of Scottish farmers still remain completely unaware of when they will receive support payment under the new schemes.
“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 £440 million 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.
“We need all businesses to get the majority of their payments in the next month to avoid further damage to family farms and those companies that rely on their business.”
Graeme McNaughton, director Agri-Food, Barclays Corporate Banking, Scotland, offered the following advice for farmers struggling with delays to subsidy payments.
“Delays to payments have deepened the cash issues farmers in Scotland are currently experiencing, with only 35 per cent of claimants having received their first part-payment so far. Many farming businesses went through tough trading conditions in 2015 which have been further impacted by the current delays to the Basic Payment Scheme (BPS).
“Barclays has a long history of supporting the sector and has been working with a number of farming businesses to enable them to navigate through this difficult period of uncertainty. We have been able to provide support measures such as our temporary fee-free new or increased overdraft service and Capital Repayment Holidays on mortgages and loans over £25,000, in order to ease cash flow problems over the coming months.
“We would advise farming businesses who are feeling cash flow pressure as a direct result of late BPS payment to talk to their agriculture manager as soon as possible to allow a facility to be put in place.
“It has been widely acknowledged that 2016 is likely to prove a challenging year for the farming industry when taking into consideration variables such as low commodity prices, the impacts of reforms and poor weather conditions hampering output.
"However, a continued forward focus on planning, taking advantage of available support packages and maximising income, where possible, by liaising with experts will help to soften the impact.”