Rural Affairs Secretary Richard Lochhead told NFU Scotland’s AGM earlier this month that the fund would help those whose cashflow problems have been exacerbated by major delays to Basic Payments.
The Scottish Government said it was continuing to process CAP claims seven days a week, and as of Wednesday had made almost 8,000 payments which equates to about 43 per cent of eligible claims.
Under the scheme – which has been developed in consultation with the banks - farmers and crofters who have not yet received a first instalment and cannot access support from their bank can apply to the Scottish Government for a fast-tracked interest-free cash advance worth 60 per cent of their CAP claim, up to a maximum of £20,000.
Mr Lochhead said: “My officials have held extensive discussions with the banks and industry this week to design a support scheme that is quick and simple to access and helps those who need it the most while allowing the Scottish Government to focus on verifying and paying as many CAP claims as we can.
“The consensus is that most farmers and crofters are already being very well-served by their banks, which have offered to help more by, for example, waiving set-up fees. In light of this, the Scottish Government scheme is being targeted at those in genuine financial need but who cannot get support through their normal bank.”
Mr Lochhead said farmers and crofters were being asked to approach their bank first, but if their request was declined, they could ask the Scottish Government for the cash advance.
He added: “We are continuing to do everything in our power to get first instalments out to as many people as we can by the end of March and the balance of payments as soon as possible after that.”
NFUS president Allan Bowie said the Basic Payment failure meant there was a ’£300 million hole in the Scottish rural economy’ and added the Scottish Government’s focus should remain on payment delivery.
He said: "We have said to Scottish Government that they must guarantee that anyone not getting funding from the banks will be guaranteed funding from the Scottish Government administered loan scheme and that the Scottish Government administered loan scheme must pay an advance equivalent to a high percentage of the payment that the farmer or crofter would ultimately get from the Basic Payment Scheme.
“In terms of priorities for the industry, this scheme must not detract from Scottish Government efforts to get vital support payments out the door to as many claimants as possible."
Patrick Krause, chief executive of the Scottish Crofting Federation, said crofters often found it difficult to secure credit from banks due to the seasonal and intermittent nature of their work. He said Holyrood’s scheme ‘could be a very welcome safety net’.
Scottish Tenant Farmers Association (STFA) chairman Christopher Nicholson added: "Hard pressed farmers will welcome this emergency funding as a stop-gap measure before they receive their BPS payments.
"This has been an incredibly difficult year with weather, commodity prices and the currency all conspiring against Scotland’s farmers, many of whom are depending on receiving their payments to settle winter bills. Tenant farmers are in a particularly difficult position as banks are often unwilling to extend extra credit to those who do not have the comfort of owning land as collateral and the £20m emergency package may prove to be a lifesaver for many.”
The Committee of Scottish Bankers (CSCB) said banks had been providing facilities to help farming customers deal with cashflow issues since the payment window opened on December 1, 2015.
Application forms will be available from the Rural Payments and Services website or by calling the RPID customer helpline on 0300 300 2222.