Pastures new: how the twin challenges of Brexit and climate change can provide new opportunities for Scottish farming

When Prime Minister Boris Johnson announced an eleventh hour Brexit trade deal on Christmas Eve, Scottish farming breathed a collective sigh of relief.

Since the vote in favour of EU withdrawal in 2016, organisations such as the National Farmers’ Union (NFU) Scotland had warned of the calamitous impact of a no-deal outcome.

The final deal fell some way short of providing frictionless trade, but the EU’s decision to grant third-country listing status to the UK and to approve the export of meat and dairy was crucial, with Scottish red meat exports alone worth £80m annually.

The agriculture sector is vitally important to Scotland’s overall economy, generating output valued at £3bn a year and supporting 65,000 jobs.

Meanwhile, the food and drink sector is valued at £14.4bn annually, with the value of exports doubling since 2007 to around £5.5bn.

Commenting on the deal with the EU, outgoing NFU Scotland President Andrew McCornick said: “No deal would have been no good to Scottish farming, food and drink, and the worst-case scenario of crippling tariffs for some sectors, particularly sheep and cereals, has now been averted.”

Despite the optimism, however, an indication of the changing relationship came in the disappointing news for seed potato producers.

At the stroke of a pen, the EU banned their importation, dealing a huge blow for the industry in Scotland, which accounts for three-quarters of UK production.

Until the latest trade deal, Scottish farming’s relationship with Europe was one formed across five decades.

It will take some time to be reconfigured and for Scottish farmers to forge a new path outside of the EU’s Common Agricultural Policy (CAP).

But there’s optimism the future can be bright.

It’s a future which will involve harnessing the benefits of digital technology – an area not always readily associated with agriculture.

Under legislation passed at Holyrood last year, the Scottish Government continues to administer the CAP scheme and has the power to make changes.

The government in Edinburgh now has the power to create a new overarching system which benefits both Scotland’s farmers and its environment.

The Scottish Government has previously proposed a five-year transition period following Brexit to provide stability and security to the country’s farmers and crofters.

As a result, most CAP schemes are likely to continue in their current form for the foreseeable future.

Following the passing of the legislation last year, rural economy secretary Fergus Ewing said: “This bill puts in place the legal framework to allow us to take action to streamline, simplify and free up resources to pilot and test activities likely to feature in a future farming and rural support policy beyond 2024.  

“The ongoing uncertainty of Brexit and the impact of coronavirus show how important it is to give our farmers and crofters financial stability in the next few years. This bill is the first step to ensure that we secure the ability to continue to operate CAP schemes from 2021 - this includes the Less Favoured Area Support Scheme, Knowledge Transfer and Innovation and Small Farmers Grant Scheme.

“The bill also provides Scotland with the opportunity to make the improvements that are tailored to suit our unique agricultural and rural needs. I am pleased this has the backing of the Scottish Parliament, allowing us to have these powers in place for 2021.

“We will continue to press the UK Government to adhere to their commitment to the Scottish rural economy that EU funding would be replaced. It is crucial that they make a clear statement on future funding for all aspects covered by the CAP to provide certainty and reassurance to the whole rural economy.”

According to the UK Government, Scottish farmers will receive funding totalling nearly £595m in 2021-22, made up of £24m in outstanding EU funds and just over £570m from the Exchequer.

Writing to NFU Scotland late last year, David Duguid MP, UK government minister for Scotland, said: “Being outside the EU not only gives our farmers a guarantee that their funding will be maintained, but also means we can develop specific policies which are suitable for Scottish and UK farmers. This will allow the UK to innovate and to incentivise sustainable practices to support our ambitious, world-leading 25-year Environment Plan.

“We are working constructively with the Scottish Government as they lead on developing new ways of funding farming, to ensure that, throughout these trying times, Scottish farmers can continue to produce the world leading food and drink that is so coveted.”

At this early stage, it’s hard to know exactly what the future funding arrangements will look like and how they’ll differ from the CAP.

But it’s hoped that increasingly sophisticated digital solutions can be used not only to better target support payments to farmers, but also help them meet sustainability and environmental targets.

In England, environment secretary George Eustice has gone some way to indicating the likely direction of travel, with the move away from what he’s called the “basket case” of the CAP.

Eustice wants to see sustainable, subsidy-free farming that only provides financial reward for so-called “public goods” such as improving the environment, animal welfare or reducing carbon emissions.

The situation is likely to be different in Scotland where livestock farming makes up a greater amount of the sector overall. 

Analysts believe that any new scheme introduced north of the border is likely to be more farmer-focused than specifically targeting the environment.

However, Scotland has made ambitious climate change commitments – planning to be net-zero by 2045 – and agriculture has a big part to play in that.

The Scottish Government has given its backing to a number of initiatives, including the CarbonPositive programme, which allows individual farms to measure their level of emissions.

Another is the Methane Capture and/or Reuse Scheme (MCRS) which supports scientific research aimed at repurposing methane emitted by cattle. 

A potent greenhouse gas, methane from cattle has been blamed as a cause of climate change.

The Scottish Government has said it is committed to exploring potential solutions for lowering levels of the gas in a bid to reduce the environmental impact of food production. 

According to NFU Scotland, average farm incomes have fallen by 75 per cent over the last five years, leaving farming families a return of just £12,600.

The industry body has said that direct support measures will remain vital for the stability of some agricultural businesses alongside mitigation tools to alleviate the impact of volatility.

But it has called for a new system which will reward the most “active, productive and efficient” farmers and crofters, incentivising innovation and adaptation.

In a policy document published last year, NFU Scotland said: “We seek a system that provides financial stability, that rewards the risk and decision taker, while delivering good environmental management and improved productivity. 

“It is also vital that a future system underpins the social and environmental contributions of farming and crofting, as well as the role they play in Scotland’s economy and the food and drinks sector.

“Direct support will remain a vital component for many, especially in the short-to-medium term. It will act as a buffer to protect productive capacity as new trade and labour arrangements are negotiated, agreed and put in place.”

So, what might innovation in Scottish farming look like?

It’s clear that farms will need to become more sustainable and environmentally friendly in the coming years and that growing consumer demand will place even more emphasis on the ethical treatment of animals.

Projects which received funding from the Scottish Government in 2020 included Digital Farms, an initiative using low-power wireless communications to allow whole farms to be digitally connected.

The aim of the initiative was to give farmers more data as a means of improving productivity and profitability, while simultaneously tackling challenges such as waste, environmental management and a shrinking labour force.

Another was the Keeping Cow with Calf project run by the Scottish Rural College (SRUC) which sought to promote “ethical dairy” by keeping dairy cows and their calves together for five months.

Meanwhile, the Rural Innovation Support Service (RISS) offers help to farmers looking to find new ways of working.

One recent project was the “grown not flown” scheme to help promote those in the Scottish cut-flowers sector.

Mark Clark, of farmer co-op Grampian Growers, was one of those taking part in the project.

He said: “With COVID and with Brexit, it’s all about the short supply chains and bringing people together.

“Along with others in the RISS group, I am passionate about flowers and bulbs, but as an industry it’s very much unknown – there is no association, no representative body.

“There is little data on the cut-flower sector in Scotland, but the big florists say there’s not enough local supply for weddings and events, even during COVID, and they’re desperate to source locally. That supply chain doesn’t really exist yet.”

Amid greater pressure to reduce carbon emissions globally in the years ahead, it’s likely projects such as this will become increasingly the norm, with agricultural produce being sourced closer to home.

The post-Brexit landscape will undoubtedly be challenging for Scottish farmers – that was the case even before COVID came along to complicate matters.

Nor is it clear what the future holds. A second independence referendum and a vote for Yes could yet see Scotland re-admitted back into the EU and the CAP along with it. 

But there is cause for optimism that the sector can thrive outside of the CAP, while simultaneously helping the country as a whole meet its ambitious climate change obligations.

The Scottish Government’s Future Strategy for Agriculture, which was published in 2018, called for a “mindset change”, a move away from financial support to help farmers and crofters become more “progressive, entrepreneurial and resilient”.

That will not be easy, particularly for those who have relied heavily on subsidies in the past.

There will be greater emphasis on innovation, collaboration and digital skills, something which would benefit from additional funding.

And farmers will be incentivised to play a bigger role as stewards of both the countryside and the environment more generally. 

Financial support is likely to be provided for schemes including wildlife promotion, carbon sequestration and waste reduction.

It will be challenging, but Scotland’s farmers have been through many challenging times in the past. 

With the eyes of the world on Scotland for the UN’s climate change conference in Glasgow in November, there’s an opportunity to use the event as a springboard for innovation, helping to deliver a long-lasting legacy which will ultimately benefit us all.