Farming businesses in the Scottish Borders and elsewhere will be closely watching the outcome of the consultation period following the Pack Inquiry’s initial report on the future of the Single Farm Payment System (SPS) in Scotland. The Pack Inquiry has until June to publish its final recommendations to the Scottish Government on how support payments to farmers should be changed beyond 2013.

The Pack Inquiry’s recommendations will have a number of implications for farming businesses. While it is likely that the current SPS will continue until at least 2013, there are certain to be changes thereafter. We are likely to see a move away from payments based on historic production linked subsidies to payments possibly being made on an area based system. This will see both winners and losers, as the change to an area based system will involve significant re-distribution of support within the farming sector. Some businesses will be able to take advantage of the new opportunities that a different support regime will create while others may doubtless suffer.

The rules surrounding criteria for payment also look certain to be changed, with simply maintaining land in Good Agricultural and Environmental Condition unlikely to be enough to receive SPS payments in future. The Pack Inquiry’s initial report has proposed that in future, to qualify for payments made for simply maintaining land in Good Agricultural and Environmental Condition there should be (1) a minimum stocking density for grassland (including rough grazing) and (2) a requirement for planting cover crops on arable land.

There are certain to be implications for land managers given the future requirement for some form of farming activity to be undertaken. The move to an area based system could also see the end of the practice of so called ‘naked acre’ lets if payments are based upon the area farmed, rather than the current practice of requiring farmers to have sufficient land at their disposal to match the number of SPS entitlements they own.

The press has given much coverage to the other recommendations of the Pack Inquiry’s initial report, which also envisages the continuation the Scottish Rural Development Programme, Less Favoured Area support and also the introduction of a new ‘Top-up Fund’.

The new Top-up Fund would introduce direct payments to farmers who undertake specific activities such as (potentially) renewables and improved management. The consultation period will doubtless see much input on what these payments might be for and how they will interface with payments made under the Scottish Rural Development Programme. It is to be hoped that the Top-up Fund will allow the Scottish Government to target funding to those communities and rural enterprises that are hardest hit by the changes, although the criteria for upon which payments from the Top-up Fund have not yet been detailed.