Scottish farmers express concern over delivery of government hardship payments

Details of the Scottish government’s Hardship Scheme have been revealed, although questions are still being raised over the delivery of payments. 

According to the National Farmers’ Union (NFU) Scotland, only 40% of applicants have received part of their payment from the Basic Payment Scheme (BPS).

However, NFU Scotland said that this equates to only £75.7 million, or 19%, of the £393m 2015 BPS and greening budget.

NFU Scotland’s president Allan Bowie said that Cabinet Secretary for Rural Affairs, Food and Environment Richard Lochhead was left in “no doubt about the impact that the failure to deliver basic support”, and subsequent knock-on delays to other schemes such as the Less Favoured Area Support Scheme, have had on farm business cash flows.

“Payment delivery failure means there is a huge £300m hole in the Scottish rural economy and Scottish government’s focus remains firmly on payment delivery,” explained Bowie.

“Details on how the hardship fund will operate are different to what people had envisaged when it was first announced at our AGM.”

Lending banks will play a pivotal role in how the hardship fund will operate, with loans through the scheme available to those who have applied to their lender for extra borrowing, and have been unsuccessful in securing additional finance.

NFU Scotland urged farmers and crofters who are experiencing cash flow problems and who cannot be accommodated within their current borrowing arrangements to contact their bank.

Each farmer’s bank would apply its normal rules and, if possible, make a cash flow loan on normal commercial terms, which could include an extension on the overdraft. NFU Scotland has said that most banks have indicated no fees will apply, although normal commercial rates will.

“It will encourage all farms who have yet to have a conversation with their banking provider to do so and will, hopefully, see established relationships between a farm business and their lender solve cash flow gaps,” added Bowie.

“That will see access to the hardship fund preserved for those in a desperate place and who have absolutely no alternative route to keeping their business going.

“We have said to Scottish government they must guarantee that anyone not getting funding from the banks will be guaranteed funding from the Scottish government-administrated 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.”

Through talking with the banks, NFU Scotland understands this procedure should allow cash flow funding to be made available to the majority of Scottish farm businesses that need it.

The organisation claimed that if this still failed to resolve cash flow issues for the farm, access to the £20 million Scottish government fund would be available.

“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,” concluded Bowie.

“By our estimates, less than a quarter of Scottish government’s £400m pot for BPS and greening has been shared. That huge financial hole dug by Scottish government is currently being plugged by banks, auctioneers, feed merchants, machinery dealers and other associated trades.”

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