Rural Payments and Services

A Scottish Government-backed loan scheme aimed at easing cash flow issues in Scottish agriculture will open for applications on Monday.

Rural Affairs Secretary Richard Lochhead announced last week the Scottish Government is making £20 million available to help farmers and crofters facing hardship whilst waiting for Common Agricultural Policy (CAP) payments. The Scottish Government continues to process claims seven days a week, and as of Wednesday had made almost 8,000 payments which equates to more than 43 per cent of eligible claims.

Under the scheme – which has been developed in consultation with the banks – farmers and crofters who’ve not yet received a first instalment and cannot access support from their bank can come 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 absolute priority is to get as many farm payments out the door as quickly as possible. Almost half of farmers and crofters have now received a first instalment, although progress implementing this very complex CAP reform is clearly slower than we’d like.

“I am aware that some farmers and crofters still waiting for a payment are facing financial hardship which is why the Scottish Government has earmarked £20 million to provide a safety net for the sector at this difficult time.

“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.

“So we are asking farmers and crofters to approach their bank first. If their request is declined, they can then come to the Scottish Government for a fast-tracked interest-free advance worth 60 per cent of their CAP claim, to tide them over until their payment comes through.

“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.”

Patrick Krause, Chief Executive of the Scottish Crofting Federation, said:

“We’ve made it clear that this is an extremely difficult situation for crofters. It is heartening to see the Scottish Government dealing with these challenging circumstances in such a creative way and the idea of the government being a lender, whilst not new, shows that they are doing everything they can to address this difficult situation.

“Crofters can often find it harder to secure credit from banks due to the seasonal and intermittent nature of their work so this scheme could be a very welcome safety net. So I urge any crofters who are facing hardship and haven’t had a CAP payment to speak to their own bank as soon as possible and then, if their bank is unable to help, apply to the Scottish Government for this support.”

Scottish Tenant Farmers Association (STFA) chairman Christopher Nicholson said:

"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.

"STFA is also pleased to note that the emergency funding will be interest free and will be targeted at genuine hardship cases who are unable to access additional bank borrowing. We would urge the government to ensure that the aid is delivered without delay and does not distract Scottish Government staff from the important business of processing payments as quickly as possible."

The Committee of Scottish Bankers (CSCB) said:

“Banks have been providing facilities to help farming customers deal with cash flow issues since the payment window opened on 1 December, 2015. They are committed to continuing to provide this assistance and welcome the Scottish Government’s decision to offer additional support to those who are unable to access lending facilities through normal commercial terms."

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For more details on the Cash Flow Loan Scheme:

Cash Flow Loan Scheme