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November 4, 2003 7:16 PM

More of Scotland's farmland could be used to grow energy crops under recent reforms to the Common Agricultural Policy (CAP).

Speaking at the Scottish Crops Conference at Perth, Environment and Rural Development Minister Ross Finnie announced details of a study to establish the availability of biofuels within Scotland, and to identify any barriers to expansion of the sector.

The study by the Macaulay Land Research Institute is being funded by the Executive. Enhancing biomass power is a priority area in the Executive's Forward Strategy for Scottish Agriculture.

The Executive is currently consulting on the CAP reform package and the flexibilities available within it. From 2004 there will be a provision for a new subsidy payment of €45 per hectare per year available for energy crops on land other than that set-aside.

Mr Finnie said:

"The opportunities now open to us under reform of the Common Agricultural policy mark a crossroads for Scottish farming.

"The key achievement of the June negotiations is to allow farmers the freedom to farm. Farmers now have the opportunity to produce for the market, not the subsidy. Farmers across the board, must see themselves as the first stage in the food - and drink chain. There are other opportunities too.

"What is clear already is that decoupling, breaking the links between subsidy and production, is not optional. While there are limited opportunities to recouple to address specific areas of concern, decoupling will force agriculture to become more market focused.

"The Forward Strategy for Scottish Agriculture acknowledges that the production of non-food crops, and the processing of animal residues into biofuels and other products, offer considerable scope for development.

"The Strategy also acknowledges that Scotland must look to these new markets for solutions that result in good economic returns to agriculture, while also meeting our wider environmental objectives such as reducing the use of non-renewable energy.

"The study will provide the basis for future developments in the area of energy crops."

Mr Finnie also announced that as a result of the exceptional weather conditions enjoyed this year, provisional figures suggest that the Scottish cereals harvest will be around 2.9 million tonnes in 2003, a rise of 15% on the previous year.

Mr Finnie confirmed that payments for 2003 under the Arable Area Payments Scheme would start on Monday November 17 - the first available day for payment under the EU legislation. The bulk of the claims are expected to be paid within the first 2 weeks. Some £129m (£10m more than last year) is expected to be paid out under the scheme by the end of January 2004.

The June CAP Reform agreement provides for a new energy aid scheme to be introduced from 2004. An aid of €45 per hectare per year will be granted for areas sown under energy crops, subject to a maximum guaranteed area.

The aid will be granted only for those areas covered by a contract between the farmer and the processing industry.

The European Commission will review the energy aid scheme by end of 2006, taking account of implementation of the EU biofuels initiative.

The existing provision for growing energy crops on set-aside land will continue under the Reform agreement, although areas subject to an application to the energy crops scheme will not count towards the set-aside obligation.