A TRUCE, albeit temporary, has broken out in the war of words over the Less Favoured Areas Support Scheme (LFASS) payments.

On Monday, during a visit to a farm near Turriff, Rural Affairs Minister Ross Finnie revealed that he was to be meeting NFUS leaders today to discuss a way out of the impasse.

Until then he would refuse to discuss the problem in detail.

This position was confirmed by NFUS president John Kinnaird, who joined the minister for a visit to Arthur Duguid’s North Cranna farm, near Aberchirder, in upland Banffshire.

The two leaders were in amicable form and obviously agree on many aspects of the slowly gestating EU rural development plan—but not on LFASS.

Last week the NFUS put forward three options which would have allowed the £61 million of LFASS payments to be made in the spring as usual, only to have the suggestions swept aside by Mr Finnie who proposed a supplementary £10 million payment in the spring followed by full payments in the late autumn.

However, there could have been no better illustration of the role of LFASS in upland farming than a late afternoon trip to the top of Mr Duguid’s hill.

His 450 acres carries 163 suckler cows and 240 ewes, which he and his wife look after with only some outside help.

He grows 120 acres of barley and 15 acres of turnips but otherwise the farm is good grassland which stretches to the top of the 740-foot Gallow Hill.

Standing there in the last of the afternoon’s sunshine there were views to Mormond Hill in the east and Bennachie in the south.

The whole of the great upland plateau of Aberdeenshire and Banff was laid before the minister and it couldn’t have been a better venue for Mr Duguid and half a dozen colleagues from Turriff branch of NFUS to make their point.

Mr Duguid explained the importance of LFASS payments in keeping stock on these grazings.

He not only has to buy in winter feed but also around 1800 bales of straw at a cost of £7 or £8 a bale.

Michael Durno, who farms in Glen Livet, said his straw was actually costing £10 per bale.

Looking over to the lower arable land in the distance, North-East NFUS president Jim Stewart pointed out that there was little chance of sucker cow herds moving downhill.

“There are no fences or buildings and the expertise had been lost,” he said.

“In short, the upland areas are the vital reservoir of store stock.

“Meantime, cow and sheep numbers are dropping just as demand for finished stock appears to be increasing.”

Mr Finnie acknowledged the problem, saying, “I am cheesed off about the regulatory position which surrounds this issue of LFASS payments.

“I will meet the NFUS on Wednesday and look at the position more closely to see what can be done.

“I know that on farms such as this there is a big income gap after receipts come in from autumn sales and the single farm payment.”

Responding directly to the question of whether he wanted to see livestock in the uplands, Mr Finnie cautioned, “Livestock is very important, but the LFASS payments have a wider scope in rural development.

“If they are connected too closely to livestock then in the eyes of the EU directorates general for agriculture and environment they would be deemed to be coupled to production.

“The wording has to be such that there is no confusion over that issue.”

Later in the evening, speaking to a packed NFUS meeting in Turriff, Mr Finnie made clear his views on voluntary modulation, the issue which lies at the heart of his problems with LFASS.

The UK was the only member state in favour of voluntary modulation, or deduction, from the single farm payment to fund the so-called Pillar Two environmental measures, including LFASS.

With the other 24 member states only supporting compulsory modulation, a log jam has been created.

Voluntary modulation is nonetheless likely to be approved in coming months but there is still a problem over whether devolved administrations, such as in Scotland, can set a rate different from a UK one.

The fear for Mr Finnie and the NFUS is that a UK standard rate is set.

It would likely be at the maximum allowable 20%, given the demands of the English environmental stewardship schemes.

Mr Finnie said, “In terms of rates I am extremely concerned at attempts to remove our devolved administration’s ability to set the rate of modulation.

“My view is that there is a case for using voluntary modulation but I am constrained by the fragile state of Scottish farming.

“There is still a big gap between the top 25% and the poorest, with a big chunk in the middle still not performing well enough.

“Our current effort is concentrated on improving the viability of farming and it would not be right to take away resources by modulating at too high a rate.

“It is hopeless and unsatisfactory at the moment because modulation rates keep changing in the EU debate.

“I want to have control over modulation here in Scotland.”

John Kinnaird agreed that the Scottish minister should set the rate but stressed that modulated funds should be returned to agricultural use.

That may be the last agreement the two leaders have this week unless they can hammer out a compromise at today’s meeting in Edinburgh.

The pressure over LFASS is unlikely to ease with news that John Swinney, MSP, is to ask First Minister Jack McConnell to explain his position on the whole matter of rural development at First Minister’s questions on Thursday.