Scottish Suckler Beef Support Scheme: Front-loading and small herd derogation scenarios. A NISRIE project report for the Scottish Government

<p dir="ltr">Scotland has retained ‘voluntary coupled support’ for its suckler beef herd since 2005 in recognition of the importance and vulnerability of the sector. Previous iterations of the Scottish Suckler Beef Scheme (SSBSS) had double or triple payments on the first 10 animals, recognising the higher unit costs of production faced by smaller producers. The higher payment on the first 10 calves in legacy schemes also acknowledged the social, economic and environmental benefits of small-scale cattle production across Scotland’s rural and island settings.</p><p dir="ltr">Analysis shows that the smallest 20% of SSBSS-claimant businesses only accounted for 1.6% of the scheme’s island payments and 2.1% of the scheme’s mainland payments in 2023. In contrast, the largest 20% of scheme claimants in 2023 accounted for 62% of the island's budget and 55% of the mainland budget.</p><p dir="ltr">From 2025 the Scottish Government have introduced a new 410-day dam calving interval eligibility condition on SSBSS calves to introduce environmental conditionality into the scheme that aims to reduce Scottish Government payments associated with technical inefficiencies and excess greenhouse gas emissions.</p><p dir="ltr">There is a wide range of calving interval performances within the SSBSS herd. Modelling predicts that 73% of island businesses and 63% of mainland businesses would have faced support changes of +/-£500 in 2023 due to the 410-day calving interval condition being imposed retrospectively. That said, a small number (158) of larger producers were estimated to face changes of +/- £3,000 in 2023 due to calving interval performance.</p><p dir="ltr">Analysis has demonstrated that the small and medium-sized suckler herds have the lowest proportion of cows that meet the new calving interval condition. Further analysis has also demonstrated that, based on payment estimates, herds with seven or fewer eligible calves in 2023 would face decreased SSBSS payments if a single calf failed to meet the 410-day calving interval condition.</p><p dir="ltr">Recognising stakeholder concerns regarding the potential impact of the calving interval condition on small herds, the Scottish Government requested analysis to assess the potential economic impacts of redistributive (so-called ‘front-loading’) and small claim derogation scenarios. The front-loading scenarios mean, similarly to earlier iterations of the SSBSS, a higher payment rate is afforded to the first ‘X’ calves in any claim. This analysis examined the following front-loading scenarios: 1 calf at 100% uplift; up to 5 calves at 50% uplift; up to 5 calves at 100% uplift; up to 10 calves at 50% uplift; up to 10 calves at 100% uplift. All scenarios were compared to the modelled 410-day payment rates since the new 2025 regulatory baseline contains a 410-day calving interval eligibility condition.</p><p dir="ltr">Front-loading on the first ‘X’ animals of each claim appears to be an attractive way to safeguard the smallest SSBSS claims/herds against the challenges of having all calves 410-day eligible for support. Front-loading uplifts impact claim sizes significantly beyond the first ‘X’ animals. Whilst a large number of small claimants benefit from front-loading, these scenarios must be paid for by lowering the effective payment rates to all animals in herds above the front-loading threshold. The larger the claim size, the higher the effective front-loading contribution (payment reduction) made per calf.</p><p dir="ltr">However, given the policy drivers (reduced emissions) and existing commitments on calving interval conditionality in the SSBSS, it may be challenging to justify front-loading in the SSBSS without introducing new policy objectives in the scheme. From a policy perspective, care must be taken to ensure there remains adequate signalling (through payment rate uplifts) to medium and large-sized herds that reward delivery of the desired policy outcomes.</p><p dir="ltr">Front-loading does not mitigate the loss of support for any producer that has no calves meeting the 410-day criteria. For example, in a 3 cow herd, 3 calves born at 415 days calving interval due to force majeure type scenarios, would receive no support, even with front-loading.</p><p dir="ltr">In contrast to redistributive support, a small claim derogation appears relatively attractive to safeguard support payments in the smallest claim sizes. Derogations for a maximum of 7 calves and a maximum of 10 calves were modelled. In this exercise, animals in claims receiving a derogation were deemed eligible for the 410 payment rate. This also meant that claimants receiving a derogation would automatically receive an uplift on 2023 payment rates.</p><p dir="ltr">The derogation scenarios do not dilute the policy rationale for the 410-day calving interval – that is signalling improved technical performance that can help reduce emissions - as it is relatively inexpensive to deliver. Any such derogation would safeguard those businesses claiming SSBSS that have a possibility of losing support payments under the new 410-day rule. The derogation could help safeguard an SSBSS Just Transition for the smallest herds and could also reduce claimant and Scottish Government administrative costs and burdens by mitigating the risks of a large volume of force majeure claims</p>