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NFFN Scotland: The 2025-26 agriculture budget gets a mixed response

Scotland
Policy & Views
Agriculture Bill
Budget
Farming budget
Government

The Scottish Government’s budget proposals for 2025-26 have been met with mixed reactions, with key funding increases for agricultural transformation alongside concerns over a real-terms cut for the sector. Adam Forrest, our NFFN Scotland Manager, provides insights.

Shona Robison, Scotland’s deputy first minister and the cabinet secretary for finance and local government, presented the SNP’s budget bill to set out their spending plans for 2025-26 on Wednesday 4 December.

Against the backdrop of a record-high £47.7 billion total settlement from the UK Government and the removal of the ringfence around Scotland’s agriculture budget, the proposed spending plan aims to maintain the Basic Payment Scheme (BPS) and Greening at their 2024-25 levels. These schemes will be extended for another year, as expected from the Agricultural Reform Route Map.

These spending plans provide no insights into allocations within the forthcoming four-tier support framework, as set out in the Agriculture and Rural Communities (Scotland) Act. This framework will deliver more significant changes to Scotland’s rural support landscape from 2026-27 onwards.

'Business as usual' may provide some reassurance in challenging times, but we know that bigger changes lie ahead and more investment will be required

Adam Forrest

The headline of the proposed budget is the partial restoration of funds previously taken from the agriculture budget. Of the £46 million cut,  £20 million will be reinstated in 2025-2026, with the remaining £26 million to follow the next year. This £20 million will increase the Agricultural Transformation Fund from £4.5 million in 2024-25 to £23 million in 2025-26.

This would bring much-needed capital funding into the portfolio, with the Scottish Government expressing a desire to collaborate with farmers on how best to allocate the resources. To support nature-friendly farming, we believe this could include:

  • Reinstating or redesigning the Food Processing, Marketing and Cooperation (FPMC) Grant Scheme which offered capital support for food and farming businesses, such as new abattoirs and cooperative processing facilities.

  • Capital grants for supply chain development initiatives which support nature-friendly, organic and regenerative farmers to add and retain value through more direct sales and the creation of local food networks, aligning with the aims of a Good Food Nation.

  • Agroforestry grants enabling low-density woodland planting.

  • A flexible capital fund supporting farmer-led, nature-friendly farming projects that complement other land management schemes

  • An Organic Action Plan which is robust and well-resourced.

The Agri-Environment and Climate Scheme (AECS) will remain largely unchanged (£21 million), with an additional in-year top-up of £4 million. However, this is still far short of the 2017 peak of £55 million for AECS. 

There are welcome increases in the funding for peatland restoration, which is up by £20 million, and the Woodland Grant Scheme, which rises by £7.5 million. While the latter increase does not fully offset the 41% cut made in the 2024-25 budget, it brings the total funding available for peatlands and woodlands to £90 million.

Meanwhile, the Nature Restoration Fund has been cut by £4 million compared to last year, though Scotland remains on track to meet the £65 million pledged to the fund over the lifetime of this parliament.

The Scottish Crofting Federation (SCF) has expressed disappointment with the budget proposals, suggesting they amount to a real-term cut in the overall agriculture budget which risks leaving crofters worse off. However, SCF welcomed the news that the Less Favoured Area Support Scheme (LFASS), the Crofting Agricultural Grant Scheme (CAGS) and the Croft House Grant Scheme (CHGS) will continue.

While the headline increase in the Agricultural Transformation Fund acknowledges the need for public investment to drive agricultural transformation, much of this budget remains ‘business as usual’.

This may provide some reassurance to agricultural businesses during challenging times, but we know that bigger changes lie ahead and more investment will be required to deliver on the Scottish Government’s Vision for Agriculture.

A recent Scale of Need report calculated that the current funding for nature-friendly farming across the UK falls short by between 57 and 68% of what is required to effectively tackle the nature and climate crises. 

In Scotland, we have yet to see a substantive increase in the farm budget allocated to nature-friendly farming as part of an overall increased, ring-fenced, multi-annual budget for agriculture.