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1. Background
1.1 The purpose of this consultation paper is to seek views on the Less Favoured Area Support Scheme ( LFASS) for Scotland. The present interim scheme runs from 1 January 2007 until 31 December 2009. As explained in section 2, there are currently EU-wide discussions about LFA support. If these are successfully concluded, then this could have significant implications - particularly for the classification of LFAs and for the basis for payments. These changes will require EU-wide agreement and current indications are that implementation is unlikely before 2014. Accordingly, while seeking views (in section 2) on possible responses to these EU-wide developments, this consultation paper focuses (in sections 3 - 6) on the development of a "second interim scheme", for the period from 1 January 2010 until 31 December 2013.
1.2 Aid to farmers in LFAs within the EU is a long-standing measure of the Common Agricultural Policy ( CAP). Since 1975 it has provided a broad-scale mechanism for maintaining the countryside in marginal areas. Within Scotland, LFASS is a significant component of the Scotland Rural Development Programme ( SRDP) 2007-13 1. It forms part of "Axis 2", which aims to improve the environment and the countryside. The indicative financial tables for the SRDP show that expected expenditure on LFASS over the seven years of the programme is €623.4 million, or nearly 30% of total expenditure. This equates to about £61 million per year at the exchange rate used in the SRDP.
1.3 LFASS was also an important component of the previous SRDP (2000-06), playing an important role in supporting farm business viability 2. A recent review 3 concluded that LFASS 2000-06 had provided socio-economic benefits to the farming community, and indirectly to the wider economy, and contributed to maintaining livestock numbers and stabilising farm incomes. It concluded that the main rationale for support in LFAs is "to maintain multi-functional farming systems providing public goods within a viable socio-economic context".
1.4 Members of the LFASS Stakeholder Group 4 have asked that the interim scheme be reviewed, and the SRDP 2007-13 includes a commitment to monitor and review the interim scheme. This review of the LFA Scheme also takes place against the background of the CAP Health Check, about which the Scottish Government has consulted separately 5. It is important that decisions on LFASS are taken within the wider context of decisions on implementing the CAP Health Check.
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