Rural Affairs Secretary Richard Lochhead announced a new package of support measures for Scottish farmers yesterday, with a five-year transition period to give the industry time to adjust.

In a statement at Holyrood yesterday, Mr Lochhead outlined how the new Common Agricultural Policy (CAP) will be implemented in Scotland, including plans for direct farm payments and Scotland's rural development programme between 2015 and 2020. A significant amount of work is needed to ensure the details on implementation and eligibility are available to the industry as soon as possible.

The main points include:

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l Strict activity requirements that farmers will have to meet to be eligible for direct payments. This will remove land with no agricultural activity from the payment regime, which is currently estimated at 600,000 hectares.

l Basic direct farm payments will be capped at around £400,000 per year after labour costs.

l Sporting estates will be added to the negative list to exclude them from receiving direct farm payments unless they can prove they are a genuine farm business.

l The creation of three payment regions and a coupled support scheme for producers in the third region, worth around €25 per ewe.

l A five-year transition between 2015 and 2019 for the move from historic to area-based farm payments, which is required by Europe. New entrants, previously excluded from receiving direct farm payments, will get the regional average from day one of the new CAP.

l A £45m three-year beef improvement scheme in addition to the eight per cent coupled support scheme for beef which is being retained. Beef producers on the islands will be eligible for higher coupled support payments than mainland producers, with an uplift of around €65 per calf.

l A greener CAP, with farmers being rewarded with Pillar 1 top-up payments for taking action to protect biodiversity and reduce emissions, and confirmation that rural development funding for agri-environment and climate change schemes will be increased by more than £10m per year.

lA separate capital grant scheme is provided for crofters in the rural development programme.

Mr Lochhead said: "This is the most radical redistribution of CAP payments ever and we have strained every sinew to forge from challenging circumstances a production-based and sustainable agricultural policy.

"I have been particularly conscious of the likely impact of these CAP reforms on Scotland's beef sector which is worth over £2bn to the Scottish economy as a whole and likely to be hit hardest by the move to area-based payments."

NFU Scotland President Nigel Miller said: "The reality is many face a steep reduction in support levels...Transition to the new arrangements has been a battleground over the last few weeks with those recently entering into the industry wanting an overnight move for all claimants to full area support in 2015, while many established businesses wanted a transition period to manage change.

"This has been a difficult area for Scottish Government and the Union, and Richard Lochhead has opted to go down a compromise two-speed approach we support."

In line with industry requests, allocation of entitlements will reflect the area farmed in 2013.