Farmers have been dealt a “slap in the face” by plans to charge them extortionate interest on emergency loans they only took out because of Scottish Government bungling.
The distribution of EU subsidies has been dogged by delays which have threatened to plunge the industry into crisis.
A failed £178million IT system is at the heart of the fiasco and the SNP administration at Holyrood has been forced to pledge £200million for cash advances to stave-off a full-scale rural revolt.
But farmers whose hardship payments end up exceeding the sum they are entitled to under the Common Agricultural Policy (CAP) will have to stump-up the difference – plus interest eight times higher than the UK base rate.
Tavish Scott, the Liberal Democrats’ agriculture spokesman, said: “This is another slap in the face for farmers who have already been left out of pocket by the utter failure of the SNP to get to grips with the CAP payment fiasco.
“Farmers and crofters have already paid dearly for the Scottish Government’s IT shambles.
“Now they have been told that they could face interest payments on a scheme that would not have been necessary if (Rural Affairs Secretary) Richard Lochhead had done his job in the first place.”
Last month the government said any farmers and crofters who had not yet received their first instalment of the CAP by the end of March would receive a cash advance worth 80% of their entitlement.
Under the National Basic Payments Support Scheme, farmers who have been overpaid will have to pay interest of 4.2% on repayments.
Interest will only be charged seven days after the CAP payment is made, but farmers say they are unlikely to have cash lying around to make repayments within a week.
Farmers who get £20,000 in CAP payments and are overpaid by £3,000 could face an initial bill of at least £166.
Scott Walker, chief executive of the National Farmers Union Scotland, said it was unlikely his members would be overpaid in the first place – but criticised the principle of punishing them for the government’s mistakes.
“We believe it is wrong that anyone should be penalised by what has been mismanagement of a flawed IT delivery system,” he added.
A Scottish Government spokeswoman said the scheme had been designed so the basic payment under CAP was more than the cash advance under the support scheme.
If the reverse was the case, the “claimant will have to repay the difference between the two amounts”.
“In such cases, if a claimant repays the balance within seven days, no interest will be charged. Interest at 4.24% on the difference, will be charged from seven days after CAP BPS (basic payment scheme) and Greening payment is made,” she added.
