There has been a public wrangle lasting more than a year over the plans to introduce electronic tags. The extent of the divide over this issue was evidenced earlier this week with a farm survey by Lloyds TSB showing almost every sheep farmer being against the proposal.
In the announcement, rural affairs secretary Richard Lochhead said the government would cover the additional cost of tags for all farms taking part in the 3 million electronic identification (EID) research pilot, which would be extended to continue to identify workable solutions aimed at further reducing industry costs.
After attacking the European legislation that necessitated the scheme, NFU Scotland President Jim McLaren welcomed the latest interpretation the Scottish Government had put on the scheme.
"The Scottish sheep industry, including the Scottish Government, was united in its opposition to this European Regulation. While concessions were secured, we were ultimately faced with the need to implement these unpopular requirements to meet EU rules," he said.
"I believe our Cabinet secretary, Richard Lochhead, has come up with a tremendous package that will introduce the regulation across our whole sheep sector in a constructive and positive manner while keeping disruption in the sheep trade to a minimum."
McLaren added he believed the proposals would stand up to any future European inspection.
The union president described the 1m worth of additional funding for the tags in the first year as a "fantastic offer" that would address much of the financial burden faced by sheep farmers.
As the scheme is already up and running, he advised that farmers looking to acquire the electronic tags at a price equivalent to current plastic versions needed to join the pilot.
Other parts of the government package announced yesterday include introducing critical control points at markets and abattoirs, thus allowing tags to be scanned at these central points.
Alan Craig, president of the Scottish Association of Meat Wholesalers, said these control points were critical to the success of the scheme. He added that the EID scheme could unlock many other benefits which would enhance the whole supply chain.
He said: "The abattoir sector has always been forward-looking and will continue to work with other stakeholders to maximise these opportunities."
The union also welcomed this proposal, believing it would strip out the cost of farmers having to have their own electronic readers. It has been estimated that if all producers had been required to invest in one of these pieces, it would have taken 4m to do so.
It was also revealed that farmers with more than one holding would be exempt from having to record any movement between the holdings, as "within business" movements will be allowed.
However, the government has decided that all lambs will require an electronic tag. It had been thought that if lambs were born, brought up and went straight to the abattoir, then they would not need to be EID tagged.
However, the union has accepted that it would be easier just having all the sheep being monitored by one system and not by two, as would have been the case under the exemption.
Lochhead indicated that there was at least one other part of the scheme that he intended taking up with the new EU commissioner at the first opportunity. This is to try to get a derogation saying that lambs need not be tagged until they are taken off the holding. This would particularly help hill farmers.