Official Report (Hansard)
Date: Tuesday, 05 February 2013
Committee for Agriculture and Rural Development
Rural Development Programme: DARD Briefing
The Chairperson: I welcome Lorraine Lynas, principal officer; Rosemary Agnew, principal officer; and Niall Heaney, principal officer. You are very welcome to the Committee. I am sure that you will have a presentation for us before we go into questions.
Mrs Lorraine Lynas (Department of Agriculture and Rural Development): Thank you, Chairman and Committee members, for the opportunity to provide you with a briefing on the current stage of development of the rural development programme. My responsibilities include managing authority for the current rural development programme and for the drafting and approval of the next rural development programme. I am supported today by Rosemary Agnew, from policy and economics division, who has been involved in the development of the competitiveness proposals and has policy responsibility for young farmers and areas of natural constraint; and Niall Heaney, who has policy responsibility for the broader rural areas and the rural White Paper action plan.
The EU proposals for rural development for 2014-2020 were published as part of the common agricultural policy (CAP) reform proposals in October 2011. At the same time, the EU published its proposals for the structural funds and common provisions for all of the EU funds. As you are aware, a key document in driving all EU policy is the Europe 2020 strategy, and it has three main aims for reviving the European economy in response to the current economic downturn. The EU aims to see growth that is competitive, sustainable and inclusive. It has translated those objectives into objectives that are relevant to rural development. It sees smart growth as being achieved through the competitiveness of our agriculture and food industries; sustainable growth through the sustainable management of our natural resources; and inclusive growth through balanced territorial development of rural areas. Beneath these three objectives, the proposals specify six EU priorities for rural development: knowledge transfer and innovation in agriculture, forestry and rural areas, which is described as a cross-cutting or horizontal priority; farm competitiveness and risk management; food chain organisation; restoring and enhancing ecosystems; promoting resource efficiency; and social inclusion, poverty reduction and rural economic development.
Each member state can design its rural development programmes from a selection of up to 23 measures to take into account their specific needs and the six EU priorities. The only compulsory measure from these is the agrienvironment measure. The main differences from the current regulation are the removal of the axis structure to improve the flexibility of the programme; a consolidation of existing measures into fewer broader measures; and an increased focus on knowledge transfer and innovation, co-operation, climate change mitigation and the environment. The strong focus on innovation in the proposals is to promote a resource-efficient, productive and low-emission agricultural sector, and, to accommodate this change, the proposals have been adapted and streamlined to cover co-operation, pilot and demonstration projects and an increased focus on skills and knowledge transfer.
One other key difference is the shift from demarcation to complementarity of EU funds. The EU has published proposals for an overarching regulation on common provisions for the regional development fund, the social fund, the cohesion fund, the rural fund and the maritime and fisheries fund. This will require each member state to prepare a partnership agreement in conjunction with its partners and stakeholders. The agreement should include a summary of the main results expected from each fund and must be submitted at the same time as the proposed operational programmes, including the rural development programme.
The challenge for the Department of Agriculture and Rural Development (DARD) and, indeed, all member states is to develop their rural development programmes based on draft proposals, which are subject to change, without knowing the detailed regulations and, therefore, the detail for the individual schemes and measures, and with no idea of the budget available for rural development. In response to this challenge, DARD established a CAP reform programme board in January 2012 to take forward the implementation of pillar 1, direct payments, and pillar 2, rural development. A number of subgroups consisting of both policy and delivery staff were established in line with the six EU priorities that I outlined. Each subgroup was tasked with considering the potential support provided by the draft regulation and an analysis of the current situation for the agrifood industry and for our broader rural areas.
Although the draft proposals would allow for a number of our existing schemes to simply transfer to the new funding period, the challenge was to look more strategically at where we wanted the agrifood industry and economic growth in our rural areas to be in 2020 and to design the schemes and measures as the main driver to achieve that change. The main direction of the proposals, therefore, is to support our agrifood industry through promoting growth. This should be achieved by ensuring that the industry has access to the necessary skills through peer learning and knowledge transfer. It is important that the acquisition of skills is supported by capital investment targeted at the correct level for the business and, where necessary, supported by a business plan. The proposals also promote the importance of resource efficiency, not only in reducing the emission of greenhouse gases and the reduction of fertiliser use but in supporting competitiveness through a reduction in operating costs and increased efficiency. Animal health and welfare is recognised as a cross-cutting issue that has the potential to improve the competitiveness of the farming industry. Management of our natural resources to improve biodiversity and climate change mitigation remains a high priority through the agrienvironment programme and forestry schemes. For broader rural areas, our proposals recognise the importance of building on the current schemes in the rural development programme and our anti-poverty and social inclusion programme.
As with the current programme, the EU requires it to be developed in conjunction with our partners and stakeholders. A stakeholder consultation group was established in November to discuss the initial proposals for rural development. The group has a wide range of stakeholders, including the farming unions, environmental NGOs, local government, local action groups, universities, business groups and representatives from the rural social economy.
This document is a starting point for discussion with our wider stakeholders and partners. We will continue to refine these proposals over the next few months, taking into account not just the stakeholder views but feedback from our independent evaluators, which we expect to appoint in the next few weeks. We intend to launch a public consultation on the proposals in April, but that will be very much dependent on the progress of the EU negotiations.
The rural development programme is of major importance to the Northern Ireland economy. Many decisions still need to be made, such as those on the delivery mechanisms, grant ceilings and rates, and the balance of funding between priorities. If insufficient funding is available to deliver all the proposed activities, difficult decisions will be required about which activity should have the highest priority.
I am happy to endeavour to answer any questions you may have on the content of the discussion paper or the process of developing the next programme.
The Chairperson: OK. Thank you very much, Lorraine, for your presentation. I have a question about the process and the input from organisations. I know that Ballymena Borough Council had sight of this document and debated it of late. I am sure that it has been the same for other councils. I think that this is the first time that the Committee has had sight of it. However, we had the stakeholder event a number of months ago. I cannot remember when it was. How useful was that exercise and how much of that has been inputted to the document?
Mrs Lynas: The stakeholder event may have been last January, and I attended it. The stakeholder event was useful in highlighting a lot of lessons that need to be learned from the current programme. A lot of the detail will come at the next stage when we start to design the delivery of the schemes and measures, which we cannot do at this stage because we do not have the accompanying implementing regulations. Even the barriers report, for example, with axis 3, will still be a very useful document, but we will not be able to use that until we get into the scheme design.
This document is still very high level, because the regulations are not set and are subject to change until we get agreement. Even small words changed within those could change the outcome and what we support. I would say that, yes, it will be valuable, but it will probably be more valuable when we get to the next stage and start to set the detail around the schemes and delivery.
The Chairperson: Would the same apply to your mid-term evaluation of the current programme?
Mrs Lynas: I think that we all recognise that the mid-term evaluation happened too early in the programme. We had to do it in 2010 because of the regulatory requirement. We have since commissioned a mid-term update, which we are waiting to finalise. The mid-term evaluation and update looked more at the higher level because of the evaluation questions that the Commission set. That looks more at the impact of the programme.
There are different levels. There is an evaluation of the processes that we have used and an evaluation of the impact that the money made on the ground. We can do all sorts of evaluations and apply them as necessary.
The Chairperson: As you said, this is a very high level document. Two of the main issues around the current programme were getting the vehicle working to spend the money, and the recession and getting match funding. Is there any way that we can, at this stage, recession-proof?
Mrs Lynas: One thing that came out of the mid-term evaluation and the mid-term update was that the availability of match funding was a major reason that prevented the uptake of projects. That is something that is also coming out in the stakeholder group. We have had only one session of discussing priorities 1 to 4 so far, and match funding is one of the things. When we come to discuss grant rates and grant ceilings, I suspect that that will be an issue that will come forward at that point, as well.
It would be very difficult to recession-proof, because we are still looking at the best projects coming forward. However, our aim is to look at the industry, both the agriculture and the agrifood industry, and to promote growth, and, by promoting growth, we will help those industries to withstand any fluctuations in the market and so on. It is at a high level, because that is all that we can do at this stage until we get more detail. However, it is about driving growth, and that is what we were intending.
The Chairperson: I will open up the questioning to members. I would appreciate it if members would keep it at a high level and not concentrate on constituency matters.
Mr McCarthy: I will try to abide by your ruling. [Laughter.] Thank you for your presentation. I am sorry that I missed the first part of it, but I am under pressure. I should not be here; I should be somewhere else.
How will the Department ensure that the correct levels of funds are targeted to help our natural environment? I am away from Strangford altogether.
Mrs Lynas: From the feedback that we have from the stakeholders so far, they are broadly in agreement with the proposals that are there. However, I suspect that the main differences will occur when we start to assign money to each of the priorities. The environmental stakeholders are very keen that we continue on the schemes that we already have. Agrienvironment climate is the only compulsory measure in the programme. So, we do have to have it in there. We have a legacy of agrienvironment carrying over from the current programme into the next programme. In the current programme, agrienvironment is worth £180 million out of the £500 million. Therefore, there will be a very strong environmental component within that in the programme.
The other aspect is that the Commission is very keen on three cross-cutting issues: client change mitigation, innovation and the environment. The Commission says that we should take the environment into consideration in every scheme and measure that we develop, and we are going to have to show that we have done that. It is pushing growth, but it is pushing sustainable growth, and that is the important aspect of it.
Mr McCarthy: We shall see a fair level of support for the natural environment.
Mrs Lynas: It has to be there, but it will very much depend on the amount of budget that we have, and, at this stage, we have no idea what the budget is likely to be.
Mr McCarthy: I wish you all the best.
Mr Buchanan: Your document focuses a lot on the programmes, but what about the delivery mechanism? In the past, bureaucratic burden was always a difficulty. Although we have been trying to get away from the bureaucracy and to get a more simple delivery, it has not really happened. Can we be assured this time that there will be more focus on delivery and that the bureaucratic burden will be shadowed into the background in some way or other?
Mrs Lynas: We were somewhat disappointed in the lack of simplification in the EU proposals. We would have liked to see more simplification. However, until we see the implementing regulations, we are not entirely sure what the full requirements will be. The point is that the move from the current programme to the next programme is a natural break point; it is a good point at which to look at all our processes. They are going to change. The term "bureaucracy" is a starting point. We need to look at what actually needs to be done to avoid EU disallowance. We have to sort that out to start with. After that, we need to look at all our processes to see what can be simplified for the beneficiary, and we have a commitment to do that. We need to look at how we can make it simpler for people to apply and to find their way around the schemes.
The CAP reform programme board that we have put in place has a number of strands, two of which are policy — policy for pillar 1 and policy for pillar 2 — and there are also delivery strands. The delivery strands are looking at all the EU area-based together, and that includes pillar 1 and pillar 2, how we can join up inspections and so on, and how the maps will fit into that. There is a lot of thinking already around those elements. However, we need to sort out the elements that have to be done, and there are a certain number of elements that do have to be done to avoid any kind of disallowance in the future.
Mr Buchanan: I was talking about 2014-2020. When will it be rolled out on the ground, if you like, for applicants to make their applications and so forth? Last time, there seemed to be a delay. We were halfway into the programme before the application could be made. That is not good practice. On this occasion we need to ensure that we are up and running — hitting the ground running, if you like — and ready to make the application as soon as the clock starts ticking, to allow the community groups and the farming community to have the time.
Mrs Lynas: Yes. There are two aspects to that. The first is to get the programme approved, and the second is to bring in the various schemes and measures. The project that we are looking at on the delivery is identifying the key stages that we need and working on a timeline backwards to identify when we need to be kicking things off to get things on the ground. The other thing that I would point out is that although the current programme ends in 2013, the spend for axis 1 and 3 can continue until 2015, so there is no natural gap in the funding that is available as such, because those local action group (LAGs) and the axis 1 delivery agent will still be fully engaged in the current programme until 2015.
In our timeline, we are hoping to have a programme with the Commission — but that will depend on the EU negotiations — and perhaps have a programme approved by mid-2014. However, that will very much depend on the various accompanying regulations that need to come out in the processes that we are going through. We know that there was criticism the last time on the slow start to the programme and getting the structures in place. They have already been identified, as to what we need to be doing in terms of establishing LEADER groups, looking at the local development strategies, animating the territory, and getting the contracts sorted out. That is all being brought together in a project plan.
Mr Buchanan: I have just one more question. Will the review of public administration (RPA) and the change of council structures affect the LAGs?
Mrs Lynas: We are more or less at the same stage as we were the last time, in 2006, when it did affect the structure of the LAGs. As you know, we went to seven LAGs because that was the council structure, we thought, at that time. We have commissioned a review of the LEADER structures in the current programme and previous programmes, and we were looking at the effect of RPA on that as well. It is still early days, but we expect that it probably will change the structures. However, that has yet to be decided. We need to decide on the delivery structures in the next few months, because, when we go out to consultation, we will probably have to put some detail about the delivery structures in there. We are fully engaged. The Department of Finance and Personnel has established a core programming group with all of the funds, because of the complementarity issue, and all of the funds are considering the effect of RPA on the delivery models for their programmes.
Mr Swann: Thank you for your presentation. It has made it a wee bit more focused. The agrienvironmental schemes in the current programme have been problematic due to perceived non-compliance and the field boundary restoration scheme under the countryside management scheme. One of the main issues seems to be that there is a training requirement in those schemes, but it could be delivered or taken during any stage of the seven-year programme. Do you have any plans to offer training to farmers who enter the agrienvironmental schemes at the initial point, rather than somewhere in the middle?
Mrs Lynas: One of the things that has changed in that article in the regulation is to allow the provision of training. Our stakeholders have given us a very strong message that that is also what they would like in training and agrienvironment. As a Department, we also recognise the importance of people understanding the schemes and understanding what is expected of them when they go into them. Yes, there are plans in there, and we need to look at that training.
There has been a very strong focus throughout the proposals on knowledge transfer and training. With the knowledge transfer and training skills element, we are trying to make it all relevant to the schemes that we actually develop. We are looking at the processes in the schemes that we want to have in place and then looking at the training that we need to be able to develop those. All of our training is focused on what we want to deliver. Certainly, agrienvironment is one of those.
Mr Swann: Sorry, Chair, I should have declared an interest on the north-east LAG.
The Chairperson: OK. No problem.
Mr McAleer: I note that, under priority 6, the promotion of social inclusion and poverty reduction, you made reference to small enterprises and diversification and all that. In a previous time, and with other councils' shared experience, people realised that they could plan for such initiatives. Have you and the Department of the Environment had discussions on looking at the planning policies in rural areas to facilitate SMEs? There has been frustration in the past whereby a project may have been eligible for funding but was denied planning permission. Is any dovetailing going on between you to address those issues and have things ready to go?
I note, under priority 3, promoting food chain organisation. You will be aware that a groceries adjudicator is about to be appointed to look at the whole issue of the food chain. Have you considered how you could dovetail and how that project could avoid duplicating what her role might be? Perhaps it should be included as a stakeholder further down the line to see how we might be able to work together.
Mrs Lynas: The issue of planning is probably a bit further down the line, but I am certainly aware that rural development division (RDD) has had discussions with the Planning Service, particularly on diversification and so on. We will have to look at those issues in terms of the rules around the schemes, whether planning should be in place and how easy it is to get planning permission. That is not something I can comment on at this stage, but it is something that we need to consider as we get further into the development of the schemes. We can certainly take your comments on board as regards planning.
With regard to priority 3 and the food chain, we are awaiting the outputs of the agrifood strategy board. We suspect that the rural development programme may be the main mechanism, or one of the mechanisms, for taking forward some of the recommendations of the agrifood strategy board. So, that area needs a little bit more developing in the proposals, because I think the board is due to report by March. However, it is certainly a good thought to increase our range of stakeholders, because although we have a stakeholder group, we also engage with people outside that. It is probably a good idea to maybe include them in our proposals, especially when we know what the initial reports from the agrifood strategy board are likely to be.
Mr Irwin: I suppose that I, too, should declare an interest: I sit on the Southern Organisation for Action in Rural Areas (SOAR). We are all aware that there were problems with the last rural development programme. I think that many of us had concerns from very early on that there would be problems. Recently, as I have said before to the Committee, £1·1 million was decommitted within SOAR. Quite a proportion of that was because of red tape and bureaucracy. Why do we seem to be dogged with red tape and bureaucracy while our neighbours in the Republic and other areas seem to be able to deliver a programme that is less bureaucratic and with less red tape? Why is it that we seem to be lagging behind other areas in that regard? I had a meeting with one of the departmental staff, who openly said to me that if you were only living a few miles down the road from my own office it would be much different.
Mrs Lynas: I am not aware of the full ins and outs of what the Republic of Ireland programme does deliver. I think you get differences between member states. You get a regulation and a set of implementing regulations, and then you are expected to draw up rules and regulations around those. It can then be up to member states to interpret those, and many interpret things in different ways. It is normally only when a member of the Court of Auditors comes in that you are told whether you have got it right or somebody else has got it wrong.
With regard to bureaucracy and red tape, we will have to do a regulatory impact assessment on the new programme as well. It is a starting point, a new period to look at all the operating rules and so on. The other aspect of that in terms of the rules is to bring the stakeholders on board early in developing those so that they can see which rules are needed and which are not. There is a general feeling of bureaucracy, but some of that is actual procurement rules that have to be done. However, it is important to make sure that our stakeholders understand and are brought on board early in that process.
Mr Irwin: I have a supplementary question on a slightly different issue. Do you envisage a break in the programme from the old programme to the new programme, and how long will it be? Will it be one year, less than that, or more?
Mrs Lynas: It depends very much on what axis and what scheme you are talking about. As I said, axis 1 and 3 can continue to spend until 2015, so we do not envisage — if we can get the programme approved and the structures in place. If we decide on the new LAG structures, there will be a period where we will have to bed in those new LAGs, but we could be establishing the LAGs, doing the animation and getting their local development strategies in place. With regard to agrienvironment, anything after December 2013 will fall in the new funding period, and any new contracts after that will have to be in the new funding period. The challenge around agrienvironment will be to get a new scheme up and running early in the new programme. However, the problem is that we need to know the outcome of the greening issue in pillar 1 before we can decide the entry into an agrienvironment programme. Therefore, we are, at times, waiting quite a lot for the Commission to bring forward certain stages before we can move to the next stage.
The other aspect of this is what happens if the regulation does not get improved in time. So far, the Commission has not come forward with a plan B; it wants us to look at ensuring that we can get agreement on the regulation. It gave a verbal presentation on perhaps rolling over some of the land base, but we are waiting for more information from the Commission. However, if it does have a break and roll over, it will have to bring in something that will cover that year, and funding to cover that year. We aim not to have a break in the programme, but it depends on re-establishing new delivery mechanisms.
Mr Byrne: I welcome your presentation, and I thank you for the document. It is pretty extensive and complex. I empathise with the three lines of questioning in relation to bureaucracy, match funding and — the issue raised by Declan — rural planning for an agribusiness. My question relates to young farmer entrants. Are any targets going to be set in Northern Ireland — a sort of quota that we are going to try to aim for? Secondly, in relation to rural businesses, what sort of employment creation numbers will be put in place so that we have a target to work towards?
Mrs Lynas: I will take the second question, on rural businesses, first. One of the main differences in the regulation is that, previously, we could only support microbusinesses. In the draft proposals, that will change to SMEs — small and medium enterprises. That will change the focus on what we were able to do previously. There is also a change in the processing and marketing grant scheme where we might be able to support larger firms. It will give us an opportunity to hit a population that we have not been able to previously in the rural development programme. In the last two programming cycles, we have had to be focused in microbusiness. There is also still diversification in there. There is the new business start-up. The aid is different in this proposal in terms of new business start-up; it is a flat payment of €70,000 on the successful implementation of a business plan, and that is also new. Previously, new business start-up aid was always on a particular piece of equipment or a particular service that they wanted to supply.
In relation to your question about whether there will be a quota for young farmers, one of the difficulties in the regulation is the definition of a young farmer, which is 40 years or younger and is head of holding, setting up for the first time. We have been lobbying quite hard to get that changed. Two types of support are available: the business start-up for farming, which is the €70,000 and is the same for rural businesses; and an enhanced grant rate through the physical investments measure where we could go up to 60% of a grant rate for young farmers. We would like that definition changed to a young farmer who is head of holding or who has become head of holding within the past five years or is just head of holding. There seems to be some movement on the MEP version of the text that we have seen. If we do not get it changed, it will limit the support that we have available, and then we may have to look at what we have done currently in the programme regarding selection criteria and other ways to incentivise young farmers into the programme.
Ms Rosemary Agnew (Department of Agriculture and Rural Development): In terms of the quota, we know from all of the statistics that the age profile of farmers is somewhere in the mid-50s. However, if you delve into those statistics for particular sizes and types of farms, the people working on those farms as the main workers, and those farms are younger. We are commissioning a survey, or hoping to, to look at the actual age profile of young people out there. However, as Lorraine said, it is complicated by the definition of a young farmer. We all recognise that there are succession issues. Farming is an industry, and succession needs to be there. However, part of the difficulty that we face as a Department is that we do not know how many young people are out there. We are trying to look at that in time to try to do something in the current programme if the need is there.
Mr Byrne: In relation to the clarification surrounding microbusinesses, which you are hoping to move to bigger types of businesses, will that mean that there will have to be interaction between the Department for Regional Development and Invest Northern Ireland, or will it be completely separate?
Mrs Lynas: Because the common provisions regulation allows for complementarity of EU funds, and we have established the core programming group, we have been discussing with Invest NI the type of support that it offers for its small businesses. We need the make sure that the programmes all complement each other in terms of training and capital support. Those discussions have been ongoing with the Department of Enterprise, Trade and Investment and with the Tourist Board in relation to tourism.
Mr Byrne: Thank you. Can I have one more supplementary question about young farmers, which will be crucial going forward?
The Chairperson: Go on ahead.
Mr Byrne: With regard to the definition, age will be one factor, and the other issue will be what land or otherwise he or she may own. Let us say, for example, that we have growth in the intensive hen or chicken sector. A young man could maybe acquire or get access to three acres. Will he have to have an extensive holding, however, or can he operate with a minimal holding that might sustain a three-hen-house business?
Ms R Agnew: That very much depends on whether the Commission comes forward with any clarification on what it means by head of holding. The Department has operated, and continues to operate, a new entrants scheme, which offers a similar type of funding, although it is not quite the same. In that scheme, we had quite extensive difficulty in determining what was meant by head of holding. In that scheme, the head of holding did not have to own any land; the head of holding had to receive a 51% share of the profits from the business, but he or she did not have to own the land. Therefore, size did not come into it. However, it very much depends on whether the Commission comes forward initially with any definition of what it means by head of holding.
Mr Byrne: Are we looking for a looser definition, such as farm manager?
Ms R Agnew: As Lorraine said, we are seeking a revised definition of what the Commission means by young farmer, so that it would be open to more applicants or, potentially, a wider pool of applicants. As it currently stands, it would only be applicable to a very small number of people.
Mr Swann: Following on from what Joe said, we are talking about definitions: active farming.
Mrs Lynas: That is a pillar 1 question. [Laughter.]
Mr Swann: Just in case you might have known.
Ms R Agnew: It is a pillar 1 question, and all I can say is that work is progressing. You will be aware that the Minister has been very clear and said that she is sympathetic to the argument that single farm payments should only go to active farmers, but the Commission's proposals are not effective and not workable at this point. We have sought, and are still seeking, to get that amended quite significantly. The latest presidency texts and the European Parliament comprise amendments have made suggestions in terms of a negative list moving away from the Commission's proposals. They have also suggested that there might be an opportunity to have an option at a regional level linked to an allocation of entitlements based on a previous production activity, and you will know that the Minister has been very keen on it. However, that has still some way to go. It is still a work in progress, but a significant issue for the Department and for all of us.
Mr Swann: Thank you, Chair, even though it was a pillar 1 answer.
The Chairperson: Thank you very much for your presentation and your answers. What is the process from here?
Mrs Lynas: We are still refining the document, and DARD will finish its internal work quite soon on that. The next stage is that the stakeholder group will discuss priorities 5 and 6 at our next meeting in February. We then need to look at all of the stakeholder comments and revise again. That then goes to the ex ante evaluators once we get them appointed in the next week or two. They will give us some feedback on our proposals based on the strengths, weaknesses, opportunities and threats analysis and the socioeconomic analysis. We will revise that, and that is what will go out to public consultation. I am happy to share any further revisions of the document with the Committee if it wishes to see them. We will probably have to come back with a revised document before the public consultation. I am also happy to share the stakeholder comments with you.
The Chairperson: That would be very useful.
Mrs Lynas: When we consolidate them into one document after the next meeting, we can certainly send the stakeholder comments.
The Chairperson: Thank you very much. Thank you for your time.