Future Agricultural Policy Proposals

Position Paper

Future Agricultural Policy Proposals Position Paper.pdf (491.26 kb)

This report is the property of the Committee for Agriculture, Environment and Rural Affairs.

Neither the report nor its contents should be disclosed to any person unless such disclosure is authorised by the Committee.

Mandate 2017-22

Contents

1. Powers and Membership

2. Executive Summary

3. Background: Agricultural Sector and Direct Payments

4. Changing Landscape of Farm Payments

5. DAERA's Future Agricultural Policy Proposals

6. Committee Position

7. Recommendations

8. References

1. Powers and Membership

1. The Committee for Agriculture, Environment and Rural Affairs is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement 1998 and under Assembly Standing Order 48.

2. The Committee has a scrutiny, policy development and consultation role with respect to the Department for Agriculture, Environment and Rural Affairs and has a role in the initiation of legislation.

3. The Committee has power to:

• consider and advise on Departmental budgets and annual plans in the context of the overall budget allocation;
• consider subordinate legislation and take the Committee Stage of primary legislation;
• call for persons and papers;
• initiate inquiries and make reports; and
• consider and advise on matters brought to the Committee by the Minister for Agriculture, Environment and Rural Affairs

The Committee has nine members, including a Chairperson and Deputy Chairperson, and a quorum of five. The membership of the Committee is:

Mr Declan McAleer MLA (Chairperson)
Mr Philip McGuigan MLA (Deputy Chairperson)
Ms Clare Bailey MLA
Mrs Rosemary Barton MLA
Mr John Blair MLA
Mr Thomas Buchanan MLA
Mr Harry Harvey MLA
Mr William Irwin MLA
Mr Patsy McGlone MLA

2. Executive Summary

4. This paper sets out the Committee for Agriculture, Environment and Rural Affairs' (AERA) considerations in respect of the Department for Agriculture, Environment and Rural Affairs (DAERA) proposals for Future Agricultural Policy.

5. It includes:

Background information on the local agricultural sector and system of Direct Farm Payments
Contextual information about changing farm payment schemes in other jurisdictions
A summary of DAERA's proposals
The Committee's consideration of DAERA's proposals and its views on the key aspects
Recommendations which the Committee suggests that DAERA takes forward

3. Background: Agricultural Sector and Direct Payments

6. The agri-food industry is key to the Northern Ireland (NI) economy and local farmers are renowned for the development of high-quality meat, dairy and crop produce.

7. Together with food and drinks processing, the agri-food sector generated approximately £5.4 billion in economy activity in 2019 and it supports employment for thousands of local people, as well as jobs in hospitality, retail and other industries.

8. The vast majority, around 80%, of local farmland is used to rear livestock (predominantly cattle and sheep) for the generation of meat and dairy products. The total calorific output from the local farming industry is sufficient to sustain around 10 million people and NI exports a significant proportion of its agri-produce to neighbouring jurisdictions in Great Britain and Ireland, as well as further afield.

9. There are approximately 25,000 farm holdings registered locally and the vast majority are designated as "Very Small." The aggregated income per farm business for 2021-22 is projected to be in the region of £33,000.

10. Profitability margins in the sector are low - in 2020 just under a fifth of local farms made an operating loss – and farmers are reliant on the system of Direct Payments which is administered by the Department for Agriculture, Environment and Rural Affairs (DAERA) and comprised 96% of net farm business income in 2020.

11. Prior to the UK's withdrawal from the European Union, NI, as part of a Member State, was integrated with the EU's Common Agricultural Policy (CAP) and funding was provided centrally by the EU for Direct Payments to farmers.

12. In recent years Direct Payments have been allocated based on the total area of land by farm holding, ostensibly to incentivise productive output, with local farmers applying on an annual basis for a payment relative to the size of the plot which they manage. Between 2015-16 and 2019-20 there was an average of £294m paid annually to local farmers.

13. Following Brexit, the UK is no longer a participant in the CAP and the UK Government has pledged continued provision of funding for NI Direct Payments commensurate with the level of funding that would have been made available by the EU until the end of the current UK Government electoral term.

4. Changing Landscape of Farm Payments

14. Across the UK and Ireland dynamics are shifting in respect of farm Direct Payments away from prioritising productive output associated with intensive land management towards incentivising use of agricultural land to benefit the climate and support environmental sustainability.

15. This is to encourage actions such as rewilding plots, planting trees and hedgerows and maintaining healthy peatland which are known to support carbon sequestration and therefore mitigate the release of harmful greenhouse gases. These measures also support biodiversity through facilitating healthy environments for flora and fauna.

England

16. Following the passage of the Agriculture Act in 2020, the Department for Environment, Food and Rural Affairs (DEFRA) announced a range of measures via a seven-year transition to deliver a new Environmental Land Management (ELM) scheme in England.

17. This will encompass a number of initiatives which will incentivise farmers to use their land for environmental and climate benefit: DEFRA has pledged that 30% of the total farm payment system will be attributed to the "Sustainable Farming Incentive (SFI) by the end of the current Parliament.

18. The SFI schemes which are currently live seek to incentivise farmers for protecting their soil health and leaving a percentage of their holding uncovered, i.e. not for productive use.

Scotland

19. In November 2021 the Scottish Government launched its Agri-Environment Climate Scheme (AECS) to promote land management practices which protect and enhance the natural environment, water quality, manage flood risk and mitigate climate change.

20. There are a range of payment incentives available under this scheme encompassing for example restoration of hedgerows, planting of new hedgerows and protecting land from grazing activities.

Wales

21. The Welsh Government is continuing with its existing farm payment regime through to the end of 2023 and intends to roll-out a new Sustainable Farming Scheme (SFS) thereafter which will address climate change and biodiversity loss by encouraging sustainable food production.

Ireland

22. In November 2021 the Department for Food, Environment and the Marine published its Strategic Action Plan to accord with the EU's proposals for the CAP 2023-27 period which includes a commitment to incentivise farmers for environmentally-friendly practices through an echo-scheme.

23. In order to apply for the incentive, farmers must demonstrate compliance with at least two of the following measures:

At least 7% of holding dedicated to non-productive and landscape features
Planting of at least three native trees per eligible hectare
Deliver a stocking rate over the previous year between a minimum (0.15 LU/ha) and a maximum value (proposed as 95kg organic nitrogen per hectare)
Limit Chemical Nitrogen Use (proposed as 73kg per hectare) across the holding
Use of a GPS controlled fertiliser spreader

24. This aligns with the bloc's overarching goals for the CAP which stipulate that at least 25% of the budget for Direct Payments will be allocated to eco-schemes and at least 35% of rural development funding will be granted for measures to support climate, biodiversity, environment and animal welfare.

5. DAERA's Future Agricultural Policy Proposals

25. On 21 December 2021 DAERA launched an 8-week a public consultation on its proposals for Future Agricultural Policies which set out how the current system of Direct Payments will change to encourage better efficiency, resilience and environmentally-friendly initiatives.

26. They also include broader policy workstreams in respect of education and knowledge transfer, capital investment and monitoring and evaluation.

Workstream 1: Resilience Measure

Purpose is to provide a buffer for the sector against short-term shocks and protect small businesses
Farmers will receive a Resilience Payment that will act as a basic safety net in proportion to the area of farmland managed. All land, excluding hard features, will be included in the geographic assessment
The total funding for the Resilience Payment will reduce over time on a phased basis and farms must meet basic requirements to apply including:
- Participation in the LiDar Scheme and soil testing
- Preparation of a Nutrient Management Plan
- Recording Sire Data for Dairy and Beef Herds

Transition of funding from the “Resilience measure to other measures will be phased in over time to assist farm transition, and it will be timed to match the capacity of these other measures to absorb and spend the monies released”
The definition of an active farmer will be revised and to be eligible farms must have cattle or sheep registered on APHIS historically or at least 3ha of an arable or horticultural crop
The minimum claim size for the Resilience Payment will be 10ha (the current minimum claim size for Direct Payment is 3ha) and a cap will be applied over £60,000
As part of the Resilience Measure DAERA will develop a Crisis Framework to support decision-making at times of market disruption in terms of the appropriateness and extent of government intervention, for example removal of commodities

Workstream 2: Headage Sustainability

Aimed specifically at suckler cow farms to promote better efficiency and is designed to facilitate change in this sector which is vulnerable and particularly reliant on Direct Payments
Aim is to improve efficiency – up to £50m of the total budget for farm payments may be allocated for such a scheme (17% as per World Trade Organisation Rules)
All suckler cow farms will be eligible based on historic cattle holdings (to avoid up-stocking)
To receive payment farmers must work over a period of 4 years to:

- Reduce the age of first calving (30 months to 27 months)
- Reduce maximum calving interval to 365 days (from 400 days)
To be eligible for the Beef Transformation Scheme payment, farms must work over a period of 4 years to reduce the maximum age of slaughter to 24 months (from 30 months)

Workstream 3: Farming for Nature

Scheme to encourage substantial contributions to environmental impacts and sustainability
All farms over 3ha eligible to apply, regardless if they receive the Resilience Payment
DAERA intends to promote a range of measures including woodland planting, peatland management, agroforestry, hedgerow plantation and field management
Peatland restoration is not included in the scheme
DAERA intends to undertake a series of “Test & Learn” pilots to identify specific schemes it will roll-out at scale

Workstream 4: Farming for Carbon

Policies designed to support enhanced productivity and better on-farm carbon sequestration e.g. reducing the number of non-productive livestock through enhanced genetics, using land more appropriately and improving feed additivities to reduce emissions
A project to evaluate the optimal timing of slurry application and fertilisers will be included

Workstream 5: Investment Measure

Continued facilitation of farm business capital grant schemes which will promote procurement at viable levels, avoid duplication and waste

Workstream 6: Knowledge Transfer

Continued facilitation of professional training and development schemes in the agricultural sector

Workstream 7: Generational Renewal

Designed to support planned and managed transition of farm ownership
Proposal to roll-out a Succession Planning Facilitation Service which will encompass a three-phase programme: (1) Planning for Succession, (2) Development of the Successor and (3) Maintaining Support for Transferrer and Successor
Aim to ensure Successor has a Level 3 Qualification in Agriculture
Enable incentives where appropriate and when key objectives have been met

Workstream 8: Supply Chain Measures

Constant review of the farming supply chain to ensure optimisation and added value

Workstream 9: Soil Testing and LiDar

Delivery of the Soil Nutrient Health Scheme to establish a soil/carbon baseline from which to measure effectiveness of interventions
Farmers must participate in the Soil Nutrient Health Scheme to receive the Resilience Payment

Workstream 10: Livestock Data and Genetics

Recognition of the need for better datasets and analysis
Aim to build a fit-for-purpose data holding of livestock with a view to:

- In the short/medium term: breed more productive animals and cull less productive ones
- In the long-term: increase profitability, reduce emissions and build better resilience
Farmers must register sires of all calves born to receive the Resilience Payment
In the future applicants to the Headage Sustainability scheme will be required to provide data for suckler cows

Workstream 11: Controls and Assurance

DAERA intends to replace the current cross-compliance Statutory Management Measures and Good Agricultural & Environmental Condition with a “simplified system” of Farm Sustainability Standards
Aim to focus on standards where there have been historically high levels of non-compliance
“DAERA’s overall aim is to make the new Farm Sustainability Standards system simpler, more flexible and more responsive to meet the challenge of current and emerging issues, whether environmental or related to animal health and welfare, food safety or plant health.”
The proposed new Standards will cover the following:

- Protection of Waters from Pollution
- Protection of Habitats and Biodiversity
- Protection of Landscape and Heritage
- Livestock food and feed/ herd and flock health and biosecurity
- Welfare and Protection of Farmed Livestock (including Transport)
- Livestock Identification and Traceability
Applicants for the Resilience Payment must adhere to the new standards
DAERA also intends to review the process for penalising farmers for non-compliance with a view to potentially introducing warnings for certain breaches (rather than fines), introduction of Fixed Penalty Notices and potential e-learning

Workstream 12: Metrics, Monitoring and Evaluation

DAERA proposes a number of measures to evaluate the effectiveness of schemes including:

- Total Factor Productivity
- Net Greenhouse Gas Emissions from Agriculture and LULUCF
- Nitrogen and Phosphorus levels
- Farm Ammonia Emissions
- Net income derived from the market
- Gross Value Added from Sector

Workstream 13: Horticulture

Aim to consolidate and increase output from this sector via a Production Horticulture Programme
Aspiration to move from £100m of output to £200m over next 5-7 years

6. Committee Position

26. The Committee recognises the strategic drive to incentivise sustainable practices and reduce climate harm through farm payments and welcomes the espoused vision for the local agricultural industry to be more productive, environmentally sustainable, resilient and situated within an effective supply chain.

27. DAERA's proposals will lead to profound changes for local farmers and will require a substantive shift in mindset and culture within the farming community, as well as in day-day farming practices to be effective.

28. Further, given that thousands of local farms fundamentally rely on Direct Payments to make ends meet, it is imperative that the proposed changes to payment schemes are well planned and robust and that effective education and engagement is carried out with the farming sector in advance of their roll-out.

29. The Committee's view on the salient aspects of DAERA's proposals is outlined below:

Resilience Measure

30. The Committee recognises the need to buffer the local farming industry from market fluctuations and unexpected economic dynamics which may arise – this is particularly important in the context of trade uncertainty following the agreement of Free Trade Deals with Australia and New Zealand which will likely pose significant challenges for the sector in the coming years.

31. Therefore, the Committee acknowledges the importance of having some form of "basic-level" payment to provide certainty for local farmers in terms of revenue.

32. However, the Committee has significant concerns regarding the proposed minimum claim size for the Resilience Payment of 10ha which is substantially larger than the current minimum eligible acreage for Direct Payments (3ha). The Committee estimates that, should the minimum claim size of 10ha be pursued, it could automatically make approx. 5,000 local farm holdings ineligible for basic payment.

33. This would cause significant economic disruption for these farmers and would threaten the viability of their businesses, likely leading to many individuals having to give up their farm holdings. This would have profound knock-on implications for individuals' employment, mental health and well-being and livelihoods in local rural communities.

34. DAERA therefore should reconsider the proposed 10ha minimum claim size for the Resilience Payment and scope the viability of an alternative which is larger than the existing minimum of 3ha – for example 5ha or 7.5ha.

35. Further, given the lack of detail in DAERA's consultation document, it is unclear how the proposed shift in funding from the Resilience Measure to other schemes will be managed both in terms of the proportion of resource that will be retained for the Resilience Measure and over what timeframe the transition will take place.

36. This is unsatisfactory and is likely to cause confusion and uncertainty for farmers regarding a fundamentally important issue in terms of their income and economic viability.

37. DAERA should, as a matter of priority, set out its proposed plan for the transition of funding across the various payment schemes which will be introduced to include the indicative level of funding that will remain for the Resilience Payment and the timeframes for transferring money to different schemes.

38. The Committee welcomes the cross-scheme elements within the proposals that, in order to be eligible for the Resilience Payment, farmers must participate in the Soil Nutrient Management Programme. This will facilitate mandatory engagement with this important project to help generate better-understanding and an evidence-base with respect to local soil and carbon health.

Headage Sustainability Scheme

39. Broadly the Committee welcomes the proposals to support the suckler cow industry and recognises that this sub-sector has long-required focussed attention and support.

40. The proposals to incentivise earlier slaughter of beef animals are positive in that they should hopefully go some way to mitigating the carbon footprint of this sector. However, the Committee notes that this may be off-set, to a certain extent, by the requirement for more feed at a younger age to make cattle reach slaughter-weight.

41. The Committee also welcomes the 4-year transition window to allow suckler cow farmers to work towards this change and to engage in measures to reduce calving interval and maximum calving age.

42. However, the Committee highlights a potential concern that the maximum calving age interval of 365 days as proposed by Year 4 may be overly restrictive, especially for native species, and would encourage DAERA to retain a degree of flexibility when assessing compliance with this.

43. Further, DAERA should scope what measures can specifically be put in place to encourage and incentivise efficiencies within the sheep farming sector, as this industry has also received a lack of support and policy attention historically.

44. While the proposals stipulate that up to 17% of the total farm payment budget can be allocated for a headage payment scheme, the actual level of funding which DAERA intends to allocate to the Headage Sustainability scheme is not provided.

45. DAERA should clearly outline its plans regarding the resourcing level of the Headage Sustainability scheme to provide greater certainty for potential claimants.

Farming for Nature Package

46. The Committee supports enabling payments to encourage farms to adopt practices to restore biodiversity health and mitigate Climate Change and recognises that farmers will play a crucial role in helping the economy reduce its emissions outlay and to improve environmental health.

47. In line with similar moves in other jurisdictions, this should be a focus and priority for the future system of farm payments locally.

48. However, the Committee has a number of concerns with the proposals as drafted. Primarily, there is a lack of detail regarding the level of overall funding that will be allocated to the Farming for Nature package and this is outwith pledges made in England and Ireland that are planning to allocate 30% and 25% respectively of their farm payment resource for eco-friendly practices.

49. DAERA should therefore outline the proportion of overall farm payment budget it will allocate to the Farming for Nature package and ensure that this is commensurate with that in other jurisdictions, and sufficient to deliver on its Climate Change obligations. It should also consider the implementation of a payment cap per applicant for the Farming for Nature scheme.

50. Further, DAERA intends to undertake a series of “Test and Learn” pilots to scope what specific interventions it will incentivise on farms at scale as part of the Farming for Nature Package. While the Committee recognises the need for ensuring that interventions are evidence-based and will be adopted en masse, there is no information provided about the potential pilot projects, where and when they will be implemented, how long for and how evaluation will take place.

51. This leads to a potential concern about lack of future-planning and the timeframes associated with engaging in pilots could delay the roll-out of successful schemes in the short-medium term, subsequently delaying the intended climate and environmental benefits.

52. DAERA should set out in more explicit detail its proposals for undertaking pilots to inform the Farming for Nature scheme including specific initiatives and timescales for introduction and roll-out.

53. Further, as has been highlighted, administrations in England, Scotland and Ireland have already devised a series of on-farm eco-scheme solutions and there is understanding of such measures which work locally through the Nature Friendly Farming Network and Countryside Management Scheme. The efficacy of pursuing a series of new pilots locally is therefore questionable when learning and evidence could be gleamed from these sources.

54. DAERA should actively engage with other administrations regarding the specific on-farm environmental schemes they are, or will, incentivise and identify any measures which could be expediently rolled-out locally.

55. In addition, the Committee notes that peatland restoration will not be included in the Farming for Nature workstream despite the fact that the Peatland Strategy fundamentally intersects with and cuts across this area. In order to ensure effective planning and utilisation of resources DAERA must ensure harmonisation across its strategic policy initiatives.

56. DAERA should set out how it will monitor progress of inter-related strategies such as the Environment Strategy, Peatland Strategy and Future Agricultural Strategy internally and ensure effective communication across the responsible Business Areas.

Knowledge Transfer Scheme

57. The Committee recognises the importance of continued education and knowledge development in the agricultural sector and acknowledges the high-quality services and courses made available through the College for Agriculture, Food and Rural Enterprise.

58. The continued commitment to this in the proposals is therefore welcome but the Committee recommends that as part of its future proposals DAERA should consider the facilitation of training groups and networks specifically for women in the farming sector. This would be as a means of encouraging uptake of training and education opportunities for women farmers who may be discouraged from engaging in forums which are predominantly male-orientated.

59. DAERA should consider the specific inclusion of women-only training forums in future policies brought under the Knowledge Transfer Scheme.

Generational Renewal

60. There is an important need to change the culture within the farming community regarding succession planning and to encourage families to have early and proactive discussions about inheritance. The proposals under the Generational Renewal Scheme are therefore broadly welcome.

61. Through recent work undertaken by the Committee it is evident that succession practices are inherently orientated towards potential male heirs and that women therefore have very limited opportunities in terms of farm and land ownership.

62. Therefore, DAERA should adopt a specific workstream within its Generational Renewal scheme to focus on encouraging farm owners to consider all siblings as potential successors and to educate them on the benefits and abilities of women farmers.

63. Further, it is not uncommon for farm families to consider succession planning only when an incumbent owner is elderly and/or coming to the end of their life, which does not facilitate effective future planning. The Committee is aware of suggestions put forward by stakeholder groups in other jurisdictions that aligning a proportion of farm payments with having a succession plan in place may be of utility in supporting early transition planning.

64. DAERA should therefore consider the viability of requiring a farm succession plan to be in place in order to be eligible for a component of farm payment.

65. Further, the Committee notes the aim that all farm successors will achieve an appropriate Level 3 Qualification and recognises the value of encouraging knowledge development. However, the Committee considers that potential successors and new entrants to the sector may have extensive knowledge, training and education in topics unrelated to agriculture which could be equally, if not more, valuable to a farm business.

66. As a result, DAERA should recognise the merits and benefits of transferrable skills and knowledge to farming practice in its policies and that completion of agricultural training to a particular level should not be a necessity. Accreditation of Prior Learning should be considered for new entrants into the sector who have qualifications in non-agricultural studies.

67. The proposals set out processes for determining eligibility for the Resilience Measure and Headage Sustainability scheme based on historical farm holding data: there is therefore a potential risk that young farmers and/or new entrants may be ineligible or "fall through the cracks" when seeking to apply.

68. DAERA should therefore ensure that there are appropriate safeguards to avoid any loss of income for young farmers and new entrants when applying for the proposed payment schemes.

Controls and Assurance Scheme

69. The Committee acknowledges that the existing controls assurance scheme facilitated via the Statutory Management Measures and Good Agricultural & Environmental Condition regulations have been enforced rigorously and have resulted, in some cases, in disproportionate penalties on farmers for relatively minor or accidental breaches.

70. The proposals to simplify the standards and to focus on those areas of high non-compliance are therefore welcome to deliver a more proportionate, flexible and constructive compliance regime. Further the Committee considers positively the suggestion of utilising alternative methods such as Statutory Improvement Notices and mandatory education as potential means of enforcement.

Timeframes and Communication

70. The proposals do not expressly outline the proposed introduction dates for the new payment schemes, nor how farmers, businesses and other stakeholders will be informed and communicated with about the impending implementation of the various measures.

71. DAERA should therefore set out its anticipated timeline for the new payment schemes to come online and its intended communication strategy to inform and educate farmers about the changes.

7. Recommendations

72.The Committee recommends that DAERA should take the following actions in respect of its Future Agricultural Policy proposals:

Reconsider the proposed 10ha minimum claim size for the Resilience Payment and scope the viability of an alternative which is larger than the existing minimum of 3ha – for example 5ha or 7.5ha
Set out its proposed plan for the transition of funding across the various payment schemes which will be introduced to include the indicative level of funding that will remain for the Resilience Payment and the timeframes for transferring money to different schemes
Ensure that a degree of flexibility will be applied when assessing compliance with the target maximum calving age under the Headage Sustainability proposals
Scope what measures can specifically be put in place to encourage and incentivise efficiencies within the sheep farming sector
Outline its plans regarding the resourcing level of the Headage Sustainability scheme to provide greater certainty for potential claimants
Outline the proportion of overall farm payment budget it will allocate to the Farming for Nature package and ensure that this is commensurate with that in other jurisdictions and sufficient to deliver on its Climate Change obligations
Consider the implementation of a payment cap per applicant for the Farming for Nature scheme.
Set out in more explicit detail its proposals for undertaking pilots to inform the Farming for Nature scheme including specific initiatives and timescales for introduction and roll-out
Actively engage with other administrations regarding the specific on-farm environmental schemes they are, or will, incentivise and identify any measures which could be expediently rolled-out locally
Set out how it will monitor progress of inter-related strategies such as the Environment Strategy, Peatland Strategy and Future Agricultural Strategy internally and ensure effective communication across the responsible Business Areas
Consider the specific inclusion of women-only training forums in future policies brought under the Knowledge Transfer Scheme
Adopt a specific workstream within its Generational Renewal scheme to focus on encouraging farm owners to consider all siblings as potential successors and to educate them on the benefits and abilities of women farmers
Consider the viability of requiring a farm succession plan to be in place to be eligible for a component of farm payment
Recognise the merits and benefits of transferrable skills and knowledge to farming practice in its policies. Accreditation of Prior Learning should be considered for new entrants into the sector who have qualifications in non-agricultural studies.
Ensure that there are appropriate safeguards to avoid any loss of income for young farmers and new entrants when applying for the proposed payment schemes
Set out its anticipated timeline for the new payment schemes to come online and its intended communication strategy to inform and educate farmers about the changes