Official Report: Minutes of Evidence

The Acting Chairperson (Mr Ford): I welcome Colette McMaster, director of food and farming policy division; Elaine McCrory, also from food and farming policy division; Colin Hart, director of enzootic division; and Mark Hawe from the College of Agriculture, Food and Rural Enterprise (CAFRE). I ask you, Colette, to give us a presentation in the usual 10 minutes or so.

Mrs Colette McMaster (Department of Agriculture, Environment and Rural Affairs): Thank you for inviting us to speak today about the Single Common Market Organisation (Exceptional Adjustment Aid) Regulations (Northern Ireland) 2017 and for considering the legislation at such short notice. Thank you, Chair, for introducing me. I have with me Colin Hart, Deputy Chief Veterinary Officer; Mark Hawe, agriculture inspector for pigs; and Elaine McCrory, assistant director, agri-food policy. In the Public Gallery, we have John Murphy, deputy principal of food policy branch, who may be called on, if necessary, to answer any detailed questions that you may have on the drafting of the legislation.

Members will recall that the Agriculture Minister, Michelle McIlveen, wrote to the Committee on 1 December and 19 December 2016 regarding her plans for use of the Northern Ireland allocation of £4·07 million EU exceptional adjustment aid (EAA) funding. You should also have received in your packs the letter that the Minister sent to the Chair of the Committee on Monday 16 January advising that she had decided to make and lay the subordinate legislation required to give effect to two of the EEA measures: a bovine viral diarrhoea (BVD) eradication incentivisation scheme; and a pig industry competitiveness scheme. As you are aware from the Minister's letter, officials were scheduled to brief the Committee on all the EAA measures over the coming weeks. Recent events have, however, have cast doubt over the Department's ability to progress the legislative powers necessary to support the implementation of those two measures in the normal way. The Minister also pointed out in her letter that the Commission deadline for spending EAA funding is the 30 September 2017.

In order to ensure that Northern Ireland farmers can benefit in full from our share of EAA funding, it has been necessary for us to proceed at haste and secure the powers required to deliver the measures as quickly as possible. As a consequence, it has been necessary to breach the 21-day rule between the making of this statutory rule and its coming into operation. That is because any delay to the implementation of the BVD and pig competitiveness measures would mean that it would not then be possible for Northern Ireland farmers to receive the full benefit of the EU funding provisionally allocated to the measures.

The Minister therefore asked officials to accelerate the legislative process and agreed that the legislation should be made and laid on Monday 16 January. The legislation will come into operation with effect from 1 February 2017. You have received a copy of the usual SL1, which describes the legislation in more detail. You will be aware from the Minister's letter that she is keen that Committee members consider and support the legislation.

As the Committee is aware, the Minister decided that the EAA funding would be best spent on four key measures: assistance to incentivise the humane destruction of BVD-infected dairy and beef calves at a flat rate, which includes a contribution towards the cost of replacing the animal and not simply the cost of removal to slaughter; a programme to enhance the competitiveness of the Northern Ireland pig industry through training in endoparasite control and financial support for the provision of appropriate medication; a free soil sampling and analysis service, plus information and advice to farmers on how best to use the results of their analysis to support efficient farm nutrient management and, hence, sustainable production; and training in business planning and risk management through CAFRE.

Those measures were decided on following consideration of the available options in the EU regulation on exceptional adjustment aid and consultation with key stakeholders. They have been notified to the European Commission in accordance with article 3(a) of delegated regulation EU 2016/1613.

As I have indicated, subordinate legislation is required to implement both the BVD and the pig competitiveness schemes. The necessary legislation for which you have received the SL1 is the Single Common Market Organisation (Exceptional Adjustment Aid) Regulations (Northern Ireland) 2017. As I have said, it is scheduled to come into operation on 1 February 2017. The Department believes that it has the legislative powers to proceed with the other two EAA measures; that is the soil testing and business and risk management training.

In summary, we have sought to progress matters as far as we can in unusual circumstances, and the legislation is in place. We have the powers necessary to implement the EAA measures and will endeavour to ensure that farmers here have the opportunity to benefit in full from the Northern Ireland allocation of EAA funding by the 30 September deadline. All the EAA measures are, of course, subject to industry uptake.

It is important that I emphasise that we have not fully bottomed out the finer detail of each of the four EAA measures, nor can we yet confirm the opening date for each measure. Work on that is ongoing and will be brought to a conclusion as soon as possible. The Minister's letter included an update on what we have done; however, I appreciate that members have only just received the information and may not have had time to consider it in full. Therefore, it may be helpful if I bring you up to speed with where we are on each measure.

The first measure — the BVD eradication scheme — will incentivise the humane destruction of dairy and beef calves that have received a positive test for BVD at a flat rate, which is a contribution towards the cost of replacing the animal. Payment will be made according to the category of the calf. According to the legislation, the following rates of assistance shall be provided: £160 for beef calf, £130 for a dairy heifer calf, and £50 for a dairy male calf. The conditions for the payment of aid are set out in the legislation and include the need for the infected calf to have remained in the farm of origin, as required by legislation, and to have been humanely destroyed and registered as dead on the animal and public health information system (APHIS) not later than four weeks — in prescribed circumstances, six weeks — from an initial BVD-positive result. It is anticipated that the Livestock and Meat Commission Northern Ireland (LMCNI) will assist the Department in delivering the scheme. The launch date and the detailed operation of the scheme will be confirmed in the coming weeks.

The second measure is the pig industry competitiveness scheme, which will cover the cost of medication for pig herds for the treatment of pig endoparasites and the blanket treatment of sows, where verified by a veterinary practitioner, for the pig unit. The scheme will also cover the cost of medication acquired from a veterinary practitioner for the individual treatment of sows prior to farrowing. As with the BVD scheme, the conditions for the payment of aid are set out in the EAA regulations and include the need for the farmer to have attended a relevant pig health training event organised by the College of Agriculture, Food and Rural Enterprise and for confirmation by a veterinary practitioner that pig endoparasites are present in a farmer's herd. We are considering the options for delivery, including the potential to use a third-party provider to assist us in delivering the scheme. Again, the launch date and the details on the operation of the scheme will be confirmed in the coming weeks.

The third measure is the pilot soil testing and analysis scheme. It will enable soil sampling to be conducted on selected fields in two targeted catchments where improvements to soil and water quality status can potentially be achieved. Soil status and run-off information will be communicated to farmers to inform their decision-making. Up to 400 farmers in the catchments will be encouraged to participate.

Additionally, outside the two selected catchments, a free soil sampling service will be advertised and made available to all livestock farmers across Northern Ireland for a limited period, with a point-scoring system to select the most suitable applicants. At this stage, an open call is expected to issue mid-2017. It is anticipated that the Agri-Food and Biosciences Institute (AFBI) will assist the Department to deliver the project. The launch date and detailed operation of the scheme will be confirmed as soon as possible.

Finally, the training in business planning and risk management will mean that farmers will be better equipped to respond to future market volatility. It is envisaged that the training will be run in a similar way to the existing farm family key skills programme at CAFRE, but will be funded separately through EAA funding. Farmers will register their interest through the CAFRE website when the training is launched. It is anticipated that courses will be available later this year.

That concludes our initial presentation. At this point, we will be happy to take questions from Committee members. We will try to be as helpful as possible bearing in mind that work is still ongoing on the detailed operation of the measures. I will endeavour to direct those to the most appropriate person. Thank you again for inviting us, at late notice, to provide you with an overview of the position and to answer any questions that you might have.

The Acting Chairperson (Mr Ford): Thank you for your presentation and attendance. The Committee is grateful for getting this much information, given the circumstances that we are in. I declare my interest as a potential beneficiary, though hopefully not, of the BVD scheme.

On the soil sampling scheme specifically — the specific reference to 400 farmers in each of two catchments, and the potential for others — have you any idea how many other farmers across Northern Ireland might benefit? How will you identify the two particular catchments?

Mrs McMaster: The detail on the two catchment areas will be worked up in line with AFBI. It will be AFBI who we will work with to help us to deliver on this. The final details will be announced when those final proposals and so on are developed. It is anticipated that there will be an open call in mid-2017 for the wider programme. You had asked about the numbers for that. It will be subject to farmer uptake, I suppose, but also to the capacity, basically, to deliver that soil testing at that time.

The Acting Chairperson (Mr Ford): Have you any idea at this stage as to whether we talking about another 200, 1,000 or 10,000? I suspect that it is not the latter.

Mrs McMaster: I know that there will be a capacity limit. The EU Commission requirements are that the funding be paid by the end of September 2017, so there is a time-limited period to deliver on this. There will be a limit on the capacity, but we will seek to actually encourage and promote uptake of this. We will encourage a big response to that, and we will have to consider how we then prioritise. We will want to prioritise that with regard to the numbers of uptake, the amount of available funding and so on, in that time frame.

Mr Irwin: Thank you for your presentation. I suppose that, being a farmer, I may declare an interest, too. I broadly welcome the scheme. One of my concerns is the tight time frame in which it has to be spent, by 30 September. It would be vital that it is on the ground and running very fast. I very much welcome a scheme to remove calves that are affected with BVD, but the difficulty is that the time period to do that is very short. That is the main problem that I see with this. There could be an issue with getting the money out on the ground if it did not get up and running very quickly.

Mrs McMaster: Certainly, we are working on the schemes, and the aim is to start them as quickly as we can. In particular, the BVD scheme is one that we are currently progressing as fast as we can. The aim of the scheme is to incentivise the early removal and humane destruction of persistently infected (PI) animals — calves. That is its purpose. We are hoping that it does help and accelerates the removal and humane destruction of those animals.

Mr Irwin: We will be at the end of January before we know it. There are only a few months to get it up and running. It would have been much better to have had a longer period — a full 12 months right through the calving period. The 30 September deadline is the weakness I see in it, although it certainly is welcome. The main calving period for suckler herds is early spring. It is very important that the scheme is up and running before then, because these calves have to be removed within six months of birth. You understand that it has to be up and running very quickly to be of any benefit this year.

Mrs McMaster: The powers to implement the BVD scheme are in the legislation that we have just made and laid. The date of coming into operation is 1 February 2017. This scheme will be in line with the criteria for payment to the eligible animals set out in the statutory rule, and animals that are humanely destroyed and confirmed dead on the animal health and public information system (APHIS) on or after 1 February and that meet the other criteria will be eligible.

Mr Irwin: I certainly welcome the scheme. I think that it is good. Many people do not understand that an animal can look perfectly healthy when it has this disease. Some farmers are reluctant to part with it when it looks perfectly healthy. They are inclined to say, "Well, I am maybe wrong with this animal; it might be OK", when it is not. So it will be an encouragement to have those animals removed, certainly.

Mr Colin Hart (Department of Agriculture, Environment and Rural Affairs): It might be helpful to add, Colette, that an animal that is humanely destroyed on or after 1 February and recorded dead on APHIS will have had a positive test up to four weeks before that — six weeks, in exceptional cases. That positive test will have happened on the day the calf was born. It takes several weeks to get it. Obviously, the scheme is extending the eligibility as far as possible. In fact, any calf born now will theoretically be eligible — indeed, before now.

Mr Irwin: OK. That is good.

Mr Swann: Thanks, Colette. There is £4·07 million for the entire package. What is the breakdown over the four measures?

Mrs McMaster: We have not got a specific breakdown against each of the four measures. They will all be subject to farmer uptake. We will monitor the spend against those four measures. What we are seeking to do is to spend this allocation to Northern Ireland to the benefit of Northern Ireland farmers. We will monitor the uptake and ensure that, where needed, we can move that money to spend it across the measures so that the full allocation is spent. Hopefully, that helps. Overall, we will aim to spend that EU money.

Mr Swann: I am concerned in regard to another scheme that is in the headlines at the minute. What you have told me sounds very similar: "We will monitor it and make sure that we get the maximum amount of money coming into the scheme". What control measures are there so that you will not go over the EU allocations, should one of the four be more attractive than you have the budget for?

Mrs McMaster: We will be monitoring each of the schemes. We have to have audit controls in place that meet EU requirements and our own requirements in the Department.

Mr Swann: I have heard that in another scheme as well. Unfortunately, that is where I am now.

Mrs McMaster: This scheme is based on our estimates as well. For example, we know what the level of BVD infection is in herds, so we know what the pattern of infection is in each herd. That is something that we are looking at when we design the scheme so that —

Mr Swann: But there is also a thing with BVD coming. You can tell me that there is also a concern of under-declaration. I would love to see BVD eradicated from our industry, but the scheme incentivises the removal of calves with a financial benefit. Some of the prices are a wee bit more than somebody would get for some of those calves, anyway. I am not concerned that we will see the real progress of infected calves coming forward and people actually declaring what they have, but it might completely skew the estimates that you have.

Mr Hart: The point there is that the calf is sampled as part of its normal identification process. Every calf is sampled within a period after it is born. It is only after that that the farmer will know whether it is positive. The rate of positives is approximately seven calves in every 1,000 across the whole country. That mirrors the position in the Republic of Ireland when they started the same scheme. The farmer will be limited to the number of calves that come back from the lab positive in what he claims.

Mr Swann: Is there a limit on the number of calves that he can claim for?

Mr Hart: There is no limit. We have statistical evidence to show that, I think, 97% of farmers have four or fewer positive animals in any given year. Rather than putting an absolute limit on that, we are proposing, in this particular element of the scheme, to watch the number of positives coming in. We have the powers under the scheme to take additional samples and do tests such as DNA analysis and so on. That is part of the —

Mr Swann: And the cost of that additional testing comes out of the —

Ms Elaine McCrory (Department of Agriculture, Environment and Rural Affairs): No, admin costs cannot be taken out of that funding.

Mr Swann: Right, so all that additional testing will be additional to the Department.

Mr Hart: There will not be "all that" additional testing; there will be an element of it. That is the point.

Mr Swann: We have a pot of money coming from Europe. We want to see the maximum spend. It is what we have heard before. Are there controls in here so that we will not get into a similar situation and instead spend only the money that is there and no more? I am not sure that I see that in your regulations; I see powers of entry and powers of authorised person, but I do not see the cap. William's concern was about September in regards to the calves, but if there is a big uptake of the soil testing and the training schemes, we could spend that money before the rest of it is in place.

Mrs McMaster: Your point is something that we look at as we design each scheme. We will be very mindful of how we are going to monitor what controls there are in the design of the scheme and the scheme guidance. We are very happy to come back to the Committee whenever it is convenient to present on the detail of each of the schemes as they are launched. It is something that we are certainly mindful of.

Mr Swann: I have expressed my concern about that package and how it is monitored. I would also like recorded the concern that a number of the schemes that have happened in the past are now being queried. The scrutiny Committee is now being told, "You didn't ask the right questions. You didn't point out the problems that should've been raised". I do not want to hold this up, but I want it flagged up that I would like to see firmer control measures in the spend to ensure that we do not get into a similar situation.

The Acting Chairperson (Mr Ford): We are in extremely difficult circumstances at the present time. I certainly endorse the comments of the Chair of the Public Accounts Committee about the way in which these schemes are managed. However, we have to accept that today is the only realistic opportunity that the Committee will have until the schemes are well under way. That is why I initially queried the number of people who could potentially benefit from soil sampling. Since we may have a reasonable idea of the numbers who will wish to put calves into the BVD scheme, for example, other aspects which are fairly open-ended appear to need fairly careful control by the Department as to how they are managed, even though, at the same time, we wish to maximise the available benefit. That is the challenge that you will have to manage day to day.

Mrs McMaster: Yes, absolutely. We very much take that on board.

Mr McKee: Is the BVD programme compulsory now?

Mr Hart: Yes. The BVD programme was compulsory from 1 March 2016. Prior to that it was voluntary.

Mr McKee: Is there any way in which that could be abused? I can see that the incentive is a good idea. It gives a few pounds for your calves and I know that, if the mother of that calf is a carrier, no one liked to dispose of that animal, because there was no reimbursement for the cost. That was maybe a cover. Looking at how the system works — I take it, by tissue tag — is there any way, without going through a whole DNA test? You will certainly not be DNA-testing all calves. I cannot imagine it; it would be quite an expense. Is there any way that this sampling, or the tissue tag — I should not be saying it aloud, maybe — could be used on a calf that has died for some other reason, nothing at all to do with BVD? What control measures are in there?

Mr Hart: The whole BVD scheme, setting aside this aid package, is based on the premise that farmers identify their calves under the identification, registration and movement (IRM) of cattle regulations. They have to insert two tags within 27 days of the animal being born. It just so happens that one of those tags now takes a sample for BVD purposes, so that is the official identification of the calf. Just as in any other walk of life, there is obviously a possibility that some unscrupulous farmers will seek to change the identity of a calf, but there is nothing particularly different in this aid package.

Your question is whether somebody could use a calf. At the point when the calf is born, the farmer does not know whether it is positive or not. The tag is clipped into the ear; it is supposed to be tamper-proof. That sample is sent off to a laboratory, and it is only some days later that the farmer discovers whether the calf is positive. For every 1,000 calves, there are only seven positives. If a farmer were planning to capitalise on this, the odds of finding a positive calf are against him to start with.

The possibility of a fraud is there, but the moneys are not that large: it is £170 per calf. If somebody is seeking to use the DNA or identity of one calf multiple times and, behind our backs, pretend that they are different identities and claim on that basis, that is something that we will need to be vigilant for. We know that, historically, 97% of farms have four or fewer positives in a year. If somebody comes up with 10 or 15 positives, alarm bells will ring. Rather than penalise the honest farmer who happens to have a really bad outbreak of BVD, in our considerations we decided not to cap the number but to monitor it closely. Statistically, somebody will stand out in what they are claiming. Bear in mind that even 10 calves at £170 is big enough money, but it does not compare to TB compensation or some of the other moneys for which the Department has to manage the risk of fraud. The moneys for BVD are quite small. We will be looking closely at that. That is why the powers to which the member referred allow us to go onto farms and take samples, including DNA. We can focus that resource particularly on where we think there is something funny going on. As departmental officials, our role is always to be alert to the possibility of fraud when handling public money. It is our duty to do that, and it will be no different with this aid package. I hope that that reassures you.

Mr Poots: Go over the values that you are putting on the calves again.

Mr Hart: It is £160 for the beef-bred calf, including the beef-cross calf; £130 for the pure dairy-bred heifer calf; and £50 for the dairy male calf.

Mr Poots: I think your dairy male calf is probably overpriced and the other two are underpriced. I would be very happy if Mr Swann could deliver me a few hundred calves — a few Charolais and Limousin — at £160. I would take them all the day long. If he is worried about anybody wanting to get into a scheme —

Mr Swann: What about the dairy bull calf, Edwin?

Mr Poots: — to get £160 for a bull calf —

Mr Hart: It is just a contribution towards the disposal; it is not a compensation.

Mr Poots: How did you come up with those figures? They do not reflect the market. You go out to the market; a Holstein calf will still make only £50, and you will not get a beef calf for less than £200. How did you come up with those figures?

Mr Hart: The figures are broadly equitable with the moneys paid in the Republic of Ireland at the moment, and —

Mr Poots: But they are not equitable with the actual market.

Mr Hart: Neither was that really the intention. This is an incentive aid package; it is not a full compensation aid package. That is the point that we need to emphasise. It is to encourage early removal. Otherwise, the farmer would get nothing. Remember, it is in the farmer's interest to dispose of this highly infectious animal at the earliest possible opportunity, whether or not they get any money. That infected calf is shedding loads of virus for its entire life, so the business case is stacked in favour of the farmer getting rid of the calf without aid. This is just to incentivise and try to make it a little —

Mr Poots: It does not reflect the market.

Mr Hart: No, it does not.

Mr Poots: The Holstein bull should be £20 or £30, a bit more for the Holstein heifer and a bit more for the beef bull calf, with the same envelope of money set aside for it. This is crazy stuff, in my opinion. It will go down badly with beef farmers in particular that a guy is getting more than what he should be for a dairy calf, when he is getting less than what he should for his beef calf. A good beef calf is worth £300 in the market, and you are giving £160.

The Acting Chairperson (Mr Ford): Before you come back, Harold wanted in on the same point.

Mr McKee: On the back of what Edwin said, is there an allowance for a pedigree calf?

Mr Hart: No, it is a flat-rate payment. It will be based on the calf's registered breed. The calf will have been registered at birth as a particular breed by the farm of origin. The payment will be paid on the basis of that registered breed.

Mrs McMaster: The rates for beef-bred calves, dairy cross-breeds and pure dairy-bred calves were based on the average lowest mart price in 2015 for second-quality beef. As Colin explained, the payment for dairy-bred male calves aims to cover removal costs. I emphasise that it is not a compensation payment to replace like for like. It is an incentive to people to humanely destroy and remove the infected animals. It will help towards removing a dead animal and purchasing a replacement animal. It is not intended to be a compensation or a like for like.

Mr Hart: The rates in the South of Ireland at the moment are €150 for a female dairy or dairy-cross calf, against the £130 that we mentioned, and €185 for a beef calf, including pedigrees, against the £160 that we mentioned.

Mr Poots: Can this be altered?

Mrs McMaster: The legislation is now made.

The Acting Chairperson (Mr Ford): The legislation has now been laid.

Mrs McMaster: It comes into operation on 1 February.

The Acting Chairperson (Mr Ford): On that basis, I suspect that we may be in a fairly pointless discussion about the precise amounts. I will bring William back in.

Mr Poots: They have got it wrong.

Mr Irwin: I am just curious whether you have any statistics to say if it is more prevalent in dairy herds or beef herds?

Mr Hart: Yes, I have those statistics. More than 50% of the samples taken came from beef animals. These statistics are provided by Animal Health and Welfare Northern Ireland (AHWNI), the company that runs this scheme. Their latest statistics are that since March there were 450,000 tests carried out and, of those, the proportion of beef — this is herds participating. It is 52% beef, 18% dairy and 28% dual herds. Not all herds are breeding herds, so they do not all register on the AHWNI database, but out of the 12,000 herds participating, 52% were beef. That is the percentage in herds.

Mr Irwin: The mixed one could skew it slightly, I suppose.

Mr Hart: It is seven calves in every thousand, but I do not believe that there is an awful lot of difference between dairy herd positives and beef herd positives. They are similar, I believe.

Mr Poots: Just in conclusion, I welcome the scheme —

The Acting Chairperson (Mr Ford): Final conclusion.

Mr Poots: Well, Harold came in, you see. No problem with that. In any event, I welcome all of the schemes. I think they are good initiatives. I do not think that there are huge amounts of money for the benefits that will be derived by agriculture. Stamping down on BVD is absolutely the right thing to do. The figures could have been done a bit better instead of just lifting them from the Republic of Ireland, but nonetheless I support it on that basis.

The Acting Chairperson (Mr Ford): I will just make one point, finally. Elaine referred to the fact that admin costs cannot be paid from this. Given that there will be fairly substantial admin costs for AFBI and CAFRE as well as your own division, are you satisfied, Colette, that those can be maintained within the existing fairly tight budgets to ensure that we get the maximum benefit delivered to the front line?

Mrs McMaster: Yes. We are looking to keep those to a minimum, and we will do that. Obviously, the schemes are a priority going forward. The EAA European money has to be spent within a certain time period, otherwise we cannot spend it. From that point of view, there is a priority in actually securing that money. Subject to the confirmation of moneys and so on within the next financial year, this is certainly perceived as something that is a priority and to assist with the EU spend within that time period.

The Acting Chairperson (Mr Ford): I thank the four of you for the work that you have done to get this here today. My understanding is that the Examiner of Statutory Rules is likely to formally raise the issue of the 21-day rule. Given the circumstances, I cannot imagine that the Committee will be too concerned about that. We appreciate that and the work that you have done in coming here. Clearly, there were points raised by members that we hope you will take on board as you actually implement the scheme.

If members are content, can I put the formal question that the Committee for Agriculture, Environment and Rural Affairs has considered SR 2017/13, the Single Common Market Organisation (Exceptional Adjustment Aid) Regulations (Northern Ireland) 2017 and, subject to the report from the Examiner of Statutory Rules, has no objection to the rule? Are members agreed?

The Acting Chairperson (Mr Ford): Robin, do you wish to put anything formally with regard to your concerns?

Mr Swann: Yes, the concerns that I have raised with regard to the caps on the spends.

The Acting Chairperson (Mr Ford): Is the Committee content that we ask the Clerk to draft a letter on that basis?