Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome John Terrington, head of the agri-food legislation branch, and Elaine McCrory, head of the supply chain transition team. Thank you, guys. That was perfect timing. If you are content, I invite you to brief the Committee.

Mr John Terrington (Department of Agriculture, Environment and Rural Affairs): Thank you, Chairman and members, for the opportunity to come to the Committee. I am leading on the Bill, particularly in this case, and I am joined by Elaine McCrory, who has been undertaking a review of the current running of the common market organisation (CMO) legacy schemes. We are here today in respect of the Agriculture Bill, which Minister Muir introduced in the Assembly on 25 November. We briefed the Committee on the Bill's proposals in June. We are pleased to be here again as part of the Bill's formal Committee Stage, the Bill having passed Second Stage on 3 December.

When we briefed the Committee in June, we set out a proposal for a Bill that would have a narrow focus in directly amending assimilated law governing the legacy EU fruit and veg aid scheme (FVAS) and providing scope for the Department to further amend the legislation that governs that scheme and another legacy EU scheme: agri-food information and promotions. We set out the context of those two schemes, the lack of scope for them to be amended lying with, for example, post-EU exit policy developments and that, as a legacy of the FVAS being an EU scheme, DAERA had a statutory obligation to fund all eligible claims for the last five years and that obligation would continue without the proposed legislative change. We return today with an Agriculture Bill in the Assembly, as I said, and it does three things: it amends the legislation governing FVAS to make support under that legislation discretionary; confers the power to make further modifications to that legislation; and provides a power to modify the legislation governing promotional schemes for agricultural products.

Ms Elaine McCrory (Department of Agriculture, Environment and Rural Affairs): Thank you for the opportunity to speak to you today. I will start by providing a little context by way of a reminder of the schemes. As John said, the Bill deals with two schemes that have their origins in the EU. The legislation governing the schemes was converted into UK law on exit and amended to make it work in a UK context. It is now known as "assimilated law." Under assimilated law, farmers and growers in a variety of sectors can come together to form producer organisations (POs) to strengthen their position in the supply chain and increase their competitiveness. While POs may be formed in a range of sectors, financial assistance is available, through the fruit and veg aid scheme, to POs in the horticulture sector. Under that scheme, assistance is payable to POs that submit an eligible operational programme with operational funds that are then part-financed by contributions from PO members.

Following the end of EU support, DAERA has provided match funding for the scheme for the last five years in Northern Ireland. There is currently one PO supported by DAERA with an approved programme over the three-year period to December 2025. In addition, there are two other POs with Northern Ireland members headquartered in England, because that is where the majority of their turnover is generated. Because of that, they are funded by the Department of Environment, Food and Rural Affairs (DEFRA). However, that could change, and they could become eligible for DAERA support in the future.

All the POs with Northern Ireland members operate in the mushroom sector. The two POs with a head office in England, as well as the Northern Ireland Mushroom Growers Association, briefed the Committee in June, as you will recall.

Mr Terrington: As I said, the first thing that the Bill does is make support under the fruit and veg aid scheme discretionary. Members will have heard the Minister confirm during the recent debate on the Bill that that in itself does not signal the end of the scheme, nor does it reflect any plans on his part to do so. He made clear his belief that the sector had potential to grow and develop, in his words:

He referred to the continued development of the farm support and development programme and to a review of the fruit and veg aid scheme. He confirmed that he had made no decisions on the future of the scheme and would not do so in advance of the outcome of the ongoing review and wider consideration of support for the horticulture sector. He also made it clear that making support discretionary, as I say, did not signal plans to close the scheme here. He pointed to the Bill's enabling powers, which provide the scope to allow for the scheme's future development so it can best reflect the needs of Northern Ireland, subject to the outcome of ongoing reviews and, of course, available budget.

The second thing that the Bill does is provide those enabling powers. I recognise that, at this time, it would be helpful to the Committee if it could, as part of the scrutiny, get some idea of what might be included in any further legislation. However, that would not necessarily be possible in advance of the completion of the review. In the event that the FVAS continued, it is unlikely that the powers would be used only once, with the Bill giving the scope for the scheme to keep pace with policy developments locally or elsewhere.

I will turn briefly to the other legacy EU scheme covered by the Bill: the EU assimilated law providing support for agri-food and information promotion of agricultural products. Under that, not-for-profit organisations can apply for EU support for promotion campaigns, primarily in third countries. The largest and most successful UK beneficiary was the Dairy Council NI, where, under the EU legislation, it successfully applied for and ran programmes comprised of inward and outward trade missions, most recently in the Middle East and south-east Asia. As I said, Northern Ireland benefited from the support under the scheme in the past, but there are no live projects under the scheme. Opening one would require a call for projects. If this were to happen now, the conditions for support would be based largely on the rules that applied before exit, with limited scope to align with any future Northern Ireland post-exit needs. The Bill, therefore, in addition to making FVAS support discretionary and providing enabling powers to further amend that law, provides the enabling powers to amend the assimilated law governing agri-food promotion schemes.

I will turn briefly to the specifics of the clauses, by way of introduction to them, as set out on page 5 of the explanatory and financial memorandum (EFM). There are six clauses in total.

Clause 1 makes support under the FVAS discretionary, so it removes the obligation to fund all eligible claims. It does that by amending article 32 of assimilated law EU 1308/2013, also known as the "CMO regulation", to remove any requirement for all eligible schemes to be funded and therefore enable the Department to continue the FVAS on a discretionary basis in Northern Ireland.

A new paragraph 1A is inserted into article 32 by subsection (4) of clause 1. It simply clarifies who is eligible for discretionary support and therefore maintains the status quo in that regard. I should point out that, while it appears to be a substantial drafting subsection, it is in effect doing nothing but restating what is there, just for clarity. Clause 1 also includes transitional provisions in subsection (5) in relation to existing FVAS programmes — a belt-and-braces provision to ensure that the new discretionary power will not impact on existing agreed operational programmes, which will be due to end at the end of December 2025.

Clause 2 provides the power to amend the CMO and named implementing and delegating acts in relation to FVAS — the enabling powers that I referred to. Subsection (1) of that clause:

and subsection (2)

That is really because you are moving from a mandatory to a discretionary fund and the scope for appeals needs to be made clear. The subsection also makes it clear that any regulations made under that will be similar to or align with existing appeal legislation that is in place.

Clause 3:

the agri-food promotion schemes.

Clause 4, subsection (1):

We believe that they are standard clauses in Bills to ensure a fully functioning statute book as a result of any changes made by the enabling regulations under clauses 2 and 3. It also provides that regulations under the Bill can be made only following approval by the Assembly — the draft affirmative procedure, per subsection (3).

Clause 5:

Subsection (1) of clause 6 provides for the Act to come into operation with Royal Assent and, given the transitional provision in clause 1, that will not impact on any existing operational programmes or the support for them.

The last clause, of course, sets out the Agriculture Act's short title.

Hopefully, it is relatively straightforward, although it is technical as soon as we move into the assimilated law area. It does what the Department consulted on: clause 1 making support discretionary under the FVAS, and clauses 2 and 3 providing the necessary powers via draft affirmative procedure, by virtue of clause 4, to amend FVAS rules and the agri-food promotions scheme rules as necessary.

Thank you for the opportunity to brief the Committee. We are happy to take questions at the start of what, I suspect, will be an ongoing process.

The Chairperson (Mr Butler): Thank you both very much for that. It was detailed, and it is good to look at that explanatory piece.

A couple of questions jump out at me. One might seem simple, but it is really important.

You have used the title "Agriculture Bill", when we are dealing with something that seems to be narrow and pointed, namely the FVAS and, in particular, the provision to make the payment that has been ring-fenced for some time discretionary. Is there a reason why a more specific title was not picked?

Mr Terrington: The best that I can do is refer you to the Office of the Legislative Counsel (OLC), for it named the Bill. I draw your attention to the long title, which makes it clear that the Bill relates to the fruit and veg aid scheme, information, promotions and matters contained therein. That narrows it to this issue. The Bill title was an OLC call.

The Chairperson (Mr Butler): I noticed in the explanatory and financial memorandum that one of the considerations is the need for a much broader agriculture Bill, which, I imagine, will have the same name. Does the broader and more detailed explanation in the long title mean that a broader agriculture Bill could not be a tool to build on this Bill and widen it out, because it is narrow in scope?

Mr Terrington: On the need for a wider agriculture Bill, the Department continues to scope out what powers are needed and what can be done with existing powers. Most of that is around the farm support and development scheme and the funding. There are questions about putting the cart before the horse in what the Minister wants to do and what the long-term future strategy should be. That is still being scoped out. I cannot say whether something will come forward in the remaining time of this Assembly mandate. Obviously, that, in itself, would have a time implication. Regardless of the year in which it comes out, it would just be called the "Agriculture Bill". The answer is that you could have an agriculture Act every year.

The Chairperson (Mr Butler): That is what makes legislation so technically difficult to read across. It is about ensuring that the implications and the crossovers are identified, which is obviously what you guys are masters at.

Mr Terrington: You could say that. I could not possibly comment.

The Chairperson (Mr Butler): The Minister has been in, and the Bill is now under Committee consideration. One of the things that gave me some confidence is that this will be subject to the draft affirmative procedure, so any changes will need to come to the Chamber. However, clause 4 does not read like that in some ways, except maybe the last sentence, so I seek some reassurance that it does not amount to Henry VIII powers and that, in all essence, any further changes or modifications will be subject to the draft affirmative procedure.

Mr Terrington: Any further changes, bar those in the Bill after Royal Assent, by the enabling powers will be made by the draft affirmative procedure. You referred to clause 4. In clause 4(1) — I will get my numbers right here; I should know it by now. I will just make sure that —.

The Chairperson (Mr Butler): It is subsection (3) of clause 4, maybe.

Mr Terrington: Subsection (1) of clause 4 extends that to — I read this out — "transitory", "consequential", etc. Those are generally technical changes that are required as a consequence in order to make, as I said, the statute book work.

To go back to the very start, the enabling power to amend the fruit and veg aid scheme rules is an enabling power to change existing legislation. That is already quite narrow; it is not a blank sheet. The power to change articles 32 to 34 of the CMO regulation is narrow. If you were to do that and that had a consequence or an impact somewhere else, there would be the need for a power to make sure that there were not any gaps or any things that were not right in the statute book, and that is what this will do. It is a pretty standard clause.

If I were to tap Elaine, I know what she would say next: she would say that EU law, by its very nature, is interrelated and cross-cutting. As we sit here now, without knowing what changes might be made, it is difficult to know whether there is some reference to a term somewhere deep in another piece of EU legislation that would require a change, once you get to that stage, to make sure that you have not missed that.

That all having been said, the main power to change the CMO and any consequential changes after that will all be subject to draft affirmative resolution thereafter.

The Chairperson (Mr Butler): It was good that the Minister clarified his ambition in the Chamber. The opportunity for POs has not perhaps been fully recognised in Northern Ireland by the sector. Thank you for answering those questions.

Mr McAleer: I want to get clarity on clause 3 and regulations Nos 1144/2014, 2015/1829 and 2015/1831, which were formally part of the Retained EU Law (Revocation and Reform) Act 2023. The legislation was sunsetted at the end of 2023. What is the Department's ability to modify those regulations, given that the legislation was sunsetted at the end of December 2023?

Mr Terrington: You are correct: those three regulations were included in schedule 1 to the Retained EU Law (Revocation and Reform) Act 2023, which was legislation that the UK Government considered spent and would therefore sunset at the end of December 2023 — a year ago. It was subsequently saved from the sunsetting by legislation that added to the list of additional sunsetted legislation that the UK Government had identified as being spent. There was also a power in the Act to save anything that had subsequently been found to be not spent.

It was pointed out that Northern Ireland had benefited from the scheme and that who knows whether it would ever be used again but it was not our position to comment; it would be up to a Minister or the Executive to comment and ask for legislation that had been of value in Northern Ireland to be removed. It was therefore disapplied from the sunset clause as it applies purely in Northern Ireland.

Mr McAleer: What legal instrument was used to disapply it?

Mr Terrington: It is the Retained EU Law (Revocation and Reform) Act 2023 (Revocation and Sunset Disapplication) Regulations 2023. It used the powers in the Act — section 1(3), I think, off the top of my head — that allowed for a case where they realised that they had revoked legislation and then realised that they did not want to revoke it but it had to be done by October last year. That power no longer exists because it was sunsetted. In the absence of the Assembly, the Secretary of State included it in a revocation or disapplication statutory rule (SR) that was made at Westminster to unpick those regulations. There was one other piece of Northern Ireland's legislation included in that from another Department, and the rest was for English Departments that realised something likely to be revoked still had a use. It was a blunt instrument, but the powers were there. It was used before the sunset, and they are no longer there. Yes. If we wanted the powers now, we could not use it, as you have rightly pointed out, because it would have been sunsetted.

Mr McAleer: It was revoked from the EU revocation. [Laughter.]

Mr Terrington: It was disapplied from sunset. You have to make sure your teeth are in. [Laughter.]

Mr McAleer: Will the fact that the legislation makes the funding discretionary, as opposed to mandatory, make the sector vulnerable if there is a policy change? The Minister is on record as being supportive, but that might not be in the case in the future.

Ms McCrory: As you say, the Minister has been clear that he will give as much reassurance as he can that he has no intention of pulling the rug from under the mushroom sector. The mushroom sector is important in Northern Ireland, and he wants to take his time, let us conclude the review and do the future policy development piece and then see where this fits in the future. Of course, any new Minister who comes in has the choice of what to do with this, but, at this stage, there are no immediate plans to do anything.

Mr Terrington: As the Minister said, discretion is not just discretion to pay or not pay; it is about how much you pay.

Ms McCrory: It is whom you pay and for what.

Mr Terrington: Purely on the question of "Pay or not pay" or "How much do you pay?", no Minister should start on the basis that money — no matter how small an amount it might be in the grand scheme of things — is taken off their budget before they start, given that it has scope to be bigger in the future, even against what budget we may have had for the past five years to support that.

Mr McAleer: Thank you for those responses.

Mr Blair: John and Elaine, thank you for the information. Some of the questions that I was going to ask have been answered.

I will move on to a broader theme. I have no concerns about the Bill, and I understand the rationale behind the flexibilities for funding in relation to changing or emerging need, but, more broadly, how much is existing environmental legislation or emerging or forthcoming legislation taken into account when legislation in relation to land use or practice involving fertilisers of any kind or anything that might link to the environment is being drafted?

Ms McCrory: I will talk about the assimilated law first. The law, as it stands, is clear that producers develop an operational programme and put it forward for approval. I cannot remember the exact line, but, within that operational programme, it says that producers must not undertake activities that would have a detrimental impact on the environment. They need the normal permits and assessments before they carry out investments.

Moreover, as part of the fruit and veg aid scheme, as it is stands, 10% of the spend in an operational programme must be spent on environmental measures, and that must cover two or more environmental activities. The PO that we fund and the other POs with Northern Ireland members have undertaken a range of environmental and energy-efficiency measures involving solar panels, LEDs, biological pest control, water saving and water reduction. Therefore, the environment is already built into the assimilated law. There is an opportunity for us, perhaps, to increase the environmental emphasis in it; that is something for the Minister to decide. If you look at the EU, you will see that it has put the spend that must be made in an operational programme up to 15%, and it can go as high as 20%, which is the case in the South. There is scope to do more, if we have the legislation.

Mr Blair: The existing considerations are there.

Ms McCrory: Existing considerations are there, and, as policy develops, we can consider what more can be done. We would need the powers in the Bill to do that, because, otherwise, we would simply be going with what is in the existing rules.

Miss McIlveen: Thank you very much for your presentation. Obviously, this is early days. I would appreciate the time to speak to stakeholders and then come back, because there will be questions that will probably be more relevant.

I understand that you will have had conversations with mushroom sector representatives and that they will have expressed concerns. What is your understanding of those concerns? What reassurance, at this early stage, have you given them?

Mr Terrington: Elaine is probably best placed to talk about the future of the fruit and veg aid scheme, in particular. She has the sector on speed dial.

Ms McCrory: I have very regular engagement with both the Northern Ireland Mushroom Growers Association representative John McArdle and Anna Mercer. I also have ongoing engagement with the POs. I will meet them again next week.

Mr Terrington: Including the two POs that are based in England.

Ms McCrory: Yes, they have members here.

As part of the review, we wanted to get their views on the scheme: what is good about it, what is bad about it and what they would like to see happen in the future. It is clear that they value the scheme and think that it has been of tremendous benefit to them. They would like to see the scheme retained, but they also point to the changes that have been made in the EU since we left and say, "Well, there are more favourable terms in the EU. There are amendments that could be made to the scheme to improve it". They are a little uncertain about the discretionary element, although they understand that we need to be able to control funding, particularly given the limited budgets. They also see the advantages of being able to amend the scheme. That is the message that we have been getting.

We have kept them informed all along. We meet them regularly. There is no doubt that they will come back to the Committee and articulate their concerns about future support. However, the Minister is clear: the mushroom sector is important. He is not going pull the rug from under it. We need to see what support that sector needs and how we best deliver it.

Mr Terrington: Whether that is the fruit and veg scheme or —.

Ms McCrory: Whether it is fruit and veg or some other type of support.

Miss McIlveen: During the development of the policy and, ultimately, the draft legislation that we have here today, were any amendments made in order to address their concerns?

Mr Terrington: I cannot say that there were. The bit that they are concerned about is the discretionary element, as Elaine said. That is a political thing that is outside our control. It will come down to budget and the Minister looking across all the other support that is out there and the future plans that he has. Even having the power to make it discretionary, if it were decided not to roll it forward to 2026 or whatever, it will still be on the statute book, if he were to find that some of the new stuff did not do it.

It comes down to the fact that it is a fairly narrow thing that is being done. We have stressed that it is important to have the enabling power to amend the legislation to align with future policy, including, potentially, subject to review and to budgets, the very things that they have called on. Those powers would allow us to make it Northern Ireland-specific. That might mean looking across the border to see what is being done or looking across to England to see what they are doing, or it might just involve unique, specific amendments to Northern Ireland that look at all of those.

The Chairperson (Mr Butler): I have two final questions. Can you give us even a high-level snapshot of what the fiscal value of the scheme has been? I was going to ask for that over the past five years, but that just takes us back to the Brexit point. Broader than that, what has the cost been? I know that it was a ring-fenced budget for those years, but what has the value of it been? What has been the buy-in from organisations in terms of their commitment? What about barriers? Have there been stumbling blocks for other organisations, such as growers of apples, strawberries, tomatoes or whatever, that resulted in our not seeing take-up, even when the scheme was ring-fenced?

Ms McCrory: When you say "value", do you mean, first of all, spend, or do you mean the value to the organisations?

The Chairperson (Mr Butler): The cost of the scheme itself and then the cost to the organisations, such as their membership fees, and the overall cost to the Department over the past number of years.

Ms McCrory: The Department has been funding it since mid-2020 because EU funding stopped in October 2020. That was the end of that; we had to fund it after that. Originally, we were spending about £2·2 million a year. We are funding only one organisation currently; DEFRA funds the others. I do not have the precise figures, but I know that the 2023 figures will be available on the CAP beneficiary website. It was about £2·2 million a year for us, but that has reduced in recent times. In the 2023-25 programme, it is £800,000 in the first year, £800,000 in the second year and £600,000 in the third year.

It can vary. The PO submits a three-year programme and says, "This is what we want to do, and here is what, we think, it will cost". The values can change a bit. The balance between capital and resource can change as they adjust to external circumstances. They then match those funds. The programmes are 50% match-funded, but there is a cap on that of 4·1% of the value of marketed production. It is whichever is lower: 50% of the total value of the programme or 4·1% of the total value of marketed production. That is how it is calculated. There is significant input from the PO members, because they put their own money into the programme.

The Chairperson (Mr Butler): Is the 50% roughly pound-for-pound?

Ms McCrory: Yes, and the cap applies.

The Chairperson (Mr Butler): OK. The cap applies, yes.

Ms McCrory: They all pay a membership levy that is determined by the PO. The PO is a democratic structure, and it decides who will contribute what. It will then decide, usually on an annual basis, how the funding — the pot of money in the operational fund — is divvied up. All members of the organisation will get an opportunity at some point. It is a case of, "If it is not my turn this year, I will get something next year". That is how that works.

As I said earlier on sectoral coverage, we currently have only mushrooms. In the past — I am talking about quite long ago; it was probably in 2000 — we had an apple PO that benefited from this. That organisation grew apples for cider-making, basically, and, because of the nature of its business, it decided that the PO model was not for it any more. Strawberry growers have been involved over the past few years as well. I think that one strawberry grower is still part of the local PO. It has not always worked for them. That may be because their business model does not fit with the aims and objectives of the PO.

Looking across to England and Scotland, we see much broader sectoral coverage, including asparagus, herbs, salads and all sorts of crops. I heard yesterday that a lot of the PO members are involved in pea production. England seems to be heavily involved in peas. Scotland is very involved in soft fruit: they are really into berries. That shows you how the POs adjust according to their specific circumstances. We want to drill a little more into the reasons for there not being more uptake here. That is a big question for us.

The Chairperson (Mr Butler): I have one last question before I bring William in, who will ask the final questions.

Something just occurred to me in relation to that. The Bill looks specifically at the discretionary powers and the mechanisms of the scheme. What governs the arrangements in and around POs? You talked about them having almost a discretionary contributory function. Is that underpinned by policy as opposed to regulation and stuff?

Ms McCrory: The governance of POs is set out in the legislation. The rules around forming a PO and being recognised as a PO are determined by DEFRA. That is because POs are able — this will sound bad, but it is not — to interfere in the market in a particular way. They can decide jointly how much they will produce and how they will market it, and they can negotiate on the prices. Individual businesses are not normally allowed to do that. It is a reserved matter, and those rules are set by DEFRA. The rules include that POs must have five members; must have a minimum value of turnover; must be set up as a legal entity; and must be set up on the initiative of the growers. Lots of rules are set down around that, and POs must comply with those rules. Non-compliance with those rules can lead to penalties.

The Chairperson (Mr Butler): Is there no discrepancy per region at all? The regulations set by DEFRA are —?

Ms McCrory: No. At the moment, it is set on a UK-wide basis.

The Chairperson (Mr Butler): OK.

Ms McCrory: We hear people saying, "We would like the rules changed", and we can articulate that to DEFRA, but, at the end of the day, DEFRA will decide.

Mr Terrington: As Elaine said, that is in a range of sectors. It is really only the fruit and vegetables aid scheme that has the advantage not only of the ability to intervene in the market but of the ability to access grant aid through the fruit and vegetables aid scheme.

The Chairperson (Mr Butler): No problem. I am sure that we will pick up on some of that through the stakeholder engagement that Michelle alluded to.

Mr Irwin: I live in the heart of apple-growing country, so I know a wee bit about it. I understand that fruit growers get basic farm payment and can claim for the farm business improvement scheme. Is this the processing end more than the growing end? The mushroom sector is the same and received £2·2 million in grant aid in the past few years. What is that for in the main?

Ms McCrory: This scheme is for growers. It is targeted at growers, so it is producers. The ethos of producer organisations is to strengthen the position of growers, because, naturally, as we know, they tend to be at the bottom end, and they take the risks.

Mr Irwin: In marketing or growing?

Ms McCrory: In both growing the produce and marketing it themselves. As I understand it, they decide on their marketing and would then use bigger marketing desks to get their produce into retail. However, the scheme is really to support growers. The money is used for capital and non-capital investments, such as polytunnels, solar panels, irrigation systems, staff accommodation in order to retain workers, training and agronomy support. Across the board, lots of activities can be funded.

Mr Irwin: Or have been funded in the past, yes. Fruit growers would complain to me that there is little support for them.

Ms McCrory: We hear from stakeholders that it is difficult for them to access other forms of support. That is something that we need to take into account as part of the review.

Mr Irwin: Thank you.

The Chairperson (Mr Butler): Are members content?

The Chairperson (Mr Butler): OK. Members, I need to seek agreement from the Committee that we delegate responsibility for the scrutiny of the delegated secondary legislation to the Examiner of Statutory Rules and forward to her the delegated powers memorandum. Are members content?

The Chairperson (Mr Butler): Thank you so much.

Thank you, guys, for the session. It was useful and informative, and we will see you again in the new year.

Mr Terrington: Merry Christmas to you all.

The Chairperson (Mr Butler): Have a good Christmas.