Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome the following Department of Agriculture, Environment and Rural Affairs officials to the meeting and invite them to brief the Committee: George Moffett, the acting director of agriculture policy division; Lorna Christie, the head of the farm sustainability development policy branch; Aidan McEvoy, the head of the controls and assurance development branch; and Gregor Kerr, the programme director of the future implementation unit. You are no strangers to the Committee. I ask you to brief the Committee, as your doing so will be really useful.

Mr George Moffett (Department of Agriculture, Environment and Rural Affairs): That is great. Thank you, Chairman, for your introduction and for the opportunity to come to the Committee today and present on the draft Farm Sustainability Payment Scheme (Eligibility etc) Regulations (Northern Ireland) 2025. As you mentioned, I am joined by Gregor, Lorna and Aidan.

The Committee previously received a written and oral briefing on the farm sustainability payment (FSP) scheme on 26 June and at the party political spokespersons' event at the Loughry campus on 5 September. The SL1 that you have received for today's discussion reflects the discussions held at those meetings and introduces a number of technical changes.

As the Committee is aware from previous briefings, a public consultation on the proposals that now make up the sustainable agriculture programme was undertaken in late 2021. The responses informed 54 policy decisions, which were announced in March 2022. A number of those decisions related to the establishment of a resilience payment, which was subsequently renamed as the farm sustainability payment. We have taken forward the development of that payment and the new scheme, in which the agricultural policy stakeholder group (APSG) has been instrumental.

The FSP will replace the farm sustainability transition payment (FSTP) and will act as a balance between providing a safety net, which will help a farm business to withstand shocks that are beyond its ability to manage effectively, and encouraging farm businesses to become more environmentally sustainable, efficient and resilient. The introduction of the FSP will see the roll-out of the following key policy changes: the implementation of the historical years exercise; progressive capping; new land eligibility rules; new farm sustainability standards to replace cross-compliance; and the introduction of conditionalities.

The Farm Sustainability Payment Scheme (Eligibility etc) Regulations will give DAERA the legal power to introduce the payment and the various elements that are outlined with effect from 1 January 2026. The minimum claim size for FSP is retained at 3 hectares. Applicants for the scheme in 2026 will need to activate three entitlements on 3 hectares of eligible land to meet the requirements of the scheme. The historic years requirement was included in the Farm Sustainability (Transitional Provisions) Regulations (Northern Ireland) 2025, which were made earlier this year. The regulations that we are discussing today amend the transitional regulations and clarify that businesses not meeting the historic years requirements will not be eligible for the FSP scheme in 2026 only, and that their entitlements may be transferred only to an existing eligible farm business. The regulations introduce progressive capping of FSP payments, phased in over a two-year period, for payments above £60,000, with capping levels increasing in stages based on the size of payments. They also introduce simplified land eligibility rules for the FSP scheme compared with the land eligibility rules that were in place previously. The objective of those revised rules is to establish practical land eligibility rules that complement the FSP scheme's objectives, can be easily understood and can be efficiently and effectively controlled.

The regulations include a list of features and land use types that will be ineligible for the FSP scheme: for example, building sites, public and private gardens, public parks and golf courses. To support the simplified land eligibility rules and mitigate any unintended consequences, the regulations amend the eligibility requirements for the FSP scheme to state that only active farmers undertaking agricultural activity are eligible to apply. They must also have management control of the land that is used to activate entitlements. Consequently, the regulations require applicants to the scheme to carry out agricultural activity on at least 3 hectares of land that is used to activate entitlements. However, where an applicant submits a claim of less than 5 hectares, they must carry out agricultural activity on at least 2 hectares of land. To ensure that there is equality across schemes, the land eligibility rules that are introduced by these regulations will also apply to EFS higher-level agreements that were made by the Department before the date on which those regulations will come into operation.

The regulations legislate that applicants for the FSP scheme will be required to meet the following conditionalities in order to receive their full payment. These conditionalities will be phased in. The first is participation in the soil nutrient health scheme (SNHS). Farm businesses must have registered for the soil scheme and completed training offered to them by the closing date of the single application form window of 15 May 2027 to be compliant. For those farm businesses that are not compliant at that stage, the regulations legislate that a 10% reduction will be applied to their farm sustainability payment in 2027. That reduction will be increased to 15% for continued non-compliance in 2028, and will continue to be applied at 15% until the conditionality has been met. The second is participation in the bovine genetics project. In this case, farm businesses must have registered for the project and completed training offered to them by the closing of the single application form window of 15 May 2028 to be compliant. As with the SNHS conditionality, for those farm businesses that are not compliant at that stage, the regulations legislate that a 10% reduction will be applied to their farm sustainability payment in 2028. That reduction will be increased to 15% for continued non-compliance in 2029 and will continue to be applied at 15% until the conditionality has been met. The regulations also legislate that penalties for failure to meet the FSP scheme conditionalities should be applied concurrently.

A third conditionality of participation in the carbon footprinting project is also planned, but that conditionality is not included in those regulations as the timeline for the roll-out of that project is still to be set. The regulations reset the two-year entitlement confiscation rule from the commencement of the scheme, meaning that no entitlements will be confiscated for non-activation in 2026. That is because the FSTP and FSP schemes are being treated as two separate schemes.

The technical changes that are included in the regulations define the order in which DAERA will apply scheme penalties. These are as follows: first, the over-declaration penalty, which includes duplicate fields; the late claim penalty; the conditionality reductions; and, finally, farm sustainability standards penalties. Under-declaration and late fee penalties have been removed, and the penalty for over-declaration of land has been increased from 1·5 times the difference found to twice the difference found. Preliminary checks will no longer be mandatory, and the Department retains the authority to implement other checks as required. The mandatory on-the-spot checks inspection rate has been removed and replaced with a requirement for DAERA to define the rate, because land eligibility controls will be carried out using remote sensing techniques, thereby removing that requirement. The regulations remove penalties that exceed 100% of the payment due in respect of what had been the area-based payments under pillar 2 of the common agricultural policy — chiefly the agrienvironment and forestry payments. These penalties apply to a very small number of businesses and are complicated to administer, as they involve a deduction from payments in following years.

Finally, the regulations simplify the requirements for control reports for farm sustainability standard checks.

That brings me to the end of my presentation. I hope that the Committee found it helpful. We are happy to take questions.

The Chairperson (Mr Butler): Brilliant. Thank you very much. I appreciate that. There will be quite a few questions. The first question I am going to ask is on the requirements and conditionalities for applicants receiving "their full FSP". We beat this around with the bovine genetics team last week, and they were at pains to point out that there would be no loss for someone who did not enter that scheme. However, the paragraph that I am looking at in your submission states that:

is essential:

Can you be clear on what element of the FSP they would be ineligible for and how that is quantified?

Mr Moffett: They are eligible for the full FSP payment. If they have not participated in the scheme by the date set, they will lose a 10% —.

The Chairperson (Mr Butler): What if, rather than not participating, they have not applied for the scheme?

Mr Moffett: If the scheme has been offered to them and they have not applied for it, that reduction will be applied until they rectify that.

The Chairperson (Mr Butler): To be honest, that is not in any way what I took from the presentation that the Committee received from DAERA officials last week. This is probably where we will push this, but it is up to members where we go with it. Last week, it was presented to us as not currently being a mandatory scheme for FSP, that it was mandatory and that it would be a case of cost recovery, which had been worked out at £13 per head, because that was the cost that was required. I have to say, guys, that this presentation moves us into a very different phase from the presentation that we got last week.

Mr Moffett: There is —.

The Chairperson (Mr Butler): Sorry, I need to nail this down once and for all. I do not want us to spend the next 20 minutes trying to tease out the absolute —. That is genuinely totally different from what we were told last week.

Mr Moffett: There are two elements to bovine genetics. The first is registration and training. All farm businesses are required to do that, and that is where this conditionality comes in. The £13 that you mentioned, Robbie, is for genotyping. That is a requirement of bovine genetics. The Department is funding that in the first year, but is looking at options for how it would be delivered from there on in. At this point, there is no plan to include that as a conditionality. The conditionality relates purely to farm businesses initially registering for the scheme and doing the training. The genotyping is separate.

The Chairperson (Mr Butler): It is separate, OK. How much of that is already picked up? How much is already happening?

Mr Moffett: In genotyping?

The Chairperson (Mr Butler): Yes.

Mr Moffett: There are some farm businesses that genotype at the minute, but it is not a big number. I suppose that the purpose of the bovine genetics project is to improve the genetic pool of bovine cattle across the industry.

The Chairperson (Mr Butler): How much of the wider genetics project is happening at the moment?

Mr Moffett: A supplier has been appointed to build a database to hold the genetic information that will come forward. The plan is that farmers will start to provide data for that and that training will start and registration will open from September 2026.

The Chairperson (Mr Butler): That clears it up a bit for me. Again, it is that push and pull. Do you think that farmers may be put off from making an application due to the conditionalities that are being imposed in addition to the farming pressures that they already experience? What I am trying to pull apart here —. It is slightly unfair to ask you this, but everything seems to be linked, even when we are told that it is not. Cross-compliance is moving, but non-adherence to one part kicks in in another part of the farming schemes and stuff. Has enough work been done to gain the confidence of farmers? As we have said before, I do not think that there is one member in here who does not want that to work. Bovine genetics is incredibly valuable. It looks like a great idea.

Mr Moffett: To go back to the rationale for the payment, it is a resilience payment to help farm businesses withstand shocks, become more environmentally sustainable, be there for the future and be productive and profitable. The Department and the Executive are investing heavily in these data platforms such as bovine genetics and the soil nutrient health scheme. The data that those platforms will provide to farm businesses is really beneficial to help them to make change in their business, to improve that sustainability and to improve that resilience. We want to ensure, by applying the conditionalities, that as many farm businesses as possible join those schemes, participate in them and get the benefits that those data platforms can deliver. However, you are right: we have talked to the industry about them. Communication and messaging will be extremely important. We have a detailed comms plan designed around this once the legislation is in place and we take this out.

The Chairperson (Mr Butler): To be absolutely fair to this, we got a good understanding of the genotyping and what is involved in that. How much work is involved for a farmer to participate in the bovine genetics project itself?

Mr Moffett: It is registration and doing the training, which will be available online. The farmer can do that at his or her leisure. It will also be offered face to face for people who are not as IT literate or who just prefer that opportunity to engage in a one-to-one session or in a group scenario. It will be quite easy for farmers to participate. The other point to bear in mind is that the two conditionalities are being phased in. If the farm business has met the soil conditionality, it comes in first, then bovine genetics, and if they meet that, they will have no reductions applied at all.

The Chairperson (Mr Butler): When do you anticipate the bovine genetics project starting if the SR is made?

Mr Moffett: I know that the Committee considered the SL1 for genotyping a couple of weeks ago. It is still to be laid. The project is up and running in that, as I mentioned, the supplier to build the database has been appointed. Sustainable Ruminant Genetics, which is the industry-led body, is in place and is working with the industry to encourage participation. Over the next number of months, there will be a lot of work and communication around it to help farmers to gear up and get ready to apply and register from September 2026.

The Chairperson (Mr Butler): The date that I have here is 15 May 2028. Is that when it goes live, or is that when the applications open?

Mr Moffett: No. The applications for farmers to register and complete their training will be available from September 2026. Basically, if they have not registered or completed their training by the closure of the single application period on 15 May 2028, those businesses will get the penalty and a reduction applied to their FSP. Before that, messaging and letters will go out to remind farm businesses of the need to meet that conditionality.

The Chairperson (Mr Butler): The final one from me is on capping. It is obviously a new way of doing things. Is there a risk for those bigger farms where that is the farmer's only business? As you know, some farmers have other businesses or occupations. Is there a risk that it could be detrimental to the bigger ones who rely on farming? Can you give me a wee bit more around the scale of the capping?

Mr Moffett: I will ask Lorna to pick that up, if you do not mind.

Ms Lorna Christie (Department of Agriculture, Environment and Rural Affairs): With regard to the scale of the capping that is being introduced over bands of payment, 265 businesses are going to be impacted by that. Of those, the majority are sitting at the lower levels of payment, which is between £60,000 and £100,000 for individual farm businesses. With regard to how that will impact farm businesses, this was announced four years ago, so farmers have been aware that it is going to happen. We are bringing it in over a two-year period, so 50% of the cap will be introduced in the first year, and that will go up to the 100% of the rates in the second year.

The Chairperson (Mr Butler): You say that 265 larger businesses will be affected. Are there any figures or a metric for the average reduction?

Ms Christie: There is not. It is difficult to work that out. If a farm business has a payment of £70,000 in the first year, the payment will be reduced by 10%, which is £1,000. In the second year, that reduction will be 20%, which is £2,000. If somebody is sitting at the other end with a farm payment of £180,000, that will obviously be reduced more.

The Chairperson (Mr Butler): OK. I remember the table that you provided, and that was in there.

Mr McAleer: Thank you very much for your presentation. Has the Department been working closely with the farm businesses that were knocked out because of the historic years? Have you noticed a pattern of them making arrangements to transfer their entitlements?

Mr Gregor Kerr (Department of Agriculture, Environment and Rural Affairs): Some businesses have appealed the decision and put in evidence. That evidence has been considered, and, where it has been found that the Department's information was incorrect or incomplete, those decisions have been overturned and the businesses have been brought in. We do not hold data on what businesses choose to do with their entitlements. We will not know that until the so-called trading window next year, which is when the businesses have to notify us of what they have done with their entitlements. We do not hold any of that data at the moment.

Mr McAleer: Thank you. That is it.

Miss McIlveen: Thank you for your presentation. We have spoken about this in the past, and I have raised my concerns, particularly about the rationale for capping. I am not convinced that high support payments encourage unwarranted risk-taking, as you have said. I am not sure that you are doing businesses a favour by reducing the support that they get. In many respects, I think that you need to incentivise entrepreneurism and progress within the industry rather than potentially, in some ways, disincentivising progress.

Further to that, I am concerned about the use of the carrot-and-stick approach, particularly around the bovine genetics programme. I am on record as saying that that is a superb programme, and people should be encouraged to use it. I am concerned about the manner in which the Department is going about it, however, particularly in placing conditionality on payments. I do not think that that was ever the intention of the scheme, and that worries me. You are saying that, when people sign up to and getting trained for the project, the next step is not to penalise them, but it is nearly as if it is your intention to do that. I think you are moving towards that. Adding that to the conversations that we had last week on the penalties, which is all part of the same process, I struggle with how this is being presented, to be honest. Given where farming families currently are, they will see this as a further choke — a noose around their neck. You are looking at capping, penalties and conditionalities, and I do not see where the incentives are.

That was more of a comment than a request for a response. We have had these conversations before.

Mr Moffett: As we discussed before, we consulted on proposals around applying conditionalities in late 2021. At that time, the response to the consultation supported them. They key message for us to leave with you today is that we do not want farm businesses to receive penalties for non-participation; we want farm businesses to participate and get the benefit that the platforms will deliver. We plan comms and marketing promotion around both aspects of the conditionality, really to ensure that farmers are not in a position where a penalty will be applied. There is work to be done, and we realise that, but we do plan to get out there and get that message out.

The Chairperson (Mr Butler): Happy enough?

Miss McIlveen: Not really.

Mr Irwin: Thank you for your presentation. I have some concerns. Did you say that you have from September 2026 to May 2028 to apply to the bovine genetics scheme?

Mr Moffett: To register and complete the training, yes.

Mr Irwin: That is 18 months, roughly.

Mr Moffett: Yes.

Mr Irwin: I have concerns that the message needs to be very clear, because there could be a lot of small suckler farmers who do not fully understand and do not register and end up being penalised through no fault of their own. In the past, many penalty metrics were not made clear to farmers.

Mr Moffett: I appreciate that, William, and, as I said to Michelle, we know that there is a job of work to be done around comms and promotion of the schemes, the data platforms and the conditionality. I know that the College of Agriculture, Food and Rural Enterprise (CAFRE) is planning training and awareness events for farmers, but also for agents and other agri-professionals who engage with farmers. That is about trying to get the information out to farmers so that they know exactly what they need to do.

Mr Irwin: I see that there now will be a penalty for over-declaration. Previously, there was a penalty for under-declaration. You are jumping from one extreme to the other.

Mr Moffett: There previously was a penalty for over-declaration, so we are maintaining that but removing the other one. In some ways, we are simplifying the penalties around that. Aidan, I do not know if you want to pick anything up there? Gregor?

Mr Irwin: It would be difficult to make an over-declaration, given that you need entitlements to claim anyway.

Mr Kerr: The over-declaration penalty is where you declare more land than is actually eligible or more land than you hold. Because of the changes in land eligibility that have come in, the soft features are no longer ineligible. Previously, a farm business might have declared an area in a field, and, when that field was inspected, we found that there was rush in the field. Therefore, that area was ineligible, so an over-declaration penalty was applied because rush was ineligible. That has now been removed, and that soft feature is now eligible. For the majority of farmers, the only time that you will have an over-declaration is if you have a hard feature that you do not tell us about. We know where the hard features already are.

Mr Irwin: Are you talking about buildings?

Mr Kerr: If they were to build a new building and did not tell us that there was a new building but tried to claim that, that is where there would be an over-declaration penalty.

Mr Irwin: A building would be taking up a very small portion. It would not be wise for a farmer to declare it intentionally.

Mr Kerr: We would not expect that. Because they have more eligible land now, with the soft features now being eligible, most farmers should not be in a position where they need to claim anything other than what they have. On a point that you mentioned previously, Mr Irwin, we will prepopulate their claim with the areas of all the fields that they can claim. It will all be in there for them. The only time that an over-declaration will arise is if they have included a hard feature and have not told us.

Mr Irwin: There were situations in bygone days where many farmers were fined heavily for duplicate fields, and much of it was a mistake. On the computer, nobody could claim for two fields because it would take it out anyway, but a lot of people were fined very heavily in the first instance a number of years ago.

Mr Kerr: Duplicate fields will remain a case where —. When the applications are made, if we find a duplicate field, we will write to contact both of the farmers involved to tell them that the field is being claimed by someone else. That allows the farmer who has mistakenly claimed it because they were farming it last year and not farming it this year to remove that from the claim with no penalty.

Mr Irwin: That is good. Thank you.

Ms Murphy: I have two quick questions. Does the Department have specific figures on the number of farmers who are ineligible for the scheme and who may be knocked out?

Mr Moffett: In the historic years exercise, the Department wrote to just under 2,000 farm businesses in June. As Gregor said, some of those businesses have come back to the Department with additional evidence that the Department has considered. Some are back in the scheme on the basis of that evidence. Slightly under 2,000 businesses are outside it.

Ms Murphy: Supplementary to that, will anyone who still has not activated their entitlements from 2025 be eligible post 2026?

Mr Moffett: They will be eligible to apply in 2026, provided that they submit an eligible claim and activate three entitlements in 2026.

Ms Murphy: Thank you, George.

Mr T Buchanan: I have a couple of things. Where will the money that you save through capping be targeted?

Mr Moffett: It will be redistributed amongst all farm businesses, so it will remain in the agri budget.

Mr T Buchanan: Have you calculated roughly how much that will save?

Mr Moffett: I think that Lorna has that figure.

Ms Christie: It is approximately £2 million.

Mr T Buchanan: OK. The other issue is qualification for the scheme. Take, for example, a small farmer who does not have much land, so, rather than put cattle, sheep or other animals on it, he grows grass only and uses that as fodder to sell to other farmers. Is that man eligible under the scheme?

Mr Moffett: He is, unless he has been excluded because of the historic years exercise. If that was the farm business model from 1 January 2022, he is eligible.

Mr T Buchanan: If he had animals on the land in 2022, for example, but he is now doing that other work, will he still get it?

Mr Moffett: He remains eligible.

Mr T Buchanan: OK. Fair enough.

The Chairperson (Mr Butler): Are you happy enough, Tom?

Mr T Buchanan: Yes.

The Chairperson (Mr Butler): Any other questions, members? Okay. Thank you very much.

Members, as the procedure is draft affirmative, there will be a debate in plenary. Are you content that the Committee supports the statutory rule (SR) as drafted in that debate? If so, we can do that, and if not — are we supporting the SR as drafted?

We will have to wait until Áine comes back.

The Committee Clerk: You could move on to that one, and we could return to it, if the officials did not mind.

The Chairperson (Mr Butler): Are you content to sit for a minute or two? Hold on; that might be Áine coming back in. No? Well, guys, if you do not mind sitting there for a second or two, I will take agenda item 12, because we are tight for time. You guys do not have to take part in this debate.

The Chairperson (Mr Butler): Áine, we have just had evidence from departmental officials on the SL1 regarding the Farm Sustainability Payment Scheme (Eligibility etc) Regulations (Northern Ireland) 2025. I will put the Question on the statutory rule, because, as it is subject to the draft affirmative procedure, there will be a debate in plenary. Is the Committee content to support the SR as drafted in the debate?

The Chairperson (Mr Butler): I will be honest: I am unsure at the moment. I need some more clarity. I am not offering a definitive position. I am not going to support it at the moment. We will record that.

Ms Murphy: When will it be laid?

The Chairperson (Mr Butler): Sorry?

Ms Murphy: Is it with the Business Office at the minute, or what is the —?

Mr Moffett: It will be laid today.

The Chairperson (Mr Butler): It will be laid today.

Ms Murphy: OK.

The Chairperson (Mr Butler): So it is four against four.

Mr Blair: Sorry, Chair. You were not abstaining there; you were voting against.

The Chairperson (Mr Butler): I am going to vote against.

Mr Blair: We need to clarify that.

The Chairperson (Mr Butler): I am not certain, John, and, if I am not certain, I am not there.

Mr Blair: A vote against is a vote against.

The Chairperson (Mr Butler): When I said I was not against, in the debate in the Chamber, I am going to get more clarity. I am still unsure in and around the FSP piece.

The Committee Clerk: Chair, this is just for you to present the Committee's view in the speech. Obviously, you all have individual views as well.

The Chairperson (Mr Butler): The Chair will make a speech to reflect the Committee's considerations and stuff on that. Thank you very much for your time.

Mr Moffett: Thank you.