Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome the following DAERA officials to the meeting and invite them to brief the Committee: Joy Alexander, deputy director of the sustainable agri-food development division; and Brenda Cunning, head of future investment measures policy branch. Thank you very much for your attendance today. I invite you to brief the Committee.

Ms Joy Alexander (Department of Agriculture, Environment and Rural Affairs): Thank you very much, Chair, and good morning, everyone. Thank you for the opportunity to outline proposals for legislation to underpin the sustainable farming investment scheme. I will give a short introduction, and then Brenda will cover the key points of the draft regulations.

At the outset, I highlight that the scheme proposals are still subject to business case approval and budget availability. My colleague Alison Chambers, along with Brenda Cunning, provided the Committee with an overview of the scheme proposals on 11 September, and it might be helpful to recap a few of those key points.

The sustainable farming investment scheme will support incremental investments in a specified list of equipment and technology and aims to support investment across farm sectors and sizes, ensuring that smaller farmers are also supported. The scheme will seek to support a reduction in greenhouse gas (GHG), ammonia and nutrient losses, and we envisage co-benefits for participants of the scheme, such as increased innovation, increased efficiency, improved animal welfare and health and/or improved plant health.

We propose a grant rate of 40%, with a maximum grant amount of £25,000 being available across the scheme. We are developing a simple application process, with the aim of having a quick turnaround of funding.

The scheme represents phase 1 of investment support under the sustainable agriculture programme. A separate phase 2 scheme will be developed through engagement with industry and by learning from ongoing initiatives and research. That will support larger, transformative investments, including emerging technologies.

The proposed legislation will be made through the negative resolution procedure under section 6 of the Agriculture Act (Northern Ireland) 1949 and sets out the framework for the operation of the scheme. As required by the 1949 Act, the regulations must be approved by the Department of Finance. As I said, the development of the business case is ongoing, and it is anticipated that we will seek approval from the Department of Finance for the business case and the legislation at the same time in the new year. Subject to the necessary approvals, we hope to have a soft launch in early 2026.

If there are no questions, I will hand over to Brenda.

Ms Brenda Cunning (Department of Agriculture, Environment and Rural Affairs): As Joy said, this is a framework approach to the legislation, which sets out powers and actions that the Department can take and various things that the applicant must do in order to be successful under the scheme.

Regulation 2 sets out the definitions used in the statutory rule (SR), including several terms related to applicants and beneficiaries.

Regulations 3 and 4 allow the Department to pay financial support to an applicant who has been successful under the scheme, subject to conditions set by the Department. While it is proposed that payments will be made in one lump sum on completion of a successful claim, the legislation provides the option for the Department to pay by instalment.

Regulation 5 provides that an application must be made to the Department or to an external delivery agent, if that option was used, in a form set by the Department and must contain all the required information. We are developing an online application and claim system for the scheme that will be simple and straightforward for farm businesses to access and use. We will seek to minimise the information required from applicants, but we will need to gather baseline information to help with scheme evaluation.
Regulation 6 allows the Department to approve an application in whole or in part and with or without conditions so that financial support can be provided. The standard process is that a letter of offer will be issued to successful applicants detailing the amount of support offered and the items for which approval has been given. The provision also allows the Department or delivery agent to vary an approval. However, the Department must engage with the beneficiary before making any such variation.

Regulation 7 sets it out that a claim must be made when and how the Department requires. In essence, that means that a claim must be submitted via the online system before the final claim submission date, as set out in the letter of offer sent to successful applicants.

Regulation 8 requires a beneficiary to supply necessary information, such as details of sums paid for an investment, the installation date of an item or its location. Application and claim requirements and conditions referred to in the preceding regulations will be fully explained in the scheme guidance and online resources so that an applicant is aware of all requirements before submitting an application or a claim. The online system will guide and prompt an applicant as much as possible, and contact details will be available, should further help be required.

Regulation 9 and 10 detail the powers of an authorised person. That is someone who may act on behalf of the Department with regard to pre- or post-payment inspections to enter premises and inspect documents. The powers rely on section 40(1) of the Agriculture Act (Northern Ireland) 1949. The provisions and the definition of "authorised person" take account of comments from the Examiner of Statutory Rules on legislation for other schemes made under the 1949 Act.

Under regulation 11, a beneficiary must retain documentation related to a support investment for a minimum of five years. That aligns with the requirement under regulation 12 for equipment to be retained for a similar period.

Regulation 13 sets out situations where, for example, the Department may determine that there has been a breach of conditions, that false information has been submitted or that an investment is unlikely to be completed. The regulation requires the Department to engage in writing with a beneficiary before making such a determination and to consider information that is provided in response.

In cases where the Department has determined that a breach has occurred, regulation 14 provides powers to withhold or recover payment and to impose a penalty.

The penalty would fall within the matrix outlined previously to the Committee and ranges from a warning letter to a 100% penalty. The Department can also terminate an approval, and, in cases of false information, for example, exclude the beneficiary from the scheme for two years.

Regulations 15 and 16 provide the Department with the ability to recover, as a civil debt, any amounts due to be paid, and it may also recover interest on any recoverable payments made to the beneficiary.

Regulation 17 allows any amount due to a beneficiary under the scheme or otherwise payable to the beneficiary by the Department to be used to pay off or offset any amount due under regulation 15 or 16.

Regulation 18 sets out timing requirements for a review of decisions to reject an application to the scheme.

The schedule to the regulations sets out a number of scheme design features that we have previously outlined to the Committee. They include the grant rate, the minimum and maximum project costs and the overall maximum grant available under the scheme. As noted in the SL1 letter, those aspects in particular are subject to the final business case.

The scheme will be open to primary food production across the agriculture and horticulture sectors. A category 1 farm business ID will be required to access the scheme. That requirement will be communicated well in advance of the scheme's opening.

The scheme will be based on a list of preselected eligible items that the Department has assessed and scored and for which grants will be available on the basis of a reference price sourced by the Department across a range of suppliers. The schedule gives information on eligible costs, such as new items on the eligible list for which a successful applicant has received a letter of offer, and on costs that are not eligible for support, such as ongoing operating costs or VAT. The scheme guidance, terms and conditions and a successful applicant's letter of offer will set out full details of all eligible and ineligible costs.

The Chairperson (Mr Butler): Excellent. Thank you very much. I have a couple of questions written down, but another couple of things have just occurred to me. The Committee will deal with the Farm Sustainability Standards (Amendment) Regulations (Northern Ireland) 2025 later today. Obviously, these are the Sustainable Farming Investment Scheme Regulations (Northern Ireland) 2026, which is different. Is there a crossover with regard to penalties, for instance? Is it the same matrix, but it only applies to this scheme, or is there a danger that, if you were to fall foul of this scheme, that might trigger something in the other regulations?

Ms Cunning: No, they are completely separate. We have sought to ensure that we are aligning — taking the same type of approach — but they are completely separate schemes and penalties.

The Chairperson (Mr Butler): Good, because, to be fair, good work has been done on the matrix and the warning letters, for instance.

Further to that, if someone receives a letter or a refusal, is there an appeal process? Is there a straightforward way to challenge the Department?

Ms Cunning: Absolutely. As part of the process, we have to engage with somebody first before we determine whether there has been a breach. We have to write to them, and they can write back and make representations before we impose any penalties. If they are still unhappy, they can write to us and challenge the decision. Any decision is very much based on any representations that have been made back. For example, there might be good reasons for somebody not having fulfilled part of their letter of offer. Something might have happened on the farm or, perhaps, the supply had gone or whatever it might be, which meant that they could not get the equipment. That would be taken into account, and the penalty would not be applied.

The Chairperson (Mr Butler): The regulations will set out the list of eligible equipment and technologies. You referred to emerging technologies: how easy will it be for the regulations to be amended and updated to reflect the emerging technologies?

Ms Cunning: That is why we have not included the list in the regulations. Some other schemes have theirs in their schedule, but, because this is an evolving picture, we did not want to do that. That is something that the stakeholders raised with us: how we add things on from one round to the next. We have a separate list that will be published separately, ahead of the scheme opening. That is what we refer to.

The Chairperson (Mr Butler): What about stakeholder engagement? We are going into a new process in the new year where we will have more time and more access to stakeholder voices. Can you be open with us about any limitations or challenges that stakeholders have raised about this or any changes that you have brought into effect? I know that you have worked hard on this.

Ms Cunning: We have had a lot of engagement through the agricultural policy stakeholder group (APSG). We have met it about five times over the past year and a half. One of the biggest concerns for stakeholders was that the scheme should be as broad as possible across sectors. We often heard concerns about what would happen if horticulture, for example, was not competing against livestock. We have been careful about how we have scored items in order to make sure that there are items across the board for all sectors.

Owners of smaller farms also expressed concerns that there should be enough. In that regard, we have proposed reducing the minimum project cost. Under previous schemes, that would have been £5,000, so we have proposed lowering that to £3,000. We have made those adaptations. For others, it is about the amount of support. Everybody would always like more support to be available. Working through the business case, however, we have arrived at that 40% grant rate. They have asked whether the £25,000 maximum is enough. To be honest, for some types of investment, it will not be enough. That is, however, where we get into phase 2 for those bigger, transformative investments. Most recently, we have been talking to the mushroom sector, which is looking at automation, but that maximum amount will not even scratch the surface. Arable farmers require big harvesting machines: that is where we will look at phase 2. That is the scope of that initiative. This is, we think, sufficient for small, incremental investments that we can launch across a broad range of farm businesses and farm sizes quickly, which is the key thing.

The Chairperson (Mr Butler): The top-level figure is, I think, £44 million.

Ms Cunning: It is £40 million of capital.

The Chairperson (Mr Butler): It is £40 million of capital. OK. Are you aware of any pressures on that at the moment? I did not pick up anything in the Finance Minister's report this week. You guys are, obviously, a wee bit closer to the DAERA figures.

Ms Alexander: As we said at the outset, we are still in the process of getting business case approval. We have put bids in for funding, so the process is under way.

The Chairperson (Mr Butler): No problem; thank you very much. I am content with that.

Mr McAleer: Thank you. You have touched on the question that I was going to ask, which is about ensuring that smaller farm businesses are part of the scheme. Those farmers, obviously, would have been included in your consultation exercise. There is the option of going down as low as £3,000 as well in order to facilitate smaller, part-time farm businesses.

Ms Cunning: We are looking at the range of equipment as well; it is not all about the high-end stuff. That is why we think that the £25,000 limit is good, because smaller investments will be made that will average out. We are also conscious that sheep farmers on smaller farms have equipment needs. We have looked at the range of equipment and the financial limits in order to take that in. The smaller farming businesses are represented on the agricultural policy stakeholder group in order to give that feedback.

Mr McAleer: What flexibilities are there as regards spending if there are unforeseen circumstances, whether that is to do with climate or whatever?

Ms Cunning: In terms of the roll-out of the scheme or for an applicant?

Mr McAleer: An applicant.

Ms Cunning: An applicant? Absolutely. We have made it clear in our online resources, in the guide and in the system that applicants should stay in contact with us, because things can happen. You might apply and you might get your letter of offer, but, with the best will in the world, you cannot get the third item on it or something has happened to the markets and you cannot afford it any more. If you contact us, we will work through that and get extensions if necessary — whatever it might need to be. The key thing, however, is to stay in contact.

Mr McAleer: Following on from that, you mentioned reference prices. Are there any flexibilities for farmers who may want to provide quotes, if they can get a more competitive price than is indicated in the pricing reference guide?

Ms Cunning: We have talked about that at the APSG. The difficulty would be in mixing and matching. If we were doing reference prices for some people and then someone else brought in a quote, is that going to be a different price that would mean that they could get more grant than somebody else who was using reference pricing? More fundamental than that, however, using quotes results in a lot more administration for farmers, suppliers and the scheme. We would not be able to roll out the scheme as quickly.

Having the reference prices means that everybody knows what grant they are applying for. They put that through almost as soon as the scheme closes. We know the grant amount that we are seeking against the bid that we have made. We can then make decisions about letters of offer a lot faster than if we were having to analyse quotes. Are they comparable quotes? Are there any issues with the quotes provided? We do not want to go down the quote road. It is too administratively burdensome for us, for applicants and for suppliers.

Mr McAleer: Do you expect it to open for applications early in the new year?

Ms Cunning: That is the aim. We will do a soft launch first, because we want to explain a few things about the scheme ahead of time, such as the category 1 farm business ID and how to use an agent, if somebody is considering that. It is just to let people know more about the scheme. We will do a soft launch first and then open the scheme for applications after that. That will allow people to consider their investment needs as well.

Ms Alexander: It is really to give people time to get themselves ready.

Mr McAleer: How early in the new year?

Ms Alexander: It comes back to budget and business case approvals. We will do it as early as we can.

Ms Cunning: We have a lot of moving parts at the minute.

Mr McAleer: Thank you very much.

Mr Irwin: You are welcome. This is welcome news. The £40 million in grant aid to farmers will be a big help. Not only that, £100 million will be spent in the wider economy in Northern Ireland, so it certainly is welcome.

In the past, there was a wee bit of criticism that there were not enough items for horticulture: have you looked at the possibility of expanding that and including more items for horticulture?

Ms Cunning: Yes, we have. We worked closely with some of the stakeholders, who suggested items for consideration. The College of Agriculture, Food and Rural Enterprise (CAFRE) advisers gave us advice on a range of sectors. There may be some things that are novel and that we do not have in Northern Ireland. We want to see whether we can put those on the list. I am conscious that we want to expand it for horticulture and arable in particular.

Mr Irwin: That is good. You hope to open the scheme early in the new year: that could be March. Irrespective of when it opens, how long do you expect it to be open?

Ms Cunning: It will have a short opening period. Under tier 1 of the farm business improvement scheme (FBIS), it was about four to six weeks. We see it having the same kind of time frame, because it is such a simple application. If it is six weeks, that is how long people will have to get in and get their applications done. We will look to send letters of offer quite quickly after the scheme closes.

Mr Irwin: If it happens to be oversubscribed, how do you —?

Ms Cunning: If it is oversubscribed, we have an indicative budget that we will put against round 1, for example. The applications will be scored entirely on the basis of the items selected, so they will be ranked, and then we will have to draw a cut-off point.

Mr Irwin: OK.

Ms Alexander: Again, the soft launch is to make sure that everybody is aware of the window and, as we said, that there is sufficient time to get all the bits and pieces put together.

Mr Irwin: That is OK. Thank you.

Mr T Buchanan: Does the farmer have to pay up front and then be reimbursed?

Ms Cunning: Yes. They purchase the item and pay 100% of the investment, and then we will reimburse the 40% grant rate. That is standard under the types of schemes that we usually run.

Mr T Buchanan: What is the timeline for that payment coming to them?

Ms Cunning: We would do it as quickly as possible. Under tier 1, there was a fairly quick turnaround. Our guidance is that, if it is done through the online process and if you have one invoice for the piece of equipment and can show the payment for that item going out of your bank account, the payment will be much quicker because we do not have to wade through a lot of paperwork.

Mr T Buchanan: On the business of it being oversubscribed, if it is oversubscribed, do you take it on the basis of the applications that come in and when they come in? If it is oversubscribed, there will be people who lose out, so how do you determine who does and does not get it?

Ms Cunning: It is not done on a first come, first served basis; it is based purely on what people have applied for. The window opens, the window closes. All the applications in at that stage will be looked at on the basis of what they have selected.

Mr T Buchanan: OK. When will round 2 open? Again, will there be a long time frame? Will there be a round 2?

Ms Cunning: There will, hopefully, be a round 2. Any decisions on when that opens will be determined by the uptake in round 1 and how well the claims were processed in round 1. For example, if we found that people had a particular issue getting the equipment, because, say, something happened to the markets, we might have to delay it, but, if we can bring it forward, that would be better. We want to deliver it as rapidly as possible.

The Chairperson (Mr Butler): OK. Aoife — sorry, it is Áine. I did that last week too.

Ms Murphy: You are at it again. [Laughter.]

The Chairperson (Mr Butler): I am at it again.

Ms Murphy: Thank you, Chair.

I have a quick query about the score matrix. I suppose that there will an emphasis on low-emission slurry-spreading equipment (LESSE) in the grant scheme and non-LESSE equipment. When do we expect to see the score matrix? Will that be transparent? Will it be published?

Ms Cunning: We do not really have a matrix as such for the scoring. Every item will be on the list. When the list is published for the opening of the scheme, a score will be attributed to each item.

What we will potentially do for LESSE is slightly different. I talked last time about how we are splitting LESSE from non-LESSE so that somebody's application is not dragged down if they want to use a non-LESSE item as well as a LESSE item. We will split them and score them separately. Everything is based on an item score, but all LESSE has the same item score because they are the same item. There are slight differences when it comes to slurry injection equipment, which is slightly better in respect of ammonia than a trailing shoe or a dribble bar. So that we can prioritise, we are thinking of looking at livestock units in combination with the item score. That will prioritise those who have a higher number of livestock units and therefore produce more slurry. Therefore, we will get more benefit from them using LESSE on it, if that is necessary. The scores will be known as soon as the list of items is published. Applicants can then look at their livestock units and know their potential scoring there, but that ranking report will not be known until we know who the applicants are.

Ms Murphy: Thank you.

Mr Blair: Following on from Tom's question, what precedent has been set in examples from similar previous schemes when it comes to a cut-off point or where the number of applications might exceed the available resource?

Ms Cunning: When capital tier 1 of FBIS was first launched, there were two tranches to be rolled out for £15 million. It was taken that it would be £7·5 million and then £7·5 million. Those first two tranches more or less worked out that way. We often overcommit slightly for a tranche because we know that there is always a little bit of decommitment — it is natural — and we are then able to bump it up the second time. Tranche 3 happened in 2020, and supply was affected by COVID, the war in Ukraine and all of that, so there was a longer time frame for roll-out. There were also a lot more applications. Originally, it was supposed to be, I think, £7·5 million as well. The decision was taken on the basis of the number of applications to increase the budget to cover them. It is all quite fluid until we know who has applied for what.

Mr Blair: If the projected cost based on the number of applications is slightly over the budget, could a variation be made?

Ms Alexander: Potentially, yes.

Mr Blair: OK.

The Chairperson (Mr Butler): Brilliant. I will "do a William": I have two wee questions. See the habits that you are going to leave. This is your legacy, William: two wee ones.

At the previous meeting, I asked about a specific idea: the grooved slots that promote animal welfare. Is that the type of thing that we are talking about? I imagine that there is a list, but, obviously, it has not been published because it is a moving feast.

Ms Alexander: It is.

The Chairperson (Mr Butler): I am really interested in the animal welfare piece.

The Minister was here last week, and I asked him about Natural England's principles around mitigation and betterment for planning. It occurred to me that this might be part of the jigsaw in unlocking the logjam in planning. Has there been any crossover, intra-departmental work in that space?

Ms Cunning: Yes, we are very engaged with the folks working on the ammonia strategy and that review. Ammonia reduction is a main driver for the scheme. There are the proposals about LESSE in the ammonia strategy, but there are also proposals in it about more use of scrapers, types of ammonia reduction flooring and covering tanks. We are very aligned with that. We are also aligned with other types of schemes where they might want to bring in biosecurity. We are looking at a wildlife-proofing package for the TB aspect. When it comes to policy, we have fingers in lots of pies. Yes, there is a driver there regarding ammonia reduction, and that is very much connected to the ammonia strategy.

The Chairperson (Mr Butler): Brilliant.

No other members have any questions. I really appreciate your time and evidence, and thank you for taking members' questions. I wish you a happy Christmas.