Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome the following officials from the Department to brief the Committee and answer any questions that we have: Manus McHenry, deputy director of agricultural policy division; Dr Devina Park, head of Farming with Nature policy; and John Crawford, acting head of legislation branch. Thank you very much for your attendance. Please feel free to brief the Committee, and then, hopefully, we will have some questions for you.

Mr Manus McHenry (Department of Agriculture, Environment and Rural Affairs): Thank you, Mr Chairman, for the opportunity to come back to the Committee to provide a further update on DAERA's plans to introduce year 2 of the Farming with Nature transition scheme in 2026. You will have received the amended regulations for consideration. With your permission, we would like to give you and members some detail on the progress that my team has made since our last appearance, which was in April.

The Farming with Nature transition scheme sits in the Farming with Nature package that forms part of a programme of change to bring progress through the DAERA sustainable agriculture programme. It aims to contribute to the delivery of many of DAERA's strategic environmental outcomes by supporting farmers and land managers to make substantial contributions to environmental improvements and sustainability. The transition scheme is the first strand of the package and was launched in 2025, focusing on farmland outside designated sites and other priority habitat areas. It allows farmers to implement actions that will deliver additional habitats, protect watercourses, provide green infrastructure for nature corridors and increase carbon sequestration.

The scheme has been and continues to be developed through an engagement process that includes the agriculture policy stakeholder group and the Farming with Nature working group, which consists of key stakeholders from the agriculture and environmental sectors. There is also extensive, ongoing engagement across policy and enabling teams, including design, delivery and inspection branches in DAERA.

Following the successful launch of year 1 of the scheme, the team has broadened, strengthened and simplified the Farming with Nature transition scheme, drawing on research, lessons learned and feedback from the Farming with Nature working group, individual farmers and wider stakeholders. That has led to the development of a robust addendum to the existing business case to justify and support the revisions to the scheme. I am pleased to say that DOF approved the addendum on 15 May this year. That means that the Department has allocated £9·3 million in funding to the transition scheme for 2026-27.

I will now give Members a brief reminder of the revised approach to year 2. It incorporates an expanded list of actions and enhanced payment levels that will deliver multiple benefits in the wider scope of the scheme, enhancing the reach and attractiveness of the scheme to the farming community and increasing the overall environmental impact of the policy. A total of 14 actions will be available in year 2, including habitat management actions. In addition to the actions currently available, the new actions include establishing arable margins and herbal leys as well as managing habitat that was created in year 1. The scheme eligibility criteria have been expanded to include

with environmental farming scheme (EFS) agreement holders to enable all those who apply to join the scheme. The minimum application threshold of 2,500 has been removed to enable smaller projects and management actions to be applied for. The upper limit of 9,500 has been increased to 20,000. In addition to the simplifications and improvements to year 1 specifications, the application process has also been incorporated to improve the customer experience.

The Committee pack includes a list of actions and payment levels. I do not propose to go through each one, but I will say that arable margins are included in the actions for this year and that herbal leys are new additions. The payment rates for supporting items — the protective fence, pasture pumps, drinking troughs with a concrete base, and gates and posts — remain unchanged from year 1.

At this stage, I will hand over to John. He will take you through the amending statutory rule (SR).

Mr John Crawford (Department of Agriculture, Environment and Rural Affairs): Thank you, Manus.

In 2025, DAERA laid a draft affirmative statutory rule to make technical amendments to existing retained EU regulations, which allowed the Department to introduce the Farming with Nature transition scheme. That was followed by a negative statutory rule to establish the rules, eligibility requirements and payment requirements for the transition scheme. That provided the legislative basis for the policy position in year 1 of the scheme. The amending statutory rule that is before the Committee today makes substantive changes to the scheme for year 2.

In summary, the SR updates key definitions, including replacing the definition "permanent grassland area" with the definition "permanent grassland sensitive area" and adding a broad definition of "machinery". It removes regulation 4(1)(b), thereby simplifying eligibility requirements; raises the maximum payment available under regulation 8(2) from £9,500 to £20,000; omits regulation 9 in order to allow the scheme to comply with farm sustainability standards; removes the suspension of support until a reported action has been carried out for the scheme; replaces a number of existing schedule 1 actions and criteria to reflect the changes that have been made to those actions for year 2; and introduces new eligible scheme actions. In addition, regulation 2 substitutes the payment tables in schedule 2 that reflect the rates of payment for existing and new actions. It also updates species lists and seed mix requirements through revised and new schedules 5 to 8. Regulations 3 and 4 make amendments to assimilated law for the farm sustainability standards and are not directly connected to the Farming with Nature transition scheme. Regulation 3 introduces amendments with the intention of providing clarity around farm sustainability standards penalties that can be applied. Regulation 4 amends assimilated law to provide clarification on the contents of a control report and the timescale for finalising it after an on-the-spot check.

Mr McHenry: Mr Chairman, thank you for allowing us to present that update. John, Devina and I are happy to answer any questions that members have about year 2 of the Farming with Nature transition scheme. Thank you.

The Chairperson (Mr Butler): Thank you very much, Manus, I really appreciate that.

Are there any categories of farmers or landowners that may be disadvantaged or excluded under the revised criteria?

Mr McHenry: Not in the case of farmers. In the case of landowners, it is important to mention that they need to have control of the land that they manage. In some instances, landowners will have rented out land to farmers who then farm the land. It is the farmer who has control of that land, so the farmer, not the landowner, would be eligible to apply to the scheme.

The Chairperson (Mr Butler): Conversely, is it expected that the amendments to the scheme will engage new applications?

Mr McHenry: Yes. Last year, for example, EFS agreement holders were excluded. This year, existing EFS agreement holders will be eligible to apply. The scope of the scheme is much wider this year to ensure that we have as many applications and as many farmers as possible coming forward to enter the scheme.

The Chairperson (Mr Butler): Thank you. Has the Department considered a situation in which fencing may still be necessary, such as mixed-use land or future scheme expansions?

Dr Devina Park (Department of Agriculture, Environment and Rural Affairs): At the minute, protective fencing is mandatory only for riparian buffer strips and is available for the "Planting new hedgerows" and "Farmland tree planting" actions. We have not included protective fencing for arable field margins at this time. The Department has been criticised for the amount of funding that has been given over to fencing in previous agrienvironment schemes. We wanted to be sure that, under Farming with Nature, we fund protective fencing wherever it is absolutely necessary to protect the environmental asset that is being created or managed under the scheme.

The Chairperson (Mr Butler): OK. That might come up again later. It was raised previously. I think that Declan raised it. Declan, before I finish my questioning, do you want to come in on that point?

Mr McAleer: I raised that point on the previous occasion. There are parts of the country where, if you drive through them now, you will see that the first cut of silage has, luckily enough, been taken in — we got it in last week — and you can see growth coming back already. If a farmer goes for the strip around the field that is proposed in the scheme without having any sort of semi-permanent or temporary protective fencing, they cannot put the cattle into the fields to graze the fresh grass. Farmers cannot do that unless they buy fencing themselves. I just think that fencing — not necessarily permanent fencing but semi-permanent fencing — would be a better solution to enable farmers to let cattle graze that grass now, following the first cut or their most recent cut.

Dr Park: The field margins that are offered in year 1 are primarily in arable fields in which cereal is the main crop. It is more than likely that those fields will be part of an arable rotation. I appreciate that there may be livestock in those fields at certain points in the year, but that is for very limited and short periods, and we think that temporary fencing is probably adequate in those situations.

Looking ahead to further actions that we may introduce over the lifetime of the scheme, a margin in a grassland field is under consideration. In such cases, it is likely that permanent fencing will be offered.

Mr McHenry: There is nothing in the scheme to stop anyone putting up a temporary fence if they wish to do so, Declan, but they would have to use their own finances.

Mr McAleer: That is my point: it reduces the incentive.

Mr McHenry: I understand.

Mr McAleer: Thank you.

The Chairperson (Mr Butler): Thanks for that, Declan.

Will you provide details of how the figures of £7 million plus the £2·3 million for resource departmental expenditure limit were arrived at? How was that allocation determined?

Mr McHenry: The funding for the scheme is split across funding that is allocated to the business to introduce the actions on their farm. As part of that and to support the process, there is the application to the scheme. Then there is the management and control of those actions on the farm: the checks that are necessary as part of the governance associated with the programme. Taking the money that goes to the farmers and the money to manage and administer the scheme together, that is the value of funding.

The Chairperson (Mr Butler): How did the Department determine that the ambition would be £7 million? How did you arrive at that figure?

Dr Park: In the addendum to the business case, we analysed the uptake of previous agrienvironment schemes on the basis of our applications in year 1 and our ambition for the level of environmental improvement that we would like to see undertaken on farms. We also had feedback on year 1 from our Farming with Nature working group, other stakeholders and individual farmers. There was some suggestion that the upper limit of £9,500 was restrictive and limited the environmental action that farmers could take on their farms, while the £2,500 minimum threshold for an application limited some smaller businesses' ability to get on to the scheme. All of that, in the round, helped with the development of the business case for that level of funding.

The Chairperson (Mr Butler): This is the final question from me before I move on to members. As you are aware, the Committee is considering Declan's Areas with Natural Constraints (Payments) Bill. Will the future strands of the Farming with Nature package deal with areas of natural constraint in any way? Is it anticipated that there will be any crossover? If that Bill becomes law, will the future Farming with Nature package build on its provisions as a starting point? Has that been anticipated in any way?

Dr Park: The Farming with Nature transition scheme is the first strand of the package. It will develop to include land, designated sites and other priority habitat areas. Some of those overlap with areas of natural constraint. As the package develops, the land will come in as well.

The Chairperson (Mr Butler): Thank you very much. Speak of the devil, and he may appear: Declan, you are next.

Mr McAleer: No, Chair, I have made the points that I want to make.

The Chairperson (Mr Butler): You are happy enough. Thank you, Declan.

Miss McIlveen: At the previous meeting, I asked about those who have been active in this type of behaviour on their farm for many years and who may not be on EFS but may have been in previous programmes or doing it naturally. There is no real reward for their doing that. Has the Department given any more consideration to how those farmers can be further incentivised?

Mr McHenry: We are developing the package, Michelle. As Devina said, this is the first strand. We are looking at options for how to incentivise farmers who have been in a previous scheme, be that EFS or the NI countryside management scheme. It is about how we bring that forward and justify it through a business case. There are businesses out there that are at the very top in terms of their on-farm environmental action. It is about how we take it forward. We continue to look at the options with the economists in the Department.

Miss McIlveen: Would that mean looking at an outcomes-based payment?

Mr McHenry: Options for outcomes- or results-based payments have been discussed quite a bit. The economic framework that we have used for a long time is based on income forgone and costs incurred, and it is about introducing other frameworks that reflect an economist's point of view on that results- or outcomes-based approach.

Miss McIlveen: You said that you are working on that. Is there an anticipated timeline for our consideration of it?

Mr McHenry: The Minister is keen that we bring it forward in this mandate. My staff and the other staff who are engaged in it are working hard to deliver that.

Miss McIlveen: Thank you.

Mr Blair: Thank you for the presentation. I have a couple of questions. Nature corridors were mentioned. In the establishment or identification of nature corridors, will there be any coordination of how a nature corridor on one farm would feed into another to create an overall benefit? If so, will the analysis of that be done by your team or by another section of DAERA?

Dr Park: When it comes to habitat connectivity and nature corridors, given that the Farming with Nature transition scheme is a spatial scheme, we will have good records of exactly where new habitat is being created. We are considering how to use that information, including, perhaps, to target work on linking pieces of existing habitat. As we begin to use more technology, including remote sensing, we will be able to identify areas where the connectivity is not as good as it could be.

Mr Blair: OK. Devina, thank you. That was useful. It is good to know that that analysis will be done.

My next question is one that I have previously asked in one form or another. There are 2-metre-minimum and 7-metre-minimum riparian buffer strips. Why are there two categories?

Dr Park: Some farmers see a strip of a width of 7 metres as a sizeable area to come out of production. There is evidence that a 2-metre riparian buffer strip can provide benefits in slowing the flow of nutrients and sediment to the watercourse and in protecting livestock by keeping animals out of the river. There are benefits. We would rather have a 2-metre buffer strip than no buffer strip, and having that choice gives farmers more flexibility in deciding what action to take.

Mr McHenry: With a 2-metre strip, river management needs to take place, and, if you need to carry out any work in the river, you have options to reach over and into it. With a 7-metre strip, you have the gateposts in action, so you can move around and drive into it. Having those two elements gives farmers flexibility.

Mr Wilson: My question is about how you will measure and evaluate the regulatory impact of the scheme against its outcomes. Has the Department set a point in time to look at measurable gains in biodiversity versus what the scheme has cost? It is important that farmers have financial assistance to enable them to participate and so that doing so is not a drain on them over and above what is normally the case. When will you say, "Let's go and measure this and work out whether these measures have been useful and beneficial to biodiversity", and what benchmark will you use?

Mr McHenry: Part of developing the business case for this element of the package was about ensuring that a monitoring and evaluation framework would be fully embedded in the scheme, so monitoring and evaluation will take place at various points throughout its lifetime. That will feed back into the Department, and it will also feed back into the higher-level policies, strategies and targets that are already set to ensure that it aligns with and meets the requirements that the scheme has been set up to deliver.

Mr Wilson: There is an assumption that creating buffer zones will encourage biodiversity to flourish. Is there a measurable way to gauge how that is progressing?

Mr McHenry: Along with our colleagues in the Department, the Northern Ireland Food Animal Information System will be included in the programme itself to assess how particular actions were addressed and to ensure that there is an environmental outcome. That will be done throughout the programme.

Mr Wilson: A departmental letter to the Committee stated that screening was carried out and that it was not anticipated that there would be:

How did you come to that conclusion?

Mr McHenry: We reviewed previous schemes whose requirements were very much based on highly specific EU requirements at that time. When putting up a fence, for example, there was the distance between posts, the number of staples and the tensile strength of the wire. To be honest, in a lot of cases, we did not feel that that was needed going forward, and that is just one example across the scheme. We have taken that on board and taken on board feedback from stakeholders and others involved, and, where possible, we have removed those requirements and left it in such a way that farmers are able to implement actions without the burden of having to worry about required specifications.

The Chairperson (Mr Butler): OK, members.

Mr Blair: Apologies, Chair. I had intended to declare an interest in a later item, but I was not here, and apologies for that as well. Declarations of interest were made earlier, so I now declare an interest in the Hunting with Dogs Bill, which we will discuss later.

The Chairperson (Mr Butler): No problem. OK, members, are we content? OK.

Thank you for your attendance. You got off lightly.