Official Report: Minutes of Evidence

The Chairperson (Ms D Armstrong): I welcome Richard Johnston, director of agricultural policy, and Ken Laverty from the farm sustainability development policy branch. You are both very welcome this morning, and I invite you to brief the Committee.

Mr Richard Johnston (Department of Agriculture, Environment and Rural Affairs): Thank you, Chair and Committee members, for the opportunity to provide a briefing on the Areas with Natural Constraints (Payments) Bill. We welcome the opportunity to speak to you on that private Member's Bill. Areas with natural constraints represent land that is classified as being in a severely disadvantaged area (SDA) in Northern Ireland. That classification was established in the 1970s. Almost half of Northern Ireland's agricultural land — around 448,000 hectares — falls within SDAs, which support more than 10,000, predominantly beef and sheep, farms. Those areas are centred in the Mournes, the glens of Antrim, the Sperrins and most of County Fermanagh. They are an integral part of our rural landscape and the social fabric of rural communities.

Farmers in SDAs make a vital contribution to the economy, the fabric of rural society and progressing our biodiversity and environmental aims. The farms are home to wildlife and support biodiversity. They support the achievement of our natural environment objectives and support high-quality livestock that underpin our economy, as well as the wider supply chain in and exports from Northern Ireland. The 2025 agricultural census makes clear that those areas account for 45% of suckler cows, 16% of dairy cows and 58% of breeding ewes.

The sustainable agriculture programme (SAP) provides targeted support that is designed to meet Northern Ireland's specific needs. It focuses on improving productivity and providing environmental benefits while supporting the resilience of the agriculture sector in the longer term. The programme has been co-designed with agriculture and environmental stakeholders, including hill farming representatives through the agricultural policy stakeholder group (APSG), to ensure a robust and inclusive developmental process.

As part of the SAP implementation, the farm sustainability payment (FSP) was introduced in 2026, replacing the farm sustainability transition payment. As of 8 September 2026, eligible farm businesses have been paid £232 million in FSP. That includes £99 million to farm businesses within SDAs and £60 million to those in disadvantaged areas (DAs). A total of £72 million has been paid to lowland farms. That means that 61% of that support has been paid to farms in DAs and SDAs. FSP is now the core support mechanism for all farm businesses, providing resilience against external shocks and encouraging improved environmental management, productivity, efficiency and profitability.

Farmers in SDAs have access to additional support through the beef sustainability package, including the suckler cow scheme, beef carbon reduction (BCR) scheme and Farming with Nature package. Those schemes provide payment for the provision of environmental public goods and the diversification of income streams. They aim to provide environmental improvements alongside emission reductions and productivity gains. With around 45% of Northern Ireland's suckler cows located in SDAs, the suckler cow scheme alone has the potential to deliver about £6 million of support to those areas.

Whilst I recognise that there is currently no stand-alone support package for the sheep sector, my team has carried out extensive developmental work and consultation to take forward proposals for the sheep sector. We have looked at the need, the policies in place in other jurisdictions and the data for Northern Ireland, and we have scoped out a range of potential interventions. We are working with the stakeholder group and NGOs to identify what could be taken forward for further development. We plan to announce more on the development of support for the sheep sector later in the year.

The Farming with Nature package will provide targeted support for farmland in designated areas and for priority habitats and species. The proposed support will help farmers to manage those areas effectively while delivering strong environmental outcomes. That scheme has launched, and there have been more than 1,700 applications. We are very pleased with the level of interest in the scheme so far this year. Activities may include maintaining vegetation through well-planned grazing regimes, looking at stocking densities and reducing the risk of wildfire by limiting the accumulation of combustible materials.

From the history of the ANC scheme from 2016 to 2018, members will recall that the scheme operated in Northern Ireland in 2016 and 2017 under the EU rural development programme and was supported with £120 million per annum. It proceeded only under ministerial direction, because it did not meet the value-for-money requirements of 'Managing Public Money Northern Ireland'. A review of the ANC scheme and a subsequent consultation on the future of support for ANCs was carried out in 2016, with affordability as a central question. In 2018, a further ministerial direction was required, with reduced funding of £8 million for ANCs.

Crucially, despite the scheme ending, SDA farmers have not seen their support diminish. The transition to flat-rate entitlements under pillar 1 has shifted significant direct payments from dairy, lowland cattle and sheep farms and mixed farms into the SDA, and there has been no change to the mix of farms entering or exiting the industry. The £19 million shift created through the flat-rate entitlement transition remains a recurring and substantial benefit to SDA farmers.

The Bill would create a significant legal requirement on the Department to establish a new ANC scheme regardless of affordability or other competing priorities. Such a scheme would require funding from the earmarked budget for agriculture, agrienvironment and rural affairs, forcing a further reduction in FSP entitlement values for all farmers, including those in the SDA. That funding would be on top of the £19 million already transferred into those areas and the move towards flat-rate entitlements, as well as the income from the BCR and suckler cow schemes and Farming with Nature.

I will turn to the financial implications of the Bill. The previous ANC scheme operated under the Northern Ireland rural development programme of the common agricultural policy and was not funded from pillar 1. Under the sustainable agriculture programme, however, all support must come from the Executive's earmarked agricultural budget. Funding for the new ANC scheme would also come from that budget, which would therefore require FSP funds to be redirected, thereby reducing overall farm sustainability payments. There is no financial provision in the draft Budget for a new ANC scheme.

On the basis of that analysis, my advice to members is that, as with previous iterations of the scheme, there is no clear, compelling value-for-money case for reinstating the ANC scheme. At the Committee's evidence session on 16 March 2026, the Bill sponsor, Declan McAleer, stated that funding for an ANC scheme should not be drawn from the Executive's earmarked budget for agriculture, agrienvironment, fisheries and rural development, noting that that budget was already under significant pressure and must continue to act as a financial safeguard for the farming community. It is important to highlight that introducing such a scheme would place additional demand on the earmarked budget and result in a scale-back to the value of all FSP claims, including those of farmers in the SDA.

The Bill calls for the scheme to be funded, at a minimum, at the level of the last ANC scheme in 2018. A new scheme, based on 2018 rates and an adjustment for the 2025 retail price index, would cost approximately £11·4 million, which would increase annually with inflation. The money would be directed towards the SDA. With inflation-linked increases mandated in the Bill, the proportion of funding that would be diverted away from the farm sustainability payment and other SAP schemes would increase year on year.

Feedback from stakeholders welcomed the scheme in general but identified issues with it that the Bill did not address. For example, the Ulster Farmers' Union made the point that, without additional funding, ANC support would redistribute already limited support within the sector, create inequality between farm types and undermine confidence in the SAP. The RSPB, Ulster Wildlife and the National Trust provided input from an environmental NGO perspective. They stated that there was an opportunity to consider how ANC payments could be redesigned to deliver additional environmental improvements, provision for which was absent from the Bill, and that there was an opportunity to amend the Bill to ensure that carbon sequestration and biodiversity outcomes were matched to payment eligibility.

While Ireland continues to deliver support to ANCs under the common agricultural policy, the other areas of the UK are moving away from providing ANC schemes, preferring to provide support to ANCs through larger environmental land management schemes. That reflects the approach taken in Northern Ireland and the measures in place as part of the SAP.

To close, I acknowledge that SDA farmers and DA farmers are essential to the fabric of Northern Ireland's agricultural community and part of the social fabric of our rural communities. Sentiment, unfortunately, cannot replace sound policymaking, and the Bill as presented represents a significant financial, legislative and budgetary challenge for the Department without a strong evidence base on outputs and outcomes to justify its introduction. Rather than introducing a separate ANC scheme, I urge all farm businesses in the SDA to engage fully with the range of schemes that are available under SAP, namely the farm sustainability payment, the suckler cow scheme, the beef carbon reduction scheme and the Farming with Nature scheme, as well as the recently launched sustainable farming investment scheme. I encourage them to maximise their support for those programmes to strengthen farm resilience and deliver positive environmental outcomes in future years. Thank you, Chair and Committee.

The Chairperson (Ms D Armstrong): Thank you, Richard, for your presentation. I have a couple of questions to ask you before I open the meeting to members. The SDA scheme was established in the 1970s, and it needs to be determined whether the criteria for designation are still robust. Has the Department conducted any exercises to update the designation, given that the previous scheme only ended in 2018?

Mr Johnston: No, there has not been any work to update the designations. That designation is an EU definition, and that stands.

The Chairperson (Ms D Armstrong): Have you any indication that the SDAs have grown or reduced?

Mr Johnston: No, the designation has not changed. There has been no change in the amount of land that is eligible. There will have been a change in the composition of farms in the designation, but we do not have the figures at our fingertips at the moment. I can take that away and bring back the evidence if you wish.

The Chairperson (Ms D Armstrong): It would be good to see that. Thank you.

Secondly, you highlight the fact that the proposal will have an annual inflationary uplift and that that will make any new ANC scheme unique among agricultural support schemes as no other scheme is index-linked or subject to an annual rise in value. Given that you state that ANCs represent almost half of Northern Ireland's agricultural land, supporting upwards of 10,000 predominantly beef and sheep farms, is such a unique scheme not validated by that statement?

Mr Johnston: I think that it sets it aside from any other scheme that we have. The Department's budget does not increase by inflation annually. The £332·5 million in our earmarked budget does not increase by inflation. It means that that £11·4 million would increase year on year, and that would squeeze other schemes. It is not that it could not be validated. If we were able to agree that the earmarked budget or the budget for the Department would increase by inflation each year, we would have the headroom to do that. However, as the framework stands, it will necessarily come out of other parts of the earmarked budget.

The Chairperson (Ms D Armstrong): What price index do you feel would be the most suitable in the circumstances provided by the Bill?

Mr Johnston: It is currently focused on the retail price index (RPI). We could potentially use the consumer price index (CPI), which is the more normally used index across a range of schemes, or CPIX, which is CPI excluding house price inflation. There are a number of measures of inflation across the economy, and CIPX is probably the most relevant one for a scheme such as this. Again, we need to do a bit of research on that if we are to include an inflationary uplift as part of the scheme.

The Chairperson (Ms D Armstrong): Thank you very much, Richard. I pass to our Deputy Chair, Declan.

Mr McAleer: I declare an interest as the Bill sponsor. I want to make a number of points. Richard, you say that you are proceeding on the assumption that this will automatically come out of the Agriculture ring-fenced budget. However, I am looking over the figures for the past number of years. The ANC scheme would cost £11 million, but the Department has spent £261 million on agency staff, IT projects and consultants in the past five years. Is this less to do with affordability and more to do with the Department's political priorities? That is £261 million that the Department has spent in five years.

Mr Johnston: With expenditure on IT and consultancy and various other expenditure that is required, we need to ensure that we dispense our governance responsibilities. Therefore, we have business cases and evaluations in place. We have robust monitoring and evaluation, and we can prove the value for money of the schemes that we put in place. That expenditure is necessary and is slightly separate from parts of the earmarked budget. The earmarked budget of £332 million is for farming support, and unless any other negotiation takes place, that is the place that we have identified as where the money could come from.

Mr McAleer: However, there is a lot of money, outside the farm budget, in the Department.

Mr Johnston: Yes. There are other budgets within the Department, but that is a decision regarding the level of value for money that would be offered for those activities or legislative requirements to meet, for example, fisheries or water requirements. Obviously, there are also implications with moving money from one place to another, so that is a decision beyond just where we are today.

Mr McAleer: The Northern Ireland Statistics and Research Agency (NISRA) carried out an ex-post evaluation report on the former scheme, which was the predecessor of the ANC scheme. You are talking about value for money but that scheme had a major environmental impact. Actually, the review of the scheme concluded that if it was withdrawn, there would be a negative environmental impact. The evidence suggested that the scheme made a contribution to the environmental situation by slowing the deterioration of biodiversity and that support in ANC areas protected upland plant species.

The NISRA report on the scheme concluded that there was a positive environmental impact and a positive impact for farming. How does the Department now conclude that there is not a positive impact based on the fact that a report was carried out, or does this go back to the Department's priorities overriding objective evidence?

Mr Johnston: I suppose that in the Bill as presented there is no requirement to improve the environment as part of the scheme. A participant will be paid regardless of whether the environment on their farm did or did not improve. In other schemes, such as Farming with Nature, we fund only environmental actions that are scientifically proven to improve environmental outcomes. We are clear, therefore, that the benefit from the investments that are made will result in carbon sequestration or in biodiversity, water or air quality improvements. Those schemes are much more specifically linked to outcomes to ensure that what we are paying for drives the environmental outcome. Just as the Bill is presented, and as reflected in the stakeholder feedback from the NGOs, we could spend the money without a specific environmental requirement, activity, output or outcome but find that, within three to five years, we have not got the environmental improvement because it was not linked to the payment.

Mr McAleer: Yet the exact same scheme that the Department ran previously was analysed by NISRA, which found that it did have a positive environmental impact and was important to prevent the decline of biodiversity in those areas. You are saying something different now, even though NISRA did an actual report and analysis of the same scheme that the Department ran previously.

Mr Johnston: I am not disputing the NISRA evaluation. All I am saying is that, at this time, we have other schemes that much more specifically ensure that we deliver environmental outcomes linked to the expenditure, so there is a clear causal link.

Mr McAleer: You spoke, Richard, about the transition towards the flat rate. You will know that, historically, when the single farm payment began, the per hectare entitlement of farmers in ANC areas was always way below the regional average because of historic production levels. You will also know that the transition was halted in year 5 out of seven, so we have not had a transition towards a flat rate. That was halted by former Minister Poots at year 5, so there is no transition towards a flat rate.

Mr Johnston: There has been transition to a certain extent, I suppose. When you look at the figures, incomes in DA and SDA areas are pretty consistent with where they were in 2017-18, so there has been no detriment to, or reduction in, incomes. I accept, however, that only five of the seven years of the transition took place.

Mr McAleer: You mentioned the beef carbon reduction scheme. We use County Fermanagh as a good example because it is virtually all ANC, yet it is the county in the North of Ireland that has fared worst in the beef carbon reduction scheme. Farmers in County Fermanagh, which is like a microcosm of ANC because it is all ANC, are paying 17% of their single farm payment for a beef carbon reduction scheme that they cannot substantially benefit from and for a protein crop scheme that they cannot benefit from either. Is that not evidence that an ANC support scheme is needed because those farmers are paying for those schemes. There is no sheep scheme either. I do not know how long we have been talking about the need for a sheep scheme, and I do not know if it will ever come to pass. Is that not a microcosm of the current situation? Those farmers are being unfairly treated because they are paying for schemes that they cannot benefit from.

Mr Johnston: The scheme is there for all beef farmers. The uptake is more than 85%, and I would need to look at the figures and come back to you about the uptake in Fermanagh, Declan.

Mr McAleer: It is 75%.

Mr Johnston: I will follow up on that with you. I encourage any farmers who are not benefiting from the scheme to phone the advisers and work with the Ulster Farmers' Union (UFU), the Northern Ireland Agricultural Producers Association (NIAPA) and the Department to claim the scheme that is there for them.

Mr McAleer: What about the farmers who cannot benefit from the scheme, or cannot benefit enough because of the quality of the land and the nature of their operation? There is no support scheme to balance the playing field for them.

Mr Johnston: There are environmental actions that can be taken under the Farming with Nature scheme to improve your land, and there is potential income from that scheme. The transition scheme has launched 14 actions this year, and there will be 35 next year. There are herbal lays that can reduce nutrients and the amount of fertiliser that is required etc. Some of the land can be improved, but I accept that upland farming is a challenging environment to farm in.

Mr McAleer: Farming with Nature is not a support scheme; it is a targeted intervention to carry out actions on land, but it is not a support scheme or a compensation scheme. Sorry for hogging him, Chair.

Miss McIlveen: Richard, thank you for presenting this morning. During the co-design process of SAP, did the APSG raise that as an issue?

Mr Johnston: I joined the Department a year and a bit ago, so I would have to go back and check that. Ken, are you aware of anything historically?

Mr Ken Laverty (Department of Agriculture, Environment and Rural Affairs): No.

Mr Johnston: I will come back to you on that point because I was not part of the Department at that time.

Miss McIlveen: It was my understanding that the issue had been laid to rest, and it has recently reared its head again. During any deliberations or conversations that I have had over the last few years, it has never seemed to be high on the priority list for the various sectors. However, it would be interesting to know whether that was the case or not.

What was interesting about our Committee survey was that approximately 67% of respondents were not content with ANC payments being funded from the farm sustainability payment budget. If the Bill were to pass and receive Royal Assent, what conditions would be placed on the Department?

Mr Johnston: We would be legally obligated. Our first action would be to pay the ANC bill, and after that we would fund the farm sustainability payment, Farming with Nature and the beef carbon reduction scheme. Our first legislative responsibility, however, would be to fund the ANC scheme. It would come ahead of all the other schemes.

Miss McIlveen: Therefore, a hierarchy would be created in the Department towards the ANC payment. Those of us who have concerns about the Bill have used the term "robbing Peter to pay Paul", but that is essentially what would happen.

Mr Johnston: Yes.

Miss McIlveen: Obviously, the Bill sponsor has said that there is plenty of money in the Department, outside of the ring-fenced budget. However, from the Department's calculations, where will the money come from? I want a clear understanding of that.

Mr Johnston: The money will come from the £33·25 million in the earmarked budget for agriculture, agrienvironment and fisheries. We will have to take the money from that pot. There is no other option unless additional money is identified by the Executive for the Bill.

Miss McIlveen: There is no wriggle room and no money down the back of the sofa.

Mr Johnston: While the Department spends over £700 million a year, all the money is allocated to various schemes. The Department faces challenges in its number of staff, the budget and the cover. For example, the progress in the sheep scheme has not been as fast as people would want, but we have looked at the responses in other jurisdictions and the data in Northern Ireland. We have a set of options to look at improving health and bovine genetics, and we are working through the process. We will have to divert resources towards an ANC scheme if the Bill is passed, and that would necessarily come from other programmes. It would slow or stop the progress of certain schemes, and, at the minute, as the Minister has said, the sheep scheme is the one that would be at risk.

Miss McIlveen: The Department will often talk about something not being value for money. Obviously, an exercise is gone through in order to ascertain that. Will you tell us about that process?

Mr Johnston: It is part of the economic appraisal process. There are reasonably well-defined methods of calculating the carbon, sequestration, biodiversity and profitability impacts. The methods exist and are used across the UK and Ireland. The challenge with the ANC scheme is that it does not link our input to our activity, outcomes and outputs. As I said, we could spend the money; we do not have to carry out a specific environmental improvement. That is the concern that the NGOs have raised. We could spend £11·4 million, £11·5 million or £11·7 million, but, after five years, we could find that we did not achieve the environmental improvement that we had hoped for. I fully accept that the NISRA evaluation says that there are environmental improvements, but the schemes that we operate now are clear that, if we pay x, we will get environmental action y. We know that, because we have agreed the price at which an environmental action represents value for money. For example, we know that planting trees at the level of over £6,000 per hectare is value for money. We do not know that we would drive value for money with the ANC scheme as it is currently presented.

Miss McIlveen: Finally, I have met you separately about the sheep sector support scheme. In your opening comments, you said that that scheme is progressing. The scheme will obviously cost money and have an impact on overall budgets. I am conscious of that, but you said that 58% of breeding ewes were in ANC areas, which leaves 42% grazing elsewhere. Broadly speaking, it would be more acceptable for the scheme to be targeted not just at one area but at a particular sector.

Mr Johnston: Yes. The sheep scheme would, in general, probably be more beneficial to SDAs and DAs, because that is where the majority of sheep farmers are. The two schemes focus on broadly the same parts of Northern Ireland.

Miss McIlveen: Will the work that you are doing on the budget for that mean that it is likely to be considerably less than the funding proposed for the ANC scheme?

Mr Johnston: I cannot give you the answer at this point, because we have not gone through the process of costing out the health or the ovine genetics options. We are working on that bit at present.

Miss McIlveen: Thank you.

Ms Finnegan: A lot of my questions have been covered. You said that, if the ANC payment were to be introduced through the Bill, there would be a legal requirement on DAERA. Why can you not reactivate the 2018 payment? Surely the mechanism exists, so why would there be a legal requirement on the Department?

Mr Johnston: I will hand over to Ken on the legislation.

Mr Laverty: The previous ANC scheme took its powers from articles 48 and 49 of the direct payments regulation 1307/2013, but they were revoked by the Rules for Direct Payments to Farmers (Amendment) Regulations 2020. First, we would need to find a legal mechanism to reinstate those powers. When we had that, we could look to bring forward a statutory rule to lay out the rules on payment rates or whatever for the ANC scheme.

Ms Finnegan: So, the mechanism exists, but the legal requirement would be necessary to reinstate the payments. Is that right? Did I pick that up right?

Mr Laverty: The powers are not there at the moment. We would need to reinstate them.

Ms Finnegan: Fair enough. You also said, and it has been said repeatedly, that there is no money to deliver. Bills come forward, and it is our job to do that, but, if there were no money to deliver, we would never bring anything forward, so is that really an argument?

Mr Johnston: It is not that there is no money; it is about the prioritisation of money. We have £332·5 million. The first priority would be the ANC payments. The second priority would be to take forward all the other schemes in the SAP. Those would be priorities 1 and 2. The money can be prioritised if the Bill becomes law. We can certainly take that forward.

Ms Finnegan: On the environmental part — Declan has touched on it — the Department states:

It says, "would not", OK? The Department's assertion that the ANC payment would deliver no environmental benefit is in contradiction to the evidence. Maybe I did not understand your answer, but the evidence is there and is in vast contradiction. In 2016, the 'Ex-post Evaluation of the 2007-2013 Northern Ireland Rural Development Programme' found that the support for livestock farming in disadvantaged areas helps to maintain biodiversity in upland habitats. Given those findings, which you acknowledged in response to Declan's question, how can DAERA justify claiming that restoring ANC payments would not improve environmental benefit?

Mr Johnston: I will clarify that by saying that there is no clear causal link between how the payment is set up and the environmental outcomes. Therefore, we are saying that there is a risk that you would pay the money and not have a linked ability to ensure that the environment is improved. I accept the outcome of the NISRA evaluation, but it is now more about how our payment mechanisms are set up to say, "If we pay for a and b, we get c and d". When it comes to outputs and outcomes, this does not have as clear a link. Ultimately, if farmers do not carry out environmental actions, we will not pay for them.

Ms Finnegan: I am not getting that. The evidence is there that there is a clear link. Again, maybe I do not understand your answer, but there is a clear link. The evidence shows that to be the case. It is in the evidence that I am just after referring to. Declan referred to that evidence well. I am not understanding that.

Mr Johnston: It is about how the mechanism works. If we are paying for an environmental action, we will pay for that being done or not pay if it is not done. In the scheme as is, the payment would be made and, hopefully, the environmental improvement would be there. That, however, is what we would hope for as opposed to being what we could actually prove within the scheme. It is more about the causation effect.

Ms Finnegan: OK. I imagine that you have read the consultation responses, 97% of which are in support of the payment.

Mr Johnston: Yes. In the stakeholder feedback that we have, the UFU's perspective is supportive, if there is additional money, of ensuring that the scheme is funded. The environmental NGOs (eNGOs) are supportive, in that, if there are additional environmental requirements, clear environmental outcomes can be linked to the scheme. Therefore, there are slight nuances in how support has been provided for the scheme.

Mr Blair: Thanks to both of you for coming this morning. I will just comment very briefly, first, that I think that there should be an environmental component to the Bill, or any similar proposed Bill, for one reason more than any other: if anybody wants to see the cost of putting productivity above environmental benefit, they should visit Lough Neagh in the summertime. It is as simple as that.

My questions relate, however, to deliverability and the issue of resource for a new Bill. As somebody who is, like Declan, sponsoring a Bill, I am occasionally — more than occasionally — confronted with the issue of resources and costs. I want to clarify, to establish a level playing field, that every single action in legislation or regulation by the Assembly and by the Department has at least some resource cost. If you change a policy, regardless of whether it needs our approval, you will have to change guidance, publish information, have public information sessions, engage with the sectors and so on, all of which come with some resource cost, whether that is hard cost or soft cost. Can we establish that?

Mr Johnston: Yes. That is an entirely fair point. The Minister is clear and is on record about prioritisation. We would need to move staff within SAP, my side of the Department, from sheep support over to ANCs. Equally, the IT and payments parts of the Department would need to build IT systems, and we would need to get legislation approved. Significant work would therefore need to take place in advance of the Bill's becoming law. Then, there is the operation of the payments section. Absolutely, we would have to reprioritise because we have scarce resources and are fully deployed at this time. We have to be clear with the Committee that there is a cost to other parts of SAP if we take this forward.

Mr Blair: OK. My second question is about the comparison with GB. I am keen to know whether there is any rationale behind the proposal to mirror the GB trend towards focusing on larger land management schemes. Surely, by its very nature, that disadvantages smaller farmers even further. I am not saying that land management, particularly where there is an environmental benefit, should not be done on a larger scale — I totally understand that — but, surely, if you are deliberately doing that to the exclusion of smaller farmers, you are further disadvantaging them before you even start to consider whether they should have additional support through ANC or anything else.

Mr Johnston: The Scots have moved to the less favoured area support scheme (LFASS), which involves an annual payment regardless of size. The Welsh have a 10% agrienvironment requirement. That is what that scheme, which is, in effect, the sister scheme of FSP, would pay. England has the environmental land management (ELM) scheme, which focuses on nature-friendly farming.

The Farming with Nature groups' projects will, hopefully, come forward in the next number of months. Between 50 and 500 farmers can join together in those groups, and small farmers in upland areas will be able to take part in those. We have also rolled over the environmental farming scheme's (EFS) four- and five-year agreements as part as Farming with Nature to make sure that we do not exclude anybody. We are bringing forward a priority habitats and species programme, so, hopefully, we will be able to launch something before the mandate ends. There are therefore a significant number of programmes that farmers, regardless of their farm size, can apply for. This will certainly not disadvantage small farmers in any way through the SAP.

Mr Blair: OK, but there is a statement of intent if we follow the GB pattern. Again, I stress that I am not saying that there is not any benefit to this, but, by its very nature, is it not focusing on the larger land management schemes, even if it simply involves more departmental resource, to the exclusion of smaller farmers? Does that not simply follow?

Mr Johnston: I suppose that all schemes are open to all farmers, so I am not sure that I entirely follow that line. Maybe we can pick it up separately.

Mr Blair: We will continue to discuss it. For the record, I recognise the difficulty with the inflationary rise, because that would be disproportionately beneficial to one stream as the years accumulated to the disadvantage of others, and there is no getting away from that. You could argue that, unless all have an inflationary rise, none should.

The Chairperson (Ms D Armstrong): That is noted. Thank you, John.

Mr Wilson: On the significance and uniqueness of the annual uplift in payment, what is your take on how it leaves other sectors? Should it become law, from a competitive perspective or an equality perspective, would it leave the Department open to complaints from other sectors, given that, as you stated, no other scheme is index-linked or subject to an annual rise?

Mr Johnston: There is that element if you look at beef, dairy etc or arable across Northern Ireland. We work quite closely with arable farmers and sheep farmers to develop specific schemes that support their growth and productivity and environmental improvements in line with the legislation that we have to adhere to. Each sector will want its own specific scheme, but, if we have priority habitats and species, support for sheep farmers and ANCs, that naturally shifts the balance of payments towards certain areas. As a Department, we have to be cognisant of that.

Mr Wilson: As for the concerns about an escalation year-on-year, is that more difficult for the Department to plan for?

Mr Johnston: I do not think that it is difficult to plan for. It is a mathematical certainty that this will eat up more of the Department's budget. In a Department that does not get an inflationary uplift, it is just a mathematical certainty.

Mr Wilson: It is really a depletion.

Mr Johnston: It will grow, and other bits will live in the space that is left.

Mr Wilson: I feel that that would create inequalities across other sectors.

Mr Johnston: It would be the only scheme to have that provision.

The Chairperson (Ms D Armstrong): Thank you so much for coming in and giving your presentation. It has been good to get more information from the Department's point of view. Thank you for that.