Official Report: Minutes of Evidence

The Chairperson (Ms D Armstrong): I welcome to the meeting Daryl McLaughlin, chief executive of the Northern Ireland Meat Exporters Association (NIMEA), and invite him to brief the Committee. You are very welcome, Daryl.

Mr Daryl McLaughlin (Northern Ireland Meat Exporters Association): Good morning. Thank you, Chair and members. Thanks for the opportunity to come to the meeting this morning to make an oral briefing on the private Member's Bill. Chair, I wish you well in your new role as Committee Chair in the time ahead. There are a few other new faces around the table as well. It is nice to see that. In light of the new faces, I will go over some points about our organisation before I get into a few other words about the Bill itself. I will be more than happy to take questions as part of that, as I understand that that is the normal process.

Who are we? Who is NIMEA? It is the representative trade body for Northern Ireland beef and lamb processors. Our members have about 5,000 employees across the network in Northern Ireland and support around 20,000 farmers in the red meat supply chain. Northern Ireland accounts for approximately 8% of the total UK indigenous production by volume, despite representing less than 3% of the UK population. We produce about one sixth of UK beef and veal by volume, which is approximately 17%, and about 17% by volume of UK sheep meat. The Northern Ireland food and drink sector supports an estimated 108,970 full-time-equivalent jobs. Those statistics are from the Northern Ireland food and drink report of a few months ago, which members will have seen.

Our members continue to serve food service and retail customers across the UK, the EU and the rest of the world. Our primary operators in deboning, cutting and packing facilities and operations primarily source product from Northern Ireland but also have key sources of supply in Great Britain and Ireland. In total, the food and drink sector has a turnover of about £7 billion. The red meat sector alone has a turnover of £1·7 billion. Those are the latest figures, and they are subject to change as part of the future review that is likely to happen. The beef and sheep — the ruminant — sector accounts for about 50% of gross turnover. That helps to set some of the context of the sector that we represent.

The DAERA-published farm income figures that were announced in August show that the total income from farming increased by 40·5% — 35·6% in real terms — from £736 million in 2024 to £1·03 billion in 2025. That was certainly welcome, and it was expected. However, production prices, particularly in beef, have come back quite a bit since then. The ongoing war in Ukraine and Russia, and the crisis in the Middle East, are certainly not helping things. They are affecting all sectors across the food and drink sector at the moment. In 2023-24, capital grants to farmers decreased by 25·7% — £3 million — to £8·8 million in 2024 due to the decrease in grants from the environmental farming scheme and the farm business improvement scheme, whereas animal disease compensation payments to farmers increased by 13·6% — £5 million — to £41·8 million in 2024. That is because of the significant increase in bovine TB. That helps to set some of the context of what has happened over the past number of years.

This is a changing time for the sector. There have been a lot of changes for primary producers through the sustainable agriculture programme roll-out over the past couple of years. As an organisation, we very much welcome that. A lot of work has gone into the development of those production schemes with the current Minister and previous Ministers. We very much welcome the collaborative work that has happened over the past four or five years, particularly in the past three years, which has been my time in NIMEA. There are other things as well. There has been the roll-out of climate change legislation and the implementation of climate action plans and carbon budgets. Revisions have been made to the latest draft nutrient management plan, which we hope can be worked through in the coming weeks and months. I cannot stress enough the importance of getting that processed and progressed. However, bovine TB, as we all know, remains a very significant challenge in Northern Ireland. That means that we need to move all of those forward in order to progress our sector. That is particularly vital for primary producers, as they need help to ensure the long-term profitability of the sector.

I will talk briefly about agriculture support measures in general before I come on to the Bill. NIMEA continues to work with Department officials and industry to enhance and develop better support mechanisms. We do not stop trying to move the sector forward, and, as an organisation, we will not be found wanting in that regard. There is ongoing work to develop sheep sector support. However, that has been quite slow. It is likely to start significantly small. However, we will engage positively, and we hope to progress that with officials in the coming weeks and months. As a lot of you well know, sheep sector support in the Republic of Ireland is at a very different level compared with the support in Northern Ireland. A lot of members will be well aware of the difference in the amount of money that is available to sheep farmers there. That is important context.

I will touch a wee bit more on the private Member's Bill. From our perspective, it is important that we have a wee look at the amount of farmers and the small farms and how important that is for the red meat processing sector. As many of you will know, about 70% of the less-favoured area (LFA) land is in Northern Ireland. Almost four fifths of farms are classified as very small, and over three quarters of those farms have cattle, with 38·3% having sheep. Those small farms contribute just shy of 20% of the total industry's standard output but account for 49·5% of the area farmed. There are 2,500 small farms in Northern Ireland, which is just under 10% — 9·6% — and about 24% of those have sheep activities. Those are just examples of the significance of the number of farmers and small farms and the importance of their output, particularly for the likes of the beef and sheep processing sector. It is also important to note that DAERA notes the importance of the output of those small farms through its statistical reviews. I know that other stakeholders, over the past number of weeks and months, have given a lot more evidence on those statistics and the relationships and why they are important to them as farmers. That is important to note as well.

I will move on to cash flow, particularly for those small farms and the small farms in those areas. I made the point earlier about the statistics for the sustainable farm investment and Farming with Nature schemes. They are quite low. It is not a massive amount of money that is being generated for those farm businesses. It is important to note that, and other stakeholders have given a bit of information on the farm incomes of small farms in LFAs. It is important to be mindful of whether they have the cash flow and the ability to avail themselves of some of those schemes, because, in order to engage in Farming with Nature or farm incentivised schemes for machinery or equipment, you have to have the cash flow to make the purchase to be involved. The important part is that, while we welcome those schemes and will continue to welcome support schemes for farmers, they can be quite slow to pay out. When farmers engage, there is usually a considerable time — nine to 10 months, and sometimes longer — before they get the money back. If a small farm has invested time in, for example, Farming with Nature and has put in a for a claim of £9,000 or £10,000, which is a fairly substantial amount of money, the farm has to have the cash flow. Eight or nine months is quite a while to wait. We need to be mindful of that as well. That is part of the reason why NIMEA continues to support the private Member's Bill on areas of natural constraint (ANCs), and, if other support schemes become available, I am sure that we will not be found wanting in supporting them as well. It is important to be mindful of that.

We are aware that departmental officials recently gave evidence to the Committee on this. From a budget perspective, they noted that the farm sustainability payment (FSP) may need to be rolled back for ANC to come into part of that. I do not necessarily agree with that. There are other ways that should be considered, certainly from an aid perspective. Our consultation paper notes that we did not support, and continue not to support, money being taken out of the earmarked money or farm sustainability payment. There are other ways for potential funding to be found if it was sought. We believe that £10 million or £11 million could be found from the wider DAERA budget or the Northern Ireland Executive. My question is whether all the current funding of the Department or wider Executive is being fully utilised to the best of its ability. There continues to be monitoring rounds when money becomes available. There is still an ongoing conversation around the Budget. We do not have an agreed Budget, so maybe there is opportunity there. I do not know; I am only making the point that there is still opportunity for funding allocations. A big issue such as bovine TB is a massive cost to the industry, from the impact on farmers to the cost of running a programme to address it. If there was a very strong and robust campaign by all to help to eradicate bovine TB in the years ahead, then money could be saved there as well. Those are the points that I want to make about budgeting.

When departmental officials were before the Committee, they note that the previous review of ANC showed that it did not provide value for money. I am not agreeing or disagreeing with what they said. All I can say is that we never saw that review or the details of it, so I cannot agree or disagree with that. I can only take what they said at face value. Why could a new ANC Bill not include a requirement for reviews every two or five years? It is only right and good governance for review clauses to be built into the Bill for new schemes that are put in place.

NIMEA believes in supporting farmers, particularly small farmers and those in LFAs or areas of natural constraint, and an ANC-type support payment would certainly help to support those farming businesses — help them to support themselves, their local community and the environment that they are managing. A lot of them are farming designated sites and areas of special scientific interest (ASSIs), which means that they do not have the flexibility to go into dairy, grow proteins or diversify. That is an important consideration. The backbone of what they do helps to provide cattle and sheep for lowland farmers for the benefit of the beef and sheep processing sector, and I suppose that all of that helps to generate a circular economy.

Chair, thank you for the opportunity, and I am more than happy to take questions from members.

The Chairperson (Ms D Armstrong): Thank you, Daryl, for your briefing. I am sure that there will be questions. You covered a lot of the points that you raised in your consultation paper. You noted the decline in breeding ewes and suckler cows and the importance of those sectors to the processing sector and to employment. Do you have evidence that the removal of ANC payments contributed directly to the decline in progeny?

Mr McLaughlin: There has been a long-term decline in ewe numbers. Obviously, there are fluctuations within years, but overall there has been a decline in the past 10 to 15 years. There has also been an obvious decline in suckler cow numbers, and the DAERA statistics support that.

I know that many suckler cows have been replaced by dairy cows. Since the dairy industry, in particular, has made strides forward, there has been more use of sexed semen etc, which, I suppose, has helped to stabilise beef throughput. The current DAERA slaughter figures, however, tell their own story about the numbers of cattle coming through for primary processing. The Livestock and Meat Commission has published forecasts that indicate the decline in beef throughput.

There has been a better stabilisation in meat yield and meat from carcass during the past year. Over the past 10 or 15 years, however, many businesses have invested significantly in their sites in order to sustain their operations. As energy costs, the cost of living and the cost of doing business continue to increase, it is inevitable that increased throughput is required in order to keep those businesses viable. Businesses have to consider whether it is economical to continue doing what they are doing. If a business decides to close a site or lay off staff, that has a very significant impact on the local community.

The Chairperson (Ms D Armstrong): That is a pressure on the processors as well. You said that you would support a standard payment across the board, rather than rates for different disadvantaged and severely disadvantaged areas. How do you respond to concerns that farmers who are facing the greatest natural constraints should receive a higher level of payment, and that there is a differentiation?

Mr McLaughlin: We came to that conclusion because, although there may be a small number of farmers in severely disadvantaged areas and something additional could be done to support them, that would be the right thing to do, but, in the round, we took the view to keep it the same in order to have something simple, so that farmers would not feel that it was one farmer against another, or that one was able to get more money than another. Would that upset, for example, the price of lamb or the price of conacre and things like that? Given the need to design schemes, put them in place, manage them and have staff to operate them, we came to the conclusion that it would be much simpler to make a set payment per hectare to those farmers. That was, ultimately, why we came to that decision.

The Chairperson (Ms D Armstrong): Thank you very much, Daryl. I will pass over to Declan McAleer, the Deputy Chair of the Committee, who is the promoter of the Bill.

Mr McAleer: Thank you very much. I declare an interest as the promoter of the Bill. You touched on a couple of things, Daryl. Whilst there are other schemes, such as Farming with Nature, from our discussions last week and having listened to you today, we have discovered that the restricted flow of cash affecting many small farmers has meant that they find it difficult to access schemes. DAERA's statistics show that farms in ANCs operate on an income of around £11,000 a year, which would be minus £17,000 without the single farm payment. Those farmers cannot afford to join or take the risk of joining the likes of the Farming with Nature scheme. The land in those areas is unsuitable for planting protein crops and for larger herds, so you have a smaller headage. There is a big gap for those farmers. Beef headage is decreasing; there has been a 21% decrease in beef cattle produced here over the past decade. In the farming ecosystem, how important are farms in ANCs to the red-meat sector overall and, in particular, to the lowland farms that rely on a steady flow for finishing?

Mr McLaughlin: Yes, thanks, Deputy Chair. I think that is why, when I mentioned the very small farms and small farms earlier, I referenced their output. We believe that it is important to support farmers in those areas because the small farms contribute 19·6% of the standard output and account for almost 50% of the area farmed. I think that there are 2,500 small farms. When you look at the significance of the output, while it seems quite small to them — and it is small — once they are brought together, it actually becomes a much bigger piece of throughput.

Those small farms are not availing themselves much of the support schemes because they are selling their stock through live sales — mostly as suckler/weaned calves or store lambs, which then go on to other farms. If you continue to withhold support from those farms then, essentially, you are putting that business model at risk, with consequences for throughput further down the chain. You are impacting farmers who are buying store cattle or store lambs. You are having an impact on the finishers, who are buying heavier cattle, and ultimately, that affects the amount of food that you produce. That is why we believe that it is important to support the likes of this scheme. That is the case with a lot of the other schemes that are on the table: we support those too because they are giving farmers options and tools that they can avail themselves of.

Mr McAleer: Thank you. Chair, last week I highlighted that the Northern Ireland Statistics and Research Agency (NISRA) had reviewed the predecessor to the ANC scheme and found that it had good environmental benefits in the post-scheme evaluation. Departmental officials were here the other week and said that this scheme would automatically cost £5 million, or £11 million in a ring-fenced budget. I did not make the point at the time that this Bill is enabling legislation, which will give DAERA the opportunity to produce regulations that will have to be agreed by the Assembly through the affirmative resolution process.

Daryl, you mentioned the importance of incorporating a review clause in the Bill to see how it is going. The regulations would also be an opportunity for DAERA to look at the 2018 scheme to see what gaps there were or what improvements could be made. Those changes could be presented to the Assembly in the regulations. Would that be right? Just elaborate on that review piece.

Mr McLaughlin: It was noted that there was a review of the previous scheme, but I have never seen that review or the details of it, so I cannot give an opinion on whether I agree with it or not. I am not sure whether that review is still available, publicly or otherwise.

There is a two-year review built into the likes of the beef carbon reduction (BCR) scheme. It takes account of where we are, whether the scheme's objectives have been met and, essentially, whether it is still the right thing to continue. Surely that is something that could be looked at in the ANC Bill so that, if it passes, there are review clauses that allow the Department to take stock, after two years, five years or whatever is deemed appropriate, and see whether the financial support has been of benefit and whether the scheme has achieved what it set out to achieve.

Mr McAleer: That is great. Thank you.

Miss McIlveen: Thank you very much, Daryl, for coming in and speaking to us today. The proposer of the Bill, who spoke previously, has said that it is enabling legislation that will require regulations, yet the Bill itself says that:

As a consequence, payments will have to be made within that period. The challenge with that, as we have heard from the Department, is that there is no additional budget for the Bill. In the event of there being no additional budget, the pie will have to be cut slightly differently, which will then give priority to the Bill in the Department. As a consequence, those who fall outside ANCs will obviously have to support or supplement that. What is your view of that happening in the event of there being no additional money for the Bill?

Mr McLaughlin: Thanks, Michelle. Our position is clear, and I think that it is clear in our response, that we do not support the pie's being cut, if you want to put it in that way, if the budget is not found. We do not believe that cutting the farm sustainability payment would be the right thing to do in such circumstances because it would just create another problem. We do not think that it would be fair, right or justified either. That is why I queried whether current budgets in the Department or the wider Executive are being fully utilised and whether there is an opportunity for the £10 million or £11 million to be found there? If strides are made to tackle bovine TB, is there an opportunity there, over the next five to 10 years, to move money around that is currently being used elsewhere? I do not think that I can be any clearer than that.

Miss McIlveen: OK. You have talked about the sheep support scheme and the fact that its progress has been quite slow. Do you see that being an alternative to or in addition to ANC payments?

Mr McLaughlin: Not from what I have seen at the moment, no: it would fall well short of expectations. There is an ongoing process with officials. They are starting to talk to us a bit more about potential sheep sector support. I do not want to prejudge that, but I certainly do not think that it will go anywhere near the help that the private Member's Bill (PMB) might deliver. That is only my assessment now: it is subject to change.

Miss McIlveen: You would prefer the ANC payment to sheep support scheme payments, but not at a cost to farmers who fall outside the ANC.

Mr McLaughlin: Sorry, can you repeat that?

Miss McIlveen: I am saying that you would favour the ANC payment over the sheep support scheme —

Mr McLaughlin: Going by the proposal that is on the table.

Miss McIlveen: — going by what is currently on the table.

Mr McLaughlin: Yes; what is proposed at the moment.

Miss McIlveen: OK, but not at a cost to farmers who are outside the ANC.

Mr McLaughlin: Yes, that is correct.

Miss McIlveen: OK. That is grand. Thank you.

Mr Blair: I will try to tease out some information on a very similar theme. Daryl, first of all, thank you. It is good to see you.

We need to have wider and more realistic conversations around overall figures. In an industry where turnover figures are in billions — there are individual companies reporting billions — there has got to be a conversation about targeting finances at those who are most in need. Sorry if there is repetition of the previous question, but we need to have realistic conversations. Do you accept that, in the circumstances, turnovers and economic inputs are good? Nobody is saying that that is anything other than a good news story. However, there is also a public cost of hundreds of millions of pounds in funding. When it comes to the Bill, and any other funding proposal that comes forward, the core issue should be how that is divided. Do you accept that, if the "inflationary rise", as I call it — the Bill sponsor and I have discussed that before — is built into that scheme or any one component of agri-funding and not others — no matter about cutting any pies — the rest of the pie reduces automatically every year, whatever way you do it? You are not choosing to cut it that way, you are designing a system where one slice of the pie gets proportionately larger because there is a rise for that component and not for the others. Do you see what I am saying?

Mr McLaughlin: Yes.

Mr Blair: If you were to put such a rise on one slice of the pie, as we have been calling it, but not the others, you would build in a reduction for other funding streams.

Mr McLaughlin: Yes, John. The inflationary increase is probably challenging, because it has a knock-on effect on other schemes. I go back to my points on building in a two-year or five-year review. If a scheme is opened, a fixed scheme payment should be laid down so that we know what it will be for that period, and, after two or five years, you can stop and review whether it is still adequate, whether it is delivering its objectives and whether additional money can be found to support an inflationary increase. There is a potential road map for that, but it goes back to my point on what we believe to be the purpose and intention of a two-year or five-year review clause. That should be adequate.

Mr Blair: I hope that you know me well enough to know that I am not seeking to argue the point too strenuously, but do you not also agree that we have to consider what the situation would be if we were to land on a five-year review? If an inflationary rise were to apply for five years before the scheme was reviewed, that could mean significant impacts on other sections of the industry and the funding that they receive. You would have a five-year knock-on effect on every other slice of the pie. That could be significant.

Mr McLaughlin: We acknowledge that, John, but, when it comes to sustainability, the agriculture budget overall has not had any kind of increase. We continue to deal with that. We would certainly like a bigger funding envelope to work within. That would benefit everybody, because, as you know, when it comes to moving forward with planning reform, the roll-out of a future nutrients action programme and the just transition, there has not been an awful lot put forward. There are a lot of asks on the table, and, as an organisation, we support a lot of them. Supporting the ask regarding ANCs is no different.

Mr Blair: That is helpful. We have thrashed out slightly more of that conversation on inflationary rises versus stagnation for other aspects of the sector.

Ms Murphy: Thank you, Daryl. It is good to see you again. My questions come on the back of some of the recent questions about finances. Those issues have been raised on a number of occasions. As things stand, thousands of farms could become unviable without targeted support — I think that you accept that, Daryl — thus having a detrimental impact on the entire sector. That is the trickle-down effect that could take place without targeted support. In that vein, have the economic consequences been considered by your organisation, and what are they?

Mr McLaughlin: Everybody will be well aware of farm incomes and the relationship between direct payment support and farm businesses in Northern Ireland. We are well aware of the figures, particularly for farmers in LFAs. To a significant extent, they rely heavily on support payments as part of their farm income. To drive a horse and cart through that would be significant. It would have significant consequences for those farm businesses, their local communities and the local co-ops that they support. It would also have a significant effect on the throughput of cattle and sheep that, essentially, trickle down the supply chain. We have not really done any assessment of that, if you want to call it that, but if you turn a tap off, the water will run out at some point. If you slow the tap's flow down, the trickle comes through more slowly. When farmers invest in suckler cows for calving, it will be 20 to 24 months before those animals come through to slaughter. That is what we are trying to protect. That is why we believe that if the Department or MLAs suggest ideas or support mechanisms, we, as an organisation, will support them. We are all well aware of the environmental concerns with the climate action targets legislation. They are stiff, and they are stark. It is obvious what is happening in the Netherlands with the nitrogen crisis. As an organisation and as an industry, we want to avoid that.

Ms Murphy: You mentioned the possible impact on supply chains. If the flow from the tap was reduced, could there be a rise in cost to consumers as a result?

Mr McLaughlin: I do not want to say yes, Áine, but there could be. As I said earlier, from the beef perspective, we produce around 17% of UK beef and veal. If you start to slow the flow there, 17% becomes 16%, 16% becomes 15% and 15% becomes 14%. What can we do as a processing business? If the stock is not available, essentially you do two things: bring it in from somewhere else and process it or stop doing what you are doing. That is what the options look like. We prefer to support our local farmers, local businesses, local communities and local people.

Ms Murphy: Thank you very much, Daryl.

Mr T Buchanan: Thank you, Daryl, for being with us this morning. You talked about the decline in suckler cows over the past 15 years. The ANC payment is based on land rather than headage. What evidence have you got, or what assessment have you done, that shows that food production would increase if ANC payments were brought in, given that they are based on land rather than on headage?

Mr McLaughlin: That is a valid question, Tom. We often hear of farmers having land that has no livestock on it, and we often think, "Why is that right and how is that fair?". Those are legitimate concerns. You would probably wonder why an area of land would be supported without having it linked to productivity. Ideally we would like to have it linked, but the proposals to link them are not off the table. As an organisation, we would say that if farmers are receiving money, then that should be linked to some sort of productivity. The dial when it comes to productivity has changed. It is not only about the animals, be they cows or a sheep. The environment is now a big factor, with what farmers are doing regarding water quality and nutrient pollution etc all coming into the mix. Ideally, if it could have been linked to a particular number of livestock, it might have been better. However, it is important to acknowledge that a lot of the farms in ANCs have a lot of designated sites. They have a lot of livestock restrictions imposed on their land parcels. It is not as simple as attaching the payment to x number of livestock per hectare, because it does not necessarily work out that way.

Mr T Buchanan: One of the real reasons why the ANC Bill has been introduced is that food production in rural areas is going down because farmers are not holding the same amount of livestock. If a person is getting ANC payments without increasing production, that is defeating the purpose in a way.

Mr McLaughlin: Yes, but also if we can help to deliver an increased farm income, then there will be an overall increase in productivity. I think that is an important factor as well. The cost of machinery for farmers, particularly given the cost of living, means that it takes a significant cash turnover to replace tractors or livestock trailers. Gone are the days when £15,000 or £20,000 would buy a tractor, and all farms need one. The scheme will help by providing cash flow, and that is an important consideration in making farm businesses viable to produce food.

The Chairperson (Ms D Armstrong): It is also to support farming and promote it to the next generation. Declan has another question.

Mr McAleer: The purpose of the scheme is to improve farm viability and keep people on the land. Also, the 2018 scheme, which is the starting point, was linked to production. There was a requirement for the herd or flock to have breeding stock in order to access the ANC payment, and the scheme was linked to production. Obviously, the regulations that give the final shape to the scheme will be agreed by the Assembly.

The Chairperson (Ms D Armstrong): Daryl, thank you for coming in today and giving such a good briefing. It has given us a lot of useful evidence. Thank you for your time this morning.

Mr McLaughlin: Thank you. I thank the members for their time and questions.