Official Report: Minutes of Evidence

The Chairperson (Ms D Armstrong): I welcome to the meeting James Lowe, chairperson of the Northern Ireland Agricultural Producers' Association (NIAPA). I ask you to brief the Committee. You have submitted a paper. Thank you, James.

Mr James Lowe (Northern Ireland Agricultural Producers' Association): Madam Chairwoman, first, on behalf of NIAPA, I congratulate you on your appointment to the role of Chairperson. It is a belated welcome, but it is nice to see a lady in the Chair.

NIAPA is an association that was set up in the early seventies. Basically, it was set up to give a voice to the small family farm, mainly in disadvantaged areas. We very much argue that the support in the Bill is not a discretionary top-up but a structural correction for land that cannot compete in productivity terms with lowland holdings. That correction has been progressively eroded over more than three decades. The cumulative effect is death by a thousand cuts. No single decision has been designed to disadvantage areas of natural constraint (ANC) farmers, but the pattern of successive scheme reforms has consistently redirected funding away from the land that most depends on it.

ANC land, structurally, is disadvantaged. It is not disadvantaged by farmer performance but by poor soil, higher rainfall and difficult terrain. Those aspects set a hard ceiling on output that no amount of skill by the farmer or investment can get around. NIAPA came into vogue back in the seventies, and, in every major reform since then, the support mechanisms have shifted in ways that have disproportionately reduced the farm income of ANCs in severely disadvantaged areas (SDAs), even when reform was framed as neutral or simplified. ANC payments were fully removed.

The Bill tries to reintroduce a scheme that no longer exists on the statute book. The most recent round of the sustainable agriculture programme (SAP) repeats the same pattern: a flat percentage cut to entitlement value is redirected to schemes that are structurally weighted towards higher stock-finishing capabilities and lowland enterprises. Without the Bill placing ANC support on a statutory footing, there is no mechanism to stop that pattern repeating itself in the next policy review. ANC support has never been static. Each reform has been presented individually as modernisation, simplification or an environmental improvement. Viewed together, that trend is one-dimensional and cumulative.

Facts show that it is recognised that around 70% of NI land carries permanent natural handicaps, with the terrain, soil and rainfall issues meaning that it requires direct compensation to remain farmed. Support included headage-based elements paid per breeding animal, which suits extensive hill and marginal livestock farms directly.

Before the decoupling, producers typically did not claim beef special premium (BSP) directly on their calves. Instead, that premium value was largely captured through the price paid at the sales ring, as many buyers factored the expected premium into what they bid for store cattle. When production-linked system payments were decoupled and folded into an area-based single farm payment, that sales ring transmission mechanism disappeared. The ANC sellers, in fact, lost that indirect benefit of BSP without ever having claimed it directly. While entitlement values were fixed against historical reference prices, that did not reflect the hidden income. The result was that lowland, more intensive holdings locked in higher-per-hectare entitlements and values that were based on direct historical claims, while the historical entitlements of producers in SDAs understated their true prior income, which brought a structural disadvantage into a new payment system for one year.

The move from historical single farm payment values to a flatter area-based BSP system was designed to be a phased model and to run over 10 years, gradually narrowing the gap between high- and low-value entitlements. That transition was ended before reaching a full 10-year convergence point, stopping short of achieving the level playing field that it was designed to deliver and preserving a share of the historical advantage held by higher-value, typically lowland entitlements.

The less-favoured area (LFA) compensatory allowance was also replaced by the areas of natural constraints scheme in that period. It was a smaller, narrower payment than the LFA arrangement that it replaced. It led on to a succession of agrienvironmental schemes, namely the environmentally sensitive area (ESA) scheme. That was succeeded by the countryside management scheme (CMS), which, in turn, was succeeded by the environmental farming scheme (EFS), which was wider and higher. At each transition, payments, rates and the number of ANC farmers able to access those higher-tier supports reduced greatly. Each new scheme iteration has drawn smaller numbers of ANC farmers into the overall rate of support than the one that it replaced.

DAERA's figures confirmed that, at that point, severely disadvantaged land was over £100 per hectare worse off than lowland and that evidence and constraints were real, growing and not diminishing. ANC payments were subsequently removed. The Bill would exist specifically to reintroduce a scheme that no longer exists. This is not a request to expand support but to restore what was withdrawn.

In 2024, the value of 9% of all SAP entitlements was redirected to fund the beef carbon reduction scheme. That rose to 17% from 2025 onwards, with the introduction of the suckler cow scheme. Every farm business absorbed that cut equally, regardless of land type, but the schemes that it funds are not equally accessible, for the following reasons. The beef carbon reduction scheme pays £75 per finished animal, but ANCs are dominated by smaller-scale enterprises that sell store cattle rather than finish them. That animal leaves the farm before it becomes eligible for payment. The suckler cow scheme pays per calving event, which does not reach breeding herds, but sheep farmers, who make up a large share of the ANC base, are excluded from both beef schemes entirely. Protein crops is another scheme for an arable payment but is irrelevant to marginal grassland and hill ground, mainly because crops such as beans, peas and lupins cannot be grown there on any large scale. Even where ANC suckler farms can access the suckler cow scheme, marginal wet or hill land carries a structurally lower stocking rate per hectare than lowland, because payment is per animal, not per hectare. A farm's income ceiling under those new schemes is set by land quality, not management. A lowland unit will always draw more on the same flat rate on the same acreage.

The entitlement cut was applied uniformly per hectare to every farm business. The opportunity to recover it was rationed by finishing capacity and stocking density, both of which ANC land structurally lacks. That is a direct continuation of the mechanism first seen in 2005: decoupling. Having a headage payment per animal systematically favours land that is capable of carrying finishing stock. That is evidenced by DAERA's figures for eligible animals in different counties in the North: County Fermanagh is severely disadvantaged, Derry is next, and the figures increase after that.

On the back of all that, we believe that the Bill should proceed and place on a statutory footing ANC support that is sufficient to prevent further erosion through the administrative reform that has occurred at every major common agricultural policy (CAP) and post-CAP transition since the 1970s. The estimated cost of reinstating the ANC payments is, as you know, just over £11 million per annum, which is roughly 3% of the direct payment budget. Our preferred option is to see funding for that through new money rather than further redistribution within the existing direct payment envelope. Regardless of the funding source, however, ANC payments must proceed. The amount involved is, in overall budget terms, small, and the case for it rests on decades of accumulated structural disadvantage for current budget convenience. Any future redirection of entitlement value into the new scheme must be assessed for ANC accessibility before implementation, not after the fact. A scheme designed for beef and sheep farmers should include stocking density or land quality adjustment so that flat per-animal rates do not systematically under-reward ANC land relative to lowland.

The loss of the sales ring premium, decoupling, early termination, successive diminishing agricultural schemes, outright removal of ANC payments and now the SAP have each moved support away from the land that most needs it. At under 3% of the annual direct payment budget bill, it is a small ask to end a pattern of erosion that has run for half a century and to ensure that small family farms that are farming on the most constrained land can continue to stay in the rural economy.

The Chairperson (Ms D Armstrong): Thank you very much, James. You put forward a strong argument for the small family farm. You said that the difference between ANC land and lowland is 100 acres. What is that in monetary value?

Mr Lowe: It is £100 per hectare payment. The lowland was fit to claim £100 per hectare more than a seriously disadvantaged area.

The Chairperson (Ms D Armstrong): The NIAPA submission states:

What specific shortcomings have you identified with the environmental farming scheme and Farming with Nature when it comes to supporting SDA farmers?

Mr Lowe: The accessibility to them. They just cannot access them. It is not viable for them to —.

The Chairperson (Ms D Armstrong): In terms of capital investment?

Mr Lowe: In terms of capital, but, number one, the capital input that they have to spend. The net gain is not there.

Mr McAleer: Thank you, James. I appreciate your taking the time to come up here. You are welcome. You are from a good county, which is a right wee distance up the road. I am sure that you have taken a chunk out of your day to be here.

We were talking about the viability of small farms in those areas. You made the point that, although the 17% cut that all farmers received is very challenging, it is particularly challenging for wee farms in ANCs. They have no means of getting that back. They endured a 17% cut to fund other schemes, but the fact is that they cannot really get it back substantially through the other schemes, so that cut has had a particularly disproportionate impact on those small farms.

Mr Lowe: Huge. They start off with a historically low single farm payment and then lose 17%, and they cannot get the benefit of the schemes. They do not have the footfall or the stock on the ground to avail themselves of those schemes to make it worth their while.

Mr McAleer: A very poignant phrase was used last week by one of the witnesses from the Nature Friendly Farming Network: farmers are almost too frightened to apply to some of the agrienvironment schemes. A substantial outlay is required to enter the scheme, which a lot of farmers cannot afford. There is then the risk that, if something is not done absolutely and precisely right, you will not get that money back, which would be devastating for those farmers. I have picked that up from farmers who have contacted me. What is your experience of people participating in agrienvironment schemes?

Mr Lowe: There has been feedback through the office. The whole online method of accessing them is not favourable to a certain generation of farmer. A lot of them cannot get online to access a lot of those schemes. That is the problem, first and foremost. A lot of guys have received fines for making elementary mistakes. A lot of our smaller members have been subjected to a high level of inspection for those things. Little common sense has been shown when they have planted a hedge a few metres short or there has been an issue concerning fencing. There has been very little common sense from certain elements in DAERA.

Mr Blair: James, thank you for your presentation this morning. I have a couple of questions. You sent us through some bullet points prior to your presentation. The second one states that the loss of ANC income in 2016 was around £12 million. That is the annual cost of what is being proposed. Can you do the maths for me, or square the circle, of a £12 million loss over 10 years being rectified by spending £11 million or £12 million a year, which would be —?

Mr Lowe: Spending what, sorry?

Mr Blair: Right. You state in your submission that the loss over 10 years has been £12 million. That equates to just one year of the funding that is being proposed. I am asking whether you can square the circle for me of replacing £12 million over 10 years with £11 million or £12 million a year, which would amount to £120 million over 10 years. Do you see where I am coming from?

Mr Lowe: Yes. You have to factor in those small parcels of land. One, the footfall is not there, and, two, you have to consider the spending power or productivity on those farms compared with lowland farms. That £10 million, £11 million or £12 million would evaporate quickly when you compare like with like. The playing field is unfair to start off with. It is nearly impossible to square that.

Mr Blair: OK. I am merely saying that, as presented, it looks like we are trying to rectify a loss of £12 million with a spend of £120 million. I get that there will be changes in practice, changes in the market, changes in trends and inflation — I get all of that — but I am asking that we look at that.

As presented, the proposed expenditure causes a problem for me. However, it is not, perhaps, as big an issue for me as this next one. I noted your commentary on the EFS and nature-friendly farming, but I hope that you can accept that, for me and many like me, an environmental component in the Bill, and quite a strong one at that, would be very important. Currently, there is no such component. I acknowledge totally the principle of trying to help those in the most severely disadvantaged areas. I acknowledge the barriers that you have presented today to accessing EFS and Farming with Nature funding. Can you demonstrate how that might be rectified and how that funding might be made more accessible? Are there any existing programmes or practices in the sector that are for the good of nature, air quality and water quality, separate from any funding?

Mr Lowe: Let us pinpoint what is going on in severely disadvantaged areas in that regard. As you are bound to be aware, a lot of work has been done under the old systems. The reality is, however, that, in those disadvantaged areas, the amount of terrain that many farmers are working on is just not viable. They have to pay out so much money up front in order to access schemes. That is the crux of the matter.

Mr Blair: OK. I totally acknowledge that you have mentioned the barriers, as I called them. Separately, then, I want to tease out something that is crucial to me and many others like me, which is that the need for environmental action is, frankly, bigger than funding streams. Given my view that some environmental component should be built into the Bill, can you give me any demonstration or example of an environmental practice in the areas that we are talking about that could be recognised by the Bill? That is where I am coming from. I expect that people will be looking at the environment and our air quality and water quality for the good of all of us, as we all do to some extent — at least, we all should. What practices already exist, if there are any — if there are not, I will accept that — for the good of our environment, and how can those be aligned with the Bill?

Mr Lowe: First, let us go back to the terrain and consider, for example, sheep grazing. Since the ANCs were done away with, there have been a lot more gorse fires, which is significant. Those guys have to be supported by that scheme to allow for that terrain to be grazed and better controlled. That is the main thing.

Mr Blair: OK, that is fine; thank you.

The Chairperson (Ms D Armstrong): Thank you, James. We have one final question from Áine.

Ms Murphy: John's question leads on to a similar point that I have, albeit that I would say that ANC farmers keep farms viable and help to safeguard the environment as well as their associated landscapes. James, I want to stay on the issue of habitats and the environment. Do you agree that the Bill is vital or important as a safeguarding mechanism for those associated areas?

Mr Lowe: Undoubtedly, Áine. You do not need me to tell you that we are losing the younger generation from rural areas, so any funding that comes in to help the unit itself and the rural economy in those areas is vital.

Ms Murphy: I come back to the importance of the rural economy, as well as protecting habitats and landscapes. James, you mentioned gorse fires, for example. What are the other potential benefits for the environment when it comes to the managing of the landscape and physically managing the land? As you said, it is difficult land to farm, and there is no direct, like-for-like comparison between ANCs and lowland farms in that respect.

Mr Lowe: Áine, the main issue is trying to keep stock. There is higher rainfall in those areas. You are trying to keep stock out and reclaim parts of the land. If there is an environmental scheme, you have to try to use that to bring in income to help to sustain the farm business. You know the figures for, for example, eligible cattle and eligible farm businesses. There are under 500 eligible farm businesses in Fermanagh, with just over 12,000 eligible animals; there are nearly 80,000 eligible animals in Tyrone. It is vital that the Bill gives a funding footing to those farms.

The Chairperson (Ms D Armstrong): James, thank you again for your briefing. We will consider that evidence as we move through our consideration of the Bill.