Cynulliad Cenedlaethol Cymru

Yn ôl i Chwilio

Y Pwyllgor Newid Hinsawdd, Amgylchedd a Materion Gwledig

Climate Change, Environment and Rural Affairs Committee

24/10/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Darren Millar AC yn dirprwyo ar ran Andrew R.T. Davies
substitute fior Andrew R. T. Davies
Gareth Bennett AC
Jayne Bryant AC
John Griffiths AC
Joyce Watson AC
Llyr Gruffydd AC yn dirprwyo ar ran Dai Lloyd
substitute for Dai Lloyd
Mike Hedges AC Cadeirydd y Pwyllgor
Committee Chair

Y rhai eraill a oedd yn bresennol

Others in Attendance

Arfon Williams Rheolwr Defnydd Tir, RSPB Cymru
Land Use Manager, RSPB Cymru
Dr Neal Hockley Uwch Ddarlithydd mewn Economeg a Pholisi Amgylcheddol, Coleg Gwyddorau'r Amgylchedd a Pheirianneg, Prifysgol Bangor
Senior Lecturer in Environmental Economics and Policy, College of Environmental Sciences and Engineering, Bangor University
Dr Nick Fenwick Pennaeth Polisi, Undeb Amaethwyr Cymru
Head of Policy, Farmers Union of Wales
Dr Patrick McGurn AranLIFE
AranLIFE
Dylan Morgan Pennaeth Polisi, Undeb Cenedlaethol yr Amaethwyr Cymru
Head of Policy, National Farmers Union Cymru
Jennifer Manning Dartmoor Farming Futures Project
Dartmoor Farming Futures Project
Rachel Sharp Prif Weithredwr, Ymddiriedolaethau Natur Cymru
Chief Executive Officer, Wildlife Trusts Wales
Tracy May Dartmoor Farming Futures Project
Dartmoor Farming Futures Project
Yr Athro Mike Christie Athro Economeg Amgylcheddol ac Ecolegol yn yr Ysgol Rheolaeth a Busnes, Prifysgol Aberystwyth
Professor of Environmental and Ecological Economics in the School of Management and Business, Aberystwyth University

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Elizabeth Wilkinson Ail Glerc
Second Clerk
Katy Orford Ymchwilydd
Researcher
Marc Wyn Jones Clerc
Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 09:01.

The meeting began at 09:01.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Bore da. Good morning. Can I welcome everybody and Members to the meeting? And can I remind people to set their mobile phones to silent and turn off any other electronic equipment that may interfere with the broadcasting equipment? We've had apologies from Andrew R.T. Davies and Dai Lloyd, and Darren Millar and Llyr Gruffydd are substituting, so croeso. Do any Members have any interests to declare? No. 

2. Dyfodol rheoli tir yng Nghymru: asesu dull sy'n seiliedig ar ganlyniadau tuag at daliadau am nwyddau cyhoeddus: sesiwn dystiolaeth un
2. The Future of Land Management in Wales: assessing an outcomes-based approach to payment for public goods: evidence session one

That takes us on to our first evidence session on the future of land management in Wales. And we've got Professor Mike Christie from Aberystwyth Univesrity, and Dr Neal Hockley on environmental sciences and engineering at Bangor University. Make sure I've got the right people. Can I very warmly welcome you? Do you want to make any opening statements, or are you prepared to go straight to questions?

I'm happy to go to questions, yes. 

Great. If I go first. What are the key risks associated with outcome-based schemes, as suggested by current schemes, and how can they be overcome when designing new schemes for Wales?

Okay. I think, first of all, when we talk about risks, we need to distinguish between risks to farmers and risks to the Government or the public side of the agreement. I guess part of the point of outcome-based schemes is to try to move some of the risk or the uncertainty on to farmers or land managers, and part of the benefit of those schemes is that you're trying to harness the fact that farmers may know more about their land and more about how to manage their land than the Government. So, I think if you talk about risk, maybe it's a negative way of looking at it. You can also think about uncertainty, variability and trying to apportion that variability to the side of the contract that's got the most knowledge about it and the most ability to deal with it, I guess. So, that's the first thing I'd say. 

I think one of the risks—. Where you've got the current agri-environment schemes, and you've got prescriptions and farmers are paying for those prescriptions, then farmers know that if they do certain management activities they will get paid, where with outcome-based schemes, payment is based on delivering outcomes, and if, for some reason, they don't deliver that outcome, then there's a risk to farmers receiving those payments. 

I think what has happened in a number of other outcome-based schemes is you have hybrid schemes where they get paid for a combination of management practices and outcomes. So, that reduces the risk. I think there's also a risk in determining whether the outcomes are achieved. So, there are different indicators of outcomes. So, things like biodiversity, if it's on a rich flower meadow, it's relatively straightforward to count the number of flowers in that field or the number of species, where, if you have water quality, it's much harder to see how that farmer contributes to improve water quality. So, those indicators may be an issue and cause some risks there.

And I think another risk is where there's low uptake by farmers. So, because it's a new scheme, they may not fully understand what the outcomes are or how they might achieve them. And thinking there's a risk of only getting paid if they deliver the outcomes, then there may be risks of getting farmers enthused by the schemes and joining them. So, therefore, there needs to be education and training for farmers to get them to fully understand what those schemes are. 

09:05

Yes, it's the uncertainty, isn't it? That's the key thing. That's the clear narrative around the discussion on Brexit and our land. At a time when we have this Brexit uncertainty anyway, then this transitioning to a model where, actually, the income you might be getting every year is quite uncertain and dependent on so many variables as well, then it's a huge leap in some people's view. So, within that, if we are moving—. You suggested that maybe you'd do a hybrid system, or there are hybrid systems out there, I should say. I mean, clearly, that would then offer at least an element of stability within the mix, wouldn't it?

I think if you've got a hybrid system where you are paying farmers to do certain practices, then they know that if they join that scheme they'll get a certain level of payment, and that reduces the risk and uncertainty about whether they achieve the outcomes. If you look at places like the Burren in Ireland, where they've got an outcome-based scheme, there is much more information, or training with farmers, and the farmers create the plans with the advisors, so they know from the start what they're trying to achieve. They know what indicators they're trying to measure against, and then they get that enthusiasm for it. So, I think getting that involvement and buy-in from the farmers is really important to reduce that risk. 

So, those plans are plans to achieve the outcomes that you mentioned.

So, how do those link back to business plans then? Clearly, you're going from year to year, you don't how much money you're going to get, you don't know what outcomes you're going to achieve. How can you have that business certainty in terms of long-term planning as a business?

I think when you develop those plans, you have an idea of what you might gain from achieving different outcomes, and hopefully, with discussions with the advisors, you've got some idea of where you might be over that time. But I don't think—. With the outcomes base, you can't necessarily guarantee success. It may be that, in the transition period, you may say, 'Okay, you will get a certain amount through your transition', but if you're fully implemented, say after five years, then you need to be able to achieve that. 

Some of those outcomes could be just maintaining what you've got, or just a little increase. It may not mean any actual increase, but just stopping a deterioration. And if you know you can maintain what you've got with your current or just slightly modified farming practices, then again, you might be able to better guarantee you're able to achieve those outcomes. 

I was just going to add. I think, as Mike said, it's partly dependent on whether you're looking at what we might call asset-building schemes, where you're trying to build something that doesn't yet exist—it may be that woodland establishment or whatever—versus maintaining what you've got. Clearly, with the first thing, you've got potentially quite significant investment costs, some start-up costs, and so, it's not just about—. The hybrid scheme wouldn't be just about managing uncertainty or risk; it's also about cash flow, partly. If you're asking a land manager to make a big investment, they're not necessarily going to have the cash flow to do that. So, having a hybrid scheme would allow you to deal with that cash flow issue as well as the uncertainty. 

And that would need to be an ongoing hybrid scheme then, and not just a hybrid for the transition, you'd imagine.

Well, not necessarily. I think one way to look at it is that you have your payments for actions earlier in the scheme. So, that's when you're building up establishing woodlands, switching habitats, whatever, and then you kind of transition to more of a payment by outcomes as the scheme goes on. Potentially, for some public goods you want to have relatively long schemes, long contract periods. 

And what mechanisms might there be to try and smooth out the variability? If you're dependent on outcomes for a large chunk of the financial return, and they're so dependent on other factors—you know, weather, pollution incidents, disease, potentially; I don't know, it could be all sorts of things really—are there mechanisms where there is some sort of recompense or something to make up for circumstances beyond your control, or is it, 'Too bad, you haven't delivered the outcomes', and that's the risk you have to take?

09:10

No, I think you can do that, and I think that's a very important point, that we need to distinguish between risk and uncertainty that is outside of anybody's control—weather—and just, as Mike says—

—a lack of knowledge about how to achieve the outcomes, versus uncertainty that is, to a degree, within the land manager's control. So, you know, the land manager can decide how much effort to put into something, how strictly to follow the prescriptions or not. And, ideally, you want to separate those two, and the whole point of an outcomes-based scheme is to put the second type of uncertainty on to the farmer, because they can control it, but to avoid the first type of uncertainty.

One more short question, if I may. So, who makes that call, if a farmer comes and says, 'Well, look, it's not my fault—it's because of this'? Is it the person who's advised, or there would be a structure in place by the Government to—? 

I think you'd want to build that in to start with and agree what kind of—. I mean, it's noticeable in the consultation, actually. Quite a few of the examples of outcomes are, actually, in a way, what you might call intermediate outcomes—they're not your final outcomes—so, things like—. You know, in an example of a woodland establishment, you might look at something like tree survival rates or something after 10 years. That's not the ultimate goal of doing the project, but it's kind of an intermediate action/outcome. And I think using those can also help to buffer against those uncertainties a little bit.

Right, thanks. What barriers are there to establishing outcome-based schemes, including World Trade Organization criteria?

So, clearly, depending on what type of Brexit we get, we'll have different implications, but even if we have no deal we still will probably have to adhere to WTO to get those trade negotiations. What WTO say is that we are unable to pay to promote food production so, clearly, we can't make payments that will increase food production, which is currently happening at the moment. So, you need to try and keep payments within the green box, so decoupled. And I think there are different ways you can interpret that green box, whether it's agriculture subsidies or environment subsidies or rural development. So, again, you just have to be careful how you think about it. So, you can't pay for level of agricultural output, but I think you can probably pay for delivering environmental goods, because that's not decoupled—or rather if that's decoupled from agricultural production. 

A lot of the schemes that I reviewed, the payments, although the payments might be depending on achieving outcomes, the actual level of payments is based on income forgone, actual costs and things like attendance at training courses and stuff. So, the way you base the payments may not necessarily reflect the value of it, and it becomes harder if you're trying to pay in respect to the public good value, and that would probably need negotiation. I'm not quite clear how you—. If it's decoupled from agricultural production, it's probably all right, but most schemes are based on income forgone. 

I'm no trade expert, but cleverer people than me have argued that, within the EU, we've been, or the Commission has been, interpreting WTO restrictions as being more restrictive than they in fact are in terms of paying for outcomes. So, I think, as Mike said, the key thing is that you can't pay for production; you can't distort trade. But, within the spirit of that, there's a lot of latitude as to how you pay for environmental goods. And, as you say, even if you're nominally paying within an income forgone approach, you can still link that to outcomes. And, in reality, the chances of being challenged on that seem relatively low.

The other thing to note is that, certainly within the EU currently, there's—. So, Mike's mentioned the green box—you've also got the amber box, which is kind of the stuff that's not definitely non-distorting, and the EU currently doesn't choose to use as much of that amber box as it could. Now, depending on what happens with Brexit, we don't know how big the UK's commitment will be under those conditions. But if it was to continue in a somewhat similar way to how it's been in the EU, then we would have a certain amount of space that we're not currently using, even within that box. I don't think that's your first port of call, but—. So, I think there's a lot of latitude. I don't think WTO is a hard limit on what you can do with these kinds of schemes, no.

09:15

Yes. In terms of the current CAP—the common agricultural policy—and the outcome-based schemes that exist under it, given that, once Brexit takes place, they will no longer apply, how do you think the removal of those restrictions might allow more creativity in the way that these matters go forward?

I think, currently, with the common agricultural policy, most of the payments are linked to pillar 1. And I think, with Brexit, whatever the formula for getting a pot of money to Wales, you've got freedom to do more pillar 2 type activity—so, the output-based schemes. So, I think there is that flexibility to spend the money in the way you might wish. I think, with the resilience schemes that you're proposing, then that's broadening it beyond just agriculture to other sectors of the rural environment, and, again, that would give—. Or rural business. So, that would give much more flexibility in terms of how you make the payments. So, I think you can almost think you've got just a blank sheet of paper with whatever money you've got and you can design what you want and try and reflect those public benefits that would maximise the benefits to society. And, again, that's important, because I think it'll get more scrutiny about how you spend the money when it's seen to be in the control of the Welsh Government, rather than Europe having a bunch of rules. So, that flexibility will allow you to be more creative in terms of how you spend the money to try and reflect the needs of Welsh society.

Yes, I agree. As we mentioned in the previous question, I think the Commission has been interpreting WTO rules slightly more restrictively than they perhaps could have been, so you potentially get some more latitude post Brexit. One thing just to note though, of course, is that, whatever happens post Brexit, whatever kind of Brexit deal we get, Welsh farmers will still be competing against English and Scottish and Northern Irish farmers, for certain. And so I guess there's a slight question as to what is agreed at a UK level about the way that payments are done and what have you. And, currently, that seems a bit of an unknown at the minute. And then, of course, any future trade deals that we sign can potentially restrict on that. But, overall, I would say the direction is more flexibility, yes.

I think also, in terms of creativity, the common CAP pays for prescription, so it tells farmers, 'You must do x, y and z to get payment.' Whereas, if you move to more of an outcomes-based approach, then you can allow those farmers to decide how they manage their land, and they can manage it to get—. And, if it's a tier-type payment scheme, you can allow them to decide how much output do they want to achieve, how they achieve it. And there's a whole bunch of ideas about the farmers know the land better than any policy maker, so, if they know when to put livestock on and off their field, or how their field responds to things, then they can be creative in gaining those solutions. And giving that creativity back to the farmers gets them more motivated. And if you, again, look at the other pilot schemes, the farmers are boasting about, 'Oh, I've got 20 species of flower in my meadow', and it almost becomes competitive against them to see how well they can do it. So, incentivising your farmers to take control of it, rather than just saying, 'I have to do x, y and z to get the money', that gets creativity in terms of what they do as well.

09:20

But I think, just to add on to that, one thing I thought was—it's kind of mentioned in the Welsh Government's consultation so far, but maybe not drawn out that much—that it allows you flexibility in terms of who is determining what we, as society, want to pay for. So, in the past, it's been very much Welsh Government—you know, within the scope of EU rules, Welsh Government then deciding what society wants to 'buy'. I think you've got the potential for greater localism in determining that. A lot of public goods that we're interested in are particularly valuable locally, and I think there's a potential for local communities having more of a say in saying, 'These are the kind of public goods that we want to see produced in our area', rather than it just being a Cardiff-based, almost technocratic decision. That applies more to some public goods than others, but I think it allows for that potentially—so, devolving to national parks, local authorities, et cetera, some of that decision-making capability is possible.

Okay. Could I just ask you about current experience and previous experience? So, where we have outcome-based schemes, and we have indicators and proxies to assess the environmental impact, how effective do you think that has been up to now in genuinely and accurately assessing the environmental impacts of these schemes?

I think that certainly different outcomes are either more or less easy to try and evaluate. So, if you look at the Burren, for species-rich meadows they've got a very easy chart to look at—these are different plant species you might have—and it's quite easy to count the number of species and you do transects over a field and you train the farmers to do it so that the farmers can understand it. That's quite easy.

In Norfolk, they've got a wild birds scheme, but they made the decision that you can't actually monitor the number of birds, because birds move around farms and it's—. There are a lot of external factors about whether the birds are in your fields. So, you have to be very wary about what those indicators are and whether it is possible to accurately count them and also to see where it is. So, for the wild birds, what they've done is looked at different types of habitats, and so it might be variability in the sward height and things—so, things that you can actually measure on the field that would attract the birds. 

As I mentioned before, things like water quality are really difficult because it's very hard to see what the quality of water coming out of a field into a river is, but you can look at management practices—so, fencing off a river so that livestock don't get access to the water; when you slide manure and slurry on the fields, et cetera. So, there are certain things you can do as indicators, which, if you achieve them, will improve it.

Climate change—again, if you're planting new trees, then it's relatively straightforward to see how much carbon might be stored, but, if you're restoring bogs, then it's much harder to see how much carbon is sequestered or retained in that bog. But, again, there are management descriptions like blocking of grips, et cetera. So, I think you need to look at each output in turn, try and work out what's the most appropriate indicator to measure, and those indicators need to be easily understood, they need to be easily measured, both in terms of the agencies plus the farmers so the farmers can see the difference they're making. So, there's no right or wrong answer, but there is experience out there of how you might best do it.

I'd just like to understand, if it is the case that you can't pay for production of food, is that going to drive more intensive farming, and if you think that there's a danger that that might happen—and I'm talking dairy farming, particularly—how are you going to then level off the outcome of intensive dairy farming and slurry in particular with paying for the environmental protection? I'm very focused here on Ceredigion and Carmarthenshire, where there's already a massive problem. And you did talk about some aspects, maybe, of devolving those decisions more locally. How are you going to square the circle? 

09:25

I think there's a number of different points there. First of all, I think your question, which is really getting at what happens if we don't do these types of schemes, is really important, and I think that's something that currently is quite unclear, maybe, in the consultation, partly because it depends on what trade deals we get et cetera, but I think we need a clear sense of what the counterfactual is. What would happen if we're not paying for this sort of stuff? Under some trade deals we might see, actually, that quite a few of the public goods that we would like to receive would be produced anyway, without paying anybody any money, because, for example, if we see a lot of destocking of the uplands et cetera—. But with the example with dairy farming and, particularly, things like water quality et cetera, and the impacts on that, I think first of all we have to remember that it doesn't need to all be about paying for outcomes. We also have regulatory tools. In many industries, in many sectors, we wouldn't think of paying people not to harm the environment; we'd be restricting them from harming the environment using regulatory tools. So, particularly with intensive, more industrial agriculture, it's entirely appropriate, I think, to regulate that in a similar way to how we regulate other industries. So, I don't think we'd necessarily want to be going down the road of paying farmers not to pollute water, but, you know, some combination of regulation and outcomes on that.

As to devolving, whether that would be—. I think understanding—. Things like water quality are very context-dependent. They depend on how the catchments work, they depend on, exactly as you say, the way that agriculture comes in there. So, some aspect of local design of schemes I think would be valuable. You've clearly got very different issues in west Wales to what we would have in Snowdonia, for example. So, yes, I think you probably want some degree of local adaptation to that, but I don't think we should think of it as only paying for outcomes.

I absolutely agree with what you're saying, and I couldn't agree more with what you're saying, quite frankly. But you talked about: if we are trying to pay for environmental outcomes—and you're quite right about the regulation; that's inadequate at the moment, because it's not working—downstream, it'll have an effect. So, how are we going to, when we're trying to, say, downstream, create a better environment than the one that exists? How are we going to be able to deal with what's happened upstream in such a way that people clearly get the message that this is what we intend to do under this sort of scheme? 

I'm not sure I completely understand the question.

Yes, and that highlights the danger of too much localism as well, because, you know, rivers cross county borders et cetera, so we don't want to get to the stage where we end up with fights between upstream and downstream local areas. So, I think that's important. There are examples of schemes that have paid for things like watershed protection and water quality. There are also private sector schemes where, for example, water companies have paid farmers to manage land in different ways, to reduce their water treatment costs, for example. So, as I say, that's a way to go, but you need to decide on what is your regulatory baseline, what is the stuff that land managers have to do, and then what, over and above that, might you pay for or not. I think it's important to have that very clear. And, as you say, that depends on what will happen with intensification of agriculture.

I think one point just to note is that we can't assume that more intensive or larger scale agriculture is necessarily more environmentally harmful as well. So, for some forms of environmental impacts, actually industrial agriculture can help to reduce your environmental impacts, because things like your nutrient flows are better controlled and things like that. So, it's not a one-to-one relationship. You can't assume that more intensive means more environmental impact.

09:30

I think, just to add to that, you may have a regular base that needs tightening up, but you may also have a certain type of cross-compliance or good farming practice. So, if you want output payments you go slightly higher and so you have to achieve this level of farming practice before you can achieve payments, and there might be an area payment base for that.

The other thing I think is if the market opens up then intensification might not necessarily be the most profitable. There are lots of cases where you have intensification, reduce your input costs, and that may actually be more profitable. So, I think it doesn't necessarily mean it will end up—. Different farmers will make different choices depending on their own circumstances. 

I was going to say, of course rivers cross the England-Wales border as well. Llyr Gruffydd.

I just wanted to pick up on this idea of having this—[Inaudible.] The message coming back from the sector is they really do want to retain some element of basic payment. So, could you have an enhanced baseline where, if you cross that line, then you're guaranteed a certain level of funding? Then, as you say, the further up you go in terms of improvements or additional outcomes, then the more enhanced that payment is. At least that would be some sort of silver thread running through the continuity of the funding.

I think on the Burren they've got that, so there are certain practices you can't do—having big bales, because that causes lots of poaching and things. I think there's an area payment element on the Burren, which goes beyond that regulatory—. But they have to be seen to be going beyond that—

And I think that's the concern—that conceptually, yes, absolutely, you can imagine a situation where you have some sort of area-based payment based on a higher bar. I think it's more that the experience of the past has been that that form of payment hasn't been very successful at achieving environmental outcomes. So, I think it's more about reflecting on why that is. Partly, it also comes down to monitoring costs. If we're paying people for cross-compliance, we still have to have some way of verifying that they're doing those things et cetera.

Conceptually, yes. I think the devil is in the detail of exactly where you set the lines.

And just on the local design stuff, in principle, that's great and you get that local ownership as well, but how then do you ensure there's consistency and that similar initiatives are paid at a similar rate in different parts of the country, or similar outcomes are delivered for the same return?

You can't have perfect consistency, clearly, if you're going to have genuine local consistency—

Because if there isn't consistency, it'll be found out and it'll be on the front pages of the papers.

Yes, but I think the key thing is: it isn't so much about ensuring that there's consistency of, let's say, payment levels, outcomes et cetera. I think it's more about ensuring that the processes are transparent so people understand that, if there is a difference, why that difference has arisen. So, it doesn't just come out as some sort of postcode lottery where farmers in west Wales are getting something completely different to farmers in north Wales. I think if it's transparent then it's okay.

And, of course, we know there are farmers who farm across the England-Wales border.

Thank you, Chair, and apologies for not being here at the start of this today. Is there any evidence of success in rewarding land managers for providing social public goods as well as environmental public goods? Could the Welsh public goods scheme be designed to ensure outputs align with the well-being of future generations goals, beyond those environmental ones?

Yes, I think this is interesting. Again, it's something that's mentioned quite a few times in the consultation, but rather vaguely as to what we really envisage by social goods. I guess an obvious one is access and that's already been done to an extent within Glastir. There is a component of that that pays for access. Again, I think you have to be a little bit careful with access. It's a bit like the regulatory baseline where we need to be careful that we're clear in principle about why we would be paying some farmers for access, whereas other farmers, it's access land and it's just a right that people have to go on that land and the farmers don't get any payment for it. Again, that's okay if the principles are very clear as to why that would differ.

So, access, I guess, feeds into a lot of the social goals under the Well-being of Future Generations (Wales) Act 2015—exercise, health et cetera. But I think, yes, you'd want to be careful about going too far down that route. The only other, clear social benefits that are identified so far—one is language and one is, I suppose, resilience of rural communities and things like that. The language one is interesting, because it's mentioned quite often, and it's often a rationale for agricultural rural support in Wales, but it seems to me that it's based, essentially, just on a correlation that says, 'Well, farmers are more likely to speak Welsh than the population as a whole.' I haven't really seen so much serious thought about how you go beyond that kind of vague correlation, really, of saying farmers are more likely to speak Welsh, therefore supporting farmers will help the Welsh language. Potentially, and particularly through the economic resilience scheme, maybe there's the potential to be a bit more innovative in that area, but I don't know yet whether those ideas are really on paper yet.

09:35

I suppose, one of the—. What other schemes have done is the training of farmers on species identification. So, there are some social benefits associated with that, with increasing people's knowledge, and that will help deliver environmental goods, but that knowledge will increase their appreciation of the natural world as well. So, that could be skewed into a social element.

Just before I talk about this, going back to this issue of fairness that you referred to a few moments ago—do we have the capacity to be able to effectively monitor the implementation of this sort of scheme? I'm talking about workforce capacity now, in terms of the land management experts with the right expertise, with the right levels of knowledge, to be able, particularly in the early years, to monitor effectively, to train people effectively, to equip them with everything that they need to deliver against the outcomes that people might set?

Broadly, yes. We've had, for example, with Glastir, we've had the Glastir monitoring and evaluation programme. So, I think there's a lot of expertise out there about how to monitor these things. And even, also, something that we've not discussed so much so far, to understand and estimate the costs of monitoring these schemes, because there's clearly a trade-off. Ideally, you want to monitor the thing you're ultimately paying for, whether that's bird diversity or carbon or whatever. But some of those things, as Mike has mentioned, are very, very difficult to monitor and so you end up using proxies to save costs. And so you have to make those trade-offs. I think, through the GMEP and other similar programmes, we have some idea of the cost of monitoring these things and how we could design it.

One thing I'd say is that in the past we've been quite limited in our ability to understand how well these schemes work because of the way the schemes are rolled out. So, we don't, generally, conduct experiments with these schemes, which is what, as a scientist, I would ideally want to do—we want to randomise them and do a proper trial. Because we don't do that, it becomes very hard to understand what exactly is the impact of these schemes and therefore, ultimately, what's the value for money for society.

I think one thing we want to think about with the design of any new schemes is that we need to build that monitoring and evaluation idea in from the start, and this is where a shift to outcome-based schemes potentially helps with that, because by shifting the focus on to outcomes you're monitoring partly for actual contractual reasons—because you need to decide how much to pay the farmers based on the outcomes—but also, hopefully, you're monitoring in an adaptive way to allow you to learn from past schemes and think, 'Well, this one didn't work, this one did work and we want to shift, over time, to the ones that work better.' So, I think the expertise is out there, but it comes at a price, obviously, and that needs to be allowed for.

I think if you look at a lot of the pilot projects, they are pilot projects, so they're quite small and it has been quite intensive training to start up with. But a lot of those pilot projects have demonstrated that most farmers are able to self-monitor after a year, and there's only a handful that had to have another year of monitoring help. And what those schemes then do is to get self-monitoring with random evaluation or assessments. So, a farmer would then write a report saying, 'This is how much I've got', and then, every now and again—say, every three years—you might get someone coming in to just check to see that's right. So, I think, initially, it's quite intense—it needs a lot of training and capacity building—but then, hopefully, as farmers get more used to the idea, the monitoring costs would decline. But they still need checks.

09:40

Can I talk, then, just about this issue of fairness? Because, obviously it would be very difficult for some farms to manage their land in certain ways, because of their altitude or because of their proximity to the coast or their proximity to water, and there will be some farmers who have taken their responsibility to manage the environment very, very seriously, and have obviously already set themselves a very high bar, and it would be difficult for them to be able to demonstrate any additionality. So, how do we make sure that they are not penalised because they've already done a great job, as it were, in terms of delivering significant public benefit, versus the farm down the road that may have been less responsible, but stands to gain significantly under the scheme, because it's easier for them to show big improvements?

Fairness is a huge issue, and as you've already alluded to in your question, there are a lot of different ways that you can look at the fairness issue. I think, on the last point, that's potentially where paying by outcomes can really help, because you're not rewarding farms that have previously degraded the environment and then paying them to improve it if you design your scheme such that you also allow for farms that have got a high level of biodiversity, for example, to maintain that biodiversity, and that's part of what you can be paying for. And going back to the previous question about risk, if you're paying for something that already exists and the maintenance of that, that's lower risk than when you're trying to build up environmental quality. So, I guess, one issue with the fairness is that those farmers who have already maintained a higher level of environmental quality can potentially access these schemes at lower risk, because they've already got it and they're just trying to maintain it. So, that's one way in which they can be advantaged by these kinds of schemes, yes. 

Obviously, though, if you're trying to significantly change the land management in an area, you may have significant capital costs, for example, upfront. I mean, how do we make sure that the programme is fair enough, but also gives sufficient incentive for people to want to switch completely, perhaps, the management of their land, I don't know, from livestock to broadleaf woodland or whatever else it might be, that obviously is a pretty significant switch?

I think that's partly where there this hybrid idea and this transition come in. So, maybe, where you're paying more for actions in the early stages, that helps with those significant set-up costs. If you look at—. So, far, we've talked a lot about European examples. Probably the greatest experience with these kinds of payments-by-outcome-type schemes is in places like Australia and the United States. The model that they've largely followed in Australia and that has been shown to be most efficient from the point of view of the public purse is various forms of auctions, where you're actually saying, 'Okay, we're putting out a call', as you would for any other kind of public tender, but the product you're buying is biodiversity or habitat maintenance. And then farmers can choose whether to bid into that or not. Now, clearly, farmers who think 'Well, I can deliver these goods quite cheaply' are more likely to bid into that. So, they're self-selecting among the farmers who can do it and potentially make a profit out of doing it, but you're also getting the outcomes at lower cost to society. So, that's an approach that—as I say, there's a lot of experience with that kind of approach, particularly in Australia, but also in the US. We haven't gone down that route so far at all, really, in the EU, but it's something that we can look at. It's been shown to be very efficient from the point of view of the public purse.

Interesting thought, yes. We need to ponder that a bit, I think. The strengths, weaknesses, opportunities and threats analysis and stuff that's in the paper around some of the models here—a lot of it is about how farmers feel more incentivised to get involved with some of these outcomes and you have this friendly competition, et cetera, but how does that play out if you're a tenant farmer, and the landowner actually receives the funding for the outcomes? From the models that you've come across, are there—? How do they cascade that responsibility, let alone the enthusiasm and the ownership—or the money—down to the person who's actually actively farming the land? 

09:45

None of the pilot schemes really went into detail about whether it's landowners or tenants— 

Yes. It probably—. Tenants would have to have some benefit because they're the ones modifying their farming practices to achieve the outcome, so that needs to reflect that, but if you're planting trees, that is a long-term benefit that might go beyond that tenant farmer. I'm not sure—

I think timescales are really key. So, where you've got very long tenancies, I think it's much less of a problem because most of these public-good schemes we want to be looking at are probably going to involve longer timescales than, maybe, we've previously considered. So, the timescale of tenancies is key, and short-term tenants are going to find it potentially difficult. Another way to look at it, though, is that, in theory, you're—. If the payments are going to the landowner, but conditional, effectively, on what the tenant is doing, it's then up to the landowner to figure out a way to incentivise the tenant to do that, and the landowner potentially becomes a middleman in the system, and they're going to have to pass on those benefits to the tenant, otherwise the tenant's not going to do it—in theory, but in practice, particularly with relatively short-term arrangements, that's going to be quite problematic. 

I think the other area's common land, and, again, it needs that group of commoners to come together to do that management option, and in the Burren, that's largely what they had. They got together, designed the scheme. So, it is possible. 

And, I think, on the common land—and that's something we haven't discussed—but in terms of co-operation between farmers, that's potentially a way of pooling risk as well. So, just as you can have co-operatives for agricultural produce, potentially, at least, you can envisage co-operatives for environmental products, and potentially that allows farmers to pool risk between them, and an obvious place, as Mike said, to start with that is things like common land, where you're having to manage it together. 

And I think catchments as well are a quite useful grouping of people. 

Just picking up again on the capacity stuff, if you look at Glastir, it's taken a number of years for things to bed in and for issues to be smoothed out, and we're looking at a few thousand contracts. I mean, potentially, here, we're looking at tens of thousands of contracts. It's going to be a huge undertaking, particularly in the initial years. Now, with the best will in the world, I can't see that the capacity is there, frankly. The administrative capacity—maybe there are experts out there, you engage them, of course you do, but there's going to be a huge, huge piece of work in wading through all of those contracts.

I think that's why you're looking at a transition, not just from the farmer's perspective, but from the administration as well. And, I think, what's proposed in the consultation so far is actually, in a way, not that radical a departure from Glastir, but it's something that allows for further reform as it goes on. So, I think, yes, you're probably looking at an administrative transition from something that maybe, actually, looks quite like Glastir to something that—and basic payments, et cetera—then transitions over just because of the capacity to deal with it. 

I suppose one way you could do it is introduce it and see it at national parks first and get them trained up and then widening it out. So, you build the capacity and then that can move on. So, some approach of making this transition seem logical.

And that was an approach within Glastir, the spatial targeting of deciding where's the highest priority for these areas.

Thank you. Well, we've run out of time. Can I thank Professor Christie and Dr Hockley for coming along and sharing their expertise with us this morning? We found it very invaluable. I've also got to remind you that you will get a copy of the transcript. I'd advise you to look through it, not because—. The likelihood is, especially if you're anything like me, and you move around when you're talking, then the odd word gets missed out. So, can I just urge you to check the transcript? Thank you very much.

09:50
3. Dyfodol rheoli tir yng Nghymru: asesu dull sy'n seiliedig ar ganlyniadau tuag at daliadau am nwyddau cyhoeddus: sesiwn dystiolaeth dau
3. The Future of Land Management in Wales: assessing an outcomes-based approach to payment for public goods: evidence session two

Can I welcome you, Arfon Williams, from the Royal Society for the Protection of Birds; Rachel Sharp, from Wildlife Trusts Wales; Nick Fenwick, from the Farmers Union of Wales; and Dylan Morgan, from the National Farmers Union of Wales, or the National Farmers Union Cymru? Can I also say that I'm glad I've got this written down here because my eyesight is not good enough to read what's written in front of you? If you're happy, can we go straight into questions?

Can I just remind you that, as you're a fairly large panel, everybody doesn't have to answer every question? If you agree with the first speaker, or the second speaker, all you have to say is, 'I agree.' It makes life easier for me and it also means that we get through the session and get through all the questions we've got.

The first question I've got is: how can schemes be developed to ensure farmers are protected from variable payments between years that might result in uncertainty of income for farmers? Who wants to go first?

Sorry. Can you repeat the question, please?

How can schemes be developed to ensure farmers are protected from variable payments between years that might result in uncertainty of income for farmers?

One of the things we have at the moment is a seven-year budget under the EU multi-annual financial framework, and, obviously, there's a concern that moving away from that will put us in a position where there'll be annual reviews, and that would include potentially being beyond the control of Welsh Government as well, which is an additional concern. So, having some sort of multi-annual framework that encompasses the whole of the UK would be a solution to that problem in terms of the overarching budget.

You need it to cover the UK because I'm sure you've got members who farm both sides of the border.

I think that's why—in terms of the policies that we've been putting forward as unions, they are obviously to have that certainty over a time period and to have that stability in place, because farming businesses need stability, whether it's to invest in productivity or to invest in the environment. You need to make sure that you've got that stable business to be able to work from, and that ability to be able to plan, because whatever you're doing on a farm, whether it's looking at your productivity or looking at the the environment, you are talking about making long-term decisions. So, it's hugely important that you have that stability in place.

Yes. I think we would agree as well. Everybody wants to secure that financial security going forwards, and, as we know, there are various concerns going forward, and no certainty beyond the initial period. Now, that's not good for anyone. The constant message that we receive from people is: they want that long-term security, they want to fully understand what's expected of them. But having said that, I think the constant focus has been on the public purse, the public investment. Now, as we all know, unfortunately, with austerity there are competing demands on public money, and so we have concerns particularly around the need to service the NHS and education, that it's very competitive out there. Actually, rural Wales is something that needs to have that continued investment and it's quite critical to us as a nation both in environmental and economic terms, but also in cultural and social terms. So, I think we're all agreed that we want to secure the long term, but also attract private investment as well. I would actually say even community investment into rural Wales.

09:55

To just perhaps add to the points made there as well, I appreciate that this is looking at the public goods aspect of future policy, but the other scheme proposed is the economic resilience scheme. I think investing in economic resilience will also provide or improve stability and long-term stability to farming. So, it's important to think of both schemes functioning together.

And, perhaps, just to finish off, we're used to contracts in Wales, agri-environment contracts—being, in the past, for 10 years, for five years. We're going to have to look in the future at contracts that may have to be many decades long. So, it's a real challenge; there's a real need to ensure that there'll be the mechanisms in place to do that and, by doing that, certainly for carbon and water and so on, but also for biodiversity, that then will help provide a bit of certainty and security for farming.

I agree with the wish to have that long-term certainty. What I'm struggling to see is, in a scheme where your income depends on the outcomes, and there are so many variables that affect those outcomes, then, how can you have that? I hear what you're saying about the economic resilience scheme, but that's a competitive bidding process, isn't it? Some will get it, some won't, some might be able to get it for some things and not other things. So, there's still a gaping hole there, really. So, I'm just struggling to see how you can plan to deliver the outcomes—and I can see how you could plan to do that—but how would that, then, link into the business plan for the farm itself, really, to make it economically viable as well, because there's such a variance?

I think Wales is uniquely placed to look at the public goods agenda. We have very interesting upland peatland soils, for example. We have our wooded estate, et cetera. So, we have a given opportunity. And the demand for those goods is only going to increase in the future. We've just gone through a summer of drought and a winter of flooding. I think, if we can increase the public understanding of the need to look at nature-based solutions to the onward issues going forwards—.

But, to your point, you can then measure those outcomes, and I think, as long as you embed some key principles in how you develop those outcomes—so, the long term, for example, and so it develops the habitat base, but if you do then attract a particular species, you then get an additional payment. So, it's then actually seen as an asset, and you're given time. You might not attract the species, but you should be able to restore the habitat. So, at least you have the security of that understanding and then—

So, would the payment be based on restoring the habitat and not attracting the species, because weather dictates, very often, what happens in some of those situations?

It's something that we've been challenged about. There's a concern that RSPB and perhaps organisations like us are going to be very much pushing payments for numbers of lapwings or payments for curlews. And, we've made the point quite clearly that what we would see as a sensible approach would be a payment linked to a habitat condition to an extent. I was challenged recently on this by a group of farmers in the Elan valley who said that what they would like to see—and they're trialling an outcomes-based approach at the moment—is a reward if they do end up with a nesting curlew or lapwing on their land. They go along with the payment for habitats so far—they agree with that—but if they do happen to get something nesting on their land, there's a cost in managing that, there's a cost in protecting that nest, there's a cost in ensuring that that nest is successful. So, it's almost like an incremental payment. Okay, there's a blanket payment for habitat work, but if you're fortunate enough that that habitat work results in a successful species occupying the land, then additional costs are covered to ensure success. That came from the farming community. It's something we've been wrestling with, but it's taken the farming community to think, 'Well, isn't this a sensible solution?'

10:00

To get back to the question, I don't think, in terms of variable payments, you can get away from it by using this type of outcome-based approach alone, which is again why we believe there's the three cornerstones part of it. But if you go down an outcomes-based approach, by its very nature it's going to be variable. Again, just going back to what was said, this summer, if you look at the drought we've had, if you tried to establish trees, possibly, earlier this summer, or in terms of some of grass species or anything like that, they could have been affected by issues that are completely outside the control of farmers. So, I think if you've got that outcomes-based approach, you're going to have that variability, which is a concern. I think the only way, within a public goods scheme, that you could perhaps look to get some more certainty is around rewarding more what's on that farm now, currently, and what's been on there for generations, and you're looking at things like hedgerows and established woodlands and areas like that, to make sure there is  greater recognition of those in a future public goods scheme. But, again, I would go back to the point that that would be part of a more integrated, comprehensive package of measures.

If I may just respond specifically in terms of Arfon's point, we can certainly see, as part of a three-tiered or a three-cornered system, how that would complement farm incomes, but, given that this is the only potential source of annual income outside the market, it is a huge concern that that sort of system, where you get bonus points, if you like, or bonus payments for curlews, highlights the real risk that there will be a huge postcode lottery. Where the curlews keep going back to the Elan valley, then that's great for those guys, but then if they're not coming back to the Brecon Beacons, then those guys are losing out. The last time we looked at a major review we modelled hundreds of thousands of different options and worked out what the impact would be not just on individual businesses, but on different areas, and what we found was, with most of the models, they saw huge movements of money for certain areas, which would have had very catastrophic impacts for those areas, and we deliberately—Government, the unions and others involved—tried to avoid that sort of change, because there were some models that would have sucked millions of pounds out of Anglesey or out of Gwent or other areas. That modelling work, that detailed work, was done before any proposals were put forward, and this is our concern about what's happening now—that work hasn’t happened before the proposals are being put forward.

If I can just perhaps reply, I agree with the point that Nick makes there—that modelling work was very much based on almost the public goods side of the house. It wasn't looking at that massive investment. This could be hundreds of millions of pounds over the next few years, investing in making farming more economically resilient. So, I think the policy as proposed by Welsh Government that's looking at—. I've done a quick calculation and it could be £0.75 billion over the next few years invested in making businesses more economically resilient and, in doing that, making more money for farmers, with a policy that's looking at improving market share for farmers and, therefore, improving the profitability, but also a policy that's looking to support farmers to look after the environment in order to deliver public goods, which obviously benefits society, but those public goods are also essential to maintaining our capacity to produce food. So, I think, as a package of policies, it makes perfect sense, but there's a danger in what Nick described there—modelling just public goods ignores the other part of the proposals on improving farm economics. So, I think the two need to be considered together.

So, in terms of that modelling, then, or in the absence of any kind of modelling in this particular context, just to ask the unions particularly, as we move from payments for actions to payment for outcomes, are there any particular sectors within agriculture in Wales that will be harder hit by that?

I think it goes back again to the fact that we don't know exactly, in terms of the future schemes. There's not much detail, in terms of the consultation there, what sectors or what areas of Wales would be most likely to go in or most likely to go out. So, that's why we need to make sure that we do have that extensive modelling, to make sure that we know the impacts for every business sector and region of Wales. Historically, there have been some sectors and areas of Wales that have tended to go into agri-environment schemes more than others. So, I think, going forward, in terms of the design of this scheme, we need to make sure that we've got an offer available to each and every farmer in Wales, because we want to make sure that every farmer who wants to undertake additional environmental activity on their farm is rewarded for doing so, whatever sector they're in and whatever area of Wales they're in.

In terms of this consultation, we have got some concerns that a lot of what they talk about is additionality, again not rewarding for what's already on the farm. So, you could, perversely, see some people who've been in agri-environment schemes perhaps for a quarter of a century—. Because they've already done so much on their farm, it's very difficult to actually do any extra again. So, again, that goes back to making sure that any future scheme rewards what's already on the farm, what farmers have already done and what they're caring for.

10:05

I appreciate you want to move on, but I'd just like to demonstrate that there aren't polarised opinions here. I agree with Dylan on the point that he made there, that there is a need to ensure that we don't lose sight of the fact that there are farmers out there doing lots of good things and they have done lots of good things under past agri-environment schemes. There are areas where their management is having a positive environmental impact and also supporting biodiversity. And on the point that you made there as well, Llyr, about moving from actions to outcomes, I think the future needs to include both. I think there is scope for an actions-based approach in the future, and possibly if we're looking to create some sort of universally available set of actions, then I think there's scope for that, and then I think there's scope for the outcomes-based approach where we need to really work in partnership together in order to work with the farming community and help farming communities and other land managers manage their land in a way that delivers a multitude of environmental benefits.

I think, Chairman, it should be noted that our concerns as unions are based on 25, if not more, years of experience with successive environmental schemes, every one of which has resulted in postcode lotteries, where some farms couldn't get in, some farms couldn't get in because they effectively were not in the right area, some couldn't get in because it would have been severely economically damaging for their farms. There are large pockets of areas where there are very few people in schemes. People on the wrong side of a road couldn't get in because they're on the wrong side of a parish boundary, or whatever. So, these concerns are based on many years of experience, and the concern is that certain geographical areas where they don't tick all the easy boxes will end up with farms that are currently receiving payments and using that money to distribute far more money to their rural economies, employing large numbers of people, are unable to continue to do that because the only way in which they could access the same level of funding would be, potentially, to effectively close their businesses down because they don't have all the nice tick boxes like the carbon, et cetera.

One very quick point: I do believe there are opportunities throughout Wales. What's going to be a limiting factor is the money in the pot; the amount of resources there are to undertake this. And I think we need to work together to ensure that, because I think there's a great offer that rural Wales has, and I think the need for that is only going to increase in the future. So, I think we need to work together. It's in all of our interests that we increase the income going into rural Wales. 

Thanks. The transition period that is proposed in 'Brexit and our land' is to have the new schemes in place by 2025. Is this time frame sufficient to allow a smooth transition to the proposed outcomes-based approach, and should we be piloting more schemes during the transition period?

Well, our experience—again, going back to that 25 years' experience—is that the best scheme that we've had so far, which was Tir Gofal, was implemented after, I believe, a seven-year pilot. Presumably, when I was a boy, there was a lot of planning going on to put that together before the pilot was implemented. And after that seven-year pilot, they knew what was wrong with it and they knew what was right with it, and then they brought it in. And it was a very popular scheme. It still had the postcode lottery element, but it was very popular. We're now, potentially, looking at trying to do what, effectively, took 10 years back in the 1990s to do in a period of, what, 18 months, based on the timescale being proposed. I don't think we've even got the time to build the computer systems to deal with that, and I don't think the resources are there, to be frank. 

10:10

And there is an opportunity for Welsh Government to build time into the system for us, because as Nick has highlighted in terms of previous schemes that have been successful, if you look at any CAP reform process that we've dealt with on a number of occasions in the past, they are multi-year. It takes a long time to be able to get a scheme in place. So, I think there is a great opportunity for us to buy ourselves some time because we have got structures and schemes in place. One thing that I think Welsh Government could do very easily is to provide an extension to those hundreds of farmers who will be coming to the end of their Glastir contracts, some at the end of this year and some at the end of next year, to be able to extend those, to be able to buy some time, so that we can look to make sure that we've all got the time to properly design a scheme, to make sure that it works for the whole of Wales, to make sure that it can be practically delivered on farms, and also, as Nick has said, to make sure that Government is able to deliver it. We could think we have the best scheme in the world, but if RPW can't deliver it, it's not going to be of any use to anyone. So, it is vitally important that we build time into this system to make sure that we get what we want at the end of it.

I don't think anyone's going to disagree with the need for a period of transition; it's just that also, even with the 2025 timeline, in terms of biodiversity that is taking a big chunk out of a very urgent need to start nature's recovery. So, if all we have is more of the same, you'll get more of the same results, and at the moment we're seeing this 56 per cent decline in biodiversity. We need to tackle that as a nation here and today, so I think we should be going in and we should be testing new funding mechanisms, looking at how we get the right type of outcomes and how we measure those, what is the best form of advice, what works, and to do that at the local level and use local knowledge, local expertise and local data to undertake that. You know, people have a real sense of place. People are going to be key to this. They understand their landholdings, they understand what can be achieved there, and you need to work with people, so I'd want to see this as a bottom-up type of scheme.   

I think what Rachel said there is one of the biggest problems we've got, to be honest with you, because Rachel's highlighted, again, what we've been hearing in the last few weeks about this massive decline—nature declining. I think if you look at Glastir, there's a huge amount of indicators there that show that we are in an improving situation. I think farmers have almost had enough of being told and told again that what they're doing on the farm is damaging to the environment, when what they are doing is taking part and being part of agri-environment schemes that have been designed by wildlife organisations. As part of that, they're doing exactly what they're saying, and there's a huge amount of positives there. And I think we're damaging the potential of people to engage in the system going forward if we keep knocking, knocking, knocking the industry all the time; we should be working together to deliver and build on what we've got. 

If I can answer Dylan there, because I was part of the steering group for the Glastir monitoring and evaluation programme. I'm involved in advising the Centre for Ecology and Hydrology and Welsh Government on their monitoring programme, and we have been critical all along of the GMEP, as it was known, and its ability to detect change in the species that Glastir is designed to benefit. What we were concerned by, and continue to be concerned by—and it doesn't look like it's going to change in the future—is that what GMEP and Welsh Government use are these indicators, and these indicators are based on common species that are widespread enough to be picked up under a series of monitoring programmes. What they don't pick up are the rare and vulnerable species, so, the species that we're really worried about. There is no effective monitoring programme in place at the moment that says how curlew are doing, how chuff are doing, how dormice—all these kind of rare species that we're worried about. These are falling through the cracks because the monitoring isn't adequate, and this is something, rest assured, that we have been pushing for the last 10 years. If it remains unresolved, it's a concern.

We've had meetings with farmers who are fed up with having the finger pointed at them, because they're not seen to be doing the right thing for these species. The problem with it is that the schemes aren't designed in a way that's going to be effective to species. The problem with Tir Gofal and Glastir, they were very popular, but they worked as individual farms. In order to address these big environmental issues, we need to work at landscape, and that's a criticism that, you know—. This is something that we've pointed out. It's something that farmers have pointed out. It's something that the unions have pointed out. We need a scheme that's flexible, that works at landscape, that delivers the right outcomes in the right places. And we can only do that if we work together on this, because a lot of the ability of how you manage, once you've established what you want to manage for, how you deliver that is working with farmers to get the right management in the right places. 

10:15

We all share the same concerns about what is happening and I don't think there's any disagreement about that. I think there's a clear view on this side of the table that what we need to do is improve what we have now without throwing the baby out with the bath water and going for something completely new. We have two imperfect schemes. We have an economic resilience scheme called Farming Connect, which is imperfect, but is great in principle and does great things. So, we already have tools that can be used and can be altered.

There's a real worry here that what's going on is, at a time when the civil service is in meltdown because of Brexit, with things that need to be sorted in terms of ports and animal health certificates and all this raft of stuff that has to be sorted out because of Brexit, that we're adding to that burden because instead of coming together and working on how we can make alterations to the current schemes that are beneficial, we are adding a huge layer of bureaucracy and work by instigating revolution—untried, untested, unmodelled, unpiloted—to our payments system, with no understanding of the economic impacts, or indeed the environmental impacts. That work needs to be done.  

The global decline in biodiversity is exactly that, and it's not any single sector's fault. There's no finger pointing here. And, actually, where we have seen measures in schemes, we have seen real improvement in species work. So, we know that when we actually do apply schemes we can affect the results. But what we need is more of that, because if we just keep the status quo, if we just keep doing what we're doing, we'll keep getting the same results, so something has to shift. And the only thing that's certain in Brexit is change. It's the only clarity that so far we have. And, so, what is that change going to be? Now, Wales does have that unique offer going forward. We do have the opportunity. This is taxpayers' money at the end of the day and we are going to have to show people what the public benefit is going forward. 

It's fairly obvious that farmer and land management engagement is critical here to deliver what we want delivered. Otherwise, it would become a high risk to try and do something and it would be impossible without that engagement. And, as you've rightly said, lots of farms are already achieving good outcomes, and some farms are not achieving good outcomes. So, that might be due to training, partly, and it might be due to a lack of engagement, or it might be due to a lack of implementing rules. So, in terms of bringing all those things together, what do you think, all of you, needs to be done, so that we do all move together on this?

The absolute key to this is the economic viability of those farms, and as Rachel has said, the one thing we agree on is that we need farmers to be there to deliver. Our main concern is that this potentially does threaten the economic viability of many, many farms, which is why we want the modelling and the piloting to be done to make sure that that risk is minimised. So, that is absolutely critical: training and good practice and everything else comes on top of somebody being there in the first place. If they've been removed from the equation because they've gone out of business because the banks foreclosed on them, then that is a major problem, because it's not just them; it's all the other people that rely on those farms. And we know, and I'm sure many of you have seen the figures, that at a rural level, we have up to 28 per cent of the rural workforce employed in the agricultural industry. That's more than a quarter in some of our parishes, if you like. 

So, it is key that we keep people on the land and give them that long-term stability. And I think that's the other thing we're all agreed on—you know, this is no good if you're going to have five-year, 10-year schemes, the types of outcomes we're talking about are going to take time. That, politically, can be quite difficult to achieve. Also, you've got 3 per cent of the population managing 80 per cent of the land. For a lot of these new markets, there are a lot of new skills that are going to be required. And also, to make the industry attractive, going forward—you know, a lot of young people now go to urban areas, go to university, for example, and how do you attract people into the industry, and that next generation? And so, I agree, the first call of that is making sure that people think that they can make a viable livelihood, and that this is something they want themselves and their families to go into. So, that long-term stability, but also being valued. There's a public understanding of the need now to manage our land, to help, for example, adapt to climate change—so, storing carbon, holding back floodwaters. If you care about any of these issues, you should be caring about rural Wales, and valuing what it has to offer.

10:20

I think, from our point of view, in terms of our membership, every one of them would see themselves as food producers, alongside caring for, maintaining, and enhancing the environment.

So, what we've got to make sure, in terms of what we've got in place, is that it allows, again, every farmer, to be able to continue to do that, to be able to get the balance, because they want to produce food, alongside enhancing where they live and work. We've got to make sure that the scheme is sufficiently rewarding, as has been said, and that it's easy to understand, and straightforward to administer.

We've got 16,000 to 17,000 claimants of the basic payment scheme at the moment and the consultation proposals potentially increase that up to somewhere around 25,000. At the moment, in terms of Welsh Government, there are probably 300 or 400 new contracts a year in terms of Glastir. We've got to make sure that we get to a system, again, where every farmer who wants to undertake this activity has the opportunity to go in, and we can't afford to wait a number of years to be able to get in there.

I agree with what we were talking about in terms of stability and long term as well. But, a crucial element for us is to make sure, again, that the person receiving the support is the active farmer. And, in many cases, the active farmer won't have a long-term tenancy agreement or something like that. So, we've got to make sure, again, that we design this scheme to make sure that it's the person who's carrying out the financial risks associated with food production, alongside the other goods they're producing on the farm, that is the person who receives the support, going forward.

I think it's worth committee noting as well that what's being proposed is an open-to-all payment—it's unprecedented since the war that that's happening, and it's a grave concern. But it's worth also noting that a similar approach was taken in England in 2005, effectively an open-to-all in terms of their payment system, and it contributed significantly to a complete meltdown in their payments that lasted for at least two years, and is a legacy that still remains. I think it cost almost £0.5 billion in European Union fines for having made such a cock-up of the system, because there was a sort of logjam, because there were so many people trying to enter the system. We can only currently deal with a few hundred contracts at the moment in terms of Glastir, every year, and yet, to try and do 10,000 in the next 18 months, two years, raises serious concerns.

Just on that, I think there's a tendency to look back, and look at them and say, 'The policies we've got are the right policies to have.' Those policies came out over half a century ago. We know so much more about the environment, and the importance of the environment in sustaining our well-being, not just this generation but future generations as well. We now know our environment ain't in good nick: we've got issues with water quality, we've got issues with air quality, we've got issues with soil, and this has all come out of 'The State of Natural Resources Report'.

The very building blocks for food production are at risk here, and there are a lot of reasons for that, but unsustainable land management is one of the big issues there. So, Dylan talking about our ability to produce food going forward, well, unless we look after our soils and our water, and think about the air quality as well, we are seriously risking our capacity to feed ourselves. And this is an opportunity for us to think about what this generation needs, but, importantly, what future generations need. We need to farm as if tomorrow matters. We have an opportunity here—a once-in-a-lifetime, a unique opportunity—to use a massive amount of public money to help farming become more resilient, but also to help farming to look after the environment for everybody, but also, importantly, look after the environment in a way that will sustain farming long term as well. I think that there's a risk that, if we continue to go down the BPS, the income support, approach, that reduces our ability to do that and there are big value-for-money issues around that. What really worries me is that the Treasury and auditors would be looking at that money and, if that money isn't delivering value for money, then that'll be hived off to the point where we won't have enough money in Wales to do all of these things. If we haven't taken this opportunity to build a resilient land-management farming sector, then food production and land management would retreat—it would retreat to those areas where it's possible. That risks farming, certainly farming in more marginal areas, in a way that—you know, we're currently seeing a retreat and abandonment of farming. More of the same isn't going to change that

10:25

And we all agree that supporting—. We all want to see local, sustainable food. Now, all of what's being proposed—and we support what's being proposed—is saying that you want to incentivise the production method behind that—so, for example, you could transfer to an organic way of farming. But we have to be really clear what the offer's going to be and what do we, for example, mean by 'sustainble'. Now, consumers are very savvy these days and I think Wales should put its best foot forward. I think we have an amazing capacity to be able to produce truly sustainable food going forward. We've got our legislative framework behind us. So, I wouldn't want to see—. So, for example, we would welcome a brand Wales being developed and that there'd be investment into that, and that will require, for example, new skills in marketing, et cetera. But it'd be truly sustainable. I wouldn't want to see, for example, a scheme that just requires regulatory compliance, because I think consumers see right through that. They want to be assured that nature is being looked after. People do look to the countryside and want nature to flourish there, and I think people who live there—. You know, farmers truly want to be the custodians of the countryside. We need to enable them, and there haven't been enough resources at scale in the past to do this—nobody's had those resources to achieve this.

You've touched on this already, really, but I wonder if there's anything else you'd like to say in terms of moving to an outcomes-based approach and how that might, in fact, pose risks to the environment rather than make things better?

Well, our experience with some schemes, certainly, has been that knee-jerk reactions to a period where there was over-grazing in some areas have resulted in the complete removal of livestock in areas—this is just one example—which has actually had a detrimental impact. And one of the big frustrations that our members have is that, rather than asking farmers what they were doing back in 1965 or what their grandfathers were doing back in the 1930s, when, I think we would all agree, things were in a better state, there is a blanket rule based on what a map says—an electronic layer in a mapping system that says they should do x, y or z. That's such a blunt instrument that it's even caused a situation where NRW have objected to what the Welsh Government is trying to get farmers to sign and have actually had to step in to stop them doing that, because they recognised that what the Glastir computer said they should do was absolutely the wrong thing from an environmental perspective, and I'm sure we've all come across those cases. 

So, that's how things can go very wrong when people are not consulted with, as people who've very often been on the land for centuries and know exactly what the change is. They've witnessed—they are the eye witnesses to these environmental changes, and yet, often, or invariably, their views are ignored and it all comes back to what the mapping layer says. And the consultation paper makes it pretty clear that this will be based on precisely that sort of mapping layer that has resulted in a number of problems.

Yes, we would like to see—. I think what's going to be critical to this is having those advice visits on-farm, around the kitchen table, so that you get that local feeling and that local knowledge, and also improving that local data. So, we want flexibility in the scheme; we want it to be outcome-based, because you want to decrease the bureaucracy as much as possible, and almost in some instances give people the right to fail, because some of these measures will be difficult to achieve—so, rather than the computer saying, 'No, the measure has to be x', actually listening to people and understanding the local conditions. Because one side of the mountain is different from the other side of the mountain; we all know this. And, you know, talking about different sectors, et cetera, I think wholeheartedly across the board there is support to ensure that—. Small and medium-sized holdings are a real concern. There's a generality that the larger holdings might seek some of the post-Brexit opportunities maybe in beef, poultry or pigs, but, again, that has to be undertaken sustainably as well. So, that might be one area of farming that might move away from such schemes, and we wouldn't necessarily want to see that. Even intensification—potentially it would be focused in the lowlands—needs to be undertaken sustainably and we need to have the right data and the right knowledge, because those invariably are going to be the areas close to people. This is what I was on about before, about community investment—what some of the new demands will be around things like access and health, et cetera. There'll be more of a demand for that, just because of proximity, and we need new data to understand that. 

10:30

One of the things we've talked about already is continuity, in terms of—. You said about a risk. What we've got to make sure is that we've got a continuation of what we've currently got delivering on-farm until we're confident that the new schemes that we've got in place can deliver and can deliver the improvements that have been talked about this morning. So, that's, again, making use of the time that we've got left in the RDP to make sure of continuation of that support, making use of the Treasury guarantee, again to give ourselves time. I think one thing we also need to make sure—. There's been some talk here about the economic resilience scheme and the public goods scheme. I think what we're all trying to say as well is that we want to make sure that every farmer in Wales has the opportunity to access both schemes. We've got to make sure that we don't get a situation where a certain farm or certain parts of Wales see the public goods as the answer to them, and other parts the economic resilience scheme. Again, we want to make sure that we've got a comprehensive package so that every farmer has the opportunity in terms of developing their business as food producers and developing themselves in terms of their public goods and their environmental work.

Just on the outcomes-based bit, it's a bit of a simplistic answer, but it's making sure we've got the right outcomes in the right place. The targeting and the mapping is part of it, but ensuring the right advice and guidance is critical, then working with all interested parties, including local communities. We've got a sustainable management scheme—we haven't mentioned SMS. The SMS projects the Welsh Government are currently running are perhaps a good template or a good starting point for partnership on the ground and working together to deliver these big joint action projects.

We've got a project on the Gwent levels that is consulting widely with local communities in order to help identify what some of those outcomes that farmers can deliver might be, in a way that develops, hopefully, mutually beneficial relationships between the community and farmers, and, ideally, is something that might actually lead to economic relationships as well. What we're also trying to do there in developing this kind of outcomes-based approach is to deliver it through the lens of the natural resource policy and the area statements, to ensure that as much as possible the actions that the management or the farming that is being delivered on the ground speaks to as many Government policies and priorities as possible. And, in so doing, any public money that is invested into that—you know, with confidence we can say that's delivering as much value as possible to wider society within Wales.

I think it's a mix of what does Wales need to do—what sort of international commitments targets, climate change, biodiversity, water, et cetera—but also what do local communities want from this and how can farmers help deliver this and how can this be as integrated as possible. There's stuff in there about health and education as well. I think it's a real challenge. I think it's really exciting. It does need an awful lot of thinking about how we do this, but, ultimately, it needs us all to work together.

Chairman, I think, as Rachel as said, that conversation around the kitchen table is essential for any scheme of this type, and I'm sure we're all agreed on that, but let's not forget that what we're talking about is at least 16,000, I'd say maybe 25,000, conversations around a kitchen table in the next 18 months or so about a scheme that hasn't yet been designed or built, and the computer system is not in place. We've seen this happen at a very low level with Glastir, where—even in a situation where the kitchen-table conversation lasted maybe an hour and then people were sent contracts through around Christmas. And they were given four or five days to sign the contracts, otherwise they wouldn't be allowed to apply for a contract again—between Christmas and the new year—and that's for something that's happening at a tiny level compared with the ambition of what's being proposed.

10:35

Well, I was just going on to just the issue on—if we've got time—indicators and proxies, Chair. But if you'd rather—

Thank you, Chair. You've mentioned some of the concerns around time frames and resources, but what are the other barriers to establishing outcome-based schemes, including WTO criteria?

I think that's crucial in terms of WTO, because, in terms of the consultation, the public goods scheme is predicated on making sure that Wales has sufficient quantity of amber box to be able to go beyond income forgone, costs incurred, and, as we know, we don't know the situation at the moment. We don't know whether the UK will have an allocation for the historic amount that we get from the EU. We don't know, in terms of what—the WTO will look at us potentially going up the hill, really, moving away from green box subsidy back towards amber box. And, in terms of the agricultural Bill, of course, we don't know how UK Government Ministers will operate that if the draft Bill, as written, goes through, because they will have control in terms of how much each of the devolved Governments have for amber box and also in terms of how it's used. So, I think it's critical, if this scheme is to go forward, that there is opportunity to go beyond costs incurred, income forgone.

Yes. And annex 2 paragraph 12 of the agreement on agriculture, which was part of the original WTO agreement from 1992, is fairly explicit in what it doesn't allow, which is payment above that income forgone measurement. And that is a grave concern, not only because of the potential that it's illegal—we've spoken about modelling, but there's also that legal investigation that hasn't been done, and the Minister, the Cabinet Secretary, has confirmed that that question has not been addressed in a response to a question last week. So, that, absolutely, needs to be bottomed out. But it's not just about that, it's also about that anything that is ambiguous in terms of its legality raises a concern that other countries can raise maybe spurious concerns and then subsequently use those concerns to raise trade barriers in order to benefit their own producers. And that's exactly what we're seeing at the moment with the USA and China and Europe and Turkey, and the trade disputes that are going on through those mechanisms, through the WTO, at the moment. And those disputes take years to sort out, during which time producers suffer acutely, and that's what's happening in America for agricultural producers at the moment, because of the retaliation that happens.

And I think there'll be those concerns, whatever is proposed going forward, because, actually, at the end of the day—you know, we've sought clarification from WTO about this, and, of course, you get an answer similar to: well, they are only going to be looking at things that give an unfair trade advantage. But they'll only examine the very specifics if there is actually a challenge that comes forward, so you can't get a very clear, defined answer. But we've looked at this; we don't think it's going to be a barrier for a public goods scheme. I'd probably have more concerns if you tried to make food a public good, because I think that argument then that you are in an unfair trading advantage could be—. It might not be made, but, you know, we are in that very uncertain area then.

I think both Dylan and Nick in highlighting the kind of concerns have also highlighted a potential solution as well. They've both alluded to costs and income forgone, and I think when you look at WTO rules—I think we agree with Welsh Government on this, and both the Country Land and Business Association and the RSPB have looked at this. I think costs, when you're looking at these systems that are essential for delivering public goods and public outcomes, then you can be much more broad with your interpretation of costs. Our big concern is that we have these uneconomic farming systems, these farming systems in marginal parts of Wales that are really essential, really important for delivering a whole raft of public goods, which they're not receiving any kind of benefit for, currently, at the moment. They're not actually receiving any kind of fair payments for this. We firmly believe that within WTO rules there exist the mechanisms in which you can reward these and incentivise these systems by covering the costs of the farming systems, and I think that's important because that will give what are struggling farming systems anyway—. Even before Brexit and the vote to leave Europe, these were upland farming systems that were massively dependent on income support and hugely at risk, and more so now. By creating a system of support around public goods that functions within WTO rules, what you're actually creating is an important new income stream for these farming systems. So, we end up with farming systems that—they're producing quality food, so they'll be benefiting from the resilience scheme anyway, but they're also receiving a payment for delivering public goods.

10:40

But let's be honest about this, you're not giving them an additional payment, because you've taken the other payment that they were already getting away, and that's what we want investigated—the economic impact of doing that.

No, sorry, Nick, but what you're actually taking away is income support. What you're actually doing is building a new relationship where you're actually making payments to farmers for delivering something that society needs—delivering a product. Otherwise, you're condemning or limiting a farming system to income support, and basing their future on the ongoing reliance on public funding. As that funding diminishes, you're putting those farming systems hugely at risk.

You can call it income support if you want, but either way, you are taking some money away and replacing it with a different funding stream that's completely uninvestigated and has ambiguity about its economic impact and indeed its legality.

Whatever the money is, if you've got the same amount of money—if you cut it differently, some will win and some will lose. Darren Millar.

I just wanted to enquire a little bit further about this issue of fairness in the system, and the capacity of the system to be able to deliver this change, because, to me, it seems that to embark upon a significant change at a time when times are uncertain isn't perhaps the best thing to do, even though we would all agree that some shift towards a more outcome-focused system is absolutely the right thing to do in the future. 'Is it the right thing now?' I think is the big question at this particular moment in time. Also, this issue of fairness, I think, in my mind, hasn't yet been resolved, so we want to reward people who manage their land well, who try to achieve these outcomes, but for some it's going to be easier to achieve outcomes than others. Some will have already made significant financial investment themselves, without levels of support that might be available under this scheme, and they may be, effectively, penalised, if you like, for having made that significant investment on their own backs, whilst down the road someone hasn't bothered, and they're going to suddenly have an injection of cash in order to deliver potential significant environmental benefits. And yet, at the same time, because of all of this uncertainty, the one thing that doesn't appear to be prioritised under the new scheme is food production, and of course we know that food security is absolutely essential for the UK, as we go into these unchartered waters around Brexit. So, do we have the capacity to deliver such significant change at this moment in time, or would it be better to make sure that the reward system that kicks in is one that is slowly phased so that we're weaned into a new system in a way that isn't this big snap, cliff edge that potentially this new system is going to create? And how do we make sure that, in all of that, we've got this food security business sorted?

I think I would agree with pretty much everything that you've said there, Darren, in terms of how we have the opportunity to give us time, because, obviously, in terms of the move of EU regulation into UK legislation allows us to be able to maintain what we've got, and we've got to remember that we are still in the transition period of the previous CAP reform, without starting the next, and this is not that we're—. Farmers aren't against change. There's been huge change in the way that farmers have received support and the various schemes, whether it's environmental or the basic payment scheme—just in this century we've seen that. So, we want to make sure we evolve, but what we've got to make sure that we evolve to is a better system than what we've currently got. Obviously, we want to see that we're making improvements in the environment, but, also, we're passionate about the fact that our food producing ability is almost a £7 billion industry in Wales. It employs 240,000 people. We've got to make sure that whatever we do in future delivers at least we've got currently, if not more, and exactly as you say: it is very difficult in these times, when we have got no idea what our trading relationship is going to be on 30 March next year, to be able to consider how we plan and design things going forward. So, I think it is important that we try to make sure that we give ourselves time in this system to make sure that what we've put in place delivers better than what we've got currently and, as you say, what we've got in terms of—. That is one thing that is within Welsh Government's control. There are a lot of things we're talking about in terms of a deal and no deal, protectionism across the world, which is completely outside the control of any of us in Cardiff, but the opportunity we've got here within this policy is to provide some sort of stability and certainty within our devolved powers. 

10:45

When it comes to the potential disparity between farmers that you spoke about earlier on, the consultation document refers to using area statements—under such a scheme, you'd understand why that would want to be done, but you can very easily imagine a scenario where you have two, effectively, identical businesses that are either side of a boundary of these areas that are defined under the environment Bill, and because they are in different areas, they have to do very different things to access the level of funding that they currently access through the BPS and, potentially, that means one farm having to do something that compromises their business far more than the other farm in order to access that same level of funding, with a subsequent knock-on effect on one side of the river, if you see what I mean. And that's the sort of postcode lottery that concerns us, not just in terms of the differences between Anglesey and central Montgomeryshire or something like that, but, actually, neighbours, because that's exactly what our experience of what is now called the public goods scheme—it used to be called the agri-environment scheme—has been.

I get that, but I think the point I was making on fairness is you've got some farmers who've been very responsible and very responsive to this whole public good agenda, if you like, in terms of improving the environment on their farms in terms of high welfare standards for animals et cetera, et cetera, and others who have been perhaps less responsive and taken less action of their own, who stand, potentially, to lose out from resources that they might have otherwise received under the new scheme.

But I would make the point that—

—a lot of those farmers—. I appreciate you're not disagreeing with me, but it's a different issue.

But in addition, I would make the point that many of those farmers who have done a lot of work have not necessarily done it simply voluntarily, if you like. They have done it because of the postcode lotteries that have existed in the past. So, farms in some areas haven't done the work because they weren't ticking the boxes and they weren't on the map in the first place.

But far from this—. You know, I keep hearing this term 'postcode lottery'. The whole intention around area statements is it's not a defined, you know, 'This side of the river' or 'That side of the street'. Actually, to look at a whole catchment scale, looking at those ecological processes and nature-based solutions, requires you not to be that definitive. But your specific terms were around food security as well, and about the need to ensure this. Yes, there is, there is a requirement of Government to make sure that we have access to affordable, safe food. However, if you look at what the real threats to food security going forward are, it's around climate change, for example. So, we already are quite self-sufficient in food—some more than others—and often the foods that we require to import are because we can't grow them ourselves. You know, we would have all started today with a cup of tea or a cup of coffee. Now, unless you have very new technologies, we will still be required to import those foods. So, there’s a—

10:50

I get that, but Brexit's going to change things, potentially, isn't it? We don't know.

I don't want to stop you, but we've got one more person to answer and we've now gone past time.

I was just going to—. On additionality, I think you’re absolutely right and I agree with you, and I think a point we’ve already made to Government, and also in our response, is that, where there is good practice and farmers have invested in good environmental management—. I can think of lots of farmers in Wales who are managing habitats really well for biodiversity. Well, they should continue to be paid for doing that. It’s not fair that they do all this great work, we get to the new public goods scheme and Government turns round and says, ‘No, we're not to pay for that, because you’re already doing it.’ That’s absolutely the wrong thing to do, and it’s certainly not where we’re coming from and not what we’re saying—good practice should be maintained.

Food security is complex. Food security is more about access to food. It’s about eliminating waste, it’s about possibly not continuing to produce what we're currently doing. It might be that, but also looking at a kind of diversity of goods as well. But what it certainly is is about maintaining our capacity to produce food. So, going back to the issue about soils and water, the evidence is there that shows that current practices in some places are actually damaging our capacity to produce food. So, there’s an issue there about, you know, how it’s better to manage an environment sustainably in order to provide society with all sorts of things, including the capacity to produce food. That’s where we would see the kind of food security argument.

I think that those are certainly the key points there, and I think it’s important to understand that difference between food production and food security. I think food security is at risk if we continue with the kind of status quo.

At this stage, can I thank the panel for coming along? As you've probably noticed, we haven't run out of questions, but we have run out of time. So, can I thank you very much? It's been very illuminating.

Can I invite the witnesses to submit any further views on the Welsh provision in the UK Agriculture Bill in writing to us, which will then be added to our list of evidence? Thank you very much.

Can we break for eight minutes?

Gohiriwyd y cyfarfod rhwng 10:52 ac 11:03.

The meeting adjourned between 10:52 and 11:03.

11:00
4. Dyfodol rheoli tir yng Nghymru: asesu dull sy'n seiliedig ar ganlyniadau tuag at daliadau am nwyddau cyhoeddus: sesiwn dystiolaeth tri
4. The Future of Land Management in Wales: assessing an outcomes-based approach to payment for public goods: evidence session three

Bore da. Can I welcome Dr Patrick McGurn of AranLIFE, Jennifer Manning, Dartmoor Farming Futures project, and Tracy May, Dartmoor Farming Futures project? Can I welcome you to the committee and thank you for coming along? If you're happy, we'll go straight into questions, and I'll start. What are the key risks associated with outcomes-based schemes, as suggested by current schemes, and how can they be overcome when designing new schemes for Wales? Who wants to go first?

I think that, if you're talking about outcomes-based schemes, the main risks that I see, and that we've had through Farming Futures, are that you're not going to achieve the outcome, or the level of the outcome, you want, because it's getting everybody to understand exactly what that outcome is. Because somebody can describe something in one way, and somebody else thinks they understand it, but you need a dialogue, to make sure that there is a true understanding of what you're trying to achieve.

I suppose another risk to associated outcomes—well, it's what people want to get. It's the short-term nature of any agri-environment measure—in five, six years, are you going to get that outcome by the end of it? Just because you stop putting fertilizer on a piece of grassland, it's not going to turn into species-rich grassland, where, possibly in the farmer's view, 'Yes, I'm going to get to the higher level of this', and therefore there may be out—the loss of production, or whatever, from that, but they don't achieve the outcome or the higher payment. Now, there are two ways of looking at that. If we go for a totally market-based approach and say that you're not actually supplying for the market, just in the same way as if you tried to improve the quality of your cattle, you might not do it in two or three years, but you're still going to be selling cattle in seven or eight years' time, when these outcome-based schemes are not going to be there. So that's part of the—yes, that's the main risk with them, I would say.

11:05

Yes, it's this uncertainty, isn't it? That's the key political narrative at the moment around the proposals in Wales. We're moving from a situation where there is an element of a basic payment, so that farmers have the confidence in terms of long-term investment—you know, at least to a certain degree, where you are financially in terms of business planning—to a model where it depends on delivering these outcomes, and what happens if you don't meet those required outcomes. So, how do you smooth that out? How do you get over that? How do you tally planning for those outcomes and the business plan that should sit next to that?

I think there has to be, there will always have to be, with any scheme, some element for a farmer of, 'What is in it for me?'

There will always have to be, in some schemes, some element for a farmer of, 'What is in it for me?' So, there'll always have to be that encouragement, because, at the end of the day, we are encouraging them to be part of this scheme, and we'd hope that they'd want to take part in this scheme for environmental purposes. So, I think it's in terms of those risks, and how those payments are managed so that the farmers know that they can undertake their planning, but at the same time can go and take steps forward towards achieving those outcomes. So, are we looking at having a basic payment that might be paid to farmers as long as they are managing the landscape to achieve an outcome, and then we're topping up those payments as they achieve an outcome? But, again, in terms of timescale, that can be quite difficult, because there are certain outcomes that might not be produced straight away. So, we've got to get that balance right, but at the same time we've got to incentivise these farmers to take part.

So, what kind of timescales are we talking about, then? It depends what the outcome is, I suppose.

It could be up to 20 years, depending on the outcome. If you're looking at the condition of a site of special scientific interest, it's not going to happen straight away, and, obviously, that's a long time period.

Probably I would say that you have to—they have to be targeted; those are the goods. You're not going to maintain some valley and expect an outcome-based scheme to work for you. All countries—Ireland, Wales, England, Scotland—are losing habitats, particular types of habitat, particularly species-rich grasslands. So, therefore, you target those areas and you get what's reasonable or good to being with.

If you take—I farm as well. On my farm, I've gone into an agri-environment scheme. I've got an extremely good example of rush pasture, Molinia—which is priority habitat. I've an extremely poor example of it on my present agri-environment scheme, which starts next year. I get the exact same payment for the two of them.

If I sell a bad calf I get a bad price for it. If I sell a good calf I get a better price for it. I'm not saying I get a good price for it, but I get a better price for it. But when it comes to my grassland, and I go to a lot of bother; I actually put more bother into the grassland that's species-rich, and it's more interesting to maintain that way, because I have an interest in it, more than I do in the other stuff, which is relatively easy to keep, but I get the exact same payment. So, therefore, the outcome-based scheme is to try to say to farmers, 'We appreciate there's a range of conditions in your land.' Now, there are some fields that I might never want an outcome-based—. I'm quite happy that they stay. They're my silage fields. I never want to see them overly improved from an ecological point of view, because they're the mainstay of my farm, but if I start gearing on the farm towards the better areas—. So, can we do that within an area as well? So, the outcome—you're starting on a reasonable baseline, and your scoring system starts on a reasonable baseline.

The AranLIFE programme that I'm working on, where we're trialling an outcome-based scheme, simplified—we've got one to five, where five is fantastic stuff, one is semi-improved or improved grassland. The farmer's quite happy because he grazes that more, but the other one, he doesn't put fertilizer on stuff because he knows it'll go. The rest are variations in between, and the hope is to move them up. But the farmer can try that, so, therefore, that's the way we get over these risks—we target these. We target the areas that need them most, would be my view.

And year-on-year variance as well is potentially an issue, isn't it? Because if it's a long-term scheme, it isn't necessarily that you get from A to B and B to C year on year, and you get a certain payment for it. So, how do you accommodate that within these kinds of schemes?

It goes back to the market, really. You're still rewarding the person with the best habitat. You still are, and then the other one has to make a managed decision—do they try to do that? There are ways round that. There are ways that you have, and it depends; people have different views. You can have a very wide scoring system that reflects any improvement in that field—it detects it. So, even if it was that you reduced the soft rush cover, the scoring system would pick that up, so the farmer can work—or if they move a water trough so it's not tramping or they reduce tramping, so you just can move the farmer up slowly. That probably gets more complicated, but some people would rather have that because, as you said, farmers can try to aim for something, or you can go for the reduced scheme, in which it's much harder to move up between increments. 

11:10

And what about cash flow pressures within this process? We know at the moment you get a basic payment in December and you know the money's coming. Is there an element of upfront payment to facilitate some capital works or whatever needs doing as part of your scheme?

What Dartmoor Farming Futures is involved in is common land. So, it's very different to looking at your farm. It's moorland. And you've very, very slow changes. So, if you're going to have it as an outcome-based scheme, that you are just paid on outcomes, you're not going to be able to measure change in 12 months. So, it's totally unrealistic to say, 'Well, we're not going to pay you anything until we can measure an outcome after five years', or something. So, in that sort of scheme, I think you've got to have tolerances built into it, but you've also got to have some sort of payment for doing the management that will lead you towards that outcome.

But there's a capital outlay for planting woodland, let's say, so, clearly, there'd need to be some sort of upfront funding, otherwise the cash isn't there to do it.

In AranLIFE, which is similar to Burren LIFE, which you've probably head of, which is an EU LIFE-funded programme that's coming to an end, we took the outcome-based approach. We looked at it—. The main important thing was the grazing of these limestone grasslands. So, we looked at what was stopping grazing. It was scrub, increasing scrub. So, we had a capital action of clearing scrub. Access was very poor, so we had capital actions for access; gates to keep cattle in certain areas, that was the capital action for gates; the provision of a water infrastructure—cattle need water to graze and sometimes it was uneconomic for the farmer to build something that cost £500 that he's going to get one week's grazing from for three cattle. An agricultural view would say it's just not worth the output, but the ecological loss was high. Therefore, we had a capital scheme to put that place in so that that farmer could continue grazing. That rain catcher will last 30 years at least, so they could continue grazing. So, personally, I think hybrid schemes but where actions are specific for the grazing—.

I see agri-environment schemes where there are a lot of do's and don'ts—you don't graze this until 1 May, the cattle have to be—[Inaudible.] And there are massive capital actions in fencing, maybe, that aren't actually required except because suddenly you've changed the management and you can't graze them on 1 May. I would rather see capital actions that are geared towards improving the habitat totally, rather than just meeting a day that you can get to graze them. So, yes, capital actions should be part of an outcome-based—.

The dilemma, or what farmers see—and it is difficult to get around this—is that if you have, say, a capital action for the removal of scrub and it actually pays well to remove the scrub, you may be favouring the farmers that haven't looked after their land in the past, And the farmer that has absolutely perfect land beside you and has looked after it really well can't avail themselves of this. In the ideal world, the payment for the ideal habitat would be always much greater than the costs of the capital actions, and it's the design of the scheme that has to cater for that. But that's not a problem, that's the design of the scheme to get around that. 

I just wanted to ask how we can make sure that any future scheme has value for money built in. We were hearing some evidence earlier on from some academics, who were telling us about the design of some of the schemes in Australia and over in the US, where landowners have to bid, effectively, in order to take a scheme on. So it might be the creation of a wetland, so many acres, and they get into a bidding process, and it's the one who is able to do it cheapest or more cost-effectively that gets awarded the contract. Is that a model you've come across and, if not, what other models are there to ensure there's value for money for the taxpayer? 

11:15

I haven't come across the model; I've heard about it, but I haven't specifically looked into it. But I think it's about ensuring, like I was saying, it's cost-effective, but it's also making sure that that outcome is going to be achieved in that specific landscape. So, it's, again, going back to some of these area management plans, making sure that each outcome is suitable to the area where that outcome is going to be delivered, because there's no point trying to deliver an outcome, or a farmer being told that they should deliver an outcome, in a specific landscape or area if that's not achievable, because that's never going to achieve value for money. So, I think one of the things we were looking at specifically with Farming Futures was that this was very much an area-based scheme, based specifically in these areas, and what are the outcomes that this specific landscape can deliver and how can these be achieved. And we won't look at an outcome that is not going to be achieved in this area, because that's not value for money for anybody. 

Both the Aran and the Burren LIFE schemes, the two schemes, have a scoring system, so they can show that, as the three, four years went by, the score increased. So, every farm in itself is being monitored because of the scoring system. If the scoring systems go down, there's something wrong with what's going on, and that scoring system is based on being looked at every year. So, therefore, that in itself has its own monitoring scheme, which other agri-environment schemes didn't really have—they had sampled plots through. So, we can build in that the actual outcome and the increase in outcome reflects value for money as well. 

In terms of the bidding system, that's something that we haven't looked at, with the exception of—. In Ireland regional areas can put in now under the European innovation partnership for innovative schemes coming through to decide things—well, it's not a bidding scheme, but different areas put in a case study. The case study, the costs of it, are met by the department, and then it's screened. So, I think there were maybe 40 applications and 12 went through where they thought that there was good—. But that was more ideas than tendership, do you know; it was more ideas. 

Possibly, we have another—. And AranLIFE was one of those that put in for that, so we're going to try this simplified outcome-based scheme, but it's something, when we talk with the farmers, we may consider: can we just, instead of bringing a farmer—? Are there farmers out there that just want to do target works—they don't particularly want to enter a scheme, but would like to do target works that would improve the habitat—and can we cater for that as well? But that's more getting into action-based, as opposed to outcome-based. 

The problem I can see with the bidding system is how it's actually done, because, if you've got actual individual farmers bidding against each other, you can end up with something happening here, something happening there, but no environmental agreement in between, which isn't going to give you landscape-scale benefits, which—you know, as far as the environment is concerned, it needs to be larger than just a single farm. So, therefore, if you're going to have a bidding system, you would need to be getting, I would have said, co-operatives of groups of farmers putting in for it and working together, which sounds great, but they're farmers, and they're individuals. So, that's the main inherent problem I can see with the bidding process—how do you actually get it as a landscape-scale improvement? 

I suppose it's more ranch-based farming, isn't it, out in the states, much bigger farms—and, of course, in Australia too. So, in terms of making sure that value for money is built within a scheme, the scoring system that you have over in Ireland seems to be quite effective at delivering that. 

It is, yes. And you get farmers—. We will have farmers coming back and asking, 'Why is that scoring so low?', and we'd have discussions with them why it was scoring so low. We'd get comparisons. One farmer rang me: 'I know so-and-so is getting the same area land as me, but he's getting more money than me; why is that?', and then you'd just explain the set to them. We'd get another farmer who visited a farm and said, 'I'm going to have 10 next year.' He looked at the Burren, and he was on the Aran Islands—'I'm going to have that there.' And, to an extent, that does come into it a bit, because farmers are—like they like to show the best cattle; they like good cattle at marts, so they don't particularly want scores that are low the whole time. So, that's—. And, again, it's targeting; it's targeting those areas where these good habitats are. They're not everywhere, so that's targeting. But they're also probably the areas that are receiving, at the moment, the least single farm payment. The average single farm payment on the Aran Islands was €100 per ha. To the east of the province, on good quality land, it was up to €500, €600 per ha. So, value for money didn't really come in to it too much when it comes to the pillar 1, but, when we come to pillar 2 incomes, it seems to be much greater within the European Union—. 

11:20

And how do you make sure that there's still choice in terms of what the land managers and farmers are able to deliver on their land? Appreciating that their land may be better suited to a certain style of management or delivery of a certain sort of habitat, how do you still make sure that there's some element of choice for those individuals to engage in?

I think that, for these outcome-based schemes, what's absolutely vital is that the farmer is involved in creating their agreement. They shouldn't have an agreement given to them that they can either 'do this' or 'don't do anything'. They need—. Because most farmers or land managers know what their land can do; they intimately know what it is, and they are the ones who have the experience to know, to a large extent, what is and isn't achievable. So, you need to have—. They need to, obviously, have expert advice with this. And it needs to be a partnership, drawing up agreements. 

We want to—. Obviously, we're going to move towards an outcome-based system with two elements, one being environmental and one being social. So, my question is: how are you going to measure those outcomes? If you've got any useful information, that would be great. 

Did you bring your paperwork with you?

Yes, I have got my paperwork. In Farming Futures, we chose some outcomes that we felt we could deliver, and we are actually monitoring the outcomes ourselves as commoners, and we report back to our steering group, each, annually to let them know how we're getting on and what's happening. Obviously, this is a pilot scheme, so there is a—. We report back every year. But what our outcomes are are public access, we've got archeology, we've got biodiversity, we've got carbon, we've got fire prevention, we've got the landscape, we've got food production, and we've got water. Now, I'm aware that those may not fit into exactly what you're looking at your system being, but, with a lot of them, they're quite easy to monitor, really. The archeology—it's quite easy to tell whether an archeological site is in good or bad condition. A lot of them have been assessed anyway. So, if, as part of your agreement, you're saying that you will, as an outcome, make sure that your archeology is in good condition, then you can just, by simple photographs—you know, photographic evidence; you can show exactly what it's like.

What we're looking at doing is maintaining an open landscape on Dartmoor. Well, what we do is we have fixed-point photography. So, you just go out each year, at the same time each year—provided you can see, it's not foggy; it may vary a bit by a few days—and you take that photograph and then you can see. Year on year, you build up this evidence of what it looks like. So, we've got the methods there for monitoring it, and the monitoring is done by the commoners. We are also doing our own vegetation assessments, which have been based on Natural England's over-grazing surveys that they do, and we've been trained by them to identify the plants and what to look for, and we actually do our own vegetation assessments, which are accepted by Natural England, the results are. I can go on in more detail, if you want me to. 

With ours, because we and the Burren are interested in the plants, the habitat, so the indicator species of that. So, the scoring system is based—. It's based on criteria that really—. An ecologist walking in the field would know that this is a good habitat, but trying to put that down in writing can be sometimes difficult. So, we tried to come up with a scoring system that was quite simplistic, but then we tried it out to see whether it worked or not, and the first year we carried out the scores ourselves; the third year, we held training courses for the farmers to see whether their fields had changed or not. And some of them put that their fields had gone up—some of these we visited, some of them—and that's what ours is now. Ours is a LIFE project. The Burren, which is more of a specific agri-environment scheme, that's what they are basing it on, just a scoring system, and showing that scoring system's—. From the social point of view, it's much harder to prove. Both us and the Burren have done a socio-economic study for the area, which is linking the importance of agriculture with, say, tourism in the area. For instance, 125,000 people a year come to visit the Aran Islands, which is a purely agricultural man-made landscape—it's a limestone rock in the middle of the sea. They made the land and soil and built the stone walls, and agriculture is vital for the maintenance of that. So, we've proved that agriculture is very important for the tourism and, therefore, the socio-economics of the county, but we haven't built that into indicator species—it's been just an on-farm plan that's what we're working with.

11:25

What would you say are the best approaches in terms of engaging land managers so that they want to be part of a scheme—they enthusiastically engage with the scheme and fulfil the requirements? Are there any obvious approaches that you've known to work?

I think I'd like to pick up from what Tracy said about involving farmers in the design of a scheme. So, if you're looking at your area scheme and involving farmers for that specific area, then you are engaging with them from the very beginning as a bottom-up approach and not a top-down approach, and they feel like they're very much part of that scheme—it's their scheme, they've helped develop it and they're aware of the outcomes that they're expected to deliver because they were involved in designing those outcomes. They feel then that they are part of it and actually want to make sure that they deliver those outcomes, because they were involved with it—it's something they've helped to develop and they want to help deliver it. So, it makes them feel a lot more ownership towards that scheme—it's not something that's just been put in front of them and it's been said, 'This is what you need to achieve', but it's been something on which they say, 'We can deliver this, we want to deliver it and we will try our very best to deliver that.' From the evaluation that we've undertaken of Dartmoor Farming Futures, one of the key things that they highlighted, to enhance their ownership of their scheme, was the involvement in the scheme design and focusing on a bottom-up approach.

Yes, and also a lot of the farmers who were involved in the training for the vegetation assessments, they went out and they were shown exactly which plants are the indicator species, how many there should be there and what condition they should be in. And once they saw this and understood that, they sort of said, 'Oh, so that's what you're looking for. Now we understand; now we can keep an eye on this and make sure this is happening.' Whereas, when you were just giving the prescription of, 'You've got to graze this number of animals for these dates', they didn't know what was supposed to be happening—they were just doing what they were told to do, so, therefore, they didn't understand what they were trying to achieve.

Okay. And, in terms of monitoring outcomes, sometimes I think it's proven to be difficult to monitor agri-environment schemes and cross-compliance schemes and other requirements because there are a lot of farms out there and a lot of things are going on at any one time, and, I suppose, only a limited number of people who are doing the checking, as it were. But, from what you've said about the schemes you're involved in, there are some basic requirements that can be monitored perhaps more easily. Who do you think should be doing the monitoring? Should it be the land managers? Should it be third parties? If land managers, what lessons might have been learnt up to now in terms of the training that's required for that to be effective?

I think there can be different elements involved for monitoring. So, as Tracy was saying, we had our farmers involved in motioning and that had a massive impact on their understanding of the scheme. So, understanding and ownership were the two biggest things that have come out of Dartmoor Farming Futures—the impact on farmers' attitudes and behaviours. Their involvement in the monitoring, I think, has been really important. There were two elements: one was involving farmers in the monitoring of the SSSI condition. So, they received training on species to go and look at. They were asked, 'If you're going out to check your stock, take a quadrant out with you and go and do a habitat assessment.' That was fed in with Natural England and was accepted by Natural England, but we also have Natural England going out and doing their monitoring as well. It provides more information and more monitoring, but also helps farmers be involved and understand their agri-environment scheme.

We also had farmers in a separate trial area. Again, it had different impacts, but one of the approaches was also to do the landscape monitoring, or contract through the agri-environment payments to have someone else go and do that monitoring for them. That's proved slightly different in the response that it's had to farmers, because they're not directly involved with that monitoring. So, in Haytor and Bagtor, one of our pilot areas, they were asked to contract second and third parties to go out and monitor, and it's something they haven't done as much. The thoughts are, and the results from the evaluation also suggest, that that hasn't helped to foster their understanding and ownership into the agri-environment scheme because they're just not part of it. So, we need to think about what elements can help build up ownership within these schemes, because if you're directly involved with something you feel like you're part of it. It's how much is passed on to somebody else, but obviously we need to have elements of other people being involved because, again, it is a scheme, it's public money, and these payments need to be going to the correct places. But it's also about making sure that those people who are delivering a scheme feel like they're part of the scheme and can deliver it and understand how to deliver it. 

11:30

The training that the commoners received was literally to go out for three of four hours to be shown how to do the vegetation assessments. It wasn't days of training or anything. There's a refresher course available to everybody once a year if they want to take it. So, it's being done very simply. The results that are coming back from those assessments are the results that Natural England would expect for those habitats. But, obviously, you do need a third party to do some of it as well, because you cannot have a system that is being paid public money being totally self-assessed, because, obviously, that is open to abuse.

I'm from the Burren LIFE and the AranLIFE. We're slightly different in that the farmers put in an expression of interest that they wanted to work with the programme first of all. So, not everybody got in. We had a selection criteria to get them in. For the AranLIFE, we had a project team, two people working on the ground and one person basically working in the office drawing up the farm plans, and we also did the check-ups as well. Therefore, we could see the changes and monitor it as well. Of 200 farmers in the Aran Islands, 67 farmers worked with us. A three-person team managed it and did all the inspections and the monitoring, which worked very well, but that was a LIFE programme. It's probably the ideal situation.

The Burren, which has moved on with numbers—they started as a LIFE project and went up from maybe 20 farmers to 200, maybe now to 300 or 400. They hire planners to come in and do the assessment and the scoring system. The farmer hires the planner to come in and then there's an assessment of the planners to make sure there's some quality control over it. Then that scoring system forms the basis of the monitoring programme, more or less, and it's an excellent monitoring programme, because if you see graphs of it you can see the movement over the years that has happened. But that is by paid consultants that the farmer pays, but then there's a quality assessment over it. So, although we went down a trial of just the one year of getting the farmers to look at the score, we're not far enough down that level.

For the next programme that we intend to apply to look at the administration of the costs, we're looking at changing our view. If it takes me a whole day to walk over a farm just to view it, can technology such as drone technology help to do that and shorten the time length of it to reduce the administration cost of it? Can we train farmers to do the drone technology so that it's in their own area and not 'Government eye in the sky' type of approach? That's for our next project. So, we've looked at some of the problems that were with, say, the high administration costs, because ours was a LIFE programme. How do we narrow them down yet still produce the outcomes? Our next project's to try that.

I just wanted to come back to the land management and the engagement of land managers, and I think you said that it's important that they feel part of it. Of course, one of the more contentious proposals for Wales is that payments can be made to not only active farmers but any landowners here in Wales. So, clearly, there's potentially an issue there where a landowner submits and agrees outcomes and the ownership and the passion doesn't necessarily transfer down to tenants—or the money, more importantly for some, maybe, but there we are. So, have you come across any kinds of issues in that respect? Probably not, but I'm just wondering what kinds of issues you think that would present.

For Ireland, that's not really an issue, because we don't have that tenant structure. We do have a conacre structure where people take it for one year. The only thing that we would have—and it's a bit embarrassing for me standing there, because the farmers at the conferences that we had there recently would talk about, 'I love these outcome-based schemes, you get paid for the work you do. Other schemes, people got paid for doing nothing', which is a bit embarrassing when the department are there at your conference as well, but that was the view of the outcome, the view of farmers—that, if they could see people doing work and getting paid for that work that they did, they thought it was a much better project, which I found quite interesting. It was those people who were doing nothing but still getting large payments—whether that comes into that, the people who are inactive farmers, things are not—.

11:35

It doesn't affect ours on the actual Farming Futures, but I know that there are places where you've got people who own relatively small farms that they're not farming themselves, they've signed up to environmental agreements, and then they're expecting to let the grass to somebody and them deliver these agreements. And a lot of them—it's not happening, and they're still picking up the payments. There's a lot of bad feeling over it, and it's very difficult—how do you—? Yes, it is a real problem.

Thank you, Chair. I think it follows on, really, from that, but in your experience, how do you think that payment increments should be structured to reward outcomes fairly and provide incentives for land managers to sign up to the schemes?

Well, looking at it from the moorland point of view where, with a lot of it, you've got very slow change. To me—at the moment, we're signed into 10-year agreements. Well, if you had a 10-year agreement, I think you'd need to have some sort of management payment that was paying you for the management you are doing. But you could have that assessed, say, every three years, where if you have achieved where you're supposed to be going, depending on what level you've got it to, you could have an increased payment, and perhaps do that at year 3, year 6. That would be something that I would have thought is a potential idea. It's not something we've looked at, but that's what we've been discussing.

The payment structure, of course, is based a lot on income forgone and cost incurred, which does make it quite difficult.

The other thing—particularly, there have been a couple trials. The results-based agri-environment pilot scheme was a programme that looked in Leitrim and the Shannon callows in Ireland at an outcome-based scheme, and when they looked at costing, it was: what was the alternative? And for Leitrim, it was conifer plantations. So, therefore, your price had to be at a level that could compete with conifer plantations. And if you have a very low suckler heard with a low stocking rate, which is typical of these high nature-value areas, then the income per hectare is quite low in them. So, even compensating the farmer for just the level of suckler cows still doesn't compete with conifer plantations, and that's a running issue in Ireland at the moment. So, that was some of the problems.

Some of the cost, it's nearly going back—. The way we looked at it, it was nearly going back to the science. We know that if you have a species-rich grassland, then the output of it is quite low. We know that if you put fertilizer on it, you're going to likely get an increase in production, you're going to get higher stocking rates and, theoretically, you can increase your value. So, therefore, if you're halfway between the really good one and the other one, you're down that—it's sort of a sliding scale.

It's quite difficult to build up purely on costs alone, because you're talking about a low-income system—suckler cows. If you've got one cow per hectare, or half a cow per hectare, as in the islands, and that's bringing in €500 a year, certainly, per hectare, it's still quite low. So, coming up with a good payment system—it is possible, but it's probably one of the more difficult things to implement. And the expectation, and that varies a wee bit. If I'm working with farmers in the east who traditionally have got €500 or €600 per hectare on their single farm payment or their past payments, you need to offer an awful lot for them, even though the outcome might not be great. If I'm working with a small farmer in the Aran Islands who's been getting €50 or €100 per hectare and suddenly there's a scheme that's offering €200 per hectare, they think that's great, whereas another area wouldn't look at that. Which maybe brings us back to the tendering situation, but the incremental payments—it's not impossible, but, of course, you are bound within the EU rules of income forgone and cost incurred, so that makes it difficult, and competing with the likes of forestry and other land-based projects. 

Thanks. The Welsh Government's plan is to move to outcome-based schemes and the timescale that they've suggested is to have the new schemes in place by 2025. So, do you think that timescale is sufficient to allow a smooth transition to the proposed outcomes-based approach, and should there be more pilot schemes developed during the transition?

11:40

I would have thought it's vital to have more pilot schemes, because—. That pilot I'm talking about is very specific to moorland common land. Anything like that needs to be widened to see how it works on different areas, and I think the pilot schemes are extremely important. I think that, also, moving to an outcomes-based scheme, there will be a certain amount of momentum to it, that once it starts and you get people involved in it, you don't want to spend too long over the transition, and I would have thought that the timescales that you've put down are reasonable. Because if you get people involved at the start, they don't want to then not be able to do anything for 10 years, because then they're just going to lose interest and go a different way. I find it very difficult to picture how it would happen, but I would have thought that that does sound like a reasonable timescale.

I just feel, supporting what Tracy said a little bit, it's being careful about the amount of time we spend in this transition period, because it also doesn't help with uncertainty for farmers, and they need to be able to understand what's going to be going on in the next five or 10 years, and what they're going to be working towards in their management plan and business plan for their farm. So, we need to be careful. Yes, there might be a time period where we do need to make sure we get these schemes right, but we also don't want to extend that transition period so it doesn't help to foster farmers' encouragement to be involved in these schemes and make them worry about what the future of farming is going to look like for them as well. So, I think it's looking at the timescale from both points of view and just being careful of that. We might need to make sure we get the timing right in how long we're planning for this, but at the same time we don't want to make it too long for farmers.

The pilot scheme is ideal, because you can see how it would address all the issues, maybe trying to put it out to the wider country within a time, but having said that, I worked as an adviser in the north of Ireland for a long time, where, as I say, there was a general agri-environment scheme that was rolled out quite easily. I think there were 5,000 applications put in in one year. It had four different grasslands. It had improved grassland, semi-improved, what are called 'semi-natural', and species-rich. So, it had four different grassland types. It's not a wild leap to turn that into outcome-based, because it's partly outcome-based altogether, yet it was administered successfully. With a bit of tinkering, it could still be an outcome-based scheme where you're rewarding the farmers with the best habitat, based on what's growing there. If you impose some concrete actions or capital works to do with that, you could still implement a wider scheme that was based on an outcome base, but could still be rolled out in the whole country. But if you want specific areas, maybe where you've got chough or curlew or something like that, then ideally pilot schemes to begin with, to address how you cope with those things would be my view. It's not impossible to widen the scheme out in an area, but it has to be more simple, outcome-based, is what I would say.

Some people have expressed concern about the capacity to be able to deal with getting all these schemes up and running within this timescale. You've talked about pilots. But, obviously, there are lots of individual farm contracts to sort out here, and there are workforce-related issues and implications that that has. I mean, from your experience in the different projects that you've been involved in, they sound quite intensive, to be honest, in terms of the discussions that have been taking place in order to establish those projects. Can we do a Wales-wide type of approach within this timescale, given the other uncertainty that's there in the background? Personally, I'm not particularly confident we'll be able to achieve it.

It goes back to what outcomes you want. It has been already shown, proven, that the simpler things are, the less the outcome will be. So, if you want a scheme that's just rolled out everywhere with minimum input, an 'applies-on-everythingLIFE', you're not going to get as strong an output, so you have to come to some way in between. 

The approach that I mentioned earlier about an agri-environment scheme that had different things still requires somebody visiting, looking at the farm—whether we move to farmers doing that and then assessing what they do—.  Of course, we have single farm payment at the moment, where the farmer puts an application form in on their own, they assess what areas are eligible—. To an extent it was outcome-based because, if you had too much scrub, farmers knew to get rid of it very quickly and there was an outcome very quickly on it. If you're wanting a wider scheme, yes it's going to be a more simplistic scheme, but it still should have—and then more targeted. 

One possibility—and it's the way of a lot of things—is this sort of tiered approach, so you have this wider scheme, as pillar 1 is at the moment, and then it narrows up into the more intensive or extensive, and the more ecological interest areas are wider, and people start putting in for those. That's probably the most logical way of doing that on a wider scale. But if you want to monitor good outcomes and Ireland's on a smaller scale—we're trying to reduce our administration costs, but it's still a small area. But, as a society, if we want outcomes then, yes, we have to put in a certain level. We just can't expect to roll out a scheme that produces everything but has minimal input into it.

11:45

I think it's also just having a look at—. For Farming Futures, we had a facilitator, and he helped to bring the pilot project together and bring everybody who was working on the scheme together, and I think we would have struggled to get the scheme to work without having the role of a facilitator. And I think that, if we're looking at going ahead and looking at these sorts of schemes and rolling them out across Wales—. Farming Futures have looked at upland commons. We've already got that element of working together, and I think the chances are that it's likely that to be able to take a scheme like this forward, it's going to be resource intensive at the beginning, and then you will have that element where you've got to bring people together. In the future, as the scheme settles down and people understand what they're working towards, it will probably settle in, the Farming Futures people understand what they're doing and the scheme is just rolling on, but we will have that resource-intensive phase, where you are getting everyone to understand that new scheme as well.

Can I thank you for coming along? You've been very helpful to this committee in terms of our investigation. You'll be sent a transcript of this. I would urge you to check it, not because it's likely to be wrong, but if you're anything like me and you move around while you're talking, it occasionally misses words, so please check that none of the words have been missed. Thank you very much for coming along. 

5. Papurau i’w nodi
5. Paper(s) to note

Can I now take us on to papers to note? The Cabinet Secretary has been invited to attend a future meeting to discuss the Bill. We haven't had a response yet, so I will, if everyone is agreed, write to the Cabinet Secretary to invite her.

We have a paper to note from Coed Cadw Woodland Trust. 

6. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o'r cyfarfod
6. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer eitemau 7 ac 8 yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the meeting for items 7 and 8 in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

And now I move the motion under Standing Order 17.42 to resolve to exclude the public from the meeting for items 7 and 8.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:48.

Motion agreed.

The public part of the meeting ended at 11:48.

Archwilio Cynulliad Cenedlaethol Cymru