Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith

Climate Change, Environment, and Infrastructure Committee

21/03/2024

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Huw Irranca-Davies
Janet Finch-Saunders
Jenny Rathbone
Llyr Gruffydd Cadeirydd y Pwyllgor
Committee Chair

Y rhai eraill a oedd yn bresennol

Others in Attendance

Aled Jones NFU Cymru
NFU Cymru
Alex Phillips Cyswllt Amgylchedd Cymru
Wales Environment Link
Andrew Tuddenham Cymdeithas y Pridd
Soil Association
Arfon Williams RSPB
RSPB
Dr Ludivine Petetin Prifysgol Caerdydd
Cardiff University
Elin Jenkins Undeb Amaethwyr Cymru
Farmers Union of Wales
Gareth Parry Undeb Amaethwyr Cymru
Farmers Union of Wales
George Dunn Cymdeithas y Ffermwyr Tenant
Tenant Farmers Association
Professor Iain Donnison Sefydliad y Gwyddorau Biolegol, Amgylcheddol a Gwledig
Institute of Biological, Environmental and Rural Sciences
Rachel Lewis-Davies NFU Cymru
NFU Cymru
Rhys Evans Rhwydwaith Ffermio er Lles Natur
Nature Friendly Farming Network

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Elizabeth Wilkinson Ail Glerc
Second Clerk
Lukas Evans Santos Dirprwy Glerc
Deputy Clerk
Marc Wyn Jones Clerc
Clerk
Masudah Ali Cynghorydd Cyfreithiol
Legal Adviser

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.

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:33.

The committee met in the Senedd and by video-conference.

The meeting began at 09:33.

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

Bore da i chi i gyd, a chroeso i'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith yma yn Senedd Cymru. Croeso i Aelodau i'r pwyllgor. Mae hwn yn gyfarfod sy'n cael ei gynnal mewn fformat hybrid, ac mi fydd yna rai tystion a rhai aelodau o'r pwyllgor yn ymuno â ni o bell. Ac ar wahân i'r addasiadau sy'n ymwneud â chynnal y trafodion mewn fformat hybrid, mae holl ofynion eraill o ran y Rheolau Sefydlog yn aros yn eu lle. Mae'r eitemau cyhoeddus sydd yn rhan o'r cyfarfod yma wrth gwrs yn cael eu darlledu'n fyw ar Senedd.tv, ac mi fydd yna gofnod o'r trafodion yn cael ei gyhoeddi yn ôl yr arfer. Mae e'n gyfarfod dwyieithog, felly mae croeso i chi gyfrannu ym mha bynnag iaith, ac mae yna ddarpariaeth cyfieithu ar y pryd ar gael o'r Gymraeg i'r Saesneg. Gaf i ofyn i gychwyn a oes unrhyw un ag unrhyw fuddiannau i'w datgan? Nac oes. Dyna ni. Iawn.

Good morning, everyone, and welcome to this meeting of the Climate Change, Environment and Infrastructure Committee here at Senedd Cymru, the Welsh Parliament. Welcome, Members, to committee. This is a meeting being held in a hybrid format, and some witnesses and committee members will be joining us remotely. And aside from the adaptations relating to conducting proceedings in a hybrid format, all other Standing Order requirements remain in place. The public items of this meeting are being broadcast live on Senedd.tv, and a Record of Proceedings will be published as usual. It's a bilingual meeting, so you're welcome to contribute in whichever language you wish to, and simultaneous translation is available from Welsh to English. Do any Members have any declarations of interest to make? I see that there are none. There we are. Fine.

2. Cynigion Llywodraeth Cymru ar gyfer Cynllun Ffermio Cynaliadwy (SFS): sesiwn dystiolaeth gyda chynrychiolwyr ffermio
2. Welsh Government’s proposals for a Sustainable Farming Scheme (SFS): evidence session with farming representatives

Ymlaen a ni, felly, i gychwyn ar y gwaith. Y bore yma, mi fyddwn ni'n cynnal sesiynau tystiolaeth yn ymwneud â chynigion Llywodraeth Cymru ar gyfer y cynllun ffermio cynaliadwy, o'r safbwynt, wrth gwrs, y maen nhw'n berthnasol i gylch gwaith, neu gylch gorchwyl, y pwyllgor yma. Dwi'n croesawu'n gynnes iawn y panel cyntaf, sy'n gynrychiolwyr o'r sector amaethyddol: Aled Jones, llywydd NFU Cymru—croeso, Aled; Rachel Lewis-Davies, cynghorydd cenedlaethol yr amgylchedd a defnydd tir gydag NFU Cymru; Gareth Parry, dirprwy bennaeth polisi, Undeb Amaethwyr Cymru; ac Elin Jenkins, sy'n swyddog polisi gydag Undeb Amaethwyr Cymru hefyd. Ac yn ymuno â ni arlein mae George Dunn, prif weithredwr Cymdeithas y Ffermwyr Tenant. Croeso i'r pump ohonoch chi. Mae gennym ni rhyw awr a chwarter ar gyfer y sesiwn gyntaf yma. Felly, awn ni'n syth i gwestiynau, ac fe wnaf i wahodd Janet Finch-Saunders i gychwyn y sesiwn.

We'll continue, therefore, with our agenda items. This morning, we will be holding evidence sessions in relation to the Welsh Government’s proposals for the sustainable farming scheme, insofar, of course, as they relate to the committee's remit. I warmly welcome our first panel of witnesses, who are representatives of the farming sector. We've got Aled Jones, president of the National Farmers Union Cymru; Rachel Lewis-Davies, national environment and land use adviser with NFU Cymru; Gareth Parry, deputy head of policy at the Farmers Union of Wales; and Elin Jenkins, who is a policy officer with the Farmers Union of Wales also. And joining us online, we have George Dunn, chief executive of the Tenant Farmers Association. A warm welcome to the five of you. We have an hour and a quarter or so for this first evidence session. So, we'll go straight to questions, and I'll invite Janet Finch-Saunders to start the session.

Good morning and welcome. We know that the Welsh Government has been consulting on this scheme for years, and has carried out co-design exercises and has pulled together some specialist working groups. We know, as politicians, that the farmers are not happy and you want certainty now going forward. What is not working in terms of process? 

09:35

Okay. Yes, there's been a lot of talk of co-design, so how have we come to where we are now? That's the question in essence. Aled.

Thank you, Janet, for the question. Can I just say I don't believe we would be in this position we are today if there had been true co-design? I say that quite sincerely. Co-designing actually means that you will work cohesively throughout the whole process, design the consultations and the proposals likewise. So, what we've seen in the last few months, probably, is there's been a huge, huge outpouring of emotion, frustration, fear as well. We didn't need to be in this position. I say that quite clearly. Had we been part of the process in the design of the proposals and the co-design, I think we'd be in a far better position than we are at the moment. 

I would also probably remark about the underlying other issues ongoing in the industry at the moment. I mentioned TB, which has been ongoing for over 20 years. Those farms caught up in the mental and economic turmoil that TB brings. We're having to live through the regulations on water quality, which has been quite onerous for many, many farms, considering as well that there are areas of Wales that have never seen any cases of pollution. So, you have that build-up of regulation compliance, which is weighing very heavily upon the industry. 

And then you turn up with a consultation with an impact assessment that demonstrates, really, the huge economic damage that could ensue if these proposals, as they are—I say that quite clearly—would affect the industry. So, what we've seen outside the Senedd, what we've seen in other locations throughout Wales, has been an indication of that frustration. So, I would say there has to be a reset. If there is true engagement, then I hope this will not be the way forward as we have seen it recently. 

Diolch. Gareth, and then I'll come back to Rachel. 

Diolch yn fawr, Cadeirydd. Thanks for the question, Janet. I just want to add to what Aled has already referred to there, really. There's a sense that ever since the first consultation in 2018, we have been calling for economic impact assessments to take place, and what we have found in this final stage of consultation is, in fact, that we are repeating a number of concerns and comments that we have made since the beginning. So, I think in light of the economic impact assessment that we have now seen in more recent months, it is no wonder that the strength of feeling has become much more apparent now than in previous years, because it's only actually now in this final consultation that some detail has come to light in terms of what exactly farmers will have to do on-farm to be part of this scheme. That type of detail has been absent in the past, so it's very much come to a head recently and, of course, we need to consider the time pressures and the timescales that we're currently working with, moving forward.

Okay, diolch. I'll go to Rachel and then I'll come to George. Rachel. 

My point is very quick. We need to recognise that in this most recent consultation, 'Keeping farmers farming', there have also been fundamental shifts from previous consultations, and the example I would draw the committee's attention to is, despite previous commitments time and time again, the payment methodology for the proposed sustainable farming scheme would go beyond a cost incurred, income forgone approach. In this latest final consultation, we're told that it's going to be cost incurred, income forgone, so it will bring in no income, no margin for those farm businesses, and so heightening people's concerns that this is not going to provide the level of stability that farm businesses need to replace the basic payment scheme. So, that's an added concern.

Indeed, and we'll drill down into that later on. Okay, George. 

Thank you, Chair, and again thank you for accommodating me remotely this morning. We in the TFA have obviously been trying to add value to the process in terms of the impact on those who don't own the land that they farm, so my colleagues in the NFU and FUW have been taking an understandably more wide-scale approach to the consultation, but we've been focusing particularly on the impact for tenants and common land, for example. And I think there's been a danger, in terms of the question that was asked, that we confuse activity with progress. There's no doubt that we've had a lot of dialogue with Welsh Government, both at ministerial and at official level, but there's been a sense that we haven't made much progress in those dialogue sessions.

So, we've made some headline progress. For the tenanted sector particularly, the Welsh Government understood that the 10 per cent tree cover couldn't apply to tenanted land, so we were very pleased that the Welsh Government recognised that early last year. And we had some changes to the Agriculture (Wales) Act 2023, which gave tenants more rights to be able to object to the landlord's unreasonable refusal. But we've had two working groups. We've had the working group on tenancies and the working group on common land, and I think very quickly Welsh Government realised that a lot of the stuff was in the 'too difficult' pile, and didn't really have the resource or the capacity to deal with those issues appropriately. So I think, from our perspective, there's been a lot of dialogue, but not that much progress, because I think Welsh Government lack the capacity to deal with the issues we were talking about.

09:40

Okay, there we are. Thank you. Janet, do you want to come back?

Yes, I'll just come back on those comments. For me, I feel that whilst this inquiry now that we're doing is more about the sustainable farming scheme, I feel this did trigger, certainly from the nitrate vulnerable zones, and then of course the bovine TB, and this seems to be the catalyst now that has caused the anger. Do you believe that we need another consultation on this, and/or further specialist input from the working group? I'm a great believer—. I come from a business industry myself. Sometimes we—the private sector, farmers—can actually be really good at policy. How do you think we should approach this now? If you were in Government yourselves, how would you now be dealing with the fact that we've got so much angst in our farming community across Wales? We know about the TB, we know about the NVZs. Because this is just a sustainable farming scheme inquiry, do you believe that the rural affairs committee should be doing a piece of work? Because I just find that there are lots of inquiries and lots of documents produced in Welsh Government, but right now we need this support for you. We don't want farmers having mental health issues or worrying about their future. How would you address it? Aled, whoever. Because I'm really concerned that, if we go back to the drawing board—

Thank you, Janet. I think you've made the point. Aled, you mentioned a reset earlier. What does that mean, effectively, isn't it?

Can I just remind the committee that, in 2015, Edwina Hart commissioned a report on the impact of regulations? Good regulations are okay. Now, that report, Gareth Williams's report, was presented in 2015. I think we probably need to reset. Regardless of the actual policies within TB and NVZs, for example, there needs to be a review of the cumulative impact of regulations and compliance, which is weighing down on the industry. I'm not saying take away regulation, but it has to be proportionate and targeted in such a way.

Now, we are—and this is factual now—there's a huge increase in people who are expressing requirements of need for consultation one to one on mental health issues. This is serious, and if we are sincere and considerate of people—. Now, these are people, these are mothers and fathers, brothers and sisters, who are going through some very traumatic experiences, so I think there has to be an approach where we review the cumulative impacts.

And then, turning to the proposals for the scheme, specifically, we've long been clear that we cannot begin this transition to future policy, to the sustainable farming scheme, until we have absolute confidence that it will deliver the same level of stability to farm businesses that the basic payment scheme does currently, and this requires far more assessment of the impact on the farming community, on rural communities, and also on the supply chain.

I think that structure, the sustainable farming scheme, the principle of a universal baseline payment in return for the delivery of universal actions is one that is workable—it is broadly supported—but universal has to mean universal, for everyone, and, clearly, there's a range of universal actions and some of the scheme rules that are preventing that universal access currently. There are issues, as George has said, for tenants, on common land, and on sites of special scientific interest—it's not universal. That support is also contingent on the universal baseline payment delivering the same level of stability that the BPS does currently. So, these are critical things that have to be got right before we can move forward, and the confidence of the industry now is at a low ebb, I'm afraid.

09:45

Okay. Thank you. Elin, and then I'll come to George.

Just to labour the point that Aled said about mental health, I think it was on the steps of the Senedd a few weeks ago that we heard the DPJ Foundation say quite shockingly that there was a 70 per cent increase in their referrals—not phone calls, referrals—for mental health support in the month of February this year, compared with last year. Seventy per cent more referrals, that is what we're looking at. 

I'd also like to labour the point as well about the changes going on in the Senedd, and leadership, and that we need clear direction from our new rural affairs Minister—or, hopefully, it'll be a new rural affairs Minister. We need to see focused stakeholder groups with farming unions, and farming representatives specifically, because no matter what happens, or what's required outside of that, the focus is on our farmers, and we need farmers to be involved in those discussions, and what is actually achievable, and realistically achievable.

Okay. Diolch yn fawr. We will need to move on, because otherwise we're not going to get halfway through. I've got George, I've got Gareth, and Aled wanted to come back on this. So, the three of you, briefly, if you may. George first.

Thanks, Chair. I think the point I would like to make is I think we do need a pause. We do need to pause and refocus what we're doing. Because the earlier consultations that we had, the earlier discussions that we had, were about both sides of the equation—the really important environmental issues, as well as the business resilience issues. There's very little within this scheme on the business resilience stuff. And bearing in mind that the basic payment scheme is not the real evil that it's being made out to be; it is the difference for many farm businesses in Wales between profit and loss. Many of those farm businesses are already delivering high-value outputs for the environment, for climate change, for water quality, for air quality, for animal welfare, doing the right thing by those things, and those businesses feel very much in jeopardy now with the move towards this new scheme. So, I think we do need to have a pause, and we do need to build in business resilience. Our members, NFU members and FUW members understand the issues around the environment and climate change that we need to address, but we also need to address food security and business resilience, otherwise we'll just offshore all of those issues. So, we need a pause, we need a proper co-design, as Aled said, and we can do that, I would suggest, over the next year, rather than having to rush something through for January.

Diolch, Gadeirydd. I just want to highlight, really—this is a point that we made in our consultation response, and in the subsequent press release, actually—that there is a seriously concerning amount of work that needs to be done on this scheme within the timescales that we are currently presented with. As Elin has alluded to, we want to see small focused stakeholder groups to identify and have the ability to discuss individual aspects of this scheme with the Welsh Government over the coming months—the timeliness of this is absolutely crucial—however, we cannot exclude the possibility of having to extend the BPS at the current rates for at least next year, if the scheme is not ready by the end of this year. And the Minister—the current Minister, at least—has consistently said that the scheme would not be introduced until it is ready, and we really, really need to consistently remind the Government of that, really. Because we cannot see the introduction of a scheme that is not ready and follow, I must say, a similar system as the one we saw with the Habitat Wales scheme, where the scheme was very much not ready when it was introduced, and we are still seeing delays in contract application dates now, because of admin issues, et cetera. So, this scheme has got to be ready. If that means delaying things for the long-term good, then so be it.

Forgive me for coming back, but I just have to get it off my chest. There have been some hurtful, unhelpful comments made in the Chamber, here in the Senedd, which have questioned whether farmers are resistant to change, whether or not they are prepared to do their part on climate change, questioning whether or not they should be supported. This is an unhelpful narrative that has been hindering progress, and I just lay that in front of the committee.

09:50

Okay. Diolch, Aled. Diolch yn fawr. Okay, Janet, we'll move on to the next subject area, then.

Great, thank you. And thanks for your honesty and frankness, because that's what we need in this committee. So, NFU Cymru, you have said the universal baseline payment must go beyond costs incurred, income forgone and incentivise the proposed actions. How should farmers be rewarded while still addressing the environmental actions needed?

Thank you, Janet. We've always said that our vision is quite clear. You will only be able to deliver if you have viable farm businesses that are there, prepared to invest in the future. I think the underlying argument is that the universal layer has to underpin the whole industry. That underpinning underpins 233,000 people who are employed in food and drink processing throughout Wales. It's the largest employer. So, the fundamentals have to be there, paramountly. The income forgone methodology is fundamentally flawed; there's no fair reward, there is zero margin, there is zero stability and zero incentives. I will tell you quite clearly, if the industry is shown the incentives, the industry will demonstrate the outcomes as well. So, I think I will lay that in front of the committee, because this is a fundamental flaw, the income forgone, costs incurred.

Thanks, Janet. Just very briefly, within this consultation document, I won't repeat what Aled said with regard to the costs incurred, income forgone methodology, what's further concerning above that is this blue-sky thinking around social value. There's ERAMMP modelling reports on the social value of environmental goods, which provide a very broad spectrum of the possibility of these types of social value payments. However, the Welsh Government will say themselves that they have no clear idea as of yet as to how they hope to incorporate the social value payment into the methodology. Again, I refer back to the timescales that we're working with currently. However, further to that, we're well aware of the fact that sustainable food production is now included within the sustainable land management objectives, and yet there is no mention of any types of social value of the production of sustainable food, or any of the other contributions that Welsh agriculture makes to rural Wales in terms of social and cultural contributions. So, yes, there is that mention of a social value payment, which could provide some element of margin above the costs incurred, income forgone model, but as things currently stand, it's very much at a very early stage.

Just to expand on that to say that, in the agricultural industry in Wales, our farming family farms are the foundation of rural Wales. You mentioned there the cultural, social, our language. It can't be forgotten that 21 per cent, I believe, or a fifth of Wales lives under the poverty line, or how much Welsh agriculture actually supports businesses, the secondary and tertiary businesses in rural Wales, and which also extends into urban areas as well. I think it's absolutely heartbreaking to see the increased use of and dependency on foodbanks and stuff in Wales. Also to say, those secondary and tertiary businesses, they aren't small play. They extend from your electricians, plumbers, skilled work like that, but also to very much educated, higher level work, workers in employment such as your veterinary staff, staff nurses. There's a whole array of businesses that agriculture in Wales is the foundation of. And also, I think Aled mentioned the Welsh food and drink businesses; that's £17.3 billion of gross sales in Wales. That's a massive number. That has been recognised by Welsh Government, with funding in areas such as Pembrokeshire, with money going in to supporting the food industrial estate. The Welsh Government recognises that, but without agriculture, where is the produce going to go, or where are those factories going to have the produce to turn out and keep those factories going and so the jobs in rural Wales?

09:55

Very quickly from me, I just wanted to touch on that level playing field point. Farm businesses in Wales are not operating in a vacuum; we need to remain competitive with farmers in the rest of the UK and the EU. If you look at what's happened in Scotland, there's that commitment of 70 per cent direct support to underpin food production, and direct support is going to continue to be a feature of the payment regime in Northern Ireland. So, I think we have to bear that in mind in the development of a payment structure for the scheme.

Coming into that there could be an element of the United Kingdom Internal Market Act 2020 as well, and that's very important in terms of fair trade around the UK.

Indeed. You're right, yes, and that introduces a whole other discussion, I'm sure, but it's a point well made. We'll skip on, I think. Jenny, you wanted to come in on this subject area as well, I think; we'll come to you next.

Thank you. The first objective in the agriculture Act is to produce food and other goods in a sustainable manner, and one of the things we've got to do, as we change things, is to improve our food security. Rachel, you and I have had discussions on the need to increase the amount of fruit and veg since the fourth Senedd. The Soil Association argues that very small farms such as small-scale horticulture producers are unlikely to receive sufficient financial incentive from an area-based universal baseline payment model, so I wondered if you, collectively, could tell us how we attack this problem. Because this is really serious, given that we are unlikely to get these products coming from abroad, because of the climate emergency.

Thanks for that question, Jenny. I just want to touch on the revised scheme eligibility criteria that they're currently proposing, which actually reduces it to three eligible hectares or the 550 eligible hours. So, you could argue, in a sense, that, actually, this scheme would be more accessible for those smaller businesses. However, of course, if you look at the array of universal actions that are currently being presented, just to touch on a couple, there will be the requirement for every single farm business to do six modules of CPD every year—that's regardless of whether it's a 3 hectare horticulture business, for instance, or whether it is 300 hectare limited company. That basically paints every single farm, or any smallholding in Wales, really, with the same brush. You've also got the requirements for ponds and scrapes, for instance: any farm under 8 hectares having to have at least 0.1 hectares of ponds or scrapes on their land. So, there are these types of barriers within the universal layer of the scheme, which currently tries to address every single farm business as the same entity, in a sense. So, it just emphasises the point of the need for flexibility, doesn't it?

I think this idea of universal actions is a bit of a misnomer, because it very much depends on the type of farm you've got. You're not actually being required to do all 17 of these universal actions.

No, of course, depending on the type of land et cetera you have, but also, the examples that I've just provided were actually applied to all businesses.

I think on the wider point on horticulture, the extent to which this scheme is going to facilitate an increase in horticulture is highly questionable, isn't it? The detail around the optional action layer is extremely limited at this stage, what level of incentive there's going to be. But in terms of horticulture in Wales, we've seen a gradual decline—we've had many conversations, Jenny, I know, about how that could be increased. But I think the market is extremely difficult, isn't it? It is risky. There are some areas of Wales that are well placed to increase their capacity or increase the volume of horticulture crops, but that would have to be led by the market. I think there is a role for Government in perhaps underpinning, providing that security to farm businesses, through public procurement, for example. But Aled himself, actually, has been—. Well, I'll bring you in, Aled, because you've been a horticultural producer in the past, so you know just how precarious it is.

10:00

I think we've had several conversations over a number of years. I go back to the 1960s and 1970s when we used to grow a small area of vegetables, and we used to market them quite locally. We worked hard and it was very successful, but there came a time when we simply could not compete. Obviously, scale is essential. There are companies—fair play, we have a company in south-west Wales that has been quite progressive in this area—but there is a reason why only less than 3 per cent of Wales's land area is used for crops, and you compare that with England, where it's 30 per cent. Our strengths lie predominantly in our grassland areas. We are probably more favoured in that respect.

I go back to the sustainable land management objectives. They are to be delivered together, not in isolation. And when you consider the well-being of future generations and being a globally responsible nation as well, I always think the issue of global food security, as well as climate change—. Climate change is not an issue for Wales alone—we have to contribute. Offshoring any of our carbon responsibilities elsewhere would, in my own opinion, be the wrong thing to do. Let's focus on our strengths, make sure that we enhance the abilities that we have to look after our grassland, our soils and our hedgerows throughout Wales. We have 106,000 km of hedgerows in Wales; they would take you to New Zealand and back twice, by the way. Those are the sorts of things that we can deliver upon. Our rich carbon soils, as well—we can do better, probably. And I think that is the issue of global food security that we can address, to a certain extent, and come back to our strengths, fundamentally.

You were producing vegetables in the 1960s and 1970s. Since then, hydroponics have really taken off, and yet I don't think I've seen any mention of hydroponics at all in any of the submissions of evidence that we have in front of us. That has to be part of the package, doesn't it, particularly for higher value vegetables? Simply relying on stuff to come from the other side of England means that they're not fresh in the way that we want this produce to be, for our children and for our hospitals and everything else. So, I still am not convinced that we've got this right.

What I would say is that it'll be market led, to be honest with you. We can't drive the market forward. I think agriculture will respond to market signals. But the cut-throat nature of food production will mean that scale is essential. We don't have the labour availabilities that certain areas do have and I think that's one of the reasons why we haven't seen the progression, probably, in vegetable growing here in Wales.

I'll move on, if I may, if that's okay. Diolch. We've had some evidence—the Soil Association, Nature Friendly Farming Network and others have been advocating moving to a more results-based approach to payments, rather than actions, when it comes to habitats. So, I'd be interested to know what you feel about that. Gareth.

Diolch, Gadeirydd. From an FUW perspective, there is certainly potential to use a system of results-based payments for improvements in terms of habitat outcomes, for instance. We can learn from similar models that are currently being used in parts of Ireland and Europe, et cetera. However, in the context of the payment methodology that we've just been discussing, we have to consider the fact that, in these countries where results-based schemes are being operated, those farmers are currently receiving a direct payment, a basic payment scheme payment, some countries are receiving a less favoured area payment, then they're receiving an agri-environment scheme payment, and then they're receiving their results-based payment on top of that. So, it's very much the cherry on top of the cake, as opposed to the fundamental ingredients, if you want to put it like that. So, there's definitely opportunity to incorporate some types of results-based approach to the options and the collaborative layers of the scheme in future. There is definitely going to be a lot of work involved in developing such a system and trials, et cetera, et cetera, but we would be opposed to including something like that in the universal layer of the scheme.

10:05

There's an inherent volatility around them, isn't there, because they're results based. Some of those results may not be delivered, actually. You're dealing with complex biological systems, climate, and so those outcomes that the Government is seeking may not be achieved as a result of factors completely beyond the control of the farmer themselves. So, they have to operate above a solid foundation in the first instance. That's the model in the rest of the EU.

Okay. Some clear messages there. Diolch yn fawr. We'll move on to our next subject area. Jenny, I think you're going to lead us on this one.

One of the things that has caused quite a lot of comment is the proposal for 10 per cent tree cover. It meets the Daily Mirror test, it's easy to understand that concept. So, why is it, do you think, so difficult for all farms, wherever they're located, to meet 10 per cent tree cover, given their value for providing shelter to animals, as well as biodiversity increasing? Who'd like to go first? 

Thanks, Jenny. I think there's a real issue here, because the 10 per cent tree cover idea stems from the Climate Change Committee analysis about the extent to which we need to increase our tree cover, principally for carbon reasons. Actually, as Aled has said already, our strengths in Wales are around our grasslands, which are already storing vast amounts of carbon, sequestering carbon on a daily basis. Many of our members feel scapegoated by this 10 per cent tree cover issue, because they feel that they are being required to do something on their land that is going to deal with the carbon emissions from the 12 per cent of land that is urban within Wales, which is delivering 88 per cent of the carbon emissions for Wales. So, I think we need to value what Welsh farmers are already doing for carbon, both through storing and sequestration.

Of course, as I said earlier, tenant farmers are not allowed to plant trees on their land. Most trees will be reserved to the landlords, so it's right that the Welsh Government has already made that change for tenant farmers, but we've also got other types of farmers who won't be able to plant trees either. And we are talking about, for the rest of the farming community, taking out a considerable amount of productive agricultural land for dubious environmental and climate change benefits, in my view. So, before we take such precipitous action, we need to really understand what it is we want to achieve and whether what we will do in this 10 per cent tree cover issue will make the problem worse, not better.

However, we have a major issue with the potential for flooding. It hasn't stopped raining since November, and it's also about trees as flood mitigation, so I wondered if the others could bear that in mind in their answers.

Thank you, Jenny. It's a shame that this consultation has been circled around the 10 per cent mandatory tree requirement. It is a shame, to be honest with you. It has taken away a lot of the good arguments. We presented a document back in 2019, 'Growing Together', a strategy for growing trees. We said quite clearly there is a role for trees, fundamentally. It's the right tree in the right place for the right reason. I've repeated that so many times, it's unbelievable. There are people living in the middle of Newport that can understand this argument.

We've fundamentally said quite that clearly climate change is an issue. Within our net-zero ambition, which was unveiled in January 2019, we said very clearly that we would not allow an erosion of our food production capacity to be allowed within a net-zero ambition. We said there are three pillars of addressing climate change. There is the productivity element, doing more for less with our resources, making sure that our inputs, good farming methodology, will deliver on that. There's the investment in the environment and sequestration that has to be part of those three pillars. And the other one, of course, is renewable energy generation. Bringing all three of them together and not allowing food production land to be taken out of production is a fundamental argument within our ambition.

10:10

Sorry, I'm going back to the point about trees and flooding. The wrong tree in the wrong place can also cause flooding. Trees can cause issues with blocking rivers and so on, and a very close friend has had to move home because of this. So, there is that importance of the right tree in the right place, no matter where you are in Wales. And, again, Aled's taken the words out of my mouth in saying that it's the importance of the right tree in the right place, and I 100 per cent support what he said.

So, do you think, because we've got the one-size-fits-all approach to this, these universal actions, everybody has to do it? Obviously, Dr Petetin has said that one-size-fits-all may not be the right approach. Do you think that might be a way of addressing the need to plant more trees?

Yes, to lead on from Jenny, I think we want to be clear: we are not anti tree; we are anti 10 per cent mandatory trees across every farm in Wales. The co-design process itself identified that, I think, for 57 per cent of farmers who participated in that co-design process, the 10 per cent trees seemed a realistic ask. But then there's 43 per cent for which it's not, so pitching it in the universal layer seems bizarre on that basis, because there was only a slight majority that were able to meet that 10 per cent.

And I think there are other opportunities for sequestration. I agree with the comment that has been made—we have to do more to understand the carbon stocks that we're already managing on Welsh farms, and we have to have that science panel to explore the range of options so that we can all contribute but in different ways. So, that flexibility needs to be there, because if you're a farm in a coastal area or in an upland area, or if you're a farm that's a tenant farmer, there's a range of reasons. If you're a dairy farmer looking to maximise your spreadable area for nitrate vulnerable zone rules, you are not going to be able to provide that land and lock it up into trees in perpetuity.

And that brings me on to the point I wanted to make around incentives. The consultation was very, very weak. This is a change in land use in perpetuity—that farmers will never be able to have that land back for agricultural production, which is currently used for their livelihoods. The incentives, or the allusion to incentives, in the consultation was very, very weak. So, there was reference to capital support, but not perhaps in all cases, and there may be support—only 'may be'—for 12 years. Now, that's a big ask—that's a big ask for somebody who is handing over this land to trees in perpetuity, particularly where it's not deriving a timber crop for commercial timber.

And I think the final point I want to make is around the Welsh Government's application of additionality, only paying additionality, and how that's being applied in the instance of SSSI where it is not prepared and where the Government is not proposing to pay the habitat maintenance element of the universal baseline payment because it believes that the SSSI is a regulatory requirement. Well, in 2030, when we've got 10 per cent trees on Welsh farms, those trees will be covered themselves by regulation, by tree felling regulations, so we could find ourselves in a position where we have done exactly what the Government has asked but the commitment in terms of supporting that change just diminishes overnight. So, I think that's a really important point. If the Government wants this, we need strong incentives and cast-iron guarantees, and we also need to recognise that every farm is different and starting the journey to net zero from a different position.

Yes, sorry.

Sorry, Jenny, Huw wants to come in. I'll then allow Jenny to make a comment and then I'll bring Gareth in, just to wrap up this area.

Sorry, Chair.

Thank you, Chair, and it's only a brief point. I'm really taken with the idea of alternative carbon sink mechanisms and particularly within soil and grassland—very taken with that—and I think there's work to do around the evidence on that and so on, and it does lend itself to a Welsh style of farming in a lot of areas. And then you mentioned dairy. So, where do we go on dairy with soil and also grassland as a carbon sink, when we know that there are very good examples of dairy farming, with pasture land with cows grazing, and then we've had a horrendous winter, we're still having bad weather at the moment, we have maize growing, stubble, no winter cover crops and so on? That's doing nothing either for the soil as a carbon sink or the quality of the soil, or, frankly, the river quality and so on. But, more importantly, to come back to that carbon sink, well, there's no grass on there, there's no winter cover. So, does that get dealt with through SFS or does that get dealt with through regulatory baseline—what?

10:15

Can we just take Jenny's comment as well, because I am conscious of the time?

Okay. I just wanted to remind Rachel and everybody else that, obviously, orchards are not deemed to be trees in perpetuity, and I just wondered if farmers have considered that as a way of meeting a 10 per cent tree cover and also producing fruit, because the different regulations that apply to that need to be borne in mind?

But I wanted to also just remind you of the additional point I made, which is, is it that we should be not having a one-size-fits-all approach to this and lowland and upland possibly having a different approach? Presumably, none of us are denying the recommendations from the Climate Change Committee that we do need to grow an awful lot more trees.

So, Gareth firstly then, and I'll come to Aled then to address the dairy and the carbon issues as well, and maybe orchards as well.

Diolch, Cadeirydd. Just very briefly, I think, Huw, you've hit the nail on the head in the sense that all farms are different—there are all these different scenarios where trees may be a favourable option and may not be et cetera. So, I'll just make that point. And I'll just refer back to your point, Jenny: the current scheme rules clearly state that farmers will have to have 10 per cent tree cover on an annual basis. So, even if they are orchards or any type of other woodland, it would have to be a permanent land-use change.

But I just want to clearly set the FUW's position on this scheme rule, really. We do fully believe that this scheme rule should be withdrawn from the scheme framework and that the findings of an independent science panel, based on identifying how farm businesses can work towards net zero in a sustainable way, that the findings of such a group can then be used to incorporate some type of scheme aim for the SFS in its entirety, and that can include many of the examples that Aled has referred to. I just want to be absolutely clear here that you can reduce that 10 per cent target to 7 per cent or to 5 per cent, but if this scheme is not economically sustainable for farming businesses, you can forget about the tree planting target altogether.

Yes, okay, diolch. I'll come to Aled. Then I know George wants to come in, and then we'll go to Janet to take us on to the next area of questioning. Aled.

Thank you, Chair. There are two issues regarding soils, for example. The Food and Agriculture Organization states very clearly that the role of ruminant farming is crucial in terms of climate change, simply because of the carbon storage that ruminant agriculture is able to deliver. So, that's an essential part with something that we do particularly well here in Wales. 

I think the science likewise has to deliver on this, because the science is progressing gradually, and it will demonstrate that the sink ability in our soils is increasing. There are methods of soil management that will increase the carbon storage. There are also technical things like by biochar and basalt, which we could use and utilise, which would lock even more carbon in, so that’s another one.

Going to the points on dairy farming, obviously, dairy farming in Wales is predominantly grassland, so, obviously, that is a good win. Now, the question that you raised regarding soil erosion, that’s a separate one on maize growing. Now, it is unfortunate that we are seeing wetter winters, and if there is land that is uncovered, then, obviously, that will lead inevitably to soil erosion, and we cannot afford to be losing our soils. The issue is addressed to a certain extent within the SFS, which is good, really, because, obviously, for sustainable farms, they’ve got to make sure that that soil management is absolutely crucial. So, there are ways that we can improve that.

Thank you. Jenny, then, before I bring George in just to wrap this up.

Yes, the final issue that I think is important to address is that Wales Environmental Link says that if we fail to effectively integrate increased tree cover into the SFS, the significant risk remains that the current trend of land conversion continues, by which they are referring to people buying up Welsh land from outside in order to just meet their greenwashing requirements. So, if we, within this scheme, do not address the tree issue, others will come in and the market will decide to do it in a different way.

10:20

Thank you. Just to address Huw's very valid points—and Aled has addressed those to a certain extent in his answer—you know what, we're not here saying every farmer is perfect in terms of the way in which they manage the natural environment. We've all got things to learn; every day's a school day. And we need to make sure that we are advising, helping and encouraging our members to best practice in terms of management of soils and cover crops, et cetera. I mean, we need to bear in mind a lot of those decisions have been driven by the markets. So, people have been driven to low-cost production systems because that's what has been required to deliver milk at a price the processors have been prepared to pay to date. So, there are some wider market failure issues we need to be addressing as well as scheme issues here. But, we're up for the challenge of ensuring that we are looking at best practice and ensuring that this scheme can deliver the sorts of environmental improvements that we all agree that we need.

And to Jenny's direct challenge about the committee for climate change, I do question the conclusion that the committee for climate change has come to on the extent of the tree cover. And I've addressed that specifically with the Climate Change Committee and I haven't yet had a valid answer as to why my concerns are not valid.

Okay. We'll have to move on, I'm afraid. The other point I would make in reference to what George has just said is we have received evidence from Professor Iain Donnison, who will be before us later on today, who highlights the fact that the Climate Change Committee actually talked about trees, but also biomass crops, and whilst trees have emerged prominently in the sustainable farming scheme, there's nothing for biomass crops. So, that's a discussion that we can explore there later on today.

Okay. Diolch. We do have to move on. We've got about 25 minutes left. Janet, do you want to take us on to the next area?

Yes, thank you. So, moving away from tree planting, what actions do you want to see in a scheme that would help achieve net zero and the 30x30 biodiversity targets, but whilst maintaining your own productive capacity?

Right, who wants to start us off on this one? Go on then, Gareth.

Quickly, then. Thanks, Janet. I think we've quite clearly covered our aspirations on net zero, haven't we, this morning? Just in terms of biodiversity targets, the one point I'd like to highlight, really, is that there doesn't seem to be a joined-up approach to the universal actions that are currently being considered within this scheme—how certain actions could create conflict with others, for instance. So, let's just highlight some examples. The inclusion of ponds and scrapes can act as a huge breeding ground for fluke, for instance, and that has implications for animal health and welfare, and tree planting, for instance, increasing certain predators for certain species, particularly ground-nesting birds such as curlews. So, you know, just two very broad examples there for you, but it just highlights how the huge array of universal actions haven't been considered within the context of each other, I would say, in current scheme design.

I would just add that there's a need to recognise that delivery of the Government's climate nature ambitions fundamentally starts with the scheme being attractive, accessible and achievable on Welsh farms. You know, we've got to start at that sort of ground-zero level, I'm afraid. We've got to get the basics right. At the moment, I think we're quite clear that universal is not universal.

Okay. I'll come to Huw first, and then, maybe, Aled, you can pick up on that.

If we accept that there's a shared objective here to achieve not only food security, stability for farmers, you know, and the stability of the investment, environment and so on, but also to do the imperatives around biodiversity restoration, climate change, as we've said, some of the environmental groups and organisations out there will say that—to come to your point, Gareth, about delay and a bit of a reset and so on that others have made—any delay here could be really detrimental to that context of the environmental objectives. Can we do this on time? Do you agree with that analysis that says delay could be not just detrimental, but, in some ways, catastrophic to that trajectory of dealing with it? Rachel, go ahead.

10:25

That argument assumes that farmers will uptake the scheme and deliver the actions that the ENGOs want to see. We're saying that there are sufficient barriers, the barriers are such, that—

So, let me put it in another way, then. Would you prefer, if the scheme was palatable to those who will have to deliver it, which will be farmers, landowners, land managers and so on, would you prefer that it proceeds pretty much on the timescale it is, because it also gives certainty, then, to the farming community that we have a scheme in place?

We cannot move until we have confidence that the scheme, through impact assessment, delivers the same level of stability that the BPS does currently. We cannot move. This is jobs and livelihoods and people's lives.

So, let me go back to the fundamental point of the timeline. If the scheme can be well designed to the satisfaction of those who will need to deliver it, if that confidence is restored that the scheme is finessed to that degree to do it, would you prefer that the timeline that is set out is the one that we stick to?

Yes. I think 'rethink' would be a better word than 'finesse' in the current context of things, and I mentioned earlier on the possibility of having to extend BPS if the scheme is not ready by the end of this year. Now, if the scheme is ready and everybody is on board with the scheme, including farming unions and other stakeholders, and that it provides that stability that is current offered through the BPS, then there is no issue. But I have absolutely no doubt that by having a scheme that is accessible and achievable to all farm businesses from the offset will deliver far better outcomes for biodiversity and net zero in the long term than what it would by introducing a scheme that is not ready, based on targets that are only six years away.

Yes. Well, I think Gareth has said it quite clearly. I think it's universal from the panel here to say, quite clearly, we need a universal that is available to all farmers, and I fundamentally believe that all farmers can deliver on biodiversity—to different extents, taking into consideration where their locations and their farming systems are, but every farmer can contribute, and that's the essential part. And if we are to impact change at scale, I think the participation of nearly all farmers within the scheme is absolutely essential.

Every time there have been iterations, either at a UK level or a Wales level, and the times when I was involved in it, there have always been challenges of actually doing exactly what you've said, which is bringing farmers with a scheme, a redesign of an environmental scheme or a major scheme as well, and that nuancing of getting it right. What I'm trying to get at here is: do you accept, representing those organisations and those individuals and those family farms that will need to deliver this, that there is an imperative to get on with this, and, if so, can this be, with all the challenges you've said, fixed, reset—whatever word we do—within the timescales that some of the environmental organisations are saying are crucial to get on with it?

I would just say we recognise that imperative. NFU Cymru established its net-zero vision by 2040 back in 2019, and it's a source of very significant disappointment to us that we put forward a proposal to Welsh Government that had the support—it was an industry proposal for a low-carbon farming framework to deliver the uptake of low-carbon action on Welsh farms at scale. That's over two years ago. It received a relatively warm response from the Minister, and it's sat in abeyance ever since. We are keen to take people on this journey to climate-friendly farming. A lot of that is about efficiencies in production and support to deliver that. A lot of that is actually understanding the baseline, every business's starting point. So, we recognise the imperative, but I think the mechanisms to deliver—. This is not going to be the mechanism to deliver without significant change. You're going to deliver nothing if you don't get the uptake. Sorry, Chair.

No, that's a clear message that's coming through, on a number of occasions. Gareth, very briefly, and then we do have to move on.

Fairness where fairness is due; it's a very timely question that you ask, Huw, based on the fact that we're transitioning to a new rural affairs Minister, and the mandate will have to come from them from an internal Welsh Government perspective, and I think, to answer your question, it entirely depends on how the Welsh Government decides to approach the next six months of co-design with the unions, and we've been calling for depends on how the Welsh Government decides to approach the next six months of co-design with the unions. And we've been calling for proper co-design on this scheme for years, and, dare I say, the stakeholder group that we've been involved in for years is extremely broad. And I think—

10:30

Nothing's impossible. 

Well, that's—. Is that a song? I'm not sure. There we are. Anyway, George, very finally, then, and briefly, because we do have three other areas and we've got 15 minutes left. 

Thank you, Chair. I just wanted to put on record that we are eight years away from when we voted to leave the European Union. My colleagues in the FUW and NFU, and ourselves, have spent an inordinate amount of time talking about these issues over the past eight years with Welsh Government, but we are now hitting the buffers because we are trying to rush this through in a way which does not meet the challenges. And there's a real danger that we will simply put a scheme out there because we just need to get a scheme out there because of the sunset clauses in the UK Act, and now what we've got within our own Welsh Act. We need to get this right. This is for the next generation, and so we can't afford just to push it out because we need to get something out the door. 

No, that's a clear message, I think, from all of you. Thank you, George. Okay, we're going to move on swiftly then. I think, Janet, you're going to take us on to talk about the different layers in the proposed schemes, because we haven't touched on that. 

Thanks, Chair. Welsh Government officials have said that less emphasis has been put on the optional and collaborative layers in a recent consultation to take account of farmers' concerns that there is too much change. These actions will be developed and introduced later. What are your views on that?

Well, I have concerns with the—. You're right, Janet, there's not a huge amount of detail in the consultation document on the optional and collaborative action layers. That information isn't available. And what I am concerned about, though, is that there are a number of references throughout the consultation that these layers that are going to come later are going to be used to remedy the fundamental flaws in the universal action layer, so remedy the flaws in the fact that they're not prepared to pay habitat maintenance payments on sites of special scientific interest, the fact that the common land is going to not receive the universal baseline payment. That's fundamentally flawed in our view. It means that some of our most valued sites for carbon and for nature are not appreciated through the universal action layer. That seems wrong. It sends the wrong signals to farmers when we're told that this is exactly what the Government wants it to deliver. I think there's a lack of confidence because of the lack of detail, the lack of budget, and it does feel very much like jam tomorrow. So, there's a lack of confidence that these layers are going to be able to provide for the shortcomings in that universal action tier. 

And I just wanted to make a very brief point on the collaborative action tier. Our experience, of course, to date, has been through the sustainable management scheme, and the track record of that is that it favoured other deliverers rather than farmers—farmer-led bids tended to be unsuccessful—and we need to question the cost benefit of such approaches, because, of course, in the end, all of us need to see action on the ground. 

I'll be very short and just say that the overall framework of a universal layer, which is truly universal, which allows stability, is good. An optional and collaborative is also very good. So, the framework I would applaud. But it has to demonstrate where you can actually progress from universal level—and I say that quite clearly, because all farms can deliver to a certain extent, but that underpinning has to be there first and foremost before you then enter into the optional and collaborative layers. 

Wales Environment Link members would like to see the optional and collaborative layers of the scheme introduced within 12 months of the scheme launching, with information on payment rates for these published as soon as possible. It hopes this would then negate the need for the stability payment. How do you respond?

I'll come in there. Again, a lot of it comes down to how the overall payment methodology looks in terms of the scheme in its entirety. I think the importance of the optional and collaborative layers firstly depends on how the universal actions, and, then, how the universal layer are designed when the scheme is launched. But more concerningly is how the funding streams for certain groups of farmers, such as those grazing large areas of common land, SSSI land, also organic producers for instance, for instance, and how support for those groups of farmers is going to either fit into the universal layer or fit into the optional and collaborative layers, which, obviously, then, leads to a wider gap for those types of producers. So, I suppose there's a lot of questions, I think, rather than answers there—apologies, Janet—but I think a lot of it will depend on what the universal layer of the scheme actually looks like as well.

10:35

Can I lob in as well, then, whilst you respond? Evidence from the Soil Association suggests that 50 per cent of the whole budget should be allocated for the other two layers, by the time we get to the end of the transition period. I don't know whether you have a view on that as well, whilst you're responding, but, Aled, I'll come to you on the general point as well. 

I think we are discussing the allocation of budgets before we've discussed the budgets, to be honest with you, and that's the fundamental underpinning that's required. The £380 million, including co-financing from Welsh Government, is crucial. That was set back in 2013, before the 2014-2020 common agricultural policy period began. So, when you consider, if you use the Bank of England inflation calculator, that figure now is nearer to £507 million, if you include inflation—. Now, if we are to deliver change at scale, and deliver if there is ambition, then I think there fundamentally has to be a requirement on true budget allocation here. Now, for a meagre 2 per cent of total Welsh Government budget, I think farming can deliver a lot of return for that money. So, there must be an allocation, a true, generous allocation, of budgets that would allow the industry to deliver on everything, the aspirations that farming can deliver upon.

Diolch. Finally to Elin on this, and then we'll come on to Huw, then, to take us on.

This also goes back to Huw's point earlier about the urgency of transitioning into and the pressures coming from the climate and environmental groups and everything, that—. We've got farmers who are championing environmental farming, and friendly farming, sustainable farming. They are the farmers, for the last 30 years, who have been involved with Tir Gofal, Tir Cymen, Glastir and Glastir Advanced, organic and common—they have been left on an absolute cliff edge in the last year. If that is the type of farming that is the type of farming that Welsh Government wants to push on, they have completely lost the confidence and the respect of those farming communities, because those farmers have been doing what Welsh Government, in the future, want to see happening on the land, and have been completely left out, hung to dry. So, it's very difficult for the Welsh Government to be promoting something, a scheme, in one way, and then we're going back to that trust of, if we do go down the 10 per cent planting trees, then what happens in 12 years, as Rachel said earlier? There is no trust in that. These farmers have been in those environmental schemes for 30 years, completely changed their way of farming and systems, and then been hung out to dry. And just to mention the absolute car crash that the habitat scheme has been— 

—and continues to be, with outdated maps and data. It's an absolute disaster.

Sure. Yes. Okay. We are going to have to move on, I'm afraid, but thank you for that point, because we haven't touched on the Habitat Wales scheme. Huw.

With the time, Chair, I can simplify my question very much. We heard a lot in the stakeholder session last week about the challenges of this scheme for common land, but also for tenant farmers. So, rather than rehearse those once again, just take us through, as a committee, the way forward. What would you like to see changed within this, so that tenant farmers and common land farming could really contribute to this, and also those tenant farmers, and farmers who have access to common land, can also have that sustainability of livelihood and so on in productive farming?

Okay. So, we'll go straight to George on this one, and then I'll invite the others to come in.

Thank you, Huw. So, turning first to the tenant sector, in the first instance, we think, for those tenants occupying under the Agricultural Holdings Act 1986, which are the secure tenancies, we need a reassessment of the rules of good husbandry, which were written in 1947, and still apply to the way in which tenancies operate today, and that is about the maximum use of efficient production. And we've seen those rules used in ways that have created circumstances where people, for example, have had wider hedgerows than they would otherwise need from an agricultural perspective, because they wanted to do that from an environmental perspective, and they've been forced to cut those back because of the way in which the rules about husbandry apply. We've said that consistently to the Welsh Government and there's been no desire to change that. And those rules also sometimes apply within farm business tenancy agreements because they are written by contract into those FBT agreements, so we need to get those changed.

We need to look again at the definition of 'agriculture' so that we're looking at bringing in the environmental aspects alongside agriculture and farming as we know it in a land-sharing sort of way, which will underpin the issues for our members. But we also need to understand that perhaps there's a route through here for looking at collaborative agreements between landlords and tenants. Because things like the gaps in hedges, the boundary features and the ponds and scrapes issue are issues that are routinely reserved to the landlord, and those issues will not be able to be taken forward by tenant farmers. So, we need to be looking at how we can do collaborative applications, maybe under the optional and collaborative bits of the SFS. So, there is more that needs to be done in those areas from our perspective.

On common land, I think we need to recognise that people who are commoners have only got a right to graze; they haven't got a right to interfere with the physical soil or the features on that holding. So, we need to be designing schemes that are finding ways that we can use grazing management systems to deliver the sorts of environmental and food production outputs that we want to see. So, it's about understanding the basis of those occupations. And it's not just about common land and tenanted land; there are a plethora of other occupational models that we need to be building into this, rather than just looking at the idea that everybody is an owner-occupier and can internalise the decisions that they make about their land management. So, there are some fundamental issues that need to be addressed.

10:40

I won't repeat what's been said on tenancies, but on common land, and similarly on SSSI sites, we believe they have to be included within the universal action layer and receive the universal baseline payment. About 10 per cent of Wales is common land, which is important for carbon, for nature, and the key management tool on that common land is active management by grazing. If we do not maintain the viability of these businesses that are often in less favoured areas or severely disadvantaged areas, if we do not maintain their farm business viability, then we lose the key management tool. These are hefted flocks; once they're gone, they're gone forever, and we will lose them forever, so this has to be got right. It cannot be let to the collaborative tier. The evidence shows that despite extensive investment in commons development officers through the last RDP to get Glastir commons agreements, success was only achieved on around 65 per cent of common land. We cannot leave it to the collaborative tier. We can achieve additional outcomes through collaborative agreements, but we have to have that viability of those businesses secured through the universal baseline payment across all of their land. In some cases, for some claims for the BPS currently, the common land makes up over half of their eligible area. We cannot leave this to the higher tiers of the scheme, I'm afraid. 

Thank you. We literally have a couple of minutes left, and there's one other area we wish to cover. With Janet and Jenny's permission, do you mind if I try and just ask a general question to try and capture an issue that we haven't touched on, which is the regulatory baseline, and just ask you whether you think the balance is right between what's included in the regulatory baseline and what would be rewarded under the scheme? Because we've had evidence suggesting that, if you look at universal action 3 on soil health planning, then it's an action that clearly enables farmers to meet regulatory requirements, which maybe doesn't chime with what the Minister has been saying in terms of the intention there. But then there are actions—maybe other actions, such as management of SSSIs—that people are arguing maybe they should be paid for, despite it being something that the Government would expect people to deliver in any case. So, just some general reflections on that, if possible, to conclude our session. George first, then Rachel, and then I'll invite either Elin or Gareth to respond. 

Very quickly, Chair, I'll just raise one specific issue, which is in relation to the pollution control regulations. Obviously, there are some wider concerns about those generally, but specifically from my sector, the tenanted sector, a lot of our members are reliant upon their landlords to put the fixed equipment on those holdings into a condition that allows them to comply with those regulations. And even though they've done all they reasonably can to get their landlords to get that into regulatory-required condition, they've failed to do so, and we're worried that they might, therefore, struggle to get into SFS, because they're not able to meet those regulatory requirements from first go. So, the issues of the tenant sector need to be borne in mind for those issues as well.

10:45

I'll be very quick. There's this proposal, it seems, to bring the whole of cross-compliance over and cut and paste them into scheme rules, with some additional legislative requirements. The first thing to understand is not all of cross-compliance is underpinned by regulation currently. Statutory management requirements are, but the GAECs wouldn't be. I think it's a false assumption to assume that farmers can simply absorb the cost of delivering cross-compliance in the absence of the basic payment scheme, particularly where competitors in other nations will be delivering the cross-compliance regime in return for that BPS. So, it comes back to that level playing field point.

A final point from me—diolch, Gadeirydd. I think if this scheme is designed correctly, then there will not be that need to increase regulation in future to compensate for the failings of the sustainable farming scheme. We would oppose any increase in regulatory burden on top of what's currently being imposed on farmers. That relates to the environmental governance White Paper that's currently being consulted upon and some serious concerns with regard to how that could apply to this question around regulation in future.

Great. Can I thank you, the five of you, for your attendance this morning? I apologise that it's been a bit of a canter, but it's not unsignificant in terms of quantity. We have of course received copies of your formal responses, as well, to the consultation, so we're very well aware of other elements that we haven't been able, maybe, to pursue this morning.

And can I as well, in concluding, just put on the record my thanks to NFU Cymru, the FUW, and the TFA, actually, for the sterling work that you've done on behalf of your sector over many years, particularly in relation to the SFS? Many people don't appreciate, I think, the hours that you put in, making very strong, very robust and very clear messages to ourselves as a committee, to individual Members of the Senedd and, I'm sure, to Government in the same way. Whilst you can do that much, one thing you can't do then is force people to make certain decisions in a way that maybe you would wish, but I think it's important that we put on record that we do recognise the heavy lifting that you've been doing for many, many years on these issues. And whilst they don't always bear fruit in the way that you and others would wish, that shouldn't in any way undermine the fact and the appreciation of the work that you have put in. So, I just want to put that on record as Chair. Diolch yn fawr iawn.

We'll now break for 10 minutes and the committee will reconvene for our next evidence panel at 11 o'clock. Diolch yn fawr iawn.

Gohiriwyd y cyfarfod rhwng 10:48 ac 11:01.

The meeting adjourned between 10:48 and 11:01.

11:00
3. Cynigion Llywodraeth Cymru ar gyfer Cynllun Ffermio Cynaliadwy (SFS): sesiwn dystiolaeth gyda sefydliadau amgylcheddol
3. Welsh Government’s proposals for a Sustainable Farming Scheme (SFS): evidence session with environmental organisations

Croeso nôl i'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith. Dŷn ni'n parhau â'r gwaith craffu dŷn ni'n ei wneud ar y cynllun ffermio cynaliadwy. O'n blaenau ni ar gyfer yr ail sesiwn, mae yna gynrychiolaeth o'r sector amgylcheddol. Rwy'n croesawu Rhys Evans, sy'n reolwr Cymru ac arweinydd ffermio cynaliadwy gyda Nature Friendly Farming Network Cymru. Mae Arfon Williams gyda ni, pennaeth polisi tir a môr gydag RSPB Cymru; Andrew Tuddenham, pennaeth polisi Cymru gyda Chymdeithas y Pridd; ac Alex Phillips, rheolwr polisi ac eiriolaeth gyda WWF Cymru. Mae gyda ni awr a chwarter, felly mi wnawn ni drio gwneud cymaint ag y gallwn ni o safbwynt y meysydd cwestiynau. Mi wnaf i gychwyn, os caf i. Mae yna lawer wedi cael ei wneud o'r universal actions, wrth gwrs—mae yna nifer ohonyn nhw. Oes yna rai ohonyn nhw dŷch chi'n teimlo efallai, o'ch persbectif chi, sydd o bosib yn mynd i fod yn aneffeithiol o safbwynt budd amgylcheddol yn benodol, neu hyd yn oed yn gwneud niwed mewn rhai ffyrdd? Rhys i gychwyn.

Welcome back to the Climate Change, Environment and Infrastructure Committee. We're continuing with the scrutiny work that we're doing on the sustainable farming scheme. Before us, for the second session, we have representatives from the environmental sector. I welcome Rhys Evans, who is Wales manager and sustainable farming lead with Nature Friendly Farming Network Cymru. Arfon Williams is with us, head of land and sea policy, RSPB Cymru; Andrew Tuddenham, head of policy Wales with the Soil Association; and Alex Phillips, policy and advocacy manager with WWF Cymru. We have an hour and a quarter, so we'll try and do as much as we can in terms of the question areas. I'll start, if I may. A lot has been made of the universal actions, of course—there are many of them. Are there some of them that you feel, from your perspective, are possibly going to be ineffective, in terms of environmental gain specifically, or even detrimental in some ways? Rhys to start.

If you're a semi-intensive or intensive farmer, I think there are lots of actions within this universal tier that have a great potential to drive environmental gains on farms. Stuff like integrating trees on farms, and planting the right tree in the right place, achieving 10 per cent habitat, and the habitat maintenance that comes with that, hedgerow management—these actions can deliver really wide-scale positive changes across the board. Some of these non-habitat and non-tree actions as well can help. So, the benchmarking, performances, soil health planning, integrated pest management, animal health and welfare—these can also improve efficiency and productivity, which, in turn, can lead to positive environmental outcomes. I think a lot of these actions make positive business sense as well, and with a lot of the actions, the industry, and organisations and bodies working within the industry, are actually encouraging farmers to undertake those actions. However, I would say that, for many farmers, particularly Nature Friendly Farming Network members, a lot of these actions might be common practice—bread-and-butter practices—on farms. So, in that sense, they could be considered unambitious. That's where I think the optional and collaborative elements come in, to pay and reward for the additionality beyond.

And we'll be pursuing those later on. Are there any reflections from the others? Arfon.

I'll focus on the habitats part of universal actions, and give just a very quick backdrop to it. The truth is that Wales is one of the most nature-depleted countries in the world. For example, we've lost 90 per cent of our enclosed flower-rich grasslands—a huge number. In our lifetime, we've lost half our wildlife. So, the inclusion in the scheme of a 10 per cent universal requirement for action for nature is brilliant. We fully support it. That 10 per cent figure, again, is very welcome, and it's based on the types of evidence that we've been working on. That's the extent of habitat we need across Wales to stop the loss of nature, really; this is what we're talking about. There are ongoing declines of biodiversity; it's not as if things have stopped. Things are still getting worse, so that 10 per cent requirement is very positive. There's some really positive stuff in there. It'll retain existing habitats and good hedgerow management, provisions of ponds—all that is welcome. 

The point that we've made in our response and the concern we have is that with that 10 per cent requirement, we won't necessarily put in the mix of habitats that we need to see across Wales to really halt the loss of nature and start nature's restoration. The mix of habitats is a very simple mix of flowers, seeds, thick hedges, scrubby areas, wet features, wetlands, the types of things that would have been very common across Wales not that long ago. So, we see the universal, the early bits of the scheme being the place where you would put that patchwork of habitats back into Wales again through the scheme. So, as I said, that in there I think is a really welcome addition.   

On specifics, we have concerns about herbal leys, as they are being described at the moment. Herbal leys are in there from a nature point of view. The idea is they're meant to benefit pollinators. The management at the moment doesn't permit that. I've been speaking to colleagues in England, with the Department for Environment, Food and Rural Affairs and the environmental land management scheme. It's proven very popular, but they're now having to rethink that because it's popular, but it's not being effective, and it's utilising quite a lot of the budget as well. So, fixing some of these things is really important going forward. 

And just to finish off, the 10 per cent is great, but there are farmers out there who are already doing more than 10 per cent. The scheme needs to reward them as well, and get those into the scheme as early as possible. It would be somewhat perverse if some of our most nature-friendly farmers, our most progressive farmers, were having to wait somewhere down the queue in order to receive payment and due recognition for the work they're already doing, if it's above and beyond that 10 per cent threshold. 

11:05

I'm sure we'll come back to that later on as well. Andrew. 

Just to follow on from what Rhys was saying, the action themselves—the requirements to benchmark, measure and to look at things like soil health—should be a good foundation, but not on their own. I think there needs to be more to signpost farmers towards the sort of actions that can then make improvements on those things. So, just taken in isolation, some of those actions in the universal layer, to answer your question, won't necessarily get us much further forward. But that comes down to how the scheme is communicated and the advice within it to make sure that those benefits are being realised through other layers of the scheme. 

I would say that there is a huge opportunity here to move beyond an area-based payment for just the land to one that is going to start rewarding for the things that really need help, whether it's soil, but particularly habitats, hedges, trees. So, that's quite a precedent to set, to actually have a payment for these things, where previously they haven't been paid. So, in that respect, if we can get good-quality hedges across Wales with farms participating, that would be a big change. That would take us far forward, I think. 

Very quickly, just to add to what everyone else has said—. And I should say I'm here representing Wales Environment Link, rather than WWF directly, so I'm trying to merge the opinions of 31 organisations—

—and the 400,000 people in Wales who support them. But I think one thing that is slightly concerning when you look at the universal layer in isolation is this language from Government that came out about maintain and retain, rather than maintain and enhance, which is obviously the legislative need. And, indeed, we can have wider arguments about how suitable that is in light of the new governance Bill, but I think seen by itself, it's probably not going to be strong enough. I know a lot of people put in requests for it to be stronger initially. I think what's come out is probably a decent representation of the co-design process, but by itself, as others have said, it's not going to really start restoring nature.  

Given that you mentioned Wales Environment Link, of course, the point has been made that the universal action for biosecurity on farms focuses on livestock. It doesn't necessarily recognise risks in relation to trees and invasive species and diseases, and those kinds of things as well. 

Yes, absolutely. That was a point that the Woodland Trust has made quite strongly, particularly around trees. Their thinking in that regard is there's not really much said about where the saplings might be coming from, and the risk that a lot of the diseases we have in Wales now have come from that kind of bad sourcing so that should be included and recognised, really, in the scheme.

11:10

Okay, thank you. I'll bring Janet in at this point. 

Thank you, Chair. TFA Cymru is concerned that there is too strong an emphasis on stocking levels as opposed to grazing management, and that mixed grazing systems will assist in the delivery of both landscape and biodiversity within these important habitats. Do you have any comments?

Yes, I'll come in first on that. I think our comments on that would be that a one-size-fits-all policy rarely works in agri-environment schemes. Just looking back at the historical or traditional approach to grazing management within agri-environment schemes, focusing mainly on a maximum or minimum number of livestock during a particular period of the year, that can be deemed quite restrictive, potentially, and not a guaranteed recipe for success in terms of habitat management. So, yes, a move towards moving from sticking to rigid grazing rates to a more holistic approach informed by the farmer’s knowledge and supported by advice from qualified advisors would be better suited, and of course we’re moving now, within the industry, to looking at more holistic grazing in general, rotational grazing and mob grazing. In order to implement such approaches on a farm you need a flexible approach to grazing management.

Okay. I'm not going to come to you all in order every time, so maybe Andrew this time, then Arfon, and then maybe we can move on.

Yes, I think it's important to recognise that there elements of the desired outcome in terms of sward height at particular times of the year—those seem to be coming in. So, I think Government has got the message that just having to farm according to set stocking-rate prescriptions isn't necessarily delivering the best results for biodiversity. It may be something that is easy to measure, or easier than, say, sward heights, but it's just deepening a culture of having to farm according to the rules, and not making the connection between your actions as a farmer and what the outcome needs to be. That’s where, particularly, farm advice comes in, to help make that connection. We could talk about payments by results as well, but maybe that will come up in other questions.

Just a quick response to the second part of that question, I think, around concerns around mixed farming and mixed grazing systems. The farm income report from Welsh Government has recently been published, showing those mixed farming systems within the disadvantaged areas and the less favoured areas—those are the ones that are showing the biggest declines in income. These happen to be farming systems in parts of Wales that are also really well-placed to deliver those environmental benefits. I’m quite happy to share afterwards, but there’s lots of evidence to show that these are quite natural resource and nature-rich areas, carbon-rich areas, so it clearly shows there’s an opportunity there to align some of the scheme’s key objectives with a way that would support and provide that economic resilience to some of those farming systems most at risk in the current climate, in business as usual. So, I think the scheme potentially provides responses to those types of concerns, and I think it’s just a matter of bringing these things together effectively now.

If I could just make another point, just on the one-size-fits-all grazing approach, particularly on the uplands, on the hills, where Glastir has driven stocking rates down, mainly in relation to trying to address historical over-grazing, where that has worked, it has worked well. We've seen the restoration of habitats. But that sort of approach fails to acknowledge that some areas have never been over-grazed, and as a result, under-grazing, and some rank vegetation, are affecting ground-nesting birds and other habitats, and it is becoming an issue. So, when informing grazing management plans, it needs to take into account how the land has been managed for the past few years—what the grazing rates have been, if it's declining, or if it's restoring, and everything like that—as opposed to what Andrew said, farming by a set of rules or prescriptions.

11:15

Sure. Yes, I think that's a message that's coming through clearly from a number of different places. Huw.

You could apply that upland and often common land approach to other areas of farming as well, but how do you get the subtly of that, the subtly of that and the knowledge of individual not just acres, but squares of land, into a scheme like this? How does that—?

I think it's collaboration. It's harnessing the existing knowledge of the farmer, and the experience of owning that land, and knowing it well, and pairing it up with quality advisors who will have more in-depth knowledge of species' management, or whatever, and payment as well—so, where you've got shepherding payments on top of just the payment for simply having habitat, for example. 

I just know many farmers who take such an intelligent approach to their land, and generations where they've learnt, learnt and learnt, and unlearnt stuff, in order to do things better, and then there are others who won't have that knowledge, but they'll have tradition, they'll be speaking to others and so on, but they won't have that fine level of knowledge that says, 'Well, how do I know what's going on up in north Wales, somewhere I could learn from?' So, who helps? Who provides that advice and support?

Farmer-to-farmer knowledge exchange is really important, and it's something that we as a network is trying to promote. I think there's a role from Farming Connect here to try and really pair up farmers together. It doesn't have to be, when we come to advice provision, a qualified expert advisor who works for a consultant, or whatever, it can be farmers learning with others farmers on farm visits et cetera. 

I think it's a key point, but I don't know if we have time—

Yes, and we will be coming back to advice later on. Very briefly then, Andrew, and then I'll bring Jenny in.

There is evidence that shows that when farmers are working together in agri-environment schemes, they're delivering better results and they're getting more reward from it, and from the process as well. So, yes, collaborative actions are going to be key.

Indeed, and we'll come on to those specifically in a minute. Jenny.

I want to look at how we influence farmers to do the right thing. In your evidence, the Soil Association is saying that there's been insufficient incentive to reduce manufactured fertiliser use on the scale that's needed to restore soil health. Given that manufactured fertiliser is a bit like trying to use energy drinks to boost your energy—it might give you a temporary boost, but then it leads to depletion of soil quality—what needs to be done to, if you like, eliminate manufactured fertiliser use, given its impact on soil depletion?

Yes, thank you. Well, I think the whole conversation about artificial nitrogen has changed over the last few years, and it's not necessarily through policy that's done that, it's through price. So, to some extent, the outside world is concentrating minds and it's forcing some change, and it's provided the opportunity to show that reductions in the use of some these inputs don't necessarily impact on yields in the way that have been previously thought, but I think it needs to go further. Certainly, within the optional actions, there needs to be something for farming without artificial nitrogen, and this is particularly a point that the organic sector is asking for. If there's going to be some sort of reward specifically for organic farming, it needs to be in that form of action, or just a payment for organic, because of the benefits that they provide.

We're not going to get to net zero without tackling artificial nitrogen; it's got a huge emissions cost from its manufacture, and then in the way that it reacts with the soil and causes emissions of nitrous oxide, which are both things that are overlooked in the discussion. And the more artificial nitrogen is applied—and without lime the soil can become more acidic—it's actually going to change the soil, and then there's a danger that soils become on a downward spiral, where the whole biological functioning of that soil is no longer working, and soil organic matter is being burnt out of them. That's really poor for resilience, given that soils are drying out, heating up, as we move into the new climate.

11:20

Yes, mining the land, as it's been characterised. Jenny, yes.

Given what you warn, though, in the way that the reduced funding for the Habitat Wales scheme is already causing some agri-ecological farms to scale back their ambition, that's quite a significant statement, in that we're hoping that we're all moving towards regenerative farming in the long term. Yet, without financial incentives, people are just reverting to other ways of doing things. How do we address this in the context of the ambition behind the sustainable farming scheme?

Andrew again, and then we'll come to Janet, then, to take us on.

Briefly, just to illustrate that point, I have got some figures. I'm not sure if this committee has looked at the Habitat Wales scheme before, but we mustn't forget that there is this deficit in support for the farms who are delivering for habitats and doing other things that you call agri-ecological. So, for example, the Habitat Wales scheme pays £69 per hectare for all types of habitats, but that's compared to Glastir, where the rates were much higher. To take an example, for permanent dry grassland, the average rate under Glastir Advanced was £188 per hectare, and it could go up to £248 per hectare for a particular type of improved acid grass. So, the feedback that I've seen from some of the surveys undertaken within those nature-friendly farming farms was that maybe they could be hanging on for a bit—at least there was some funding and they could hang on—but it has to be addressed through the introduction of those optional actions that improve the balance of finances for them.

Organic support: the sector is grateful that there's some support; there was initially no support, but it's still a reduction. So, unenclosed upland has gone from £15 per hectare down to £9 per hectare. Enclosed productive land, £65 per hectare under Glastir Organic, is now £45 per hectare. So, again, costs of production are rising, so these systems won't really be able to endure a reduced rate of payment forever, even though there's a mechanism within the proposals to provide a match through the stability payments.

So, what you're saying is it's not sustainable unless there's funding to go with it.

Absolutely.

Thank you. Right, we're going to move on to Janet, if we may, because we have a number of areas we wish to cover. So, Janet, do you want to take us—? Obviously, we'll come back to some of these in other spheres. Janet.

NFFN says many farmers are already delivering more for nature than the universal actions will support and will be disadvantaged by the delayed access to the optional and collaborative layers. The Welsh Government say interim schemes will continue ahead of these layers. Does this address those concerns, do you feel?

Just to reiterate the point that we included in the consultation, one of our key asks, really, is to introduce both the optional and collaborative layers as soon as possible, by 2026 at the latest, really. I mentioned earlier that those who potentially haven't been in agri-environment schemes or semi-intensive farms will perhaps deem this scheme as fairly ambitious, but others who are already undertaking the actions might deem it unambitious. For example, those who are farming organically, managing designated sites, high-quality habitats, they'll be relying on the optional layer and the collaborative layers to reward the additionality, essentially, that goes beyond the universal baseline. But if these aren't going to be introduced—we're hearing 2027-28—in the short term, they are going to lose out and risk taking a major funding cut. So, both farm incomes and biodiversity, I would argue, are losing, are likely to suffer. So, in many ways, the scheme as it is presents a bit of a cliff edge for those farmers who are going above and beyond the baseline.

And just to reiterate what Andrew was saying in terms of the interim schemes, we surveyed 20 farms in conjunction with Soil Association and others and that showed us an average loss of 76 per cent in support under the Habitat Wales scheme compared to Glastir. So, the interim schemes, as they are, aren't sufficient. And I would say, yes, that the continuation of other grants, such as the small grants for capital works, must carry on as well and reward beyond income forgone and costs incurred—pay for the time and the added value as well. So, it's a major concern of ours, really, that those farmers who are delivering most of the scheme outcomes are at the back of the queue, if you like.

11:25

I just wanted to reiterate that point; I don't think it has been made enough. These are the farmers who are doing what the Welsh Government seeks to incentivise across the industry, yet, as Rhys said, they are at the back of the queue for support. I don't quite understand how that's been allowed to happen. It seems completely counterintuitive to the transition Welsh Government are trying to foster across everyone. So, I would very much hope that—. You know, we're going to get a new Government forming today, and this must be a key area for priority, because, I think, as we've discussed in the past, these high-level actions—that's the stuff that the Welsh Government knows quite well and it's got experience of doing. It could do that quite quickly, if it actually put resources into it, and I think there's been a bit of a divide between focusing on the universal element and getting that bottom-level scheme operational, and in the meantime you've had other teams working on Habitat Wales and it's all seemed quite disconnected. Hopefully, that will change.

Just to add, I think the wider context here is Government's commitment to the global biodiversity framework and that target of 30 per cent of Wales well managed by 2030. One of the keystones, one of the cornerstones, to achieving that will be SSSIs. Those farm SSSIs, by the end of this decade, are going to be kind of—. The plans are there, and they're going to be well managed and the resources will be there to enable farmers to do that. So, there are a number of concerns there—the ones that Rhys pointed out—about the delays of the scheme getting SSSIs into the optional or collaborative layers. Also the lack of maintenance payments early on, from the beginning of the scheme, that completely puts the wrong message out there.

I think there's also a concern around Natural Resources Wales's capacity to support this as well. This will require NRW working with farmers on the ground to develop the plans and then to ensure that those plans are implemented effectively. So, there's a big resource ask there, and I think that sits within the wider advice category as well. But, yes, those farmers doing more than 10 per cent, they need to be incentivised and they need to be supported to do that from the out. We can't really delay bringing SSSIs in until the tail end of the scheme, because—. There will always be a delay—this is going to be quite complicated—so the longer we leave it the less likely we are to actually achieve that target. 

Thanks, Llyr. Two questions, and they do relate to some of the conversation we've just been having: in the earlier session with farmers unions and organisations in front of us—different organisations—there was clearly a call there, as there has been for some time, for a delay, a reset, a rethink, whatever you want to call it, and a clear point of view that unless you bring the majority—. You've talked about those where there's the greatest environmental gain, but the farming unions will say as well, those who actually need viability of their farm businesses. So, if there were a delay—three months, six months, 12 months—what are your thoughts, not just in terms of nature, the environment, biodiversity and so on, but also in terms of that balancing up against bringing the greatest majority of willing farmers and land users with us? Arfon.

I'll start the ball rolling with this one, then. I think that having a scheme, a well-designed scheme, and a scheme that, when implemented, will deliver the results it's intended to achieve, is vitally important here. On what it's looking to achieve, we've got 2030 targets for biodiversity, we've got climate change targets; within the global biodiversity framework there are pollution targets, 30x30. We've got less than a decade to achieve this. So, any delay to starting on this is going to make that challenge—a hard challenge—even more difficult to achieve. So, clearly, we're not in support of a delay in starting the scheme. What we would say, though, is that there may be scope to look at some sort of phasing of aspects of that scheme.

11:30

We've touched on some of these already, and I think we could look at phasing in some of these aspects, because this type of approach is new to the majority of farmers in Wales. Perhaps 4,000 farmers have been in agri-environment before, so there are 4,000 farmers out there who are used to this type of approach to receiving support. The majority aren't, so this is a new venture for them. So, I think, in introducing something like this, then I think it would make sense to phase some of these things in, but also then provide the advice, guidance and support whilst you're doing it. But this isn't about delaying the end, this is about putting something in place that will still get us to where we need to get to by 2029, which is the transition of the scheme. 

Okay. That's an interesting, nuanced approach. Can I ask you—? I want to bring others in as well, but can I just extend into the second area of questioning I had there as well, which is the budget? Now, look, I guess people sitting in Welsh Government will be saying, 'If we had more budget, we'd be throwing more at this', because it's such a significant matter to do—food policy, food security, environmental issues—all of it landing in one moment here on this and related aspects of farming and land management and so on. But how does that phased approach—? Can that phased approach be made to work with the current budget that we can see? Or does it require additional money, advice, support, as well as the money going into the incentives and the direction? Can it be made to work with the money we've currently got available?

I think the work that RSPB has done shows that the budget isn't enough at the moment. We've looked at this, and, just from purely delivering the environmental priorities that this scheme needs to do, our work shows that we need close to £500 million per annum to deliver what it is that we need to achieve through this scheme. Whether we'll get that, I don't know. It's a massive ask during this current climate with this kind of squeeze on public finance, but what that does, clearly, point to is that the money that we do have needs to deliver as much as it possibly can. 

So, it definitely needs to be in that 'public money for public good' space and that multi-benefit space as well. 

Alex, I wonder if I can come to you next on this, because WEL, as a consortium of all the environmentalists, has also suggested including a sustainable farming and designated landscape programme through the optional and collaborative layers as well. Can you pick up where Arfon left off there, both in terms of budget and delays, implications, how we can manage this? 

Yes. As you hinted at the start, we're in a situation where climate emissions are going up from agriculture. It's still a driver of decline. We're also losing jobs in the sector quickly. We're losing them quicker than what the SFS predicts that they might be, actually. It's quite—. You know, the status quo isn't working. So, we do need to get action quickly. WEL doesn't have a position on delaying yet, but I'm sure we probably will get to one quite quickly, and it wouldn't be too far away from what people have said already. 

Yes, and I—. 'I suspect', I should say. It needs to go through all the sign-off. I think, on the budget, clearly, we do not have enough. We've never had enough. Even when we had more money going into this, it was never really a priority, and that needs to change. And I think, if you are trying to deliver this scale of change across the whole sector, there comes a point where you have to put your hand in your pocket and actually put money up towards it, and I think the new Government has to make that priority. One thing that we have worked on and is ongoing, is what is the scope for leveraging private finance into this as well, and that's a complicated road. There are many compromises to be involved in that, and I don't have the answers as to what that would perfectly look like, but that is potentially one option of getting there. But I think, if we are going to work with a very limited budget, we need to be focusing on that where it's most needed, and on the farm types that most need public support and also deliver the most public benefit.  

And do you think you would agree with where the broad farmers' unions are, generally, on where that would be? Do you think there'd be agreement on what types of farming, what types of support, those would be?  

I'm not sure how far the agreement would go. I think it kind of belies some of the structural discussions that have gone on in this scheme from the start, where—. I think it was mentioned earlier about whether 'universal' was a misnomer. It seems to me, reading what Welsh Government have been doing for some time, that they have designed a scheme that does not suit every farm in Wales. And that seems quite intentional, because, if you were doing one that suited absolutely everybody, I think it would look quite different to how it looks. So, there's been that inherent design decision going through it, which it has never really been open about and, when we've seen critiques of the proposals, it doesn't surprise me that they've come from certain sectors that, clearly, would be hardest put to meet with the demands of the scheme. I think the question becomes how far you diminish the scheme overall to include everyone and what the consequence of that would be, or whether you just go, with a limited budget, 'Actually, these areas need support more than others' and maybe that's where you focus it. But that's a decision for the new Government, I feel.

11:35

Thank you. Rhys wanted to come in, and I can see Arfon has got hand up.

I'd just like to make the point that agriculture cuts across the whole of society in the benefits that it provides. That's in terms of not just food production, but nature and climate, flood risk mitigation, energy—

Listen, we may or may not agree with that, but if we're stuck—I won't go through why we are where we are, but if we're stuck—with the funding we roughly have now, tell me, Rhys, how do we take this forward? If new money appears and we can draw it from other things, fantastic, but, if it doesn't, how do we do it?

Well, it's a case of we won't meet the ambition of the scheme. I think it's as simple as that. There's so much weight, I think, put on farmers' shoulders to deliver all of this, and without a budget and proper payment rates it's not going to benefit anyone. And that's what I was thinking about—drawing from other funding sources and that agriculture shouldn't be siloed.

I didn't mean to cut you off, but I could see exactly where you were heading. Arfon.

Just referring back to the farm income report that's come out in the last couple of weeks, and I think—. Looking at this objectively as a policy that's about delivering public money for public goods and providing economic resilience to at-risk farms and farming communities, then it clearly points towards those mixed farms, mixed family farms, within the less favoured areas, the severely disadvantaged areas, where incomes are declining. But, also, these are the areas where, potentially, with the right support and the right advice and guidance, they could incorporate public goods delivery as what they do and benefit from it, and probably find themselves in a potentially more secure position in the way that that's not open to competition in the way that some of the other things they're producing are. So, I think following the money is one of the things—look at where support is needed. And I think the indication shows that it's in those areas that have the potential to really benefit from this public goods agenda.

And on a Venn diagram, your argument would be that there'd be an overlap there in terms of the biodiversity and nature gains, as well as that type of farming that actually needs sustenance for those wider issues of vitality of communities, as well as food production, making use of the natural resources that we have in a—. Yes.

I think it's more than an overlap. I think it's—. Sorry. I think it's that these things are totally interdependent on each other; those farming systems deliver these types of outcomes and these outcomes need those farming systems.

Yes. So, there isn't enough money. Definitely.

And there needs to be a blended finance approach. But, actually, that's where the scheme, as it's outlined, could position farmers to be able to take advantage of that. So, they have to be able to benchmark, to understand their impacts, to be able to evidence that. These are the sorts of things that they'll be then trading in. So, I appreciate the spirit with which a lot of those universal actions have been put together, as preparing farmers for that future. Yes, that was my point.

Good. Okay. There's a lot there. Thank you for that. We'll move on to Jenny, then.

Dr Ludivine Petetin from Cardiff University, who is an expert in agri-environmental issues, who we're going to be hearing from later on this afternoon, is arguing that a one-size-fits-all approach doesn't really work, and that's, in particular, in relation to this 10 per cent tree cover, which has obviously generated a lot of heat and not a huge amount of light. How do you think the next Welsh Government should be approaching this? Do we desist from making it a universal action, or can we rely on optional and collaborative actions? Or do we have a different scheme for lowland farmers to upland farmers?

11:40

Who's first? Rhys, are you happy to go? I'll give you all a chance on this one.

First of all, I guess, just to acknowledge that it's a shame that there's a narrative out there at the moment that pits trees against farming, that it's a choice of planting trees or producing food. If we successfully integrate trees on farms, then both can flourish in terms of productivity, efficiency, but also the environmental, biodiversity and climate gains from tree planting. But I would say that a one-size-fits-all policy doesn't work. I've already mentioned that in relation to grazing.

What we as a network have suggested as a bit of a compromise would be potentially to lower the planting threshold to around 7 per cent, which, from what we understand, is the average woodland cover on farms in Wales. Beyond this point, farmers could receive an incremental payment increase in payments per hectare for every percentage increase in tree cover on their farms. This could be capped, maybe at around 25 per cent, to avoid entire farms being planted with trees, because that's obviously a perverse outcome if too much funding is weighted on that action.

I think this sort of flexible approach could achieve three things. It would make the scheme more accessible to maybe those lowland, more productive farms on better agricultural soils, but acknowledging that those under 7 per cent would need to plant. It would reward those who already exceed 10 per cent, and it would encourage and reward farmers above 10 per cent to plant more, because currently perhaps the incentive isn't there. But I would say, as well, that this should be complemented by more bespoke farm assessments to actually look at, strategically, where are the best places to plant trees on farms.

I suppose we have to think how have we got to this point. Initially, many years ago, the first proposals around the scheme involved a farm sustainability review for every farm going into the scheme. At that point, there would be a plan, I think, around what the opportunities were for the farm—so, a much more tailored or bespoke approach. There are big challenges around how to deliver that at scale, but we have got a five-year transition now.

But what we've got instead, because there was a big pushback against the cost and, more importantly, the money being put into advisory budgets rather than farm payments, is a fixed rule that is causing a lot of division and dispute and it's increasingly having to be made more and more flexible to allow for exemptions or whatever. At some point it becomes almost meaningless whether that's actually a rule or just quite a complex scheme approach.

For the Soil Association, we see that, really, the best way to integrate trees into farming, which is essentially what the scheme is trying to do, rather than replace farming with trees, is to have that whole-farm plan where you can look at the benefits that the trees bring, not just in terms of how they support the farming operation, but what sort of financial income streams could be realised off them.

Before I come to Arfon, Jenny, you wanted to interject briefly.

I just wanted to point out that Dr Petetin is saying that the most vocal anti-tree protesters have tended to be dairy producers and/or big farmers, and there's a danger that we shift the dial on how we approach this, which may not be equitable, given that they may not be the ones who most need support in order to make a living.

I think the economic impact assessment does show that. I think that suggests that dairy has got the biggest step to make to meet that 10 per cent tree cover target—I think something like a 70 per cent increase on current levels of trees. But that would only contribute something like 9 per cent towards the overall scheme ambition. So, yes, it is right to flag that, and that introduces questions about for what type of farming characteristics is this scheme being designed.

Arfon Williams 11:44:48