National Assembly for Wales

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? 

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.

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.

Okay. Rachel.

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.

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.

Okay. Thank you. Gareth.

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.

Okay. Diolch. Aled.

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.

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?

Aled.

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.

Gareth.

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.

Okay, briefly, from Elin first, and then Rachel.

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?

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.

Go on, very, very briefly.

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.

Gareth first of all, and then I'll bring Rachel in.

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.

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.

Briefly.

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.

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? 

Let's invite George in 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.

Okay. Elin.

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.

Sure. Rachel.

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.

Okay, there's a lot there. Thank you for that.

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?

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.

Yes, George.

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.

Okay. Rachel.

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.

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?

Gareth, do you want to come in?

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.

Aled, what about this time imperative?

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.

Have we got time to just do a brief—?

Very briefly.

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—

So, it's not impossible. 

Nothing's impossible. 

Thank you. 

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?

Rachel, yes. Rachel, go on. 

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. 

Diolch yn fawr. Aled. 

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. 

Okay. We'll come back to Janet then.

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?

Gareth, first of all. 

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.

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— 

Well, I was expecting you to say that, yes.

—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.

That's an important point. Diolch. Rachel.

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.

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.

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. 

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—

Good luck with that. 

—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.

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?

Who wants to go first? Rhys.

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.

It will, it will. Arfon.

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.

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?

Andrew, that's directly to you.

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.

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.

Okay. Alex and then Arfon.

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.

Thank you.

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. 

Okay, thank you. Huw.

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.

Right, and you've touched on some of those already.

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. 

Okay. 

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. 

That's interesting. 

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.

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—

So, are you asking for more funding to come into—

Exactly, so—

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.

Okay, thanks. Andrew.

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

Okay. That's coming across. [Laughter.]

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?

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.

Andrew, and then I'll come back to Arfon.

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.

Thank you. Arfon.

Just building on comments from the two either side of me, I think the concern has also highlighted perhaps a bigger issue about the lack of a woodland strategy for Wales. I think we've got a target, which I forget—is it 180,000 by 2050? It's a huge area of trees in Wales, but we don't have a strategy for how or where these trees are going to go. So, I think my response to this would be that if we'd had the strategy and a scheme target, that gives a much better place to start from than where we currently started from as an individual farm approach. But I think the combination of a strategy, a scheme target and this whole-farm plan, agroforestry working with farmers approach, would probably get us to a much better place than the current system would.

I also think, on the point Andrew made about these on-farm reviews, if you're combining a climate review with a habitats review or a tree review, you can actually look for those synergies, where farms may need to plant more trees just to achieve their individual business carbon targets. So, I think this probably needs reframing and it's a way of reframing it in the positive.

But I think on Jenny's point, my simple answer to Jenny's point would be that farms who plant more trees should get more money. I think it's probably as simple as that. If this comes down to that type of approach, well, the financial benefit should go to those who are doing more to meet these environmental targets, and if some farms opt to do less, then that should be reflected in the level of payment.

Alex, did you want to come in on this?

I think Jenny's hinted at it as well, but the equity issue is quite important. We're trying to do a fair and just transition here, and there are issues that are raised if you take the requirement off. If you leave a situation where woodland creation becomes optional, then by definition, a lot of people will opt out of it, and that means if certain farm types don't go into it because it's not seen as financially viable for them in that situation, then that places a much greater burden on other farms. And in other industries, we don't really say, 'Okay, well, you've got the worst problems; it's hardest for you, therefore we'll ignore you and let other people pick up the slack.' So, I think there is a just element to it.

Fundamentally, as people have talked about, going from 7 per cent to 10 per cent isn't actually that big of a change overall, but in some areas, it's much harder than others, and there is some scope to probably reflect that further. I think the whole debate we've had around this for the last couple of months has become quite removed from what the actual proposals are in many of the cases. With a lot of the anger that's been expressed, which has been very justified in many ways, and some of the points that have been raised, actually, that's not what's on the table. So, it's very hard for Welsh Government to deal with that, because they've ended up in this catch-22 situation where the 10 per cent is the result of listening to pressures from the sector to simplify and not face a burden and put money elsewhere, but then, it's become too simple, and if you add complexity, then that's also opposed as well. So, how do they get their way out of it?

But I think the key part, just to come back to Andrew's point, and it brings in the earlier point about private money as well, is that the key part of this proposal and why it's so important in universal about woodland creation is it's about integrating tree cover better into agriculture. If that doesn't happen, there is a great risk that the money is always going to be there for tree planting, and when it goes into other schemes or other private ways of sequestering carbon, then that land does leave agriculture, and as other people have said, once it's gone, it's very hard to get it back. And that process that's gone on in Wales will only get worse with the status quo. I think there's potential to add accountability in. I would much rather see Government take the money of big organisations that are seeking to sequester, and have some control over it and put it into these schemes that are accountable to the public and are run by Government, rather than just buying up massive tracts of land. And I fear if we get this wrong, that's where we might end up.

I think 10 per cent is achievable for most farms, not for all farms very easily, and that really puts us back into money, and there have been suggestions made about how you incentivise and we're a long way from getting there at the moment.

Indeed. There's plenty of food for thought there. We'll move on to Janet next.

The farming unions are calling for a delay to the scheme until it provides the same level of stability to agri-food businesses as the current support. What would the implication of delaying this be, do you feel?

We've spoken a bit about the delay already, haven't we? I think we need to move on to discuss the payment methodology, Janet.

Okay. Could a costs incurred and income forgone payment methodology have unintended consequences for the environment—for example, if farmers do less to gain more income, as the payments are based on average values? 

One of the biggest problems with costs incurred and income forgone is that payment tends to be generated on doing less. This was the problem with past agri-environment schemes, where the higher payments were often based on the higher stock reductions. But looking at some of the really important nature areas in Wales now, where farming is a key delivery mechanism, if anything, there's not enough grazing or we're seeing not enough mixed grazing—we're seeing the reduction in upland cattle and these sorts of things. So, this'll have to be about a scheme that incentivises, in some cases, more farming, more livestock. If we use the current model as it's been used in the past, then that doesn't lend itself to that approach. So, I think that's the main perverse outcome that I can think of from using that model. We need, in some cases, to reward more nature-positive farming.

Just to add to that, if there's no profit in the actions, then, there's very little incentive, particularly in the capital works element, I would argue. If it only covers the costs incurred and the income forgone, then what about the farmer's time? What about the added value, both the social and environmental value of, say, planting a hedge, for example? So, yes, to get farmers on board, we really need to move beyond the costs incurred and income forgone model.

What about the social value element, then? There's talk of that social value payment in the system somewhere. How would you see that potentially rebalancing against what you said about providing additional incentives?

I think it's important to include that value part of the payment to get that genuine reward in what farming is doing. Farming will be producing really important commodities here. We did some work a couple of years ago on costing the benefits of nature-based solutions to mitigate climate change, looking at three broad habitats. One was peatland, one was saltmarsh, and one was new woodland. The work that we've done showed that for every £1 invested in these habitats, the peatland generated £4.62 worth of benefit; saltmarsh, £1.31; and woodland, £2.79. And those are based on a range of societal benefits. So, it's possible to do this and I'd be happy to share this work with the committee afterwards. But I think payments to reflect that wider value are really important if we're going to get into a place where farmers deliver this type of thing based on understanding it's as important and as valuable as the livestock and the food they're producing.

Are we seeing that working in any other context at the minute? Are there examples out there in different settings maybe?

It's challenging, because the data is patchy, and I think that the Welsh Government are saying that as well in some of the initial advice that they've had. So, it is difficult to get together the data on each and every possible ecosystem service or benefit that comes from some of these actions. But it is possible to get, I think, proxies or guides to the weighting of payments. So, whilst we may not be able to get to a pounds-and-pence value for each and every action—the social value of it—you can get a relative importance of it, and that's when you start to see other benefits come through. 

And there's the whole cultural and linguistic area as well, which you could potentially look at. That's probably even more complicated and fraught in terms of measuring. I'll bring Alex in first and then I'll come back to you, Arfon. 

On that social value element, just building on what Andrew said, I think the Welsh Government have got themselves down a little bit of a rabbit hole, when you look at the spatial impact of social benefits. There's been some research, I think, that was published relatively recently, which shows that you can't give much money on social value on those terms because it turns out that not many people live on a mountain, and where people live is a long way away. But, fundamentally, the decisions that are made in the Brecon Beacons affect whether or not the Plass floods out there. So, there is social benefit and other types of benefit all the way through a system that they haven't got to grips with recognising. And it is very hard to do that. And I think if you get too far down the road of saying, 'This is worth x, because x number of people live within it, or they travel to an area, or they might benefit', you'll just—. You'd spend the rest of your life trying to work that out and you'll never really get anywhere. I think there has to be quite a simple way of just recognising that this has value, and you don't necessarily need to overly justify what amount you put into it, as long as it acts as a incentive. And potentially, that's—. Maybe you could say that, previously, under CAP, there was much more of a heavy audit system that maybe pushed people down into taking this route. Maybe that's less of an issue at the moment—maybe get the stuff working—but that's something to consider, really, that if you obsess too much about value in everything—I mean, I've tried in other projects—you just don't get there. And you just need to take some things as read and move forward with it.

Yes. Okay, thank you. Arfon.

Just a very quick point: if it is possible to create a social value payment, that then becomes an additional ask of the budget. So, it does, then—. You know, it does then highlight the need for even better targeting and effective use of that limited, that finite, pot of money, if it's going to incorporate value as well as income forgone and costs incurred.

Sure. Okay. Okay, thank you. Just a few more questions from me on the payment methodology, because WEL has highlighted your concerns about retaining of BPS during that transition period will leave maybe little money left for collaborative and optional elements. So, how do you propose to phase out the BPS effectively? Because we're all mindful of a need to avoid a cliff-edge situation.

Yes. I think the point that was in it, is, when you get to these massive numbers in stability payment and BPS, effectively, that's money that could be being spent on other elements of the scheme and getting them up and running, and it would be much better if farmers were paid as being part of that scheme than they are just holding on to a relatively low—comparatively low—condition payment in other regards.

I think one thing that maybe they should look at is, rather than being wedded to this 20 per cent reduction each year, actually look at, 'Well, where are we in year 1 and year 2? Where are farmers? What are the participation levels like in the new scheme and where are the optional and collaborative layers?' And maybe look again at this if you get to that point where it turns out that lots of farmers have gone into it, and actually that's constraining the money and there's a lot of money being underspent elsewhere. And maybe we can look to change the rate of decline because of that.

I think one of the things is that, when we have spoken to Welsh Government about it, they are not clear what would happen to underspend. Because they have to make—. There's a general logic as to who is going to go where into the scheme, and that decision's made at the start of the year, but they have to put the budget behind it before that. It's going to be quite obvious relatively quickly where demand is and where it isn't, and we need to see something from Government that basically says, 'Well, that money does get re-allocated, but it stays within agriculture.' Because my great fear would be— . Say the worst-case scenario is that people don't go into the scheme or lots of people stay—you know, they ride out BPS. Then the money has been set in a way that means that there will end up being underspend, and the new Government goes, 'Oh, well, actually, we can go and spend that money on the NHS instead, then, because clearly farmers don't want it.' And that's a balance of all the issues we've already talked about, about being attractive and setting payments rates right, but there should be some flexibility as we go through it to go, 'Actually, how is it being used and how can we change the step down as a result of that?'

Okay. Yes. Not easy, any options, I suppose, when it comes to that kind of transition. Can I, just specifically to Nature Friendly Farming Network and the Soil Association as well—? You've advocated for more of a results-based approach rather than an actions-based one. Can you tell us a bit about that? Because, obviously, we had evidence from the farming unions earlier and the obvious concern is that there are so many variables around climate and things that can impact on results that you are asking farmers to really stick their neck out without that security that they probably need in terms of knowing, if they're going in a certain direction, that they will be paid for that.

Yes. I wouldn't say it's the silver bullet, I think. But elements of results-based should be brought into it, and it's very much around, you know, what are your indicators, what your targets, and picking the right ones that are going to be most directly responding to the farming practices. Yes, everything is being impacted by growing conditions and migratory patterns, but, for things that are only happening on that farm, it is possible. I think what it does, though, introduce, as I've talked about earlier, is this opportunity to really get the farmer into the driving seat of that scheme, so that they're making decisions and seeing the impact of their decisions on getting greater results and receiving more payments. There's evidence right across Ireland with these schemes working. It's not a completely new concept. Welsh Government is also piloting it in a limited context with environmental impact assessment type habitats.

Yes, just to add on that, really, it would be great to see an element of further trials on this. They're trialling on the Llŷn peninsula—some successful trials there. But, inherently, it will drive better habitat management and better results in terms of habitat quality. The habitat prescriptions within the universal layer are around retain and maintain, so then there's nothing almost to distinguish between a high-quality hay meadow and one with just one or two species, or a marshy grassland elsewhere. And advice, I would say, is central to the success of any results-based scheme. If the Senedd have the budget, I would recommend you go out to Ireland to actually see these schemes first-hand and speak to some of the farmers who have been involved in it, because they do work, and the payments are sort of weighted then towards those higher quality habitats—eight, nine or 10. So, it's a team effort then between the Government and the farmer to try and improve the habitat quality, so the farmer gets more payment and the Government meet their target.

Huw wants to come in, and then I'll come to Arfon.

Yes. Arfon might want to pick this up as well, because, in the earlier evidence session, we heard the view that there may well be merit in this but it needs to be in addition to the stability that comes from, clearly, input-based payments and so on. Would you agree with that as well, that this is an added one? It's interesting you were talking about pilots, because they might show us the way, what's going on in Ireland might show us the way, but it should be on top of the other things that give certainty.

The simple answer is 'no'—eventually, no.

Eventually. Okay.

Because I think farmers—. There are farmers out there who are very good at grassland management and management of stock. In some ways, management of habitats isn't that different. It's about ensuring your habitats are in good condition.

I'd be really excited if Government actually put in place some trials on how to do results-based, not just in the optional and collaborative but right across the piece. I was a Tir Gofal officer for a number of years, and Tir Gofal agreements were quite kind of—. In some ways, farmers received Tir Gofal agreements, they had habitats and they had prescriptions in there, and it was either you achieved your objectives or you didn't, and it was quite a passive thing, really. Farmers weren't that particularly involved with it, or most farmers weren't that involved with it. I think if you developed a results-based approach where you're working with farmers to understand what habitats they've got, what 'poor' looks like, what 'moderate' condition looks like and what 'good' condition looks like, and there are payments associated with moving through that sort of continuum, then that changes the dynamic entirely. That's about farmers wanting to get their habitats in the best condition possible to receive the best payment possible.

I think the challenge then to Government would be how you construct a scheme where you can do that through a universal level, where there is probably very light advice provision and monitoring, through farmers, perhaps, taking photographs and feeding back in—this is doable—and then how do you then move through the various stages of optional and collaborative in the way that we're seeing these in Ireland, around the Burren and areas like that, where there are big collaborate partnerships working on results-based schemes. But I think these are the sorts of things that we should be trialling, and we should be trialling—. That should be the part of the development scheme, and we should be getting on and doing this now within Wales.

Just on that, Huw, I think, with the scheme in Ireland, for example, the farmer will only get a payment if they're on, I think, at least four or five out of 10, based on the co-developed scorecard. You could argue that that sort of exists now within the payment methodology. So, you get a payment for having a habitat. So, provided that it's four or five out of 10 for that particular habitat, that could be then defined as a stability payment of sorts, for having a habitat and maintaining it in a semi-decent condition. Then, as Arfon said, it's working, then, together to achieve a higher end score. 

Okay. [Interruption.] Briefly. 

I don't think anyone here is advocating that there shouldn't be a universal payment, a sort of base payment. And in fact, I think there are some NGOs who have done some work to show how, in some situations, there needs to be a payment to provide a viable system, a farm system, that could then deliver for environmental objectives, so particularly in uplands, marginal settings. But the key thing is how much budget that bit commands and what are the conditions, what's the change to the status quo that comes with it. 

Okay. Thank you. Right, we have 10 minutes left and a couple of areas that we still wish to cover. So, I'll ask Janet to take us into the next one, which is about the regulatory baseline. 

Thank you. Are you aware of what is required under national minimum standards, the regulatory baseline over which payments will be made? Has that information on the regulatory baseline been really clearly communicated with you?

Arfon. 

I think the kind of—. As an organisation, as a network as part of WEL, we've been very clear on the need for national minimum standards to underpin the scheme—national environmental minimum standards—to tidy up existing regulation, to bring it into one place, to fill gaps around—. There are gaps in there around soils and water, and some biodiversity gaps in there. So, it would be an opportunity to pull together a very clear set of rules and regulations and standards in a way that could be presented to farming, in the way that cross-compliance was. But, importantly, there would also be very clear civil sanctions underpinning it as well. Because I think there's an awful lot of regulation out there. I think there is—. Even if it was implemented more effectively, we'd be better off than where we are at the moment. I think it does need explaining more clearly to farming. It does need packaging up. But I think there does need to be a much more effective system behind it to ensure that those practices that do have a damage on the environment, if they're not resolved, then there should be a means of being able to penalise those effectively. 

Yes, okay. So, is the balance right, then, in terms of what you would expect to deliver as part of a regulatory baseline versus what you're being paid to achieve? Because, in evidence, Dr Petetin's paper, which we'll be interrogating later on under another panel, refers to universal action 3 on soil health planning, and says that that's an action that clearly enables farmers to meet regulatory requirements, whereas yourselves and others are saying that maybe management of SSSIs should be rewarded despite them obviously being a regulatory requirement that would fall under the baseline. So, is the balance right as it stands?

Well, as you mentioned soils, there is a case to say that, in England, there's a requirement under the farming rules for water to test soils, to have a soil test that's within five years. So, it may not be as frequent as what's being proposed to be rewarded, but there isn't that equivalent within Wales. There is, within the enhanced nutrient management approach, a requirement to test, but, in every other aspect, I believe, of the agricultural pollution regs, it's just a recommendation to test, rather than a requirement. 

I think on the SSSI—and I can't remember if we covered that—there is a query about the way that—. The proposal is that the universal baseline payment would not reward on an area basis management of SSSI land, whereas the example of the habitat requirements that come with that scheme rule suggested things that were going above the legal minimum of not damaging the SSSI, so things like grazing it in a certain way. So, I think there could be a gap there. 

Okay.

If I can just come in on the communication of what is required of farmers, I think the SFS process in itself is an exercise of, perhaps, how communication can be improved, in that I still hear some farmers and members of the public of the belief that you have to plant 10 per cent of trees in addition to what you have, that having the 10 per cent trees and habitat means taking 20 per cent out of production. So, there's a lot of misinterpretation, I guess, and that's just on two scheme rules, let alone a wider regulatory floor. So, I think there's an exercise there to try and improve that communication.

Yes, sure. Okay.

Incredibly quickly: I don't disagree with anything that's been said, but regulation only works so far—there needs to be enforcement as well. Wales is traditionally very bad at enforcement—it does not fund NRW sufficiently to do this. NRW are under massive pressures, and this falls down the list. So, as part of this, that needs to be sorted out as well.

Thank you. It's an important point. Thank you. Okay. We'll come on to Jenny, then.

Thank you. I just wanted to look at the issue for small farms. Obviously, the eligibility criteria has been reduced to 3 hectares. But that still disadvantages new businesses, particularly horticulture. You don't need a lot of land to produce quite a large amount of vegetables and fruit, particularly if you use polytunnels. And we're trying to strengthen the foundational economy anyway for reducing climate emissions. How could we stimulate more horticulture, to enable us to feed our villages and towns, and our schools in particular? What needs to change to ensure that we've got food security improved?

I agree that, if you've got 3 hectares, and if the payment is area based, then you're not going to benefit a lot from the scheme. I think support for more start-up horticulture enterprises, and mixing that together, integrating on a more mixed-farming system, would be welcome. The skills and knowledge as well; I think Farming Connect actually has a bigger role to play in concentrating more on the horticulture side of things. And there's providing a security of access to markets, I think. So, if you're a livestock farmer, or an arable farmer, you're fairly secure in your markets at the moment. Diversifying into a new enterprise, obviously, brings its own challenges and uncertainties, new ground, not sure where the markets are. So, in terms of how the Welsh Government can help—public procurement, certainly, and the resourcing of local fruit and veg for schools and hospitals from local farmers would be something that we would greatly welcome.

Arfon.

I think, just on the point that Rhys made there about—. Earlier on, I mentioned a woodland creation strategy; I think that's part of a wider land-use strategy. But I think there's clearly a need for some type of food strategy in Wales that talks to a land-use strategy, to align production with consumption. And I think that that would then allow the types of responses that Rhys described there, including public procurement.

There we are. Okay. Andrew.

There's a lot of debate around this scheme, around how it's supporting or guiding sustainable food production. But we're having that debate in the absence of anything that's set out in policy terms, as to what and how, and how much of what types of food Wales should be producing. So, there is that bit of a void there, and I think setting that direction would be the first thing. You could see that, for example, working for organic, with the Welsh organic action plan, and we haven't had one for many years. But there are now many more tools available to make that work, not just to support production, but also to make sure that it's local consumption and it's benefiting schools and local authorities, and that sort of thing.

Sure.

It's obviously a very hard agree from me. I think I should really quickly fly the flag for Food Policy Alliance Cymru, because WWF has been involved quite heavily in that, in trying to bring forward a national food strategy for Wales. And I think it is the elephant in the room in all of this—that we're trying to create a more sustainable agricultural food system, but the Welsh Government's only really focused on the production and support element of it, and there's a whole other plethora of things that need to be done. And particularly when you talk about the size of change in the wider economy, that's where the great gains are to be had, because we desperately need to improve nutritional security for Wales, because it's very weak at the moment.

Sure. Okay. Thank you. Huw.

So, in the 30 seconds remaining, I'd like your thoughts, please, on advice and support. We've talked about it a lot, both in terms of the quantum and the quality, and where that should reside. NRW have a role in this, Farming Connect have a role in this, I suspect that some expertise within other organisations out there will have a role and so on. So, your final thoughts on this particular area, as to how we align this scheme and where it goes, and the wider issues of farming support and advice, with what we're trying to do here, because it's quite a leap in what we're trying to do. Go ahead, Rhys.

Yes, just looking at past schemes, specifically Tir Gofal, one of the biggest positives from that was the availability of a local officer to help not only get into the scheme, but through the implementation as well, and having a trusted, knowledgeable officer to help during the whole entire process would be welcome. And that person could help signpost, as you say, to different advisory bodies like Farming Connect.

Where would that currently sit, sorry—that trusted individual—in your mind? 

It could be a Welsh Government officer, it could be a Farming Connect local development officer. But it's the quality and the access to that advice that is important. 

Andrew. 

We're constantly saying that it should be seen as an investment in the results of the scheme, not a cost. We've got to change that conversation around what it's going to cost to put advice into it. Having some sort of standards would probably be essential to ensure that there's consistency, because, as Rhys says, there could be a multiplicity of different delivery routes. I can think of the vets, for example, being involved in this. They're just looking at animal health, but there's a wider farm system that needs to be considered, and so they need to have, I'd say, some awareness of SLM and what the scheme is trying to achieve. So, there are all these different routes available. 

Arfon. 

Just a few things, I guess. The advice needs—. I think the big challenge with advice now is combining it and integrating it, because I think up until now it's been very siloed advice, and this is the big step change of this scheme—this joined-up delivery of objectives. So, we need the advice to do the same as well. I think that something that Farming Connect and Government could do now is get a suite of demonstration farms in place that reflect or represent the main farming systems in Wales—demonstration farms that do, again, demonstrate the join-up of these four objectives across the piece. I think the advice needs to include why we need to change as well as the how; I think that's the bit that's missing at the moment. 

And also, from personal experience and experience of projects we deliver on the ground as well, it's having trusted individuals who are going to stay the course as well. I think that part of the problem we've seen in recent schemes or recent years is farmers don't really know who's going to turn up next on their yard to give them the advice. When I was a Tir Gofal officer, my role was to work with farmers over a period of years. 

Okay, diolch yn fawr. Alex. 

Nothing to add. 

There we are. Okay. Well, can I thank you all for your attendance today, but also for the way that you've engaged in this very long, drawn-out process? I'm sure you feel that it's—. Well, it has been going on for years, but just to pay testament to the fact that you have been very diligent and robust, and always willing to come to this committee as well to share your views, and to us as individual Members as well. I'm very grateful. I pay testament to the work of the farming unions, and it's just right that we recognise the work that you've been doing for a long, long time on this as well, and, no doubt, for maybe months to come also. So, with that, thank you so much for joining us.

The committee will now break for lunch and we'll go back into public session at 1 o'clock for our final evidence session today, but I would ask Members to maybe be here about five minutes before then, so that we can just have a quick pre-meeting. Diolch yn fawr. Thank you. 

A very warm welcome to you both. We'll go straight into questions, if that's okay, and I'll kick off, if I may, starting with you, Dr Petitin. You say in written evidence that a very siloed approach is used in the scheme design. Would you be able to just expand a little bit on that?

Thank you very much for the question. I guess I should start, perhaps, with a positive here, which is that we see a lot more of the interconnectedness between farming, the environment and food production in the SFS than we do, perhaps, in other schemes and other proposals across the UK. So, this is really a positive, and it also can be seen in the sustainable land management objectives. We have this complementarity between those three aspects, which is really key.

However, when you look at the implementation of the objectives into the scheme itself, we can clearly see that there are some tensions, and in particular with the lack of a agri-food strategy, or an agri-food policy, if you want to put it another way—it is clearly missing. We are only looking at one aspect here rather than looking at it from a horizontal perspective across the agri-food supply chain, and I think this is something quite important that is missing.

Another aspect, perhaps—and again, putting emphasis on food production here—is how little there is in the text of the scheme on food production, and what type of food we want to encourage: perhaps more fruits, more veg across Wales. And, yes, there is a little bit on orchards, and how they can be used—great, but a bit more of that would be useful, and also thinking about linking this also to the type of food and also the health aspect of the food that we grow, which I think is really important, and the impact on obesity, and impact on alcohol consumption, if you want to put it this way as well. I think it's important to bear that in mind. 

The other aspect I wanted to mention perhaps straight away is the lack of emphasis on regenerative farming. There's a bit of organic, but not very much. And I think, again, we need to be forward looking. We have the Well-being of Future Generations (Wales) Act 2015, and I think every one of us was hoping for a little bit more in terms of this emphasis. Scotland is doing it in its Agriculture and Rural Communities (Scotland) Bill, and I think a lot could be done in terms of looking at this horizontally, as I said, and looking at this interconnectedness, rather than, I would say, adopting a one-size-fits-all approach, which is basically what happens in the scheme.  

Just coming back to the lack of a wider strategic context, if you like, and that it needs a stronger policy context, with the best will in the world, that isn't going to be addressed in the timescales that we're looking at in terms of delivering, potentially, a sustainable farming scheme. So, do you accept that maybe it has to proceed in that little bit of vacuum, or do you actually feel that maybe we should be pausing, putting stronger policy frameworks in place, and then allowing it to feed into those?

What do you mean by the timescale?

Well, everybody's telling us that this has to start next year.

Yes—I just wanted to clarify. This is a big issue, yes. If we think about the idea of a just transition, it is just too quick. The next iteration of the scheme will be heard over the summer—whether that's early summer or late summer; we're looking at, perhaps, September—and then that would mean three, four months for farmers to actually get there. And, yes, this is the scale of it all. The scale and the pace of it all is very concerning, I completely agree with you. And the fact that all of the actions included in the scheme have to be done 2029. We're talking four, five years in order to get there. This is something that's really concerning. Ideally, what you would want is a holistic approach, as I said, looking across policy coherence, environment, agriculture, food—and trade as well needs to come in—so that we have, actually, policy, an agri-food plus policy, that makes sense. I know that trade isn't devolved, but still, trade is clearly impacting on farmers on a daily basis.

So, are you advocating a pause, then, in order to get everything lined up, or as much as we can lined up, before we actually expect farmers to be implementing this?

A pause, maybe, but at least something that is more incremental, that goes not over five years, but that we look at 10 or 15 years.

Okay. Huw.

That leads towards what we heard in the session immediately before lunch, where there was an argument for a phased approach. But let me just push back at you. It's the old Churchill argument during the second world war: he gets offered three options on radar, one of which will take about five years to complete, but it'll be superb, and he says, 'Give me the one that'll deal with the issue that is now coming across the channel.' The phased approach, I just put to you, might be a way of doing this, so that we can also put that alongside the need to develop those overall strategies as well, because that signals a direction of travel. But let me—I'm just playing devil's advocate—push back at you. We don't need to delay everything; we can actually move ahead with some things. We need to move ahead with things.

I agree. We need a starting point and we need to start sooner rather than later, but it's the speed and the pace we're going at. We're talking four, five years' time. I know that there are certain targets that have to be hit with the UK Climate Change Committee, but some of those, for instance having 20 per cent of the UK agricultural land going towards changing its agricultural use to sequester more carbon and reduce emissions, are by 2050, not by 2029. So, we need an incremental, phased approach, by stages—the term doesn't really matter, as long as it's progressive—rather than being quite abrupt.

Can we bring Professor Donnison in with any thoughts about what we've been talking about?

I'd very much agree with what Ludivine's been saying, in the sense that it trying to have something that's more flexible than one-size-fits-all, and also the phased approach. I think probably we all recognise there is an urgency in terms of tackling climate change. So, it's how do we move quickly in those areas where it's easier to move quickly, and then how do we perhaps have a more phased approach for those that are more challenging.

Another bit in this, which I was thinking about before today, is I think one of the challenges here in terms of us academics is that, basically, our careers are built on complexity—dissecting complexity is what we do. In the case of farming, it's basically handling the complexity of the markets, the climate and so on, and I guess from a policy perspective it's actually looking for simplicity. Somehow we need to navigate something that's, I guess, flexible and complex enough to actually achieve the right outcome, but actually recognises the need for something that's simple enough to deploy. I think that's really what the challenge is here in terms of where we're all trying to get to.

Is it not a bit tragic that we've taken seven years talking about this and we still haven't come as close as you'd like to what you'd like to see? We touched on this earlier with the sectors: the Government says it's co-design, well, why were there 3,000 people on the steps of the Senedd if the sector was part of designing the scheme? Clearly, many people don't wake up to the reality, maybe. We've seen it in other spheres, haven't we, when there's public consultation and all that kind of thing. Unless it's imminent or directly affecting individuals, then they might be late getting to the discussion, really. But is it not disappointing that we're still talking about this?

I think it is. But I guess you can probably see how it's happened, in the sense of, when you're talking in generalities, I think we all agree about this need to tackle climate change, the need for hopefully achieving net zero and how we do that. That bit's the easy bit, it's actually when you start drilling down in terms of actually what does this mean for individuals that it becomes more complex. I think, probably, actually, maybe, for farming, it's more difficult, let's say, than other sectors. So, in a sense, if you are dealing with manufacturing, you're talking about a fairly small number of businesses. In effect, the automotive industry moving from internal combustion engines to electric vehicles—that's a small number of manufacturers. Whereas here, you're dealing with a very large number of small businesses. I think that's probably part of the challenge.

Yes, and I was maybe just teasing people a little bit there. Can we come to Janet?

Thank you. Is there enough focus in the SFS design on the outcomes and results we want to see for the environment rather than actions? If not, how could outcomes be incentivised?

Thank you for the question. When reading the text of the scheme, it's very clear there are a lot of 'dos and don'ts', as I call them, which, I have to say, from a farmer's perspective, is much easier to fulfil than just obscure, sometimes, goals and outcomes and objectives that have to be fulfilled. So, from the perspective of farmers, it's much, much easier to have 'Yes, do this' or 'Don't do that'. But the whole idea was to have an agricultural policy that delivers on public money for public goods, wasn't it, and here we're kind of going back to what existed before, a little bit, with the CAP: 'Let's do this, let's not do that'. So, yes, there are certain discrepancies.

Something I've wanted to stress is the difference between the objective in particular of sustainable land management on food production and how very little there is in the scheme in relation to food production, as I said previously, in terms of what type, how much et cetera. I think we need to bear in mind that with the 10 per cent of tree cover plus 10 per cent of habitats, there will a loss of land that would occur. Does that mean, then, more intensification? Does that mean more intensive farming? I don't know—I was just wondering. So, here, where are the actions in terms of what type of food we want to grow?

In terms of climate change, and going back to the objectives, it's very clear that it's at the heart of the scheme. But, what, also, I struggled to see a little bit is the emphasis on biodiversity and the resilience of ecosystems. So, yes, there is a bit on habitats—quite a lot on habitats—and woodland, but there is little on the diversity that we need in terms of having resilient ecosystems and to have resilient fauna and flora. I think that a little bit more on that would have been useful.

The other one, also, that is something that I say all the time is where is the emphasis on rural development in this. Where is the emphasis on the Welsh language and the culture? I'm not really seeing it here in the sustainable farming scheme. So, all of the second pillar that we had under the common agricultural policy—all of the social aspects of the common agricultural policy—is not really present here, and I think this is another big gap when you compare the objectives in the agriculture Act and the scheme itself. 

Iain, do you have anything to add?

My thoughts on this are about how this maps onto some of the, if you like, megatrends that are occurring in agriculture globally. I think there's clearly a focus within the sustainable farming scheme proposals around the climate change and sustainable agriculture piece. But you've also got these big bits, and, again, hearing about food and that shift in terms of diets, and, actually, seeing a greater diversity of crops—part of that in terms of, actually, becoming much less reliant on six crops providing the vast majority of calories globally. We're going to be seeing a greater diversity of crops; in the case of grassland, that's going to be more species within swards.

Again, there's not so much in there about how do we align this with, for example, the Eatwell plate in terms healthy generations now and in future. So, I think there's a bit there, and, also, around those technologies—so, some of the technologies that we already know and some of the technologies that are going to be coming down the pipeline, and, really, probably, those that we can see, because, again, with the urgency, we don't want to be waiting for technologies that, really, are too far away from deployment. But, I think, also, thinking about how we deploy those technologies within trying to achieve that. But I think food, in particular, in relation to addressing things like the Eatwell plate and diet, is really key in this. 

Thank you. Janet.

You say in written evidence that 17 universal actions are a lot of requirements for what may be very little money available. Which of the universal actions do you believe are critical for a successful scheme and one that delivers for farmers and the environment? If all of the panelists could speak on this, please.

I would say that all 17 are needed. I wouldn't take one out and put it in the bin, if I can—[Laughter.] That was a joke. All of them are needed, but it goes back to what we've been saying, which is around the rush, the speed and, as I said, the uncertainty around the budget—how much financial support are we actually talking about? There is massive uncertainty in terms of what's going to happen after 2025. We just don't know. I think a big worry is that farmers could be signing up for those schemes, and then, at the end of the day, there may be so very little financial support that they could struggle even more, and I think this is really something to bear in mind. Something that really, really concerns me is the pot of money that will be available to farmers.

Now, in terms of which actions I particularly welcome, I thought the emphasis on continuing professional development is really important, in terms of, as Iain said, new technologies, what's out there, what can help us. I think this is really important, so that farmers keep an eye out and are informed about these new technologies. I think two of the actions are really important as well, in terms of focusing on soil, so action 3 and action 4 focusing on soil health and multispecies cover crop. This is something that was clearly missing under the agricultural policy. There was never a soil directive. There was very little on soil. And I think this is something really to welcome. Of course, the link also with the water resources regulation is also really welcome, in terms of linking that more closely to farmers. So, I think there are some really positive and beneficial changes in terms of the actions, as well as, of course, the greater emphasis on habitat, woodland, pond et cetera. But the soil, I think, is a really different and very, very positive one.

Before I bring Iain in, one of the clearest messages that's come through from the roadshow that the Government held was that there are too many universal actions—17. Anecdotally, many farmers have told me that they were sat in those meetings when the officials were running through the actions, and by the time they got to 6 or 7, they'd already decided that it isn't worth it. So, I don't know whether you have any reflections on that. There's what we'd like to see and what maybe is practically acceptable to many. Interesting, maybe as academics, but not surprising, that the CPD is of particular interest to you. That has been held up as one the sector feels is quite condescending. Now, they're not dismissing that there's always room for learning, but when you have the same requirement for a small family farm and maybe a mega dairy, big business farm as well, then, really, it doesn't feel, it doesn't sit comfortably—a few reflections. Huw, do you want add to those?

Can I just add to that? It seems that one of the things missing from—. If I was a farmer out there now—you don't look at the complexity of this, and many won't make representations even at the consultation, they'll leave the farmers unions or they'll engage at a meeting place, and leave the NFU, FUW and others to do it. But in terms of interpreting from 17 points or even if there were 25 or 50 points, what seems to be missing to me, if I was a farmer out there now doing it, the same as if I was somebody in a business sector looking to implement some new Government complexity/simplicity thing, is I'd want to see models of how this would work for my farm. So, I wouldn't be interested in the 17—'That's too much, it's just beyond me.' What I'd want to see is, for an upland hill farm with some light lambs on it, and a bit of grazing with some cattle, and lots of open spaces and a bit of common land, 'Here's the sort of scheme that might apply to you and here's where the advice will now come from'. If you are lowland with a mix, and perhaps a small dairy as well, 'This is the sort of thing that you'd be looking at and here's a model that might work for you, and now here's the advice.' So, I just wonder whether the point we've got to needs to be taken further and explained better. 

Let's go to Iain on this first, then.  

Actually, my point was going to be almost exactly that. 

Swot. [Laughter.]

Again, there's a bit about how do we work with the complexity, and I think it's almost like those pathways, in the sense it exactly is, 'If you're this type of farmer in these kinds of areas, it will be this set', and you're not faced with this long set of actions. Again, it's this one-size-fits-all. It's the fact that land is different, farms are different, and it's how do we come up with something that's simple enough to deploy, but is, actually, recognising the diversity of farms out there. So, I think it's exactly that. That, to me, sounds sort of sensible—'This set of actions applies to these kinds of farms.' And maybe give people, if there are some other things, if you like, on the menu that they think, 'I could really do that here as well'—they have that option—but, basically, 'This is the default set that you would have.'

Yes, because even CPD would stun me a little bit, as a farmer, I've got to say. But if it was said, 'Well, you're this type of farm, so what you might want to do is look at some of the alternative crops', or 'If you're this type of farm, you might want to look at this type of light cattle grazing' and so on—yes?

Yes.

That means more to me than CPD.

Absolutely.

It's six courses, isn't it? Yes, okay. Jenny wants to come in as well, and then we'll come back to Dr Petetin.

Thank you very much. Thank you, Dr Petetin, for pointing out that big farmers and dairy farmers seem to be the most vocal, at the moment, against the sustainable farming scheme, because, of course, they have the most to lose. So, how do we focus on a just transition where those who have the least are given the most support? That could be at risk if the Government responds to lots of noise.

Thank you for the question. I'm just going to come back to one aspect here, and something that I found quite positive in the scheme, in action 1, on benchmarking, where there would be an opportunity for farmers to compare how they are doing in comparison to the rest of the sector that they are based in. I think this is also very positive, because you mentioned, 'How do I compare with other types of farms that are similar to mine?', and I think this would be really good. Because, very often, it's the data, the information, as you said, that is missing for farmers, and sometimes it's just a little push that would enable them to do so much better, and they want to do better, it's just that sometimes, as you really well said, they just need a bit more information, what's relevant to them. And that benchmarking would be quite useful, I think.

Now, sorry, going back to the question asked, yes, in terms of the lack of transition, I'm sorry, I'm going to repeat what I said just before, but it's two things mostly: the speed and the uncertainty around the budget that creates those concerns and these worries for farmers. As we just said, in terms of the speed, farmers will have nine months to get to where they need to be in order to enter the schemes. I know that some actions are incremental, so it's not all at once from day one, but still, we're talking nine months, even less, which is incredibly short. And then, as I said, the budget: is it going to be financially viable for farmers? We just don't know. Welsh Government doesn't know. We need to wait until we have the next Government in place to know how much will come to farmers.

And then perhaps something I just want to stress—I'm going to go back to when I was quite young—when there was a change in the common agricultural policy reform in 1992—coming from coupled support to what exits currently under the CAP, so area payments and headage payments back then as well—farmers didn't protest. Farmers knew that they had the financial incentives to change, they knew they had the time to do it, and there were no protests across Europe. And here what we are seeing is something completely different, because we are in a different set of regulations; there are also these other things: new trade, new regulations, new regimes, as well as the issues that I have just mentioned. And I think this should be also acknowledged—that farmers don't come to protest just for the sake of it, it means that there is an issue and it needs to be acknowledged. And in the start, when the First Minister—well, sorry, the previous First Minister now—refused to engage with farmers, that also set it in a certain light in terms of comparing to the EU, where the Commission was like, 'Okay, we're going to talk to you.' And I think it's also the relationship that there was between the Government and the farmers that was already, 'Okay, they don't really want to engage', and that's really problematic in terms of getting to this just transition that we need.

Okay. Lots of issues there. Could I just ask Professor Donnison to enter into this discussion as well, because in your paper you're saying quite clearly that the world is moving on anyway and we absolutely have to look at new crops, new agriculture and less dependence on six crops, which are, presumably, all dominated by large multinational companies whose only concern is profit? There's almost nothing about vertical farming in any of the evidence that we've been presented with, and yet we can see just how much can be produced, even in just a simple polytunnel. But it's difficult for people to change to what they don't know. Both the Government and all the other stakeholders—how do we get them more focused on supporting people to step up to the plate on the global food security issues we all face?

On that, I guess if you look at any sector around the world, in terms of achieving change, whether it's semiconductors, whether it's agriculture, it is around—in a sense, it's academia, industry and policy making identifying those pieces and doing that. So, it feeds into some of the other questions as well. But how do we have parallel streams of the innovation that's been supported in universities, colleges and so on and in industry, and how do you align that, in the take-up and actually helping those businesses, in this case farms, to adopt those, potentially early, and help them take those risks, particularly, again, if we want to move fast, which I think we do, on these where we can? So, if we have that as a driver, how do we get some of these technologies that we've got sufficient confidence in, and there are a number, that we say, 'Right, okay, how do we get those deployed and how can we support those farmers that are willing to engage with that as participatory research, for example, where there are examples of that already taking place?'? But I think that is a challenge, those sectors.

You mentioned controlled environment agriculture, and it's a good one. These extremes of vertical farming—it's a bit like the space race—there are probably going to be a fairly small amount of those, but, absolutely, polytunnels, combining that with photovoltaics, pumps and so on—. We're seeing over the border, where polytunnels have fairly transformed agriculture, there are opportunities there, I think. And, again, those more into, maybe, that horticultural space, they're fairly small areas of land. In a sense, some of the people who've taken these technologies say, 'I've taken some fairly low-grade land, and I'm now growing the kind of produce that you'd be producing on much higher grade land.' So, that's a way to address, maybe, the fact that Wales doesn't have a high proportion of some of those classic horticultural lands that would be found in the east of England.

The other issue that we face is that I think it's probably a minority of farmers who are actually members or any of the organisations who are representing their members. How many people are not a member of either the NFU, the FUW or the tenant farmers and what do they think? Do we know?

Well, I don't know that we can answer that question, but it's a fair question to ask, isn't it? How are we hearing all the voices, really? We're going to have to move on, Jenny, I'm afraid. We have a number of other areas we wish to consider. I was going to ask whether the balance is right between what's included in the regulatory baseline and what would be rewarded under the scheme, because in your paper, Dr Petetin, you reference universal action 3, I think, on soil health planning, and you suggest that that's very much something that farmers would need to deliver in terms of meeting regulatory requirements, yet are being recompensed, potentially, for that. We've also heard that SSSIs should be rewarded, but, of course, aren't, so there's a bit of inconsistency, potentially, there or—what do you want to tell us about that?

Well, yes, there are some inconsistencies in terms of, not where the regulatory baseline is—we know where that is—but in terms of what is then financially supported under the scheme. The idea very early on for the Welsh Government was to apply the polluter-pays principle. And obviously, the 'polluter pays' means that farmers should only get supported if they go beyond the regulatory baseline. And, of course, in some of the actions—in particular, action 3—it's a clear link to meeting the regulatory baseline. 

And I think—. Well, is it delivering on what the Welsh Government promised? No. Is it a good thing? I would say 'yes'. We need both. We need the farmers to get to where they need to be in terms of, when we have new regulations, stricter regulations, having an action that rewards them for doing so, I think this is great, but it doesn't mean that, in 10 years' time, we couldn't do more and improve on this. I think it depends on, when we have a shifting baseline, then we should help the farmers get there; I think this is really important. But other aspects, like the 10 per cent tree cover, like the 10 per cent of habitat, go beyond, well beyond, the regulatory baseline. And those deliver on the polluter-pays principle, and I think that's really beneficial—okay, with various issues with those. But, in terms of the mix between meeting the regulatory baseline and then implementing what the Welsh Government said in relation to the principle, that is welcome here, I think.

Okay. Huw.

What does strike me, Chair, out of this conversation is that, if we could get this broadly right and we take a commensurate approach to using the available money to phasing in the important things first—. And we'd have to agree what the important things first were, but, on things like this, where you are putting a financial signal in, that, on a hard-line approach you would say, 'That should just be within the regulatory framework; soil should be of a good standard', and we can agree what a good standard is and how you and so on—. But, if they're not there yet, you put in a measure, but then, like the old European context with CAP, you come to periodic re-evaluations, where you then go—hopefully, not 10 years' down the line, but you say—'This is in place, we envisage, for at least the next spending period, and at the end of that spending period, we will re-evaluate measures blah, blah, blah', because actually they should be driven by the regulatory baseline. So, I just wonder whether that's the way you would envisage a scheme like this working, to give certainty, but also flexibility—that you say, 'Some of these are ones that we anticipate will change, or maybe even disappear over time, because they'll be incorporated into a regulatory baseline.' Is that something you'd agree with?

Iain? Yes. Well, both.

Yes.

Yes, completely agree with, yes. Because farming, like climate change and biodiversity, evolves and the urgency may be on something today, but might be different in five years' time, and I think that having a scheme that evolves, but not changes—

All the time, exactly.

—every year or two—. No, no, I'm not saying that at all. But there are those plans, over four or five years—nd I think at least five years, but, often, when you are looking at really protecting the environment, we are looking more at 10, 15 years. Then, yes, we are looking more at this kind of change to ease farmers into those changes, rather than just changing it every couple of years—that's not what I'm saying; that's not what I'm saying at all.

No. I mean, I guess it's that bit of how do we engage with the maximum number of people, because that's what will give us the outcome that we all, hopefully, collectively want, and so it's making it easy to engage, and then, once people are engaging to, in a sense, have that journey to work on that baseline.

Thank you. Okay, Jenny's going to take us on to another area now. 

Okay. Dr Petetin, you, in your written evidence, note that organic or environmentally friendly farmers would struggle to meet some of the requirements of the scheme. And I wondered if you could just elaborate on that.

Thank you. Well, when you listen to the news or you watch the media and it says, 'Well, this is all to green farming'—

I think I've frozen.

Can you hear us, Jenny, because we can hear you?

I can now, yes. 

Yes, you're back now.

I missed the very beginning. I'm sorry.

That's fine. Sorry, carry on.