Economy, Trade, and Rural Affairs Committee

We'll move on, therefore, to item 2 on our agenda, which is papers to note. Are there any issues that Members would like to raise from the papers? Sam Kurtz.

Thanks, Chair. Have we had any response from the Minister to item 2.4, which is a letter that we wrote?

No, we haven't, not as of yet. Are there any other declarations of interest? No.

We'll move on, therefore, to item 3 on the agenda, which is an evidence session. This is the second evidence session for the committee considering the general principles of the Agriculture (Wales) Bill. We're hearing today from the NFU and the Farmers Union of Wales. I note that Dr Hazel Wright is taking part virtually. May I welcome the witnesses to this session? Before we move straight to questions, can I perhaps ask them to introduce themselves for the record? Perhaps I can start with Dr Hazel Wright.

Hi, I'm Hazel Wright. I am senior policy officer at the Farmers Union of Wales.

Diolch yn fawr. Libby Davies.

Hi, I'm Libby Davies. I'm the Senedd and parliamentary affairs officer for the Farmers Union of Wales.

Dylan Morgan.

Bore da. Dylan Morgan, head of policy, NFU Cymru.

A Huw Thomas.

Hello. Huw Thomas, political adviser, NFU Cymru.

Thank you very much for those introductions. Perhaps I can just kick off this session with a couple of questions. Obviously, as you know from the Bill, there are four sustainable land management objectives. Would you say that those objectives are appropriate, and would you advocate any other objectives that you feel should be included in this Bill? If I can start with Dylan Morgan.

Thank you, Chair. Just to set out before we start that, obviously these are initial thoughts; it's still early days in terms of going through the Bill. So, as you say, as time develops, perhaps we'll come to a more detailed position.

But I think, just starting off with sustainable land management in general, although it's not defined in the Bill, it is defined in the explanatory memorandum, and we don't actually fully support the definition that Welsh Government have got for 'sustainable land management' within the explanatory memorandum. We believe that there's another definition based on a World Bank definition that is more comprehensive, really, in the fact that it looks at land, water, biodiversity and environmental management alongside the need to meet rising food and fibre demands while sustaining ecosystem services and livelihoods. So, importantly, it adds the importance of food production and rural communities within that definition.

I think in terms of the objectives that are laid out in the Bill, it is fair to point out to begin with that Welsh Government seem to have made significant progress since the original 'Brexit and our land' in terms of their thinking, and it is pleasing to see that food production now is placed as a first objective, which is quite surprising to say, really, because you'd think, as an agricultural Bill, food should be front and centre. But it is pleasing to see the progress that Welsh Government has made. We believe that the first objective needs to be strengthened to recognise our responsibility globally to maintain and enhance food production, given the challenges that we face across the world at the moment. So, we believe that it should be amended, really, to highlight the need to enhance the production of food in an environmentally, economic, social and country-sustainable way.

I think, with regard to the fourth objective, again, this is something that's developed into Welsh Government thinking over the last four years, and it's pleasing to see that recognition of the role that we play in terms of managing the countryside and the language. But I think it doesn't highlight enough the integral role that farmers play within that, so I think we should be highlighting that it's farmers that deliver that, so, it's to support farmers to deliver those objectives.

We would be keen, as well, to see the addition of a fifth objective to recognise the importance of a vibrant farming community—farming in terms of delivering vibrant rural communities. So we'd be very much looking at a fifth objective to recognise the role that we play related to the economic activity on farm, because of what that then delivers, really, in terms of rural communities.

Okay, thank you. And Hazel Wright, would you like to come in on this?

Yes, just to say that I totally agree with Dylan on those points. You can't achieve the other SLM objectives without farms that are financially viable. And one of the reasons why it's really important to look at these objectives in that light is to futureproof farm policy, because there may be a situation in the future where there is a change in policy that operates under the same SLM objectives. Now, if farm viability and economics are not part of those objectives, then that could take a shift change away from policy in the future, because it still works under the SLM objectives but it's not inherent as part of them. So, I think it's incredibly important to recognise that it's not just about today and about this farm policy, but to futureproof it as well. But, I completely agree with Dylan on that.

Okay, thanks. And I know that Hefin David would like to come in on this particular issue. Hefin.

Yes. Just something that was said at the very beginning rang a few alarm bells—the fact that the definition of 'sustainable land management' is disputed. I'd just like to take a step back and understand the dialogue that stakeholders have had with the Welsh Government prior to the development of the Bill. Have these concerns been raised? I know that we're at Stage 1 and we get the opportunity to make amendments later and raise these concerns, but normally, you'd expect some dialogue with stakeholders to get these kinds of basic things tied down. So, I'd just like to understand that, please.

Dylan.

The dialogue has obviously been through—there have been extensive consultations, really. It started off with 'Brexit and our land', followed by 'Sustainable Farming and Our Land', and then, obviously, the White Paper ahead of the Bill. So the definition of 'sustainable land management' was certainly within the White Paper. I think it might have been in 'Sustainable Farming and Our Land' as well, but I would have to check. We have consistently highlighted that the definition that Welsh Government use is based on a definition that's come from the United Nations. The point is that there are other definitions out there, and, as you say, the one I quoted comes from the World Bank, basically. As you say—

So, with that in mind, can you help me understand how fundamental is this as an issue for the Bill?

I think what's important is what we are talking about—what are the key objectives? Now, the definition of 'sustainable land management' isn't contained within the Bill, it's contained within the explanatory memorandum. But, obviously, the Bill talks about—. There is a provision about sustainable land management. So, SLM finds its way through the Bill, but there isn't the exact definition within there. Now, as I say, the objectives have moved forward, and, as I mentioned, it's pleasing to see that food and the role that farmers play in terms of caring for the countryside and the Welsh language are within there. So, I believe that progress has been made there. Obviously, we would like to see further progress around strengthening food production and the importance of farmers in terms of underpinning rural communities and rural livelihoods.

Thank you, Chair.

Thank you, Hefin. Do you believe that the Welsh Ministers’ duties in relation to monitoring and reporting in Part 1 are actually sufficient to give an overall picture of progress on the sustainable land management objectives? Huw Thomas.

Diolch. Thank you. I think we've considered those. We take the view that Welsh Ministers need to consult with the industry on how they intend to monitor and report against these objectives. I think it might be desirable to see these objectives anchored in some sort of reporting mechanism on domestic food production, possibly. We'd emphasise that any indicators set or targets set have to be realistic and achievable, of course, as well, with a defined timescale. A lot of them will be quite long-term aspirations as well, so they will be quite long-term processes. We are considering the duties and I think we'll probably respond more fully when we get back to you with a written submission on that point. But, certainly, they need to be realistic and achievable in terms of what they ask people to do.

Okay. Libby Davies.

The FUW has also welcomed provisions in the Bill to improve scrutiny and transparency, particularly given our longstanding concerns with the programme monitoring committee. Picking up on the point that Huw was making about the long-term objectives of this scheme, the five-yearly impact report assessments that will be used to determine the effectiveness need to consider that some of the actions within this scheme may take longer than five years to fully see the effectiveness, so we're considering that. For example, carbon sequestration, we would be concerned with any policy changes that may occur upon that report, given that it needs to be allowed time to fully see the effectiveness.

Okay. Thank you very much. I'll now bring in Sam Kurtz. Sam.

Diolch, Cadeirydd. Good morning, everyone. Moving on to support for agriculture, could I ask what your views are on the list of purposes for which support may be provided? Dylan.

Well, in terms of the purposes, perhaps I go back—we launched a policy document earlier this year, talking about our policy priorities for the Bill going forward. And we didn't have any issues with the outcomes that were in there already, which are mirrored in the powers for support, but we wanted to add an additional four to that. That was around rural vitality—so, again, looking back at the role that we play in rural communities; food security—our responsibilities in terms of global food security; farm productivity—I think productivity is something that's missing from the Bill throughout, really, so I think that this is important to be able to get powers to support around productivity; and the Welsh language.

Now, I think we're pleased to see that, from previous iterations of the White Paper, we have seen that food, now, is included as one of the powers to support. It does say, 'encouraging the production of food in an environmentally sustainable manner'. I think, from our perspective, obviously, sustainability means environmentally, economically, socially and culturally, and obviously that's enshrined in the Well-being of Future Generations (Wales) Act 2015 as well. So, I would be looking to see that first power to support amended to include economic, social and cultural, alongside environmental. And, as you say, I think we'd like to see an additional objective, certainly around improving the productivity of agriculture on farm. I think we have got—. It does mention here that the Welsh Ministers can add or amend these at any time; we feel that that needs to be strengthened, so that they could only do that following consultation.

Okay. So, just to come back quickly in terms of productivity, is there a trade-off between productivity and sustainability, or can they co-exist?

Absolutely the two co-exist. Generally, what makes your business more efficient also generally has environmental gains, particularly if we talk about climate change, for example. If we make our animal production systems more efficient, that means that we're producing product with a lower carbon footprint. So the two definitely go hand in hand.

Thank you. Hazel, anything to add?

Just to say that I agree with Dylan on the changes to the objectives, and I also agree that farm sustainability is part and parcel of the SLM objectives and wider concerns about being net zero by 2050. And all the concerns within the well-being of future generations Act, they're all covered by a farm that is sustainable and viable. So, I just agree—yes.

Thank you. Anything else from the panel? No. Thank you, Chair.

Thank you, Sam. I'll now bring in Jenny Rathbone. Jenny.

Good morning. In the middle of a climate emergency and a nature emergency, do you accept that no change is not an option?

I think we recognise where we are in terms of the global threats to food production and coming from the war that's started in Ukraine, and, of course, the changing climate. We are, of course, outside of the EU now, so that forces change as well. So, I think we accept the changes that are coming. We've worked through successive rounds of consultation to try and refine and finesse the initial proposals. I think that anything that the Welsh Government offers has to be sufficiently attractive to farmers or it all falls down. It might be that Welsh Government can conceive of a scheme or schemes, but if sufficient farmers aren't going into them, then the whole thing will fall apart anyway. So, it has got to be something that works for everybody, really.

Absolutely, absolutely. So, just looking now at Part 2 of the Bill—

Sorry, Jenny. Before you go on, I think Hazel might just like to come in on that issue as well.

Oh, Hazel, would you like to just—

Sorry, yes. Just to say that, obviously, we're all working under climate change and all those kinds of emergencies and public priorities, and I would just say that farmers are part of that solution—we're not opposed to it, we're part of it. And part of the whole ethos of the SLM objectives, and why we're here today, is to say exactly that: that, actually, our industry has something to give towards those targets and those pressures that all nations are facing in terms of climate change and those emergencies. It's just about making sure that the changes that take place keep those people on those parcels of land in order to meet those objectives. So, just to be really clear about the fact that it's not the changes I welcome, but it has to be sufficient, otherwise nobody meets their objectives. So, it's not just the farming industry that won't meet its objectives, but Welsh Government and other nations won't meet their climate change targets and objectives either.

Excellent. Okay. So, moving on now to Part 2 of the Bill: do you think that the objectives and the duties of the Welsh Government, as set out in the Bill, are sufficient to support the changes that we need to make to develop sustainable agriculture? I mean, bearing in mind that it's about supporting farmers in a very difficult environment, with climate change, the nature emergency and the need to produce more food locally.

Dylan.

Yes. No, I think, you know, as you say, what we're talking about now is having a comprehensive scheme to deliver against our aspirations in terms of being net zero in agriculture by 2040, in terms of making sure that nature thrives in Wales, but also, as you say, in terms of playing our role in making sure that we play our part in dealing with the global food security crisis that's facing us at the moment. So, I think, in terms of the additions that both unions have proposed with regard to the power of support, I think that gives us the opportunity to do that. I think it's important to note that this is a framework Bill, isn't it, really? So, it's giving the powers, then, to Welsh Government to subsequently introduce schemes underneath that, really. So, I think what will obviously be crucial, as has already been highlighted, is how Welsh Ministers then use the framework powers they've got to deliver schemes. And, obviously, as has already been mentioned, it's making sure that those schemes are sufficiently attractive for all sectors, for all farm types, for all areas of Wales; that they're adequately funded—and obviously that's going to be crucial in terms of making sure that we continue to secure a fair funding settlement for Welsh farming; and that all that is, again, underpinned by an enabling regulatory framework. So, as you say, these are just giving the powers; what's going to be important is how those powers are subsequently used.

You accept that we can't tie the hands of future Governments into what they have to do, and, you know, in light of the money we do or don't have from the UK Government that obviously constrains what we can do, and so that's why we obviously have to talk to you constantly.

Yes, but I think it's important that we as Wales have a long-term plan for what we want to achieve as well. We need to set out what our strategic aims are and how we go about delivering that, so that we've got a strong ask, then, to the Treasury in Wales and the Treasury in Westminster subsequently, really, isn't it? Because, as both unions have talked about, a lot of these things we're trying to achieve take a long time, don't they? In terms of farming production systems, they're multi-annual; in terms of what we want to achieve on climate change and things around maintaining and improving nature, again, those are all long-term activities, aren't they?

Okay. But in terms of improving the food security problem that we already have, do you think that the powers are sufficient to enable Government to intervene, to strengthen our food security?

The powers, as currently written within the Bill, are not; I think the powers that we're proposing to add to these would allow that to happen. So, strengthening our food production potential within Wales, making sure that we've got a plan to be able to assess, maintain and enhance food production. I think it's very important again that we bring productivity in there and, as you say, productivity is about improving efficiency on farm and that has economic and environmental gains. So, I think if we add what we've highlighted, I think that would provide the framework that we need.

Although I have to say, I don't agree with your response to Sam Kurtz's question about productivity and sustainability being one and the same thing. Productivity may actually harm sustainability.

It's interesting. I was in discussion with Welsh Government last week around proposals for an agri-tech plan and some work they're doing under the digital economy, and one of the key points that they’ve made in their draft plan is around the fact that efficiency gains deliver economically and environmentally. So, I absolutely believe that, in terms of efficiency gains and productivity improvements, they deliver economically for the farm, they help to produce food more efficiently, but they also have environmental gains, whether that be in terms of meeting our net-zero commitments or in terms of improving the environment.

All right, thank you. Shall we bring in Hazel, because it’s more difficult for Hazel to—? Did you want to comment on this aspect of the Bill?

I guess, as a general, wider point, I agree with Dylan that, ultimately, the powers in the Bill aren't sufficient at present because they don’t directly recognise the economic viability of farming families as being part and parcel of the sustainable land management objectives. And just to say that I also agree that it's a wider picture, because the Bill is the overarching legislation for what will be the sustainable farming scheme, and it's the SFS scheme that will determine the resilience of those farms, and whether or not they can deliver those objectives. So, I think that has to be borne in mind when you talk about the Bill, that actually underlying this is a future scheme for farmers and that will—. Resilience is borne out of stability, and stability happens when you have a future scheme that allows farms to farm in a way that makes sense for their economics, but also for the environment.

Okay, but we're not examining the policy here, we're examining the principles. The principles in Part 2, are they sufficient to ensure that it will be an obligation of Welsh Government to ensure that the objectives are carried out, by working with you to ensure that we get sufficient food production to feed our nation and to improve the resilience of the land to the climate emergency and the nature emergency?

Yes, but again I would say that, obviously, as part of that it’s about what the SLM objectives actually are as well. So, yes, while the powers might be there for them to do that, ultimately, without it being inherent in the SLM objectives that you have to look at things like food security and the production of safe, traceable food, then it's a different type of objective than we would want to see.

Okay.

Okay? Thank you, Jenny. I'll bring in Sam Kurtz. Sam.

Diolch, Cadeirydd. Staying on support for agriculture, how do you think the approach to agricultural support differs to other UK countries and the EU? And if there are differences, what are the implications of any potential divergence? Hazel.

I think, in general terms, there is a common direction of travel. We've talked about the fact that this is a global issue that needs a global policy. So, yes, we're all moving in the same direction. There's general rhetoric around the provision of payments for public goods and environmental services in all of the policies that I've looked at at the moment, and all nations are fundamentally tackling the same issues.

In terms of the potential for divergence, this is likely to be based on the costs and payments incurred in each scheme, what each scheme pays for and how resilient it makes each farm, and also how income stable they are as well. But, I would say that there's a lack of detail at present. We may have time in the written answers in response to this to go into more detail when more details of the other schemes come out. So, it's difficult to say exactly how much divergence would occur.

What I will say is that, in terms of the Welsh and the Scottish Governments, they've both committed to stability payments, intermittently a cliff edge of funding, and that’s really important in terms of making farms resilient and stable in the future. We also have common frameworks on things like fertilisers, pesticides and organic standards, so these will avoid cross-border friction, and we welcome the maintenance of those frameworks.

I guess the caveat to this, when we talk about divergence, is to say that agriculture is devolved and it is our job to do the best we can for Wales in light of those other global policies. So, I hope that answered the question, in terms of direction of travel, whilst also respecting devolution and our desire to do what's best for our farmers.

Fab, thank you, Hazel. Anybody from the panel? Huw.

Yes. I don't think there's a huge deal I can add to what Hazel has said, really. Obviously, it's worth remembering, perhaps, even within the common agricultural policy, there was some latitude for different policies tailored to different farming systems as well. I think, what we've always advocated at NFU Cymru is a policy for Wales, made in Wales, tailoring it to the structures of agriculture that we've got within Wales as well. We're also mindful that there are many hundreds of farms that straddle the England-Wales border, and they sometimes get difficulties because of their peculiar circumstances. So, we need to ensure that they are taken with us as well.

As was said, there is the common framework programme of course, putting some limits on policy action—agreed limits on policy actions—which we think is perfectly sensible. Although respecting the devolution settlements of allowing people to act differently, it places some limits on that as well, so as not to tilt the playing field too unfairly.

Fab. Last week, the Minister outlined that the sustainable farming scheme—. 'There won't be a cliff edge' is the language that she used, and all farms will transfer over from the BPS to the SFS at the same time. There won't be some farms trialling it and then being moved over; they'll move over in block. Is this something that the unions agree with, accept, or is there another approach that the unions would prefer to see to the change from BPS to SFS?

I think it's extremely important, in the process of transition from where we are today to the new schemes, that we don't have a cliff edge or any loss of support to agriculture, because that just doesn't affect Welsh farming; it obviously affects communities, the supply chain, everyone who relies on us. NFU Cymru and the FUW have put together a framework proposal earlier this year, which we've presented to Welsh Government, we've presented at the party conferences, and we've presented to a number of non-governmental organisations. And, basically, I think we've highlighted a way that we can evolve into the new scheme rather than having some sort of revolution.

So, it's about amending and evolving the Rural Payments Wales online system, which we think is a world-leading system in terms of delivering for farmers and ensuring that support gets to the industry on time. We believe, in terms of the data and the information that's contained within there, it already contains quite a bit of the information that Welsh Government are talking about with some of their outline proposals for the SFS. So, from our position, it's about having an evolution into a new scheme rather than stopping one scheme on one day and starting a new scheme. And I think we need to use the time that the Minister's highlighted between 2025 and 2029 to evolve in that way.

Excellent. Libby, Hazel.

Yes, I would just say that we've been quite supportive of the lengthy transition period. What's most important, as we transition to the new scheme, is that no farmers are left disadvantaged, especially those who may choose not to enter into the new scheme. We need to ensure that it's smooth and that it's fair for all farmers.

Excellent. So, just on that point of those farmers who choose not to enter into the new scheme, with First Milk announcing in September another price increase in milk, so it's just shy of 49p a litre—these are high prices for commodities, for agricultural products—how is the new sustainable farming scheme going to be attractive enough to entice farmers to potentially hand over some productivity—we haven't touched on the 10 per cent tree planting yet—but potentially handing over some productivity to then be enticed into the environmental schemes where, if they're looking at baseline figures, it could be potentially more financially sustainable for them to stay outside the scheme? Dylan. Hazel, go ahead.

The crux of this really is about how attractive it is to farmers. And part of that will be what the universal actions look like. So, as you may well be aware, the national minimum standards now are the previous good agricultural and environmental conditions, and I'm hoping not plus and not ramped up. So, there will be a set of standards that all farmers have to adhere to, whether or not they are part of the new scheme.

In terms of making it more attractive to engage in the scheme versus being able to keep your land for production, that is entirely down to how attractive the new scheme is and what those universal options look like, and of course the payments as well. It has to pay to be part of the scheme. And we've always opposed any scheme that looks at just income forgone. And I appreciate that that's not the rhetoric that's being used for the SFS scheme, but, certainly, the payments have to be attractive enough to make it worth while for farmers to enter. Otherwise, as you say, with the commodity prices being what they are, then people will have to make those decisions, and the best decisions for their business's viability.

Of course, on top of that, markets are volatile and prices do change, so I guess the relative attractiveness of the scheme will depend on the current market circumstances at the time, but, from our point of view, and as Dylan mentioned the frameworks that we've put in place, and the FUW and NFU proposals for the future of that scheme, all of our work on that is designed to make it attractive and to make it attractive for as many farmers to enter as possible, irrespective of the potential for markets to be more attractive than perhaps they could be in the future.

Excellent. Thank you. Dylan.

I think it's just important to highlight that while some commodity prices are strong, obviously in terms of input costs they are at record levels and continue to rise on a daily basis, and, as you know, energy production and food production are intrinsically linked. But I think, from our perspective—. Currently, there are around 16,500 farmers who claim various CAP support. From our perspective, I think all of us have got a responsibility to make sure that as many of those farmers as possible have that opportunity to enter a future support scheme, and I think we will have failed if there are certain sectors or certain areas of Wales that are excluded from this scheme. I think there's an onus on all of us to make sure that that happens, and I would go back again: we don't have to have a scheme that is either food production or environmental enhancement—we can do both. I mean, farmers have been doing that throughout time. So, it's about producing food alongside caring for and enhancing the environment and meeting our climate change aspirations.

Excellent. Thank you.

Thanks, Sam. Jenny would like to come in on this point.

I just wanted to pick up on farmers who might be tempted not to go into the sustainable farming scheme. They would still be, obviously, having to adhere to the laws around water pollution and other laws. They wouldn't simply be allowed to make the money and trash the land, so to speak. So, how much conversation have you had with your members about making it clear that there will still be obligations on them, even if they decide not to go into the sustainable farming scheme?

Well, obviously farmers are fully aware of the regulatory baseline. As you say, as Hazel has mentioned, that's an intrinsic link of cross-compliance at the moment in terms of the statutory management requirements element of cross-compliance. Obviously, whatever we do, the regulatory baseline is there. You know, there are farmers outside of the scheme at the moment, and that is the baseline, and farmers are fully aware of that and will continue to adhere to that in future and be fully aware of that.

Now, there is a discussion, obviously, about what the baseline looks like in future. The White Paper talked a lot about national minimum standards and civil sanctions. This Bill is silent on that. I'm not sure what the thoughts are of Welsh Government now with regard to national minimum standards. It's still mentioned in the outline scheme proposals that were published in July. I have heard that there might be a second agricultural Bill that talks about the regulatory baseline, but obviously that is something we will have to look at in the future. But I think we need to make sure that the regulatory baseline in Wales doesn't impact on our competitiveness either, as well, really. We've got to make sure—. We are selling our product into markets in the UK, the EU and globally, and competing with other countries. So, I think, again, when we talk about the need to look at what's going on in the rest of the UK and the rest of the EU, that's as important, if not more important, for the regulatory baseline as it is for the future scheme.

I'm not aware of any proposals from Welsh Government to eliminate our animal welfare standards or our clean water standards. There may be noises off from other adjacent countries to eliminate lots of regulations, but are your members under the impression that we are in some way going to follow that low-regulation line, and does that then make it possible for somebody to be farming that's not part of the sustainable farming scheme?

No. We're very proud of our standards, and, obviously, in terms of the discussions with regard to international trade agreements, we've had over a million signatures that we've got from consumers highlighting how much they value the high standards in Wales. I think our biggest concern is the impact of some of the international trade deals that have been done, and the concern that our farming in Wales may be undermined as a result of competing with food from other countries that isn't produced to the same standard. We are very proud in terms of the food that we produce and how we produce that. We've got the regulatory baseline, but also we've got farm assurance, which is an assurance scheme that goes above and beyond the regulatory baseline. In terms of selling Wales to the world, we are adamant that we do that on the basis of producing high-quality, safe and, crucially, affordable food, and that's where the SFS and the support scheme that Welsh Ministers deliver for Wales is making sure that it helps us to be able to produce the food that the consumer wants at an affordable level that is available at all price points.

True, whilst accepting our global responsibility. So, I just wondered—I'm sure we all agree with your concerns about international trade agreements—is there something missing from this Bill to ensure that that is crystal clear, that we can't simply be lowering our carbon emissions and then exporting them somewhere else.

Hazel, you wanted to come in on this, to respond to Jenny's point. Hazel.

It was on the previous point about our membership, and I just wanted to say that we've been really, really clear with our membership that this policy is a significant change away from the basic payment scheme in terms of the general environmental and agricultural conditions that attracted payment under BPS now being minimum standards that don't attract a payment—that you would have to adhere to the universal actions above that in order to get a payment. So, we've been really clear with our membership, because I think, at the beginning, there probably was some confusion around that. But, as far as I'm concerned, we've spent a lot of time doing knowledge transfer on that issue so that they are really clear that, whether they're in the scheme or not, they will have to adhere to these national minimum standards.

Going back to some of the points about the trade deals, as far as I'm aware, there are no powers in the Bill to stop imports of competitive products that don't meet our high standards coming in, and I think this is a point to make in terms of this Bill only representing half the equation. Now, we've talked about the fact that these national minimum standards are becoming the baseline and then to get a payment you have to go above that to the universal and then the optional and collaborative options. Now, if they make us less competitive, at a time when the market is being flooded by imports that don't meet those standards, then I would say that that is a disaster for the Welsh economy and for Welsh farming but also in terms of these targets and objectives that are part of sustainable land management and climate change and all of those things that are supposed to be public priorities.

So, it is a real concern to our membership that, at this point in time, there are these two disparate processes happening—the one is the trade deals and the other is this agriculture Bill and the SFS scheme. And I think it's really important to recognise that. That's why, as part of the discussions that NFU and FUW have had as part of our frameworks, it is making sure that this scheme pays and that, ultimately, it's attractive and that farmers are resilient, because, as I said at the very beginning, without all of those issues, you fail on the other objectives in terms of climate change and carbon and so on that you're trying to achieve. So, I would reiterate again that the fact that we can't stop competitive products coming in that might be of a lower standard is of real, real concern, and actually it demonstrates a level of hypocrisy, I think, in overarching holistic policy.

Very quickly, then, Huw, on this, because I'd like to make some progress if possible.

Yes, just very quickly, it's just worth mentioning the intersect between this and the United Kingdom Internal Market Act as well. Obviously, Welsh Ministers can increase standards here, and they can do that, but, of course, products produced elsewhere, perhaps to lower standards in some of the other home nations, can still come in and they won't be able to prevent that happening. So, we could be undermined from within the home nations, but, of course, as has been said, with imports coming in as well. Once imports enter the UK, they will be in free circulation and Welsh Ministers won't be able to keep them out despite insisting on higher standards, perhaps, for our own domestic producers. So, it's just worth being mindful of that—as proud as we are of the standards, producing to that standard is something that can be undermined by actions taken elsewhere.

Okay. Thank you. I'll now bring in Hefin David. Hefin.

I never know whether I should unmute myself or whether it's unmuted for me. That's the issue there.

Can I just look at the supply chain? The White Paper stated that support may be needed for the wider industry and the food supply chain beyond the farm gate to deliver SLM outcomes and support rural economies. Can I ask for the panel's views on that and the impact that would have, and the appropriateness of it in the context of the Bill, and also how it differs from what happened previously?

Hazel Wright.

Okay, so, in terms of appropriateness of funding for ancillary activities, I think it depends on the budget that's available in total. So, currently, these activities would be funded under pillar 2 of the current scheme. And the Welsh Government's regulatory impact assessment bases that future support package at about £280 million in total. And this is based on the monies provided for pillar 1 and Glastir. When you include the rural development plan pillar 2 budget and Welsh Government match funding, then it is around £370 million. And the reason I mention these figures is because it's on that basis of full funding that funding for ancillary activities would be, I guess, palatable to the union. Because, any support that's ancillary isn't going straight into direct farm support for things like universal actions and those other actions above and beyond that farmers can be paid for. So, the budget here is really important in terms of gleaning whether or not those activities are appropriate or not.

What I would say is that if they are ancillary activities, they have to be for Welsh agriculture—they have to benefit Wales—and it shouldn't just be a wider agricultural policy. And I think that has to be protected in terms of whether or not it's appropriate to support ancillary activities. So, I understand their purpose in the previous ancillary support under pillar 2, but, obviously, we're looking at a diminished budget, so it will depend on that full budget whether we can provide absolute support for that.

Can I say, as a lay person here, wouldn't anything that benefits the local—I take your point about them having to be Welsh-based activities—supply chain, either upstream or downstream, more likely downstream, is going to benefit the suppliers, who are the farmers? Surely, that's only going to be a positive, even if it isn't quite as easy to measure in monetary terms as direct subsidies.

Yes, it's still positive, and I'm certainly not saying that we're opposed to that kind of support; it's just that it's a very different type of support to the direct support that was paid under BPS, and it's all about proportion. At the moment, we don't know what the proportional split is between things like those ancillary activities and also things like universal actions and the collaborative and optional actions. So, we find that that proportional split is something we could probably give more detail to in a written response, but I would like more information about the budget before giving a full response on that.

I don't want to put you on the spot—I understand that—but just to think about broad terms, how would the Government measure proportional benefit in the supply chain? What method should they use to assess whether certain points in the supply chain would benefit more than they would under direct funding?

That's a really difficult question.

Yes, I thought it would be, but it is fundamental to the ancillary aspect of the Bill.

I suppose I would go back and say that ancillary activities won't benefit all farmers to the same degree. I'm going to give a slightly tangential answer on this and say that if you look at, for example, the promotion of products and if you look at, for example, advertising—I know this is slightly—[Inaudible.]—but it's an example that I hope makes sense—where, if you look at advertising for a particular dairy product, for example, it creates an uplift in all dairy sales. So, there's a mechanism there to uplift dairy by providing—. Normally, those adverts are done by particular brands—higher level brands and so on—but it creates an uplift across the whole industry. But it is difficult to measure how much that uplift in terms of cost benefits would be.

Also, I think you have to remember that many farms in Wales are away from public population densities as well. So, there's a provenance aspect to ancillary activities that has to be recognised in there, because not all farms will benefit to the same extent from some of those local supply chains, short supply chain issues simply because of their provenance in Wales. I know it doesn't quite answer the question, because I'm not sure I can at the moment, but it's simply to say that even if the proportional cost-benefit gain was there, it wouldn't be the same for all farms, and that's why we have to be proportionate and say that universal actions are for everyone; the ancillary activities probably aren't.

Okay, I appreciate that, and I am sorry to put you on the spot—

No.

—but it really is helpful to us.

Dylan, would you like to add something to this?

For brevity, it was to support almost everything that Hazel has said there with regard to—. The supply chain has previously been supported under pillar 2. It is vital, when we talk about the budget, going forward, that we do talk about the pillar 1 and pillar 2 budgets combined, which works out at around £370 million/£374 million per year. I think the important thing is making sure that we use this to support Welsh agriculture from farm to fork. We've got some fantastic processing facilities in Wales, whether that be meat, milk, horticulture and potatoes, and they have benefited from support from the Welsh Government in the past. We need to make sure that that is there. But that support needs to be predicated on the basis that they are adding value to Welsh produce wherever possible.

Chair, if there is any further information that Hazel would like to share after a little bit of thought later, that would be very helpful.

Yes, absolutely. We'd appreciate that, Hazel. If I can now bring in Luke Fletcher.

Diolch, Gadeirydd. I want to round out some of the questions around support. I'm thinking specifically around third-party schemes here now, but I'd be interested in your views on some of the powers the Welsh Ministers have to support those schemes. I'm interested as well in how you would expect these powers to be applied. I'm not sure who wants to kick off on that.

I'm happy to go. I think currently there is a lack of clarity around what third-party support might look like. Generally, farmers are wary of third-party schemes, because in previous cases, that has meant that a higher proportion of money has gone to administration of these schemes rather than the direct support. I think also there's a potential with third-party schemes that it can open somewhat of a postcode lottery. If we're looking at a scheme that applies to specific area, for example a water catchment area, if you're not within that water catchment area, you're not eligible for that support. So, again, it creates this postcode lottery, which is against the principles of the sustainable farming scheme being available for all farmers across Wales.

Did Huw want to come in on this?

I don't think I've got a huge deal I can add, really, to what Libby just said. I think there's a wariness about third parties operating schemes; as was said, about perhaps funding haemorrhaging away to administration, staffing costs, and not finding its way down to farmers, and, perhaps, whether there might be a reluctance on the part of farmers to provide information to third-party operators of schemes as well. So, we've got some concerns, and the postcode lottery point is also a very good one we'd emphasise as well.

Thank you for that. I suppose it will be important to get that clarity from the Welsh Government as soon as possible. I'd also be interested in your views on the regulation-making powers for checking eligibility for support as well. Shall I come back to you, Libby?

We absolutely understand that the spend of public money requires some sort of eligibility check. What we would ask is that that is administered as efficiently as possible. But yes, we understand the need for some sort of eligibility check.

I imagine the NFU is in a similar position on that.

Yes. Our issue is not around the need, as Libby said, to be able to have eligibility checks. I think our issue is sometimes in terms of how they happen on the ground and, basically, the heavy-handed and insensitive way that it happens on occasion. I think the important thing is how we go about checking that.

A final question around agricultural support, before I move on to Chapter 3 of Part 2. Do you believe the reporting requirements for Welsh Ministers relating to support are appropriate, and do you find that they usefully integrate with the sustainable land management report? I think I'll start with you, Dylan.

I think, again, we respect the need—. It is vitally important that we have full transparency with regard to the financial support the Government makes. I think the Bill talks a lot about disclosing information in terms of recipients of support, which we presume means farmers. I think when we're talking about any financial reporting, it's vitally important that we look at the administration costs as well, whether that's within Welsh Government or by third parties. Because currently, we see pillar 1 support, which is run extremely efficiently, extremely cheaply. In terms of the pillar 2 support, whether that's within Government or outside of Government, there is a significant cost in terms of administration. So, again, I think when we talk about financial reports, we need to look at where every penny is spent.

I think what's missing from the Bill that there is in the UK Act is a multi-annual financial plan. Again, going back to a response to a question from Jenny earlier on, I do think it is imperative that within this Bill, there is a measure that requires Welsh Ministers to prepare a multi-annual financial assistance plan. We respect there are obviously challenges and difficulties with that in terms of comprehensive spending reviews and the support that comes from UK Treasury, but if we in Wales haven't set out what our plan is and what we want to deliver against our strategic objectives in Wales, then we're not putting a very strong case to UK Government, with all due respect, for that money. So, I think it's vitally important that we have that multi-annual plan, and that also then gives some stability and certainty to farmers that there is funding there for a set period of time.

On that multi-annual financial assistance plan, has that been raised directly with the Government? Have they been quite open to exploring that further?

Again, we were expecting to see this within the Bill. It's in section 4 of the UK Agriculture Act 2020, on which a lot of the other powers within this section are mirrored. So, we were quite surprised that that wasn't included within the Wales Bill. Like they have replicated a number of other clauses within this, we would like to see that included in the Wales Bill.

Great. Thank you, Dylan. Did Libby or Hazel want to come in before I move on?

Just very quickly to agree with Dylan in terms of the previous comment about disclosing the cost of administration of the scheme, and just to say that we are looking at a different scheme to the BPS, which was easy to administer. We are looking at something like farm sustainability reviews in order to look at the options that farmers can undertake under the universal actions. That, by its very design, is likely to be more expensive. So, just to back Dylan up on that point that it is imperative that we also have reports on the costings of the scheme, because we need to look at transparency in that, and value for money as well.

Great. Thank you, Hazel. If I could move to intervention in the agricultural markets now, there are a number of circumstances that could lead to a declaration of exceptional market conditions. In your views, are the circumstances listed within the Bill sufficient? Huw.

Diolch yn fawr. Thank you. Again, this is something that mirrors the provisions in the UK Agriculture Act. I would, first of all, say the powers conferred to Welsh Ministers are discretionary, so they're discretions to act. We considered this, and we think it's whether you consider the disruption to be—. It talks about 'severe disruption'; it's whether it should be 'a significant disruption'. What we've, of course, seen, somewhat out of the blue, this year is input costs spiking, and that is another factor that can really disrupt agricultural markets. So, it's not necessarily the price that's realised to the farm gate for the finished product, it's the cost of producing the product as well. So, it's taking sufficient account, really, of the spikes in input costs.

The effectiveness of this or otherwise will depend on the Welsh Government's willingness to deploy these powers. We've seen, when we were in the EU, and even now, looking into the EU from the outside, a willingness to deploy funding to support farmers when particular crises do hit, for example the measures we saw taken over the fertiliser situation in the EU over the summer months. It will boil down to whether Welsh Ministers are prepared to use the powers. And we can't be naïve about what might be happening in England, as well. So, there may be circumstances pertaining to there that might ripple out, for example, where they're having a particular difficulty. It is a complicated question and a complicated decision as to whether intervention is undertaken.

On that point of discretion, I know the FUW has raised concerns, as well as the NFU, around how different Governments within the UK could think of different reasons as to why they should be intervening in the market—that those criteria might be different with the discretion being there. The FUW has previously called for co-ordination across the UK on market intervention. Is there a role for this in the Bill, in the process? I'll come to Hazel, if that's okay.

I think the Bill should have a provision that says that there has to be that collaboration and co-ordination across the UK. Obviously, from our previous calls, you would expect me to say that. I appreciate that there is this UK agriculture marketing monitoring group that reviews and analyses market information and that all devolveds are part of that group. However, it's unclear at the moment how that data will be collected and how Welsh Government will feed into that process. Obviously, we would be in favour of that data sharing continuing, but it's just unclear at the moment as to how that would happen.

I would say that we would have real concerns about situations where the level of support provided—the definition of 'exceptional', when that support is provided and when it is rescinded, and for how long it's provided—was different between devolved administrations. So, we welcome an approach that's more tailored to Wales in terms of market circumstances and the products that can be covered under that, but, at the same point in time, divergence will distort the internal market. So, I do think the Bill should make provision for that collaboration and co-ordination, yes.

Thank you, Hazel. Did Dylan or Huw want to add anything?

I think it is important there is co-ordination throughout the UK. There is at the moment what's called a market monitoring group where the different devolved countries come together under the common frameworks programme, it's just whether that is strong enough, really, to be able to act in a time of crisis. I wouldn't have any disagreement with what Hazel said.

Market condition is always a bit of a lagging indicator as well. They show what things were like perhaps a few weeks ago, so it's just catching up with that. It's whether the market monitoring group can be as fleet of foot as you might want as well, because things can happen very quickly. How often will they meet and consider these things? A lot can happen in a month or a few weeks, for example.

Great. Diolch.

Diolch, Luke. I'll now bring in Vikki Howells.

Thank you, Chair, and good morning, everyone. As a committee, we are really keen to ensure that the specific needs of tenant farmers are met in the Bill. So, could I begin by asking each of you how far you think the Bill provides Agricultural Holdings Act 1986 tenants with fair access to future support, and is it robust enough to support those tenants? I'm not sure who wants to start with that. Hazel.

I appreciate that there is this route to dispute resolution if there are restricted clauses in a tenancy that might preclude a tenant from engaging in SFS. I think, from our point of view—and I will caveat this with the fact that we do have a tenants committee at FUW and we will be discussing it further with them to get some more options and potential changes—I would say that this dispute resolution service is not a silver bullet to get rid of all the problems facing tenants in terms of the SFS. We've had comments back from some members to say it could potentially aggravate a relationship between tenants and landlords that, previously, actually, was quite happy. So, I'm not saying it's not welcome, I just don't think that it's the answer.

I think better than dispute resolution would be SFS universal options, et cetera, that just work for tenants, whether that's the fact that the options themselves can be done on an annual basis as opposed to these very lengthy longer term universal options that are being considered—that's one way around it. I think that, if the scheme favours a significant long-term investment from the landlord, it would put the tenant in a weaker position. So, we have to look at the SFS and make that more desirable, as well as the powers that are in the Bill.

I have to say, there is dispute resolution, but, in some cases, the reluctance of a landlord to give consent for that work actually might be rational given the long-term adverse impacts of the scheme on the value of that agricultural land. As I said, we do have a tenancy group to discuss this, and we will provide further details and examples in our written response. I would say that, to me, this is more a question about the SFS than it is the powers in the Bill, because it's the SFS that will decide whether or not a tenant can actually participate.

I would echo everything that Hazel has said. The important thing is making sure the SFS works for the 30 per cent of farmers in Wales who farm land that they don't own. That's not just AHA tenants, obviously; that's farm business tenancies, the unwritten tenancies and all the other agreements that are out there. We need to make sure that we get the scheme right for that.

And again, as Hazel's highlighted, I think, in terms of the AHA element, it is a step forward—that there is dispute resolution within there—but it's not a great situation if you've got a tenant and a landlord going to dispute resolution; you haven't got a good relationship there. So, we want to try and make sure that the scheme works so that we don't have to get to that. Again, we've got tenants meetings at the end of this month to discuss this specific proposal, so we'll respond in our written response. But I think there is a question, as well, in terms of FBTs, and the 1995 Act—whether we need to look to be able to include something around that within the dispute resolution process as well. But we'll respond to that in written evidence.

Okay. Thank you.

Okay. And, nobody else on that? I'll move on to my second question then, which is specifically looking at those who farm on common land. So, I'm just looking for some views from our witnesses as to whether the new agricultural policy framework is accessible and appropriate for those who farm on common land.

Dylan. Libby.

I think there is a lack of detail at the moment for how this scheme will work for those who farm on common land. There are concerns about how easy or accessible it will be for those who farm on common land to even enter the universal stage. I think it's important to note that it's fairly typical for a number of people to have grazing rights upon a piece of land, and so, therefore, there need to be provisions within this scheme that allow that collaboration to work.

Again, I think it's probably more of an issue for the SFS than the ag Bill, again making sure that the SFS works for common land. I think 10 per cent of the land area of Wales is common, so if we are going to meet our objectives around the climate, nature and food production, we need to make sure that common land is included with this. It's also vitally important economically for a significant proportion of farmers. We have farmers who have over 50 per cent of their land as common land, so if they can't get that land into the SFS, it would have dire implications for the viability of their business, really. So, it's making sure that it works for the SFS, Chair.

I would just quickly add as well that, similar to what Hazel said, on tenants, we also have a common land committee. I presume that the NFU has similar arrangements. And so, we'll be continuing to discuss with them throughout the co-design period.

Okay, thank you. And on this point, I think Hefin David would just like to come in. Hefin.

Yes, just to Hazel. I'm aware that there are disputes about use of common land as it's happened in my constituency, and I think the FUW actually supported a farmer in a dispute. Will this Bill have any implications for those kinds of disagreements on use of common land?

At the moment—I may be wrong on this—I haven't seen anything particular in the Bill. It seems to mention dispute resolution for tenants, but I didn't see anything—I could be wrong—in particular related to commons. In terms of Glastir commons, I know that they used commons forums to try and co-ordinate, but I really need to consult with my membership about how they see that moving forward, because I think there are pros and cons to that element of it. I don't know if that answered the question.

There are mechanisms in place to be able to have some form of dispute resolution, but I'm a bit reticent, without speaking to my common land committee, to say more at the moment.

Okay. Anything else, Vikki?

Not on this section. Thank you, Chair.

There we are. Thank you, Vikki. I'll now ask Sarah Murphy to come in. Sarah.

Thank you, Chair. I'm going to ask some questions about the collection and sharing of data. I find this part of the Bill quite fascinating. I know that it does build on the UK agriculture powers, but it will give Welsh Ministers the power to require those in the agri-food supply chain to give information that relates to productivity, supply chain fairness, animals and plant disease improvements. So, it is going to be, I think, helpful in terms of getting an overall picture of what's happening, but I wanted to know from you to what extent are the provisions on the collection and sharing of data appropriate and proportionate, in your opinion. Shall I start with you, Huw? Yes.

Thank you. This, again, is something that we've given some initial thought to. The UK Agriculture Act 2020 makes a similar provision for UK Ministers. But I think, crucially, what that also does is it imports a provision into the UK Agriculture Act 2020 that does introduce some safeguards. So, you would say an equivalent provision to what’s in section 49 of the UK Agriculture Act 2020, to give a bit of a safeguard, really, around the quite extensive data collection powers in Part 3. And essentially, I suppose, those would mean that any duty or power in Parts 1 to 5 would require that data to be processed in accordance with standards, and wouldn’t authorise any disclosure that would potentially contravene data protection then as well. I think perhaps one unknown quantity is the UK Government’s intention as regards GDPR once we stepped outside of the EU. That’s a factor to take into consideration as well. So I think you raise a very valid point, and it’s a point that’s resonated—it's been a bit of a concern with us as well, so thank you.

I just wanted to ask, have they told you—? Because I can see that there’s an overview of what information will be collected, what data will be collected, and that’s on the farmer then, essentially, the business owner, to provide that data, so then there can be penalties if they don’t do that, or if the information provided is inaccurate. Some of these things, though, people who’ve been working in this for a long time can make mistakes on, so has there been any—? What is it like for the people you know, the farmers you know; how are they feeling about having to do this? Are they being given any kind of training or anything like this in terms of how to gather this and how to provide it? Any support in that area?

Farmers will variously provide data sets not just to Government, but to some third parties, so it’s perhaps not something entirely novel, but I think they would, yes—. There is a value to this data for Government, presumably; they want it for a reason, and really, we would say that it should perhaps attract a payment, then, if farmers are going through the administrative process of gathering or harvesting this data—they need to be recognised through that. But it shouldn’t be mandated that perhaps that data’s handed over to third parties, for example. So we need to be sure about what the destination of that data is.

And have they been clear with you on what that might be, then?

I’m not sure how much detail is on the face of the sustainable farming scheme. I don’t think there’s a huge deal of information there.

Okay. As you said, last week, when we asked the Minister questions about this, I did raise the UK Government saying that they’re going to scrap GDPR on 7 October. Now, we’ve had more information on that where they have laid out what I suspected was the case, which is that we’re now entering this digital trade era, and the two things that the UK Government have said that they specifically intend to do with GDPR are to make it so that it’s much easier and faster and cheaper to transfer our data to the US, and also to be able to transfer it to countries that have lower data protection standards than we do in this country. They see this as big business, lots of money, and the data that will come from the farms is extremely lucrative in terms of insurance and in terms of—. As you know, part of being able to be competitive is not having that data being shared with Australia and New Zealand, which we’re setting up trade agreements with now, which will impact our farming communities. So, yes—the issue here is that this Bill is based on GDPR, and if that no longer exists, there could potentially be an issue here. So I was wondering if there have been any discussions around this, and any kind of idea of what would happen in that case.

I don’t think we’ve yet had the opportunity to discuss this in any detail with members, but that conversation is to follow, and I’m sure that we’ll elaborate on that in our written submission to this committee and the representations that we make to Welsh Government and MSs as well.

Wonderful, thank you. I just wanted then to—. Of course, coming on to the enforcement provisions, there could be monetary enforcement provisions if farmers decide that they don’t want to give it for whatever reason, or if they give it inaccurately; so have you got any feedback on that, and whether you think they’re proportionate?

I think it's just the usual; these powers and penalties need to be proportionate, really, don't they? As you alluded to yourself, people can easily make an administrative error in terms of gathering data. Something simple like that should not lead to—an inadvertent accident shouldn't lead to penalties like that.

Okay, thank you.

Hazel, would you like to come in on this?

Sorry, my sound is a little difficult at the moment and it's gone a bit quiet, so I'm hoping you can still hear me.

In terms of data collection, I suppose, can I turn it slightly around and say that, obviously, we have supported a payment for data provision for farmers? And one thing that I would really like to see with that data provision is the ability to showcase the inroads that Wales is making. There doesn't seem to be much provision in the Bill, or actually much discussion, around how we brand Wales and its green credentials in terms of farming. If, for example, the data shows a reduction in anti-microbial use or it shows an increase in trees, hedgerows or whatever that might be, then that data should be used as part of a competitive advantage for our products, especially at a time when markets are being flooded with cheaper, potentially less good imports.

In terms of data collection itself, one concern that we did have was that, whilst we support the use of technologies for data collection, which has been mentioned—things like geo-mapping, and so on—they're not 100 per cent accurate 100 per cent of the time, and there are potentials for mistakes when you use automated technology. We've seen examples with Glastir, for example, where an on-farm inspection has cleared the farm, it's been okayed, and then there's been a mistake on satellite mapping imagery that has caused an automatic penalty, which then has to go to appeal, and it's very costly and it takes a long time.

So, in terms of that collection, we'd want some pragmatism where it's automated, because we are looking at a situation where we are talking about on-farm sustainability [Inaudible.] larger data collection for the farm. And if you can't automate some of that process, obviously that's welcome because it's streamlined, and it's obviously good in terms of value. But, there has to be that caveat in there that it doesn't automatically reach a penalty for the farmer, because of the fact that the data might not be accurate when it's automated. So, just that other comment to add.

Thank you. Thank you very much. Moving on to the next section, then, which is about marketing standards and carcass classification, are the powers around marketing standards and carcass classification appropriate, in your opinions?

Again, it mirrors, to an extent, the UK Agriculture Act 2020. I think we'd like to see Welsh Ministers provide justification for why they are pursuing a particular standard for a product. We need to understand why they might embark on a particular course of action. So, we'd certainly make that point. And again, I think anything that's done by Welsh Ministers is holed, to an extent, by the internal market Act as well, because, obviously, we could pitch our standards up here, but if any of the UK home nations have a lower standard, then we aren't in a position to prevent that product coming into our marketplace. What that would do, of course, is to put our producers at a competitive disadvantage as compared to producers elsewhere. So, that would be a concern and we'd, sort of—. I think there has to be some sort of collaboration. It does point to some sort of collaboration, as others have alluded to, within common frameworks to look at how you might arrive at a situation whereby we don't cause too much disadvantage to any one sector, or any one part of the UK home market over and above another.

Okay. Why do you think they're focusing particularly on this, then? Why do you think they're focusing specifically on this?

On marketing standards? I'm not really sure. The UK Government took similar powers for itself in the Agriculture Act 2020. I suppose a lot of those things would have been within the gift of the EU when we were in the EU, and, obviously, outside of that structure, they may wish to resume control of that domestically. I'm not absolutely sure why that might be the case.

Thank you. And, in your view, could the effect of the revisions allow changes to marketing standards or carcass classifications in Wales to be impacted by the United Kingdom Internal Market Act 2020, as you've just mentioned?

I suppose I pre-empted your question there maybe a little bit. Well, yes, I think the answer is 'yes'; there could be an impact from the internal market Act if, as I said, we pitch our standards higher. High standards are laudable, of course, and something we welcome, but you cannot do that in isolation and being naive to what's happening elsewhere in the UK. You've got to be mindful of that and ideally arrive at a collaborative arrangement, I suppose, to ensure that we don't end up disadvantaging our own producers.

And do you think that there should be a provision in the Bill for that?

I think it's maybe been provided for under common frameworks. I suppose Welsh Ministers could legislate for whatever they want, but it's just whether the UK Ministers will come to the table and agree. I think it would be quite laudable, possibly, to do so, but I don't think we've got the power to compel UK Ministers to come and reach agreement on this—as desirable as that might be perhaps.

Thank you very much. Thank you, Chair.

Okay. Thank you very much indeed. I'll now bring back Vikki Howells. Vikki.

Thank you, Chair. So questions on wildlife now from me. Firstly, can you give your views on what impact the ban on the use of snares and glue traps will have on the agricultural sector?

I think, with due respect to myself and Huw, we are not experts on snares and glue traps. We don't feel that we're comfortable in being able to talk about that at the moment; I think there are probably other people who could be called to the committee who would have far more experience and information on this as such, really. Again, this is something we'll probably have to consult on with our members, to see if they want to respond to this element of the Bill. But, as I say, I don't think either of us feel comfortable, at this moment in time, in terms of being able to pass comment on snares or glue traps.

Thank you. I appreciate your honesty with that. Hazel, do you have anything to add?

It's exactly the same. We have an annual health committee, so obviously we can review current evidence and research around this. But at the moment, because we haven't had a chance to do that, I'd be wrong to try and answer this question at the moment, but it may form part of our written evidence.

Okay. Thank you. That's it from me on that then, Chair.

Thank you, Vikki. I'll now bring in Llyr Gruffydd. Llyr.

Thank you very much, Chair. Clearly, we still don't know how much money the Government will transfer in payments to the sector, and that makes things slightly difficult perhaps in appreciating the impact of much of what we're discussing really. But there are details as to the administrative costs, and so on, of the Bill in the regulatory impact assessment. I was just wondering if you have any comments on the costs around the preferred option that they're going for.

I think Hazel's mentioned this earlier on. In terms of the regulatory impact assessment—and I think that does run to a couple of hundred pages, so we're still working our way through that—I think our concern when we read through some of that is that they do talk about the funding going to farming as around £280 million in terms of their impact assessment, where we are talking about the agricultural Bill delivering the replacement for the CAP, which is pillar 1 and pillar 2, and we've already talked about the supply chain and a number of the collaborative actions in there. So, in terms of where things stand at the moment, the funding through the CAP to Wales works out at around £374 million per annum—that's the £337 million per annum agreement with the UK Treasury, and then the Welsh Government put in around £40 million extra as match funding for the domestic RDP. So, we see, going forward, that in terms of the funding for agriculture, we need to be looking at at least that. Because, as has been highlighted by all of us this morning, the challenges and the opportunities that we face going forward around Wales producing the most climate-friendly food in the world, against a backdrop where our nature is thriving, we need to make sure that we've got a budget to match that ambition.

I think what we also need to do is to make sure that the maximum amount of that resource is focused on delivery. And again, looking through the regulatory impact assessment, there do seem to be some quite eye-watering figures around the potential administration in terms of what they're talking about for future schemes, where again we would highlight that, historically, the support, certainly through pillar 1, has been delivered very efficiently through Welsh Government. So, I think we need to make sure that that's the case in future around the costing system. So, again, there's still a lot more for us to go through when looking at the regulatory impact assessment and to see the figures that have been included, but those would be be my initial thoughts.

Okay. And even when you look at the regulatory assessment, obviously the Government themselves acknowledge that there are so many variables that it's always very difficult to put a proper figure on administrative costs, for example. I think they quote £27 million, £28 million for their own administrative elements. Does Hazel want to add anything on that? Or, Libby, do you have anything to add?

Just to support Dylan on that in terms of the budget. If the SLM objectives are as important as we all believe that they are, then there has to be the budget to deliver that. And, obviously, we are in a situation where, as Dylan has mentioned, this pillar 1 was easy to administer. This is a very different beast, this new SFS scheme, so the costs of administration are likely to rise. And again, that goes back to the transparency that we talked about earlier. I mean, our concern will always be that we need to protect the cost for those transitioning across, those current 16,500 BPS claimants at the moment, who rely on that income to be profitable and viable, and so there has to be the mechanism for them to transfer over to the SFS universal element and still maintain that income.

Yes. Okay. I'm sure many of us would echo that. Just moving on, then, to some of the international obligations that we have, and whether there are any alarm bells or anything that's caught your eye, in terms of within the Bill or the sustainable farming scheme in relation to us still complying with international obligations like the World Trade Organization rules. Huw.

Okay. Diolch yn fawr. I think, to an extent, this consideration is perhaps out of our hands because it's the UK Government that's the signatory to the agreement on agriculture at the WTO. And we also know that UK Ministers took quite extensive powers for themselves in the Agriculture Act 2020, carving out powers for themselves in terms of setting significant limits on domestic support, not only within the UK envelope, but also within the home nations themselves as well. Potentially, an artificial ceiling could be imposed on Wales, so although our levels of support might not fall foul of the WTO, it is at the discretion of the Secretary of State in DEFRA to impose a ceiling, and that ceiling could be lower than the one that might be required by the WTO. So, we have ample headroom within the amber-box provisions within the WTO and we aren't about to fall foul of that, but what could happen, I suppose, is that the DEFRA Secretary of State could take some actions, if they were so minded. So, yes, I suppose the WTO issue has been farmed out to an extent.

Yes, in the context of the UK Bill. Yes. Okay. And, yes, Hazel has her hand up.

I've nothing to add in terms of WTO boxes, thankfully, but just to say that our stance has always been that the SFS must award farmers above and beyond income foregone, when they're providing these environmental goods and services that are non-marketable services, and they are the non-marketable benefits of food production that consumers, the general public say that they desire. So, just to be really clear about that: wherever this SFS scheme falls within WTO regulations, our main priority is to ensure that it's above income foregone and that we meet our obligations in a way that fairly awards farmers. You know, just to say that that's where we are at the moment.

Yes. Okay. Diolch yn fawr. By its nature, any framework Bill—and we've touched on this earlier—is all about giving Ministers regulatory powers. When you're in opposition, you get very nervous about that kind of thing; when you're in Government, you're all for it, of course. You know, that's how these things work, I'd imagine. You touched earlier specifically on the need for consultation, if Ministers exercise their regulatory powers around changing the list of purposes. I'm just wondering, other than a general, 'Yes, we need to try and tighten all of this up', whether there's anything in particular that you feel needs to be strengthened in terms of being explicit in the Bill on any particular ways that the Ministers could use regulations. I see that Hazel is keen to come in, and then Libby.

No, carry on.

Yes. So, we've been talking about national minimum standards and the White Paper that had an emphasis on those. Given the importance of these, I do feel there's a need for full scrutiny, and these should be under primary legislation as opposed to secondary under the SFS, because these national minimum standards, as we've talked about previously, are for every farmer, irrespective of whether or not they choose to join the SFS or not. So, I think, from our perspective, we would want more scrutiny on that, simply because it's so important to the industry, in terms of its competitiveness and its viability. So, that's just one comment on that.

Yes, okay, that's interesting, actually. Did you want to add anything?

No, Hazel's covered that.

No, that's the point made. Okay. Dylan.

I think it's vitally important that—. National minimum standards and civil sanctions were included in the White Paper ahead of this Bill, but they're not included in this Bill. It is vitally important that they are subject to primary legislation, whether that be under an agricultural Bill Act No. 2 or whatever. They talk about them still being in place by the time the SFS kicks in in 2025, so I think it would be interesting to see what Welsh Government's plans are regarding this, because where the regulatory basis sits is crucial.

They talk about cross-compliance coming into national minimum standards. Now, it's important to remember that cross-compliance is made up of two things: statutory management requirements, which are the law of the land, so I don't think we'd have any issues with those being moved into the national minimum standards, but also good agricultural and environmental conditions, which are above and beyond regulation, and there is the potential that if those are somehow just subsumed into regulation, that potentially makes it harder for elements under the SFS to be supported, because you can only support for actions above the regulatory baseline. So, I don't think Government should just think that just because it's cross-compliance now that it should become regulation. Because there is a cost to all of this, and we have to be aware of that when we talk about, again, competitiveness there.

I think we need to look at affordability as well, particularly for tenants. We've seen some regulation come in recently that is extremely challenging for the tenanted sector in particular. So, again, that's why it's important to have proper scrutiny with regard to this.

I think there would be concern as well—. Again, throughout the document, it talks about third parties and the potential for powers to be conferred across to third parties. And, again, I think farmers would have concerns if they saw regulation farmed out to third parties to administer, because we know a number of third parties often have specific agendas, and I think that would be a challenge for the industry if that were to happen.

Okay. Well, some very important points there, I think, that we need to capture. So, just coming back, really, to the subordinate legislation and the powers that Ministers have. They can, for example, amend the definitions of 'agriculture' and 'ancillary activities'. So, presumably, you would see certain risks around that.

We don't believe that the definition of 'agriculture' should be amended by secondary legislation. The definition of 'agriculture' goes back to the Agriculture Act 1947. Actually, it goes back thousands of years, really, doesn't it? So, we would have some serious concerns if it was easy to be able to amend that.

And I see Libby and Hazel both nodding. Yes. Okay, fine, thank you.

So, finally from me then, you've mentioned previous iterations of consultation papers and White Papers and everything. It's just a general question, really, about stakeholder engagement throughout the process. How would you characterise your role and whether the sector's voice is finally being reflected in the Bill and in the proposed scheme? Hazel.

I'm sure that Dylan will have something to add to this as well, but just to say, obviously, he's mentioned, and I think I did too, the FUW/NFU joint framework for the future of support, and we've presented that proposal to Ministers, politicians and officials. We've outlined a mechanism to increase food production alongside environmental goods and services, and I would say that, as a real positive, the SFS is very different to the scheme proposed under 'Brexit and our land', and many of the concerns that we have raised have been taken onboard. So, I do want to be positive about that and about the direction of travel that has been taken.

There's obviously work to be done. We've mentioned quite a lot of the work that needs to be done today, in and around both the Bill and the scheme itself. I know that there have been comments previously—wide public comments—about how slow the transition has been in Wales, or how slow the rate of movement has been. I would say that's a testament to the fact that there has been room for re-evaluation and refection in the scheme, and I would say that we are grateful for that.

Obviously, it's not perfect—I caveat with the fact there's still work to be done, but we do expect further consultation next year, and we're still in the process of co-designing the second stage of that. So, we are committed, and we will continue to work with Government to make this scheme as fair as it can be to give farmers that stable income that they need to meet all of the SLM objectives. But I do want to be positive, with the caveat that there's more to do.

Just to back up, obviously we as a union have had a set of key principles and cornerstones around productivity, the environment, stability. We've said from day one, really, our ideas for what a future policy scheme should look like, and, obviously, FUW, in terms of their consultation response, have said something similar. We've worked really closely together, and almost four years ago to the day, we were here launching our joint vision for a future agricultural policy based around five key principles. And earlier this year, obviously, we added some significant detail to that to set out a detailed framework for what a future agricultural policy should look like.

As Hazel said, I think we are pleased that Welsh Government, in terms of the latest iteration of the SFS, have included a number of elements of our detailed proposal within there, most notably for undertaking a set of universal actions you will receive a baseline payment and that element of stability. And there are elements within those universal actions that again are things that, jointly, our two unions have proposed. But, obviously, there are other areas where we fundamentally disagree with Government on, in particular around some of the targets set around tree cover and habitats. But, again, I think we do feel that, through those three consultations, from 2018, when Welsh Government first set out their proposals, to now, things have moved forward. And, as we've talked about, the introduction of foods far more centrally in terms of the Government's thinking is positive. I think they need to go further, particularly in light of the challenges that we face today in terms of global food security. And, from our perspective, we've still got some time between now and the SFS coming into being in 2025, through this Bill and through the secondary legislation that will follow from there. So, I think both organisations stand ready to work with the committee, and obviously work with the Welsh Government, to make sure that we get a scheme that works for Wales.

Promises have been made along those four years that you mentioned, from that initial meeting, around piloting and modelling, and it never really happened in a timely manner, I believe. It's difficult to imagine the kind of on-the-ground activity that we're talking about when the Government is talking in terms of bigger frameworks. There are a lot of moving parts to this. Do you feel that the Government has done enough to line those up in a way where you can actually come to a conclusion as to how confident you can be in this legislation to deliver what we think the Government is trying to achieve?

Obviously, we've talked about the Bill this morning and the improvements that we'd like to see to be able to add in. As you say, we've specifically talked about food, we've talked about productivity, and we've talked about the role of agriculture in wider rural communities. So, provided we get those powers within the Bill, I think the framework there does allow the support schemes underneath that to be able to deliver what we want to achieve for Welsh agriculture.

Hazel talked earlier on with regard to transition and the concern around a cliff edge. Again, as two organisations, we've set out a framework, but also a transition about how we move from where we are today, and we evolve so that we can take farmers with us on that journey, so that we don't see a cliff edge, whether that's stability support and, as crucially, environmental support, because, obviously, we've got Glastir contracts at the moment that all run out at the end of next year. We've potentially got a funding gap of at least a year before we have a new scheme in place. As I say, through our joint proposals, we've set out a way of how we develop and take a lot of the information and good work that's already delivered through the current schemes and evolve them and amend them to make that future policy that all of us desire for Wales.

Diolch, Llyr. I'll now bring in Sam Kurtz. Sam.

Diolch, Cadeirydd. You mentioned Glastir woodland, and, obviously in the last 12 or 18 months we've seen a lot of press coverage around outside bodies buying up farmland in Wales for tree planting and gaining access to Glastir woodland funding. Is it your understanding that the agriculture Bill helps mitigate that, or does nothing to mitigate that? This problem—is there a solution to it within the current draft agricultural Bill? Dylan.

Okay, I'm happy to start, yes. Sorry, I didn't want to hog the—. I think what's absolutely crucial is that, when we're looking at future support, it's targeted at the active farmer. Now, the 'active farmer' has been a very difficult thing to define, and the EU and various others have tried to do that for probably 50 years and struggled. I think, again, what we need to make sure in terms of what we develop is that we are talking about activities that only active farmers can do, and, again, I think we've talked about some of those things—some of those things associated with active animal health planning, with active soil management planning, with regard to the provision of KPIs and things like that. So, it's trying to make sure, when we're talking about the future schemes and the Bill, that active farming is crucial to that. I think we have got some concerns, again. We didn't touch on it in terms of the definition of agriculture, but the ancillary activities: 49(i) is very broad and very wide in terms of what can be done on land. I think we've still got some questions whether 49(a)(i), (ii) and (iii) should be included, because 'ancillary activity' within the Bill seems to be very broad and seems to be very wide and seems to almost allow Welsh Government to do whatever they want. So, I think we need to give some further thought whether that should be there at all, or whether we should narrow it down to make sure that these activities can only take place on agricultural land, and that means land that is farmed by agricultural producers. So, I think there is some more work to do, Sam, to make sure that we nail that one, really, to be able to prevent that widespread land use change, and potential purchase of land by outside sources that I don't think any of us within Wales want to see.

Excellent. Hazel, anything to add?

I'd just agree with Dylan about section 49(a), about the ancillary activities, because it does say,

'taking action, on land used for agriculture—

'(i) to create and manage habitats, or for other purposes relating to nature conservation',

and that is a very broad definition, and potentially means a move away from, as Dylan has mentioned, the active farmer and food production elements of it. So, I'd just support him entirely on that.

Okay. And to stay with you, Hazel, do you see that there are potentially any unintended consequences in the drafting of the Bill as it is?

I guess the unintended consequences come from the things that we've raised previously—you know, not having that full recognition in the objectives that farms also have to be economically viable to support the wider social and other policy objectives that are needed. The rhetoric around the sustainable production of food and the rhetoric around food security is all very welcome, but unless it's an objective within there, then the unintended consequence is that it's not a futureproofed policy, and actually you could end up with these broader definitions that mean that support is diverted away from those on-the-ground agricultural activities that our membership and NFU's membership undertake. Obviously, that would be something that again hinders the progress on climate change and also the objectives that are required under the SLM.

Excellent, thank you. Huw, Dylan?

In terms of unintended consequences, I think, going back to, again—. The unintended consequence would be the difficulty in achieving our objectives around food security, climate change and nature if we have a support structure in Wales that isn't open and accessible and attractive to all farmers, all sectors and all farm types.

Okay, excellent. You've mentioned quite a few of the areas where you'd like to see further information from the Government on this. Is there anything else that we've not touched on that is a cause for concern, or something that you think is very good within the agriculture Bill that is a good building block to build up on from, or is there anything that we've not touched upon as a committee that you think we should be aware of, from your perspective? Libby.

From an FUW perspective, it is mentioned, payment capping, although we would like to see firm confirmation that that will be included. For us, that's a mechanism to ensure that the support is going to the active farmers and family farms, which is entirely what our union is based on. I guess that links as well to the points that have been made by Hazel and Dylan on the importance of having that economic stability of family farms in the objectives because, without that, not only do we not have those people to reach the environmental objectives but also those are the people who then feed back into the wider rural economy. So, yes, we'd like to see payment capping.

Excellent. Thank you. Huw, Dylan?

I don't think I've anything much to add, really. I think we are in the foothills of getting to know this Bill and looking through it, and I think we're going to have to, over the next few weeks, really put it under the magnifying glass, and perhaps if things do emerge—unintended consequences or things that aren't clear—we'll certainly feed those in via our written evidence. And it may be that our members may identify things as well, as they consider it as working, practicing farmers. They may see things as well that they bring to our attention.

Excellent. Thank you. Thank you, Chair.

Diolch, Sam. Now, obviously, earlier on—. Sorry, Hazel, you'd like just to come in on this point.

Yes, just to say, on the things we haven't touched on—we don't have to go into detail; we have a written response for that, I appreciate that—I would like to just mention young and new entrants and farm succession as well and the lack of support for young farmers and new entrants to help, I guess, mitigate some of the barriers for them coming into the industry as well. And part of that relates in an indirect way to payment capping. And there's also concern about renewables and where they fit into this entire scheme as well, because obviously they do meet a lot of policy objectives but there's very little discussion around where they sit at the moment. So, those are just other comments to add to that as well.

Thank you very much for that. Now, earlier on in our session, we were talking about agricultural support, and the Bill gives Welsh Ministers powers to continue existing farm support and ensure the operation of the agricultural sector following exit from the EU. Now, the committee has received evidence calling for these powers to be time limited in order to prevent indefinite use. What are your views on that? Dylan.

I think, from our perspective, it's extremely important that those powers are maintained and we wouldn't support any time-limiting of those. We have just seen what has happened in the world since 'Brexit and our land' began, when we talk about the COVID pandemic, we talk about the crisis in Ukraine, we talk about the trade agreements with major agri-exporting nations being set up. I commend the Welsh Government in terms of the stability that they've provided to the industry through the maintenance of the current structures, and I think it's important that those options are maintained with us, going forward. If we learn the lessons from what other countries have tried to do in the past when they've moved from one system to another and the problems that they've had in terms of being able to support the industry, I think it's vitally important that we have all the tools in the box, and those tools maintained in the box, because we don't know what will happen in the future. So, I think it's extremely important that we keep everything that we've got there and then, obviously, it's for Welsh Ministers to decide how they use them and how they move from current schemes to future schemes.

Hazel, Libby, anything to add to that?

I won't take time repeating what Dylan has said, but just to say I completely agree—we wouldn't want to see it being time limited, for all of those reasons.

Okay. Thank you very much. Are there any other questions Members would like to ask? Any other questions at all? No. There we are. Our session has therefore come to an end. Thank you very much indeed for being with us this morning. It has been very useful. We've heard some very powerful points from you this morning, which will help us in scrutinising this Bill. So, thank you very much indeed for being with us. A copy of today's transcript will be sent to you in due course and, if there are any issues with that, then please let us know. Thank you very much for being with us today.

We'll move on to item 4 on our agenda, and I propose, under Standing Order 17.42, to resolve to exclude the public from the remainder of the meeting. Are Members content? Yes, I see that Members are content. Therefore, the motion is agreed and we'll move into private session.