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Lords Hansard for May 18th 2006


2.09 pm

Lord Vinson rose to call attention to the state of British agriculture; and to move for Papers.

The noble Lord said: My Lords, it is a great honour to open this timely debate on the state of British agriculture and it is a pleasure to welcome our new Minister, who I hope will find this debate a kindly, helpful and agreeable baptism.

When I was a boy, I used to play in a tithe barn. Five hundred years before, it stored grain for the community in case of crop failure. Little has changed over the centuries and, worldwide, agriculture is protected or supported in some form or another because the production of food is essential. It is also an immensely high-risk business. I hope that this debate will throw useful light on the present mix-up that government intervention represents and will lead us to new and more appropriate policies.

Agriculture is different. There is no other industry that plans its output years ahead and has no idea what price it will receive. In turn, that price can be inordinately affected by the weather, disease and exchange rates, and when the product finally gets to the market, it is at the mercy of buyers because it is perishable and has to be sold. It is for those reasons that agriculture has been protected throughout the ages. A nation either has a protected agriculture or, if is fully exposed to international and natural risks, it has virtually no agriculture.

That begs the question of whether we need an agricultural industry in the first place. Agriculture involves only some 2 per cent of the population so could an island such as ours not survive totally on imports? But this is a facile argument because most activities represent only a small part of the economy, be they farming, electrical power generation or dentistry. They are, however, no less essential for that.

There is also another basic reason. This country has to pay its way in the world and must use its natural resources to its best advantage.
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In terms of natural advantage, the British Isles are good for growing grass, and cereal crops are, of course, a glorified grass and meat comes from grass. Our farming is efficient and we do it as well as anyone. It is an essential part of our balance of trade.

Until recently, we were producing virtually all of our temperate food requirements, but the proportion has now slipped to some 62 per cent and is falling. The consequence is that our horrendous imbalance of trade has grown by a further £15 billion over that period and is now running at nearly £60 billion a year. If existing farming outputs were to fall further, coupled with the effect that that would have on the food processing industry, the imbalance could grow to nearly £100 billion a year.

Furthermore, our oil balance is turning negative - we shall have to get down to paying our way in the world. An efficient British agricultural industry will help us do just that.

We cannot go on meeting our imbalances by selling our best companies, property and government stock as we are doing at present; the nation is living off its capital and is selling its silver. That cannot last.

The Governor of the Bank of England said that it is not a question of whether the pound fall but of when it will fall, as the dollar is currently falling. Paradoxically, that fall in the pound will, by making imports dearer, bring a degree of protection to British agriculture, but, at that point, we shall need all the output we can produce and will be glad to have it. The internationally exposed sectors of the economy are very much the victims of the rate of exchange and our rate is held artificially high by disproportionate interest rates attempting to prevent a rationed housing market exploding.

Critics often ask why we do not we treat our agriculture like New Zealand treats its, which is managing all right. The answer is that New Zealand devalued 20 per cent when it adopted an open trade policy and that immediately gave its farmers a better margin, and New Zealand is climatically the finest lamb producing area in the world. Here I am more than pleased to declare an interest as a hill farmer in Northumberland since I retired from active business life. Few people realise that the UK sheep industry and that of New Zealand are comparable, but sadly the UK lacks the co-operative marketing that has served New Zealand so well.

Worldwide, there is an eternal cycle of government intervention in agriculture. It goes like this. Food is a commodity that nations do not wish to run out of and hence production is encouraged. That leads to surpluses. They lead to low world prices. Production then becomes even more uneconomic, and governments subsidise at a higher level to ensure supply. That gets expensive. Governments then get fed up with the whole thing and scrap it. A few years later, food shortages loom as farming declines - as in Canada today - so governments start to subsidise all over again, as America did five years ago. I believe that Europe is about two-thirds of the way through that cycle.
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At the Doha talks, it was suggested that the EU should open up its agriculture and buy from the underdeveloped world. It is difficult to see how the EU can buy from Africa, for example, which cannot even feed itself.

The scale of the food supplies needed to feed the EU, let alone ourselves, is little recognised. The United Kingdom's demand for cereals is some 20 million tonnes a year and if even half of that were to be placed on world markets, the Chicago price of wheat would rocket through the roof. Old Europe grows some 200 million tonnes of grains a year compared to North America which grows some 300 million tonnes of grains a year. Even if half Europe's demand - 100 million tonnes - were withdrawn and placed elsewhere, it would not work. There would be food shortages on a massive scale and little left of the Amazon jungle by the time Brazil had cleared it. So much for Kyoto! If global warming is a threat to long-term food security, that has to be taken seriously. Europe needs its farmers.

There is, of course, one over-arching consideration for government intervention in agriculture today, and that is that our landscape is dictated by the nature of its outputs. Our landscape was largely formed by sheep: they are the best lawnmowers in the world. The environment is important and must be protected.

It is for all these reasons - and they are widely accepted throughout the EU - that agriculture is treated in a special way, and needs to be. Even the Americans, with the most efficient grain-growing land in the world, subsidise their farmers to protect them from world prices. World food prices seldom represent the cost of production but are largely influenced by surpluses dumped to clear the market. The growing fair trade movement is recognition of that and aims to give primary producers precisely the same artificial price support that we give our farmers.

If food is sold below the cost of production, it can be asked who is subsidising whom? Worldwide, food is too cheap. Without surplus production, the price of food would rise and the taxpayers' money, currently going into farming through subsidy, would in theory be spent directly. But manifestly, in world agriculture a perfect free market does not work and cannot work.

So, if we are going to protect British agriculture, then let us at least do it efficiently. I have no doubt that, during this debate, other noble Lords will draw attention to the scandalous inefficiency of Defra, which has got itself a hopeless muddle, largely because the present system is complex to administer and calls for excessive bureaucracy. Farmers have had to find millions of pounds to pay interest on loans they have taken out to cover shortfalls caused by the failure of subsidies to arrive. No other government in Europe bungled it. The failure is unique to Britain and Margaret Beckett, who had been head of Defra since 2001, was responsible for this fiasco. The new Minister will need a big broom to clean the Augean stables.
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British agriculture is currently declining, even with subsidies. Real farm incomes, unlike those of any other section of the community, have fallen dramatically and are some 10 per cent less than they were 10 years ago. Many farmers earn less than the men they employ. Our agriculture is declining, as this debate will no doubt bring out, because of ever-rising costs and ever-falling market prices. For example, it used to take 200 sheep to buy a tractor but now it takes 400 sheep, and milk is sold in supermarkets for half the price of bottled water. When it comes to regulation, a farmer said to me the other day, "I spend most of my time filling forms. We shouldn't now be called "farmers"; we should be called "formers". But the present wasteful and inappropriate EU subsidy shambles does not weaken the case for agricultural support.

It is difficult to see what our membership of the EU does for Great Britain, and farming and fishing in particular. We are currently supporting our farming industry with money recycled back from part of our contribution to the EU, and it would be sensible seriously to consider repatriating the right to run our own agriculture with our own money in our own way.

Many believe that we should return farming support back to the simple and logical deficiency payment system that gave the public cheaper prices and only supported the efficient farmer when the market price dropped below the median cost of production. That could be coupled with a simpler form of agri-environmental support by amalgamating the complex cocktail of the present schemes - countryside stewardship scheme, single farm payment scheme, single entry scheme, English woodland scheme, habitat scheme, and so on - bringing with it a huge reduction in bureaucracy, and a far less harassed lifestyle to our agricultural community, where the young simply do not want to face the endless hassle now carried by an ageing workforce.

I am sure that other speakers in this debate will develop all such ideas, and many more, which time prevents me raising, and we have, indeed, a very distinguished and experienced panel of speakers today.

Agriculture and the food industry it supports have delivered fantastic rises in productivity which underpin the standard of living of us all. In the immortal words of Sir John Harvey-Jones:

    "If it wasn't for the scientific development of agriculture we would all be hoeing".

Currently, world production of food is only just meeting demand. Organic farming will not feed the planet. I am no Malthus and I believe that, with sensible genetic development, wheat, for example, could be made self-fixing in nitrogen. That would make agriculture and the fertilisers it needs far less oil-dependent and the world could continue to feed itself cheaply. A prosperous British agriculture should be at the forefront of such developments.

Agriculture is a long-term business. You've got it or you haven't got it. You cannot simply turn it on and off. I hope that this debate will help our new Minister
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in his thinking and ensure the prosperity of an essential British industry that can help us to pay our way in the world and, at the same time, give a reasonable living to our farming community. I beg to move for Papers.

2.22 pm
Lord Christopher: My Lords, as someone who perhaps does not quite match the description of the speakers who follow him given by the noble Lord, Lord Vinson, I congratulate him very genuinely, and not as a matter of convention but because I have long hoped that there would be a debate about agriculture here. It is not a natural subject on this side of the House. I am very glad indeed to welcome my long-time noble friend to the ministerial post and assure him that whenever possible he can have some support from me.

I hope that what I wish to say will be helpful, and I hope even more that I can perhaps sow a few seeds. I find myself in great sympathy with the majority of what the noble Lord, Lord Vinson, said. My first question is: do the Government have a medium-term to long-term policy in agriculture? I believe the answer is no. Have the Official Opposition got one? Frankly, I believe their view is, "No, we don't either". So we almost have a blank sheet of paper with a lot of problems where we could begin to think long-term. I expect the nature of the issues to be seen very largely as cross-party, because there is much more at stake than simply the political issues.

Yesterday, we had a Question on British values in education. One thing was not mentioned, and it probably never would be; that in Britain we have a splendid tradition in politics to never shut a stable door until satisfied that the horse has bolted. That is pretty clear when we look at a number of issues around us. Energy is pretty much in the news, and there are others - rural housing, roads, traffic and so on. The time is certainly overdue for us to begin to think long-term about farming.

I begin with an issue which the noble Lord, Lord Vinson, touched on, which is food supply and food security. What proportion of what food is now imported? Where does it come from? Long term, which sources are secure? I have never seen any satisfactory answers to those questions. What will be the changes, for example, in volume and nature with populations who now live on cereals but who increasingly demand meat? Argentina is a very good example. At one time Argentinean meat was common in our shops; now it is not, and it is substantially consumed locally. When South America et al and China have a standard of living which matches ours, they will see a considerable change in demand for different foods from those they have now.

Secondly, there is the World Trade Organisation, a matter mentioned by the noble Lord, Lord Vinson. How much longer can it persist with its narrow approach? The last time I mentioned this I was dismissed, not wholly politely, by someone on the Benches immediately opposite me as being anti-free trade. I am certainly not, but I do not believe that if you do not support the United States's protectionism
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that you can necessarily leave things without any consideration of the changes that there should be in WTO thinking and policy. For example, on the sugar agreement, if other things had been considered, we would not have had a very damaging result for many poor countries. That case was brought by two countries that really did not need any help at all, Australia and Brazil. We should address and consider the principle whether something should be done.

Thirdly, we should be looking at public education. Food is seen as something which comes in plastic bags and supermarkets. There is a lack of understanding of what farming and food are about. There are questions of health, food price, which I agree is too low, tastelessness - even the Jersey Royals I bought the other day had no flavour at all; whether it is over-production or whatever I do not know, but they did not taste very well - and of course quality.

Fourthly, are a handful of supermarkets less of a monopoly than the Milk Marketing Board? I suspect the answer is no. Should they be as influential as they are - more so than any other institution in Britain - in dictating, albeit a step back, farming policy?

Fifthly, I turn to the National Farmers Union. I am looking very hard in front of me at one or two faces. I wish Peter Kendall, the new president, well. I was sorry to miss him at the reception held recently. If I was talking to him, I would say, "Yes, react when you must but, for goodness' sake, start being proactive. Be more constructive". Public opinion for farmers is absolutely essential. They get nowhere unless public opinion is with them but they seem, more often than not, to alienate the public.

I take as a good example the renewal of live exports, especially of calves. Mr Kendall says, very helpfully, that he wants to export only to those countries - France, Belgium or wherever - which comply with the new EU regulations for raising them. Fine, but prove it - show people what is happening. Yet the politically carefree Richard Haddock, south-west regional chairman of the NFU, seeks to import calves from Spain and Italy to the UK for re-export. What on earth does that do to the public opinion on what farmers are about? Why does the NFU not condemn it now? I would like to know what needs to be done to raise UK demand for veal produce under conditions which people will accept. There is nothing wrong with veal, but we certainly do not seem to eat it here.

If the NFU is right on badgers, that will be a most damaging piece of publicity for farmers. The science says that it is not wise, if not wholly wrong. I am old enough to recall when tuberculin testing first came in. Bovine TB reduced progressively and was eliminated. Are badgers alone responsible for its return?

There are one or two things that we should consider in this context. First, why is the effect of inbreeding more prevalent in dairy herds than in beef herds? The noble Lord, Lord Soulsby, sent me a most interesting report recently. I do not have time to read it, but it clearly talks about the effect of reducing the constitution of animals, albeit of companion animals, which is clearly relatable to farm livestock. When I see
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cows limping around, lame because of the size of their bags, I wonder what we are all about or what the public think we are about. Part of the cause might lie with us - the farmers - and not with badgers or any other consideration. When you create cows with short lives and yielding two or three times what they did 20 years ago, you must expect some reaction.

To conclude, I seek a major NFU contribution and a long-term policy that has wider considerations than simply farmers and farming.

2.31 pm

The Earl of Erroll: My Lords, I thank the noble Lord, Lord Vinson, for the opportunity to discuss this matter, although I am afraid I am extremely unprepared because I am in the middle of wrestling with my wife's SP5 forms, and it has taken much longer than even I expected when I was working out stuff on the spreadsheet. It would be easier if I could simply send my spreadsheet off; the figures would be accurate. The problem is getting the right things in the right boxes, but that is another subject. I return to the sorry tale of ordinary farmers in the field.

There are two brief points to make. I congratulate the Minister on taking over at a very dangerous moment. I think he is a very brave person indeed. I felt very sorry for the noble Lord, Lord Bach, who I think tried very hard but who unfortunately was misled. I think there are problems with the structure of agencies reporting to departments and to Parliament, but that is another subject for another day. I also thank the Minister for the 80 per cent cheque that we received the other day. As I shall discuss later, I wonder whether we will receive the other 20 per cent later.

I shall continue my little story of where we will get to with this thing, and why I thought we were getting somewhere but why I am beginning to wonder whether we are not descending back into chaos. I do not understand how Defra will sort out and reconcile the parcels that I am now putting into the new SP5 forms with the ones I entered last year because, since then, we have had a set of maps from the RLR. Defra will reconcile them with the 2005 ones to establish the entitlements, against which it will recheck my 2006 form. I can help Defra with the form, but I doubt whether it will be able to sort it out itself because everything has changed since the base for the Ordnance Survey mapping was changed to make positions of the parcels more accurate, so some of the parcels have moved by up to half a hectare. So although I agree that the position of 590 parcels overall is to within 0.04 of a hectare, some parcels vary by up to half a hectare, plus or minus, individually. That cannot be reconciled entirely because the base maps have changed and there is a real problem with it. The attitude is, "If you want some consultancy, I will help you; I have offered it before".

The real problem will arise later this year when the inspectors come round and try to remove the money. They start by saying, "You have not complied here,
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and this and that is out. We are going to dock this money and that money from you". I am very worried, as are several other people, that that is exactly what will happen to the last 20 per cent, because how do you repeal the decision? If the inspectors can find enough little non-compliance issues, they can unilaterally remove your last 20 per cent and keep it for the Government or whatever. I do not know what happens to it, but I can tell the House that there is a lot of suspicion out there. It is a lot of money.

I am in despair. We agreed our maps with the Rural Land Registry on 21 April; there was one tiny boundary change to make, and that was all. On 17 May - yesterday - we received a new print-out of some SP5 forms. I thought, "Oh great. These will be up to date and accurate, because the last ones were not". I was not waiting for them; I did not expect them. Were they accurate? No. Thirty-two of the fields - exactly half of them - have discrepancies and have to be redone. It does not matter; I am rewriting them. Indeed, that is what I have been doing today, instead of getting on and preparing my speech. I rang up the registry's customer service centre at Newcastle to ask what was going on. We checked one of them and found that it was right; it had been updated. So where do we lie?

Even more confusing this morning was a big packet from the Rural Development Service. We have been trying to get into an entry-level scheme since last August. What has it done? It has lost 80 to 90 hectares. I have not had time to add it up, but it has lost several major parcels. As those parcels are woodland and so on, they earn you the money for the points you earn by setting aside land in the fields, so you cannot go into a partial ELS. What frightened me when I talked to one of the assistant consultants we have working on this for the RDS is that they did not understand it. They wondered why we were not getting our payments. I said that it was because I did not have the maps. Even people working at senior consultant level do not understand the problems, so now I understand why there is a problem. The assistant consultant is a very nice chap who knows what he is talking about in some ways, but he does not understand the complexity. Another ELS problem arises which I shall not even tackle because I do not have enough time.

As I said in my last speech, the real cost of the ELS is all about farmers having problems and struggling. Isabelle set aside the land, paid for the seed, applied and did all the work for the ELS last year. Can she get the money? No. That is the real cost to farmers, quite apart from the lost interest and all that sort of stuff. I now understand the rather depressing A5 booklet we received about two years ago, which basically said, "There are four things you can do under the new scheme. We suggest you retire, diversify, try to continue to farm, or sell. We suspect that none of these options will actually see you through the future". I thought it was one of the most depressing things I had ever read. How true it is becoming.

The banks, as the noble Lord, Lord Bach, said, are happy with the situation. Of course they are; they are lending us assets. What will happen? This is the
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interesting thing about it; is it the nationalisation of land through the back door? The farmers go bust, and the banks take the assets and sell them to new City money or yuppie money that has come from somewhere. Those people will not know how to manage the farms, so they will get land agents in who will charge them a lot of money for doing it, but it does not matter whether they are profitable or not. Then, of course, the academics at Defra will tell the agents what they have to do, and the agents will be compliant because it is not in their interests not to be so. We peasants who survive - idiotic or otherwise; those few of us who try to continue to farm - will carry out their bidding. But that is about all we are doing - we are not farming any more; we are just following a rule book. What if the rules are wrong or idiotic? The other night, reading the latest huge thing from Defra about derogation that she had to go through, Isabelle said, "Oh! We are not going to be allowed to drive across some of the fields without getting written derogation first from Defra". What happens if there is a water or gas leak on the other side of the field? Are you going to lose your cross-compliance money because you will not be cross-complying, or can you respond to the emergency? It says nothing about it in the handbook. It is just another way of getting rid of that final 20 per cent, is it not? Defra can just hope for some water leaks around the place.

Then there are the mowing dates and being worried about your set-aside. Have you got it exactly right, down to the nearest 0.01 of a hectare? You may have some reserves. The trouble is that the rules for mowing fallow are different from the rules for mowing set-aside. There is a window of about two weeks in which you can comply with both. What happens if it rains? Do you think you will get your derogation from Defra to go and do the field in time? My wife is still waiting for a derogation to use a particular spray. She applied for the derogation last harvest, but has still not had a reply from Defra. I am afraid that you are not going to get it.

What do we do? We have more regulations, all of which are well meant and a good idea. They look good on paper. I read a Defra booklet yesterday in the National Liberal Club. It said that Defra was protecting the watercourse. It is, and it is quite right that we should protect watercourses and all sorts of other things. But these things carry a cost, and we will not survive at all as farmers unless money is put into trying to comply with these higher standards, which the rest of the world does not comply with. The regulations are well meaning, but it is very difficult to comply with some of them.

Then there are the nitrate-vulnerable zones. The RB209 guidelines are supposed to be guidelines, but I can tell the House from experience that the inspectors are adhering to them and will fine you if you do not adhere to them, because they have tried it on Isabelle. She passed them on to her agronomist, who said, "Oh, don't worry. We won't have a problem". He came back to her and said that it was difficult; this year, everything was being marked down. As she is growing energy crops, she has to hit a representative yield, but
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we do not know whether the RB209 guidelines will allow her to do that, so she may lose her money one way or the other. What happens if the weather changes? With new crops, there are new nitrogen uptake requirements, and things like that. There are all sorts of matters of opinion in the guidelines. Noble Lords should try reading and understanding them - it took me a long time.

I am sorry to talk so much about the everyday toil of farming folk in this country, but it illustrates a little the parlous state that we are in.

2.39 pm
Lord Tomlinson: My Lords, I join others in thanking the noble Lord, Lord Vinson, for this very necessary debate. Having said that I welcome it, I shall make one or two comments on things that he mentioned. He bemoaned the fact that we did not have a return to deficiency payments. I merely remind him that his Government had the opportunity between 1979 and 1997 to do something about that. Equally, when he talks about the repatriation of the CAP, were that to be desirable, the same comment applies. He also bemoaned the lack of co-operative marketing strategies. My understanding of co-operatives - and I have some background in co-operatives in other areas than agriculture - is that almost by definition they are a do-it-yourself process. If co-operatives are desperately needed, the remedy is in the hands of farmers to do something about it, not to bemoan the fact that nobody else has done it.

I marginally disagree with my noble friend Lord Christopher when he said that this subject was not a natural one for Members on this side of the House. As somebody who represented the constituency of the noble Lord, Lord Plumb, in another place for five years, part of the necessary imperative for peaceful coexistence was that I had a masterclass from him at least once a month during that period. That taught me to appreciate agriculture and recognise something of its importance.

This afternoon I want briefly to look at the strategy for sustainable farming and food that was launched at the end of 2002. In that strategy were several very important long-term aims for agriculture, which are apposite to the circumstances that we face today. Long-term aims for agriculture included the need to secure a more competitive and sustainable industry with a stronger market orientation. I certainly welcome that. They included, too, the aim to reduce agriculture's reliance on subsidies based on production and reflect instead the public benefits that agriculture provides. I certainly support that, too. In addition, there is the aim of encouraging restructuring for long-term economic and environmental sustainability, which I also support.

In those circumstances, the reform of the CAP is fundamental and central to the implementation of that strategy - free to farm to the demands of the market as subsidies are decoupled from production. We are now moving in that direction but what a pity it is that we have wasted so much time. For many years I served in
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the European Parliament and regularly in our debates and discussions on the budget and on agriculture we complained about subsidies being linked to production, about over-production and about the process of intervention - and we discussed dumping on the world markets, with concomitant damage to third world agriculture when, at the same time, the system was endemically encouraging fraud. We complained about all those things. Something is now being done about it, and I welcome the commitment of the Government to CAP reform. It is slow, but the slowness is caused not by their reluctance but by the necessity to drag parts of a reluctant European Union along with them. We should give credit to the Government and praise where it is due.

We should recall, in the system that is being replaced - one hopes to the benefit of the environment - the environmental damage that was being done in striving for constant levels of production irrespective of quality and the environmental damage done. You have only to look at the costs currently being borne by consumers in the water industry to see the price that they are paying for the excessive use of nitrates by some of our grain producers to lift their production levels.

Agricultural reform is extremely important and the vision has to be one in which we have a more sustainable farm sector, which is genuinely competitive in a globalised world. The CAP does, and will, so distort the European budget, that there are financial as well as agricultural and environmental imperatives in this process. If we need a common policy and not a production subsidy, does not that open up the possibility for some areas of national financing or at least some areas of co-financing of agriculture?

In the debate on agricultural reform, inevitably a lot of people in the United Kingdom have focused on the problems every time the UK rebate becomes engaged in the discussion. I am somebody who believes that we should compromise no further at any point in the discussion of the UK rebate. That rebate is something that mathematically would work itself out of the system if we had the correct agricultural reforms. The rebate is a correction to the expenditure side of the budget; if we got expenditure on agriculture correct, the rebate would mathematically work itself out of the system. I believe that there should be no more compromise with that; it should be the measure by which we know whether we have got the right reform.

On farm incomes, I listened to what has been said. I recognise the problems but, to be totally fair, we should talk not only about farm incomes; we should also note that the Farm Business Survey showed that 46 per cent of full-time farms in England in 2004-05 had diversified business arrangements, and that the average output of the diversified activity was some £18,500 - very often a sum larger than that which the farmers were earning from agriculture. In parenthesis, I wonder why it is that, with the crisis often referred to in farm incomes, agricultural land prices are rising dramatically.
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Finally, I pay a personal tribute to my noble friend Lord Bach. He served this House well and the Government loyally, a service that was not entirely reciprocated in the recent reshuffle. I shall refer briefly to two particular aspects of his work. With the single farm payments, he was working with a system and implementation programme not of his making - and if we look at the situation today, we find that 85 per cent of payments have been made. Although he was subject to political criticism, that criticism was not offered by any of the farming unions; neither the NFU, nor the CLA, nor the TFA criticised him. I also pay tribute to the work that he did in the lifting of the beef export ban after 10 years. There was a great success and a great fillip for the beef sector of British agriculture, and I pay tribute to my noble friend for his role in it.

2.48 pm

Earl Peel: My Lords, like other noble Lords I thank my noble friend for introducing this timely and very important debate to your Lordships' House this afternoon. I declare interest as an owner of land in the north of England.

Before making my small contribution, perhaps I could join with others in welcoming the noble Lord, Lord Rooker, to his new position. However, as the noble Lord, Lord Tomlinson, said, the reason why the noble Lord is in that position is because of the departure of his noble friend Lord Bach. I do not wish to comment on the reasons for the noble Lord's departure other than to agree with others that it seems bizarre that he was so unceremoniously dismissed when the architect of the single farm payments fiasco has been promoted to Foreign Secretary. But I would like to say that I very much appreciated working with the noble Lord, Lord Bach, which I did in some detail during the course of the Commons Bill and the Natural England and Rural Communities Bill. I always found him extremely courteous and very helpful.

Returning to British agriculture, the fact that so many farmers have been rocked sideways because the single farm payment has not reached their bank accounts speaks volumes and demonstrates only too clearly how desperately vulnerable so many of them are. But I agree with much of what the noble Lord, Lord Tomlinson, said. The truth is that the old system of production-based subsidies was unsustainable and, certainly, politically unacceptable. But, as happens to all industries from time to time, there are big shake-ups and the consequences can be dire, certainly in the short term.

I have met and spoken to quite a number of farmers of late. Inevitably, I get fairly mixed messages. But notwithstanding the wise words of my noble friend Lord Vinson and some of his predictions, I believe that among so much gloom and despondency some optimism is beginning to shine through. It would seem that elderly farmers are perhaps less concerned. They have, if you like, done their bit and could look at the single farm payment as a sort of pension. The ones in
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the middle - those of my age - I think are struggling. They have farmed in a particular way for so long that the change is quite difficult to come to terms with.

However, the younger farmers are, I believe, more encouraged by the future. I accept that they buck at all the regulations and no doubt believe, probably quite rightly, that many are quite unnecessary. But they can by and large cope, particularly due to their grasp of modern technology. They have learnt the concept of high quality, traceable food and how to connect with the consumer and the retailer. The problem, of course, is that the retailer has much more to do in connecting with the producer, which is half of the problems that we face today.

Furthermore, I have seen some remarkable examples of on-farm diversification, a point that the noble Lord, Lord Tomlinson, raised. But we should not think that this is automatically the panacea for all our farming ills, for the simple reason that not every farm can provide an alternative source of income. Indeed, not every farmer is willing or capable of embracing alternative business opportunities. Why should they? It was not perhaps their calling in life: they are farmers.

Most farmers I know accept the need for change, but in return they ask for two things - fairness and consistency. In my belief, both those commodities have been in rather short supply of late. It did not help when the then Secretary of State, Mrs Beckett, hailed the recent deal on the CAP budget as a major success, only to be undermined by the Prime Minister who announced that the CAP needs further reforms. That threw everything into chaos. Now no one seems to know where we stand with regard to future Pillar 1 payments, what levels of modulation are to be implemented and what will be available under the various rural development and agri-environment schemes under Pillar 2.

Marketing is clearly a key component of modern farming. Surely, labelling should reflect the true source of the produce sold. It is no use when imported pigs, for example, are treated and cured in this country, and then sold under the Union Jack logo, which I know is happening, for example, in a big plant in the West Country.

However, the one point that I find totally illogical is how cheap imports of meat can be allowed to enter our markets, when it is quite clear that they come from countries where animal welfare and general standards of production fall far short of those that are so rigorously imposed on our own farmers. What are the Government doing to redress that situation? Perhaps more importantly, what can the Government do given the WTO trade conditions?

Clearly, the role of the farmer in the countryside goes well beyond the production of food, a point rightly made by my noble friend Lord Vinson. Access to the countryside is, by tradition, a free service. Logically, if as a nation we wish to see a landscape that is well cared for and managed to produce not just food but also diverse habitats and wildlife, clearly that must be paid for out of the national purse.
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I resent the word "subsidy" in such cases when clearly the farmer and land manager are being paid to provide a service. Wildlife needs management. It does not just happen. I am bound to say that the balance of nature can at times be very disappointing. Much has been promised in terms of resources for agri-environment schemes, but whether the finance will meet the expectations again remains to be seen.

Perhaps I may finish with a few words about the hill farmer. I have a special interest as I own land in the hills, most of which is subject to tenancy, and I know what those farmers are going through. I believe that this stalwart community, many of whose families go back several generations, is worthy of special treatment. Here, the future looks particularly precarious and it is a fact that without the availability of the various environmental schemes, most would not survive. There can be no doubt of the potential impact on some of our most important landscapes. Unless we ensure the survival of those with the special knowledge of sheep husbandry and professional skills the impacts could be very severe indeed. To that end, I suggest to the Minister that the present hill-farming allowance be continued until its successor has been fully thought through and the Rural Payments Agency is fully confident of implementing a new scheme effectively.

In conclusion, whereas no one can underestimate the significant problems facing our farmers, I believe that there is, as I have already said, a slightly brighter future ahead. Our farmers have a great track record of resilience, which is second to none. But the future lies in the young men and women who can adapt to those changing forces. However, it is imperative that the Government encourage them in every possible way that they can, which is a lesson that perhaps we could learn from - dare I say it? - the French.

2.57 pm
Lord Beaumont of Whitley: My Lords, I, too, offer my thanks to the noble Lord, Lord Vinson, for introducing this debate at this time. It has already shown its worth. We have had a number of first-class speeches, most of them provocative. I hope not to let that tradition down. That British farming is in a mess is no secret. Indeed, world agriculture is in a mess, but I imagine that it is the national problem that we are addressing today, although the roots of our troubles lie in international economics and, to be specific, in free trade.

Free trade as a dogma, as an extreme, is the invention of the Liberal Party. It is a con trick to extract the votes of the townsmen at the expense of the countryman. But like all dogmas coined by conmen, it is the corruption of something worthwhile. Extreme free trade and extreme protection are both deeply flawed. As so often, we must look for the golden mean. Extreme free trade counts as its virtues the production of cheap goods and cheap food and thereby always pays the least possible wages and does the least possible for the environment. That is the logical way in which it must progress.
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Extreme protection makes the rich richer, usually at the expense of the poor. The golden mean is to be found, as we are beginning to realise, in the concept of fair trade. Fair trade is free trade conditioned by care for people and the world, and moderate protectionism is protectionism where it can be justified by care for people and the world. That justification, when we are talking about food production, can be found in the doctrine of food security, which has been mentioned several times in the debate and is a concept that the older ones among us are quite used to, since it governed our survival in World War Two. Then we had to grow as much food as possible and pay in wages and profits to workers and farmers at least the amount necessary to ensure it. Since then, we have been able to neglect our agriculture, and therefore our countryside, by buying cheaply all over the world. But for those of us who look ahead further than the next 10 years, the unique window of 150 years when the world could in the short term afford the luxury of free trade, is coming to an end.

The trigger for this reaction to normalcy is the end of the age of oil. But, you may say, "The world is awash with oil". And so it is, but the world being awash with anything non-renewable is the inevitable sign that production is at or just past its peak. In this case, the experts largely agree that it is just past its peak. Economists tell us that that is merely the signal for substitution, so that is all right then; except that in this case there are no substitutes. Nuclear power actually needs a lot of fossil fuel to set it up, and there is no way any sane man knows of disposing of its lethal waste. Biomass has its uses, as is often said in this Chamber, but it is a direct competitor with food for fertile land, and fertile land is something which we must preserve at all costs. There are various other candidates to replace oil, but they all involve using more energy than they produce.

So, if we want to eat - and I think we all do - we must set about making this island as self-sufficient as possible. That involves taxing imports of foodstuffs sufficiently to make it profitable for farmers to grow food, and subsidising small farms at the expense of large ones, because small farms grow more food in quantity per unit of land and manpower than large ones. The bonus, in addition to not starving, is that we will begin to rebuild our countryside.

None of this will be easy because it would involve, among other things, leaving the European Union and the World Trade Organisation. But it ought at least to unite the nation as World War Two did, since the Labour Party will be able to abandon its creation of a nannied suburbia in favour of its old ideals of increasing the welfare of the poor, and the Conservative Party will be able to perform its duty to conserve. It may be a bit tough on the Liberal Democrats, but you can't have everything, and it ought to cure them of being carried away by dogma. Conmen can't get away with it for ever.
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3.03 pm

Lord Corbett of Castle Vale: My Lords, I join in congratulating the noble Lord, Lord Vinson, on staging this debate, and I welcome especially the return of the Minister, my former neighbour in Birmingham when we were both at the other end of the building, to ploughing this particular furrow. I know that he has a strong attachment to it. I should tell your Lordships that I was briefly a Member of the Commons Agricultural Select Committee, and for 10 years during the last century I was on the staff of Farmers Weekly; not sitting at the seat of the noble Lord, Lord Plumb, but more often than not enjoying a glass with him and none the less picking up his wise views on the state of the industry then.

Of course then, as now, the health of British agriculture was vital to all those industries that make fertilisers, sprays, medicines, machinery, twines, vehicles and all the rest. Then, as more painfully now, the costs of oil-based inputs were crucial to the industry's prosperity. As in too many of our basic industries, the "big is better" philosophy overtook the more sustainable "small is beautiful" experience. I believe that we have neglected the importance to agriculture and rural communities of small, family-run farms, either tenanted or owned, and sadly the healthy independence of farmers has perhaps denied them the benefits of co-operative buying, selling and other innovation.

I want to talk briefly about Mr Bill Howes, who runs a 30-strong herd of Tamworth pigs at the back of his semi in Burton Green near Coventry. The Tamworth pig, of course, is primarily a bacon pig. The "Rural Living" section of the Birmingham Post yesterday helpfully told us how last year Mr Howes won with his Tamworths at the Royal Show, just at the end of his road in Stoneleigh near Kenilworth, and at the Three Counties Show near Malvern, and that he took Reserve Champion in the interbreeds class at the Hatfield Show in Hertfordshire. Does he like his pigs? This is part of a poem he wrote about them:

    "If you like pork and bacon too,

    A Tamworth is the pig for you

    By young and old, its meat is eaten,

    For its flavour, it can't be beaten,

    For something special in your sty,

    A Tamworth is the pig to buy".

Now there's a man who knows and cares about his pigs. It illustrates the point that small can indeed be successful and beautiful.

The tragedy now is that too many people - and not all of them young, as my noble friend pointed out - think that milk comes out of a bottle and meat from a shrink-wrapped pack. The industry itself has perhaps been too inward looking, and it has taken harder times for farmers to get into innovative ways of earning a living where that is possible, and especially the development in terms of both cash and consciousness of taking farmers' markets into the hearts of our towns and cities. They have been a great success and they speak volumes about the regard with which the agricultural industry is generally still held.
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But farming, like every other supply or service industry, depends on people, and most people need somewhere affordable to live. Almost one in five of England's population lives in rural areas, a point not always appreciated. They live in settlements with populations of fewer than 10,000 people. Workplace earnings data show that average earnings in 2004-05 in most rural districts were £17,400 a year compared with £22,300 in the major urban districts. Those figures come from a timely final report published yesterday by the Affordable Rural Housing Commission. It was set up last July by Defra and the then ODPM. Its task was to inquire into the scale, nature and implications of the shortage of affordable housing for rural communities in England and to make recommendations to help address this unmet need. In passing, I am very sorry that the brief kindly provided by the NFU for the debate today did not even mention rural housing. I know that the union recognises the problem, and I am only sorry that the issue was forgotten. I commend the formidable Eleanor Goodman, a distinguished former political editor at Channel 4, for producing such a thorough report in a mere 10 months.

It is interesting to note that the problem of the lack of affordable housing either to rent or to buy in many of our towns and cities is precisely mirrored in rural areas. One of the major causes in both cases is that councils were not allowed to build to replace when a previous Conservative Government introduced the right to buy. That, as the commission report argues, has had a proportionately greater impact on reducing the stock of social housing in rural areas than it has in towns, and fewer homes have been built to replace it. And affordability has fallen over the years. Between 2000 and 2005 the average house price rose by £73 in every £100 in rural areas, against £68 in every £100 in urban areas.

The commission makes what I believe is a compelling case for building more affordable housing for rent, part sale or sale, arguing that 11,000 new homes a year are needed in settlements of less than 10,000; that number could be reviewed over time. The Housing Corporation plans to fund housing associations to build around 3,000 homes in these areas in each of the next two years, but that ignores the fact, as I have said, that roughly one in five of the population lives in rural areas but gets only one in 10 of the new homes that the Housing Corporation is going to fund.

It is not as if suitable land in rural areas is not available. The report notes that a good deal of land in the countryside is owned by the public sector. Some of it has become redundant. One thinks of the sites of former big out-of-town mental hospitals and military establishments, let alone former industrial brownfield land.

The commission urges extending the partnership, working between public bodies and the private sector to release this land.

The answer, says the Commission, is to expand the ways that link private and other non-statutory bodies and the public sector in affordable housing. The idea
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is to involve landowners, the private sector and the not-for-profit organisations, such as community land trusts, to work together to enable those who work in rural areas to be able to afford to live there, with a prospect of their children being not too far away when they start to raise their own families.

The report's most controversial suggestion is that local councils should have planning powers to prevent the sale of properties in rural areas as second homes, exempting present second homes. An ODPM survey two years ago found that there were 93,000 second homes in mainly rural districts of England. The use of such powers will be decided on a case-by-case basis and would build upon the restrictions already in place in most of the national parks and to be introduced in parts of the Scottish highlands.

I should say to the noble Baroness opposite that this makes it the more surprising that the Conservative spokesman on communities and local government in the other place condemned the suggestion yesterday. Barely was the ink dry upon the report. I hope that she will reflect more deeply on that. That is why I am glad that the Secretary of State for Rural Affairs, David Miliband, and Ruth Kelly, the Secretary of State for Communities and Local Government, are giving this idea careful consideration.

This is not a small matter. In South Hams in Devon, 10.9 per cent of the homes in that district are second homes. In North Norfolk, the figure is 10 per cent; in Penwith in Cornwall it is 8.6 per cent and in South Lakeland in Cumbria it is 7.6 per cent. So this is a really big issue. If we are serious about meeting the need for affordable housing in rural areas, it will need more than words and rhetoric to build them.

3.12 pm
The Earl of Selborne: My Lords, I join with other noble Lords in thanking my noble friend Lord Vinson. Like some other speakers, I declare an interest as a farmer. I should also declare an interest as a trustee funding agricultural research because my remarks will be concerned with the role of agricultural research, particularly that funded by the public.

It is common ground between all of the speakers so far that the whole agricultural sector is recognised to be in a state of transition - and inevitably so because it was anticipated many years ago with the reform of the common agricultural policy, with the Doha round and with much else besides. Many of us were urging for that for a long time and it is irrelevant now to ask whether or not the agricultural sector, the Government or others have put in place suitable measures. However, when the noble Lord, Lord Tomlinson, takes to task those who failed to establish co-operatives, I remember that the first co-operatives were called marketing boards. They were phased out because they were incompatible with the European Union, or the EEC as it was. We had something called Milk Marque, which, can you imagine, had to be closed down because of the unfair competition that the farmers would exert on the
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multiple retail outlets. That was an example, I fear, of co-operation which should have been allowed, but certainly was not.

In a situation where the sector is in a state of transition and falling incomes, it is important to establish what it is that you can reasonably ask the Government to do - and I accept that farmers very often are unreasonable in their demands - what it is reasonable for the sector to do and what might be the long-term strategy to which everyone, with some measure of agreement, can sign up to.

In the 1950s, of course, it was much simpler. It was quite clear that the Government and the public knew that food security was an issue and that increased production of safe, nutritious food was clearly required. It was fairly uncomplicated. The farming sector got credit from George Brown and others in the National Plan and "Food From Our Own Resources". A number of measures, which were successful from the point of the view of the consumer as well as the farmer, were used to achieve this. These included capital grants, production support and, above all, investment in agricultural research and development.

I recognise that we will not go back to deficiency payments, however much my noble friend Lord Vinson might wish it. I recognise also that the imperatives of the World Trade Organisation require us to be highly competitive, albeit very much more environmentally aware than we were in those halcyon days of the 1950s and the 1960s. So there is a very clear and reasonable challenge to agriculture: you have got to be competitive. You are not going to get the same support but the Government can perhaps still help in certain respects - not least in helping to set the vision, the strategy, and in producing a coherent base for research and development. Not all of this, I hasten to say, must be funded by government. Others can and should contribute.

With regard to the biological sciences funded by the Research Council under the ministerial supervision of the noble Lord, Lord Sainsbury, the Government have achieved a very creditable record. The science base has expanded through funding research councils such as the Biotechnology and Biological Sciences Research Council and the Natural Environment Research Council, which have been able to increase their expenditure in real terms.

The problem in the agricultural research sector dates back - this may sound as though I am harping back into history - into the early 1970s under Lord Rothschild's customer/contractor principle. Your Lordships may remember that he came up with what I suspect is now a disastrous concept of taking money away from the research councils and giving it not to the farmers or their organisations to spend but to the ministry of the day, which was MAFF - the Ministry of Agriculture, Fisheries and Food. The argument was that the farmers would be incapable of organising themselves to administer this research, and so £19 million was moved out of the research councils and was given to MAFF.
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That was 25 or 30 years ago. What has happened to that money over the years? It has been transferred by degrees to the policy objectives of Defra - a different ministry with highly laudable objectives. The sum of money is now, in real terms, about one-fifth of what it was. So it has disappeared. Lord Rothschild's concept of having a vicarious customer, someone who could act as a sponsor, has been disastrous.

If you accept my thesis that the agricultural sector, above all, has to be seen to be embracing new technology, taking on the fundamentals of environmental considerations, nutrition, linkages with other biological sciences and contributing to some of the wider objectives of the National Health Service - all of which I believe the research councils are undertaking in a co-ordinated way - you will find that the old Research Council institutes, such as Rothamsted Research, the Institute of Grassland and Environmental Research at Aberystwyth and North Wyke in Devon and the Institute of Animal Health, are withering on the vine - and they are withering on the vine because Defra has withdrawn support. It says, "These are not our institutes and not our responsibility. They are the research councils' institutes. We have no overall strategy and do not feel responsible for the redundancies or the lack of ability to maintain this infrastructure".

It can be argued that by competitive bidding, you can go to universities and get the work done elsewhere and that no one should assume that they have an automatic right to funding from Defra or anyone else. That may be true if you think you can buy the research elsewhere. Supporting a sector such as agriculture needs farms, extremely expensive animal facilities and the infrastructure we were proud of in the 1970s and 1980s but which is now at dire risk. There is every likelihood, because of yet further withdrawal of funding by Defra, that IGER and Rothamsted will be merged into one funding stream. Those further cuts will tell farmers that although they need research and should be funding part of it themselves, Defra does not have the vision to understand how it should be playing its part in underpinning the infrastructure for research.

We should be proud of our great tradition of agricultural research. We now have new Ministers - I am deeply impressed by the Secretary of State's blog, which I read carefully; it is quite open and transparent. I hope that before the noble Lord, Lord Rooker, gets too deeply immersed in the conventional wisdom of Defra, he will find the time to visit these research institutes and ask them whether they can justify continued funding. If the noble Lord will do that, I will give him no further trouble.

3.19 pm

The Countess of Mar: My Lords, I, too, am grateful to the noble Lord, Lord Vinson, for introducing this topic for debate today. I also welcome my old friend - if I may call him that - the noble Lord, Lord Rooker. We dealt with many things together, particularly OPs, when he was at MAFF, and I have huge respect for
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him. I declare my interest as a partner in our small family farm. I think that the noble Lord, Lord Corbett, would support me in that.

Farming is in crisis, and I do not use the word lightly. The problems are widespread and have implications for both rural and urban communities. At a time when we have at last acknowledged the importance of countryside stewardship, the financial difficulties faced by some members of the farming industry mean that we are at risk of causing long-term damage to the environment. The appearance of our landscape is inextricably linked with the way in which it is farmed. In many upland areas, for example, bracken and gorse are beginning to dominate. In the lowlands, it is the ubiquitous ragwort that is most obvious. Despite legislation that requires ragwort to be controlled, it is visible in pony fields, on road verges and railway embankments. No one seems to care any more.

Why is this so? The answer is complex: a combination of failure by government to understand or care about rural issues and an industry with an economically unstable base. The problems associated with the Rural Payments Agency are a small part of the whole, though I hasten to add that, to the beleaguered hill farmers, they are currently dominant.

It is iniquitous that farmers who milk cows seven days a week to produce milk that is then sold to the supermarkets should receive less than the cost of production. There are many fewer dairy herds in this country than there were 10 or 20 years ago, but the number of cows remains almost stable. This means that fewer people are managing the herds. I listened very carefully to the noble Lord, Lord Christopher. The pressures to improve efficiency drive people to make false economies which may include a reduction in routine, precautionary health measures which, when combined with a reduced inclination to save the life of a sick animal, mean less contact with a veterinary surgeon. They might also cut back on the amount or quality of the rations fed to their animals.

A smaller labour force means longer hours for those who remain, and the burden of constantly changing legislation makes life no easier. Both the herdsman and the cattle are now functioning under extremely stressful conditions. Serious welfare problems can arise. Is it any wonder that we hear with increasing frequency of breakdowns in both human and animal health?

The Minister knows of the effects that a herd breakdown with bovine tuberculosis has had upon one family that I know, for I have recently written to him about them. This was a massive breakdown. Since February 2005, they have lost more than 180 animals out of a herd of 260.

Another family that I know have been under TB restrictions for more than five years. A few weeks ago they finally had two successive clear tests. This meant that the restrictions were lifted. They decided that they would get out of milking while they could, sell their cattle and diversify. They reviewed their cropping programme, decided not to rent any pasture and, as a
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precursor to the sale, to slaughter a number of older cows. Disaster befell them when the abattoir reported that two of the cows had active TB lesions. The cows had never had a positive skin test in all the five years of repeated testing. They were not even inconclusives.

The farm is back under restriction. The family now has to return to milking. Their cropping plans are all awry and the grazing land that they formerly rented has been let to other tenants. They cannot just throw in the towel and walk away from the animals or the land, as someone might do in any other kind of business. They cannot sell the animals, except for slaughter. Both families have always co-operated fully with Defra and the State Veterinary Service. Compensation does not replace the loss of their prized animals. What do they do?

The malaise lies not just in the dairy industry, but with all our livestock industries. Our high welfare standards - as some noble Lords have mentioned - increase the cost of production in both the pig and poultry industries. Sheep farming in the hills is becoming a soul-destroying occupation simply because there seems to be no understanding within government of the role that our indigenous hill sheep play in the production of strong maternal lines for ultimate meat production in the lowlands. Nor do they seem to understand the role that these sheep play in the preservation of the British landscape. British producers' efforts are undermined by the supermarkets and mass catering suppliers who buy cheaper meat and eggs from abroad. They have constant concerns about biosecurity, with diseases that are often the result of poor husbandry in other countries and lax biosecurity at ports of entry - a responsibility of government - threatening their livestock.

The isolation among farmers is palpable in some rural communities, and can cause long-term mental illness and even suicide. The long hours worked for very small economic return have a direct impact on the way that animals are cared for. It should be remembered that the majority of farmers have an empathy with their livestock - a fact that seems not to be readily appreciated by those sitting in Whitehall. In the aftermath of BSE and the foot and mouth epidemic, they are repulsed by the prospect of further mass killing - euphemistically called culling by Defra - of healthy livestock in the event of avian flu or some other infectious disease. They find it impossible to equate the propensity for Defra to kill healthy animals whilst diseased and sick badgers and other wildlife are allowed to continue to spread bovine TB across our countryside.

Are we going to see malaise as deep as that which occurred during the slump in world agriculture in the 1930s, with abandoned farmsteads, land left to lie fallow and families who know about tending animals and crops retreating to the cities? It is apparent that farming for food production is very low on the list of priorities for the UK Government, as other noble Lords have mentioned. I do not believe that food security features very prominently in the policies of the EU either. I know that I am not the only person who
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worries about the effects that a possible oil embargo might have on our food supplies. What are the contingency plans in the event that we cannot get beef from South America, lamb from New Zealand, poultry meat from Thailand or Brazil or vegetables from Africa because there is no transport?

I do not believe that you can get rid of an industry that provides the staples of life to a population on the basis that someone else will do it for much less, without understanding that, in the event of a supply crisis, there will be no home-grown fount of knowledge and experience to tap into. If we look at present day Zimbabwe, we can get some idea of what happens if novices take over agriculture. To put it baldly, the population starves.

The Government really must wake up to the effects that their policies, together with those of the EU, are having in both the long and the short term, on human and animal welfare, food security and the landscape. I look forward to hearing the Minister's response.

3.27 pm
The Duke of Montrose: My Lords, I add my thanks to the noble Lord, Lord Vinson, for this very timely debate. All of us here could go on discussing the subject for much longer, but we are limited to eight minutes and we must make what use we can of them. This is certainly a period of great contrast because this is the time of year when optimism strikes a high note for the farmer. The leaves on the trees are fresh and green, the grain is well through the ground, the fields are full of lambs and sleek cattle and the magic of nature is all around. I declare my interest in all that we have to discuss today as a producer of cattle and sheep and a member of the Scottish National Farmers Union.

Within the past month, as the noble Lord, Lord Tomlinson, pointed out, we have finally seen the lifting of the ban on the export to Europe of cattle aged under 24 months. That leaves the industry trying to recover from a catalogue of disasters that go back for 10 years or more. It has been a hard spell for farmers with ever reducing incomes and also for government. We have to be grateful for the generous support, however reluctantly provided. It is easy to forget that one of the aims of the CAP was to bring the level of rural income up to the general level of the population, as the noble Lord, Lord Corbett of Castle Vale, pointed out to us.

There has been a crescendo of crises - BSE, foot and mouth, now TB and avian flu. We live in a country with a great penchant for regulation and a very variable and tricky climate, so our production cannot compete on price alone. As the noble Lord, Lord Vinson, pointed out, we produce only 62 per cent of the food that we require.

However, the future of our livestock production has to come from our ability to produce a quality product. The new regulation allowing for export to Europe applies to cattle and carcasses under the age of 24 months. That has already triggered an increase in
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the general price of cattle by 8p per kilo carcass weight and has also been reflected in the price of sheep, which gives some welcome relief to the industry. But current production within this country has been geared to produce cattle of up to 30 months and these are rated as totally acceptable for human consumption. That now leaves a great tranche of cattle between the ages of 24 and 30 months that can qualify for that premium export market only if the beef is bound and packaged. For all the effort and expense that this takes, what is left is then regarded in the trade as a second-rate product and any premium that might have been gained from quality is lost. Are the Government planning to tackle this anomaly with our European partners? There does not appear to be any scientific basis for excluding the cattle aged up to 30 months. Are meetings scheduled at which the subject can be raised?

In Scotland, we have just lived through the first incidence of a case of H5N1 bird flu in this country. Norfolk has seen another variant. We can only consider ourselves very fortunate that it never spread beyond the first case. We still do not know what would happen if the disease was carried in by a live bird. The remarkable thing is that for once, despite an animal disease, there does not appear to have been a drop in consumption in the United Kingdom. That has not been the case for Europe, however, and the oversupply of poultry products has meant a severe cut in the price. The Minister will be aware that the EU Commission is allowing that governments may give assistance to producers who have suffered. Will the Government be holding meetings with representatives of the industry to assess whether any assistance would be appropriate?

Another great concern is the perverseness when European regulations are implemented with a literal interpretation, such as seems to be our speciality, and achieve the opposite of their purpose. The most outstanding current example is the waste incineration directive, where anything that is not a primary product of a process is liable to be classed as waste. This has led to the banning of the burning of tallow in most rendering plants. They were then going to be forced to burn heavy engine oil to heat their processes instead of tallow, which is a locally-produced and green, renewable fuel. I understand that this has been put on hold at the moment, but one wonders how long it will take to get some resolution from Europe to let people know what the future should be. Agriculture has always been a great utiliser of these secondary products, now considered waste, as well as a producer of a number of others from its own processes. There seems to be a case for a special classification of these materials so that everyone is not forced to go running around constantly looking for special licences.

The Scottish NFU has drawn my attention to the purpose of the EU water framework directive, another EU regulation, which is there to ensure that all water bodies are of good ecological quality by 2015. That concerns areas where water shortage raises environmental questions about water use. This issue must apply in many areas of England and Wales as it does in Scotland, where there is high rainfall and volumes of water are satisfactory. In those areas there
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is no need to have the trouble and expense of licensing abstraction and impoundment, unless it is to compound the sea of red tape that surrounds us. That particularly applies to agriculture. I have to accept that in England and Wales the regulation is more generous than the one we have up north, in that it allows a de minimis level of 20 cubic metres without a licence. Even so, it bears consideration.

As with so many of the stipulations of cross-compliance, and as was pointed out by the noble Earl, Lord Erroll, it would be reassuring to think that the Government were giving some thought to the cost of implementation. Perhaps it is worth noting the figures that have been supplied to us by the Country Land and Business Association, which reckons that regulation imposes a cost of approximately £1 billion on an industry with a turnover of £8 billion; that is, of small and medium-sized businesses in the rural economy.

The production of the countryside may need some redefinition or refocusing, and it may need some guidance on useful ventures, but we should never lose sight of the central role that meaningful production plays in keeping the countryside as a living and vital part of the whole rural economy.

3.34 pm

Lord Young of Norwood Green: My Lords, I thank the noble Lord, Lord Vinson, for enabling this opportunity, congratulate - if that is the right word - the noble Lord, Lord Rooker, on his new appointment and commiserate with the noble Lord, Lord Bach, for the reasons that other noble Lords have stated.

How we relate to agriculture as a society in a national and international context in a truly global world is rightly the subject of intense and continuing debate. If, like me, you are a townie whose knowledge of agriculture is limited to a bit of vegetable growing in the garden, and probably too influenced by my addiction to that daily dose of rural life as portrayed in "The Archers", you enter this debate with a suitable amount of caution.

With my trade union background it is hardly surprising that I should pose the almost eternal question: what about the workers? But it is surely appropriate given the role of the Tolpuddle Martyrs, those Dorsetshire farm labourers who were transported to Australia in 1834 for the heinous crime of trying to form a trade union.

Next year, 2007, we will rightly celebrate the 200th anniversary of the abolition of slavery, but I put it to noble Lords that the task is not yet finished. In the 21st century, people can arrive in the UK from the EU or as immigrants or illegal immigrants and be subjected to conditions akin to slavery. Some, having paid for their transportation in appalling conditions and paid again for the prospect of a job, will have incurred debt which will take them possibly years to repay. Effectively, they are in bondage. Passports will be confiscated or forged papers provided at a price. Those people will be herded together in housing conditions that are both unsafe and unsanitary, and forced to work long hours in unsafe conditions. They will be
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transported to work in vehicles that are overcrowded and unsafe, sometimes resulting in fatal accidents, and denied basic employment rights such as health and safety, holidays and the minimum wage.

I am, of course, referring to temporary or migrant agricultural workers in the UK, which, at a rough estimate based on government and union figures, amounts to 600,000 people, who are now covered by the Gangmasters (Licensing) Act. Some 22,500 businesses use temporary labour and there are about 1,000 labour providers in the agricultural sector. By any standards this is big business which, given the criminal elements involved in the appalling abuses of workers, was in dire need of reform. I put this in context. Not all gangmasters are criminals and most farmers, suppliers and retailers were trying to ensure fair conditions for temporary labour, but it was an appalling situation, ripe for exploitation and well overdue for reform.

I must declare an interest in this issue as the vice-chairman of the Ethical Trading Initiative, an alliance of companies, NGOs and trade unions which exists to identify and promote the implementation of good codes of practice in company supply chains, taking the ILO conventions as the basic reference. This organisation, ably led by its director Dan Rees, played a key role in the creation of the gangmaster legislation.

The Government have come in for a lot of criticism in this debate, but in that area they deserve praise. They reacted quickly to Jim Sheridan's Private Member's Bill. As a result, one of the most complex Private Member's Bills was steered through Parliament inside six months. That was some achievement. Defra and the Department for Work and Pensions have been working closely with the Ethical Trading Initiative since 2002 - which led to the creation of the Temporary Labour Working Group - to design a code of practice for labour providers and methods to assess compliance with the code. That code of practice was the forerunner to the licensing conditions that the Gangmasters (Licensing) Act subsequently adopted. It recognised the Temporary Labour Working Group method of auditing gangmasters for compliance with the code. It has adapted its audit method and even intends to use its auditors in some of the inspections. Very good progress has been made in that area. It is a very good example of all parts of an industry working together.

The Temporary Labour Working Group was a feat in itself. The Ethical Trading Initiative co-ordinated the efforts of six supermarket competitors, the National Farmers Union, the Transport and General Workers Union, the Association of Labour Providers and trade associations representing packers and importers as well as food manufacturers. To get a group as diverse as that to co-operate in producing, dare I say, more regulation is a major miracle, but in that case regulation was very much needed.

In 2004, the Temporary Labour Working Group audit programme was established; previously it had been a trial. The intention was to prepare as many labour providers as possible for regulation and to
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improve standards in the industry in the mean time. It has been successful; 800 labour providers have been identified, and 450 audits have been carried out in 2005-06. We welcome the announcement by the Government on 13 March of the new gangmasters licensing regime. The Gangmasters (Licensing) Act will apply to the provision of labour across the entire food sector and urges industry to act now to prepare for licensing.

From October this year, labour providers will need a licence if they supply labour to any farm, packhouse, or food processing and manufacturing facility. The Government announcement is exactly what the food industry wanted; a level playing field across the entire sector with the licensing applying to businesses, which supply an estimated 600,000 workers to the sector. The licensing imposes new checks on employers to verify that workers are employed legally, are paid the minimum wage, work reasonable hours and work in safe conditions. The legislation is a wake-up call to all labour providers in the food industry and those that use their services. The DTI has encouraged labour providers to put their houses in order so that they can rectify any issues before licensing comes into force.

We hope that the legislation will help to prevent tragedies such as the Morecambe Bay disaster on 5 February 2004, where 23 Chinese migrant workers drowned picking cockles just to supply food for our table and for the export market. It was a terrible indictment for that to happen in this century, and that is not the only tragedy that has taken place. There has been much progress. I quote the Minister when he was replying to debate in Grand Committee:

    "At the latest date for which I have figures, 81 licences have been issued and there have been 295 applications. The licensing authority is to be congratulated on working from a standing start". - [Official Report, 16/5/06; col. GC 67.]

I agree. There has been a bit of delay in the shellfish industry because of the complexity of that industry, and we hope that the Minister will do all he can to ensure that regulation comes in as quickly as possible.

Finally, I congratulate all those concerned. A lot was achieved with a voluntary code by responsible producers, suppliers and retailers, but as we can see from the cross-party consensus on this issue it was not enough, given the level of exploitation and criminal elements involved. If we are to prevent further exploitation and more tragedies such as Morecambe Bay, I hope that the Minister will ensure that the Act is rigorously enforced and that those who try to evade the regulations are brought to justice. I thank the noble Lord, Lord Vinson, once again.

3.43 pm
Lord Plumb: My Lords, I, too, thank my noble friend Lord Vinson for initiating the debate on the state of British agriculture. It is a timely opportunity to review the farming industry's position. I very much welcome the noble Lord, Lord Rooker, to his place on the Front Bench representing agriculture. For both of us this is like recycling; we have been eyeball to eyeball in the past - I was wearing a different hat in those
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days - but I wish him well in his new responsibility. I join everyone in thanking the noble Lord, Lord Bach, for the work that he did in a very short time. He was certainly not responsible for some of the difficulties that we face at the moment, and he became a good friend to many of us.

I declare my interest as one of those elderly farmers who my noble friend Lord Peel referred to earlier; I need my single payment. I also declare the various bodies involved in agriculture, politics and commerce that I have been and continue to be involved in. I am proud to be the patron of the Cotswolds Conservation Board, which is concerned with the preservation of the countryside. The noble Lord, Lord Rooker, spent some hours with me across some of that countryside not so very long ago looking at what was being done.

Noble Lords are familiar with the sorry tale of the failure of the Government to pay the bulk of the single payment scheme by the end of March, as had been repeatedly promised by Ministers. I hardly need to reflect on the increased costs for many farm businesses - the stress that that caused them and many other businesses supplying the inputs. I hope that the Minister can deny the statement made in the European Parliament requesting an extension until 14 October before final settlement is made. If it is true that 85 per cent of farmers have received the single payment - I understand that £213 million is still to be paid, and that more than 5,000 farmers are waiting for the full payment and some are waiting for part payment - it is essential that those outstanding bills are settled and that payments are completed, and that it is ensured that the 2006 payment is not at risk and that all payments are made by 30 June. What would be the position in Brussels if that did not happen?

As other noble Lords have rightly said, the farmers' cash flow is probably at an historic low, for reasons outside their control. I hope that the Minister will accept that the estimated debt in farming is calculated to be £12 billion. If we take the low value of the euro against sterling for trade in Europe, the estimated loss is something like £3 billion - yet we talk about the freeing up of trade with other European countries. Many farmers might say that we should follow the lead of the Chancellor of the Exchequer and put surcharges and interest on late settlements of the single payment, as the Treasury does on late returns or late tax payments this year.

However, farming is not just about the single payment. Planning for change is hardly an exact science, but it means that every opportunity has to be taken to look at the potential for new products for modern consumers, particularly in the energy market, and to learn to diversify, as farmers are doing. It is difficult to bracket farming into one operation when it has become so diverse and so specialised, and the market so globalised. If there is a food deficit in this country of £13 billion and we see self-sufficiency falling in the past 10 years from 74 per cent of our own market to 60 per cent, surely we must look at the market itself and do something about it. I accept that that is a responsibility that farmers must take for themselves.
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Food safety and security does not seem to register, as the noble Lord, Lord Christopher, said. There is always a risk of importing diseases such as avian flu, salmonella and foot and mouth, as we know to our cost. TB continues to spread like wildfire across the countryside, while the Government appear to wring their hands in despair. I know that scientific evidence comes from both sides, and that the position is extremely difficult. The cost of one pre-movement test for farming is of some help, but it is like shutting the stable door after the horse has bolted. It is a tragedy that could have been avoided if action had been taken 10 years ago.

Farmers accept that they are in a risk business. Their products, either from the land or the animal, are subject to disease or the vagaries of the weather. In response to the demand for quality food produced from environmentally friendly farming, they welcome the announcement by the Office of Fair Trading to refer the grocery market to the Competition Commission. Does the Minister agree that analysis of the impact that food retailers have on producers might also be considered as part of that? The mind boggles when a producer is getting 18p a litre for his milk and it is sold in the supermarkets - at least, in the one that I use not far from my flat here in London - for 79p. The other day, I saw organic milk being sold at 99p a litre.

While cash flow and market returns remain a major problem, agriculture continues to be the recipient of yet more regulations designed to bring farming into line with controls applied to other businesses and other industries. Plastic and card packaging, which the noble Duke, the Duke of Montrose, mentioned, is covered by the waste directive, and demolition and machinery waste is classified as controlled waste. These changes have implications for all farm businesses and add further cost to the present enforcement of regulations.

We are well aware that there are tough times ahead and we have to accept that sleep-walking into the future, dictated only by today's financial and trading giants, would be disastrous. Many areas of the country are successfully promoting sustainable food, and I am a great believer in localised food production and processing.

I want to mention one thing outside this area. Farming land in the future will be about more than just producing food. Last weekend in Budapest I attended a conference which brought together people concerned with the World Trade Organisation and with where we are heading. The theme of the conference was producing products for biomass and biofuels for heat and so on. The whole emphasis worldwide, therefore, is on renewable energy from crops, and we are aware that various reviews are taking place. We are aware of the energy review taking place, and I was encouraged by the Prime Minister's comments to the CBI.

Industrialised crops can play a vital part in the step-change towards energy efficiency. We either keep up with the rest of the field or we give a lead in reducing CO2 emissions. I read in a recent report that, in an age of energy efficiency, we waste enough heat in power
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stations to heat the whole country for free; that we reuse only 1.4 of 5.6 million tonnes of reclaimed timber, with the balance going to landfill; that we have failed to recognise the energy resource in waste materials; that we have failed to recognise the need to consider the options for renewable heat; and that our forests could become more viable through the use of woodchips. It seems that the biggest barrier is ignorance.

Finally, for the first time in my life, production is free from the shackles of commodity support. The cheap food policy that we have had in the past has gone and the Government's ability to control production has therefore been reduced. We are on our own, and I believe that farmers will, and must, take responsibility for controlling their destiny in the future, particularly in marketing their goods.

Baroness Farrington of Ribbleton: My Lords, we are running into a difficulty between exceptional quality and regulation of time.

3.53 pm

Lord Grantchester: My Lords, I am very pleased to be able to contribute to this debate today, coming as it does at a critical time during the process of transforming agriculture from being production and subsidy-driven to being market-focused and responsive. I thank the noble Lord, Lord Vinson, for introducing the debate.

I join other noble Lords in paying tribute to my noble friend Lord Bach. Working with him on the Natural Environment and Rural Communities Bill, I found him approachable, helpful and extremely courteous. Turning to the Front Bench, I give an immediate welcome to my noble friend Lord Rooker, with his renewed responsibilities, and to the new team at Defra.

I often think that agriculture makes an ideal area to attack whichever government are in office. After all, we have had a succession of diseases and disasters to contend with against a backcloth of dialogue with our European neighbours about the common agricultural policy. The list reads: TB, brucellosis, IBR, leucosis, BSE, foot and mouth, and TB again, with some diseases being more political than real.

It is a risky business, where the Government must foster conditions that produce stability and maintain a balance between competing demands. We have often had debates in your Lordships' House about whether the glass is half full or half empty. The Government, facing the issues of environment, food and farming, have steered, by and large successfully, along a course of sustainability.

I shall try to give the perspective of a dairy farmer in Cheshire, a director of Dairy Farmers of Britain - a co-operative of some 3,000 dairy farmers - having been president of the Royal Association of British Dairy Farmers, and chairman of the Cheshire county Country Land and Business Association. The process of change through reform of the CAP is posing severe challenges. The long-term nature of agricultural
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decision-making requires time for transition. The statistics of 2005 mirror this trend and highlight the severe, critical economic conditions.

Total income has fallen by 8.9 per cent in current prices, 11 per cent in real terms. Average producer prices of agricultural products fell by 3.2 per cent. Total value of output fell by 1.6 per cent. Prices are now 21 per cent below the peak of 1995. The farmers' share of food prices has fallen by 23 per cent between 1988 and 2005. Since 1998, food prices have risen by only 8.5 per cent, whereas the oil price index is up by 22 per cent. In contrast, in 2005, the average price of agricultural inputs rose by 1.9 per cent. Farmers can only survive by increasing productivity, reducing their unit costs. In 2005, productivity continued to increase by 7 per cent. The result is that 66 per cent of net farm income is less than £20,000. The average full-time farm employee net income is a pitiful £12,500.

Within this average, sectors have had varying results. Cereals have fallen by 6.7 per cent where other arable crops are up by 6.6 per cent. The value of wheat production has fallen by 19 per cent. The dairy herd has fallen by 3.1 per cent, whereas beef is up 1.6 per cent.

What sort of agriculture will survive? What are the major sector challenges and what actions can the Government take to facilitate success? The immediate challenge is to rectify the implementation of the single payment scheme. This is a failure of administration, not policy. The Government will be proved correct for deciding on a dynamic hybrid model, rewarding farmers for environmental enhancements rather than according to some historic position. This is not to belittle the severe economic impact that the delays in payments have brought to the countryside. Agriculture's borrowing in the first quarter was a record £9.5 billion, an increase of 11 per cent year on year. While the banks have been responsive, the increase in the drain on resources nevertheless puts real investment under threat.

The payments agency is to be congratulated on the fast implementation of partial payments to relieve the situation. I understand that 85.8 per cent of expected total payments have now been paid. Perhaps the Minister can confirm the up-to-date position, priority to claimants for the hill farm allowance and that all payments due will be completed by 30 June. Looking ahead, can the Minister look to make partial payments for 2006 in December of 2006, to boost farmers' confidence that difficulties will not be repeated?

The problems with the mapping process are still to be resolved. Can the Minister report on the progress being made? This is a vital element in many of the environmental schemes for modulated money, and is holding up applications for the entry-level scheme. In 2006, the overall modulation rate will be 10 per cent, up from 5 per cent in 2005. There are fears that the modulation rate could reach 20 per cent in 2007. Can the Minister look at freezing the current rate, and report on Defra's discussions with the Treasury to
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confirm 100 per cent matched funding, in the light of the impact these deductions will have without commensurate uptake for modulated money?

Within the dairy sector, the challenge lies in the food chain. Supermarkets, capturing an ever-increasing proportion of sales through their position and consolidation, have subjected the supply chain to ever-increasing deflation, as the statistics show. Dairy farmers recognise that scale is imperative along the supply chain. They also recognise that adding value to their raw product is necessary to capture more of the end price. The Government are to be congratulated on setting up English Food and Farming Partnerships to promote co-operation and investment. Can my noble friend confirm that this funding will continue?

To achieve scale in production, businesses need confidence to invest. They need confidence that the competition laws are not going to institutionalise their weakness in the supply chain. The co-operative Dairy Farmers of Britain has set a strategy to shorten the supply chain and create brands to offer value-for-money products. Producers must invest, often only to safeguard their position and their vital supermarket contracts, and often without the luxury of expecting higher profits. It is the supermarkets that have the relationship with the consumer, and all that remains for the supplier is to be as efficient as possible and one step ahead of what the supermarket wants. If consolidation cannot proceed to match the consolidation at the retail end, innovation and investment will be jeopardised. In this regard, it is to be regretted that the farm diversification grants are not set to continue to allow time to meet future challenges.

In the livestock sector, both beef and dairy, the immediate challenge concerns TB. Your Lordships have debated this topic at length and the industry still looks to the Government to make effective decisions to bring this under control. The problem in wildlife - namely, the badger - must be addressed. It is my belief that the spread out of the south-west and up the west side of England and Wales is commensurate with the development and growing of maize further north. Badgers enjoy maize, increasing the interaction between cattle and themselves. I am continually approached about the inadequacies of the tabular compensation scheme. The higher-value pedigree breeder cannot risk-manage his herd, and his trading ability is compromised by such simplistic compensation.

In the beef sector, the lifting of the ban on the export of British beef on 3 May is a huge Government success, some 10 years after the BSE crisis closed the overseas markets. The OTMS is also being wound down and prices have been maintained. One consequence of this is that the first load of calves has just been exported. However, the challenge remains of reducing the amount and scope of regulation. Perhaps my noble friend can look at some of these regulations, which are a consequence of taking "short cuts" necessary to make businesses work.

Agriculture is in transition. The future lies in tackling costs, building scale, innovating and adding value. As the population becomes further separated
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from agriculture and the countryside, I pay tribute to the educational charity Farming and Countryside Education, which is behind a scheme to create a whole curriculum year of activities centred around food and farming, supported by the Department for Education and Skills. The work of Jamie Oliver in underlining quality is also important. These are positive signs that point the way for agriculture to prosper

Baroness Farrington of Ribbleton: My Lords, even the noble Lord, Lord Plumb, is drawing attention to the clock.

Lord Grantchester: My Lords, I am sorry. These are positive steps in the countryside. Much has been achieved and I look forward to further progress continuing.

4.03 pm

Lord Marlesford: My Lords, we owe a debt of gratitude to my noble friend Lord Vinson. I learnt of his deep insights into the rural economy when I sat as a member of the Rural Development Commission under his chairmanship some 15 years ago. As a Suffolk farmer, I warmly welcome the noble Lord, Lord Rooker, as he takes over responsibilities for Defra in this House.

Let me say a word about when Ministers should resign. It is rare that major maladministration is a Minster's direct fault. Civil servants have their own agendas and, when things are going wrong, like anyone else they will conceal their incompetence for as long as they can. That is why it is so crucial that Ministers keep a real grip on their departments. Civil servants always try to keep Ministers at arm's length by methods exposed long ago in "Yes Minister". But when there is a major scandal about departmental administration, the Minister should resign - not to accept blame, but to enable the successor to insist on having a better grip on the department.

As far as Britain's farmers are concerned, Defra has been an unmitigated disaster. The Rural Payments Agency has been a scandal. It deceived its Ministers, who then misled the whole farming industry. I believe that Mrs Beckett should have resigned; instead, she has been promoted. We understand the reason: the Prime Minister wants to be his own Foreign Secretary and she will be a compliant tool to that end. Mr Hoon has sensibly been appointed to do the real work on Europe. I believe that the noble Lord, Lord Bach, was hard done by. I always thought he was an effective Minister at defence, but he was not able to get a grip in time to prevent the Defra RPA debacle.

The noble Lord, Lord Rooker, has heavy boots. I have respected him for years, ever since 1975, when he nearly got me expelled from the Palace of Westminster for six months for putting into the Economist the secrets of a House of Commons Select Committee before it was ready to publish them. I believe that he will get a grip on Defra. David Miliband is one of the best in the Government and is perhaps a future leader of his party. He will need to get some mud on his boots, which Mrs Beckett, from the
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shelter of her caravan with her pre-packaged Tesco food, never really did. But if Mr Miliband is to reverse the widespread disillusionment with the Government in the rural community, he will have to take some strong action. I have one preliminary suggestion for Defra Ministers: get a full-time permanent secretary. The present incumbent may be a bright lady, but to allow a big department that has performed as badly as Defra to have a part-timer in charge for the sake of political correctness is as about sensible as recruiting the disabled to the SAS.

British farmers today do not have an effective spokesman. When I worked for Fisons, my first boss was a giant: Jim Turner, later Lord Netherthorpe and head of the NFU. I am not a member of the NFU, so I have no interest to declare, but I do not believe that we have had anyone who has really stood up for farmers since my noble friend Lord Plumb. As an article in the current issue of Arable Farming by the current NFU president Peter Kendall makes clear, the present regime prefers to lie snugly in bed with Defra officials and encourages its leader to bask like a schoolboy in a photo opportunity with the Prime Minister and Mrs Beckett on the steps of Downing Street and to express his deep appreciation to the Prime Minister for sparing him the time of day.

Let us face the fact that British farming is now in as deep a recession as it was in the 1930s. I shall use one figure to demonstrate that: the price of wheat. The current price of feed wheat for the 2006 harvest is about £68 per tonne. It was less than that for the 2005 harvest. Five years ago, it was well over £100 per tonne. If we relate today's prices to 1935, we have to divide by 38 to adjust for inflation and multiply by four to allow for the increase in yields from perhaps a tonne an acre to perhaps 4 tonnes an acre. That brings the price of wheat back to the equivalent of £6 to £7 per tonne in the 1930s, which is what it was in those days and wheat costs in excess of £70 per tonne to produce, even for efficient farmers.

The drastic fall in wheat prices is mirrored in other farm products. The price of oil seed rape has nearly halved. As my noble friend said, milk costs at least 20p per litre to produce. Even small family dairy farms in the west country where they barely cost in their own labour now live at subsistence level. Five years ago, the price of milk was 24p per litre and milk was modestly profitable; the price is now a shaky 18p. Earlier this month, I drove down to Cornwall; there was hardly a cow to be seen on the route, whether in Somerset, Devon or Cornwall. Only about half the milk produced in the UK is consumed as liquid milk, so supermarkets can continue to use milk prices as a weapon in their competition wars. That will mean more butter, cheese and other such products being imported.

Let us not forget that the crucial difference between the old arable area payments scheme under the CAP and the new single farm payment scheme is that while the cash paid out will, to start with, be approximately equal between the two, the SFP demands
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environmental expenditure which was not previously required - all very nice and good, but it is a net loss of revenue to the farmers.

So, what do I ask the Minister to do? First, review the regulations which surround the single farm payment. Many of them are either invented by Defra or gold-plated by Defra. They are not part of EU regulations. Let me remind the noble Lord, Lord Rooker, that last week the new German chancellor Angela Merkel called for a 25 per cent reduction in EU regulations.

Secondly, I ask him to halt the arrogant way that Defra communicates with and threatens farmers. To see what I mean, let the noble Lord, Lord Rooker, look at the wording of some of the forms and instructions which farmers receive. A Suffolk farmer, Mark Horvarth, is taking Defra to the High Court to challenge the wholly disproportionate penalties for any transgressions of the Countryside and Rights of Way Act, which have to be applied to farmers in England but not to farmers in Scotland or Wales. Let the Minister pre-empt Mr Horvarth by withdrawing those penalties.

Thirdly, let the Minister review the vast number of wholly unqualified busybodies, some of whom are said to have been shelf stackers from Tesco, who have been recruited to enforce these complicated details of a new single farm payment scheme, as devised for English farmers.

I have suggested that the noble Lord, Lord Rooker, along with Mr Miliband, has the opportunity of making the Government much less unpopular in rural areas. So I suppose that, from a strictly party-political point of view, I would have been better not to make this speech.

4.11 pm

The Earl of Caithness: My Lords, I agree with all the previous speakers who have said that the current situation of and the future for farming in the UK is dire; but it is especially so for those in the more marginal areas where diversification is harder and where the population is less, particularly in the north of Scotland. I am allowed to mention Scotland in this debate because, thanks to my noble friend Lord Vinson, this Motion was framed in terms of "British" agriculture.

It is essential that as we move forward to a more market-placed economy for farmers, the industry can compete effectively on cost, with cheaper available imports which potentially do not reach the same standards of production. On costs and returns it is sobering to appreciate some of the problems some farmers face. I would like to pick up on what my noble friend Lord Marlesford has just said by highlighting two. In 1971, when I made my maiden speech on the role of agriculture in the Scottish economy, the average price of winter wheat was £32 per tonne. It has now doubled to £60 per tonne. In contrast, the average price of compound fertilizer then was £38 per tonne, which has now quadrupled to £142 per tonne.
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For there to be a future, psychologically farmers need to feel that the Government are behind them, not in a financial sense but in a supportive positive sense. I agree with my noble friend Lord Peel that this has not yet been demonstrated by this Government - indeed, quite the opposite. Allowing producers to be able to produce food cost effectively is essential and leads me to the issue of gold-plating Brussels's legislation; a factor that in most cases increases the cost of production for farmers in order that they can meet the rules as they are interpreted in this country. In the process, this often also shifts the focus from the practicalities of quality production to ensuring a high requirement for administration. The noble Earl, Lord Erroll, vividly told us of some of the headaches that he and his wife are currently encountering, and some of the happy hours he is spending trying to sort out the problems.

Two examples illustrate just how over-regulation has the potential to harm farm business. The first is the EU waste incineration directive, mentioned by my noble friend the Duke of Montrose. The worthy aim of this directive is to prevent or to limit, as far as is practical, negative effects on the environment and human health from the incineration and co-incineration of waste. However, due to the onerous and unnecessary burdens it imposed, the consequences for farmers' costs, climate change and the environment generally were all negative. The industry convinced the Commission of its case and, although committed to reviewing legislation in due course, the Commission made it clear that the situation could be resolved at member-state level. I understand that 22 member states have done so, and have agreed that tallow can continue to be used as a fuel. It was only in early May that the UK Government finally agreed that the status quo could remain in this country until the EU produces its review report. The Government eventually ended up with the right decision, but that decision took far too long to take and is a good example of how the UK lags behind the other EU member states when it comes to the sensible application of legislation.

The second is the EU water framework directive, which my noble friend the Duke of Montrose mentioned. The net result of that directive, as it is interpreted in Scotland, is that it is most unlikely that any fruit or vegetable grower would be prepared to absorb the extra costs that will be incurred. Production could not expand in the first instance to meet the cost, and it would fall in the long run because of the need to rotate sites. As we all know, Scotland is not generally short of water, but the perverse effect of these proposals will be to drive the production of crops that may need irrigation to other countries with less plentiful supplies of water. It will also defeat many of the Government's other objectives. As so often with MAFF, and now with Defra and the Scottish Executive, it is depressing how little thought is being given to how life will actually work in practice.

The Hampton review on the regulation of business was published with the 2005 Budget, with recommendations accepted by Government that
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include: regulators using risk assessment to concentrate resources on where they are most needed, thus lightening the load for those who comply; regulators communicating better with each other to avoid duplication and inconsistency; inspections only where there are reasons for them; and fewer regulators. Mr Hampton highlighted the conflict between the need for advice, which is very important for farmers working mostly on their own and having to digest a wide range of often complex regulatory requirements, and the fear of enforcement action. Sadly, only part of the report applies to Scotland, so there is unequal treatment among UK farmers, which is yet another complication.

Hampton recommended reducing 21 of Defra's inspection and enforcement functions to six new thematic regulators: the Environment Agency, Natural England, the animal health agency, the agriculture agency, the Food Standards Agency, and the Health and Safety Executive. In principle, it must be desirable for businesses to have fewer regulators to deal with, but can the Minister say what progress is being made in advancing their detailed implementation proposals for this important restructuring? Bigger bodies could simply mean bigger bullies for those being regulated. Can the Minister assure the House that the enforcement of regulations by the new regulators will be fair and proportionate? Defra has committed itself to reducing the administrative burden on business by at least 25 per cent by 2009. Given the new raft of regulations descending on farmers, such as agricultural waste, EU emission standards for farm machinery, integrated pollution prevention and control, livestock registers and electronic sheep ID, does the Minister believe that the department is on track with regard to farm businesses, which Defra has accepted are disproportionately exposed to higher compliance costs compared with larger businesses, and which are in no position to pass on these costs to their customers?

The farming industry supports the whole-farm approach to regulation, whereby farmers who sign up to this internet service should have fewer forms to fill in and fewer inspections. They should also be able to check online the information that government agencies hold on their businesses for different purposes, such as animal records, habitat maps, water-catchment area data and land designations. In theory, the system should also accommodate single payment scheme information, farm census data, waste licence exemptions and a range of other items that farm businesses have to deal with. How many farmers have Defra attracted to the scheme since its launch in late March, and is the Minister confident that the IT systems adopted for the whole-farm approach will be up to the job, given the cautionary tale of the RPA's difficulties in delivering payments?

Farmers have suffered a succession of terrible years, as the noble Lord, Lord Grantchester, ably demonstrated. The future is bleak, but the Government can do something to help if they put their mind to it and in a way in which they have not done to date.
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4.19 pm
Lord Livsey of Talgarth: My Lords, we have had a very wide-ranging debate, and I thank the noble Lord, Lord Vinson, for introducing it as he did. I apologise for the absence of my noble friend Lady Miller who, with EU Sub-committee D, is looking at biofuels in the West Country. That is where I thought that I was going to be before I heard about this debate late last week.

I associate myself with the remarks that have been made about the noble Lord, Lord Bach, who was the victim of what he was told about the RPA. There was a lot of economy with the truth in the information that he received, and he was very hard done by. I welcome the noble Lord, Lord Rooker, although I have already done so twice.

The debate is on the current state of farming in Britain. We have heard an awful lot about the Rural Payments Agency debacle. We have had a discussion of that recently in this House, and I do not want to go over the ground that I went over then. However, it is very important to make the point that the 5,000 who have not so far been paid should be paid the single farm payment by 30 June. Many of them are hill farmers who are in desperate need of those payments.

I repeat what I said in the RPA debate - that I have considerable reservations about the agency's situation. Apparently, the costs of the administration of the RPA this year will be some £250 million. It will cost one-quarter of a billion pounds to administer the RPA! The cost of administration has doubled in the past 18 months, which is an extraordinary state of affairs. We must ask ourselves whether that is value for money. A similar thing is happening in the NHS, where £1.1 billion is being spent on an IT project that does not appear to be working properly. From what the Minister said recently, I know that an investigation is going on; I hope that it is very focused and objective.

The situation confronting British farming is very mixed. Some sectors are beginning to show signs of promise, while others are absolutely flat on the floor. The RPA issue has compounded the situation. On a product marketing basis, milk prices remain depressed. We have to record the fact that between 1,500 and 2,000 dairy farmers still leave the industry every year, which cannot go on. Cereals have not moved upwards in price for decades; if anything, the price has reduced to values that I used to budget on decades ago. Beef is starting to benefit from the opening up of the European and other export markets as a result of lifting the export ban, which is a very good thing.

One structural problem is that young people have left the industry and the farming sector. As someone who has been president of a young farmers' county branch for the past couple of years, I know that there is great potential for young people in the farming industry to tackle the competitive culture that is now coming in. In our area we have done a lot of work on farm diversification; indeed, we have run competitions to produce a wider variety of income streams into the farms. So there is depression, but there are also some
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signs of hope, so we should not be too downbeat. There is a challenge which, as people have already said, the farming industry has met very well from time to time - and it is well capable of doing so.

One of the most important issues that has, rightly, been put forward in this debate, is the whole issue of food security. It is a very worrying situation. When we consider the rate of 63 per cent self-sufficiency and 73 per cent indigenous self-sufficiency, we can see that the drop in the UK's ability to produce its own food is really a very serious matter. Imports have risen. There is no doubt that were farmers to be given the challenge to produce more in better market circumstances, the balance of payments to the Exchequer could be improved by at least £20 billion. That is a significant sum of money which could have very beneficial effects.

I am particularly concerned about the world-wide potential scarcity, as there is already, in food. I believe that as a natural resource it is as important as oil, if not more important. Undoubtedly, there is a food production gap, as there is an energy gap, in the world. We would be very foolish not to address that as being extremely important. We can play our part. However, we have to have a proper market in which to operate. Frankly, the exploiting of the market-place by some of the richest supermarket chains in the United Kingdom is totally unacceptable. Local economies have been marginalised. The transporting of food halfway around the world has also had a very bad impact on third world countries. This has to be tackled bravely.

The profitability of supermarkets - including Tesco with profits of £2.3 billion, which is equal to almost the whole net profitability of all British agriculture - is an unacceptable state of affairs. The investigation by the Competition Commission must look at the exploitation of primary producers. Only 8p in the pound spent in supermarkets goes to the primary producer. The rest goes elsewhere. On looking at information that came out this week, in March, the retail price of milk was 51p a litre and producers got 18.35p. That gives a differential of 32.5p a litre, which went somewhere other than to the primary producer. Across the EU, it is reckoned that only 27p per litre farmgate price is required for dairy farmers to make a profit. That would still allow a 24p a litre supermarket margin under the present situation. This is totally unacceptable.

I have long thought that the activities of accountants in those big firms have already discounted the value of direct farm support coming from government, and that they have ended up with the money and the farming industry has not. I am sorry to be so outspoken, but I believe that that is, generally speaking, the situation.

On looking at farm incomes, a question was asked on Monday about pay rates in the United Kingdom. The UK average was £431 a week, which works out at £22,400 a year. In my country, Wales, the average was £390 a week - £20,280 a year. I have to tell noble Lords the average farm net incomes in Wales over the past 12 months: milk producers averaged £20,000; less favoured area grazing livestock, £16,400; and lowland
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grazing, £8,100. They are all below the income that everyone else earns. The average is £15,700 a year. There is something radically wrong in the way in which the market of primary produce is operating.

The Government must insist that the Competition Commission looks at the primary producers supplying the food chain, as well as small grocer's shops. When we produced a lot of information on this in 1999, I was involved in the other place in primary producer prices. It ended up with a report saying that it was fair to consumers and there was not a single mention of what happened to the primary producer situation.

A lot of important speeches have been made today. The noble Lord, Lord Corbett, was right to concentrate on affordable housing because it is a very central issue, and I remember reading his articles in Farmers Weekly many moons ago. The noble Earl, Lord Selborne, made a crucial speech about the importance of agricultural research and research council funding for it. We cannot afford to neglect this area. We have to tackle climate change, and research stations are working on the resource side by growing nitrogen-fixing crops which do not use vital resources. Frankly, if we neglect areas of agricultural research such as these, we shall get absolutely nowhere. The noble Lord, Lord Plumb, made an excellent speech which needs to be examined carefully, given the wisdom of his experience over many years. Further, the noble Lord, Lord Grantchester, made a courageous speech from the Government Benches. He told his own Government exactly what the situation is, and I congratulate him on that.

As an agriculturalist I could go on for another hour, but I do not have the time, as the whip is rightly indicating. This has been a good debate. I am sure the Minister will take on board what he has heard today and will act to improve the situation in what is a crucial industry: our agriculture.

4.31 pm

Baroness Byford: My Lords, I am most grateful to my noble friend Lord Vinson for introducing this debate and to all noble Lords who have participated in it. The awful truth is that much of British agriculture is kept afloat only because of its assets in the form of land, which outweigh its debts in the form of bank loans and unpaid bills. The situation in England is far worse than anywhere else due to the appalling delays in the new single farm payment scheme. I am glad to note that the payments are starting to come through, but that does not take away from the fact that we should never have been in this state in the first place. I am sure the noble Lord, Lord Rooker, will acknowledge that. It is a disgraceful situation and I hope that he will ensure, with his usual robustness, that the outstanding payments are made as soon as possible.

Many noble Lords have referred to the noble Lord, Lord Bach. The noble Lord was unfortunate to hold this ministerial position at the wrong time. He inherited a system with which he had nothing to do. As
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we took Bills through the House he was always courteous and ensured that all noble Lords were given access to the Bill team, for which I am grateful.

The latest figures on single farm payments show that 58,700 full payments have been made, along with 31,000 partial payments. This means that 85.8 per cent of the total expected payments have been settled, but some 5,000 claimants with claims of over £1,000 each have still not received any money. I hope that the Minister will be able to update the House on the position. While addressing the single farm payment scheme, can he tell us whether the Government will consider extending the deadline beyond the end of May for the 2006 applications? Let us get everything correct within the Rural Payments Agency rather than insisting that farmers apply early. I understand that penalties will not be imposed, but actually they are not the answer. As other noble Lords have pointed out, the system is complex and needs sorting. At this point I should remind the House of my family farming interests.

Several noble Lords referred to the problems faced by hill farmers, an issue I shall return to straightaway. In its briefing the NFU states that it believes that,

    "a transition period of two years (2007/8) must be implemented whereby the current HFA scheme is continued, as we are not confident that the current systems in place would be able to meet the proposed deadlines. A new scheme would have to be set up by 1 Jan 2007. In our view the evidence is clear that it is simply not achievable for RPA to draw up a scheme, have it approved by EU, and then ask farmers to apply within that timeframe".

Again, I would be glad if the Minister would comment on that.

Perhaps I may turn now to the many excellent contributions that have been made today and pick up on the question of food security and self-sufficiency. I am often rubbished and told that we do not need to be self-sufficient - that it does not matter - but in an uncertain world where, unfortunately, climate change often means that the harvests of some countries totally fail, it is something to which we should cast our minds. With the change to the single farm payment, there is a likelihood that farmers may well move from producing wheat and feed to producing energy crops and diversifying into forestry. This could be reflected in the amount of food we produce, which may well continue to fall.

I turn now to British food production in more general terms. Many aspects of the current position give me cause for concern. Chief among these is a realisation of the number of miles that our food travels from farm to fork. Even our daily bread has to be transported many miles to the shelf from which we take it. In the old days, the main street of any British town used to have at least two bakers, two butchers, a greengrocer and, perhaps, a grocer. Now, in some places, they are lucky if they have a convenience store or a corner shop.

The noble Lord, Lord Tomlinson, referred to the globalised market. We know that that is where we have to compete, but I believe that we should compete in an even-handed way and it is up to the Government to ensure that that is possible.
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Within this tale of closures to which my noble friend the Duke of Montrose referred, abattoirs have been legislated almost out of existence, so most of the butchers' shops they supplied have gone too. The latest EU ruling on beef means that any meat over two years old has to be sold off the bone. There is no great trouble with that, but the bones the butcher removes have to be stained, kept in a separate store and removed from premises in dedicated transport. The butchers could easily return it to the abattoirs, which have all the facilities necessary for marking and destroying, but the rules forbid it. I have been told that the cost to the butcher of the new method will be about 40p per kilo of meat sold. Surely this is ridiculous.

Let me move to one or two issues which other noble Lords have referred to and perhaps bring in some new ones. The noble Lord, Lord Plumb, touched on disease and its spread. He gave a figure of some £573 million, which the Government pay towards control of various diseases including TB, scrapie and BSE. I know that the Government have instigated a partnership to consider the sharing of responsibility for the costs of animal diseases and I would be grateful if the Minister could comment on that. Although it is fairly new and getting established, it needs to be clear where the responsibilities lie and how the industry is expected to pay towards some of the costs.

The noble Lord, Lord Grantchester, and others have referred to the continuing cost of bovine TB, which is at this stage out of control, with more than 3,500 herds being reported on tests for the first time last year. If the Minister could tell the House when the Government will have a response to the ongoing comprehensive review, that would be enormously helpful. Perhaps he could also comment on the zero-based review which Defra is undertaking at this moment.

We all want to see the production of healthy, good food. I should like it to be as locally grown and marketed as possible. I am not saying that there should not be international trade - please do not think that I am - but when the noble Lord, Lord Tomlinson, referred to it, I do not think he built into the equation the pollution caused by the food miles travelled and the pollution from air miles. That does not come into the equation but I believe it should.

I was grateful for the contribution of the noble Lord, Lord Young of Norwood Green, and for his reference to the gangmasters. I prayed against the statutory instrument two days ago but only to raise awareness of it and the need to get the legislation enacted as quickly as possible. I think the delay has been unfortunate.

The noble Lord, Lord Corbett of Castle Vale, should look to my previous Question on the Order Paper in relation to affordable housing. I am trying to get a response to it as quickly as possible. It is an issue on which I speak on a regular basis in this House. The ability to live and work - and to continue to work - in their own locality is a big problem for many.
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My noble friend Lord Selborne referred, as others did, to science and research. Everything that we do should be based on good science and research knowledge, with the Government making their judgments on that. If we keep cutting back on research establishments, we run a real risk of losing knowledge and skills.

In thinking about where we can go in the future, I have tried to say, "We are where we are". It is not a happy situation; incomes are, on average, £12,500. For long-term investment, that is not good. I have tried to say where we think we can go. My noble friend Lord Caithness and others spoke about the need to minimise regulation. We all know that we need regulation, but please can it be as proportionate and minimal as possible? We should not have any more regulation than other countries against which we have to compete and which are allowed to get away with less.

I believe that the farming industry has a great role to play in the future of our country, not just in the production of food and energy, but for the life it offers people. Our tourist industry is based on the success of farming. Healthy living and activities are based on people getting out and enjoying the countryside.

I have two more things to say to the Minister. First, I would like to highlight the concerns expressed by farmers about the cross-compliance rules being introduced with regard to the single farm scheme. Some are quite worried that this will have a regressive impact on the way in which they farm, and some may well come out of the scheme. Secondly, my noble friend Lord Caithness said that he wanted the Government behind farmers. I would rather have the Government alongside farmers, giving them the lead and showing them where they think the farming community can play a worthwhile role in the future.

4.42 pm
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Rooker): My Lords, I have found the debate fascinating. I really appreciate the tributes that have been paid to the work of my noble friend Lord Bach. They have been unanimous, which is not without significance. I saw him early this morning and will make sure that these comments are drawn to his attention.

I welcome the debate. Before the announcement nine days ago, I was in Northern Ireland. Now I have the chance not only to speak, which I appreciate is important, but to listen. As I have said before, we would not get this debate in the other place. It has formed a checklist for Ministers and I will make sure that it is gone through with a fine-tooth comb. I have been handed lots of comments about what colleagues have said this afternoon; there is no way, in the time available, that I can remotely attempt to do them justice. I want to refer to what each person has said, but dissecting Hansard will provide a checklist for action for Ministers in Defra and in other parts of the Government. I will make sure that it is done that way.
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I am also grateful for the personal welcome I have received. As I said to the massed ranks of Defra this morning in Westminster - some 300 or 400 people - I will have to stop saying "I'm back" because it is not MAFF, it is Defra. As I let slip the other morning, it will always be MAFF as far as I am concerned.

I have been a city dweller for most of my life. That point was raised when I was appointed to MAFF in 1997. At that point, the brief was about safe food. My constituents wanted safe food, just like everybody else did, and farmers wanted to produce it. But the point is that I do not see the countryside as a chocolate box lid. I want to make that absolutely clear. I never have done. In fact, I have the proof in one of my old files that I dug out. In 1990, for a brief period I was on the Back Benches so that I could serve on a Select Committee - the Public Accounts Committee. I also decided at that point that I would start to have a look at a few things that I had never done before, because I had been in the other place a long time by then. I draw noble Lords' attention to the Adjournment Debate on rural communities on 5 April 1990 led by the honourable Member for Birmingham, Perry Bar. That was on the Order Paper.

I was stopped in the corridor of the other place a few days before by colleagues and they said, "Hey! What right have you got to debate rural communities? That's our turf". I said, "I don't think you're doing it well enough". I spent some time when I was on the Back Benches visiting rural communities and farms. I remember being in East Anglia in particular and other areas, and taking advice from the experts on land management at the NFU. I prepared that debate, which I then took through my party. The point is that I know what is meant by the rural way of life for rural dwellers and those who work in the rural community. But as my noble friend behind me said, 25 per cent of the population live in designated rural areas even though they are not necessarily involved in rural activities.

I have one interest to declare: when I was at MAFF I actually joined the Soil Association, which was symbolic in a way. It is still there and I see no contradiction. In fact, I was able to argue for GM foods on a television programme. I said that there was less pesticide on them. I am not arguing that today, but the fact is that that is one interest I have to declare.

I need to get another question of my chest. What is my top priority? The RPA and single payment is the answer. There are many priorities for new Ministers, but there is only one top priority. After the questions that I had last week, I was back from Northern Ireland and I headed off to Reading to the headquarters of the RPA on Friday afternoon. I could not have gone any quicker. I have not solved all the problems, but it was important that I went there. I apologise on behalf of the Government for the deep distress that has been caused by the constant promises given in good faith for the money that never arrived. But as people now know, a little more than 85 per cent of the money has been paid. It is already in bank accounts, not just cheques in the post. However, I again apologise for the distress that has been caused.
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That is a top priority. I will do everything that I can in working with officials, but I will also be taking advice from all quarters. There will be no no-go areas as far as I am concerned. I am interested in the past because you have to learn from it, but in terms of the future, 2006 has already started. I understand that and the pressures on farmers.

Before I comment on colleagues' contributions, I should say that we have changed the date from 15 to 31 May and we genuinely want all the forms in by 31 May. We have received 70,000-plus. There will be no penalties up to 31 May, but I desperately implore farmers to get the forms in. We discussed this with leaders of the tenant farmers, the country landowners and the NFU last Wednesday afternoon along with the Secretary of State and we said that we desperately needed their help to get their members to get their forms in. There are difficulties with the forms, as we have heard from noble Lords. I accept that, but we want all the forms in if we possibly can. That is the only way that we can begin to assess how we are going to move forward.

We still have to deal with some issues from 2005. By the way, there is no attempt to hold back the 20 per cent. Our intention is to pay that. Indeed, we have already started paying some of the 20 per cent payments for the top-up. I might also add, because I will never have time to deal with everything, that we have already started paying some of the 5,000 hill farmers who have applications above 1,000. There has been a difficulty there, particularly for hill farmers who could not get the money until the single farm payment was paid, but we have started to make inroads - I saw figures yesterday - into that 5,000.

There are the 20,000-odd where the claims are less than 1,000; that is, £600. They have to be paid, but the priority has to be those who need the money as part of their main income. No one is going to tell me that 1,000 is a fundamental part of an income. But they will be paid. We will work as best we can to the dates that have been set out. We are having this assessed and reviewed daily. There is a hands-on approach from the Secretary of State and me, and I will report back to the House regularly.

I really appreciate this debate introduced by the noble Lord, Lord Vinson. It has been a bonus for a new Minister to have the opportunity to listen to widespread opinions. His was an incredibly thoughtful speech, most of which I agreed with. I am not saying that there was any point I disagreed with, but that I understood and agreed with most of his points.

The fact is that the landscape is man-made, and we have to pay for it. If people in this country want the landscape of the countryside, they have to pay for it, because it is man-made - it is not nature. Making the connection between food production and the landscape, as other noble Lords have said, is a key element of what we are trying to communicate. There is no question that so far we could have made a better job of that.

In his early comments the noble Lord made a key point, which others have made, including my noble friend Lord Corbett and the noble Lord, Lord Livsey,
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about co-operative marketing. We are no good at it. We have to get the farmers and producers to get a bigger grip on parts of the food chain. They will only do that by co-operation. It cannot be done working as individuals. Maybe it is just something in the British psyche. The Germans, the French, the Italians and, in certain areas, the Spanish have more producer control over the food chain, which has to be a good thing. That is not an attack on the supermarkets, but if the producer is only getting back 8p in the pound, something is clearly wrong. Producers feel beleaguered, particularly with regard to milk. I understand that, and I will do what I can to push that forward, but it has to be self-made, as someone said. You cannot force people to co-operate, just like you cannot force them to be good neighbours.

My noble friend Lord Christopher and others raised the issue of food security. I am as concerned about food security as I am about energy security. There are some real issues relating to the issue. There is not time to get into the detail, and I do not want to quote lots of figures, but the UK is 73 per cent sufficient in the food we can produce in the country. We are 60 per cent sufficient in all food, as there are some foods we cannot produce. Food security is important, particularly because, as I think the noble Countess mentioned, if there is a problem with oil and transport there is difficulty picking up imported food.

My noble friend Lord Christopher was the first person in the debate to mention bovine TB. We will come back as quickly as we can as a result of the consultation, as I said in answer to the Question the other day. It is a difficult issue. I have reviewed some of my files, because I received Professor Krebs's report and set up the Bourne inquiry of the independent scientific group. I have seen quotes from scientists in 1998 saying, "In five years" - or seven, because of foot and mouth - "we will have the definitive answer about TB, what it is caused by and how much it will cost". But we haven't, have we? And yet I have to go with the science. My department is more reliant on science than most others in government. I am catching up with issues and I am finding that the science at the moment is not as clear-cut as we were promised when we set up the inquiry.

The noble Earl, Lord Erroll, gave me a quote that I shall use for ever when he referred to us as, "we peasants". Four Earls, a Countess and a Duke, and the Earl says, "we peasants". But I will be asking questions about the issues he raised about the maps and so on.

My noble friend Lord Tomlinson referred to the reform agenda. There is such an agenda. It is true: farmers want reform. Some 5 per cent of farmers are producing some 50 per cent of the output, so there is a great dislocation between the sizes and output.

I have visited small average farms in Northern Ireland run by family partnerships with the farms being passed on to the son. Those farmers used modern technology. They did not use glitzy hi-tech but had good returns; in other words, they made a go of their farms. The key was that they embraced reform.
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The noble Earl, Lord Peel, asked about modulation. There are serious issues in that regard which I encountered when dealing with agriculture in Northern Ireland. I dealt with modulation in connection with rural development programmes. Discussions and decisions on that are ongoing. The noble Earl mentioned the landscape and cheap meat imports from animals that were subjected to poor welfare standards. That has been a constant complaint and I suspect that there is more than a grain of truth in it. We must tackle it as our producers will be damaged if we do not ensure that everyone else follows the rules. It is not a free for all; it is a regulated market. If it were a free for all, we would all go down because there is no way that we can compete with those abroad who are cutting corners. The noble Earl also mentioned the hill farm allowance. I take the point that he made about the payment and about the system continuing until the new one is established.

I say to the noble Lord, Lord Beaumont of Whitley, that the British Government have no plans to leave the European Union, which is the point that he made. I understand where he is coming from. My noble friend Lord Corbett asserted that the healthy independence of farmers had stopped co-operation. He picked that up from the years he spent as a journalist on Farmer's Weekly, as he said. My noble friend gave us the example of a small but successful pig producer. That farmer is making a go of it. I refer to the issue of whether the vast majority of the population know where their food comes from. The degree of ignorance is enormous in that regard. We need to devote more attention to that issue in as positive a manner as possible. My noble friend also laboured the need for housing for the large percentage of families who live in rural areas so that they are not driven away. I fully accept the usefulness of the report that was published this week.

I shall need a separate brief for the speech made by the noble Earl, Lord Selborne. I give the commitment that I shall seek to meet his challenge. His words struck a chord with regard to the work that I undertook at the former MAFF. There was a fairly large budget for the science base. In the next couple of weeks I shall be visiting two of the laboratories. I refer to the usefulness of the research budget and the ways that things have changed since the days of Rothschild. However, as I say, I need a separate brief to respond to his speech but I shall meet his challenge with regard to the science councils.

I am extremely grateful for the warm welcome given by the noble Countess, Lady Mar. She does not hold back at all even though I think that she likes me. The noble Countess made it absolutely clear that there is a problem with farming and that it has an uneconomic, unstable base. Yesterday she gave me a letter, which I have read and submitted to the department, on the stress caused to families who have an outbreak of bovine TB in their herds. In the past I have visited farms during outbreaks and have witnessed the stress that that caused to farmers. As I said the other day when I answered a question on this point, no one ever
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approached me about sick cattle except farmers. Plenty of people moaned about badgers but we do not obtain food from badgers, although I am told that in the 1920s badger ham was considered a delicacy. However, I should think that it would be illegal today. If cattle become ill, there is a real problem. People and families who work on the farms have physical contact with those cattle every day and suffer enormous distress if the cattle become ill. I understand that and have seen it at first hand in Gloucestershire and on a farm that I visited in Staffordshire where there was a very severe outbreak. Therefore, I fully understand the situation. I will try to make more such visits but that must not get in the way of the top priority of dealing with the RPA. That is more important than visiting farms. I am not immune to that but there is a serious issue here.

The noble Countess also referred to isolation among farmers. We have made more money available to tackle rural stress but I accept that that does not solve the problem. We have to stop the stress occurring in the first place. I can remember being told about people putting on their Sunday best queuing up at MAFF's regional offices for the IACS day, and it was a question of meeting people who you would not normally see and of social intercourse and talking to other people. That has gone; the markets have gone in some ways, and they were the gel that held the community together. That is not there now, and that means that people are more isolated, under more pressure, with more change, and that can cause massive illness, which can lead to tragedies in some cases.

On the beef ban, I looked up my notes yesterday, and I thought, "Hang on, there is something funny here". After nine years as a Minister, I only made my first visit to Brussels on 3 May to feed Northern Irish beef to the assembled crowds, including some customers who were going to buy it. That is a big success for the industry, and it is a tribute to officials, farmers and the whole meat industry to get the ban lifted. It is true that it has taken 10 years. Our beef has been more checked over and more tested by the Euro vets than anyone else's beef. We cannot use food safety as a marketing issue because that is not on, but we can market our beef as more checked and better tested than anyone else's in Europe, because so many hurdles were put up before us over the years, and we passed every one of them. The corollary to that is when the Euro vets come to check us, as they will do later in the year, we cannot afford any negative reports. I accept that some people say that there is the 24-month rule and the other rules. I have to look into the deboning and the transport of the bones back to the abattoirs. We cannot afford to have anyone saying, "The Brits are cutting corners and they are taking risks with food safety". We have to get through that check and test later in the year. I hope that we can rebuild our industry, which was worth £600 million a year for a couple of years before the ban was imposed.

My noble friend Lord Young paid tribute to the work on the gangmasters legislation, and it is a very successful operation. We had a good debate on that the other day. The noble Lord, Lord Plumb, gave me the
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benefit of his time 18 months ago for a day in the country looking at various aspects, for which I am incredibly grateful. He made the point regarding TB and the single payments. The noble Lord, Lord Marlesford, made a trenchant speech. He does not like my department; I accept that and I will do my best to make him love everyone who works there, including the Permanent Secretary, who is always available and is on the job 168 hours a week like Ministers. We do not measure the way that we do it by clocking on and off. Those days are gone; you are available all day every day. I will get him to learn to love Defra before I finish.

The noble Earl, Lord Caithness, raised the issue of the tallow decision and the burning in the renderers. I accept that he complains that it took too long to get that decision. There is an issue to be raised there, and I fully accept the legitimacy of what he said. The noble Lord, Lord Livsey, raised the issue of producers, and I have touched on that. I cannot do justice to what the noble Baroness, Lady Byford, said, and I will have to come back on some of the points. I will write on the issues that I have not covered. I cannot change that date of 31 May. I cannot impress enough that farmers must get those forms back to us. She raised the question of the abattoirs, and I will be looking at that because it is an issue for the Food Standards Agency in some ways. I do not want to preside over the demise of the small abattoirs; I was trying to stop that when I was there before. It is the responsibility of the Meat Hygiene Service, and farmers and food are now my responsibility.

I make the same offer that I have made before, and this is not done in a negative way. If anyone can find a regulation that we are operating that we do not need to operate, or somewhere we have gone way beyond the rules in a way that we do not need to, tell me what it is and I will get it changed. There is no reason why we should operate more than an inch beyond what we need to do, given all the pressures that are on us. I have said this before to agriculture and farmers, and I have also said it to the fishing community. It is genuinely meant, but people do not come forward with specifics. I make the offer genuinely; I can take a fresh look and a fresh start. If we can find anywhere we are over-regulating way beyond what we are required to do by law, we should not be. We are not in the business of gold-plating. We need to get gold in food production for the whole of the food chain - for the producers, the retailers and everyone working in it. They deserve the gold, not us putting gold into regulations.

5.04 pm
Lord Vinson: My Lords, the Minister's closing remarks have been exactly what the whole House wanted to hear. It was a draught of commonsense. It typifies what this profound debate has produced - people are not interested in who is right, but what is right. The various party spokesmen summed up much better than I could, and the debate showed the depth and breadth of experience in this House. On behalf of this side, I thank all noble Lords who have taken part and reiterate to the Minister that if this is the way that
18 May 2006 : Column 468
he has started, by God, he has set a wonderful precedent to continue. Thank you. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.





































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