§ 11.50 p.m.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop)
I beg to move,That the draft Amendments of the Hops Marketing Scheme 1932, as amended, which were laid before this House on 30th June, be approved.The Hops Marketing Scheme has operated since 1932 and has been amended on several occasions. The Hops Marketing Board considered that further amendment of the scheme was required to secure the supply of specific hop varieties of the quality standards wanted by United Kingdom brewers and to enable them to be supplied on forward contracts for up to two or three years ahead.
The proposed amendments were designed to introduce provision for each variety of hops consigned to the Board to be allocated to a separate varietal pool and for a system of priorities in payment to growers within pools so that they would be encouraged to produce hops to be sold on forward contract. The scheme's quota provisions would continue to operate, but in a somewhat more complicated fashion than before. Amendments were also proposed to provide for transition from the present arrangements. In addition, the Board also sought power to acquire hop baling presses and to sell them to registered producers should the need arise. Finally, the amendments delete a reference in the scheme to the Permanent Joint Hops Committee, which no longer exists.
1554 The Agricultural Marketing Act requires that, in normal circumstances, a marketing scheme may be amended only on the initiative of the board concerned, and the board must first notify all registered producers of the proposed amendments. The Board circulated the proposed amendments to growers in November 1975. A poll of producers has to be held on whether or not the amendments should be submitted to the Minister if growers with an aggregate hop area of 1,000 hectares so request. In this case, no poll was requested and the amendments were submitted to my right hon. Friend's predecessor in January 1976.
Lord Peart, the then Minister, duly gave notice that he had received the proposed amendments, and three growers subsequently made formal objections. In accordance with the Act, the Minister directed that a public inquiry be held into the objections, and he appointed Mr. A. O. R. Vick, barrister at law, to conduct it. Mr. Vick heard evidence from 11th to 22nd October 1976 and reported to my right hon. Friend the present Minister in December 1976, and the report was published in January 1977.
The Board subsequently indicated its intention to make certain administrative arrangements, not requiring amendment of the scheme and explained their effect to growers at a series of special district meetings. I understand that the arrangements are satisfactory to the objectors and to other growers and that their effect would be to allow growers to offer hops up to the limit recommended in the report. After considering the amendments and the report, and in the light of the arrangements to be adopted by the Board, my right hon. Friend proposed to the Board some modifications of the amendments. These modifications were of a largely technical nature, allowing the amended scheme to operate with effect from the 1977 crop and providing for the Board to maximise payment to growers in certain circumstances where the amendments, as originally drafted, would have led to a lower return on their hops. The Board assented to these modifications.
As there has been a public inquiry and as my right hon. Friend is satisfied that these amendments will conduce to the more efficient operation of the scheme, he has laid these amendments as modified 1555 in draft before each House of Parliament for approval. I therefore seek the approval of the House for them.
§ 11.54 p.m.
Mr. Michael Joplin (Westmorland)
I find myself in the strange situation of not knowing whether to declare an interest. However, I declare an interest as a farmer, but not as one who has grown or is ever likely to grow hops.
The Opposition welcome the proposals. We regard them as a forward step in the marketing of hops—a product which has for many years been marketed through one of our statutory marketing boards in which we have faith and confidence and which we hope will be allowed to continue within the rules of the European Economic Community.
This proposal to improve the marketing of hops comes hotfoot on the heels of the legislation which the Government proposed last year—and which we did not oppose—in the form of the Agriculture (Miscellaneous Provisions) Act 1976. The Minister will remember that we all became great experts on the sex life of hops and we agreed to allow certain designated areas to be set up for the production of seedless hops. The Government said that the purpose of such areas was to enable our hop growers to participate more in the export trade, which particularly likes unsexed hops. However, I should not care to go too deeply into the merits of sexed or unsexed hops tonight. As the scheme is partly concerned with helping the export trade, it will not be out of order to ask the Minister to tell us what has happened as a result of that Act of last year. Are some of the zones being set up? Can the right hon. Gentleman give us a progress report on these developments?
The Hops Marketing Board has intimated to me that it regards it as of great importance to have these amendments accepted as they will enable the Board to increase its prospects of developing an export market as well as at least maintaining our share of the home market. We should remember that, now we are within the EEC, it will be much easier for producers of hops in the rest of the Community to move into our market area.
1556 I am particularly pleased to see the way in which forward contracting arrangements have been entered into by the Board for this year's crop—that is, 1977. The Board has sold 75 per cent. of the estimated average production on indexed contracts and more than 10 per cent. of the estimated average production on fixed-price contracts. That is for this year's crop. However, the Board says that for next year's crop it has already sold 74 per cent. of the estimated average production and that orders from the brewing industry are already starting to come in for 1979. This is something that we should acknowledge as an excellent result and an example of the way in which these marketing proposals can be made to work.
I should like to ask the Minister a question relating to quotas and these proposals. What will happen if there is a bad season and the estimated average production fails to be reached by a fairly considerable margin? Will there be severe penalties?
The Minister said that the proposals come to us in this form following the public inquiry which was carried out in October of last year. I hope he will confirm that the three producers who objected are now happy. Will he confirm that the scheme will allow growers to offer up to 100 per cent. of their basic quota under the forward contract scheme?
Since the Government have followed the recommendation of the inspector relating to the views of the three producers, what of the views of the other 164 producers of hops in the country? Are we likely to find that the scheme, as amended and agreed by the Board, will meet with objections from those growers? They might be unhappy with the proposals as they have now been produced. We ought to know to what extent the bulk of the producers have been consulted now that the Board has altered its proposals.
I do not wish to be critical of the Board, which has the confidence of the whole House. Over the past few months we have heard many expressions of confidence in the marketing bodies for milk, potatoes and hops. The view has been forcibly expressed that these statutory bodies ought to be allowed to 1557 continue to do their job. I was particularly glad to see how, in some respects, the Hops Marketing Board came out of the inquiry very well. At one stage the inspector tells us that there was a good deal of criticism about the Board's activities on the export side of the business.
In paragraph 40 of the inspector's report, he says:I therefore reject the criticisms of the Board as regards the export side of the case made by the objectors although I am confident that the Board and indeed the growers realise how essential it is for the industry to become export orientated in the changed marketing conditions.The Board comes out of the inquriy rather well.
In paragraph 61 of the report we are told that the objectors were critical of the Board's costs. I imagine that that was a reference to administrative costs. On page 22 of the report, the inspector says of that criticism:I heard very little evidence from the objectors as to the criticism of the Board's costs being too high, indeed, Mr. Bellamy in his closing submission, without formally abandoning the point, did not wish to pursue it.That, again, is a feather in the cap of the Board. I was glad to see, in paragraph 32, the inspector saying of the chairman of the Board:Mr. Scott, who carried the brunt of the attack'"—that is, by the objectors—was an impressive witness, having a profound knowledge of the industry as well as of the Board's policy in recent years.The House continues to have confidence in the way that the Board does its work. If we are to have a continuation of this scheme, it is important that the EEC regulations allow this type of operation to continue. I hope that the Minister will tell us something about the future of the Board under these new arrangements within the rules of the Community, I hope he will confirm that these proposals are in no way likely to cause the Community to tell the Board that its activities are outside the Community rules. Rather, I hope that the Board will be able to continue with its valuable work.
Although the inquiry was a victory for the three objectors who opposed the Board's proposals, the Board has shown itself to be sufficiently adaptable to change its proposals in the light of the inspec- 1558 tor's report and recommendations. We should give credit to the Board for being sufficiently flexible to change the proposals in the light of the evidence. I hope that these powers will considerably improve the marketing of hops. I hope that they will allow us through the varietal pools to expand our export trade and strengthen our grip on the home market. We welcome these proposals.
§ 12.5 a.m.
§ Mr. Michael Hamilton (Salisbury)
I thank the Minister of State for bringing forward the amendments. In so doing I must declare that I am a member of the Hops Marketing Board, and I have been so since before I came into the House. The Minister pointed out that the Board is now 45 years old and, therefore, in the prime of life. It was the first of the marketing boards to be set up. It has abolished surpluses and brought stability to the industry, stability that is so sadly lacking today on the mainland of Europe where over-production is rife.
The hops industry is very small. We have heard that there are fewer than 500 growers. However, it would be a mistake to imagine that the marketing of hops is a simple, unsophisticated business. I suggest that the 10 pages of amendments that we are considering are highly complex even for the hop grower and well nigh unintelligible to the ordinary layman.
In essence, membership of the European Community has necessitated new trading arrangements between the Hops Marketing Board and its customer the Brewers Society. It has rightly been said that these proposals facilitated the making of long-term contracts. As my hon. Friend the Member for Westmorland (Mr. Jopling) pointed out, they will improve the export potential of the Board. Moreover, they will encourage the growing of varieties that are wanted and will discourage production of those that are least in demand. All in all, the amendments to the scheme are important and it is to the credit of the Minister that they have been brought forward despite the usual July pressures on parliamentary time.
Important though these amendments are, they are not, as some might imagine, directly relevant to the continuance of the Hops Marketing Board within the Eurpean Community. That hurdle still lies 1559 ahead, although I am glad that my hon. Friend referred to it.
I am deeply conscious of the plight of small growers, especially in Germany, who are incapable of organising their own market. I am conscious, too, of the straits in which the English hop industry found itself between the wars before the Board was established. It was then an industry crippled with over-production and bankruptcies. If hop growers wanted their marketing boards wound up, the Minister would do it for them tomorrow, but that is not their wish. I am very happy to reassure my hon. Friend, if he needs reassurance, that that is so.
When the crunch comes, and when the constitution of the marketing boards is on the European agenda, I beg the Minister to have in mind the benefits which have accrued in this country from the present system.
§ 12.11 a.m.
§ Mr. Bishop
I am pleased that the amendments to the scheme have been welcomed by the hon. Members for Westmorland (Mr. Jopling) and Salisbury (Mr. Hamilton). I am sorry that I had to go into some of the technicalities of the consideration of the objections, but it was necessary in order to assure the House that the procedures had been properly followed.
The hon. Member for Westmorland asked me what would happen about quotas in a poor harvest. That is a matter for the Board. The amendments allow for special arrangements if there are exceptional circumstances.
The hon. Member commented on the Agriculture (Miscellaneous Provisions) Act and the debates we had last year, particularly in Committee, on the sex of hops. The Act allows the Minister to designate an area in which the growth of seedless hops could be enforced. The hon. Member will know of the need to keep the sexes apart. We have not had a request from growers for an area to be designated in 1977, although it is likely that such an area will be designated in the coming year. Hampshire already grows seedless hops on a voluntary basis and has not felt the need for enforcement.
I believe that the Board has fully consulted. The objectors have indicated that the proposed amendments are acceptable 1560 to them, and the difficulties they feared—those of the old system working alongside the new system when the quotas were determined—have been removed. Their objections are no longer relevant. One of the objectors, Mr. F. Wilesmith, has now joined the Board, which prompts me to comment that "If you can't beat 'em, join 'em". The position now is that all the procedures have been followed and the objectors accept the situation.
I turn now to the position since the accession of this country to the EEC. Until accession the United Kingdom market was self-contained, with a restrictive import regime and close liaison between the Hops Marketing Board and the brewers regulating the supply and demand. However, the freer marketing regime and the increased demand for lager-type beers, for which mainly Continental seedless hops are used, has created new pressures on the hops industry. Although acreage has fallen, there has been substantial replanting with new varieties and production has not fallen commensurately, as has been the case with many other products. Increasing yields have also produced surpluses, and these pressures have led directly to the proposed revision of the scheme.
The hon. Member for Salisbury raised the question of the future of the Hops Marketing Board. I remind him that agreement was recently reached in the Council of Ministers on an amendment to the hops regime aimed at stabilising the EEC market and reducing the imbalance between supply and demand. United Kingdom growers will continue to benefit from income aid that will be paid through the Hops Marketing Board until the end of 1980. Before the end of 1980 we shall need to discuss with the Board its constitution after that date. The aim will be to ensure the continued effectiveness of our hop marketing arrangements within the EEC context. The current amendments may well set a pattern of marketing which will continue past 1980.
Our objective remains to maintain such functions of the boards as are considered essential to orderly marketing of the products concerned. In this case we are concerned about hops.
The present scheme has served the growers well over 40 years, but it limits incentives to adapt production to changes in demand. These amendments will 1561 encourage growers to produce hops which can be sold on forward contract, thus providing a firm base for the development of the industry. I, too, pay tribute to the co-operation of all those concerned in this matter, including the Hops Marketing Board and my officials. The amendments involved are technical, but I am sure that the Board and my officials understand them. We are confident that when they are working they will help the Board to do the job it has been given and which it has discharged so well over the last 40 years. I commend the amendments to the House.
§ Question put and agreed to.
That the draft Amendments of the Hops Marketing Scheme 1932, as amended, which were laid before this House on 30th June, be approved.