HC Deb 10 April 1978 vol 947 cc1127-44

10.23 p.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang)

I beg to move, That this House takes note of Commission Documents Nos. R/3069/77 and R/3121/77 on Farm Structure. I must first congratulate the Scrutiny Committee and its Chairman, the right hon. Member for Bournemouth, West (Sir J. Eden) on their excellent report. Taken together the two documents that are the subject of this motion constitute a formidable quantity of paper. The Scrutiny Committee has done the House a service in dealing with all this material so concisely and in giving the House the benefit of its penetrating conclusions.

The Committee's report sets out the main points of the Commission's report on the application of the socio-structural directives in 1975, which it also summarises, so I need not detain the House with a dissertation on this subject. I should, however, indicate that we entirely agree with the conclusion of the Scrutiny Committee's report that there is insufficient experience of the operation of the directives to form a basis for proposing major changes in them. In addition, we endorse the report's criticism of the Commission's explanation of the reasons why directive 72/160 has failed to promote structural improvement.

As the Scrutiny Committee's report says, the broader factors are what govern the propensity of farmers to give up their land. We discovered, while operating our own farm structure schemes, that Government incentives in this direction are unlikely to be cost-effective and in the United Kingdom they had very little effect at all. Like the Scrutiny Committee, we are also against any measures to curtail aid to efficient dairy producers.

So far as the analysis of the Commission's actual proposals is concerned, here again I can only agree with the general conclusions of the Scrutiny Committee's report. As we see it, a number of points of principle arise. One of the most important of these is the increase in expenditure under the FEOGA guidance section which is involved, bearing in mind, as we have already noted, the lack of experience so far in the Community as a whole of the operation of the present provisions. There is also the further differentiation of FEOGA aid in favour of certain regions of the Community, which we consider highlights the need to ensure that Community money is spent in a cost-effective way.

We agree with the Scrutiny Committee that the reduction in the minimum area qualifying in less-favoured and mountain areas in Italy for the LFAD compensatory allowances could hinder improvements in farm structure. So also could tie concession proposed for parts of Italy and Ireland under which FEOGA reimbursement would be payable under directive 160, even if the land released by the annuitants went to farmers with no prospect of reaching the comparable income.

This concession also seems to cut across the Commission's proposal to strengthen incentives under this directive where land is released to farmers with development plans. The special premium linked to rental values which is proposed would, moreover, as is indicated in the Scrutiny Committee's report, cause substantial administrative problems and give rise to anomalies in United Kingdom conditions.

For instance, the premium actually received by a farmer could vary from £50 per hectare to over £500 per hectare in the same region of the United Kingdom. There would, furthermore, be a tendency for the lowest payments to be made in areas of poor land, where farm structure is in general also poor. In any event, as I have said, our experience leads us to doubt the effectiveness of incentives of this kind, and I am glad that the report goes along with this conclusion.

The proposed Commission drainage initiative in less-favoured areas in the West of Ireland raises both the question of the regional differentiation of rates of FEOGA reimbursement and that of possible impacts on Northern Ireland. We should not, of course, wish to oppose cost-effective measures to accelerate drainage programmes in Ireland, but the programmes will need careful scrutiny. We shall also wish to pursue the question of what seems to us to be the illogicality of excluding from the special aids analogous areas in Northern Ireland, especially in view of the possibility of fruitful cross-border co-operation in certain catchment areas.

The Commission's proposal to amend directive 72/159 is of little interest to this country and, indeed, we see no justification for any changes in the ground rules of that directive. The House will, I am sure, be glad to know that our EEC capital grant scheme, the farm and horticulture development scheme, is now very much a going concern following the changes we made in June 1976 and the ADAS advisory effort that has been put in. There are, however, some detailed changes we should like to see in the directives and we shall be pursuing these as the opportunity offers. We do not, however, agree with the NFU and COPA that in general the Commission's proposals are inadequate. I am glad to see that the Committee's report takes the point that as the proposals stand they are costly and that, as has been observed, they have no very sound basis in experience.

In conclusion, I should like to affirm that our general stance at present is to seek to ensure that Community funds are disbursed in a cost-effective way, to resist measures that do not make sense in United Kingdom conditions or in terms of the basic objectives of the Community's socio-structural policy, and to secure improvements on detailed aspects of the directives. Subject to the view that the House may express tonight, both on the Commission's proposals and on the Commission's second report, we shall continue to pursue these objectives.

10.30 p.m.

Mr. Robert Hicks (Bodmin)

We are grateful to the Minister for explaining the Government's attitude to these documents.

On the surface, this debate may appear somewhat detailed—relating as it does to proposed amendments to farm structures, less-favoured area programmes, drainage schemes and various matters connected with farm modernisation—but in fact it raises questions of substance on the future operation of the Community's agricultural policy, particularly with regard to the cost-effectiveness of the measures, reviewed in the Commission's report, which are designed to stimulate agricultural reform.

The Community's farm policy has been subjected over the years to various pressures and criticisms. As with most political subjects, we have all tended to take the favourable aspects for granted and to concentrate our attention on those facets which give cause for concern. In this context, that concern manifests itself in the real worry about the disposal of structural farm surpluses and—equally important—a consideration of how we are to prevent a further spreading of the problem of surpluses to other farm commodities in the not-too-distant future. It is in the light of the prevailing and potentially more worrying situation that we should consider these documents.

The Commission's proposals highlight the Community's dilemma. The suggestions in these directives have not only agricultural but political and regional implications. Some aspects of fundamental reform should be seen in a regional and social light rather than in a strictly agricultural light.

As one who represents a peripheral part of the United Kingdom, I am aware of the feeling of neglect and frustration that our problems in the regions are not fully understood in Whitehall or possibly in Brussels. But we must resist the temptation to assume that, because many of these problems concern other parts of the Community, we should dismiss them. That would be totally wrong.

We must examine these proposals in the light of the Community's future requirements of its farm policy. Is directive 72/159, relating to farm modernisation, a national aid which will put no direct cost on Community funds? If, as I believe, that is so, would not the Minister agree that this practice is in effect subsidising farm incomes, and thus does little to contribute to basic restructuring? Also, do not the products of these smaller units receive Community funds from the guarantee sector of the farm budget?

What will be the cost to Community funds of the amendment in directive 75/268 in respect of farming in hill and less favoured areas? The Minister rightly pointed out the concern felt by the Department about the cost-effectiveness of certain of these proposals. Will he go into a little more detail and say how much is involved?

Does the Minister really believe that the reduction in the qualifying area for headage payments in certain parts of the Community from three hectares to two hectares and the increased level of payments in these areas is consistent with the declared aim of improving farm structures, on the one hand, and reducing structural surpluses, on the other?

In the context of the directive concerning less favoured areas, may I ask the Minister also what representations his Department made in respect of the application of this directive to Britain? The proposals concern in the main other parts of the Community, but there is a real problem in that certain parts of Britain meet the necessary criteria to be considered as less favoured areas, but, because the Government chose to go for the old hill cow and hill ewe subsidies, those areas now fall outside this provision.

A comparison of areas in the United Kingdom which do not qualify under the less-favoured area directive with other parts of the Community in which farmers qualify shows that an injustice is being done to the farmers of approximately 1½ million acres of such land in the United Kingdom. Would not the Minister agree that, as the Commission is looking at amendments to these directives, the time is appropriate for a review of the land within the United Kingdom that should qualify to be classified as less favoured areas? It has been suggested, for example, that some parts of France that produce milk are classified as less favoured areas. This is not so in Britain.

It is proposed in directive 72/160, which concerns measures to encourage the cessation of farming, to create an additional special premium relating to the rental value of the land. This would be a supplement to the existing arrangements involving payment of a lump sum or an annuity. What will the cost be? What representations has the Department made to the Commission as to the effectiveness of these proposals? As the Minister rightly implied, some of us doubt from experience how effective these measures are. There is reason to doubt the role of a financial incentive in persuading people to leave farming.

I conclude by adding a few general comments to my remarks about the Commission's report on the measures aimed at achieving reforms necessary to improve the structure of Community agriculture. It is true that progress has been made. It is only necessary to look at the statistics to see the fall in the number engaged in full-time agriculture. Would not the Minister agree that there is still a long way to go and that it is more difficult now to persuade those who have not already decided to leave agriculture? There is a natural wastage, but will the Minister quantify the numbers of those expected to leave as a result of these inducements, as opposed to leaving for other reasons?

We on this side of the House express a general concern about the lack of activity that has resulted from these measures, because there is no doubt in our minds that we still have a long way to go in implementing a meaningful programme of farm reorganisation and farm modernisation throughout the Community if we are to achieve the two objects which I mentioned at the beginning of my remarks, which are, first, to promote a better farm structure and, secondly, to avoid unnecessary farm surpluses.

10.41 p.m.

Mr. Wm. Ross (Londonderry)

The Minister will no doubt be aware of the reaction in Northern Ireland to any suggestion that the Irish Republic is getting a better deal out of the EEC than is the Northern Ireland part of the United Kingdom. In the light of the reaction that is often heard in the Press, and sometimes deliberately fostered in Northern Ireland in this regard, I echo the words of the hon. Member for Bodmin (Mr. Hicks) when he said that it was time we reassessed the areas of less favoured land in the United Kingdom, and I say in particular Northern Ireland. This is a serious bone of contention and it is a matter on which I should like the Minister to give some sort of understanding this evening.

Given that there is always an adverse reaction in Northern Ireland to any suggestion that the Republic of Ireland is getting a better deal than is Northern Ireland, there would be an even worse reaction if any idea arose in Northern Ireland that something that was done in the Republic was having an adverse effect on the farmers in Northern Ireland.

In that respect I draw the Minister's attention to the cross-border rivers which run from the Republic into Northern Ireland, and specifically those rivers which flow into Lough Neagh or Lough Erne, because both those loughs are used in one way or another in Northern Ireland for drainage and fishing purposes, and they are subject to flooding along the shores. Sometimes heavy rainfall over the catchment area of the rivers concerned can cause those loughs to rise very rapidly, with extremely serious results in the low-lying areas surrounding them.

In those circumstances, has any thought been given by the Department of Agriculture in Northern Ireland, and by the Minister of Agriculture, Fisheries and Food here, to what steps should be taken to prevent any serious consequences arising from works taking place in the Irish Republic? The rivers are principally the Erne and the Blackwater, but no doubt there are other smaller streams. We also have the problem that will arise, inevitably, if these rivers are drained and banked in the Republic, and the downstream sections are not banked. The flooding that would result would be immediate and immense as soon as the drainage schemes commenced, and this is a matter which I hope the Minister has taken on board.

There is also the problem of the River Finn, which flows into the Mourne from County Donegal. I do not think that the problem is as serious there as in other places, but no doubt there will be a problem in that area too, although of lesser dimensions.

I now deal briefly with the areas to be drained. I note that these are restricted to catchment areas of 30,000 hectares and field drainage areas of 100,000 hectares. What puzzles me is that according to the Twelfth Report of the Select Committee on European Legislation the machinery costs in field drainage are restricted to 5 per cent. of the costs. Is this correct? If it is, I must tell the Minister that nobody does land drainage in that way any more. If machinery costs are restricted to 5 per cent. of the total cost, that would have to imply hand labour in the digging of the ditches for the land drains. If that is so, it could not be said that the money was being spent in a cost-effective way under modern conditions. Will the Minister comment on that aspect of the papers before us?

I turn briefly to the whole contention that it is possible to improve the farm structure through getting small farmers to leave their land and allow it to be sold to someone else. The plain truth is that all these schemes simply have not worked, for a variety of reasons, not least of which is the rate of inflation in Western society today. That inflation rate, even in the remaining lifetime of a person of 55, has been seen very rapidly to erode the economic advantages that are supposed to accrue to the former owner from the loss of his land. People are no longer prepared to believe in the supposed advantages. They are no longer prepared to take the risk. Therefore, the contention fails on that ground alone.

In addition, there is among small farmers everywhere—in Ireland perhaps more than in most places—an almost mystical attachment to the land they own. This is well known to anyone engaged in farming. To those people the property they own is far beyond any money price. In those circumstances the pride of ownership overrules any economic advantage that can accrue to the owner.

On those two facts alone—thoueh no doubt others will be brought forward this evening—this whole concept founders. I believe that it will continue to founder. It just cannot float.

On the basis of my experience, and looking at the farming structure in my own area, where farms are growing in size, I believe that a change in the structure will come about only through the death of the present owners and through their children and grandchildren being unwilling to live the existence that their forebears had. Young people are no longer prepared to put up with that existence. If they can get a better job they will go to it, even if it means going quite a long way. They will not return. When the old folk die off the land is sold, and in that way the farms will naturally increase in size. There is no way of speeding up that process.

According to these documents, the farms that have increased in size are mainly cattle and dairy farms. They do not mention sheep farms, but they are fairly large in acreage anyway, and are often one-man and two-man farms, or at any rate family farms. They do not need further to increase in size. Quite a lot are as big as the family can handle now in many parts of the country, so we cannot expect them to grow very much.

I suggest that the dairy and cattle farms have increased in size simply because they are not labour-intensive. They are machinery-intensive, if one is going in for dairying and silage. They may be intensive in the same sense to some extent in cattle farms, but one family—the farmer and his son; or perhaps one should say two families—can handle a very large acreage.

We are all aware that such farms are not normally found in areas suitable for grain growing. Grain farms in, for instance, Eastern England are a fair size anyway, and they are highly mechanised. Such farms may increase in size quite a bit yet, but I doubt that. We may well have seen the end of the major part of growth for the present generation in that direction as well.

These directives represent an attempt to speed up a natural process in the growth of farms. It is an attempt that will fail. The process will take place naturally anyway, and I believe that we are wasting money in trying to do it in this way.

10.50 p.m.

Mr. Peter Mills (Devon, West)

I must declare an interest in these matters. As one surveys the Community scene today, and the common agricultural policy in particular, one must agree that these directives are of great importance. I believe that the hon. Member for Londonderry (Mr. Ross) has the matter slightly wrong, and I shall come to that in a minute. In my view, in the context of the problems of the Community, of the CAP and of surpluses, for the long term we must take measures such as those proposed in the directives.

In the short term, it may well be that it is a matter of price—the end price—that can be controlled in order to deal with some of the surpluses in some commodities but—this is where I think that the hon. Member for Londonderry has it slightly wrong—the fact is that in the Community as a whole there are areas that have a long way to go.

There are areas where the process of modernisation and amalgamation into more viable farms with the right structure is already under way. I think that Northern Ireland presents an excellent example of that, with small viable farms. Many of them have the structure right because they are family farms. In the South-West of England we have already made good progress. If I may speak of my own past for a moment, I started with 28 acres—hardly a viable farm nowadays—but in the South-West now the average is considerably higher.

Already many of the policies set out in these directives are in operation in certain parts of the United Kingdom, and in the South-West in particular. We have had farm amalgamations. We have had viable units set up, and we have modernised. Already the process is under way, but in other parts of the Community—in certain parts of France and Germany, for example—there is a long way to go before farming comes up to the standard of the excellent small family farms of the South-West or, indeed, of Northern Ireland.

There is, therefore, a difference, and I believe that these directives can play a role in the future in dealing with the problems of the Community as a whole and of the CAP in particular.

The Commission's single aim, as it is put, is to help farmers who are willing and able to do so to attain 'comparable' incomes, and provide an alternative non-agricultural income or occupation, or an early retirement annuity, for farmers who do not wish or cannot attain this level. I am sure that we should all agree with that aim. One hears constantly about the problems of very small farmers and of farm workers in earning incomes comparable with those of other sections of the community. I am sure that that is right, but one must try to ensure that one does not set the end prices so high that the big farmers make large profits and the very small farmer is still struggling to obtain a living standard—a living wage, if one cares to call it that.

Therefore, I believe that in the Community as a whole we should look seriously at providing some help to the very small farmers who can never attain that position. That is what this is all about. It is sad to have to say that in practice the measures have not worked very much. In my view, Governments within the Community are not taking these problems seriously enough. We in this country take them seriously. We have quite a good track record in dealing with these matters.

Unless these measures are effective, I am certain that the very small farmers, not in this country but elsewhere in the Community, will stick it out. They will become more and more stubborn in refusing to move from the land, more and more determined to stay and go on farming. However much the cut in end price, they will have no alternative work, no other occupation, to go to. I believe, therefore, that these directives are very important and that many of the other measures that the Community is dealing with are merely tinkering with the problem. Until we get the structure right, we cannot deal with the surpluses or with these very small farmers desperately trying to live on the small acreages.

Farm modernisation is crucial both to the farmer and the consumer. One cannot expect the consumer to pay high prices for various farm products, and it is right that we should try to make our farms modern so that they can have an output at reasonable cost to the consumer. I am all for farm modernisation, and I hope that the directive on modernisation can go ahead.

But when considering the directive on payments to outgoers, I emphasise again that it is not much use paying a small farmer to go out of business if we have not provided some alternative work, some alternative hope for him, so that he and his children can make a decent living. There are many areas in other countries of the Community where there is no alternative work or no hope for such people. So we have to think not only of payments to the out-goers but of alternative work for them. That must cost money. Time is needed for these things to have a genuine impact. Time must be given. We cannot do it overnight. It takes a very long time to persuade people to make such changes.

Mr. Nigel Spearing (Newham, South)

Can the hon. Gentleman resolve this apparent dilemma? He has laid great emphasis upon changing the structure of farm holdings, on the assumption, I presume, that that will provide viable units. But it will not necessarily decrease the amount of land in cultivation. If that is so, presumably surpluses will remain the same, particularly if lowland farms become more efficient. Unless the structure actually takes land out of cultivation—and that would be the marginal, less accessible land, which, apparently, is not the policy—surely the policy that the hon. Gentleman is advocating will fail even on his own criteria.

Mr. Mills

That is a fair point. My answer is that I do think that in some circumstances it is right to take land out of production. The land I am thinking about is the poor scrubby land in the Community which could be used either for forestry or for the "playground"—the sort of land necessary in the modern world for holidaying and other pursuits. I believe that in certain areas it is just not feasible to go on farming on such land. I am talking not about this country but about certain areas within the rest of the Community. I believe that there is a problem, but that forestry can play a considerable role on some of the poorer land—and in the long term that would be of great benefit to the Community itself and to the nation concerned.

The directive talks about training. How right that is. It is important to retrain people. The Governments must pay attention to this aspect, particularly with regard to the younger members of these small farming families.

Then there is the question of the less favoured areas. Here I perhaps disagree slightly with my hon. Friend the Member for Bodmin (Mr. Hicks). I believe that the problem of the less-favoured areas is a social problem more than a farming problem. Again it is a matter of many smallholdings in upland areas which are very difficult ever to make viable. The recognition of this as a social problem lay behind the whole idea of the hill-cow subsidy in days gone by. Admittedly it had the advantage of ensuring the production of store cattle for fattening lower down. But there was a real social element in giving those subsidies, for otherwise there would be depopulation of the uplands areas. This is the sort of thing that ought to be done not quite so much by the Community as by national Governments, and it should be dealt with as a social problem rather than as a farming problem.

The whole problem with the set-up in Brussels at the moment is that far too much money is being directed at the guarantee side and at supporting farmers in production, rather than seeing that the money is used for the Regional Development Fund and other alternative work within the more difficult areas.

I hope that we shall urge the Government to look at these various directives very carefully indeed. It is not such an urgent problem in this country as in other countries within the Community. We have already gone a long way towards dealing with these matters. The other countries in the Community need to put their house in order, in a sense. We have started on that road under various Governments over a number of years. We have begun to get the structure right. The other countries within the Community have not taken the message seriously.

I urge the Minister to redouble his efforts to see that other Agriculture Ministers within the Community start to take this matter seriously, so that there will be pressure for more of the funds within the Community to be used in dealing with the whole of the problem that I have tried to outline. It is essential that they do this, otherwise surpluses will go on and on and on. Until we get the structure right and provide alternative work for many of these small farmers within the Community, these surpluses will go on and on and on.

11.3 p.m.

Mr. Richard Body (Holland with Boston)

I am very glad that my hon. Friend the Member for Devon, West (Mr. Mills) acknowledges that some of our land is not fit to be farmed, but I think I am right in saying that, just across the border from him, 700 acres of Exmoor was brought into cultivation, not because it is land which should be cultivated but because of the system of grants and subsidies which makes it possible.

Like my hon. Friend the Member for Bodmin (Mr. Hicks), I was disappointed that the Parliamentary Secretary gave no estimate of the cost involved as a result of these directives. Five years have now gone by and I should have thought that we could have some estimate of at least the visible cost of what has so far been done. The visible cost would be the money that has actually been received by the farmers who have been the beneficiaries of these schemes, but there is also the invisible cost, and it is this that disturbs me, as I think it must disturb anyone who is concerned with the level of efficiency of British or European agriculture. The invisible cost is what must be paid out by those who contribute to the scheme, namely, the taxpayers themselves.

The whole essence of what is intended under these directives is that there should be a transfer of resources from the efficient to the inefficient, from those who are able to pay taxes, and who therefore by that standard are at least reasonably efficient, to those who are inefficient in a sense and would be out of business, or very nearly out of business, were it not for the grants and subsidies that are available.

The purpose of these directives, in other words, is that the strong should be weakened in the hope that the weak should be strengthened. That, surely, is no prescription for raising the level of efficiency of either British or European agriculture. This is something that will be of great importance from now on, because we are now facing structural surpluses. These are chronic and permanent surpluses, which will pile up from now on.

I like to think that there are many efficient farmers in Lincolnshire. I am delighted that my hon. Friend the Member for Gainsborough (Mr. Kimball) is here, as he also comes from a county which is capable of growing food much more efficiently than Devon and Cornwall, where the farmers thrive on grants and subsidies. My part of England is extremely apprehensive about the way in which these surpluses are mounting. If they are to continue to mount, the efficient producer will be at a grave disadvantage, because he has to compete against those marginal producers who will be kept in business as a result of schemes of this kind. They will, therefore, face unfair competition.

For that fundamental reason I am one of those hon. Members who are rather more sceptical of these directives than the Parliamentary Secretary himself indicated. I hope that he will meet my first query as to the total cost. However, I recognise that he can give no hint to this House of the true invisible cost of these schemes as a result of diverting resources from the efficient to the inefficient.

11.6 p.m.

Mr. Geraint Howells (Cardigan)

I have listened with interest to many of the points made by hon. Members. Whatever our views about the structural problem in this country and other countries of the Community, to many small and large farmers farming is a way of life.

One matter that I should like to raise tonight—I am sure that the majority of hon. Members will agree—is that, whatever the outcome of the farm structure in the years to come, we must not introduce any sort of element of compulsion in order to move any farmer from the land, whether he be in Wales, Scotland, England, Northern Ireland, or anywhere in the Community. If those people prefer to be small farmers—farming 10 or 20 acres or even 1,000 acres—that is their way of life.

I believe that they have played a major role, although not perhaps in producing food for the country. I also believe that we have a social problem as well. If we do away with many of our part-time farmers, in many areas more depopulation will take place. Over a period of time these small farmers have been of benefit to the community in which they have served and lived. I hope that the Minister will do everything to persuade his colleagues in Europe not to introduce any element of compulsion whatever in the years to come.

Mr. Body

Except on the taxpayers.

Mr. Howells

I should also like to mention the plight of the marginal farmer. I hope that the Minister will say something about the inquiry that is now taking place into the future role of the marginal farmers. As I have said on many occasions, they can play a major role as well in increasing production from that particular type of land. I hope that many of those who are farming in the marginal areas, which have been deprived under the orders and directives that we have accepted from the EEC during the last few years, will come under the hill area compensatory allowance scheme in the years to come.

I hope that the Minister will be able to let us know when he will be able to finalise that inquiry and others which are looking after the interests of the marginal farmers.

11.9 p.m.

Mr. Strang

Perhaps I may reply briefly to a number of points made by hon. Members. The hon. Member for Bodmin (Mr. Hicks) referred to directive 72/159, on modernisation. He asked whether this was a national aid only. In the United Kingdom context, this is the farm and horticulture development scheme which is supported by FEOGA to the extent of 25 per cent. of total expenditure.

I agree with the hon. Gentleman's comments on the proposal to reduce the minimum qualifying area from three hectares to two hectares. As for extending the area eligible for compensatory allowances under the directive on less favoured areas, I must say that hon. Members are rather underestimating the stringency of the criteria. In fact, the United Kingdom went to considerable lengths to secure the maximum coverage for this directive. It is fair to say that this is one of the measures out of which we do very well financially. It is also worth noting that France recently endeavoured to extend its area but was refused.

One of the considerations overlooked by hon. Members is that if one brings in too dense a population, it throws the area that it is intended to cover outwith the necessary criteria and renders it ineligible. I shall not go into any more detail, although I sympathise with the general objectives of extending the less favoured areas directive's coverage. But if hon. Members look hard at the criteria in the directive, they will find that it is not as easy as they suggest and that, of course, 41 per cent. of the United Kingdom's agricultural area is covered already, with Ireland the only country with a higher percentage.

On this general question of the role of financial incentives in encouraging structural reform and encouraging farmers to leave the land and to amalgamate, I tend to agree with the observation of the hon. Member for Londonderry (Mr. Ross). One can exaggerate the impact of these measures, and that is why we should be pretty hard headed when looking at the cost. It is no use spending a great deal of money if it is likely to have little effect. As I indicated in opening this debate, we have found that our own scheme, which was introduced in the 1967 Act, has not been a success in terms of its objective of achieving farm amalgamations. Therefore, when the hon. Member for Devon, West (Mr. Mills) speaks as though we had achieved a great success in this connection, I am not sure whether he is referring to a historical fact of life in that we have had our good farm structure for a very long time, or whether he is suggesting that recent Governments can claim credit for this. I very much doubt the latter.

Mr. Peter Mills

I agree with the hon. Gentleman when he says that the amalgamation scheme has not worked very well. But what has happened is that both Governments have provided alternative work. In many small towns in the South-West there are now factories set up where there is alternative work for young people who used to work on farms.

Mr. Strang

I do not dissent from that. I think that the hon. Member will also agree that our pricing policy over the years has probably had an effect on the number of smaller holdings and that we have genuinely endeavoured to relate our prices to the efficient producer. To the extent that there is a case for these measures seen from a United Kingdom standpoint, perhaps the less favoured areas directive would make it easier for us to secure greater restraint on common prices. For example, we support the nondelivery premiums for milk under the milk action programme not so much as a means of moving milk producers out of production as a compensation for what we should like to see, namely, a policy of total restraint on the common milk price.

On the general point about West Devonshire, we must not forget that we are now discussing these structural proposals against a background of very high unemployment throughout Europe, where more than 6 million people are out of work. That is likely to have a much greater impact on changes in this direction over the next few years than any measure that we are discussing now.

Turning to the specific matter raised by the hon. Member for Londonderry in relation to the Irish Republic and Northern Ireland, I agree that we do not want to see a measure which simply provides aid for the Republic when there is just as good a case for its implementation in certain parts of Northern Ireland. Certainly we have in mind the two-river catchment areas referred to by the hon. Member—the Blackwater and the Finn-Lacky—as cross-border catchment areas where we believe that there is a general willingness to co-operate and implement a scheme of this nature.

The limit on the element of machinery does not apply to the land drainage cost. All land drainage costs qualify for grant. The limit applies only to the total grants for co-operatives that purchase machinery.

The hon. Member for Holland with Boston (Mr. Body) asked for an estimate of the cost. The Commission's estimate of the FEOGA cost per annum is about 12 million units of account. Over five years the total cost to FEOGA is estimated to be 65 million units of account. I emphasise that we are in the very early stages of discussion of these measures. They have been discussed only at official level. They have not yet come to the Council. We see a great deal of work to be done in modifying them. As I have indicated, we are not very enthusiastic about parts of them. That is generally accepted by hon. Members, including the hon. Member for Bodmin (Mr. Hicks) from the Opposition Front Bench.

I agree with the hon. Member for Cardigan (Mr. Howells) that there can be no question of compelling any producer to leave the land.

We have had a useful debate. A number of points have been made, from none of which I dissent. The views of hon. Members, and perhaps more especially the comments of the Scrutiny Committee, will be helpful to the Government in pursuing these matters in the Community in the months ahead.

Question put and agreed to.

Resolved, That this House takes note of Commission Documents Nos. R/3069/77 and R/3121/77 on Farm Structure.