HC Deb 04 June 1984 vol 61 cc130-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodlad.]

12.7 am

Mr. Roger Gale (Thanet, North)

I am grateful for this opportunity to bring before the House a matter of considerable concern to a significant minority of potato growers throughout the country and to a number of my constituents in particular.

Many hon. Members have written to me about the subject. I shall not name them all tonight, but I hope that their constituents will realise that their representations have been expressed. I refer to the operation and future of the Potato Marketing Board.

The board has recently proposed amendments to the potato marketing scheme which, unless an inquiry is held, will commence its parliamentary procedures in the near future.

When introducing that scheme in an editorial in a special edition of Potato News the board said: The Potato Marketing Board has been working with no substantial change to its operations for fifty years … Over the last ten years the changes in the factors which affect the Board's operations have been more profound than any in the organisation's history—the Board must respond to them. The demonstrated opinion of about 650 potato growers in the country is that the board's response, based upon a working party report is inadequate to meet their needs. In part, I believe that to be the result of poor presentation and a high-handed attitude by an organisation which many of those who sought my support regard as a self-perpetuating quango.

The report was produced by a working party on which active potato growers were not represented. The active, professional voice was missing from all the party's deliberations. The proposals were presented to the growers in a take-it-or-leave-it fashion.

My hon. Friend the Member for Beaconsfield (Mr. Smith) has kindly made available to me a letter from the Minister, who said: producers were invited to decide whether or not they wished to hold a poll on the amendments but, in the event, the number requesting a poll fell short of the number stipulated in the scheme. The House has recently sought to introduce a wider element of democracy to voting systems, especially in trade union legislation. The House may be interested to know that when a special issue of Potato News appeared, poll cards were not issued, nor were return slips and tear-off reply forms sent to registered producers, although the board was able subsequently to circulate every producer to say that there would not be a poll.

Under the existing potato marketing scheme, 1,000 signatures are required from growers with an aggregate potato growing area of 8,000 hectares in order to call a poll. The board's figures show that only 503 signatures were received but that well over the 8,000 hectares were represented. The aggregate area was 10,587 hectares. Ironically, under the proposed amendments to the scheme, both of those figures would fall within the necessary requirements for a poll.

What is more significant, and which has angered many growers, is that all non-voters, including those who were not aware of the option of a poll, were counted as being in favour of the board. That system has prompted one grower, Mr. Peter Wingrove from Shredding Green farm in Buckinghamshire, to comment, This is reminiscent of the USSR voting system—or is Arthur Scargill in charge. It is not suprising that a significant number of potato growers feel that they have been gerrymandered out of what democratic rights they have. It is for that reason, at least in part, that the subject is being aired tonight. Many growers are so angry that they would cheerfully see the board abolished immediately. Only time will tell whether that will become necessary. Having carefully studied the subject, I believe that it is necessary for the fullest and most public inquiry to be carried out into the board's proposed amendments and, through those proposed amendments, the very operation of the board.

We can certainly agree with the board's statement that, in the past 10 years, changes in the board's operations have been more profound than any in the organisations's history. In the past three years, the EEC ruling that the board may not restrict potato imports has struck at the very reason for the board's existence. In October 1980, the potatoes sub-committee reported that this country was likely to remain self sufficient in potatoes for the foreseeable future and that it was the policy of the United Kingdom Government and the National Farmers Union that it should continue to be so. That is no longer the case. In a letter to me dated 24 May, the NFU said, We believe that the best way to discourage imports is to keep the home market adequately supplied … If the home industry could no longer supply the home market our Continental competitors, notably the Dutch, would take advantage of any shortfall and retain their hold on part of our market, as they have done in West Germany, for example. Many believe that the free market in Holland has given the Dutch their foothold. They have a free market; we do not. Why else would the Ministry of Defence send Dutch potatoes to the Falkland Islands?

In 1981, the Lincolnshire branch of the NFU was reporting to head office and throwing back at him the words used by the chairman of the board. It described the operation of the potato marketing board as being like a milking stool with three legs; the control of imports, acreage and Government financial support. As he said, take one leg away and the stool collapses. Many growers believe that with the removal of the control of imports, the stool has, indeed, collapsed. The Potato Marketing Board claims that for the investment of tens of millions of pounds, it has produced a return for the industry in increased prices of hundreds of millions. There is no statistic that convincingly supports that argument. On the contrary, it would appear that such money spent by the board on buying in domestic potatoes, which have then been sold for stock food, has simply drawn in further imports to compensate for those potatoes bought in by the board.

Further, it is an alarming and irrefutable fact that while some growers of main-crop ware potatoes may have benefited from the operations of the board, the volume of imports, particularly of processed potatoes, has increased dramatically since 1980. There is a grave danger that the potato processing industry — which is of course worth jobs as well as money—will establish its permanent and exclusive base in the hands of our overseas competitors. The Potato Marketing Board claims that the 1983 processors scheme was a benefit to the industry. That is denied by some growers and the major domestic processors alike. The board's new proposals do not address themselves to this vital area, and unless we act swiftly, it will be lost to us for good.

But it is in the area of first early potatoes—the area of most concern to my constituents—that the board's proposals most signally fail to meet the market challenge from the new environment created by the EEC decision. The Potato Marketing Board is ill-named. It is not a marketing board in the true sense of the words. In a recent reply to my parliamentary question, the Minister indicated that in the past 10 years, the total quantity of potatoes marketed by the board for human consumption amounted to less than 1 per cent. of all those eaten in Great Britain.

The board is, therefore, not a marketing board, but a regime. The case for that regime, and for the control of the acreage of ware potatoes is, I believe, as I have indicated, worthy of close examination. But I also believe—and I think that the Minister and I may here find common ground—that the case for that regime is not applicable in any sense to the early potato market. It is in that market that we face the fiercest competition from Greece, Egypt and — slightly later in the year and coinciding exactly with our own crop—from France. Our competitors do not face the acreage restrictions that our domestic growers face, nor are they subject to control of quality. Again, in response to a parliamentary question, the Minister informed me that imports of potatoes into the United Kingdom are not subject to restrictions other than on plant health grounds.

I support a Government who are committed to the free market cause. Nowhere is that free market perhaps more applicable than in the early potato sector. The free market case may well have the support not only of the Ministry but of the executive of the NFU as well. Yet again, the new board proposals do not address themselves to this, even as a possibility. Instead, there are indications that there may be a levy rebate of 75 per cent. on potatoes lifted by the end of June and, to quote the NFU—— a more liberal attitude on the part of the Board to applications by early potato producers for extra quota on a year-to-year basis. It is worth pointing out immediatelly that a 75 per cent. rebate of a levy that is under the same proposals due to increase dramatically, will leave the early potato growers little, if any, better off than they are already. The proposals for an increase in acreage are wishy-washy to say the least. We are therefore faced with the fact that the best growers in the world, growing in Thanet the best product on the best land are restricted, and will continue to be restricted, unless the Minister acts, to growing their quotas and standing idly by while the import of an often inferior foreign product supplies the market that they could supply.

The growers' suggestion is that they should remain affiliated to the board and pay a registration fee to allow the board to monitor production and consumption, but that they themselves—the best arbiters of their trade—should be allowed to decide what quantities they grow. That seems a reasonable request and is entirely in keeping with free market Conservative policy.

In conclusion, I urge my hon. Friend the Minister to instigate a full inquiry into the board's proposals; to ensure that the growers are properly represented at that inquiry; to address his Department particularly to the alarming growth in the import of processed potatoes, and to the introduction of strict grading controls over imports so that, at the very least, both main-crop and early growers are comparing and competing like with like, and the early growers are given a free handto satisfy our needs and produce the crop that they and we both know they can produce so well.

12.20 am
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor)

I am grateful to my hon. Friend the Member for Thanet, North (Mr. Gale) for providing this opportunity to discuss the Potato Marketing Board and the scheme which it administers. As he will recognise, there is a difficulty of timing for me about answering all the points he made because there may be a public inquiry into the board's proposed amendments on which Ministers will eventually have to decide. It would, therefore, be wrong of me to prejudge any of the issues.

It might be helpful if, first, I were to recap on the statutory procedures for amending the potato marketing scheme and comment on the Government's proposals for potato market support in the future. In so doing, I hope that I shall be able to cover some of the points that my hon. Friend raised, and at the end I shall deal with two of the specific matters.

It is worth stressing at the outset that the Potato Marketing Board is a producer organisation which is independent of Government. It has been in existence, at the wish of registered potato growers, for 50 years. The procedures for amending any of the provisions of the scheme are laid down in the Agricultural Marketing Act 1958. The Act provides that before the board can submit any proposals to Agriculture Ministers for amending the scheme it must publish its proposals to all registered potato producers.

As my hon. Friend said, the scheme obliges the board to hold a poll of producers—on the question whether the proposed amendments should be submitted to Ministers—if one is demanded within one month of publication by at least 1,000 registered producers who have in aggregate a potato area of at least 8,000 hectares. To put the numbers in context, I should add that there are over 25,600 registered producers.

The Agricultural Marketing Act 1958 makes similar provisions with regard to revocation of the scheme. A poll on whether or not the scheme should be revoked must be held if demanded by at least 1,000 registered producers having in aggregate a potato area of at least 8,000 hectares. Revocation would follow if demanded by at least 50 per cent. of producers voting, representing one half of the potato tonnage of those voting.

The Potato Marketing Board published proposals for amending the scheme on 12 March by serving notice on every registered potato producer. Subsequently, members and staff of the board, together with representatives of the farmers' unions, attended a series of meetings held throughout Britain at which they explained the purpose of the amendments and responded to growers' questions. I gather that many, if not all, of those meetings were well attended.

The board has subsequently announced that in the period of one month following publication allowed to enable producers to demand a poll, it received demands for a poll on whether the amendments should be submitted to Ministers from 503 registered producers, as my hon. Friend said, who grew a total of 10,581 hectares. Some producers demanded a poll on revocation of the scheme and some called for polls on both issues. A total of 653 producers having 12,342 hectares made demands in one form or another.

As the demand for a poll fell short of the statutory minimum requirement of 1,000 registered producers having in aggregate 8,000 hectares, the board decided not to hold a poll—it was entirely within its prerogative to take such a decision, and Ministers could not interfere — and instead submitted the proposed amendments to Ministers on 18 April.

To comply with the Act—this is the second stage—following receipt of the amendments, Ministers must publish in the Gazette a notice acknowledging receipt of the amendments, stating where copies could be obtained or inspected, and specifying a period of not less that six weeks during which objections and representations could be made. Objections must be in writing and state the grounds of objection and the specific modification required to the amendment. That is important because some of the representations that we have received have not stated the grounds of objection and the specific modifications. I am grateful for this opportunity to point that out again. I have no doubt that my hon. Friend will be pointing that out to those of his constituents who are objecting to the proposals.

The notice was published early last month in the London and Edinburgh Gazettes and in newspapers and periodicals that are likely to be read by potato producers. The closing date for receipt of objections is 22 June. My hon. Friend's constituents are free to submit their objections and it is important that in so doing they state the specific modifications that are required. I am grateful to him for initiating the debate and providing further publicity of the opportunity that is available to producers to submit their objections. The notice tells them what they must do to make their representations valid and in a form that is likely to lead to possible action.

The Act also requires Ministers to direct that a public inquiry be held if any valid objections are made and Ministers do not propose to modify the amendments to meet those objections. Having considered objections and representations, together with the report of any public inquiry, Ministers may then decide to modify the amendments or, if they are satisfied that the amendments will lead to the more efficient operation of the scheme, and if there has been a public inquiry, lay a draft order before both Houses for affirmative resolution.

I apologise for having taken some time to go over the legal framework in some detail, but it is clearly fairly complex. I believe that it illustrates clearly that there are a number of opportunities along the way for those who dislike or positively object to any proposed changes to make their views known fully to Ministers, and for Parliament to debate any amending legislation.

Mr. David Harris (St. Ives)

Will my hon. Friend acknowledge that this procedure comes at the precise time when most potato growers are lifting potatoes? Probably the last thing that they want to do is write to him or to the authorities in compliance with the procedures which he has rightly outlined. It is the most inconvenient time for growers.

Mr. MacGregor

I have a great deal of respect for my hon. Friend. I very often agree with him, but I must say on this occasion that if this matter is so important to the future of potato growers, as some of them are saying, a little time spent on taking advantage of their proper democratic and statutory rights now must surely be one of the things that they should put at the top of their list of priorities. It cannot take so long to write one letter provided that they adopt the proper form or procedure. However, I am grateful for the chance to say once again that this is the time to do it.

Mr. Kenneth Hind (Lancashire, West)

rose——

Mr. MacGregor

I hope that my hon. Friend will forgive me for not giving way to him. I have a number of points to make in response to my hon. Friend the Member for Thanet, North. I hope that my remarks about a public inquiry will deal with my hon. Friend's first point. The opportunity for such an inquiry is still in front of the growers and parliament and it is up to the producers to determine whether it is taken. The trigger is in their hands.

There is no question of amendments being forced through against the wishes of the majority of the growers. The opportunity to object or to complain about the effects of the scheme does not arise only when an amendment is proposed. The opportunity to do so is an integral part of all marketing schemes. The scheme provides for arbitration if a producer is aggrieved by any act or omission on the part of the board or, failing agreement, to be appointed by Ministers. Section 19 of the Act enables Ministers in certain circumstances to direct that a committee of investigation report on any complaint about the operation of the scheme. My hon. Friend will appreciate that the Agricultural Marketing Act imposes quasi-judicial responsibilities on Ministers, including the responsibility that we may have to come to a decision on all the issues that he has raised this evening. I hope that he will understand that it would be wrong for me to make any comment beforehand on a subject that may give rise to the statutory procedure being invoked and which might, therefore, prejudice the outcome.

Having dealt with the public inquiry, I turn to the part the Government have legitimately played in recent events. As my hon. Friend knows, from time to time the Government act jointly with the board over market support arrangements. As I informed the House on 28 February, the Government have reviewed certain aspects of the support that is provided for potatoes.

I should like to explain more fully what we have in mind for the future and why we considered that some change to the present arrangements was necessary. We start from the position that there is no common organisation of the market in potatoes under the common agricultural policy. In the absence of a Community regime, member states therefore remain free to operate their own national arrangements subject only to their keeping the Commission informed of the measures adopted. Our present system of support for potatoes is based on powers contained in the agriculture legislation of 1947 and 1957 to provide guaranteed prices or assured markets. Although our support arrangements have evolved over the years they remain founded essentially on the annual determination of a guaranteed price and the making of a deficiency payment if the price received by producers falls below the level of that guaranteed price. In deciding to review the way that market support has operated for potatoes the Government had in mind two major considerations. First, the maximum amount of the levy that the board can raise from producers is currently linked by formula to the level of the guaranteed price which has been held steady since 1978. It is for the Government to fix that guaranteed price after full consultation with all concerned. The board's scope for raising income has thus been curtailed over recent years. This became especially apparent during the 1982 maincrop potato season when the board's financial resources proved insufficient to meet its share of the cost of market support and it had to have recourse to a Government loan to enable it to meet its contractual obligations to growers.

The second major consideration leading to the review of support arrangements was the Government's wish to limit the extent and open-endedness of our financial commitment to market support for potatoes. The House will appreciate that, as potato support expenditure depends on supply and demand, it is extremely difficult to predict the likely call on public funds in any particular season. In addition, the deficiency payments system is potentially a very costly one to operate in seasons of heavy surplus. For each £1 that the average price falls below the level of the guaranteed price the potential cost to the Government is about £5 million.

The first option that the Government considered in the review—I come to a point made by my hon. Friend—was whether to dismantle support arrangements altogether and to introduce instead a free market for potatoes. I do not disguise the fact that that idea had its attractions, but there were other considerations, such as the highly volatile nature of the potato market, the potentially large annual variation in potato yields and other considerable pressures facing farmers in other commodities.

The Government concluded that a sudden switch—I emphasise the word "sudden"—to a free market in those circumstances after the long history of that different system could significantly increase the chances of price instability, adversely affect production and consumption and have a serious impact on imports. The evidence of the drought years of 1975 and 1976 showed how badly consumption can be hit by very high prices and how long the recovery process takes. In addition, years of very low prices can reduce producer confidence in the crop and lead to substantially reduced levels of planting and production in the following season, and hence again have an impact on imports.

The Government therefore concluded that stabilisation of the potato market within a limited managed market framework would help to avoid disruption, retain producer confidence and thus give consumers a reasonable assurance of supplies at reasonable prices.

Following detailed discussions with, and in the light of the representations over 18 months from, organisations representing a wide range of interests within the potato industry, including the potato growers action group—I believe that my hon. Friend will have seen from a reply to a question he asked my right hon. Friend the Minister of Agriculture, Fisheries and Food that there was widespread consultation with many organisations, and hence with many producers—I was able on 29 February to announce the Government's revised proposals for potato support arrangements. Those arrangements are to take effect from the 1985 season. They represent a considerable shift from the current arrangements, but, nevertheless, they were widely welcomed within the industry.

The Potato Marketing Board and the farmers' unions have undertaken to recommend their members to accept the package we have offered. The key elements in the package are a substantial increase in producer contributions to the cost of support buying and a shift in responsibility for those costs on to producers in years of average surplus; the removal of the Government's obligation to make deficiency payments; and the limitation of the Government's share in support buying to years of exceptional surplus only.

That is very much a move to a freer market responding to the pressures of the market place. I have made it clear to the Potato Marketing Board that it should see the matter in that light also. My hon. Friend referred to processors. Processors have been closely involved in the review of existing support arrangements, and I have encouraged them to forge closer links with the board. They are together studying opportunities for joint co-operation to promote the uptake of home-grown potatoes by this growth sector and thereby preserve the health of our potato industry. Although it is up to them to discuss and to carry through measures for joint co-operation, I am taking a close interest.

I shall deal with two of the other points that my hon. Friend made. He asked about grading controls on imports. That was a point that the NFU representatives made when they came to see me about the details of the scheme and the Government's support. I have undertaken to study the matter and I hope to be able to say something about it shortly.

My hon. Friend mentioned early growers. I shall draw my hon. Friend's anxieties to the chairman of the Potato Marketing Board. It is a matter within the board's competence. Ultimately the board is responsible to, and must respond to, its growers. I know that it is aware of the anxieties of early growers and is drawing up proposals under which additional basic area can be allocated annually to first early growers.

The aim of these measures is to put the Potato Marketing Board on to a sound financial footing for the future and to reduce the cost to public funds of potato market support in the longer-term. The new arrangements will be reviewed after five years, by which time it is hoped that the board will have built up sufficient reserves to make it as nearly as possible self-financing. Certain of the amendments that the board is proposing to make to the potato marketing scheme — and here I am thinking particularly of the proposal to increase the producer levy—clearly form an integral part of the support package for the future. That is why it has been so important for the industry to debate the issues fully and to decide what system of support it wants for the future.

My hon. Friend has stressed the views of some growers. I cannot tell at this stage how many. He can be assured that his constituents and other people who have put points to him will have an opportunity until 22 June to make their views known, to propose modifications, and to see whether they can persuade sufficient growers to back them to show that they carry support. If the amendments proposed by the board receive the necessary approvals of the industry and then of Parliament over the next few months we shall, seek the approval of both Houses to the necessary enabling legislation and have further opportunities to return to the matter.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to One o' clock.