EEC FARM PRICE REVIEW

HL Deb 03 February 1975 vol 356 cc709-48

5.31 p.m.

Lord WALSTON rose to move, That this House take note of the Seventh Report of the European Communities Committee (Session 1974–75) on EEC Farm Prices Review (R/3358/74) and on the Draft Directive on Less Favoured Farming Areas (R/17/75). The noble Lord said: My Lords, I am particularly glad to be doing this for two special reasons: the first and most important reason is that those of us who pay any attention whatsoever to the Community, and who are engaged in thinking about whether or not it is right for us to be members of the European Community, are exercised about the sovereignty of Parliament, so that it seems to me that on an occasion such as this we have an opportunity to exercise a certain amount of sovereignty over what goes on in Brussels. The Select Committee which your Lordships set up, originally under the distinguished chairmanship of the noble Lord, Lord Diamond, and now under the equally distinguished chairmanship of the noble Baroness, Lady Tweedsmuir of Belhelvie, has the task of looking at all the Directives and proposals, all the secondary legislation emanating from Brussels, sifting it, examining any of it that appears worthy of examination.

Fortunately for your Lordships, a small number of cases are reported to your Lordships in such a way that you have an opportunity to discuss the recommendations of your Select Committee. Those recommendations are then, one hopes and believes, studied and listened to, as, indeed, will be the views expressed by all your Lordships taking part in the debate this evening, by the Department concerned and, above all, by the Minister concerned, so that when he—in this case my right honourable friend the Minister for Agriculture—goes to Brussels to finalise the Price Review he will be fortified and, I hope, influenced by what has been said here. In that way—in theory at least—it is possible for Parliament to retain at least as much sovereignty over the decision of Ministers and Governments as it has had in the past. I say "in theory" because I do not wish to prejudge this issue and we are only in the very early stages of it. It depends on the working of the Select Committee and its sub-committees, and on the discussions which take place in this Chamber and in another place. It also depends on the attention which is paid to such discussions by the Minister and on his influence in Brussels. It is upon all those things that we shall eventually make our judgment as to whether or not there is sufficient influence still residing in Parliament.

That, my Lords, is the first reason why am happy that we are having this debate. The second reason is that it concerns what is probably the most hotly disputed aspect of the Community; namely the Common Agricultural Policy. This has been hotly disputed for very many years, because, I suppose, it affects the price of food and the price of food affects everybody. It should, of course, be disputed for many other reasons because of its effect on the wellbeing of a very large section of the community—the farmers and farmworkers. Perhaps most important of all, it should be disputed because it has a profound effect upon our relationship with the Third World, about which I may say a few words later on.

However, whatever the reasons, the Common Agricultural Policy has undoubtedly been one of the most controversial aspects of the Community, and now for the first time in this House we are having an opportunity of discussing before they actually come into force, proposals which are very germane to the Common Agricultural Policy. These proposals, as your Lordships know, concern the actual prices which it is proposed will be paid to the producers of the Community during the current year. The actual document which is extremely long is available to your Lordships. I hope some of you may have read it. I know that the members of the Committee concerned undoubtedly have studied it in great detail. Our recommendations on this are now embodied in this Seventh Report which has been available, not for a very long time I am afraid, because we have had to work to a very close timetable, but long enough for those who had any interest in this subject to have been able to read it.

I do not propose to go through the Report in any detail. It is not very long and I hope you will agree that it has in it quite a lot of meat. I will merely pick out one or two of what I consider to be the salient points. The first point is what is described on page 2 as, "Agri-Monetary Measures". This is a complex matter, but at the risk of over-simplifying it—and I hope that those of your Lord-ships who understand it far better than I do will not think it amiss if I do this—I will explain the monetary procedures of the Common Agricultural Policy as follows: the Common Agricultural Policy is, of course, based upon a common monetary policy, but because that is not yet in existence there was invented what was called the "unit of account" which was itself based upon the value of the dollar. That was the common currency on which the whole of the agricultural price structure of the community was based. It worked very well so long as the various exchange rates of the different member-countries remained in harmony, but when they were revalued, devalued or fluctuated that played havoc with the unit of account and with the monetary policy of the Common Agricultural Policy. To some extent that has been overcome by the creation of what is known as the "green pound", which is, in effect, the devalued value of the pound vis-à-vis the unit of account.

Of course with a fluctuating pound it has been impossible for the value of the green pound to be changed daily or weekly, which would be necessary if it was to be a true reflection of the value of the pound. It has been stabilised at a figure which, as it works out, is favourable to the consumers of this country, allowing consumers to buy from the rest of the Community produce at a price lower than would be the case if we had to pay the actual value of the pound as regards the mark or even the franc. However, it is unfavourable to the British farmer, because it puts him at a disadvantage with regard to prices compared with many of his fellow farmers in the rest of the Community. There is no question about it; as the green pound is fixed today, the prices which the British fanner receives are lower and he is to some extent under a handicap. Therefore, may I suggest to your Lordships that the value of the green pound at the present time is in urgent need of revision.

Turning to the actual prices, one thing which we must remember is that this country is still in the transitional period. Therefore, many of the prices which are agreed in Brussels do not actually apply to this country, though presumably— possibly my noble friend will confirm or deny this when he answers—when the Price Review takes place between the Government and the National Farmers' Union in this country due regard will be paid to the prices which are agreed this month in Brussels.

I will mention only two or three of these prices. The Brussels proposals for wheat prices are just under £64 per ton. We do not know what the price for the British farmer will be, but there are certain indications that it may be in the neighbourhood of £55 a ton, which is considerably below what the Brussels figure will be. We do not know, either, what will be the price of barley in this country. The Brussels price for milk is nearly 33p per gallon. The United Kingdom price is 30p per gallon, which is about 10 per cent. below the Brussels price. In the case of sugar, we have come on to the actual Community price. The proposal is that for the ensuing year the price of the harvest which has just finished should be 16 per cent. higher. I must express my own very strong doubts as to whether that will be sufficient incentive to encourage farmers in this country to grow the extra amount of sugar that we believe will be needed.

We listened earlier to the Statement concerning sugar, which makes it quite clear that whatever may be happening to world prices today there is still a very marked shortage of sugar. Whatever we can buy on the world market is considerably more expensive than the price we are paying producers in Europe at the moment, whether they are other members of the Community or producers in this country. Perhaps I should once more declare a personal interest. I think it is well-known to your Lordships that I am a producer of sugar beet, and I see little indication among any of my neighbours, or other growers, or people who have not been growing sugar beet but who will have to grow it if we are to get the desired increase, that the increase which is being talked about now will be sufficient to achieve it.

With those rather sketchy points on prices, may I remind your Lordships that we say in this Report that we are in general agreement with what is proposed, with these certain reservations and doubts, We are also in general agreement with the draft Directive on less favoured farming areas. It does not look as though any of these Directives will seriously affect any of our existing subsidies and the help given to less favoured areas, although there are certain points which I personally do not consider to be at all reasonable. Why, for instance, should grants be refused to a farmer if he happens to be over 40 or 45 years old? Certain restrictions of that kind, and also restrictions with regard to size, do not seem to make sense to us or to be in the interests of agriculture or efficient production. However, I do not want to labour that point and will leave it to other speakers who have far more experience of these matters than I have to enlarge upon them.

Nevertheless, one thing which struck us most forcibly as we were listening to all the evidence that came before us—we had both written and oral evidence from very many bodies, including the Ministry of Agriculture, Fisheries and Food and the National Farmers' Union —was this. How is it possible to pass a reasoned judgment on prices for any agricultural product if one does not know what are the objectives of the agricultural policy? Unless one is given guide-lines of this kind—"We want to increase sugar beet production by so-much per cent.", or, "We want to restrict the amount of milk to such and such a level", or "We want to encourage the development of more forage crops and discourage the growth of potatoes", or whatever it may be—it is impossible to say whether these prices are right or wrong.

All one can say is that, in general, it looks as if they may hold the balance pretty much as it is, or something of that kind, and that is just not good enough at the present time because we are all aware of the threat of world food shortages. We are all aware of the enormous inflation in prices of wheat and coarse grains that has taken place, and, above all, of sugar. We are all aware, too, of the recent "butter mountain" and its sudden disappearance, and of the shortage of cheese and dairy products at the present time. We are aware of the recent short-age of meat, of the great encouragement which was given to producers to produce more meat, and now the sudden glut and complete collapse of the market. All those things are with us, and they are factors which we must take very seriously into account, and which I should have hoped that by now both Her Majesty's Government here and the Commission and the Council of Ministers in Brussels would have taken sufficiently into account to be in a position to say, "Here is our long-term agricultural policy for the Community as a whole. This is what we want to achieve, and these are the prices which we propose in order to achieve them, and the other methods also." Those, however, we do not have before us; we have rumours before us.

Again, I hope that my noble friend will substantiate that the Minister of Agriculture is working with his colleagues and with the industry on a long-term policy and that it will shortly see the light of day and be available for discussion. It is quite clear from the voluminous documents which I have been attempting to study over the last few days and which have come from Brussels, that they are giving thought to this matter and have a great deal of background information. However, background information is not enough. It is essential to begin with, but on that background or on those foundations must be built a more constructive structure.

To quote one or two facts from these documents, it is a fact that the Community is still the largest importer of animal feedingstuffs in the world, and that these imports account for 25 per cent. of the total imports of the Community. By 1977, it is expected that we shall still have to bring in approximately one-third of our total needs of animal feedingstuffs and grains of different kinds, mainly maize and soya, and at least 15 per cent. of our sugar. In the last ten years, the average rate of increase of imports of agricultural food products was running at 7.7 per cent. per annum. So all the indications are that we will require very substantial amounts of food to be imported from overseas, and that there-fore it must be in our interests in selected cases to grow a good deal more than we are growing at the present time.

I must not allow myself to be led astray into a discussion of long-term agricultural policy for the Community, but I think we would all agree that whatever is the policy of growing more food of certain kinds it must not be an inward-looking policy, it must not be a protectionist policy; and the statements which we listened to earlier must have gone a long way towards dispelling any lingering doubts that might have been in people's minds that such was the case. The Agreement reached between the Community and the 46 developing countries is surely an enormous step forward. Again, declaring an interest as a producer in one of the developing countries, I am delighted that it has got as far as it has, and I certainly add my congratulations to those already expressed here to my right honourable friend the Minister for Overseas Development, on the very great struggle she has put up and the great success she has had, and also on the fact that the outcome of the sugar talks has, by and large, been successful. But for all that, my Lords, we must aim at increasing production in this country and in the EEC.

A short digression, if it may be allowed, brings me to the question of research in agriculture. If we are to have a long-term policy it must be based on scientific advance and on more efficient agriculture. It is highly disturbing to learn that the amount of money available for agricultural research has been cut; that at the moment agricultural research establishments are forbidden to replace staff who have left for any reason—moved on to more important jobs, gone overseas or whatever—even though that might mean breaking up a team. One might have a team of three or four scientists working on a project—on seed breeding, for instance. One man, a micro-pathologist in the team may go and, as things are at present, he cannot be replaced. There is a freeze on replacement.

The proposals which have been put forward, in regard to public expenditure to 1978–79 on agriculture, fisheries and food, make it quite clear that, even if the funds grow as rapidly as is forecast here, then in view of the cuts that have already taken place it will be 1978 before the levels of two years ago, 1973, are again reached. That is a very serious situation to be in at a time when we are talking about expansion. I should like to remind your Lordships of the kind of financial advantages which can and do arise from basic research. The seed breeding successes are the most obvious ones, the best known and the best publicised. The new varieties which have come from the Plant Breeding Institute at Cambridge of the Maris varieties during the 1974 season added £23 million to the value of the crop over the next highest yield. If, ten years ago, the Government had prevented that research by cuts, this country would have been £23 million poorer this year. That is the sort of situation that we are risking at the present time.

The Earl of ONSLOW

My Lords, may I interrupt the noble Lord, in order to underline the point he is making, which is so important. Normally, it was considered that one would be very lucky to get two tons per acre of wheat and now Maris Huntsmen growers are getting over three tons per acre. I apologise to the noble Lord for interrupting, but it is such an important point that I thought it should be emphasised.

Lord WALSTON

My Lords, I am grateful to the noble Earl for emphasising this point, and I am tempted to go on and give a whole list of other examples. I will not do so, and I will just mention one or two of them. At the moment, research is going on at Rothamstead on the application of fertilisers to sugar beet, which has shown in its provisional stages that if the results of that research are finalised and adopted at least 5 million pounds of fertiliser can be saved every year. At the National Institute of Agricultural Engineering at Silsoe, research is going on into different methods of tillage which can effect a very big saving in our consumption of fuel. Also, there is research into the use of slurry which will effect a very big saving in our use of nitrogen, and will prevent the wastage of it which takes place. Research is being undertaken at the National Institute of Research in Dairying at Reading, which can cut the £30 million annual losses at the present time due to mastitis by at least a half, and possibly by two-thirds.

Those are just a few examples and I urge the Government, even in these days of great financial stringency, to restore forthwith these cuts so that in the years ahead we shall once more be able to say, "£23 million saved on plant breeding; £30 million on disease control, and so on." These are essential things in this country, and in the Community as a whole if we are to have the sort of agriculture that we want, bearing in mind that the forecast of the Community even to 1977 still shows us to be such big importers of feedingstuffs of the kinds that we could to quite a large extent grow in this country.

My Lords, I apologise for having kept you long on this matter, but I believe it is important on the grounds that I have mentioned already: the importance of this Parliament being able to exercise its influence on decisions in Brussels; the importance of the Common Agricultural Policy as something which we all agree needs revision, and therefore the importance of the proposals put forward on prices; but, above all, the necessity of urging on our colleagues in Brussels and throughout the Community, as well as on our own Minister, the absolutely essential need to have forthwith a long-term agricultural policy. We may then know in what direction we in this country are trying to go; in what direction the Community of which we are partners is trying to go, therefore enabling us to assess the means which are being put forward to achieve the desired results. My Lords, I beg to move.

Moved, That this House take note of the Seventh Report of the European Communities Committee (Session 1974–75) on EEC Farm Prices Review (R/3358/74) and on the Draft Directive on Less Favoured Farming Areas (R/27/75).—(Lord Walston.)

5.59 p.m.

Lord SANDYS

My Lords, the House will indeed be grateful to the noble Lord, Lord Walston, for bringing before your Lordships this afternoon, and giving us an opportunity of discussing, the Seventh Report of the Select Committee of your Lordships' House on these two very important documents. As the noble Lord, Lord Walston, said, this is the first opportunity that we have had of discussing the European Economic Community's agricultural policy, and the House will indeed also be grateful to the noble Baroness, Lady Tweedsmuir of Belhelvie, and her Committee for so carefully examining the voluminous documents referred to.

We are at the very beginning of a whole new ball game and the noble Lord, Lord Walston, has piloted us through two documents which are of formidable size and complexity, but I should like to commence my remarks by examining the documents themselves. We have before us, first, the Farm Price Review, and secondly, the Draft Directive on Less Favoured Farming Areas, both of which weigh a great many kilos. I defy any of your Lorsdhips to carry these papers with ease on the person in a pocket. I feel there is a serious point here. I ask the Government to give a little attention to to this, purely on the grounds of economy of paper. I ask them to see whether these documents can be condensed by the EEC into a more portable form, and whether they can be produced in a manner in which the documents are economical to produce, yet easy to handle. In Westminster, we are very fortunate in having printed for our use a daily issue of Hansard—occasionally it is interrupted, but not frequently. It contrasts sharply with the difficulty one has in reading the documents which are available from the EEC, and our own. Your Lordships probably will have found, as I have, that in certain lights it is extremely difficult to decipher some of the documents. They are not particularly well printed. It is also difficult to manage them because of their binding. Perhaps this is a small point, but from dealing with the unbound Hansard which we had printed on single sheets last summer, we are all familiar with this problem, and I ask the Government to investigate it at the outset.

My Lords, to deal in greater depth with the documents themselves, I think the House will be particularly grateful to the Committee for carrying out its duties of scrutinising the documents. But first of all, perhaps we may examine one especially important sentence which appears on page 3 of the Report, which ought to be printed in almost elephantine capitals. The sentence reads: If agriculture is to pay its full part in the economy of the Community, greater capital investment will be needed". I imagine that is a misprint—"pay its full part" should read "play its full part"; nevertheless, the words appear to be interchangeable. This is the centre of the problem. The noble Lord, Lord Walston, referred in great detail to the specifics. In my brief remarks I shall not refer to the specifics on farm prices, but would like to draw the attention of your Lord-ships especially to what the noble Lord said in his closing remarks on the import of feedingstuffs into the United Kingdom.

We have been all too keenly aware of this problem in the past six months and, indeed, have been saved providentially by a mild winter in that we have been able to take the opportunity of using grass for a much longer period than is normally customary. But this is a crucial factor. Reviewing, as one does, from time to time such problems as straw burning, it seems absolutely fantastic, with hindsight, that we should have considered it necessary to produce a Draft Code on Straw Burning, when straw at the present moment is reaching such fantastically high prices on the open market for both barley and wheat straw. It is a fluctuating situation. One recognises that surpluses and shortages occur alternately from season to season. The noble Lord, Lord Walston, was suggesting to your Lordships that long-term planning programmes should enable the EEC to overcome its mountains, be they of butter, feedingstuffs, dairy products and so on. We should be able to have a more even pattern of production, distribution and market pricing.

My Lords, I should like to turn the attention of your Lordships to the second document, the Draft Directive on Less Favoured Farming Areas. In this connection, I would especially draw the attention of your Lordships to a document produced by the National Farmers Union about two years ago, entitled A Policy for Hill Farming in the United Kingdom. When this document came out, the President of the National Farmers' Union, Sir Henry Plumb, said: Hill fanning not only covers about one-third of the farming area of the United Kingdom, but also plays an invaluable part in the production of our meat supplies. I think it possible that it is insufficiently realised that the relationship between our hill and upland farms and the remainder of our farming areas is totally different from what is largely taken to be the less favoured areas in Europe. The less favoured areas in Europe are very largely mountainous regions—in certain cases, rather over-populated mountainous regions such as in the southern part of Italy—with a totally different characteristic from the British hill farms and up-lands. I think it has been stressed sufficiently in the past, but perhaps it may be stressed once again, that it is essential that the success and prosperity of British farms ultimately depend on the success and prosperity of the hill farms throughout the United Kingdom. It is in this regard that all those interested in agriculture will welcome especially this document, as it enables the continuation of our hill subsidies.

In turning to the document to which I have referred there is one particular paragraph I should like to stress regarding the nature of hill farming. On page 6, it says: The close interrelationships between up-land and lowland farming characteristic of our livestock industry have no parallel in the Six. This helps to explain why in the Community the special problems associated with hill or mountain farming are regarded as being mainly of a social nature, and as such, aid provided has been largely on social grounds. This emphasises precisly what I have been saying. I feel that this point has to be taken into account in future years when examining policy.

The noble Lord, Lord Walston, referred in some detail to policy in regard to young farmers. In the Report itself, an especially relevant comment appears at page 3 of the Seventh Report. Under the heading of "Agriculture Structure" these words appear: They consider the present proposals for less favoured areas inadequate for aid to young farmers to be shallow and in part ill-conceived". That is a fair comment. It in no wise seeks to do injustice to the policy which is an attempt to help the young farmers, but it is a shallow and in part ill-conceived policy. To encourage the young farmer very many wider issues have to be considered, some fiscal and of a domestic nature. Here, one might digress and mention the highly important matter, currently under review, of the capital transfer tax. There are such issues as farming structure, and also such very important issues as the great need in all countries for an adequate system of training, and farm schools. What is considered here we take to be a step, but a very small and rather hesitant step, in the right direction. We hope it will be reconceived and will be reviewed in a much wider manner.

My Lords, I do not wish to prolong my remarks, because those who are to follow me will have much wider experience in the EEC than I. I most warmly welcome the opportunity to listen to the noble Lord, Lord Saint Oswald, who will follow me in this debate. Once again, I should like the opportunity of thanking the noble Lord, Lord Walston, for speaking on this matter, because the steps we have taken today in discussing this matter are steps which are at the very beginning of a review of farm policy. Perhaps we shall be able to develop a system which we will come to recognise, as we did a few years ago in our calendar, of the Oxford Farm Conference, followed by a Farm Price Review, followed by debates in your Lordships' House and in another place. It is, above all, a stability which is needed, and all farmers, 1 think, today yearn for that as part of the European fanning policy.

6.10 p.m.

Lord SAINT OSWALD

My Lords, it is always a pleasure and a warm satisfaction to take part in any debate in the name of the noble Lord, Lord Walston. I have been, I may say, most disappointed not to have been able to attend as an observer any of the meetings of his Committee which has produced this excellent and closely considered Report. I regret it particularly since I am not only a member of the European Parliament but a member of the Agricultural Committee of that Parliament.

Before this country entered the European Community, the anxiety of those who opposed our entry was expressed in a number of shibboleths, among the most frequently voiced of which was the heart-cry of "higher food prices"—higher prices, that is, as a result of our imminent membership of the European Community. The curious fact is that this anxiety is still being repeated when fact and experience contradict its validity. For instance, I am able today to congratulate Mr. Peart on the Sugar Agreement which he brought back yesterday and with which he was clearly very pleased himself, if his demeanour on television and his words in another place were anything to go by. I doubt whether I could be rationally challenged in saying that such a favourable agreement for this country could not have been reached outside the Common Market.

It was my intention to ask the Minister who is to reply some questions as to the duration of the Agreement reached, but I understand that in a Statement made by the Minister of Agriculture in another place, which was not repeated here, he in fact included the significant words: Agreement was reached on a protocol which enshrines the principle of indefinite duration of access arrangements. Here is something upon which he can indeed be congratulated. It must be a great reassurance to the sugar producing countries of the Commonwealth. I cannot in fact believe that it was a very difficult achievement since I know how total and how definite was the dedication of M. Lardinois, the Agriculture Commissioner, to honour the bankable assurances given during the negotiations for entry.

As regards the wider picture, covering other commodities, Mrs. Shirley Williams stated in another place on November 11th (col. 4): Official estimates now show that food prices are, on balance very slightly lower than they would have been were we not members of the Community. That is part of a Ministerial speech. However slight the difference, it is on the right side of the balance sheet and I hope it will have served to allay some of the perfectly genuine anxieties expressed before the act of entry.

The Community, and Britain within the Community, together with most of the rest of the world, has just passed through an outstandingly difficult agricultural year. As farmers, both the noble Lord, Lord Walston, and I are aware of it. Ironically enough, one aspect of the problem is due to the high level of technical efficiency achieved by the farming industry. I recall that in January 1973, when I made ray own first speech in the European Parliament, the most evident problem staring us in the face was the "butter mountain". Incentive schemes were then being proposed by the Commission and put before Parliament to encourage dairy farmers to convert to beef. I think two different schemes, among those put forward, were debated and in fact implemented by the Council of Ministers, and the farming industry reacted with such promptitude—that is to say, modern techniques enabled the industry's reaction to be so swift—that last year's problem was a glut of beef, causing distress and even disaster to many farmers who had responded to the exhortations, against which nobody to my knowledge, on either side of politics, had objected. This, of course, as the noble Lord, Lord Walston, said, calls for long-term thinking in the planning of agriculture.

The other main problem of the past year has been that of sugar, caused by the coincidence of a meagre beet harvest throughout Western Europe and the diversion of cane sugar to other buyers on the world market, leaving the Community countries in some danger of a sugar famine, which has now been averted. I think it is fair to mention, though without any wish to create controversy, that in the negotiations of 1971 had we been less intent upon protecting the interests of the Commonwealth sugar producers and the interests of New Zealand, it is more than conceivable that certain other terms obtained, more closely on behalf of our own country, would have been more favourable. There was an element of quid pro quo endemic to any such negotiations, and we chose to assist our partners in the Commonwealth rather than ourselves.

We have now been members of the Community for two full years, and during those two years, as it turns out, the Common Agricultural Policy has given our country lower prices, together with greater security of supply, than we would have enjoyed outside. The benefit has been felt by the whole population of our country in terms of the food they have bought.

On entering the Community, I for one was aware of the fact that where each of the other member countries had a Ministry of Agriculture, we alone had a Ministry of Agriculture, Fisheries and Food—and I underline the word "Food". That is to say that our Ministry represented, as it represents now, the consumer as well as the producer. I am bound to say that in the light of experience, although we have been made aware of the power of the agricultural lobby— in particular of COPA, the union of agricultural organisations, of which Sir Henry Plumb became President a week or so ago; and this is signal recognition of our influence—and although consumers are not as recognisably organised as they are in this country, the interest of the consumer has been very much to the fore in Parliament, in the Com-mission and in the Council of Ministers.

It is not easy to identify, confidently, cither advantages or disadvantages where they occur, but the following facts can be mentioned. Consumer subsidies on butler and beef (by which pensioners are specifically favoured) are worth £30 million a year to Britain out of Community funds. There are also "monetary compensatory amounts" which, although they bedevil statistics and give headaches to anyone involved in working them out, have been introduced to protect the housewife against the rise in imported food prices due to the depreciation of the pound, and of course other European currencies. These amounts are paid as subsidies on food imports from across the Channel or across the Atlantic and represent a value of about £5 million a year. Until Saturday and the Agreement reached by Mr. Peart, the Community was already giving a sugar subsidy equivalent to £2 to every British household. It is too soon, for me at least, to have worked out the corresponding figure since yester-day, but the Minister may be able to oblige.

Such a farm policy, which proposes security of supplies and stability of prices, must cost something when world prices in a given commodity are low. But when supplies are scarce and world prices zoom upwards, the benefit of this insurance policy is directly felt, even if not directly appreciated. One of the obligations laid upon farmers by this policy is to give favourable treatment to consumers within the Community. The Prime Minister of France said recently that if his country had sold her grain and sugar outside the Community at world market prices she would have made a profit increase equivalent to £1,500 million.

We are of course principally interested in the future rather than the past or present. To an extent, we find ourselves in something of a vacuum, since the meeting of Agricultural Ministers on the 20th and 21st January ended at about 9 o'clock at night and set a later date of 10th February for the next long and, hopefully, final and conclusive session on the coming year's prices. That session is expected to last a full three days. All would be happier to have set an earlier date, and the Commission expressed its disappointment that a final announce-ment could not be made, as intended, on 1st February. However, as the noble Lord, Lord Walston, quite rightly said, that at least has given an opportunity to this House to discuss the matter before it was decided within the Community.

The reason for delay was that the intervening calendar was very crowded. The Green Week in Berlin occupied the whole of last week, and in particular the German Minister of Agriculture, but it enabled Agricultural Ministers to hold a meeting. Mr. Clinton, as President of the Council of Ministers during these six months, will be discussing intensively with M. Lardinois during this time, and in some matters which brook no delay measures have been taken. For instance, prices in milk production will be back-dated to 3rd February, and the guaranteed prices for fat cattle, which should have ended on 31st January, will be continued to 2nd March. There is a general conviction that the European Commission's proposals are basically sound, and agreement can be reached, and can only be reached, on the basis of a substantial rise in agricultural prices, taking into account the monetary compensatory amounts, and with measures to aid the under-privileged forming part of the consensus.

Naturally I cannot claim to be privy to the Government's thinking on these matters, but the personal utterances of Mr. Peart do not reveal any important cleavage between him and his colleagues within the Community. There has been a great deal of talk about fundamental changes in the Common Agricultural Policy, and changes have always been inevitable. My understanding, at second or third hand, is that Her Majesty's Government hope to return to a system of "deficiency payments". I believe that so much, even Mr. Peart, with all his persuasiveness, will not achieve any agreement with his European colleagues. But he has the advantage of being in Office at a time when the Community, by a decision reached more than a year ago, is setting about a stock-taking of the records so far of the Common Agricultural Policy. This policy, as other policies operated before and since our entry, is regarded as a flexible instrument, subject to evolution in the light of experience.

The basic object at which, I think, nobody would cavil, is the assurance of a strong and stable agriculture, providing food at fair and reasonable prices—reasonable, that is, for the producer and the consumer. To that end the phrase most frequently heard in debate in any of the member countries individually and when they are gathered together is the need to restore confidence in the farming industry. I appreciate that that is too general an observation to satisfy the noble Lord, Lord Walston, in the question he specifically put. It would be wrong to imply that all is totally harmonious at all times between the nine nations in the complex field of food production and food consumption. I understand that the British Government wish to suspend from 1st July this year the existing incentive for farmers to switch from milk to beef, in which our own Minister did not win universal support. As a dairy farmer myself, I can go on record as saying that I think he was taking a reasonable line in the circumstance. I should like to ask the noble Lord who will reply what, if anything, has been decided with regard to aid to glasshouse growers, and in particular for young farmers, defined for this purpose as those under 40 years of age. My understanding is—the echo that I hear—that an idea for a special scheme for young farmers was in fact rejected.

Turning far more briefly to the matter of assistance to the "less favoured areas"—the second of the draft Directives under debate—I hope I can give some reassurance to my noble friend Lord Sandys, who has just spoken. I should like to emphasise to your Lordships that the Commission has shown exemplary effort in seeking to meet the requirements of this country in this field. A mountain farming scheme existed in draft before the enlargement of the Community in 1973. This scheme, being defined by height above sea level, would not, I believe, have included a single acre of hill farming land, as defined in Britain. The whole scheme was therefore redrafted, in order to include the entire hill farming area in this country, and will happen once the new scheme, passed by the European Parliament in the plenary session of last month, is approved by the Council of Ministers. One particular section of the Commission, one of those sections working under M. Lardinois, has been responsible for this; and both good will and hard work have been brought to bear. I am happy to say that some of those far from faceless bureaucrats have become my friends in the course of the redrafting.

The calculations by those officials took account of the fact that despite 15 years of agricultural development policy within the Community, the discrepancy between incomes in the farming industry and in the manufacturing industry showed no tendency to diminish. They further calculated that over a wide area this was not due in any way to the inefficiency of the farmer, and that in a certain category it was directly attributable to the adversity of nature. They argued that if we wanted to maintain farming in such communities (that is to say, maintain human occupation of whole areas) despite their adverse conditions, then we in the Community would have to admit the need of special help for them. The need to extend this help goes beyond purely agricultural needs; it is a matter of decision for society and by society.

The prevention of depopulation also goes beyond mere sentimentality or aesthetic judgment. It includes the waste services already in existence in areas endangered by depopulation, and the requirement for new services (at high capital cost) for those who move from the unrewarding areas into other already overcrowded areas. In the background to this question of whether we want to have empty or populated these areas of great natural beauty, the map, which was available for us at the session attached to the Commission's Working Paper—and in a somewhat less legible version attached to the Explanatory Memorandum for the benefit of this House—shows some startling discrepancies within agriculture. It shows that one quarter of the entire farming area of the Community—that is, land being farmed, working farmland—is occupied by over a million working farmers and represents only one tenth of agricultural production, which is an indication of the degree of poverty suffered in those areas by those individuals. What seems important to me is that the member-nations are not in the Community purely for what they can take out of it.

The map reveals that certain nations are not benefiting in any way from this scheme. In their whole territory there is nothing defined as a "less favoured area". They are therefore not simply net contributors but unilateral contributors and non-benefactors. Large transfers of finance will be required from which they will not benefit. The cost of the whole scheme is 500 million units of account (that is approximately £250 million) over the period of the first three years. That corresponds to a little over one-third of the entire Regional Development Fund. A slightly less happy note has to be struck in mentioning the fact that the Council of Ministers has so far barely discussed this question, having been occupied over other matters. It has been calculated that Britain will receive at least 25 per cent. of the benefit of the scheme, once it is approved.

My Lords, I should like to end by quoting (and I am certain that this is within the Rules of Order) the words of my honourable friend Mr. Scott-Hopkins in the European Parliament in the last Session on an agricultural debate. Addressing the House, the Commissioner and the Council of Ministers, he said: Farmers today are worried, are anxious and are looking to us all, all the three elements here, to see that their future, their income, their livelihood is safeguarded in the years to come. If we do not do it, then, indeed, we shall be culpably guilty of not doing our duty towards a very important sector of our constituents throughout the whole of the Community. He spoke as a Member of the House of Commons, a British delegate like myself; that is the kind of voice which is being heard in the European Parliament and I am happy to note that in the Record "applause" is also recorded.

6.31 p.m.

Baroness ELLIOT of HARWOOD

My Lords, I am sure that we were all fascinated by listening to the account given by the noble Lord, Lord Saint Oswald, of what is really happening in the European Parliament and also about his experiences in Brussels. I have always been a strong supporter of our being part of the EEC, but I have found, as have many people, great difficulty in discovering what goes on there. We are most indebted to the noble Lord, Lord Saint Oswald, for telling us a number of extremely interesting things which I—and I am sure other noble Lords—did not know. Therefore we are greatly indebted to him for this precise explanation. Also, we are most indebted to the noble Lord, Lord Walston, the chairman of this Committee whose Report we are discussing, and a most admirable chairman he is. I have only just been made a member of this Committee, but I have been to two meetings and found them absolutely fascinating. What is more, I yield to no one in my admiration for the knowledge that the noble Lord, Lord Walston, has of the agricultural industry.

There is only one subject about which I believe I possibly know more than he, and that is hill farming, since he farms in East Anglia and I farm in the Borders. Without boasting, I know something of hill farming because I have been trying to make it pay for forty years; so I can speak with some authority on that subject. Otherwise, in the two meetings I attended, which were chaired by the noble Lord, Lord Walston, I have learnt more about the Common Agricultural Policy than I could have learnt in any other way. I am most grateful for having been co-opted on to the Committee.

I think it is also significant that this is the first time your Lordships' House has discussed this kind of Report, a discussion on agriculture and the Community. We have, by a very long chalk, more agriculturists, and people with knowledge of agriculture, in this House than they have in another place. Many of your Lordships have long experience as farmers. Therefore it is of great interest that we are the people who at the moment are discussing this extremely important Report. Again I should like to thank the noble Lord, Lord Walston, for his speech today, since for the first time I have begun to understand a little about the unit of account, about the green pound and about various other specialised aspects of the Community policy. So I thank the noble Lord, Lord Walston, for his very succinct and simple description of what I have previously found very difficult to understand.

I am one of the people who feels that the vast amount of written material issued from Brussels is a little daunting. I have read a good deal of it, though certainly not all. Of course, as we all know, reading that kind of material, which is simply Roneod or Xeroxed, is a little trying. Therefore if it is possible—it may not be —for these documents to be printed in a slightly better manner it would be of assistance to those who want to study them. In reading all these documents one realises most forcefully the immense variety of climates, soils, conditions and so on, that the Community has to cater for in any agricultural policy. It is enormously difficult. While I have often been critical I now realise, having studied this situation rather carefully, what tremendous difficulties they are up against. One therefore must have some patience.

As your Lordships will have read the Report which we are discussing, I do not need to stress many parts of it. But I agree with what has been said, for instance, that indiscriminate help to all farmers, of whatever size or value, must be wrong. It is to encourage efficient production on a long-term policy, which must be worked out by the Commission, at which we should aim. There has also been stressed the great difficulty which arises between incomes derived from industry, or public services, and incomes derived from food production. Yet if we start to raise for farmers the income from food production we get great opposition from those people whose incomes are derived from non-agricultural interests. You cannot win on this one, which is extremely difficult. While we should not give indiscriminate help, I support those who feel that the help given to efficient agriculture is a very good way of spending public money.

I have always maintained that agriculture is a way of life not to be compared to the get-rich-quick ideas of many people. Nevertheless, if production is efficient and the labour is skilled money can be made, and in a way far more satisfactory to me than any other. The proposals of the Community must be related to the needs of the Community and the efficiency to enable those needs to be met economically. One or two speakers have mentioned the butter mountain and the beef surpluses. They are no evidence of a well thought-out policy of production; and where at the same time there is an appalling shortage of food in the developing world—as witness our debate the other day on the Food Conference in Rome and its findings—the CAP should plan for enough production in Europe and in the Community and a substantial contribution for the developing world. I entirely agree on this point with the noble Lord, Lord Walston. That is one of the obligations we should take upon ourselves. In the words of the Seventh Report: A price review cannot be taken as a substitute for an agricultural policy. It can only be a means of implementing a policy once agreed upon. The noble Lord, Lord Walston, and others discussed various aspects of the policy. I should like to talk about beef and lamb production and also the policy for upland hill farming. I begin by dealing with beef. Between July 1973 and July 1974 beef prices in France dropped by 4.6 per cent. and in Belgium by 11.4 per cent., and it is quite unnecessary for me to stress what happened in the United Kingdom. Prices fell by 50 per cent. or more, and in the autumn we had alarming demonstrations by farmers unable to sell their cattle except at derisory prices. Intervention has helped, but not perhaps as much as we should have wished. But what any beef producer will say is that what is needed is a base below which beef prices cannot fall; in fact, a deficiency payment system, which we operated so successfully in the United Kingdom, and where for months beef kept at a good and reasonable price and no deficiency payment from the Exchequer had to be made.

It is, I think, most unfortunate, as the noble Lord, Lord Saint Oswald, mentioned, that this policy is one that the CAP are not prepared to accept. But in our Seventh Report we have asked whether the Minister could ensure whether the system, which the CAP are advocating, must be universal. Why, in certain special areas where it suited the type of production best, should not it be possible to prefer the intervention price and to operate that? I know that this is highly controversial, and I am making the suggestion only because Mr. Peart has fought so manfully—and I say that with great admiration—to get the kind of policy which suits the United Kingdom, and he has been very successful in many ways. I therefore ask whether he might again struggle to see whether or not we could have a variety of policies in connection with beef prices. If not, something more than what has been done will undoubtedly be needed because we must have a floor below which the price of beef cannot fall. That is the only way in which we shall get stable beef production.

My Lords, I was very interested in what my noble friend Lord Saint Oswald had to say about the CAP policy on the less favoured farming areas. As a farmer—and I think I am the only hill farmer who is speaking in this debate— this is something which we very much welcome. The proposals arc extremely helpful because, as I think my noble friend Lord Sandys said, and as has been stressed by the National Farmers' Union —and indeed all farmers know it—the question of production of store cattle and sheep in the United Kingdom is absolutely basic, not only to Scotland but also to the North of England and to Wales. What has been done to help those areas in improving their production and, in many cases, in using all the acres of hill land that were being wasted has to be seen to be believed. That will be obvious at least to any of your Lordships who has lived among the hills as I have. We have seen the enormous increase in production that has occurred since 1948, when Tom Williams was at the Ministry of Agriculture.

When I was attending this Committee, I found it very interesting to realise—as I had not done previously—that the CAP has no policy for sheep and lamb. I should have thought that in the CAP they would be interested in the production of mutton and lamb just as they are interested in all other kinds of production, particularly cattle. However, they are not. It would be a great help to farmers in the United Kingdom if we could more easily export our sheep products to Europe. What happens now is that, when the Paris market is open, this has repercussions throughout the whole sheep industry from John O'Groats to the Borders of Scotland and right through Wales. But it is entirely arbitrary. It depends whether the people in France take it into their heads to want more mutton or not. There is no overall policy. I do not know whether it is possible to have one or whether it would be of advantage, but it seems strange that there should be absolutely no policy. Perhaps they do not eat mutton in Germany, Belgium and Italy; perhaps it is eaten only in France. But certainly it would be a great help if there were a policy for sheep and mutton as well as for beef.

I am delighted that this new policy of the CAP is being pursued and, as my noble friend Lord Saint Oswald has told us, in many ways this is a very unselfish gesture by the European countries, since a good many of them will get no advantage from it at all. Therefore, from that point of view, one is extremely grateful. But there are two recommendations in this policy to which I take strong objection. The first is the requirement that farmers over 65 years of age should not receive any hill or farming assistance. I do not hide from your Lordships the fact that I am well over 65 years of age, but I am a very active farmer and I should be extremely annoyed if my farm were to be excluded because of my age. I hope very much that whoever represents us in the negotiations in Brussels will seek to do away with that age limitation in exactly the same way as that which directs aid towards young farmers. It seems to me to me equally silly for an active farmer of 41 to be treated differently from an active farmer under the age of 40. There seems to be no point in this at all, and I hope that Mr. Peart will be able to stamp on those two very silly recommendations because they have absolutely no relation to efficiency, good farming or increased production. I do not think that skill in farming has anything to do with age.

My Lords, I should like very strongly to support what the noble Lord, Lord Walston, has said about research. Like everyone else, I have had great benefit from research, particularly into the diseases of animals. I do not know what we should do in Scotland without the great research institutions in Edinburgh and St. Boswells, at Grey Crook. The Animals Diseases Research Institute in Scotland is absolutely vital.

Lord INGLEWOOD

My Lords, if the noble Baroness would allow me to interrupt, we also rely on the research institutes in the North of England.

Baroness ELLIOT of HARWOOD

My Lords, according to this, the North of England will be just as badly dealt with as Scotland. In any case, I am all for the research institutes, wherever they are, whether it is Cambridge, the South of England or wherever. The point is that research saves money. One of the great problems in producing animals is disease. The number of diseases which animals can get is terrifying. Very often these are new diseases, or perhaps they have not been dealt with so far. Take the enormous effort we are all making towards brucellosis-tested herds. We would not do this unless there was research all the time into the disease so that we can at least get some help with this extremely difficult matter. Therefore, I strongly sup-port the noble Lord, Lord Walston. I do not believe that research is a waste of money. Rather, it is a good investment, and I hope that the Government will be brave enough to go on with it.

My Lords, we in this industry are subject to many unknown and unpredictable happenings. While every farmer knows that, the principle of producing what is needed, in the quantities needed and by the most efficient methods, is something which we can all apply to all farms, coupled with the need to get a fair return for one's labour. I hope very much that the Minister will be able to make representations in Brussels for the policy that we have outlined and will be able to achieve the kind of concessions that will help the United Kingdom. I do not say that we should be selfish about this, and of course we must consider the other areas as well; but, as I think the noble Lord, Lord Walston, and various other speakers have said it, it must be stressed very strongly how important it is to have a policy, and one which must cover extremely varied conditions. We cannot have a policy which is suitable only for one particular area. I have great faith in Mr. Peart. I hope very much that he will be able to press the points we are making. I can assure him that there is no doubt that all farmers here want to improve production and to grow more food, and so obtain a return which makes it possible for us to continue.

6.49 p.m.

Lord LLOYD of KILGERRAN

My Lords, may I begin by apologising form-ally to your Lordships that my name was not on the list of speakers, but I am sure that my name was put forward some ten days ago and there appears to have been some hiatus in the usual channels of which I am not aware. I should like to join in offering congratulations to the noble Lord, Lord Walston, on the clear and expert manner in which he has introduced this important paper on the EEC Farm Price Review and also the draft Directive on the Less Favoured Farming Areas. As is well known, the noble Lord has an international reputation in a wide range of agricultural activities. I hope, therefore, that it will not be presumptuous of me to comment briefly on these reports in the light of my experience, which is mostly related to conditions in the hill and upland farms in which my country of Wales abounds. I have been encouraged to make these observations by the remarks of the noble Lord, Lord Sandys, and the noble Baroness, Lady Wootton of Harwood, in their support of the importance—

Baroness ELLIOT of HARWOOD

Elliot.

Lord LLOYD of KILGERRAN

I am terribly sorry. I do apologise to the noble Baroness, Lady Elliot of Harwood.

I am encouraged by the observations of the previous speakers of the importance of the upland areas and hill farms and their inter-relationship with other fanning areas. The document on the Farm Price Review which is before us excludes the price proposals in respect of potatoes, wool, mutton and lamb, and therefore so far as Wales is concerned it does not touch a large section of fanning activity in that country.

Like other noble Lords, I have myself spent a great deal of time studying and trying to manipulate the large number of documents associated with these reviews, and I have read the reports issued by the European Parliament, in particular its Report of 13th January 1975. The mass of statistics and information in the papers, dealing largely with the wide diversity in geographical, economic and social factors in the Community, impresses on me once again the absurdity of trying to continue with a Common Agricultural Policy for the Community as was in force before the United Kingdom acceded to it.

Accompanying all this diversity to which I have referred, there has been introduced into the monetary structure of the EEC, international and national monetary uncertainties—for instance, the floating currencies and devaluation—which have completely undermined the concept of the Common Agricultural Policy in practice with its fiction of the common price for the whole Community. Such a concept at least presupposes fixed monetary parities between the nations concerned, and I strongly support, with the noble Lord, Lord Wolstenholme—I mean Lord Walston; I am sorry I am getting my names wrong. May I quote Shakespeare: What is there in a name?

The Earl of ONSLOW

My Lords, I sincerely hope that the noble Lord is more accurate in his quotations from Shakespeare than he is in his quotations of the names of noble Lords present in the debate.

Lord LLOYD of KILGERRAN

I am much obliged to the noble Earl for that very helpful intervention. Most members of the Community seem now to accept that drastic changes in the Common Agricultural Policy are inevitable, and some important steps have been achieved by the Government—for example, it is now recognised that the Community should contribute to the support and development in the hills and uplands. But among all the facts and figures which are associated with these proposals, I have searched in vain for proposals which could be said to be directly and realistically directed to the farming conditions in Wales.

In all price-fixing discussions, it is of course essential that there should be a balance between the needs of the producers, if they are to remain in business, the prices to be paid by consumers and the effect of general taxation. But the proposed livestock increase contemplated in the Review is too small, in my view, to help and encourage livestock producers in the small farms of Wales who have been so hard hit by increased costs and falling prices—and many of whom are in a difficult financial position. I hope that in future negotiations this special position of livestock farmers will be borne particularly in mind. I therefore endorse the views of the sub-Committee on page 6, where it is stated—and I quote: The confidence in the future stability and an economic return are the prerequisites of maintaining food supplies. Again, I support the last sentence of the Report: That the proposals in this agricultural package will inspire neither the confidence needed for expansion nor the reinvestment requisite for efficiency. In reaching this rather dismal conclusion, I should, however, like to pay a personal tribute to the Minister of Agriculture, Fisheries and Food for the way in which he has persevered in his difficult negotiations. He has made great headway in bringing more flexibility into European policies and in particular in establishing that direct aid is often essential to producers of livestock as well as reliance on end prices. From these Benches we wish him well in his future negotiations.

6.55 p.m.

The Earl of ONSLOW

My Lords, this is a very important document that we are debating today. It has been said already by the noble Lord, Lord Walston, and by the noble Lord, Lord Saint Oswald, but it seems to me a pity that more of your Lordships have not taken part in this debate. I certainly should have put my name down earlier. I am a farmer, as your Lordships know, since I have declared an interest earlier. I do not want to discuss the whole Report, but I should like to pick out one or two subjects.

The first is that it seems to imply that the beef-cereal equation cannot be got right within the intervention system. In Part II in the beef section, the Report refers to 91 per cent. and 87 per cent. of guide price for intervention buying, and also states that full-scale intervention is not practical for beef. Let us, therefore, urge upon Her Majesty's Government, and Mr. Peart in particular, that the Common Agricultural Policy should be changed. Perhaps "changed" is not the right word—"improved" or "modified" might be better. This should be done not for the sake of change, but for the sake of fairness to consumers; and, in my contention, consumers' and farmers' interests are exactly the same because fluctuating prices do neither of them any good.

Grain should certainly be supported by intervention, but let us work out a deficiency payments scheme for meat, tied to a grain intervention system. This system would surely allow the market to mop up surplus amounts of beef, as we have seen in the last year or so, and would obviate the need for expensive subsidies like beef coupons to old-age pensioners. In saying this, one is not saying that old-age pensioners should not be allowed to buy beef. It would seem to me better that they should get a proper old-age pension and so be able to buy it on the open market.

My second point is to urge the Community as a whole to go in for being self-sufficient in temperate products. If the United Kingdom had been able to increase its home-grown food production from 35 per cent. before the war to 65 per cent. now—and the NFU claim that it can be further increased to 80 per cent.—then surely the Community as a whole, whose agricultural acreage per head of population is rather larger than ours, should be able to do this.

We have only to see what the Russian grain purchases of 1972 and the Arab oil price cartel have done to increase prices to see that this must be desirable. It has also been said that the Community is very short of animal protein. I think it imports, as the noble Lord, Lord Walston, said, 25 per cent. of its needs. This is surely one of the areas where production could be very much increased. For instance, France over-produces wine. One hesitates to advise the French on what to do with their vineyards ; but it would be possible, I should have thought, to produce grain or maize for animal feed in some of these areas.

Thirdly, I should like to comment on the statement in the Report that farm gate prices had fallen in 1974. The noble Baroness, Lady Elliot, commented also on this matter. This coincides with large rises in input costs; and, at the same time, inflation has been varying from the German 7.5 per cent. to the English 20 per cent. This cannot be good for the farming industry; it cannot help them. Some of it ought to be made up by the increased yields of grain. Such figures do not help us—and by "us" I do not mean only the British Isles, but the whole of the EEC—to become self-sufficient, which is what we should be aiming for.

Lastly, my Lords, I turn to the important section of the speech of the noble Lord, Lord Walston, on the difficulties of working a Common Agricultural Policy with floating pounds and, for that matter, the green pound. This must somehow be changed. How, I do not know; but it seems to me that the vital need is for a common European currency. When that happens all these difficulties—of green pounds, floating pounds, snakes in tunnels, and heaven knows what else! which is going on in the Community currency systems—will be much easier to overcome. Thus, we shall be enabled to run a Common Agricultural Policy whose objective must be for Europe to become self-sufficient in food—outside of the influence of the cartels, of the Russians, or of whoever else wants to buy up our grain. Then these foods will be ours and we shall be free to produce —and each area in Europe will be free to produce—food on farms for the benefit of Europe as a whole. This is the objective for which we should aim.

7.7 p.m.

Lord STRABOLGI

My Lords, I think we must be grateful to my noble friend Lord Walston for initiating this debate and for drawing your Lordships' attention to the Report which is the subject of our deliberations tonight. I must apologise for the fact that my noble friend Lord Beswick was not able to answer for Her Majesty's Government, but suddenly this morning he developed 'flu; so I am afraid that this task has fallen upon my unworthy shoulders, but I will do my best. It has been a great advantage to me to listen to this debate. We have had an interesting debate showing great knowledge, as is always the case in this House, and there has been a wide diversity of views expressed. The debate has ranged far and wide and at one point there seemed to be a formidable woman Peer taking part called "Baroness Wootton of Harwood". As I am an under-study tonight, I am glad that such a formidable combination is not participating; in actual fact, we listened with great interest to the noble Baroness, Lady Elliot of Harwood. I should like to deal a little later with that speech.

My Lords, before answering the main points which have been raised, I should like to start with some comments on certain points in the Select Committee's Report, which is formally the basis of our debate. The Report emphasised that a satisfactory agricultural policy must go wider than simply establishing support prices. I entirely agree with that and I also accept that the structural proposals contained in the documents referred to by the Select Committee have limitations; although the proposed Directive on less favoured areas would nevertheless represent a significant advance. I shall have a little more to say in the course of my speech about this question of the less favoured areas, which has been referred to by most noble Lords. I think I should add that the EEC Council has already agreed that the proposed aid for young farmers should be examined further and not adopted as part of the current package.

Coming back to the Committee's remarks about agricultural policy generally, it has been a cardinal point made by the Government that the Community agricultural policy cannot operate merely by trying to manipulate market prices. The policy must, I submit, be more flexible. In the beef sector, particularly, we have urged the need to support producer returns by other means, besides intervention buying. We secured the introduction of direct payments to producers, including the variable premia, which we have been operating since November. The Commission should shortly be making their stocktaking Report on the Common Agricultural Policy. In considering this, we shall have very much in mind some of the more general points raised in the Select Committee's Report and, of course, in today's debate. I certainly took note, as I am sure did all noble Lords, of what my noble friend Lord Walston said about the sovereignty of the British Parliament and of how the Minister when he goes to Brussels will be fortified by what is said in London.

My Lords, there are two issues of some substance in the Select Committee Report on which I should like to comment before moving on to deal more specifically with the Commission's support price proposals. The Committee report unfavourably (in page 2) on the system of monetary compensatory amounts. However, as they acknowledge, this system has brought substantial benefit to our consumers in the form of import subsidies financed from Community funds. The obverse of this is that our producers' returns are not as high as they might be. However, the Committee are wrong to say that the system has increased the costs to producers of imported inputs; it has not affected non-agricultural inputs either way. In the case of animal feedingstuffs, the system is currently providing subsidies of £5 to £6 per ton on all of our cereal imports.

The other general point which I should like to make concerns food aid. The Select Committee's Report, in a couple of places, refers to the possibility of the Community providing produce to the developing countries. This was also touched upon by my noble friend. While I accept that there is a role for food aid, I must emphasise that, in the Government view, the best way of helping developing countries with their food needs is by encouraging increased production there. I do not believe that an objective of Community policy should be artificially to stimulate increased EEC production for food aid. The disposal of commodity surpluses as food aid must be kept under careful review.

My Lords, I should like now to turn more specifically to the EEC farm price discussions. Here I should say how much we appreciate the tributes which have been paid to my right honourable friend the Minister, which I think were most generous. I find noble Lords on the other side of the House most generous about what this Government have done in the last 12 months in trying to improve the terms. I am sure that noble Lords will understand that in replying to some of the many points which have been made tonight, I want to avoid weakening my right honourable friend's position in the negotiations which are to be resumed on the 10th February. However, I can certainly confirm that my right honourable friend will be determined to see that fair and responsible account is taken of the interests of both producers and consumers. Clearly, no settlement would be acceptable which puts in jeopardy the Government's commitment to the efficient and economic expansion of our great agricultural industry. Equally, the Government could not agree to unnecessary additions to the inflationary pressures facing consumers.

In particular, in considering the future shape of the EEC beef régime, to which reference was made by the noble Earl, Lord Onslow, the Government have already made it clear that they will not agree to support-buying in this country at a level leading to the accumulation of large stocks of degraded beef. The only point of producing beef is for it to be eaten and not to build mountains with it. At the same time, especially with beef's long production cycle, producers need an assurance of a satisfactory return; otherwise, they cannot be expected to make the necessary long-term investment. My right honourable friend has insisted in Brussels that the way to meet the interests of producer and consumer in this matter is through a system of premia such as the Government introduced last year.

That deals with the general situation. I should now like to try to answer some of the more specific points that have been raised. My noble friend Lord Walston referred to agri-monetary measures and the value of the green pound. This was also referred to by other noble Lords. The proposed changes in the parity rates used for CAP purposes in respect of the German, French and Benelux currencies are primarily for the countries concerned. I do not think we need to intervene. We are not prepared to see another change in sterling's representative rates so soon after October's change.

Such a change would reduce the benefits our consumers gain from the monetary compensating amount subsidies on our imports. In particular, it would cut the advantages we secured from the suspension last October of the so-called "abatement rule" for monetary compensatory amounts. The suspension of this rule has meant our getting substantial FEOGA financed subsidies on all our cereal imports. These are now running at some £5 to some £6 per ton. There is another change in the representative rate for the Irish pound and this could create problems for us, especially in Northern Ireland. We have made this clear in the Council. We shall see that this aspect of the matter is not overlooked. An announcement will be made at the appropriate time on whether subsidy rates will be increased to offset the price increases arising from the next step towards full EEC price levels and the Council of Ministers' decisions on farm prices for 1975–76.

My noble friend referred to the Price Review and asked whether the EEC's price decisions will be taken into account in the UK's Price Review decisions. The answer is, Yes, our 1975–76 guaranteed prices will certainly take into account the decisions on EEC farm prices. My noble friend Lord Walston referred to sugar and sugar beet. The Government entirely share the sub-committee's view that we should aim at increasing our own production of sugar from beet, both to deal with the present acute shortage of sugar in the Community and throughout the world, and to get a better balance between imported and home-produced supplies. To this end, we secured an increase in our basic beet quota from 990,000 tons to 1,023,000 tons and a maximum quota, inclusive of the basic, of just over 1½ million tons.

Turning to the beet acreage, the level of beet acreage planted is, however, essentially a decision by the farmers themselves who must decide between the different possible crops open to them. It is also a matter which depends consider-ably upon the commercial judgment of the British Sugar Corporation who decide the acreage for which they will seek con-tracts. The Commission's price proposals would yield a grower's price of approximately £16 per ton, taking account of transport allowances, and so on. This should, we believe, represent a satisfactory incentive to producers.

My noble friend also raised the question of the less favoured farming areas. This was also referred to by most other noble Lords. It is an important matter, and we take full note of what the noble Lord, Lord Lloyd of Kilgerran, said. The Less Favoured Areas Directive is important to us for two reasons: it gives a practical shape to the undertaking which the Community entered into in the accession negotiations to take the necessary action to preserve reasonable incomes for farmers in hill areas. When we consider that the Community had no system of support for the hills in those days, and the Directive now provides for grants and subsidies in all member States which are almost identical to our own, this must be regarded as an encouraging sign for us, and I am sure that the noble Lord, Lord Saint Oswald, who is a member of the European Parliament, will be pleased about this.

The second point is related. The new system does not merely closely follow our established arrangements; the proposal now before us involves the commitment from the Community to finance on a large scale our expenditure in this area, and because it is a bigger issue for us than for any other member State at present we would, at some £20 million per annum, be the largest single beneficiary. It is true that in some respects the Directive, as it stands, limits our freedom, but the Government are aware of all these points and have already set out their view on them to the Council. We are seeking for a measure of flexibility before the Directive takes effect.

Several noble Lords raised the question of elderly farmers. It is true that the Directive limits the payment of special livestock subsidies in the hills to fanners who are not receiving a retirement pension. An appreciable number of farmers in the United Kingdom could be affected by this provision. This restriction exists because the Directive is part of the enlarged Community's overall structure policy which had its origins in the Mans-holt Plan. The idea is that public funds should be used selectively in the interests of improved farm structure. The preponderance of farmers at or near retiring age in other parts of the Community is a real problem. But we do not think this is the right solution, and I can assure the House that we are seeking to limit its practical effects in this country.

My noble friend Lord Walston asked what were the objectives of our agricultural policy in the long-term. The Government have been holding talks with the interests concerned about the long-term prospects for agriculture. It is hoped that the conclusions of these talks can be announced soon. The Government have made clear their commitment to the economic and efficient expansion of our agriculture. My noble friend also raised the question of research and showed great concern about the cuts which he said have been made in this area, and he asked the Government to restore these forthwith. The current year's budget of the Agricultural Research Council, which represents slightly more than half the spending on agricultural research in this country, was reduced to a level some 3.7 per cent. lower than for 1973–74 as a result of the Public Expenditure cuts of December 1973—that was during the last month or two of the Conservative Government. The effects of the cuts have been made more severe by very high increases in the prices of animal food-stuffs and fertilisers.

To achieve the savings necessary, I understand that the directors of the ARC institutes have agreed to a moratorium on new appointments until March 1975. Although the Government clearly cannot promise that the ARC will be protected from any short-term difficulties which may face Government-financed organisations in the future, I can assure my noble friend that, in general, we share his views on the importance of agricultural research and its claim on our resources. Indeed, within the limits necessarily set by wider public expenditure considerations, it is our intention to provide in the Estimates for 1975–76 an increased sum for research commissioned by the Department with the Council.

I was very grateful for the speech of the noble Lord, Lord Sandys, and for the non-Party basis which he adopted. The noble Lord was quite right when he said that this is the first opportunity the House has had to discuss the EEC's Agricultural Policy. I shall of course, in the presence of the noble Baroness, Lady Tweedsmuir of Belhelvie, take up the question of the documents, to see whether these can be produced in a more portable form. I think this is probably a matter for the Lord Chairman of Committees and the usual channels. I will certainly talk to the noble Earl the Lord Chairman and also to my noble friend the Chief Whip who is sitting behind me on the Front Bench, to see what can be done. The noble Lord, Lord Sandys, also referred to the less favoured farming areas, and I hope I have dealt with those.

We also had a very interesting speech from the noble Lord, Lord Saint Oswald, who speaks from his great knowledge as a Member of the European Parliament. I am sure we very much appreciate the kind remarks made about the achievements of my right honourable friend in regard to the Sugar Agreement. The noble Lord asked what had been decided about the glasshouse growers, and I think I can give him some information on that point. There has been reference to the effect of fuel oil costs on horticulture. The Government recognised this problem in the subsidy given last year, which was worth some £7 million. Contrary to the impression given in the Select Committee's Report, the subsidy is not available for fuel used after 31st December 1974. However, representations have been made to extend the subsidy and these are being considered by the Government. We welcome the Committee's comment that this matter should be considered in the context of an overall energy policy. Certainly horticulture, like any other fuel user, must adapt to the increased cost of energy. The Commission have said they will be making certain proposals to the glasshouse sector. These proposals have not yet been received but they will be carefully studied when they are received; and in the mean-time the Government are considering the representations that have been made.

I was interested in the speech of the noble Baroness, Lady Elliot of Hare-wood, and what she said about beef. I think I have answered her points during the course of my speech. This is one of the matters which will be taken up by my right honourable friend in Brussels. We greatly appreciate the congratulations proffered by the noble Baroness. The noble Baroness Lady Elliot of Har-talked about the less favoured farming areas. I think I have already covered the points that he raised. As he says, there is no mention of Wales. That is so, but there again, we hope that one day in the future the Principality will be in. This, of course, is not entirely in the hands of Her Majesty's Government but we take note of what the noble Lord said. I was interested in the speech of the noble Earl, Lord Onslow, about the beef question. As I have said, this is being made the subject for further negotiation.

I hope I have answered all the points that have been raised. In conclusion, I should like to repeat my appreciation of the diversity of views expressed today, and assure noble Lords that their points will be fully weighed by my right honourable friend in his further negotiations next week. Assuming that those negotiations are concluded, he will be reporting the outcome to Parliament. It has been most helpful to hear the views expressed, and I know that my right honourable friend is determined to secure decisions that strike a proper balance between all the various interests involved. We shall be aiming to make further significant progress in the Government's efforts to influence the Community's agricultural policies in ways which are favourable to the United Kingdom.

7.28 p.m.

Lord WALSTON

My Lords, I am sure we would all wish to express our condolences to my noble friend Lord Beswick on his sickness, and to hope that it will not be long before he is recovered and able to be present in your Lordships' House again. While we are sorry he is not here today—if I may say so without appearing to be insulting to him—we have lost nothing, because the noble Lord, Lord Strabolgi, has fulfilled the task admirably and has answered all our questions in a most thoughtful and helpful manner. This has undoubtedly been a worthwhile debate from our point of view. I think it has been good for us to express our views and listen to the views of others. I hope it has also been a worthwhile debate from the point of view of my right honourable friend the Minister of Agriculture, and that it will help him in Brussels.

There are perhaps three specific points above all others which have emerged from this debate, to which I hope he will pay attention. The first is our strong support for the present system of hill-farming subsidies and other helps. I hope he will not give way on that, whatever other helps may be brought in for special areas in different parts of the Community. We hope he will stick firmly by the policy which enables the noble Baroness, Lady Elliot, to continue to farm so effectively and which might even enable the noble Baroness, Lady Wootton of Abinger, to do so if she wishes.

The second point, while not of immediate relevance to Brussels—though I hope it is something which can be done on a Community scale and not just on a national scale as the years go by—is the complete unanimity of those who have spoken on the importance of research and the overriding economic reasons for promoting research in spite of cuts which may be necessary elsewhere.

The third and undoubtedly the most important point which has come out of all this is that, while we criticise prices in certain respects, while we think that the desired result may not be achieved especially in the sphere of sugar beet, and while we recognise the problems that there are with beef, all these things are relatively unimportant compared with the overriding importance of the long-term policy for agriculture, bearing in mind the great need, even of the enlarged Community, for imports, the rising cost of all production, the rising cost of investment which is essential for efficient production, and the rising demand on a long-term basis throughout the whole world in the years ahead. So there I hope that my right honourable friend will not only pursue with the utmost urgency, and bring to a fruitful and speedy conclusion, his negotiations with the National Farmers' Unions on a long-term policy for this country, but will extend his discussions and make use of his great experience and the experience of this country in discussions with the Community and the Council of Ministers, so that very soon they will follow our example, or even lead us —I do not mind who comes first—in producing a long-term policy for the whole of the Community. I am most grateful to all noble Lords who have taken part in this debate and to those who have remained to listen to it.

On Question, Motion agreed to.