HOPS AND POTATOES MARKETS: 32nd EEC REPORT

HL Deb 05 July 1976 vol 372 cc1031-68

3.8 p.m.

Lord RAGLAN rose to move, That this House takes note of the Thirty-Second Report of the European Communities Committee of this session on the Hops Regime (R/471/76), and the Potatoes Market (R/238/76). The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper, and I should like to thank the usual channels for allowing or encouraging this debate to be held early in the afternoon for the greater convenience of the people who wish to speak on the Motion.

Your Lordships' Sub-Committees beaver away week after week—the Agriculture Sub-Committee not least—and we report on matters of considerable economic importance to agriculture in this country and try to do our best to draw our conclusions to the attention of the Government. We feel our efforts are better rewarded if we can hold our debates at a time when other Members of the House can be encouraged to attend.

In introducing this Report on hops and potatoes—which your Lordships may think is a highly technical subject. as indeed it is—may I say that I am doing so against the background of British marketing techniques as they have developed over a century, in contradistinction to those which have developed on the Continent. I want to indicate why the proposed common régimes in these two commodities are arousing some apprehension. In contrast to the other eight States in the Community. Britain has not been self-sufficient in agricultural produce for some 150 years; that is, ever since our population outstripped the capacity of our land to support it. With the policy of allowing imports to make up the balance, the Government moved gradually to that of importing food bought as cheaply as possible from all parts of the world, in return for the sale of manufactured goods. British agriculture was unable to compete, it was demoralised and starved of capital and, except for a brief period in the First World War, discouraged, so that in the late 1920s and early 1930s it had sunk to the lowest point to which it could have sunk.

It was recognised by the Government that they had to take some positive steps to maintain home supplies, if only as a strategic resource. Even so, whatever action was taken could be only in respect of those commodities in which we could be self-sufficient, and which were of such a nature that they did not interfere with the then freely available supplies of food grown by our established overseas suppliers and imported into this country at below our domestic costs of production. So it was not politic to interfere with imports of, say, North American wheat, Argentinian beef or New Zealand lamb. But it was politically safe, and economically wholly desirable, to encourage home production of commodities which we imported very little and which, moreover, were awkward to move round and import, such as milk and potatoes.

It seemed right that the Government's action should be drasticand comprehensive, so the idea of the statutory agricultural marketing boards was born and, under the leadership of the late husband of the noble Baroness, Lady Elliot, Sir Walter Elliot, marketing boards for milk, potatoes, hops and wool were established. The essential feature of a marketing board is that all those who produce more than a certain quantity have to belong to it. In return for this element of compulsion, the Government, advised by the boards and the farmers' unions, set a price and guarantee a sale. In this way, the farmer can be encouraged to invest and plan longterm in reasonable confidence, while the Government, whose job is also to protect the consumer, can by their involvement better hope to ensure continuity of supplies at a reasonable price.

The situation on the Continent among the other eight is quite different. I think I am right in saying that it has never been the policy of any of the other eight not to be self-sufficient in food production, if that could possibly be avoided They have no history of making a virtue of dependence upon foreign food supplies. On the whole, their tradition in marketing is one of organisation of voluntary producer groups, and direct statutory interference in the marketing of agricultural products is little known. Therefore, any common regime which is formulated in Brussels is not only liable to ignore, but is directed to discourage, our type of statutory marketing board and to exhibit in contrast a commitment to voluntary producer groups as the best way to encourage efficiency in marketing.

The proposed common régimes for both hops and potatoes, adverted to in this Report, are of that nature and what British farmers and consumer organisations fear is that if a concession is given to Brussels in respect of either of the two commodities, for no better reason, as they see it, than that we should fall into line, then at risk from some future régime will be the Milk Marketing Board and, perhaps, the Wool Marketing Board, which right from their conception have been a staggering success; and, in the case of the Milk Marketing Board and, I believe, of the Hops Marketing Board, too, the basis of a highly efficient industry. The belief in this country is that we know the right way to do things here, and it is Brussels which is out of line, or up the creek, or whatever metaphor of disapprobation one feels in a mood to express.

In fairness to Brussels, things appear, to me at any rate, not to be so simple. Most of the formulators of the CAP are totally unacquainted with agricultural depression of the character which inspired the creation of our marketing boards. Their problem, as must be the case in any self-sufficient agricultural economy, is one of controlling surpluses which inevitably arise if the policy is at no time to tolerate a deficiency. If you do not want a deficiency you must have occasional surpluses and, in a self-sufficient agricultural economy, paying for surpluses is an insurance premium against a deficiency.

In any case, in not all commodities have marketing boards in this country been successful. I can think of the Egg Marketing Board and the Tomato and Cucumber Marketing Board, both of which had rather painful deaths. However, it remains the case that the Milk Marketing Board and the Wool Marketing Board and—one of the subjects of the Motion this afternoon—the Hops Marketing Board have been most advantageous to producers and consumers. I will leave it to the noble Earl, Lord Selborne, to describe exactly why he thinks the Hops Marketing Board should be retained, with its constitution substantially unaltered, within the framework of the Commission's draft Directive, because the Sub-Committee make out the same kind of case in their Report.

The noble Earl is chairman of the Hops Marketing Board; he and his manager gave evidence to the Sub-Committee, and we were unanimous in agreeing that the board does an excellent job with its highly specialised commodity, where the nature and capital requirement of its product require that all producers must belong to the hoard if output and quality are to be maintained, and very long-term investment protected, against the risk of disruption by the possible activities of one or two rogue producers who might feel moved to stay outside the ambit of the board if they do not have to join it compulsorily.

With respect to the potato régime, the Sub-Committee were not so united. This really arose from the fact that the Potato Marketing Board is not really a marketing board at all and should more aptly have been called the Potato Control Board. Together with the farmers' unions, the Potato Marketing Board advises the Government upon the support price that should be set for any one year; that is, the price level below which the Government should buy any potatoes. But it does not market potatoes, except in so far as it may purchase them for stock feed if the market price falls below the support level. Under the Community Directive, this function would be performed by the producer groups and, evidently, Continental experience is that they perform this function adequately.

The other main function of the Potato Marketing Board is to set an acreage quota, which is intended to prevent the over-production of potatoes. In practice, however, since 1971 this quota has not been taken up, and it appears to the Committee that the acreage grown has been a function of the market price which producers expect to get, rather than of the guaranteed price. What is more, the quota system does not seem to he working in another respect because the penalty for growing potatoes outside the quota is not enough to discourage people from growing more potatoes than their quota.

Whereas some of the Committee believe that the comparative stability of the market price of potatoes in this country is a result of the Board's functions and activities, there seems to he evidence to suggest to others of us that the new found stability in the market would as likely be the result of the high capital cost involved nowadays in growing potatoes on an efficient scale and the resulting reluctance of producers to venture in and out of production in the way that they previously could when so much of potato planting, harvesting, grading and storage was carried out by hand and the capital equipment involved was negligible.

One significant difference which would arise under this Directive is that whereas at present imports are controlled—and as a general rule the import of all main crop potatoes is banned—under the proposed regime there would, of course, be a free market in potatoes. But not all the Committee were convinced that these imports would he a sufficient threat to undermine the stability of the home market, bearing in mind the cost of transport and the efficiency of home producers. Other members of the committee—and this opinion may be voiced this afternoon—believe that the very presence of the Potato Marketing Board may do a lot to secure the stability of supply and price and that it is better to keep a hold of nurse for fear of getting something worse. Speaking as an individual member of the Committee, I feel myself that the proposed régime might allow more instability into the market, but I am not personally convinced about it.

As for the postulation that the demise of the Potato Marketing Board would be the thin end of the wedge, which would in time wreck the other marketing boards which work so well to the benefit of everybody, I think it is not good policy to defend an organisation whose efficacy is in doubt in order to protect the principle of retaining an organisation whose efficacy is not in doubt. Therefore I am saying that I do not believe in the thin end of the wedge argument but that the regime in each commodity should be studied on its merits and in relation only to the nature and production of that commodity. I think that we have much to teach our Common Market partners in regard to the marketing of milk, hops and wool, but I would not go to the stake in defence of the Potato Marketing Board.

May I conclude by referring to a recent draft Instrument in reference to the production and marketing of hops, Instrument R/1473/76 of 15th July 1976, which lays down levels of income aid to producers of the hops of the 1975 harvest and special measures for stabilising the market in hops. Perhaps I may read part of the first paragraph of the Ministry of Agriculture's Explanatory Memorandum which says that: The Report concludes that the world hop market continued to be oversupplied in 1975, with an adverse effect on producers' returns. It notes especially the problem of assuring a fair income to Community producers at the same time as restoring a quantitive and qualitative balance between supply and demand ".

As I read the proposed regulation, apparently the Commission's solution is to encourage producers to produce more and then to pay them for keeping their extra production off the market. I believe that this is a perfect example of where the Community could benefit by our marketing board experience. The best thing that the Community could do to regulate the marketing of hops would be to institute marketing boards for hops throughout the Community. With those final remarks, I beg to move the Motion standing in my name.

Moved, That this House takes note of the Thirty-Second Report of the European Communities Committee of this session on the Hops Régime (R/471/76), and the Potatoes Market (R/238/76).—(Lord Raglan.)

3.26 p.m.

Lord SANDYS

My Lords, the House will be very grateful to the noble Lord, Lord Raglan, for bringing before it two debates on the very important matters of agriculture and consumer affairs. As chairman of Sub-Committee D of the European Communities Committee, it is most suitable that the noble Lord should do so.

In regard to the first of the two draft Directives that we are examining this afternoon, that of hops, I agree entirely with the noble Lord that this is a most technical subject. As I was driving yesterday through the hopyards of Herefordshire, I wondered what I should be able to tell your Lordships, but I was comforted by the fact that my noble friend Lord Selborne, who is Chairman of the Hops Marketing Board, is to participate in this debate. We shall greatly benefit from his intimate knowledge of how the marketing procedure machinery works.

The hops industry is very interesting. I know a little about the industry as I live in that part of the country. It is centred upon two areas, one of which is on the West hank of the Severn: the Teme Valley in Herefordshire. In this country there are approximately 450 growers of hops, which is a remarkably small group when one realises that the growers cover a total of approximately 15,000 acres. The real difficulty is the absence of elasticity of demand, which is due to the fact that the sole outlet is the brewing industry.

When one looks at the proposals contained in the documents before us today, one's immediate reaction is that once again the Commission's proposals are unsuitable for the industry in this country and that the intention is to achieve too much too quickly. Reading through the report of the Committee, I was very much struck by how quickly the real nub of the issue was reached. The question centres upon the Hops Marketing Board and its future. I think that everybody who participated in those discussions recognised the great value of the Hops Marketing Board and we hope that in future it will continue to be of great value to the industry.

Perhaps I may quote one important question that was asked by the noble Baroness, Lady Tweedsmuir of Belhelvie. She drew out the point when she said: I wanted to ask why you really find this difficulty about the continuation of the Hops Marketing Board, because this particular instrument says that the prerequisite to the recognition of a producer group is that the total production of associated members must be sold through that group which is exactly what happens ". In reply, it was said that the main difficulty is one which requires: the organisation, the producer group, to permit its members to resign after three years and subject to certain conditions". Turning, as one must, to title 2 of the document, on page 10, set out there is the Schedule whereby producer groups may withdraw, and looking at this in detail I cannot see why this should be such a substantial problem. The rules proposed do not make for simplicity in discussion at this present moment, and as arranged in the draft Document it appears to our advisers that this may be a difficulty. From this side of the House, it is our advice that this is where the draft Order should he revised, and in our view there is opportunity to do this, between now and the time when this Document comes up before the Council of Ministers, which I understand is to be in August this year, or possibly a little later.

One should not complain, perhaps, of the complication of legal documents because we frequently have to surmount many hurdles. But in the Preamble to the Document we have to surmount no fewer than 33 "whereases ", and of course one of the most important of them relates to the "whereas "which deals particularly with poor harvests. This is where one should stop in one's tracks because it is a situation with which one is presented today. I am not going to digress on the situation with regard to the hop harvest, because I am not in a position to do so, and I feel certain that the noble Earl, Lord Selborne, will be able to tell us about it. But generally in regard to both the wheat situation and the potato situation, to which I shall come in a moment, this is a crucial problem.

I am very glad that in the list of pieties shown in the Preamble there are arrangements whereby measures can be made, derogating from the application of strict rules on the quality standards. It is obviously essential that in years such as 1976, when the harvest will undoubtedly be particularly difficult, the system must be flexible. This is what we say over and over again to Brussels: "Please build into the regulations a degree of adapta- bility for circumstances which we may not be able to foresee even a matter of a few months ahead. "

I turn to potatoes. I was very glad to hear what the noble Lord, Lord Raglan, said about the Potato Marketing Board, and to hear his views generally about marketing boards, because I feel that there is no division whatever here between the two sides of your Lordships' House. We are strongly in favour of the retention of the marketing boards, with possibly some variation in their scope and activity in order to bring them into line with the Common Agricultural Policy, but undoubtedly they will form the focal point of the arrangements for the future.

Your Lordships will be well aware that there are over 445,000 acres of potatoes in this country. Although at the present moment we import approximately 250,000 to 300,000 tonnes from abroad, this is really a seasonal crop. Later in the year we nearly always export about 100,000 tonnes of seed potatoes. If one looks with care at the document, Food from our own Resources, the Government White Paper, which is really the guide to the whole of their agricultural policy, it will be seen that over and over again the question of self-support comes up, and we are informed that we are self-supporting in potatoes. This is true in a manner of speaking, but it is not true in a manner of speaking so far as demand is concerned because, of course, in the very nature of things, people wish to acquire new potatoes rather earlier than they are available in this country. If it is possible under the future marketing arrangements for consumers to be able to do so, surely it is highly desirable that this flexibility should be retained.

Looking further at the situation with regard to potatoes, it is very much a matter of considering the situation so far as the drought conditions are concerned. I hope the noble Lord, Lord Strabolgi, in his reply, may be able to give us some reassurance with regard to the likelihood of the harvest this year. It must be remembered that ever since January the potato has commanded a fantastically high price. In the Sunday Times rather late in that month the fact was recorded that the price of a potato had exceeded the price of an orange. This, surely, is a situation which cannot be contemplated in a marketing system. Of course, weather conditions, and many other conditions, with reference to the transporting of potatoes and marketing arrangements, do enter into it. But if it is possible to arrange the potato crop for next year in a better manner than was done for this year it will be of very great benefit.

3.37 p.m.

The Earl of KINNOULL

My Lords, I rise to support the Report and recommendations of Sub-committee D, and to congratulate the Committee, and their chairman, the noble Lord, Lord Raglan, on their report. I also congratulate the noble Lord on his speech just now in introducing it. The noble Lord, Lord Sandys, and I are the only two nonmembers of the Committee who are daring to speak on this subject. I hope the Committee will not feel aggrieved by this. I should declare my small interest in potatoes, as I am a registered grower of 12 acres of potatoes, and I should like to concentrate my few remarks on this Report on the question of potatoes.

The European proposal to do away with the support prices for the home growers and to rely in future on the market forces and the European producers, I believe could not have come at a more sensitive time. Indeed, I think the Committee particularly picked up this point. I find that the potato is quite an emotional issue at present. In the British diet the potato has been one of the staple foods; it has been a staple diet for families, schools and hospitals. Yet last year we saw the tragic reduction in the crop, and a situation where one perhaps was not only unable to afford a lamb chop but could not afford a potato. What one could afford was a bowl of rice and some pasta. I think there is nothing better than the British potato, and I hope very much that with the help and support of the Committee who have been examining this problem the Government will take a very strong line on the European proposal.

I would ask the Government whether we have learned anything from the results of the failure of the crop last year. I say this particularly because it seems, with the present exceptional weather, that we could well have another failure this year. I would ask the Government whether they think it is a reasonable accusation against the Marketing Board and their agents. Last year, because it was the one in eight years where we suddenly had a deficit, as against either a normal crop or even a surplus as in 1971, the Government stood by, almost actionless, almost without a positive policy. I say this because the Government imported last year only 200,000 tonnes out of a deficit requirement, the normal consumer requirement, of 1½million tonnes. I understand that we normally consume 6 million tonnes but because of the price and because of the scarcity we consumed only 4½million.

Secondly, I would ask the Government whether it is satisfactory, when the Department is asked to control prices, simply to say to all the housewives and to all school managers and hospital authorities who cannot afford the potatoes, "We are satisfied that the middle-man is not making too much profit". Is there not a case in these conditions for having some sort of emergency powers whereby the Government can purchase at a price which gives a fair return to the producer and a fair price to the consumer? I believe that for the majority of the large potato growers, if they were asked the question last year, "Do you really wish to sell your potatoes above the price that British children can pay and are prepared to pay for your potatoes? ", the answer would have been, "Certainly not ". But it was the conditions of the market. I believe there should be a much closer examination of the relationships between the producer and the consumer. The powers of the Potato Marketing Board, which were established in the 1930s and were updated in the 1950s and 1960s, and indeed the Government's powers, should be looked at to see that we have a better relationship between producer and consumer.

The other point I would put to the noble Lord, Lord Strabolgi, is the European proposal. I was very kindly sent a copy of the European Parliament's proceedings, and I have it here. I found it very illuminating. One had the British member Mr. Osborn, saying: I thank Mr. Schwabe, who is acting for Mr. Muller, for raising this point. Then I look to see what Mr. Schwabe had said, and I find: Ich mache darauf aufmerksam… Then one looks to see what Mr. Howell has said: Speaking on behalf of the Conservative Group, I feel that we should support Mr. Cointat's suggestion… and Mr. Cointat's suggestion was: J'avoue que, tout comme mes collegues …. What I am trying to say to the noble Lord is that I hope at some time we can have an English translation of what the European Parliament are saying.

My final point to the Government is in the form of three questions. I hope the noble Lord can give some reassuring answers today. First, how do they assess the present crop of potatoes. I know this is an almost impossible question, but I wonder whether the noble Lord can give us figures of the number of acres sown on the British market and how the crops are looking. Secondly, I should like to ask him whether, in collaboration with the Potato Marketing Board, the Government will consider taking much quicker action on the question of imports. And my final question is to ask whether they will examine, again with the Potato Marketing Board, the very stringent rules on the health requirements of imported potatoes, and I particularly have in mind potatoes from Poland for human consumption. I cannot believe that potatoes which will be eaten almost from the sack can cause any great health hazard in the future. I hope the noble Lord will be able to say something on that. I should like to end by congratulating again the Committee and their Chairman, the noble Lord, Lord Raglan, on their work.

Lord SAINSBURY

My Lords, before the noble Lord sits down, may I beg leave to ask him a question. If I understood him rightly, he said that middle-men had made a great killing, or made profits, as a result of the drought shortage. From what I hear—and I happen to live, not being a farmer, in a potato growing area —the farmers who held back the marketing of their potatoes until late in the season when the price was very high made very considerable sums of money and are boasting about the large sums they have made. So I do not think it is fair to suggest that middle-men, whoever they may be, took advantage of a short supply position.

The Earl of KINNOULL

My Lords, I am not sure whether the noble Lord was wishing me to reply or whether he was making a statement. I think when he reads Hansard tomorrow he will see that I was not accusing middle-men of making a great killing. What I was saying was that the Department's defence, when the housewife is angry, is simply to say that the middle-men are not making a great killing.

3.46 p.m.

Baroness ELLIOT of HARWOOD

My Lords, I rise to take part only quite briefly in this debate; being a member of the Committee over which Lord Raglan presides with such excellence, I should like to pay a tribute to him and to the fact that he is a very practical farmer and understands what it is to be a practical farmer, which I am myself. I should also like to thank him very much for referring to the commencement of the Marketing Board. Lord Collison, who follows me, and is also a member of the Committee, will remember very well, at that time when he was leading the National Union of Agricultural Workers, the beginnings of the Marketing Board in 1931, 1932 and 1933.

As Lord Raglan has said, it was my husband who was the Minister of Agriculture at the time. Faced with the enormous variation in prices which people could get for milk or any other commodity, he saw that what would make more difference than anything else to the farmer and the consumer was some stability in price. You could only get stability in price by organising the commodity in a way which would be as fair as possible to both sides. It was not at all easy. At the beginning of the Milk Marketing Board those farmers who had been producing milk rather expensively in the East of England were very annoyed because their prices came down, and the people who were producing in the West country, where milk was being poured down the drains because it was so cheap and because it was not distributed in a successful way, were delighted because their prices went up. The net result, after a lot of to-ing and fro-ing, was the idea of marketing.

Of all the Boards which I have watched from the beginning, the Milk Marketing Board was the most successful. The Hops Board about which we are concerned today is, equally, a very successful enterprise. I was present during the discussions which took place in the Committee and during the evidence, which is recorded in the Thirty-second Report. It seems to me that it is important for British agriculturists, and also for the EEC, to consider, having got a very good method of selling, whether it can be enlarged and continued within the EEC itself. I was present when the Committee visited Brussels last year for about 48 hours. We went over, led by Lord Raglan, to talk to M. Lardinois and other people in Brussels about agriculture.

It seemed to me that the problem was not so much a problem of production but a problem of selling. In the EEC the problem of production seems to rush madly from a meat or butter mountain on one side to a shortage on the other. That is exactly what happened in this country before we took the important step of organising agriculture and certain products of agriculture through marketing Boards. I think that the EEC might well take a leaf out of our book, to see whether or not the methods which they are employing for selling could be greatly improved. My impression, in talking to M. Lardinois—I do not know whether my colleagues had the same impression—was that they have no selling agencies in Europe at all. It is difficult to know where you can buy food unless it is at an ordinary market. Of course there are markets in every town in France, Germany, or Belgium, which I imagine operate about once a week, but it is much more difficult to have a selling policy for agricultural products in Europe. That is how it seemed to me when we were discussing this matter with M. Lardinois.

Certain commodities they sell very well. The French sell wine very well. They have wonderful advertisements all over France about buying wine. But you never see any kind of advertisement about buying milk. In fact, they consume little milk as compared with consumption in this country. This is partly because they have not got the same methods nor the same ideas of selling. I would hope very much that our representatives in Brussels will stress this point very strongly. Selling is what we agricultural producers badly need. Through the Boards we can sell here in this country milk, hops, or potatoes, or whatever. We can also, I suppose, sell independently; but if you are a dairyman, I think you sell 100 per cent. through the Milk Marketing Board because it is so good and so well organised. It has a really brilliant organisation for selling not only milk, but cheese and all the produce which comes from milk.

I should look with great sorrow upon the future if we were to find that we were being pressed to adopt the methods, or, I might almost say, the non-methods of selling of the Community when our own methods of selling are so much better. The Community are urging people to go into co-operatives. It would not suit us in this country nearly so well to go into co-operatives for production and selling. To begin with, our units are much bigger than those on the Continent. When one talks about the size of agricultural farms one is staggered to find how tiny are the farms in France, Belgium, or Germany, compared with the average farm in this country. Here they are getting larger, and, with the improvement in technology, with the improvement in management and with the improvement in machinery, farmers can produce much more. It would therefore be a retrograde step for us to say, "Well, we must go into the same type of organisation as the EEC ". I really do not think that it would work as well as our present system.

I am a strong supporter of the EEC so I do not want to appear to he "knocking it "on its agricultural policy, but I very much hope that the Government will try to persuade the EEC to adopt some of our methods. We can do so by showing success. I believe that about three weeks or so ago there was a deputation from Brussels, I presume at the request of the Department or the Milk Marketing Board, to study the Milk Marketing Board methods. I was told that the deputation from Brussels was enormously impressed by its visits to the Milk Marketing Board centres and by what had been done by way of this system. I very much hope that we press strongly to keep our methods while at the same time trying to see whether they can be so adapted as to be utilised on the Continent.

The noble Earl, Lord Kinnoull, spoke about agricultural futures—about being able to obtain an idea, or some figures, for future production. That is exceedingly difficult. At present in some parts of the country we have a very serious drought, yet in other parts—where I live, for instance—we had the wettest May on record. It is difficult to be able to say what is going to happen when we are entirely dependent on the Almighty for whether or not the rain or sun is with us in appropriate measure to make production possible for us. With all the technology we possess, we still depend on the weather. It is something for which no amount of planning is possible.

I have just spent the whole of last weekend at home driving tractors in a hayfield, and never in my life have I seen hay like we have in the South of Scotland today, because for ten days we have had the most glorious sunshine and terrific heat while we had such a wet May that the grass grew like nothing on earth.

We have about three times as much hay in a fortnight as we expected to get in the whole year. It is impossible to forecast this sort of thing. Therefore, it makes agriculture an exceedingly difficult industry to organise. That is why I come back to the point that if we can persuade the EEC to adopt the kind of organisation that can help, albeit not completely, to level out the variations which emerge from differences in climate and conditions, and so on, we shall be doing something to help enormously in production and also in selling.

The Minister of Agriculture is an extremely able person, one who has done extremely well by British agriculture all the time he has been Minister. I hope he will be backed up by the Department in endeavouring to keep as much as we can of our own marketing organisation and in trying to persuade our colleagues in Europe that ours is the best way of doing things. If we can do that it will help the CAP, it will help farmers and also consumers. I very much hope that some of our words from this short debate may reach M. Lardinois and his colleagues in Brussels.

3.58 p.m.

Lord COLLISON

My Lords, it is always a pleasure to follow the noble Baroness, Lady Elliot of Harwood. Although we sit on opposite sides of the House I find that we are more often than not in agreement about agricultural matters, and so it is today. I entirely agree with her when she says that she feels that the marketing hoards have done a magnificent job, and that we should try to persuade our Continental friends to follow our pattern within the Community. However, I am not qualified, and do not propose, to pass any opinion about hops. I know nothing about them. I come from Lady Elliot's West Country, Gloucester-shire, where they are not grown, except right on the border of Hereford, and I was far from that. But I wish to say a word or two about potatoes. Before I do that may I also offer my thanks to the noble Lord, Lord Raglan, and congratulations to him for his chairmanship of the Committee. I am sure that that chairmanship enables the Committee to do whatever good work it does. So much depends upon the chairman; I have found after long experience that this is true.

I think too that it is rather a pity that we had to discuss this matter about potato marketing now. Incidentally, the noble Lord, Lord Raglan, is quite right in saying that the Potato Marketing Board is not a marketing board; it is a kind of planning, or control, board as he has said. It is a pity that we had to try to discuss this matter at a time when we had suffered the worst shortage of potatoes we had ever known. As has been said, prices went sky high and housewives were, naturally enough, taken aback. As a result, the tendency is to blame everyone—the farmer, the middle man and the Potato Marketing Board—a point I make because I believe that over the years the Potato Marketing Board has achieved a very good balance indeed between the consumption and production of potatoes.

The Board has been able to do this because it has had responsibility for deciding what acreage shall be planted. The Board allows somewhat of an overestimate in doing this and, although we have been told that the full permitted acreage has not been taken up, I feel satisfied that the Board, through its planning activities, has enabled demand and production to be kept in reasonable balance; and clearly if we want stable prices we must keep production and consumption in balance.

Last year things went terribly wrong and—I do not know—they may go wrong again this year, but nobody could have foreseen what was going to happen to the potato crop last year; it happened out of the blue. There may have been some under-planting and that, combined with the weather we had, could have created the conditions I have been describing. However, in support of my claim that the Board has achieved stability between demand and production over the years, I will quote from what we on the Committee were told when we interviewed Brigadier E. B. Forster. I asked about the situation and the shortage. I then asked if he thought that, with the more open market that the Community proposals would allow, we should be better off than under our own system. He replied that the difficulties had arisen completely out of the blue and he made the obvious point that we had a ban on the import of main crop potatoes only when we were not short of them, and that whenever we were short of potatoes the import barriers were lifted and imports could come in. He then quoted from an EEC document. I appreciate that Brigadier Forster represented the Potato Marketing Board and was therefore anxious to support his own case. Nevertheless, the facts as given to us by the EEC support the point I made about stability. Brigadier Forster said: The EEC themselves, the Commission, published some figures at the end of last year showing the prices in units of account for all the Members of the Common Market. Statisticians can play around with figures in all sorts of ways, I appreciate, but we have taken "— and at this point he said that if the Committee was interested he would leave the document that he had mentioned with us, which he did and which is published as an appendix to the Report— the average over the 14 years with which these figures are concerned, 1959–60 to 1972–73. These are taken from the Commission's figures, not our own—we have not produced any. If you take an average of these figures and if you take either the full width of these figures or an average above and an average below, you will see that the United Kingdom has had the steadiest and most reasonably priced products—I am talking now of potatoes—in the Common Market. Have I made this point clear, that what I am trying to say is that the price of potatoes has varied less in our country than in any other of the Common Market countries? The sort of figures I am talking about are these: if you take the variation between the highest and lowest mean years around the average, whereas our figure has varied about 31 per cent. both ways, you have figures of 72 per cent. and 76 per cent. in Belgium, in Holland 71 per cent.—twice the variation ". That evidence seems to support the point I have been making. As I have said, supply and demand, if equated, gives stability to the producer and the consumer in terms of what the producer can get for his product and what the consumer must pay for it.

I wish to make it clear that I am not speaking critically against the Common Market. I realise that we are in the Common Market. I am simply saying that the proposals must be looked at carefully. Maybe we must make some concessions. We are in the Market and I think noble Lords know that I am a firm supporter of it ; I have made that clear in the past. However, the proposals, accepting that they are aimed at freedom to trade within the Community—which is in line with the general objectives of the Treaty of Rome—nevertheless would result in the Potato Marketing Board losing its power to plan the target acreage, and to give support to farmers through the guaranteed price, so that either the Board would have to disappear completely or we should have to consider how its activities would have to be amended. The proposals only propose to provide support in terms of dehydration for animal feed and in terms of providing money to enable farmers to store their surplus potatoes, and they are the only two forms of aid given. The present support would disappear, so the Potato Marketing Board would lose that particular function. The Government and we as a Committee had to make up our minds as to what we thought was the right thing to suggest and it is true that the Committee was divided on this issue.

As I have said, we are in the Common Market. I have also said that perhaps concessions must be made. Nevertheless, I am sure that we in this country must, in terms of our marketing boards and the Potato Marketing Board in particular, agree that we have in these boards very sophisticated machinery which works well for us. In their place we should be accepting a system which would undoubtedly be helpful to the other Members of the Community, whose activities in the sphere of potato production and consumption vary from country to country. While it would also create a certain uniformity, I must say, because it should be said, that whatever we do about it—and it is of course for the Government to decide—I am satisfied in my own mind that the machinery which we have is good. It has worked well for us, as I have pointed out. It has given stability and confidence to the farmer and has produced stable prices to the housewife, given the fact that other things are equal. That is the decision that has to be taken.

My Lords, I have spoken because of my view that what I have said must be said. I fear that in a sense we should be taking a step backwards. We could be affected by gluts on the Continent, prices could fall and there could be a failure to maintain the stability that we have enjoyed in the past. That might be the price the Government decide we have to pay. I would rather we used all our persuasive powers, in this and other respects, to bring the Market countries into line with what we have here because I believe that what we have here has been worked out on the basis of long experience, and practical experience shows that it works.

4.10 p.m.

The Earl of SELBORNE

My Lords, first I wish to join others in congratulating the noble Lord, Lord Raglan, upon the way in which he has initiated the debate. It is indeed a most timely moment for this subject to be discussed, particularly for the hop growers. It is as a hop grower and as a member of the Hops Marketing Board that I have a particular interest in the debate, and I should explain that I am the vice-chairman, not the chairman, as the noble Lord, Lord Raglan, was kind enough to describe me. I say that in case the chairman thinks that I am trying to usurp his job. This Regulation from the EEC—I refer to the Hops Regulation—has very good intentions; that must be clear to all hop growers, be they in this country or on the Continent. The régime recognises the predicament which the hop market is in, particularly in Europe. There is weak selling created by a multitude of small growers, particularly again in Germany, who are in no position to organise their own market.

There is also overproduction which creates the present particularly low prices. The Community's partial solution to date, under a Regulation dating back to 1971, has been to look at the income that growers have derived from hops, draw a line at a certain point, and say that any grower earning an income below that point needs aid, and the Community has been generous in giving that aid. The result, of course, is that there has continued to be overproduction of unwanted hops, but the reason why these hops have been low priced in the first place is because no one very much wanted them. This regime again recognises that this is certainly a fault, and it makes suggestions as to how it can partly be rectified.

Therefore, so far no hop grower in this country or anywhere else would do anything but praise the good intentions of this draft Regulation. The proposals take the form of giving aid through producer groups; that is, unless one markets one's entire crop through a recognised producer group, one will not be eligible for any further aid which may be forthcoming from the Community. Again, in so far as that will improve the marketing position of producers, it must be highly laudable. It also proposes to give aid to groups of varieties rather than just to any variety which happens to be below this magical line to which I referred. Again, in so far as one can differentiate between groups of varieties that are in demand, and those groups of varieties that are not wanted, which therefore should surely be discouraged, this again must be progress.

I hope that what I have said about the West German producer indicates that there is certainly good reason to suppose that much encouragement is needed for him to improve his marketing strength. Of course, one must realise that the West German hop grower is very much the largest producer within the Community; the English producer is certainly large, but not by the standards of the West German producer. I say "large "realising of course, in all humility, that hops as a crop in this country are almost insignificant in terms of their value and output. Nevertheless they are an important ingredient in what is an absolutely essential part of our diet, and without hops, I suspect, a very large industry—the brewing industry—would find itself with total problems.

Where the régime runs into difficulties, as the noble Lord, Lord Raglan, very fairly and clearly pointed out, is that we have in the United Kingdom a very much more sophisticated method of marketing hops than anywhere else in the Community. We have the Hops Marketing Board, and I am most grateful to those noble Lords who have referred, I think, with accord to the success of the Hops Marketing Board. I think that this is generally recognised, and I am quite sure that a very large majority of hop growers would be most anxious to make sure that the Board retains its powers.

It is successful because it prevents surpluses accruing in this country. It does this by operating a quota system. It tries to determine what the market will be in any one year and then proportions a quota to producers which is based on previous performances of previous years. It is also successful because it is the ultimate in a producer group. It has a 100 per cent. membership. Not only do we market our hops through the Marketing Board but everyone does it; I say "everyone ", except the brewers who are in a special position and they are excluded.

Therefore, as growers, trying to sell competitively in our own market and more recently elsewhere, we have the ultimate marketing strength. We have a position where we are all in the cooperative together. It is this 100 per cent. membership which is our greatest strength, and this is the facet of the Marketing Board that, though perhaps rather by the back door, nevertheless appears to be under threat by the draft Regulation. Therefore it is an irony that the Hops Marketing Board, which seeks to improve the producers' returns in Europe and to increase the marketing strength and to remove surpluses, is under threat by a Regulation which tries to achieve exactly what, it is recognised by everyone, including, I suspect the Community, is achieved by the Board in this country far more successfully than elsewhere.

This difficulty in which the Community finds itself with the Hops Marketing Board arises because of the Community's definition of what a producer group should be. It wishes a producer group to be voluntary, by which it means that growers should be both free to join and after a period of years—perhaps three years—free to leave. The Hops Marketing scheme requires growers to market through the Board and there is no provision for individual growers to opt out. The only way that this could happen would be if the majority of growers decided that the Board fulfilled no further useful purpose, and the majority of growers asked the Minister to wind up the Board. To that extent one must recognise that it is a statutory producer group, brought into being in the first place at the express wish of growers, and kept in being, perhaps in a negative sense, again by the express wish of the growers who have not, as yet, asked for a poll to be taken to see whether it still commands the support of the growers. To my mind there appears to be very little likelihood that such a poll would be demanded by a large number of growers.

The effect of the Board is that not only is there a quota on production to which all growers find themselves disciplined; they also find themselves being rewarded with an equal price for an equal article. Why is it, therefore, that this compulsory element of membership is so dear to the heart of the hop grower? Why can it not be that we gracefully allow ourselves to change to an EEC voluntary producer group, with people having the right to opt in and out as they wish?

Perhaps I may go back just a little in time. My noble friend Lady Elliot of Harwood referred to the early days of the marketing boards when Sir Walter Elliot brought them into being. But I should like to go back just a little earlier than that, to 1925, when there was another cycle—very much the same as there is at the moment—of over-production in hops, and there were very great economic difficulties, particularly in this country. The English hop growers decided that they must do something about it, and they formed themselves into an association called English Hop Growers Limited. They were most successful in that they got 90 per cent. of the acreage to join. This association disciplined its members by asking them not to pick all their hops so that the surpluses would not he added to. The members were also asked to hold out for a sensible price for what was, after all, a very expensive crop to grow—many growers were being bankrupted at that time.

The association was wrecked by 10 per cent. who remained outside. By 1928 the association had to dissolve because those people who had remained outside—as I said, they represented 10 per cent. of the acreage—continued to sell the crop from their full acreage, and in order to make sure that they got the sales they were looking for they were always prepared to undercut the big group of 90 per cent. of the people. Not unnaturally this created considerable dissatisfaction among growers, who then vowed that this was not a situation to which they would return.

My noble friend Lord Sandys has referred to the fact that the hop crop is unique in having no elasticity. We should like to influence brewers as to the amount of hops which they use in their beer, but we cannot. The demand is something over which we have no control and, by bringing down the price, we cannot increase the consumption of hops. We might be able to sell more abroad, but that is a separate subject. I believe that one must accept, therefore, that what we are trying to do is to get a fair reward for all growers in competition with other producers from other parts of the world, and to sell the hops as competitively as possible.

Going on from 1928, when the Agricultural Marketing Act 1931 come into being, hop growers leapt on the measure as their salvation. It is no coincidence that, in March 1932, the hop growers were the first body of farmers who, backed by a poll which showed a very large proportion of hop growers in support, went to ask the Minister to bring in a hop marketing scheme. That scheme came into being in 1932, in time for that year's new crop. It was the first of all the marketing schemes. It has remained in existence ever since. There have been modifications, as there should be in any organisation, but it remains to this day a body which commands very wide support from the growers and the industry. I am proud to say that my great-grandfather played a large part in getting the scheme through your Lordship's House, and in another place my grandfather did the same job at the same time. However, it is not through filial loyalty that I now say to your Lordships that this is an organisation which should be maintained. I say so because it is demonstrably doing a job which others on the Continent have failed to do.

As has been indicated by others, the hop market is a fickle one. It is the Hops Marketing Board which has brought stability to it. The English hop grower has traditionally supplied the English brewer and, until recently anyway, English beer was rather different from Continental beer. I suppose that, if the hot weather continues very much longer, the trend towards lager beers will accelerate, as will the move towards the Continental brews. It is for this market that the Board finds itself doing all in its power to encourage growers to produce the very different kind of hop that is needed. But, again, it is the Board, fulfilling a slightly different function, that is able to co-ordinate and give the impetus to sell the hops which the individual, fragmented groups of growers would not be able to achieve. Again, it is the marketing strength which the Board is able to give to the grower which is so important.

The grower must accept that the commercial risks are his. I do not believe that any farmer expects the taxpayer or EEC funds automatically to bring up his income to a satisfactory level. It is true that this is happening on the Continent. It is not the English grower's wish to be subsidised. As I say, he has been managing without subsidies until we went into the EEC, and he would prefer the system of trying to equate production with demand to be tried out in Europe. However, I believe that one must accept, however much we should like to see others try to bring their own house into order, that the administrative machinery simply is not there. There is a widespread body of growers in Germany, and the idea of trying to get them to pick only 80 per cent. of their crop, or whatever, in one year is one at which the mind boggles. I believe, therefore, that one must accept that a Marketing Board as such simply will not occur in Europe.

However, that does not mean to say that, where there is a Marketing Board which gives the great strength I have mentioned to the producer, we should be deprived of the advantage because others cannot conform to this high standard and this sophisticated machinery. After all, the Board is an organisation existing at the express wish of growers and funded by them. There is nothing to stop people from other countries selling hops in this market. It is not a closed shop. Brewers may buy where they wish.

The regulation as such does not refer to the Hops Marketing Board, but simply says that aid will be given to producers who market through recognised producer groups. That is the rub; what is a "recognised producer group"? Of course, as I have already said, a recognised producer group must be an organisation which is entered into voluntarily. This creates a complication. Why is it that the Board—which is compulsory in this country—cannot work alongside voluntary producer groups elsewhere? What I suggest should be done to the regulation is that two alterations should be made. One has already been suggested by the European Assembly.

There is one rather sinister paragraph in Article 5 of the regulation which says that producer groups, should refrain from occupying a dominant position in the Common Market or a substantial part thereof". The critical words there are, "or a substantial part thereof ". The European Assembly—very sensibly, I feel—suggested that the paragraph should read: should refrain from occupying a dominant position in the Community ". Clearly, this is important because, otherwise, even if we somehow conformed to a voluntary producer group, we should still have to fragment ourselves by Statute in order that we should not dominate a substantial part of one of the areas in the Community. Again, it seems utter nonsense, when we are trying to organise producers into groups, voluntarily to recommend groups to fragment themselves.

Far more critical, however, is the question of the compulsory element of the Marketing Board. Here, there is a very important precedent which has been created elsewhere. If, in order to get the grants which he must have if he is to be competitive with other growers producing on the same market, the English hop producer finds himself having to be heavily subsidised—and clearly, he must have the subsidies or he will be driven out of business—I think that he would ask that a country should be allowed to recognise as a producer group any organisation in one of the Member countries which appears to be successfully fulfilling the object of the EEC hop policy, notwithstanding the fact that such a body might have powers to compel the minority to join if the majority so wished. In other words, I suggest very strongly that, for the purposes of this hop regulation, powers should be given for the minority to be coerced into membership of the group if the majority wish it.

That would effectively give all that would be necessary of the powers of the Marketing Board that we hold so dear. It is the element without—the small body of growers with this great disruptive influence quite disproportionate to their size—against which it is so important to protect ourselves. It might be asked why, if there is such a wide body of support from growers as a whole, one need be so worried about the few. I say again that it is a fact which was proved in the 1920s that a small number of growers can exert great influence in sliding the market away from the firm prices which are needed.

If, however, the individual hop grower finds himself unable to benefit from grants and finds himself competing from a position of disadvantage and having to come back to Parliament and ask for the Hops Marketing scheme to be repealed so that he can be allowed to form voluntary groups recognised by the EEC, that will be a very damaging precedent for other Marketing Boards. As a result, I believe that hop growers, small in number though they are, have an influence well outside their numbers. Once opponents of Marketing Boards—and there are many of them in Europe—say that Boards are incompatible with the way in which the market should operate and we have the precedent of the Hops Marketing Board being dissolved in order to benefit from EEC aid, that will be a very embarrassing precedent for other Marketing Boards. For that reason and for the specific reason that hop growers want the Board to continue, recognising that it is doing a good job, I hope that the Council of Ministers will find itself able to amend the regulation as I have suggested.

4.30 p.m.

Lord STRABOLGI

My Lords, I think we have had a most notable and particularly well-informed debate, even by the standards of your Lordships' House, and we must be very grateful to my noble friend Lord Raglan for giving us the opportunity to debate this Report of Sub-Committee D. I think the House and Parliament, and indeed the whole of the United Kingdom, is very well served by these Committees of your Lordships' House, which sift the proposals coming from Brussels. I wish that more was known about them outside this House, because I think they fulfil a very important function indeed, although I know they make a great deal of work for their Members, which is given selflessly. My Lords, I think we must also be grateful to the noble Earl, Lord Kinnoull—and I am particularly grateful—because he had down an Unstarred Question on potatoes which he kindly agreed to take off and have combined with this debate. I am very grateful to him for doing this, and I think we shall be able to deal with the points he has raised a little later. I was very glad, too, that the noble Earl, Lord Selborne, took part, with his unrivalled knowledge, which perhaps I may he allowed to say appears to be inherited. As he has told us, he is the third Earl of Selborne to interest himself in these matters.

My Lords, if I may deal with hops first, I may say that I appreciate the concern expressed during this debate, and particularly by the noble Earl, Lord Selborne, about the role of the Hops Marketing Board in the common organisation proposed for hops. It has always been appreciated that membership of the EEC would involve changes in our arrangements for many commodity sectors as a consequence of adopting the Community system. We need to consider, and consider very carefully, the effects on the functions and operations of the Hops Marketing Board of the proposed regime, and seek to maintain those functions which are essential to the orderly marketing of hops, while at the same time ensuring that United Kingdom producers will benefit fully from the Community aid schemes.

The Commission's proposals for a revised régime recognise the need for a much more closely organised hops market than has hitherto existed in the Community. The marketing of hops in some other areas of the Community has not hitherto been as well organised as in this country, as has been pointed out today; and, clearly, the prosperity of the United Kingdom producer depends not only on the conditions obtaining in the domestic market but on the levels of supply in other major hop-producing countries. The Coin-mission are hoping to achieve greater market discipline by encouraging the development of producer groups and increasing their attraction for individual growers. This approach is similar to that adopted in the United Kingdom in the 1930s, but despite the fact that the Hops Marketing Board provides a more than adequate means of equating demand with supply, the Commission have difficulty in accepting it as a producer group in the way that they look on these groups.

The problem at the moment appears to be that the compulsory membership of the Board is difficult to reconcile with the concept of voluntary organisation envisaged in the draft regulations. Depending on the final form of the regulations, some adaptation of our present marketing arrangement as operated by the HMB may be necessary so as to secure the maximum benefit from the modified regulations. Clearly there may be practical difficulties involved. However, we believe that it is in the interests, not only of our own growers but of those growers in the rest of the Community that these difficulties be overcome. I am sure, my Lords, that, given good will and an understanding of all the circumstances, they will be. In this respect we must recognise that the United Kingdom, as the Community's second largest producer, must be concerned with finding a solution to the problem of hop producers throughout the Community, and not merely with trying to maintain the status quo at home. We are, and have been, in close touch with the representatives of our growers and with the Commission at all levels in order to seek some arrangement which will ensure the greatest benefit from the Commission's proposals to growers here and in the Community, and we shall continue to be so.

My Lords, before I leave hops, I should like to answer a few questions of detail which have been raised both in your Lordships' House by the Committee and sometimes outside. First of all, it is asked whether the Minister is prepared to make acceptance of the HMB as a producer group a condition of agreement to the regulations. I would not wish to anticipate our negotiating attitude towards a regulation which is subject to discussion with other member States and the Commission, and which could be changed as a result of these discussions. We are asked, too, whether United Kingdom growers would lose by belonging to the HMB if aids were channelled through these new types of producer groups. We cannot see how the HMB as at present constituted could he recognised as a producer group under the regulations as drafted, and it would follow that aid would not be available to British growers unless they were revised. There is of course provision in the draft regulation for a transitional period to July 1978.

Could the Board qualify for recognition as a producer group? As I have said, it is not possible under the present draft, but this draft is still under discussion in Brussels, and we shall need to consider the position of the Board in the light of the version which is finally agreed. Could the Board maintain control over its members without compulsory membership? This was a point raised by the noble Earl, Lord Selborne. The concept of group discipline is inherent in the Commission's proposals, in that they provide minimum membership and resignation periods. The Board's powers go further, but in practical terms there may not be much difference. The proposals provide for transitional arrangements for member States, as I said, down to July 1978. Most producer countries seem likely to require some transitional arrangements.

My noble friend Lord Raglan asked about the question of non-harvesting grants, and what progress is being made. Proposals for non-harvesting grants are being considered by the Commission following criticisms from member States about the timing of the measure and the conditions attached to it, and the Commission have undertaken to reconsider their proposals. Before I turn to potatoes, may I say at once to the noble Earl, Lord Kinnoull, who gave us examples in several European languages of the Commission's proposals, that I will at once take that up with the European Office, because I absolutely agree with him that these should be produced for your Lordships' House in the language of this country. I am very grateful to him for drawing attention to this.

Perhaps I may turn now to the Commission's proposal for a common organisation of the Community market in potatoes. When one sees the diversity of conditions in the nine member countries, it is hardly surprising that the Commission appears to have had a rather difficult task in trying to draw up a common régime. Potatoes are very late-comers in the field of agricultural commodities to be considered for a Common Market organisation. I must admit that potatoes have been headlines in the past twelve months, and I shall be dealing with some of the matters raised by the noble Earl, Lord Kinnoull, in a moment; but I think this underlines the fact that they are a very basic crop. When Sir Walter Raleigh and Thomas Herriot brought the potato to our shores, I doubt whether they for one moment imagined that it would become the staple food that it is today.

Most countries in the Community have evolved their own methods of marketing designed to suit their own particular needs. Compared with the Dutch, who have no regulatory mechanisms other than grading requirements, the arrangements we have operated in the United Kingdom are highly structured. These are described in the Committee's Report. I think it fair to say that, generally speaking, these arrangements have suited us very well; but this is not to say that they could be operated efficiently and effectively on a Community basis; because the potato industries of our European partners are very different.

The Commission proposal envisages a free market in potatoes and potato products conforming to enforceable grading standards, regulation of supply by adjustment of the grading standards and encouragement to producers' groups to hold potatoes off the market in times of assessed surplus. There would be provision for aid for the eventual disposal of surplus production by producer groups at low prices for dehydration into animal feed. On new potatoes, imports would be subject to reference price arrangements and a high tariff of 21 per cent. ad valorem from April 1st instead of May 15th as at present. As the Committee have said, and as your Lordships have also said today, such a régime would involve a fundamental change in our national régime. Discussions in Brussels are still at an early stage and to date have been confined to obtaining clarification of certain aspects of the proposal.

It is clear to Her Majesty's Government that there are various points which we regard as unsatisfactory. Some of these have been touched on by noble Lords today and I will come back to one or two a little later. The Commission is bound by certain guidelines in Article 39 of the Rome Treaty in the type of régime it can propose for agricultural commodities. There are obvious difficulties in reaching a régime which will meet these conditions and actually be an improvement over present internal arrangements in Member countries but we are still at a very early stage and it is possible that further examination of the complex problems can reconcile some of the difficulties. Our aim must be to find a solution which takes account of' the particular circumstances of potato production and marketing in the Community and of the interests of both producers and consumers. This is our objective and the Government will cooperate fully in the search for a satisfactory solution which meets our basic requirements while at the same time honouring the rules of the Community that we have joined.

My Lords, I should like to turn now to one or two points which were raised by the Committee, first on the need for a régime. Here, as I have indicated, there are Treaty provisions which set out the objectives of a common agricultural policy for commodities. There are arrangements for all basic commodities except sheepmeat and potatoes; and, clearly, it would be tidier if the whole of the agricultural centre was covered. But this does not mean that just for tidyness we must accept an unsatisfactory arrangement. We shall work for an acceptable Community solution. The Committee also pointed to the need that any common organisation should maintain confidence among producers, encourage the orderly marketing of the crop and provide consumers with relatively stable prices. They expressed the opinion that the proposal offered producers less security than they enjoy under our national régime.

Our policy is, and that of successive Governments has been, that the United Kingdom should be self-sufficient in main crop potatoes except in seasons of unusually low yield. This, I am glad to say, has been successfully achieved through the operation of cur guarantee and marketing arrangements. The Commission have said in the European Assembly that their objective is to establish a regime that would guarantee European consumers regular and adequate supplies of quality potatoes. We support this objective and, given efficient production, there is no reason to be unduly concerned, bearing in mind that we are in an early stage in the negotiations. We are not satisfied that the proposals in their present form cater adequately for a situation where farmers' confidence could be badly shaken by a season of abnormally high yields when prices would slump. This could lead to reduced plantings. Yields naturally vary from year to year but consumption is relatively static and does not greatly increase when prices fall; and, as has been seen this year, prices have to be very high indeed in times of shortage to cut back consumption.

Potatoes in excess of those needed for consumption would depress producers' returns below a reasonable level. Our present arrangements, we believe, provide a means of avoiding this situation. The confidence placed on producer groups, as defined, to ensure stability is open to serious question given the very small share of throughput on a Community basis that they control. While they can assist in orderly marketing, it is unrealistic to foresee the expansion of such groups to an extent that would represent a viable mechanism for surplus disposal. Nor do we consider that the aid for dehydrated surplus potatoes at the end of the season would alone provide a satisfactory overall solution to the problem of surplus disposal. The Commission's proposal does not meet the bill and we hope that they will think again. We shall seek full examination in Brussels on this matter.

The noble Baroness, Lady Elliot, and I think also the NFU, have made a suggestion of a facultative list of measures. We will support the provision of flexible arrangements which, with Community backing, can be invoked to deal with the problems as they arise and wherever they arise in the Community, This, I am sure noble Lords would agree, would be a sensible approach but it needs detailed examination.

Concern has been expressed at the prospect of the United Kingdom being required to remove the ban we maintain except in years of scarcity on imports of main crop potatoes. One of the basic philosophies of the Common Market is free trade between Members, and it is difficult to see a case for exempting potatoes from this concept after a transitional period. The Committee have reported their view that imports seem unlikely to have a great impact on the United Kingdom market in normal years, given the cost of transporting them from the Netherlands and elsewhere.

The proposed reference price system for new potatoes, coupled with a high tariff from 1st April, instead of 16th May, as at present, could result in an unnecessarily high level of protection at this season of the year and, in our view, is in the interests of neither our producers nor consumers; since producers stand to lose their seed trade with supplies of new potatoes and consumers will have to meet additional costs at a time when there are insufficient Community supplies to meet their needs. Much depends on the timing. We understand the problems of the producers in the Southern parts of the Community, but it must be recognised that the United Kingdom has a traditional demand for imported new potatoes in the spring and I can see no prospect of this being satisfied from within the Community. This whole question will, therefore, have to be fully examined. But I must make it perfectly clear that we cannot accept any proposals which could blatantly work to our disadvantage.

Noble Lords and the Committee, I think, have agreed the case for a reasonable transitional period, and we agree this as well. Clearly whatever arrangements are agreed, these will entail significant changes in existing régimes operated throughout the Community and it is essential that these are phased in an orderly way to minimise disruption to the market.

I was asked about the future of the Potato Marketing Board and I can see from the debate that different views are expressed about this. I may say that the negotiations are at a very early stage and I think that our first priority should be to seek arrangements which are satisfactory from the viewpoints of producers and consumers alike. Then we can consider in the future what role the Board may have in its operation.

The noble Earl, Lord Kinnoull, mentioned the events of the past season, and he raised the question of the adequacy of the powers of the Potato Marketing Board as of course he was perfectly entitled to do, and I am glad that he did. The shortfall in supplies from the 1975 crop was due to the hot dry summer last year which reduced a United Kingdom yield by about one-third and also affected the crops in other Northern European countries. All practicable steps were taken, both by the Government and by the Board, to alleviate the supply situation, but no amount of administrative action could make good our shortfall of some 2½ million tonnes compared with the previous year. The Board did what it could by relaxing the normal riddle sizes and encouraging orderly marketing. We are satisfied that it took the action open to it and acted responsibly in the very difficult situation we have experienced.

The Board has no powers to import potatoes. This is the function of the trade. Unlike other marketing boards, it is not a monopoly buyer. The Board regulates the area related to potatoes by means of its quota powers. Plantings in 1975, like those in the previous years, were fewer than the total of the quota issued and below the target determined by the Government and the Board. I am happy to say that the downward trend in plantings has been reversed this year. But even in 1975 the area planted would, had the yield been normal, have been sufficient to enable requirements to be met without significant supply difficulties. I must emphasise that the conditions of the 1975 crop were exceptional, and I am sure that it would be wrong to over-react to the events of that season in looking at our potato policy generally.

I should like now to come to the prospects for 1976 where we are having another hot summer. The 1976 crop was planted, as I said, in ideal conditions and the recent downward trend in plantings was reversed. The area planted by registered producers in Great Britain is estimated to be at least 10,000 hectares more than last year. The recent very high temperatures have cast serious doubts on the prospects of our achieving a normal yield over the United Kingdom as a whole. While rainfall in the North and West of England, Scotland and Northern Ireland has been reasonably satisfactory the crop in the Southern, and Eastern parts of England, including the main growing area of Lincolnshire, badly needs rain. The weather in the next fortnight or so will be a crucial factor. We shall almost certainly this coming year obtain more potatoes from our home crop than we did in last year's adverse conditions—I would say "certainly "were I not made cautious by the recent weather phenomena—but supplies are not now expected to be so plentiful as they were in the 1974 season. As on many other fronts at present, we must hope for rain. We shall continue to keep the estimated supply position under careful review during the forthcoming critical weeks.

The Earl of KINNOULL

My Lords, I am most grateful to the noble Lord, Lord Strabolgi, for giving way. Could he advise those of us who are not familiar with hectares what that means in acres? How does the total acreage for planting this season compare with last season?

Lord STRABOLGI

My Lords, there are two and a half acres to a hectare. The noble Earl also asked for some figures. The actual targets in 1973 for the whole of Great Britain were 206,000 hectares, and in 1974 204,000 hectares. They were down, as I said, in 1975 to 200,000 hectares. They are probably going to be up again this year, but I cannot give the actual figures. Regarding the production there were 215,000 hectares in 1974 which yielded 31.6 tonnes per hectare. This dropped last year to 22 tonnes per hectare. It is too early to give the figures for this year. They will certainly be up on last year, probably nearer 27 tonnes, or something like that.

The shortfall in the 1975 crop of course resulted in high prices, as the noble Earl said. At the retail level, prices of home produced potatoes reached a peak in the last week of April when they averaged from 16p to 17p per pound, though there will have been some higher quotations. The high levels obviously raise the question of whether some form of price control was appropriate. The noble Earl mentioned this. The possibility of freezing prices was given careful consideration; but the Government concluded that it would not be in the consumers' best interests. Imposing price controls would have been a very complex administrative task and, more important, it would not have overcome the shortage. On the contrary, fixing prices at an artificially low level would have encouraged consumption to continue unchecked thus exhausting the available supplies more quickly and indeed that might well have discouraged the import of supplies from overseas which, in the event, helped to alleviate the shortage. The noble Earl asked about Roumania. I believe that potatoes are not allowed to be imported from Roumania for health reasons. We were enabled to import them from many other countries last year in the emergency.

I hope that has answered the various questions. It is most useful to have had the opportunity to debate these important proposals and hear the views of noble Lords upon the complex issues involved. I appreciate the constructive attitude which all your Lordships have taken to these proposals. I will ensure that my right honourable friend the Minister of Agriculture, Fisheries and Food, is aware of all the points raised this afternoon.

Lord SANDYS

My Lords, before the noble Lord sits down, may I thank him for his very careful and detailed replies on many matters which my noble friends have raised? May I tell the Government that from this side of the House we are particularly distressed to note that the Government believe that the Hops Marketing Board will not be able to fulfil the qualifications for a voluntary producer group. As the noble Lord said, this is an early stage of negotiations and I hope that the Government will give an urgent and high degree of priority to this particular issue, the subject of which has been so much at the heart of this debate.

Lord STRABOLGI

My Lords, I am very glad that the noble Lord raised that point. I should like to stress that the words I used were: As at present drafted it would not be possible for the Hops Marketing Board to qualify for recognition as a producer group ". As I said, the draft is under discussion in Brussels and we shall be considering this point with the other Community Members. I am very glad he raised it; it gives us the opportunity to clarify the matter.

4.59 p.m.

Lord RAGLAN

My Lords, I should like to thank my noble friends on the Committee for their kind compliments; they are delightful people with whom to work. The noble Lord, Lord Strabolgi, praised us for holding such a well-informed debate. I would inform him that it is very difficult not to be well informed from the enormous amount of paper received and the length of evidence which we took. We all knew the subject very well by the time we had finished. I should like to thank my noble friend for his thorough reply. He has taken the point which was unanimously put forward that we think that it is vital to the hops industry that it remains in its present organisation, and we hope that they will induce the Commission to accommodate their Directive to understand how we are organised in this country. I do not see, reading the Directive myself, that it should be very difficult for them to do so.

I do not think I have anything else to say before going on to the next Motion, except to point out that the problem about potatoes is knowing what the devil to do with the surplus production. It is the same problem that we criticise the Common Market for so frequently—in other words, the enormous surpluses that they have and do not know how to deal with. I can hear my noble friend saying, "That is a very big problem with the potato industry ". The question is: What do we do about shortages and what do we do about the enormous overproduction which can come about in a very good year? It is an interesting fact that abundance makes a producer worse off than shortage. With those remarks, my Lord, I commend the Motion.

On Question, Motion agreed to.