§ 4.3 p.m.
§ Lord STRABOLGI rose to move, That the draft Agricultural Products Processing and Marketing (Improvement Grant) Regulations 1977, laid before the House on 10th November, be approved. The noble Lord said: My Lords, these regulations, which will apply throughout the United Kingdom, are closely linked with a recently-adopted EEC regulation and it may help if I first say a few words about that. In February this year, the Council of Ministers agreed Regulation No. 355/77 designed to achieve improvements in the processing and marketing of agricultural products. This new regulation will largely replace an earlier one, Regulation 17/64, which had been in operation when we joined the Community. These arrangements—known as the Individual Projects Scheme—had no fixed 2004 budget but were simply allocated unused funds from the Guidance sector.
§ Regulation 355/77 applies only to projects concerned with processing or marketing agricultural products. It has a firm budget of 80 million units of account for the whole Community for each of the five years for which the regulation will run. Aid under the regulation will be available for capital investment in marketing or processing projects. These can be undertaken by a wide range of people, but they must meet the criterion of bringing adequate and lasting economic benefits to agricultural producers. However, the total of aid is limited and, even if an application meets all the criteria contained in the regulation, it will still have to compete with others for FEOGA aid. All applications will be considered in Brussels and assistance will be given to those which, in the opinion of the Commission, look most likely to satisfy the purposes of the regulation.
§ The EEC regulation will only cover projects which have attracted some grant from the Member State concerned; minimum contribution of 5 per cent. of the eligible costs is required and successful projects with a national grant of less than 8 per cent. will receive aid limited to not more than two and a half times the national contribution. Projects attracting national aid of 8 per cent. or more will be eligible for the maximum rate of assistance under the EEC regulation of 25 per cent. or, in some special circumstances, 30 per cent.
§ This brings me to the need for the regulations which we are discussing today. There is a wide range of schemes under which United Kingdom applicants can obtain the necessary national grant. These include the Agricultural and Horticultural Co-operation Scheme and Regional Development Grant. But these are not all-embracing and a number of worthwhile projects have been excluded from consideration for FEOGA assistance in the past because they did not attract United Kingdom grants. In particular, projects in the food industry located outside assisted areas were rarely able to qualify.
§ We felt that a new approach was needed with the adoption of Regulation 355/77. My colleagues, the Secretaries 2005 of State for Scotland, Wales and Northern Ireland and the Minister of Agriculture agreed that, with the new regulation being addressed to the processing and marketing area, it was no longer sensible to rely wholly on existing United Kingdom grant schemes to support applications; to do so would exclude worthwhile projects as a result of considerations quite unconnected with the purposes of the EEC regulation.
§ A further aspect of the EEC regulation is also relevant here. For 1979 and 1980, priority will be given to applications within programmes of aid drawn up by Member States and, from 1981 onwards, only programmed investment will be eligible for consideration. In these circumstances, it is clearly in the national interest that well-argued, coherent programmes be prepared; success in this could well be frustrated if it were to be found that some projects, however good, could not be included in the programme because they lacked the necessary national grant.
§ That is the background to the regulations now before your Lordships. In essence, these regulations are very simple. They allow the appropriate agriculture Minister to approve a project which is unable to receive sufficient United Kingdom grant under any other United Kingdom grant scheme in such a way that, first, the project can be submitted for consideration in Brussels; and, secondly, if the Commission wishes to aid it, the necessary minimum of national grant will be made available under these regulations to allow the project to qualify for EEC aid. I should emphasise that no United Kingdom grant under these regulations can be paid in any case where the project is not selected by the Commission for grant under EEC Regulations 355/77.
§ I hope your Lordships will agree with me that these regulations are a logical and worthwhile step to take which will be of genuine benefit to the food and agriculture industry. I therefore commend them to your Lordships.
§ Moved, That the draft Agricultural Products Processing and Marketing, (Improvement Grant) Regulations 1977, laid before the House on 10th November, be approved.—(Lord Strabolgi.)
2006§ 4.10 p.m.
§ Lord SANDYSMy Lords, the House will be grateful to the noble Lord, Lord Strabolgi, for explaining in some detail this interesting extension of the system to say that FEOGA funds can be obtained for selected projects. There are a number of questions, of which I have given prior notice, which I should like to ask the noble Lord. First, in regard to the budget, the noble Lord mentioned that 80 million units of account had been set aside for this purpose. Would it be possible to express this in the form of pounds sterling? Secondly, is the budget going to extend over a period of more than one year? Is it therefore a budget for a period up to five years? I wonder whether fish farming is included in the remit of this particular order? If so, will the noble Lord indicate which parts of the fish farming industry would be eligible and which would not? Thirdly, in regard to the question of which agricultural products are normally eligible for this type of activity, could he indicate which article in the Treaty of Rome gives us this piece of information?
§ 4.12 p.m.
§ Lord STRABOLGIMy Lords, I am grateful to the noble Lord, Lord Sandys, for the welcome he has given this order and also for giving me prior notice of the questions he was going to raise. I take first the matter of the FEOGA budget and the amount the United Kingdom is likely to receive. I understand that no fixed allocation of the 80 million units of account (which is about £53 million, depending on the exchange rate) will be made to individual countries; but on past performance we would hope to obtain about £6½ million, which is the equivalent, roughly, of 10 million units of account. If this is allocated on the basis of a 25 per cent. rate of grant, which would cover £26 million of United Kingdom investment per annum; the minimum United Kingdom grant at 8 per cent. would amount to £2.8 million, but is likely to be greater as the rates of grant under the Co-operative Grant Scheme, Redmeat Slaughterhouses Industry Scheme and Development Grants are normally above the minimum of 8 per cent.
The noble Lord asked about fish farming. Fish farming as a production activity would be ineligible for FEOGA assistance under this regulation, but I 2007 can say that investment concerned with the marketing and processing, which of course would include packing, of such fish would be eligible in principle for FEOGA assistance from the regulation. The noble Lord also asked me about the products and from where one could find which were eligible. Regulation 355/77 concerns the improvement of marketing and processing of agricultural products. These products are defined as those covered by Annex II to the Treaty of Rome, which broadly covers primary agricultural products and the first stage of processing. I hope that answers the points.
On Question, Motion agreed to.