HL Deb 25 July 1979 vol 401 cc1927-34

2.58 p.m.

The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers)

My Lords, I beg to move that the Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1979, a draft of which was laid before this House on 5th July 1979, be approved. Your Lordships will know the important role which hill and upland farmers play in the livestock sector of our agriculture. The hills provide some 60 per cent. of the specialist beef cow population and 20 per cent. of the total breeding herd, while hill sheep constitute some 60 per cent. of the total breeding flock. The hills, therefore, play a fundamental part in the cycle of renewing the national breeding flock and the production of suckled calves and store lambs.

The special difficulties with which hill farmers have to contend have always been well recognised and we have a long tradition in this country of providing financial assistance to them in the form of annual headage payments on hill cattle and hill sheep. These used to be called the hill cow subsidies and the hill sheep subsidies. Nowadays these payments are made as hill livestock compensatory allowances under the provisions of the EEC Less-Favoured Areas Directive No. 75/268. They are fixed according to the severity of the permanent natural handicaps which affect farming activities in designated areas. In the United Kingdom these areas cover most of our traditional hill farming and livestock rearing land.

The rates of these allowances were reviewed last autumn in consultation with the farmers' unions. The outcome was that the previous Administration announced on 9th March that in the special circumstances of this year, and subject to Parliamentary approval, a supplementary payment of 50p would be added in 1979 only to the higher rate of allowance for hill sheep, which is £3.60 per ewe, thus making the rate for 1979, £4½10.

The regulations now before the House confirm the supplement of 50p on the higher rate of hill sheep allowance for 1979 which was announced in March. This will be worth £3 million to hill sheep farmers in the United Kingdom. In addition, the regulations implement a minor change in the maximum rate of allowance payable under the Less-Favoured Areas Directive. This rate, which is applied both to each livestock unit and to each hectare of eligible land, is increased from 53½50 to 53½70 units of account. That, translated into English, means an increase from £33½92p to £34½05p, an increase of 13p.

In the United Kingdom it will benefit, if only to a small extent, a comparatively small number of hill farmers who stock their land at a rate which is somewhat greater than one livestock unit—the equivalent of one head of cattle—per hectare. The change does not affect the rate of allowance paid on each hill cow. The Government are aware that the farming industry does not regard the increase made in these regulations as adequate. At the time we took office we realised that it was necessary to review the position of hill livestock producers in view of the very bad weather that they had earlier this year. A request was made by the farmers' unions for a number of specific measures of assistance and we gave this thorough consideration. But we had to couple our consideration with a recognition of the need for the maximum restraint in public expenditure.

We fully recognise that in many parts of the country hill farmers, and sheep farmers in particular, have been caused serious difficulties by the severe and prolonged winter. These included sharp increases in feed costs. The pattern of losses of sheep was uneven and, fortunately, serious losses were confined to only a minority of hill farmers. Both the sheep market and the cattle market are at present very firm and, while costs have been heavy, the prospects for recovery should not be underestimated. The prices which will be obtained in the autumn sales of store lambs and suckled calves will be an important factor in determining the financial position of hill livestock producers.

As my right honourable friend announced in another place on 5th July, we believe that a judgment on the need for further increases in compensatory allowances should be deferred until we can take account of the prices obtained during the main period of the autumn sales. At that stage we shall consider the level of support which is justified in the light of the prices which are then obtained, the increased costs, the problems of restoring flocks to their former size and general economic conditions. If an increase is justified, it will be paid with the allowances due at the beginning of 1980.

My Lords, the main provision in these regulations, the 50p increase, will provide a valuable measure of assistance for a hard-pressed sector of our livestock industry whose position will be reviewed again later this year in the manner I have outlined. I ask the House to support these regulations. I beg to move.

Moved, That the draft regulations, laid before the House on 5th July, be approved.—(Earl Ferrers.)

3.3 p.m.

Lord WALLACE of COSLANY

My Lords, on behalf of my colleagues, I should like to thank the noble Earl for his clear explanation of this order. Any increase of allowances to hill farmers is particularly welcome, bearing in mind the hard winter that they faced in late 1978 and early 1979. I think one must pay tribute to the toughest and hardworking section of the agricultural industry. We have at least one hill farmer among us, the noble Baroness, Lady Elliot of Harwood, and I think that the House will agree with me that in the nicest possible manner the noble Baroness herself is tough and hardworking.

What gives me concern is whether the increases keep step with inflation; and, in particular, I observe that the compensatory allowances in respect of ewes of an approved breed is payable for 1979 only. I doubt whether in point of fact the allowances are adequate, and I can well understand the industry making their complaint. I also note that the order covers all areas of the United Kingdom, which will bring some consolation to Wales.

No mention is made of the arrangements for winter keep. Will these arrangements continue or are they completely unaffected by this order? The explanatory note to the order refers to eligible land. What constitutes eligible land? What number of farmers are affected and are thus disqualified from claiming a full subsidy? Are there any alternative arrangements for them? Obviously, there is an increase in cost, but I make no point on this. The British housewife and the economy benefit from the productive efforts of this worthy section of the farming community.

I raise one complaint—which I may say has almost become traditional—and that is regarding the long delay in payments. Naturally, applications have to be made and vetted; but in the natural circumstances of the industry, and with the hard graft and risk involved, it is reasonable that there should be some anxiety over the prompt arrival of a cheque. Perhaps the noble Earl can now or later give some assurance on this point. Finally, on this side we welcome this order and pay our tribute to a hardworking and sturdy section of our community.

Lord MACKIE of BENSHIE

My Lords, of course I welcome this order. I should like the Minister to go into a little more detail regarding the Government's attitude to the production of store stock from the hills. It is my view that the production from the hills does not in any shape or form conic into the category of the production of over-produced food such as milk and other commodities. The production of lamb is in great need. We need more lamb; it is an expensive and much sought after commodity. Beef is really not in surplus in the world in any shape or form.

It appears to me also that on the hills when one sells a lamb or a suckled calf one is selling at something like a third or at least less than a half of its eventual selling price. In fact, the hills and uplands supply to the public this essential commodity, beef and mutton, which they desire and which is so much sought after. I should like to hear the Minister's attitude to the relief of this very hard pressed section of our industry in view of the fact that none of the strictures rightly made against the CAP applies to the production of the basic store stock from the hills. Of course, we welcome this order but I should very much like to hear the noble Earl's attitude to the general proposition that I have made regarding these producers of the basic stock.

3.7 p.m.

Baroness ELLIOT of HARWOOD

My Lords, I do not require to declare my interest since the noble Lord who spoke first from the Opposition has pointed out that I am in fact a fairly considerable hill farmer. While I realise that the noble Earl on the Government side is in the awkward position of having to economise in every possible way, there are some economies which are more valuable than others. An economy in which one could involve the lowering of production of what the noble Lord, Lord Mackie of Benshie, has pointed out is one of the essential foodstuffs and not over-produced at all in the EEC, is something which we ought to think twice about. We could still increase our production from the hills which would be an enormous advantage to the consumers in this country and an enormous advantage to everyone concerned.

I can only reiterate what has been said over and over again: last winter was the very worst one I can ever remember—and I have been in farming for 40 years in the hills—and it was unbelievably cold. If it were to occur again, I do not know what would happen to our production. The weather was simply appalling. I should like to say " thank you very much " for the fact that one of the grants is increased by 50p; but I hope that when the Government look at the agricultural situation in the autumn they will realise that it takes two or three years on a farm that breeds store stock to recover from a winter such as the one we have just had. You cannot turn it over like that and say, " Next year is going to be all right ". It will not be all right because it is impossible; one cannot make up the numbers in that period of time. I urge the Government to look at this sympathetically. I must not in any way suggest that we are extravagant—we are not, we are highly economical—and what we are producing is something that the whole agricultural community wants. I hope that the Government will look very sympathetically on the hill farmers.

Lord GLENKINGLAS

My Lords, may I add one point to my noble friend in addition to those made by the noble Baroness? May I urge the Government to make up their minds rather soon? Most of us—my family have been hill sheep farming now for well over 50 years—realise that we kept our stock alive last winter entirely at the expense of the banks, because the cost of food rose to astronomical heights. I was buying hay from England at something over £100 a ton. It is not a very happy situation to be in in the spring. Certainly, if we get another year like that, there will be no chance of my bank continuing to support the operation at that level. The animals are alive because we were able to borrow money. We shall not be able to do it again if the Government take a long time to make up their minds.

Lord RAGLAN

My Lords, if the noble Earl does not mind taking on board one more question—he may or may not be able to answer it without notice—may I ask whether he is able to say what proportion of the total quantity of sheep meat and beef which comes into the national herd is in fact contributed by those farms which are classed as " marginal " and which are affected by this order?

Earl FERRERS

My Lords, I am grateful for the remarks which noble Lords have made and for the welcome which has been given to this order. The noble Lord, Lord Wallace of Coslany, said something which I should like to reiterate: he paid a tribute to the hardworking farmers who live on the hills. This is something which I share totally with him. They live in very difficult conditions and are often subjected to extremes of climate. Theirs is a very hardy profession indeed. I do not know whether that is necessarily why my noble friend Lady Elliot was described as being " tough "—a most ungentlemanly description to apply to my noble friend, I thought; but I think we know what the noble Lord meant. She is certainly well experienced in the business of sheep farming.

The noble Lord, Lord Wallace, also asked whether winter keep would be affected by this order, and the answer is that it is not. He also asked to what kind of farmers this order referred, and the answer is that it refers to those sheep which are kept in the less favoured areas and also to certain breeds of approved sheep. They will get the allowance of up to £4½10 and those other hill ewes—what one might call upland sheep as opposed to hill sheep—will get the allowance of £2½85, which is not in fact covered by this order. The noble Lord did say that there was a delay in making this payment. That is perfectly true, and some of the delay has been caused by the strike of computer operators, but I can assure him that it is the Government's intention to make this payment as soon as possible and by the end of September at the latest.

The noble Lord, Lord Mackie of Benshie, wanted to know the Government's view of hill sheep farming. I think that is a fairly extensive question and I would not really care to go into a great deal of detail now other than to say that we believe that the sheep which come from the hills of the country are in many ways the fundamental stock of the sheep farming industry. It is very often they who have produced the initial stock which are then crossed with others, leading to the fattening of sheep, which is in fact what the industry is about. Therefore, we consider that the production from the hill areas is of great importance.

My noble friend Lady Elliot said she hoped that we would review this in September and take account of the fact that it takes two or three years to replace stock lost through bad weather conditions. This we entirely accept. Of course, it would be erroneous to expect the Government to under-write all losses experienced by hill sheep farmers as a result of weather conditions. That is part of the nature of the business, but we will certainly take that factor into account when reviewing the whole situation. The important point is that we shall take into account the returns that sheep farmers get from the autumn sales, and it seems at the moment as if those returns might he quite reasonable.

My noble friend Lord Glenkinglas suggested that the Government should not take too long in making up their minds. That is a fair enough criticism to make. I think I can say that earlier on we were hearing rather the reverse criticism made—that the Government had been a bit too quick in making up their mind! I think there could possibly be another inference, but we were criticised for making up our minds too quickly. We shall certainly take the point and not take too long in coming to a decision.

Lastly, I was asked by the noble Lord, Lord Raglan, what proportion of the beef and sheep comes from the hills. As I said in my opening remarks, the hills provide some 60 per cent. of the specialist beef cow population and 20 per cent. of the total breeding herd; sheep constitute some 60 per cent. of the total breeding flock. My Lords, I hope that I have been able to deal with the majority of the questions. I am grateful to your Lordships for the welcome which has been given to the order.

Lord RAGLAN

My Lords, do the figures include Scotland?

Earl FERRERS

Yes, my Lords.

Lord RAGLAN

I thank the noble Lord.

On Question, Motion agreed to.