HL Deb 06 August 1980 vol 412 cc1575-8

7.14 p.m.

The Earl of MANSFIELD

My Lords, I beg to move that the draft scheme laid before the House on 25th June be approved. If in an agricultural context I can say this, I think that we are sailing into calmer waters. The Agriculture Act 1967 provided for a scheme of grants to be devised for the benefit of agricultural co-operatives. Such a scheme was introduced that same year and modified in 1971 in the light of experience. When its initial 10-year life expired in 1977 the scheme was extended for a further three years, and again modified to bring the rates of grant for capital costs into line with those available to individual farmers and growers under the Farm Capital Grant Scheme and the Horticulture Capital Grant Scheme. In May this year the period of the scheme was further extended for three years until 14th May 1983.

Ths scheme, which is administered with the help of the Central Council for Agricultural and Horticultural Co-operation, basically offers assistance to cooperatives towards their formation costs (including feasibility studies and initial managerial salaries), and grants on their capital investments. In 1979–80 107 applications for grant were approved and about £1.2 million paid out. This compares with expenditure in 1979–80 of about £84 million on the two individual capital grant schemes.

As your Lordships know, the FCGS, HCGS and FHDS are being simplified and rationalised. These changes make it necessary to amend the Agricultural and Horticultural Capital Grant Scheme if only because of the existing references to the FCGS and HCGS, which will cease to exist as such. However, the Government are taking this opportunity to make more significant amendments to the scheme in order to provide better incentives to farmers and growers to market their produce through co-operatives.

Specifically, we are proposing that, first, a schedule be added to the scheme listing the capital and non-capital costs for which grants are available to cooperatives and specifying the maximum rates of grant for each item; and, secondly, that the maximum rate of grant for capital investment by co-operatives in central facilities be increased from 22½, per cent. to 32½ per cent. with effect from 1st October 1980. These central facilities are those which are, by their very nature, related to more effective marketing.

It has been the policy of successive governments over many years to encourage the promotion and development of agricultural and horticultural co-operation which we see as a particularly effective means towards achieving our objective of improving British agricultural marketing. In August 1979, my right honourable friend the Minister of Agriculture appointed five advisers who are looking into all aspects of agricultural marketing. Two of them gave particular attention to the work of the Central Council and the encouragement of cooperation. Their conclusions were clear —that the development of co-operation must have a high priority in any attempt to improve marketing; that the position and past record of the Central Council must place it in the forefront of any Government initiative on marketing; and that the continued work of the Central Council should be backed up by renewal of its funds for developing marketing and by extension of the co-operative grant scheme.

Following these recommendations the Government have taken action in four specific ways to enable co-operatives to play a full role in the improvement of marketing. First, we have reorganised the Central Council for Agricultural and Horticultural Co-operation so that the council's marketing work can be integrated more closely with its work on co-operation generally. Secondly, having given the council a new structure and a dynamic new chairman, we have increased the marketing promotion funds available to it by over £100,000 in the current financial year. Thirdly, my right honourable friend has instructed all sections of his department, but most particularly ADAS, to pay special attention to the needs of marketing, to encourage market awareness among producers and to develop the closest links with the processing and marketing sides of the food, agriculture and fishing industries. In Scotland, my department and the colleges of agriculture are also actively considering how they might help improve marketing, both in their educational and advisory work.

The Government appreciate that, by themselves, research, discussion and exhortation can only do so much to develop co-operation and better marketing. These efforts must be complemented by aid directed to the right place at the right time. We estimate that the increase in grant rates will cost an additional £500,000 annually from the financial year 1982–83, plus £100,000 in 1981–82 as additional financial claims start to build up. We are confident that this expected increased uptake of co-operative grants will be accompanied by at least an equivalent decrease in capital grant claims by individual farmers.

I hope that noble Lords will support these improvements to the co-operative grant scheme, and I commend this statutory instrument to the House.

Moved, That the draft scheme laid before the House on 25th June be approved—(The Earl of Mansfield.)

On Question, Motion agreed to.