Hops Marketing Bill [H.L.] (Hansard, 8 December 1981)

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)
My Lords, I beg to move that the Hops Marketing Bill be read a third time. I thought that it might be helpful just to say a few words on the Third Reading of this Bill. Although my noble friend Lord Selborne mentioned in the Second Reading debate that, as chairman of the Hops Marketing Board, he was sorry to see it disappear, I believe I am right in saying that the board and the industry in general have accepted that an alternative system must be adopted in order to comply with the European Community rules.
I also think it true to say that, having once accepted the necessity for change, the board, the industry and the Government have, collectively and independently, concluded that the most sensible course to take is the one which this Bill is designed to make possible—that is, the dissolution of the board in a way which will 1264 preserve the orderly system of marketing hops in this country. As your Lordships will be aware, individual producers will be able to vote in a poll as to how they think the board's assets and liabilities should be disposed of. The Bill does not explicitly say so, but it is hoped and expected that hop producers will support the new voluntary producers' group, which will be called the "Hops Marketing Board Limited", and, if this is so, most, if not all, of the assets will be transferred to it. If sufficient support is forthcoming, the Hops Marketing Board Limited will buy and sell hops on behalf of its members in a way very similar to the system employed by the present board. It is hoped and, indeed, expected that we shall therefore ensure the continued stability of the hops market.
Producers have been kept fully informed by the board of the proposed alterations, and have been able to attend discussion meetings in their areas to ask questions and make their views felt. The board themselves have shown great patience and understanding in taking account of a wide variety of points, and I am glad to see support, now, from virtually all sectors for this Bill. I beg to move.

§ Lord Bishopston
My Lords, I am sure that we are grateful to the Minister of State for his comments on the final stages of this Bill. As he said on Second Reading, and again today, the board has been in existence for half a century, having been formed in 1932. Although there have been criticisms, of course, of the fact that there have been a number of boards and Quangos—a criticism which I do not share—the Hops Marketing Board, with the full backing of the hops industry and the brewing industry, has made a notable contribution.
We now come to the final stages of the passage of this Bill in your Lordships' House, and in the Bill we now have a potential alternative way of organising the industry. Naturally we shall consider what effect the Hops Marketing Board has had over five decades in looking for the qualities that we expect in its successor. I think that it brought confidence and stability—and I am sure that the Minister will agree with that—so that growers, producers and, indeed, the brewing industry were able to plan ahead with confidence. That is really essential in this industry as well as in other aspects of the agriculture and food producing industries. I feel sure that few, if any, will be pleased that, due to the EEC requirements, we have had to find an alternative way of doing what the Hops Marketing Board did so well.
A brief review is necessary to look for and to anticipate in the new arrangement those qualities which were essential and which we saw in the period up to the present situation. As we did not have a detailed Committee consideration I think that it would be helpful to your Lordships' House if the Minister of State clarified a few queries which I wish to put to him. Will the Minister clarify a little more the position regarding the result of a poll, to which he referred, which has to be held to ascertain the views of the industry about the successor organisation? I have in mind the requirement regarding the number of regis 1265 tered producers voting, and those capable of producing not less than two-thirds of the quantity of hops potential produced in this country.
I presume that the Minister of State's reference in column 410 of the Official Report of the Second Reading debate on 17th November, when he referred to numbers and areas, was in fact a reference to the potential quantity of hops production which those areas might represent. Can he say a little more about how another poll which may have to be held will get the required majority if such does not obtain the first time? If less than a two-thirds majority is arrived at the first time, what kind of questions will have to be put so as to get the requisite majority the second or further times? I feel sure that we all hope that the required majority will be obtained the first time because fragmentation of the industry certainly would not be an aid to its stability.
Clause 2 refers to safeguards for employees. I am sure we are pleased to see that, but I think it would be helpful if the Minister, who has referred to consultations having taken place within the industry, would also say a little more about what consultations have taken place with employees and trade unions, and with what result. I anticipate that the results have been acceptable to both sides.
On forward buying and contracting ahead for three or four years, which is a feature of the present arrangements, I presume that this is to continue—not only for producers of the Hops Marketing Board Limited (the successor organisation in the new co-operative) but also for those outside the organisation. This is essential, not only for the mass of producers but also for those not covered by the new society and who are not in it. If there is to be more than one society or body, how does the Minister see Clause 4 working out when disposing of or sharing the assets and liabilities of the present board? I think that to arrive at such a position would create a very serious situation, and one anticipates that it will not happen.
The noble Earl, Lord Selborne, chairman of the Hops Marketing Board, hoped that there would be no devisiveness, as it could be a serious factor and cause instability. In such circumstances there are a number of factors which are important. The Hops Marketing Board was concerned in a number of aspects of importance to the industry, apart from forward buying and contracting. There were the concerns of productivity, the concerns of research and development, pricing, experimental work and so on. Obviously this must continue under the new arrangement, and I should like some assurance that this will continue as before, because it is vital to the future competitiveness of the industry, especially as we might be competing in a much greater way in Europe.
The Minister said (and I was pleased to hear it) in the Second Reading debate that we are self-sufficient with hops, except for about 10 per cent. or a small percentage of special requirements which we had to import from abroad. In the more competitive situation of the EEC it would certainly be a good thing to feel that we could produce all the hops we want and that we do not have to import from abroad. Those are the queries I should like the Minister to comment upon because I think that for him to do so would be 1266 helpful to the industry itself.
Finally, I feel that we all have cause to be thankful to the Hops Marketing Board and to its chairman, the noble Earl, Lord Selborne, and indeed to board members and staff and for the co-operation and the work in which the Ministry itself was involved. I feel sure that we wish them well in their future work, in taking over from such a successful predecessor, in serving the needs, not only of the hops industry but also of the brewing industry, and that all would drink their health to the future.

Earl Ferrers
My Lords, I am grateful to the noble Lord, Lord Bishopston, for his general welcome to the Bill. He did ask a number of points and I will do my best to clarify them for him. He rightly suggests that if a two-thirds majority is not obtained in the poll of registered producers provided for in Clause 2 of the Bill, then the result could be considerable instability in the hops market. In practice, we have good reason to hope and to expect that the first poll will successfully provide for the transfer of the board's assets and liabilities. The board have kept producers well informed of the situation and have sounded out their feelings so that they may be taken fully into account in framing the question to be put in the poll. The poll will be carried out along similar lines to that provided for under the Agricultural Marketing Act 1958. There are two components to the requisite majority; first, a two-thirds majority of the individual producers who vote in the poll and, secondly, those producers voting in favour must, between them, be capable of producing two-thirds of the potential hops production of all those voting.
The noble Lord referred to the remark that I made during the Second Reading when I referred to the "area" of hops. In referring to the area, I was hoping to simplify—that is always a dangerous thing to do—an otherwise complicated explanation. In assessing a producer's production capability, his area—in other words, his hectares—is multiplied by the average production of hops per hectare. Therefore the voting capability is actually proportional to a producer's hop area. Unlike the European Community's milk polls, it is the majority of those voting which counts; the votes of any producers who do not participate in the poll will not he counted as negative votes. With only some 400 registered producers involved, I doubt whether there will be very many non-voters. As I have said, I hope that the first poll will produce a favourable result for the sake of all concerned in the industry. If it does not, however, further polls may be held on the same or on different questions. For instance, if some producers wish to form a second producer group and claim a share of the board's assets, a poll could propose that the assets be disposed of proportionately between the new society and a second specified group; that is one of the options. If no poll produces a result at all, then in the last resort the Minister may step in and petition the courts for the board to be wound up. I would like to say that this would of course be highly undesirable and also extremely unlikely. It would be undesirable for producers and for the hop industry as a whole, but naturally the Bill has to cover every contingency. That particular 1267 position will only arise if producers have been unable to agree upon the better course of action. The Bill protects the interests of all concerned in this event, in so far as surplus assets will be fairly distributed—but I would not be prepared to forecast the result in terms of market stability.
I understand that the board have fully consulted their employees in relation to Clause 2(7) and that they are content. Clause 4(1) relates only to the present board and it is designed to avoid holding elections to a body which is on the point of dissolution. The Hops Marketing Board Limited and any other society will presumably arrange their own elections and no provision for that is necessary in the Bill.
What happens to forward contracts will also depend on the result of the whole. The board, I understand, intend to propose that all their forward contracts with producers should be transferred to the new society or its subsidiary. This will mean that provided the necessary two-thirds majority is attained, all producers who have hops under forward contracts with the board, whether of not they join the society, will be required to deliver those hops to the society or to its subsidiary. This is necessary in order to ensure stability on the market. Any producer who decides not to join the society will of course be free to sell any other hops—in other words, hops which are not subject to forward contracts—anywhere that he likes. It is true that the United Kingdom producers have enjoyed the option of forward indexed contracts, where the price payable by the buyer is subject to an adjustment or a surcharge in respect to inflation; whereas, of course, continental producers do not have this facility. But there is nothing in the Bill which will prevent the new producer group operating forward indexed contracts, and I understand that it is the firm intention that they should continue.
Since the United Kingdom became a full member of the Community there have been no commercial barriers to trade, either from the point of view of imports from or exports to the Community. Arrangements under discussion make no change to these trade prospects. Opportunities for would-be exporters to the United Kingdom, as for United Kingdom exporters to the Community, are determined by straightforward commercial considerations.
The noble Lord, Lord Bishopston, quite correctly referred to the stability of the hop market. I entirely agree with what the noble Lord said, including all the ancilliary advantages of the present Hops Marketing Board system, which has, of course, guaranteed the stability, or at least supplied the stability, in the past. I would simply say to the noble Lord that this is why the Bill is designed to enable the present system to continue—that is, because of the stability which it has given the industry in the past. It has been so designed, with the consent of producers, with as little change as possible but without—and this is the only matter of import—the element of compulsory membership.
I am grateful to your Lordships for the way in which this Bill has been received, not exactly with the height of controversy. I hope that I have answered the quite correct and prudent questions of the noble Lord, Lord Bishopston. I agree with him that the noble 1268 Earl, Lord Selborne, and those members of the Hops Marketing Board ought to be congratulated on the generous and understanding manner in which they witness and have facilitated the demise of their own board into a different object after the Bill is passed. I wish them well and I wish the hop producers well. I like to think that this modest Bill will help them in the future, as, indeed, the Hops Marketing Board has in the past.