Agriculture

HL Deb 25 March 1981 vol 418 cc1179-200

Debate resumed.

3.58 p.m.

Baroness Elliot of Harwood

My Lords, after a most interesting discussion I think we can perhaps return to our debate on agriculture. It falls to me with enormous pleasure to congratulate the noble Lord, Lord Elphinstone, on his maiden speech. We have all enjoyed it very much. It is delightful to find someone young, energetic, and practical who is engaged in agriculture. I wish him the best of luck. I am sure he will do extremely well, and we shall all hope to hear him not only on agriculture but on other subjects. In any case, we should like to congratulate him on an admirable maiden speech.

We are indebted to the noble Lord, Lord Gisborough, for this debate. As time is a vital element in a short debate, I shall be very short indeed. I speak as a hill farmer and as someone who is particularly interested in sheep and store cattle, and that is what I am going to speak about. I congratulate the Government on what they have done so far to help us in this section of the industry. We are faced with a real problem in that beef numbers have fallen for the fifth consecutive year, being 20 per cent. lower than they were in 1975, and it is believed—I hope this will not turn out to be true—that in 1981 there will be another drop of 5 per cent. All this happens not because we cannot sell beef but because we cannot make beef pay. That makes the beef premium intervention absolutely vital, and I am glad that the Minister of Agriculture has been so strong on that matter in view of the vital pal t it plays in this section of the industry. I also thank the Government for the increase in the suckler cow herd premium, which is most welcome.

On the subject of mutton, lamb and wool, all of which are part of hill farming, last year was absolutely disastrous, due partly to the weather and partly to EEC hesitations and postponements which kept prices very low, and when the new sheepmeat policy was agreed it was too late to do anything for the hill sheep farming industry. On that I entirely support what the noble Lord, Lord Mackie of Benshie, said. If this agricultural policy is to occur every year, which it will, it is vital that a decision is taken before the end of the year, because we are not dealing with a static industry but with one where the demands of nature are such that things have to be done at certain times, and if they are not done you lose the opportunity for another year. So I agree with what Lord Mackie said on this issue and I hope the Government will be very strong when they discuss the matter.

Last year we had the great problem of exporting lamb to the Continent. At that time the French market was opening and shutting and Her Majesty's Government were unable to do anything on that topic. However, the sheepmeat regime came in, followed by something known as the clawback. Although it is right in principle that exporters of lamb should not claim two sets of subsidies, it began by stopping completely the export trade; and although I am glad to say that the situation is better now, the Minister has himself said that further adjustments must be agreed on.

I also thank the Government for the hill ewe and sheep subsidies, which have been of great help by raising the overall limit on special areas for hill land. That is bound to be of help because the more assistance we can get at this difficult period the better it will be for the industry. And it is an industry which is vital agriculturally to the whole production of sheep and cattle in this country. We are the people who produce the store lambs and store cattle. People with farms where there is rich land, so they can fatten, get their animals from the hill farmers, so the hill farmer is vital. This is not a question of saying that something better could be done in these areas. Nothing better can be done than to provide the sheep, lambs and store cattle which turn into the meat which the consumer buys in the shops. It is therefore vital to keep the hill sheep and cattle remaining on the hills. That is where they are produced, so making the best use of that land.

In 1980, farming incomes declined by 10 per cent., about 24 per cent., in real terms, as the noble Lord, Lord Mackie, said. We have heard about bank loans. Certainly the bankers have done best out of the decline in agriculture. I am glad the Budget has reduced the bank rate to some extent; that will be of great help to the farmer. Many EEC countries give enormous subsidies to their farmers. The French Government are subsidising French farmers to the tune of £450 million. That is out of all proportion to what we do or, in my opinion, to what should be done, and it falsifies the whole position in the EEC. However, I am hoping very much that out of the new policy, which is still being discussed, some of the anomalies will be dealt with.

All farmers in the EEC have suffered a drop in their incomes, but none as much as United Kingdom farmers. As with all industry, it is not only the drop in income but the difficulty of investing in new machinery and capital equipment, investment which is essential if we are to keep the farming industry up to date, and the fact that we have not had that amount of money to reinvest will, I am afraid, take a while to overcome. I agree with the noble Lord, Lord Mackie, that we are hoping that out of the new proposals and CAP prices some of that loss will be made up to us. In my view our Minister is doing a splendid job in speaking up for the British farmer in the EEC. We should back him up all we can for what he is trying to do, and I hope very much that he will be successful.

4.7 p.m.

Viscount Sidmouth

My Lords, like the noble Baroness, Lady Elliot of Harwood, I congratulate the noble Lord, Lord Elphinstone, on his maiden speech, which was short and to the point. When necessary, this House can already muster a formidable amount of mud on its boots, including ex-presidents of the National Farmers' Union, and we hope the noble Lord will in the future speak on this and other subjects.

For the purpose of this debate, horticulture is deemed to be included within agriculture. Politically, growers are content to be part of an industry the size of which the noble Lord, Lord Peart, described, but we would not wish the size and importance of our section to be overlooked on that account. With a turnover of about £800 million, it is an important economic unit on its own account and its problems are in many ways different from those of agriculture. That is particularly so within the context of the European Community. Before Britain joined the Community, horticulture fell outside the price review system which at that time constituted Government policy towards agriculture. Instead, there was a system of tariffs which were protective towards certain sensitive commodities during the United Kingdom production season.

When we joined the Community it was clear from the start that the main plank of the common agricultural policy—that is, the target price system—would virtually not apply to British horticulture. It is true that eight commodities come within the intervention system, but, for various reasons, only apples have been significantly involved in that system in this country. Yet the Community right from its inception was in balance or in surplus in a wide range of horticultural products. That is confirmed by the fact that in 1978–79, 163,000 tonnes of tomatoes went into intervention in Italy, for example, while in 1979–80 22 per cent. of the Belgian apple crop did the same thing. Externally, there is therefore a system of common Community tariffs.

I have referred to the historical background because the problems of British horticulture today arise in the context of the CAP. It is of course a basic concept of the European Community that tariffs between member countries should be abolished. It so happens that two such countries—France and Holland—were, and are, strong competitors with British horticulture for our home market. Internal competition of this order, and the unimpeded flow of trade among member countries, is of the essence of the CAP, with the hopeful aim of encouraging efficiency in agriculture and reducing costs. British growers have always been well aware of that point, and many of them have spent the last 20 years gearing up to meet it, mostly with considerable success.

But the obverse of this part of the CAP is set out in Article 92 of the Treaty of Rome. Article 92 states that, except where otherwise provided for in the treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it [adversely] affects trade between Member States, [be deemed to] be incompatible with the common market". Perfectly fair competition can probably never be achieved in a community comprising so many different nations, regions and climates. None the less, that is a very important article of the treaty, and currently many of the problems of British horticulture lie in that area. Both France and Holland have strong national policies for encouraging exports of horticultural produce, and national aids have undoubtedly been deployed towards that objective. An outstanding example is the very low price for gas enjoyed by 95 per cent. of the Dutch glasshouse industry, while in France there has been extensive Government aid, such as in the advertising of French apples in this country.

That sort of pressure is adversely affecting the viability of British horticulture and causing even more severe cutbacks in net income than is occurring on the farming side. There has been a progressive decline in the area of horticultural land, from 305,000 hectares in 1977 to 268,000 hectares in 1980. Both the Commission in Brussels and our own Government are aware of that situation, and I hope that in replying to the debate the Minister will confirm that something will be done about it. On the one hand, it is essential that all forms of national aids should be investigated, and anomalies such as the Dutch gas price eliminated. On the other hand, it is perfectly legal, and in accordance with the treaty, to give both short-term aid to correct anomalies and long-term support such as research and advice.

On the last point, the Minister will, I think, be aware that agricultural research in this country has been of a high order and that the record of the horticultural industry in the uptake of this research has been quite outstanding. Here I should very much like to support the point already made by the noble Lord, Lord Peart: that it would be folly of the highest order at this point to run down even further the advisory services. I think that the Minister should again look very hard at the cuts which are being made, or are contemplated in this area. In recent years there have been drastic reductions in staff, and the process cannot go any further without serious loss of efficiency.

Finally, my Lords, it seems that the present proposals from Brussels concerning co-responsibility could well be looked at closely in the context of horticulture, provided that they are applied in a way which will genuinely help to reduce surpluses. Of course there are political difficulties, but, so far as the British grower is concerned, in no way is he interested in growing for intervention; at the cost of his inputs, he simply cannot afford it.

4.14 p.m.

Lord Wise

My Lords, I should like to add my congratulations to those already extended to my noble friend Lord Elphinstone on a first-class maiden speech. My noble friend is a young man of wide interests, and I hope that we shall have the pleasure of listening to him on many occasions in the future. It is I believe evident that at the moment the farming industry in this country is really in the doldrums. There is certainly nothing very buoyant about it, and the outlook for the immediate future is not particularly bright, but I feel that there is hope that conditions will improve in the long term. The problem facing the industry at the moment is very simple, but incredibly difficult to solve. The problem is one of rapidly increasing costs with a more or less static return. As my noble friend Lord Gisborough said—and I feel that it cannot be emphasised too strongly—farming income has been falling every year since 1976, and in fact it fell by 23 per cent. in real terms in 1980.

It is recognised that the industry has a superb record of productivity. This alone has enabled it to keep its head above water in the past few years, although indebtedness to the banks increased by, I think, £700 million last year to the rather astronomical figure of £3,200 million. The record of productivity cannot be sustained under these conditions. Numbers in livestock breeding herds are down, and capital investment of all types on plant, machinery, buildings, et cetera, is rapidly falling. Obviously that is due in part to lack of confidence, but I think even more so to lack of resources. That is serious because it must lead to loss of production with consequent probable future domestic food shortages. It will make the industry less competitive and the country more vulnerable to overseas pressures. It will undoubtedly also have serious repercussions on all the ancillary trades; and there are many of these entirely dependent for their viability upon a thriving and prosperous agriculture.

I now wish to turn to the Community Commission's farm price proposals. The proposed average price increase of 7½ per cent. is completely inadequate for doing much to help the United Kingdom farmers, whose costs have increased by so much more than average, but at least it will help. However, it is imperative that our green pound is not revalued by 6 per cent., as the Commission proposes. That would have the effect of lowering our price increases to between 1 and 2 per cent., which would create an impossible position with the current trend of ever-increasing costs. It would surely be grossly unfair that our farmers receive only a fraction of the increase received by other European farmers, thus making it impossible for them to compete; and the consequences would be dire indeed.

One has to acknowledge that a revaluation of the green pound could possibly be of slight benefit to the consumer. I understand that it would involve a reduction in the cost of living of about a quarter per cent. However, that would surely be entirely dependent upon the actions of the processors, wholesalers, and retailers, who could well decide that in the present recession it is necessary to improve their profit margin, rather than reduce prices; and who could blame them?

The common agricultural policy obviously has immense significance for the success of the Community, and the cost must be controlled. Therefore, I think that for that reason alone there would appear to be some logic in the co-responsibility measures in the cases of milk and sugar, which are in surplus at the present time. Indeed, I think it could well be argued that there could be a move towards rationalisation in those commodities, but it seems illogical to impose levies on other products that are not in surplus. That would lead to a further fall in the real income of our farmers, and this general measure must be resisted, for it is totally unacceptable.

What of the future? With the progressive fall in the inflation rate and the general increase (one trusts) in EEC product prices, one hopes that the present cost/price gap will narrow. There will undoubtedly be a reduction in the total area of land farmed, with fewer holdings, but an increase in their average size. That I think will lead to a trend towards even greater specialisation, which may well be advantageous.

I consider that over the next few years we must take a long, hard look at our marketing structures. It seems imperative that we improve our marketing performance, and I feel that greater emphasis should be placed upon quality, rather than quantity. Our grading standards in certain commodities should certainly be improved, and I believe that producer boards should take due regard of this fact. If this can be achieved then I, for one, am reasonably optimistic regarding the long-term prospects for the agricultural industry.

4.20 p.m.

The Earl of Onslow

My Lords, first I, too, should like to congratulate my noble friend Lord Elphinstone. Would it not be lovely if every speech in your Lordships' House went on for only four or five minutes! We would save an enormous amount of money on overtime. But I think I may overshoot his excellent example. One thing that I thought was very pointed in what he said was that we should not regard agriculture in isolation; and it is, after all, our most successful industry, and possibly our most important industry.

I have given notice to my noble friend Lord Ferrers on this particular question, and it is the topical one of, basically, deer and foot-and-mouth. What I should like to know is: if deer in the New Forest were to get this wretched and horrible disease, how is anybody to know that they have got it? The last outbreak took place in the West and the North of England, where there is a very small, almost non-existent indigenous deer herd. In the South of England there is a very large and rising herd of roe deer, and it is in much more wooded surroundings, where they can lie up and really not be found at all. If this virus can jump the Channel and land in the Isle of Wight, it can jump the Channel and land on a roebuck snugged-up in the New Forest as easily as anything, and we are not going to know about it. If that happens it is going to become endemic in this country, with all the ghastly consequences which that entails.

Agriculture, as has already been said by Lord Gisborough and by others, is having a very difficult time at the moment. Real income is down by 24 per cent. Agricultural wages, thankfully, have kept pace and have slightly overtaken the rate of inflation, but I would suggest to your Lordships that they are still too low for the standard of skill which we demand from our agricultural labour force. I would also suggest that they are a fairly small part of the gross farm turnover. However, the cost-squeeze has been vicious. In 1976 feed barley ex-combine cost £72 a tonne. In 1980 it fetched £89 a tonne—a difference of 24 per cent. However, the Kings of Morocco and Saudi Arabia have done very well, because they have put up their prices for nitrogen and phosphate fertilizers by nearer to 100 per cent. in five years. The example is that in 1976 Nitram was £59 a tonne, and it is now £113 a tonne. Sprays are up by 100 per cent. Fixed costs—rent, rates, electricity, et cetera—are all up by over 100 per cent.

This discrepancy has forced the farmer to grow more corn, and consequently the intervention stores are full. Farm investment in machinery is down, with its bad effect (as has already been said by at least one noble Lord) on employment in our farm machinery manufacturing industries. Farmers' incomes, though falling, are heavily subsidised by the increasingly unpopular CAP. The European butter and skimmed milk mountains, wine lakes, olive oil slicks and beef-bergs all confuse and worry the public and rightly so. France and Germany use the common agricultural policy for social reasons. Germany uses it to subsidise secondary occupation for Wolfsburg car-makers and other industrial workers. France keeps large numbers of peasant farmers in existence to avoid rural depoluation. I would certainly not wish to criticise either of these very worthy aims, but in the end it means subsidies for butter for Russia, which in turn releases Russian money for Russian guns with which to shoot Afghan peasants.

Rural depopulation also affects this country. The corn plains of East Anglia and Wiltshire-Hampshire produce efficiently with very little labour, all highly skilled, on very expensive machinery which consumes enormous energy. This rural depopulation in turn lessens demand for rural services and transport, et cetera, and consequently the vicious circle of falling demand followed by falling standards followed by falling demand becomes obvious. The population tends to age, and the youth goes away to the cities, with their unemployment problems.

Rural depopulation is shown at its most difficult in Wales, I would suggest to your Lordships; not because it is worse there but because there is a cultural and to a certain extent ethnic problem superimposed. The derelict Welsh cottages are bought up by retired people for holiday homes, the local people see around them good quality houses not occupied for most of the year, and this produces a jealousy—unattractive, yes, but I would suggest to your Lordships that it is understandable as well.

I do not want to reopen all the discussions that we had on the Wildlife and Countryside Bill. I suspect that that could even be an impeachable offence. But farming has responded quite marvellously—with grant aid, of course—to the demands which, as my noble friend Lord Elphinstone said, the country and various Ministers have put upon it. They have grown more food; but I would suggest to your Lordships that the countryside is a less rich place than it was 40 years ago. Please do not think that I am blaming the Ministry, the farmers or the environmentalists; I am merely pointing out a situation which has arrived. I do not know what the solutions are, but I do think that we in the farming industry must not only look at our own immediate interests and at our own immediate problems, which are very severe, but have got to understand the interests of others. If not, we shall become isolated. A picture of overpriced food, of a prairie countryside with no hedges, factory farms, nil investment, enormous and growing surpluses and impoverished farmers in hock to the bank for much more than they can afford is, admittedly, a fairly exaggerated picture, but I suggest that there is enough truth in it to cause concern.

I do not honestly know what to do, but there must be a solution, and it must he a solution which does not sacrifice our fight against inflation; because, as has already been said, inflation is not only the worst enemy of the farmer, it is the worst enemy of a stable, ordered and progressive society. All can do is to hope that my noble friend Lord Ferrers and my right honourable friend Mr. Walker can understand the situation as I see it and as I think a lot of others see it, can apply their minds to it and, please God!, can come up with some answers.

4.28 p.m.

Lord Burton

My Lords, perhaps I may also add my congratulations to my noble friend Lord Elphin-stone. Your Lordships will be pleased to hear that he made a number of points which I had down to make myself, so that has cut down the length of my speech. There is little doubt that there is great worry in the farming community at the current financial situation in British agriculture, and I cannot believe that at least some of the rumblings of the grave situation have not penetrated Government circles. As my noble friend Lord Gisborough has said, there was a drop last year of 24 per cent. in United Kingdom farm incomes; but the Government's own figures show that in Scotland the drop in that income was 52 per cent. It was down to £33 million in total, as opposed to £114 million in 1978. The total income of all Scottish farms was only one month of British Leyland losses.

There are 30,000 agricultural holdings in Scotland. Therefore, the average income per holding was only £1,100. I ask your Lordships: what other section of' the community in this country at the moment is working for £1,100? When our rates go rocketing up, is it surprising that the farmers are very much peeved when they see their senior officials getting a 20 per cent. increase in their salaries? If one considers the incomes of the rich lowlands and Angus farms, there must be many farms in Scotland last year which lost money. Is it surprising that, as we have already heard, bank borrowing is rocketing up? Even the banks are now worried at the situation.

Six out of 16 of my farm tenants have given up their holdings in the last 18 months. It must have been the 'thirties since this last happened. The writing is on the wall. What is one to do with these farms? If one relets them, one depreciates their capital value by 50 per cent. One of our most efficient industries is being strangled. If one is in debt to the bank and the income from assets is insufficient to meet the interest on the debt, there is no option but to sell off stock. This reduces the efficiency of the unit and the return from the unit. The circle is a vicious one. The United Kingdom beef herd (the breeding animals) has dropped 6 per cent., that is by nearly 100,000 cows, in the last two years. The projected drop for this year of beef and veal is over 8 per cent. But what is happening to our competitors? France increased its beef herd by 4.5 per cent. last year; the EEC is giving Irish farmers £25 million which, when topped up by the Irish Government, will be more than the Scottish farmers' total net income.

What is happening to milk? Our milk herd has been reduced but French milk production was up 5.5 per cent. in 1980. We are handing over our markets to our EEC partners. This must stop. The only stable commodities at the moment are grain and sheep production, but this follows two disastrous years for sheep and there still remains the clawback problem. We look like finishing the grain year with large unsold stocks, which bodes ill for next year's grain prices. What are the answers to these problems? The reduction in the minimum lending rate in the Budget is clearly to be welcomed, but what was given with one hand was taken away with the other. Fuel tax and the increase of vehicle registration costs were particularly heavy taxes on the rural community.

The Government are clearly reluctant to increase agricultural prices as this would increase food prices and thus inflation, but there are legal means within the EEC of helping farmers so that the industry is not damaged in the long run. Our EEC partners are giving massive help to their farmers—the French, the Dutch with fuel costs, and the Irish, as I have just mentioned —and none of these coutries has our rate of inflation and our rising costs. It is not surprising that our farmers ask how it happens that our Minister of Agriculture goes to Europe and stands out alone in resisting price rises to the farmers. The question must be posed: Can any one man act as Minister of Agriculture, Fisheries and Food? How can he wear so many hats at once? I see that the noble Lord on the opposite Front Bench is laughing. He has tried it, but it is not a feasible operation. The consumer lobby will always be bigger than the agricultural lobby and therefore prices to the farmers are always likely to be kept down.

If we cannot pay the farmers more, is there no means of reducing costs to the farmers? Again, there are other proposals which will increase our costs. There is to be a new marketing organisation to be paid for by the producers. If it is felt that there is a need for a new organisation with compulsory levy powers, then let us look at the existing marketing organisations and see whether there is not room for cuts there which could pay for the new body. Do we need all the existing bodies, all the organisations that we have: BAC, BAEC, AOS and SAOS, the milk boards—five of them—the potato boards, the hop board, old Uncle Torn Cobbleigh and all? I could go on. I think there are about 20 organisations already dealing with marketing. The old grey mare of agriculture, she ain't what she used to be, she groans under the existing crew, but if Auntie Deta gets on her back as well, I think that the old mare will collapse. Will the new organisation be able to tell, for instance, the North of Scotland Milk Marketing Board how they can better sell milk in Achiltibuie? I doubt it.

There is talk of more levies. If these are to be implemented, then it should be on increased production only and not on herd size. The EEC "milk lake" is caused by increased production from France and Germany, and their farmers should pay for it. If there was a levy on herds of more than 15 cows, then 98 per cent. of the United Kingdom dairy farmers would be caught, but only 50 per cent. of French farmers. The milk surplus could be cut at a stroke by increasing health regulations. Our milk has to be cooled and kept cooled. The continental milk goes into churns and sits cooking in the sun. If the continental producers adopted our standards, then all the herds of 15 cows or less would go, as they have done here. The continental countries wish to keep the small farms in existence for social reasons.

During the Report stage of the Wildlife and Countryside Bill the Government were defeated on an amendment to give more help to the rural areas. We all want to keep the rural population but these social requirements should not be paid for from agricultural funds—as we do with the crofting finance at the moment. These social costs must be removed from the agricultural budget.

4.35 p.m.

Lord Woolley

My Lords, may I add my congratulations to the noble Lord, Lord Elphinstone, and, like other speakers before me, welcome him to the small but diligent band of agriculturalists who from time to time, rarely in some cases, speak in this House. It was an interesting and delightfully delivered speech. We hope to have the pleasure of hearing him on many future occasions. We are grateful to the noble Lord, Lord Gisborough, for introducing this subject for debate. I think he covered the ground extraordinarily well and there is not all that much that I can add. I must declare an interest as a farmer. I have not yet been farming all my life but I hope to in the course of time. The noble Lord made a most comprehensive survey of the industry. I am afraid I shall have to repeat many points that other noble Lords have made but I hope not to take too long in doing so.

There is no doubt that the agricultural industry is having a bad time. There have been bad times and good times or (should I say?) bad times and less bad times, in the history of the industry. This is natural; but usually we have been able to see some sorts of solutions, difficult though they may have been to accomplish. I listened with interest to the noble Lord, Lord Peart, and I should like to join with him in the plea he made about the Agricultural Advisory Service, ADAS. I would underline everything he said about how valuable MAFF and ADAS have been to the agricultural industry. We know about economies and about how natural it is to say, "Everyone else but not us". I say that this has been of great value not only to agriculture but, through agriculture, to the economy of the country as a whole, and I hope that his words on that matter will be seriously considered.

The trouble is (and this has already been stated) that the costs are inflating at a far higher rate than the returns are increasing. Every farmer looking to his accounts finds that situation. I, personally, and, I am sure, the industry as a whole, support the Government in their determined attempts to conquer inflation. This is the pervading ill that affects us and certainly affects agriculture. Perhaps no single factor has been more significant in our financial difficulties at this time than the indebtedness and the payments we have to make to the banks, a matter which has been dealt with by the speakers who have preceded me. It is one thing for bank borrowings to be going up when production is going up and things are going in step and the ratio is being reasonably maintained, but it is quite another when production is going down and prices are going up.

I do not want to exaggerate the position. Certainly, the steam has evaporated. This is a dynamic industry. Its importance has been well stated. It was the noble Lord, Lord Peart, who quoted the president of the National Farmers' Union—and may I say how pleased I was to hear his tribute to him—about the production from agriculture. These were not new comparisons; they have been used on many occasions. But it is fundamentally true that this is the biggest single industry in this country. No country can afford not to have a healthy agriculture. I do not think that there is any doubt about that. Our agriculture is sick at this present time. We know that it is sick; the difficulty is to find the cure. We did have a system which, with all its difficulties, worked extremely well. I remember Mr. Macmillan, when he was Prime Minister, saying to me in May 1960 that whoever devised the agricultural system that we were then working, of guaranteed prices, production grants and the most liberal trading that it was possible to have, was a genius. Those were his words 21 years ago.

He was right in my judgment, because largely out of all the difficulty and experience of wartime had come the 1947 Agriculture Act. The noble Lord, Lord Peart, knows a great deal about that because he was involved in it with his friend Torn Williams. This did not make farming easy but it made it sound; it gave it a credit-worthiness. We were able to borrow finance and increase production. I have seen agriculture in the latter half of my lifetime almost revolutionised. This is a great achievement and one that we do not want to see slip away from us from a national point of view.

I believe that we have to look extremely seriously at the EEC. I fear that there is a tendency to close our eyes and to keep repeating in a magic way the virtues about the EEC: we have heard this this afternoon from the Foreign Secretary and many other speakers. I am not here to run down the EEC, but I believe we have to be more realistic about it. I believe that our Prime Minister is being realistic. She is not afraid to go in there and fight the corner of this country. In doing so, far from doing a disservice to the EEC and the concept, she is giving it the only chance that it can possibly have for survival. If we try to fool ourselves that we can indeed make work things that are unworkable, then we are only heading for ultimate disaster.

This is what has been happening to some extent. By all means let us keep the concept of a common agricultural policy, the overall objectives and a framework; but let us accept the hard fact of life that one cannot implement those objectives in exactly identical ways in all the varying countries that go to make up that Community. This I do not believe can be done. I believe the sooner we face this fact the better. It is being done progressively. We have heard the noble Baroness, Lady Elliot, refer to the £450 million of French aid. We have heard from the noble Viscount, Lord Sidmouth, about the subsidies from France for the export of their apples, and the various devices about the fuel subsidisation in Holland.

All these activities are going on. They are not supposed to go on, they are contrary to the Treaty of Rome, but they will go on—of course they will—because no country is going to abandon the interests of its own people and important sections of its own population. It will not do it. Therefore, I believe that if the Community is to continue, it will—and I believe that we should be working in this direction—have to try to loosen up the modus operandi so that there is a greater degree of responsibility and flexibility to different countries working within an overall policy. I know that is not easy of achievement; but the whole concept is not easy of achievement. We did this within our own country. It was not easy to reconcile the various interests within the United Kingdom. It is impossible to reconcile them all in a Community of 10 differing nations if the attempt is made to do this on one single pattern of operation.

I have said enough, my Lords. I have no panacea—I do not think any of us has a panacea—for the problems that face us. But if we are going to look to the future I think that we must try to grapple with the fundamental elements that face the agricultural industry at the present.

4.46 p.m.

Lord Digby

My Lords, as a signals officer I spent a great deal of time trying to communicate with the noble Earl, Lord Ferrers, in the depths of the jungle. I hope that he gets the message loud and clear from this House today—certainly louder and clearer than I ever achieved. I think that everyone has been of one voice.

I am afraid that I am going to offend the noble Earl, Lord Gowrie, and perhaps be impeached. But I must remind your Lordships that we have spent many days and nights on the Wildlife and Countryside Bill, and in general the arguments have ranged between the conservation lobby and the farming lobby with the Government acting, as they should, as a very firm umpire. The argument is between those who want to see, feel, hear and smell the countryside for recreational purposes, and those who obtain their livelihood, income and also their recreation from the land.

I hope that noble Lords most vociferous in the conservation lobby are here today because I can assure your Lordships that they would do more for conservation by advocating a viable rural economy than by forming any number of SSSIs or AONBs, valuable as all these are. I am reminded of a story that my mother used to tell. She was brought up in a Welsh mining valley. One day she fell into a hole on the hills caused by mining subsidence. She complained bitterly about the coalmines which had ruined her beautiful hills and valleys. Her father took her by the scruff of the neck down to the worst disused hovel that he could find. He said "Yes, my girl. This is how you would be living if it were not for industry and the coalmines". That is a lesson which we ignore at our peril. We must create the prosperity that will enable us to afford conservation.

My Lords, I suggest two ways of ensuring a beautiful countryside: the first is to subsidise partridge shooting; secondly, to ensure the profitability of livestock farming. My first solution is hardly likely to be adopted as it would offend the anti-blood sports lobby and blatantly favour rich farmers. However, that does not mean it would not be effective. The partridge needs hedges for shelter, nice weedy headlands to encourage grubs for food, and hedgerow timber to provide shade and security.

However, I must be a little more serious. The more acceptable solution would be to encourage livestock farming, which requires reasonable-sized fields with good stock-proof hedges and trees for shade and shelter. And, above all, it provides more rural employment. In the days when the drift from the land was encouraged this was not so important, but with today's unemployment and the migration of rural workers away from the villages, I suggest that a good source of agricultural employment is in the national interest.

I farm in an area of outstanding natural beauty and run a traditional dairy, beef and arable farm, employing 10 men and providing houses and a livelihood for 17 families. A neighbouring farm of the same size is all arable and employs only three men. I have no idea which is the more profitable, but I have no doubt that my stock farm is a bigger asset to society and the countryside as a whole. But could economics force me to change? First, I have already given up my single suckled beef herd, as every single field and area of downland on which they grazed is crossed by a right of way, and this precluded me from running a bull with them. However, if the Wildlife and Countryside Bill becomes law in its present form I shall be able to start up this herd again.

In the last year agricultural wages have gone up 28 per cent., which is more than keeping pace with inflation. That is good; but the price we get for our milk has gone up 8 per cent. while the price of calves, which are an important by-product of dairying, has gone down 50 per cent. You may say, "Good, we will get rid of the dairy mountain". But there is no butter mountain in Britain. We import butter and, by our own efforts within the industry, we have built up the best liquid milk interest in the world and we have the most efficient dairy industry.

Do you want me to follow my neighbour's example and keep no stock? If I did, doubtless I would now be watching cricket in the West Indies and I would have nothing to do in the winter. But what would the families in my village be doing? They would be watching the dole queue. And as I reduced my labour so the hedges would go, the hedgerow timber would go and the rural economy would suffer; so that the one vital thing that must be produced out of this economy is a viable livestock industry. I find that many people look at my valley and say, "What wonderful natural beauty"! Of course, that is nonsense. It is entirely man-made and I can tell your Lordships that unless farming is prosperous it will not be man-maintained.

I should like to turn to one other subject of which I have a slight knowledge; that is, county council smallholdings. These are small but highly productive farms, probably two or three times the size of small farms in Bavaria or France. They provide a chance for farmworkers to become self-employed farmers. It may well be that they and their wives work twice as hard as if they were dairymen, but they are their own masters with freedom to plan their own lives—except, of course, for the constraints of their bank manager and those of the cows, which have to be milked 365 days a year. They believe in that life, but I must warn your Lordships that, despite the fact that those smallholdings produce more per acre than any of the big farms around and are highly viable, the bank overdrafts of smallholders are rising and the profits out of which they must pay the bank charges are falling.

Farm profits halved in five years is serious for me, but for a small farmer, a smallholder, it can be disastrous. If the green pound is revalued, I fear for the demise of many smallholding businesses, and therefore I must congratulate the Minister on his firm stand on this subject. I would remind him of the years when the green pound was not devalued, so that the British farmer did not get the benefits that I saw farmers getting in the Irish Republic. Agriculture has responded to every call since 1939 and 2½ per cent. of the population produce 70 per cent. of our food. I am confident that the Minister will not underestimate our problems and will fight our battles with success.

4.55 p.m.

Lord Mottistone

My Lords, I should like to join those who have congratulated my noble friend Lord Elphinstone on a very remarkable maiden speech: certainly I think it was one of the best, if not the best, I have ever heard. It was not only thoughtful but thought provoking, and that is rare in a maiden speech—not to mention the fact that it was short! I hope I shall be able to follow that good example. I should like also to thank my noble friend Lord Gisborough for having introduced this debate on the most timely occasion.

I do not agree with the noble Lord, Lord Peart. I am sorry he is not in his place to hear me say that, but I am sure he will be back shortly and perhaps my comment could be passed on to him. I do not agree with the noble Lord for two reasons. One is that it seems to me to be proper as the noble Lord, Lord Mackie, said, for this debate to take place before the Minister goes to Brussels at the end of the month and fights his battle; and also because, as will be known to those who are members of it, Sub-Committee D is busy writing a report and struggling manfully to produce it in time, on the whole question of the price review and indeed on what the Commission call their "reflections" on the common agricultural policy. That report was approved by the Committee today and should be available to your Lordships in about a fortnight's time, when we plan and hope to have another debate on the subject. We, being rather more pessimistic than others, feel that the agricultural Ministers will not reach a conclusion at the end of this month, and are very likely still to be debating the subject in April. We hope to be able to contribute at that stage, and that is an opportunity the noble Lord, Lord Peart, will have for a further debate on the subject after the Minister has returned at the end of this month.

Before going on to what principally I mean to say, and being encouraged to do so by my noble friend Lord Onslow, I feel I must make some mention of foot and mouth disease in the Isle of Wight, which I come from. It was only yesterday morning that I was treading on a chemically-impregnated mat before being allowed out of the Isle of Wight and to talk to your Lordships. It is a terribly tragic situation. I happened to be living in South Hampshire in the mid-1960s when we last had a nasty attack of this fell disease, and one remembers very well how much it hit the small farmers. It was not altogether a question of money—because of course they get compensation—but that they may often have spent years building up a herd which had to be destroyed overnight.

The particular farmer who this time has been hit so hard in the Isle of Wight—I admit I am not more up-to-date than midday yesterday—farmed on land belonging to a family connection of mine whom I know very well, and he has lost not only his herd of cows but also his collection (I do not know what the proper collective term is) of pigs which he was doing particularly well with. They, too, have had to be destroyed.

I must confess to not knowing the farmer as well as I perhaps should, but if he is, as my noble friend Lord Elphinstone said, of the conservative type, no doubt he will be able to grin and bear it and in due course build up for himself another herd. But if he is more of the entrepreneurial type described by my noble friend, perhaps he could be financially stricken in a very heavy way as well, nothwithstanding the compensation. I do hope that this particular fell disease does not spread further and hit the mainland. or indeed that it does not spread further within the Isle of Wight.

I am joining in this debate because, as I suspected —and it has been the case—the farmers among us have touted their wares with considerable skill and ability in the usual way, and have made their points with great enthusiasm. I would take issue with my noble friend Lord Burton, who implied that the poor little farmers never open their mouths and tend to be downtrodden: that was the general gist of what he was saying. That certainly is not my experience, either of serving on Sub-Committee D or of debates in your Lordships' House. It seems to me that farmers are among the best organised collective groups of people and, furthermore, that the National Farmers' Union are probably the best lobbyists outside this House that there are in the country. I say that wholly congratulatorily and not in any way in criticism. But it means that those of us who occupy a different position in what I like to call the food chain should also speak up for themselves.

I probably do not need to remind your Lordships that I have an interest to declare in being closely associated with the biscuit and cake manufacturing industries. Therefore, I shall find myself talking for that part of the food chain which processes the food that is produced by my noble friends who have spoken in this debate so far. Something like 70 per cent. of all the food that is eaten has first been processed, so it is an aspect of the farming picture as a whole which must not be disregarded when giving advice to Ministers, or, indeed, when seeking to get the balance right within the complicated arrangements of the common agricultural policy.

The recommendation of the Select Committee scrutinising the European Economic Community, in its report last year on the common agricultural policy, that it should be not just a common agricultural policy, but a common food and agricultural policy, was a very sound one and one that needs to be remembered and, indeed, implemented as soon as practicable. As a consequence of that, I suggest to your Lordships, while sympathising very much with all the points made earlier in this debate about how the price adjustments. year by year, should take full account of the requirements of the Treaty of Rome, let alone the needs of the farmers in practical life, that the balance must also reflect the position of the food processors in this total picture.

The food chain takes us all the way from the farm gate to the individual private kitchen, and we must not forget the retailers and wholesalers who are part of this process. They are often highly criticised, and everybody assumes that all the other people in this system are making much too much profit at the expense of the ones in whom he is particularly interested. But the fact of the matter, as I think some noble Lords have made clear, is that we are all struggling in these difficult days of high inflation and high interest rates. It does not make very much difference where you are in this picture, and one must not over-emphasise one interest if that turns out to be done at the expense of the other interests which are essential for delivering the food to the people who are going to eat it.

So I trust that my noble friend on the Front Bench, when he is conveying our thoughts to his right honourable colleague, will make this point that the common agricultural policy needs to be a common food and agricultural policy, and that the balance which he will seek to achieve should make sure that, so far as is practicable, all the interests concerned receive the proper concern for the contribution that they make towards the production of food for the individual.

Finally, I should like to say, as has been said earlier, that, when Mr. Peter Walker gave evidence to Sub-Committee D last week, he really impressed us—or, certainly, impressed me—not only with a wonderful grasp of the situation, but with a very clear picture of what ought to be done and how it can best be done in the interests of all concerned. I trust that he sticks to that when the time arrives at the end of the month.

5.5 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)

My Lords, I would echo what many other noble Lords have said in thanking my noble friend Lord Gisborough for putting down this Motion, because it has given us an opportunity to discuss the problems of agriculture, and the problems relating to price fixing, before the price-fixing agreements have been arrived at. This is, in many respects, helpful and we shall certainly take note of what your Lordships have said. I am quite sure that your Lordships will understand if I do not seek to discuss every single item of the price-fixing negotiations in advance, because that would be totally inappropriate. The noble Lord, Lord Mackie, said that he hoped this debate would influence and support the Minister. I can only tell him that it will give the greatest support to my right honourable friend and, where it seeks to influence him in the correct way, it will have achieved the ambition of the noble Lord, Lord Mackie.

One of the greatest pleasures of this debate has been the remarkable speech of my noble friend Lord Elphinstone. It was a pleasure to hear him speak on a subject of which he has not only practical, but intellectual experience. His speech was short, concise and full of knowledge and it had that happy flavour of being one of genuine experience as well. I hope that we shall hear him on many other occasions. He said that confidence is at a low ebb and that agriculture needs guidance. Many people would wish to see the way through difficult problems. The whole country—indeed, the whole of the Western world—is facing very difficult problems, and agriculture is bound to be affected by them.

But may I give my noble friend this bit of help and encouragement? It is frightening to think that, since the jubilation at the end of the last war, the population of the world has doubled. It is alarming to think that in the next 19 years the population of the world is likely to increase by 50 per cent. Those people must be fed, and agriculture is the means by which they have to be fed. There are not many industries where you can see a total need for a product. It is our business to try to see that the immediate difficulties and problems are overcome.

The noble Lord, Lord Woolley, was right when he said that there is no panacea. It is a question of working through the difficulties and the problems in order to ensure that agriculture in this country, and within the Community, fulfils the required role. My noble friend Lord Digby chided me, and said that he was once a signals officer and hoped that he would get his message through to me today more clearly than he did some years ago when he was at the end of a wireless set. It is perfectly true. His message did get through better today, and the reason why it did not get through before was that he did not know how to work his machine.

Lord Peart

Perhaps he should have been court-martialled!

Earl Ferrers

My Lords, I could not court-martial a senior officer. Not surprisingly, we have heard a certain amount about the problems of agriculture. I agree with my noble friend Lord Gisborough that it is a matter of great concern that farming incomes have fallen in real terms by 50 per cent. since 1976. My noble friend Lord Burton said that he hoped that the rumblings had got through to the Government by now. I can tell him that the Government are very concerned that real incomes should have fallen by that amount.

The latest figures show borrowings of some £3,200 million, which is about double the level in February 1978—only three years ago. If these borrowings were for investment, that would not be so much of a worry. But, if they are simply to keep farm businesses afloat, then that is a matter of great concern. Of course, the 2 per cent. cut in minimum lending rate which was announced in the Budget has been a help and it implies a reduction in borrowing charges in the farming industry which, taken together with the other decreases which were announced last year, will result in a net reduction of some £140 million or £150 million.

We have to remember that farming in this country is not alone in facing these difficulties. There is a squeeze of varying force in the farming sector in the whole Community and that causes a dilemma. If the Community raises prices, presumably it adds to the cost of the common agricultural policy, which may well encourage further surpluses. But if the Community does not raise prices, then farmers are in the position of having constant prices but increased costs. That will seriously worsen the already declining farm income. This is a fact of life with which we are confronted.

The noble Lord, Lord Wise—I agree with him—said that the success of agriculture does not relate merely to the farming community; it is also of fundamental importance to many other industries. One thinks of industries like the fertiliser and agricultural engineering industries, both of which have suffered very severely because of the declining purchasing power of farmers, coupled with immense cost increases. They, like other industries, have suffered from the double vice-like grip of inflation on the one hand and recession on the other, which work together but against prosperity.

This is a problem which faces not just agriculture and its connected industries but the country as a whole. It is a major problem with which the Government of the day, whatever party happens to be in power, are presented. There are many other industries which depend upon a successful agricultural industry and which are affected by a downturn or an upturn in the future of agriculture. These industries are all those which are involved in the rural economy, right across the board from suppliers, through transport and leisure to tradesmen. The prosperity of agriculture is far greater therefore than just the immediate area of agriculture.

I am bound to say that the success of agriculture depends a great deal upon research and upon the communication of that research to farmers. The noble Lord, Lord Peart, referred to ADAS. I am second to none in my support for ADAS, whose officers have done a remarkable job. The noble Lord said that he was concerned about the cuts which he thought were likely to be imposed. As the noble Lord knows full well, Government expenditure has been too large. The borrowings of the Government between 1974 and 1979 rose from £40,000 million to £80,000 million. The Government have got to stop this rise in expenditure. Right across the board this has had to be done. Everybody says, "Yes, but we mustn't cut schools, or the social services, or agriculture, or defence".

All I would say to the noble Lord is that agriculture, in common with everything else, has got to be prepared to accept some form of restriction. Our job in the Ministry of Agriculture is to streamline the activities of ADAS so as to ensure that we get the best value for money that we can afford, with the least distress, the least inconvenience and the least impact possible both on the recipients of the service and on the participants. No decision has yet been taken with regard to the problems to which the noble Lord, Lord Peart, referred.

My noble friends Lord Onslow and Lord Mottistone referred, quite rightly, to the problem of foot and mouth disease. As we all know, this is a terrible disease and I would extend my sympathy to those people whose animals have been slaughtered because of it. It is unfortunate that whenever my noble friend moves house the disease seems to crop up. He said he was living in Hampshire when the disease cropped up last time, and now that he is in the Isle of Wight it has cropped up there. I am sure that there is no connection between the two. One merely records the facts stated by my noble friend.

My noble friend Lord Onslow asked me about the deer in the New Forest. It is perfectly true that deer are able to get the disease. When animals are running wild it is very much less easy to determine whether they have got it than when they are in an enclosed community. But practical experience and scientific evidence confirm that deer are unlikely to be a factor in the transmission of viruses during an epidemic of foot and mouth disease in domestic livestock. We are bound to concentrate our efforts on the livestock population, which experience shows is the most likely population to contract foot and mouth disease. That is, of course, in the domestic situation. I can assure my noble friend that we shall take this point very seriously and do what we can to ensure that if the disease does affect wild animals we know about it.

We have heard quite a lot about the problems of agriculture. Perhaps we should look at some of the strengths and achievements of the farming community. Last year, agricultural production reached the highest level which had ever been known. A major factor was the record cereals harvest. It was the fourth successive year in which we had had a record cereals harvest, although growing conditions were variable. Scotland, as we have heard, was less fortunate than some other places. But the latest figures show that the areas planted to winter wheat and barley for 1981 are the highest ever recorded. In an intervention the noble Baroness, Lady Gaitskell, said that we so often play down our successes. She is quite right. We do play down our successes. May I remind the noble Baroness of this little success: that in 1970 we in this country produced 60 per cent. of the food which we could produce and that 10 years later, in 1980, the figure had gone up from 60 per cent. to 75 per cent. This is a great and considerable achievement.

Of course it is true that there are difficulties in some of the livestock areas. My noble friend Lord Digby reflected the view that the shift of difficulties has been slightly greater in the livestock area than in the cereals area. However, the latest figures show that the recovery of the sheep breeding flock from the levels of the mid-1970s has continued. I have no doubt that a substantial part of that recovery is due to the agreed sheepmeat régime. This is encouraging. On the other hand, the cattle breeding herd was down by 2.6 per cent. at December, 1980, compared with a year earlier. That is a matter of great concern.

I have noted the difficulties faced by hill farmers, which have been mentioned. Both my noble friend Lady Elliot of Harwood and the noble Lord, Lord Mackie of Benshie, referred to them. The hill farmers are an integral part of the agricultural scene. We want them to succeed in the best way that they can. They farm in difficult circumstances. This is acknowledged by the fact that in November 1979 we raised the hill livestock compensatory allowances by the biggest amount ever and, a year later, raised them yet again. We also introduced the beef supplement premium. I am not suggesting that this is an answer to the problem. All I say is that it is an indication of the fact that the Government are concerned about the hill farmers.

Another point which is of immense importance is investment. We have heard about the difficulties facing agriculture. Let me point out that 20 years ago the capital employed per man in agriculture was 60 per cent. of that which was employed per man in manufacturing industry. Today the figures are the same. Agriculture employs per man the same capital as does manufacturing industry. It is a remarkable achievement.

The Earl of Onslow

My Lords, may I ask my noble friend whether this includes land values? If it does, it is a very different value than if it just means tenants capital.

Earl Ferrers

My Lords, I will write to my noble friend giving him details of exactly what those figures do relate to. It is an important point. However, the inference is correct: that however agriculture operates, at the moment it has to employ the same amount of cash per man as does industry.

One or two noble Lords have referred to the common agricultural policy. The noble Lord, Lord Woolley, considers it to be a problem. I regretted to hear that he is not very enamoured of it. Let us remember—the noble Lord, Lord Peart, made this point and I agree with him—that the United Kingdom is in the Community. We intend to stay in the Community. We intend also to do all in our power to make the Community succeed. Of course, the common agricultural policy, which affects all member states and all farmers within each member state, is not perfect. Nothing ever is. We wish its shortcomings to be improved. I am bound to say that there is not much point in referring to a common agricultural policy if some member states introduce the types of national aids which have been referred to this afternoon by, I think, my noble friend Lady Elliot of Harwood and the noble Lord, Lord Woolley, which totally distort competition.

Since last summer, for instance, the French have given additional national aids to their farmers amounting to about £430 million. They have given income subsidies to their farmers, for example, at a rate of 1 per cent. of the turnover for milk and poultry. Not only is this unfair, but it is against the spirit of the common agricultural policy, and of course it tends to lead to increased surpluses in the Community which others have to fund. My right honourable friend has made the strongest complaints about this to the Commission and they have opened proceedings against the French.

The noble Viscount, Lord Sidmouth, referred to horticulture and the problems which relate to the supply of gas for horticulture. I recognise that there are severe problems which face the glasshouse industry. Again, there have been unfair subsidies given by Dutch competitors on energy costs. My right honourable friend has taken this up again with the Commission and the Commission have agreed that there is unfair subsidy and they have asked the Dutch to correct this position. I would only say to the noble Viscount that I accept and I recognise the difficulties which face the glasshouse industry but the right thing is to get the unfair distortion of trade corrected as opposed to everyone turning round and saying that, because one person is behaving incorrectly, therefore it is right for others to follow suit. The whole purpose of the common agricultural policy is that there should be fairness in competition, and where there is not my right honourable friend has taken that up most vigourously.

I was glad also to hear my noble friend Lord Wise refer to marketing and my noble friend Lord Mottistone refer to processing. It is absolutely fundamental that the marketing of agricultural products is one of the most important aspects of agriculture. It is one that my right honourable friend has pressed very strongly ever since he became Minister. In the old days, there was the feeling that agriculture could produce the food and there was the nation ready to eat it. Things have changed. Now the Community is our market and we have to market our agricultural produce. I am glad to see that there are many people —farmers, wholesalers, retailers—taking an active public interest in this problem.

My noble friend Lord Mottistone is absolutely right when he refers to processors. If I may give one example, 25 per cent. of the potato crop is taken up by processors. But if we do not provide in British agriculture the right type of potatoes of the right quality and with a continuity of supply at the right price, the processors will erect their firms in other parts of the Community and the United Kingdom will lose out twice on that score. First, by agriculture not providing that which it can provide, by not marketing it properly and also it will lose because of the employment which will go to other countries by virtue of them having the processing plants. So the marketing of agricultural products is absolutely vital.

I wish to refer to one last thing, because I know that a number of noble Lords mentioned it, including my noble friend Lord Gisborough. It is, that the Commission have proposed a revaluation of the green pound. The Government have been criticised from certain quarters for allowing the high positive MCAs. It is important to recognise that MCAs go up or down during the year in line with movements in the value of sterling. This does not affect the farm gate prices, but what does affect the farm gate prices is if, at the annual price fixing, the green pound is specifically altered. The Commission's proposal for a 6.2 per cent. revaluation would therefore, so far as the United Kingdom producers are concerned, remove virtually all the benefit of the common price increases which the Commission are proposing.

At a time when we have been experiencing one of the highest levels of inflation within the Community, and a severe fall in farming incomes, it would be manifestly unfair to the United Kingdom and to our farmers, and the Government have made it perfectly clear that we cannot accept it. On the basis of the Commission's proposals there is no question of our agreeing to a revaluation of the green pound. With regard to prices, we are looking for restraint overall, but within the total we want to see more help given to the hard-pressed livestock sector. I am grateful for the views which your Lordships have expressed and we will certainly take note of them in the forthcoming review of the Community's agricultural prices.

5.26 p.m.

Lord Gisborough

My Lords, I hope the House will agree that this has been a very useful debate. We have had some extremely interesting and well-informed speeches. I should particularly like to add to the congratulations to my noble friend Lord Elphinstone. He pointed out that farmers are presented with a problem as to whether to do very little and have no overdraft or to modernise and work for the bank. That was supported by the noble Lord, Lord Woolley, who pointed out the difference between borrowing in inflationary and deflationary times. I hope that we shall hear the noble Lord, Lord Elphinstone, many times again.

I should like to thank the Minister for answering many questions and I think that much that he said will be reassuring to the industry, particularly concerning the green pound. One very good thing about these two-and-a-half hour debates is that the shortness of the speeches that is necessary tends to concentrate the minds of speakers and that must be a good thing. Before I resume my seat, I should like to mention that there is a meeting tonight at 6.15 on foot and mouth disease, which may be of interest to certain noble Lords. My Lords, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.