HL Deb 17 November 1981 vol 425 cc409-25

3.8 p.m.

Earl Ferrers

My Lords, I beg to move that the Hops Marketing Bill be read a second time. This is not a lengthy Bill. It is relatively simple in intent, but, in order to understand it, it is necessary to touch upon some of the intricacies of the system of hops marketing. For those who are directly affected by it, it is an important piece of legislation even though its relevance may not be fully appreciated by the many millions whose only contact with hops is when they drink some beer.

The Hops Marketing Board was originally set up in 1932. It was the first marketing board to be set up under the Agricultural Marketing Act 1931, which has since been superseded by the Agricultural Marketing Act 1958. In setting up the board, the aim was to construct an orderly system for marketing hops. At that time, individual hop producers were in some considerable disarray in disposing of their crops, and it is not, therefore, surprising that over two-thirds of hop producers supported the proposal to establish the marketing board. The board has done a remarkable job over the years in achieving the orderly marketing of hops and safeguarding the position of growers vis-à-vis the buyers of hops. Producers and buyers have been happy with the marketing arrangements, and all parties have been reluctant to alter the system. Indeed, over the last few years the Hops Marketing Board has had the privilege of the services of my noble friend Lord Selborne and I know that we are all grateful to him for the work he has put in to the board in his years of tenure as chairman.

Since the United Kingdom joined the EEC in 1973, we have been aware that questions could be raised about certain aspects of some of our marketing boards. It gradually became clear that, in the view of the European Commission, we would not be entitled, once our transitional period ended on 31st December 1977, to maintain compulsory marketing through a board in a sector which is covered by a Community régime. This presented problems in three areas; pigs in Northern Ireland, hops in England and milk throughout the United Kingdom. Northern Ireland pigs became the subject of an action in the European Court. Milk was very much a special case; we were able to establish that the United Kingdom milk market had certain characteristics which distinguished it fundamentally from other member states. It was, therefore, legally possible to obtain an amendment to the Community's milk régime permitting the continued operation of the milk marketing boards. The United Kingdom hops market has no such distinguishing features and, after detailed examination, it became clear that it would not be legally possible to amend the Community hops régime in order to make a special provision for the Hops Marketing Board.

In 1979 the judgment against the Northern Ireland Pigs Board by the European Court upheld the Commission's view that where there is a Community régime for a particular product, it is not permissible for an individual member state to retain legislation requiring producers to sell their produce through a particular body such as a marketing board. So, although the Hops Marketing Board has similar objectives to producers' groups, which are encouraged under the hops régime—that is, to achieve orderly marketing and strengthening of the position of growers on the market—there is the fundamental difference, in Community eyes, that the membership of a producer group must be voluntary. Yet it is obligatory in this country for hops producers who wish to sell their hops to do so to or through the agency of the hoard. That is the difference and that is the cause of the Bill.

The Commission suggested to us that our hops marketing scheme was contrary to Community law and indicated that if we did not make appropriate changes they would find it necessary to start proceedings against us in the European Court. The threat of such proceedings is still with us, and it is only our preparations for the introduction of this Bill to rectify the situation which have delayed action being taken against us.

Following extensive discussions with all interested parties, including the Commission, it was concluded that legislation should be introduced which would end the present system of compulsory marketing. To maintain continuity and stability of the hops market, provision should be included for the transfer of the board's forward contract commitments and assets to a voluntary successor body meeting Community requirements. The hoard has almost completed the preparatory work necessary to establish such a body, which would be the Hops Marketing Board Limited, as a co-operative society under the Industrial and Provident Society Acts.

My right honourable friend the Minister of Agriculture mentioned in another place that legislation would be introduced as soon as time permitted. Although severe congestion in the legislative timetable has unfortunately meant some delay in finding a slot in the programme, that time has now come. It might be helpful if I explained briefly the various clauses of the Bill. The Bill seeks, first of all, in Clause 1, to revoke the Hops Marketing Scheme 1932; this will be done on an appointed day made by the Minister. Clause 2 provides for a poll of registered producers to be held to decide how the property, rights and liabilities of the board are to be disposed of. If two-thirds of producers (by number and by area) are in favour of the proposals set out on the ballot paper, and if the board subsequently passes a resolution incorporating the terms of the proposal, then the assets and liabilities of the board will be transferred on the appointed day to the successor body or bodies specified on the ballot paper.

Clause 3 is a very technical clause and deals with contracts which have already been made between hop producers and the board for the forward sale of their 1981, 1982, 1983 and 1984 crops. Clause 3 transfers these forward offers of hops, made under the hoard's forward contract plan—which sets out the terms and conditions of the agreement—to the successor body or bodies inheriting the board's assets and liabilities. The clause also specifies the extent of a producer's commitment under the wording of the contract.

Clause 4 requires the board to prepare and present to the Minister audited accounts down to the day before the appointed day. When the Minister has received the accounts and has been notified by the board that they have wound up their affairs, he is required to make an order dissolving the board. Clause 4 also provides that, if no resolution is passed under Clause 2(2), then the Minister is empowered to present a petition for the winding up of the board under the Agricultural Marketing Act 1958, in which event the surplus assets of the board will be divided between registered hop producers.

I would only add that we have sought to retain as much as possible of the current system of marketing hops as producers have indicated that they would wish. In effect, producers will, if they so vote on the poll, be able to market their hops through the society in the same way as they have in the past through the board. At the same time, any individual who does not wish to join the society will be free to market his hops as an individual. With that explanation, my Lords, I beg to move.

Moved, That the Bill be now read a second time.—(Earl Ferrers.)

3.17 p.m.

Lord Bishopston

My Lords, I am grateful to the Minister for the way in which he moved the Second Reading and for providing the background, which I am sure will be most helpful in assisting us to get a perspective of events which led up to the need to bring forward this measure and which, as he said, replaces a proved system of nearly half a century, the hoard having been formed in 1932. As we know, the Hops Marketing Board has been one of the number of boards and organisations which over the years have made a significant contribution to the prosperity of agriculture, our most productive industry, and the industry has benefited from the work of the board's chairman, now the noble Earl, Lord Selborne, the members of the board and all associated with it in the organisation of the hops industry.

As the Minister said, the Government have been required by the EEC to review the position, and that has taken a considerable time. That of course does not matter much if the outcome will be welcomed in years to come. There have been protracted negotiations with the EEC and the subject has engaged the attention and concern of several Select Committees of this House and another place, meetings attended by successive Ministers of Agriculture and officials, to which of course members of organisations concerned with the industry have made their contributions, so there has been a fair amount of consultation.

There was the EEC Council regulation of July 1971, another in 1973 and yet another in 1976, brought forward by the Commission because the 1971 regulation had proved insufficient in the surplus situation on Community and world markets which had occurred since 1973; so the legislation then thought desirable was not all that foolproof in the national interest. The 1976 regulation was introduced to amend the earlier rules of 1971 so as to discourage what I think was excessive production, to stabilise the market and ensure a fair income for producers.

When the Select Committee of this House on the European Communities considered the matter in 1976, it was claimed that there was nothing in the instrument then drafted to stop the board continuing to operate, but growers would qualify for financial aid only if they belonged to a recognised and registered group. In the Thirty-second Report from the Select Committee of the House of Lords on the European Communities, of 5th May 1976, in a section on policy implications, the committee stated, in paragraph 10: The Committee see no merit in the proliferation of bodies to perform the functions presently carried out by the Hops Marketing Board. Moreover, the Committee see no reason why the marketing of hops would be improved by moving away from the concept of a marketing hoard set up at the wish of producers and terminable by a vote of those same producers (but with an obligatory membership once established) towards that of a voluntary producer group with exclusive marketing rights.". In paragraph 12 the committee stated, briefly: The Committee therefore consider that the best procedure would be to amend the draft Regulation to allow the payment of Community aid through 'existing marketing organisations in Member States which carry out the objectives of recognised producer groups '.". Therefore, if I read it aright, it appears that a few years ago the Select Committee of this House felt that the present system was satisfactory, and there was hardly any justification for change. Clearly, a fair amount of consultation and discussion has taken place since then in order to see how our own hops industry could come into line with the EEC requirements.

I note from the current annual report of the board that the change proposed for the transfer of assets and liabilities of the Hops Marketing Board to a voluntary producer group was not the solution originally sought by the board or by the National Farmers' Union. The two bodies sought to amend the EEC regulation for the common organisation of hops so that the hoard could continue to operate with its powers and functions largely unaltered.

While I am pleased that the board is able to assure us that arrangements are now well advanced for formulating the rules, contracts and marketing arrangements for the new society, the chairman, the noble Lord, Earl Selborne, warns us in the annual report that, the Community's inability to accommodate within the EEC hops régime the most successful hop producers' organisation in Europe only increases the risk of an unstable hops market". So as we go into this new scheme there are some misgivings about the future, and this is so very important. The annual report of the board was issued as recently as the annual meeting held on 24th June 1981, so there can hardly have been time for more recent events to have given any greater assurance on this important matter, which vitally affects our industry. As the noble Earl the Minister has said, this is an important issue, and certainly to my mind it is not by any means small beer.

But whatever our views about the Community might be there will be no dispute that if we are members of a common market, it is absolutely essential that any changes considered necessary should take into account the experience and the record of the policies pursued by member countries, especially those where their industries are best organised. It would be interesting to know to what extent the regulations have been amended to take into account any representations that we have put forward in recent times. I believe it also essential that the Community should relate change to the highest common denominator, if future success is to be assured. It is no wonder that the common agricultural policy comes in for sustained criticism, and as the CAP budget represents a major part of the overall budget, the public quite naturally equates the success of the Community as a whole with the success or otherwise of the common agricultural policy.

I should like to conclude by asking the Minister a number of questions, answers to which would be helpful to the industry. I wonder whether he can tell us what percentage of hops produced in the EEC as a whole are produced in this country. I understand that in 1976 about 25 per cent. of the total of hops produced in the Community were produced in this country, so clearly we then had a major interest. It would be helpful to have the current figures. Furthermore, if the figure is considerable in relation to the production of other member countries, can the Minister say whether the production was of general interest to Community members, or whether it was to satisfy our own, or any other particular need, in respect of varieties? The need of varieties is an important factor.

I understand that for some years for us there has been a record of no surpluses and no bankruptcies, which means that demand and supply have been very desirably evenly matched. Can the Minister say what confidence he has that our future hop market is likely to be one of stability and continued confidence? Is the Minister satisfied that in the new arrangement protection of the interests of our growers will continue and that the home market will not be undercut, maybe unfairly, by supplies from other countries? As I say, confidence is so essential.

Can the Minister tell the House what aid, both financial and in other ways, is at present available from Government sources, and say whether this will continue? Can we be told what present aid comes from the Community to the hops industry, and whether, as a result of our complying with the regulations, any further help might be expected from those sources? It would be useful to know more about the position of other Community countries where there has not been the mature organisation that we have had for half a century, since I understand that there has been a history in the EEC of chronic surpluses? That might be well for them, though of course it creates an enormous problem, but we certainly do not want that kind of situation to apply here.

It has been the practice for EEC aid to go to those producers in the Community who had an article which was least desired by the market. This was making a bad situation much worse because people who otherwise would have been forced by economic restraints to remove those hops, felt that they could go on because they were being bailed out by the EEC. We have seen this happen in relation to other commodities, and if it continues to happen in regard to hops, it would mean that the most efficient and most important producers in this country would be at a grave disadvantage compared with the less efficient people elsewhere within Europe.

If we are to have a voluntary organisation, instead of a statutory one, as we now have, I should like to know what contact there will be with the Government, what areas of accountability will continue in force, and how the industry can in other ways be monitored in the interests of the producers and the consumers? What control will there be in place of the present statutory organisation?

I shall end my speech by making a few comments which I think the House will accept. British agriculture is among the most efficient of such industries in the world, and this has been due in no small part to the partnership of successive Governments, organisations and individuals whose interests have been in tune with the needs of producers and consumers. I am sure that this must continue, and I believe that the Minister can do much for future confidence if he not only gives assurances now, but can go on to assure us that the Government will continue to be the champion of our national interests within the perspective of the wider Community. Bearing in mind that the changes are about to take place, I believe that replies to some of my questions will give the assurances which the industry and the country seek.

3.29 p.m.

Lord Mackie of Benshie

My Lords, I rise to regret the passing of the Flops Marketing Board. Along with the noble Lord, Lord Donaldson—I mean, Bishopston—though somewhat more briefly perhaps, I should like to say what an excellent thing it has been. One can call the Hops Marketing Board all kinds of names. One can call it a cartel, a monopoly, or many other things, but the fact is that it worked extraordinarily well. Your Lordships got your beer laced with the right sort of hop, the producers got a decent living, and the brewers, funnily enough, could well afford the price that they had to pay for hops. It was a most excellent arrangement in theory. Speaking as a Liberal, and bearing in mind the views of Adam Smith and such things, I dare say I should disapprove of it, but I am fairly sure that Mr. Friedman and the other gurus of the Tory Party would think that it was absolutely appalling. But the thing is that it worked extraordinarily well: the brewers got their hops, the people got their beer and the farmers got decently, but not over, rewarded. This is a state of affairs which I trust and hope the noble Earl, Lord Ferrers, will see continues with the new body.

I think it is a great pity that we could not "fiddle" the Commission to accept the Hops Marketing Board, but on the whole it is probably a good thing that we are changing to be in line with the rest of Europe. What I should like to ask the noble Earl about it is this: Is he satisfied that, as at present constituted, we can hope for a satisfactory poll, and that the producers will accept it? Also, is he satisfied that the ordinary marketing in Europe will continue, or will be expanded, and that our hop marketing body, be it a co-operative or whatever it may be, will have proper liaison with Europe and be able to continue ordinary marketing? Because really, this is not a case for a free-for-all; it is a case where we should take as a practical example how well the organisation has worked with the Hops Marketing Board.

I hope that the noble Earl, Lord Ferrers, will be able to answer the questions posed by the noble Lord, Lord Bishopston; and If look forward with great interest to hearing what the noble Earl, Lord Selborne, has to say. He certainly knows far more about hops than the Minister and the noble Lord, Lord Bishopston, or Lord Mackie, put together.

3.32 p.m.

The Earl of Selborne

My Lords, I certainly would not claim to know more than the Minister; that would be a most unwise assumption to make on this matter. It occurs to me that many noble Lords in the Chamber today will take only a passing interest in this Bill, and will not consider it totally central to legislation of this Session. I look at it rather differently, as of great importance; but then, as my noble friend has explained, I am a hop grower and, indeed, I am chairman of the Hops Marketing Board. I recollect, as the noble Lord, Lord Bishopston, has already reminded us, that from time to time over the years we in your Lordships' House have taken a passing interest in the Hops Marketing Board, and have tended to say that the Hops Marketing Board is a force for good in the marketing of hops in Europe and there is no earthly reason to change it. Quite frankly, that has remained the attitude of myself as a hop grower and, indeed, of the board to this very day.

However, hops is a minority crop, and the EEC apparently takes an extremely severe view of a statutory organisation which is involved in the marketing of agricultural crops. We know that in the case of the Milk Marketing Board—the Minister has explained this—an exception was made. A reason was found why milk could be an exception to the apparently otherwise incontrovertible rule that statutory powers breach the Treaty of Rome; and the reason, as we have heard, was that there was something which differentiated English milk from European milk.

I give great credit to the Milk Marketing Board and to the Government of the day for having negotiated that extremely important concession, because, quite frankly, the milk marketing boards in this country have demonstrated that in an extreme situation of over-supply it was most important to keep a stable influence in the marketing of milk in Europe. That was provided, and still is provided, by the four milk marketing boards in Great Britain. In fact, in its own small way that is precisely the case of the Hops Marketing Board. The difference, of course, is that hops is a minority crop. The cost of support (there is a small cost of support for hops in Europe) is really totally insignificant, and you will not get people in Brussels prepared to make another exception for something which is financially and economically insignificant. That is the difference.

The Hops Marketing Board was started, as we have heard, in 1932. It was the first marketing board brought in on that extremely enlightened legislation the Agricultural Marketing Act 1931, and I claim by descent a great interest in that legislation. In July 1932 it was my great-grandfather who, in this House, pushed it through a rather reluctant House, if I hear the story aright—reluctant on this side but not, of course, on the other side, and I give credit to the Labour Administration of that day for having brought it into being. In another place it was my grandfather who pushed it through there; so I am aware that over my shoulder there are no less than two of my ancestors wondering why on earth I am not prepared to defend to the last breath the Hops Marketing Board at this moment.

I think it is sad that the last two Governments were not able to persuade the Commission and the Council of Ministers that the Hops Marketing Board was a case where an exception could be made or an extension could be made of the principle of producer groups with statutory powers. As I have said already, quite frankly there was no one who was prepared to criticise in any respect the standards of hop marketing in this country. Indeed, we have been held out by the Commission themselves and by others as an example of how a reasonable supply and demand has kept the market here in equilibrium, to the great advantage of the brewers and also to the stability of the hop producers. As the noble Lord, Lord Bishopston, has reminded us, that has not been the case overseas, in Europe in particular. It has not been the case because they have far less sophisticated marketing organisations. The hop producer tends to be very much in the control or under the influence of hop merchants, and such producer groups as exist, encouraged by the EEC with grant-aid and income support, have really not yet been able to make anything like the influence on the market, to the benefit of the producer and, indeed, of the consumer, as is the case with the Hops Marketing Board in this country.

So what we have is the EEC recognising that hops, with only one customer, the brewer, is a classic commodity where there is a totally inelastic demand. You cannot create a greater demand for hops—at least, not until you have managed to increase the consumption of beer. We find, therefore, that the EEC are going out of their way to try to strengthen producer groups, to increase their membership and increase their influence in the market, but at the same time are turning round to the one proven and efficient producer marketing organisation, which happens to be the Hops Marketing Board in Great Britain, and saying, "You are doing a wonderful job, but you have got to stop, or at least change your ways, because you happen to breach the Treaty of Rome".

I repeat that it is a great sadness that we have not been able to put enough political clout behind this rather small but effective organisation in order to win the day, but the fact is that we have not won it and the help which your Lordships gave in 1976, about which the noble Lord, Lord Bishopston, reminded us, has proved to no avail because in the end we were threatened with proceedings in the European Court. For many reasons the producers did not want to be involved in that, not least because we did not think we were going to win—we have already had the Redman judgment on the Northern Ireland Pig Marketing Board, which I gather was a great expense to the producers in Northern Ireland—and also because, as your Lordships will have gathered from my noble friend's exposition on this Bill, we sell our crop forward. We sell it forward in order to create this very stability which we so welcome; and we sell it on an indexed contract, which is an important principle which I commend to the attention of those concerned with other commodities. It is a great help to a producer to know what, in rough terms, he is going to sell his crop for, with an indexed inflation clause.

The very last thing we wanted was a European Court case which would have run the risk of creating total consternation among our customers—that is, in the main, the British brewer—who would face the prospect of not being able to be supplied with the hops which he had already brought; or, at least, he might think that was to be the implication if the Hops Marketing Board was to be declared illegal. Moreover, if as the result of such a judgment, it had to be wound up and its assets dissipated or returned to the Ministry, even, this would have been a total disaster.

So having accepted, albeit reluctantly—and I hope I have made it quite clear that it was not by our wish that we accepted that the statutory powers could not continue—we were then most concerned that if there was to be a transition to a society, to a producers' co-operative, with voluntary powers, then it should be done by the means that we would wish rather than have them imposed on us by the European Court, with all the risks that are implied in that. Here I must give credit to the Ministry of Agriculture and to the Central Council for Agricultural and Horticultural Co-operation for the assistance that they gave in setting up a society which, once this Bill becomes enacted, producers registered with the Hops Marketing Board will determine should take over the assets of the board. This will have the effect that producers will have the opportunity to continue in an organisation which effectively continues in the same way. However, this organisation will no longer derive its status from the Agricultural Marketing Act of 1958; it will become one of the Industrial Provident Society enactments. This is not totally as we would wish because any voluntary group has the potential of divisiveness being created among its membership—the lack of which has been the great strength of the marketing board. But we are confident that a high proportion of producers will wish to join the society; and, if this is so, we will have an organisation which continues to set an example in the marketing of hops in Europe.

There is discussion going on formally, or informally—I do not know which—within the Commission as to whether the existing producer groups should be entitled to extend their rules in certain respects to non-members. It is an interesting principle. It brings one back to the concept of producers group with statutory powers. I hope that that principle will one day find more favour—not perhaps because of a parochial interest in hops, but because we cannot continue to support agriculture in Europe by the expensive and politically unacceptable means of withdrawals and the destroying of materials and so on. Once you can get a system of controlling and keeping production and supply in balance within your organisation you have an extremely sophisticated and efficient means of supporting the producers and the customer.

It is true—and I take Lord Mackie's point—that the Hops Marketing Board was once described as a cartel and was looked at enviously by those who were not involved in hop production. But that was before we entered the EEC and when there were also import restrictions which were not imposed by the board itself. This had the result of the board issuing quotas in order to keep production in line with demand; and these quotas became saleable products. In recent years this has not been the case. In the EEC import restraints have been removed and there has been no point in being the only country in Europe which imposes restraint on production in that way. As we have one market, if only one body within that market tries to restrain its production then others simply will take advantage of it. What the marketing hoard has been recently is a producer group with statutory powers which is demonstrated by the fact that it has made indexed contracts, unavailable to other producers throughout Europe, and sells forward a high proportion of its crop in this way. Because of the strength derived from its statutory powers it has been an extremely efficient and flexible producer marketing group.

It was set up 50 years ago for this purpose and has adapted successfully to this new role. However, it is not to continue as such, but I hope that your Lordships will give this Bill your support for we could not afford to find ourselves in the position of being a football in the middle of expensive litigation and we wish to assure our customers that, in spite of this small difficulty, we will continue to market as before

Lord Leatherland

My Lords, I should like to put a simple question to the Minister in charge of this Bill. The Bill provides for an organisation scheme to control the marketing of hops. Hops are a constituent of beer, although in varying quantities according to the kind of beer that you drink. I want to know whether this will put up the price of hops and, therefore, the price of beer. I ought to explain that I have never touched a drop of beer in my life, although, when I came out of the Army early in 1919, I nearly became a brewer. My colonel, who had a high opinion of me, was a big brewer in the Home Counties. He said on the day of my demobilisation, "Leatherland, if you ever want a job, come to my brewery". Unfortunately, I had another job to go to; otherwise I might have become a brewer and I might, therefore, automatically have become chairman of the Conservative Party in my county; but that was never the case. I simply want to know whether this will put up the price of beer.

3.45 p.m.

Viscount Falmouth

My Lords, may I congratulate my noble friend on the Front Bench for bringing forward this Bill right at the start of the Session, and also the noble Earl, Lord Selborne, who did so much for the Hops Marketing Board and the industry. He has set the facts before us in a cogent and clear fashion. I hope that this Bill will have a swift and easy passage through your Lordships' House and another place. As my noble friend has said, the aim of this Bill is to end the 1932 Hops Marketing Board and to transfer its assets and objectives to a hops marketing society, the grower-controlled co-operative, to satisfy the law under the Treaty of Rome.

I should like to declare an interest here, because I have grown this compelling crop for 25 years but alas! grow it no longer because I do not have the time to give attention to it—and it is an industry that demands attention—but I have a number of doughty hop tenants who are most interested in this Bill. I welcome the Bill, if somewhat reluctantly, first because it has the blessing of the Hops Marketing Board, who know the problems of the industry so well. It puts an end to the doubts of people who are very committed to the EEC and who have the feeling that it will be bad for morale. It will not have much effect, I understand, on the present position of the growers, although it does away with the compulsory provision that they must sell to the board.

This last board was crowned with success in the early 1930s in putting together a stable system of selling, with room for exports, for a product subject to gluts and shortages from year to year. I have no reason to disbelieve what I had been told—that in the blitz in London hops which had been in store before the setting up of the board in 1932 went up in flames. This is some measure of the difficulty caused by the over-supply of one product with only one use. I hope that this new society, like the old board, will be a great encouragement to research. If one talks to a hop grower about verticillium, he will wince at the memory or fear of his hop hills wilting and dying in a geometrical progression—it works like that. Large acreages were saved by the breeding of new strains and varieties under the aegis of the old board, particularly at Wye College in Kent, strains which were tolerant of and resistant to the disease and had the added bonus of better qualities—the noble Lot d, Lord Leatherland, will be pleased to hear that.

Large amounts of fixed equipment have to be furnished and maintained on these hop farms, in the shape of oasthouses, drying floors, furnace units, hop-picking sheds and machines, wire work at £2,000 an acre and the plant itself. Faith in a continuation of orderly marketing must be present if growers are to have confidence to continue growing the crop. The signs are, as we have heard this afternoon, that the hops marketing co-operative society will bring this confidence with it as the old HMB has done since 1932 with its system of forward contracts.

Rightly—if I may make a personal note—Kent holds the headquarters of the board as it will the society. It was an Edwardian poet who wrote in a somewhat overwrought idiom: Fair soil of Kent, (Parent alike of fruit and flock and kind) What hops, what cherries, can compare with thine? Whose fertile earth (if patriot cares were first) Almost alone might quench the nation's thirst". Fortunately, there are those other patriots under the board—and now one hopes through the society—in those famous hop growing counties of Worcester shire, Hereford and, I am glad to say, Hampshire who will continue growing and—if it has not been mentioned before—much to the benefit of Her Majesty's Treasury. My Lords, I warmly support this Bill.

3.52 p.m.

Lord Mottistone

My Lords, I speak as advised by the Brewers Society who, under the circumstances welcome this Bill, if only to make sure that we are not at loggerheads with the EEC Commission. All that they would ask is that the Bill has a speedy passage and is not amended. In its present form, it seems just about right.

Lord Hawke

My Lords, I hope the House will bear with me for one minute. I voted for this country to go into the Common Market (a) to stop European wars and (b) to have a ring fence round 200 million people which would stop the Far Eastern imports coming in free, because I knew from experience that we could never compete with the Far East.

These "antics" that emanate from Brussels add fuel to the Wedgwood Benns of this world and it is a great pity that we have to put up with them. Before the marketing board was created—I am talking now about 60 or 70 years ago—a great friend of mine told me a story of how marketing was carried out in those days. He had a relation who was an estate agent for one of the biggest hop merchants. The agent was instructed to create a very fine pheasant shoot. The brewers were invited to the pheasant shoot and the agent had instructions to place them according to the amount of hops that they had bought during the course of the year. The one who bought the most hops had the place where most pheasants were supposed to arrive.

It seems possible, reverting from a statutory body to a voluntary body, that some of my noble friends—perhaps my noble friend Lord Selborne—will be expected to provide a great pheasant shoot in order to reincarnate the system of marketing hops which prevailed before the board came into being. I hope he views that with equanimity; I am sure that the brewers will.

3.55 p.m.

Lord Walston

My Lords, I am sorry that, owing to some hitch in the arrangements, my name was not put down on the list of speakers. I hope that your Lordships will bear with me if I speak from the Benches of the Social Democrats on this matter. As a very old supporter of the whole concept of marketing boards, I support this Bill. The farming industry and the consumers of this country owe a very great debt of gratitude to those two great benefactors of agriculture—Dr. Addison and Walter Elliot—for their successful efforts in creating marketing boards. Alas! there are few of them left at the present time.

In praising their vision and the actual implementation of the marketing boards, one must not forget that at least in the case of hops a producer's monopoly was created which at times gave very great financial benefits to those relatively few people who on the relevant date were growing hops. When they came to sell their land, the fact that there was a hop quota added very considerably to the value of the land.

I mention that not because I am in any way opposed to the concept of marketing boards—I believe them to be essential and I should like to see more of them—but because I think that it is right that we should realise that when we create something of this sort we are at the same time in danger of creating a privileged position for a relatively small number of people and the consumers' interests must above all be safeguarded. Safeguards were built into the original marketing boards for the consumers. It is a matter for historical discussion whether those were adequate and whether they were adequately enforced at different periods.

So far as hops are concerned I think, as one or two other speakers have already said, that the chances are that the brewers can look after themselves. Even if they may sometimes have to pay somewhat more for the essential ingredients of their brew—and hops obviously is one of those—it does not seriously reflect in the price that the noble Lord, Lord Leatherland, were he to be a beer drinker, would have to pay for his beverage.

The observations of the noble Lord who has just sat down concerning where hops were bought and the rewards that sometimes went to the buyers of hops, reminded me of a comment made to me by a very large maltster several years ago when we were discussing malting barley (of which at that time I was a grower) and the different qualities and prices that he paid. He confessed to me that he bought his barley where the pheasants were best. It was undoubtedly the belief of a good many barley merchants that by inviting maltsters to come and shoot with them, and giving them a good day's sport, they would find it rather easier to dispose of the barley that they had bought from farmers. That is an indication that the free market does not always work quite so freely as some people would have us believe.

In general, it is absolutely right that in all agricultural commodities in these days it is necessary for there to be long-term security for the producer. It is a very long term operation. The ultimate consumer—as well as the intermediate consumers—will benefit from that even though at times they may forego the immediate advantages of being able to buy at a lower price.

There is one question that I should like to ask the noble Earl, if he could answer it in his reply, and it is this: Assuming that this Bill becomes the law of the land, will it then be open for new people to become members of what in effect is a co-operative? Will there be any restrictions on new membership, and will there be any restrictions on the acreage that they may plant, whether as members of the co-operative or, indeed, as private individuals farming and growing their hops on their own? I know that in practice, since it is the very reasonable habit of the brewers to buy their hops forward, they would much rather operate their forward contracts through the successor to the Hops Marketing Board and it would be a very rash individual farmer who would attempt to grow hops in the hope that he might be able to sell them. But it is a point of principle on which it would be interesting to get the noble Earl's comments and his assurances, one way or the other, as to what will be the position of new entrants to the industry. My Lords, I believe the Bill is a good one and I support it.

4 p.m.

Lord Donaldson of Kingsbridge

My Lords, as my name was mentioned, however inadvertently, at the beginning, that perhaps gives me the right to say a very brief word. I cannot believe that the noble Lord, Lord Bishopston, is as flattered as I was at the confusion of the noble Lord, Lord Mackie; but I should like to make one point, if I may, to the noble Lord, Lord Hawke. He and I, with most Members opposite and indeed I believe most Members here, in spite of their present view, all voted with eyes open to join the Common Market. Anybody who thought that the closed shop and the restrictive practices of the Hops Marketing Board, which had worked so well for so long, could be tolerated under the Treaty of Rome had not given the matter very much thought.

I should like to agree with my noble friend regarding the virtue and value of marketing boards and to point out that the only reason the Hops Marketing Board is different from other boards is that hops represents a minimal part of the price of beer and even if we reduced the price of hops through better production the brewers would certainly not reduce the price of beer. So it has done nobody any harm and everybody good. But that is not the case with other marketing boards, which are far more difficult, and we have got to fight to keep them.

4.2 p.m.

Earl Ferrers

My Lords, I am grateful to your Lordships for the welcome you have given to this Bill, because one recognises that the Hops Marketing Board has done a great job of work and everyone was content with it. In so far as it is necessary to change this, I suppose it is inevitable that there is a certain degree of regret. If I may say so, I think that my noble friend Lord Selbourne, who is after all chairman of the board, put his case not only extraordinarily clearly and well but without any sense of bitterness and rancour at seeing the board over which he presides being changed, mostly in nomenclature but also with a few other differences.

I was grateful to the noble Lord, Lord Donaldson, for what he said about the European Community. When we joined the European Community we knew there would be occasions like this where it would be necessary to make changes; but I suggest that this is a change not of substance but of degree, and of course it would be quite wrong if we were to put a change like this against the total advantages of the European Community, which are very substantial.

The noble Lord, Lord Mackie, also regretted the passing of the board. He said it had always ensured that the beer was laced with the right sort of hops. I must say I thought that was rather curious coming from a Scotsman, because I have always thought they were mostly concerned to make sure that their beer should be laced with the right sort of whisky. Be that as it may, the noble Lord expressed his regret over the passing of the board and he asked whether the poll would be satisfactory and whether the producers would accept it. My noble friend Lord Selborne gave the answer to that, and of course he is really in a much better position to do so than I, in view of his position. I would merely confirm our understanding that the majority of producers want this and will turn to the new society. There may be one or two who will wish to do otherwise, but I hope there would be a minimum of such people.

My noble friend Lord Selbourne was absolutely right when he said that although he regretted the passing of the board and the necessity for the Bill, he thought there would be one thing that would cause more trouble than anything else: that would be to have a European judgment made against us. That would have thrown the whole industry into total confusion. It is precisely to avoid such a situation that this Bill is being introduced.

The noble Lord, Lord Leatherland, asked one simple question: is it likely to put up the price of hops and the price of beer? It seemed to me when he asked that question that it was very much like asking whether one has stopped beating one's wife—because if I were to say "yes", that would delight the farmers and upset the consumers. If the answer were "no", it would be acceptable to the consumers but disappointing to the producers. On the whole, I think the answer is that it will be unlikely to have any effect, because the new arrangements will virtually follow the existing ones and therefore the difference is likely to be absolutely minimal.

I was sorry to hear that the noble Lord almost said he had never drunk a drop of beer in his life. I would suggest that it would be helpful if he were to do so, because, if he did so in sufficient quantity, he would, by increasing consumption, help to keep the price of beer down and, by increasing demand, help to put up the demand for hops—in which case everybody would be satisfied, including the noble Lord's friends.

My noble friend Lord Falmouth paid a tribute to Wye College for the work and the breeding done there. It is a tribute which I would endorse, because they have done a very great deal of work on hops and on the plants which are used. The noble Lord, Lord Walston, asked one question: he said that marketing boards were on the whole good and that he welcomed the Bill. I would subscribe to that. Marketing hoards are good, and have provided great service in the past. I think that in the change we are about to see one must recognise that what was suitable and right in earlier days may possibly have to be modified under the new arrangements. The noble Lord asked whether it would be possible for new people to join the co-operative. The answer is that new people can join the co-operative and new producers can plant what they like. A quota merely affects the method of payment for hops.

The noble Lord, Lord Bishopston, asked a number of questions which, if I can remember them, I shall try to answer as succinctly as possible, because in fact he put his finger on a number of important points. He asked what the area of hops grown in the United Kingdom was as a percentage of the whole European Community area. The answer is 22 per cent., not 25 per cent., as he thought. Belgium and France each grow about 3 per cent. of the Community area. West Germany has about 70 per cent. of the production, and so in fact we are the second largest grower in the Community. The United Kingdom is self-sufficient in hops, except those which are required for brewing certain types of beer, for which we have to import the hops. About 10 per cent. of the total United Kingdom requirement is imported. The demand for United Kingdom hops abroad in fact varies. It depends on the yields in the Community and the rest of the world. In some years we have quite a significant volume of exports.

The noble Lord said, quite rightly, that in the past there have been no surpluses and no bankruptcies. I think that this is largely true. We have sought to retain in this new society as much as possible of the current marketing system for hops. I have every confidence that these arrangements will provide for a continuation of the market stability, which will be to the great benefit of the producers and the brewers alike. I do not think that there should be a great threat from imports, because the Bill makes no change in the arrangements for inter-Community trade.

The noble Lord also asked about Community aid and aid which is given to the Hops Marketing Board. There is no financial aid which is available to the Hops Marketing Board at present, but there is income aid payable from the European Community which is paid to individual producers via the board. This amounts to about £¾ million. We are satisfied—and we have discussed this with the Commission—that the new society will qualify for recognition as a producer group under the terms of the EEC hops régime. We shall then be able to ask the Commission to propose a regulation defining England as one of the regions in which the income aid can be paid through a producer group.

The noble Lord referred to Community surpluses. In the past there have been fluctuations in supply which have caused problems. But the Community's policy of encouraging marketing through producer groups, and the mechanisms available in the European Community hops régime, should help to ensure a more orderly marketing of hops as the years go by. The Bill has no impact on the payment of income aid. There is no differentiation as to the quality of hope, but the Community operates quality controls and these appear to work quite well. It is, of course, essential that producers never forget the market for which they are producing.

The noble Lord also asked: as this is to be a voluntary society, what contact will it have with the Government? The new voluntary society will be formally recognised by the Government as a producer group under the Community hops régime. I am sure that there will continue to be regular contacts between the society and the Ministry, which we have found to be very useful in the past. But the Government will have no special control over the society. Its legal status will be exactly the same as that of other farmers' co-operatives. The noble Lord asked whether or not new people will be able to join the society, and the noble Lord, Lord Walston, asked the same question. I have explained that there will be plenty of possibilities for new producers to join the society, if they and the society so wish.

I am grateful to your Lordships for having received this Bill in the way that you have. Hops are not an industry—if one may so call it—which covers a vast section of the countryside or a vast section of agriculture. But they are extremely important in that section which they do cover, and our only concern is to ensure that those who produce hops will be able to do so with the same security and the same stability as in the past. I hope that when this Bill becomes law, it will be shown that the basic arrangements which hop producers have in the past enjoyed will, for the most part, continue in the future.

Lord Bishopston

; My Lords, before the noble Earl sits down, may I apologise to him for having put so many questions? Yet I am sure that the industry and the House will be grateful for the extra information which he has now given to us.

On Question, Bill read 2a, and committed to a Committee of the Whole House