HL Deb 26 November 1981 vol 425 cc856-69

3.21 p.m.

Earl Ferrers rose to move, That the draft regulations laid before the House on 4th November be approved.

The noble Earl said: My Lords, I beg to move that the Agriculture and Horticulture Grant (Variation) Scheme 1981, which was laid before this House on 4th November, be approved. It might be convenient if, at the same time as we deal with the Agriculture and Horticulture Grant (Variation) Scheme 1981, we consider the Farm and Horticulture Development Regulations 1981, the Agriculture and Horticulture Development (Amendment) Regulations 1981 and the Farm Structure (Payments to Outgoers) (Variation) Scheme 1981, which were also laid before the House on 4th November.

Three of the statutory instruments before your Lordships introduce in the United Kingdom the restrictions on investment aids for milk and pig production. The remaining statutory instrument, the Farm Structure (Payments to Outgoers) (Variation) Scheme, is concerned with payments of grants to ageing farmers. This is the simplest statutory instrument, so I will deal with it first and, so to speak, get it out of the way.

As long ago as 1967 we introduced a scheme to encourage older farmers to retire and to allow their farms to be amalgamated to form larger units. Soon after we joined the European Community, similar arrangements were adopted which we had to implement. Because farms in the United Kingdom are generally significantly larger and more economically viable than elsewhere in the European Community, there has been no great interest in these arrangements. But under the terms of European Community Directive 72/160 we are obliged to operate a scheme of incentives to older farmers who want to give up their farms for amalgamation. The statutory instrument which we have before us today makes very minor amendments to the principal scheme which Parliament approved in 1976, and will have no practical effect on the farmers involved in the scheme. They will still be able to qualify for the grants on the same conditions as before.

I would now come to the other three statutory instruments. Many of your Lordships will recall that the price package which was agreed by the Council of Ministers in April of this year included a number of amendments to European Communities Directive 72/159 on the modernisation of farms. This is the directive which requires us to have the Agriculture and Horticulture Development Scheme, which is the EEC scheme, and permits us to have the Agriculture and Horticulture Grant (Variation) Scheme, which is our national scheme. The changes, which were agreed by Ministers, are introduced partly by new European Community regulations and partly by a new directive which amends Directive 72/159. European Community regulations, as opposed to directives, are directly applicable in all members states, and so, technically, they need not be incorporated into our domestic legislation. But if we did not amend our own legislation it would be misleading and incomplete. We also wanted to clarify certain points. In addition, we had to implement the amendments which have been introduced by means of a European Community directive which does not have effect in member states without national legislation. These are the main purposes of the remaining three statutory instruments which are before your Lordships.

As many of your Lordships know, for some years there have been certain limitations on the extent to which investment in pig production could be grant-aided. These limits were on a financial basis, and they were complicated to administer. The Council of Ministers decided last April to replace them with new physical restrictions which we believe will have much the same effect in the United Kingdom as those they replace.

Another important decision, which was also made last April by the Council of Ministers, was to limit assistance to dairy enterprises. In future, grant under the Agriculture and Horticulture Development Scheme and the Farm and Horticulture Development Scheme will be paid only on that part of the investment which is needed for a maximum of 40 cows per labour unit in the case of businesses with up to one and a half labour units (in other words, up to 60 cows). For businesses which already have more than one and a half labour units, an increase in the herd size of not more than 15 per cent. is permitted. Businesses which expand beyond these limits will be eligible for aid on the relevant proportion of their investment.

However, under the Agriculture and Horticulture Grant Scheme aid will be limited to businesses with not more than 40 cows. Any business which is expanding above, or which already exceeds, this limit will not receive any aid under this scheme. The sort of investments which will be covered by these restrictions are milking parlours, dairies, buildings which house dairy cows (including fixtures and fittings) and so on. We shall not be excluding from grant-aid items like buildings for young stock or general purpose investments such as fencing, drainage, machinery sheds, et cetera, even if they are on specialist dairy farms. We shall continue to exclude aid for the purchase of dairy cows.

There are other changes which were agreed by the agriculture Ministers and which are incorporated in amendments to Directive 72/159, and which we have to implement by means of domestic legislation. The principal objective of the Agriculture and Horticulture Development Scheme is to help farmers increase their income through a programme of planned investment. Farmers whose incomes are already well above the average non-agricultural income cannot qualify, but those whose incomes are only just above that level may do so. One of the amendments in the statutory instruments sets out more precisely which of these farmers may qualify and stipulates that they may receive only two-thirds of the normal grant.

At present there are two types of investment limit on which grant may be paid. One is a limit per labour unit—per person on the farm—and this is being significantly increased. The other is an overall limit per farm business. The present ones we introduced ourselves last year. The one applying to the Agriculture and Horticulture Development Scheme is now being imposed, at a very slightly lower level, by the European Community. The one applying to the Agriculture and Horticulture Grant Scheme is unchanged. The statutory instruments implement these changes. A small alteration to the Agriculture and Horticulture Development Scheme will be the inclusion of forestry income in the provisions relating to the achievement of what is known as the comparable income.

The three statutory instruments which are before your Lordships implement these changes, but, with one exception, they do not amend the coverage of the schemes or the rates of grant. The exception is, I am glad to say, the extension of grant aid to the provision of permanently-sited durable structures cladded with plastic which are to be used for agricultural purposes. We already pay grant on such structures to horticultural enterprises; but plastic-clad structures are now being used for housing animals, particularly sheep, and we considered it only right to aid them on the same basis as for horticultural purposes.

Most of the changes to these grant schemes are technical, and I have done my best to describe them to your Lordships. They will, however, come as no surprise to the farmers who will be affected by them. The decisions which were taken by my right honourable friend the Minister and his colleagues in the Council of Ministers earlier this year were fully publicised at the time, and the farming unions in the United Kingdom have been kept informed of progress. My Lords, I commend these schemes to your Lordships House, and I beg to move.

Moved, That the draft regulations laid before the House on 4th November be approved.—(Earl Ferrers.)

3.30 p.m.

Lord Bishopston

My Lords, the House will be grateful to the Minister for the information that he has provided in moving these four orders. He said at the end of his speech that in many ways these are technical matters. But they go beyond that; they concern matters of principle with regard to our relationship with the Community itself and the CAP. I am not sure that the House will appreciate the reasons for the orders being brought forward, because there has been criticism from all sides in the industry and from the National Farmers' Union about the possible effects. With regard to the dairy sector, the National Farmers' Union say that they "deeply regret" the decision implemented by these orders of restrictions on capital grant aid for dairy farming. The main aid will be limited to smaller dairy herds and to an amount which will not increase the herd size beyond 60 cows for the Agriculture and Horticulture Development Schemes (AHDS) and 40 cows for national investment grants (AHGS).

It seems extraordinary, as we have the most efficient and productive dairy sector, that measures should be taken by the EEC to restrain our output—and that is what these orders are all about—and, at the same time, to encourage the smaller, less efficient farmers and producers in other parts of the Community. I am sure that there will be no disagreement on those comments. As the Minister has said, last year a European Community document set out proposals to restrict investment aid in milk and pig production and these proposals form part of the larger package of structural resources agreed with the Council of Ministers in April of this year.

These three orders before us today implement the measures in the United Kingdom; for, of course, we have to comply with their terms. But I agree with the Minister that it is helpful that, although we may not have to do so, we are amending the legislation accordingly. The main changes include the restrictions, as the Minister has mentioned, in respect of milk and pig production. Under the AHGS, it seems, aid will be limited to businesses with not more than 40 cows. It is well known that we have larger dairy herds, and we shall be at a disadvantage because of it. We are efficient producers of milk, not only with the larger dairy herds but with regard to the average output per animal. These are important points because they mean that we can have a much higher output generally.

For this reason the Community wants to restrain us because there is a surplus in the Community. But the surplus is not of our making. We produce just about enough of our liquid needs, as noble Lords will know, and less than our needs for manufacturing purposes. So there is scope for even higher productivity in this country at the expense of the less efficient production elsewhere. I think that many will ask why the British farmers and producers should be restrained and the less efficient in the Community not only be protected but encouraged by the restraints of the EEC directives and by the effect of these orders on our industry. It would be interesting to hear from the Minister a few facts about our average herd size and our production per animal compared with other member states and the effect of these orders. There has been over a period of time a number of restraints to reduce or eliminate surplus milk production and no one would argue about that; but what I am saying is that, although this order is not too serious, it is a step in the wrong direction.

Some recognition of the efficiency of British milk production and the distribution scheme was shown by the Community's acceptance that the Milk Marketing Board should continue to operate. This is a rare tribute to our producers, distributors and consumers. It was an achievement to have got that continuation made possible.

With regard to pig production, the curtailment of grants in the pig sector is also a cause for concern to the pig industry and to the National Farmers' Union for it removes the existing financial limits on pig investment and enables future grants to be determined on the basis of pig numbers. Here again the United Kingdom industry is discriminated against more strongly, our pig herd size, like the dairy herd size, being higher than in the rest of the Community, as grant aid will be available only up to 85 breeding pig herds or 550 fattening pig places per farm. The Government, I think, should have sought to apply to the EEC for the discretionary investment exemption of up to 1,000 fattening pig places under the AHDS. Maybe the Minister of State will comment on that assertion.

As we all know, the pig industry has for many years been beset with problems. I recall in my days in the Ministry with successive Ministers, the efforts we made from time to time (sometimes regarded as being marginally legal within the Community) to help the industry. Investment overall has not been high enough. These orders do not encourage investment and may indeed inhibit progress in a sector of our industry where we are only 75 per cent. self-sufficient in pig meat and therefore we are capable of much greater production. Instead, there are these limits which will discourage high productivity.

Although the outlook is more hopeful generally for the pig sector, I think we can do without this latest dose of cold water from the Government and the EEC. I appreciate that there are some aspects which are still open to grant aid. I am thinking of the general purpose items such as the Minister has mentioned: the cladding of buildings, for instance, and the requirement for 35 per cent. of feedingstuffs to be produced by the business. Will the Minister comment on the position of farmers who, following the dropping of the Government's former requirement of prior approval, may be caught out by the changes, not yet having got approval of their development plan involving investment in pigs?

We are all proud of the efficiency and productivity of our agricultural industry. Most of us would agree that if the productivity and efficiency of agriculture were seen in other parts of the economy and in other industries this country would be facing fewer problems than we face today. It is essential that in our dealings with Brussels our Ministers continue to stress the point that, if changes are necessary within the Community as a whole, they should take an example from our producers and, as I said last week on another item concerning the Community, accept changes which are related to the highest common denominator and not otherwise. I hope the Minister can assure the House that in future dealings the Government will stand firm and look after British interests, although we recognise the progress towards that interest which the Government have made in the past.

3.38 p.m.

Lord Lloyd of Kilgerran

My Lords, may I join in thanking the Minister for so carefully and well describing the content of these many regulations. I do not propose to enter into the technical matters in the way that was done so eloquently by the noble Lord who has just sat down. I should, however, like to refer to one theme which, it seems to me, formed the basis of the Minister's account of these regulations. He said that these regulations before the House were intended to help farmers to increase their income by planned investment. He also said that these regulations will come as no surprise to farmers. I am wondering about the farmers who come from the parts of Wales with which I am familiar, and whether these regulations are sufficiently understood and have been made clear by the Department of which he is the Minister, to the small farmer whom it is intended to help.

Can the noble Earl say whether there are easily available pamphlets in simple form to summarise the regulations in such rural areas as those parts of West Wales? I can understand that the large organisations, the farmers' unions, have no doubt sent round to all their members accounts of these regulations before they were published, and also the EEC regulation 72/159 to which he referred. This is not a simple document to understand. May I, therefore, ask the Minister to give an assurance that the widest publicity will be given to these regulations, particularly in Wales, to help farmers, as he said, to increase their income by planned investment?

Baroness Elliot of Harwood

My Lords, I should like to say one or two words very briefly. I appreciate entirely the problem facing our Minister of Agriculture when he has to go to Brussels and argue our case, because our case is a simple one. We farmers in this country have tried—and tried very successfully, as the noble Lord, Lord Bishopston, said—for a number of years to improve the techniques and the production, to lower costs, employ fewer people and at the same time increase the amount of land under cultivation and the amount produced. In this case we are referring to dairy and pigs. We have been extremely successful.

If the one task you are asked to do—and it is not easy, as we all know—is successful, and you do it, it is a bit hard to find that these regulations from Brussels penalise the very thing that has been done; in other words, to enlarge the amount of production and the areas under cultivation, to reduce the numbers employed and to produce everything as efficiently and cheaply as possible. I know that in Europe they are struggling with a peasant agriculture. Whether in Germany, France, Belgium, Holland or wherever it is, there is tremendous pressure from their farmers, who are saying: "We are only small farmers; we have not got the equipment or the means of production that they have in other parts, and particularly in the United Kingdom. Therefore, we want help to keep small and to get as much money as possible." That is exactly the opposite of what we have tried to do and what we have done very successfully.

It is hard on the dairy farmers. An enormous number of people have gone out of dairying in this country, as any farmer in your Lordships' House knows very well. Yet our production is first class; it has not gone down and we have been able to get as much milk on to the market as we did when we had certainly at least another third more people in the dairy industry. So, as I say, I think it is a little hard on people and while I do understand the Minister's probems—and I am a strong supporter of the Common Market, so I must not be too critical—I realise that he is facing a difficulty. But if this has to happen and if it hits our dairy and pig industries badly, then our Ministry has to make some sort of gesture towards those people which will compensate them for what they have had to do because of the CAP or the Brussels regulations.

Speaking as a farmer, I am grateful to the Government for the many ways in which they do help us and for the many ways in which they fight our battles in Brussels. I am confident that they will go on doing so, but these particular orders for the time being are just a little harsh on two sections of our dairy industry.

Lord John-Mackie

My Lords, I should like to say a few words on the Farm Structure (Variation) Scheme which the noble Earl, Lord Ferrers, thought could be got out of the way fairly quickly. If the other three are to be a help for we farmers, as the noble Baroness, Lady Elliot, has just said, I will accept with gratitude. But as the noble Earl, Lord Ferrers, will know, I have been in correspondence with him on the question of farm structure.

This order is to vary the payment to farmers for amalgamating farms. I farm 22 miles from your Lordships' House and round our village in less than 10 years we have had three nice farms fragmented, mainly for reasons of finance and getting the most out of them. The most recent example was a very nice 150-acre farm with a nice farmhouse, two cottages and a beautiful set of buildings: that was sold piecemeal recently and broken up completely. I think this is a very bad thing indeed.

I understand the attitude of the noble Earl and I can fully appreciate his difficulties, but the Ministry have a very negative attitude towards this. If we can pay grants for amalgamating farms, would it not be possible to give some help towards preventing the fragmentation of farms? It is quite tragic to see this farm at the foot of my road broken up and bought by developers and such people, the farm buildings and house sold to one person, with no land at all, or very little—perhaps a few acres to keep horses—and they will go completely out of use in spite of recent grants having been given, as I happen to know, for the buildings, for a grain store and another store on the farm. I think this is quite ridiculous. The Minister should take a much more positive attitude and see if something can be done to stop the fragmentation of farms.

Lord Houghton of Sowerby

My Lords, I wish the noble Lord, Lord Boyd-Carpenter, had remained behind to ask a few questions about the economics of agriculture. What he was talking about with the Office of Manpower Economics is surely chicken-feed compared with the intricate administration behind these regulations. The Minister of State introduced these regulations, I thought, in a spirit of resignation. I can quite understand, on this of all days, that there is a spirit of resignation in the minds of Ministers and of noble Lords on the Benches opposite.

I think that aid to agriculture has become one of the most intricate mysteries of public administration in modern times. How can the public grasp—how indeed can noble Lords in this House grasp—the real significance of regulations of this kind? I would say in passing that if industry generally had had the cosseting, the care and the public money which agriculture has had over the last 30 years probably our industry might be more efficient than it is. There is no doubt that we have treated agriculture as a special case almost to the exclusion of real necessity for industrial need elsewhere.

However, since we are so conscious both of manpower considerations and of public expenditure, I would welcome any information that the Minister can give us about the background to these regulations. Will they save money, or do they mean spending more money? If they are largely technical, as the Minister of State said, are we then having a complex exchange of one form of regulations for another, to little purpose other than to comply with the regulations of the Economic Community? Do all the forms have to be changed? Does there have to be much more explanation given, as the noble Lord on the Liberal Benches said a moment ago? Do the farmers understand this? Have we here another problem of people not taking up their claims and not knowing what they are entitled to? Should there be an advisory service to farmers to stimulate them to ask for the public money they do not know they are entitled to?

This is a mystery world and, as a layman. I am anxious to know more about it. The only interest I have to declare is that on several occasions I was chairman of the Agriculture Farm Price Review in a Labour Government. I was the arbiter between the Minister of Agriculture on the one hand and the Treasury watchdogs and those in control of the purse, on the other. That was an interesting experience in arbitration.

Quite seriously, does it take more clerical officers or executive officers to bring about the administrative changes that are needed to implement the paragraph which I see here? It reads: For the purposes of this regulation 'pig place' means the facilities necessary to house one fattening pig; save that where the herd includes breeding sows, the facilities necessary to house one such sow shall be taken to be the equivalent of 6.5 pig places.". There is a sum for you. I am sure that there has to be a clerical officer, with an executive officer to make sure that the clerical officer gets his fractions right, and we have an interesting study in the economics of agriculture. I shall not bore the House with other quotations from these regulations.

What I noticed at the beginning of this debate—and I am in a rather playful mood this afternoon—was the exodus of noble Lords from the Chamber when these regulations came forward. Was it the farmers leaving, because they felt too embarrassed to remain behind, or have all the non-farmers gone and left all the farmers behind? It is an interesting study in manpower in this Chamber. At the present moment, who represents what on these regulations? I claim to represent the public interest, which is always a good alibi when you are poking your nose into other people's business.

But, seriously, this is an astonishing set of documents and if they are only to comply with the directives of the EEC one might ask for an exemption clause. If the changes are technical and will lead to unnecessary administrative expense, could we be excused from making them? Is that impossible? I think that I have said enough. Probably, laymen should not remain behind when regulations on agriculture are under discussion, because this is more complicated than taxation which everybody grumbles about. After all, it has been said that anybody who can fill up a football pool coupon can do anything that public administrations can ever require them to do.

Lord John-Mackie

My Lords, before the noble Lord sits down, may I say this: We were warned about making off-the-cuff calculations, but I have the feeling that in one year British Leyland has had three times what agriculture gets.

Lord Houghton of Sowerby

My Lords, I would not know the grand total of public money that has gone into British Leyland. On the whole, there is not the equivalent of British Leyland in the agricultural industry. They are mostly small businesses, and we are all interested in small businesses and in giving aid to them now. All right, then. Those who want aid for small businesses might take up all the grants given to agriculture at the present time and see whether there is any precedent there that might help.

I ask your Lordships to look at paragraph 4 of the Agriculture and Horticulture Development (Amendment) Regulations, which reads: (b) that the nature or structure of the business is such as to place at risk the maintenance of an earned income at the level of the said comparable income, and that the earned income per labour unit reasonably required under the existing system of production is not greater than 120 per cent. of the said comparable income.". I am sure that small businesses would like to claim under that paragraph. There is probably money there, if they only knew where to find it. I really should like to see how farmers can cope with all the questionnaires that have to be sent out, and answered in order to qualify for these grants. I wonder whether agriculture ought to be asked to simplify its claims upon the public purse, so that the public understand rather more clearly what farmers get out of the state for all the things which they do, and which they should be doing, in the ordinary course of their business. My personal observation is that, on the whole, agriculture is a pretty prosperous industry.

Lord John-Mackie

My Lords, I must apologise for rising a second time—

Several noble Lords


3.55 p.m.

Earl Ferrers

My Lords, the noble Lord, Lord Houghton, is always fun to listen to. He said that he was in a playful mood. He began by saying that I got up in a spirit of resignation. I assure the noble Lord that I have no intention of resigning. It may be that others will dispose of one, but, in that respect, I do not think the noble Lord will have much joy. I think he really meant a spirit of resignation that—for some extraordinary reason in his eyes—things are not as pleasant as they might be. But I assure the noble Lord that the Government are entirely happy with the state of affairs in which they are trying to improve matters.

I was sorry that the noble Lord referred to the exodus which happened as soon as I got up. I noticed that, and I assure the noble Lord that it was not the farmers who were leaving, nor, indeed, the non-farmers specifically. I thought that, because it was I who was rising, that indicated to others that it would be more agreeable to leave the Chamber.

I thought that the noble Lord opened up his soul a little when he said that the only thing he had done was to be chairman of the Agricultural Farm Price Review. Just before he said that, he asked whether there should be an Agricultural Development Advisory Service. That is one of the most extraordinary things for anyone in the noble Lord's position to ask, because the Agricultural Development Advisory Service has been going for, I think, about 40 years, certainly under a different name. It is one of the most remarkable organisations, which spends its time advising farmers on how to improve their land, how to improve their work and how to get better productivity. But the contribution of the noble Lord, Lord Houghton, is to produce Bills the whole time, and he is producing another one today to stop the export of agricultural produce in one form or another.

The noble Lord, Lord Houghton, asked whether this matter would involve more civil servants. I can tell the noble Lord that there were 15,000 civil servants in the Ministry of Agriculture in 1978, when the party of which he is a distinguished member was in power, and there are 13,000 now, in 1981. So the number of civil servants has gone down, and I do not think that that is a cause for anxiety.

Then the noble Lord said that he wondered whether small businesses had the advantage of funds such as are available to agriculture. I would only tell him that, since 1979, the present Government have introduced 70 different measures to increase the capacity of small businesses. So they have not been left out. If the noble Lord asks whether all the small businessmen know what kind of grants are available to them, I can only say that I do not know whether each one knows of the 70 that are available to him.

But as regards the burden of the noble Lord's remarks, I would only say this. Of course these subjects and these documents are complicated. If he finds difficulty in understanding them, I think we shall all find difficulty. But that is the nature of the legality of the system. Any form of agricultural support always was complicated. I remember, before we entered the European Community, finding great difficulty in understanding the ways in which some of the deficiency payments operated. So there is nothing new in that.

To come to the slightly more serious remarks which were directed to me about these amendments, I was quite glad when the noble Lord, Lord Lloyd of Kilgerran, said that he would not go into the technical detail which the noble Lord, Lord Bishopston, had gone into. For that, I am very grateful and I much appreciate his co-operation. I would put him straight on one point. He asked what effect this would have on the small farmers of Wales, for whom he said I am responsible. I assure him that it is, in fact, the Secretary of State for Wales who is responsible and not the Minister of Agriculture. But I can also assure him that the Agricultural Development Advisory Service, of which he will know a great deal, even if the noble Lord, Lord Houghton, does not, is there to advise the farmers of Wales—and will do so—as to their rights and as to the possibilities under these schemes. Explanatory leaflets will be available to farmers from the Ministry's divisional offices, and they will explain the details of the schemes.

The noble Lord, Lord John-Mackie, said it was a pity that in some places farms were being broken up. I can understand his feelings over that. Of course, the usual complaint is that farms are being amalgamated and being made too big. It is quite interesting to hear that the noble Lord, Lord John-Mackie, now complains when farms are being made smaller. I think it would be wrong for the Government to take individual action over anything like that; indeed, we do not have any powers to do so. Inevitably, it is a case for the market. There are occasions when farms will be amalgamated, as well as occasions when farms will be made smaller. That is the nature of the agricultural scene.

The noble Lord, Lord Bishopston, as well as my noble friend Lady Elliot of Harwood, said that these statutory instruments were hard on dairying. There is no doubt that they will have an effect on dairying. The noble Lord, Lord Bishopston, quite rightly said that they will affect the output of British dairy farms and that this was not fair. I sympathise with his viewpoint, but one has to accept the fact that as a member of the European Community we have a collective responsibility for surpluses which arise. We have a collective responsibility so far as we have to pay for the surpluses, or subscribe very substantially towards them. We have a collective responsibility for how to dispose of the surpluses.

What my right honourable friend has always said is that the European Community, if there is to be penalising, should penalise those people who create the surpluses—and the increasing surpluses. That is why he has always been against the co-responsibility levy, as it has been suggested it should be applied, because it would discriminate against certain of the larger farms. But I can tell the noble Lord that the average dairy herd on the continent is about 13 whereas the average dairy herd in the United Kingdom is 51. But over 40 per cent. of the dairy farms in England have fewer than 40 cows. Therefore they will be able to qualify for the national grant. The corresponding figure for Northern Ireland is 70 per cent., for Wales 60 per cent. and for Scotland 37 per cent. In the United Kingdom as a whole, 25 per cent. of herds have fewer than 20 cows. So this is trying to avoid an increase in yields of milk produced by farms which are of larger size. I know that it is inevitable that where there is a surplus of milk something has to be done to restrict it totally. Inevitably, also, in a package of this nature one has to agree within the Council of Ministers various items which may affect countries differently. It is an agreement, and it is an agreement of a package. I think the noble Lord, Lord Bishopston, will realise from that that a number of the smaller farms will still be able to obtain grant for this and that the larger farms will not. But there is nothing to stop the larger farms from making their own improvements without grant.

Lord Bishopston

My Lords, I am grateful to the Minister for giving way. I am sure he will realise that if we are to overcome some of the problems of surpluses and high costs, and many of the criticisms of the Community itself, we have to ensure that agriculture and food production take place in those areas where they are most efficient, otherwise the growing concern and criticism of the Community will continue.

Earl Ferrers

My Lords, the noble Lord is of course perfectly right, and he opens up a wide discussion which it would be inappropriate to start upon now. All I would say to him is that those who are the most efficient are, in a way, those whose existence can be justified on financial grounds, but that there are other factors which have to be taken into account. The noble Lord, Lord Bishopston, referred to discrimination against the United Kingdom in pig places. In 1979. about 75 per cent. of United Kingdom holdings had fewer than 400 pigs and less than 9 per cent. had between 400 and 1,000 pigs. The average pig herd in the United Kingdom consists of fewer than 200 pigs and most pig farmers therefore will still be able to qualify for grant.

The noble Lord also referred to pig and dairy enterprises which will be caught by the new restrictions. Farmers who already have an approved development plan, which includes investments in these various sectors, will be exempt, but anyone who wishes to vary an approved plan to include investments of this kind will have to comply with the new restrictions. Under the agriculture and horticulture grant scheme, farmers who have started work or incurred expenditure on dairy or pig investments will be exempt from the new restrictions, provided that they can produce evidence that they had entered into a legally binding commitment to incur the expenditure before 30th November.

I hope that I have answered most of the questions which were put to me. I realise that in some ways certain noble Lords would have preferred a different set of statutory instruments. I would merely repeat what I said earlier: that we are part of the Community and that to effect a price package which has to allow for a reasonable return for the farmers without permitting an over-production and a surplus it is necessary to come to corporate decisions. If I may once more refer to the noble Lord, Lord Houghton of Sowerby, I would say that the success of the common agricultural policy, despite all its difficulties and complexities, is that ever since its inception we in the European Community have been able to have an abundance of food at reasonably cheap prices and of a total variety. That is a small price to pay for these statutory instruments.

Lord Vernon

My Lords, before the noble Earl sits down, may I put this point to him? He said that there is a surplus (which is true) of milk products in the Community as a whole. It is also true that there is not a surplus within the United Kingdom and that we have to import quite a large proportion of our dairy products. So this particular order will discriminate against the United Kingdom dairy industry.

Earl Ferrers

My Lords, I do not think it will discriminate against the United Kingdom. It will cover each state equally, in so far as the grant which may be payable refers to the same size of farms, whatever state one is in. In that respect, therefore, it is uniform. Of course I accept that it does not apply to the larger farms and that in that way it is discriminatory. But it does not apply to the larger farms in any other country, either.

Viscount Massereene and Ferrard

My Lords, before my noble friend sits down, may I ask him whether this means that the Government are asking the larger dairy and pig farmers to reduce their numbers of cows and pigs to the numbers kept by the small farmer who will get the grant? We in this county have a most efficient agricultural industry which equals the record of Denmark. One man on the land in England produces food for 27 people, whereas one man on the land in France produces food for only 8 people and one man on the land in Germany produces food for only 9 people. This is, without doubt, discriminatory. It will affect the great efficiency of agriculture in this country. I agree that we do not want surpluses, but why should we pander to the desire of the French Government for the agricultural vote, which is very big in France?

Earl Ferrers

My Lords, I have a remarkable respect for my noble friend's mental acrobatics. He asked whether this means that the large dairy farms have got to reduce the numbers of dairy cows down to the size at which they can claim the grant. I never said anything of the kind. The statutory instruments do not say anything of the kind. I cannot understand how my noble friend could have begun to think such a thing. If, however, he thought it—and he clearly did—I can tell him that he is wrong. Indeed, I went further than that. I said that it does not stop larger farmers from expanding their dairy herds; they can do so. But they will do so without the benefit of the Government grant or without the benefit of a European Community grant, simply because there is a surplus of this product and it is considered unwise to encourage those who are already big producers to get even bigger. But if they wish to do so out of their own funds, they are entitled to do so.

On Question, Motion agreed to.