HL Deb 30 March 1983 vol 440 cc1577-81

4.4 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers) rose to move, That the draft order laid before the House on 2nd March be approved.

The noble Earl said: The order will bring into effect the levy scheme which has been submitted by the Meat and Livestock Commission under the terms of Section 1 of the Pig Industry Levy Act. Your Lordships will recall that this Act received Royal Assent on 1st March, having been generally welcomed and passed rapidly through all its Parliamentary stages. Your Lordships will also be aware that the Aujeszky's disease eradication programme began on 14th March. In the short time that has elapsed, the disease has been confirmed in 29 herds totalling over 30,000 pigs. It is expected that the majority of infected herds will have been dealt with during the next six months.

The owners of those herds will receive compensation both for the loss of their herds and for the consequential loss which will result from having their herds slaughtered. The Pig Disease Eradication Fund Limited, which was set up by the National Farmers' Union, has established loan facilities to finance these payments in the initial stages of eradication, and it will be reimbursed from the proceeds of the levy, which will be raised by the commission as a result of this scheme. In order to keep the costs to the producers—who have agreed to finance the programme—to a minimum, it is important that the levy scheme comes into operation as soon as possible

The rate of levy for the first year of the programme will be 30p per pig slaughtered or exported alive. That is the maximum rate which is allowed by the scheme, and it was part of the basis on which the producers agreed to the scheme. Alterations to the rate will depend on the progress which is made with eradication and on the level of receipts from animals sold as salvage. The collection arrangements in the scheme are designed to be a straight addition to the Meat and Livestock Commission's existing levy arrangements to keep the administrative costs to the minimum.

The scheme will provide funds to enable Aujeszky's disease to be eradicated from British pig herds. It completes the legislative process which was initiated when the results of the producer poll were announced last November. I commend the scheme to your Lordships and, in doing so, congratulate all concerned in getting the eradication programme started so quickly. I beg to move.

Moved, That the draft order laid before the House on 2nd March be approved.—(Earl Ferrers.)

Lord Bishopston

My Lords, I thank the Minister for explaining the order, which we welcome because, as he said, it brings into effect the intention of the Government—supported by the official Opposition and other parties, and the hopes of many in the industry—as expressed by the recently passed Pig Industry Levy Act 1983. The levy was introduced in response to grave concern expressed by the industry about Aujeszky's disease and, as he said, the order gives power to the Meat and Livestock Commission to raise the levy, the proceeds of which will be used to pay compensation and other costs necessary to control and, we hope, eradicate the disease affecting pigs.

May I ask what consultation took place with the NFU—I was going to add, and with the Meat and Livestock Commission, but obviously they were consulted—and the industry in general about the level of the levy? I am certainly not opposing the levy but wondering what consultations took place to decide its level and the conditions under which it is to be collected, as outlined in the order, together with the basis of compensation. The Minister said that 30p was the maximum. I know from experience, as a former Minister of State, that although it is often the practice for Parliament to agree to maximum levels, the industry can impose a lower levy if it wishes, perhaps later reaching the maximum.

As the Minister will be aware, the pig industry is not without its problems, and various suggestions have been made about helping it with deficiency payments and so on. I notice that in the other place his right honourable friend the Minister of State said that prices had held up strongly for quality products. But there are distortions in supply and demand in respect of feeding grain and so on, and many pig producers have incurred losses. As I say, we are aware that the industry has its difficulties. That makes the levy much more essential, so as to help the industry in the bad times when the disease affects livestock. Perhaps the noble Earl will comment on the amount which might be regarded as essential and how he sees the levy in terms of balancing other costs. I welcome the levy, but it might be helpful if the Minister would comment on the questions that I have asked.

Lord Mackie of Benshie

From these Benches, my Lords, I too welcome the order and hope that it goes speedily into execution. The industry is paying for the whole cost of the scheme and it says a lot for the industry that in very bad times it has agreed to do that. Aujeszky's disease is enormously dangerous and our experience—with foot and mouth and other diseases—has been that the slaughter policy works and can preserve the health of the herd. I too should like the Minister to say whether he has any idea of the total amount of money which might be involved in compensating the 29 herds to which he referred, how long it will take to raise sufficient money to enable compensation to be paid and when he expects the levy to be lowered. In other words, can he give us any idea of how he expects the money side of this to go in this essential eradication scheme?

Baroness Phillips

My Lords, I should like to put a point that the Minister may feel is out of order since we are talking about money, but perhaps it is rather in defence of the pigs. I notice that the eradication of this disease seems to be something that has fairly newly arrived on the scene. One wonders whether the close husbandry of pigs might have something to do with some of these diseases which now seem to be prevalent in the farming community.

Earl Ferrers

My Lords, perhaps I may deal first with the question put by the noble Baroness, Lady Phillips. This is not a new disease. It has been around for some time—from, if I remember correctly, the early 1960s. It has not assumed bad proportions until recently. We in the Ministry of Agriculture have always considered that there are many other diseases which are potentially more harmful, but, where this disease does exist, it can have very penetrating effects. That was the reason why we suggested to the pig industry that, if they wished to eradicate this, the Ministry of Agriculture would co-operate in all ways in identifying and dealing with the disease provided that the farmers themselves financed it. The noble Baroness is quite correct. The more intensive any form of husbandry becomes, the more liable are the animals or plants to disease. That is a fact of life.

With regard to the noble Lords, Lord Bishopston and Lord Mackie of Benshie, the noble Lord, Lord Bishopston, asked what consultation there had been with the National Farmers' Union. He will appreciate that there has been considerable consultation with the NFU and with the Meat and Livestock Commission, because the Meat and Livestock Commission have the practicality of having to collect the levy and the NFU have the problem, for the first time, of organising financing on anything like this scale. There have been close consultations. The rate of 30p per pig was included in the poll document with the agreement of the National Farmers' Union and that was the basis upon which the producers agreed to the scheme in the first place. So there has been close consultation with the industry throughout.

It is difficult to say how long this levy will last at its present height. I can tell the noble Lord, Lord Mackie of Benshie, that it is anticipated that the greatest cost of the scheme is going to fall in the first year. Now, the scheme is under operation and the veterinary surgeons of the Ministry of Agriculture are out locating the diseased herds and disposing of the diseased herds. This is the period when the greatest slaughter, and therefore the greatest compensation, will be required.

I should point out that those animals which are clinically diseased will not be sold but disposed of. But those which may have evidence of having been infected, although they are clinically sound, are perfectly suitable for human consumption and will go for slaughter. There will be a salvage value on those carcases. It is difficult to say what that might be. As a rough approximation, one might think that the compensation could be in the region of £20 million and the anticipated salvage could be about £16 million. The balance therefore would be in the region of £4 million. And it is anticipated that the levy on 15 million pigs a year will produce about £4½ million.

I think I should make it clear that the levy is collected by the Meat and Livestock Commission and will be passed over by direction of the Minister to Pig Disease Eradication Fund Limited. The actual funding for the consequential loss will be part of the duty of the organisation itself and the actual compensation for the animals will come straight from the levy. In other words, the payment will be in two parts. One is the payment for the animals which are destroyed and the other is a payment which is funded totally by the industry and which is for the consequential loss, which is in the nature of 20 per cent. per animal for breeding animals and 5 per cent. for fattening animals on separate premises.

Lord Mackie of Benshie

My Lords, do I understand that the consequential loss will not come from the levy?

Earl Ferrers

My Lords, the consequential loss will come from the levy; but it will form a different part of the actual payment which the farmer receives. He will be paid the cost of the value of the slaughtered carcase and then paid separately the compensation for loss of profit.

Lord Bishopston

My Lords, before the noble Earl sits down, may I explain the nature of my question about the 30p maximum? I think it is usual with the Meat and Livestock Commission on various animals to set a ceiling and to levy lower than that ceiling. I presume that the 30p maximum which is going to be levied from the start is considered adequate, and that the commission does not need freedom to go higher. If they do, this will need another order at a later date. That is not a criticism, it is merely an explanation.

Earl Ferrers

My Lords, I am so sorry I did not make that point clear. I thought I had done so by saying that the greatest expense is likely to come during the first year. But it may take two or three years at the 30p levy in order to refund Pig Disease Eradication Fund Limited. Therefore, it is not anticipated that there will be an increased levy. It will merely mean that the receipts may possibly continue for three years, although the greatest expense will come during the first year.

On Question, Motion agreed to.