§ 7.32 p.m.
§ Lord Belstead rose to move, That the draft amendments laid before the House on 20th December 1984 be approved. [7th Report from the Joint Committee.]
§ The noble Lord said: My Lords, I beg to move the draft amendments to this scheme, and, with the agreement of your Lordships, I would speak also to the two statutory' instruments which follow on the Order Paper.
§ The Potato Marketing Board is a producer organisation constituted by the Potato Marketing Scheme made under the Agricultural Marketing Act 1958. Although the board is independent of the Government, your Lordships will know that the Government act jointly with the board over market support arrangements.
§ The system of support for potatoes is based on powers contained in the Agriculture Acts 1947 and 1957 to provide guaranteed prices or assured markets. Our current arrangements are founded essentially on the annual determination of a guaranteed price and the making of a deficiency payment if the price received by producers falls below the level of that guaranteed price.
§ As your Lordships may remember, at the end of 1982 the Government decided to conduct a review against the background of the Potato Marketing Board being in severe financial difficulties resulting from its inability to raise sufficient income from producers to meet its full share of market support costs, and the consequent need for the Government to provide additional funding to help the board meet the costs of its 1982 crop support operations.
§ A year ago the Government's conclusions on the review were announced. First, we decided against a free market for potatoes. This season, for example, main crop yields are 8½ tonnes per hectare higher than last season, and we concluded that a sudden switch to a free market would significantly increase the chances of price instability.
§ Our second conclusion was that stabilisation of the potato market within a limited managed market would help to avoid disruption, would retain producer confidence in the crop, and would thus give consumers some assurance of supplies at reasonable prices. We also made clear that the Government's aim would be to reduce their commitment to the costs of market support by the end of a five-year running-in period for the new arrangements. We felt that a greater responsibility should be placed on producers for meeting the costs of market support in years of average surplus, and that the Government should contribute to such costs only when exceptional surpluses arose. As a first step towards achieving this aim the board agreed to increase its levy on producers to around twice the current level. For their part the Government agreed to help the board along the path to financial self-sufficiency by making grants to meet any shortfall in producer funding of market support during the five-year running-in period.
§ There are two further elements in the financial package. My right honourable friend the Minister 906 announced in another place on 24th June 1983 that the Government were making loans of up to £7.4 million available to enable the Potato Marketing Board to meet its 1982 crop support obligations. In the event, only £5.9 million of this facility was drawn upon. If your Lordships approve the package of measures now before the House we shall be making appropriate arrangements to have that amount written off.
§ The final element in the package is that the House is being asked to approve the discontinuation of the deficiency payment arrangements, which are extremely open-ended, applying as they do to about two-thirds of a crop, and impose a potentially very high commitment on the Government. Instead, we shall provide assured markets for less than 600,000 tonnes of potatoes in the United Kingdom and will re-draw the cost-sharing formula to bear more heavily on producers in seasons of average surplus. Related changes will apply to Northern Ireland.
§ Perhaps I may say a word about the procedures which led to the presentation to the House of these amendments to the scheme. The Potato Marketing Board formally consulted potato growers in March of last year. About 500 registered producers demanded a poll on submission of the proposals, and others demanded a poll on the revocation of the scheme itself. This represented about 2 per cent. of all registered producers and fell considerably short of the statutory minimum requirement of 1,000 necessary to force the board to hold a poll. The board therefore submitted its proposals to the Government.
§ As required by the Act, the proposals were then published, allowing a period of some six weeks during which people could make objections and representations. As a result Ministers decided to hold a public inquiry. The report of the inquiry was submitted to Ministers on 22nd October, and was accepted in full. The modifications to the amendments suggested by the chairman were formally put to the board, which accepted them on 20th November.
§ The scheme amendments are contained in the rather lengthy document which I am formally moving first. Laying the draft in this way is a fairly unusual procedure, but one which is required by Section 2(7) of the Agricultural Marketing Act 1958. Subject to the approval of the House, the next step would be for an order to be laid approving the amendments in terms of this draft.
§ The draft falls into three parts: the first is a brief resume of the effect of each of the amendments; the second is in the form in which any subsequent order would be made; and the third shows in bold type how the amendments fit into the existing paragraphs of the scheme. Let me say just a word about the two most important amendments, Nos. 10 and 11. It is they which set a new base rate of £75 per hectare for 1985 which will also be used for determining the rate of producer levy for subsequent seasons. These amendments also link future rates of levy to the level of producer returns and provide that the levy cannot be reduced from one year to the next. Amendment No. 12 is also important because it reduces the minimum number of producers required to demand a poll, and their respective aggregate potato area, in line 907 with the recommendation of the chairman of the public inquiry.
§ If I may, I will now say a brief word about the two succeeding orders: the first, the Potatoes (Assured Markets) Order 1985, simply enables guaranteed prices to be set for potatoes which have been grown for sale for human consumption and the quantity of such potatoes which may be bought with Government financial assistance. I know that this is familiar to the noble Lord, Lord John-Mackie. There is one new feature as regards the support arrangements in this order in Article 4(3), which deals with direct intervention. If producers fail to take up contracts with the board up to the quantity determined by the Government, the board will be permitted to use the balance for market support if that would be likely to save money.
§ The other order, the Potatoes (Protection of Guarantees) Order 1985, largely repeats the provisions of the 1959 order which it supersedes, in requiring certain categories of growers and merchants to provide information about their trade in potatoes. This enables the Government to monitor the extent and cost of market support and to ensure proper accountability over the commitment of public funds.
§ This order contains one new feature under Article 7 on the misuse of stockfeed. There have been cases of misuse of potatoes which have been purchased under market support arrangements and, having been dyed, were scheduled for livestock feeding. The misuse has involved these potatoes either being sold for human consumption or planted as seed. Such cases have been difficult to pursue in the absence of specific legislation designed to deal with the matter. Although instances of misuse have been rare, it seemed right that we should close this loophole.
§ The amendments to the scheme and the two orders before the House form an integral package designed to update our support arrangements and to ensure greater financial viability for the future. I formally beg to move the amendments to the scheme.
§ Moved, that the draft amendments laid before the House on 20th December 1984 be approved.—(Lord Belstead.)
§ 7.42 p.m.
§ Lord John-Mackie
My Lords, we are grateful to the noble Lord, Lord Belstead, for putting these orders before us and for his good and commendably brief speech in doing so. I no longer grow potatoes, but I could not agree with him more about the free market in potatoes. I suffered from it from 1926 onwards. There is no question about it, the Potato Marketing Board has been a boon to farmers. I know that recently, as the Minister said, there has been unhappiness about it from some sections, but, on the whole, the National Farmers' Union is happy with the orders and the draft amendments. Indeed, I know that because there has been no lobbying about them, which is unusual.
I have not much to say about the orders, but I cannot remember how this "average surplus" is arrived at. What is an "average surplus" nowadays? We are grateful for the write-off of the monies given to 908 relieve the situation after the big crop of 1982. I presume that it has been worked out that inflation has doubled since 1955 because I note that all the fees have doubled in the new draft.
Sometimes in looking through this document—I think I have put this point to the noble Lord before—I wish that some shorter version could be put before the farmer or the grower because of the difficulty of the language. I have complained about it before, especially Paragraph 11, which is an important paragraph. It reads:The actual rate of ordinary contribution in respect of any calendar year shall not exceed the formula rate which shall be calculated for every calendar year subsequent to 1985 by multiplying the formula rate for the previous calendar year by the total of the returns per hectare of the earliest three of the previous four calendar years divided by the total of the returns per hectare for the earliest three of the previous five calendar years, provided that if the formula rate so calculated is less than the formula rate for the previous calendar year, then the formula rate shall be the formula rate for the previous calendar year".I appeal to the drafters of this sort of thing! I know that when it is worked out it is probably simple, but on the face of it it looks like a fantastic paragraph of official language.
When I said that I was dealing with these orders and the new amendments to the potato marketing scheme somebody asked me whether the potato futures market would have any effect on the Potato Marketing Board. I wonder whether the Minister would care to comment on that.
As the Minister said, the two orders are simply bringing things up to date. It is only right that the question of stockfeed potatoes should be tightened up because there have been many malpractices there. It is a difficult problem even if they are coloured. I remember when I used to farm in Lincolnshire and we bought stockfeed potatoes. The first thing the staff did was to help themselves for their own eating. I have never heard of anybody planting them, but I suppose it has been done. With those few remarks, may I say that we are happy to see these orders go through the House tonight.
§ Lord Belstead
My Lords, I am grateful to the noble Lord for welcoming the fact that we have gone for the continuation of a limited managed market. I am glad that the noble Lord feels, with his experience of the industry, that the industry now is content that this is the right way to go forward.
The noble Lord asked me how the "average surplus" is arrived at. It is arrived at by looking at the surpluses over the last five to six seasons. The new arrangements, which I did not really spell out in my opening remarks, are that the Government are now saying that they will pick up 50 per cent. of expenditure on the surplus between the parameters of 200,000 to 300,000 tonnes and will take total responsibility for the final 200,000 tonnes of surplus which brings the total to 600,000 tonnes, with the industry taking the responsibility for the first 200,000 tonnes.
The noble Lord welcomed the two orders. I am grateful to him for that and for allowing me to speak to all three. I think I ought to write the noble Lord a line about the futures market. The fact is that it is to some extent a help or a hedge in the way in which the 909 market works, but I should like to put something down on paper about it, if the noble Lord will allow me to do so.
§ On Question, Motion agreed to.