Farm Commodities: Over-Production

HL Deb 06 February 1991 vol 525 cc1198-231

5.26 p.m.

Lord Stanley of Alderley rose to call attention to the case for controlling over-production of farm commodities in the United Kingdom; and to move for Papers.

The noble Lord said: My Lords, the problems of the United Kingdom cannot be resolved in isolation. We must have regard to the European and indeed worldwide food surpluses. British agriculture is virtually bankrupt. One of the main reasons is over-production. I ask your Lordships: what can we do about it? I believe that we must all accept the fact that we are bankrupt. Until we do that we shall make no progress in solving our problem. I say "our problem" because it is not just the Government who are to blame; we all are. We pay too much for our agricultural land; we pay uneconomic rents, and that is partly caused by roll-over relief and a natural human desire to farm. The great difficulty is being able to get out of farming once you are in it.

The high land prices and rents then force farmers to produce more, so adding to the problem. We shall not solve our problem until we recognise our bankrupt state and so force down land prices and rents, thus allowing us to farm less intensively. Governments must also shoulder some blame in encouraging us over past decades to go down that path. My point is that we must accept the situation, stop crying over spilt milk, and try to solve our problem. The first requirement in solving it is to discover the aim of British agriculture. Without a clear objective we shall fail.

In any policy to control surpluses we must insist at the end of the day that the centuries of achievement and work which have made British agriculture, dynamic, resourceful and efficient, must be preserved and indeed encouraged. It is the Government's responsibility to ensure fair trading conditions, so enabling a reasonable livelihood for those remaining in farming. If my noble friend Lady Trumpington does not agree with that objective—and I think she does—I hope that she will say what her alternative is. Certainly the MacSharry proposals, concentrating support on the very small part-time farmer, would do the opposite. Why subsidise inefficient peasant holdings at the expense of the British farmer and farm worker?

I believe that any other objective, particularly the MacSharry proposals, will cause the following problems. First, they will cause higher food prices that will encourage imports and make us lose our markets; secondly, they will lead to an inefficient high-cost, unhygienic and indeed dangerous peasant agriculture; thirdly, they will place an impossible strain on the GATT negotiations and destroy—this is possibly what I mind most—the soul of the farmer. Will any farmer wish to produce half crops or manage livestock inefficiently? Will he have any self-respect left if he has to live off social security payments, as suggested by MacSharry? Fourthly, they will cause more environmental damage because an illiterate, struggling peasant agriculture will not have the ability to keep and improve our countryside. I hope that I have carried your Lordships with me so far. The question is: how do we achieve our objective?

First, as I have said before, we must all recognise that, as we are bankrupt, the do-nothing situation is just not an option. Indeed it would encourage more production, resulting in more bankruptcies. Moreover, time is not on our side. We have dillied and dallied far too long and a decision is essential. I used to think that the way forward was market forces, or the devil take the hindmost. This could still work if we had a level field, but sadly this is not possible, or certainly not possible in the short term.

If I may, I will give my usual simple example, which I know always irritates my noble friend on the Front Bench. If I am to have a level field I must be allowed to take out useless hedges, perhaps have all rectangular 100-acre fields and be allowed to burn my straw. The ban on burning will cost me £30 an acre; I am not allowed to burn, and, moreover, I am not compensated for it. So the level field already has a trench in it. Of course these are only small examples.

The market forces philosophy will not work unless the public and the Government are prepared to put up with these level field practices. While we are a rich nation, with full, or perhaps overfull bellies, they will not. From a conservation point of view, certainly in many cases they should not. Therefore the free market philosophy to control our surpluses must be coupled with some other form of medicine. The menu of environmental grants, although helping those few who are rich enough to indulge in such practices anyway, will not help the working farmer. There must be, in the short term at least, some form of production control. For instance, if it is necessary to reduce production of arable crops by, say, 10 per cent. to get into a non-surplus situation, there should be a compulsory—I repeat, compulsory—set-aside in excess of that 10 per cent. figure. I would hope very much that the set-aside payment could be enhanced on environmental grounds to encourage a grass set-aside with restrictions on how it should be extensively farmed.

We ought also to consider redundancy payments to help farmers and farm workers leave the industry for, sadly, we still have too many farmers. It may also be necessary in some commodities to have quotas. But they must be transferable so as to encourage the efficient and to enable the inefficient to get out. This would allow our farms to be farmed efficiently and cost effectively. Once the surplus problem is solved it should be possible to open our gates to imports, perhaps with some form of deficiency payments. I accept that in the first few years my scheme would require more bureaucracy, but not that much more in the United Kingdom where we have relatively large holdings. If other European Community countries prefer a different method, so be it, provided that they do not make the field less level. If they wish to keep their part-time peasant farmers on the land, they should be supported out of national social payments not agricultural ones.

I strongly believe that we should not sacrifice our efficient and progressive British agriculture on the altar of the European Community inefficient and high-cost peasant system. We have tried the carrot of voluntary controls on production and they have not worked, so now it must, sadly, be a question of the stick in the form of compulsory supply management to get our surpluses under control. My Lords, I beg to move for Papers.

5.36 p.m.

Lord Gallacher

My Lords, we are indebted to the noble Lord, Lord Stanley of Alderley, for his choice of subject and for the able manner in which he introduced this important subject to the House this evening. There are in our opinion three aspects which need to be stated at the outset: first, the effects of any GATT settlement on Community agricultural policy; secondly, the recently tabled proposals by Commissioner MacSharry for the future of the CAP; and, thirdly, but no less important, the European Commission's own work programme for 1991 which includes a review of the financing of the European Community, evaluation of the common agricultural policy and re-examination of the common agricultural policy. All these are outwith the direct control of the Ministry of Agriculture. Therefore any production controls in Britain will necessarily mirror settlements reached elsewhere and especially those reached in Brussels.

The United Kingdom is again in a position of having to respond to Community proposals. It has no powers of initiative. This is both a weakness and certainly the price that we pay for the indirect system of democracy which exists in the European Community. The position is aggravated in my opinion by the fact that Britain's nominees to the Commission itself have never held the agricultural portfolio. The last three were Danish, Dutch and Irish in that order. That suits very well the other major agricultural member states such as France, Germany and Italy. All are small farmer nations and current retrenchment policies, as the noble Lord, Lord Stanley, has pointed out, are geared to suit small farmers, especially when social payments to compensate for low guarantee prices are included. This perpetuates the existing small farm structure in Europe and therefore must automatically penalise United Kingdom farmers.

Britain's position under Commissioner MacSharry's proposals looks like being our worst ever. We pay a major part of the cost of the common agricultural policy, yet the policy is now being restructured in a way which we know will penalise British farming. We must ask ourselves whether the Minister of Agriculture is wise to seek merely to change present proposals. Mr. Gummer played a significant part in getting fellow agriculture ministers in the Community to face the reality of the GATT negotiations, but he now appears to believe that he can negotiate a solution to the consequences of any GATT settlement which will not excessively penalise British farmers nor add to costs for British consumers. In our opinion, he cannot.

More radical reforms are necessary than have been mooted so far, including a critical look at the five objectives of the common agricultural policy enshrined in the Treaty of Rome, some of which are now unreal. If amendments are required to the treaty, we should declare for them. After all, we conceded as much if not more in agreeing to the Single European Act which included the extension of majority voting in the Community.

No one denies the fact that without a common agricultural policy it is unlikely that the European Community would have been formed in the first place. We are however on the verge of forming a Community where most internal trade barriers will have been removed. We must ask ourselves whether present commodity regimes for agricultural products in the Community can be justified after 1992. If fundamental change along those lines is unacceptable to the agriculture ministers at present, then a start should be made by repatriating responsibility for those commodity regimes which are not of major significance in all member states. Tobacco, sheep meat, rice and wine come to mind. Regimes may remain in the Community for those commodities which are basic to member states, such as cereals, milk and beef. Here again, one should add the rider that they must be subject to eventual repatriation.

Such a policy would permit specialised retrenchment in the Community. I believe that most people who have had experience of expansion and retrenchment in business will recognise at once that it is relatively easy to expand, but that it is significantly difficult to retrench. In particular, where entrenchment involves an element of justice such as is now necessary under the common agricultural policy, it becomes infinitely more difficult in our view to retrench justly for 12 member states rather than allow the member states to engage in such retrenchment as is necessary. We believe that Britain, as a paymaster of the common agricultural policy, needs to be less wedded to the concept of an all-embracing CAP after 1992. By merely seeking to reform existing proposals which are unhelpful to us, we run the risk of being outvoted in the process of seeking to change the present proposals.

Plans to curb over-production devised thus far in Brussels will, as the noble Lord, Lord Stanley, said, neither help our farmers nor stifle the complaints of British consumers. Even as a negotiating ploy—such ploys are very important as we well know when dealing with the common agricultural policy—we should now be making strong repatriation noises in Brussels, especially at meetings of finance ministers. I say that because in the final analysis it is the finance ministers who will control agricultural spending and any policies of retrenchment under the common agricultural policy.

In a sense, to engage now in proposals for specific commodities may merely encourage the continuance of present proposals. If we must retrench, then we believe that that can best be done by our own agricultural ministry in England and Wales as well as by the agricultural departments, which are no less important, in Scotland and in Northern Ireland. In our opinion, we ought to be saying that loud and clear. One hopes that one of the consequences of this debate will be that we shall have fresh thinking on the overall problem, without becoming enmeshed in the details of which commodities to produce and in what fashion we propose to produce them.

5.44 p.m.

Lord Harris of High Cross

My Lords, I should like to thank the noble Lord, Lord Stanley of Alderley, for raising this important issue and for opening the debate in such a thoughtful and admirably brief speech. I find myself caught rather unprepared by the brevity of the speeches which we have heard thus far. Nevertheless, I shall do my best to emulate them. I have also been thrown by the sight of the noble Lord, Lord Prior, sitting on the Bishops' Benches. I must tell him that he would for my money, make a most welcome addition to them. Finally, by way of apologia, I must admit that I have not as yet had the opportunity to read the MacSharry Report. However, from what I have heard, it is not all bad.

When I saw the Motion on the Order Paper I was a little suspicious because it refers to "controlling over-production". It aroused my mean economist's suspicions of further devices and dodges such as quotas, licences, set-asides, funny money like the MCAs, and other short-term expedients; but what we want is not so much to control over-production as to put an end to it. The method is not more fancy franchises, but more free trade in world markets, including Eastern Europe, with less subsidised prices, as the USA and the Cairns Group have been urging on the benighted EC. If there were any suspense involved I would spare your Lordships from waiting by saying that, in a nutshell, my argument is that the mischief of over-production is the perverse result of well-intentioned political efforts to control markets by faking the price system. I believe that there are better policies available to match our chosen ends.

A week ago in Moscow with the temperature at 28 degrees below freezing I saw a group of young Russian market economists positively boiling with rage at the effect of artificially low shop prices which create queues and shortages of what passes as foodstuffs, though they are more stuffs than food. Today, with the temperature somewhat warmer, I shall try to keep cool in denouncing the opposite effect of artificially high producer prices which create the surpluses about which the noble Lord complains.

On the return flight from Moscow I read an article in the British Airways Business magazine on the crisis in Europe's agriculture. It confirmed that it is not only the taxpayers and consumers who are suffering under the CAP but also a large part of the farming community for whose benefit the entire game is supposed to be rigged. I stand before your Lordships in the unlikely disguise of a farmer's friend.

Over the years, party men like to talk about keeping the countryside in good heart, with independent yeoman farmers eagerly preparing for the next harvest. It is true that the minority of big farmer-landowners may still be flourishing—although they may deny that fact—but the drift from the land continues, driven by high rents or mortgages and interest rates which absorb the lion's share of more modest incomes. They leave behind many others who are apprehensive of the vagaries of future European politics.

The article in the British Airways magazine referred to farmers selling off their land for various leisure pursuits and warned that if all the golf courses being planned in the South East were actually built we could before long be facing the equivalent of a golf mountain; though I predict that that will not happen so long as people are using their own money.

Faced by such nightmares, I turned for illumination and hope to a recent IEA Hobart paperback entitled Farming for Farmers? by Richard Howarth of University College, Bangor. He has obligingly written a popular version for the Bruges Group of which I confess to being chairman. You do not have to be a paid-up Bruges-ite to find the whole story both shocking and alarming. With analysis and statistics, Mr. Howarth explains how it is that, despite a family of four paying about £1,000 a year in higher prices and taxes, the majority of small farmers derive little, if any, benefit from this macabre game of pass the parcel. Figures vary, but it appears that the public may be paying £2 for every £1 of theoretical benefit conferred on the farmer. But in a recent year, of total farm subsidies costing two-thirds the EC budget well over half was absorbed in storing surpluses, paying subsidies to export them and administering the whole crazy system. We do not know how much of that goes in fraud, which is estimated to abstract at least 10 per cent. of the total budget under the somewhat complacent control of Monsieur Jacques Delors.

The full tally of wickedness includes what the economists call the "Ricardo" effect of high guaranteed prices and quotas becoming embodied in higher land values, the harm which intensive farming inflicts on the environment, the havoc that surpluses wreak on world markets and the damage subsidised exports impose on farmers in less developed lands.

However, noble Lords will be glad to hear that Mr. Howarth is no doctrinaire. He acknowledges a case for helping small farmers; not by price fixing which he thinks should be phased out but by direct support for low farm incomes and by encouraging the growing trend towards diversification.

We are already seeing the expansion of deer farming, wine production, organic food, and farm shops, as well as catering for leisure pursuits such as nature trails, farmhouse holidays, camping, canoeing, even war games, as well as sports—favoured, I am told, by your Lordships—such as riding, shooting and fishing.

Mr. Howarth foresees the Ministry of Agriculture, Fisheries and Food being wound up—or wound down—in favour of the Department of the Environment; though not I hope, I hasten to add, during the amiable tenure of the Minister. Such a change could dramatise an extension of existing grants for conservation areas. That need not rule out building developments, including contemporary country houses and balanced modern villages, as well as the tasteful conversion of farm buildings into holiday cottages, restaurants, craft workshops and retirement homes. We can argue how extensive such grants and subsidies should he, but they will be open payments which could be costed and compared with the visible benefits.

Mr. Howarth believes that there is no reason why we should not continue to have prosperous and flourishing agriculture, different in shape perhaps from that which we now see. Above all, a policy along those lines would replace the damaging paraphernalia of price guarantees and the resultant export subsidies and import levies of which the full costs may be less visible or calculable but which are certainly very much larger.

5.52 p.m.

Lord Middleton

My Lords, it is always most refreshing to hear the noble Lord, Lord Harris. I suppose that a man from Mars would be astonished that we can use the words "over-production of farm commodities" in a hungry world less than one-thirtieth of whose surface is suitable for growing crops and whose population is increasing by 200,000 every day. That is a paradox that could be debated ad infinitum.

My noble friend's Motion refers to overproduction in the United Kingdom, but he has explained that he is looking outside the United Kingdom at the wider picture of European Community over-production and its implications for the European budget and the GATT negotiations. Of course those are not new problems. He will remember, from his work on Sub-Committee D, that the House of Lords Select Committee on the European Community has been looking at them since it was set up about 18 years ago.

My noble friend referred to the need for production control. When the Select Committee reported in 1983, Sub-Committee D had looked at the various options for supply control, including control over support prices, quotas, a mixed price system, acreage diversion schemes, production thresholds, deficiency payments and so on. The committee reported again in 1985 on reform of the CAP; in 1986, on cereal surpluses; and in 1988 on stabilisers.

Every year, the committee examined the Commission's annual farm price proposals. Our conclusions have been consistent. We have been opposed to quotas, which, except for certain products such as milk, are difficult to administer and which under a high pricing system are not beneficial to the consumer and prevent an efficient producer from expanding his market at the expense of the less efficient. We have been unenthusiastic about acreage diversion schemes. We were against the limitation of cereals output through a tax on imports, such as nitrogen fertilisers, which would not be conducive to efficient production and would be difficult to organise and police. In general, until now, we have concluded that the CAP must operate to a greater extent through the price mechanism.

In last year's Select Committee report on rural policies, we recognised the inevitability of a greater exposure of farmers to market forces. Nevertheless, we have consistently said that the complete abandonment of support for agriculture would not be acceptable on economic and social grounds. In view of what noble Lords have referred to as the "MacSharry" proposals, which are currently under discussion in Brussels, it is worth recalling the Select Committee's 1985 report Reform of the CAP, in which we said that where farming became economically unviable in certain areas then the problem should be dealt with as a matter of social and regional policy and not through the price system. My noble friend Lord Stanley said that he agreed with that view. That view was restated in our rural policy report, which we debated last November.

What has happened in the past few years is that there has been much tighter control through the price system and by the means of stabilisers; a milk quota has been in force for seven years; and the produce mountains have shrunk, at any rate in the United Kingdom if not in the rest of the European Community; but so have farmers' incomes. Yet the European Community budgetary problems remain as intractable as ever, and the GATT negotiations are bedevilled by the friction caused by subsidies on the export of farm products.

As industry teeters on the edge of recession, the Commission is now calling for a sharp reduction in price support for European farmers. Those proposals are contained in a paper which I read only this morning, as soon as it became available. It is a communication from the Commission to the Council entitled, The Development and Future of the CAP. It is subtitled, A Reflection Paper. It is those proposals that have been discussed in Brussels this week by the agriculture Ministers. Broadly, what the Commission is saying is that it has so far failed to stem the continued increase in Community budgetary expenditure and that therefore more drastic measures are required to limit production.

The Commission proposes severe cuts in support prices. To compensate, payment will be made to farmers conditional upon land being taken out of production. The proposal is that the amount of support would be scaled according to farm size: the larger the farm, the less the support. No figures are included in that version of the proposals.

In the paper, the Commission is calling for discussions on a fundamental reform of the CAP. It is the intention that Sub-Committee D shall inquire into these proposals forthwith and report to your Lordships. We shall need to consider the implications of an open market approach to agriculture policies and a sharply reduced level of CAP support. I suspect that much of the argument will revolve around the question of whether the price mechanism should be used to achieve social objectives. In view of what we said on the subject in our recent rural society report, I have no doubt that we shall look critically at the suggestions for the modulation of price control. I suspect that we shall see the need for expanded special help for producers in disadvantaged areas. I dare say that we shall once again look hard at any proposals for compulsory controls on output; and we shall consider the need to promote rather than inhibit efficient production. I hope that, if any report to the House on the proposals were to be critical, it would also be constructive. In that connection, it was interesting to hear what the noble Lord, Lord Gallacher, said, and I shall read his speech with enormous interest.

I am grateful to my noble friend for once again bringing these complex matters to the attention of your Lordships. The views which noble Lords have expressed this evening in the debate will be of great benefit to the Select Committee's forthcoming inquiry.

6 p.m.

Lord Houghton of Sowerby

My Lords, I urge noble Lords to study carefully the MacSharry recommendations on the future of the CAP. I believe it to be the most important substantive document before the Community so far on the subject. Until we study it carefully and understand its purposes and implications, I do not believe that we can carry on an intelligent debate on the future of surpluses in our agricultural industry.

We are dealing, first, with the need to achieve a Community policy and, secondly, with the need to find an intelligent and acceptable policy for agriculture. When the noble Lord, Lord Stanley of Alderley (whom I thank for introducing the debate) asked what was the purpose of agricultural policy, the answer must be in large measure to keep farmers on the land. The land can go to no one else if the environment is to be preserved and the countryside to bear some semblance of care and prosperity, as it has done over the past 30 or 40 years.

Thus we must pay attention to small farmers so long as it is possible to keep them on the land. If we consieer withdrawing support from the larger farms and withholding it gradually from the smaller farms, agriculture will fall into the hands of big agricultural business. My fear is that the pressure on intensive animal husbandry will increase. That is my main interest for my allotted eight minutes.

Until now we have paid insufficient attention to what has been going on in intensive animal production. A letter appeared in The Times this morning which wounded me deeply. I was a member of the Labour Government who were so weak in dealing with the Brambell Report 25 years ago. What an opportunity we had and how we missed it!

Brambell was warning of the conditions in which animals were kept under the intensive system. The report tried to lay down basic conditions for the lives of animals in those circumstances. One demand was that they should be able to turn round; another was that they should be able to lie down on reasonable bedding. Where we failed was in not making more statutory conditions for intensive animal husbandry. We relied too much on the voluntary response of the farming industry to this kind of animal keeping.

The MacSharry Report contemplates pressure for more extensive animal husbandry and curtailing intensive animal husbandry. That is what we ought to do wish the land which may become available for wider use in farming interests. What we have done to pigs in the past 25 years has gone absolutely against the recommendations of the Brambell Report. We ought to be ashamed of ourselves. Who called for alleviation of these dreadful conditions? Not the farmers, not even the veterinary surgeons. It was the animal welfare people who are scorned as cissies by a large section of the community. We should never have allowed this to happen.

When we tackle the conditions we find that capital investment in equipment and processes is so heavy that it becomes almost impossible to get rid of it. Farmers want eight years in which to give pigs a decent life. They would prefer 10 years and the Government think it should be five; or do they? I am not sure. It is possible that the Government also think it ought to be eight years. That is eight years of misery for millions of pigs while we get rid of the cruel equipment in the intensive pig industry today and provide a broader and happier life for one of the most intelligent farm animals. I have said before that pigs are probably as intelligent as some Members of Parliament. They should be able to seek a better understanding of their conditions from Parliament than at present.

I plead for animals. Greater competition may put pressure on intensive husbandry, and we must be careful about that. However, as long as the conditions encourage greater production of meat—sheep meat, beef and so on—we must watch what we do with the surplus. The budget for the Common Market has doubled in the past four years. Production has quadrupled in that time. We are up against a rise in production in the Common Market of 2 per cent. per year, with internal consumption rising only 1 per cent. and farm incomes not improving. The numbers employed in agriculture are falling, with the result that there is a surplus in production which we wish to dump on a stagnant economy in neighbouring countries. That causes friction over the CAP and GATT in our relations with other countries, as well as their internal differences.

This problem can be the source of much discord in the Common Market. Since the European Community will undergo considerable additional strains in the near future, possibly as a result of the Gulf conflict, we do not wish to aggravate members. Let us give every consideration to what may provide a consensus in the CAP. If our own department has a better scheme, let it produce it and tell us more about it. Quite clearly, British people must take a greater interest in agricultural production methods and the industry than in the past. One cannot do to the agricultural industry what one can do to manufacturing industry: leave industrial units of production to close down and say goodbye to the workers and the people who run it.

The land is in the hands of the farming industry. It belongs to the people. We are entitled to know how it is used. If it is used intelligently, with compassion for animals, then we shall probably be happier about it than at present.

6.8 p.m.

Lord Palmer

My Lords, how warmly I commend the debate on how to control agricultural surpluses. I congratulate the noble Lord, Lord Stanley of Alderley, on bringing the subject to the attention of the House. However, it seems tragic that, viewed globally, there is no over-production of food. In reality, there is a vast amount of under-consumption, especially if we consider central and eastern Africa, where millions are dying from a lack of food. But perhaps that ought to be the subject of another debate.

It is worth reflecting for a moment on what the so-called surpluses really are. Are the Government aware that just before Christmas the UK had 27 days' supply of butter in stock, 25 of beef and—I am amazed to hear—just one day's worth of wheat? With many nations involved in a dangerous war, I should have thought that these stock levels were surprisingly low.

The Government have always had a strategic and moral responsibility to ensure that the nation is defended and fed. I am sure your Lordships agree that they have done this admirably. However, the partnership between the Government and the agricultural industry is unique. Successive governments from the middle of the last century have fulfilled this responsibility to feed the nation by providing and managing a support system for the means of production of our vital food. Without food, there is no nation.

With indebtedness by UK farmers standing, as the noble Lord, Lord Stanley, said, at an all-time record of nearly £7 billion—a 95 per cent. increase over the previous decade —the Government cannot simply walk away from the problem. The Minister in another place has pledged that British farmers will not be disadvantaged. In your Lordships' House too we have heard much sympathy expressed for farmers and their terrible plight. This sympathy is much appreciated but it does not pacify the bank manager, nor does it stave off bankruptcy. We must not forget how the situation has arisen. Most importantly of all, we must remember that farmers throughout Europe have only done what they were told to do.

One often hears the argument that agriculture is facing the same problems as the coal and steel industries have faced. However, the problem is not the same for farmers, in that they were financially encouraged to produce more. They were told to drain the wetlands and to borrow from the bank to make up the shortfall. Suddenly the brakes are on, but the very nature of farming requires long-term planning. Already 90 per cent. of the 1991 wheat harvest is in the ground and growing. No one can realistically hazard a guess at the tonnage or what the financial yield will be. Are the Government aware that a 10 per cent. reduction in the price of wheat paid to farmers would reduce the price of a 60p loaf by just 1p?

A bad spell of weather at the wrong time could easily reduce incomes by up to £150 per acre. That is why any plans to reduce the so-called surpluses must take the long-term future into consideration. The agricultural industry must be sufficiently prosperous to attract new blood into its ranks and to ensure that UK agriculture is competitive with agriculture elsewhere in the world, and most especially in Europe. At the same time farmers must be able to afford to manage the countryside for conservation and recreation purposes in the ways which the public require and deserve.

In the past some people have dismissed farmers for crying wolf. However, there is nothing mythical about the wolf now at the door not only of farmers but also of many thousands of people in the countryside who depend on a healthy rural economy. The Government have a moral commitment in this matter and they must act now before it is too late. I should be grateful if the Minister will assure the House that the Government will resist most strongly the MacSharry proposals. They discriminate most unjustly against UK farmers and will bankrupt many of them. Despite being criticised by the Council of Ministers earlier this week, the proposals seem likely to creep back via the Commission's farm price proposals which are to be announced shortly. Let us hope that that is not the case.

6.14 p.m.

Lord Willoughby de Broke

My Lords, as the noble Lord, Lord Stanley, has said, any discussion of United Kingdom over-production cannot be divorced from European agriculture and the common agricultural policy. The structure of the CAP gives every incentive for over-production. Radical change is essential both from the point of view of the present unsustainable cost of the CAP and of the effect of dumping onto world markets Euro-surpluses at a fraction of their cost. The CAP has not even succeeded in maintaining the incomes of both arable and livestock farmers. Here I must declare a painful interest as I have a dairy and arable farm in Warwickshire.

With this debate in mind, I have considered some of the methods which other countries use to control their agricultural output. I shall not argue whether it is a matter of controlling or stopping output. New Zealand is perhaps the most radical example. There the system of farm support was viewed by farmers themselves as being unsustainable. Over a short period of time from 1984 to 1989 New Zealand made its farming subsidy free. That was achieved at some cost but not at the catastrophic cost that had been forecast. I am told that some 800 farmers out of a total of 50,000 left the industry with compensation. New Zealand fed this country for a long period, including during the war. That country has legitimate cause for complaint when the EC, in spite of a commitment to the contrary, continues to dump cheese and other dairy products on markets that New Zealand has developed. That course lacks both justice and financial common sense.

Neither Australia nor Argentina subsidise their farmers. The US has a system which approximates to Mr. MacSharry's proposals which seem to have been unceremoniously booted into touch this evening. In the United States a deficiency payment is made to those wheat farmers who agree to take 15 per cent. of their land out of production while a further 15 per cent. of the land has to be diverted to other crops. The American farmer receives about a quarter of his gross income through this deficiency payment. I am told that this is a successful programme and that it has an uptake of about 85 per cent.

I am astounded that British taxpayers have not reacted more strongly to the huge cost of farm support in Europe. After all, the taxpayer foots the bill for wheat at £120 a tonne when the world price is now £40 a tonne or even below. The taxpayer foots the bill for the butter sold to Russia at 1,100 dollars a tonne when it costs the EC 4,000 dollars a tonne. That subsidy amounts to well over twice the world price. Every cow in Europe receives a subsidy that is higher than the per capita income of half the world's population. I hope that my noble friend the Minister can tell the House what dairy stocks are currently held in intervention stores.

The cost of CAP expenditure in the UK alone is quite staggering. It amounted to £1,000 million in 1989–90 and it is estimated to increase by a further £600 million in 1991, while the figure for the EC as a whole last year was £12,000 million. We have had poll tax riots but I have yet to hear of CAP riots. Perhaps we have not had such riots because the taxpayer is unaware of what he or she is shelling out. The noble Lord, Lord Harris of High Cross, pointed out that it costs each family of four nearly £1,000 a year, or the equivalent of 7p. off the rate of income tax, to support European farming and its attendant surpluses.

The final insult to the British taxpayer is that the great majority of his unwitting contribution goes not to the British farmer—that would probably be bad enough—but to the many French, German and Italian farmers. For many of those farmers farming is only a part-time job anyway. The taxpayer, having paid his subsidy, then pays a second time by buying back his now high-priced goods through the shops. If the CAP is to be reformed, that could easily be the result of a taxpayers' revolt rather than through political debate.

What methods should we consider to reduce these surpluses and the cost of producing and selling them? This evening we have discussed cuts in support prices. I have not had the opportunity to read the paper to which my noble friend Lord Middleton referred. I hope that any of the cuts would bear equally on all producers. However, that may be politically difficult to achieve.

Voluntary set-aside has demonstrably not worked. Grain output increased during the first two years of set-aside. As my noble friend Lord Stanley has commented, compulsory set-aside would probably work. We must, however, realise that we are talking of a large acreage, probably at least 20 per cent. of the total arable acreage to achieve a 10 per cent. reduction in output. I gather that that would amount to about 3 million acres. One could fit a lot of golf courses into that acreage. But what of the rest of the land? Should we use it for mown weeds or long-term tree planting? My noble friend Lord Stanley helpfully suggested extensive grazing. That might be more attractive than the present alternatives. However, at current prices of £90 to £100 an acre for an unspecified period, the set-aside option could end up looking awfully expensive, leaving aside the image of paying farmers to do nothing—a sort of agricultural dock labour scheme.

Could we not discuss some sort of contract between farmer and government to produce less; say, 20 per cent. less over five years? The farmer could reduce his production by any means he liked, probably by reducing nitrogen and herbicide application, but without the necessity for the bureaucracy that would be entailed in nitrogen rationing. He would be compensated for joining the programme, provided that he reached his target year by year. This would, at least, have the advantage of keeping farmland farmed, maybe in a more environmentally acceptable way, without the disruption to the rural economy that large-scale set aside would entail.

I believe that farmers would welcome constructive proposals such as we have heard tonight. Farm incomes are still falling with no relief in sight and we are still over-producing as hard as we can. I am sure that most of us would back a policy which made real sense for the future, which may well be a combination of some of the proposals that we have heard today. The need is urgent, as the noble Lord, Lord Palmer, has said, and I much look forward to hearing from my noble friend the Minister what the Government may have in mind.

6.21 p.m.

The Earl of Carnarvon

My Lords, I, too, am extremely grateful to the noble Lord, Lord Stanley, for introducing this very important debate on farming to your Lordships' House. The European Community's Commission is considering radical revisions of the common agricultural policy, which are designed to control production and reduce surpluses, to protect the environment and to redirect support to some farmers and some regions.

Some of these ideas are extremely worrying for the United Kingdom's medium to large family farms, both livestock and cereal growers, and is leading to a run down of a great industry. It will cause more loss of employment in rural areas and—this is an important point—will compromise the farmer's and landowner's traditional role as managers of the countryside.

I believe that the Community should increase extensification and introduce more appropriate set-aside policies, which could achieve lower levels of production and a more environmentally friendly farming industry. If this is achieved, then local planning authorities must not negate the effect by failing to understand the farmer's predicament, and by putting every possible obstacle in the way of him enjoying his livelihood and maintaining his workforce.

My own workforce at Highclere has decreased from 14 in 1987 to seven today. This not only affects those families very drastically, but also all the non-farming rural industries in villages and small towns which they help to sustain. Only 10 years ago United Kingdom agriculture provided 200,000 full-time jobs. Now there are about 140,000. That points to a severe decline in the economic health of the farming industry which is now at crisis level.

I do not apologise for being anecdotal. This week I was delighted to hear that our family farm had topped the gross margin league table in the Meat and Livestock Commission's single-suckled lowland herds in the south and south-west area. One should have been thrilled but, allowing for fixed costs, we showed only a small profit. I believe that the runner-up just about paid his way. The other 18 have probably all lost money. I think it fair to say that livestock farmers returning figures to the Meat and Livestock Commission are probably among the most go-ahead in the country.

Nothing gave me more sadness in December last year than to have to make redundant two senior staff, both of whom had been with me for over 20 years, and one of their sons. I know that other industries are in a depressed state as well as farming, but they do not get the same hammering from the media as farming. I hope that this debate will put the record straight as to the very serious position that farming is in today and the overall effect that this may have on our countryside generally.

6.25 p.m.

Viscount Mountgarret

My Lords, I, too, am grateful to my noble friend for bringing this very important matter before your Lordships this evening. But I have to say to him, and to my noble friend on the Front Bench, that I do not have quite the same enthusiasm for the set-aside arrangements that have been made recently in order to try to control the production of our crops.

I said to my noble friend when she was introducing a Bill in an admirable way—the amount of work put into it was tremendous and deserved compliment—as I say now, that it is not the right way to go about matters. When we think of it, the set-aside arrangements are a financial incentive to a farmer not to do anything. It is a reward for sitting back and doing nothing. I do not think that in any walk of life one should be rewarded for sitting back and doing nothing.

One day the set-aside arrangements are bound to come to an end. When that time comes, what will happen to the many farmers who have decided to adopt the scheme, to reduce their manpower, to reduce their livestock and to capitalise thereon? It will be much harder to find money then in order to go back into the business of farming and the production of food. It is a dangerous step for farmers to take, although I understand why it was felt to be necessary.

Quotas do not really work—my noble friend Lord Middleton has touched on this point—but some arrangement like that must be looked at far more seriously. It is no good having a farmer on one side of the fence producing four tonnes of wheat to the acre while a farmer on the other side of the fence is being paid to do nothing. Surely to goodness there is a middle road. Is it not possible to devise some form of quota? Is it not possible, as my noble friend Lord Willoughby mentioned, to achieve some reduction in the use of the fertilisers and nitrogen which seem to get into our water systems, causing great concern to many people?

I do not expect to carry everybody with me, and I see a noble Lord shaking his head, but we ought to address ourselves to these points. Why have an enormous input into some areas in order to maximise output when there could be a lower general level? That would benefit the conservation side. Instead of the combine finishing harvesting in August or in July with the plough following close behind and the field being sown again immediately in order to get increased production—earlier sowing, increased production—why not leave the stubble as they used to do and encourage the wildlife? You may encourage your game as well as your wildlife, but that is traditionally the source of part of a farm's income.

One does ask the question whether we may perhaps be going down the wrong route. That is my contribution to this debate. I am concerned about set-aside and I believe there should be a better way, such as encouraging lower production. Yes, indeed, the money might have to be found to subsidise and assist farmers and landowners who may suffer a reduction in income, but it would be a better route to take than actually paying people to do nothing.

As the noble Lord, Lord Houghton of Sowerby, very rightly said, the land is there and something has to be done with it. Farmers exist and we have to look after them. I would go one stage further and say that it is not only the farmer but also the landlord who is involved here. It is a partnership, as the noble Earl, Lord Carnarvon, has said. If the returns from agriculture are such as to prohibit the farmer from gaining a meaningful living and, if he is a tenant farmer, paying a realistic rent to his landlord, then the countryside will be affected. There is no doubt about that.

There exists a popular myth of the landlord with broad acres, worth an awful lot of money and so on; but, realistically speaking, not an enormous amount of return is made out of investment in land and agriculture. I am sure many of your Lordships will know that very well. There are sacrifices to be made by many landlords and indeed farmers, if they own their own farms, for providing the benefits of conservation, such as the planting of trees, the resurrection of hedgerows, the maintenance of stiles and gates along public footpaths, and so on. If the money is not there to carry out these activities the conservation of our countryside will suffer. It is no good handing it over to conservation bodies and so on. It is the people who live and work on the land who actually do it quite well. It can only be done provided proper returns are made, and I come back to where I started: to pay people in any walk of life to sit back and do nothing cannot be the right approach.

Lord Mackie of Benshie

My Lords, before the noble Viscount sits down, would he not agree that it has been highly profitable to hold land and that the capital value has risen enormously, even though the return is very small? Would he not agree that this factor has contributed to the rise in costs to the farmer?

Viscount Mountgarret

My Lords, of course it is perfectly true that the capital value of the land is high, but you do not go around with your land stuffed in your pocket in order to pay for this, that and the other. Indeed, if returns continue to fall, the capital value will continue to fall.

6.33 p.m.

Lord Northbourne

My Lords, I should like to congratulate the noble Lord, Lord Stanley, on instituting such a lively debate, to which one of the most lively contributions so far has been that made by the noble Lord, Lord Houghton of Sowerby. I agree that there is a major problem of over-production in European agriculture and, still more, there is the ghastly waste resulting from the common agricultural policy. Surpluses, as the noble Lord, Lord Palmer, pointed out in his excellent speech, if not a thing of the past, are not so much with us as they were.

The fundamental problem is technological progress, and in this country technological progress, in crop production at least, has given rise historically to approximately 2 or 3 per cent. increased yield potential year on year. There is no particular reason to suppose that this incremental ability to produce crops will not continue. Therein lies our problem: from the same amount of land, whether we want to or not, we are going to produce more crops; and that is why we must, either physically or through economic sanctions, reduce the incentives to maximise production.

Like many of your Lordships, I must confess to being a large farmer. I have to say that I do not recognise the image of large farmers which we have learnt to expect from the press and which some speakers this evening, like the noble Lord, Lord Harris, have been tempted to follow. I believe that on the whole large farmers in this country are doing an excellent job, producing food efficiently and looking after the countryside. I think most of your Lordships would agree that those of us who live in the countryside, when we do make a bit of money out of farming, are inclined to plough it back into the piece of the countryside we live in and love. There is a warning there: that if the fortunes of agriculture decline too sharply—a point just made by the noble Viscount, Lord Mountgarret—the potential for landowners and farmers to maintain the countryside will be eroded. This applies not simply to ecological considerations but also to the maintenance of many historic buildings in the countryside—not only the great houses but also the historic and beautiful farm buildings which are probably one of the most important features of the English landscape. I suggest that the Government will have to take into account the inability of farmers to maintain these buildings in future and, if they want to preserve the landscape, will have to do something about it.

The noble Viscount, Lord Mountgarret, referred to nitrogen in the water supplies. I had the privilege of being on Sub-Committee D when we were taking evidence on nitrogen pollution. It appears in fact that most of the nitrogen flowing into the water supplies now was released some 50 years ago when the grasslands were ploughed out at the beginning of the Second World War. It also appeared from that inquiry that nitrogen fertiliser out of the bag, properly used and with the timing of the application in spring, not in autumn, is probably the most efficient way of ensuring that nitrogen does not percolate into the water supply; and ley farming is the worst culprit, I was sorry to learn. It is a very surprising result. And of course the reason why most of us can no longer have bare stubbles in the autumn for the partridges is because we cannot afford to. As most of your Lordships know, spring corn crops do not pay.

I should like to talk for a moment about small farmers. I absolutely agree that there are reasons for subsidising them, but I think it is important that we should look at why we want to subsidise small farmers. I believe that will lead us to certain conclusions as to how they should be subsidised. Do we want to subsidise them because they are producing better quality food? I would suggest the answer is no, because it is not the case. Do we want to subsidise them because they are less costly producers? I do not think that that is the case. Do we want to subsidise them for social reasons? There I think the answer is probably yes; we want to support them for the benefit of the rural community and sometimes perhaps because they have no alternative employment possibilities. Finally, but not least important, we want to subsidise them for environmental reasons, particularly for the sake of the maintenance of the landscape and of the buildings in the countryside.

If we look at those reasons, it is reasonable to come to the conclusion that the most powerful thing any government could do to encourage small farmers would be at once to repeal the existing landlord and tenant legislation. When I was a boy there were eight farms on the estate where I live in East Kent. Now there is one. The reason is entirely because no landlord in his right mind will sign away to a tenant a farm which he knows is going to drop to half or two-thirds of its value the day he signs that lease. However, perhaps that is a matter for another debate.

I believe that the next most valuable thing we can do to help small farmers in the countryside is to create opportunities for part-time work. That would enable people to go on farming in relatively uneconomic agricultural situations, while retaining their self-respect and achieving a reasonable standard of living. In this context, it is worth noting that in Germany more than 50 per cent. of farmers are now part-time farmers. In Redesdale, where I used to farm, I was talking to one of the old farmers the other day. We were going through a list of farmers up and down the valley and there was not one who did not work on forestry in the winter, take paying guests, or have a caravan site. The movement is already there.

Environmental payments, and particularly environmental payments in conservation areas and less favoured areas, are already established and agreed as being a way of helping farmers, and particularly a way of paying farmers to do something useful in terms of management of the countryside. Finally, and as a last resort, there is the possibility of social subsidies, and social subsidies on a regressive basis so as not to patronise people and not to fossilise the society of the countryside. I see that I am running out of time. I should like to finish by saying how much I look forward to the report of that admirable body, Sub-Committee D.

6.41 p.m.

Lord Wade of Chorlton

My Lords, the truth is that a planned industry never works. The more subsidy you put into an industry the poorer everybody seems to get. My family have farmed in Cheshire for many generations. I look back and I see the lifestyle that was enjoyed by my grandfather and great-grandfather. Relative to the size of business we run now and they ran then when there were no subsidies, one sees that we have gained nothing from the vast amount of money that has been poured in. This is mainly because of what has happened to it. Every time we have put money in, we have put it in for the wrong reasons. We have put it in to support the inefficient rather than to improve and benefit the industry.

Noble Lords have emphasised the serious difficulty in which agriculture now finds itself. This cannot be emphasised anything like enough. In many parts of the country we have never seen such numbers of farmers going bankrupt. As a result the businesses that depend on farming locally for their living are also disappearing at a phenomenal rate. Within the CAP the British industry has to pull back, even though it is not over-producing.

In fact we do not produce enough temporal food. We have to import a large quantity of milk products and various other products. That would be unnecessary if we were to use all the opportunities that we have. On the other hand we have to look at the fact that since 1945 we have brought into production much land that was never previously thought capable of cultivation. That is because of advances which have made it possible to drain and improve land, to plough up land and to take down woodland. I can see in Wales land ploughed in the last 20 years which for generations previously no one would have dreamt of going anywhere near with a plough.

We have encouraged a lot of land to come in. Now, in the course of events, we have to encourage a lot of land to go out. Even if we are not over-producing in the United Kingdom we have to see ourselves within the European context. As suggested by certain noble Lords, we have to take out certainly up to 2 million acres of land within the next few years. I believe that the right approach is to take it out of production.

One of the difficulties in the past was the fact that people saw ours as an industry that they could plan and control. The best and easiest way for change to evolve in agriculture is to allow the market, as much as possible, to take its place. We can slowly allow farmers to switch to the activities they should be undertaking. I do not agree with many environmentalists. I would also say to the noble Lord, Lord Houghton, that the cattle and breeding animals of this country have never, in the history of time, been so well looked after, so healthy and so fit as they have been over the last 25 or 30 years. They have never suffered less disease. They have never been better cared for by the farmer.

I have travelled round and seen herds of every possible species. They are fitter, better, more effective, and better fed than they have ever been. If I have the misfortune to come back as any other animal, I know that I would prefer the life of an animal in the last 25 years. At any other time in history, I would have sat out in fields up to my neck in mud with nothing to eat. I do not agree with those who say that agriculture, or farming, has had a bad effect on the environment or the animals. The skills and technology to which the noble Lord, Lord Northbourne, referred, have never been better.

If we are to solve the problems of the future then I believe that the answer is to take out the land and for farmers to move from what is now a subsidised system to a free market system. It has to be accepted within our industry, and most farmers do accept, that that change has to take place. If we are to survive in the ever closer world in which trade has to take place, then we have to trade at world market prices and we have to restructure our industry so that we can cope with world market prices. We can only do that if we stop using money to support production which is uneconomic.

I do not agree with any of the policies put forward which say that we should use what resources are available in the CAP to support marginal producers and those whose enterprise is not viable. Once that decision is taken and we accept that what has to happen is that people have to go out of the business if they cannot run efficiently on a lowering price, then we have to use our resources to help them to get out, and look for the free market structured industry which will then develop. If we are to do that, it will require a fresh look at what people can do with land and how the rural economy actually operates.

As the noble Lord, Lord Northbourne, said, if people are going to leave agriculture then the individual has to have something else to do. What we cannot accept, and what will never work, is a concept that says on the one hand that we have to reduce agriculture and reduce production but on the other hand that we cannot use the land for anything else. Many argue that the ideal world is a world where all the farms and all the greenery around us are looked after and are beautiful. Well, that only happens when there is efficiency. People refer to the buildings. The buildings are beautiful, but they were not built in recent times. There have been complaints during discussion of recent Bills —the Planning and Compensation Bill comes to mind—about the poor condition of farm buildings. That has nothing to do with planning. It is because the farmers do not have any money to build any decent farm buildings.

The farm buildings that people take pride in—the buildings that they like to drive around and look at—were built when the industry was prosperous. If you want a prosperous industry you have to encourage those who are efficient. You have to produce on the land that can produce efficiently and take out of production the land that is inefficient.

It should be clear policy—it has now to be a European policy—that within a period of time agriculture will be taken into a free market where people can produce at world market prices. To do that there is a river to cross. We have supported our farmers so strongly for the last 25 to 30 years that we have to help them to cross the river. We have to give them a pair of Wellingtons or a bridge to show them that we can see a way out and that we have a clear definition of the sort of competitive, effective, and efficient industry that can be a powerful and great force for Britain. We will then see the beautiful countryside and the attractive farms because the farmers will be able to create the wealth to make it possible.

6.48 p.m.

Lord Dunleath

My Lords, I join with noble Lords in thanking the noble Lord, Lord Stanley of Alderley, for having introduced this topic, which is one of considerable concern to all of us who are at present involved in agriculture. We are grateful to him for having, raised the subject at this time. As a number of noble Lords have intimated, the common agricultural policy is to a large extent a social policy rather than an agricultural policy.

It is understandable that within the EC there should be the aspiration to keep as many farmers as possible on the land. But I consider it basically wrong—I believe that the noble Lord, Lord Stanley also said this—to penalise the efficient in order to subsidise the inefficient. It is not an exact parallel, but there are similarities with the collapse of communism, when the inefficient were subsidised at the expense of the efficient. I have seen that in Russia and, more recently, in Poland. I do not believe that that is the answer to the EC problem at the moment.

Furthermore, as noble Lords have said, many of the small farmers, about whom Commissioner MacSharry is quite rightly concerned, are part-time farmers. Moreover, quite a number of them do not farm from the land but from concrete, using the by-products of other industries, such as the brewing industry. In my view those people should not be the recipients of subsidy to the detriment of the efficient farmers. After all, that is what the market economy is all about; namely, that the efficient thrive and the industry slim itself down accordingly.

By contrast with the European farmers to whom I have just referred, in that part of the country from which I come, Northern Ireland, farming is the biggest single industry. It employs about 13 per cent. of the population—not just the farmers themselves but those in the service industries ancillary to it. Most of the farmers are family farmers who own their land. They are not tenant farmers. They are entirely dependent on their own efforts to make their living. For the most part they do not have other jobs. The only way in which they can strive to beat increasing overheads and keep themselves efficient is by expansion, acquiring either more land or more milk quota. If that opportunity is denied them, people who contribute in a considerable degree to the economy will be put out of business. I am sure that we all agree that it would be disastrous for that to happen in Northern Ireland.

The original purpose of the common agricultural policy was to encourage farmers to produce efficiently what it is possible to produce in their areas. In other words, there is no point trying to grow maize or sugar beet in the northern and western parts of this country where the climate is not suitable for such products. However, in the northern and western parts of the British Isles grass can be grown much better than anywhere else in the European Community. Therefore our grassland-based farming should be encouraged. That is the area to which the Community should be looking for the production of milk, beef and sheep. Let other areas of the Community grow other crops for which they are more suited. If the Community is to be efficient, the original objective of encouraging farmers to do what they can do best should he pursued. That is what the market economy is all about: encouraging people, whether in industry or agriculture, to do what they do best.

There is perhaps also an argument for holding a certain surplus of foodstuffs in the EC. Surpluses are expensive to retain but compared with the possibility of a disaster—perhaps a couple of seasons of bad weather—a surplus probably acts as an insurance policy. If that surplus has to be reduced, as I think it probably does, then contrary to what some noble Lords have said—I believe the noble Lord, Lord Middleton, said that it would reduce efficiency—I respectfully suggest that a restriction on the use of nitrogenous fertilizer is one of the best ways to do it. Not only would such a restriction reduce production, it would also reduce the risk of leaching of nitrates into the water system.

In contrast to certain other noble Lords, I am afraid that I cannot be enthusiastic about the set-aside system. Most farmers are proud of their land and look after it well. They do not want to see it polluted by scutch grass and other weeds which would take a long time to clean up should the set-aside policy be reversed. Therefore bearing in mind that our land and farmers constitute one of our greatest assets, I suggest that efficient and well-managed farming should be encouraged rather than discouraged.

6.57 p.m.

Lord Aldenham

My Lords, I also should like to thank my noble friend Lord Stanley for introducing this debate. I was slightly surprised to note that the wording of the Motion had been slightly changed. I was also surprised to see that it referred to surpluses in the United Kingdom. I was not aware that there were enormous surpluses in UK agriculture, which I think various other noble Lords also suggested.

I should declare my interest. For the past 10 years I have been a landlord, tenant, partner and indeed proprietor in various farm enterprises, all of them extremely small but not by European standards. With impeccable timing I left the City to enjoy the life of the open air, in the hope of sharing in the profits of what I thought was a booming industry. I arrived to find a situation which, in retrospect, is not unlike what I believe used to be called the Schleswig-Holstein question: three people understood it; one is dead, one is mad and the other one has forgotten the answer.

Ten years ago the common agricultural policy was basically out of control. Surpluses were rising fast. The public's perception of farmers was not at all that of the dear old Farmer Giles of my youth. I went to a farm very like the one that the noble Lord, Lord Wade, mentioned. It was a London clay farm which was ploughed up as a wartime measure and only survives as mainly an arable farm because of the kindly aid of the common agricultural policy. In my lighter moments I am inclined to say that I am a hobby farmer rather than a professional one because I am certainly not paid to do it. On the other hand, I employ one man full-time and manage to employ two more on a seasonal basis. I am delighted to do so. The same man has been there for 27 years. Like the noble Earl, Lord Carnarvon, I should be most unhappy to sack someone who has lived for so long in the same place and who knows the farm better than I do.

I could opt for set-aside and I am sure that I should do better out of the land. However, I did not leave the City to do that. As many noble Lords have suggested, I prefer to work in the open air and feel that I am doing something that in theory is useful. I also have doubts about my landlords' views on my setting aside land that I rent from them. I am not 100 per cent. convinced that I should enjoy the alternative, probably of liaising with the local council for more public access. I already enjoy sufficient access because I live only 12 miles from Marble Arch.

I do not believe that country management—that is the maintenance of a beautiful countryside—would be an attractive option without the discipline of working on the land. It is like a theatre set rather than what industry unfortunately calls its factory floor.

The debate is about over supply in the UK. I have read the latest figures for agriculture in the UK and I find it difficult to equate them with serious over supply. Last year we produced a total of 22.5 million tonnes of cereals and we used 1,000 tonnes more than we produced. We are net importers of sugar, potatoes, tomatoes and, I am sorry to say, apples and pears. We also import lamb, beef, pigmeat, poultry, butter and cheese. Of all those commodities we produce less than we consume. Wheatstocks in the UK are now about 75,000 tonnes. I estimate that to be about 3½ lbs. of wheat per head; that is about two loaves.

Certainly there is an over supply in the European Community. Since the reunification of Germany the problem has become worse. I understand that this year 1.5 million tonnes of East German wheat have gone into intervention. That amounts to 14½ lbs. of wheat per head of the population in the European Community. That is a great deal for us to be paying for.

I looked at the original aims of the common agricultural policy. I shall summarise them but I expect that most noble Lords already know them. The first aim was for efficient production; the second aim was for a fair standard of living with increasing earnings for people on farms; the third aim was to stabilise markets; the fourth aim was to regularise supplies; and the fifth aim was to maintain reasonable prices for the consumer. In addition, it was stated that social structures should be investigated; any necessary adjustments should be gradual; and it should be borne in mind that agriculture is integrated with the whole economy of the Community.

In considering those aims I believe that production is efficient; it appears to be far too efficient. The aim to achieve a fair standard of living is now a failure; the standard of living is dropping fast. The internal markets are stable but destabilised world markets contribute to a considerable degree, as was seen in the recent GATT talks. Supplies are obviously sufficient. As regards reasonable prices, I have read many recent press cuttings which state that consumers are paying too much for their food. The noble Lord, Lord Palmer, pointed out that a change in price of 10 per cent. made only 1p difference on a loaf. However, the farm-gate price has little bearing on the total value of a product when it reaches the consumer.

Many noble Lords have spoken about the MacSharry proposals which, I understand, have been shot down. I believe that there is merit in some of his ideas. Originally price incentives were important in raising production but they are now overused. I have read that the basic world price for wheat would be approximately £85 per tonne if we had a level playing field, as requested by the noble Lord, Lord Stanley. Prices should drop to an open market level as soon as possible to enable efficient producers to continue and to allow the less efficient producers such as myself to drop out. Much as I enjoy farming I must admit that I do not do it at the cheapest price.

If we wish to keep farmers on the land, there must be some form of graduated support in order to help small farmers to counteract the drop in prices that I suggest is necessary to reduce production.

7.6 p.m.

Lord Mackie of Benshie

My Lords, many varied opinions have been expressed in the debate. Indeed, there was a considerable difference in volume and in content between the previous two speakers. I begin by reiterating the necessity for discussing the topic of the debate because the situation is ludicrous. In 1975 the figure for the guaranteed support fund was 4.5 billion ecus. In the same terms it is 11.5 billion ecus for this year and still rising. Therefore, it is obvious that something needs to be done about the situation.

It is extraordinary that since the 1970s the income from farming in this country has halved. The Government say that this year the income has decreased by 14 per cent. but, rightly, the NFU have upped that to 22 per cent. taking into account all the factors. It is extraordinary that, while the income of farmers has been decreasing, there has been an enormous rise in costs in the CAP. Obviously the taxpayers will not tolerate that situation for long; something must be done about it.

The noble Lord, Lord Stanley, wants compulsory set-aside. He mentioned a figure of about 10 per cent. That is a solution but I do not favour it. One always gets on better in agriculture by bribing farmers rather than shooting them. By that means we can achieve the noble Lord's desired result. I do not believe that MacSharry was on the wrong track in his proposals for set-aside. After all, the tying of guarantees to set-aside has worked in the United States. They have set aside a bigger area than the whole of the cereal area in Europe. If that were cultivated one can imagine that we should be in oil slicks of grain. It is a practical example to follow. If we returned to a fair figure, and old-fashioned acreage payment, paid to people who have set aside, we should leave the competent farmer on good land to farm the whole of his acreage if he wished.

He would have the guarantee of only about 90 ecus as an intervention price. If he wanted to do that and that was better than taking the set-aside payment, which would perhaps not even cover his overheads, he would be entitled to do so. However, a great many people farming land which should not be growing grain—a point made by the noble Lord, Lord Wade of Chorlton—would take the set-aside and thus reduce the acreage of land for growing cereals, and I am talking about cereals.

We must look at what the quota system has done. The dairy farmers have been getting on rather well and the quota system suited them. However, it is a ludicrous position. The quota system is set to leave a surplus as of 14 per cent. That is the most expensive form of support in the whole system. We cannot possibly continue with that. The quota system and the land price have led to farms in the west of Scotland, to which I personally would not go for love nor money, receiving £3,000 to £4,000 per acre. The noble Viscount, Lord Mountgarret, would regard that as a very bad investment. Even with the quota, those farms are in no way worth that sort of money. That is the distortion which occurs with a quota system. If we wish to return to a system of a world price based on a restraint on production which is reasonable and to which efficient farmers can work, we cannot continue with the complications which give rise to the sort of distortions which we have seen.

Consumer associations always talk about how much money the consumer would save if we could buy our food from abroad. However, the world price is ludicrous and is subsidised. Let us consider a price of £40 per tonne. The best figures that I have seen for production for Australia, the United States and the good farms in this country and the North of Germany, demonstrate that the lowest figure at which a competent farmer can produce and make a reasonable, small profit is about £80 per tonne. Therefore, we are dealing with totally false figures.

On social payments, I agree with the noble Lord, Lord Gallacher, about repatriation. There is no question other than that should be in the hands of government. However, I am not in favour of giving up the CAP. The urban population of this country is the most anti-farmer that one can find anywhere in the world. For years the people of this country have been accustomed to buying their food from the poverty of the Okies in between the wars, written about so eloquently, and from all over the world at prices which starve the farmers. In conditions of surplus I should not like to return to being at the mercy of the electorate of this country. Therefore, we need a European policy which works.

The reason that it has not worked is that the Council of Ministers did not do its job properly. For 20 or 30 years the Commission has tried to point out that surpluses were arising. The Council of Ministers, for purely political ends, kept on increasing prices and exaggerating the price of land and, as I have said before, the price of equipment. Equipment dealers did very well because farmers bought equipment for tax and many other reasons. Therefore, costs were driven up.

If we are to be sensible, we need a set-aside payment which will take out of production the bad land and reduce acreage and surpluses. Furthermore, that would keep land available should we return to the situation where, for example, there is a dangerous drop in the level of world stocks of wheat. There may well be a return to years of drought, as happened in the land of the Pharaohs. Therefore I believe that we should look at the MacSharry plan. I agree that we need to take land out of production. However, I should prefer to do that by bribing the farmers with an acreage support system; and the small farmer, who is not the worst off, should be looked after by the state. The state should make the social payments. The CAP payments should go in a practical manner to those who produce efficiently.

7.17 p.m.

Lord Carter

My Lords, the House will be very grateful to the noble Lord, Lord Stanley, for giving us the opportunity to debate this extremely important subject. Although the terms of the Motion refer to the over-production of farm commodities in the United Kingdom, we have obviously had to set that in a European context. This has been a wide-ranging debate with a subtext: how do we deal with the problems of success in agricultural production?

We can all agree that no one in his right mind would now design a system of agricultural support remotely resembling the common agricultural policy. Like the proverbial Irishman, we certainly would not start from here. Unfortunately, there is an Irishman—Mr. MacSharry—who is starting from here. It is clear that, if they were adopted in their present form, his proposals would be disastrous for the British rural economy, a point well made by my noble friend Lord Gallacher. I beg leave to doubt whether a vast system of outdoor relief for the majority of European farmers is the best way to secure adequate supplies of food at a reasonable cost to the European taxpayer and consumer.

At the outset I should like to deal with an idea mentioned in the information memorandum on the communication of the commissioner and also on the proposals in the reflection paper. The information memo states: At the same time the top 10 per cent. or so of larger and more developed farmers will be asked to fend a little more for themselves". For something over 30 years I have been involved in very detailed farm management accounting on some 60 large farms which are mainly in the South of England. The average working acreage of the farms is about 1,200 acres, just the sort of farms which should be able to fend a little more for themselves. I checked the figures this morning and, in the five years from 1985 to 1989, the average return on those farms on a tenant's capital before any charge for interest on borrowed money was as follows: in 1985, 5.2 per cent; in 1986, 9 per cent; in 1987, 7.5 per cent; in 1988, 7.9 per cent; in 1989, 11.4 per cent. the average over the five years was 8.2 per cent. I am not entirely sure if those are the large farmers who are flourishing according to the noble Lord, Lord Harris of High Cross. Those figures, as I have said, take no account of interest charges on borrowed money.

If one-third of the capital was borrowed, the average return after paying interest would be 3.8 per cent. If half the capital was borrowed, the average return after paying interest would be 1.3 per cent. If the value of the land was included in the calculation, the return on capital would be hardly noticeable.

A number of your Lordships have made the point that both the MacSharry and the free market approach will be disastrous for agricultural employment. Each of the samples of farms which I have described has an average labour bill of just under £100,000 per annum. Their first reaction to severe pressure from MacSharry or for the free market will be to reduce the scale of their operations and to release labour. One can imagine the effect on employment and the knock-on effect on the rural economy if those farms were forced down the MacSharry or the free market road.

However, we can all agree that there is a problem of over-production. So how should that be dealt with? Perhaps I may say a few words about approaching the problem through relying on the free market—an approach which seemed to be favoured by the noble Lords, Lord Harris of High Cross and Lord Wade. It is a point that I have not seen made elsewhere. Suppose we were able to reduce our farm prices to world prices; how do we ensure that that reduction is reflected in the retail price of food to the consumer? The concentration of buying power in this country is greater than in any other member state in the Community. How do we ensure that the reduction in the farm price is not just absorbed in increased margins for the wholesaler, the processor and the retailer?

Many ideas have been expressed in the debate, and all rely on reducing output in one form or another. We know that physical production quotas work best on those products which leave the farm and go to a single buyer—for example, milk and sugar beet—or by restricting the acreage of the crop that can be grown, for example, potatoes or hops. If we restrict the acreage of a crop, what happens to the surplus acreage? As we know it can either be set aside or planted to a crop which is not in surplus, or a crop which could be used for non-food purposes. I should say immediately that the latter is a very doubtful prospect. The forthcoming report from Sub-Committee D will bear that out.

With crops, such systems of physical control, either of output or acreage, are feasible but are difficult to operate. With livestock it would be very difficult indeed. There are the problems with intermediate livestock. What happens to the price of store cattle, sheep or pigs? There are problems in counting. Putting the position as delicately as I can, livestock may be moved around to make the counting of them rather difficult; that is not easy to do with crop acreages.

Therefore we must ask what is the alternative to the physical control of output. As we have heard it would be an attempt to reduce output by reducing inputs—the less intensive farming mentioned by a number of noble Lords. I suggest that such proposals should be examined in the UK with some care. In principle they have many attractions. There are the obvious environmental attractions and also the employment attractions. It has been calculated that in every successful scheme for set-aside one job will be lost for every 800 acres set aside. On the sample of large farms I described earlier, a 20 per cent. reduction in output, while maintaining the level of profitability to secure the princely level of 8 per cent. return on a tenant's capital before payment of interest, would, in the absence of any form of grant aid for environmentally friendly systems, require reductions in costs of around £70 to £80 per acre in the running costs of those farms.

An environmental grant—perhaps the "green premium" that the Labour Party are suggesting, or the ideas of the National Farmers' Union, the CLA or the CPRE—used with a form of cross compliance to price support, could, in the UK circumstances resulting from our farm structure, be an attractive idea. There is no time to elaborate on that. It needs a debate in itself. But it is clear that production could be reduced by 20 per cent. if grants to encourage environmentally friendly farming were made sufficiently attractive.

The great attraction of such an approach for UK agriculture is that it must be adopted, if it is to make sense, irrespective of farm size. Indeed, a rational environmental policy intended to reduce surplus production would be particularly generous to the 20 per cent. of farms which produce most of the agricultural output. That thought is touched on in the MacSharry paper, which, in referring to the contribution of an environmentally sustainable form of agricultural production and food quality, suggests: This approach would be complemented by more specific measures on the environment to be tailored to the situation in individual Member States". That is a point which we should be negotiating on the MacSharry paper and bearing very much in mind. I understand that the Government have rejected the MacSharry proposals, at least in principle. It would be unfair to expect a detailed response from the Government at this stage. However, I hope that the Minister will be able to give the House an outline idea of the Government's reaction to the proposals—after all, we have them in front of us and they are proposals for the fundamental reform of the CAP. We hear that Mr. Gummer has said that he intends to ensure that British farmers will not be disadvantaged. If the Government reject the MacSharry proposals, as I believe they do, we should be told exactly what is the nature of the Government's alternative.

7.25 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

My Lords, I am sure that my right honourable friend the Minister will want to read your Lordships remarks and ideas very carefully. I, too, will want to read the debate. I fear that if I answered all the points now I would take too long and greatly bore your Lordships.

The Motion of my noble friend Lord Stanley of Alderley focuses on over-production in the United Kingdom. In winding up this debate I want to emphasise that what we face is a Community problem and it is only action at a Community level which will bring forward just solutions. Thus, the fact that the European Commission has just produced a discussion paper suggesting the most far-reaching and wide-ranging reforms of the common agricultural policy since its inception over 20 years ago is of the utmost importance to us in the UK. This paper, which sets out the Commission's ideas for CAP reform but does not include any detailed proposals—let alone figures, as my noble friend Lord Middleton reminded us—was discussed by agriculture Ministers at the Council in Brussels earlier this week.

Let us first look at the hard facts. My noble friend Lord Aldenham was quite right in saying that with the exception of cereals the UK is not in surplus in any of the main commodities. Consumption actually exceeds demand in all the other main commodities. For beef, for example, we are only some 90 per cent. self-sufficient compared with an EC figure of 110 per cent. The figures are even more striking for milk. We are only 88 per cent. self-sufficient in butterfat against a Community figure of 114 per cent.; with a figure for the Netherlands of 233 per cent. and for Ireland 317 per cent. This makes the Commission's apparent wish to cut our milk quota by more than any other country's—to which I shall turn in a moment—all the more ironic.

However, whatever the source, we have to look at the matter from an overall EC point of view and surplus production is wrong. It does not make economic sense to produce more than the market needs; keeping supply above the level of demand imposes costs on the consumer, and the storage and disposal of surpluses is expensive for the taxpayer. Furthermore, surplus disposal on world markets creates tension with our world trading partners, as the current GATT negotiations have made clear. That is why—and in this I reject some of the remarks of the noble Lord, Lord Palmer—the UK Government have for so many years been leading the fight to reform the CAP; to bring down its costs and to make it more market-orientated.

The noble Lord, Lord Gallacher, said that the Minister could not negotiate a successful GATT deal without damaging agriculture. It is in our interests that there should be a successful outcome to the GATT negotiations, and that includes agriculture. Failure would rebound on our farmers as trade retaliation would follow. As I have already said, reform of the CAP is vital, regardless of the GATT.

There is also an overriding reason why changes to the CAP are needed now. It is clear that agriculture expenditure in the Community is again running out of control. Forecasts for this year and next are alarming. If nothing is done the CAP could cost 25 per cent. more in 1991 than in 1990. If expenditure is to be kept within the agricultural guideline, as it is legally required to be, policies will have to be changed. I need hardly remind your Lordships that these increases in expenditure come at a time when farmers' incomes are under severe pressure. To paraphrase the noble Lord, Lord Mackie of Benshie, it seems to work out that more and more money is spent, but less and less is seen by the farmers. That is an intolerable situation.

The Government therefore welcome the fact that the European Commission is considering radical reform of the CAP. We also welcome some of the ideas put forward in its discussion paper. We agree that substantial cuts are needed in support prices and that milk quotas should be reduced. That would encourage consumption, improve competition and help to bring supply into line with demand. We agree that existing environmental measures need to be extended although in our view the Commission's ideas do not go far enough; and in that respect I listened with great interest to the noble Lord, Lord Northbourne.

But although we welcome some of the Commission's ideas we believe that there are fundamental flaws in its basic approach. In particular, we are concerned by the cost of its ideas and by the emphasis that it places on exempting small farmers from the consequences of reform. The result of this obsession with small farmers is that the measures suggested by the Commission would, in our judgment, actually increase the cost of agricultural support in the Community. Believe it, or believe it not, these ideas were brought forward to deal with a budget crisis! Equally, the Commission's paper does little to address the problems of the beef regime where expenditure is rising most rapidly.

Incidentally, beef intervention stocks in the EC in 1989 stood at 123,000 tonnes. In December 1990 they stood at 700,000 tonnes. The figures speak for themselves. My noble friend Lord Willoughby de Broke asked me for the stock figures for EC milk products. In 1989 butter stocks stood at 20,000 tonnes. In December 1990 they stood at 243,000 tonnes. In 1989 stocks of skimmed milk powder were 5,000 tonnes. In December 1990 there were 336,000 tonnes.

The noble Lord, Lord Palmer, said that in December there was one tonne of wheat stocks in the United Kingdom. The figures that he was giving were wrong. In December there were 34,000 tonnes of wheat in the United Kingdom. I am at one with my noble friend Lord Stanley of Alderley on the Commission's ideas. Small farmers would be favoured and larger farmers would be severely disadvantaged. For example, small milk producers would be exempt from quota cuts which would fall exclusively on larger producers. Under such a system the largest overall cut in quota would inevitably be suffered by the UK despite the fact that, as I have already said, we are not self-sufficient in milk.

In the cereals sector the Commission is suggesting that farmers should receive direct payments on an area basis provided that they set aside a proportion of their land. But larger producers would receive lower rates of aid and have to set aside higher proportions of their farms. Again, the UK, with its efficient structure and large number of larger farms, would be worst hit.

I must make clear that we cannot support, and are strenuously resisting, this emphasis on protecting the smallest and least viable farmers. It simply does not make economic sense to protect the less efficient at the expense of the most efficient when we are trying to make the CAP more market-orientated and competitive in a world situation. It is simply not fair to discriminate heavily against UK producers who, as I have said, contribute very little to the overall surplus problem in the Community. Why should they pay the price for efficiency twice? That is once by undertaking the cost of modernisation and a second time by paying the price for protecting those farmers who have failed to modernise. We shall therefore continue to argue in the strongest possible terms that the burden of CAP reform must be a shared one and borne equally by all member states.

I turn to some of the specific points raised by your Lordships. My noble friends Lord Stanley of Alderley and Lord Middleton both referred to supply management. One difficulty in dealing with that idea is that it often seems to mean different things to different people. However, if supply management means the widespread use of compulsory measures to reduce production linked to high support prices, I and my colleagues in the Government are against it. The best way to manage supply is to link it with demand. Compulsory set-aside or new production quotas would reduce the ability of producers to respond to changes and it would make farming less able to adapt to the demands of the market. That is the exact opposite of what we wish to achieve. By treating the efficient producer on a par with the inefficient one, such policies would reduce the premium on efficiency.

In the United Kingdom we have some of the most efficient and competitive farmers in Europe. It cannot make sense to handicap them in that way. I know that there are many in the industry who also support that view and lay great store on increasing productivity, competitiveness and not putting the industry in a straitjacket. However, it remains true that in the total pattern of CAP reform quotas may have some part to play. For example, we cannot ignore the contribution that milk quotas have made to halting the growth in milk production. We are certainly ready to consider proposals to make voluntary set-aside more efficient.

I know that a number of your Lordships expressed concern about set-aside, but we continue to believe that voluntary set-aside has a useful role to play as a complement to a policy of price restraint. A number of your Lordships also advocated greater use of extensification. That is something which is hinted at in the Commission's paper. We are equally ready to consider any ideas that emerge to encourage extensive farming.

The noble Lord, Lord Northbourne, and the noble Viscount, Lord Mountgarret, touched on nitrogen quotas which have also been suggested as a form of supply management. It is claimed that these could provide a simple means not only of reducing production but also nitrate pollution. That is a simple concept but one which, on closer examination, proves to be both technically and administratively complex. It would be unlikely to achieve the desired result. If noble Lords would like me to expand on that I shall be happy to write to them.

The noble Lord, Lord Houghton of Sowerby, said that we should support the MacSharry ideas because they would discourage intensive animal husbandry. As I said, we do not believe in penalising efficient farmers and rewarding the inefficient. However, I do not accept that efficient farming and high standards of animal welfare are incompatible. Indeed, my right honourable friend the Minister has been actively pressing the EC to introduce uniformly high welfare standards across the Community. I hope that if I quote Churchill I shall not get the same letters that I had when I last spoke about pigs to the noble Lord, Lord Houghton. It was Churchill who said: Dogs look up to us, cats look down on us and pigs treat us as equals". My noble friend Lord Willoughby de Broke spoke about cheese and the situation in regard to New Zealand and the EC. Exports of cheese from the EC attract an export refund in order to bridge the gap between the EC and world market prices. The current rate of refund for Cheddar cheese to Japan is 48p per pound and that has remained unchanged throughout 1990 and 1991.

It is not known whether the Commission consulted New Zealand before this rate was set, though that would not be usual. World trade in dairy products is regularly discussed in meetings of the GATT international dairy arrangement at which both the EC and New Zealand are represented.

The noble Lord, Lord Gallacher, claimed that a successful reform of the CAP was impossible to achieve and that we should seek repatriation of agricultural policy. I found that part of his speech most interesting. My right honourable friend the Minister is well aware of the negotiating realities in Brussels. I am sure the problems of agriculture cannot be dealt with by trying to destroy a common policy for agriculture; but it must be a reformed CAP, which is what we are determined to achieve. We are not alone in seeking reform. All EC agriculture ministers agree that reform is necessary. We are not alone in objecting to Commissioner MacSharry's ideas, so I do not agree that a successful outcome is impossible to achieve.

This debate has given me the chance to underline the importance that the Government attach to reforming the CAP and to ending the unnecessary and costly production of surplus foods in the Community. Our aims in considering these reforms are to make EC agriculture more market-orientated and competitive; to reduce the cost of the CAP; to lead to closer integration between agriculture and the environment; and last, but by no means least, to avoid discrimination between farmers in different member states.

7.42 p.m.

Lord Stanley of Alderley

My Lords, I must thank all noble Lords for a most stimulating debate. In particular I thank my noble friend Lady Trumpington for the trouble she has taken in replying. Noble Lords were particularly disciplined in the time they took in making their speeches. If we had the same amount of discipline among the Twelve in the European Community we might better be able to get somewhere.

We had general agreement on a number of points. First, your Lordships agreed that the financial position of British agriculture is far more serious than is generally recognised outside the House, particularly by the media, and perhaps possibly by the noble Lord, Lord Harris. Secondly, the bankrupt state of the industry will cause havoc, not just to farmers but, as your Lordships pointed out, to the environment, to the rural society and to the welfare of stock. We agreed too that British agriculture should not be made inefficient as a result of any policy and that we should aim—I think the word would be right—for a competitive agriculture. But we need some medicine, or as my noble friend said, a bridge, to help us get there. I heard no opposition or alternative to supply management as that medicine or bridge, though I fully accept that some of your Lordships thought erroneously that such a system was paying a farmer to do nothing. It is not. It is far from that, and it is far from the ordinary set-aside that one sees today. It is much more than set-aside. I fail to understand the description of my noble friend Lady Trumpington of supply management. It is not the same as mine, so perhaps if we understood each other a little better there would be a compromise way forward here. My Lords, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.