Organic Farming

HL Deb 02 December 1993 vol 550 cc718-38

7.10 p.m.

The Earl of Clanwilliam rose to ask Her Majesty' s Government what action they intend to take to promote organic farming in the United Kingdom.

The noble Earl said: My Lords, it may be considered an appropriate moment to discuss organic farming following a debate on the genetic modification of organisms. The subjects are related, and it is interesting that the Agricultural and Food Research Council is starting biochemical research into plant structures.

The debate is due to the inspiration of those involved in the organic industry. I refer to the Organic Farmers and Growers Association which is allied to the Soil Association and the SAFE Alliance. This is a great time in their history. After 50 years in the wilderness they are now recognised through the organic aid scheme. It is therefore right to recall at this moment the pioneering efforts of the formidable Lady Eve Balfour and Lawrence Hills, not to mention my mother.

Organic farmers, together with the Henry Doubleday Research Association and Elm Farm Research, recently met my right honourable friend the Minister, Mrs. Shephard, who was properly impressed by their presentation. Indeed, I believe that the word that she used was "exciting". Your Lordships will note a large research content in that delegation. It is interesting too that the Government are funding £950,000 worth of research into the subject. I hope that that research will be properly co-ordinated. The noble Earl, Lord Kitchener, is to speak. He is president of HDRA and no doubt will concentrate his remarks on the subject of research.

Organic farmers do not expect revolution to come from this debate. However, they are looking for steady progress towards the aim of increased acreage of organically organised farms, fairly supported in proportion to the contribution that they make to the environment debate.

Perhaps I may say a few words about organic farmers themselves. As we all know, they are no single interest group. They are part of the original farming community, farming land in the manner of their forefathers. They have resisted the blandishments of the agro-chemical industry and the persuasions of government tax breaks and incentives. If CAP reform means anything, it is the conversion to extensive farming which is what the organic system—essentially a mixed whole farm concept—is all about. If the first round of negotiations on CAP reform fails—perhaps my noble friend will allow me to suggest to him that it might—in view of the fact there are increasing yields from farms with a less than 10 per cent. reduction in the acreage, then a new system of controls will have to be introduced. In that context, the existing controls and regulations governing registered organic farmers provide a ready made scheme. No one likes controls. Indeed, the Government can take credit for reducing such controls and that is to be welcomed. Following the introduction of incentives to intensive farming after the last war, controls inevitably proliferated. That is no less the case under the present set-aside rules. The exhausting plethora of paper brought about by set-aside could be replaced by whole farm plans of considerable simplicity.

I shall not expand at this stage on the comparison between intensive farming and the need for conservation of animal and bird species, botanical species and, not least, the actual farm products themselves. They are often destroyed by sheer carelessness. I am sure that the noble Baroness, Lady Nicol, will speak on the subject of pesticides. She is much better qualified to do so than I am. Suffice to say that recently I attended a meeting upstairs at which the agro-chemical industry explained its ethos. It was chillingly frank in putting to us the fact that the farming community is now dependent upon that industry, that intensive farming is here to stay and that it was not going to allow it to be altered. Some respite is being given to overworked soil but paradoxically only through the ridiculous set-aside system which pays the farmer to stop production and recompenses him for the loss of subsidy which he has so gallantly foregone. It is difficult to imagine anything more ridiculous.

It has been stated in the press that UK farmers received subsidies of £1.2 billion in the last year. We are now in the strange position of organic farmers running mixed farms on which productivity levels are not 15 per cent. but 30 per cent. less than those achieved by their fellow intensive farmers who do not benefit from the set-aside programme. Therefore, they are effectively performing set-aside but the Treasury seems to seek to punish them. It uses the specious argument that they adopted the practice—a practice which others are now being paid to perform—of their own free will. That there is no benefit in being right is amply exemplified in that curious argument.

In recent discussions with the Minister I understand that there was a commitment to organise an inter-departmental meeting with officials to look at the problem of how to reward those farmers who are already organically organised. And for that we are most grateful. Perhaps I may ask my noble friend, in his reply, to tell the House how that inter-departmental operation is progressing. I ask in particular as it is proposed in the Ministry's own organic aid scheme that organic acreage should be trebled in the next 10 years. It is the existing organic farmer with his, and in notable cases her, wealth of experience who will be vital to the increase in organically farmed acreage that the aid scheme postulates. I have to tell my noble friend that existing organic farmers are liable to leave the scene altogether as their fight against subsidised competition from their fellow EC organic farmers expands at their expense while they are left without any help from the multifarious schemes arranged through the organic aid scheme.

Also, the organic farmer will be getting less than his intensive neighbour from the CAP reform measures through set-aside, arable aid compensation and livestock premiums. Their position is becoming untenable and there is already evidence of reduced numbers of registered organic growers. That is a most unfavorable trend.

Set-aside can be described as a typical bureaucratic fudge which involves inherently bad land management. And at what cost? I believe that £140 million will be spent on set-aside support of 556,000 hectares at £253 per hectare. ESAs, the Stewardship Campaign and other favoured government institutions are to receive a further £61 million. I ask for the same consideration to be extended to existing organic farmers. I should like to be among the first to praise those NGOs for the vital work they do and for which they are deservedly rewarded. Perhaps I may mention also the new regional forests that are to be planted with broadleaved trees. That is another excellent example of the Government's intentions in the environmental field.

As regards other farmers' benefits from grants from the Government and the EC—or is it now the EU?—where set-aside hectarage gets £253, rising next year to £320, existing organic farmers will get nothing. They farm 35,000 hectares; that is, 35,000 hectares of whole farm area which is to be considered in relation to 556,000 hectares of set-aside and the 4.1 million hectares farmed in the UK. The intensive farmers who convert will share the £1 million. That is about the same as the amount which the Government will be spending on research. But if, as is right, existing farmers are also to benefit, there will be less than £30 per hectare available to go round.

Let us be realistic about the £1.2 billion. There is to be only £1 million available for organic farming. Then, to add insult to injury, existing organic farmers are majestically advised to go out and buy more land which they can convert organically to make themselves eligible for support. Is the Treasury going to give them a grant? That would be most welcome. But it would be much better to spend the money on existing organic farmers to keep them in business. The organic aid scheme should produce hidden benefits to the Treasury which in total would probably refund the whole cost of the scheme. After all, it should not be beyond the wit of man to save £1 in £12,000, or £1 million in £12,000 million. The savings to the Treasury would include conversion to a mixed farming system which would mean a reduction in acreage eligible for set-aside and arable compensation; a reduction in crop acreage of high payment areas such as oilseed, and lower crop yields overall which would mean lower costs through intervention, storage and export subsidy.

This matter has been discussed previously in your Lordships' House. A debate was initiated by my noble friend Lord Selborne on EC Regulation 2078/92 on 19th May. Organic farming is established as a recognised means of extensification of farming practice by the EC but it cannot reach its full potential unless it overcomes the marketing constraints of low volume. That requires central packing and marketing of products. With only 35,000 hectares under cultivation, and that distributed widely across the realm, it is not a practical proposition.

The organic farmer is therefore left with the option of special arrangements with local retailers or sale at the farm gate. There are some opportunities such as dairy products which sell well but at an uneconomically small premium. The organic farmer has to fight an endless battle against the odds in selling his produce, often having to convert it into bread or sausages or other products. There is also the by now well-known problem that our fellow EC organic farmers are subsidised well above the level proposed in the aid scheme, exacerbating the marketing problem for the UK supplier.

I have asked my noble friend on previous occasions much the same question as I am asking now. We have not really received any satisfactory answers. Whether we will obtain any more satisfactory answers this evening remains to be seen. Surely it is not so much a case of there being no money, as we are always told, but rather that others have, as of this moment, a prior call on it. There are large sums being disposed of—£1.2 billion—in what might properly be described in some cases as a positively vulgar waste of money. If there is such a thing as subsidiarity, then it should be applied to use some of this money to encourage organic farmers in what is a useful, recognised and environmentally successful system. Organic farming is here to stay; indeed, it has been here as long as farming has been known. I suggest to my noble friend that it is the responsibility of government to see that it is encouraged and supported.

7.23 p.m.

Baroness Nicol

My Lords, we are grateful to the noble Earl, Lord Clanwilliam, for giving us the opportunity to debate this important subject. I am only sorry that he suffers the fate of every topic of last business on a Thursday in that he has a rather thin House. None the less I believe that this will be a valuable debate. I am also particularly grateful to him for covering so well all the economic aspects and the problems of set-aside. Your Lordships will be relieved to hear that that means I can shorten my contribution quite considerably.

I support the intention behind this debate, which is to encourage the Government to give greater support to organic farming. I wish to emphasise a few of the points that have already been made as well as to develop them a little. First, it makes no sense at all to import 60 per cent. or 70 per cent. of the requirements of an identified and growing market—which I understand is presently valued at about £125 million —for goods which we can perfectly well supply ourselves, especially when the quality of what comes in from abroad is often suspect. Many questions need to be asked as regards how truly organic many of our imports are.

There is a subsidiary question on this matter that I wish to ask the noble Earl, Lord Howe. As regards the figures for imports, my honourable friend in another place asked the Minister, Mrs. Shephard, to quantify the cost of imports of organic produce. She replied: This information is not available because import statistics do not distinguish between organic and conventional food".—[Official Report, Commons, 28/10/93; col. WA 778.] The figure I have given comes from Food from Britain which is an official organisation. I find it rather surprising that this information is not available to Mrs. Shephard. Perhaps the Minister can clear up that matter when he replies to the debate.

Secondly, an improvement in conditions for organic farmers would result in increases in rural employment. A number of debates have been held recently in your Lordships' House on the problems of rural areas. It makes sense to encourage the use of the traditional skills of people in rural areas. I should have thought that that is yet another good reason for supporting organic farming.

Thirdly, and not least in my book, organic farming is beneficial to the environment. The Government have on many occasions stated their concern for the maintenance of biodiversity worldwide, and charity begins at home. We have problems of diminishing species in this country. Much of the damage can be traced to modern farming methods. As the noble Earl said in his opening remarks, the extensive use of pesticides has had damaging effects. I understand that the term "pesticide" includes herbicide and therefore I will use it as an inclusive term.

The British Trust for Ornithology and indeed the RSPB can supply examples of bird species which have declined in recent years—some of them almost to the point of extinction. This decline can be directly traced to non-organic farming methods. Therefore the improvement of organic methods would help to restore the balance. We have been assured in the past that there is consultation and co-operation between departments on environmental issues. The noble Earl has said tonight that there is co-operation between MAFF and the DoE on economic issues. Where is the evidence of co-operation in this case on environmental issues?

Can the noble Earl tell us whether the DoE and MAFF have had any discussions on the future of organic farming and whether the DoE's point of view has been taken into consideration by MAFF? We have heard that the number of organic farms in the United Kingdom is beginning to decline. That seems to me a stupid thing to happen at a time when we all know that the market for these products is growing in this country and that the supermarkets cannot meet the demand for organic produce. Something must be done to reverse the trend.

The National Farmers' Union has expressed disappointment at the present low level of support for organic farming and I understand that the Government usually listen to the NFU. Therefore I hope that they will listen in this case. Obviously the support for new entrants is welcome but, as the noble Earl said, it is much more important to support those who are already in business. The introduction of organic farming is a long haul and cannot be done overnight. It takes many years. It is even possible that in the long term we may have to move away from the present strains of crops which are being grown because they are heavily dependent on pesticides and chemicals generally. We may have to return to the older strains, or indeed to new strains which have the same qualities of disease resistance which crops had in the past.

I am always a little surprised to hear chemical farming referred to as conventional farming. I can remember when conventional farming was organic farming. We could well come round to that view again.

Our organic farmers are competing in the marketplace with producers from other countries where, as we have heard, they are realistically encouraged. In Germany, for example—and I cannot remember whether the noble Earl mentioned the figure—organic farmers can expect £200 a hectare for new entrants and £150 a hectare for existing producers. That compares with £70 per hectare for new entrants in the United Kingdom, which falls to £25 per hectare after a five-year period.

If we had sensible, realistic policies from the Ministry of Agriculture, Fishery and Food, we could reach a point where we could at least satisfy our own demands for organic produce in this country. That would make a contribution to our balance of trade and also have considerable beneficial effects on our countryside. It seems to me that that would represent very good value for money, to use the Government's current phrase for everything.

7.30 p.m.

Earl Kitchener

My Lords, I shall concentrate on the question of research into organic farming.

The manufacturers of pesticides, herbicides and chemical fertilisers naturally make the best case they can for the use of their products. However, the potential benefits of organic farming, such as the long-term health of the soil and the many beneficial organisms which live in it, the increase in natural predators and in birds and other wildlife, are of general benefit and should therefore be investigated by the Government.

An economic way of doing that would be to find farmers, some with organic policies, who are already keeping good financial and farming records, including information on such matters as earthworm population, water-holding capacity and amount of humus, and to supervise their record-keeping. That would give the results a validity which they would not have if they were merely done by the farmer, who might be thought to have a bias towards his own system. That work would, of course, have to continue for a number of years.

My noble friend the Minister who is to reply has kindly referred me to a MAFF document, Arable Crops and Horticulture Research Strategy and Requirements 1992–94, which details the Government's work and plans in this area. I am glad to say that MAFF has supported work on green manures and on non-chemical weed control done by the Henry Doubleday Research Association, of which I am president. Because of the long-term nature of this work it would help such bodies to know well in advance what grants they are to receive. We have heard that nearly £1 million is to be spent on this in the current financial year. It will be most interesting to see the results.

Another step which the Government could usefully and cheaply take would be to make clear to consumers of organic food that, in spite of the name "common agricultural policy" their fellow countrymen growing this food are at present, but not I hope for long, playing uphill against many countries in Europe where producers are more favourably treated than those in this country. It is not in the food sector alone that we should benefit if consumers were to seek out home-produced goods.

7.32 p.m.

Viscount Addison

My Lords, at a glance, organic farming would seem an ideal way of making inroads into surplus production. But what are the justifications for expecting aid in, during and after organic conversion? To a certain extent I have sympathy with current organic farmers because they had expected funding but that funding appears now to be available only to those farmers now converting to organic production. No longer does it seem that organic food is a buzzword. While marketing dictates at the end of the day, then marketing is probably what is needed in the form of new incentives.

The organic sector represents less than 1 per cent. of the total farmed area. Therefore, generally the size of organic enterprises is small while husbandry and additional costs are high. The bulk of organic output in England and Scotland has been sold to wholesalers and co-operatives. In Scotland on average nearly 80 per cent. of output went through co-operatives.

I should like to draw your Lordships' attention to a Mintel International Group press release concerning the record growth of vegetarian and organic food sales. It states that: 'The number of vegetarians has increased steadily over the last 10 years,' says Mintel analyst, Helen Ruddick. 'The Vegetarian Society puts the number at up to 7% of the population, but our figures show that the proportion of people whose diet is mainly vegetarian is now over one in ten, and is actually as high as 17% among teenagers'. Vegetarian does not mean organic. A vegetarian is one who abstains from eating animal food, while organic food is food produced without the use of artificial fertilisers or pesticides. Without meaning any offence, perhaps we should call these people "organns".

The report goes on to say that: Mintel's consumer research reveals that only 2% of housewives always buy organic food but more than half would buy them at least occasionally if they were cheaper. If a premium price is not achieved for the producer then a wide margin, a disparity in returns between standard farming practice and organic methods, looms. It is evident then that organic producers cannot grow their produce at a competitive cost.

On the subject of profits and margins, Farmers' Weekly of 19th March 1993 stated that the gross margin for organic Mercia was £555.48 per hectare (£222.20 an acre) but £607.46 per hectare (£24.98 an acre) for conventional Hereward. That means that the price for organic wheat was less than expected at £187 a tonne, compared with £147 a tonne for conventional milling wheat sold just after harvest. The cost of organic fertiliser is high, which dramatically reduces the organic gross margin. Weed, pest and disease pressures were comparatively low last season in organic wheat due to the dry early and mid-season weather, but I guess that those organic farmers who suffered from a high rainfall during the autumn must have had very bad problems with their wheat. Therefore, it seems that missing out the middleman is the only justifiable way of pulling back lost income where gross margins are concerned.

The main argument concerning government support relates to the lost income of possibly £800 a hectare, or £320 an acre, resulting from the two-year grass ley conversion period which is required by the United Kingdom Register of Organic Food Standards. However, I hope that the Minister will explain that land undergoing organic conversion can be included in the set-aside area. That additional income would make a difference.

Organic produce sold through farm shops and consumer co-ops, where customers get together to buy from producers who pool and deliver their produce, works well. That is the best way of short-circuiting the food chain. It also enhances income. It therefore appears that niche markets and local retailing offer the only opportunity.

I do not feel that there is any great future for the organic farming of livestock. For example, organically farmed lamb differs only in that different parasite treatments are used and organophosphorous dips are not used. The consumer will picture a contented sheep grazing on the hillside, but it should be remembered that vegetarians do not eat meat anyway. The fact remains that organic producers have never been able to prove that ordinary food is dangerous. We have the Food Safety Act 1990 and the Food Safety Directorate as watchdog in that respect.

It is worthy of note that a typical organic farm receives an extra helping of nitrogen from the atmosphere equivalent to 8,000 cowpats falling on each hectare of land every year. The old school used to say, "Where there's muck there's money", although in this case the muck can be classified only as invisible earnings.

Organic vegetables are not as organic as one is led to believe. Shall we be flooded, I wonder, with genetically engineered flavour-savour tomatoes, as mentioned by my noble friend Lady Denton of Wakefield in the previous debate? An intensively farmed carrot receives in nitrates 30 per cent. from the soil, 30 per cent. from chemical fertiliser and 40 per cent. from airborne chemical fertiliser, while an organically grown carrot receives 60 per cent. nitrates from the soil and manure, and 40 per cent. from airborne chemical fertiliser. Acid rain has a great deal to answer for, so one cannot guarantee that any food is free from residues in today's polluted world.

In surveys, many shoppers express interest in green products but when they hear that they have to pay premium prices, enthusiasm fades. I cannot see any great future for organic farming if the public are not prepared to pay the price. Even when taking into account the benefit for eligible organic farmers of farm and conservation grant schemes, arable aid schemes and set-aside arrangements, and less favoured area payments, any shortfall in income would have to be made up by the consumer.

I regret that I do not have enough information to comment on imports of organic produce but I trust that other noble Lords will do so.

There is mileage in the group marketing grant, which encourages farmers and growers to develop effective marketing structures, because freshness of produce and its marketing hold the key to the survival of organic farming, in my opinion. All of us farmers know the problems of difficult land in a wet time. We know what slugs, septoria and yellow rust will do. I feel sure that those producers who get the right balance of production to a known market and off the right land from a well managed and marketed outfit will do at least as well as the well managed input farmer. I shall not refer to him as the "conventional" farmer. However. every farm situation is different, and one cannot expect a bottomless pot of gold to be on hand to balance the books. That is farming and that is how it has always been. The market may well be there but, if that market is not on the doorstep, then the costs are disproportionately high.

I admire the efforts of the director of the British Organic Farms and Organic Growers Association, Patrick Holden, who puts forward a sound case for the survival of organic farming. I should like to see more support for the horticultural sector, especially where there is an absence of pesticide use on crops under glass.

Finally, perhaps I may ask the Minister whether he knows of any agricultural college-run organic farming courses in existence.

7.43 p.m.

Lord McNair

My Lords, almost everything that I would have said has been said. I shall therefore simply emphasise a few points. I grew up on an organic market garden. It is perhaps therefore bred into me that I prefer farming to go in the direction of organic farming. It frustrates me that we seem to be lagging behind our Continental competitors. It does not make sense to me that we produce only about £37.5 million worth of organic food out of the current market value of £125 million. That figure is obtained by a simple calculation; I do not have the figure as a statistic. It surely makes sense to give greater encouragement to organic farming so that we do not import unnecessarily.

There is a second reason for encouraging farmers and growers to produce organic food. As many noble Lords have said, if we are serious about improving the quality of our soil and retaining or restoring previous bio-diversity levels, we must move in such a direction.

I remember that in the mid-1970s Fisons took double page advertisements in national magazines such as the Radio Times. On the left-hand page was a picture of a wonderful garden with healthy, succulent vegetables. The caption said, "This is what happens if you have a Fisons garden". On the right-hand page was a picture of a garden with yellow, withered, stunted vegetables and the advertisement was indicating that that is what occurs if one lets mother nature do the job. I had a friend who wrote on organic matters and organic gardening. He protested to the Advertising Standards Authority at what he called "eco pornography". I agreed with him. I thought that such an advertisement libelled mother nature. I now see that Fisons is selling its own range of organic fertilisers. It must have decided that if you cannot beat them, you might as well join them.

Your Lordships will be delighted to hear that that is all I have to say because I have mislaid the last page of my speech. I urge the Minister to listen to the encouragement that he has been given to consider these issues closely.

7.48 p.m.

Earl Baldwin of Bewdley

My Lords, I speak, not as an agricultural expert, but as someone who has taken a keen interest for some time now in nutritional matters and in environmental questions affecting human health. It often surprises me how concerned we can be at the global level—and quite rightly—on issues such as the destruction of forests and whales, and bio-diversity, and how little we follow it through to questions of how pollutants affect our health as individuals here and now. At the heart of this is the low status accorded to environmental medicine (which is strange in the 1990s), and to nutritional medicine after a long period in which the link between food and human health was almost severed in the medical mind except for cases of gross malnutrition.

It seems to me that the chemicalisation of the food supply poses significant dangers to the populations of the developed world, and it is not enough to say that the evidence of widespread harm is inconclusive by reason of the dearth of good scientific studies and the weaknesses of toxicology. I believe that the indications are already there. We know of the dangers to the water supply from intensive farming. We are aware of the incidents of damage to individuals from pesticides and herbicides, which may quite possibly turn out to be the tip of a considerable iceberg; and we are discovering how these substances linger on produce we buy in the shops. Three years ago the British Medical Association shifted its stance in a report on pesticides which drew attention to the dangers and commented that absence of proof was not proof of absence.

A more subtle danger with the use of artificial chemicals lies in the loss of micronutrients and the consequent imbalance in the overall environment. We are learning more and more about the importance to human health of zinc, selenium and other nutrients, to say nothing of vitamins whose benefits feature almost weekly in the medical press; yet these are often seriously depleted by our farming and production methods. This cannot possibly be good for our health. It would probably be simplistic to attribute the rise in chronic disease and allergic illness, to say nothing of the dramatic recent decline in the sperm count in men, to this factor alone. But it is all part of a pattern of pollution in the late 20th century which is drifting dangerously near the point of no return, for which we cannot afford to await the definitive scientific evidence.

There was a German-American doctor called Max Gerson for whom I have a great admiration (Albert Schweizer described him as "one of the most eminent geniuses in the history of medicine"), who devised a treatment for TB and cancer 50 years ago based on organic wholefoods. He described the soil as the human body's external metabolism—a fine phrase—and forecast that as agriculture departed ever further from natural methods so patients would become harder to cure. That has certainly proved true of the Gerson treatment, where recoveries that could be seen within 12 months 40 years ago now take a year-and-a-half or even two years.

But health is not just the absence of disease. Claims have been made that organically grown food has qualities that set it apart from other food, not just by reason of the absence of toxic residues. Again, this is an under-researched area, but evidence from animal studies and from techniques near the frontiers of current scientific practice suggest that there may be something in it—something positively health-giving.

The organic market is an important market. It is supported by a growing number of consumers, as we have heard, who are increasingly conscious of the interlinking needs of health and the environment. It is sad that this demand cannot remotely be met from the home market. For all the reasons I have given, and more, this market surely deserves the maximum support from the Government.

7.51 p.m.

Lord Beaumont of Whitley

My Lords, my name is immediately below the gap on the list of speakers, but I really do not think that this debate calls for that kind of speech. Therefore your Lordships will be glad to hear that I shall confine myself to a short contribution to the case which has already been massively put forward.

The Government are to be congratulated on introducing the Organic Aid Scheme, the OAS, but it is generally recognised by everyone, and I am told even by the Minister, that the limited support given in the OAS may act as a disincentive to farmers to convert to organic production when measured against the grotesquely large amounts of money which can flow into the bank accounts of what we must now learn not to call "conventional farmers" who have been receiving arable aid payments.

The OAS is flawed in a number of ways. The main one is that it excludes existing organic farmers whose land was registered as organic on 10th August 1993. I have not been able to find any reason why that should be so and maybe the Minister will, in replying, give a reason which makes sense for it being so.

Set-aside is politically unpopular and is inefficient. Organic farmers can achieve the targets which set-aside is meant to achieve as part of normal farming practice. Set-aside should be scrapped. I know that that will take Europe-wide agreement, but it should not be unachievable. It should be scrapped and the money invested in organic research and extending and supporting organic farming.

The MAFF is to be congratulated in that it has contracted Elm Farm Research Centre to carry out a small part of its £7 million research programme on limiting nitrate leaching, one of the many ills which, as has been mentioned, is caused by non-organic farming. Elm Farm is owned by the private charity, the Progressive Farming Trust, and is the only organisation in the country doing vital research work on organic farming, as well as providing professional consultancy services to farmers wishing to convert to organic. It deserves all possible support and it is good that it is receiving support. If other bodies are also doing that, then I apologise to them and I should like to hear of them, but I think that the trust is the only one.

Now that it is becoming increasingly recognised by the United Nations Food and Agriculture Organisation, by the EC and by MAFF that organic farming provides the best available approach to sustainable farming—and what a change that has been over the past few years, that one can make that remark truthfully—there is an urgent need for money to be invested in research. The research is needed not so much to compare or demonstrate the effects of organic versus other forms of farming, but rather to improve and develop well tried organic systems which are already operating to everyone's benefit.

7.54 p.m.

Lord Carter

My Lords, the House is grateful to the noble Earl, Lord Clanwilliam, for putting down this Unstarred Question. I cannot help reflecting that this afternoon we have gone from one extreme to the other, from biotechnology at the extremes of the new information and new techniques to organic farming, a very old system indeed.

We have come a long way from the days of what we used to call "muck, mystery and magic". I have been a student of the words and works of Newman Turner, Frend Sykes, Lady Balfour and Basil Furneaux and, to bring us up to date, the interesting work being done by His Royal Highness the Prince of Wales, as well as Barry Wookey, in my own county of Wiltshire. Having said that, it is still obviously a small sector of agriculture, amounting to only about 90,000 acres and 800 producers. With 70 per cent. of the market supplied by imports, I certainly agree with my noble friend Lady Nicol in questioning the controls on the integrity of imported products. It was said to me rather cynically by someone in the food industry that the further away from the UK the food was produced, the more organic it became.

We have already had reference to the perverse effect of the CAP reforms where the lower cropping and stocking rates of the organic farmer mean that the farmers are penalised. I should like to ask the Minister a question which has already been asked by the noble Lord, Lord Beaumont: what produced the change of mind in the Ministry? There was a feeling for some time that the existing organic producers were to be included in the grant aid scheme. Why were they excluded when the scheme was finally produced? What would it cost to extend the aid scheme to existing producers, as has been suggested? After all, existing traditional or conventional producers—whatever word we use—receive their aid and organic farmers are doubly disadvantaged.

It seems to me that the whole concept of the organic management agreement is similar to the ESA approach. It is an adaptation of the environmentally friendly farming approach. Obviously, as part of a matrix of conservation-grade farming, there is environmentally friendly farming and, for those who want it, organic farming. It is a logical extension which of course involves the reduction of surpluses and increased environmental protection. It seems to me to be logical to extend that approach to organic farming. My own feeling is that the less intensive or environmentally friendly farming will become the logical alternative to set-aside. I think that the Minister should be doing more work on this, and I shall come back to that point.

I ask again the reason for our support for organic farming being at rates which are so much lower than in some other member states of the EC. What is the rationale for that? Is it a typically perverse Treasury policy? There is a policy which, if it were adopted, could reduce surpluses, would add to environmental protection and would reduce the import bill. It seems to me to be one of the examples that we always get in government, irrespective of party, of the left hand not knowing what the right hand is doing.

The evidence from the RSPB shows that there are now higher breeding densities for some bird species and I am sure that that also applies to other flora and fauna on organic farms. I fear that, if the Ministry persists in its policy, it could have a serious effect on organic farming, which, though it will not be wiped out, will be, much reduced from its already very low level.

We know that the Prime Minister has organised a study of the effects on the balance of payments of the import penetration of foods which I think is being chaired by David Naish, the President of the National Farmers' Union. There is also the Strathclyde initiative, looking at the sourcing of food products in this country. If we put those two together, I would ask the Minister whether in those two studies there is any consideration of the effect on the balance of payments of the expansion of organic farming. That should be brought into the equation. As an alternative to set-aside, it would be very popular publicly. Not every farmer will do it—very few will in total—but it will be extremely popular.

To give just one example of the absurdity of the set-aside policy, we know that this coming year the increase in the compensation for set-aside will be in the order of 20 per cent. to 25 per cent. That increase was the price of the French agreement in the run-up to the Blair House agreement, about which there is still argument. It was part of the price of the deal. When the cheque comes, it will be extremely welcome, but the policy is completely barmy.

In conclusion, I should like to make some more general points. Why do so few farmers farm organically? I believe that there are three main reasons. The first is the lack of objective economic evidence on the costs and the profitability of organic farming. I declare an interest here. I have had a long-running interest in the management accounting approach to agriculture. Most farmers suspect that it loses money. But how much does it lose? Research has been done in the past, I believe at the University of Aberystwyth, but I do not believe that there is a strong body of objective economic and accounting evidence to show the costs and returns of organic farming over a period of years.

The second reason is linked with the first. It is, I believe, the fear that the organic premium might suddenly disappear as the result of a sudden change of policy by a supermarket group or some other body. To refer back to the lack of objective economic evidence, how important economically is the premium? That question is crucial. Obviously, the economic success of organic farming depends on the premium. It would be extremely important to know at the margin how important in financial terms that premium is.

The third reason is very rarely mentioned but is in my view as strong as the other two put together. Organic farming is much more skilled and intellectually demanding than is, if I dare say so, traditional or conventional farming. It is much easier to reach for the spray-can or the syringe than it is to work with nature. I believe that many farmers are unsure of their ability to meet the considerable technical demands.

That point brings me to a specific question that I wish to ask the Minister: what research is the Ministry doing or supporting to overcome what I would call the technical barrier? A figure was mentioned by the noble Earl, Lord Clanwilliam. I believe he mentioned a figure of £950,000. Is that the total of the Ministry's support for research into organic farming, or is there a larger figure? That would be helpful to know.

I have already asked what is the rationale for excluding current growers and limiting grant aid only to converters. Why are our grant levels less than those of our European competitors? Have sums been done on the effect on the balance of payments? And, as I have already asked, what research is the Ministry doing?

Another reason that there are difficulties with organic farming and its promotion lies in the culture of the Ministry. It has had nearly 50 years of intensive farming, or conventional farming, or however one would like to describe it. Some years ago I attempted to mount a seminar on low input farming, a subject in which I am extremely interested. I do not refer to organic farming, but to low input farming. I asked ADAS to take part, but it refused to take part unless we changed the title to "lower" input farming. That would seem to be a connoisseur's distinction, but it was very important to ADAS at the time. It says a lot about the culture of ADAS and of the Ministry; and that culture still persists. It is very difficult for people who have been brought up, technically, with nearly 50 years (since the end of the war) of intensive, chemically-aided and capital-intensive farming to have the mindset which enables them to switch over to organic farming, which is much more intellectually demanding, and in its own way is more technically demanding. It is a niche market. It is no good pretending that it would solve our agricultural problems. It would always be a niche market. Demand is expanding, while our supply is likely to decrease if present policies continue. It is perverse not to support organic farming in the way that has been suggested. Why is it not put (to coin a phrase) on a level playing field with conventional farming? I must say that my noble friend Lady Nicol has put us all in some difficulty. Every time we say "conventional farming" now we feel ashamed of ourselves. I see it not as the complete answer, but as part of a matrix, or group, of policies which would involve conservation grade production, environmentally friendly farming, and, for those who want it, organic farming. The three should be seen as an organic whole, and the Ministry should produce a policy which supports all three.

8.4 p.m.

Earl Howe

My Lords, my noble friend Lord Clanwilliam is always a most eloquent defender of the cause of organic farming, and his speech this evening has in no way tarnished that accolade. I am sure that the House will be grateful to him for giving us the opportunity to debate this many-faceted subject.

It was, I confess, with some disappointment that I detected in my noble friend's speech a note of criticism for the level of backing which the Government have provided to the organic movement. The Government have every reason to be proud of their record in relation to organic farming. We were the first to press for organic methods to be integrated into Community environmental measures. We have taken the lead in developing Community marketing standards for organic goods. We have developed an effective and independent mechanism for regulating organic standards domestically, in the form of the United Kingdom Register of Organic Food Standards (UKROFS) and we have emphasised our intention of preserving its independence. We have developed and funded a coherent programme of research on organic farming methods, about which I shall say more in a moment. And, in close consultation with organic sector organisations, we have developed proposals for financial aid for conversion to organic status.

As my noble friend will know, Ministers and officials in my department maintain close contacts with the organic sector. I myself met their representatives during the summer, and my right honourable friend the Minister of Agriculture, Fisheries and Food herself met them again on 15th November. On that occasion she was glad to confirm that improving the impact of the CAP on the environment is one of her main aims and that we believe that an increase in organic farming can play a part in measures to achieve that objective. She also reiterated that the Government are keen to encourage our farmers to meet the demand from consumers for organic produce. At the same time it is important that consumers should be able to buy organic food with confidence that it is truly organic and that genuine producers should not be undercut by fraudsters.

My noble friend was somewhat critical of the Government's approach to financial support for organic farming. That support must, however, be seen in the context of our overall approach to the CAP. Our aim is to reduce agricultural support generally, so that farmers come to rely more on the market. Against that background I believe it is perfectly legitimate, as well as desirable, to help farmers who want to convert to organic methods with the initial cost of doing so. But it makes no sense to pay such high sums of continuing aid that organic farmers become wholly dependent on subsidy. To do that not only distorts the market, but it does nothing to help the long-term stability of the organic sector. I have to tell my noble friend that we will not try to compete with the high levels of aid that we understand some member states intend to pay; indeed we will be urging our Community colleagues to look very carefully at the justification for them. Incidentally, I understand that the scheme in Germany which was quoted is soon to expire.

It was on that basis that my right honourable friend's predecessor, John Gummer, made a commitment to seek agreement for an aid scheme to encourage those wishing to convert to organic agriculture. That commitment has been translated into an organic aid scheme the proposals for which feature in each of the agriculture department's agri-environment programmes. Those plans form the UK's response to the agri-environment regulation. The announcement followed careful consideration of responses to a consultation document which was issued in March this year. Providing the EC Commission agrees, the aid will be paid on an area basis with a minimum eligible size of one hectare. It will be paid for five years on any parcel of land entered into the scheme up to a maximum of 300 hectares. In non-LFA areas the rate is £70 per hectare decreasing over the period. There will be a premium for the first five hectares of £30 per hectare per annum for the full five years. That will particularly help smaller producers, including horticulwrists, for whom the cost of registration and inspection are proportionally greater. Those producers who already farm using organic methods will be able to receive aid for new land entered into conversion. We have thought about the scheme structure very carefully, and I believe that it will prove attractive.

I am of course well aware that the organic sector bodies are disappointed that no aid will be paid on existing organic land. But as I explained to their representatives in July, public resources are limited and any scheme that we devise should maximise value for money. With that in mind it was important to devise a scheme that would offer encouragement to those who wish to convert, especially during the initial period of conversion when there are additional costs as well as declining yields and when the produce of the farm is by definition not organic and therefore unable to attract a premium. Given that our express aim is to see the area of organically farmed land triple over the next few years, it would have been very difficult to justify utilising part of an already tight budget on something which did not directly contribute to that expansion.

Lord Beaumont of Whitley

My Lords, how does the Minister believe that he will attract more people into this form of farming when they already see organic farms going out of business and out of organic farming because they do not have the money to pay their way?

Earl Howe

The reported drop in numbers in organic registrations is regrettable. But as the noble Lord, Lord Carter, indicated, there are a number of reasons for that, which are not by any means wholly associated with the structure of the scheme that the Government have introduced. I shall come in a moment to some other considerations that bear on the point made by the noble Lord, Lord Beaumont.

Existing organic farmers can benefit already under a number of schemes open to farmers generally. For example, under the farm and conservation grant scheme, grants are available for a wide range of investments.

They include the provision or improvement of facilities for the handling of what are sometimes called farm "wastes", such as manure and slurry, which for the organic farmer are important sources of nutrients. Grant is also available for the establishment and upkeep of a number of features such as hedges. Farmers may enter existing organic land in some of the other environmental management schemes, such as that for environmentally sensitive areas.

Nor should we ignore the assistance that is available by way of the arable area payments scheme and livestock subsidies, as pointed out by my noble friend Lord Addison. These are as valuable to organic farmers as they are to those whom we now call conventional farmers. Indeed, I believe that arable area payments are proportionately more generous to organic farmers, because they are calculated on the basis of average regional yields, not organic yields. The advent of rotational set-aside is also helpful because it provides organic farmers with a payment for what is often a standard element in organic arable procedures, namely fallowing.

Lord Carter

My Lords, I am sorry to interrupt the noble Lord. The Minister is absolutely right on a per acre basis because the yield is worked out on the regional yield and the organic farmer will probably have fewer cereals in rotation than the traditional arable producer. It is a case of swings and roundabouts and he will probably end up worse off.

Earl Howe

My Lords, in that respect he is no worse off than the conventional mixed farmer in the example that the noble Lord gives.

Prior to CAP reform, fallowing was not something for which farmers derived any support at all. We have in addition allowed organic producers to enhance the fertility of their set-aside land by sowing clover-rich leys. My noble friend sought to point up a contrast between the sums of money budgeted for set-aside and the budget for the organic aid scheme.

There is no denying that the idea of promoting organic farming as an alternative to set-aside has its attractions. But we must bear in mind that the point of set-aside was to achieve a rapid reduction in arable output across the Community. With the best will in the world, organic farming, which depends for its success on specialist skills, as the noble Lord, Lord Carter, rightly said could not provide an effective solution to over-production in the short or even medium term. Set-aside, for all that it is not an ideal policy, is nevertheless with us, and we should be seeking to maximise the opportunities for environmental enhancement which it offers. My noble friend was rather too ready, I thought, to play these opportunities down.

In that context the noble Baroness, Lady Nicol, laid stress on the environmental benefits of organic farming, as did the noble Earl, Lord Baldwin. While I appreciate the environmental benefits of organic farming, conventional farming when it is done properly is not damaging to the environment, nor is it in any way unsafe. At the same time that we are helping farmers who choose the organic route with the difficulties of the conversion period, we are helping farmers generally with advice on good farming practice. It would be wrong for the Government to provide too strong a lead either way. In the end choices should be left to farmers, consumers and the market generally.

The noble Baroness also referred to the use of pesticides, as did the noble Earl, Lord Baldwin. There are very strict controls on pesticides and other chemicals used in farming and processing. So it is not generally necessary to buy organic food to ensure a good and healthy diet. But some people prefer food produced in an organic way and their demands should be recognised. As I said, in the final analysis it is for individual farmers to decide whether to go organic and whether to stay in organic farming. As I mentioned earlier, it is disappointing to hear of a decline in numbers, but it is hoped that the new scheme will provide a significant incentive to those who may think of converting.

Following the public expenditure survey, our provision for the proposed organic aid scheme in the UK is over £1 million for 1994–95 and £2 million for 1995–96 and 1996–97. These are considerable sums of money at a time when public expenditure must be firmly controlled. They exceed, I think, some speculated figures. My noble friend said that they are not enough but (if he will forgive me for saying so) he might perhaps be tempted to say that about any budget. What matters is that the scheme encourages more farmers to convert to organic systems and that it will achieve the objectives that we have set for it. I believe that it will do so. But government assistance to the organic sector does not stop at subsidies. As I mentioned earlier, the Ministry of Agriculture, Fisheries and Food has an important research and development programme for organic farming and has commissioned a wide range of projects. The majority of the current organic programme is aimed at exploring the practical problems of converting to organic agriculture and the difficulties and benefits of farming organically.

My noble friend Lord Kitchener will be pleased to learn that my department is already adopting the approach that he mentioned of using organic farms for research purposes. In its research project on conversion to organic milk production, 10 commercial farms are participating in the collection of financial and farm practice information. I am glad that the Henry Doubleday Research Association is involved in a good deal of our research. Such research is generally placed by competitive tender. I feel sure that the HDRA is already confident that it is well able to compete for such work.

The noble Lord, Lord Beaumont, mentioned work done by Elm Farm. I am glad to take the opportunity to acknowledge the advisory and research work of Elm Farm, some of which is MAFF supported. We are also spending a great deal at other research establishments, including the Agricultural and Food Research Council and the Agricultural Development and Advisory Service.

My noble friend Lord Addison asked whether any agricultural colleges run courses on organic farming. The answer is yes. There are several colleges offering organic courses and what are termed modules of courses. Unfortunately, I do not have the names but I shall be glad to supply them to him by letter.

To answer the noble Lord, Lord Carter, for the 1993–94 financial year we shall be spending nearly £1 million on organic research—a sizeable sum for what is still a relatively small sector.

We also continue to support standards for the production of organic food. In 1987 the United Kingdom Register of Organic Food Standards (UKROFS) was established by Food From Britain with funding from the Ministry of Agriculture, Fisheries and Food. This independent body, whose board includes experts from the organic sector, members concerned with processing, wholesaling and retailing, plus consumers and a trading standards officer, and which is chaired by Professor Spedding, produced a set of national standards and established an independent certification and inspection scheme. Subsequently UKROFS has become the UK body for implementing much of the EC regulation on production and labelling and maintains a register of all organic producers. It also approves organic sector bodies and authorises imports from third countries. MAFF continues to underpin that work by providing assistance and resources. The whole future of our agriculture and food industries depends on how they respond to the challenge of the market. That is no less true for the organic sector.

Our producers have the necessary technical expertise to supply demanding customers with excellent quality products. But, on its own, that is no longer enough. Organic farming must in the end justify its continuing existence, not by reference to subsidies and not simply through the quality of its product, but by its ability to satisfy the demands of the market. That point was brought out clearly by my noble friend Lord Addison. Today's market is highly competitive. The industry as a whole needs to change, to gear its organisation and its marketing to what the customer wants to buy. The Government have been doing a great deal to help bring about that change.

As my noble friend Lord Addison mentioned, we made the group marketing grant available to encourage the development of effective marketing structures so that our farmers and growers can compete more effectively and win markets at home and abroad. We drew up proposals under the 1993 Agriculture Act for a new marketing development scheme which we issued for consultation. That scheme offers scope to grant aid to a much wider range of marketing activities in the food and farming sectors. The UK provision for those grants is £6.4 million over the next two years.

Organic producers, like others, will be able to take advantage of those initiatives. The lack of a proper marketing infrastructure is often identified as one of the most significant problems for the growth of organic food sales and I hope that full advantage will be taken of what the scheme offers. Other initiatives are in train. Better communication and more collaboration within the industry are important keys to successful marketing. That is why we are keen to bring suppliers and customers closer together and two of my ministerial colleagues are taking the lead on projects in the horticulture and catering sectors.

We also want to help our exporters tackle the large continental retail market and are promoting an exciting and carefully targeted initiative which will include practical help in drawing up export strategies and meeting buyers.

My noble friend asked about the recent meeting between my right honourable friend and representatives of the organic industry. We are considering carefully the points made at that meeting. My right honourable friend agreed that officials should meet organic representatives to examine whether CAP mechanisms could be made to fit the circumstances of organic farming better. However, she did no hold out the hope of aid for those who have already converted. There is to be a further meeting with the organic industry in the spring to discuss the role of organic farming in relation to CAP reform. Meanwhile there is a good deal of liaison on organic issues between MAFF and the DoE both at official and ministerial level.

Much as we may wish it to prosper, we must recognise that the organic sector represents a tiny proportion of Britain's farmland—much less than 1 per cent. The Government want that proportion to grow, particularly so that our farmers can satisfy more of the demand for organic products. But that growth must be sustainable and market led. To achieve that, there is a role for the organic movement to perform as well as a role for the Government. I hope that I have been able to demonstrate that the Government's contribution is in no way lacking.

House adjourned at twenty-four minutes past eight o'clock.