HL Deb 03 February 1997 vol 577 cc1462-70

4.42 p.m.

Lord Lucas rose to move, That the draft order laid before the House on 13th January be approved [9th Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move that this draft order be agreed to.

This order provides for the establishment of a potato industry development council to take forward some of the work of the Potato Marketing Board. A year ago, we debated the order which led to 30th June 1997 becoming the date when the potato marketing scheme would be revoked.

As required under Section 27(1) of the 1993 Agriculture Act, the Potato Marketing Board has applied to the agriculture Ministers for approval of a scheme to transfer its property, rights and liabilities to a successor body: a development council. This followed a growers' poll and our own consultations, which both showed overwhelming support for such a body.

The proposed functions for the council are listed in Schedule 1 to the order and can be summarised as commissioning or assisting research and development; the collection and dissemination of statistical information; generic promotion and the development of exports; and setting basic quality standards for raw potatoes.

The council will comprise 16 members including the chairman and one other who must be independent of the potato industry. Nine members will represent the interest of growers, including at least one seed potato specialist; one will represent employees in the industry and the remaining four will represent the industry beyond the farm gate, including at least one with knowledge of the marketing or distribution of potatoes.

The council will be required to keep a public register, in two parts, of producers who grow one hectare or more of potatoes and first purchasers of 100 tonnes or more of potatoes. The dual register reflects the dual funding system that has been agreed upon by the joint committee of the Potato Marketing Board, whose members represent all sectors of the industry and consumers.

While a single levy might seem to be more efficient, there was significant opposition to it from growers and from processors. Growers in particular argued that a single levy point would undermine the concept of a body able to act for the industry as a whole. And the dual system does have the advantage of giving the council access to much better information on the industry. We feel that Article 9 of the order deals as effectively as possible with the practical difficulties that the dual system might have presented.

The order provides for a ceiling of £40 per hectare for the growers' levy and 25 pence per tonne at the first point of sale. We have set the ceilings higher than the anticipated actual charges to save the need for early amending legislation.

With this order we draw to an end the cycle that started with the passing of the Agriculture Act 1993. I have pleasure in commending it to the House.

Moved, That the draft order laid before the House on 13th January be approved [9th Report from the Joint Committee].(Lord Lucas.)

4.47 p.m.

Baroness Nicol

My Lords, my interest in this order arises from the fact that I am a vice-chairman of the all-party Retail Group. In that capacity, I have become aware of some of the concerns within the retail industry. There are in fact two main areas of concern. The first is the levy to which the Minister referred. As he said, the Potato Marketing Board worked with a single levy on growers based on the acreage of potatoes grown. That levy was passed up the chain as part of the cost. It was a system that worked very well, I am told.

The proposed introduction of a levy at the first point of sale as well as a levy on acreage, in the opinion of the British Retail Consortium, will inevitably introduce loopholes and opportunities for avoidance, due to the large number of merchants, merchant growers, agents and other operatives selling potatoes within the industry. They believe that the new system also will be expensive to enforce and very difficult to operate.

Therefore, I must ask the Minister whether it would not be better to fund the new council through the tried and tested method of the single levy on acreage, as we did before. I do not feel that he gave a very convincing explanation of why the second charge has been introduced and I should like to hear more about it. Will not the double charge have the effect of inflating the cost, at the end of the day, to the consumer or indeed the processor?

The second area of concern is the membership of the proposed industry development council itself, a body set up to: increase efficiency and productivity and improve and develop the service that the industry renders the community". No one could argue with those aims. But the composition of the council is taken directly from the Industrial Organisation and Development Act 1947-50 years ago—and does not reflect the needs of the present-day industry.

Retailers understand what consumers want and aim to fulfil that demand by close co-operation with growers. The partnership approach which has developed over recent years works well for the farmers, who grow to the specifications of the retailers in relation to varieties as well as to other specifications. Surely the structure of the new development council should reflect that partnership. Does the Minister appreciate that there is a new relationship which should be recognised in the council, or has the formula for the new one just been taken off the shelf as part of the old 1947 model? That is not appropriate for 1997.

I do not know what consultations the Minister had with the retailing industry, but will he undertake to look again at this matter before the draft order is approved?

Lord Stanley of Alderley

My Lords, before the noble Baroness sits down I wonder whether I may ask a question. I think I must have misunderstood her. Did she suggest that the retail trade should shoulder none of the charges for the development council?

Baroness Nicol

My Lords, the proposal as it stands in this order is complicated. It can indeed be open to abuse and we have managed very well without it so far. I should like to know from the Minister why it is needed.

4.50 p.m.

Lord Stanley of Alderley

My Lords, I love the noble Baroness smiling at me. She was in fact saying no, the retail trade should pay nothing towards the council. She does it very charmingly, but it goes without saying that I think she is totally wrong.

I support the order, not least because I am, with my son, a potato producer. I supported the noble Lord, Lord Carter, when the whole question of dismantling the PMB was discussed and voted on during the passage of the Agriculture Act 1993 and the necessary affirmative order moved by my noble friend Lord Lucas in 1996. Now, four years later, I repeat my plea.

It was accepted by my noble friends on the Front Bench in both cases that the development council will be frustrated in what it hopes to achieve if the present unlevel playing field continues, with all other European Union countries having the ability to give surreptitious aid to their producers. It is essential in order to ensure the future of our industry that fair competition goes hand in hand with the development board.

I remind noble Lords that any form of support or quota was taken away from British growers in the 1993 Act, but not so—I repeat—for our continental competitors. As an aside, I should perhaps say that the 1996 potato crop came to a staggering £500 million less than the 1995 crop. We do not need any more "bumps", as my noble friend Lord Lucas said in 1996, caused by the national governments of our continental neighbours being able to support their own producers.

What action will the Government take to ensure, as they promised in 1993 and 1996, a light-weight European potato scheme with as level a playing field as possible? If, as it seems, we are incapable of bringing any sense to the workings of the common agricultural policy, will the Government promise to undertake an investigation into the state of competition in the potato market, including state aids, and make that report public, in particular to Parliament?

In 1973 I was persuaded to vote to join the European Union; I believed it would encourage a common market. Sadly, it appears that I was wrong and it has become an uncommon muddle. The potato market has the potential of being a perfect example.

4.52 p.m.

Lord Lyell

My Lords, perhaps my noble friend the Minister can clarify one point for me. Article 9, paragraph (6), states: Where two or more persons jointly carry on business". I presume that refers to people acting under paragraphs (3) and (4). I had in mind a fairly large farm or family who are both growers and also acting as "first purchasers" under this order. Either today or later perhaps my noble friend can give me some guidance on what paragraph (6) means, especially the last phrase, "shall … be treated as constituting a single person".

4.53 p.m.

The Earl of Balfour

My Lords, perhaps I may ask one question of my noble friend in connection with this Potato Industry Development Council Order. Although the constitution is set out under Article 4, I am concerned in respect of the ordinary consumer.

Many people, when they go to a shop to buy potatoes, want to know what is the best potato for boiling, making chips, roasting or baking, as the case may be. As the noble Baroness, Lady Nicol, said, we are dealing with retailers. My problem is that most supermarkets regard the potato as just that—a potato. They cannot give advice as to what kind it is. I am fond of potatoes and like eating them. But quite often the only place I can obtain information about them is from the little farm shops which can tell me—I do not put them in any order of preference—whether I should buy Golden Wonder, Maris Piper or Pentland Squire. Those shops are the only places I can obtain the information.

I do not see anything in the order which gives the encouragement and help that the ordinary purchasers—all of us or our wives—need to strengthen an extremely important industry and one that I should like to see flourishing.

4.55 p.m.

Lord Mackie of Benshie

My Lords, I join the list of people speaking in the gap. My name was meant to be included.

I suppose one must welcome the order, but the fact is that throughout Britain our potato farmers are suffering the worst year that they have had for a long time and they are regretting the demise of the Potato Marketing Board. As the noble Lord, Lord Stanley of Alderley, said, unless we have some reasonable guarantee of a level playing field with the Continent, without help the industry will have to operate in a manner which, even if farmers are super-efficient, is not likely to make them prosperous under the present conditions.

Can the Minister tell me how much money the maximum of 25p a tonne would raise? It does not appear to me to be a lot. If one does all that is required, £40 per hectare, plus 25p a tonne, is not a great deal of money. One is expected to promote our export markets and conduct research into the growing and handling of potatoes and, as the noble Baroness, Lady Nicol, said, one has to reassure the public that potatoes are healthy and good to eat. All that takes a great deal of money. I do not believe there is a ready answer. But it is important at the present time to reassure the public that our methods are healthy; that we do not leave residues and cause problems with chemicals and all the things the environmentalists constantly, and rightly, complain about. If the marketing board is to do the research and to provide an explanation, it will need a lot of money. I should like to hear what the Minister has to say about that.

4.57 p.m.

Lord Carter

My Lords, I thank the Minister for explaining the order so clearly. In this debate we may have a little less excitement than we had in the previous debate this afternoon.

From these Benches we generally welcomed the order in the debates on the 1993 Act. I made it clear on behalf of my colleagues that if the PMB was to be wound up, we would support a potato industry development council to fulfil the important functions of research and development, of collecting statistics, of generic promotion, of developing exports and of guaranteeing the basic quality standards.

In relation to promotion, I was pleased to see in the first schedule to the order that paragraph 3 promotes, the production and marketing of standard products"; and paragraph 8 undertakes arrangements for better acquainting the public in the United Kingdom with the goods and services supplied by the industry and methods of using them". In discussions on previous development council orders we had problems with "promotion". It seems now that the Government are happy, under the 1947 Act, that promotion can be included.

When the order refers to "generic" promotion, can the PIDC, under European regulations, use its funds to promote the British potato or can it only promote potatoes as a whole? Can we isolate the British potato for generic promotion?

At the risk of upsetting my noble friend Lady Nicol, I have long supported the concept of development councils in agriculture. Agriculture is divided into small units; development work is for the benefit of all farmers and therefore all should pay. The only way to do that is through some form of compulsory levy.

Perhaps I may say in passing that it is interesting to compare the attitude of this Government with that of the previous Administration led by the noble Baroness, Lady Thatcher. We had a number of attempts to try to get development councils. She saw them as just another quango and compulsory levies as just another tax. How things change!

I wish to make a final point about the potato regime itself and take up an issue raised by the noble Lord, Lord Stanley. We support, as do the Government, the principle of a lightweight potato regime in Europe, which is also supported by the Commission. It would be our wish to secure such a regime. But if we are not able to get the agreement of other member states, it will not happen. We should be clear about that. That will not surprise the Government, as they have been in exactly that situation with BSE for the past 10 months.

I wish to make two small points of detail. How will the development council know that a producer's hectarage has increased? Will it have to rely entirely on the producer informing the PIDC? There is a scheme in Article 8(4), but it is not entirely clear how the PIDC will know that the hectarage has increased. Can the Minister make absolutely clear what is to happen to the assets of the PMB? Does he have any information as to their likely size? What are they likely to amount to? Do the assets include the PMB research station? I saw in the farming press only this week that a consortium involving ADAS, the Scottish agricultural colleges and the Cambridge University Research Association is involved on the research farm owned by the PMB. It would be interesting to know how that will fit in with the work of the development council.

I conclude by repeating what I said when we debated the Agriculture Act 1987. I said that if the PMB had to be wound up it was essential that the development council should be in place to continue so many of the important functions of the old PMB. We therefore support the order and wish the new development council well.

Baroness Nicol

My Lords, before my noble friend sits down, I wish to make it clear that I am not opposed to the establishment or to the functions of the council but to the funding and composition of it.

5.2 p.m.

Lord Lucas

My Lords, I am delighted to reply to this short debate in which the proposals put forward by the Government have received such a general welcome, if slightly qualified in some quarters. Perhaps I may deal with the points that were raised in the order in which they were raised.

The noble Baroness, Lady Nicol, raised some of the concerns of the British Retail Consortium. The House and the noble Baroness must understand that the proposals have been arrived at after consultation with all sides of the industry. As she will have learnt from my noble friend and indeed from her noble friend, there are a variety of views on how the funds should be raised and how the council should be made up. Nonetheless, agreement has been reached on the proposals before us today. They may be something of a camel; they may be a racehorse. We shall have to wait and see how they perform over the next few years.

If there turn out to be problems, there will be opportunities to bring forward amending legislation once everyone involved has agreed that things need to be changed. We have done the best we can, and the industry has done the best it can, to produce these proposals. I hope that the British Retail Consortium will feel able to live with them and that it will not go ahead with its proposal to play dog in the manger and not put forward someone for the council. That would be sad.

We recognise that retailers are at last starting to play a constructive role as regards British agriculture and British horticulture. For many years, as I am sure my noble friend and others will agree, they did not. Indeed, they seemed to be set against it and seemed to be trying to find ways of tripping it up. I think that is changing. I hope that if the consortium agrees to take part in the council it will find it constructive. In the end, what matters to potato producers is getting the best market for their produce. The retailers are a very important part of that and must to a large extent have an identity of interests.

I do not think we are looking at a council which will turn out to be producer dominated in that way. Nine producers are to be chosen by the Government. They are not being elected by some coterie of producers. I would expect them to have a wide variety of views. If the retailers and those in other parts of the industry were to put forward their views to the producers, it would take an exceptionally bad argument not to win over one of the producers to their cause and thereby take away the producers' majority on the council.

Perhaps I may turn to the subject raised by my noble friend Lord Stanley of Alderley. We are and have been fighting for a lightweight potato regime. The Irish presidency tabled revised proposals based on the fruit and vegetable regime which were discussed at the Agriculture Council of 18th November. The revised proposals did not, as the House knows, command the support of the majority of member states. We hope that in the long run we will achieve agreement on this. There are some signs that some member states are moving towards our proposal. However, as the noble Lord, Lord Carter, recognised, we stand in the middle between a group of states to the south of us which wants a heavyweight regime, and a group of states broadly to the north of us which wants no regime at all. It is a very fine line. If we go jumping around too much we might fall off on the wrong side of it. A period of quiet and slow diplomacy will repay our efforts in the end. So far as any cheating or unfair state aids are concerned, if anyone can bring those to our notice with enough evidence to go on, we shall pursue them, and pursue them vigorously.

My noble friend also raised the question of whether we would investigate the state of the European potato market. I shall draw that request to the attention of my colleagues and will write to my noble friend. However, I am not aware of any such proposals. I shall also write to my noble friend Lord Lyell. The wording of the order provides for a partnership or company to be levied once rather than there being a levy on each partner to avoid in any way duplicating levy collection. However, perhaps I should look at Hansard again and make sure that that answer fully covers what my noble friend was asking.

My noble friend Lord Balfour asked for information on the use of each variety of potato and what they were best for—what was best for frying, boiling and all the other uses of the potato. That comes back to what the noble Baroness, Lady Nicol, was saying. There is a role for retailers to play in this, a role which, as regards potatoes and perhaps some other similar produce, they have not played to date. A good deal more information would be useful, and if that worked back into better varieties of potato being available with more information from retailers so that consumers knew how to use them, that would be extremely good and would be helpful for the potato industry as a whole.

The noble Lord, Lord Mackie, asked how much the levy would raise. If the levy was set at £35 a hectare and 20p a tonne, which is where we think it will start out at, it would raise £6.3 million in total, with £1 million of that coming from the first point of sale. The noble Lord might well argue that that is not enough money for everything the council might want to do. That is something it will have to establish in practice. However, as I am sure the noble Lord knows, there is a balance to be drawn between the wish of the industry to be levied and its wish to spend money. It is a balance familiar to any Chancellor of the Exchequer. Indeed, if, after the next election, Mr. Gordon Brown, the colleague of the noble Lord, Lord Carter, would like to apply for the job of chairman, he might be well qualified for it.

Lord Carter

My Lords, if the noble Lord has a job to tell the difference between a camel and a horse, I do not think we should take his projections about the election too seriously.

Lord Lucas

My Lords, the noble Lord, Lord Carter, drew attention to an interesting side line on our situation within Europe. The French can, of course, promote French potatoes in Britain and we can promote British potatoes in France. However, we cannot promote British potatoes as such within the UK. The marketing campaigns undertaken by the council can be timed to coincide with the British new potato harvest or with some particular new variety which has been planted somewhere. We can act, as I am sure the French will act, in promoting our own potatoes, but we must not act so as to act against the interests of our Community colleagues and try to exclude them from our market. There is a subtle balance to be drawn. I am sure the council will draw it wisely.

The assets of the Potato Marketing Board will transfer to the Potato Industry Development Council. It is not yet clear exactly what they will be and what they will comprise. Dealing with them will be a matter for the potato council. I am sure that the noble Lord will be kept informed as matters progress.

The need to audit the acreage returns from producers is evident. The council will be helped in that by having information from the payers of the first-purchaser levy who will have information about who is supplying them with potatoes. They will be able to work with that information to produce an effective audit—nothing is ever perfect—of the acreage returns.

As the noble Lord said, a consortium of Scottish agricultural colleges, otherwise known as SAC/ADAS, and the Cambridge University Farm, have expressed interest in managing the Sutton Bridge experimental unit. The decision on that will be for the British Potato Council. We shall not be seeking to interfere with it. I hope that answers the questions that have been raised today.

Baroness Carnegy of Lour

My Lords, before the Minister sits down and for the comfort of the noble Baroness, Lady Nicol, can he confirm that I am right in believing that of the 16 members of the council, nine will be people representing the interests of producers? They will pay for 80 per cent. of the cost of the council so fair is fair in that respect. That may comfort the noble Baroness.

Lord Lucas

My Lords, at this point we believe that it is fair that the producers have what is in effect a bare majority on the council. Much will depend on how the members of the council are selected as regards their individual qualities. The noble Baroness should look forward with optimism to us finding a range of people to sit on the council who will not act in a pig-headed and stupid way and go against the interests of the people who, after all, are their largest customers. I believe that they will be seeking ways to work with the retailer. I hope and expect that the fears of the noble Baroness and of the British Retail Consortium will prove to be unfounded.

On Question, Motion agreed to.