Agriculture

HL Deb 16 November 1998 vol 594 cc1032-43

6.20 p.m.

Lord Donoughue

My Lords, with the leave of the House, I shall now repeat a Statement on additional aid to United Kingdom agriculture which is being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food. The Statement is as follows:

"Since I took up office as Minister of Agriculture, Fisheries and Food in July, my colleagues and I have had wide-ranging discussions with farmers' leaders and with working farmers around the country about the problems being faced this year and how we might reasonably address them. It has become clear that all sectors, but particularly the livestock sector, have been adversely affected by a marked deterioration in market conditions. The weather has made it difficult to grow adequate supplies of feed for the coming winter and to finish stock. In consequence, animals have had to be kept for longer than usual and are now coming forward onto an over-supplied market. The collapse of export markets in Asia and in Russia has exacerbated this situation, leading to further pressures on the United Kingdom market from supplies from countries which would otherwise export to those markets.

"Within the constraints imposed by the common agricultural policy, the Government have already taken many steps to offer extra support to farmers. We paid £85 million in agrimonetary compensation to suckler cow and sheep producers at the beginning of this year. We supported the introduction of a European Union private storage aid scheme for pigmeat in the face of a fall of about 50 per cent. in the producer price of pigs. Additional action was taken in Northern Ireland.

"We have relaxed the rules on the moisture content of cereals eligible for purchase into intervention, in recognition of the difficulties caused to cereals producers by the wet summer.

"We successfully lobbied the European Commission to grant two blocks of private storage aid for sheepmeat to help move lamb on the market. With effect from 8th October we removed the obstacles to the export of whole sheep carcasses to France and, on beef, we have successfully negotiated the introduction of the export certified herds scheme in Northern Ireland and expect soon to see a partial lifting of the ban for Great Britain.

"In addition, we have persuaded the Commission and other member states to increase beef premium advances from 60 per cent. to 80 per cent. for this year, thereby considerably easing farmers' cash flow problems. We have met the costs for one year of Meat Hygiene Service enforcement of controls on specified risk material from cattle and sheep; and we have met the start up and first year running costs of the new cattle tracing system.

"I have had useful talks with the retailing sector, resulting in positive undertakings on origin labelling of meat, and on the welfare and feeding standards to apply to purchases of meat, which will be particularly helpful to pig producers. I have also made representations to public sector purchasers of meat.

"Not all these initiatives cost money, but those that have have in total been worth more than £150 million to the industry in addition to the ongoing support it receives from the CAP. But our discussions with industry representatives at both Ministerial and official level have persuaded us that more should be done to support United Kingdom agriculture in what are proving to be exceptionally difficult times. In recognition of these extremely difficult circumstances the Chancellor and Chief Secretary have, exceptionally, allowed me access to the Reserve for this financial year and I am grateful to them.

"In the spring of this year, the Government drew down £85 million of agrimonetary compensation for the beef and sheep sectors. There remains the possibility of drawing on a further £48.3 million for the beef sector in the current year. I have asked officials to notify the European Commission today of the Government's intention to draw this sum and to make it available to producers on the same basis as the beef element of the spring package—that is, to suckler cow producers in proportion to their 1996 premium claims. I do not anticipate any difficulty in persuading the Commission to approve this arrangement. We expect the eventual rate of payment to be about £29.50 per head.

"While these additional payments to the suckler cow sector will be of some help to hill farmers, the Government recognise that more needs to be done to help this fragile sector. We have therefore decided that, subject to approval from the European Commission, we should increase hill livestock compensatory allowances for the 1999 scheme year by £60 million. Though precise headage rates have still to be worked out, we estimate that, broadly speaking, this will allow us to put up rates across the board by about 55 per cent. As is normally the case, the vast majority of producers will receive the increased rates of allowances during February and March 1999.

"In the longer term, the European Commission has proposed replacement of the hill livestock compensatory allowance scheme as part of a range of measures in the Agenda 2000 package to assist the rural economy. I intend to undertake full consultation with farmers' leaders and environmental groups on the shape of the successor arrangements.

"On 29th July I announced the Governments intention to close the calf processing aid scheme when the obligation to run it lapsed on 30th November. We considered that the scheme was drawing too many calves from the market and squeezing beef producers' margins. However, the Government were asked to reconsider this by farmers who argued that, in the absence of an export market for British beef, closing the scheme now could have adverse consequences for the market.

"We therefore encouraged the Commission to review the rate of aid payable under the scheme to fix it at a level which would attract the poorer quality calves from the dairy herd while leaving the better quality calves from that herd and those calves from the beef herd to find their own price level on the market.

"I am pleased to say that the Commission broadly accepted our arguments in this regard and will shortly publish a regulation fixing a special rate of aid for the UK under this scheme of 80 ecu—around 70 per cent. of the current rate. The new rate will come into force on the first Monday following publication of the regulation, either 30th November or 7th December. In view of this, we have decided to continue to operate the scheme for the remainder of the present financial year at the new rate. We will wish to keep the scheme under review with the industry. I know that maintenance of the scheme will be welcomed by dairy farmers.

"This aid package for the livestock sector is worth some £120 million in 1999. In assembling it, the Government have concentrated on those areas to which farmers and their leaders attached the greatest priority.

"We also need to think of the longer term future in announcing these measures. Government and all those associated with food production in the UK need to work co-operatively together to develop a blueprint for a successful, viable agricultural sector. This means in particular securing reform of the common agricultural policy. That reform must create the conditions to allow sustainable and competitive EU agriculture to operate effectively on world markets; it must reduce the burden currently imposed by the CAP on consumers and on taxpayers; and it must free up resources to offer scope for better targeted measures to support the rural economy and enhance the environment. That will mean significant changes in the way we support agriculture and require imagination, flexibility and enterprise from all those concerned.

"My colleagues and I intend to undertake a thorough review, in close consultation with all interested parties, of the Government's long-term strategy for the rural economy. This will develop policies which offer a secure future for the rural areas. We shall over coming months consult widely on a range of issues. Trading conditions will remain tough in the months ahead, but I hope that this package and the commitment to generating a vision for agriculture will give the sector the boost it needs to face the future with confidence".

My Lords, that concludes the Statement.

6.32 p.m.

Lord Luke

My Lords, first, I welcome the Minister back on his feet. I hope that the cow which had the temerity to step on his foot has been well and truly de-boned!

I thank the Minister for repeating the Statement made in another place by his right honourable friend. We on these Benches welcome unreservedly the fact that at last the Government recognise that there is a crisis in the agriculture industry in the United Kingdom. During the past year there has been a very large drop in the income of virtually all farmers. We say that by far the most important reason for that lies in Downing Street and the overwhelming strength of the pound. The grain trade is recovering a little, but from a very low base. The incomes of some farmers are now lower than the minimum wage.

The first words in the Statement refer to the weather. Farmers know about the weather; no one is more expert on it. They must always discount the impact of the weather on their activities. It is other factors which sometimes they cannot cope with, notably the level of the pound. Why is there no mention of that?

The Government welcome, and so do we, a partial lifting of the ban on beef exports next week. What about beef on the bone? With regard to the positive undertaking on origin labelling of meat, that is emphatically not what the BRC said had been stated. Can the Minister clarify the exact situation, which is so vital to pig producers in particular? How much longer will the public unknowingly be able to purchase imported meat produced using methods which are illegal in Britain?

I welcome the Government's intention to draw down the £48 million outstanding in the EC account for the beef and sheep sectors, but why did they not do that earlier? While welcoming the Government's plans to increase the HLCA allowances for 1999, we are very worried about the future and hope that the Government will press our case with great vigour when discussing successor arrangements with the Commission. Dairy farmers will welcome the calf processing aid scheme extension, at least for the next few months, but, again, what happens next?

The package is stated to be worth some £120 million in 1999. That barely matches the underspend on the agricultural budget in the past two years. However, it is most welcome.

There are some glaring omissions in the Statement. Horticulture is always left out. Growth promoters are being used for soft fruit production—for example, pears—which are then imported into Britain under EC rules and sold in direct competition with British pears. Those growth promoters are illegal in Britain. What do the Government propose to do about that? Furthermore, there is no mention of poultry. What about honesty in labelling?

Like the curate's egg, the Statement is good in parts. However, much more needs to be done before the Government even begin to recover the confidence of Britain's farmers.

6.36 p.m.

Lord Hooson

My Lords, I thank the Minister for repeating the Statement. If a cow trod on his white-booted foot, I trust that suitable compensatory allowances will be made.

The Statement has been long delayed. The crisis in the industry has been apparent to anyone with any knowledge of farming for well over a year. It has become steadily worse and has reached the stage of a true depression. In particular, I welcome the suggestion that after due consultation the aid given to agriculture will be better targeted. I have lived in an agricultural community for most of my life. I believe that the smaller farmers have suffered the most. They do not depend so much on the subsidies as on the prices in the market. The main source of income for a farmer who has 4,000 sheep is the headage payment and not the final product. The aid needs to be better targeted.

Can the Minister deal with the problem that is troubling me? The Statement declared that the aid package for the livestock sector will be worth some £120 million in 1999. Is that the value of the additional aid package or the whole? Does it include, for example, the £48.3 million for the beef sector in the current year which is drawn down from the agrimonetary compensation? That is available only for this year, and not for 1999 so it cannot be added to the 1999 sum.

The Government can claim credit for increasing the beef premium advances from 60 per cent. to 80 per cent. for the year. That has helped farmers' cash flow problems. However, it is rich for them then to claim that they have met the cost for one year of the Meat Hygiene Service enforcement of controls and the start-up and first year running costs of the new cattle tracing system when they themselves imposed those costs on the agriculture industry. Therefore, in claiming that the aid package is worth some £120 million for 1999, the Minister must make clear how that sum is made up. Does it include what was drawn down in 1998? The Government must be completely frank about that.

It seems to me that the crisis is continuing. I am quite certain that the banks are holding back from foreclosing because if they foreclosed on many farmers it would have a domino effect and would be devastating for the country. I welcome the aid package, but it is long overdue. As the Minister and the House know, many Members of this House, including myself, have initiated debates here on the state of agriculture and it has taken a long time for the Government to begin to grasp the problem.

However, greater explanations are needed. We need further explanations of the headage proposals for the coming year. I do not begin to understand—and perhaps this can be explained to me—the proposed additional £60 million to put up the HLCA allowances by about 55 per cent. across the board. For example, there are 7 million ewes in Wales. I do not know how many there are in Scotland, but it must be many more. In England, there are more still in the hill areas. At the moment, I cannot see how that increase will put up rates across the board by about 55 per cent. Perhaps the Minister will explain that for me and, I am sure, for many other people.

Lord Donoughue

My Lords, I welcome the fact that the noble Lord, Lord Luke, welcomed the package. That is only fair, and I am sure that the whole farming industry will welcome it. Some of the issues which he raised went rather wider than the subject of the package but they are of relevance to the industry. I suspect that we may have a better opportunity to deal with those matters in Wednesday evening's debate on the state of agriculture.

I thank the noble Lord for his consolation on my sore foot. I must admit that I am still not quite as quick on my feet as I should like to be.

The noble Lord said that the Statement did not mention the level of the pound. Two-thirds of the rise in the level of the pound took place under the previous administration so I might have expected the noble Lord not to mention it either, but it is now easing a little.

The noble Lord asked me about pig meat and labelling. We have taken measures to ensure that the content and the country of origin are clear on the labelling. We had recent meetings with the supermarkets which were extremely helpful. They agreed that next year they would import only fresh meat which met our standards or processed meat under their own labels which had not been produced in countries with welfare standards worse than ours or where the animals had been consumers of meat and bonemeal.

The Opposition seem to have a continuing misunderstanding of the position as regards the underspend, but after this time I cannot believe that it is an accidental misunderstanding. There is no underspend in the department. The sums referred to are European Union funded payments for which there was no budgetary provision. They are demand led and cannot, with total accuracy, be predicted in advance. Therefore, there was a shortfall in the estimates. That is not the same as an underspend and it does not release any surplus of money which can be spent elsewhere.

The noble Lord, Lord Hooson, asked for more targeting. We sympathise with that. Much of our effort this year in our two aid packages has been to try to target more. However, within the constraints of the CAP, it is not easy to do that. But if the noble Lord looks carefully at the package, he will see that it has been devised and targeted towards the sectors which we believe have suffered the most—the livestock sector and especially the hill sector.

The noble Lord asked how much is new money. The package is mainly new money. Roughly £100 million of it is from the Treasury and from the reserve. I calculate—although I ask your Lordships not to pin me down absolutely—that £20 million will be recovered from the European Union.

The noble Lord may be interested to know that we estimate that roughly £21 million of that will go to Wales. He asked also about the £48.3 million which is part of the agrimonetary package.

Lord Hooson

My Lords, do I understand that that is part of what is attributed to 1999 but is a draw-down on the 1998 funds?

Lord Donoughue

My Lords, it is the part which is the second phase of the three-year package in relation to the agrimonetary arrangement.

The noble Lord mentioned charges. I resist what was behind his remarks on that subject. Those charges are necessary to bring our industry up to the standards which are necessary to sustain consumer confidence. Consumer confidence is an asset to the industry; it is a benefit to the industry; and in most other industries such charges are paid for by the industries themselves. I do not see them as a burden on the industry but as a necessary cost in order to maintain confidence in the industry, which has been damaged deeply by the experience of recent years and especially BSE.

The noble Lord said that this problem has existed for a long time. I should point out to him that this is the second package in a matter of some 10 months. I believe that the Government have acted with reasonable speed. But it takes some time to construct packages which are both targeted in the way that he would like and acceptable to the European Commission. I shall write to the noble Lord on the question of headage.

6.48 p.m.

Lord Monro of Langholm

My Lords, I declare an interest. I know that farmers will welcome the £120 million but will be disappointed about the total because they are going through a real crisis in the countryside at present and this package has come almost too late for many.

Will the Minister tell me what sort of new money will be available for an average hill farmer with, for example, 400 ewes and 30 sucklers, and when it will be paid? It would seem that the money will not be available until the spring. That will mean that there is a long hard winter ahead for most hill farmers until anything at all is paid.

Secondly, in his peroration, the Minister spoke at length about the reform of the CAP. Most farmers accept that if there is a reform of the CAP in the near future, there will be less income for the farmers and a less substantial increase in prices in the shops. That seems an unlikely way for agriculture to make profitable progress. Therefore, will the Minister tell the House how and when he believes the reform of the CAP will take place, because there is a great deal of apprehension in the countryside as to whether it will be advantageous? The majority of farmers feel that, at the end of the day, they will see a lowering of the current subsidies, particularly for livestock, which mean so much to them at the present time.

Lord Donoughue

My Lords, I am sorry that the noble Lord feels that the industry will be disappointed. It may be that it is never possible to do enough. However, we have done a great deal. I should like to give the House an indication of how much will go to the average hill farmer, but the average hill farmer is not easy to define. It will certainly run into four figures. The noble Lord asked when. The agrimonetary money is paid in January. The hill livestock compensatory allowance will be paid in March. Those items therefore are paid quite soon.

No one can forecast when reform of the CAP will happen. We know from previous experience that the European agricultural community is reluctant and slow to face reform. But it was committed at the Cardiff Council to follow an agenda, and reform should be firmly agreed by the year 2000. Of course, it must be in place for the World Trade Organisation talks that will start that year. None of us can foresee what the final shape will be, although this Government argued our position at the Council. I was there at the Council to argue it in the presidency. We support the Agenda 2000 reforms put up by the Commission although we consider them to be too modest.

To the farmers I would say that all change is threatening. No doubt some will feel that. But we believe that ultimately it will be advantageous to British farming to be reformed in the more liberal way being proposed which will make our farming more viable and sustainable. I cannot believe, after the two crises we have been through this year alone, that anyone could argue that the present situation in farming, the present structure and nature of its financing, is the ideal.

Lord Northbourne

My Lords, I welcome the package and particularly the Minister's statement that he intends to develop a strategy. I should like to think it will be a strategy for food production in this country well into the 21st century. Are the Minister and his colleagues taking into account in developing that strategy the projections for growth in world population? I understand that the projection is that the world population will double in the next 30 years. How will we feed people in this country in the year 2030?

Does the Minister agree that, on the whole, British agriculture is both efficient and flexible? It is also not unwilling to restructure; but restructuring agriculture, particularly agricultural holdings, takes time. More than anything else farmers need a certainty in the direction in which we are going and time to adapt. They need help to level the violent fluctuations in prices which are so damaging to agriculture. A clear policy and help with violent fluctuations in prices are more important to farmers even than subsidies.

Lord Donoughue

My Lords, I am pleased the noble Lord welcomed our approach to the longer-term strategy. That is exactly what we propose to construct and it is a strategy for our whole food production chain, not just the production end. We will of course take into account what the noble Lord said in relation to growth in world population. That is a central point in regard to the necessary reforms as in Agenda 2000.

The key question is whether our farming will have proper access to the growth in world markets. If we are excessively protected within the existing European regime, under the world trade rules we will not have adequate access. That is why reform to a more liberal regime which will give our farmers more access to those growing world markets is particularly important. I take very much on board what the noble Lord said about restructuring taking time and the need to adapt. Our proposals today are short-term measures. We wish them to buy time to introduce longer-term reforms. But they are not a statement that we will always underwrite the present structure in cement. That is not the case. Restructuring must take place.

Lord Elis-Thomas

My Lords, I welcome in particular the £21 million for the livestock sector in Wales to which the Minister referred in the Statement. Can he confirm that when his colleagues are looking at the long-term strategy for the rural economy, food production, afforestation and added value from countryside products in terms of food-related manufacture will form a central part of that strategy? If there is to be a shift of resources from the end-price support for agricultural products, that must be relocated within added value in the rural economy if it is to be of benefit to those areas.

In looking at the Agenda 2000 renegotiations, will the Minister examine the difficult issues which may arise as between the European Union funding arrangements, the UK Treasury, the Scottish parliament, the Northern Ireland Assembly and the National Assembly for Wales? Clearly those bodies will have a direct involvement in the whole question of the rural economy, particularly if added resources are to be made available from the European Union in terms of objective one. They will need to be targeted with UK Treasury support to replace any reduction in agricultural support. That will ensure that there is not a further undermining and bringing about of a crisis in the rural economy as a result of the transition into the Agenda 2000 arrangements.

Lord Donoughue

My Lords, I welcome again what was said about the longer term. In my view it is more important than what we have announced today, although that is critical to individual farmers. I agree totally with the noble Lord in relation to a broader rural economy. We are committed to what we call a "living countryside" and a "prosperous rural economy". But that depends upon a whole number of rural industries. The noble Lord mentioned forestry, but there are many others and not just farming.

I believe that we cannot have a prosperous countryside without a prosperous farming industry. But the prosperous countryside goes much wider and we are looking into that. As a small point, the abolition of the agricultural panels when we first took over was in order to replace them with representatives of the much wider rural economy. Now when we meet there are up to 16 different trades and professions present. That is important. I agree also with the noble Lord's point that we must not undermine within the less favoured areas what we do with Agenda 2000.

Lord Hardy of Wath

My Lords, I congratulate my noble friend on his Statement. Can he confirm that a critical situation in agriculture existed before May last year? Since then he has not only given one tranche of relief but secured rather more success in negotiations in Europe than several of his more recent predecessors managed to achieve.

Will my noble friend accept that if an adequate active population is to continue in the rural areas of England, as well as in Wales and Scotland, some consideration will have to be given to longer-term changes in agriculture, especially in regard to the replacement of the basis of headage by acreage or hectorage? Will my noble friend accept that that is in the longer term, but in the shorter term smaller farmers—some of whom may have entered in recent years because livestock production is the way in which the smaller farms establish themselves in the industry—need to be retained? In that regard will he continue to give sympathetic consideration to their plight and perhaps look again at the regulations and policies in regard to intensification.

Lord Donoughue

My Lords, I thank my noble friend for his remarks and for his positive approach to our Statement. It is indeed the case that the brewing agricultural crisis existed before May 1997. The turn-down in incomes began in 1996 and, of course, two-thirds of the rise in sterling occurred under the previous administration. We have given over £200 million in extra money to the industry this year alone.

My noble friend referred to the European Union. My view is that the change in approach to the EU, which began on 1st May, is probably the most significant change. I am absolutely convinced that we would not have got the beef ban lifted in Northern Ireland, and for the rest of Great Britain shortly, had the previous approach to Brussels—namely, as containing a gang of enemies—been continued.

My noble friend made a critical point as regards small farmers and the future of a living countryside. It is certainly not my vision of the future of the countryside that, in the pursuit of efficiency, we end up with a prairie. One of the regions that I am responsible for is the south west. It is absolutely clear to me that we have to find ways to sustain the family farm, which is often a smaller farm, in such areas. So we have a delicate balance within Agenda 2000. I am not sure that it has been fully thought through, but we have time to consider our approach. We want a more liberal and more efficient agriculture. We want an agriculture that can thrive on world markets and exploit the great population growth in the world. Without being committed to preserving all our existing structure, which I would not wish to do, we also want to ensure in that future that there are family farmers and small farmers who are providing a living rural society and community as well as a rural economy.

Earl Peel

My Lords, just how serious this matter is was brought home to me today. I have just returned from Edinburgh where I was talking to someone associated with hill farms. He told me that some hill farmers are now having to take advice from vets on how to put down their stock humanely because they simply cannot sell them for a profit. So I welcome the package. However, as my noble friend Lord Luke said, it has come too late. Indeed, there is no questioning the fact that enormous damage has been done. Nevertheless, we welcome the package for what it is.

I should like to explore one aspect of what the Minister said about the development away from the headage payments in the future. I find this quite interesting. There is no doubt in my mind that the way that headage payments have been administered has caused enormous environmental damage. I would very much welcome a move towards area payments, to which the noble Lord, Lord Hardy, made reference, instead of the headage payments which are now in place. I should be interested to hear whether that policy is one which the Minister and the Government are pursuing.

However, what concerns me most of all is the fact that we have all heard rumours and, indeed, read reports in newspapers that the percentage of the CAP within Agenda 2000, which is likely to be continued towards the less favoured areas, is likely to fall. That would be a disaster. Therefore, can the Minister give a firm assurance to the House that the Government will fight for every penny for the LFAs as a percentage of the CAP in the future? I say that because, without that, all the Minister said about small farms and the local socio-economic package would fall by the wayside.

Lord Donoughue

My Lords, we are aware of the hill farming crisis to which the noble Earl refers. That is why this package, like the previous one, is very much targeted to hill farming. The agrimonetary compensations will greatly help hill farmers. Of course, the hill livestock compensatory allowance—that is, £30 million to beef and £30 million to sheep—will also specifically help them.

However, I must reject the idea that the package is too late. It had to be considered in a measured way. I should point out to the noble Earl, and to other Members of the House, that it involves £100 million of new money from the reserve to which other sections of our community and our economy might feel that they have equal or greater claims. Allocating this money to farming rather than to health or education was not an easy choice. Indeed, such matters have to be most carefully considered.

I note what the noble Earl said about area payments. I can assure him that we are pursuing the whole question in the context of the intensive/extensive farming issue. As regards assistance to the LFAs under Agenda 2000, I can tell the noble Earl that we are acutely aware of the position. When we had the presidency and the informal Council in the north east—a less favoured area—we arranged that the special paper was actually on what was called, "farming in fragile areas", which is very much the same. It is certainly our intention to fight to defend that sector of our agricultural community.

Lord Geraint

My Lords, I welcome the Statement repeated by the Minister. However, before we get carried away with the proposals I am sure the noble Lord is aware that the incomes of farmers have gone down since his Government took office by anything up to 100 per cent. I honestly believe that the farmers of Wales, England and Scotland will be bitterly disappointed with the proposals. Indeed, there is hardly anything in them: if they have lost 100 per cent. over the past 18 months, they will receive about 10 per cent. extra. So where will that leave us? Nevertheless, it is a step in the right direction.

I ask the Minister once again to consider what I suggested earlier this year. I have in mind the view of the majority of the farmers and leaders in this country; namely, that a Royal Commission should be set up to look into the plight of people living in the countryside.

Lord Donoughue

My Lords, we are very aware of the rapid decline in farming incomes, although it varies. I should point out to the noble Lord that, on average it is not 100 per cent. Indeed, it is just over 70 per cent. and it took place following a quite remarkable rise of over 70 per cent. in the previous four years. It was a fall from an exceptional high, but that does not make it less painful.

As regards the areas with which the noble Lord is particularly concerned, I can tell him that many did not enjoy the bonanza of the 70 per cent. rise in real incomes in four years which occurred in agriculture as a whole. So, for them, it is especially painful. However, we are aware of the situation and will consider the noble Lord's idea of a Royal Commission.

Lord Jopling

My Lords, when the Minister reviews the various matters, especially as regards LFAs, will he give particular consideration to extending considerably the area covered by the environmentally sensitive areas scheme? While the scheme suffers perhaps from the fact that I claim some paternity for it, it has four outstanding merits. First, it is already approved by the European authorities. Secondly, it is extremely environmentally sensitive. Thirdly, it does not encourage further production of surpluses. Fourthly, and most importantly, it is aimed particularly at farmers in "difficult" areas, mostly small farmers. That means that one would give the help where it is needed most.

Lord Donoughue

My Lords, I thank the noble Lord for his comments. I acknowledge his great experience in this area. We are looking at precisely that proposal. I have asked officials to consider how we can make greater use of the ESAs. Some areas appear to be less interested in the scheme than others. Some areas are oversubscribed and some are undersubscribed. We are considering the matter.