Farm Incomes (Hansard, 10 February 1999)

§ The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue)
My Lords, the Government consider that the Agenda 2000 proposals for reform of the common agricultural policy will reduce agriculture's dependence on price support and make it more robust and competitive in the face of increasingly open world markets.

§ Lord Renton of Mount Harry
My Lords, I thank the Minister for that Answer. Does he expect general agreement on the Agenda 2000 proposals to be reached before the March summit meeting? Beyond that, what overall effect does he expect these proposals will have on British agriculture? Given that there is now talk of a one-third cut in direct payment to farmers and the money being diverted instead to low-income farmers or to schemes that are more environmentally friendly, in his judgment, at the enc of the day, will the average British farmer be better off or worse off?

§ Lord Donoughue
My Lords, it is difficult at this stage to forecast the degree of success. The Germans, who hold the presidency, are committed, as we are, to achieving agreement. The process is that the Agricultural Council meets next week, to be followed by a meeting of the Council in March. Everyone is committed to achieving agreement. However, we know from past experience that matters can become tricky, especially on small items.
As to the effect on British farmers, overall, reform will be very good for European farming. British fanning is particularly well placed to benefit. It is more efficient and capable of taking an open view of world markets. In terms of specifics, we calculate the cost to British farmers as being within the range of £200 million to £300 million. That represents a decline in incomes. However, we estimate the gains to consumers to be upwards of £1 billion. There will be some loss on our budget. We shall certainly look to see that British farmers do not suffer.

§ The Countess of Mar
My Lords, in his reply to me yesterday about the increased burden of charges being placed on abattoirs, the Minister stated: The effect of these increased costs will be to reduce producer incomes and to encourage further rationalisation in the primary production and meat slaughtering sector"—[Official Report, 9/2/99; col. WA 21.] 204 If farmers are to lose out as a result of Agenda 2000 and in this respect, where on earth are they to get any income from?

§ Lord Donoughue
My Lords, we have made clear from the beginning that some restructuring must take place in British agriculture and that the meat sector is an obvious area. However, we are convinced that in a more open food producing market British farmers will find new ways of earning their incomes more competitively and will be less dependent on production support. It is also our commitment to direct more funds into agri-environmental schemes and rural development. Farmers will benefit from that approach.

§ Baroness Miller of Chilthorne Domer
My Lords, in that case, what preparatory work has been undertaken by Her Majesty's Government for the implementation of the rural development regulation? Also, what account has been taken of best practice, as learnt in Objective 5b areas, LEADER programmes and Rural Development Commission areas?

§ Lord Donoughue
My Lords, we do whatever preparatory work we can. It can be a waste to do such work in advance of deciding the final details. The noble Baroness will be aware that what is being agreed, we trust, in Europe on the rural development side is a matter of structure concerned with simplifying and merging existing regulations.

Lord Bruce of Donington
My Lords, will the noble Lord give an undertaking that that part of the common agricultural policy which has resulted in the payment of millions of pounds to a small number of individuals for producing nothing at all will be eliminated?

§ Lord Donoughue
My Lords, I am reluctant to give that absolute guarantee to my noble friend. Like all of us, he is aware that the common agricultural policy has particular quirks. However, I believe that the process of reform that we have embarked on and which is being contemplated is only a small step. We are constantly pushing and shall push further, after these reforms have been agreed, towards a situation in which there are no supports for production even when they are not wanted and no controls over supply regardless of the market. We wish to move towards a more market-sensitive agriculture. When we reach it, some of the matters of which I detect my noble friend may not wholly approve will diminish.

§ Lord Tebbit
My Lords—

§ Lord Hylton
My Lords—

§ The Lord Privy Seal (Baroness Jay of Paddington)
My Lords, I believe the feeling of the House is that the noble Lord, Lord Tebbit, should ask his question. There will still be an opportunity for other noble Lords to intervene after that.

§ Lord Tebbit
My Lords, I wish to put two points to the Minister. First, he rightly says that British 205 agriculture is more efficient than much of the agriculture on the Continent. That derives partly from the fact that British farms are considerably larger, in general, than French farms. Does it therefore make sense to discriminate against the larger farmers and in favour of the smaller ones? Secondly, can the Minister say whether he expects that restrictions on milk quotas will be abolished in order that British producers will be able both to satisfy our own market and export to the Continent?

§ Lord Donoughue
My Lords, as regards size, the noble Lord is correct. British farms, of about 65 hectares on average, are considerably larger than those on the Continent. I shall not mention the extent of farming with which my noble friend who intervenes is connected. He obviously finds the figure I quoted too small for him to contemplate. The whole drift of the reform, except on modulation, where mere proposals are involved, is in the direction of rewarding the larger farm. That leads some of us to worry about the small and family farms. I thought that the noble Lord might ask that question.
It is absolutely our position to press for the abolition of milk quotas; we are now urging a termination date for them. That is not in the Commission's proposals. I agree wholly with the noble Lord about what is desirable to assist our very efficient milk producers. They are limited under the present arrangements.

§ Lord Hylton
My Lords, can the Minister confirm that the Government's aims include an expansion of organic farming and food for which there is an unsatisfied demand? I declare my own interest in that area.

§ Lord Donoughue
Yes, my Lords. Since coming into office this Government have pressed to improve support for organic farming. The basic situation now is that the demand for organic food products is increasing at 20 per cent. a year. Our food producers who did not position themselves early enough are not able to supply that. About 70 per cent. of organics sold by food retailers are imports. We want that corrected. We have announced a significant increase in aid to organic farmers and to assist people to convert to organic farming.