Organic Farm Scheme (Hansard, 4 May 1999)

§ The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue)
My Lords, since the introduction last month of the organic farming scheme there is no area limit on the subsidy payment to individual farmers entering the scheme because there is no longer a restriction on the area of land that they may enter. Financial provision for the scheme in 1999–2000 is £6.2 million.

The Earl of Clanwilliam
My Lords, I thank the Minister for that reply, and particularly for the support that the Government are giving to organic farming. However, does the Minister understand that the limit of £6.25 million has probably already been overtaken by those who are presently in the line of fire?
Does the Minister agree that in the light of the present controversy over genetically modified foods, however that may be considered, there is an enormous new demand for organic food and therefore a great demand, especially in terms of horticultural work, to stem the flood of imports from Europe?

§ Lord Donoughue
My Lords, I thank the noble Earl for his remark on what the Government have done. We have indeed doubled the amount of financial provision under our new scheme. The noble Earl is right to suggest that demand may run ahead of supply in this area. It seems to be the case that we have had as many applicants in the first two weeks of the new scheme as, on average, in each year since the scheme was first introduced in 1994. So funds may indeed run out for this year. However, the organic regulations that we laid earlier this year provide a mechanism for carrying applications forward until the following financial year.

§ Lord Middleton
My Lords, if the prospects are so rosy for organic farming, will the Minister explain why it needs subsidising?

§ Lord Donoughue
My Lords, I would rather discuss that matter with the noble Lord in the Tea Room afterwards. The schemes are CAP half-funded agri-environmental schemes. The case for funding is that it takes five years to convert, and in the early years there is a significant loss of revenue to the farmer who, for instance, may previously have been heavily subsidised under the arable area payments scheme. If he enters into organic farming, he loses that subsidy. He also has to deal with the heavy toxic state of the soil as a result of the heavy application of pesticides. We support the idea that that conversion should be 549 subsidised in order to ease the cost. We subsidise only the conversion period, and our conversion rates are heavily front-loaded for that early period.

§ Lord Taylor of Blackburn
My Lords, is it my noble friend's intention to attend the public meeting on organic farming to be held in Ambridge this evening in "The Archers"? Will he be kind enough to offer advice as to which way matters should go?

§ Lord Donoughue
My Lords, I thank my noble friend for that question. Unfortunately I am informed that we have other business nearer home. However, I should be happy to talk to them about the dramatic success of organic farming in this country over the past year or so. A year ago, only 0.3 per cent of land in this country was organically farmed. The figure is now 1.6 per cent. That is well up the league table for Europe. So we have had success. There is a long, long way to go. Retailers are finding that demand is expanding at about 20 per cent a year; roughly 70 per cent of that demand has to be met from imports. It is our aim and hope that, in time, the rapidly expanding demand for organic food can be provided from domestic sources, where the profit premia are very high indeed.

§ Baroness Miller of Chilthorne Domer
My Lords, if that is the case, I find the Minister's reply quite cheering. Turning to the environmental measures that organic farming so ably supports, does the Minister agree that only about 3 per cent of agricultural spend in this country goes on such measures? Will he therefore look towards dramatically increasing the subsidy paid to organic farms on the basis that this type of farming is so beneficial for British wildlife? Consumers are voting with their pockets to support this approach. Will the Government do so?

§ Lord Donoughue
My Lords, it is true that the funds that are available specifically to support environmental measures in farming are still low. It was the Government's view that they should be increased. We argued for that in Agenda 2000, and we were not very successful. It is true that organic fanning is an environmentally friendly form of farming, and we therefore support it. The conditions attached to receipt of grant include the highest possible environmental conditions; so support is provided in that way. Given the profit premiums—for lowland sheep there is a premium advantage of 90 per cent in returns, and hill beef has a premium advantage of 60 per cent, as does wheat—one has some sympathy with the noble Lord's previous remarks. Farmers are well encouraged under the new scheme to turn to organic methods. The available profits should be the biggest incentive.

§ Lord Luke
My Lords, some arable farmers have environmentally sensitive areas on their land. Is it true that such a farmer, wishing to go organic, does not qualify for subsidy unless he forgoes his ESA subsidy? If so, why?

§ Lord Donoughue
My Lords, it is not true. It is the case that double funding is not permitted under 550 European Union rules. When the previous Minister, Jack Cunningham, circulated his review in anticipation of our reforms, it was clearly stated that double funding is not possible. Indeed, it is not desirable and I am sure that noble Lords would not wish to support it. There is a tapering of the organic farming aid scheme to cake into account the ESA subsidy. But virtually all farmers will still be significantly better off by taking up the organic farm aid scheme. The average less favoured area farmer with an ESA, going organic, will still be some £200 per hectare better off. As I said, there is a tapering, a reduction of about 10 per cent for the best land, around 25 per cent in total return over five years for the slightly less good land, but farmers are still much better off. Of course, the ESA scheme is for 10 years and organic aid is only for five.