HL Deb 03 March 2000 vol 610 cc757-87

11.8 a.m.

Baroness Hogg rose to move, That this House takes note of the report of the Science and Technology Committee on Non-Food Crops (1st Report, HL Paper 5).

The noble Baroness said: My Lords, the subject of the Motion standing in my name on the Order Paper is the report on non-food crops by the Select Committee on Science and Technology, whose sub-committee I had the honour to chair. Its considerable insights into this highly complex and very important topic are entirely due to the knowledge and commitment of the other members of the committee, to our specialist adviser, John Slater, to the work of our excellent clerks and of the specialist assistant in the Committee Office. We were extraordinarily well supported.

My task was merely to occupy the seat of ignorance below the high tables of scientific and agricultural expertise brought together for this inquiry, both on the committee and in its support. In that chairmanship role, I should also like to thank the chairman of the Select Committee, the noble Lord, Lord Winston, for his support, guidance and wisdom in steering the report to its final conclusion.

While I hope that members of the sub-committee will forgive me for not thanking all of them individually, I should like to express particular thanks to three members who are, alas, no longer in this House. I refer to Lord Birdwood, Lord Nathan and Lord Middleton. It was a measure of the generosity with which those hereditary Peers contributed their special knowledge to this House that they should have participated so greatly in the committee during their last days of parliamentary life. They are much missed. I hope that newer Members of the House of Lords will forgive me for saying that however expert they may be, I do not think they could have contributed more. It is some, although perhaps not total, consolation that two other members of the sub-committee, my noble friend Lord Selborne and the noble Lord, Lord Rea, should have survived the cull.

I should start by declaring again the interest noted in the report. I am chairman of an economic consultancy that has clients both in the energy sector and in the pharmaceutical industry.

I believe that our inquiry was extremely timely. Farmers, who are predominantly engaged in food production, have suffered a 60 per cent fall in incomes in the past three years alone. Although only a small proportion of the agricultural land of the United Kingdom is currently devoted to the production of non-food crops, recent scientific advances offer the potential for new land-based economic activities, ranging from energy generation to the manufacture of pharmaceutical products. Of course, there is no miracle cure for the severe problems facing the agricultural sector in these new crops. To pretend that that is so would be ridiculous and would distract from the important issues involved in their research and development. But there is potential that any government who wish to claim that they care for the rural economy have both the opportunity and the obligation to nurture; nor, as our report makes clear, should this be seen simply as an alternative activity for farmers. There is great potential here for high value-added industries, and thus for the economic growth of the United Kingdom as a whole.

I shall not take up the time of noble Lords with lists because I believe that the report speaks powerfully for itself. Some of these "non-food crops", for example, hemp and flax, have a history quite as long as cereal production. But others are quite novel or are being grown for novel purposes. Advances in plant biochemistry offer the potential to generate a range of renewable materials that could replace products synthesised from mineral oil. Our report highlights, for example, the development of plant-derived vaccines and specialty chemicals for industrial use that may be prohibitively difficult and expensive to synthesise. The image of the "roofless factory" should not be overstretched, but it gives vivid expression to the potential and should offer some encouragement for partnership between those whose expertise is in growing things, and those whose skills are in manufacture, distribution and sales.

The noble Lord the Government Chief Whip was good enough to ensure that we received the Government's response in time for this debate, and I thank him for that. Perhaps I may also thank him for the fact that he himself is to respond to the debate. I know that we shall benefit greatly from his expertise and wisdom in this area. I should also say that I was most encouraged by the tone of the Government's response and by much of its contents. I am very glad that the Government agree that more co-ordination is needed, because I am sure that, without it, much potential will be lost down those famous Whitehall crevasses. I also agree that co-ordination in Whitehall is not in itself enough. I therefore warmly support the Government's proposal for a joint forum of industry and the scientific community to look for potential opportunities, advise on priorities for research and on ways in which government policy can help. I agree wholeheartedly that these new industries must be market led. I am delighted to learn that the intention is that this forum should publish an annual report.

But, for a number of reasons, I am disappointed that the Minister for Science should remain a somewhat shadowy figure in these proposed arrangements. First, although the Ministry of Agriculture, Fisheries and Food has done excellent pioneering work in this area—the committee was particularly impressed with what they saw at the laboratory in York—I believe that the Department of Trade and Industry has a very important part to play in sensitising industrial customers for these products to their potential.

Secondly, I believe that it would be an important signal that these industries have great economic potential in their own right, not merely as substitutes for food crops.

Thirdly, I believe that vesting responsibility for championship in the Minister for Science is essential to ensure that the issues which involve the environmental risks and rewards from these crops are not merely fully explored, but are seen to be explored. While by no means all of these novel crops involve the techniques of genetic modification—as the analysis in our report makes clear—some do. The issues that arise need to be confronted and resolved across Whitehall, or business will be reluctant to devote its energies to research and development.

The diffusion of departmental responsibilities is illustrated by the Government's response to the committee's comments on the relationship between the Government's environmental targets and the development of non-food crops, not merely for energy purposes but also in the production of biodegradable materials. This part of the Government's response lists initiatives by the DETR, MAFF, the DTI and (God save us!) Customs and Excise. I hope that the noble Lord, Lord Carter, will forgive me a reflection from my Downing Street days: such lists are always an illustration of the need for central drive. Although the Office of Science and Technology nowadays is rooted in the DTI rather than in the Cabinet Office, I understand that it is still intended that the Minister for Science should have a cross-departmental role and access to the authority of No. 10. That is why we believed that it would be not merely useful but necessary for him to take a lead role.

On a more generous note, however, I thank the Government for responding so positively to our urgings with response to joined-up government at European Commission level. I am very glad to hear that the Government are resisting Commission proposals that would discriminate against the production of flax and hemp for new industrial purposes. However, I hope that the Government will reconsider their response on the domestic regulation of the growing of industrial hemp. Perhaps I misinterpreted the response, but it read just a little weak-kneed. I hope that some route to deregulation can be found; I cannot see why not. I would not wish to leave your Lordships with the impression that I am not glad to have received such a positive response to so many of the committee's points.

Clearly, our report has been considered very carefully by the Ministry of Agriculture, Fisheries and Food. That is a great encouragement to the work of the Select Committees of this House and shows a willingness to listen to the expert voices assembled on this particular sub-committee. It was my great privilege to serve its members, however marginally, in the role of chairman. I thank them again for their contribution to an important debate, and I thank the Government for the care and courtesy of their response. I beg to move.

Moved, That this House takes note of the report of the Science and Technology Committee on Non-Food Crops (1st Report, HL Paper 5).—(Baroness Hogg.)

11.15 a.m.

Lord Rea

My Lords, first, I congratulate the noble Baroness, Lady Hogg, both on the clarity of her presentation and its succinct length, and on the benign but discerning way in which she chaired the sub-committee. It was a real pleasure to work with her. I second her thanks to our Specialist Adviser, John Slater, who was formerly the chief economist at MAFF. He provided invaluable help. I feel that it is rather an injustice that the names of our Clerk, Don Rolt, and his deputy, Adam Heathfield, are not to be found in the report since, together with Mr Slater, they did so much to marshal the evidence, arrange the field visits—literally, in some cases, in the field—and put together the report.

There are several connected reasons why it was timely to undertake this inquiry; for example, the overproduction of food crops by efficient agriculture in much of the developed world, which has resulted in steps to regulate and restrict that, such as through milk quotas and, relevant to our topic, the set-aside regime. Another reason for the inquiry was the general realisation of the need to re-think the use of the countryside. Our minds were rather concentrated on that by the current crisis in agriculture which unfolded as the inquiry proceeded. We also had environmental concerns, such as the need to reduce the burning of fossil fuels and the desirability of increasing the proportion of biodegradable materials used in manufacturing and, particularly, packaging.

As the noble Baroness pointed out, there are also rapidly developing biotechnical processes using plants to produce pharmaceutical and other chemicals which are difficult or expensive to synthesise. We discuss on page 18, paragraphs 3.31 to 3.34, the concept of the "roofless factory", which the noble Baroness mentioned, in which it might be possible to modify plants to produce a variety of useful, often highly complex, chemical substances, such as vaccines.

That leads to the sensitive area of GM crops, mentioned by the noble Baroness. All our scientific witnesses felt that, provided that sensible precautions are taken, enormous benefits will be—some already are—obtainable from appropriate use of GM methods. In effect, it provides a more rapid way of reaching the goals which have been, and will still be, achieved by conventional selective plant breeding over the years. But at least products from non-food crops do not enter the human body. However, to avoid possible harmful effects on the environment, an effective system of control and monitoring needs to be in place. Our report covers those concerns in Box 5 on page 19.

I give an example of a product which has been developed through conventional selective breeding: high erucic acid oil seed rape, otherwise known as "HERO", has a valuable industrial application. We witnessed that on a visit to the Croda factory in Hull which makes erucamide. Through an industrial chemical process, the "HERO" is split, fractionated, amidated by reaction with ammonia, and finished into granules. It is then exported widely worldwide and to factories in Britain where it is mixed with liquid plastic at a high dilution (1:1000) before the plastic is moulded into various products. The erucamide acts as a slip agent which prevents two plastic surfaces from sticking together so that they can be separated as in a supermarket food bag. Incidentally, I often feel that they do not use quite enough of it, judging by the difficulty I have in opening those bags! Unfortunately, the plastic with which it is mixed uses material based on the petro-chemical industry.

But since petro-chemicals are originally derived from plants, there is at least the theoretical possibility that some plastics could, in the future, be based on non-food crops. At present, the fields of Humberside, east Yorkshire and north Lincolnshire provide the raw HERO material for that profitable chemical industry which supplies 40 per cent of the world market for erucamide.

I described that process in a little detail not only because we visited the plant and were impressed by its large-scale operation but because it is an example of the direction in which other processes might develop in the future.

The problem with non-food crops as a whole, whether non-fossil fuel crops, plant fibres or industrial raw materials, is that the market is not, at present, a friendly place. The majority of products with which non-food crops must compete are coal or, more particularly, petro-chemical based, especially fuel and plastics. Although oil prices at present are in a rising phase, oil is still relatively cheap and it does not look like running out for some decades yet. New oilfields are still being discovered.

But as well as price, inertia in the market is a factor. It takes time for industry and consumers to switch to new products, unless those new products are a quantum leap better. Pioneers risk getting their fingers burnt and they may need some pump-priming support, in the same way as retailers introduce new products as loss leaders. In fact, that is, in effect, what the non-fossil fuel obligation is doing with some extra help which is being given, not all by government, to biomass energy products such as ARBRE in Yorkshire, which we visited.

As the noble Baroness indicated, we were extremely impressed by some of the research which we saw and discussed—highly practical research at the Central Science Laboratory at York, funded by MAFF, and more basic research at the University of York. Those all concentrated on the production or supply side. However some research in non-food crop production is being carried out by industry; for example, ICI, Du Pont and others. The Chemical Industries Association stated that, Chemicals from crops offer an exciting possibility for the future success of the chemical industry". It would appear that relatively slight shifts in the tilt of the market playing field, which at present is uphill for non-food crops, may lead to substantial increases in demand. But the Government need to assist rather more than they are doing at present. There is not only the need to reform the common agricultural policy and the set-aside regime so that there is positive encouragement to grow those crops—rather than merely making use of a loophole designed to reduce cereal production—but there is also the need for a more active role for the Government in informing industry and encouraging it to make more use of those products.

As the noble Baroness said, the report recommends that a Minister should co-ordinate policy and carry forward programmes. We suggested that the Minister for Science, with his strong links with the DTI, should act as a champion for non-food crops, heading an interdepartmental committee. Since industry needs to be motivated to use non-food crops, we felt that the DTI should be taking the lead on an interdepartmental committee such as we suggest.

Like the noble Baroness, I am rather disappointed that the Government's response rejects our suggestion, though their proposal for a joint industry and government forum led by a senior industrialist is, we all believe, an advance on the present position. But I do not understand why the Government are shying away from taking the lead and thus giving the forum the clout that it needs. In view of the need to encourage the development of non-food crops through demand rather than supply—industrial pull rather than agricultural push—it would seem more appropriate for the forum to be under the aegis of the DTI rather than MAFF. That is not to underrate the vital role of MAFF in research and the support of growers, and the excellent work that we saw in action. But it is important to emphasise the need for expansion to be market rather than producer led.

It was a privilege to work on the committee which, for me, opened doors to a new and fascinating aspect of human ingenuity which I hope will develop successfully for everyone's benefit. I look forward with great interest to my noble friend's reply. I realise that, highly expert as he is on all matters agricultural, he cannot, at this point, deviate much from the Government's response. But I hope that he will be impressed, particularly by the words of the noble Baroness and by some of our comments and criticisms, and that he will carry through some of our ideas to those in high places.

11.27 a.m.

Lord Taverne

My Lords, I found this a most interesting and valuable report. I too congratulate the noble Baroness, Lady Hogg, and her colleagues on their role in producing it.

I want to speak on only a small part of the committee's report; namely, the section dealing with innovation and, in particular, the recommendation in paragraph 7.18 in which the committee states that, we strongly support the case for research into applications of biotechnology, to enable the potential for new pharmaceutical and other products to be developed from plants to be evaluated". For some years, I have taken a special interest in biotechnology. I have no special axe to grind except that I am a keen environmentalist and I regard the failure to take account of the impact of many of society's activities on the environment as one of the threats to the quality of our society's future. Also, perhaps because I am married to an immunologist, I am much concerned with the public understanding of science and regret the fact that many people not only know very little about science but do not seem to want to know. I feel that there are great dangers in the lack of public understanding.

I turn to the question of innovation and especially the possibility of the roofless factory, to which the noble Lord, Lord Rea, referred, and the possibility of using biotechnology to produce crops which bring industrial and pharmaceutical benefits.

What I say may not seem immediately relevant, but I shall explain in due course why it is. I have just returned from spending three days this week at the OECD conference on food, biotechnology and safety. I was one of only two politicians, if I may call myself that, present. The other was Ms Joan Ruddock who had a rather different perspective. She and so many of her former colleagues in the Campaign for Nuclear Disarmament have moved into Greenpeace and other environmental lobby groups.

Five particular points emerged from that conference which I regard as particularly important: first, the overwhelming—one might almost say unanimous—view of the plant biologists and the other science specialists that biotechnology and, in particular, genetically modified organisms present no special threats. There must of course be careful regulation and testing of new products, but they are not particularly worried about that branch of science as compared with others.

The second strongly emerging conclusion was the absence of any evidence that genetically modified food poses any danger to health. The draft report—it was a draft report, not the final report, so too much emphasis should not be placed on it—suggested that, from the experience so far, there was no significant impact on health. Speaker after speaker said that it was not a question of no significant evidence of harm to health, but that there was absolutely no evidence whatever of harm to health.

We now have the experience of hundreds of millions of people in the United States who have been eating genetically modified food for 10 years or more without any evidence whatever of harm to health. There is now evidence from China of hundreds of millions of people eating genetically modified food without any harm to health. There have been 50,000 field trials in over 45 different countries, which have so far shown no evidence of harm to health, nor indeed, to the environment. That does not mean to say that there should not be more trials. Each product must be treated and tested on its own merits.

The third impression was of the strong support for the new technology which emerged from the developing world. Real, not just potential, benefits were cited. I had not realised that 80 per cent of the cotton crop now planted in at least one of the provinces of China is genetically modified. China has placed biotechnology at the top of its industrial priorities. One might mention that pesticide spraying in China has now declined on average from some 12 sprays to some three sprays. The Minister for Agriculture and Land Affairs in South Africa is also an enthusiastic supporter of GM crops.

My fourth impression was of the depressing anti-science attitude of the environment lobby groups; in particular, Greenpeace and the Soil Association. That we should consider the non-scientific rather than the scientific criteria was, indeed, an approach advocated by one of their speakers. They ignore the evidence and proceed on a dogmatic basis. No evidence of any kind could possibly change their minds about the new technology. They are against it on dogmatic grounds. Indeed, Greenpeace goes further. Not only does it ignore scientific evidence, but it wants to stop others finding out the results of scientific experiments, because it is determined to stop such experiments and to destroy the crops. Its activists break the law, ignore facts and are intolerant of other people's views. That is behaviour which I can describe only as antidemocratic.

My fifth impression was of the totally unbalanced and inaccurate reporting of the conference by the press. On a day on which we had heard evidence from various sources about the benefits of the new technology, the headline on "Channel 4 News" proclaimed new fears about genetically modified food; in particular, the vulnerability of the elderly and the young. That is relevant because, unfortunately, the scare headlines in the press, which have in many cases been generated by pressure groups, are making this country a hostile environment for biotechnology. Several people came up to me afterwards and stressed that point strongly.

That point is relevant to recommendation 7.18 of the excellent report. One of the American experts said that, regrettably, despite the excellence of science in this country, he would not recommend his clients to carry out future research in Britain. I am afraid that the article written by the Prime Minister for the Sunday papers did not help. I saw the headlines, but I have only recently read the article. I must say that the article is far more balanced than the headlines. But the Prime Minister knows something about reporters and he must have known—indeed, perhaps it was his intention to pacify the pressure groups—that the headline would be his view that there is no doubt about the potential for harm both in terms of human safety and in the diversity of our environment from GM foods and crops. Of course that was the headline and immediately the spin put on it was that the Government had changed their attitude and drawn back from support for the new science of biotechnology. It was the view of the industry representatives that such headlines did a great deal of harm.

That is a matter of great importance because biotechnology has been one of the relatively few industries in which we have pre-eminence and excellence because of the excellence of our science base. There have been reports in Nature stating that many of our young scientists in this area do not see a future in this country. We must face the role of the pressure groups. Formerly they had excellent aims, but now they have their own agenda. They are more driven by the need for publicity, expanding their membership and increasing their power than for doing good to the environment. They are now proving to be the wreckers and destroyers of jobs and they are seeking to deny the great potential benefits which the biotechnology industry can bring to this country. Perhaps even more importantly, they are seeking to deprive this country of developments which are vital to the fight against hunger and the protection of the environment. I am glad that the report of this House at least is a voice of sanity in a chorus of hysteria.

11.36 a.m.

Lord Marlesford

My Lords, I first declare an interest as a Suffolk farmer. I should like also to say what a pleasure it was to sit under the chairmanship of my noble friend Lady Hogg. It was not a new pleasure because for several years when we both worked on the Economist she was my immediate boss. I am delighted also that the noble Lord, Lord Carter, who is a senior member of the Government, is here to reply to the debate. I was going to say so anyway, but I am even more pleased that he heard the remarkable speech to which we have just listened. I hope that he will ensure that the Prime Minister reads it.

I begin by putting our report in the context of British agriculture. I am going to emphasise what I hope is the great importance of the major conclusion of the report, but I do not believe that non-food crops will be more than marginal to British farming. In that context, I see them as being very much like organic farming; excellent, but marginal in scale. On the evidence we received, they cannot begin to lift agriculture from the worst recession from which it has suffered since the 1930s. In fact, we must recognise that there is not much the Government can do to help either. They could, of course, have given monetary compensation of some £2 billion over the past two years rather than one quarter of that sum, which is about £½ billion, caused by the high value of the pound. However, I blame rather more the NFU—an ineffectual lobbying body if ever there was one—for that failure. Indeed, the Government and the taxpayer must be glad that they are not in the days when the great Jim Turner led the British farmers into battle.

Jim Turner, by that time Lord Netherthorpe, was actually my first boss. I remember one piece of terrific advice he gave me: when you have a new idea, always try it out on the hard anvil of common sense. I have tried to do so, however dispiriting it tends to be when I have an idea.

Government help for agriculture is very different in Britain from that in the United States. I understand that aid for American agriculture recently exceeded 10 billion dollars. So much for the much vaunted adherence of America to free trade. However, I digress.

Let us be clear that recessions in British agriculture are long lasting. That which started with the opening up of the American middle west in the 1860s lasted until the First World War. The price of wheat fell during that period from £15 per ton to £5 per ton and remained there until the First World War, when it returned to £15 per ton. There was a decade of depression in the 1930s. The price of wheat, which is a good indicator, was back at £5 per ton for the whole of that period. I emphasise that today's price of £70 per ton, adjusted for inflation, would have been only £2 in the 1930s. If one assumes a tripling of productivity—yield—that only puts it at £6. I think we should assume that there could well be another five years of low or further falling agricultural incomes. By that time many farmers will have gone out of business and far fewer people will be employed in agriculture.

Already the number is down from over 750,000 in 1948, some 50 years ago, to just over 300,000 now. Before anybody thinks that that is a remarkable figure, we should remember that in 1948 there were around the same number of people employed in this country in coal-mining—750,000—and there are now substantially under 20,000. This is all part of the process known as "creative destruction", which is the American phrase for industrial restructuring upon which world prosperity over the coming century will depend.

I turn to the substance of our report; that is the scientific part. Let us consider some of the specific nonfood crops which we investigated. I refer, for example, to the famous short rotation coppice, grown to burn in order to generate electricity. Like many of the renewable resources which it is claimed are needed to produce energy, this is to a large extent political tokenism. It is to some extent dependent upon the price of oil, which is anyone's guess. However, just as the price of under 10 dollars per barrel at the end of 1998 was an obvious nonsense, I find it hard to believe that the present price of 27 dollars per barrel will be sustainable for that long.

It is interesting to note how that happened, and perhaps your Lordships will indulge me for a few seconds. My view is that the Americans realised the huge problems which Russia was suffering, and that any IMF money almost went out of the airport before it reached Moscow. They realised that if they could increase the cashflow of Russia by increasing the price of oil, that would possibly solve what could be a serious political problem. The White House gave a nod and a wink to the oil companies to get into bed with OPEC. I do not know how long that will last but it is doing some good, so maybe it should continue for a while.

The present economics of short rotation coppice are unattractive, even with the present price of agricultural products. It also requires a 15-year commitment of land. I would certainly hesitate to do that with any of my own land. To make a meaningful contribution in terms of energy, a huge agricultural area will be needed. As our report shows, over 300,000 acres would be needed to produce 750MW of electricity. That is over a third of the entire area of my own county of Suffolk.

The real future for non-food crops is not in their importance to farming but to industry; to raising levels of technology; and to humanity. I refer, in particular, to the pharmaceutical industry and other parts of the chemical industry. In that respect, I echo the comments of the noble Lord, Lord Taverne. For centuries, plant breeding has been a form of genetic modification. I hope that what he said may do a little to counter the totally pernicious propaganda on the other side.

It is for that reason that it was appropriate that this study should have been made by the Science and Technology Select Committee, and that is why I share the disappointment of my noble friend Lady Hogg. The Government have not accepted our advice that this should be guided from the Government's point of view by the Minister for Science. I hope that perhaps the noble Lord, Lord Carter, will take away the thought that that point is at least worth reconsideration.

As regards MAFF, compared to the days when it was led by Sir Michael Franklin, it is a pretty poor department. However, it will have a new permanent secretary, so maybe things will improve. I hope that our report has at least put on record the scientific importance of non-food crops and that we focus the attention of the Government on the great priority of ensuring that in these areas of high technology, particularly bio-chemistry, Britain remains in its leading world position.

11.46 a.m.

Lord Williamson of Horton

My Lords, I join with others in congratulating the noble Baroness, Lady Hogg, on her excellent chairmanship of the subcommittee for this inquiry into non-food crops.

There were moments when her belief in sound economic principles was slightly tested as we examined the agricultural policy. None the less, she led the Committee to a report which I believe will be of value in the medium term not just to Government, but to research, industry and those with agricultural interests.

That is shown by the largely positive response from the Government to the report of the Select Committee. I thank the noble Lord, Lord Carter, for the document we received this week. In particular, I am glad that the Government recognise that non-food crops, other than energy crops, also need encouragement in suitable ways. Like other members of the Committee, I believe that the long-term potential of some of the crops has still to be unlocked. I am glad that the Government have responded to our request for greater co-ordination.

The Government have proposed a joint government/ industry forum which, as has been said, does not match the point that we principally made that we look for a ministerial champion. In that respect, the noble Lord, Lord Carter, is behaving like a knight; that is to say, on the chess board he moves forward one pace but also moves sideways one pace.

I am glad, too, that the Government have accepted that there is potential further to raise the profile of non-food crops. It is a feature of the report of the Select Committee that, although it recommends greater co-ordination, both at national and European Union level, it is also realistic in indicating the wide range of crops and uses with which we are dealing. There may even be plants here which the noble Baroness, Lady Strange, might not recognise!

The report sets out the very different considerations which apply in particular to energy crops, industrial oils, starches, fibres and speciality chemicals. The message is "co-ordination, yes; but a single solution for all non-food crops, a single suit to fit all sizes, no".

I draw attention to four points. First, it is not likely to be the best course to start from the standpoint of land use. That is the temptation of people in agriculture. However, the committee resisted that. Even on the most optimistic assumptions, the total area devoted to non-food crops is bound to remain small in the future. It is now perhaps at maximum 5 per cent of the arable land. The arable land accounts only for one-third of the land in agricultural use in the United Kingdom. I believe that we, in the subcommittee and in the report of the Select Committee, took the right course in concentrating on the actual and potential uses of the many non-food crops; the extent to which research and development could improve the performance; the suitability of crops for their markets, and on barriers to the exploitation of existing and developing technologies.

Your Lordships will note that the sub-committee met a number of true enthusiasts for the future of the non-food crops that they were researching, using on a pilot scale or using commercially. Bravo for the enthusiasts! But even the sober report from the Parliamentary Office of Science and Technology in 1995, which was updated in 1999, notes that interest in non-food crops has reawakened and their potential as raw materials for industry as energy sources and for many other uses is being re-evaluated in several countries.

In Parliament and in government we have a duty to ensure that the new developments are properly assessed alongside other priorities in the support for research programmes, particularly in the widening application of biotechnology, and that they do not run up against artificial barriers or indifference. I welcome the Government's response on that point.

Barriers do exist. For example, there are rules on set-aside land which are extraordinarily complicated and they deter not only farmers but also processors. The National Farmers Union referred to that in the documents it distributed. It is almost certain that the current value of the non-food crop sector does not reflect at this time the economic contribution or the potential scientific and environmental contribution which they can make.

Secondly, we have to act within the framework of government policy, particularly in the two areas of renewable energy and waste disposal. For renewable energy the Government's target is 5 per cent of electricity from this source by 2003 and 10 per cent by 2010—a tall order in my view. But in looking at the contribution from projects such as the ARBRE project, we do not know how much of that electricity will come from other renewable energy sources such as solar power, wind and water. So we are slightly in the dark. In any event, in the use of short rotation coppice there are a number of what I would describe as "brave" assumptions about the extent to which yields can be raised, disease, pest damage and so forth.

Project ARBRE will work, but the cost of extending short rotation coppice to 125,000 hectares (the noble Lord, Lord Marlesford, quoted acres but I am very up-to-date) and around 20 to 25 new power plants at a subsidy within the range—it is a bit terrifying—of £410 million to £520 million over a 25-year period seems to be neither realistic nor economic.

Similarly, on the packaging side, the Government have specific targets and there are three approaches to the waste mountain problem; that is to say, the three Rs—reduction, re-use and recycling. The Select Committee was impressed by the way in which environmentally-friendly regulation in some other countries can open up new markets for products from non-food crops. We have to bear in mind that the public perception of a greater use of biodegradable materials in packaging is more and more favourable and the Select Committee urged the Government to raise the benefits of biodegradable packaging in the hierarchy of objectives.

Thirdly, we have to recognise that the non-food crops are affected by fall-out from the agricultural policy. The substantial reductions which have been made in market support—for example, cereals—under the agricultural policy are bound to affect some nonfood crops such as the high erucic acid rapeseed, to which reference has been made, and linseed which, to coin a phrase, compete for subsidy with the major cereal crops. That is not perhaps healthy, but that is the way it is. Member states have taken their decisions, less radical than the European Commission proposed, and we are to have a standardised area payment for cereals, oilseeds, linseed and set-aside with the continuation of set-aside. That means less public money for oilseed and linseed, but creates a situation in which perhaps the market forces will have more force. All the crops, with a single area payment, will compete for the use of land on the basis of the margin between their costs and what they can obtain from the market.

Finally, I come to the point which for me is the most significant, and for many others in the committee; that is, the importance of encouraging innovation and the development of new technologies, in particular feedstock, speciality chemicals and the new medical and pharmaceutical uses. Although "roofless factory" sounds a bit of a catchphrase, it may be nearer reality than we think. Plants already produce around 100,000 chemicals and the potential of applied biotechnology, perhaps allied to conventional plant breeding, for the production of renewable sources of industrial raw materials and particularly for medical and pharmaceutical use, is likely to be extremely important. After all, the first human clinical trials for vaccines from plants have already taken place.

I have only referred to a few points, but in its entirety this report and the Government's response is evidence once again of the real value of the work of the Select Committees of this House.

11.55 a.m.

Lord Soulsby of Swaffham Prior

My Lords, I, too, express my thanks, first, to the Select Committee for identifying this topic for study and, secondly, to my noble friend Lady Hogg for her able—indeed, superb—chairmanship of the sub-committee. I am particularly thankful as I for one was not fully aware at the outset of the potential for non-food crops. I read the 1991 report of the European Community on non-food uses of agricultural products, but that report did not touch in any significant way on the high-value, low-volume niche products which I wish to deal with today and which have a strong and good future economically and scientifically. Those products are subject to potential conditions such as co-ordination of various departments within this country and Europe to allow good progress both in science and agriculture.

Some non-food crops have been part of agriculture for hundreds of years; for example, thatch, oil for soap, hemp for ropes and sacking, and so forth. Many have been replaced by products of fossil fuels, and those that remain constitute less than 5 per cent of the 6.3 million hectares of arable land. Most are grown on set-aside land. I believe set-aside to be an amazing abuse of our beautiful countryside and feel strongly when I see the land not used for its proper purposes. Nevertheless, I suppose every cloud has its silver lining and that has led to the greater interest in the potential for non-food crops, niche markets and high-value, low-volume products such as pharmaceuticals, cosmetics, fragrances, oils and fibres.

Plants, like animals, are capable of synthesising complex biological molecules from simple elements. They do it in a much more efficient and effective manner than we can do it in chemical factories. They are cell factories compared with the chemical factories which require high energy inputs of fossil fuels, often associated with pollution of the environment, in achieving the end product. There are some outstanding examples of using plants to manufacture complex biological molecules—plants either bred for that purpose as a natural part of plant breeding or plants that are genetically modified to produce scarce molecules.

For example, as has been mentioned by the noble Lord, Lord Williamson, vaccines requiring the insertion of part of a pathogenic genome into a plant have produced some amazing results in vaccines. I give just one example of where that is leading, this being the production of a vaccine for rabies in India by inserting the rabies genome into spinach. Spinach is grown, eaten and forms part of an oral vaccine for humans in a similar manner to the oral vaccine for rabies in foxes. There are some 25,000 human deaths from rabies per year in India and there is little hope of vaccinating the whole population to prevent rabies by the normal use of the diploid cell vaccine. However, the approach I have mentioned—it is still in the developmental stage—offers one solution. There are other examples that one could mention. They require genetic modification of the organism and are effective approaches for the future.

While I am mentioning the potential for medicinal products, biotechnology and genetic modification are also applicable to industrial products. For example, vegetable-based oils have a role in the manufacture of polymers. It may well be possible to produce polymers direct from genetically modified plants, opening up the possibility of a wide range of other products that are applicable not only to non-food crops but to food crops too which would prevent damage when harvesting, when in storage and so on.

There is a wide variety of candidate plants for investigation but only a small proportion has been investigated in detail for the potential to produce these niche products. This requires intensive scientific research and development which will include studies of genetically modified organisms. It is particularly encouraging to hear the noble Lord, Lord Taverne, mention the conclusions of the Edinburgh conference. Possibly, at long last, we are getting some degree of common sense on the subject of genetically modified organisms.

The support for GM organisms has been identified by our committee. I believe that there must be a robust response on the part of the Government for such work. A noticeable aspect our inquiry identified was the lack of a co-ordinated approach across the relevant government departments to enable the full potential of non-food crops to be realised. The report identifies the need for an interdisciplinary committee, preferably led by the Office of Science and Technology and the Minister for Science.

On a visit to Brussels it was obvious to me at least—and I think to others—that non-food agriculture is by no means a priority area. The Directorate-General of Agriculture concentrates on food production, naturally, but other directorates-general concentrate on their specific areas too. There seems little evidence of enthusiasm for a co-ordinated approach on nonfoods. As we recommend in the report, the European Union 6th Framework Programme would seem to be an appropriate place for non-food research. Not only would this enhance the work on non-food crops but it would also have important overtures for plant breeding and genetic work in general.

The more one reads the report and the associated evidence, the more enthusiastic one becomes about the non-food crop area. I believe that there is enormous potential to be realised in this field. But at present it is bound, unfortunately, by regulatory constraints, many of which could be swept away by an effective interdepartmental approach. The Government's response to the report is encouraging on the whole with respect to non-food crops. It states that they have recently announced plans to provide substantial support for energy crops. I believe that it is also urgent to give similar encouragement to non-energy, non-food crops. In "looking positively" at this matter—as the Government response states—not only will the situation be kept under study but the Government should also translate this into early action, both to help alleviate what I believe is the parlous state of British agriculture but also in the longer term to enable the United Kingdom to assume a leadership role in the science and development of this sector of agriculture.

12.6 p.m.

Lord Porter of Luddenham

My Lords, we are grateful to the noble Baroness. Lady Hogg, for her clear presentation of the report. It was a privilege to serve on the committee which she chaired.

The report is concerned with what many people might regard as being of rather minor importance, since non-food crops, as defined, occupy less than 5 per cent of arable land—as the noble Lord, Lord Williamson, pointed out—which itself occupies only a third of the total agricultural area. Food crops are preeminent, as they always have been, but the importance of non-food crops from agriculture has fallen dramatically compared with fossil organic supplies.

In the mid-19th century, nearly all the organic materials in use came from agricultural sources, animal as well as plant. Apart from food, these included not only fibres, leather and fur for clothing and domestic fabrics, paper and board for construction, but also the fuels for lighting, domestic heating and industry.

By the Second World War most of these had been replaced by mineral oil and gas. These fossil hydrocarbons not only became our main source of energy but, in the hands of the chemists and others, they became plastics, oils, new fibres, paints and other substitutes for non-food crops that were previously harvested from the land.

I apologise for recalling this well-known bit of not very ancient history, since most of us here lived through part of this revolution. But the rapid changes that have occurred in the past century will be reversed. The only certain prediction that one can make is that fossil hydrocarbons are a diminishing resource which cannot be replaced, while non-food crops provide a renewable source of organic feedstocks as long as the sun shines. Of course none of us knows, or is even bold enough to predict, when this will happen, but it will happen.

The problem is, of course, that other things have changed in the past century which remove any hope of a return to the old days. The organic materials, whether fossil or renewable non-food crops, are demanded by a greatly increased population. The supply of these non-food crops is far below what is needed if they are to substitute for fossil materials. Paradoxically, food crops, which a few decades ago were seen as the major limit to growth, are now rather plentiful, even for the increased population, thanks to the green revolution and other advances in agricultural science—though it must be noted that many of the improvements in plant yield also use fossil hydrocarbons and energy intensive fertilisers.

Nevertheless, we may ask ourselves whether scientific advances cannot provide a similar solution by increasing the efficiency of production of non-food crops. In particular one thinks of the rapidly developing advances made in this area by modification of the genome, which has already been referred to by several speakers. Plants can now be genetically modified to such an extent that almost any imaginable change will become possible once public fears of the unknown are assuaged. The noble Lord, Lord Taverne, referred to the potential power and working power of these genetic changes.

Several factors which are needed to expedite these changes are recommended in our report. I would like briefly to emphasise just three of them. First, the playing field where food crops and non-food crops compete must be levelled. Subsidies by the common agricultural policy were introduced in other days of food shortages and fears of approaching starvation which no longer exist. The problems of that kind which remain result from local poverty and unequal distribution rather than world shortages of agricultural products.

Secondly, the Government should implement research programmes which aim to improve the efficiency of growth of non-food crops, particularly by exploiting the new knowledge of the chemistry and genetics of photosynthesis. The noble Lord, Lord Soulsby, referred to the wonderful powers of plants as self-sufficient factories which can bring about these miraculous changes. Without such revolutionary developments, it is unlikely that non-food crops will be able to contribute to the major reductions in the consumption of fossil hydrocarbons called for by the international meetings held in Rio and Kyoto.

Thirdly, the lead from government on these matters needs to come from an inter-departmental and interdisciplinary committee with broad expertise, in consultation with industry and the scientific community led by the Minister for Science. Although the Government's response on that was encouraging in parts, it was rather disappointing as regards the reference to the Minister for Science.

None of us has the foresight to predict the direction or pace of these changes. We shall be wise to keep our options open while we develop the knowledge and skills that will be needed to survive and prosper in the new century.

12.13 p.m.

The Duke of Montrose

My Lords, I apologise for not having put my name on the list of speakers. I must also declare an interest as a farmer on the west coast of Scotland—an area where the application of pure economics is regarded as rather strange.

I found this a very useful and thorough report. I congratulate the noble Baroness, Lady Hogg, and her committee on all the work that they put in. It struck me that only the cultivation of Christmas trees had been missed out, but perhaps that is not a sufficiently large area of production to have merited much thought.

In paragraph 2.12 of the report the committee's attitude towards not providing subsidies to crops for industrial purposes makes sense only if one cannot find commodities for which there is a market. There is advantage in putting land into production for alternative products which have a market as that means that it does not produce products which are in surplus. Also, on the question of producing bio-fuels, that goes some way towards meeting our responsibilities to reducing CO2 emissions under the Kyoto agreement.

I wish to pursue a slightly different line from that of my noble friend Lord Marlesford as regards short rotation coppice. It is worth consideration. The committee has looked at its viability as a crop on land attracting set-aside payments in comparison with the gross margins that can be obtained from wheat.

As your Lordships will know, set aside payments are available only to sizeable cereal producers whose land qualifies from its historical use and listing. The anomaly in considering that issue is that there are grassland areas in the west which potentially could be more successful in growing short rotation coppice and where the concern expressed in the Note of the Parliamentary Office of Science and Technology of March 1999 about a shortage of water would be the least of anyone's concerns.

Current gross margins in these areas are far less than that for wheat. Therefore, it would be easier to produce a crop that was competitive. But the current policy is that there can be no subsidy. My thoughts in this area turned up one strange aspect of Agenda 2000, the European policy for agriculture. Whereas the Commission's recommendations originally said nothing, the policy put before the Council of Ministers in Berlin suddenly produced a ruling that the policy should prohibit any multi-annual payments on grassland.

That is something that I would like to be considered and addressed in looking at the revision of Agenda 2000, which must take place in the short term rather than the long term because of the lack of funds. That is precisely the sort of encouragement that might be needed if some of the more suitable areas for growing short rotation coppice were to be encouraged.

12.16 p.m.

Lord Winston

My Lords, I wish to speak very briefly in the gap. In my capacity as chairman of the Science and Technology Committee, I thank the subcommittee very much indeed for its excellent report and for the firm, wise and charming chairmanship of the noble Baroness, Lady Hogg. The report contains a number of things which are extremely important to British biotechnology. We have heard some of them this morning. This report is very welcome.

12.17 p.m.

Lord Razzall

My Lords, perhaps I may join the noble Lord, Lord Winston, and indeed almost every other speaker, in congratulating the noble Baroness and her committee on what I believe we all agree is an excellent report. That has been demonstrated both in the quality of the report itself and in the seriousness and quality of the speeches made by noble Lords this morning.

I begin by declaring an interest as the chairman of a United Kingdom company created for the purpose of developing end uses and new markets for non-food crops, concentrating in particular on the use of miscanthus, otherwise known as elephant grass, as a renewable energy source.

I do not know whether noble Lords have been struck over the past few days by the coverage of the crisis in Mozambique—the last of a number of weather crises which have occurred over the past few months—and the short-term nature of the solutions which have been put forward. We watch Mr Paxman and his colleagues cross-question Ministers as to why they are not doing more to get additional helicopters into the area. However, it is not facetious to say that no one I have heard commenting on the matter has ever asked what the Government are going to do as regards the long-term solution to such problems in implementing the report of the committee of the noble Baroness, Lady Hogg.

Few can doubt that a number of these weather disasters are occurring at least in part as a result of increasing global warming and the failure by governments throughout the world to reduce the emissions of greenhouse gases, particularly CO2.

As the report shows, government policy in this area has been clear for some time beginning in 1997 with the European White Paper which set the objective at 12 per cent of primary energy coming from renewable sources by the year 2010. The report of the DTI in March 1999 set a target of working towards renewable energy providing 10 per cent of electricity supplies by the year 2010. The Government believe that they are on target to achieve 5 per cent of electricity from renewables by 2003. I have my doubts about that, but that is the Government's belief. As the report makes clear, in their policies for CO2 reduction sustainability, the Government have already set policy objectives to which non-food crops could contribute—for example, as biomass for electricity generation.

So, in theory, the mechanisms are in place to implement the policy objectives the Government have set themselves over the past two years. I suppose that the policy objectives could be described—as they are in the report—as implementing the non-fossil fuel obligation, known colloquially as NFFO, under which NFFO licences are given to generating companies, which can then use renewable sources to supply energy to the grid. As your Lordships may be aware, a number of NFFO licences have been granted, but to date very few generating companies are implementing those licences and supplying electricity to the grid in that way. I believe that the report touches on a number of factors for why very little has happened.

As an aside, I understand the reservations of the noble Lord, Lord Marlesford, with his farming background, about the use of non-food crops for energy purposes. I would not suggest that non-food crops are the sole solution for renewable energy purposes. I suspect that he marginally overstates the case in regard to it being impossible for the farming community to use those sources for this purpose.

In considering these issues we should not be too United Kingdom insular. We are talking about the use of certain products in the United Kingdom but, if the report's recommendations were to be implemented, the United Kingdom could become a leader in creating this industry throughout the world; we would not be limited to efforts within the United Kingdom. The report touches on a number of structural reasons why these licences and renewable sources of energy are not being developed in the way that they could be.

Starting first with the farmers—as I am sure the noble Lord, Lord Marlesford, and, of course, the noble Lord, Lord Carter, would want me to as the report indicates, when farmers plan enterprises they base their decisions on the costs, on the returns from the market, on the subsidies available and on the regulatory constraints attached to such subsidies. Farmers are currently living in a world in which there is significant uncertainty with regard to the regulatory framework and the subsidies that will be available to them in relation to the growing of non-food crops.

Secondly, if the generating companies are to enter into contracts to supply renewable energy to the grid, they have to be certain that they will have a 10 to 15-year supply of material at a secure price. That problem is a mirror image of the problem facing farmers.

There are many reasons for the farmers' problem—certainly there are four. First, as the report indicates, the Agenda 2000 proposals for the further reform of the common agricultural policy seem likely to discriminate against non-food crops. Secondly, and related to that, the postponement of any significant reforms to the common agricultural policy to a date unspecified—but presumably in four or five years' time—would mean that such reforms would be in the middle of the period during which the farmers and generating companies will be committed to providing the renewable source of fuel.

Thirdly, tied in with that, as again indicated in the report, is the reduction in, and potential elimination of, the set-aside payments on which farmers in many of the areas for growing non-food crops will rely. The fourth point highlighted in the report is that the MAFF support programme is perhaps too narrowly focused. It is, as the report indicates, designed to maximise crops with a significant agricultural impact in terms of hectares, without necessarily looking at the wider impact of the farming problem.

Returning to my Mozambique example, we need to ask the Minister today whether he will give undertakings as to government action. Can he confirm, first, that when Her Majesty's Government participate in the re-negotiation of the common agricultural policy, the interests of non-food crops will be protected and that the Government will take that on board as a key negotiating objective? Secondly, can he confirm that future alterations to set-aside payments will not penalise the interests of non-food crops? Thirdly, and most particularly, will he take on board the very strong recommendation of the committee on page 30 of the report in regard to, first, the role of the Minister for Science as an identifiable champion of non-food crops; and, secondly, the creation of an interdepartmental committee under the auspices of the Office of Science and Technology? As your Lordships will know, and as the report indicates, this is a similar recommendation to the one which came from the European Communities Committee in its recent report on electricity from renewables. That recommendation was rejected by the Government; this is a variation on that recommendation. Is the Minister prepared to give that undertaking today?

This is not a dry or technical report. Your Lordships may agree that unless this Government, European governments and other governments throughout the world take a lead now in this area, there will be ever more tragedies on the scale of Mozambique in years to come.

12.27 p.m.

Baroness Byford

My Lords, I, too, wish to thank my noble friend Lady Hogg for the way in which she chaired the Select Committee. As she rightly acknowledged, there were contributions from many people with great expertise, but I suspect that she has slightly understated her own general knowledge and the important role that she played within the committee. I should like to record my sincere thanks to my noble friend and to the other committee members, including the three Lords she mentioned who are, unfortunately, no longer Members of your Lordships' House but who brought great expertise to the report.

It is strange that the noble Lord, Lord Razzall, should start his speech with a reference to Mozambique because two facts have particularly struck me this week: one is the importance of what we learn from the position in Mozambique—I shall return to that matter shortly—and the second is a point raised by his noble friend: the importance of the conference which is taking place in Edinburgh. I shall return also to that matter.

We are lucky that this country is an island, although we, too, are obviously affected by global warming. We shall not, thank heaven, be subjected to the kind of penalty that Mozambique is paying for being a continent nation—a nation that has been flooded by waters coming from neighbouring countries as well.

By the same token, we cannot be, and should not be, totally reliant on food from abroad. Nor, indeed, should we he isolated from the role that non-food crops play. We should arrange our affairs so that we can retain our ability to fend for ourselves in emergencies.

The report is a most helpful document. The range of crops and the variety of uses to which they can be put is most encouraging. As a lay person who comes from a farming family—although I do not practise farming any longer—I should declare an interest. The range of possibilities of these non-food crops surprised me. It appears that, if they are properly and thoughtfully introduced, they will do many things for us. They will, it is to be hoped, raise farm incomes; they will maintain the land in a cultivated state; they will preserve the basic husbandry skills that we must not lose if we are to retain our ability to look after ourselves in crises; they will help to maintain our environment and reduce the production of non-degradable waste. It is almost too good to be true.

I thank all members of the Select Committee for their work and for their balanced and prudent recommendations. The Government too are clearly impressed with their work as they seem prepared to accept many of their recommendations. However, I am disappointed that they have rejected what I consider to be some of the most important ones.

In an increasingly competitive world, with global marketing and ever larger numbers of multi-national companies fighting for ever larger increases in share, the Government should be careful not to cede too much control to these non-elected, non-democratic and non-governmental groups, which corner the means of production, patent their processes and dictate the outcomes. We have seen that particularly within the GM scenario, where control is in the hands of so few large companies.

In the production of non-food crops, we have an opportunity to ensure that producers, processors, retailers and consumers all benefit and that all the side effects for our countryside and environment are also beneficial. The committee recommends that a Minister for Science should take the lead on this interdepartmental committee and be responsible, for assessing and exploiting the potential of non-food crops, and in particular their potential to form the basis for new innovative industries". If the Minister has heard one thing today, it has certainly been the clarion call from all sides of the House that a Minister for Science should take the lead. I add my weight to that call. The Government have in effect said no, but I hope that their experience on the GM side will be reinforced by what has been said in so many well thought-out speeches today.

The committee wants to see government support for various types of research. The Government's response is that the current levels of sponsorship are enough. Some of the figures they quote for expenditure over a number of years do not even match the latest estimates of, for example, the cost of the Pinochet investigation—some £75 million. Therefore, we need to look at this issue in a wider context.

The report stresses and highlights the failure of the European Commission to introduce a targeted framework for the development of non-food crops within the 1999 CAP reform, a point to which other noble Lords have referred. The committee asks the Government to put this necessary system in place in advance of the CAP reforms. We note the United Kingdom's programmes to prepare for the phased introduction of new technologies, but the Government's response to that is to push for the completion of CAP reform. Will the Minister give some indication as to whether more money will be made available for non-food crops?

Many noble Lords have spoken with great knowledge of the potential of non-food crops. I recognise that many may be small but they do have high value output and may well come to occupy niche markets. It is important to take that point on board. We realise that non-food crops cannot compete with food crops but that does not mean we should not realise that there is a market, welcome it and help it along the way. Some noble Lords referred to the need to deregulate hemp. Perhaps the Minister will respond to that. The noble Lord, Lord Rea, referred to extending the set-aside area to help with non-food crops. Several noble Lords referred to the research side. Research in this field is extremely important. I wish to add my encouragement to the Government in that regard.

In a world where so many people are struggling for food and we are at certain stages producing too much food, it seems logical that we should give weight to the production of other crops. I consider non-food crops to be essential in that regard. I am struck by the committee's recommendation and request that the Government should raise the benefits of biodegradable packaging in their hierarchy of objectives. I was surprised that the committee felt it necessary to urge that as a course of action. Anyone who walks the countryside, as I do—it is true in the cities as well—will see our grass verges and hedges festooned with plastic carrier bags, torn polythene wrapping and sandwich boxes. Indeed, this week in my own lane I saw a breakfast cereal box dumped as well. The Government will know how important it is to spend money on looking at our packaging needs.

The debate is especially timely because the Government have produced a report on sustainable agriculture and a pilot set of indicators has come out today. Item 30, on page 52, looks at the planting of non-foods. Two points strike me on that page. The importance of non-food crops to sustainable development is stressed as they provide new commercial opportunities to farmers and help to support our rural economy. The item goes on to say: The extent of non-food crop production is largely dictated by the market and it is therefore difficult for the Government to set targets. The Government does support the long term development of new raw materials for industry and energy". I hope that the Minister will give this matter greater consideration and perhaps encourage cash support for these important non-food crops.

I conclude by thanking all who have helped to make the report possible. It was a very constructive report. I wish the committee great success in the future.

12.37 p.m.

Lord Carter

My Lords, I should like to congratulate the noble Baroness, Lady Hogg, and the Select Committee on Science and Technology on holding their inquiry into non-food crops and on bringing forward this debate today. It has been an outstanding debate and has demonstrated the range of expertise in your Lordships' House. At the outset, I should declare a previous interest. Before entering government, I was for 30 years a director of United Oilseeds, a farmers' co-operative responsible for marketing a substantial proportion of the national oilseed crop. That involved linseed, high erucic acid, rapeseed for industrial use and an involvement in biofuels. We sent two cars from Land's End to John o'Groats and back, fuelled entirely on rape oil.

Non-food crops hold out great potential and their significance is growing for a number of reasons. But left to the market alone, development is likely to be haphazard. It is therefore timely for us to take stock of this area and to consider what can be done to encourage development in a more coherent way. The committee has carried out a useful analysis of the state of the sector and made some valuable recommendations on which the Government hope to build.

As we all know, there is nothing new about non-food crops. The report explains that well, as indeed have a number of the speeches in the debate. Despite their undoubted potential, there is a chicken and egg situation with non-food crops. Farmers could grow them if that made economic sense, if they had the necessary expertise and if there was a market. Industry could use them if there were a reliable and competitive supply. Getting these factors lined up in a world where the players are already under great pressure is the key challenge for non-food crops.

It is clear that we have to think about the volume and the value of non-food crops. The committee report includes a helpful table at Box 1, listing many examples of the uses of non-food crops. Frankly, I must admit that some of the crops and their uses were new to me, as I expect they were to members of the committee.

Some are markets with substantial volume. These would include construction materials and textiles—using fibre crops as flax and hemp—or paints, plastics and lubricants, using oilseeds. Others are more niche applications, such as pharmaceuticals—referred to by the noble Lord, Lord Soulsby—and nutritional supplements, using crops such as borage or meadow foam. In between, there are industrial applications with moderate potential; for example, dyestuffs such as woad or resins and adhesives.

The question is: what support and on what scale should we give to particular crops? If the niche is small, over-production will drive down the prices and the advantage is lost. Some crops are supported for wider reasons. Energy crops contribute to government commitments on climate change and renewable energy. They also help farmers to diversify. There is no point attempting to do this on a small scale.

I suggest that the way forward for most industrial crops is to facilitate technological development rather than to stimulate production. Once things are technically feasible, the market can take them up. We expect the new Government/industry forum to advise us on how to do that—a subject to which I shall return later.

I should also add that it would be wrong to think of the development of non-food crops as merely a response to the present problems in farming. That point was picked up by the noble Lords, Lord Marlesford, Lord Williamson and Lord Razzall. Such crops have a proper economic and agronomic role in their own right, as the report clearly indicates.

Since the mid-1990s, the Government have been seeking to address this challenge. In MAFF, the alternative crops unit, now the Agri-Industrial Materials Section, was set up to encourage the development of alternative crops. MAFF's Central Science Laboratory in York, the Alternative Crops and Biotechnology Group, was set up to develop research consultancy on non-food products from existing and novel crops.

At that point in time, there was a great deal of interest in the problem of set-aside land, which was mentioned by a number of speakers, and a drive to help farmers find some positive things to do with it. The government negotiated in Brussels the right for farmers to grow non-food crops on set-aside, with the result that most such crops can be aided at broadly similar rates to those that are payable on food crops. Production of non-food crops in the UK, particularly oilseed rape for uses such as slip agents in plastic film, rapidly increased. Non-food oilseed crops are grown on around 10 per cent of set-aside land and can be grown also on maincrop land. There are almost 1,000 hectares of energy crops in the ground and other nonfood crops total around 300 hectares. That is to put the whole matter into perspective as regards the marginal use of such crops, as mentioned by the noble Lord, Lord Marlesford.

However, the whole area of the use of set-aside for non-food crops brought us up against one of the recurring constraints in EU policy. The Commission in Brussels jealously guards set-aside as a market management tool for the cereals market and accords other uses of it a low priority. The percentage of land involved is variable and there are strict rules to prevent abuse of that aid. All sectors concerned with non-food crops have complained that this bureaucratic system is no basis on which to build a new industry.

Moreover, important as the agricultural end is, it is clear that development needs to be driven by market opportunities. The Agri-Industrial Materials Section has convened a series of seminars and conferences to bring together the potential users, producers and scientists who could help develop the necessary expertise.

The Government have funded a significant programme of underpinning research and development, with MAFF spending around £1 million per annum since 1994. Research spend in Scotland is currently around £700,000 per annum. Programmes aim to improve the potential of new crops and their industrial applications. There is also a LINK programme, which takes forward the results of the strategic R&D and to which the Government have committed £4 million over five years.

In 1999, MAFF agreed to support the Centre for Novel Agricultural Products (CNAP), which is part of York University, with a £2.1 million grant for a plant genome research centre. That will enable us to understand the link between plant genes and the products they synthesise, and should open the way to the production of valuable new plant products. This work is not, however, targeted at genetic modification of crops for food uses.

A very important milestone on this road was the establishment in August 1995 of ACTIN, the Alternative Crops Technology Interaction Network. Recognising that new uses will not get off the ground unless the necessary technology is developed, ACTIN aims to bring together all the key players. These include interested businesses from the farming and industrial sectors, scientific and technological expertise from the research community, and the relevant government departments. The Government have supported ACTIN since its inception with pump-priming funding from BBSRC and DTI, and staff seconded from MAFF. ACTIN maintains a highly professional Internet database on companies and individuals. It has also organised an impressive series of conferences and seminars to promote interest in alternative crops.

Perhaps at this point I should pay tribute to the contribution made to the development of non-food crops by my good friend, Ben Gill. ACTIN was his brainchild, and he is still a very hands-on chairman, despite his heavy commitments as president of the NFU. He has done a huge amount to put alternative crops on the map, and we are all indebted to him.

At the European level the Interactive European Network on Industrial Crops and their Applications (IENICA) has been set up with support from the Commission. It is based at the MAFF Central Science Laboratory in York. This is an Internet database based on crops and markets, with information supplied by 14 member states. IENICA has also organised international conferences on the performance of natural fibres, speciality products from plants and industrial uses of vegetable oils. The Central Science Laboratory is bidding for funds to extend the scope of the IENICA database. This will be a useful development which the Government fully support.

We came to power with a number of manifesto commitments which are relevant to non-food crops. First, we made clear that the common agricultural policy had to be reformed to save money, to support the rural economy and to enhance the environment. Those objectives were very much in our mind when approaching the Commission's Agenda 2000 proposals for CAP reform. We pressed hard for a new approach towards support for non-food crops to take them away from reliance on set-aside and the link with the cereals market, and to transfer them into the domain of rural development, where their true significance in terms of rural employment and the environment could be recognised. It is a matter for regret that few other member states supported those calls. Nevertheless, an important new rural development regulation was agreed as part of the Agenda 2000 settlement, which recognises among its aims the promotion of non-food crops.

Our manifesto promised that we would also lead the fight against global warming through our target of a 20 per cent reduction in carbon dioxide emissions by the year 2010. It stated also that there would be a new and strong drive to develop renewable energy sources. In pursuance of those commitments, the Government accepted at Kyoto a target for a 12.5 per cent cut in UK emissions of greenhouse gases, and we have also adopted a domestic target that 10 per cent of UK electricity should be generated from renewable sources. Both those targets relate to the year 2010.

I turn now to energy crops. MAFF has been working closely with the DTI and DETR on the implementation of these commitments. It is clear that renewable energy can make an important contribution to greenhouse gas reductions if it is used instead of energy from fossil sources such as oil and gas. Experts calculate that the 10 per cent target for renewable electricity is unlikely to be met without a contribution from new sources, including offshore wind and energy crops.

An important aspect of our non-food crops policy has, therefore, been the encouragement of energy crops. These can not only contribute to climate change and renewable energy targets, but can also provide a useful new opportunity for farmers and lead to permanent new jobs in power generation in rural areas.

We have heard during the debate that some of the most promising crops for use in the UK are short-rotation coppice, willow or poplar trees which are harvested on a three-year cycle, and miscanthus, commonly known as elephant grass, which is harvested annually. MAFF has studied the economics of these crops, and confirmed that they involve a very high cost of establishment. They are also unfamiliar long-term crops and it is clear that farmers will not convert to them without encouragement. In the short term, we have arranged for the Forestry Commission to increase the planting grant available under the woodland grant scheme to get short-rotation coppice established in the region of Project ARBRE, the UK's first biomass power station in Yorkshire.

A report by consultants ECOTEC for the biodiesel association BABFO argues that previous research which the Government commissioned from ETSU under-estimated the CO2 benefits for the use of biodiesel instead of conventional and mineral diesel. The Government accept that biodiesel can be environmentally beneficial, particularly in niche applications such as inland waterways. My noble friend Lord Whitty, the Minister for Roads, met BABFO last month to discuss its analysis and agreed to keep the potential of biodiesel for cost-effective reductions in CO2 emissions under review. However, taxation on fuel is a matter for the Chancellor. We are aware that BABFO is in touch with the Treasury. The Government are committed to encouraging the development of environmentally friendly fuels but not at the expense of granting long-term subsidies. To some extent, the jury is still out on biofuel crops such as rape oil as a replacement for diesel, but if the technical and fiscal problems can be overcome they may have considerable potential.

Last December my right honourable friend the Minister of Agriculture announced that he planned to spend £30 million on the development of energy crops within the six-year lifetime of the English Rural Development Plan. A new energy crops scheme will be introduced this year, with payments available from 2001 onwards. This will include planting grants as well as measures such as support for producer groups which will help to reduce costs.

The Select Committee has rightly drawn attention to the importance of sectors other than energy crops and made proposals to encourage their development. We take this as a timely reminder of the need for a balanced programme of activity in non-food crops. We intend, subject to resources, to see what can be done also for those other sectors. Although the Rural Development Regulation refers to non-food crops in general, it really gives us a basis to support only the production of energy crops. That is a disappointment. We therefore need to work within the regimes which apply to other crops.

Other non-food crops such as oilseeds for lubricants, speciality chemicals and cereals or proteins for starch production receive support similar to that enjoyed by food crops under the Arable Area Payments Scheme. Further CAP reform is expected in this sector, but there is no reason to believe that those crops will receive any less favourable treatment than food crops if any changes are made.

The Government accept the broad thrust of the Select Committee's report that more needs to be done to encourage the development of non-food crops, particularly those other than energy crops. In its report the committee drew attention to several areas of need. First, it indicated that there was a need for better co-ordination between government departments and suggested that the Minister for Science should chair a new interdepartmental committee to achieve that. The Government agree that co-ordination should be improved and that new arrangements are needed to ensure that the departments concerned, particularly MAFF, DTI, DETR and the devolved administrations, work together to maximise their effectiveness.

Another theme identified by the committee which is relevant here is the need for the activity to be market-led. In the Government's view the best way to address both issues is for a new government/industry forum to be set up with full involvement by the user community. In particular, the body should to be chaired by a senior industrialist from one of the user sectors to ensure that all the activity is properly market-focused. The job of the new forum would be: to keep the development of non-food crops under regular review; to look ahead for new areas of opportunity; to identify priorities for research; and to advise on ways in which government policy can contribute to a positive outcome. We intend to consult interested parties on the setting up of such a forum and, if the response is positive, to bring it into existence later this year.

We believe that in this work the lead should continue to lie with MAFF. While the science input is important, the availability of non-food crops will continue to be determined by agricultural factors. The crops also have important contributions to make to rural development potential, which is an argument for responsibility to remain in the agricultural/rural domain. As we see it, this is not an area where government can take sole responsibility. We are keen to play a facilitating role, but the activity must make commercial sense. We envisage, therefore, convening and servicing the new forum, but the use which is made of it will depend largely on inputs from industry.

I assure the House that the Government take this proposal very seriously. We want the industry to be involved precisely because it is the users who should drive the production of non-food crops. While the scientific input is crucial, there is, or should be, a close symbiotic relationship between demand and science. There is no question of this subject being kicked into the long grass; nor do we want it to be just a talking shop. We need to reflect on the helpful comments which have been made in this debate today and then put proposals out to consultation with key interests, who are essentially industrial users, agricultural producers and the research community. There is no point in going ahead unless the idea has the broad support of those interests. If it does, we shall take steps to find a chairman with suitable industry credentials and get the show up and running. We shall expect it to make a difference and to make a mark on the activities of both the Government and the industry in this field.

I believe that it is wrong to read too much into the proposal that there should be an industrialist, not the Minister for Science, as chairman. The DTI and OST will be fully involved in the new government/industry forum. We envisage that the chairman will come from the user sector and, therefore, emphasis will be very much on DTI interests. The best way to engage the industry potential is to ensure that the Minister for Science takes a personal interest, as will Ministers from MAFF and other departments.

In the short time left, perhaps I may reply to some of the matters raised in the debate. If I do not manage to cover all the points, I shall, as always, write to noble Lords. I start with one very important correction. The noble Lord, Lord Williamson, said that I was like a knight in chess, moving one step forward and one step to the side. Perhaps the noble Lord should be aware that in chess a knight moves one square to the side and two steps forward. As Chief Whip often I feel more like a humble pawn than a knight!

The noble Lord, Lord Razzall, asked whether the Government would keep in mind non-food crops when the CAP and set-aside were renegotiated. Yes. The move towards rural development is an important principle, and next time round we shall continue that process and ensure that future changes to the CAP do not disadvantage non-food crops.

The noble Lord, Lord Taverne, said that the benefits of biotechnology were not sufficiently appreciated. We do not believe that that is so. The Government recognise that biotechnology can create great potential benefits, but there are public concerns which cannot be ignored. Biotechnology has a vital part to play in the development of non-food crops, as a number of noble Lords have pointed out. The Prime Minister has made it clear that the policy has not changed. We have always placed human health and protection of the environment at the top of our priorities, and will continue to do so.

I was asked by the noble Lord, Lord Soulsby of Swaffham Prior, whether the EU's 6th Framework Programme for R&D should give priority to non-food crops. Negotiations on that framework have recently begun. We shall seek to ensure that its structure coherently reflects the policy of EU member states. So far as concerns the UK, non-food crops are certainly one of those activities which will need to be considered in the negotiations.

The noble Duke, the Duke of Montrose, pointed out that no subsidy was paid for short rotation coppice planted on grassland. That is quite correct. However, some western regions are suitable for SRC. We have looked closely at support for grassland. The current powers under the Rural Development Regulation will enable us to give aid for grassland and proposals will be issued very shortly.

The noble Baroness, Lady Byford, suggested that hemp should be deregulated. We recognise that hemp is a useful non-food crop, but the growing of it is governed, as always, by the CAP regime. Complete deregulation is not realistic, but our aim is to ensure that a viable industry is able to continue in the UK.

This has been an outstanding debate. I hope I have demonstrated that the Government take the subject of non-food crops seriously and welcome the contribution of the noble Baroness, Lady Hogg, the Select Committee and your Lordships today. We are at an exciting juncture. There is ever-increasing interest on the part of consumers in the composition and manufacture of the products that they buy. Sustainability is a theme from which everyone stands to gain. Non-food crops are ideally placed to take off in the new environment. The Government accept that more needs to be done, and I have indicated the steps that we intend to take. Equally, there is more for the industry to do. I very much hope that the forum that we propose to establish will act as a catalyst for activity in both areas and that non-food crops will continue to develop as a result.

I conclude as I opened by thanking the noble Baroness, Lady Hogg, and her Select Committee for producing a comprehensive and constructive report and stimulating a most useful debate.

Baroness Hogg

My Lords, the speeches today have illustrated the range of expertise available to the committee—agricultural, international, medical and scientific. I am most grateful to the noble Lord, Lord Taverne, for his contribution. I only wish that he had been part of the committee. I thank my noble friend Lady Byford for her thoughtful and detailed contribution.

I perhaps owe an apology to my noble friend the Duke of Montrose for an omission on my part. I should have drawn your Lordships' attention to the introduction to the report where, not without difficulty, we define the remit of the inquiry. We excluded all forestry. Because it is the scientific committee we focused on the growing of short-term crops which would provide the raw material for new industrial processes. No insult to Christmas trees was intended. All forestry was excluded along with daffodils and golf courses.

I thank the noble Lord, Lord Carter, for his detailed reply, taking carefully into account all the points made in the debate. Like other speakers, I remain disappointed about the involvement of a Minister for Science. I do not see any incompatibility between a forum chaired by a senior industrialist and the Minister for Science adopting the role of the champion within Whitehall. However, that should not lead MAFF to believe that I am not extremely grateful for the care, courtesy, detail and encouragement in its response.

When our excellent clerk, Andrew Makower, briefed me for the debate, he hinted delicately that at this hour your Lordships' minds might be moving from non-food crops to perhaps the other kind. I conclude by commending the Motion.

On Question, Motion agreed to.