HL Deb 03 July 2001 vol 626 cc768-70

2.57 p.m.

Lord Renton of Mount Harry

asked Her Majesty's Government:

By what means they intend to restore profitability to British agriculture.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)

My Lords, these are difficult times for British agriculture and the Government are working hard to help the industry tackle the challenges that it faces. We have already introduced measures worth £1.35 billion. However, in addition to the difficult process of recovery from foot and mouth disease, further changes will be necessary in farming and the food chain and on the framework of the CAP to achieve a sustainable long-term future. The Government will shortly announce a policy commission on the future of food and farming.

Lord Renton of Mount Harry

My Lords, I remind your Lordships that I have an interest in this matter as chairman of the Sussex Downs Conservation Board. I thank the Minister for that reasonably frank Answer. What hope can he give us that his new department, which brings together the interests of agriculture and the environment in a specific way, will be more successful than the previous two departments in producing initiatives that are friendly to agriculture and the environment? Does he accept that, with the current crisis in the farming industry, there is a real need to sell to farmers the importance of biodiversity and environmental improvement as part of agriculture moving forward? Finally, I remind the Minister that the acronym of his new department is DEFRA, which in Welsh means "wake up"—a good motto for the new department.

Lord Whitty

My Lords, I have taken linguistic advice from my noble and learned friend the Leader of the House, who tells me that that is not an entirely correct transposition from the Welsh. However, for those who wish to think that it is, I believe that DEFRA will provide a clarion call for a change in our approach to rural development and the role of agriculture within that. The department places agriculture and food production within the totality of the food chain and horizontally within the whole remit of rural development. In addition, it places it clearly in the areas to which the noble Lord, Lord Renton, referred.

There is a requirement for agriculture to observe more broadly the needs of the environment and, in particular, the interests of biodiversity and, therefore, the future prosperity and beauty of our countryside. I believe that the creation of our department makes for a new departure in that respect.

Lord Tomlinson

My Lords, does my noble friend agree that a serious negative cost to British agriculture arises from this country remaining outside the European single currency? Will he therefore suggest to our mutual right honourable friend Mr Gordon Brown that he bears that seriously in mind when he makes his evaluation of the five economic tests for membership?

Lord Whitty

My Lords, I am sure that my right honourable friend the Chancellor is aware of the implications for agriculture, as he is of those relating to the rest of the British economy. He would not expect me to pronounce any new policy in relation to the euro here today. However, the decline of the euro against sterling has coincided with a drop in farm incomes. There has been a 20 per cent decline in the value of the euro against the pound over the period 1995–99, which has seen a serious squeeze on farm incomes. That is undoubtedly part of the issue. Nevertheless, the industry must address longer-term structural and world price issues, quite apart from our relationship with the euro and the CAP.

Lord Carlile of Berriew

My Lords, does the Minister agree that one method by which to restore business viability to many small farms would be the prompt payment of compensation in respect of foot and mouth disease? Can he offer farmers any good news about the acceleration of that process, which is taking many months and causing widespread frustration, particularly to small farmers in the hill areas of this country?

Lord Whitty

My Lords, I believe that there is a problem, as the noble Lord indicates. However, to say that the compensation process is taking many months is an exaggeration. We have a target for the payment of compensation, both for foot and mouth disease and for the welfare disposal scheme, of 21 days. In general, we have not met that 21-day target, but the average payment has been made between 30 and 40 days. That period is reducing and the process is now speeding up substantially as the number of cases diminishes. I recognise that there has been a problem. We are doing our best administratively to tackle it.

Lord Peston

My Lords, will my noble friend remind your Lordships of the scale of agricultural subsidy in this country? Noble Lords opposite used to believe in the free market but no longer do so. Why remotely should the Government be responsible for restoring the profitability of any one sector of the economy? In a modern market economy it is required that the sector itself should put its house in order and that it should not expect further handouts from governments.

Lord Whitty

My Lords, as ever, my noble friend Lord Peston has impeccable logic. However, the position of agriculture in our society and in our economy has been recognised by successive governments as being in some ways a special case. Clearly the profitability and marketability of the produce of agriculture is an important dimension. However, the Government must also take account of the role that agriculture plays in the rural economy as a whole and, indeed, in the rural landscape. It encourages, for example, visitors to the countryside and makes its contribution via tourism to the prosperity of the countryside more generally. Therefore, agriculture is perhaps in the long run no different from other industries, but the context in which it operates requires special government attention.

Earl Peel

My Lords, on that basis the long-term good of agriculture can be sorted out only if the short term is addressed, and in view of the fact that livestock markets are now closed, can the Minister tell the House how farmers are going to dispose of accumulated stock come this autumn? That will certainly have a direct effect on the cash flow and business interests of the farms in question. An animal welfare problem will also arise because, as grass begins to run out, how on earth will farmers feed their stock if they cannot use the livestock markets?

Lord Whitty

My Lords, I believe that most people within the agriculture sector—I am sure that this applies to the noble Earl—recognise that the priority must be to defeat the disease. Inevitably, that means that there will continue to be some severe restrictions on movement and on livestock markets through to the autumn. I accept that that will cause significant problems, in particular for sheep farmers but also for others, which will need to be addressed by a coherent strategy. Defeating the disease is the first priority, and ensuring that there are no welfare problems is the second. But, in the long run, we must move to a market situation. Therefore, whatever action we take in relation to the dispersal and disposal of stock in the autumn must also be conducive to a long-term, more balanced market situation. We have not reached that stage yet.