Examination of Witnesses (Questions 162-179)
27 APRIL 2004
LORD WHITTY
AND MR
ANDREW LAWRENCE
Q162 Chairman: Ladies and gentlemen,
welcome to the final evidence session in the Committee's inquiry
into Agriculture and European Union Enlargement. Can I welcome
to the Committee Lord Whitty, Minister for food, farming and sustainable
energy, and Mr Andrew Lawrence who—it says, Mr Lawrence—is
described as "The Head of the European Union International
Agriculture Division". Does that mean that Defra has a European
Union Home Division?
Mr Lawrence: I think there should
be an "and" actually.
Chairman: That makes the world divided
into two distinct categories. That is much clearer. You are very
welcome and we will be very interested to hear what you have to
say. As you are aware, the Committee, as part of its preparations
for our inquiry, did visit Poland and Hungary and we have taken
evidence as well from those who, in a few days, will become full
members of the European Union. I would like to ask Mr Mitchell
if he would be kind enough to commence our questioning.
Q163 Mr Mitchell: I just wonder to what
extent British agriculture and food industries—take them
separately perhaps—should be welcoming enlargement? To what
extent should they be fearing it?
Lord Whitty: I think the balance
is clearly in favour of welcoming it, and the opportunities for
export, particularly as the incomes of the accession countries
grow, should be very substantial both for the processing sector
and for the higher value-added end of the agriculture sector.
So I think the balance is clearly positive. In practice, though,
the change will not be dramatic because, after all, both the tariffs
and the access and, to a large extent, the regulations have been
in place in preparation for accession, and the trade patterns
already reflect that. So we are not actually expecting any major,
immediate shift in trading patterns, but obviously in the medium
term there will be more trade either way, but very substantial
opportunities for UK companies.
Q164 Mr Mitchell: What are the main opportunities
for agriculture? I am told it is a comparatively poor market,
and they are big agricultural producers themselves.
Lord Whitty: It is a big market
and it is a market which, on the basis of all previous accessions
to the EU, will grow quite rapidly in terms of income and at a
stage in its prosperity which is likely to lead to higher quality
foods beginning to be brought in those areas. So I think, as I
say, both in the processed sector and in some more value-added
parts of agriculture we would expect, in the medium term, as the
prosperity of those countries grows, UK agriculture to benefit
from that.
Q165 Mr Mitchell: What do you see us
exporting then?
Lord Whitty: We are exporting
everything from prime British meat (hopefully, relatively shortly,
including beef) through to Scotch Whisky, and perhaps high value
but not necessarily seen as the luxury end of processed foods,
convenience foods and so forth. So I think there is quite a range
of things which that population will be getting into more than
they are currently or have been historically.
Q166 Mr Mitchell: What are the threats?
Lord Whitty: The threats, insofar
as they are there, are that as Central European agriculture adapts
there will be more, probably, at the lower value-added end of
some markets where the Polish, Hungarian and Czech, particularly,
production would be more competitive and there are some areas
where that is likely to happen faster than others—they are
already relatively competitive in the fruit area, for example—and
it either has a direct effect in that there is more fruit exported
to the UK or it has an indirect effect, which is more likely in
the immediate term, in that the exports will go to Germany and
Austria where we have some exports at the moment. I think there
might be a displacement effect, but I think that is relatively
limited because, of course, the whole point of a common market
is that trade moves around it and that, therefore, over time trade
will move, in probably not totally predictable ways, in both directions—or
all directions.
Q167 Mr Wiggin: I am glad that you mentioned
fruit because one of the concerns I have is that not just the
new members but, also, the existing members under the mid-term
review will be changing the way that they handle their subsidies
and single farm payments and all the various derivatives thereof.
Areas in my constituency have the traditional orchard; there are
a lot of them and they are going to be handled in a very different
way here than, perhaps, in France. One of the threats, perhaps,
from this enlargement is that we will perhaps not subsidise or
support farmers with traditional orchards whereas France may well.
Is that the case?
Lord Whitty: No, it is not the
case. It is a complicated issue but as described that is not the
case. The single farm payment, when interpreted in an area sense—in
the sense that we and Germany are doing it—would exclude
permanent crops, which includes orchards of all sorts.
Q168 Mr Wiggin: Does it include hops?
Lord Whitty: No, hops are part
of the general approach. It is only, really, orchards or trees
that are fully excluded. They have never previously been subsidised,
they will not be subsidised under our move to an area payment
system and nor will they be subsidised under the French sticking
with historic payments. So no existing EU orchard of the kind
you are talking about—well, of any kind—would in fact
be subsidised under the new system.
Q169 Mr Wiggin: Would it not be the case
that traditional orchards, because of the height of the trees,
had grazing under them and, therefore, they did receive a half-IACS?
Lord Whitty: There are some orchards,
but they would be a minority of these orchards, where there is
grazing and, therefore, they are already IACS registered. In those
cases there are some obscurities about how the Commission will
eventually interpret some of these regulations, but it seems to
us that if it is already IACS registered, whether it is in Britain
or in France, as grazing land and, therefore IACS registered,
then it will continue to be IACS registered and will be available
for the single farm payment moving to an area base. In other cases,
which is virtually all the commercial orchards and most of the
traditional orchards, then they would not be so included.
Q170 Mr Wiggin: I am very grateful for
that answer because when Alun Michael answered the adjournment
debate last week[7]he
led me to believe that orchards should go into the Countryside
Steward Scheme, which of course they cannot do now because that
is closed for this year, and so farmers are in this dilemma as
to whether or not they should grub up traditional orchards.
Lord Whitty: I think there is
some misapprehension amongst the orchard owners. Of the traditional
orchards to which you are referring, two-thirds—or over
60 per cent anyway—are already in the Stewardship scheme
and the Stewardship scheme has run for five or seven years. So
actually they are receiving a higher level of support than they
would be even at the back end of the movement to area payments.
So it would be a perverse decision for them to abandon that. Although
the current Countryside Stewardship Scheme is closed, in the sense
that it ends next year, as we review what we now call the higher-level
agri-environment schemes, there will be an orchard option in that,
which is still being developed in its totality, and again we would
expect most traditional orchards to qualify or be eligible for
that. It certainly would be a better return than they would get
even in eight years' time from grubbing up their orchards.
Q171 Mr Wiggin: I am always a bit nervous
when people say "in totality" but I think I can take
from that answer that people who have got traditional orchards
would be eligible for the Countryside Stewardship Scheme when
it reopens next year?
Lord Whitty: Yes. It will be called
something else but there will be an orchard version of it, yes.
Q172 Chairman: Can I bring you back to
the line of questioning that Mr Mitchell was following? What ministerial
visits have been paid to the new entrant countries in the last
12 or 24 months?
Lord Whitty: I will answer for
myself. I have visited at least twice in the period the Czech
Republic, Slovakia, Hungary, and Poland. I have also visited Estonia
once. I think that is it in my case. At least one of my colleagues
has been to all the Baltic States in that period. For some reason
they have not organised any visits to Malta and Cyprus, which
is regrettable, but, nevertheless, I think I have had very good
contact with my opposite numbers in the main Central European
states.
Q173 Chairman: Did any of those visits
involve you in the promotion of British food and farming products
and services?
Lord Whitty: Only in the very
general sense that there were a number of trading limitations
which, particularly, the Polish were still engaged in, which I
was advocating lifting and which has largely been successful and
would, in any case, have to be successful at the point of accession.
So I was not there for a trade fair or a promotion of British
food in that sense.
Q174 Chairman: Apart from getting to
know your political opposite numbers, which is a good thing, have
you worked out—and perhaps Mr Lawrence might like to comment
on this—a strategy to assist us to develop beneficial approaches
for the two-way trade to which you have referred earlier?
Lord Whitty: Not in the course
of my visits, but in terms of discussion with Food from Britain,
who is our major promoter of the food end of the export market,
I have discussed with them how they are approaching the Central
European markets.
Q175 Chairman: So you have discussed
with them but you have not, for example, put on a dedicated exhibition
in any of the aspirant countries to, if you like, act as a point
of focus for what we can do for them and what they might be able
to do for us, etc—in other words, to try and establish in
tangible form some better trading links than we have at the moment?
Lord Whitty: There have been visits
organised by Food from Britain to Poland, Hungary and the Czech
Republic to pave the way for that, but if you are saying has there
been a big British food exhibition in Prague then I think the
answer to that, certainly as far as government agencies are concerned,
is no.
Q176 Chairman: Has Food from Britain
received any additional funding from Defra, given the potential
that you identified in your earlier series of answers, to open
a few more doors, or are they having to fund what comes out of
your discussion from their existing budgets?
Lord Whitty: They have been given
extra money in total but there is not earmarked money for Central
Europe, no.
Q177 Chairman: There is not?
Lord Whitty: No.
Q178 Chairman: Let me ask you another
question: have you made any calculations as to the benefits to
the United Kingdom in the agriculture and food sense of the enlargement
of the CAP or possibly the deficits? Can you paint us an economic
picture as to what this actually means?
Lord Whitty: I guess the answer
to that is no, because clearly we have to explore the markets.
We are talking about working from a relatively low level of trade
either way between ourselves and the exporting countries, and
clearly we are encouraging British exporters to look more positively
at their opportunities.
Q179 Chairman: Let me pin you down a
bit. We visited Tesco's when we were in Hungary and Poland and
they are working very closely with the Polish and Hungarian producers
to develop their own sources of supply. Clearly, we have a lot
of expertise in our food industry which could assist in that process.
Have you had any discussions with Tesco's about what might be
done with the UK's food industry to help develop and sell our
equipment or our techniques to help them do that task of building
their food chain supply in Poland or Hungary, for example?
Lord Whitty: I have had discussions
with Tesco's, because they are, as you know, one of the big investors
in Central Europe, and that has touched on this area, but of course
we have not specifically gone through systematically the range
of products which Tesco's might get from Britain.
7 HC Deb, 20 April 2004, col 268 [Cider Apple Orchards]. Back
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