Several
hon. Members
rose—
The
Chairman: Order. Given that so many hon. Members want to
ask questions, I propose, under the provisions of Standing Order No.
119(7), to extend the time for questions to 6 pm. The debate will still
end at 7 pm at the latest.
Kelvin
Hopkins: I have not got many more questions—perhaps
this will be the
last. Another
aspect of the CAP, which has not been touched on, is the fact that as
well as having a tariff on basic foodstuffs, there are restrictions on
processing food in developing countries because they are higher value
added and the European Union wants to retain relatively high value
added processing, rather than allow it to be developed in the poorer
countries. Will my right hon. Friend pursue that in her new post and
look to find ways of permitting poorer countries to do more food
processing and thus develop their economies and raise their living
standards?
Jane
Kennedy: I will undertake to do that, and I look forward
to discussing such issues with my hon. Friend in the coming weeks and
months. It is right that we press the EU to make the necessary reforms
to the CAP to remove the distortions to the global food trade that he
described.
Tim
Farron: I am sure that the Minister is as delighted as I
am that you have extended the time available for questions,
Mr. Chope. The upside is that the more I say now, the less I
will say in the main debate—I
promise. On
the health check and food prices, in the past few years, we have seen a
reduction in the number of people in farming and the capacity to
produce food in this country, particularly in the dairy sector, but in
others, too. We can compare that situation with the WTO figures that
predict a 50 per cent. increase in the world’s population by
2050 and a 100 per cent. increase in demand for food over the same
period. Will the Minister reflect on those two things? Does she agree
that, when it comes to the health check, we should ensure that we are
aware of the need to have sufficient food production capacity in this
country?
Jane
Kennedy: I am happy to reflect on that—I could do
so for half an hour. I have not yet looked in sufficient detail at the
self-sufficiency argument, but it is interesting. I genuinely believe
that the UK agricultural industry is well placed to take advantage of
the reforms that we are proposing for the CAP. If we can secure those
reforms—we all believe that they should be achieved—the
UK
agricultural industry will grow, strengthen its position, and continue
to be a significant exporter of high-quality arable and meat produce. I
genuine believe that, but we need to ensure that we secure the correct
reforms.
In
the 1980s, we grew more of our own food in the UK than at any other
time in our history, including during the second world war. However,
that was because the CAP was subsidising food production, and it did
not necessarily reflect a healthy agricultural industry. Therefore,
going forward, we need to engage in serious debate on the subject.
Protectionism is not the answer. We need to persuade our partners in
the EU that that position is the way forward, and I hope to bring my
energies to doing
so.
Mr.
Jack: A number of the new member states have their farm
payments covered by the so-called single area payment scheme, the
operation of which the Commission proposes to extend until 2013.
However, a number of those new member states have also felt a sense of
resentment that they are not getting the same kind of financial deal
that established member states get. Will the Minister give us some
indication of how the politics of that debate are going? Does she feel
that some of the newer member states might seek to find some way to
increase payments under their system, the price of which could be
agreement to the overall reform
package?
Jane
Kennedy: That is not a question to which I can give a
simple answer. I believe that we have yet to achieve a level playing
field in the CAP. The health check and the Commission’s
objective—moving away from direct payments in the way that we
have discussed—are important if we are to move towards a level
playing field. The health check reduces the reliance on direct
payments, which bring about the distortions to which I alluded in my
last
answer. A
level playing field is important, and it is clear that the distribution
of funding under the CAP is inequitable. We believe it important that
UK farmers are not disadvantaged by farmers in other parts of the EU,
either because they are allowed to meet lower regulatory
standards—a point to which members of the Committee have already
alluded—particularly in relation to animal welfare, or because
they are allowed to benefit from measures that improve relative
competitiveness in their member state, but which are not available in
the UK. I am sure that we will return to that subject many times,
possibly even later in this afternoon’s
debate.
Mr.
Drew: The Government’s intention has always been to
encourage transparency in the operation of the payment mechanism. What
progress is being made on the single farm payment that would allow us
to see who receives what? Notwithstanding data protection—we do
not need to see the names—we need clarity on how the process
really works and some idea of where the money goes and what benefit it
has. Do the Government continue to push that argument within the EU,
and if not, why not? Perhaps we could do more in this place to ensure
that we got the greater transparency that would allow all of us in
Britain to know exactly what money is paid and to
whom.
Jane
Kennedy: I will need to reflect further on my hon.
Friend’s question on transparency. What I can tell him is that
there is some concern about direct payments
that are currently being made going to those who are not active farmers
under the single payments scheme. However, we have to accept that when
we decouple payments, the link with production is broken. Attempts that
might be made to reintroduce it, perhaps by seeking to exclude
non-agricultural activity from the definition of
“farmer”, would work against the interests of farmers, if
we are indeed seeking to encourage them to diversify their business
into other activities.
I
know that my hon. Friend was asking a broader question, but we have
some concerns about proposals that might be made to narrow the
definition. The Rural Payments Agency has published details of the CAP
payments and the EU now requires further details to be published, so
there is greater transparency, which he is asking for. Some information
covering rural development was published last month and the rest will
follow next year, so we are making progress on
that.
Mr.
Jack: Pursuant to the Minister’s last comments, can
she tell us whether the Commission has decided what the various levels
of disallowance will be for this country in connection with the recent
operation of the
RPA?
Jane
Kennedy: The RPA is a much-loved organisation—I
have worked with some during my time in government. The issue to which
the right hon. Gentleman refers has yet to be resolved and is being
actively considered. I look forward to working with the RPA and have
already met its leadership. The health check might well bring forward
challenges to the RPA, but it is in a better place than it was. The
fact that it is in that better place is very much down to the drive and
clear sense of direction that its management team and staff have
brought to bear, and the offer to those in receipt of payments now to
have a single caseworker will achieve a much better relationship with
farmers.
Mr.
Jack: Under the health check proposals, the Commission
seeks to abolish intervention for durum wheat, rice and pig meat. For
feed grain, intervention is to be set at zero. Recently, when questions
were asked about the security of our food supply, members of the public
were concerned that overall world stocks of wheat, for example, had
dropped to 35 days. Can the Minister give the Committee any information
about the state of stocks of any of those commodities, held either
publicly or privately within Europe, and will she provide an assessment
from the Department of the implications for stock holdings of those
important commodities with regard to the health check
proposals?
Jane
Kennedy: I am unable to find those figures at my
fingertips. If I find them in the briefing for the debate, I will share
them with the right hon. Gentleman, but I do not have them at this
moment.
Mr.
Drew: Pursuant to my earlier question, I am pleased to
hear that at long last we are going to try to define what a farmer
is—the Minister was moving in that direction. One of the daft
things about moving to area-based payments, although there are many
reasons why we had to do that, is the fact that we have
made
payments to people who, by any stretch of the imagination, do not farm
or provide anything for the landscape, but just happen to own a piece
of
land. With
that in mind, will we look again at whether there should be a de
minimis level below which we will not make payments at all? One problem
with the RPA is that it pays very small sums to great numbers of
people, many of whom, by my definition, are not
farmers.
Jane
Kennedy: Yes, as part of the health check we propose a 5
hectare de minimis level. That is sensible. Otherwise, we would end up
making very small payments—a horse paddock could qualify, for
example. The answer to my hon. Friend’s question is
yes. Motion
made, and Question
proposed, That
the Committee takes note of European Union Documents No. 9656/08 and
Addenda 1 and 2 — Draft Council Regulation establishing common
rules for direct support schemes for farmers under the Common
Agricultural Policy and establishing certain support schemes for
farmers, and Draft Council Regulation on modifications to the Common
Agricultural Policy by amending 320/2006, 1234/2007, 3/2008 and an
unnumbered document relating to the Common Market Organisation for
wine, and Draft Council Regulation 1698/2005 on support for rural
development by the European Agricultural Fund for Rural Development
(EAFRD), and Draft Council Decision amending Decision 2006/144/EC in
the Community strategic guidelines for rural development (programming
period 2007 to 2013) and European Union Document No. 9923/08,
Commission Communication — Tackling the challenge of rising food
prices — Directions for EU action; supports the Government's
negotiating aims that the 'Health Check' should cut further the trade
and market distorting nature of the CAP, reduce regulatory burdens,
give farmers greater control over their business decisions, and direct
more public spending towards delivery of targeted public benefits, and
considers that the separately proposed measures to tackle rising food
prices are adequate and proportionate to the scale of the
problem.—[Jane
Kennedy.] 5.42
pm
Mr.
Paice: I thank the Minister for the courteous way in which
she has answered—or tried to answer—some of our questions
and promised to come back to us on others. We all understand that this
is not the easiest of subjects to absorb in two short
weeks. I
start by reminding the Committee of my interests in the register,
although going by the Minister’s last remarks, those interests
may be short lived with regard to de minimis payments. As the hon.
Member for Westmorland and Lonsdale said, the debate takes place
against a background of increased concern about food security. Earlier,
the Minister referred to self-sufficiency. Those of us who believe that
food security is important do not advocate self-sufficiency—I
want to stress
that. Nobody
pretends that we can produce every egg, lamb, grain of wheat or
whatever in this country. We never have done that and it is clearly
impossible. Added to that, today’s consumer demands make it
impossible to produce all our requirements all year round. Trade, both
import and export, is an important part of agriculture and, as the
Minister and others have said, in assisting the developing world. I do
not know whether it was a slip of the tongue, but I hope that in
serious debates in the future, we do not get confused between food
security and self-sufficiency. We do not make that claim.
However,
Conservative Members feel strongly that domestic production is an
important part of food security. Just as the Government appear to be
concerned about
energy security and producing a significant amount of our energy in this
country, so too should we produce a substantial amount of our food.
Over the last decade, there has been a significant reduction in the
amount of food that we produce indigenously. In 1997, the figure was 82
per cent., but it is now down to 74 per cent. The Minister may say that
that figure went up from the previous year, and it did. There has been
a one-year increase, but that does not change the fairly dramatic trend
over the last decade. Livestock has been a particularly hard-hit
sector. In the UK, we have lost about 200,000 suckler cows, nearly
500,000 dairy cows and 5 million sheep. Many of those will have come
from the upland areas that have been commented
on. I
congratulate the Minister on reading the House of Lords debate. If it
does not get her to sleep at night, nothing will. However, it is a
worthwhile report, and I look forward to the report from the Commission
for Rural Communities, which, as has been said, will be some time
coming. The Royal Society of Edinburgh published a report about a month
ago—a good study of the uplands of Scotland. I accept that it is
about Scotland, but having read it, there is a tremendous amount of
read-across to the English uplands and it is worth
studying. The
reductions in UK production are worrying from the point of view of food
security, and whenever we consider the health check proposals we must
have that at the back of our mind. Can they in any way help to reverse
the reductions or might they accelerate the trend?
The objective
we seek from the health check—and, more importantly, from the
post-2012 CAP, because the health check will run for only a relatively
short period of four years once it comes into play—is a truly
common policy. That is why I wholly endorse the Minister’s
demand for decoupling across the board. I am glad that the Commission
is proposing that a number of other products come into the decoupled
regime, but I am sorry that that will take up until 2014, as she has
said. There
are still some oddities: we will continue to have national aid for
nuts. I will not open that point up to the sort of joke that might be
made, but it is true that there is a page in this document listing the
amount of money and the area to be given over in every member state to
aid for nuts. They are nutritious of course, but it defies belief that,
as a sector, nut producers should continue to receive
aid.
Kelvin
Hopkins: I am sympathetic to the hon. Gentleman’s
theme, which is to maximise domestic production of our own food. Does
he have any statistics to show how much of the imported food is food we
cannot produce ourselves—tropical fruit, for example—and
how much of the decline in our home production has come about because
we are becoming net importers of things that we can produce
ourselves?
Mr.
Paice: I am sorry, but I thought I had made it clear that
the figures I quoted were for indigenous food—food that can be
grown in this country. If the hon. Gentleman wishes to look across the
board at all food consumed in this country, I think that about 61 per
cent. of all food is grown in this country, but the decline from 82 to
74 per cent. is in food that can be produced here. It does not include
tropical fruit or things of that nature.
The second
objective of the health check—and therefore, I hope, of the
longer-term review—is stability in policy. In the ever
increasing number of years that I have been connected with the
agriculture industry, there have always been calls for reform, review
and abolition of agricultural policy. I remember it before we joined
the EU, but since we joined there has never been a period when
countless outside organisations and hon. Members have not been calling
for further change. That is no way for any long-term business to
proceed. If
anybody doubts that agriculture is long-term, they need only get out
there and see how long it takes to produce crops and livestock. A
long-term business cannot plan if it must constantly look round the
corner for the next reform that may or may not affect income. It does
not have to be a question whether there will be a payment for x or y;
it may be to do with import controls or a range of other things.
Businesses need
stability. As
the Minister also asserted, we need the policy not to be
trade-distorting, either internally or externally. That is why
Conservatives Members endorse the Government’s position on
moving support to pillar two, because it achieves the common policy
overall but allows more national discretion. Pillar two by its nature
is not trade-distorting and there is not, therefore, an issue of
anti-competitiveness across different countries in the EU. There are
probably huge differences between us about how pillar two money is
used, but the principle of shifting resources from pillar one to pillar
two is
right. The
first thing that the health check does is make some corrections, and in
my view those things are entirely right. The first issue is the minimum
threshold, which the Minister referred to. I must admit that I was
slightly surprised when she cited the figure of 5 hectares. It is not
necessarily that I think that is wrong, but the Commission’s
proposals are of course for €250 minimum, or 1 hectare. If the
Government are pressing for that 1 hectare to be increased
to 5 hectares, it is pretty dramatic.
I can tell
the Minister that the effect of that would be pretty dramatic because
by coincidence I happen to have with me details of the number of
agricultural holdings across every country in the EU. In Romania, for
example, there are nearly 3 million holdings of less than 2 hectares
and 4 million holdings of less than 5 hectares. All those
would be debarred from any receipt under her proposals. There are
figures of an equivalent kind for Poland, and even in this country she
would remove 107,000 holdings from the system. In the whole EU, with
the 5 hectare de minimis figure she would remove just over 10 million
out of 14 million holdings.
I suspect
that the Minister will have to think again about that, or she will have
a policy that applies only to approximately a third of current farmers
in the EU. However much abuse there may be—I certainly agree
that there should have been a de minimis figure from day one, and we
should not have extended the provision to pony paddocks and all the
other nonsense that there was at its introduction—I do not think
that a 5 hectare de minimis figure represents a realistic, achievable
policy. I
want to mention the second thing that is being put right in the health
check: more decoupling. I have made the point that that should be
applied across the board. I am concerned, however, that the health
check does not
really set out any long-term vision for post-2012. It seems
to be fiddling at the edges and making a few changes without really
beginning to set out a stall for
post-2012. Nowhere
is that more obvious than in the point about modulation. We have always
endorsed the concept of compulsory modulation. The Commission’s
proposals on increasing it by just 2 per cent. a year for the next four
years are unbelievably unambitious. I would much rather that we had a 5
per cent. increase, year in, year out, until a significant part of
pillar one, if not all of it, had shifted across. I know, being
realistic about EU negotiations, that that would not be achievable at
this stage.
I am grateful
for the Minister’s quite robust comments about the concept of
progressive modulation. I share those views. It is wrong for this
country because it is trade-distorting and socially distorting, and for
all the other reasons she gave, and it is wide open to accountants and
lawyers to abuse it, and simply to break up existing holdings to claim
more funding without the progressive
modulation. That
brings me to the changes to section 69, which is now sections 68 to
70—the national envelope concept. There are attractions to it.
For example, there are people even in this country who will say,
“It would allow us to continue to make a headage payment for
sheep in the uplands.” However, it is wide open to the
anti-competitiveness to which the Minister referred, because other
countries could take the whole 10 per cent. of their national envelope
and use it in ways that clearly distorted trade across the EU. I do not
believe that any recoupling in any guise should be
acceptable—not in the health check and certainly not beyond
2012. I hope that the Government set their face against the whole of
that national envelope, because it is not consistent with the
objectives that they have laid
out. I
am grateful that the Commission has at least used the words
“simplifying” and keeping land
in “good
agricultural and environmental
condition”. I
say that it has at least used the words, because we have already
discovered that there is a great deal of difference between objective
and
reality. I
have often cited “good agricultural and environmental
condition” as a clear example of where the Government have taken
gold-plating to A-level standard, if I can use the Minister’s
earlier comment. The “good agricultural and environmental
condition” requirements under current EU legislation occupy just
12 lines of text. The Government managed to turn that into three books,
which they sent to every farmer to tell them what they had to do to
keep their land in good agricultural and environmental
condition. This
time, there is a slight change. The Commission proposes simplification.
Annexe 3 of the proposals is just half a page of fairly succinct
statements. I hope that the Minister will go back to her officials and
say that when they publish whatever comes out of the health check, they
must follow the Commission’s brevity, rather than the verbosity
that we have had
previously. There
is a clear economic theory that says that Government or public
support—particularly such things as import controls and
production subsidies—forces up food prices unnecessarily, but as
politicians we have to be careful not to raise public expectations that
by getting
rid of such support we automatically create cheaper food. That is a
risky strategy, but over the past 20 years Ministers of both parties
have fallen into that trap. The Member who referred earlier to a sum of
£20 a week for the average family was doing the same thing,
because that £20 a week comes from work done before the 2003
mid-term review. That did not account for the huge decoupling. One can
argue that the CAP still costs the taxpayer a lot of money, but the
argument that it puts food prices up by such amounts is misplaced in
today’s
world. I
am particularly concerned that on page 9 of the papers before the
Committee it is suggested that removing market support in certain areas
could lead to a 7 to 9 per cent. price cut for consumers. I
have only to remind the Committee of what has happened to two staple
commodities in the past 18 months. The price of milling wheat, which
feeds through to the price of bread, rose from £70 or £80
a tonne two years ago to £200 a tonne in the early part of this
year. It has now fallen back to £145 a tonne. That has had
nothing whatever to do with the CAP. It is purely a question of supply
and demand on world markets, brought about by climatic conditions and
exacerbated by the diversion to
biofuels. We
have seen a huge increase in the price of bread. To be fair, not a lot
of it was due to increases in the price of wheat, although that was the
excuse used by the producers. However, the increase was not brought
about by anything to do with the Government or production support.
Exactly the same applies to the price of milk. Farm-gate prices have
gone up from about 16p or 17p a litre two years ago to about 28p a
litre, yet at the same time we have seen a cut in support for the dairy
sector. Again, it is all down to world supply and demand.
I hope that
the Minister will take this as a friendly suggestion: please do not
allow credibility to be given to the argument that getting rid of
support will bring down food prices, as many consumers will be
disappointed. I do not advocate support for production and we should
not use fallacious arguments for it. Nevertheless, food prices are
important. In
the long term, there is only one way to keep food prices affordable,
which is where I began: we need to ensure food security. We must
continue to produce a significant proportion of our own requirements
and, I hope, halt and reverse the decline to which I referred. If the
world is going to be short of food, it is not logical for this country
to set out on a policy that can mean only greater reliance on world
supply, not
less. Overall,
the health check proposals are a move in the right direction. I believe
that they are unambitious, given where I would like them to go and in
respect of laying out a post-2012 policy, but in principle they are
right. It would therefore be wrong not to welcome
them. 6.2
pm
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