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Baroness Hayman: My Lords, I shall do my best to answer the questions raised by noble Lords. Perhaps I may reassure the noble Lord, Lord Hylton, that he does not need to invite me to Thetford Chase. I was walking there on Sunday, and enjoyed it very much. I do so as often as I can, when I can get away from here.

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I appreciate his point about conifers. We have not set our face against conifer planting. We have said that we would not expect to see any forests that were entirely conifer, but some broad-leaved trees in every forest. Conifers are clearly important for revenue earning in rural areas, as the noble Lord suggested.

I deal, first, with the issues raised by the noble Lord, Lord Hylton. I am grateful to him for having given notice of them. He raised the wider issue of the strength of sterling, and the impact that that has on many of our industries, and in particular imports. The order will not in any way resolve all the sector's financial difficulties. We are considering separately how to respond to the serious fall in timber prices. The order will tidy up a loose end making it clear that income generated by the Forestry Commission can be reinvested in the delivery of public benefits in the forests of England and Wales.

The noble Lord asked whether the order allows transfers to the Consolidated Fund. Yes, it will. Paragraph 5(8) of the schedule provides for such transfers if Ministers so direct, and similar provisions will be made for the Scottish Consolidated Fund, about which the noble Lord, Lord Mackay of Ardbrecknish, asked.

As regards there being too much pressure by the Treasury to generate funds, we believe that it is right that the Forestry Commission should be charged with ensuring that taxpayers receive a good return on their investment in public forests. It is also charged with delivering other benefits, such as encouraging wildlife and providing recreation for the public. We believe that it has the balance right; and, perhaps more importantly, independent auditors have just certified all the Forestry Commission's forests as complying with the highest standards of sustainable management. That feeds into the thinning issue, to which the noble Lord referred. It is standard silva cultural practice, designed not only to benefit from the important small roundwood market such as paper but also to ensure good quality mature trees in years to come. It is entirely proper that Forest Enterprise should continue with this practice. Indeed, it would be failing in its duty if it did not. I reiterate what the noble Lord was told. All our forests are certified as sustainably managed. That gives them a marketing advantage although, of course, that advantage takes place currently in the context of an international market which is in some ways disadvantaged.

Those were the main issues raised. The noble Lord, Lord Mackay of Ardbrecknish, asked whether payments into the Scottish Consolidated Fund mirrored provisions in the Forestry Act. With the noble Lord's agreement, I prefer to write to him on that point.

On the basis of those answers, and with thanks for its general welcome, I commend the order to the House.

On Question, Motion agreed to.

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Milk Development Council (Amendment) Order 2000

8.26 p.m.

Baroness Hayman rose to move, That the draft order laid before the House on 14th February be approved [11th Report from the Joint Committee].

The noble Baroness said: My Lords, the main purpose of the draft order is to permit the Milk Development Council, a non-departmental public body whose activities are wholly funded by a statutory levy on all milk sold by dairy farmers, to engage in the generic promotion of milk; that is, the marketing of milk to a wide audience without reference to its origin or brand.

Specifically the draft order does three things: it provides for the widening of the MDC's statutory remit to include generic promotion; it increases the maximum rate of statutory levy by 0.03p per litre to raise funds to carry this out; and it clarifies that the maximum rate of levy is exclusive of value added tax. The levy itself is subject to VAT but most levy payers are VAT registered and, therefore, able to reclaim it. It is the intention that these changes will apply to England, Scotland and Wales. The MDC does not operate in Northern Ireland, where different arrangements apply.

Approval has been sought from, and been given by, the European Commission to the proposal, for the raising of funds in this way is considered to be a state aid. The EC approval will also require the Milk Development Council to tender the campaign in accordance with the EC public procurement rules.

The amendment would allow the MDC to approach Ministers for an increase in the actual levy, currently 0.04p per litre, within the new maximum to raise funds for an advertising campaign. The dairy processing companies have voluntarily agreed to match dairy farmers' contributions pound for pound. Latest estimates are that a total of £6 million will be raised per annum for an initial 18-month campaign, after which its success will be reviewed. Research commissioned by the MDC and National Farmers' Union has already indicated that a spend of this order should have an impact in the market-place. Ministers welcomed the proposal, which was supported by all parts of the dairy industry, to extend the remit of the Milk Development Council.

We recognise--indeed we were talking about it earlier today--that the dairy sector has suffered significant falls in income resulting from a drop in the price it receives for its milk at the farm gate. That is an unfortunate consequence of the strength of currency and other factors. Therefore, the additional cost of generic promotion will impose a burden on them. It is important to repeat that we are doing this at the

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request of representatives of the sector. In order to be convinced about our decision, a poll of all producers was carried out last autumn to seek their views. Across Great Britain a clear majority--over 75 per cent--of those who cast a vote were in favour of the proposal.

To conclude, the draft amending order is an important piece of legislation that has the support of all sides of the industry. I beg to move.

Moved, That the draft order laid before the House on 14th February be approved [11th Report from the Joint Committee].--(Baroness Hayman.)

Baroness Byford: My Lords, I too thank the Minister for putting forward the order tonight. The statements in the order are very positive. I am sure that dairy farmers will be glad to hear of the move to promote their milk industry. Moreover, from their point of view, they know the cost to them and how they will pay it. This will be in the form of a levy of 0.03p per litre, together with the existing 0.04p that they already pay to the MDC.

While welcoming this statement, there are a couple of questions I should like to ask the Minister. I understood from what she said--and indeed was well aware of it--that the processors said that they will match the 0.03p levy on a simultaneous payment system. However, the fact remains that the farmers have to pay by statute, whereas there is no legal compulsion upon the processors.

The Regulatory Impact Assessment of 31st January in paragraph 7 states:

    "So far as the campaign itself is concerned, should evaluation demonstrate that it is not meeting its objective, the MDC would reconsider the campaign. If it was discontinued producer's contributions would be adjusted accordingly. Similar action would be taken if the processors' contribution was withheld for any reason".

The RIA came out at the end of January. Have all the processors--because there are so many now compared to the number in the past--given a complete undertaking to fulfil their part? If the Minister has any further details perhaps she could enlarge on that section because it is obviously fairly important. The matching funds have in principle been pledged from these processors and the agreement is subject to detailed arrangements being made with the dairy processing industry. I am happy with that.

We are told that this levy is for a 12-month period. Perhaps the Minister could confirm that. I understand that it will come into effect as of 1st April. In practice, the monies will not come forward until June--I may be wrong--because it has to come from the farmers, go to the processors and then to the MDC itself. Can the Minister say when she expects this advertising campaign to start; whether it will be before June, or July.

At a time when all aspects of farming are under pressure--and we had a debate here last Wednesday and questions again today--the dairy industry cannot

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afford the proposed scheme to fail. Currently, there is a trade deficit in milk which for this country, with its superb grazing and highly successful breeding, seems ridiculous. It has been made even worse by the way the Irish Government were allowed extra milk quotas when they are already self-sufficient, which will enable them to export even more of their milk with impunity.

We on this side welcome the national generic campaign which has the merit of encouraging the public, especially young people to adopt the milk-drinking habit at a young age through the school milk scheme.

In assuring the Government of our support in principle for this initiative, I was reminded, on looking back at some papers--although he is no longer in his place--of the noble Lord, Lord Donoughue, who at last year's Royal Show, when speaking in support of the European Protected Food Names Scheme, said:

    "Collaborative groups can afford to devote resources to finding and developing markets".

I feel his words could well apply to the proposed designs to improve the sales of British milk and British products. Anything that helps the industry is indeed welcome.

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