Agriculture

rose to call attention to the state of British agriculture; and to move for Papers. The noble Lord said: My Lords, it is a great honour to open this timely debate on the state of British agriculture and it is a pleasure to welcome our new Minister, who I hope will find this debate a kindly, helpful and agreeable baptism. When I was a boy, I used to play in a tithe barn. Five hundred years before, it stored grain for the community in case of crop failure. Little has changed over the centuries and, worldwide, agriculture is protected or supported in some form or another because the production of food is essential. It is also an immensely high-risk business. I hope that this debate will throw useful light on the present mix-up that government intervention represents and will lead us to new and more appropriate policies. Agriculture is different. There is no other industry that plans its output years ahead and has no idea what price it will receive. In turn, that price can be inordinately affected by the weather, disease and exchange rates, and when the product finally gets to the market, it is at the mercy of buyers because it is perishable and has to be sold. It is for those reasons that agriculture has been protected throughout the ages. A nation either has a protected agriculture or, if is fully exposed to international and natural risks, it has virtually no agriculture. That begs the question of whether we need an agricultural industry in the first place. Agriculture involves only some 2 per cent of the population so could an island such as ours not survive totally on imports? But this is a facile argument because most activities represent only a small part of the economy, be they farming, electrical power generation or dentistry. They are, however, no less essential for that. There is also another basic reason. This country has to pay its way in the world and must use its natural resources to its best advantage. In terms of natural advantage, the British Isles are good for growing grass, and cereal crops are, of course, a glorified grass and meat comes from grass. Our farming is efficient and we do it as well as anyone. It is an essential part of our balance of trade. Until recently, we were producing virtually all of our temperate food requirements, but the proportion has now slipped to some 62 per cent and is falling. The consequence is that our horrendous imbalance of trade has grown by a further £15 billion over that period and is now running at nearly £60 billion a year. If existing farming outputs were to fall further, coupled with the effect that that would have on the food processing industry, the imbalance could grow to nearly £100 billion a year. Furthermore, our oil balance is turning negative—we shall have to get down to paying our way in the world. An efficient British agricultural industry will help us do just that. We cannot go on meeting our imbalances by selling our best companies, property and government stock as we are doing at present; the nation is living off its capital and is selling its silver. That cannot last. The Governor of the Bank of England said that it is not a question of whether the pound fall but of when it will fall, as the dollar is currently falling. Paradoxically, that fall in the pound will, by making imports dearer, bring a degree of protection to British agriculture, but, at that point, we shall need all the output we can produce and will be glad to have it. The internationally exposed sectors of the economy are very much the victims of the rate of exchange and our rate is held artificially high by disproportionate interest rates attempting to prevent a rationed housing market exploding. Critics often ask why we do not we treat our agriculture like New Zealand treats its, which is managing all right. The answer is that New Zealand devalued 20 per cent when it adopted an open trade policy and that immediately gave its farmers a better margin, and New Zealand is climatically the finest lamb producing area in the world. Here I am more than pleased to declare an interest as a hill farmer in Northumberland since I retired from active business life. Few people realise that the UK sheep industry and that of New Zealand are comparable, but sadly the UK lacks the co-operative marketing that has served New Zealand so well. Worldwide, there is an eternal cycle of government intervention in agriculture. It goes like this. Food is a commodity that nations do not wish to run out of and hence production is encouraged. That leads to surpluses. They lead to low world prices. Production then becomes even more uneconomic, and governments subsidise at a higher level to ensure supply. That gets expensive. Governments then get fed up with the whole thing and scrap it. A few years later, food shortages loom as farming declines—as in Canada today—so governments start to subsidise all over again, as America did five years ago. I believe that Europe is about two-thirds of the way through that cycle. At the Doha talks, it was suggested that the EU should open up its agriculture and buy from the underdeveloped world. It is difficult to see how the EU can buy from Africa, for example, which cannot even feed itself. The scale of the food supplies needed to feed the EU, let alone ourselves, is little recognised. The United Kingdom’s demand for cereals is some 20 million tonnes a year and if even half of that were to be placed on world markets, the Chicago price of wheat would rocket through the roof. Old Europe grows some 200 million tonnes of grains a year compared to North America which grows some 300 million tonnes of grains a year. Even if half Europe’s demand—100 million tonnes—were withdrawn and placed elsewhere, it would not work. There would be food shortages on a massive scale and little left of the Amazon jungle by the time Brazil had cleared it. So much for Kyoto! If global warming is a threat to long-term food security, that has to be taken seriously. Europe needs its farmers. There is, of course, one over-arching consideration for government intervention in agriculture today, and that is that our landscape is dictated by the nature of its outputs. Our landscape was largely formed by sheep: they are the best lawnmowers in the world. The environment is important and must be protected. It is for all these reasons—and they are widely accepted throughout the EU—that agriculture is treated in a special way, and needs to be. Even the Americans, with the most efficient grain-growing land in the world, subsidise their farmers to protect them from world prices. World food prices seldom represent the cost of production but are largely influenced by surpluses dumped to clear the market. The growing fair trade movement is recognition of that and aims to give primary producers precisely the same artificial price support that we give our farmers. If food is sold below the cost of production, it can be asked who is subsidising whom? Worldwide, food is too cheap. Without surplus production, the price of food would rise and the taxpayers’ money, currently going into farming through subsidy, would in theory be spent directly. But manifestly, in world agriculture a perfect free market does not work and cannot work. So, if we are going to protect British agriculture, then let us at least do it efficiently. I have no doubt that, during this debate, other noble Lords will draw attention to the scandalous inefficiency of Defra, which has got itself a hopeless muddle, largely because the present system is complex to administer and calls for excessive bureaucracy. Farmers have had to find millions of pounds to pay interest on loans they have taken out to cover shortfalls caused by the failure of subsidies to arrive. No other government in Europe bungled it. The failure is unique to Britain and Margaret Beckett, who had been head of Defra since 2001, was responsible for this fiasco. The new Minister will need a big broom to clean the Augean stables. British agriculture is currently declining, even with subsidies. Real farm incomes, unlike those of any other section of the community, have fallen dramatically and are some 10 per cent less than they were 10 years ago. Many farmers earn less than the men they employ. Our agriculture is declining, as this debate will no doubt bring out, because of ever-rising costs and ever-falling market prices. For example, it used to take 200 sheep to buy a tractor but now it takes 400 sheep, and milk is sold in supermarkets for half the price of bottled water. When it comes to regulation, a farmer said to me the other day, ““I spend most of my time filling forms. We shouldn’t now be called ““farmers””; we should be called ““formers””. But the present wasteful and inappropriate EU subsidy shambles does not weaken the case for agricultural support. It is difficult to see what our membership of the EU does for Great Britain, and farming and fishing in particular. We are currently supporting our farming industry with money recycled back from part of our contribution to the EU, and it would be sensible seriously to consider repatriating the right to run our own agriculture with our own money in our own way. Many believe that we should return farming support back to the simple and logical deficiency payment system that gave the public cheaper prices and only supported the efficient farmer when the market price dropped below the median cost of production. That could be coupled with a simpler form of agri-environmental support by amalgamating the complex cocktail of the present schemes—countryside stewardship scheme, single farm payment scheme, single entry scheme, English woodland scheme, habitat scheme, and so on—bringing with it a huge reduction in bureaucracy, and a far less harassed lifestyle to our agricultural community, where the young simply do not want to face the endless hassle now carried by an ageing workforce. I am sure that other speakers in this debate will develop all such ideas, and many more, which time prevents me raising, and we have, indeed, a very distinguished and experienced panel of speakers today. Agriculture and the food industry it supports have delivered fantastic rises in productivity which underpin the standard of living of us all. In the immortal words of Sir John Harvey-Jones:"““If it wasn’t for the scientific development of agriculture we would all be hoeing””." Currently, world production of food is only just meeting demand. Organic farming will not feed the planet. I am no Malthus and I believe that, with sensible genetic development, wheat, for example, could be made self-fixing in nitrogen. That would make agriculture and the fertilisers it needs far less oil-dependent and the world could continue to feed itself cheaply. A prosperous British agriculture should be at the forefront of such developments. Agriculture is a long-term business. You’ve got it or you haven’t got it. You cannot simply turn it on and off. I hope that this debate will help our new Minister in his thinking and ensure the prosperity of an essential British industry that can help us to pay our way in the world and, at the same time, give a reasonable living to our farming community. I beg to move for Papers.