Agriculture

My Lords, we have had a very wide-ranging debate, and I thank the noble Lord, Lord Vinson, for introducing it as he did. I apologise for the absence of my noble friend Lady Miller who, with EU Sub-committee D, is looking at biofuels in the West Country. That is where I thought that I was going to be before I heard about this debate late last week. I associate myself with the remarks that have been made about the noble Lord, Lord Bach, who was the victim of what he was told about the RPA. There was a lot of economy with the truth in the information that he received, and he was very hard done by. I welcome the noble Lord, Lord Rooker, although I have already done so twice. The debate is on the current state of farming in Britain. We have heard an awful lot about the Rural Payments Agency debacle. We have had a discussion of that recently in this House, and I do not want to go over the ground that I went over then. However, it is very important to make the point that the 5,000 who have not so far been paid should be paid the single farm payment by 30 June. Many of them are hill farmers who are in desperate need of those payments. I repeat what I said in the RPA debate—that I have considerable reservations about the agency’s situation. Apparently, the costs of the administration of the RPA this year will be some £250 million. It will cost one-quarter of a billion pounds to administer the RPA! The cost of administration has doubled in the past 18 months, which is an extraordinary state of affairs. We must ask ourselves whether that is value for money. A similar thing is happening in the NHS, where £1.1 billion is being spent on an IT project that does not appear to be working properly. From what the Minister said recently, I know that an investigation is going on; I hope that it is very focused and objective. The situation confronting British farming is very mixed. Some sectors are beginning to show signs of promise, while others are absolutely flat on the floor. The RPA issue has compounded the situation. On a product marketing basis, milk prices remain depressed. We have to record the fact that between 1,500 and 2,000 dairy farmers still leave the industry every year, which cannot go on. Cereals have not moved upwards in price for decades; if anything, the price has reduced to values that I used to budget on decades ago. Beef is starting to benefit from the opening up of the European and other export markets as a result of lifting the export ban, which is a very good thing. One structural problem is that young people have left the industry and the farming sector. As someone who has been president of a young farmers’ county branch for the past couple of years, I know that there is great potential for young people in the farming industry to tackle the competitive culture that is now coming in. In our area we have done a lot of work on farm diversification; indeed, we have run competitions to produce a wider variety of income streams into the farms. So there is depression, but there are also some signs of hope, so we should not be too downbeat. There is a challenge which, as people have already said, the farming industry has met very well from time to time—and it is well capable of doing so. One of the most important issues that has, rightly, been put forward in this debate, is the whole issue of food security. It is a very worrying situation. When we consider the rate of 63 per cent self-sufficiency and 73 per cent indigenous self-sufficiency, we can see that the drop in the UK’s ability to produce its own food is really a very serious matter. Imports have risen. There is no doubt that were farmers to be given the challenge to produce more in better market circumstances, the balance of payments to the Exchequer could be improved by at least £20 billion. That is a significant sum of money which could have very beneficial effects. I am particularly concerned about the world-wide potential scarcity, as there is already, in food. I believe that as a natural resource it is as important as oil, if not more important. Undoubtedly, there is a food production gap, as there is an energy gap, in the world. We would be very foolish not to address that as being extremely important. We can play our part. However, we have to have a proper market in which to operate. Frankly, the exploiting of the market-place by some of the richest supermarket chains in the United Kingdom is totally unacceptable. Local economies have been marginalised. The transporting of food halfway around the world has also had a very bad impact on third world countries. This has to be tackled bravely. The profitability of supermarkets—including Tesco with profits of £2.3 billion, which is equal to almost the whole net profitability of all British agriculture—is an unacceptable state of affairs. The investigation by the Competition Commission must look at the exploitation of primary producers. Only 8p in the pound spent in supermarkets goes to the primary producer. The rest goes elsewhere. On looking at information that came out this week, in March, the retail price of milk was 51p a litre and producers got 18.35p. That gives a differential of 32.5p a litre, which went somewhere other than to the primary producer. Across the EU, it is reckoned that only 27p per litre farmgate price is required for dairy farmers to make a profit. That would still allow a 24p a litre supermarket margin under the present situation. This is totally unacceptable. I have long thought that the activities of accountants in those big firms have already discounted the value of direct farm support coming from government, and that they have ended up with the money and the farming industry has not. I am sorry to be so outspoken, but I believe that that is, generally speaking, the situation. On looking at farm incomes, a question was asked on Monday about pay rates in the United Kingdom. The UK average was £431 a week, which works out at £22,400 a year. In my country, Wales, the average was £390 a week—£20,280 a year. I have to tell noble Lords the average farm net incomes in Wales over the past 12 months: milk producers averaged £20,000; less favoured area grazing livestock, £16,400; and lowland grazing, £8,100. They are all below the income that everyone else earns. The average is £15,700 a year. There is something radically wrong in the way in which the market of primary produce is operating. The Government must insist that the Competition Commission looks at the primary producers supplying the food chain, as well as small grocer’s shops. When we produced a lot of information on this in 1999, I was involved in the other place in primary producer prices. It ended up with a report saying that it was fair to consumers and there was not a single mention of what happened to the primary producer situation. A lot of important speeches have been made today. The noble Lord, Lord Corbett, was right to concentrate on affordable housing because it is a very central issue, and I remember reading his articles in Farmers Weekly many moons ago. The noble Earl, Lord Selborne, made a crucial speech about the importance of agricultural research and research council funding for it. We cannot afford to neglect this area. We have to tackle climate change, and research stations are working on the resource side by growing nitrogen-fixing crops which do not use vital resources. Frankly, if we neglect areas of agricultural research such as these, we shall get absolutely nowhere. The noble Lord, Lord Plumb, made an excellent speech which needs to be examined carefully, given the wisdom of his experience over many years. Further, the noble Lord, Lord Grantchester, made a courageous speech from the Government Benches. He told his own Government exactly what the situation is, and I congratulate him on that. As an agriculturalist I could go on for another hour, but I do not have the time, as the whip is rightly indicating. This has been a good debate. I am sure the Minister will take on board what he has heard today and will act to improve the situation in what is a crucial industry: our agriculture.