Debate on the Address

My Lords, I echo the remarks of the noble Lord, Lord Harrison, in welcoming our maiden speakers. I extend the ambit of his remarks to those on the Benches on which I sit. I must confess that I was not in the Chamber when the noble Lord, Lord Sheikh, was speaking, but I was watching the television when the noble Lord, Lord Bruce-Lockhart, was on his feet. I did not know who he was and I thought, ““Who is this?”” Two minutes later I thought, ““My goodness, he really knows his stuff””. When he concluded I realised that he was on our Benches—and that does not always happen. I should like to address a few comments to the House about farming. I declare an interest in that I am a dairy farmer in Cumbria, which now has more dairy cows than any other county in Britain. I am also the chairman of Carr’s Milling Industries, which is one of the biggest agricultural supply companies, animal feed compounders and flour millers and is based in the north of England. I have not participated in a number of the more recent debates about agriculture in your Lordships’ House because I felt that I had too great a personal interest in the problems of the single farm payment. I have been materially economically damaged by what has happened but, if I refer to anything from my own experience, I hope it will be understood that I am trying to draw some generalised conclusions for the benefit of the House. We have heard already about the problems facing dairy farming. The good news in the agricultural sector as a whole, which was first mentioned in the debate by the Minister, actually increases the problems of the dairy sector because the high price of grain leads to a high price of animal feed in precisely the same way that the higher price of wheat that Carr’s Milling turns into flour puts up the price of bread. In thinking about the problems facing the dairy sector we should be clear in our mind about what has happened over the past few years and I should like to put in front of the House what I think has occurred. There has been a glut of milk in the European Union. Where you have a glut of milk, the base of the price that is paid is the price for milk in the processing because that is the cheapest part of the market. Over the same period, the pound has been very strong against the euro and, in a single market, that inexorably will have the effect that surplus production, wherever it is, will be drawn to the country with the strong currency. Therefore, rather like a vortex, surplus milk has a tendency to move towards the United Kingdom. At the same time, processors of milk on the Continent invested in improving and enlarging their processing plants, a great deal of it with the help of public money. This has meant that milk products processed on the Continent have been able to compete probably more keenly in the UK market than their UK equivalents because, in a number of cases, the plants from which they are working are more up to date, more specialised and larger. At home, the dairy farmer is faced by oligopoly buyers—the hard men who have made money out of the supermarket wars. Noble Lords may say, ““Well, that is market forces””. Of course, in one sense, it is market forces—but for a market to be proper it must be free and fair. After all, that is why we have a competition policy and a trust policy. It is the basis behind the politics of international trade and fair trade. What we have seen happening has been the exploitation by the buyers of a dominant position in a market which has been exacerbated by structural inequality caused by currency. In addition, the buyers—that is, the supermarkets—have been using liquid milk as a loss leader in order to promote their businesses as a whole. In my view, if this goes on for much longer, it may well destroy the United Kingdom dairy industry. The conventional wisdom is that the effect of this will be the growth of a large number of industrial farm enterprises. I am not sure, at these prices, that if I was an investor looking at this I would consider the return to be adequate enough. If nothing happens along those lines—and I suspect that if prices remain at the levels they are now it may not—in a world where you can fly flowers in from Kenya and green beans in from Chile, it will be possible for milk to be supplied in this country. This will be achieved at huge expense and the use of enormous quantities of energy in clocking up huge numbers of food miles, thus ensuring a significant price rise to the consumer and an undermining of our national security. If that were to occur, the effect of distortions in the market place would lead to the siting of Europe’s—and possibly the world’s—dairy industry in economically, environmentally and sustainably sub-optimal locations. I do not think that is a sensible way for the world to organise its affairs. I should like to touch briefly on hill farming. I had thought about making a few comments based on statistics but on my way down here this week I thought not. On the station platform at home, as I was getting on to the train, I ran into a friend who has been a senior figure in the National Farmers’ Union and a very senior figure in the hill farming world. He simply said, ““If things go on as they are, there will not be any more hill farming in the centre of the Lake District””. The arithmetic that currently applies to the economics of hill farming simply does not make it sensible if present trends are exacerbated. I do not want to elaborate on it any more than that. I put it on the record for the benefit of those who take decisions about these matters. The crucial thing to remember about hill farming is that sheep are the only form of lawnmower that works in the high fells. This House and the other place have invested a great deal of time and the Government have invested an enormous amount of effort in legislation such as the CROW Act and the recent commons legislation. If the fells go back, all that work will have been wasted. I am president of the Cumbria tourist board. Our tourism industry is enormously dependent upon access to the fells and the condition in which they are kept. Many, many more jobs depend on that than on the details of husbanding sheep. There is a strong move afoot, which I endorse most strongly although it is controversial in some circles, for the Lake District to apply for and become a world heritage site. The noble Lord, Lord Clark, is doing a lot of work on this. It is inconceivable that that could happen if the high fells are not properly looked after. On the single farm payment system, I entirely agree with the noble Lord, Lord Bach. The intellectual basis of the system we have in England seems superior to those in the other home countries. But, crucially, can it be delivered? I did not agree with the noble Lord quite so much when he said that my party, when in government, had not been sufficiently robust in trying to reform the common agricultural policy, not least because I do not have the slightest doubt that he will agree with me that Mrs Beckett is no Lady Thatcher. The key thing about these policies is whether they can work. We have seen appalling problems with the single farm payment scheme. I believe that it goes wider and that there are huge problems with the administration of the flanking measures. The entry level scheme does not seem to be functioning in England. I have the right number of points and wanted to go into the scheme. You first need a map. We started the process 20 months ago; maps have been lost, letters have been lost and telephone calls have not been replied to. We are no further forward than we were 20 months ago. When we get there, the Government’s great promise is that we will be offered a five-year contract. That is of any value only if it is government policy that there should be no agri-environmental schemes at the end of the five-year period, and I do not believe that to be the case. A large number of Defra employees are in Cumbria, where I live, and it is apparent that most of them—almost all of them—are good people. Sometimes in debates about the shortcomings of the system, we have not put on record the fact that a lot of people have been working very hard to try to administer something that has got completely out of control. Sometimes I am reminded about the troops in the First World War being ““lions led by donkeys””. A number of people have said that we are caught in the common agricultural policy. I think that we would all agree that nobody devising an agricultural policy now would come up with anything that looks particularly like the present one. But it is part of something bigger and it does not do any good, in the real world, to fantasise about how things could be done differently on a tabula rasa. The common agricultural policy is part of an interdependent web of political relationships which go right up to the European Commission at one end and drop right down to the individual farmer at the other. In the workings of this interdependent system, it is terribly important that there is mutual confidence, legal certainty and equivalence in dealing with the various aspects of the way it works. Those who are affected by a system of this kind need to be confident that things will occur which were promised. That is as true of the European Commission as it is of the farmer. After all, the way in which these agricultural policies are being implemented in the UK is part of a wider set of policies put in place at European level, where each member state has given commitments to do certain things as part of the mid-term review change in the way in which agricultural policy is implemented. The Commission is entitled to be as upset as the farmers about the way in which the changes have not taken place in this country. The crucial lesson to be drawn is that delivery is at least as important as clever conception. Justice delayed is known to be justice denied. Equally, payment delayed is the same as payment denied. This is as true for those on social benefits as it is for those who have an agricultural entitlement. The Government know this only too well. If I responded to a letter from the Inland Revenue and said I was sorry but my computer system was down and if you are lucky you might get some money before next Christmas it would, quite properly, show me the door—metaphorically. We need to concentrate more on clever delivery and less on clever thinking and concepts. In the gracious Speech, we have seen flagged up many pieces of proposed legislation, almost every one of which has the potential for Byzantine complexity. Let us learn a wider lesson from the débâcle of the single farm payment. Let us—legislators and the Administration—remember that the best can be the enemy of the good, and let us try to keep it simple.