Common Agricultural Policy (EUC Report)

My Lords, it falls to me to congratulate the noble Lord, Lord Sewel, and his committee on the thoroughness with which it has conducted its inquiries and the fund of information which it has unearthed. I have even heard some outside this building saying that it is a textbook for anyone wishing to understand what is happening in the common agricultural policy. I also congratulate him on obtaining the opportunity for us to discuss these findings today, even if he had to wait a little before it became possible to do so. As noble Lords will be aware, it also gives us a chance to look at what the EU Commission has come up with in what it has described as its health check. It should not be surprising that it contains many similarities and enough was known about the general direction of the health check to inform some of the findings of the report. But it is very clear, all the same, that neither report has reached the point where the findings will be put directly into practice. As the noble Lord, Lord Sewel, said, the EU report seems to lack a certain amount of vigour, which, in this country, we would like to have seen. Perhaps an indication of the sort of battle that is in store can be seen in a press report yesterday: in the effort to secure a yes vote in the Irish referendum on Lisbon, the Irish Prime Minister announced that he would use his country’s veto to block any liberalisation plans in the current round of WTO talks. As the noble Lord, Lord Sewel, has pointed out, there can be no doubt that we are now entering a very different period in agricultural markets where world price levels are approaching those that we have maintained in the EU. Can the Minister tell us if there are commodities which, in the past three months, have required export refunds other than perhaps a form of export guarantee? If we have reached that point, it would make it much easier to reform EU policy to the point where there are no export subsidies, which, as the noble Lord, Lord Sewel, said, is one of the central aims in his report. A rather more difficult area must be tariffs. Any reform of tariffs will have an immediate effect on commodity prices within the EU, as it also will on third-world countries for which the EU provides preferential tariffs. I can appreciate that the purpose of this report was to review the internal workings of the CAP. I have looked, perhaps all too briefly, at the report, but I have not found any mention of these external effects of CAP policies. None the less, it is a consideration that will have to be taken up, which should not go unmentioned today, and will require to be reviewed along with all the other policies. I should declare my interests: I am a livestock farmer, a member of the Scottish National Farmers Union and a member of the Scottish Rural Property and Business Association. Given my interest in things north of the Border, it will not be a surprise to those who served on the committee that I come back to a topic that was raised in the evidence given by the Scottish Rural Property and Business Association representative; namely, the requirement with some commodities to retain a certain critical mass in vulnerable areas. That is largely because of the difficulties in maintaining downstream processes and businesses. As we can see, this rationale has been used as an excuse in a number of other countries for maintaining an element of their commodity support payments and not fully decoupling. It is one of the weaknesses of the health check programme that it requires that no one who has not maintained these payments should be allowed to reintroduce them. But it does not propose to bear down on those who are applying these payments at present and perhaps doing so indiscriminately. It also contains the proposal that it should be possible to direct assistance to fragile areas, which surely should be the threshold that should be used in considering any commodity or other connected payments. This kind of support—I think that the noble Lord, Lord Sewel, pointed it out too—requires to be looked at largely as social and environmental support. Does the Minister consider that this support could be entirely moved into Pillar 2 and not create the distortions which cause the problems with our negotiations with the WTO? It is very encouraging for us to know that a reduction in the conditions required for cross compliance is in consideration, but there are other aspects of EU regulation that will need careful review. The most recent that I have come across is in haulage regulations. I know that the Minister does not have responsibilities north of the Border, but it might be as well for noble Lords to be slightly aware of some of the problems. The movement of livestock from the islands and the west coast of Scotland is a highly seasonal affair, largely taking place for two months in the autumn. One of the main livestock hauliers in the area has just sold up his business because the cost of compliance and the sternness of the regulations make it uneconomic and too frustrating for him and his employees. The EU regulations state that for any animal involved in a journey that from start to finish lasts from eight to 12 hours, the lorry must be fitted with a watering system. At least half of the animals being transported are sheep, who have no idea about drinking bowls or nipple drinkers. The ferry from Uist to Oban can take up to seven hours before any onward journey is considered, and once the time has been exceeded, both the lorry and the trailer require climate controlled forced ventilation and satellite tracking. This may not be quite the same challenge for areas in Cumbria or Wales, but all these areas are also affected by the lack of small-scale slaughterhouses nowadays, which has increased the difficulties for the animals and the hauliers. The noble Lord, Lord Sewel, said that the EU is still looking at bearing down on making large payments to larger farmers. There was a proposal to cap single farm payments which would have had a disproportionate effect on UK farmers, but now that same idea is being targeted at increased modulation. Again, from the Scottish point of view, where more than 85 per cent of the land is in less favoured areas that tend to comprise huge acreages or hectarages of land, although not necessarily huge businesses, this would be felt very heavily. It will discourage the development of larger units. We have all seen that if agriculture is to move forward, some small-scale units need to be amalgamated so that larger and more efficient businesses can be put in their place. The aim of the agriculture commissioner, Mariann Fischer Boel, is of course to increase food production in order to stem rising prices, so to introduce a policy that would actively discourage an increase in food production seems absurd. In their response the Government ask if they can channel aid to these areas in a more focused way to help with unemployment, but that would require innovative thinking. I do not know whether the Minister can give us an indication of how that might be done. They will have to come back to the fact that a certain amount of what might loosely be called agriculture will be needed for the management of the vegetation, and as time goes on, some sort of useful production in order to supply the increasing demands of the world’s population will be needed.