Common Agricultural Policy (EUC Report)

My Lords, it is deeply moving to see the noble Lord, Lord Pearson, here today as a surprise appearance in the gap. He has added lustre to the quality of the debate, but his remarks were very predictable. I am sure that the Minister will deal with some of them. They always reach a fundamental existential conclusion, and we know what it is. It is not really part of this debate. I imagine that most other participants today are anxious for us to remain enthusiastic and active members of the European Union, which is an increasingly successful entity in a difficult and complex world, with more and more opportunity to help other parts of the world, not least in food production. We have had the benefit of some very expert views. I think of the sagacious comments of my noble friend Lord Livsey, and I note what he rightly said about the expense of the United States farm support system. Other experts such as the noble Earl, Lord Erroll, and the noble Lord, Lord Cameron, have spoken, and we are due to hear from a great expert on agriculture and horticulture; the Conservative spokesman. Above all, I echo the thanks of previous speakers to the noble Lord, Lord Sewel, and his colleagues for a very arresting and radical report, which needs much careful attention. This debate has arisen at the same time as the Commission has produced its preliminary draft health check proposals, of some complexity, and there is a lot more to come in the negotiations. Paragraph 211 of the report sums up the great difficulties of getting the balance right between the legitimate and growing single market in food and farm products and the pressure to repatriate partially some of the differences and variations in complicated national policies. That is an intricate exercise for the future, and we wish all member Governments and the Commission well in trying to get the best system for post-2013. Britain takes less in total in CAP support payments on recent statistics than, say, France, but its average take is much higher because of the relatively high incidence of giant farms and large estates. Yet when the Commission tried, rightly, to apply a cap on CAP payments, the UK Government and wealthy UK estate-owning farmers protested vigorously, somewhat ironically. However, everyone knows that large farm estates have to be helped somehow to preserve and enhance the local environment for the general good. That is the reality. So the European Commission needs sympathy and help in its often abstruse and hard to grasp searches for solutions for post-2013. The planned scrapping of set-aside will inevitably reduce the subsidies to the largest entities anyway, and those funds can then be deployed in smaller farms, especially where pro-environment objectives are encased in the overall activity. Meanwhile, the old world of excessive CAP support for excessive production is over—which is welcomed by most people—and few will lament that major change. The next few years will, however, reflect the global change to booming demand and food shortages in many developing countries. It is fascinating also to observe the changes in French thinking in recent times. The presidency period that it will inherit on 1 July will reveal a much greater willingness in France to accept radical new objectives, which is a major adjustment. So if France can change in the future, Britain needs to as well, armed as we are with our famous obsession for free markets and the survival of some of the most skilful asset-strippers. I say that slightly tongue in cheek, but people will know what I mean. Of course, the big German farms could also suffer if the 7 per cent reduction at over €100,000 is implemented by the member states by the November deadline for the package to be agreed. I trust that this target can be reached, because there is a wide range of views among the 27 about future modernisation priorities, from the acceptance of some interventionist support at one end, to the total scrapping of present-day subsidies, which seems to be the view in Sweden. Meanwhile, the French agricultural population is now down to 4 per cent and many small farms in France have ceased to function. This makes the task of modernisation easier, not harder. I declare an interest, as I live in France and I am surrounded by some of the remaining small farms. I am glad that the Danish commissioner, who has been praised in this debate several times, has advocated the use of unspent funds within the CAP support nexus to help third-world farmers, showing once again the powerful example that the EU can set as a provider of investment aid to underdeveloped countries, rather than short-term handouts to prop up. The relatively high free-market view is endorsed in the sub-committee report, with its advocacy of the farming sector, "““capable of standing on its own feet, competing in open international markets without subsidy or special protection””." I hope that the committee clerks, when they read the Hansard of this debate later, will send a copy to the United States and Japanese farm support agencies where subsidies remain the highest in the developed world, much worse than the CAP. I hope that the European Commission will heed the committee’s later suggestion that the other available funds, such as cohesion, structural and regional funds, as well as CAP Pillars 2 and 1 can better be used to deal with the weaknesses of the rural economies in many sub areas of the member states. The Commission in Brussels, like sub-committee D, is anxious to get the balance right between the logical availability of common support mechanisms post-2013 with the localised national and regional decision-making within each member country to secure the focused policy effect of cash help, plus incentive cash for innovative measures if farmers enhance the environmental benefits as well. This acceptance of permissive flatter payments being used by the members is surely a highly desirable objective if it can be practical, fair and transparent. That is of course a big ““if””, but it must be achieved. The Commission is very keen to move away from the historic payments model, as the report of the noble Lord, Lord Sewel, emphasised. It also expresses support for full decoupling and full abolition of set-aside, which must surely be pragmatically inevitable in the global village context if the advanced countries are to set an example. WTO rules also favour non-subsidy models for locally weak and impoverished farming zones, as well as normal units. I see that the National Farmers’ Union strongly argues for all arable support to go, not for keeping it for suckler cows and ewes, for example. I believe that the Commission is more and more committed to the full abolition of export subsidies and the eventual elimination of milk quotas and cereal intervention payments. We have five years to go before this brave new world has to start, which is an adequate transitional period for normal healthy farm units to accept. Even after 2013, some support mechanisms could be retained pro tem on a tapering basis. In fact, the sub-committee report advocates this approach in paragraph 245. On these Benches, we also welcome the report’s strong adherence to the co-financing of Pillar 2 outlays, as it enhances the subsidiarity of national efforts to secure local aims with efficient spending norms. We also welcome the proposal that member states could pay the SPS in two doses, which would mean that hapless farmers here would not have to wait an excessive time for full verification of claims. We would save some of the embarrassing comparison of other member states with the efficiency, or not, of what has happened here. I pay tribute to the noble Lord, Lord Rooker, who is not here for understandable personal reasons, for his honest admission of the difficulties with the department’s system in that regard. I was glad to note that the National Farmers’ Union campaigned to get rid of the permanent pasture restriction, or the irritating ““use it or lose it”” rule. I very much agree with that. The NFU also worries about the distorting effects of Article 68 or 69—or is it the other way round?—payments under the 10 per cent procedure, and this certainly needs to be thoroughly sorted out and clarified into a tangible model system for 2013. I understand also that the NFU—and I do not act as its agent, it just happens to have made a number of good suggestions on the health check—is concerned that the Article 68 schemes could produce the opportunity for member states’ agricultural ministries to slip into the habit of introducing quasi-modulation discounts. In paragraph 239 of its report, the sub-committee strongly supports the plans to get like-for-like reductions in voluntary modulation in return for increasing compulsory modulation. I would be grateful, therefore, if the Minister responded to this specific point in his wind-up speech, including the proposed modulation tabulation from the 3 per cent, the 6 per cent and the 9 per cent matrix of reductions onwards to the final outcome likely for 2012. I observe that the national modulation systems in, say, Portugal or Britain will reduce the payment against the increases in EU modulation, presumably to produce the same net effect, but how will all that work in practice? That is an important question. There are bound to be some uncertainties in those areas pending the working-up of the final reform package, but it would help to have the Government's preliminary thinking, while we fully accept that there is still a maximum of negotiating water to flow under the CAP bridge. Finally, I would be most grateful if the Minister were able to say something on the latest unrest among dairy farmers, which has been mainly manifested in Germany, Holland, Austria and a little less in France. However, I feel that the debate has been useful and timely, and that the report of the noble Lord, Lord Sewel, is a tremendous generator of important and radical thought.