Common Agricultural Policy (EUC Report)

My Lords, I declare an interest as I am active in my family farming and horticultural business, and am a member of and active in a number of organisations connected with it. I join other noble Lords in congratulating the noble Lord, Lord Sewel, and his committee on a first-class report. The competence of those involved shines through, and it is well written, clear and straightforward. It is more than a layman’s guide in the sense that it provides definitions of those strange words that the CAP uses, such as ““decoupling”” and ““modulation””, which are not normally used in the language. It can also be used as a textbook by experts, as my noble friend the Duke of Montrose suggested. I read the report thoroughly, as I had it with me while I was overseas sheltering from the rain last week. I tried to read between the lines to see whether I could detect any subtleties. I do not see any; I see a pretty unanimous committee working on a strong consensus. Accordingly, it has been able to produce a report that has not had to blunt its thrust, and has had good interaction with many witnesses. I found myself compiling what I want to say today with far too many notes, because the report is detailed and the various recommendations are worthy of comment. I have to edit out some of what I say, as I am sure the noble Lord, Lord Dykes, had to as he tried to encapsulate all his points. Events have moved on since the report, as the noble Lord, Lord Sewel, said and as we discussed last night. The health check has arrived. It is only in draft, but it contains the structure for substantial reform. Although Commissioner Mariann Fischer Boel said that it was not reform but that reform awaited the budget review, we can see that the concept of having one vision and two steps incorporates a serious attempt at change. The report is right to have anticipated that. There is a coincidence of argument between the report and the health check, and the Government’s response. There are areas of difference but, generally speaking, there is consensus. As the noble Lord, Lord Sewel, pointed out, the events of the past few months have, if anything. highlighted the urgency of change and the need to maintain momentum for it. This week, the United Nations summit in Rome has drawn attention to the need for food security to be high up the political agenda. We have an opportunity to keep the topic to the fore. One interesting thing about the report is that it reveals the tension that exists between commonality and subsidiarity, and I do not think that these matters are easily resolved. There is also a tension between the more productive areas of agricultural regions—the areas where I am fortunate enough to farm—and the less favoured areas of which my noble friend the Duke of Montrose and the noble Lord, Lord Livsey, spoke. The report leans towards a resolution through greater control by member states, particularly in the environmental and social fields in Pillar 2. I think that that must be right, but it still shows that there is a tension between protectionism and the free market. That may be inevitable but, pace the noble Lord, Lord Pearson, we did not solve that problem in the pre-CAP days. The noble Lord, Lord Sewel, is right to say that there must be a move towards removing subsidy and facilitating the freeing of the market. There remains a strong necessity to liberalise markets where we can, and the report recognises that. However, there is one point that I feel the report failed to address but should have done—that is, the huge inhibitors to the free market created by nitrate vulnerable zones and things such as the pesticides directives. Somehow or other, we have to try to stop the generation of restrictive and inhibiting ideas from the Community if farmers are to play their full part in boosting agricultural production in this country. As if to reinforce these distortions that come into play, the report concentrates on the use of Pillar 1 for social purposes. Channelling funds through Pillar 1 may not be the best way to tackle these problems—the committee was right to draw attention to that—but I disagree with the noble Lord, Lord Livsey, in that I am not sure that support through production prices or production subsidies is the right way to deal with the social problems of disadvantaged areas. Pillar 2 is the right vehicle for that activity. Environmental benefits are very important, and farmers are properly recognised as agents in providing a landscape and an environmentally attractive background to the lives of all citizens in this country. However, I am not sure that the cost to industry is always recognised. The benefits can lead to a number of market disadvantages. For example, we are rightly in favour of things such as animal welfare but within the market these can lead to distortions, particularly on a worldwide basis. If in these areas we repatriate scheme management and funding to national Governments, I hope that there will be ways in which we can balance out the disadvantages. I suspect that a key element will be proper labelling on foods of the country of origin. The Community has been slow to recognise that that is one way in which it can support consumers and also support producers in maintaining high standards and have them clearly recognised on the shelves. The report goes into some detail on the single payment scheme and it must have been right to do so. The scheme has caused a great deal of difficulty and has lost farmers a lot of money over the past couple of years because of its complexity—as it operates within England at any rate. The English authorities were right to undertake an area payments system. Historic payments, as the committee suggested, will have to be phased out if we are to avoid ending up with more distortions than we currently have. It was also right in what it said about the costs of small payments and the need to eliminate, on a de minimis basis, smaller claims and not to be diverted from seeking to cap payments. It is important to try and facilitate partial payment, as the health check recommends, so that where there is some concern about the precise exactitude of a claim, at least a fair percentage of it could be paid to the farmer, avoiding the huge financial problems that some farmers have had trying to get their payments paid on time. One difficulty that farmers face—the noble Earl, Lord Erroll, was absolutely right—involves the bureaucracy that goes with so much farming today. The burden of overregulatory cost compliance is very negative; it has had an enormously negative effect on the way in which farmers view the CAP. It is often overegged and the inspection requirements are far more demanding than they need to be. Many farmers are prepared to maintain very high standards. I have to declare an interest as a member of LEAF, which sets standards—it is a quality mark. We need facilities whereby membership of such organisations reduces the necessity of having a double-whammy inspection system. I hope that, notwithstanding the thrust of the report on the production side, there is also an important role for the common agricultural policy in maintaining rural communities. The report addresses that but stretches beyond the immediate problems of the CAP. It requires us to try to maintain the social fabric of rural communities, which involves the provision of post offices, health service reorganisation and the resolution of transport difficulties—all of those feed into strengthening rural communities. That involves not just Governments—I am not seeking to make an assault on the Government—but also the commercial banking sector, retail organisations and the whole area of retail planning, which have made the survival of rural communities very difficult. I believe that the CAP can be an agency for trying to ensure that we have sustainable communities in rural areas in future. I suspect that the key, as the report suggests, is the liberalisation of the system. This objective has a moral imperative. We must seek to provide food for our country’s citizens that is of a fair quality and at a reasonable price. We must all be prepared to meet this challenge. If we are to take the industry with us, we must take every opportunity to get bureaucracy off farmers’ backs. The noble Earl, Lord Erroll, spoke eloquently of the hassle factor, which so annoys farmers. We must recognise that in a world where food markets are changing fast, the need to provide good quality food at reasonable prices is a major challenge. To do that we need investment in science and technology. I hope we shall be able to debate that aspect in the future because I am sure that a programme of modernisation is necessary if we are to achieve full productive capacity with our farming resources in this country. We need to encourage new farming techniques and we need a proper linkage between pure science and its application. I end by repeating my congratulations on an excellent report. I hope that the committee has similar success on fisheries. I also hope it returns to agriculture as the debate moves on. This is a fast-changing scene and I believe that continual interaction between this House, its committees and the policy is very important. There is a consensus on much of which we speak; there is a tide which we can catch; it is a time of challenge to feed the citizens and the world; it is a time of change for farmers and politicians; and it is a time of opportunity which we should welcome.