My Lords, I begin with Amendments 174 and 285, in the name of my noble friend Lady McIntosh. I recognise my noble friend’s desire to ensure that farmers are protected against chronic disturbances such as structural market changes and disturbances caused by environmental factors such as severe weather or the Covid-19 pandemic. Indeed, a number of other noble Lords mentioned their concerns. The existing powers are sufficiently broad to ensure that agricultural producers will be covered should they need financial assistance due to exceptional market conditions caused by economic, environmental or other factors. In most cases, farmers already manage the effects of fluctuating weather conditions.
There are also powers in existing legislation that allow the Government to act in exceptional circumstances to support farmers in the event of extreme weather conditions. For example, the National Environment and Rural Communities Act 2006 could be used to make one-off payments to farmers affected by extreme weather conditions. As we saw in response to recent flooding, the Government successfully launched a new farming recovery fund for England using powers under this NERC Act.
The particular powers in Clauses 18 and 19 are framed to deal with unforeseen short-term shocks to agricultural markets rather than chronic conditions. The Covid-19 situation is exactly the type of exceptional circumstance that these new powers are intended to address. Another example would be the dairy crisis in 2015, when the ending of EU dairy production quotas led to increased production, global dairy prices being low and rationed sanctions on imports of dairy products from the EU significantly reducing demand. This caused a sudden and significant drop in the price of dairy products across the EU. This event was unpredictable and caused a severe market disturbance, which had an effect on prices, and future circumstances such as these could be considered exceptional market circumstances.
The noble Lord, Lord Carrington, asked what we could do to support farmers when more long-lasting difficulties appear, including the after-effects of flooding. The Government want to encourage farmers to manage their own risk and become resilient to foreseeable disturbances. The Government will help farmers to invest in equipment, technology and infrastructure, which will support high-quality research to promote innovation and productivity in agriculture, horticulture and forestry to make farms more resilient. The Bill also sets out powers to strengthen fairness and transparency in the supply chain, enabling food producers to respond more effectively to market signals, strengthen their negotiating position at the farm gate and receive a fairer return.
The second aspect of the amendment seeks to ensure that disturbances caused by environmental factors will be covered by this clause. These powers are triggered by the effects of disturbances rather than by what has caused them. The exceptional market conditions powers could be used to address severe market disturbances caused by economic or environmental factors, so long as there is an adverse effect on the price achievable for one or more agricultural products.
The noble Lord, Lord Carrington, asked what is meant by “prices achievable” under Clause 2(b). The price achievable is to be given its ordinary meaning, and includes not having a product available to sell; in that case, the price achievable on the market would obviously be zero. The current Covid-19 pandemic is a disturbance caused by environmental factors and is exactly the type of exceptional circumstance that these new powers are intended to address. We could not have foreseen that this pandemic would be as wide-reaching or prolonged as it has been, and farmers could not have been expected to prepare for the disturbances in daily life it has caused. I understand that Welsh Ministers are content that the existing powers are sufficiently broad to ensure that agriculture producers in Wales will be covered should they need financial assistance due to market conditions.
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I turn to Amendment 175 in the name of the noble Lord, Lord Hain. As I have said, the existing powers are sufficiently broad to provide financial assistance in exceptional market conditions caused by a range of factors, including the environment. Any future restructuring of the agriculture sectors to meet
environmental needs is likely to be planned and to take place over a longer timeframe and would not be an appropriate use of these powers. The noble Baroness, Lady Ritchie, asked why there was no definition in the Bill of exceptional market circumstances or severe disturbance; indeed, a number of people asked how we would know when the Secretary of State could use the powers. We strongly believe that including a definition in the Bill could tie us to a specific definition which might not cover a future situation or could delay action, because, for instance, evidence would need be gathered to show that the definition has been met. It is also important that we can limit intervention in the market and financial assistance to farmers to truly exceptional situations; otherwise, we will discourage farmers from managing their own risk and could undermine private sector provision of risk management tools.
In Amendment 176 the noble Baroness, Lady Jones of Moulsecoomb, seeks to limit financial assistance under exceptional market conditions to producers that meet our existing high welfare standards. I recognise her sincere concern in this area, but we strongly believe that the welfare of our farmed livestock is already protected by comprehensive and robust legislation which is further supported by species-specific welfare codes. Defra’s Animal and Plant Health Agency inspectors and local authorities conduct inspections on farms to check that animal welfare standards are being met. Appropriate action is taken against anyone who breaks animal welfare laws. If our high animal welfare standards are not being met, this will be addressed under the relevant enforcement regime. As such, a specific reference to maintaining existing animal welfare is not required in this clause.
I am conscious that the noble Lord, Lord Grantchester, asked a couple of questions about storage facilities and the formal circumstances in which these clauses could be triggered. I do not have that specific guidance, but I will write to him and put a copy in the Library.
I hope that I have sufficiently reassured my noble friend Lady McIntosh, and I ask her to withdraw her amendment.