Brexit: Agriculture and Farm Animal Welfare (European Union Committee Report)
(7 years, 1 month ago)
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Lord Teverson
That this House takes note of the Reports from the European Union Committee, Brexit: agriculture (20th Report, Session 2016–17, HL Paper 169) and Brexit: farm animal welfare (5th Report, HL Paper 15).
Lord Teverson (LD)
My Lords, the common agricultural policy has probably not been one of the most popular policies of the European Union over the past 40 years in the United Kingdom. Successful as it was in its original years in ensuring food security for the European continent after many years of warfare and trial, when we joined in the 1970s it was perhaps seen as the main reason for the large budget contribution that the United Kingdom made to the European Union. I remember all too well in the 1980s the structural problems, with the milk powder mountains and wine lakes. More recently, we have had schemes such as set-aside that were not particularly successful, the issue of the green pound and all the other bits of Eurocrat jargon that surround the CAP.
At the moment, under the most recent form of funding, the new system for landowners means that the more land you own, the more subsidy you get, so the barley barons get most of the cash, our food prices are higher than the world average, small farms are still going out of business and rural biodiversity is still declining. We can look at the common agricultural policy and say that it has not been an overwhelming success for the United Kingdom—and perhaps not for Europe. It still takes 36% of the European budget, although that has hugely declined from more than half the budget over the life cycle of the common agricultural policy.
You could say that if there is one area where Brexit has to work, it must be agriculture. Indeed, we heard much evidence of the various opportunities from our withdrawal under Brexit to move away from the common agricultural policy. The first is cheap food. At the moment, it is true to say that, with external tariffs for food, farmers are relatively protected, and some of our witnesses suggested that if we moved away from the common agricultural policy post Brexit, food prices could reduce by 7% or 10%.
We have an excellent opportunity to save taxpayers’ money. At the moment, under the CAP, our farmers and landowners receive €28 billion per annum in subsidy. It accounts for 40% to 60% of farm income. We could stop that, as the New Zealanders did in the 1980s, take it back into the Treasury and use that money elsewhere.
We could get rid of some of the rules. We found it a little difficult to find too many rules that the agricultural industry wanted to get rid of immediately, but the three-crop rule was one of them and there are others, perhaps more contentious ones such as on pesticides, that could be removed. In terms of animal welfare, we could move the gauge up or down. We could take more opportunities to drive our own welfare standards within agriculture.
Of course, we do not have to give all those funds back to our own taxpayers; we could use them perhaps more intelligently in terms of environmental management, rural development, integrated policies and making sure that agriculture is not an isolated area of policy but that it ties in well with climate change and broader environmental policy.
The United Kingdom is a big food importer. Our trade balance with the European Union is some €18 billion per annum. That surely gives us some leverage to attract free trade agreements from other countries across the world that want access to that market. Clearly, we have access to most of those elsewhere already so that would not change greatly. That is a list of important positives from disengaging from the CAP as part of the Brexit process. We heard a lot of that from many our witnesses.
Of course, there are challenges as well, which are significant. First, regarding trade, some 80% of our exports of agricultural produce go to the European Union. If we add in the food sector and those countries where the EU has free trade agreements from which we benefit, the number goes up to 97%. Part of that is around perishability. It is much easier to export products to geographically close areas and, obviously, it is part of the single market. Indeed, at the moment the EU external tariff is 54% on dairy products and some 22% on cereals. That gives an idea of the sort of level of tariff barriers there could be.
Of course, there will be non-tariff barriers as well. We as a committee are not saying in any way that we would not be able to reach a trade agreement, but if we did not, clearly some of those non-tariff barriers would be even greater. I am sure that the noble Lord, Lord Trees, will tell us about phytosanitary conditions and all of those other non-tariff issues.
We would hope to trade at least on World Trade Organization terms, but I hope there will be much better opportunities with the EU in a future agreement. However, already we have issues with the WTO over tariff rate quotas. This is already a key area. The Government have been successful in finding agreement with the European Union over the splitting of these quotas, but immediately that has caused a reaction in the United States, New Zealand and Brazil objecting to that solution and opening up that whole area of future tariff rate quotas with both the EU and the UK. It gives a taste of future meddling and perhaps vexatious intervention that some of these issues will create.
People are one big area the industry is concerned about and that is why being able to retain current EU staff and workers in this country, and in this sector in particular, is important. It is well known, and has been said many times, that 90% of our vets in abattoirs, an important part of our animal welfare programme, are non-UK EU nationals. In both food processing and agriculture, we require a large number of workers from the EU. Yes, we could replace them from other parts of the world, but that obviously will depend on our migration policy. Already we have difficulty in attracting and retaining people. An issue that came over very strongly is that agricultural workers in particular are skilled workers. The way in which they are able to harvest is very skilled but not in terms of a Home Office definition. It is an area where automation cannot substitute in the medium or short term. People are a key factor.
The committee welcomes the Government’s response on funding, which is guaranteed at current cash levels up to the next election. In reality, after that—this is not something that we should blame the Government for—the public and taxpayers will find it difficult under continued austerity to justify the amount of money that goes to this sector. So there will be a real issue around selling that deal. Of course, that may be around being able to guarantee better environmental management of all the public services that farming provides.
There is an issue around devolution. One of the things that the CAP provides is a common framework for agricultural policy not just for all member states but within the United Kingdom. Yet, importantly, agriculture is devolved. How do you make sure that there is a continued single market within the United Kingdom? Will we have four different regimes? Indeed, policy stability is one area that I had not thought of but it came through from some of our witnesses. The CAP might be difficult to change, but at least it meant the future could be planned to a large degree. Will that remain? In Ireland, there is an issue not so much of devolution but of cross-border trade and supply chains, so there are particular challenges.
Our report on welfare received a great deal of media attention on, for example, beef hormones and chlorinated chicken, which is not really a welfare issue, but under international pressure for other trade deals will those welfare standards be challenged? Our witnesses, particularly from this sector, were very keen that welfare standards should not decline post Brexit.
Lastly, in terms of the challenges of which there are many more for those who have read the full report, there is Defra itself. We have said many times in our environmental and fisheries reports that the workload on Defra is huge. Apart from being sympathetic to the Minister on the Front Bench, we again ask whether there are sufficient resources for Defra to deliver legal certainty and all those policies in that huge area over the period.
If I may start to conclude my remarks, there is a real dilemma in this area. Two approaches can be taken in terms of benefits and potential positives about Brexit and the negatives. Will we become a low-tariff, competitive New Zealand-style economy, open to free trade, open to those opportunities to bring down food prices and move on those deals where high-quality food and welfare standards will be difficult to enforce, given the sort of negotiations we will have with countries such as Australia, Argentina, Brazil and particularly the United States? Or will we continue to be a country, outside Europe, that demands high welfare standards and high-quality food and that looks to protect our hill farmers? It is absolutely clear that all our livestock farming cannot compete with the economies of scale, and particularly the lower welfare standards, in the large economies of the United States, Australia and New Zealand, perhaps, but also Argentina and Brazil. They can be characterised as the Liam Fox version and the Michael Gove view of Brexit—interesting but the Government will have to resolve that dilemma.
Will the Minister be able to include agriculture more successfully in his 25-year environmental plan? What is going to happen about tariff rate quotas? How does he see the whole WTO negotiations? How can we have a farming Bill when at present we do not know what the end destination is? Will the Minister reconfirm our commitment to high animal welfare standards? How does he see the transition?
Some 71% of land in the UK is devoted to agriculture, which employs 800,000 throughout the food supply chain and is 7% of the economy, worth £100 billion of value added. It is a vital part of our economy and our future. This raises as many challenges as it does opportunities. I beg to move.
Baroness Vere of Norbiton (Con)
My Lords, I respectfully remind noble Lords of the advisory speaking time of six minutes. There is another debate after this, and I am sure those noble Lords would be most grateful.
Lord Jopling (Con)
My Lords, I am delighted to follow the noble Lord, Lord Teverson. I congratulate him and his committee on producing a most interesting report, which takes us on to new ground. I particularly want to follow up the latter part of his remarks. I draw the attention of the House to my farming interests, as shown in the register.
Close attention is at last being paid to agriculture and the implications of Brexit. Twice in the last year I have spoken in this House about the fundamental problems and solutions: I am still waiting for a response from the Government. When I read the Minister’s evidence to the committee I did not get much further. We now have a position where the NFU and the Select Committee are beginning to address these crucial matters. Until now, apart from promises to continue the current support for five years, most of the comments from Ministers have related to environmental matters and animal welfare. These are important but they are not central to the challenges which we face in agriculture.
People are at last talking about trade and tariffs. I am very alarmed indeed when I hear former and current Ministers speaking about free trade and illustrating their point with New Zealand’s experience some decades ago. It had a ready, untapped market nearby which we do not. In the years after the Second World War, British agriculture was supported by a near-free-trade policy, but this was underwritten by a system of agricultural support through guaranteed prices and efficiency payments, which cost the United Kingdom Treasury huge amounts of money. A review of agricultural policy was set up after the 1964 Conservative defeat, led by my old friend Jim Prior—I am sorry that our noble friend Lord Prior is no longer in the Chamber. I was a member of that study, and we concluded that a better system of supporting agriculture was not through guaranteed prices and efficiency payments but through import levies. This became the policy of my party in both the 1966 and 1970 elections, before we joined the European Community. Some people criticised it because of its effect on the cost of living and the price of food, but this had no political impact because we were able to demonstrate that the effect was absolutely marginal. This is partly because food was a much decreasing part of the cost of living and partly because farm-gate prices are a small fraction of shop-shelf prices.
As the Select Committee report demonstrates, we still have support for agriculture in the United Kingdom through the common external tariff of the common agricultural policy. If we were foolish enough to move to a free trade philosophy, the agriculture industry would be challenged by a flood of cheap imports, produced under standards which are far below our own, which would depress prices. Not only that but our exports to the European Union—which as the noble Lord, Lord Teverson, said are very substantial—would have to jump over the common external tariff unless we were inside it. We face a great dilemma. First, we must realise that the neatest way to support agriculture is through tariff protection. The effect on the cost of living was marginal in the 1960s; it is even less now. The report suggests that in 2015 the tariff was 10.7% over all agricultural goods. We should seek to negotiate that so that we remain, as far as possible, within the current tariff regime of the European Union. Secondly, arguments in favour of free trade in agricultural products are, in a way, a repeat of the great debates on repealing the Corn Laws in the 19th century. It was wrong then and it remains wrong now.
Lord Rooker (Lab)
My Lords, I will kick off with a few words on the animal welfare report. The Government’s response to the report says that they want to maintain high animal welfare standards after Brexit, that it is important to base animal welfare policy on evidence, and that we should seek to avoid high standards being undermined by cheaper imports produced to lower ones. They agree that consumer awareness and appreciation of high-welfare products are key to the willingness to pay and that labelling is a key aspect of consumer transparency and awareness. However, it is speaking with a forked tongue to applaud high welfare standards while the food production animal is alive, but then ignore the issue at the point of slaughter. I am not in favour of banning any process that Parliament has agreed for exemption of the requirement for animals to be stunned before slaughter but, if we are to put consumers first and their interests to the fore, the label must clearly say whether an animal was or not. That is a key element in animal welfare. It is not a clear issue but it should be so for the consumer. There can be no argument—Brexit or not—which opposes informing consumers.
Will the Minister explain the Government’s response to paragraph 15 on financial support? What on earth did they mean about new ideas, piloting new ways of working, and telling people not to be guided by the CAP but to be creative for the future in respect of animal welfare?
Farming is for the long term; farmers cannot wait and wait before crucial decisions are made. I will illustrate with a couple of good, real-life examples where urgent decisions have to be made by the end of this year—not hanging around in the lazy way the Government are—which I found in the Agri Brigade column in the current edition of Private Eye. Unless an agreement regarding organic farming standards is signed between the United Kingdom and the United States in the next three months, the Organic Milk Suppliers Cooperative will stop production of Kingdom organic cheese, which has an 18-month production cycle. The deal for this is between the EU and the USA. It took the United Kingdom co-op eight years to develop the brand and in 2015 it became the first EU dairy business to qualify for USDA certified organic status. This opened up a premium market for UK farmers. Today, Kingdom Cheddar is the only volume European cheese sold in the United States. The UK co-op dairy farmer members altered their farming practices to meet US standards: in other words, they raised them from those of the EU. They had to use fewer antibiotics, improve breeding and calf management and improve animal welfare. The cheese needs a processing, maturing, packing and shipping time, plus a shelf life in the United States of 18 months, so an early decision by the end of this year is crucial to continue.
The co-op has pointed out that an exchange of letters between the United Kingdom and United States Governments does not need to wait until the Article 50 process allows for third-party talks; it is simply an equivalency exchange of letters to recognise regulatory standards of production. On 14 September, the co-op pointed out that this valuable business had been hard won. It says that it cannot afford to take the risk of producing for a niche market a product that it may not be able to be sell post Brexit in April 2019. What are the Government doing about this? Time is short; they must know about this. Will they agree, for example, to purchase production which in any event cannot be sold later to the United States? I have not raised this purely on the basis of what was in Private Eye; I contacted the co-op and have raised it with the agreement of its chair.
A second example is that of sheep production. This autumn, UK sheep farmers have to decide whether to retain millions of ewe lambs for breeding or send them for slaughter as fat lambs. If these young females are kept for breeding, most will not be put to the ram until late next year and will give birth in spring of 2019, just as the UK leaves the EU. Some 40% of lamb production goes to the EU, so unless we keep access to the single market, these exports will face an EU sheep-meat tariff of over £2,600 a tonne. The price that UK farmers receive for their animals will collapse and that will completely smash hill farming in this country. The idea that we can wait around for this lazy Government to wake up to the reality of life is a non-starter. We are being damaged as we speak. This is not something that can wait. Action on these two issues is required by the end of the year.
My final point concerns access to labour. The patronising attitude of the Government to the committee’s points on labour supply for the food and agricultural industries simply hides the fact that the leavers did not have a clue about the structure of the industry in the UK. In fact, the very same issue about EU labour supply is emerging in the committee’s current inquiry on energy security after Brexit. The status quo is not being maintained in the current period of uncertainty while the Tory party fights it out among itself, to the detriment of the nation because people are leaving the UK. This has nothing to do with seasonal workers; that is a separate issue. As we have already heard, 90% of vets, 40% of meat inspectors and an even higher number of workers in abattoirs and meat cutting plants are from the EU. The Government say that sourcing workers from the domestic market is the key. It is implied that reducing regulation, which I say effectively means risking food standards, is an option. This is what the Government mean when they refer to,
“more flexible inspection models and risk based controls”,
in their response to Recommendations 43 and 44.
I do not know why we carry on with this charade, to be honest. This cannot be done—it is as simple as that—without enormous damage to our economy, living standards, public services and standing in the world. The cost is too high. We know that now; we do not have to wait. As the noble Lord, Lord Butler, said earlier this afternoon, it is not carping to point out the obvious and take steps to avoid a very bad decision.
Baroness Miller of Chilthorne Domer (LD)
My Lords, I thank my noble friend Lord Teverson and his committee for producing two very thought-provoking reports. I am very much looking forward to the maiden speech of the noble Lord, Lord Vaux of Harrowden.
I would like to concentrate my remarks on conclusion 153 of the committee’s report on agriculture, which states:
“It may be hard to reconcile the Government’s wish for the UK to become a global leader in free trade with its desire to maintain high … standards for agri-food products”.
I think it will be not just hard but impossible. Besides the quality of our food, we can reach the same conclusion about our countryside, biodiversity, farm animal welfare, workers’ standards and almost every aspect of farming. The choice is between keeping what makes our landscape and food special or opening the door to free trade agreements that will force low food prices to determine everything. I remind your Lordships that cheap food is cheap because the environmental cost, the health cost and every other cost of producing it are hidden.
I was very pleased to hear Michael Gove say that we are,
“determined to be global leaders in protecting unique landscapes and habitats”.
To achieve that he will need to speed up the environmental plan so that there is a policy base for negotiations. I thank the Minister very much for chairing such an interesting round-table discussion on the plan last week in your Lordships’ House. I hope that it will be the first of several. Michael Gove also said:
“Our new agricultural policy will recognise the importance of improving production as well as protecting our strong food and animal welfare standards”.
However, he gives no clue as to the policies that will make this happen. I suggest a few policies that could help our farmers maintain their place in a global marketplace. I think that New Zealand has been mentioned at least twice this evening. The fact is that our farmers will not be able to compete with mass-scale, low-standard production scenarios. Britain has 700 people to the square mile and New Zealand just 46. We are a small, intensely populated island so we must plan for an agriculture that is closely and sensitively related to our communities and recognises that the health of our ecosystems is fundamentally related to the health of our cities, towns and villages. We are a relatively small-scale producer in global terms but other countries buy from us because of the outstanding quality of British beef, lamb and other products. That is a good niche to be in and is one we can expand.
I hope that post Brexit the EU will still be an important market for us. Therefore, will we try to conform to the same standards? Two current examples are neonicotinoids—I know that the Minister is responsible for the national pollinator strategy—and glyphosate, both of which are being increasingly restricted and possibly phased out in the EU. Will our Government move in parallel?
To keep and develop our quality agriculture, it is clear that we must encourage bright young people to go into farming. At the moment, scenarios of halving incomes, such as that in the Agriculture and Horticulture Development Board report, are frankly very off-putting to them—realistic but off-putting—and so are the nigh impossible economics of getting a foot on the ladder because of the diminishing number of small farms, which was so eloquently laid out in the recent CPRE report. That report shows why small farms of under 20 hectares are very important. Can the Minister confirm that the Government are already thinking that public money should reward farmers for public goods rather than the size of their landholding?
Animal welfare has been mentioned this evening. I maintain that animal welfare is definitely a public good because well-kept animals, besides that being ethically important, are healthier. That is a very important public good when it comes to antibiotic usage. Other important policy areas to develop a vibrant food production sector include continuing to follow the precautionary principle with regard to pesticides and hormone-treated meat and improving food labelling schemes, which was also mentioned this evening. It is necessary to maintain country of origin labelling but expand that to include production methods, as advocated by the Labelling Matters coalition, and for all the reasons so eloquently laid out by the noble Lord, Lord Rooker. We need to be more open to farming methods such as agroforestry which deliver multiple benefits and multiple incomes for farmers. What are we going to do to recognise diversity of breeds and seeds? For example, diversity in seed varieties is very important. What will happen with the registration and intellectual property rights of EU-registered varieties?
Finally, there are two issues in the Brexit debate that are Defra’s responsibility but have not been mentioned recently. If Brexit happens, pets and pet owners face a sad choice: take holidays apart or do not travel. Pets will have to be left in kennels rather than enjoying France or Spain with their owners when the EU pet passport scheme stops applying to the UK, as the UK leaves the EU. Will owners returning from the EU with pets face months of quarantine? Can the Minister give any reassurance that reciprocal arrangements for pets will be reached such as those that will apply to people?
Finally, animal passports will also affect the multibillion-pound horseracing industry. Currently, Irish, British and French counterparts can, under EU law, move tens of thousands of horses a year freely in and out of each other’s countries without hindrance. What will happen if that tripartite passport scheme were to end? What discussions have been held about this issue, and is there a solution within sight?
Lord Curry of Kirkharle (CB)
My Lords, I welcome the opportunity to contribute to this debate. I, too, am a member of the committee and I want to express my appreciation for the excellent support that we received, and continue to receive, from our clerks and the staff team. I declare my interests: I am a partner in a farming business in Northumberland and a trustee of Clinton Devon Estates, both of which are in receipt of the EU basic payment scheme and engaged in environmental stewardship. My other interests are listed in the register and include chairmanship of the National Land Based College and the Prince’s Countryside Fund.
For the agricultural sector, Brexit presents the most important event since the Agriculture Act 1947. This is a once-in-a-lifetime opportunity to reshape British agriculture and make sure that we design appropriate support arrangements and negotiate sensible trading agreements, so that we really can ensure that agriculture continues to contribute to the economy, is valued by the food industry, can shape and influence the management of the countryside, and can influence the health of the nation.
The noble Lord, Lord Teverson, has already highlighted the economic importance of agriculture, which, together with the food industry, is the largest contributor to the UK economy by far. However, with well-designed policies, and appropriate access to markets, British agriculture could contribute much more. Brexit presents an exciting opportunity to reshape the future for farming in the United Kingdom. The trade negotiations are of critical importance, as we highlighted in the report, and I am pleased to see that the Trade Minister is negotiating a split of the tariff rate quotas with the EU, as we recommended, even if this proves an interim measure for a transitional period while we negotiate longer-term trade deals. The noble Lord, Lord Teverson, has already mentioned this issue.
Access to the EU market is critical for all agricultural products, particularly our lamb and pork. The noble Lord, Lord Rooker, has passionately referred to this. I fully understand the need to take a tough stance in negotiations and threaten to walk away, but I hope common sense will prevail on both sides and that we secure access to markets without major disruption. I also hope agriculture is not sacrificed as part of the panic to reach trade deals, to open up markets for the rest of British industry. Moreover, we need a period of transition or implementation—I really do not mind what it is called.
We also need to take this opportunity to review our performance as an industry sector and to seriously examine whether we are fit for purpose and able to withstand greater competition, as we anticipate more exposure to global markets post Brexit. We should seize the opportunity to address our own productivity record. Productivity needs to be a major driver of policy. Time is short so we should develop, as a matter of urgency, tailor-made solutions focusing on skills and the application of science. We need a professional industry, as the noble Baroness, Lady Miller, said, that attracts bright talent. Our record in the application of scientific knowledge—knowledge exchange—has not been good enough. As I said at the beginning, I declare an interest in these areas. It is essential that the Government recognise the potential to improve our productivity and ensure that targeted support and incentives are available to address this. It should be an important component of a redesigned policy.
The Prince’s Countryside Fund has already been doing some important work with a programme aiming to assist family farm businesses to improve their confidence, efficiency and resilience. I know the Minister is well briefed on this work. Many farm businesses are under severe pressure and need sound advice to make both short and long-term decisions on the future of their businesses. A recent analysis by the PCF shows just how dependent many family businesses are on the basic payment scheme. Only 16% made a profit from farming activities without the benefit of the BPS and other diversified income. Many of these farms are impacting on our productivity and need help. For some, a well thought-through exit scheme would be a sensible solution.
We also referred to regulation in the report and, as a former chair of the Better Regulation Executive, I am very concerned, not only about the transfer of EU regulation into domestic law but also that we take the opportunity to simplify support systems. We said:
“Brexit presents a new and important opportunity to replace elements of EU agricultural regulation that are bureaucratic, ineffective or ill-tailored to farming conditions in the UK”.
I hope the Government will bear this in mind.
There is lots of speculation and debate about how to design a new support system that properly recognises the public goods that agriculture delivers, and has the potential to deliver, in its management of the countryside. We address this in some detail in the report. It is vital that we try to quantify what those public goods are, their value, and how they can be applied and targeted to deliver specific outcomes in different geographic areas. Obviously, caring for the environment, in both environmental protection and improving habitats—building on the progress that we have made—is critical, but these are not the only public goods that agriculture delivers. I have been trying to encourage Ministers and officials to view this as an opportunity to be clear about the outcomes that we want from the management of the countryside. These include environmental outcomes, of course, but also outcomes in water management, carbon sequestration, public access, healthy and wholesome food, vibrant rural communities and so on. Once we are clear about these outcomes, we can then target policies to deliver them if the market will not do so.
Finally, let me move on to the need to replace the CAP with a UK framework. We address this in the agriculture report. I fully understand that the devolved Administrations of the United Kingdom will see Brexit as an opportunity for further devolution of both resource and policy. However, the potential for having very diverse polices throughout the United Kingdom create confusion and conflict is very high. We said in the report:
“This will require either a UK-wide framework or the negotiation of co-ordinated agricultural policies by the UK Government and the Devolved Administrations”.
We need to take this seriously: it is a real concern and it is urgent.
In conclusion, it is a real privilege to have the opportunity to contribute to post-Brexit policy design. Most of us were too young in 1947. It is also a huge responsibility, and we need to think very carefully about how we do it. This is such an important point in our history: we will leave a legacy that will be judged by future generations.
Lord Whitty (Lab)
My Lords, I congratulate the noble Lords, Lord Teverson and Lord Curry, and the other members of the committee. It is a very effective report. We speak in a week when we have had two quite bad pieces of news. The first is that the Agriculture and Horticulture Development Board has produced a fairly well-based report on its expectations for various scenarios as the outcome of Brexit. They list three: evolution, which is, broadly speaking, the Chancellor of the Exchequer’s preferred outcome; unilateral liberalism, which I presume is Liam Fox’s preferred outcome; and fortress Britain, which, I presume from his remarks this week, is Chris Grayling’s preferred outcome. Whatever the origins of those broad-brush outcomes, the conclusion is that in the last two, there will be dramatic falls in farm income in almost all sectors and for almost all farms. In the first scenario, which is broadly the status quo—through a free trade agreement—farm incomes will be kept up only if the level of subsidy from the UK Government keeps pace with what would otherwise have been the European payouts. In all three scenarios there is a presumption that consumer prices will increase, which may be interesting for some theorists. As the noble Lord, Lord Curry, says, we have an opportunity to redevelop and bring in a different British agricultural policy, replacing the 40-odd years of the CAP. Michael Gove has a serious challenge.
We have to see any new agricultural policy in the broadest possible terms. As a bit of history, the CAP was first conceived not simply as a protectionist food policy—although it was always that—but as a regional, rural and social policy. In effect, it was avoiding for the rural areas of France and Italy the kind of depopulation and rural poverty which in the previous century had hit other economies such as those of Ireland and Scotland, and which in the current century is hitting many Asian economies with rural depopulation and poverty. The CAP has always had multiple outputs.
Therefore, we need a wide range of objectives—public goods, as the noble Baroness, Lady Miller, calls them—for any new system: support for the wider rural economy and society, and the rural environment; support for land and water management; and the preservation and enhancement of our natural capital. The answer will be different in different parts of the country, and it will be different in different English regions. However, there are political problems with the fact that they will be very different in different parts of the devolved Administrations. If what has hitherto been the Brussels input to agricultural policy is simply centralised in Whitehall, there will be quite serious problems with the devolved Administrations. We need an all-UK approach to this, but it will be difficult to achieve without causing grave difficulties for the devolution settlement.
Just this week, Carwyn Jones, the First Minister of Wales—who was my oppo in Wales when I was Agriculture Minister and he was in Cardiff—has pointed out that certain trade outcomes and regulatory outcomes could completely wipe out hill farming in Wales. That would be a disaster, not just for Wales but for the whole country. There will also be serious problems in Scotland and Northern Ireland. In the latter, it is greatly compounded by areas covered by previous reports from the Select Committee with regard to the Irish trade and the dominance of the north-south arrangements. Goods which end up as consumer goods finally cross the border several times, and the Irish economy, both north and south, depends heavily on exports to the UK, and via the UK to the EU.
My second main point is on trade. The noble Lord, Lord Teverson, already reported on this week’s row on trade quotas. This is a situation in which, quietly, EU, UK and WTO officials were seeing a way forward. Almost immediately after that became semi-public knowledge, it was objected to by other countries, with which some hope we will reach very detailed free trade agreements in the near future. This proves a number of things. First, we do not have that many friends out there. However, it also proves that if agricultural quotas are not settled, it will be very difficult to deliver a whole-scale free-trade agreement with Europe and, beyond Europe, with other countries. Unless agricultural quotas are settled, because agriculture is such an important aspect of the European Union, reaching an agreement on other trade arrangements with Europe will be more difficult. When we come to negotiate the other agreements that people have in mind, unless we have settled that, they will not know what their quotas will be, whether they have an arrangement for a free-trade agreement with Europe already—in which case there are quotas referred to there—or if they can trade with Europe free of quotas but facing tariffs.
It is in fact worse than that. Historically, any agreement on trade has floundered heavily on failure to agree, under the WTO or whatever, and under GATT before it, on agricultural quotas and the reflection of the level of subsidy—the amber box subsidies—in any trade negotiations. The latest example of that, only 10 years ago, was the almost complete failure of the Doha round, principally because we could not agree multilaterally on trade quotas and trade subsidies for agriculture.
Agriculture therefore has implications way beyond its own importance within our economy, our society and our countryside. Unless we manage to resolve with our European partners and beyond the way in which we treat trade in agriculture, we will not get free trade agreements anywhere.
Lord Hope of Craighead (CB)
My Lords, I, too, congratulate the noble Lord, Lord Teverson, and his committee on their excellent and wide-ranging report on agriculture. Things have moved on a little since it was published last May and the Government issued their response to it. But for Scottish farmers, which is my area of interest, their future outside the EU is still a very uncertain world.
I am not a farmer or a landowner. My only qualification for contributing to this debate is that I own a small cottage which sits in the middle of a hill farm in East Perthshire and which is close to some of the best soft fruit-growing areas in the region of Tayside. The hill farm is typical of such places in our area. The only income, apart from the subsidy under the CAP, to which the noble Lord, Lord Whitty, just referred, comes from selling the stock produced on the farm. As the farm is organic, there are exacting EU rules that must be and are complied with. The weather is a frequent cause for concern. Heavy snow at lambing time can result in many losses. Late frosts and lack of rainfall may delay the growth of grass in the grazing areas, resulting in the need to buy in extra feed. The fact is that the subsidy is essential to the farm’s survival.
As for the fruit-growing areas in Tayside, raspberries and strawberries are now being farmed on an industrial scale. Access to a large and reliable workforce is crucial during the picking season, which can extend to as much as three or four months, due to the use of plastic tunnels and similar equipment. The bulk of this workforce is supplied by seasonal workers from the EU. Not nearly enough people live locally who are available or willing to do this work. Without certainty that this workforce will still be available after Brexit, these enterprises may have to close down and the industry disappear. So the effect of the vote to leave has been to create an increasing sense of uncertainty as we move closer to exit day.
There are three matters of particular concern: ensuring that the subsidy continues after Brexit; preserving and protecting the market for beef and lamb; and access to seasonal labour for the fruit growers. First, as the report makes clear, farmers in the devolved areas are proportionately heavily dependent on financial support from the EU. In Scotland, it comes in the form of the basic payment scheme, which is administered by the Scottish Government. In their reply to the report, the Government say that they will continue to commit the same cash total in funds for farm support until the end of this Parliament. So far, so good. But what will happen then? As each month passes, the end of this Parliament will draw closer, and there will be an increasing need for clarity as to what will happen after that. I appreciate that no Government can bind their successor, but it will not do for us to have to wait until the new Parliament has been elected to find out what will happen. Surely, some mechanism can be put in place so that farmers can be assured that the same amount of money, adjusted for inflation, will be available and ring-fenced for future years. The question of whether the current level of subsidy will continue beyond the life of this Parliament should not be allowed to remain unanswered for much longer.
Whether there will be continued access to the European market for Scotch beef and lamb, and if not, what will replace it, is a matter of increasing concern as well. Some 89% of Scotland’s exports in beef and lamb goes to EU countries. Demand for these products remains strong but its future has now been put at risk by the vote to leave. The Government’s response is right to draw attention to the conflicting factors that are at play as plans are laid for the future. On the one hand, there is the risk of barriers being put in their way by excessive tariffs or excessive delays at our frontiers. On the other, as has been mentioned, cheap imports of beef and lamb from countries with whom we enter into new relationships, with less rigorous standards than our own, would make our home-produced stock uncompetitive.
Hill farms operate on narrow enough margins as it is. In their response, the Government say that they will work with the industry to build a new future when we leave the EU and that the maintenance of our existing high standards will be protected through domestic legislation. Can the noble Lord say what progress has been made in discussing these issues, especially with the devolved Administrations, and what form that legislation might take? Trade, of course, is a reserved matter, but agriculture is not. Scottish hill farmers need an assurance that their particular needs are being taken into account so that the work that they are doing to such high standards will continue to be profitable.
Lastly, in their response to the section of the report on filling the labour gap, the Government say that this will depend in the first instance on the ability to source workers from the domestic labour market. They say that there is not enough evidence to introduce a new seasonal agricultural workers scheme, although they will keep this position under review. The Minister should come to Tayside in the harvesting season to see what is going on there. Access to the willing and competent workforce which its EU workers provide is vital to its success. The fact is that that region’s domestic labour market cannot provide that kind of service. That may not be the case elsewhere—I do not know—but it is certainly no answer to the fruit-growers in Tayside.
In response to the section on devolution, the Government say that they are aware of the importance of agriculture to the devolved Administrations, and that they will work closely with them to address the issues specific to their industry. Are they willing to acknowledge that the opportunities for filling the labour gap might differ between one part of the country and another? Will consideration be given to allowing Scotland to have its own seasonal agricultural workers scheme? I hope that the noble Lord will be able to use his influence to see that it will.
Lord Howard of Rising (Con)
My Lords, I declare an interest as a landowner and a farmer. I thank the noble Lord, Lord Teverson, and his committee for the work that they have done. The Brexit committees must be working overtime and all night for the amount of reports and papers they produce. Unfortunately, in the time available there is too much ground to cover in the detail that one would like, but there are one or two points that I would like to make to your Lordships.
In several places, both the animal welfare and food standards reports comment on the conflict between the present high standards in animal welfare and food products and on whether the ability to buy cheaper food in world markets might lead to a decline in those standards. In the case of animal welfare, I cannot see why coming out of the European Union should cause standards to decline. If there are lower tariffs, there may be attempts to import animals from countries where their welfare may not be to our high standards, but it should be quite possible to insist on standards, and the savings on leaving the European Union will mean that resources will be available to ensure that these standards are maintained.
The same would apply to food. If food purchased on the world market is cheaper, as the noble Lord, Lord Teverson, pointed out earlier, it does not mean to say that the food is worse. Indeed, it may be better. We know that the man from Del Monte only ever picks the best.
I realise that it is the job of the committee to foresee and bring attention to difficulties, but all too often the underlying assumption is that things will be worse outside the European Union. Too many of the comments of those consulted reflect their wish to protect their vested interests and cling on to subsidies, rather than consider what would be best for the greater good. That is understandable, but it is the duty of politicians to take an objective view. Although the report has much to commend it, there is still scope on occasions for a more rigorous review of the self-interest arguments—perhaps a little more Boris and a little less moaning.
Concern was expressed in the report about the availability of labour. However, I point out to your Lordships that, certainly in my part of the country, East Anglia, and on my farm in particular foreign labour was being imported to cope with seasonal requirements long before Britain joined the European Union, and this will surely continue after we leave.
Comment was also made in the report on the rigidity of the common agricultural policy, and this is certainly true. If we are to have farming subsidies, I agree with my right honourable friend the Secretary of State at Defra that they should be directed at preservation and conservation in a more flexible and environmentally friendly manner than the present system under the European Union. That system demonstrates how EU centralisation, one size fits all and bureaucracy can be plain foolish by the time it percolates through to where edicts are put into practice.
Lord Davies of Stamford (Lab)
My Lords, with very great respect to the noble Lord, I do not think that he has read the report on animal welfare which is before us. It makes it quite clear that WTO rules do not, contrary to what he said, provide a basis for excluding meat produced at standards which are too low.
I remind the House of my interests as declared in the register. I own some land in Lincolnshire, which I regularly rent out for grazing. I will endeavour to be very succinct and to advance simply six propositions in the course of six minutes.
The first proposition is that British agriculture will never again operate in such favourable circumstances as it does now, while we are a full member of the EU. That is simply because agricultural policy and agricultural subsidies are decided by 28 countries, in the great majority of which the political weighting of agriculture is much greater than it is in this country. Therefore, the best friend of the British farmer has always been the French, German, Polish or Dutch Minister of Agriculture, not the British Minister of Agriculture, who has a brief from the Treasury saying, “For God’s sake cut the cost and reduce the subsidy if you possibly can”.
My second proposition is that that would be a problem if we remained outside the EU but in the single market in some form or another, because it would mean that over the years, with increasing discrepancy, British farmers would be subsidised and supported at a lower level than their competitors. In any market that obviously produces distortions, and things become very bad for the less favoured party, which in this case would be the British farmer.
Proposition number three is that far more serious is the scenario that the Government want to lead us into. It is one where we are not a member of the EU single market but endeavour to sign free trade agreements with lots of people around the world. The Government deceive themselves entirely about the prospects of doing that, by the way. I have explained on many occasions in our debates that there is very little prospect indeed of signing such a deal with China unless we are prepared to drop steel quotas, or with India unless we are prepared to accept Mr Modi’s demands for massive immigration into this country, or with the United States unless we are prepared to accept hormone-injected beef and chlorinated chicken. So there are great difficulties in that and, even if there were not, it would be absurd to say that we should throw away the benefit of the particularly favourable terms under which we can sell 70% of our exports to the EU and to those countries with which the EU has free trade agreements, and to suggest that we can compensate for that with the remaining 30% of our exports. As I have just explained, more than 90% of that 30%—that is, the three countries I mentioned—are very unlikely to do a deal with us at all. Therefore, the Government’s policy urgently needs rethinking from the bottom up. They are leading this country into a minefield, which is uncharted from their point of view, and I am afraid that they do not see the great dangers that we are facing.
However, in the event that we sign free trade agreements with some other countries—let us say members of the old British Commonwealth, such as Australia, New Zealand and Canada—they will be largely concerned to sell us their agricultural products. We will have very large refrigerated ships arriving in London every week with massive amounts of cheap Australian frozen beef, which will knock the bottom out of that market.
Therefore, my fourth proposition is that in those circumstances we will have the worst of all possible worlds. We will have a situation in which British farmers meet competition from countries with cheaper labour and considerable efficiencies and economies of scale, undercutting our producers in the domestic market —and, at the same time, because the continentals will not allow us tariff-free access to their markets while we allow other countries to export to the UK in competition with their exports, we will have to face tariffs on our exports to the EU. That point has already been well made. The tariffs are very high—20%, 40% or 60% at present, depending on the product. That would be the worst of all possible worlds for British agriculture.
I make two propositions on the animal welfare issues that have been raised in the second of the reports before us. Proposition number one: it is a total waste of time and will not contribute one iota to the sum of animal happiness, and will almost certainly contribute to the detriment of animal happiness, to concoct a system of animal welfare and not protect it at the frontier by excluding imported products that are themselves produced to lower standards. If you do that, you are simply exporting the industry to somewhere else in the world where animal standards are lower, losing employment in this country and generating employment somewhere else, and the animals will certainly be treated far worse wherever they are then raised. Quite disgusting things happen to these poor animals, including in what we might think of as sophisticated markets such as the United States, which runs almost a complete zero grazing system. This will not contribute at all to animal welfare but will destroy employment in our own country. It does not make sense.
My final proposition is this: it is not possible to stop products coming in at the frontiers, as logically should be done, because it is not consistent with WTO rules. The committee could have been slightly more unambiguous on this point, as it is quite clear that there are no WTO rules to provide for that. It is therefore quite certain that a large number of countries will say that it is excluded by the WTO rules. We have already heard examples this evening of how the WTO can take a very perverse line, if it wishes to, in pursuit of the interests of a particular nation. The idea of renegotiating the rules of the WTO is complete nonsense —it would take decades. And why would any of these countries agree in principle to change rules that are, in many cases, in their favour and against our interests? I am not sure that that problem can be resolved.
The position is this: the prospects of the British farmer are pretty grim and the prospects for animal welfare are pretty grim. We owe it to the nation to say those two things extremely clearly.
Lord Vaux of Harrowden (CB) (Maiden Speech)
My Lords, it is an honour to speak for the first time in your Lordships’ House. It is often said that joining this House is like being a new boy at school. I would go a little further: it feels more like being the nervous child who joins half way through the second term, when everyone else has already made friends and knows their way around the building. It is for that reason that I am so grateful for the kind and generous welcome from so many of your Lordships. I am not sure whether to be reassured or worried by the noble Lord who said, “Don’t worry, I have been here for 10 years and I still feel like the new boy”. I also thank those many members of staff who have been so helpful in my first couple of weeks. I know I will need their assistance for much, much longer and I thank them in advance.
I have received much advice on the subject of this maiden speech—gratitude and brevity are common themes. On the matter of controversy, it has been less clear-cut. I will try not to follow the advice that said, “Don’t worry about that; just go for it”.
My career has been mainly in finance and technology, as well as the emerging markets of south-east Asia. More relevant to today—and here I must declare an interest—for the last couple of years I have been farming beef and sheep in south-west Scotland and am in receipt of various subsidy payments under the CAP.
I thank the committee and the noble Lord, Lord Teverson, for these excellent reports. The Brexit: Agriculture report provides the best independent analysis that I have yet seen of the many opportunities and challenges, sometimes contradictory, that the industry is facing. Less favoured area beef and sheep farmers face particular challenges. Up to 40% of sheep farming production is exported, of which around 95% goes to Europe. Profitability is already low. The noble Baroness, Lady Miller, and the noble Lord, Lord Whitty, have already referred to the AHDB report that shows that profits could halve. In fact, it shows specifically that, in the worst case, LFA beef and sheep farmers risk having their profits entirely wiped out.
I welcome the Government’s statement that they do not wish the industry to face a precipitous cliff edge and the commitment to provide the same cash support until the end of the current Parliament. However, in the event of a no-deal Brexit, at the end of March 2019 sheep farmers will be faced with an immediate loss of market for over a third of their production. Could the Minister please explain what analysis the Government have carried out on the impact of a no-deal scenario on the beef and sheep sectors specifically, and what plans they have to mitigate the effects of this potential cliff edge?
The Government’s response to these reports sets out many general aims and intentions, all individually laudable. For example, the introduction to the response describes a,
“once in a generation opportunity to transform our food and farming policies, improve our environment and protect our rural landscapes … to create the best trading framework for both consumers and producers”.
On sections 31 to 35 of the report, the response talks of designing,
“a new agriculture policy from first principles in order to most effectively support the agricultural sector”.
It is hard to argue with any of that. However, I know I am not alone in feeling that these responses are, if your Lordships will forgive me, rather woolly.
As the noble Lord, Lord Rooker, pointed out, farming is a long-term business. Investments in land improvement, machinery, buildings and bloodline improvements and so on are all substantial multiyear commitments for small family businesses. The lack of specific policies and the resulting uncertainty is making it very difficult for farmers to plan for the future. Talking to a neighbouring farmer on Saturday, he said simply, “It is just all up in the air”.
There is already anecdotal evidence of delayed investment decisions, and it seems likely that the availability of finance may start to be affected. This would have serious knock-on impacts throughout the supply chain and for the wider rural economy. The average age of farmers is 59, and the uncertainty is putting succession plans at risk and must be deterring new entrants to the industry. Will the Minister please assure us that we will soon see the,
“coherent domestic policy to support farmers to become more profitable, to support environmental outcomes and to promote things such as animal welfare”,
which the Minister of State referred to in his evidence, as set out in paragraph 17 of the report, so that farmers can start to invest for the future again?
The Earl of Kinnoull (CB)
My Lords, it is a great pleasure to follow for the first time my noble friend Lord Vaux of Harrowden after his excellent and fluent maiden speech. He brings to the House not only expertise in agriculture but strong credentials both as an accountant and as someone who has held senior positions in the software industry for almost two decades, in both the UK and Asia. At the weekend, I spoke to a near neighbour of his in Galloway. In praising my noble friend’s diplomatic skills, this neighbour suggested that one of his toughest assignments, indeed achievements, has been to bring harmony and order to an important local entity that he chairs. I speak of course of the Fleet District Salmon Fishery Board—the source, no doubt, of a lot of local argy-bargy. I look forward very much to hearing his many contributions to the House in the years to come.
I declare my interests as set out in the register of the House, especially those in relation to agriculture, and remind the House that I am also a member of the European Union Select Committee. I too congratulate the noble Lord, Lord Teverson, on the barn-storming speech he made earlier. It was the most wonderful survey of what has gone into these two very powerful reports in this important debate.
I will make three points tonight and confine myself to the Brexit: Agriculture report. All these points relate to resources. The first concerns seasonal workers, and here the ground has been prepare by the noble Lords, Lord Teverson and Lord Rooker, and my noble and learned friend Lord Hope of Craighead. I live in Perthshire, surrounded by soft fruit farms, and am active in organic vegetables. I can confirm that the local farms active in these sectors, including us, use significant numbers of seasonal workers, almost all of whom come from EU 27 states. I repeat the invitation of my noble and learned friend Lord Hope, and associate myself with all his words, and ask the Minister to come to Perthshire, where I will give him a personal tour of the situation so he can see how strong these businesses are and how much we depend on these seasonal workers.
The report went into the science of this. Paragraph 253 records that Queen’s University Belfast estimates that, UK-wide, this seasonal workforce is 80,000 strong in horticulture alone, 98% of whom are from the EU 27. Paragraph 264 of the report goes on to say that:
“Many workers in the agricultural sector are often regarded as ‘unskilled’, but are in fact extremely skilled at sector-specific tasks such as crop handling and harvesting”.
I know only too well how true this is. I was, therefore, initially delighted to read in the Government’s response that:
“Access to a sufficient and appropriately skilled workforce is essential for the whole food chain, and we welcome the Committee’s recognition of the importance of this issue”.
However, I was baffled later on in the Government’s response to read:
“For seasonal workers, the Government has stated that it does not believe that there is sufficient evidence to introduce a new Seasonal Agricultural Workers Scheme in at this moment. We keep this position under careful, ongoing review”.
I regret—and here I concur totally with the noble Lord, Lord Vaux—that these words have sent a shiver down the spine of those businesses which use seasonal agricultural workers and their investment sentiment is accordingly very poor—and it is very poor in the very agricultural sectors that have been responsible for so much of the growth in agricultural GDP in recent times. “Why would one invest in a climate of such future workforce uncertainties?” is essentially the question being asked at the farm tables, in Perthshire for sure and, I have no doubt, elsewhere. I would be grateful if the Minister would comment on all of this and tell us whether this position is changing and, if not, what extra evidence the Government need in order to change their mind.
Moving to my second point, as I believe the Government will conclude that a new SAWS is not only necessary but very much in UK PLC’s interests, I hope that such a new scheme will learn the lessons of the old one. An example here would be the need for flexibility on visa end dates. The old SAWS was clear that, when the time was up for a seasonal worker, he had to go home. This was unhelpful in the agricultural sector where harvests can be late unexpectedly, leading to wholly unnecessary problems.
A more important example for today is the fact that forestry was not included in the old SAWS. Earlier today in the River Room, the Minister was launching Action Oak. This vital initiative unites all the relevant UK bodies in working together in the face of the multiple disease, pest and squirrel threats to trees—particularly oak trees—and, ultimately, of course, to energise landowners and land managers to plant. It is a milestone in helping to protect our countryside and environment. A small part of this milestone will involve the use of seasonal forestry workers. Accordingly, I ask the Minister to confirm that the needs of the forestry industry will form part of the careful, ongoing thinking that the Government are doing about seasonal agricultural workers, as I referred to a moment ago,
In closing, I move to my third point. The report sets out between paragraphs 277 and 283 why Defra needs considerably more resources, especially additional staff. The Government response on 29 June stated:
“The resourcing of EU exit work is a key priority of the Department and is subject to on-going assessment. Work continues to identify the number of dedicated posts required in the long-term to meet the demands of EU Exit”.
In other words, “Don’t know about that”. I wonder whether, three and a half months further on, the Minister could update us on how the thinking is on whether Defra really has enough resources. I know that this House would press strongly for resources to be given to Defra at this vital time.
Throughout this debate there has been a common theme of the importance of the agricultural sector to our nation and of it, and indeed Defra, being properly resourced. I hope we will hear strong and positive news from the Minister who, as the whole House knows, understands all of these issues so well.
Lord Wigley (PC)
My Lords, I also congratulate the noble Lord, Lord Vaux of Harrowden, on his polished maiden speech and wish him well in the House. I am grateful to the noble Lord, Lord Teverson, for introducing this report. I should declare an interest by way of ownership of six acres of farmland—not one of the biggest estates in the land—and as a member of the Farmers Union of Wales.
I want to put on record the very grave misgivings among the agricultural fraternity in Wales concerning Brexit, particularly if it transpires to be—as seems probable—the hardest of hard Brexits. There are many aspects of life in Wales which differ from those of England, but none more stark than in the agricultural sector. Sheep farming is the predominant sector in Wales, with 80% of Welsh farms involved in the sheep industry, and the Welsh sheep flock amounts to 29% of that of the UK.
The proportion of Welsh GVA produced by agriculture is about 0.7%, compared to 0.4% for the UK. It was because circumstances are so very different for agriculture in Wales to that in England that agriculture was fully devolved to the National Assembly. That is one of the compelling reasons why any powers returned from Brussels to the UK which are relevant to farming should be fully transferred to the devolved Governments. It is then a matter of getting an agreed framework in place for discussions between the four Administrations of these islands to ensure that issues relating to the harmonious working of a UK single market can be best resolved.
As we leave the EU, we shall of course leave the CAP. Welsh farmers could face a cash crisis unless there are specific safeguards. These are necessary because Welsh farm income levels are very modest. Between 2012 and 2016, the average annual farm business income of all Welsh farm categories was only £26,520. Welsh agriculture depends heavily on financial subsidies from the EU. Wales currently receives about £274 million a year by way of direct subsidies under the CAP, with a further £555 million coming to Wales between 2014 and 2020 through the Rural Development Programme. In total, 80% of farm income in Wales comes from the EU’s common agricultural policy.
The current level of funding should be guaranteed by the Treasury to the Welsh Government, as was promised time after time by Brexit campaigners during the referendum. These funds should be outside the Barnett block and ring-fenced by the Welsh Government for supporting agricultural. Such guaranteed funding should run for 10 years. It is no use promising that the funding will last only to 2022 when agricultural investment runs on a five to 10 year planning cycle.
Welsh farming, particularly the meat sector, is heavily dependent on EU markets, which take some 35% of all the meat produced in Wales. So the outcome of Brexit is critically important for Welsh farmers. Any changes to the CAP levels of funding or in market access could have catastrophic consequences. The degree of damage will depend on the type of Brexit which the UK Government negotiates.
In this context, an important study was published in August. Undertaken by FAPRI, the Food and Agricultural Policy Research Institute, it was commissioned to undertake the economic modelling work by DEFRA and the devolved Administrations. The conclusions of that work were dramatic.
The study focused on three alternative scenarios. The first considered the impact if the UK succeeded in negotiating tariff-free and quota-free access for UK products into the EU and likewise for EU products into the UK, with the UK maintaining the EU tariff structure to the rest of the world and for there to be a 5% facilitation cost on UK-EU trade. In these circumstances, the study projects a small benefit for the UK beef and dairy sectors and a marginal 1% decrease in sheep prices and output value. We could live with that option.
The second scenario was on the basis of there being negotiated a World Trade Organization default package, including most favoured nation status being granted to imports from the EU to Britain and on UK exports to the EU; for tariff rate quotas to be retained on imports from third countries; for no change in the tariff structure for exports to the rest of the world; and for there to be an 8% facilitation cost on UK-EU trade. This would have a favourable impact of up to 30% on beef and dairy prices, but an adverse impact of 30% on sheep prices. That clearly could be advantageous for some parts of Britain but devastating for large parts of Wales. It would also have a 4% to 5% adverse effect on wheat and barley, which should make England hesitate before supporting that option.
It is, however, the third scenario which should frighten the living daylights out of anyone concerned with agriculture—the hard Brexit option of unilateral trade liberalisation. This would mean zero tariffs on imports into the UK, both from Europe and the rest of the world; it would mean having most favoured nation status for UK exports to the EU; no change in tariff structures for UK exports to the rest of the world; and an 8% facilitation cost on UK-EU trade. This scenario—the black Brexit bombshell, if I can call it that—would cause a 45% drop in beef prices, a 29% drop in sheep prices, a 10% drop in milk and dairy prices, and a 5% to 7% drop in wheat and barley prices.
This month, the Agriculture and Horticulture Development Board published the results of similar modelling which again predict that, for all the extreme Brexit scenario, there would be a drop in all farm incomes of over 50%, with less favoured area livestock farms particularly hard hit.
The Farmers Union of Wales has called on the Government to secure a long-term agreement with the EU to maintain tariff-free access to the EU’s single market for Welsh agricultural products. The FUW has also called for a 10-year transition period. This is something that Brexit campaigners must take on board: the harder the Brexit settlement, the longer the transition period that will be necessary in order to minimise economic chaos.
What all this means is that a hard Brexit will signal the end of Welsh farming as we know it. Any Government which would allow this to happen would be guilty of mind-blowing irresponsibility. If there is to be a hard Brexit, surely there must be a confirmatory referendum in early 2019 so that people have the opportunity to think again. Among those leading the queue for such reconsideration will be the farmers of Wales when they fully appreciate what is about to hit them.
The Duke of Montrose (Con)
My Lords, I join those who wish to congratulate the noble Lord, Lord Teverson, on securing this debate. I must declare my interests as set out in the register, in particular as the recently retired president of the National Sheep Association of the United Kingdom, 50 years as a hill livestock farmer and member of the Scottish NFU.
I consider it a privilege to have been able to participate in this committee inquiry, and the rate at which our committee staff summed up the evidence put before us I found quite breath-taking. We received evidence from 20 witnesses representing every aspect of the industry, from academics to production and marketing. We also received 56 written submissions, all of which must have a direct interest in this subject, including from the Minister.
For the livestock side of the industry, it hardly needs me to emphasise what many other Peers have been saying. In fact, most of the points I would like to make have already been introduced into the debate, but I want to nail down one or two aspects. Anything less than tariff-free access to Europe will cause immense disruption to the livestock industry. The noble Lords, Lord Whitty and Lord Wigley, have drawn the attention of your Lordships to the Agriculture and Horticulture Development Board report which came out just last week. It reiterates that the Government have said that they will guarantee the same level of funding at £3.1 billion for food production from the date of Brexit to the end of this Parliament. Some farmers feel that they can operate without any of that, but what there is has provided a lifeline for much of our beef and sheep production, as many noble Lords have pointed out. Can the Minister tell the House how much, if any, of that sum was required for the administration of the current scheme or what additional costs were incurred under this heading? It would be a great triumph if the Government could come up with a support system that cost less, and I hope that they will strive to achieve that.
Most noble Lords will also understand how agriculture presents a stumbling block to the dedicated free trade enthusiast, a point made by the noble Lord, Lord Whitty, as it continues to develop tariffs and subsidies in spite of various international agreements. That is so much so that it has been the undoing of much that was hoped for in the most recent Doha development agenda. However, it has always proved hard to see how there cannot be some assistance in certain critical situations. The Government are obviously looking at the minimum that can be worked with as well as where we will stand if no deals are available. The noble Lord, Lord Teverson, told us that there has been some discussion about the allocation of European tariff-rate quotas for agricultural goods. Inevitably, this has produced a negative response from the third-party nations which at present are the beneficiaries of this policy, and that highlights how there is nothing straightforward about the whole negotiation. Because of the third parties involved, it looks as though no meaningful agreements can be reached until the UK lays out its attitude to basic WTO rules and publishes a proposal for its tariff rate schedule. Can the Minister tell the House if there is a target date for finalising this proposal and what that date might be?
The report I referred to earlier emphasises that the number of farms in England has fallen by 20% in the past decade, but we are familiar with the fact that that is only part of the story. Some consideration should be given to the manning required to keep the skills and experience needed to make the countryside run well. Until now, farmers have prided themselves on being open to innovation. The innovation they have welcomed has largely been in relation to efficient and economic food production. What illustrates that well is that according to World Bank figures, the total numbers working in UK farming just after the Second World War came to around 10% of the working population. Today the figure is less than 0.9%, which is a fall of around 99%. For other countries in Europe the equivalent figures are 20% at the end of the Second World War reducing to a current figure of around 2.8%. How much lower can we afford to go? Proposals now come with a heavy element of what we like to think will be beneficial environmental measures. There is no doubt that as we understand more about the science of what surrounds us, they are something that we have to try, but their history is fairly short and it will take some time to tell how many of them will turn out to be merely passing fads. We are still faced with an escalating world population and the need to double food production efficiently.
Baroness Murphy (CB)
My Lords, I speak with no more expertise in agriculture than being resident in rural south Norfolk, so I am rather like my noble and learned friend Lord Hope in that respect; I am surrounded by fields. The county of Norfolk has the largest agricultural sector of any English county and contributes 7% of English food production. I am a psychiatrist first and a historian second. I do not think that my first skill will be useful in this debate but perhaps the second will be.
I congratulate the committee chaired by the noble Lord, Lord Teverson, on identifying in no uncertain terms the serious risks to which the Government are exposing our rural community. Leaving the European Union is of course a political decision, not an economic one, but in my view possibly the most foolish political decision a UK Government have taken in my lifetime. I do not blame the British public. If you ask them a foolish question, you will get a foolish answer. There is no escaping it, however, because apart from the Lib Dems, the main political parties are intent on hurtling over the cliff like lemmings. By the way, lemmings are not committing suicide; they are simply misjudging the distance they have to jump across the water to find a new habitat—a rather better analogy for the Brexiteers, I think.
Our rural economy is kept afloat by the £3 billion that flows into rural areas from the EU, and while there is a commitment to the continuity of mainstream CAP funding over a brief transition period, history tells us that the Government will almost certainly pull the plug on farming subsidies quite quickly. There seems to have been very little in the way of learning from history of how previous subsidies developed over a longer historical period. I will not go back to the support for wheat producers through the Corn Laws that went on for 30 years after the Napoleonic wars, as the noble Lord, Lord Jopling, did, but I will refer to 1917 as the Atlantic blockades began to bite during the First World War. The Corn Production Act 1917 and Agriculture Act 1920 ensured that the last years of the Great War were profitable ones for farmers, but those Acts which protected farm wages and corn prices were repealed in 1921—just three years of peacetime for the Government to lose interest in farming. In 1921 the Government were facing a potential £20 million subsidy bill for the agricultural sector when other parts of the economy had no such protection and high food prices were resented by a predominantly urban electorate. We are, and remain, a nation of townies. The result was a rapid reduction in agricultural wages, by about 40% in the first year, and the increased indebtedness of farmers, which did not improve until subsidies were re-introduced in the Second World War. Then it started all over again. Indeed, subsidies were withdrawn again after the Second World War, apart from support for some important food products we were short of.
What will be different this time round? Perhaps the Minister will tell me. Will the urban public be happy to see £3 billion go into a sector that produces only £9 billion of GDP? That seems unlikely. As the economic disaster of Brexit impacts on the rest of industry and our public services, the Treasury will surely look to that £3 billion pot to start funding its other priorities—and I might vote for it too. That is a threat to the very fabric of rural Britain, not only to our home-grown food production capacity but to the environment, landscape and wildlife. I thought the noble Baroness, Lady Miller of Chilthorne Domer, would say what she has said before: that it would be ironic if the old Britain that the Brexiteers are so nostalgic for is wiped out by Brexit itself.
Of course, if we get a common market free trade deal with Europe and a continuing customs union, all will not be so doom and gloom, and there could be a new settlement for agriculture and the environment. No one doubts that the common agricultural policy system is inefficient and has rewarded the wrong things. Indeed, I carry no candle for the great wheat barons of Cambridgeshire; I hope one is not sitting in the Chamber. It would be nice to see more-focused support for the type of sustainable but efficient food farming that produces goods that are attractive to consumers all over the world without ruining our landscape. However, if we leave with no deal, as some deluded folk seem to think we can with equanimity, then, as we have heard so often here, our farming communities will become theme parks, perhaps for foreign investors chasing nice houses. Will the Minister assure us—I am asking a lot—that the Government will not leave the EU without a realistic trade and customs deal sealed, and will create a mechanism to support the public benefit that farming can have for us all?
Viscount Hanworth (Lab)
My Lords, I follow an excellent speech. The six sub-committees of the European Union Committee of the House of Lords have produced a collection of authoritative documents that have revealed in detail the nature of Britain’s relationship with the European Union. I have counted 17 such documents that are addressed specifically to the problems of Brexit, and there are more to come.
The reports demonstrate the complexities that an advanced industrial nation faces in the context of a global economy, where there are numerous interdependencies of trade and production; they have also served to highlight some startling deficiencies in the knowledge and intelligence of the incumbent British Government. However, to be fair, such shortfalls are inevitable in the complicated modern world. It seems that the sub-committees have processed and revealed far more information than the Ministers in charge of Brexit negotiations are capable of absorbing. Even the civil servants charged with advising the Ministers may be severely challenged. Therein lies one of the major hazards of Brexit.
The first matter on which to focus our attention is our trade in agricultural products with the EU and the rest of the world. The EU is our largest single trading partner in agricultural products. Of our agricultural exports, 80% go to the EU and 97% to countries in a wider free trade network, which includes the countries with which the EU has a free trade agreement. Likewise, 94% of our imports of foodstuffs and agricultural produce, which considerably exceeds the value of our exports, come from such countries.
The EU trading arrangements are based on a commonality of interest among the member nations, though their basic feature is unrestricted free trade among those nations. The EU has established numerous free trade agreements beyond Europe, while maintaining tariff barriers that have been designed to protect European agriculture and industry. The British Government are keen to maintain the benefits of our free trade with the EU while seeking to promote our trade with other nations through further reciprocal agreements. In the somewhat discredited phrase, the aim has been to have our cake and eat it. It is a fallacy to imagine that we could easily negotiate a more profitable trade in agricultural products with the rest of the world, as the Foreign Secretary has asserted. As examples of products that could be targeted for greater exports, he cited haggis, which the US has banned on health grounds since 1971, and Scotch whisky, on which India imposes a 150% duty. Those are hardly significant opportunities.
The process of negotiating trade deals is lengthy and difficult. At the heart of any such negotiations are the tariff rate quotas, which provide favourable reciprocal trading relationships at reduced tariff rates within limits governed by the values and volumes of the trades. Our Government have blithely assumed that they could acquire a proportion of the EU quotas determined by previous volumes of trade. As we have heard, that proposal has met with strong resistance from those with whom we would seek to increase our trade. The UK has been told that such an arrangement is unacceptable to the US and other WTO members, who wish to force the UK to open its market further to their farm products. Several witnesses who contributed evidence to our sub-committee warned that this would be the likely outcome. Many commentators regard it as unlikely that, after Brexit, the UK will be able to retain access to the free trade agreements of the EU with third countries. The nightmare is that we shall become subject to conditions of free trade in respect of imports, while being restricted in our exports.
The greater access to our markets of agricultural producers in the third world might result in lower prices for our consumers, but it could devastate our agricultural industry. In return for allowing our industrial imports into the US, we would have to allow the import of US agricultural goods that are produced to very different standards and by very different methods from our own. The EU imposes stringent standards on food safety, animal health, the use of pesticides and a wide range of agricultural practices. If Britain were constrained to pursue a trade policy outside the EU network, many of the standards that we impose on imports might have to be disregarded. To be competitive in overseas markets, we might have to lower our standards, which would severely prejudice our chances of maintaining our volume of trade with the EU. Merely to incorporate raw materials in our products from sources that are not regulated by EU standards would prohibit our trade with the EU.
Next, I turn to the restrictions on the freedom of movement of labour that are the objective of many Brexit advocates. British agriculture relies greatly on workers from the rest of the EU. There is considerable reliance on seasonal migratory labour for harvesting and fruit picking, but many permanently resident EU migrants are employed throughout the agricultural and food processing industries. Some of the facts and figures are surprising. We have been told that 40% of staff on egg farms are EU migrants, as are 50% of workers in egg-packing factories. In poultry meat factories, the figure is 60%. In recent years, nearly half of the veterinary surgeons registering in the UK have qualified from veterinary schools elsewhere in the EU. We have been told that 90% of the vets working in slaughterhouses are EU nationals from abroad. Vets can be described as skilled workers, in contrast to fruit pickers and abattoir workers. However, our witnesses have been unanimous in declaring that it is unhelpful to make such a distinction in agriculture. Fruit pickers may not have qualifications relating to their job but they are skilled nevertheless, and they cannot be replaced readily by casual untrained labourers. Our agriculture depends on them. Whereas some Ministers recognise the truth of that, the message coming from the Government is that the immigration policy after Brexit will be based on the skill levels of immigrants.
There is much more that can be said but I am conscious that our time is limited. I am happy to see that others have raised some of the many issues that I have neglected.
The Earl of Sandwich (CB)
My Lords, the noble Lord, Lord Teverson, and his committee have given the country an honest picture of the sorry prospects for agriculture in relation to Brexit. We have heard some splendid contributions. I congratulate my noble friend Lord Vaux on his very pertinent speech.
My interest in the register refers to income that our small west Dorset estate receives from the EU, chiefly under environmental stewardship schemes. I am also well aware of the plight of small and marginal farmers in the West Country, some of whom are our friends and neighbours.
The NFU reminds us that,
“farming is the bedrock of our largest manufacturing sector, food and drink processing. This is worth £108 billion per annum and employs 3.9 million people”.
Our whole nation owes a debt to farmers and farmworkers for our food supply and the care of our environment. Generation after generation of farmers have looked after these two essential elements in our lives: what we eat and the countryside we enjoy. And yet we are allowing the most vulnerable to go slowly down into the mud.
This must not go on. As the noble Baroness, Lady Miller, has already mentioned, we are already losing small farms day after day. One-third of all holdings under 20 were lost in just one decade, 2005-15, according to the CPRE quoting Defra. With Brexit looming, the prospects are not very bright.
The sort of vision laid out recently by Neil Parish MP in his CLA interview concerns me, because he should know. He mentions that struggling farmers and tenants on marginal land are expected to be the casualties of any future system, but he offers little comfort to them. He talks instead of,
“bigger ... and more competitive farms”,
in the future and sees competitive farming moving,
“towards more of a grant-based system”.
Payments, he says, must go to those who are “actually farming”.
The sub-committee wants the Government to clarify their intentions as soon as possible, as any reductions will have a significant impact on agriculture, as everybody has made clear. Equally, it says, farmers themselves will have to make a strong case and perhaps lobby Parliament to maintain support at the same, or similar, levels beyond the end of this Parliament.
One key point in the report was made by the First Minister of Wales, who said in evidence that the loss of subsidies would,
“put our producers at a competitive disadvantage”,
compared to other member states unless similar levels of support are put in by the Government. This is such an obvious fact that it stares us in the face and demands an answer.
The report also warns that leaving the EU will create,
“significant uncertainty for the … agri-food sector”.
If UK and EU standards begin to differ after Brexit, there is a risk for producers of substantial non-tariff barriers being in their way.
The section on movement of goods in the new customs White Paper conjures up the prospect of huge inland customs offices behind every port, with all the attendant queues and delays. How do the Government think that this could ever be an improvement on today’s traffic to and from the EU? How will farmers and food exporters be affected by the transition to WTO requirements? It seems, from all accounts, adversely.
In their response to the report, the Government admit that EU tariffs in the agriculture sector are higher and more complex than in other sectors and say that they are,
“carefully assessing the potential impact”.
Well, they should hurry. There is not much time.
The NFU has long grappled with the issue of better regulation. This is not an easy subject when you think of those complicated IACS forms and their successors. How can farmers or anyone expect to receive grants without completing these massive documents? Whatever the outcome of Brexit, I cannot see this as an EU problem; it is a UK disease just as much, so let us try to cure ourselves of it. We will all agree with Neil Parish that we want something that delivers payments on time and does not get messed up by computers. The NFU states that,
“farmers have had their fair experience of bad regulation and the NFU has … long campaigned for reform. This does not reflect an opposition to regulation per se, but rather a desire to see the details of design and implementation improved”.
Delays in Defra, hearings and appeals are another thing: I have myself waited two years and still have no reply. Then there are all the EU directives on clean water, nitrates, crop protection, animal welfare and so on. Are we going to reinvent all these? How will we trade with Europe if we are not aware of the latest standards of health and hygiene? Do our EU committees continue to monitor legislation, or will they be disbanded? These are serious questions and the exasperating fact is that this Government are still not in a position to answer them.
The latest “no deal” drama, designed perhaps to hurry the negotiations, is going to postpone these decisions even longer. In the end, surely we will have to accommodate the EU in roughly the way we do already, or else find ourselves on the end of fines and litigation. If an amendment to the Bill brings us back to the drawing board, I shall not be sorry.
Finally, on migration, which has been mentioned by many speakers, it seems obvious that many farmers and market gardeners who depend on seasonal migrant labour will find it impossible to carry on after Brexit—my noble and learned friend and others have mentioned this. The Government say in their response that they have announced their intention,
“to commission advice from the Migration Advisory Committee to better understand the reliance on EU migrant workers across the economy”.
As the report says:
“The entire food supply chain will be adversely affected”.
When will the MAC give this advice? Do we not know enough already to realise that these seasonal workers from Europe are either not going to come at all, or they are going in due course to be denied visas and deprived of any services normally due to them? They will go underground or disappear into the black market, and who is going to cope with that: accident and emergency?
Lord Greaves (LD)
My Lords, there were a lot of wise words there from the noble Earl. This is a really good report and I congratulate my noble friend and his committee on producing it, and I associate myself with a lot of what has been said today, particularly the excellent speeches by noble friend Lady Miller and the noble Lords, Lord Wigley and Lord Whitty.
The report is amazingly topical. That it is topical five months after it has been produced is a sign that nothing very much has happened. After the initial speech by my noble friend Lord Teverson, we heard an interesting speech from the noble Lord, Lord Jopling, with whose conclusions I agree. However, in the course of it, he attacked the repeal of the corn laws and I thought, “Only in your Lordships’ House could the repeal of the corn laws still be an issue for debate and discussion”. As the noble Lord said, it was wrong then and wrong now to remove the tariffs; I would say that it was right then and wrong now. It was right then because Britain controlled farming policy not only in this country but in all parts of the British Empire, which were the great wheat-growing lands, and it controlled much of world trade. The world has changed since then.
Many noble Lords have pointed out defects in the common agricultural policy—indeed, there are many—but the noble Lord, Lord Whitty, reminded us of the way in which the underlying purposes of the CAP have evolved over a period of time. When it was set up so many years ago, its purpose was essentially food security: to make sure that the then six members of the Common Market had security over their own basic food supplies—this was just after the war, when there was great insecurity around. In that, there is no doubt that it has been outstandingly successful. As the years have gone by, many of the other things that it has evolved and the ways in which it has supported agriculture have changed, from tariffs and intervention payments to maintain prices, through to direct payments, through to the present system of area payments—where basically farms are paid for being a farm and for being a certain size, whatever they do on that farm—together with Pillar 2, which has not used as much money as Pillar 1 by any means, but has evolved in ways which have enhanced local environments and rural development. I do not believe that without the CAP those policies would have been introduced into this country.
What do the Government want? In this week’s Farmers Guardian I came across a statement by a Defra spokesman. I will read it out because it includes all the contradictions and the lack of clarity which underlie the present position. It says:
“Outside the EU and free from the bureaucracy of the Common Agricultural Policy our farmers will be able to focus on growing, selling and exporting more fantastic produce. We are determined to get the best deal, one that allows us to continue to have tariff-free, frictionless access to the EU market and we will strike new trade deals around the world to help farmers take advantage of the growing appetite for great British food”;
in other words, every possible advantage of every possible system and every possible circumstance. The fact is that completely frictionless access to the EU market, which we have now because we are in the customs union as part of the single market, is incompatible with regulation-free operations. The European Union is simply not going to agree—whether or not the talks get that far—to frictionless access to the market unless this country accepts most of the rules and regulations that operate within the existing CAP and single market. We will have to obey the rules and will have no say in what they are. That is a fact that this Government do not seem to understand.
I just want to say something about food security and the very learned comments made by the Transport Secretary on television on Sunday that all we have to do is grow more food in this country. I do not think we need to grow more food. We might need to grow better food and different food but what we need to do is stop wasting so much food. About half the food grown in this country is not eaten. It is ploughed back because the market has failed; it is rejected by the supermarkets because it is not the right shape and colour; it is left unsold in supermarkets and thrown away; and huge amounts of it are bought and thrown away. If only people would really tackle that problem, it would transform the food market and answer a lot of the problems.
Ask farmers what they think about government policy at the moment and they will say, “They do not know what they want, they do not know what they are doing and they do not know where they are going”. A decision has to be made. The Government have to decide: do they want full, frictionless access to European markets and to remain a member of the biggest free trading area on the planet, with all the advantages of that, or are they going to throw all that away and go for the unknown?
The Duke of Somerset (CB)
My Lords, I welcome these two reports to the general series of Brexit debates, and declare my interest as a farmer in receipt of EU basic payments and as a landlord of other farms. The main theme running through both reports is the economic woe that would result from a hard Brexit, where WTO rules would prevail in the absence of trade and customs deals.
By way of background, UK farmers currently export at least 60% of their output to the EU. As the 18th speaker, I make no apologies for repeating some of the points that have already been made because they are very important. Our costs of production are far higher than our future competitors’, be it sheepmeat from New Zealand or beef from Brazil. Thus it would be a terrifying scenario were UK producers to face a likely 50% tariff tax into Europe, plus the customs checks, at the same time as they faced open doors to imports from the rest of the world at low or nil tariffs. A vivid example of this could be sheepmeat, which would look like this: New Zealand lamb imports, with no tariffs applied, arrive at about £2 a kilogram, as against UK lamb costs to the EU of nearly £6 a kilogram when the 50% tariff is applied. This will make no sense.
However, the Government have told us that they intend to maintain the current payments of subsidy to the end of this Parliament. But in terms of medium-term—let alone long-term—planning, which farming and certainly forestry need, this is not very reassuring. The Government talk of negotiating a deal as their preference, together with a changed subsidy basis at home, but daily we see the complexity of this, with the stalling of the talks in Brussels and opposition even to the reform Bill along the Corridor. Just look at the controversy over things such as third-country rules, rules of origin, the division of current quotas, or most favoured nation clauses. These are all challenging hurdles that we have to overcome.
Presumably we would like to see our citizens benefit from Brexit but the cost of food is rising and it is bound to do so. I hope that we will not abandon our animal welfare standards or our quality assurances but these will be extremely difficult to maintain in the face of free imports of beef from the US food lots or dubious chicken practices. One might say that the market will choose but when we buy our sandwiches or visit a food outlet, it will be nearly impossible to know the origin of the meat, especially as current food labelling can easily mislead. We also know that 85% of shoppers make their choice on price.
These standards add to our production costs, and the danger of a race to the bottom is well made in the reports —as is another major problem: our heavy dependence on EU labour. As in many other industries, our vets, our fruit and vegetable pickers and our milkers—as a few examples—are now mostly non-British. How is this to be addressed when we are unable to get the basic agreements as to the rights of our citizens living in Europe and vice versa? The House has frequently highlighted this problem, and it is vital that workers and employers have certainty now as to where they will stand at Brexit.
The question of definition between skilled and unskilled labour and the effect of this on visa approvals is paramount. Just because a worker cannot produce a paper qualification does not mean that he is unskilled. The recent fall in the value of sterling means a 20% reduction in wage values and it is not helping the retention of EU staff, so a recruitment shortage is already apparent. Perhaps the Minister will confirm that an assessment of needs will take priority over simple skill distinctions. I know that I am painting a gloomy picture, but I believe that it is realistic and typical of the disaster that Brexit will be for our country. We have—just—voted to leave, but we did not vote to become poorer.
Defra is planning its next 25-year environmental strategy and would like to shift support further in that direction. That is fine if basic farming can survive and contribute towards desirable projects, such as the maintenance of traditional features, soil and water quality and wildlife—even sheep grazing in marginal uplands. We have been hearing about the value of natural capital. Ecosystems that slow water, biodiversity that encourages raptors and environmental assets such as timber production for housing and carbon capture are excellent, but they all require a healthy rural economy to work.
Will the Government encourage the rollout of GM crops? GM could increase yields by 1 tonne per hectare, which would pay arable farmers for the complete loss of their current subsidy. Without knowing it, we are already eating quite a lot of GM food. However, 60% of UK land use is for grass. Livestock is the sector most reliant on subsidy, at well over 100%, whereas dairy is the least reliant: only 1p to 2p per litre is represented by subsidy. Thus, there will be some big changes to our rural landscape, and there is not much in these two reports to encourage anyone to welcome March 2019.
One possible exception is the chance to simplify and humanise bureaucratic administration and inspection. However, given our tendency to gold-plate EU regulations, I rather doubt it. I am sure the Minister will put a positive spin on the situation. But unless the Prime Minister herself can be shown the pitfalls of hard Brexit, our countryside and industry will be ill served.
Lord Liddle (Lab)
My Lords, I congratulate the noble Lord, Lord Vaux of Harrowden, on his maiden speech. I think I am right in saying that it is many centuries since his ancestors first appeared in this Chamber but his speech tonight shows that he has a very good contribution to make to the modern House of Lords, and so we welcome him. I also congratulate the noble Lord, Lord Teverson, on a quite brilliant extempore exposition of his committee’s report, which showed tremendous clarity of thought about the complex issues involved.
I am no agriculture expert but I approach this as someone who has looked at European Union affairs in the round for the last quarter-century. I should declare my only interest in this debate: I am a member of Cumbria County Council and although I am not a landowner or a farmer, I am well aware of the views of many hill farmers who find themselves on the margins, many beef farmers who are pretty prosperous and many middling dairy farmers who somehow or other manage to survive. That is the knowledge which I bring.
For me, the real problem in the question of agriculture and Brexit is the clash of goals, which the Government have failed to resolve. This is the clash between, on the one hand, what Defra says in its response to the Select Committee’s report about securing,
“a more productive and environmentally sustainable future for UK farming”,
and, on the other, what we saw in the White Paper on trade that the Government published last week. That was an ideological commitment to Britain having an independent trade policy in which I fear British agriculture is literally going to become the sacrificial lamb. Dr Fox’s commitment to an independent trade policy is evangelical. The paper is full of statements about the benefits of free trade and about how Britain is going to take advantage of the boundless scope for new agreements with the Commonwealth, old and new, and the new economic powerhouses of the world. I do not think the picture of a free-trade nirvana for Britain is realistic.
I worked in the European Commission for three years; I went there to work in Peter Mandelson’s cabinet when he was Trade Commissioner. I went as a committed but rather naive free trader, and I quickly learned that there is no such thing as a free lunch in trade relations. Only hard bargains can be struck. Our trade partners are not going to lay wreaths on the statues of Cobden, Bright and Robert Peel. They see trade relations as fundamentally about economic power, and you will get no deal unless you put bargaining chips on the table. What are our British bargaining chips? I am afraid to say that the bargaining chips we have are the same as the bargaining chips the EU has in its trade relations, which are the tariff and quota regimes in agriculture. This is what the Australians, the New Zealanders, the Americans, the Brazilians and the Argentinians will be trying to get at in return for our greater access to their markets. As we have heard from other speakers, there will be very serious consequences as a result of this policy. As many speakers have said, it will make it impossible to have a free trade agreement with Europe that covers agriculture, and our exporters will face huge tariffs which will be a big problem for them. But it will also mean that our domestic producers are undermined by low-cost producers from other parts of the world.
Some people will say that that is what free trade means. We saw it in textiles. In textiles, poor people are benefiting from cheap clothes and cheap shoes as a result of free trade. I do not think the same argument quite applies to agriculture. It is an approach that shows the price of everything and the value of nothing. From my Cumbrian experience, I know that agriculture and farming are embedded in the county’s way of life. Hill farmers do not just live off their sheepmeat sales; they sustain the landscape and a culture that has rightly just been awarded world heritage status. There are things of great value that we have to fight to preserve.
I also believe that getting this wrong could have a profound impact—I would like the Minister to comment on this—on the unity of the United Kingdom. I believe the reckless pursuit of an independent trade policy could easily give the Scottish Government the excuse they want to raise again the question of Scottish independence and the Scots’ control of their agriculture. Similar pressures might well come in Wales. This would be a very high price for Britain to pay for an independent trade policy. I hope the Government realise that they are facing a clash of goals which they have to resolve very quickly.
Lord Trees (CB)
My Lords, it is a pleasure to speak on this topic. I thank the noble Lord, Lord Teverson, for opening this debate in such excellent fashion and for the fair-minded way he has chaired the Energy and Environment Sub-Committee, on which I had the pleasure to serve until recently. I declare my interests as a veterinary surgeon as listed in the register of interests.
The issues that Brexit presents to agriculture and animal welfare fall broadly under four areas, which are common indeed to many other industries and which I remember with a mnemonic, “the right leaving system” —“t” for trade, “r” for regulation, “l” for labour and “s” for support; that is, financial support. It will be important that we get the right leaving system because the implications of Brexit are profound with respect to both agriculture and animal welfare.
A major concern with regard to new trading environments concerns animal welfare, and many noble Lords have spoken on this already. We are rightly proud of the high standards of animal welfare that we in the UK apply to our livestock. There have been repeated assurances from the Government, including the Prime Minister, that a priority will be to maintain the UK’s high standards of animal welfare, as well as assurances from stakeholders such as the NFU, which told the sub-committee that it absolutely supports the Government’s ambition to maintain welfare standards post Brexit. These assurances concur with UK public opinion, which suggests that 80% or more of the UK public want animal welfare standards to be maintained or indeed improved post Brexit.
So why am I worried? Welfare costs money; it inevitably increases the cost of production. There have been views about Brexit alternative to those that I have just cited, professed by various politicians and others, that leaving will offer opportunities to reduce the cost of living through lower-priced imported food. Indeed, a former Defra Minister has suggested that the price of food might reduce by as much as 10%. There is an inevitable contradiction between the pursuit of the lowest-cost food and a desire for high welfare and environmental standards. While a major selling point of the UK’s agricultural produce is its high quality, it would be unacceptable and quite impractical to have a situation where we either lowered those standards; or produced food to export at a higher standard, as a premium product, yet offered our own population imported food produced to lower environmental and welfare standards. There is a real risk of this because, if we are to operate under WTO rules, it is far from clear that welfare considerations, as distinct from animal disease considerations, can be used legitimately to limit imports in any way. The sub-committee heard conflicting evidence on this, and it is extremely important that we have some clarity over this issue.
In free trade agreements the partners can agree mutually acceptable welfare standards, so achieving FTAs that incorporate minimum welfare standards in many different countries—including, critically, the EU 27—will be important for animal welfare as well as wider economic reasons. Of great significance is the pressure that could be exerted by consumers, charities and NGOs, and the presence of existing assurance schemes. Schemes such as Red Tractor and RSPCA Assured have been extremely successful in advancing and maintaining welfare standards, and are generally understood by the consumer. Although they are voluntary, there could be scope to use financial inducements that might replace the CAP to achieve a higher compliance rate among UK farmers. Have the Government considered how financial inducements might be used to help to maintain welfare standards? Of course, the best way in which the public could ensure good environmental and welfare standards of food production would be to buy British products with assurance labels. This not only safeguards standards but enhances food security, reduces food miles and maintains our rural economy.
On a general point, with regard to the withdrawal Bill and animal welfare, while the Secretary of State has given some assurances about the important legal principles set out in the EU treaties, can the Minister explain, in writing if necessary, which of the principles of animal sentience and environmental laws will be recognised as general principles under the terms of the withdrawal Bill? Importantly, can he confirm whether they will apply to future government decision-making and judgments in court?
The regulations pertaining to animal medicines and vaccines are essential for health and welfare—an aspect of regulation not yet mentioned in the debate. It is essential that we can transpose the EU regulations in such a way as to maintain existing products, facilitate the pipeline of future products and ensure that the future UK regulatory environment provides appropriate standards to satisfy the future overseas markets on which we will depend, not the least of which is the EU 27.
The last issue is labour. Another major impact of Brexit on animal welfare is the serious veterinary workforce shortages that we are facing, because such a large proportion of vets in the UK are non-UK EU nationals. I have spoken about this in a previous debate, so I will not reiterate everything. Suffice it to say that all trade in livestock and livestock products depends crucially on veterinary inspection and certification, much of which is done by non-UK EU nationals—indeed, nearly all the vets responsible for the welfare of animals at slaughter fall into this category. It is critical that, post Brexit, we can continue to recruit EU nationals to work here, so as not adversely to affect both trade and animal welfare.
In conclusion, if we can achieve all of the above, at least with regard to animal welfare, we will have achieved the right leaving system.
Lord Krebs (CB)
My Lords, I thank the chairman of the Select Committee of which I am a member for the skilful way in which he chaired our meetings and drew these two reports to powerful and important conclusions.
In my short speech, I want to talk about two questions which lie at the heart of what we have been debating this evening. First: what is the Government’s plan for feeding the nation with affordable, safe and nutritious food after Brexit? We have not had a food policy for decades, but in the light of what we have heard this evening, it seems that there is a case for the Government having a plan. Secondly—a point that we have heard a lot about—what kind of future land use policy and farming industry do the Government want?
First, a few comments about feeding the nation, and particularly about the price of food. We heard conflicting views about this, and it would be nice to have some clarification from the Minister of the Government’s view. The major food retailers and the British Retail Consortium estimate that a no deal Brexit could add about 10% to food prices, and today’s report from the Resolution Foundation echoes that conclusion. Even with a deal, if it was a hard Brexit outside the single market, there could be significant tariff and non-tariff barriers, which would add substantially to the price of food.
To the poorest people in our country, this could be the difference between being able or unable to feed their families. The lowest decile income group already spends more than 17% of its weekly income on food and non-alcoholic beverages, according to the Office for National Statistics, and research at Oxford University for the Trussell Trust has revealed that three quarters of the 1.1 million users of food banks go hungry several times a year. Undernourishment is not just a third world problem; shockingly, it is right here in the UK, one of the richest countries in the world. Therefore, have the Government estimated the impact of Brexit on food prices in a no deal or an outside-the-single-market case and, if so, what is the answer? What, in particular, is the Government’s estimate of the impact of any price changes on the poorest people in this country?
I will not say anything about food standards and safety, other than to ask the Minister what plans there are for replacing the role of EFSA after Brexit? What about the future of farming and land use? As your Lordships have already heard, the Secretary of State for Transport offered the view on Sunday that, in response to a no deal outcome or an outcome in which there are significant tariffs, farmers in the UK would step in to fill the gap by growing more food, a comment that the chair of British Summer Fruits described as, “Tripe that beggars belief”. It is an interesting idea, but I would welcome some clarification from the Minister on his department’s analysis of how any increase in production of food would be achieved. Would it involve more intensification of farming or turning over more land to farming, bearing in mind, as we have already heard, that more than 70% of the land surface in this country is already farmed, and much of the remaining land surface is populated by towns, cities and villages? Can an increase in production by UK farmers be reconciled with protection and enhancement of habitats and endangered species that will enable the Government to fulfil their promise of leaving the environment in a better state than they found it, bearing in mind that the more primary production and the more of the sun’s energy that we take for our own consumption the less there is for the rest of nature? We cannot have it both ways. Perhaps the Minister can also add which particular kinds of food would the farmers in this country grow more of if they were to increase their production?
We heard a lot about the role of non-tariff barriers in relation to animal welfare and I do not propose to repeat that, other than to say that our farmers are in favour of maintaining high standards but, given the upward pressure on food prices that could result from Brexit, there may be a downward pressure for us to import cheaper products from overseas.
As the noble Lord, Lord Teverson, said in his introductory remarks, and as others including the noble Lord, Lord Curry, and the noble Baroness, Lady Miller, have said, we are in some ways faced with a fork in the road for the future of agriculture and land use. One future is characterised by free trade, low tariff and non-tariff barriers and cheap food, with a race to the bottom on welfare and other standards. In that future, many farmers would be unable to compete and there would be a real opportunity to reclaim the countryside for wildlife and conservation. So, perhaps that is the Government’s plan.
The other future is one in which tariff and non-tariff barriers are maintained to protect standards for consumers as well as to protect our farmers. This, as we have heard from many noble Lords, is likely to be associated with more expensive food. There may, of course, be a third, middle way which I have not thought of, and I very much hope that the Minister will be able to share with us his department’s current thinking on these matters.
Lord Grantchester (Lab)
I thank the House for allowing me to speak momentarily in the gap. I had thought that my name was on the list to speak. I declare my interests as a dairy farmer receiving EU funds and having been chairman of a dairy farmers co-operative.
I thank the noble Lord, Lord Teverson, for his excellent introduction to the two reports and congratulate the committee on the comprehensive nature of both of them. They deserved separate debates for which Back-Bench advisory time could have been increased. I also congratulate the noble Lord, Lord Vaux, on his maiden speech.
The first issue is obviously support for single farm payments under the CAP. Average farm income is £38,000. I know that averages hide wide discrepancies between farms and the various sector differences. The AHDB Horizon report has indicated that this could fall to £15,000 under a poor outcome on leaving the EU. This underlines the key area of defining the support to be adopted following the ending of government commitments to fund the £3 billion of support that UK agriculture in its widest sense currently receives. To vulnerable sectors where direct support is a key part of revenues in beef, lamb and cereals, the economic survival of farming and the UK’s production of food is at stake.
The second key issue is that primary processing must be maintained in the UK and be competitive as much of agriculture’s perishable output is consumed within the UK. Ideally this should be UK-owned as, in that way, the decision-making is done from a UK perspective to UK-defined priorities.
The next issue is overseas trade where, in the UK, an overriding percentage, some 80% of agricultural product trade, is undertaken with the EU. The Government like to talk of free trade deals. Is it the measure of success whether it is free trade or not? I pose the question as trade seems to be spoken about only in terms of “free” trade, without qualification. Against the background where every trading bloc supports its agriculture, implications need to be examined and an equitable level field maintained. To leave the EU, the portion of tariff trade quotas needs to be split and then allocated. There is also the position of aggregate measures of support to determine.
It is not a wise, more a glib, retort to state that no deal is better than a bad one. It needs underlining most stridently that no deal under WTO rules is the worst possible kind of bad deal in any continuum of definitions. The belligerence being shown—that the UK must somehow have its own trade policy—must be tempered with reality. The US has already objected to the UK and EU’s representations to the WTO on splitting the TRQ between the UK and the EU. The European Union has answered that the EU and UK intend to maintain the existing levels of market access available to WTO members. Will that split happen at an average across all the agricultural sectors? As was discussed earlier, average settlement could distort or displease the various commodity sectors. A letter from the UK mission in Geneva suggests that a sectorial approach, based on historical trade and consumption patterns, will be pursued. Can the Minister confirm this? Can he also confirm whether it is agreed that aggregate measures of support may also be split and allocated to the UK, as the EU currently has an allowance of €72 billion, of which it uses only a small portion?
There is so much of importance in these two reports. I echo the conclusion that the UK must confirm and clarify continued support to agriculture on action-based measures for improved productivity across the industry sectors while delivering environmental benefits and enhanced production standards with high animal welfare assurances.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the noble Lord, Lord Teverson, for introducing the two excellent reports with such clarity and to all noble Lords who have spoken this evening. I characterise it as a debate of the experts and the heavyweights and include in that the noble Lord, Lord Vaux. I congratulate him on his maiden speech and look forward to hearing his contributions in the months to come.
It is impossible to consider this debate in isolation from the wider Brexit landscape. The Government are once again in crisis over the direction that the Brexit negotiations might take. The European Union (Withdrawal) Bill has been roundly criticised, not least by the Delegated Powers and Regulatory Reform Committee of this House, which highlighted the excessively wide powers that Ministers were trying to take for themselves. As we know, the Bill is now stalled in the Commons with a weak Government facing over 300 amendments, many of which are from their own side. The negotiations in Brussels are also stalled, with no progress to show after 15 months and the possibility of no deal looming larger.
Agriculture is just one sector among many frustrated and angry at the lack of progress, but this is one where we cannot afford to fail. Without overstating it, a healthy UK farming sector is fundamental to our economy, to individual prosperity, to our environment and to consumer confidence in food safety and standards. We urgently need clarity about the future vision and the practicalities, not least about the issues of devolution which many noble Lords have raised today. This Brexit agriculture report, and the earlier report on trade in goods, identify the scale of our reliance on trade with the EU. A number of noble Lords have repeated this point. We are only 61% self-sufficient in food and the figure is dropping. Despite the ill-informed comments of Chris Grayling, it is impossible to imagine how we would feed the nation in the short and medium term without a continuing reliance on EU imports, particularly of key foods such as fruit and vegetables.
There is an increasing recognition from those in the farming and food production sectors that continuing tariff-free access to the EU single market is crucial. This has to make sense. The reports make it clear that no deal, and a reliance on WTO rules, could be disastrous for our food trade. We have already heard the risks associated with falling back to WTO rules, with a number of non-EU countries objecting to our plans to inherit part of the EU’s quotas for agricultural goods. I therefore hope that the Minister can reassure us that a no-deal outcome for agriculture is not seriously being considered.
The report also highlights the growing concern among food producers and manufacturers that supplies of migrant labour will be restricted. This is an issue among those employing both seasonal workers and full-time staff. The UK summer fruit and salad growers are already flagging up problems with seasonal workers. This affects some 80,000 workers, most of whom are from the EU, and many of whom are already making plans not to return even before the Brexit deadline. The Environment, Food and Rural Affairs Committee report, Feeding the Nation, identified similar concerns from food producers. However, Ministers at that time denied there was a problem. I recall that when I raised this with the Minister in an Oral Question earlier this year, I had a similar denial that a problem existed, so perhaps he can now clarify whether this is still his position, or does he now agree that we should reinstate the Seasonal Agricultural Workers Scheme in some form? However, this is not just a problem for seasonal workers; there are more deep-seated recruitment issues with full-time staff. The British Poultry Council estimates that 60% of its workers are EU nationals and the British Dairy Farmers body estimates that 56% of its farms employ EU workers. These are specialist jobs, which UK citizens cannot or will not do. A recent YouGov survey found that only 4% of respondents would consider this type of work. These jobs are often in remote settings, with low pay and unsocial hours.
In addition, we have heard this evening about the problems of recruiting vets and the fact that so many of them come from the EU. These challenges extend across other farming and food manufacturing sectors, so does the Minister understand the urgent need to give existing EU workers greater certainty about their right to stay, as well as providing for a sector-specific migration policy to provide the crucial workforce for the longer term?
The separate report on farm animal welfare also highlighted a number of crucial challenges which have been echoed in this debate. As the report made clear, animal welfare barely featured in the referendum debate but, by the same token, we know that the British public care deeply about this issue, as indeed do farmers. We are rightly proud of our high animal welfare standards, and no one wants them compromised. As the report makes clear, 80% or more of the UK public want the standards maintained or improved post Brexit. So far the comments of the Secretary of State and other Defra Ministers have been reassuring on this issue, but there are real concerns about whether this is a universally held view among our trade negotiators, particularly some members of the Cabinet, who are under intense pressure to come up with the new markets and opportunities promised in the referendum. Therefore, I hope the Minister can once again reassure us that any new free trade deals will require imports to meet UK animal welfare standards. Will he also guarantee that there will be no moves to lower domestic standards to reduce price? I hope he agrees with most players in the sector and, I think, all noble Lords who have spoken this evening, that the UK should compete internationally on quality, reputation and brand recognition, not price. I hope he will also say something positive about enhancing animal welfare standards. For example, I hope he will add his support to the campaign to ban live exports for slaughter or fattening, and to the need for mandatory labelling of the welfare systems used.
We welcome the reassurance that the Government have given to farmers about protecting farm payments until the next election, but the report also makes a strong case for clarity and certainty beyond that date. As we have heard this evening, longer-term investment decisions are crucial to maintain a robust farming and food sector. We cannot wait around, as many noble Lords have stressed. At the same time, there is understandable concern that the sector will compete with other powerful lobby groups for a shrinking pot of money after 2019, particularly if the latest economic forecasts are to be believed. Therefore, while we look forward to the forthcoming discussions about the future shape of subsidies and payments post-CAP, and while we very much welcome the emphasis of the Secretary of State on environmental protection and the public good, we hope the Minister will take the message back that these issues cannot be left until the last moment. We need guidance and clarity now.
Finally, the Minister will know that there is considerable unease about the future shape of governance and regulation needed to uphold our agriculture, animal welfare and environmental policies, as well as our international obligations post Brexit. Obviously, if we want to continue trading with the EU, we need to demonstrate parity with existing rules. Concerns remain, however, as to whether the EU (Withdrawal) Bill will deliver equivalence on issues such as environmental protection and animal welfare standards. The governance gap left by those lost EU institutions must be filled, including access to justice, and recourse to effective penalties such as fines for government failure.
In addition, the Europe-wide scientific institutions, which underpin an enormous amount of the work that we do in agriculture and with which we collaborate so effectively, will need continuing agreements on participation or separate UK replicas. Consumer rights in food safety and food quality standards will also need to be enshrined in new laws with new institutions. I hope the Minister will be able to give us some reassurance on this matter.
All these issues pose huge challenges and vast complexities, and I have been able to touch on only a few of them. The lack of progress is not helpful. Thankfully, the Government are now beginning to accept the need for a transitional period; let us hope that can continue until we have an acceptable alternative structure in place. Among those in the Chamber today, there has been a great deal of agreement, but the complexities and contradictions of a future deal are all too apparent. It is hard to see how farmers and consumers will be winners when the final dice fall. I hope the Minister can reassure us that the Secretary of State will have a seat at the top table when the dice fall and the final package is being agreed, so that he can put some of his errant Cabinet colleagues straight and we do not end up becoming the sacrificial lamb, as my noble friend Lord Liddle implied. Finally, will the Minister confirm that when the details of the future package are known, given the major concerns that have been raised around the Chamber today, the promise to give Parliament a meaningful vote on the outcome will be adhered to both in the spirit and in the letter? I look forward to his response.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)
My Lords, I am most grateful to the noble Lord, Lord Teverson, and the committee for the reports on agriculture and farm animal welfare. They provide—as have all the previous reports to which I have had the privilege of replying—such an important and useful resource as we move towards exit and develop further our future farming and animal welfare policy. I of course agree that the Government have a key role to play in securing a positive future for farming and our countryside. It is appropriate here that I should declare my own farming interests, as set out in the register. As your Lordships have said, 70% of UK land is farmed, so our decisions on future agricultural policy will have a profound effect on our natural landscapes and rural communities for years to come.
The committee’s reports raise a number of important areas relating to trade, access to labour and future funding arrangements that require our attention. As your Lordships will know—I am afraid that I will say it again—this Government are committed to ensuring we leave our environment in a better state than it was in when we found it. We are working to drive forward our vision for a vibrant agricultural sector, underpinned by high animal welfare and production standards. I am delighted that the noble Lord, Lord Vaux of Harrowden, has chosen this debate to make his maiden speech. His experience of these matters, and some of the others that he has mentioned, will be invaluable in our deliberations.
I hope your Lordships will also accept that, although I shall endeavour to respond to as many questions posed by your Lordships as possible, I shall follow up this debate with a detailed response, because if I answered every one of the questions asked in the debate, we would all be here at midnight.
However, it is important to address the issues raised in the reports, and, obviously, one of the key elements was agriculture seeking clarity on future funding arrangements. It is clear that farmers will need time to adjust to any rearrangements. That is why the Government have a manifesto commitment to maintain the same cash total in funds for farm support until the end of this Parliament. I know that my honourable friend the Farming Minister, George Eustice, has been in communication with the noble Lord, Lord Teverson, and has confirmed that the figure includes all EU and Exchequer funding provided for farm support under both Pillar 1 and Pillar 2.
My noble friends Lord Jopling and the Duke of Montrose, and the noble Lord, Lord Krebs, posed the question of how we can become more productive and grow more food. The Government are showing their intent by facilitating investment to enable the industry to become more productive and innovative. Through the UK Government agritech strategy, launched in 2013, £80 million has been invested in four world-class centres for agricultural innovation to support the wide-scale adoption of innovation and technology in the food and farming supply chain. We are already seeing new partnerships form, for instance between one of our centres for agricultural innovation and the National Institute of Agricultural Botany on potato yields.
The Government are also developing a modern industrial strategy with the aim of improving productivity. The food and farming sector plays a key role in our rural communities in this country, so it is well placed to contribute to our aim of improving productivity across the nation. The noble Lord, Lord Curry, who has great experience of agriculture, and I will want to reflect on that in greater detail.
I also endorse the committee’s recognition that we have some of the highest farm animal welfare standards in the world. To me, coming from a farming background, good stockmanship and husbandry are matters of principle for the overwhelming majority of farmers, who have the utmost respect for their animals and their welfare. We have some of the most robust animal welfare legislation in the world, and I say to the noble Baroness, Lady Jones of Whitchurch, that we have made it clear that when we leave the EU we will not only maintain but, where possible, seek to improve our high standards. We have already announced a number of measures to strengthen our current standards, and all have been welcomed very widely. I hope that those will also be endorsed by the noble Baroness, Lady Miller, and the noble Lord, Lord Trees. The Secretary of State recently announced that we will publish draft legislation for consultation around the turn of the year to increase the maximum sentence for animal cruelty offences to five years in prison.
We are delivering on our manifesto commitment to require CCTV in every slaughterhouse in England and have recently concluded a public consultation on this issue. The noble Lord, Lord Rooker, referred to these matters in part of his speech. We also have a manifesto commitment that, as we leave the EU, we can take early steps to control the export of live farm animals for slaughter. We are also raising standards on farms by modernising the English statutory welfare codes, another move which has been welcomed by industry. The updated codes of practice—
Lord Davies of Stamford
My noble friend Lord Rooker particularly suggested in the course of his excellent speech that we ought in this country to make it mandatory to state what method of slaughter has been used when meat is sold. Do the Government endorse that objective?
Lord Gardiner of Kimble
If the noble Lord had been a little more patient, I would have come to that matter. I assure your Lordships that I will come to it.
We have already consulted on a new code for meat chickens and plan also to prepare new codes on laying hens and pigs. These measures will demonstrate to consumers at home and abroad—the noble Baroness, Lady Jones of Whitchurch, rightly referred to this—that our food is produced to the very highest standards. I believe it will serve to entrench the UK’s position as a global leader in animal welfare.
We will of course continue to ensure that our high animal welfare standards are underpinned by robust science and evidence. Our research programme in Defra is complemented by the independent advice that we receive on specific welfare issues from the Farm Animal Welfare Committee. In addition, the Animal Health and Welfare Board for England has strategic oversight of Defra’s animal health and welfare policy and supports the department in its partnership working with industry. We will continue to work closely with Defra’s delivery bodies, including the Animal and Plant Health Agency, on the enforcement of animal welfare standards to make sure that we improve our current delivery of farming policy and pave the way for a smooth transition to a future system.
I was most grateful for the invitation from the noble Earl, Lord Kinnoull, and the noble and learned Lord, Lord Hope of Craighead. In fact, I attended a conference in Dundee earlier this year and, on my way, saw for myself in Tayside and Perthshire the enormous importance and traditions of fruit-growing in that part of Scotland. The noble Earl and the noble and learned Lord, together with a considerable number of other noble Lords, raised the question of access to labour and seasonal labour. It is important that I say that the Government are working very closely with the Home Office, business and communities on this significant issue.
In both reports, the committee stresses the importance of developing future policy that addresses the agricultural sector’s labour needs. My honourable friend the Farming Minister attended the Seasonal Workforce Working Group, which brought industry and government together to discuss seasonal labour needs and to share potential solutions and best practice. I say to the noble Earl, Lord Kinnoull, the noble Lord, Lord Vaux, and the noble Earl, Lord Sandwich, that I encourage all relevant sectors to contribute to the Migration Advisory Committee’s call for evidence. It is very important that, in considering these matters, all relevant sectors make their contribution.
One of your Lordships said that this has been a debate of the giants and, although I have a brother who is a vet, I am very conscious of that when the noble Lord, Lord Trees, is present because he speaks with such experience and authority. I assure your Lordships that I have regular meetings with the British Veterinary Association and the Royal Veterinary College —it is my privilege to lead on animal health and welfare. In government we absolutely recognise the key role played by vets in ensuring high animal welfare and health standards. Indeed, the Prime Minister specifically made it clear that securing the status of the veterinary workforce is a top priority. It has been my privilege to meet many EU nationals who serve in our veterinary profession and I can say how important they are to us.
A number of your Lordships also stressed the important work that is being done and must be done with the devolved Administrations, and I am very conscious of that. Many noble Lords mentioned that but I was very conscious of what the noble Lords, Lord Teverson and Lord Rooker, as well as the noble Lord, Lord Wigley—as I would expect, quite rightly—the noble Lord, Lord Liddle, and the noble Baroness, Lady Jones of Whitchurch, had to say on the matter. I would be the first to say that all these matters are extremely complex. It would be absolutely daft to suggest that any of the matters we are discussing are straightforward; they are extremely intricate. However, it seems to me that we need to ensure the effective functioning and maintenance of the UK’s single market, both to preserve the internal market and to ensure that the UK can meet its external trade commitments.
It is also essential that we ensure that the devolved Administrations are confident about co-operative working. Importantly, the Secretary of State has had, and will be having, many meetings with them to discuss such collaborative working. It is essential that the UK Government continue to work closely with our colleagues in the devolved Administrations on an approach to returning powers from the EU that both works for the United Kingdom as a whole and reflects the devolution settlements of Scotland, Wales and Northern Ireland. A number of your Lordships mentioned the historical importance of our connections with both Northern Ireland and the Republic.
Turning to future trading arrangements, I agree with your Lordships that all potential impacts of new trading relations on the agri-food trade must be considered carefully and that the Government should work and consult widely with producers and consumers. We are determined to create the best trading network and framework for the UK. So many of your Lordships raised this issue and I am very conscious of their experience. My noble friend Lord Jopling has experience as a Minister, and he is worried about going back to the dilemmas of the 19th century. However, it is important that we work strongly on finding the right way forward. The Government plan to replicate broadly the EU’s current schedule of WTO commitments. This would mean that our bound tariffs—the maximum that can be applied—would not be reduced from current levels. Some WTO members choose to apply tariffs at a level below their bound rate. As the committee noted, such a decision has impacts on different groups, including farmers, consumers and the food industry.
We are making a proposal that is consistent with the WTO rules and are committed to engaging extensively in the coming weeks and months. We have hosted meetings with food and farming and fishery organisations across the breadth of the country to ensure that their views are fully represented. The Secretary of State has been clear that we cannot compromise our high environmental and animal welfare standards. That point was raised in particular by the noble Lord, Lord Teverson, my noble friend Lord Howard of Rising and the noble Viscount, Lord Hanworth, but I think it is shared by all noble Lords.
It is essential that consumers have confidence in the food they eat. That is an issue that the noble Lord, Lord Rooker, in part of his career, was very conscious of. Many consumers prefer British farm produce, given the trusted high standards we apply and the confidence they have in our sector. The retail and catering sectors, too, play a key role in promoting higher animal welfare standards throughout the food chain. I say to the noble Lord, Lord Davies of Stamford, that this is where I will refer to the noble Lord, Lord Rooker. Leaving the EU does indeed present us with an opportunity to decide whether current labelling rules on animal welfare and other matters are as they should be. Obviously, we will be considering this matter—another point that the noble Duke, the Duke of Somerset, raised.
I sense that, other than the noble Lord, Lord Teverson, there has been more pessimism than optimism in some of tonight’s contributions. It is very important that in our deliberations we are rightly proud of our food and drink industry. The global demand for British produce is growing, with exports of UK food and drink surpassing £20 billion for the first time last year. Whisky is the UK’s top export at £4.1 billion, with cereal and associated products at £2.3 billion, dairy at £1.4 billion and meat at £1.6 billion. Indeed, given that the noble Lord, Lord Wigley, spoke tonight, I must mention also the excellent Welsh lamb, with exports worth £111 million last year out of a lamb total of £326 million. As your Lordships have said, these are enormously important parts of our rural fabric and it is essential that we work to ensure their continuing success.
Lord Rooker
What is the answer for farmers and primary food producers who have to make a commercial decision by the end of this year because the production process will take them beyond April 2019, when they will lose their markets if the issues are not settled? What is the Government’s answer to those people? Thousands of people need to make decisions at the end of the year about entering a production process when, at the end of the day, they may not be able to sell the product.
Lord Gardiner of Kimble
I understand that. It is why we are working night and day. I say to the noble Lord that we are not a lazy department. The department has the responsibility and its Ministers and officials are working night and day in the British interest and for British farmers. I would be grateful if that was recognised by some of your Lordships.
The noble Lord, Lord Krebs, rightly referred to the fact that the Secretary of State set out in his speech to the WWF in July that we need to take the opportunity, outside the common agricultural policy, to ensure that public money goes to reward environmentally responsible land use. That is why we have pledged to work with farmers, food producers and environmentalists across the UK to devise a new agri-environment system. In doing so, we will be able to recognise better the valuable work done in our rural communities, in which food production and good environmental land management run hand in hand. Many custodians and farmers of the land recognise that. It is my privilege to meet many farmers and land managers and they are much more positive than many of your Lordships have suggested about agri-environmental schemes and working to increase food production.
The EU (Withdrawal) Bill will convert the existing body of EU environmental and animal welfare law into UK law. That is very important. I agree with the noble Lord, Lord Greaves, that food waste is an issue that we all in this nation should grapple with. I am grateful to the noble Lord, Lord Teverson, and the noble Earl, Lord Kinnoull. I said— forgive my passion—that I see officials working night and day and how excellent they are, and Defra has recruited more than 450 additional staff, comprising policy generalists and specialists to support our comprehensive exit programme. More than 350 have already taken up posts, with the remainder currently progressing through our pre-appointment processes. They are welcome and very important to us.
I am also seized—this comes within my responsibilities —by what the noble Baroness, Lady Miller of Chilthorne Domer, said about pet passports and equine sector issues. I was in Newmarket talking to equine interests and pet passports came up only this morning in discussions. It is very much work in hand.
We can all agree and unite on many issues where we have to work in partnership. This is where a wide range of stakeholders come in as we develop our future agriculture policy.
I am struck by the words of the noble Baroness, Lady Miller, about future generations. Not only do we want a domestic farming policy that encourages the current generation but it is absolutely essential that we encourage future generations. That is why innovation, agritech, agricultural colleges and all that we are doing is about the future generations who will farm the countryside and the land for us, to produce top-quality food and to address soil health management, which I know the noble Lord, Lord Krebs, is particularly interested in. He used to advise me on the issue when he chaired the Climate Change Adaptation Sub-Committee. We need these advances in agritech. We need to produce high-quality food and enhance our environment.
From the outset, both reports have been of immense value in highlighting many of the matters we are wrestling with. A thriving farming industry with improved environmental conditions and high animal welfare standards: we ask our farmers to do an enormous amount. I am conscious of what the noble Lord, Lord Liddle, said about farming in the communities of Cumbria—indeed, in all the rural counties of Britain—playing a key part. It is the backbone of the countryside and provides so much for us.
We need to commit to developing a future farming policy that produces a vibrant agricultural, horticultural and, indeed, forestry sector that plays its part in developing a better environment for future generations and champions the highest possible welfare standards. I repeat, the noble Lord, Lord Teverson, gave a considered and rounded speech about the opportunities, challenges and the enormous complexities of this. It is our responsibility to get it right, and that is what the department responsible for this issue is working night and day to secure.
Lord Teverson
My Lords, the hour is late and another debate is due to take place. I thank all noble Lords for their passionate contributions, including that of the Minister. One thing I want to do, in particular on behalf of the members of my sub-committee, is thank our clerk at the time, Celia Stenderup-Petersen. She was an excellent clerk for our committee, but ironically and largely because of Brexit, she has since left her post and now has a job with the Danish foreign office. We wish her well. I also thank Jennifer Mills, our policy analyst, and our special advisers, Professor Fiona Smith on the agriculture report and Caroline Spence on the welfare report. I also thank the noble Lords, Lord Cunningham of Felling and Lord Trees, who have left the committee.
I finish by pointing out that the noble Lord, Lord Krebs, said something that is absolutely right: we are at a fork where the Government must make a decision. I was also very impressed by the maiden speech of the noble Lord, Lord Vaux of Harrowden. In the end, he was the only speaker to describe the Government’s official response—I do not include the Minister’s response to the debate in this—as “woolly”, which is an appropriate adjective for the subject. Until the issue of the fork is resolved, that is inevitably the Government’s position. However, I thank the Minister for providing clarity on a number of issues from Defra’s side, and I hope we are given the same clarity, perhaps in a different way, from the Department for International Trade, so that in future we have a congruence of both departments.