Common Organisation of the Markets in Agricultural Products (Fruit and Vegetable Producer Organisations, Tariff Quotas and Wine) (Amendment etc.) Regulations 2021
Baroness Bloomfield of Hinton Waldrist
That the Grand Committee do consider the Common Organisation of the Markets in Agricultural Products (Fruit and Vegetable Producer Organisations, Tariff Quotas and Wine) (Amendment etc.) Regulations 2021.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, this instrument applies to retained EU law relating to the common agricultural policy, including the common organisation of the markets, or CMO. It uses powers in the European Union (Withdrawal) Act 2018 to correct deficiencies in retained EU law and enable functions to be exercised by UK public authorities.
First, the instrument fixes an error relating to the commencement of Part 4 of the Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020. There is doubt as to whether the amendments made by Part 4 of that instrument came into force, as intended, at the end of the transition period due to the error in the commencement provision of the instrument. To put this matter beyond doubt and ensure that the retained EU legislation has been amended as intended, this instrument revokes and remakes the amendments that Part 4 of the Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020 purported to make. Those amendments concerned fruit and vegetable producer groups, fruit and vegetable producer organisations and notifications of agricultural market information to domestic authorities. The instrument also revokes and remakes some provisions made by the Common Organisation of the Markets in Agricultural Products (Producer Organisations and Wine) (Amendment etc.) (EU Exit) Regulations 2020 concerning fruit and vegetable producer organisations that may not have taken effect due to the commencement error in Part 4 of Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020.
Additionally, this instrument remakes amendments to EU regulations relating to the fruit and vegetable and processed fruit and vegetable sectors and the fruit and vegetable producer organisation aid scheme, including, among other things, activities that can be funded under the scheme, the amount of aid that can be claimed and the requirements that the producer organisation must meet to be eligible for funding. No policy changes are made through these amendments; they simply minimise any ambiguity in the rules, which will apply to this legacy scheme in the UK until it is switched off in England.
The instrument also amends retained EU legislation to make specific provision for transnational producer organisations implementing an ongoing operational programme to continue to receive aid in respect of all their members based in the UK and the EU until the end of their ongoing operational programmes. These amendments are required to prevent the retained EU legislation being operationally deficient as a result of the application of Article 138 of the withdrawal agreement to ongoing operational programmes.
The instrument also remakes amendments to EU Regulation 2017/1185 to ensure that Defra and the devolved Administrations can continue to obtain certain production and price data from economic operators. The information is used for market management purposes. Defra and the devolved Administrations intend to maintain the collection and use of this information in the UK.
I turn now to the provisions that concern the administration of tariff rate quotas. The specified EU law relevant to this instrument sets out broad provisions on the administration of export tariff quotas that result from international agreements. The instrument seeks to make operability amendments, which are needed to give the Secretary of State the power to make detailed provisions in a future instrument for the administration of export licences for UK goods imported into third countries under tariff rate quotas, such as UK cheese imported into the United States. This in turn will allow UK exporters to continue to benefit from preferential market access, although other powers will be needed to ensure that traders in the Crown dependencies can access such quotas.
These amendments replace references to “EU” with “UK” and remove references to the administration of import tariff rate quotas, as these are covered by regulations made under the Taxation (Cross-border Trade) Act 2018. No policy changes are made by these provisions.
I turn now to the provisions concerning wine. We have included a minor change to entry 1 of the table at Annexe 9A of retained Regulation 1308/2013. This change will make it clear that the established wines referred to are those recognised as
“established protected designation of origin”
and “established protected geographical indications” of the type referred to in Article 107(2) of retained Regulation 1308/2013.
I hope I have assured your Lordships that this is a simple instrument needed to correct remaining inoperabilities in retained EU law to create an operable legislative framework to manage and administer many aspects of agricultural policy. I beg to move.
Lord Moynihan (Con)
My Lords, I am grateful to my noble friend the Minister for that clear explanation—a fascinating defence of correcting an error. It is in the spirit of recognising that she has clearly done a lot of work on this that I simply want to ask a few questions and draw her attention to a number of issues relevant to the statutory instrument.
I should add that my interests in the wine trade elements of the statutory instrument stretch back to being a member of the Select Committee of your Lordships’ House that looked into the wine trade in the UK and Europe, as well as to my membership of the Haberdashers’ Company wine committee. It is in that context that I wish to ask my noble friend the Minister a number of questions. I do so in gratitude to the WSTA, which has provided some very good briefings over recent months, as we have returned to this subject in the space of just two months to correct the error that my noble friend has kindly brought to the attention of the Committee.
The most significant change from leaving the single market has been the introduction of wine export certificates for English and Welsh wine exports to the EU. While the TCA has introduced a simplified certification regime that can be self-certified by producers without the need for costly laboratory analysis, which would have been the default outcome had the TCA not been agreed, the simplified system is still in my view—and in the view of many in the industry—paper-based but unnecessary. No other category of alcoholic drink is required to have an additional import certificate when entering the EU or the UK. I see no reason to maintain the requirement for wine coming into the UK.
The UK and the EU should surely agree on the forms that should now be scrapped completely for movements of wine between the two but, failing that, there is provision in the TCA to develop an electronic system, which we have debated in previous Committees on this subject. I would be very grateful if the Minister could confirm that that is being developed as a matter of urgency, hopefully by the end of the year.
The second item I want to raise—I am sure that the noble Baroness, Lady Ritchie of Downpatrick, will also raise this when she follows me—is the moving of goods into Northern Ireland. This is still a significant issue, as is well known to the Committee and the House. The Northern Ireland protocol requires goods sold in Northern Ireland to have a Northern Ireland or EU 27 food business operator identified on the label, but UK excise rules require an excise duty stamp as proof of payment of excise duty. This means that English producers must either produce specific labels for Northern Ireland or “oversticker”, which is costly and bureaucratic. Of course, there is a solution: get rid of excise stamps for spirits, since no other category of alcoholic drink requires proof of payment of excise duty.
Attached to the statutory instrument were a number of documents which the Government have published, technical notices which helped people prepare for the end of the transition period. In the spirit of removing ambiguities, I close by gently pointing out that, on the food and drink labelling changes, there is a guidance note on completing the wine exports self-certificate, which everyone now has to complete. It says with regard to box 7:
“Only complete this section if the place of unloading is different from the consignee’s address you entered in Box 2.”
However, box 2 is for the serial number. Perhaps officials could have a little look at that to make sure that the next edition of that form, which is now required, is corrected. But in the spirit of thanking my noble friend for bringing this statutory instrument to the attention of the Committee and removing ambiguities that had otherwise existed, I confirm that I support the statutory instrument and I think that both he and his officials have done some excellent work in clearing up the uncertainty—not necessarily an error, but an uncertainty—that has led to this statutory instrument.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
I thank the Minister for his explanation of these regulations. It is a pleasure to follow the noble Lord, Lord Moynihan, on this issue. I note that this instrument, which is subject to the affirmative procedure, would amend several retained EU regulations relating to the common agricultural policy and the common organisation of agricultural markets for the fruit and vegetable producer organisations aid scheme. Basically, in my humble opinion, they seem to deal with marketing operating measures. I further note that, according to some research, this SI and previous related regulations are essential to prevent significant disruption at the end of the transition period.
The Minister stated that the regulations would not introduce new policy but would preserve the regime for supporting rural development, as well as updating other aspects of retained EU law to reflect amendments made by the EU in 2019 and 2020. In fact, the Minister in the other place, Victoria Prentis, made referrence to that fact and stated it directly as part of her contribution to that debate in the other place. Before moving to the actual SI, which I know is striving to remove those ambiguities as we proceed on the path following our exit from the EU, it is important that economic stability is created within the farming sector. For the landowners, the tenant farmers who are the producers, for the wider rural network and then for the processers, retailers and consumers, it is important that this legislation allows that to happen.
I hope the Minister can provide assurances to the Committee that this will underpin our agricultural and agri-food industry. Maybe she can provide an update on this issue in tandem with the implementation of the Agriculture Act of last year. Only last week, we had a debate in your Lordships’ House on the Hungry for Change report, where we discussed the need for the Government to be working with charitable organisations and other bodies in both the central and local government sectors to ensure greater accessibility to environmentally sustainable food for all at a reasonable cost. I am in no doubt that we all need to work together to develop a food system that becomes resilient to shocks in our system and to safeguard all our communities and people. Will the Minister indicate that this SI will enable us along the road to do just that? Will she provide assurances to that effect?
Moving on to the SI, I note that the regulations contained therein will fix an error relating to the commencement of Part 4 of the Agriculture (Payments) (Amendment etc.) (EU Exit) Regulations 2020. Will the Minister elaborate on the nature of the error, why it has to be corrected and how this correction will contribute to the marked importance of agricultural products to the rural and wider economy?
The noble Lord, Lord Moynihan, referred to the Northern Ireland protocol, the attendant issues that have arisen out of Brexit and the difficulties for products being imported into Northern Ireland from GB because Northern Ireland will still have to adhere to EU rules. Therefore, with the operation of the Northern Ireland protocol, where agri-food products are governed by this instrument, what is the relationship between it and the protocol? I presume that Northern Ireland will continue to be governed under the original EU rules.
We do not want any trading barriers between Northern Ireland and GB and vice versa. Therefore, could the Minister indicate whether, in negotiations with the EU, the Government will pursue a Swiss-style arrangement with it, which would eradicate a large proportion of the problems for SPS?
Furthermore, will this instrument ensure that Defra and the devolved Administrations continue to obtain certain production and price data from economic operators, and how will this manifest itself? What will be the intersection between this statutory instrument and the common frameworks for agricultural support; food labelling and compositional standards; plant health and varieties; and seeds? I indicate my interest as a member of the Common Frameworks Scrutiny Committee. Can the Minister provide an update in relation to this matter as well?
It is worth noting that many of these SIs, which deal with EU exit matters, coincide with many of the issues of divergence that are covered by common frameworks. It is further interesting to note that a large proportion of these frameworks relate to Defra and are at very early stages. Perhaps the Minister will be kind enough to indicate when we will receive the final frameworks for scrutiny. Why are they being held up? Perhaps she could write to me on those particular issues—I look forward to that.
Baroness McIntosh of Pickering (Con)
I am grateful and delighted to follow the noble Baroness, Lady Ritchie. I commend my noble friend for so eloquently introducing the regulations before us today and correcting, in her inimitable way, the earlier error, which we appreciate greatly. I always hesitate when any noble friend responding to these debates claims that these are technical not policy changes: there is one policy change that I hope that my noble friend will look favourably on when these regulations possibly come before us again.
I have a number of questions for my noble friend. Paragraph 10.2 of the Explanatory Memorandum states:
“Defra has engaged with the Devolved Administrations on its approach to CAP legislation under the European Union (Withdrawal) Act 2018”.
My first question is: what has the nature and exact form of that consultation and engagement been? I do not just refer to the devolved Administrations: what representations have been heard by, or consultation had with, the relevant agricultural representatives covered by the regulations?
My noble friend said that the existing regulations will eventually be switched off. What will the timeframe for the regulations be? Is it bound by the new reforms that we are currently looking at in the form of ELMS and replacing the CAP provisions? It would be interesting to have that confirmed.
Like my noble friend Lord Moynihan and indeed as my noble friend the Minister encouraged us to do yesterday, when she so wittingly and carefully looked at this—I have taken a leaf out of her book and am grateful to her for making this suggestion—I have taken the opportunity to look at some of the technical notes. I particularly looked at those on the UK transition —I am not sure whether I am entirely the wiser as a result—and the food and drink labelling changes.
My first question relates to the provision for honey. The guidance states that GB honey is no longer to be called EU honey but a “blend of EU honeys”, a “blend of non-EU honeys” or a
“blend of EU and non-EU honeys”.
Can my noble friend make a guesstimate of the cost of this? I note that paragraph 12.3 of the Explanatory Memorandum says that no impact assessment has been prepared and that the department is
“confident that the changes … fall below the £5m per annum threshold for net direct costs to business”.
However, if it applies to honey—I will come to the wine industry in a minute—it could be a sizeable cost. It would be interesting to know why no impact assessment has been done.
Assuming that there is a cost to having these labelling provisions, because one label will be prepared for the EU/Northern Ireland market and another prepared for the British market, could these costs not be extinguished if we signed up to the SPS provisions of the EU? If the Government felt unable to do that, could we not sign up to the less onerous provisions agreed under what I call the New Zealand version, as a deal has been done between New Zealand and the EU with what I understand are less onerous provisions than the SPS provisions of the rest of the EU? A lot of producers would like to know why, if they are good enough for New Zealand and the EU, they are not good enough for British exports to Northern Ireland and the EU.
I will briefly come on to wine—and who would not want to? It is interesting to note that the original reason many people were persuaded to join the European Union was to get cheaper wine. Now we are told that we should embrace the UK-Australia free trade agreement because we will get cheaper wine. I hope we will get more exports of Scotch whisky to Australia by the same token. With reference to the requirement for different SKUs for the different markets—which for wine means different labels, provisions and costs—which I am sure my noble friend will recall we discussed when this matter was last debated some weeks ago, a very simple provision could be introduced which would require a UK address on the label, as is currently allowed for food and drink, making one UK label acceptable for both the UK and the EU market.
I respectfully ask my noble friend why we cannot do this for wine. I know that my honourable friend the Minister in the other place, Victoria Prentis, has met the wine industry and warm words were exchanged. While warm words are welcome, we need hard action. I hope my noble friend will look favourably on the suggestion which, I repeat, has been made on a number of occasions by the wine sector and would save it an awful lot of bother and cost. We could simply make that provision in the new label.
Lord Bhatia (Non-Afl) [V]
My Lords, this instrument, which is subject to the affirmative procedure, would amend several retained EU regulations relating to the common agricultural policy and the common organisation of agricultural markets, which is a fruit and vegetable producer organisation aid scheme. It fixes an error relating to the commencement of Part 4 of the agriculture payments EU regulations 2020.
This instrument remakes some amendments made by the common organisation of the markets in agricultural products regulations relating to fruit and vegetable producer organisations that did not take effect due to the commencement error outlined previously. It makes amendments relating to transnational producer organisations taking part in the fruit and vegetable producer organisation aid scheme. It amends legislation relating to trade provisions to allow for the administration of tariff quotas for agricultural products.
There was an error in the previous instrument. The error included in the regulations led to doubt as to whether the provisions included in Part 4 took effect on the implementation period’s completion date. If Part 4 did not commence on the implementation period’s completion date as intended, it could have a knock-on effect for some provisions included in the regulations. This instrument puts this matter beyond doubt and ensures that there is legal certainty that the retained EU legislation has been amended as intended.
Finally, the Agriculture Minister has stated that the regulations were essential to prevent significant disruption at the end of the transition period. The Minister also stated that the regulations would not introduce new policy but would preserve the regime and support development. Can the Minister explain who made this error and what it has cost?
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
The noble Baroness, Lady Gardner of Parkes, has withdrawn, so I call the noble Baroness, Lady Jones of Whitchurch.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the Minister for her helpful introduction to these regulations. They are, as she says, broadly technical in nature, correcting, in that now familiar phrase, “errors and deficiencies” in previous SIs. While I cannot claim to have reread all the previous SIs that are corrected here, I looked back at the Common Organisation of the Markets in Agricultural Products (Producer Organisations and Wine) (Amendment etc.) (EU Exit) Regulations 2020 (S.I. 2020/1446), as the EM suggested in paragraph 7.5 that they should be read in conjunction with each other. Then I discovered that the earlier SI was correcting errors and deficiencies in a previous SI. Now we seem to be correcting errors and deficiencies in previous errors and deficiencies. It makes one wonder how the organisations affected by these changes ever keep abreast of the layers of these amendments. I am sure that the Minister will agree that this is far from an ideal situation.
Given where we are, I have a few questions to follow up. Some of them have been raised by other noble Lords in the debate. First, the Explanatory Note states:
“There is doubt as to whether the amendments made by Part 4 of those Regulations came into force, as intended, on IP completion day”.
Further on, it states that part of the earlier SI
“may not have existed due to the error in the commencement provision”.
Again the Minister explained this in her introduction. What has been the impact of these errors? Have businesses or producer organisations been adversely affected by the fact that these regulations have not been watertight and might not have been introduced in a timely way? Is there any recourse to compensation when errors are found to occur in this way? For example, has there been an occasion when the fruit and vegetable aid scheme might have been invoked because of market failure but payments were unable to be made?
Secondly, this SI seems to require the head office of a producer organisation to be sited in the nation where the majority of its marketed production takes place. Does this change the provision for transnational producer organisations that we have previously discussed? Will they still be able to access funds in the UK even if their head office is elsewhere?
Thirdly, I shall pick up an issue raised by other noble Lords about the market for established wine designations and GIs for UK wine, particularly the implications of the trade and co-operation agreement which was signed in December after we had agreed the previous SI. Do we now have an established UK process for approving new designations and retaining the reputation of UK wines, which was envisaged at that time? In the previous debate, the noble Lord, Lord Gardiner, said:
“Our aim is to ensure that imports of third-country wines continues unaffected while continuing to increase domestic wine production.”—[Official Report, 18/11/20; cols. GC 710-11.]
Do UK wines now have the flourishing market in the EU and third countries unhindered by tariffs and red tape that was envisaged at the time by the Minister? Have the Government now reached an agreement with the Wine and Spirit Trade Association, which at that time was very unhappy with the certification process for shipments of EU wines into the UK, which it felt to be overburdensome? That point was raised by the noble Lord, Lord Moynihan, and the noble Baroness, Lady McIntosh. I look forward to the Minister’s response.
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
The noble Baroness, Lady Bakewell, has scratched, so I call the Minister, the noble Baroness, Lady Bloomfield.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank all noble Lords for contributing to this short debate. I agree with the noble Baroness, Lady Jones, that this situation is far from ideal. However, to put it in context, since July 2018, Defra has laid 340 SIs subject to parliamentary procedure, 216 of them relating to EU exit. Current estimates are that we have at least as big a programme in mind for the current year. The 340 instruments Defra has laid since July 2018 represent nearly one-quarter of the UK’s entire EU exit and transition period SI programme. I am afraid that some errors were always going to happen given that volume of work.
I was asked specifically by the noble Baroness, Lady Ritchie, and the noble Lord, Lord Bhatia, what the error was. It was a drafting error in the commencement provisions of the Agriculture (Payments) (Amendment, etc) (EU Exit) Regulations 2020. There is some uncertainty as to whether Part 4 of that SI, the amendments that relate to retained EU legislation, came into force as intended on IP completion date as that part of the SI was stated to come into force immediately before IP completion date. That resulted in Part 4 of the SI purporting to amend retained EU legislation that did not exist immediately before IP completion date. I hope that that answers the question.
My noble friend Lord Moynihan asked a number of questions to do with wine, as did my noble friend Lady McIntosh and the noble Baroness, Lady Jones. The Government have met the Wine and Spirit Trade Association. Defra Ministers had useful discussions with Miles Beale and his team at WSTA. The WSTA was keen to press its concerns about VI-1s and raised a few other issues, including labelling and electronic certification, which officials are actively looking into.
On my noble friend Lord Moynihan’s questions, the UK wine sector prepared well for Brexit, with the result that trade has continued largely unaffected by the new arrangements. However, like some other food sectors, wine has encountered ad hoc problems with exports to certain EU member states in terms of customs arrangements and wine certification. We have worked with the companies involved, their agents, the Foreign, Commonwealth & Development Office and the member states concerned to resolve immediate issues and to establish what can be done to ensure that the matter does not reoccur on future shipments. Leaving the EU gives the UK Government scope to review and change policies so that they may better suit the needs of our people and businesses, so there may be the opportunity to review the need for VI-1 certification for imports. We keep all these areas of retained EU wine law under review to ensure that they meet the needs of consumers and the trade and are generally fit for purpose. It is possible to transmit wine certification via electronic means. We will consider all aspects of the process and transmission as a matter of urgency.
My noble friend Lady McIntosh asked about stakeholder engagement. The SI was drafted in active consultation with policy officials from all devolved Administrations, who were given the opportunity to comment at each drafting stage. Affected fruit and vegetable producer organisation stakeholders are aware of and engage with Defra’s plans for the sector. Defra has proactively engaged with transnational producer organisations affected by the UK leaving the EU and the operability amendments that that requires.
I think that I have already answered the question about wine importer labelling, but I should add that the Government have introduced an easement that allows an EU importer or bottler to be displayed on wine marketed in the UK until 30 September 2022. Similar arrangements are made for food products and are designed to support the industry’s transition to new rules. In the intervening time, we continue to work with industry to review the current wine labelling arrangements and replace them with something more practical if that is possible.
The noble Baroness, Lady Ritchie, asked a number of questions about Northern Ireland trade, some of which I will answer in writing if I am unable to do so here. In terms of trade disruption, the UK has always been clear that implementing the protocol had to respect Northern Ireland’s place in the UK customs territory. We have protected and respected that important principle. Through the UK trader support scheme we are ensuring maximum continued ability for Northern Ireland businesses to export both to the EU and to GB and therefore keep disruption over the next few years to a minimum. In the long term, the prosperity of Northern Ireland will depend on the whole set of economic measures that the Government implement, of which agriculture and agri-food is only one part. I should add that agriculture is, of course, currently devolved, but we are very keen to work with all the DAs because we all want the same thing: an environmentally sensitive, sustainable food system.
Turning to the questions asked by the noble Baroness, Lady Jones, on the impact on the food and vegetable producer organisations aid scheme, there is actually no impact on this scheme. The UK continues to follow EU legislation as it applies to EU member states for the duration of the current operational programmes implemented by producer organisations. They have continued to implement their approved operational programmes and receive all payments due. The retained legislation, as amended by this SI, will apply to any new operational programmes implemented by UK POs. This is likely to be from 1 January 2022 onwards. We hope to begin negotiations shortly with the EU to agree to switch to retained legislation before the end of the current programmes, but this SI will be in force before that happens. This means there will be no gap between legislation, and therefore no impact on producer organisations.
The noble Baroness, Lady Jones, also asked whether there were occasions when fruit and vegetable producer organisation legislation could have been invoked if the relevant amendments had been in force. The answer is that they could not: EU legislation continues to apply to existing operational programmes. She also asked about requirements about where head offices are sited, whether they change the position for transnational producer organisations and whether they can still access funding. As we are continuing to follow EU legislation for the duration of current operational programmes, transnational producer organisations can continue to receive funding in respect of all actions carried out by their members, no matter where in the UK or the EU they are based. If we switch to retained EU legislation following agreement with the EU, this SI will mean that UK transnational producer organisations will continue to receive aid in respect of all their EU-based members for the remainder of their current programmes.
The noble Baroness, Lady Jones, also asked whether the market for wine has recovered following the transition period. The UK market saw a slowdown at the beginning of the year, as many companies had moved supplies of wine as a contingency for a no-deal Brexit. Similarly, the hospitality sector has been hit at a global level due to Covid, which has also impacted on transport costs. We are seeing the sector recover now, and the opening up of the hospitality sector will help. In answer to the question about whether the UK has a fully functioning GI scheme, the UK has a fully functioning GI scheme covering food and drink, wines, spirits and aromatised wines. We also have a new logo for products protected under the UK scheme to use, which I recall was dealt with in an earlier SI when we met one another. On third-country wine imports and exports, we have taken steps to ensure that wine products can be imported and exported freely. We have recently extended the easement whereby any wines arriving from the EU will not need to have associated wine certification to 1 January 2022. This will provide time for the sector to adjust to the new trading arrangements, including those set out under the UK-EU Trade and Cooperation Agreement.
Lastly, I reiterate that we are in continual discussions with the Wine and Spirit Trade Association. I think I have now answered most of the questions, barring those from the noble Baroness, Lady Ritchie, which I will answer in writing. I apologise to my noble friend Lady McIntosh that I am unable to answer her specific questions on honey, which I recall was also covered by a previous SI: I fear that the honey team is not in its hive today. I will look at Hansard in case there are other points I have missed. In the meantime, these regulations are worthy of your Lordships’ support, and I commend this statutory instrument to your Lordships.
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
My Lords, the Grand Committee stands adjourned until 5 pm. I remind Members to sanitise their desks and chairs before leaving the Room.