Agriculture: CAP Direct Payments

Debate between Lord Livsey of Talgarth and Lord De Mauley

Tuesday 27th July 2010 Lords Chamber

[Lord Livsey of Talgarth]

To ask Her Majesty’s Government whether they have reached conclusions on the findings of the Department for Environment, Food and Rural Affairs-funded Dutch Agricultural Economics Research Institute (LEI) study of the likely impact on United Kingdom farmers if common agricultural policy direct payments were removed by 2013.

[Lord De Mauley]

My Lords, I declare an interest as a recipient of the single farm payment. The Dutch Agricultural Economics Research Institute’s report, commissioned by the previous Government, is an academic exercise to look at a hypothetical scenario. It should be noted that the data are from 2004 to 2006—a time when exchange rates were unfavourable to the United Kingdom—and fail to account for the 70 per cent increase in UK farm incomes that has since occurred. Finally, there is no chance of direct payments being withdrawn by 2013.

[Lord Livsey of Talgarth]

My Lords, I thank my noble friend for that reply, but does he not agree that the LEI report indicates that 35 per cent of farms in the UK would become financially unviable if Pillar 1 payments were withdrawn, while 83 per cent of all EU farms would remain viable? Will he seek to reverse the previous Defra policy of abolishing single farm payments, as that would save many UK livestock farms that depend on those payments for their financial viability? The alternative is land abandonment. This subject is very important.

[Lord De Mauley]

My Lords, I acknowledge the first half of my noble friend’s contention, but in my initial Answer I explained that the report data are somewhat out of date and that there have been fairly substantial changes in the economic position for farmers since then. My noble friend is right that the financial perspective for 2014 to 2020 will be negotiated in a scenario of much more limited financial resources being available than before. The Government’s view is that Pillar 2 represents a more effective use of those limited resources. However, I am really not expecting direct payments to disappear immediately under the next financial perspective.

Agriculture: Dairy Industry

Debate between Lord Livsey of Talgarth and Lord De Mauley

Monday 26th July 2010 Lords Chamber

[Lord De Mauley]

My Lords, I am not entirely sure what the question was, but we think that competitiveness is extremely important in this market.

[Lord Livsey of Talgarth]

My Lords, when the supermarket ombudsman is in his place, will the Minister take action to make it illegal for retail milk to be sold for less than the cost of production? It is the reason why 14,000 dairy farmers have left the industry since 1997 and why we have only 11,000 left. The ombudsman should use his powers to address that problem immediately.

[Lord De Mauley]

I acknowledge my noble friend’s point, but it will be up to the ombudsman to make these sorts of decisions. Industry tells us that there are grounds for cautious optimism in the dairy industry. The continuing decline in production has put pressure on buyers to pay more remunerative prices. Secondly, most major retailers now have dedicated groups of farmers supplying them with milk in return for premium prices.