Fertilisers and Ammonium Nitrate Material (Amendment) (EU Exit) Regulations 2019

Baroness Vere of Norbiton Excerpts

Wednesday 20th February 2019 Grand Committee

Moved by

[Baroness Vere of Norbiton]

That the Grand Committee do consider the Fertilisers and Ammonium Nitrate Material (Amendment) (EU Exit) Regulations 2019.

[Baroness Vere of Norbiton (Con)]

My Lords, we have already discussed fish, horses, animals and plants, and now for something completely different—fertilisers and ammonium nitrate.

This instrument changes legislation in two areas. First, it amends domestic legislation that is out of date and, secondly, it addresses failures of retained EU law to operate effectively and other deficiencies arising from the UK’s withdrawal from the European Union.

Legislation surrounding fertilisers concerns the manufacturing and marketing of products. It provides for the definition, composition, labelling and packaging requirements for specific categories of fertilisers that are set out in lists. The legislation does not address the application or use of fertilisers and it does not change the definition or compositional requirements of fertilisers.

In 1975 the EU created its first set of legislation relating to fertilisers. The wide disparity in existing fertiliser rules between member states and the bulky nature of these materials restricting cross-border trade meant that it was not suitable to fully harmonise rules on all fertilisers across the EU. Instead, fertiliser rules were partially harmonised to begin removing technical barriers to trade within the EU. This means that the UK has kept its existing domestic framework alongside the EU framework. The EU regulation sets out the requirements for EC fertilisers, previously called EEC fertilisers, that can be freely sold across the EU. Manufacturers can choose which framework to market their products under, and this partial harmonisation is still in place today.

The current domestic framework for any material described as a fertiliser is the Fertilisers Regulations 1991. In the EU, the current framework is EU Regulation (EC) No. 2003/2003, and this applies only to fertilisers labelled “EC fertiliser”. It was implemented in UK law by the EC fertilisers regulations 2006. Ammonium nitrate fertilisers are controlled through safety regulations that apply to all ammonium nitrate in Great Britain.

Part 2 of the instrument amends out-of-date references in the domestic legislation—for example, omitting references to EEC fertilisers and EC fertilisers to ensure clarity for users of the legislation. In the case of EU legislation, Part 3 of this instrument amends retained EU law to ensure that it will operate effectively after exit day—for example, references to member states and the Commission are amended to refer instead to UK authorities. A requirement as to the language to be used on labels is also amended. The SI replicates the EU framework in UK law by replacing the “EC fertiliser” label with an equivalent “UK fertiliser” label. The requirements will otherwise remain the same.

Part 4 of the instrument amends domestic legislation as a result of exit. It ensures continuity of supply by recognising EC fertilisers for a two-year transitional period after exit day. This will minimise burdens on businesses and authorities.

The amendments made in this instrument do not change the definition, compositional requirements, labelling or packaging rules of fertilisers, whether marketed under the existing domestic framework or under the EU framework.

Ammonium nitrate fertilisers are additionally covered by domestic safety regulations, as they can be misused as improvised explosives and pose safety risks if mishandled in manufacture, transport or storage. Part 4 of the instrument amends the regulations surrounding ammonium nitrate fertilisers with high nitrogen content in Great Britain in order to treat imports from EU member states in the same way as imports from other third countries, in line with WTO obligations. Northern Ireland has separate restrictions on ammonium nitrate for historical reasons, which this instrument does not amend.

Under the British ammonium nitrate regulations, the rules for imports from the EU are different from those for imports from outside the EU. In light of WTO rules, it would not be possible to retain these differences. Therefore, the instrument amends some aspects of the ammonium nitrate regulations—in particular those relating to detonation resistance tests, or DRTs—to apply the more stringent of the two regimes to all imports, whether from the EU or elsewhere, after the end of the two-year transition period, and to uphold current safety standards.

Currently, the definition of what constitutes a “batch” of ammonium nitrate differs depending on whether the import comes from the EU or elsewhere. The EU definition is based on a production run that lasts no longer than 92 days, whereas the non-EU definition relates to any single imported consignment. Using the non-EU definition in this case would cause increased costs for manufacturers due to additional testing, and provides no additional safety benefits. Therefore the EU definition of “batch” will be applied to all imports from exit day.

Continuity of supply is ensured by a transitional period of two years for imports from the EU, which provides 99% of imported ammonium nitrate to the UK. This allows the continuation of current rules with regards to the time limit for detonation resistance test certificates, and the ability to recognise EU laboratory test certificates. These arrangements give manufacturers time to prepare for compliance with the import rules post exit and, importantly, this reduces any burdens on UK laboratories immediately after exit.

The instrument was presented to the sifting committees on 1 November 2018 as a negative instrument. The House of Lords sifting committee was content with that, but the House of Commons sifting committee did not agree with the Government. It considered that the effect of one regulation was to allow Ministers to charge fees to cover the cost of tests needed for official control measures. In addition, it considered that the instrument conferred powers to legislate. It therefore recommended that the instrument be debated in Parliament. The instrument has been amended since it was presented to the sifting committees to reflect certain recommendations in the report, and the Explanatory Memorandum has been amended.

In general, fertiliser policy, like other agricultural policy, is devolved. The devolved Administrations were closely engaged in developing these regulations, which apply to the same geographical areas as the original legislation that they amend. All the Administrations have agreed to maintain a single common framework for fertilisers labelled as “UK fertilisers”, while continuing their own domestic framework. This will make the marketing of fertilisers much clearer for industry, and is a good example of how well the four Administrations work closely together for a common goal.

The instrument relates to the maintenance of existing regulatory standards with no significant impacts, or new or greater administrative or economic burdens on business or other stakeholders. While there was no statutory requirement to consult on this instrument, officials have held discussions with key stakeholders: the fertiliser manufacturers’ representative body, the Agricultural Industries Confederation, and the farmers’ representative body, the National Farmers’ Union. Their main concerns have been addressed by allowing for a transitional period for existing rules and compliance with the amended rules. The changes to the rules on ammonium nitrate have also been developed in conjunction with the Health and Safety Executive and the Home Office to ensure that safety and security elements are maintained or improved.

These measures are essential to ensure that the retained EU framework will operate in the UK alongside the existing domestic framework and, importantly, allow the continued trade in high-quality, safe fertilisers. I beg to move.

[Baroness Byford (Con)]

My Lords, I am grateful to my noble friend for introducing this statutory instrument. I shall start where she ended and thank her for the consultation the department has had with the Agricultural Industries Federation and the National Farmers’ Union. It is essential that we take advice from or hold consultations with them. In the same way, I should declare our family’s farming interests because obviously fertilisers are used on the farm.

I have little to question my noble friend on, but I am grateful that the Government have responded to the Commons sifting committee which referred the question of costs to the department. That has been addressed and the Minister has reminded us that 99% of fertilisers are imported from the EU. It would be logical to accept this statutory instrument and I am grateful for the way in which the labelling requirements have been addressed; in other words, we can still use the EU fertiliser labelling scheme until the UK fertiliser labelling scheme is put into place.

The most important thing that I have picked up from this statutory instrument is the need to ensure that fertilisers are bought, sold, stored and then used on farms safely and securely. It is easy for accidents to happen, and we do not wish to see fertilisers fall into the wrong hands. I welcome these regulations and again I thank my noble friend for introducing them.

--- Later in debate ---

[Baroness Young of Old Scone (Lab)]

My Lords, as I came to the House today, my local farmers were carting megabags of EC fertilisers everywhere I went. I presume they have come to the conclusion that spring is here; it seems that in spring a young farmer’s fancy turns not to love but to fertilisers.

I thank the Minister for her clear exposition of the regulations, and for the briefing meeting that she very kindly convened. I am sure everyone will be delighted, at this point in the evening, to hear that this statutory instrument appears comparatively straightforward. We welcome the changes that have been made as a result of the consultation and the sifting exercise, including the introduction of a two-year transition period for the fertilisers part of the regulation.

I would much prefer that the transition period be overtaken by an outbreak of sanity and us remaining in the EU, rendering the provisions unnecessary. However, it would be good to hear from the Minister what the Government anticipate that the longer term will hold. Currently, fertilisers are partially harmonised in that member states are permitted to have a domestic regime in addition to the EU rules. Do the Government anticipate us trying to keep in harmony with EU fertiliser standards and controls in the longer term, and if not, what impact would that have on both imports and exports?

Of more concern, though admittedly affecting only a small number of UK fertiliser manufacturers, is the position of those manufacturers who export to the EU. They may already have to meet individual member state requirements where a member state has a domestic regime. A technical notice has been issued by the Government on where the parachutes are if we crash out on 29 March. Under that, UK manufacturers who wish to continue trading with the EU will have to send samples to EU labs for testing in order to comply with EU regulations. Any necessary sampling or analysis will be carried out by competent laboratories included in the Commission’s published list. Manufacturers in the UK will be able to label their products “EC fertilisers” only in accordance with the EU framework, and UK companies will only be able to export EC fertilisers to the EU if they comply with the EU regulations, which include a requirement that I did not quite understand, that,

“the manufacturer is established within the EU”.

Therefore, I ask the Minister for clarification on two points. First, in the short term, does the requirement to have the sampling and analysis carried out by an EU lab double up the costs—an EU lab and a UK lab—and is this an additional burden on UK manufacturers? This would be at odds with the Government’s statement in the Explanatory Memorandum that there will be no added cost burdens to manufacturers. Secondly, does the requirement that the manufacturer is established within the EU in reality rule out UK manufacturers being able to market their products under the EC label if we crash out of the EU at the end of March?

All this would be unnecessary if we came to the conclusion that leaving the EU is the arrant folly which it is, but I am sure the Minister is not going to give any key assurances on that tonight.

[Baroness Vere of Norbiton]

I thank all noble Lords who have taken part in what has thankfully been a short debate; I believe that this is a fairly simple piece of secondary legislation which we should be able to dispatch fairly quickly. However, I appreciate the comments made by many noble Lords, and certainly from my noble friend Lady Byford. The consultation period was very important to us, and it was quite interesting that the agreement was that two years was the best time; this is the period that had been used previously. For example, when the label had to be changed from “EEC fertiliser” to “EC fertiliser”—they had to knock out an “e”—that took two years, which seemed the appropriate amount of time for the bags to be relabelled and for more to be produced with the new label. The transition period is an important issue for the labelling and I am pleased that it seems all parties are happy with where we have got to.

I turn to the comments made by my noble friend Lady McIntosh. It is always a pleasure to see her in these debates, but I sometimes fear slightly what she may say—I do not want to say that she may go off-piste, when I am sure many of us are supposed to be skiing. She certainly asked me some questions that I cannot hope to answer within the scope of what the Committee is discussing. For example, I am afraid that ammonia emissions go far beyond what I have and can help noble Lords with, but it is important that many bodies already exist which farmers can go and speak to on the use of fertilisers. When we get to consider the Agriculture Bill in your Lordships’ House, we will be discussing advice to farmers and their relation to the environmental land management schemes which will be put in place. All those things are very important for how we function in harmony with the countryside, so perhaps my noble friend would hold her horses just a little while longer and we will come back to that.

[Baroness McIntosh of Pickering]

I am most grateful to my noble friend for answering as she did. This goes to the point that a number of your Lordships made during the debate that other regulations have been coming through. It must be just as irritating to the team at the department to have this piecemeal approach. It would help farmers enormously if we had one approach to a substance such as ammonia.

[Baroness Vere of Norbiton]

My noble friend is quite right but I see us as doing something specific today, which is to protect our country in the event of a no deal Brexit, which I am sure none of us would want to see. I recognise that we sometimes have to deal with these provisions in a slightly piecemeal fashion but they are designed to be piecemeal—to be nice little nuggets that we can discuss and then hopefully move on, having protected our legislative framework which is clearly so important.

I also put forward a slight word of warning because apart from my Defra job I have another, which is as the Whip for BEIS. I am sure that many of your Lordships will be aware that that department has issued an SI which amounts to 330-odd pages. I see my noble friend Lady McIntosh saying that is not a problem but I am afraid that many people have regarded it as a problem. To a certain extent, bite-size pieces can be better. I see the noble Lord, Lord Grantchester, rubbing his hands in glee and I hope that I will not be the Minister taking it through—I am sure that my noble friend Lord Henley will be better by then and with us.

To go back to the matters in hand today, my noble friend Lady McIntosh also mentioned the list of laboratories. Yes, that will be republished. At the current time, I believe that three laboratories do fertilisers. It will be republished shortly and I will make sure that that is the case.

I turn to the points raised by my noble friend the Duke of Montrose. What we are dealing with today is more about the imports than the exports, as I am sure he will appreciate. It is so important that our farmers have continuity of supply. Obviously, we cannot tell the European Union what to do if we leave with no deal. We will unfortunately be in a situation where there will be no reciprocity. However, it is the case that we import vast quantities of fertilisers, including ammonium nitrate, which is why we are extending a warm hand to those overseas manufacturers and saying: “Look, it’s okay. We will continue to recognise your labelling for the next two years to ensure continuity”.

With regard to chemicals more broadly and the REACH SI, regulations on which will I know be coming to us soon, that is a far more complicated area and we will have to go into it. It was most important for us to make sure that we have the systems and laboratories in place, and that we accept the results from overseas laboratories for that two-year period.

The question of exports was raised, both by my noble friend and the noble Baroness, Lady Young. Fertiliser manufacturers based in the UK will, of course, be able to sell products into the EU. If we leave with no deal, they will do so as a third country, but they will have to comply with the EU regulation—they already comply with it at the moment, Regulation (EC) No. 2003/ 2003—and any other relevant legislation.

The noble Baroness raised the point about ensuring establishment—this is a very broad term—within the EU after exit. Sometimes, when exporting to third countries, you have to comply with them as they require. In some cases of larger companies, it would be cost effective to have an office there, but for many it is simply a case of using an import agent in that country. Those requirements would come into being; however, this is for no deal only. If we have an implementation period, none of this will come into play. If we get a free trade agreement thereafter, as we hope, much of this will continue, as we all wish it to, so I am afraid we are dealing solely with a no-deal scenario today.

[Baroness Young of Old Scone]

Will the Minister confirm that that small number of 20 or 30 manufacturers of fertilisers in this country will have to get lab tests in the UK and the EU—potentially in member states that have a national testing regime—and pay for an agent? That seems like quite a major burden on the poor souls.

[Baroness Vere of Norbiton]

I cannot really comment on the costs because the testing of fertilisers is not required quite as often as, for example, for other chemicals. I imagine that there will be a small increase in costs for those companies that want to export into the EU, unless of course the EU decides that it wants to mitigate those costs and would like to work with us, either on a bilateral basis or whatever. That is indeed the case: exporters, whether of fertilisers or, quite frankly, of anything else, will find that certain things will be different for them when they export in future if there is no deal. This is why the noble Baroness and I would like a deal.

[Baroness Young of Old Scone]

I just do not want us to leave.

[Baroness McIntosh of Pickering]

On that point, highlighted by the noble Baroness, the technical notice says that Norway, Iceland and Liechtenstein, being party to the European Economic Area, will be covered. Will lab costs have to be applied to export to those areas in the event of no deal as well?

[Baroness Vere of Norbiton]

We will have to look into that in greater detail. I will write on that. We are possibly slightly off topic, as this is about the cost of exporting, but I will certainly write. I am very happy to do so.

Turning to the pesticides SI, it covers a range of different topics, so it is important that we discuss it today. It updates out-of-date references and provisions in the Ammonium Nitrate Materials (High Nitrogen Content) Safety Regulations 2003 and makes corrections to the EU plant protection product regulatory regime. It is a bit like what my noble friend Lady McIntosh is doing—it covers lots of things, but we are being told that we should not have done that. This instrument was laid on 18 February. We produced an impact assessment, which considered the collective impact of the three statutory instruments, and noble Lords will know that we have already discussed the other two affirmative SIs. This SI was discussed today in relation to the specific provisions about ammonium nitrate.

I believe that I have covered most of the points raised. Like my noble friend Lord Gardiner, I will review Hansard with great interest to check that I have covered all the points. Where I have already promised to write, I will certainly do so.

Motion agreed.