Sheep Farming: No-deal EU Exit

Debate between George Eustice and Helen Goodman

Tuesday 3rd September 2019 Commons Chamber

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Darlington (Jenny Chapman) on securing this important debate on a day when we have already had a lot of discussion about our EU exit. She has raised this issue in a series of parliamentary questions, and a little later I will address some of the concerns and issues she raises.

The UK sheep sector is incredibly large and important. Combined, our upland and lowland sheep production had an annual production value of around £1.26 billion in 2018, accounting for around 4.5% of all agriculture output in the UK. As a number of hon. Members have said, the sector is also responsible for some of the most iconic landscapes in the UK.

There are 16 million breeding ewes and some 70,000 sheep farms across the UK, and the sector is particularly important in some of the devolved regions. For instance, around 50% of UK sheep production and the national flock is in Wales and Scotland. The UK is the largest producer of sheepmeat in the EU, producing around 38% of all the sheepmeat and goatmeat produced in the EU last year. The UK is also the world’s third largest exporter of sheepmeat, behind New Zealand and Australia, so we are a truly global player in this sector.

Around a third of our annual production of lamb is exported, and as the hon. Member for Darlington said, over 95% of it goes to the European Union. Total lamb exports in 2018 were valued at around £384 million, with a large amount of that coming from the European Union. The main export destination for lamb in 2018 was France, followed by Germany and Belgium, but for certain parts of the industry, notably those in Wales that tend to produce smaller lambs, some of the Mediterranean countries such as Italy and Portugal are also important purchasers of our goods. Some of our heavier lamb, predominantly from lowland areas, is more sought after in northern Europe. We recognise that, because of all those factors, in the event of a no-deal exit the sheep sector is the most exposed in its trading relationship with the EU, and we have always acknowledged that.

In managing those risks, we have two important factors going for us. First, we have a large domestic market for food in general and for lamb in particular. Measured by import value, the UK is the world’s third largest market for food and drink, coming after only China and Japan, so there are many opportunities for import substitution, as we currently source a significant quantity of lamb from New Zealand.

Secondly, we have an independent exchange rate—an independent currency and a floating exchange rate. That is incredibly important for the agriculture sector. It helps as an automatic stabiliser when we have shocks. We now contemplate the prospect of having to leave the EU without a withdrawal agreement, although that is not our preference, as all hon. Members know. Having a floating exchange rate makes that easier for the farming sector than it would have been had we become trapped in the euro some years ago.

[Helen Goodman]

I am astounded by what the Minister has just said. The pound has fallen by 20% since the referendum, which means that for every export the farmers are getting 20% less money. How can that be good for them?

[George Eustice]

The hon. Lady has it the wrong way round, as it is always the case that for sectors that are producing goods, such as agriculture, a weaker exchange rate against the euro leads to higher prices. It is no secret that since the referendum result in 2016, when there was an adjustment of sterling against the euro, agriculture commodity prices in the UK have been at highs, and that has helped farm incomes. That is a recognised fact; exchange rates are a key driver of agriculture commodity prices.

We recognise that even with those important factors going in our favour, the sector is still exposed. Some modelling has been done by a number of different organisations, including the NFU. It is important to recognise that tariffs are a tax on consumers first and foremost. Some estimates therefore anticipate that were the EU to apply full most favoured nation tariffs on lamb, there would likely be an increase in consumer prices in the EU of up to about 20%. That reflects the fact that the UK is the dominant lamb producer in the EU and there are limited other options for it to source its lamb from.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 29th November 2018 Commons Chamber

[George Eustice]

My right hon. Friend makes a good point, but I can tell him that the Bill has important provisions that will enable us to strike down and improve some retained EU law, particularly in relation to the burden of administration. We are absolutely clear that we want a totally different culture in how we regulate farmers in the future. The Bill also enables us to target support at farmers who are delivering public goods, including those in severely disadvantaged areas.

[Helen Goodman (Bishop Auckland) (Lab)]

2. What recent discussions he has had with the Secretary of State for International Trade on maintaining environmental and animal welfare standards in future trade agreements.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 7th June 2018 Commons Chamber

[George Eustice]

I thank my right hon. Friend for raising that issue. We have no intention of rolling out badger culling throughout the low-risk area. However, in response to one single incident that we have had in Cumbria of an outbreak that has got into the badger population in a limited way, we have consulted to ensure that we have the option to deal with that following veterinary advice and the advice of our chief scientific adviser.

[Helen Goodman (Bishop Auckland) (Lab)]

The Secretary of State is using his current role to flirt with radicalism—in particular, taking cheap shots at the payments made to the landed aristocracy. Rather than capping total amounts paid in the future scheme, would it not be more sensible to look at the rate of return and the marginality of the land?

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 26th April 2018 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

Teesdale farmers tell me payments that should have been made under the higher level stewardship scheme are late. They are upland farmers on the lowest incomes. Will Ministers stop blaming Europe and sort out their own administration?

[George Eustice]

We have made a number of changes and are working very hard to deal with the current problems with countryside stewardship, and progress has been made. I would simply say that we are not blaming the European Union. It is true that it has changed the rules so that all agreements must be processed simultaneously, whereas they used to be processed across the year, which has caused major administrative problems both for the Government and for farmers.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 25th January 2018 Commons Chamber

[George Eustice]

The point I would make to the hon. Gentleman is that, when we leave the European Union, the withdrawal Bill will bring across all existing EU regulations, including those on chlorinated chicken. As my right hon. Friend the Secretary of State has said many times, animal welfare is the issue here, and the issue of chlorinated chicken can sometimes mask animal welfare concerns.

[Helen Goodman (Bishop Auckland) (Lab)]

British farmers will be completely undermined if we have a flood of imports from countries with lower animal welfare standards. Will the Minister now tell the House that that is to be one of the Government’s red lines in negotiating free trade agreements?

[George Eustice]

If the hon. Lady had listened to my earlier answer, she would have heard me say that we have no intention of undercutting our own reputation for quality by lowering our food and animal welfare standards in pursuit of a trade deal.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 26th October 2017 Commons Chamber

[George Eustice]

As part of our work on innovation, we are considering grants to support investment in farms. Tax policy is obviously a matter for Treasury Ministers, but there are already annual investment allowances to support investment in farm machinery, and many farmers make use of them.

[Helen Goodman (Bishop Auckland) (Lab)]

The uplands have some of the most important environmental benefits in the country, but the farmers have extremely marginal incomes. Will the Minister therefore commit to making no cuts to the support for hill farmers in the uplands?

[George Eustice]

We are doing quite a lot of analysis of sectors of the industry that could be affected by any future reform in agriculture policy. The hon. Lady is right to say that some farmers in the uplands are more financially vulnerable, and we are taking that into account. We have also been very clear that any change we implement would have a transition period to ensure that people can adjust.

Oral Answers to Questions

Debate between George Eustice and Helen Goodman

Thursday 29th January 2015 Commons Chamber

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

My hon. Friend makes a very important point. In December Council, the UK pressed hard for a commitment to protect bass stocks. We got a statement from the Commission and subsequently wrote to it. I can confirm that it has now implemented emergency measures to protect bass during the spawning season and ban the very damaging practice of pair trawling, which is a major step forward.

[Helen Goodman (Bishop Auckland) (Lab)]

T2. My constituents who run rural businesses were very disappointed that the north Pennines LEADER bid for support was turned down. They think mistakes were made in the assessment. Will the Minister undertake to ensure that the bid is re-examined?

[George Eustice]

There is an appeals process and a number of bids were not successful. This was a competitive process. The LEADER group to which the hon. Lady refers is welcome to submit an appeal for consideration.

Common Agricultural Policy

Debate between George Eustice and Helen Goodman

Monday 7th July 2014 Commons Chamber

[George Eustice]

I am going to try to make progress, I am afraid, and I will address many of the points my hon. Friend made if I have time to get to them.

On the agri-environment schemes, we have been clear that 87% of the pillar two budget will go on the new environmental land management scheme. At the higher end, the scheme will be broadly similar to the existing higher level stewardship scheme, but we will also have an additional rate that has more requirements and obligations than the existing entry level stewardship scheme, and which is more proactive and is almost a middle rate. These will be more targeted, and my right hon. Friend the Member for South East Cambridgeshire raised concerns that this would effectively lead to white areas or deserts where there would be no such support. Alongside this scheme we intend to deal with the problem of so-called white areas by ensuring that there will be directed options right around the country so that whole areas of the country will not be excluded, and grants to support the planting of woodland, for instance, will be universally available.

Many Members touched on matters relating to the three-crop rule, which will cause difficulty for some farmers—up to around 7%, possibly more. We gave serious consideration to advancing what is called a national certification scheme—a nationally designed scheme that would achieve the same thing—because, as my right hon. Friend the Member for South East Cambridgeshire said, the three-crop rule does not in itself guarantee crop rotation. Indeed, there are all sorts of anomalies, not least that a cabbage and a cauliflower are regarded as the same crop botanically as far as the EU is concerned, and there will be lots of similar complications to work through. When we looked at the alternatives, however, we found that they were all more complicated and even more difficult to administer than what was already on the table.

A number of hon. Members have mentioned the uplift to the single farm payment, which is important. It recognises the value we place on upland and moorland farmers, not just as custodians of the countryside, as my hon. Friend the Member for York Outer (Julian Sturdy) mentioned, but as food producers. We are, therefore, equalising the basic payment for upland farmers and lowland farmers, and we will almost double the rate for moorland farmers to about €70 per hectare.

My hon. Friend the Member for Thirsk and Malton raised a number of issues, the first of which related to commons. We understand the concerns about the commons register, which has always been the starting point for the mapping of commons. There are disallowance risks in departing too far from the system we have had in place to date, but I can confirm that in addition to starting with that existing commons register, the RPA will utilise other information available to it, such as aerial photography, to help ensure that those who are entitled to claim on common land can.

My hon. Friend also mentioned the issue of disallowance, and I can confirm that we have set aside a figure of 2% to plan for that. It is our aspiration to get to zero disallowance, but the way in which the disallowance scheme works is incredibly complicated and convoluted. Frequently, the disallowance we get is through no fault of our own; it is often because the European Commission does not understand its own rules, and we can get into very protracted arguments. For instance, the fruit and veg scheme has been notorious as a cause of disallowance. The system is very complicated and I do not think we will ever be able to eliminate disallowance altogether.

A number of hon. Members, including my hon. Friend the Member for Thirsk and Malton, have highlighted the issue of the modulation rate—the inter-pillar transfer. We have made it clear that we will modulate at 12% initially and have a review in 2016. She asked what the criteria for that will be. There are two basic criteria, the first of which is whether there is sufficient demand for those agri-environment schemes to warrant an increase in that budget. That links to a question raised by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). The second is an assessment of the impact on the competitiveness of British agriculture.

Many hon. Members, including the hon. Member for Bishop Auckland (Helen Goodman), have raised concerns about the new IT system. The existing RPA computer system is simply not fit for purpose and we need a new system. The new common agricultural policy is far more complicated, and there are coefficients attached to some environmental focus areas. Somebody growing peas or beans will find that that counts for only 0.7% towards their EFA—0.7% of the area declared—whereas for hedges there is a coefficient of up to 10 times the area of the hedge. The idea that we could do this by drawing things on maps with pencil, as we do under the existing system, and sending that in to the RPA is simply not credible. We therefore believe that to cope with the new system we have to have a digital by default approach and to have everyone adding their data by computer, because that will be simpler.

I completely understand the point that many hon. Members have made about broadband access. We are investing £500 million through BDUK—Broadband Delivery UK—and a further £250 million in phase 2. We have a third fund of £10 million to pilot creative ideas for those really hard-to-reach areas. In addition, we will have an assisted digital package. We will send paper guidance to every farmer in year 1, so although they will not have a paper application form, they will have paper guidance. That guidance will include detailed information on our digital offer. The crucial thing for those lacking the computer literacy to complete their form online or those who have no broadband access is that we will be setting up a number of digital service centres right around the country, particularly targeted at those areas where there is a problem. Farmers will, thus, be able physically to take their information into an office, which will have privacy and be discreet, and work with an RPA agent to enter that information on the system. That is the right thing for everyone. It is right for those farmers, because it removes the risk of them getting penalties and disallowance.

[Helen Goodman]

rose—