Agriculture and Food Industry

Lord Grantchester Excerpts

Thursday 24th July 2014 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I thank the noble Lord, Lord Plumb, for introducing our debate today and pay tribute to his continuing championing of agriculture. I declare my interests in a commercial dairy farm in Cheshire in receipt of EU funds and my life-long experience of co-operating with other farms and farmers in the food chain. In that regard, I chaired Dairy Farmers of Britain, which managed liquid dairies and an ingredients factory as well as engaging in hard and soft cheese manufacturing.

Through the reduction of international trade barriers, agriculture now has to have a global outlook, and we must be aware of the different perspectives that this can bring. From the top down, we have to be concerned with the health of the population, bearing in mind the modern challenges of obesity and climate change. However, when we look up from the agricultural perspective, the industry can seem very different when farmers recognise the headlock that they can often be in in the food chain, continually seeking to resist pricing to the marginal unit of production, which drives farming policy and outcomes without regard to profit as a return on risk and investment. It is a challenge to the future to drive down unit costs of production, as is the constant restructuring of the supply chain.

We on this side of the House are very aware of the importance of joined-up food policy. It is disappointing that the noble Lord, Lord Cameron, is not in his place today. However, the noble Lord, Lord Curry, has pointed out the need for rural proofing and getting an integration of policies on the rural economy from Defra, BIS, CLG and even the Home Office. That is why, in government, the Labour Government published Food 2030, a comprehensive vision for a sustainable and secure food system for 2030.

I thank the noble Lord, Lord Plumb, for his introduction to the debate today. He and other noble Lords have highlighted the importance and value of agriculture in the UK economy. Food is indeed the biggest manufacturing sector in the UK. It employs 3.7 million people in a huge range of businesses from farms to retail. That is equivalent to 14% of all GB employment. Agriculture and food processing is worth more than £80 billion to the UK economy and is our largest manufacturing sector.

The noble Lords, Lord Palmer and Lord Marlesford, and the noble Earl, Lord Caithness, highlighted the changes in food production over the years. The noble Earl, Lord Selborne, drew attention to the importance of research to the future development of agriculture and its effects on the environment. He also mentioned the importance of work on nutrition, a key aspect of the remarks of the noble Baroness, Lady Parminter. The noble Baroness, Lady Miller of Chilthorne Domer, drew attention to the fragility of the environment and the importance of soil structures. The noble Lord, Lord Bilimoria, highlighted the importance of agriculture to the drinks sector and in developing international trade, while the noble Baroness, Lady Bakewell, extolled the virtues of farmers’ markets.

However, agriculture is not one trade, but rather is made up of different sectors, often competing against each other for space on the supermarket shelf and often concentrated in different parts of the UK. The noble Duke, the Duke of Montrose, drew attention to the consequences of this practice.

I resist the challenge to take a diversion in my remarks to answer at length the noble Earl, Lord Caithness. However, I will speak of Labour’s approach to agriculture and the food chain, which is focused on several key areas. The first is the importance of skills. Improving skills and competitiveness is a central aspect of a sustainable food and agricultural industry. There is a growing need to educate farmers with business skills. Have the Government given any thought to how they might take forward the work of the food and farming partnerships set up under the previous Labour Administration? The farming industry faces particular challenges in maintaining and building its skills base, innovating to stay profitable and attracting new entrants to the sector.

We must also help diversification across the rural economy and up the food chain and be aware of the effects of planning and the tax regime, whereby farm shops are often considered on a separate basis from the capital structure of agriculture. At the root of sustainability is the creation of a more highly skilled workforce and better paid jobs. A key element of Labour’s Agenda 2030, our long-term strategy to earn and grow our way to a higher standard of living—a priority of the next Labour Government—is to invest in the quantity and quality of apprenticeships. We will strengthen and develop a manufacturing supply chain to boost productivity and raise living standards. The long supply chain in the food sector is a very important aspect that we need to recognise, as we should the input provided by the FDF paper, Ingredients for Success.

Another key area on which our approach is focused concerns that of the United Kingdom’s place in the EU. At home, the impact of the challenge of the cost of living crisis is especially crucial for the wider population. Returns are being focused not only in the top companies but on the top management of those companies. A balance needs to be struck in focusing the returns throughout the industry and across the companies in the food chain. The challenges thrown up by the increasing use of food banks need to be understood and met. The Government, industry and stakeholders must work together to ensure that food is available and accessible by reducing market volatility and ensuring that our national, regional and international trading systems work effectively.

It is vital that we remain a key member of a reformed European Union and pay attention to the impact of the CAP on agriculture. The UK food industry is highly integrated into that of the rest of the EU. It is crucial that Britain remains in the EU to benefit from better access to markets. The EU is also leading the Transatlantic Trade and Investment Partnership to ensure that we can open up the US market, especially to European beef. The EU has free trade agreements with a number of emerging economies, including Chile, South Korea, Mexico and South Africa. Will the Minister tell the House why the Conservative Party would risk threatening this hugely important industry by leaving the EU?

The third aspect on which I wish to concentrate is food. In this regard the noble Baroness, Lady Parminter, highlighted the importance of nutritional quality. Other issues raised today include food security, which the noble Lord, Lord Curry, mentioned. The noble Lord, Lord Bilimoria, spoke about GM food and the noble Baroness, Lady Scott, spoke about the lack of a coherent food policy and the lack of attention given to ethical concerns. I shall highlight food safety.

Food security needs to remain a central priority for the entire food system, protecting the health of consumers and their safety from disease and contamination. The challenges that this throws up include maintaining investment in animal livestock health and being aware of diseases crossing over into the wild population and, indeed, into the human population through zoonosis. I am very glad that the noble Lord, Lord Trees, mentioned that issue. Under the Tory-led Government the horsemeat scandal severely damaged the consumer’s confidence in the industry, and we must fix that urgently.

The Elliott review into the integrity and assurance of food supply networks is a crucial part of restoring that trust. The final report was due to be published this week. Can the Minister explain why this important report has been further delayed? The continuing delay and obfuscation by Defra Ministers is damaging the process. We already have the interim report. As Parliament is now rising, will we have a further three months to debate the report? Given that the food and agriculture industry is so valuable to the British economy, the Government’s continued delay, by not publishing the report, is bad for the food industry and bad for consumers. Consumers deserve better and Ministers must take account of this report.

The fourth aspect that I will focus on is the CAP and its reform equitably throughout the European Union, bearing in mind integration with other land uses and, by the same token, the importance of the value of food-producing land in the equation. Food must be produced in a way that is environmentally sustainable or we will create problems for the long term. We always need to be aware of the need to feed a growing world population in a way that does not degrade natural resources on which farming and food production ultimately depend. Labour wants to see reform of the CAP based on clear principles. It should enable farmers to thrive in a liberalised global market without the need for subsidies across the UK, bearing in mind the challenges that this will bring to the food sector to deliver returns to primary production—that is, agriculture. It should ensure that funding is used to support environmental and other public investments, including supporting rural communities. It should demonstrate that the payment is a genuine public good, and value for money. It should create a level playing field with other EU member states and not disadvantage other UK farmers.

The public want real and transparent value for the money that they pay out each year, and fairness for this in future generations. Does the Minister join Labour in supporting a fair distribution of returns from taxpayers and the market in an overall sense to encourage agricultural innovation and improved profitability? Agriculture is very resilient but needs to have its voice heard and reflected in public policy.

[Baroness Northover (LD)]

My Lords, I am grateful to my noble friend Lord Plumb for calling this important debate, not least because it enables us to emphasise the huge contribution that our farmers and those in our food industry make to the economy. I feel immensely privileged to be answering the noble Lord. This is my opportunity to tell him that, when I was young, I recall my father, a tenant farmer, speaking in awed and hushed terms of the noble Lord when he was vice-president, then president, of the NFU. My parents felt that here was a true champion of what they were doing. They felt valued as they sought to make a living out of difficult hill-top land, the fertile valleys being occupied by a golf course, which my father longed to plough up. They worked against the odds in food production in dairy, beef, sheep and arable, training me and my siblings as expert sheep-dogs, bale movers and—I address this to the noble Lord, Lord Marlesford —straw burners. The noble Lord, Lord Plumb, said that farming is not for the faint-hearted; he is so right. I also know how important the agricultural industry is to our own food security and what we can contribute, given the huge global need that my noble friend Lady Parminter and others pointed to.

The UK agri-food chain, from the farm to the retailer to the caterer, is estimated to be worth £97 billion. Our world-class food and drink manufacturing and retail sectors supply consumers both in the United Kingdom and abroad. The food supply chain employs some 3.7 million people. Food and drink is the country’s largest manufacturing sector, contributing £24 billion to the economy and employing 370,000 people. British food and drink has an excellent reputation for its high standards and rigorous traceability, as well as the strong environmental and animal welfare standards that are valued by consumers across the world.

We have a rising UK and global population, and demand for British produce is increasing. At the same time, for the types of food that we can produce in this country, we import 31% of what we eat. Consumers care increasingly about the origin of their food, thus offering the chance for UK producers to increase their share of the domestic market. We want to provide the right conditions for UK producers to take advantage of these opportunities now, in the face of increasingly fierce international competition.

Both the agriculture and food sectors have their challenges. Our rate of agricultural productivity growth has lagged in recent decades relative to some of our key competitors such as the USA, Denmark, Ireland and the Netherlands. Various noble Lords referred to this. We therefore need to increase our rate of agricultural productivity but, as my noble friends Lord Selborne and Lady Parminter emphasised, we need to ensure that we do it sustainably, to ensure that we can go on competing in the global market.

My noble friend Lord Plumb is absolutely right about the need for research to underpin agriculture. After all, it was in the United Kingdom that the agricultural revolution started, which transformed agriculture in Britain and around the world. That combines now have eight computers demonstrates the complete variance from my father’s battered old combine. Only his engineering skills kept it going and, when it was finally sold, it was bought by a collector. It is right that science and research must underpin the agriculture industry. As my noble friend Lord Selborne emphasised, this is the key. That is why we have brought forward the agri-tech strategy, which was mentioned by many noble Lords.

However, as my noble friend Lord Selborne and the noble Lord, Lord Curry, pointed out, we cannot be complacent. The strategy was launched to support the agri-food sector, providing the UK food and farming industry with opportunities to increase productivity, grow the economy and give UK businesses a competitive edge both here and overseas. The Government are investing £160 million through the strategy, as noble Lords have noted, in projects that will, for example, establish centres of agricultural innovation. The strategy also calls for a joined-up, industry-led approach to improving skills in the agri-tech sector. My noble friend Lord Selborne emphasised the importance of linking this to farming practices. My right honourable friend the Prime Minister announced funding of £18 million from government and industry for 15 agri-tech catalyst projects on 21 July so that they can become commercially viable.

We have a long record of innovation in farming in this country. However, in recent decades, as I mentioned, our productivity has not grown as fast as that of some of our competitors. The strategy is designed to help tackle this by supporting the transfer of innovation to the farm. There is huge potential from breakthroughs in areas such as plant and animal breeding and in the application of technologies such as the satellite imaging mentioned by my noble friend Lord Plumb in terms of their effect on agriculture—my father would have been stunned to hear my noble friend say the things he did. The aim of the agri-tech strategy is to ensure that we make the most of these opportunities. The noble Lord, Lord Trees, rightly emphasised that animal health is relevant in this area. I am sure that he knows, but I would point out to him that the new catalyst projects announced on Monday 21 July included one for technology automatically to monitor pigs for early detection of health and welfare issues.

Many issues came up that show the need for a research base in agriculture. The noble Lord, Lord Bilimoria, and my noble friend Lord Ridley mentioned GM. At an Environmental Council last month, there was overwhelming support for the proposal that will allow member states and the devolved Administrations more choice on whether to cultivate GM crops. The next stage is to agree this proposal with the European Parliament, and these negotiations could conclude later this year or next year. If adopted, it will be a few years before GM crops are grown commercially in the United Kingdom but, earlier this month, an EFRA Committee report on food security recognised the benefits of GM technology and supported the UK’s efforts to make the approval process operate more effectively.

My noble friend the Duke of Montrose asked a very specific question on sheep carcasses. I can let him know that the EU Commission is looking into this, but that is at a very early stage, and we note what he says. My noble friend Lord Marlesford mentioned herbicide-resistant black grass in wheat. We recognise that this is a serious issue, and we will look carefully at this problem.

British food and drink is known the world over for its quality, and our food and drink industry is a success story both at home and internationally. Since 2010, we have seen exports increase by £1.2 billion to reach an impressive £18.9 billion in 2013. Increasing exports provide an excellent opportunity for the sector to grow even further as well as to become more resilient and more profitable. With surging global population growth and demand for western products increasing worldwide, there has never been a better time to pursue food and drink export opportunities. That is why I can assure noble Lords, including the noble Lord, Lord Bilimoria, that promoting food and drink exports is a key government priority. To help grasp these opportunities, Defra and UKTI launched the UK food and drink export action plan. This details the Government’s commitment to champion UK food and drink overseas, break down trade barriers and open up new international markets for our produce.

Last year, the United Kingdom exported food and drink to the value of £18.9 billion, as I mentioned. There is room to increase this even further, particularly in emerging markets. The export action plan outlines an ambitious target, jointly agreed by government and industry, to add £500 million to the UK economy by helping 1,000 UK food and drink companies with their international growth up until October 2015. The plan also details government and industry’s commitment to work together to champion UK food and drink overseas, open up new markets, overcome barriers to trade and simplify and improve support and trade procedures for exporters.

Back home in the UK, both agriculture and food manufacturing face another challenge: the skills gap. Various noble Lords referred to this. This affects innovation and profitability. The Food and Drink Federation anticipates that 137,000 new employees are required in food manufacturing by 2017 to meet its ambition to grow sustainably by 20% by 2020, and 45,000 of these will be needed in management roles and professional jobs. The noble Lord, Lord Grantchester, mentioned apprenticeships. The Government are supporting the food industry’s work on creating a number of career pathways for young people. These include the BIS-led reforms to ensure that apprenticeships are even more rigorous and responsive to employers’ needs and the development of the UK’s first food engineering degree at Sheffield Hallam University.

The future agricultural workforce is a vital part of meeting the challenge of global food security. We are currently addressing a number of the findings of the Future of Farming Review, which industry and Government worked on together, to look strategically at the opportunities and barriers encountered by those making a career in farming.

My noble friend Lord Caithness mentioned various challenges, including poor pay and poor prices. They are clearly important factors. He will be pleased to know that we held a beef industry summit on 1 July, bringing together all parties in the supply chain to discuss the fall in beef prices. My noble friend Lord Marlesford mentioned milk prices. There were record milk prices in 2013, and they have remained high in 2014. When I hear about various variables, it takes me back to my father’s view of why he needed a mixed farm, not only for the preservation of the soil, but because he never knew which bit of it might be profitable at any time. Sheep would be losing money, arable would be neutral, but a third area—let us say beef—might be making a little. He never knew which it would be and which would be losing.

My noble friend Lord Caithness also mentioned seasonal agricultural workers. We understand the concerns over the availability of seasonal workers. We have established an industry-government working group bringing together growers, labour providers and relevant government departments. We are pleased that Jobcentre Plus has shared its experience in helping with temporary recruitment in the relevant industries and it is now working with the agricultural sector. It is worth bearing in mind that, on average, UK farmers enjoy higher incomes than others in the EU but we fully realise that that varies by sector. Seeing the variability plays an important role in recruitment into the industry.

My noble friend Lord Plumb is right to emphasise the importance of colleges and to note the encouraging increase in competition for places, which indicates the health of the industry. As part of CAP reform, we are developing a new rural development programme and have dedicated £140 million to farming growth and productivity, with particular attention to how to support new entrants and those developing their businesses in the early years, to pick up on a point that the noble Lord, Lord Bilimoria made. He also asked more generally about the CAP, as did the noble Lord, Lord Grantchester, who emphasised the importance of the EU market and its influence in other markets. He is, of course, absolutely right about that. I remind him, as my noble friend Lady Warsi so often does, that the Prime Minister has made it very clear that he does not intend to leave the EU.

Our approach to implementing the new CAP in England is aimed at minimising the burdens on farmers while delivering value for taxpayers and improving our natural environment. Within a smaller overall EU budget, English farmers will benefit from £15 billion of funds over the next CAP period and we will invest at least £3.5 billion in rural development schemes. A bigger share of the rural development budget will be spent on the environment than ever before—87% compared with 83%. I point out to my noble friend Lord Caithness that we aim to have an IT system that is simple, affordable and effective, but assistance will be provided for those who genuinely cannot or do not get online, ensuring that farmers and their advisers have access to the guidance they need. What he said rather rang true.

We should acknowledge that agriculture’s contribution to our economy is not just about production. Significant economic and social benefits are provided directly to local economies and communities. We heard some wonderful examples from my noble friend Lady Bakewell, on farmers’ markets. It was lovely to have that as a contribution to the debate. My noble friend Lady Scott made the important point that the Government need to do much more to educate people about food and where it comes from as part of the wider context. She will probably know that Defra sponsors Open Farm Sunday, which is held every June and sees more than 200,000 people go to farms to see where food comes from. Natural England has set up educational access agreements with farmers, which help them host educational farming visits. Quite a lot of work is going on but I am sure that more could be done and I know that children enjoy that immensely.

As I have indicated, agricultural and food industries are not without challenges. Noble Lords will be aware of the increasing demands on our land. Defra has helped to fund a project by the University of Cambridge—a sustainability leaders’ platform—which clearly outlines the calls on land, including those from food, fuel and housing. The Government are currently discussing how policies that can have an impact on land interact so that the best outcome is achieved. My noble friend Lady Miller of Chilthorne Domer spoke passionately about the need for us to steward our soils. She is absolutely right. We fully recognise the importance of soil and its essential role, including in food production, carbon storage and flood protection. The ambition expressed in the Natural Environment White Paper was that all soils should be managed sustainably by 2030. New national standards to limit erosion, protect soil organic matter and maintain soil cover will be in place from 2015. I hope my noble friend is reassured by that.

On Monday 21 July, Peter Bonfield’s report, A Plan for Public Procurement, was published. My noble friend Lady Parminter referred to what she found within that and what she wished might have been in it. In the report, my right honourable friend Elizabeth Truss, the Secretary of State for Defra, stated that the plan will create £400 million of new business opportunities for the British food industry. From 2017 all of central government will commit to buying fresh, locally sourced, seasonal food so that all food that can be bought locally will be.

My noble friend Lady Parminter spoke about the Green Food Project. The noble Lord, Lord Curry, and my noble friend Lord Ridley also spoke about this in a strategic context. We are committed to supporting growth and increased competiveness in the food and farming industry. We are working in partnership with industry to focus on priority areas for action, including through the areas I already outlined. We want a healthy and resilient farming industry that contributes to our food security. I assure noble Lords that we have looked at how this also serves to enhance the environment and reconcile any tensions there might be within that. The research and technology we are investing in will also, we hope, help contribute to that.

There are various other things that I might need to reply to in a letter, I am afraid, given the time.

[Lord Grantchester]

Since the Recess is approaching, could the noble Baroness say anything about the Elliott review?

[Baroness Northover]

Yes, we are considering Professor Elliott’s interim recommendations and will respond to his final report, which will be published shortly. I am sure that the noble Lord will enjoy reading it as he lies on the beach somewhere or other. The professor’s interim report recognises that UK consumers have access to some of the safest food in the world. This record must not be undermined by criminals. We should pride ourselves on our record in this area, built upon the work of a number of Governments successively. I am sure that we will all look forward to debating the report when it comes out in its final form in due course.

This has been a wide-ranging and thoughtful debate, reflecting the huge expertise among its participants. We fully share noble Lords’ sense of the key importance of British agriculture, both for own food security and for our potential contribution worldwide. That is why we support the range of research, investment and other areas that we do.