Common Agricultural Policy

Lord Henley Excerpts

Thursday 18th November 2010 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)]

My Lords, I join others in offering my compliments to my noble friend Lord Greaves on his timing of this debate. As has been mentioned, it is only today—it has just been published—that we have seen the real, and not leaked, document on the common agricultural policy from the Commission. I am advised that it has considerable similarities with the leaked document, but I cannot comment on that now as I have not been though it in detail as it was only published this morning. I offer my compliments to my noble friend on having this debate but suggest that it might be somewhat premature. No doubt there will be comments that I can address.

I offer my thanks to all noble Lords who have spoken for the thought that has gone into their contributions, particularly given that we have had no time to look at the Commission’s proposals. As all noble Lords will know, we have waited for them a long time and there has been plenty of discussion over the past year or two across Europe about what we hoped to see in this communication and to assess whether it meets our expectations and those of farmers, consumers, taxpayers and, of course, the environment. I endorse what the noble Baroness, Lady Quin, said. I can offer reassurance to my noble friend Lord German that my honourable friend Mr Jim Paice has continued discussing these matters at a European level. He visited the European Parliament pretty early on in his time as the Minister responsible for agriculture, has had discussions with George Lyon MEP, who wrote the report, and has engaged with others on this matter.

I shall try to respond to all relevant comments raised in the debate but there will be more time to reflect on the proposals in the coming months, and no doubt there will be other opportunities to debate these matters. I want to say from the outset that the Government are committed to ambitious reform of the common agricultural policy. We also recognised, as my noble friend Lord German said, that it might be quite difficult. There are 27 countries involved and because of co-decision, matters become even more difficult. Although we are committed to ambitious reform of the CAP, we also accept, as the noble Lord, Lord Williamson, put it, that already a great deal has happened over the years. We no longer have the wine lakes, the butter mountains and other topographical features composed of different foodstuffs of one sort or another. However, in view of the significant challenges and opportunities ahead, we believe that reforming the EU framework so that farmers can be prepared for the future is essential. We shall continue to push for that in the coming months and years.

My noble friend Lord Greaves mentioned, for example, that by 2050 we must respond to the need to feed a world population of 9 billion people—3 billion more than at present. That means that worldwide food production must be increased by about the same amount as in the whole of last century, if not more, if we are to see an increase in living standards. That will certainly present a great many market opportunities and productivity challenges for United Kingdom agriculture. By removing unnecessary barriers to agriculture’s ability to respond, such as the market distorting subsidies in the CAP, is a starting point. Alongside that we need to invest in skills, training, research, as mentioned by my noble friends Lord Plumb and Lord Cathcart, and innovation which will increase productivity and enable farmers to become resilient to future market and environmental fluctuations. Indeed, improving productivity is a central element of the challenge, delivering dual benefits. Reducing farming inputs such as fertilisers and pesticides relative to outputs is not only good for farmer profitability but would reduce the impact on the environment. Here too we believe that farmers can play an important role.

In an earlier debate in this House, I outlined the important role that farmers play in managing the natural environment. The House will be aware of that, aware of our commitment to encourage that and of the emphasis that we place on the role of agri-environment schemes delivering a range of important environmental benefits. Farmers have a key job to play in managing the land so that it can continue to produce foods sustainably as well as help it to adapt to the changing climate and environment.

Sustainable management of soil and water, as mentioned by the noble Baroness, Lady Miller of Chilthorne Domer, forest management, as mentioned by other noble Lords, and protecting the biodiversity of landscapes are just some of the interlinking components of a much larger picture within which farmers work. Future agriculture policy needs to be better focused on supporting these sorts of objectives, rather than stagnating existing structures and encouraging ongoing dependency on expensive subsidies that deliver little in the way of outputs for the investment being made. That is why we continue to see a very valuable role for Pillar 2 of CAP in the future, delivering targeted, measurable outputs that offer value for money.

This brings me to an issue that we must have in the forefront of our mind when we assess the proposals on CAP. This must be seen against the significant economic challenges that face the whole of Europe. The CAP represents over 40 per cent of the EU budget, Pillar 1 alone accounting for 33 per cent, so it cannot be immune to the hard choices that we are making elsewhere in the UK and we hope are being made in the EU. Indeed, the CAP budget in 2009 was €55 billion. I appreciate that the noble Lord, Lord Williamson, implied that this was a very small percentage—I think he used the figure of about 1 per cent—but I remind him of the quotation from the American senator:

“A billion here, a billion there, and pretty soon we are talking about real money”.

That €55 billion is a rather large sum of money—roughly equivalent, I am told, to the total spending on healthcare in all the new member states. No other EU sector receives this much support.

We need to be clear about where our priorities are and where money is best spent to stimulate competitiveness, sustainable growth and environmental public goods, contributing to the wider EU economy. The agriculture and food sectors have an important role to play in that. In Europe, they are particularly well placed to respond, with their high-value, high-quality produce, if farmers have the right framework to enable this. Therefore we need to use the next period—the period we are discussing, 2014-20—to help farmers adapt to a future that will be very different from today and enable them to respond to as-yet unforeseen challenges ahead. Fossilising existing structures will not help in this process; we need a new approach.

Our responsibility, along with the other 26 member states, is to set the direction of travel for our farmers. Our clear priority for this Government, and one that must underpin the Commission's approach, will be to reduce unnecessary red tape for farmers and simplify delivery of the CAP. I give that assurance to the noble Earl, Lord Erroll, in relation to his comments. The question that we now seek to address is whether the Commission's proposals establish the framework to enable this to happen.

Noble Lords raised a number of specific issues, and I would like to address one or two of those. First, the point made by the noble Lord, Lord Wills, on the impact of the CAP on developing countries. I agree fully with him that we need to pay particular attention to that and we will want to ensure that any reform focuses on that. I have taken on his concerns, but I assure him that Her Majesty's Government share them.

Secondly, noble Lords—including my noble friends Lord Dykes and Lord Cathcart, who disagreed—asked whether we should be reducing payments to the larger farms. I do not fully agree, I take the point made by my noble friend; we do need to ensure that we do not find ourselves discouraging business structures that are going to be competitive. There are also legal problems—I see that this is a debate in which many lawyers are involved—and this might be a matter where we create a lot of business for the lawyers, and accountants, for that matter, when we come to definitions and the problems of restructuring businesses to get round the CAP.

On the question raised by the noble Lord, Lord Wills, about transparency in relation to the EU judgment, we will look very carefully at it—I have not done so myself—but a new legal framework is likely to be needed and we will be very keen to ensure that it delivers greater transparency and openness, in line, as he put it, with the coalition document, which is our Bible in all these matters.

We will obviously consider these proposals in considerably greater detail and respond to the Commission in due course. Noble Lords would not expect me to make a response today, when our document was only published earlier today on the web and I have not yet seen it. We will not, at this stage, want to set out our negotiating position. I think it was again the noble Lord, Lord Wills, who sought a degree more transparency on this issue, but I think he will accept that, in terms of our negotiating position, we would not want to set our cards out on the table at this stage, facing upwards. That comes later on in the game of poker. There is still a very long way to go and negotiations are only just beginning. We will work with all interested groups, we will be listening to all Members of both Houses and all others who have an interest over the coming months, but we will continue to press for ambitious reform.