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Agriculture And Horticulture

Volume 13: debated on Monday 23 November 1981

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10.15 pm

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food
(Mrs. Peggy Fenner)

I beg to move,

That the draft Agriculture and Horticulture Development (Amendment) Regulations 1981, which were laid before this House on 4 November, be approved.

I understand that it will be for the convenience of the House if with this we consider also the following motions:

That the draft Farm Structure (Payments to Outgoers) (Variation) Scheme 1981, which was laid before this House on 4 November, be approved.
That the Agriculture and Horticulture Grant (Variation) Scheme 1981 (S.I., 1981, No. 1533), a copy of which was laid before this House on 4 November, be approved.
That the draft Farm and Horticulture Development Regulations 1981, which were laid before this House on 4 November, be approved.

The House will recall that on 3 November 1980 we debated a motion concerning European Community document 9280/80 which set out proposals to restrict investment aids for milk and pig production. Those proposals eventually formed part of a larger package of structural measures which was agreed by the Council of Ministers at the CAP price-fixing in April of this year. Three of the motions that we are considering today implement the terms of those measures in the United Kingdom. They are the Agriculture and Horticulture Grant (Variation) Scheme 1981—which I shall refer to as the AHGS—the Farm and Horticulture Development Regulations 1981—usually called the FHDS—and the Agriculture and Horticulture Development (Amendment) Regulations 1981—abbreviated to the AHDS.

As many hon. Members will know, the AHGS and the AHDS—which replaced the FHDS in October last year—give effect to the main provisions of EC directive 72/159 on the modernisation of farms. The AHGS also has to conform to conditions laid down by that directive. The changes now to be made are introduced partly by new EC regulations and partly by a new directive which amends directive 72/159.

EC regulations are directly applicable in all member States and so technically need not be incorporated into our domestic legislation. However, if we did not amend our own legislation it would be misleading and incomplete. We also wanted to clarify certain points. In addition, we had to implement the amendments which have been introduced by means of an EC directive which does not have direct effect in member States. These are the main purposes of the three statutory instruments.

The House may wonder why it is necessary to amend the FHDS, which has been closed to applications for over a year now. Under that scheme and its successor, the AHDS, a farmer undertakes to carry out an approved programme of investments over a period of up to six years—called a development plan—the purpose of which is to bring the income of his business up to at least the average non-agricultural income—known as the comparable income—per labour unit.

Development plans approved under the FHDS, which has been closed for a year, will last up to six years after the scheme closed to new applicants and may be varied during that time. Consequently, any changes to the current schemes also have to be applied to future variations of development plans under FHDS. The statutory instrument does that. In addition, because the principal regulations had already been amended several times, we have taken the opportunity to consolidate them so that they are more convenient.

I turn to the substance of the three statutory instruments. As I mentioned earlier, the main changes to the schemes are the introduction of restrictions on aid to investment in milk and pig production. As regards dairying, the effect will be to limit aid under the AHDS and new variations under FHDS to that part of the investment needed for a maximum of 40 cows per labour unit in the case of businesses with up to one and a half labour units—in other words, up to 60 cows. For businesses which already have more than one and a half labour units—that is, 60 cows—an increase in the herd size of not more than 15 per cent. is permitted. Businesses expanding beyond those limits will be eligible for aid on the relevant proportion of their investment. However, under the AHGS, aid will be limited to businesses with not more than 40 cows. Any business which expands above, or which already exceeds, that limit will not receive any aid under this scheme. The sort of investments that will be subject to those restrictions are milking parlours, dairies, buildings housing dairy cows, including fixtures and fittings and so on. We shall not be excluding from grant aid items such as buildings for young stock or general purpose investments such as fencing, drainage, machinery sheds and so on, even if they are on specialist dairy farms. We shall continue to exclude aid for the purchase of dairy cows.

The restrictions on aid to pig production will work in a different way. Until now, under all three schemes the limitations have been financial, and they have applied to the amount of investment in this sector that is eligible for grant. Those financial limits were laid down in directive 72/159. They are to be replaced by rules which will limit aid to the investment needed to reach 550 pig fattening places per business. For breeding enterprises, one breeding sow will be considered to be equivalent in this equation to 6·5 fattening pigs. There has always been a rule under which farmers wishing to obtain grant on pig investments must show that their business could produce 35 per cent. of the feeding stuffs required for all the pigs in the business. This rule remains unchanged. The sort of investments affected here will be buildings used for housing pigs together with integral fixtures, fittings and equipment.

General purpose items such as feedstores and slurry tanks will not be excluded from grant aid. The purchase of pigs will continue to be ineligible for grant aid. In introducing the restrictions we want to be as reasonable and as fair as possible, while remaining within Community law. With that in mind, we are exempting from these changes farmers who already have an approved development plan that includes investment in these sectors. However, anyone seeking to vary a development plan to include investments of a type that would be caught by the restrictions will have to comply with them. No doubt hon. Members will remember that when we introduced the AHDS and AHGS in October last year one of the main changes from the previous scheme was the dropping of prior approval. I can understand, therefore, that some farmers who may have started work or incurred expenditure in some other way on an item of investment which would now become subject to these new restrictions, may be concerned that they will be caught out by the new rules. To avoid that, we shall honour such claims and requests, provided that the farmer can produce evidence that he entered into a legally binding commitment to incur the expenditure before the statutory instruments came into operation.

We believe that these exemptions are entirely justified and are within the scope of the EC regulations. The three instruments we are considering at the moment make several further changes in the capital grant schemes. As I mentioned earlier, farmers who wish to claim grant under the AHDS must have an income below the comparable income and must carry out investments in a development plan designed to bring them up to at least that level.

Up till now, farmers whose businesses generated the comparable income but were at risk of falling below that level have been able to qualify for a development plan. The rate of grant they received, however, was reduced to 80 per cent. of normal rates. Under the amended regulations now before the House, such farmers whose businesses already generate more than 120 per cent. of the comparable income per labour unit will no longer be able to undertake development plans. Those earning between 100 per cent. and 120 per cent. of the comparable income will have grant limited to two-thirds of normal rates. Very few farmers will, in fact, be affected by this change. In 1979, for example, only 11 development plans were approved in this category in the whole of the United Kingdom.

Another necessary change to our schemes concerns the labour unit and business expenditure limits eligible for grant aid. These general financial limits on investment under the schemes are to be changed with effect from 1 January 1982. Farmers are limited at present to about £32,915 worth of grant-aidable investment per labour unit over a period of two years for the AHGS and per development plan for the ANDS. This is subject to an overall limit per business applied in the United Kingdom of about £136,000 under the AHDS and about £99,000 under the AHGS. The limit per labour unit is being raised to about £44,875, which is a significant increase. The overall limit under the AHGS which is United Kingdom imposed will net be changed, but the overall limit under the AHDS will be reduced by about 1 per cent. to £134,626, a new limit imposed by the European Community. This slight reduction will not apply to farmers who have already submitted development plan proposals and many farmers will be able to benefit from the increased limit per labour unit.

Another small alteration in the running of the AHDS will be the inclusion of forestry income in the provisions relating to the achievement of the comparable income. It will work like this. In calculating his end-of-plan income, a farmer has had to discount any income from nonagricultural sources in respect of his first labour unit. Only 20 per cent. of his income, or 50 per cent. if he is in a less favoured area, can count from non-agricultural sources in respect of the second and subsequent labour units. As forestry has not been regarded as an agricultural activity, income from it has not been allowed to count when a farmer has been calculating his income. Now, however, forestry income will be included both for establishing eligibility for entry to the scheme and for calculating end-of-plan income. This should help the smaller hill farmer who has previously found it difficult to meet the income qualification for admission to the EC scheme.

The range of items of investment covered by the schemes and the rates of grant will remain the same as before with one exception. I am pleased to tell the House that grant aid will in future be available for the provision of permanently sited durable structures for cladding with plastic which are to be used for agricultural purposes. We already pay grant on such structures to horticultural enterprises. However, plastic clad structures are now being used for housing animals, particularly sheep, and we considered it only right to aid them on the same basis as for horticultural purposes.

Most of these changes to our grant schemes will come as no surprise to the farmers who will be affected by them. The decisions taken by my right hon. Friend the Minister and his colleagues in the Council of Ministers earlier this year were fully publicised at the time and the farming unions in the United Kingdom have been kept informed of developments. In addition, there has been fairly wide coverage in the agricultural press of the changes which are to come, and we issued a further press notice on the day these statutory instruments were laid before the House. I do not think, therefore, that it could be claimed that we have been keeping anybody in the dark on this subject.

Finally, I turn to the fourth statutory instrument which we are considering today—The Farm Structure (Payments to Outgoers) (Variation) Scheme 1981. This scheme provides for the payment of grants to ageing farmers as an incentive to them to give up the farming of uncommercial units. The statutory instrument we have before us today makes very minor amendments to the principal scheme which Parliament approved in 1976. The principal scheme contains references to other regulations made under directive 72/159 which are now obsolete, but it fails to mention later regulations which replaced them. The variation before the House therefore rectifies this omission by replacing the deficient references with a general form of words which will relate to any regulations which have been or may be made under directive 72/159. As I mentioned earlier, the change is very minor and will have no practical effect on the farmers involved in the scheme.

With all of those rather mouth-jumbling initials, I hope that I have been able to make matters clear to the House. I commend the regulations and schemes to the House.

10.32 pm

The Parliamentary Secretary has given a fairly lucid explanation of the technical aspects of the orders. I intend to confine myself to the two main issues, which are basically the limitation of the grant available to dairy farmers and to pig producers respectively.

We are all aware that the background to the curtailment of grant eligibility of dairy farmers is the huge milk surplus in the European Community, which costs the Community thousands of millions of pounds. Conservative Members have recently sought to point out that there has been a fairly sharp reduction in the amount of butter intervention. At huge cost, the Community has indeed managed to dispose of butter, but no one can deny that there is still a very substantial structural surplus in the EEC milk sector.

I shall come to that.

These changes in the eligibility of dairy farmers for capital grants derive from the Commission's approach to this problem over a period of years. It is worth mentioning that of all the measures and proposals put forward by the Commission, some of which have been implemented—usually in a rather different form from that originally conceived by the Commission—this is probably one of the smallest and least significant. Certainly, it is far less significant and important in terms of its cost and impact on the dairy sector than, for example, the large payments made to dairy producers throughout the Community to give up production or to change over to beef production.

Before the hon. Gentleman goes too far in adumbrating on the huge intervention stocks, may I remind him that we learnt in Question Time last week that intervention stocks in Britain represent only two days' consumption.

If we had a domestic agricultural policy we would not be introducing any of the changes. Their only justification is that they are EEC regulations and the only surpluses that count are overall EEC surpluses.

The issue is not how much butter is in intervention but the enormous cost of the milk sector. We could prevent any butter from going into intervention if we were prepared to spend another £2,000 million to sell it to Russia even more cheaply and in even larger quantities. No one who knows anything about the dairy sector in the Community denies that there is a huge surplus.

Of course, there is no surplus in Britain. On the contrary, we still do not meet all our requirements, but there has been a substantial increase in British production over the years and our share of the domestic market has increased significantly.

Ministers in successive Governments have accepted that as long as we are in the Community it is impractical to expect that we should be able to isolate ourselves from measures aimed at reducing the size of the milk surplus. However, let us be under no illusions. The measure before us is not only not aimed at tackling British surplus but discriminates unfairly against the British dairy industry, because we have, on average, much larger dairy herds and a significantly more efficient industry than the rest of the Community.

Many would ask, therefore, why we should be penalised more than the rest of the Community. I read recently that about 40 per cent. of our herds are of 50 cows or more, against an EEC figure of about 4 per cent. I hope that the Minister will tell us what percentage of British dairy herds have 60 cows or more and will therefore be ineligible because of the restriction that the Government are imposing.

Although the amounts involved in the curtailment of grants in the pig sector are probably less than the sums involved in the dairy sector, British farming and the NFU find the curtailment of grants to pig producers less acceptable.

The first reason is that' there are no huge structural surpluses in the pig sector. In addition, our pig industry has gone through difficult times in recent years, partly because of high sale prices in the EEC, which are implicit in the CAP. The pig sector has suffered for a long time, as has the poultry sector, because of high feed costs—about 70 per cent. of production costs are attributed to feed costs.

The MCAs operated adversely against the pig sector. Over a long period, the Labour Government succeeded in altering the size of the MCAs, but, ironically, when the MCAs became positive MCAs, after everything that we had gained in successive arguments, the size of the MCA was reversed and what was achieved by reducing the size of the negative MCA became a disadvantage with the positive MCA. There is no question of that being a defence. The Labour Government introduced a special subsidy to help the pig industry and I hope that this Government will be prepared to introduce a pig subsidy if it becomes necessary in the future.

It seems as if the outlook for the pig industry is better at present and, therefore, it is discouraging that at this of all times the Government are implementing these EEC measures, which have the effect of wiping out the eligibility for grant of many pig herds. I hope that the Parliamentary Secretary will tell us what proportion of British pig producers will cease to be eligible. The proportion must be significant, but presumably we are talking about a smaller proportion in the dairy sector.

As the Parliamentary Secretary explained, the limits are 85 breeding pigs or 550 fatteners. Of course, the 35 per cent. feed rule is being retained, which is important. As the Parliamentary Secretary knows, the EEC regulation permits a member State to adjust the limit where it can be shown that the 550 pig places will not provide a comparable earned income for 1·5 man work units. Looking at the figures objectively, because net profitability per pig in Britain is relatively low, I believe that Britain would qualify for this adjustment, and the NFU has also produced figures which point in that direction. The adjustment is important—1,000 pig places as opposed to 550 places. I ask the Parliamentary Secretary why that provision is not included in the regulations.

The basic issue here is, of course, the fact that Britain as a member of the EEC has to implement these policies whether or not they are in the interest of our agricultural sector. In some sectors we do not produce a surplus. In the pig sector we fall a long way short, producing well under half of our bacon. The Parliamentary Secretary is always talking about scope for expansion. This is an area where there is that scope, particularly given the problems in the Danish pig industry. The Danes are unable to meet the quotas in Britain because of the severity of the situation there. Many people find it difficult to accept that we should have to limit our grant aid schemes in this way, given the Government's overall objective of increasing British agricultural production.

We do not exaggerate the impact. The amount of money lost to the industry as a result of the changes is not massive compared with the many other sources of income going to the industry. However, the principle is important. I hope that the Minister will make it clear that we shall not continue to accept limits which seem to apply fairly and equally but which in practice discriminate against the British industry because we have larger units.

We can accept changes from time to time, but it is important for the Government to make it clear that they will resist proposals, particularly in relation to the co-responsibility levy on milk, which discriminate against British agriculture.

10.45 pm

I shall confine my remarks to the restrictions on aid to dairy investment and pig production. I criticise the hon. Member for Edinburgh, East (Mr. Strang) for what he said about surpluses. It does no good to the industry to harp on surpluses. It is foolish, because circumstances change so rapidly in agriculture that one day there is a surplus and the next there is no surplus. Even if one accepts the butter problem, milk powder is scarce. It is unhelpful for the Opposition to constantly highlight the surplus instead of trying to assist, as the hon. Member for Edinburgh, East did towards the end of his speech, by tackling discrimination against British producers. I agree with the hon. Gentleman in that respect.

I am unhappy about the proposals. They discriminate against the British producer. Far from there being a surplus of milk in Britain, the supplies for manufacturing purposes are becoming short. More milk must be produced in Britain. More milk means more employment, which is vital. In my constituency, the huge plant at Torrington has been short of manufacturing milk for a long time because of the shortage of liquid milk. That is wrong. To introduce a disincentive to dairy producers seems unwise. More milk for manufacturing plants means more employment.

I confess that I am a stock man. The balance is wrong in Britain. We produce far too much cereal and not enough stock. I regret anything that could hinder the development of stock.

New investment in Britain's dairy industry is vital. Circumstances can change rapidly. The issue might involve only a few people, but it could affect confidence. I am unhappy about the proposal. I hope that the Minister will return to Brussels and achieve some relaxation for our industry. We are discriminated against in the measures, and that is unfair.

I do not disagree much with the hon. Member for Edinburgh, East about the restrictions on aid to pig production. It is unfortunate, and I am unhappy about the suggestion.

We need to increase our pig herds and our pig production, because that would mean more employment. We must be more determined now that the Government have created a climate in which confidence can be restored. The hon. Member for Edinburgh, East was stretching matters when he claimed that the previous Government had done everything possible to assist over MCAs. The hon. Gentleman has forgotten all the argument that occurred at the time. In the better climate that now exists, it is right that investment in pig production should continue.

I hope that the. Minister can obtain in Brussels some relaxation of the restrictions in order to encourage the efficient and progressive pig farmer in the United Kingdom. I trust that my hon. Friend will examine the matter again. I am unhappy about the situation, though I should not feel inclined to vote against the regulations. My hon. Friend the Minister of State nods. If I felt strongly enough I should vote against them, but I do not think that that situation has been reached. I hope, however, that the Government will seek some relaxation of the restrictions.

I believe passionately that agricultural production is getting out of balance. There is too much concentration on cereals and other crops. We need to get back to meat, beef and pig production. The regulations do not help. They do not create the confidence that is necessary.

I see a reference in paragraph 4 of the Farm and Horticultural Development Regulations 1981 to bank loan guarantees. I hope that the Minister can influence our Treasury friends. The problem is not the guarantee of the loans. The problem is the interest rate. I hope that progress can be made, especially if the Americans play their part, in achieving a considerable drop in interest rates. This would help investment in agriculture more than anything else. It is interest rates that hinder development.

With those few words, and seeing that the Chief Whip has arrived, I shall simply repeat that I am slightly unhappy but that I shall take no further action so long as the Minister takes note of what I have said.

10.52 pm

I should like to direct my remarks to that part of the Minister's opening statement that related to plastic cladding and structures. I think I am right in saying that this provision is covered in paragraph 10 of the Agricultural and Horticultural Development (Amendment) Regulations 1981, as my hon. Friend may be able to confirm in her reply.

I declare a constituency interest. A company in my constituency, Filclair U.K. Ltd., is one of five companies, I believe, that have adapted their previous work in structures for the horticulture industry to cover sheep houses, which seem already to have achieved some success. I understand that sheep wintered in houses produce 30 per cent. more live lambs than out-wintered ewes in the same flock. I welcome the extension of grant to cover this type of structure.

The concern of my constituents—I understand that it is also the concern of other companies already active in this sphere—is that the extension of grant could be said to apply to that part of the structure for which no standards are apparently laid down. I understand, in the case of tubing, in particular, that unless some specific standard is laid down for galvanising, there is a fear that structures erected by those seeking to enter this field without using adequate material would not last the 10-year period that I understand would be required to provide the life that is the term of the grant. I should be grateful if my hon. Friend the Parliamentary Secretary would deal with that point.

On the face of it, it seems that there is a logical case here for examining standards. The Agricultural Development and Advisory Service has been very helpful in the move from horticulture to sheep structure It has been suggested to me that the National Institute of Agricultural Engineering might well be the appropriate body to assist in setting such a standard. There would be a number of other aspects which would be considered for a standard if the matter were worked upon. For example, I am told that the length of the tie rods is of importance. Those more expert in these matters than I may wish to add to the list.

I recognise that my hon. Friend the Parliamentary Secretary may not be able to give a complete reply tonight. If she is unable to give the kind of response that I am seeking, I hope that she will let me know about this matter in the near future. With the time now available, it is of importance to those already in the industry and those who might wish to extend from horticulture to sheep buildings.

What I have raised may touch on the wider question of standards relating to the whole industry. My hon. Friend may wish to comment on that in her reply.

10.56 pm

I question the use of plastic on farms, beyond its use in horticulture. I came down the M11 today in a gale. I saw a plastic building half away across the road. Plastic structures are untidy. They are an insubstantial material on which to give grants. They are hardly the sort of things that one wants to see helped in any way to get on to farms.

I agree with my hon. Friend the Member for Devon, West (Mr. Mills). We are very unbalanced between livestock and arable farming. In my part of the world, East Anglia, which is largely arable farming country, we always used to have plenty of livestock on every farm. There is no reason why those farms, which are mainly big farms, should not carry a livestock unit. It may be that the fanner cannot be bothered with it. Very often he is probably making such a good thing out of sugar beet, barley, wheat and potatoes, so as not to want to bother with livestock. But there is very much imbalance.

I have today looked at the Ministry's slaughtering figures for fat cattle. They have dropped considerably from the figures for this time last year. I believe that no arable lands can remain in good fettle for long without some form of livestock on them. I urge the Minister to encourage the younger farmer by giving him a chance of having a livestock unit within and arranged with the larger arable farmer. This has happened in one or two places in my constituency. The younger, smaller farmer has a livestock unit, using some of the buildings which would not be used otherwise, buying straw from the larger farmer and returning the muck to the large farmer.

East Anglia has lost many of its dairy herds over the past two or three years and dairy herds provide a large proportion of the store cattle which go into fattening stock later. We are becoming dangerously short of stockmen, of livestock and of many arable farms. I hope that we shall use all our endeavours to encourage those sectors.

I welcome the inclusion of forestry. There is no doubt that belts and windbreaks have always been a great advantage to arable farming in the area that I represent. Forestry is rightly included in the schemes that we are discussing.

Finally, if only the Government would put into being the agreement between the Country Landowners Association and the National Farmers Union, some of the damage that was done by the previous Labour Government when they introduced the inheritance of tenancies would be reduced. Younger farmers would thus be enabled to get into farms that are presently not open to them. I have no doubt that many pension fund owners would be pleasd to let their land, as would other landlords, if only the Government would implement the agreement that exists between the CLA and the NFU.

Unfortunately, that agreement did not go nearly far enough. It should have included long-term leases within it. However, it went a certain way. Next year the Government should introduce legislation to put the agreement into effect.

I am grateful to the Chair for allowing me to take part in the debate. We are dealing with a minor matter, but some of the underlying issues will have an effect on the entire industry. One of the most important issues is the imbalance between livestock and arable farming, which could have great repercussions throughout farming.

11.8 pm

I do not want to go over the ground that my hon. Friend the Member for Devon, West (Mr. Mills) covered with such distinction and clarity. However, I wish to draw attention to the unpredictability of the needs of both the EEC and the world outside it. We are about to see the first member of the EEC withdraw from it, by which I mean Greece. Today's newspapers include a clear indication by the Greek premier that, subject to a referendum, which he is certain to win, Greece will withdraw from the EEC.

Within the next three years Spain and Portugal will join the Community. Within the next three or four years we shall have an EEC with a substantially different balance of milk production and consumption of milk products than in the past. It is true that the olive oil lake and the wine lake will become more excruciating problems, but we are about to enter an era in which the milk surplus will be substantially smaller.

When I intervened in the short speech of the hon. Member for Edinburgh, East (Mr. Strang), it was to remind him that at Question Time last week we learnt that intervention butter stocks in the United Kingdom amounted to not two months' or two weeks' supply but two days' supply. These are intervention stocks, as the Minister emphasised. They do not include the working stocks of the private manufacturing sector. The so-called butter mountain is two days' consumption in the United Kingdom.

Not so many years ago there was a cheese mountain. That diminished within five months to a matter of days' consumption. We need to remember also that milk production each year depends upon a factor that cannot be predicted by farmers or controlled by Governments—the weather. The weather controls the rate at which grass grows. Grass is still the paramount efficient food for milk production. No amount of skill by Ministries will control the weather.

In the 1960s there was a Supplementary Estimate of £78 million—then an immense sum of money—when there was a temporary shortage of beef. Those of us whose memories go back as far as that know the desperate consequences of a shortage and how an apparent surplus can so quickly be transformed into a shortage.

In a world crying out for food we want our policies to produce a surplus on average, not a shortage. One can never expect that, taken over a period of years, one's production will equal one's consumption, precisely because of the unpredictable elements. Therefore, is it better to budget for a surplus when the world is short of food or for a deficit? Obviously, the sensible answer is to budget for a surplus.

There is the perfectly legitimate consideration of employment in our processing industries. If we allow our processing industries to collapse, when there is a particularly good spring and summer and the growth of grass is more than anticipated there will be nothing to take up that extra flush of milk in excess of the requirements of the liquid milk market. Therefore, this is part of good husbandry, in the agricultural sense, as well as being an important source of employment, often in parts of the country where there is no alternative manufacturing employment. We need to remember that.

I have a small milk factory at the top of the Culm Valley. At one stage it closed. It then reopened to make use of butter oil and turn it into a product known as "Gold". That factory employs a substantial number of people, not just from one village, but from several around it. It is typical of the scene to be found in creameries—whether they are in Crediton, Torrington or Lostwithiel in Cornwall—throughout the South-West. Let us remember that the cost of closing them falls on the taxpayer in terms of unemployment benefit. The cost does not fall only on the people concerned. Therefore, do not let us succumb to an enthusiasm to balance the books elsewhere in Europe at the expense of a healthy producing and manufacturing industry in Britain.

The House sometimes debates aspects of the Brandt report. Sympathetic sounds are made from both Front Benches. However, what many people in the desperately poor countries need is not money—they cannot eat that, and moreover it often sticks to the fingers of the politicians and administrators in their countries—but food. They cannot live on grain alone. Milk products are often dried. They are among the most important nutrients that the EEC can supply to the grossly underdeveloped countries of Africa, Asia and South America. It does not make sense to be full of sympathy and good intentions, but to make sure that one does not have the manufactured milk supplies to send.

The hon. Member for Edinburgh, East spoke of selling EEC butter cheaply to Russia. If my memory serves me correctly, the EEC stopped doing that a considerable time ago, yet the hon. Gentleman referred to it as if it were happening now, or at least last Wednesday. He misleads the public when he revives memories of a purely temporary situation.

We have such a thing as a national agriculture industry whose characteristics are not identical with the average of the EEC as whole, whose pattern of agriculture is much more efficient, whose pattern of agriculture is much more efficient, whose density of holding is greater and whose burden of interest is the largest in Europe. Those are the factors that we must accommodate in making judgments on what is, and, even more importantly, what is not, acceptable in EEC policy.

11.10 pm

This has been an interesting debate. I apologise again for all the mouth-jumbling initials.

The hon. Member for Edinburgh, East (Mr. Strang) asked about the average size of dairy herds. Just over 40 per cent. of the herds in England have fewer than 40 cows; in Northern Ireland it is 70 per cent; in Wales, 60 per cent; and in Scotland, about 37 per cent. Moreover, in the United Kingdom as a whole 25 per cent. of herds have fewer than 20 cows.

The hon. Gentleman also expressed concern about the size of pig holdings. In December 1979 about 75 per cent. of holdings in the United Kingdom had fewer than 400 pigs. Only 8·4 per cent. had between 400 and 999, and 5·5 per cent. had in excess of 1,000. The average pig herd in the United Kingdom had fewer than 200 pigs. That should be compared with Holland, which had the next largest average herds, with about 160, and Demark with about 100.

The hon. Gentleman referred particularly to what he regarded as discrimination against larger units. I trust that the figures reassure him that that is not totally so. He hoped that the Government would stand firm against discrimination against larger units. He may be aware that we are opposed to most of the Commission's proposals on milk, except the supplementary levy, exactly because we believe that they discriminate against larger units.

The hon. Member also asked why, in the derogation for the pig herds, we have not included the discretionary 550 to 1,000. The average United Kingdom pig herd is well below 550. As I pointed out, it is less than 200. Many pig units have already received assistance, so we concluded that at least at present we have no need to take advantage of the derogation. However, I assure the hon. Gentleman that we shall keep the matter under review.

My hon. Friend the Member for Devon, West (Mr. Mills) also made a point about larger units and I trust that he will have been reassured by my comments on the Government's insistence that we shall not be discriminated against. Indeed, the 15 per cent. extra was deliberately negotiated, as we have slightly larger units and we did not want them to be discriminated against.

My hon. Friend also raised the problem of pig farmers who expand their enterprises beyond the new pig limits. Under the former FHDS—and now the AHDS—such farmers will be eligible for aid on a proportion of their investment, up to the limit. Under the AHGS, any claim that is received that covers investment over the limit will be rejected. My hon. Friend will know that many of us share his concern about the level of interest rates and the relative effect that that has on farmers who are in debt as a result of their investments.

My hon. Friend the Member for Arundel (Mr. Marshall) was specifically concerned about the new section that gives grants—like those being given in the horticultural sector—for plastic cladding in the agricultural sector. At present no standards have been laid down about the structure of plastic-cladded sheep housing. All items under the grant schemes must be of a capital nature. They must be permanent and durable structures. That leaves a fair amount of scope within our general requirement that the item must last for about 10 years. There is no British standard, but we shall look into the points that my hon. Friend raised. I realise that they are of concern to him.

I do not wish to press my hon. Friend unduly, because I recognise that she is trying to be helpful. However, I am sure that she will understand the concern of those manufacturers who say that, although there is a general provision that the structure should last for 10 years, it is easy for someone new in the field to come along and say that the structure will last that long, and discover that it will not only after it has fallen down.

I take that point and I shall look into the question and write to my hon. Friend. There is no British standard, but my hon. Friend has expessed concern and I should like him to receive a proper answer.

I have heard my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) speak before on the subject of his concern—livestock units in East Anglia. He is right to be concerned, and he often expresses his views. He will know that in the last review we improved the relativity between livestock and cereals. The Commission's paper on the reform of the common agricultural policy and the mandate makes additional proposals for creating a balance between the livestock and cereal sectors. We have strongly supported those proposals.

Together with other hon. Members, my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) made a serious point about surpluses. I am delighted that I do not have to stand at the Dispatch Box and accept responsibility for the weather. My hon. Friend was most courteous about that. Governments are blamed for everything but the weather. Most commodities in surplus amount to no more than a week or two weeks' supply.

My hon. Friend referred in particular to the surplus in butter. As he will know from the parliamentary reply that he received, the surplus consists of only two days' supply. In an industry such as agriculture, which, as my hon. Friend said, is subject to the vagaries of the weather, the line between too much and too little is sometimes very fine and it is impossible to arrange for supply to equal exactly demand. As my hon. Friend pointed out, it is better to have a surplus than a shortage. Given the position in Eastern Europe today, I am sure that all hon. Members will support that view.

I trust that I have answered the points that have been raised about the provisions, which sound more complicated that I expect they will prove to be. I trust that they will be accepted.

Question put and agreed to.

Resolved,

That the draft Agriculture and Horticulture Development (Amendment) Regulations 1981, which were laid before this House on 4 November, be approved.

Resolved,

That the draft Farm Structure (Payments to Outgoers) (Variation) Scheme 1981, which was laid before this House on 4 November, be approved.

Resolved,

That the Agriculture and Horticulture Grant (Variation) Scheme 1981 (S.I. 1981, No. 1533), a copy of which was laid before this House on 4 November, be approved.

Resolved,

That the draft Farm and Horticulture Development Regulations 1981, which were laid before this House on 4 November, be approved.—[Mrs. Fenner.]