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Common Agricultural Policy Single Payment Scheme (Set-Aside) (England) Regulations 2004

Volume 670: debated on Wednesday 2 March 2005

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8.48 p.m.

rose to move to resolve, That this House calls on Her Majesty's Government to revoke the regulations laid before the House on 21 December 2004 (SI 2004/3385) [6th Report from the Merits Committee].

The noble Baroness said: My Lords, in calling on Her Majesty's Government to revoke the regulation I bring to the attention of noble Lords the concerns expressed by the Merits Committee in their sixth report of Session 2004–05. The regulations are drawn to the special attention of the House on the grounds that they give rise to issues of public policy likely to be of interest to the House.

Before I go any further I would like to express my thanks to Paul Bristow, who has also brought to my attention two more statutory instruments that the Merits Committee considered yesterday on the common agricultural policy single payment and support schemes, which incorporated the IACS payment. I understand from him that the Merits Committee is not bringing any specific concerns to the House, but it is important that the House is aware that yet more regulations are coming. Some of the problem we have is that they are coming out piecemeal. I understand why, but it raises issues that we are addressing tonight.

I turn to the Merits Committee's report. Paragraph 2 states that many livestock farmers and horticultural crop producers have little or no experience of the previous set-aside provisions. Paragraph 4 states that a large number of farmers will have to set aside land for the first time, particularly dairy farmers and other livestock producers. I am sorry that the noble Lord, Lord Grantchester, has left us; I hope that he might return. The committee goes on to say that dairy farmers are under a great deal of economic pressure and that this new requirement could exacerbate the situation.

Paragraph 6 refers us to the third report of the current Session, when the committee drew to the special attention of the House the cross-compliance regulations. On that occasion the committee was concerned with the interaction of the economic health of the farming industry in general, the sustainable management of the countryside and the reform of the CAP. The question posed at that time was whether Defra had struck an appropriate balance in those regulations between the environmental concerns being expressed and the pressures that that put on farming practices—of which I know that the Minister is aware.

It is, therefore, against that background that I wish to ask the Minister one or two further questions. As the Minister will be well aware, farming incomes fell again last year and dairy farmers were among those most affected. With milk prices at an unacceptably low level and the quota systems still to be agreed, coupled with the ending of the headage payments, it is understandable that many dairy farmers are still apprehensive about the changes that they face and the future decisions that they have to make.

One should add to that the statement made by the Secretary of State that these new payments, originally planned for June 2005, would not be paid on time and have now been deferred to February 2006—and even that is still not written in concrete. The Minister cannot but be aware of the dire position of some dairy farmers. Both he and I were on the panel that attended the NFU conference only last week in Birmingham, where serious concerns about the state of the dairy industry were expressed.

To that dilemma should be added the continued spiralling out of control of bovine TB. That has not been helped by the Written Statement given on the 10-year bovine strategy document. Although I need to look at it in greater detail, looking at it quickly, it is full of words but lacks action. It will continue not to control the disease at all. When the Minister comes to comment, I am sure that he will accept that this disease is out of control, has seen the decimation of many milking herds and the restriction of many farmers to sell, move and trade in the normal way.

What a pity it is that the Government were not prepared to make an oral Statement on that 10-year strategy, which would have given the House an opportunity to debate it, but just issue a Written Statement, thus denying us the chance to have at least three-quarters of an hour of discussion on this crucial issue. So there is enormous pressure, particularly on the dairy sector. Raising this issue tonight has given the Minister a chance to explain how Defra envisages dairy farmers, for example, setting aside land to bring them under the requirements of the order, when so many of them use all their land for grazing in rotation.

In the light of the concerns that I and others have expressed, will the Minister think again about bringing forward an interim payment to help dairy farmers in particular, but beef and sheep farmers in the same way, who from the cessation of headage payments and through no fault of their own will find themselves in serious financial difficulties?

Will the Minister ensure that in future changes which affect the management of the countryside and wildlife will come through the House in the normal, respected way?

If I may, I shall refer to a matter which does not directly fall within this subject, but is of great importance and I seek clarification from the Minister. If he is not able to give it tonight, will he come back to me on it?

The issue is the care and management of the countryside. Will the Minister comment on the announcement yesterday, on 1 March 2005, on the rule changes for legally controlling pest birds? I understand that the rules have changed—it has been in the news that they have changed—so why was there no information on the Defra website when the announcement was made? When inquiries were made, why were Defra press officers unaware of any of the changes? If changes are going to happen to regulations of whatever sort, surely those involved and other stakeholders should be aware of them before they are announced.

I am sure that I am not the only one who is concerned about the changes. Indeed, why were they introduced overnight, without warning stakeholders and individuals? If that happens on one issue, what assurances can the Minister give that it will not happen on other policy matters? If the Minister can assist us tonight, I shall be grateful. But, failing that. I hope that he will make a statement tomorrow. These are important regulations and I hope he will respond to the Merits Committee's concerns and to the questions that I have raised tonight.

Moved to resolve, That this House calls on Her Majesty's Government to revoke the regulations laid before the House on 21 December 2004 (S.I. 2004/3385.) [6th Report from the Merits Committee.](Baroness Byford.)

My Lords, the noble Baroness does the House a favour by raising this matter, bringing to the attention of the Minister the comments of the Merits Committee, particularly in relation to dairy farmers, and providing him with an opportunity to explain how he thinks the regulations will work.

As the noble Baroness said, these regulations are part of a wider group of regulations relating to the introduction of single farm payments. As the Minister will know, the Liberal Democrats have broadly supported the Government's general thrust in the way in which they are introducing single farm payments in this country and the way in which that is being implemented. Along with many people, we feel that the crunch will come when we see how cross-compliance will work and whether it will work as successfully as we want. It is at the heart of the change: putting money not just into producing things, but into other public benefits.

As the committee and the briefings pointed out, the dairy industry has serious concerns, particularly about small and medium-sized dairy farms that will be faced with a situation that they have never had before. Can the Minister explain how set-aside will work on a fairly small upland dairy farm where most of the land, as the noble Baroness said, is, to a layman, used for growing grass? That is what we used to call "permanent pasture" but nowadays it is pasture that is regularly scraped off and resown. It is not quite as permanent as it used to be, but it is basically pasture.

The maintenance regime for those fields very often depends on grazing by dairy cattle. A lot of people say that dairy farms are not terribly environmentally friendly, but that is the way in which the fields are kept in good condition and the land managed. I do not understand how set-aside applies to land such as that. On an arable farm, set-aside is fairly easy. Crops are not grown on the land, which can be managed in a fairly light way during the year to keep weeds down and so on, and at the end of that period it is put back into use. But if you have grassland which is not being properly managed, all kinds of weeds—thistles, docks and that dreadful ragwort stuff, and so on—will start to grow.

What are farmers supposed to do to manage these fields which are set aside? Are they expected to mow them, in which case they will have a crop of hay or silage? How does that satisfy set-aside? These are things I do not understand. Perhaps other people do and perhaps the Minister can explain them to me.

These regulations are necessary because set-aside is part of the common agricultural policy, as we know. I hope that the Government are moving towards a regime in which, if set-aside has to continue, land is not set aside simply not to produce things on it, but for positive environmental reasons. That is absolutely crucial. The whole concept of set-aside, as we have known it, does not have general public support. People think it is stupid to pay people for not growing things on land. They have a great deal of justification for feeling that.

In the longer run we must move either to a system in which set-aside means something quite different—where it means something positive and not something negative—or, alternatively, move towards a situation where set-aside is no longer part of the regime.

If you have a regime based on production subsidies, then set-aside has a logic to it. If you have a regime based on whole farm payments with lots of environmental and social benefits built into the results of those payments, set-aside begins to lose its logic completely. Really, we should be moving towards a regime in which set-aside is abolished.

My Lords, I thank noble Lords opposite. The noble Baroness ranged rather widely away from the order against which she was praying. I shall not be able to answer all her points tonight. I will deal separately with those that I can by correspondence or by talking to her.

On these provisions, as the noble Lord, Lord Greaves, said, we have a proposition which is a consequence of the decoupled payment and the substantial reform of the common agricultural policy introduced last year. That decoupled payment has been largely welcomed by the leadership of the agriculture and land-owning interests and has both economic and environmental benefits. It has economic benefits because it frees farmers to pursue the markets which are there and growing, which they can access and which are most profitable, rather than chasing the subsidy. It is environmental because some of the conditions attached via cross-compliance will improve the quality of our land in a number of areas.

However, the noble Lord, Lord Greaves, has a logically sensible point. It is true that some of the detailed regulations attaching to the decoupled payment across Europe have not been contrived by ourselves, but by, if you like, a legacy of past schemes which were not eliminated cleanly by this latest negotiation. Regrettably, set-aside is one of those. I am not saying that there should be no role for set-aside, but that the application of set-aside across the board to a decoupled payment is not hugely logical, as the noble Lord said.

However, it is there as a European requirement and we have to make as much sense of it as we can, subject to interpretation by the Commission. While we have managed to bring back to national level, and, indeed, sub-national level, many decisions on agricultural policy as part of this reform, this was not one of them. We are, therefore, making the best of a situation we would probably rather not be in.

Nevertheless, I think that some of the reaction to the matter has been exaggerated. Essentially, in England there will be a set-aside rate required of 8 per cent in the lowlands, 1.3 per cent in the uplands and nothing for moor land. That means some of the farmers indicated by the noble Lord, Lord Greaves, are exempt, or almost exempt. Small producers with less than 19.48 hectares outside upland SDAs and 122 hectares in the uplands, other than moorland, would not have to set aside any land at all. Many small farmers of all kinds would be excluded. As the noble Lord also says, of course, arable farmers are used to this, but dairy farmers are now brought in, as is horticulture, which was not previously subject to any support system. While horticulture will benefit from that system, it will have to get used to set-aside, at least to a limited degree.

It is claimed that dairy farmers are the most affected, which adds to their other problems. We have had discussions, in this House and elsewhere, about the position of dairy farming. I was chairing a meeting of the Dairy Supply Chain Forum this morning, where we discussed the future for the industry, and some interesting topics arose. It is true that dairy farming is facing a number of difficulties at present, but as regards this proposition, apart from the small farmers to whom I have already referred as being excluded, particularly in the uplands, most dairy farmers will not be required to meet set-aside, because, by any definition, the land they are dealing with is permanent pasture.

The issue arises when the pasture is regarded under Commission rules as temporary—that is, when it has been used for something else within the past 5 years. That will apply to some dairy farmers, although it is not the case on a large number of such farms, many of which would be excluded anyway. The temporary grassland is effectively the area where a set-aside requirement now applies that has not applied before. However, that is not the whole range of dairy farming, and certainly not of upland farming in general. Nevertheless, I recognise that this is a complexity we could well do without, and which dairy farmers will have to get used to where it applies to them.

We are currently discussing with the Commission what can be done to reduce, for example, the set-aside requirements for farmers who were affected by foot-and-mouth, where land that would not normally trigger obligation was, by derogation allowed during that period, considered as set-aside. If that was an interruption to permanent pasture, some inequity clearly arises from that. We are discussing that and a number of other anomalies with the Commission to minimise the unfair effects of this requirement.

Nevertheless, the broad range of farmers who will now be freed from the obligation to chase the subsidy will be used to set-aside. It will be a minimum obligation on others, and it is in any case one we cannot avoid under the EU rules. The regulations before us tonight, which I hope the noble Baroness will not press her objection to, make the best of the system, and help to deliver and clarify the way in which the rules should be operated. Further information on this area will be going to farmers and their advisers. While I accept the logic of the noble Lord, Lord Greaves, I am not able to follow it completely, but I think we are doing our best within this system.

I have to underline that the decoupling of the payment is such a major advance for agriculture that these little irritations have to be lived with.

My Lords, I should like a point of clarification before the Minister sits down. The rules may not be exactly the same for a farmer north of the Border as they are down here, but I understood at my end that temporary grassland was land that had been in crop for four years before the introduction of the IACS scheme, which I believe was in about 1996. There may be an anomaly: people with farms that were in arable crop in 1991, but have never been so since, may suffer from this classification of "temporary grassland".

Yes, my Lords, the rules in Scotland are different. However, if land has already been classified as temporary grassland, the presumption is that the set-aside rules would apply. The issue is where land which anybody would regard as permanent pasture may have been disrupted relatively recently before the reference period and therefore there is dubiety about whether it is temporary grassland or permanent pasture. I suspect that there will be difficult cases, both north and south of the Border, in that respect. I am afraid that the noble Duke will have to address any more detailed points on that to the Scottish authorities.

My Lords, this confirms that the basic definition of permanent pasture and temporary grassland is the same throughout the United Kingdom. The payment system and the requirements on set-aside are different in Scotland but the definition will be the same. What the land was used for prior to the original IACS, pre-1992, is not relevant; it is where the land in the reference period for this scheme was already classified as temporary grassland.

My Lords, I am most grateful to the Minister for his response to my Motion, and to the noble Lord, Lord Greaves, and my noble friend the Duke of Montrose for their questions. The cross-compliance regulations that are evolving create challenges. The noble Lord said that they would not affect many people; I think that they will affect a few more than he thinks.

The question of temporary pasture is outstanding and, as the noble Lord said, there are still more outstanding matters. The one thing that the Minister is aware of is the difficulty of planning the best way for the future so that we get a balance between the regulations being laid down and better environmental circumstances, which we would all like to see. That has added to the uncertainty.

I am grateful to the Minister for answering some of my questions. He did not refer to the two issues that I raised on bovine TB. I am sorry that he felt unable to comment on that today because it is a very big issue. It is relevant because it creates huge problems for dairy farmers. I am not surprised that he did respond to my point about things being changed overnight. I am grateful for the opportunity to raise the matter because it is important. If regulations are to be changed overnight and nobody knows about them, including the department, how on earth are practitioners who are trying to keep within the law to know what is expected of them? I gave just one example that hit the headlines yesterday. I hope that the Minister will take up my invitation to make a statement to clarify the matter tomorrow, because we are uncertain whether there has been a change, and, if there has been a change, what it involves.

I am very grateful, as always, to the Minister, who is extremely knowledgeable and addresses all our concerns in a very genuine manner. I thank other noble Lords who have spoken. I do not regret raising this subject, because it has given us the chance to clarify some of the issues that have been raised. At this stage I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.