To ask Her Majesty’s Government why they are introducing the compulsory electronic identification of sheep by implant; and whether they have taken account of the views of the industries concerned.

My Lords, I beg leave to ask the Question standing in my name. In so doing, I declare an interest as a part-time farmer.

My Lords, the introduction of electronic identification is an EU obligation, which must be implemented on time to avoid national disallowance and/or infraction proceedings. We are working closely with the Commission and the UK industry to minimise the impact of these regulations. We have already secured significant beneficial changes, such as a two-year delay in implementation and the phasing in of individual recording.

My Lords, I thank the Minister for his reply and wish him well in his endeavours, but why has it taken so long for the Government to comprehend the intense hostility to this measure from those breeding and slaughtering some 10 million of our sheep from the largest flock in Europe? Would he not consider, in view of the fact that full traceability of sheep movements already exists, that this might be an excellent opportunity for the EU to demonstrate its democratic legitimacy not only by granting a temporary derogation but by abolishing this costly, impractical, unnecessary and wholly nonsensical regulation?

My Lords, it is not fair to say that it has taken the Government a long time to recognise the concerns. We have been well engaged with the industry and we work hard with it to get appropriate derogations and variations. I accept that this regulation is probably, on balance, not a good idea. It will create more costs than benefits in most of the industry. Nevertheless, those costs have been significantly reduced by our negotiations. This is part of being in the club called the European Union, of which I am proud to be a member citizen.

My Lords, I declare an interest as a very small sheep farmer—I am not talking about my size—in that we have only six sheep at the moment, as the rest drowned a few years ago. Will the Minister please tell the House precisely the benefits of this electronic tagging? I add that I am delighted that goats are being let off the hook.

My Lords, I confirm that goats are off the hook. The modest benefits of the scheme are traceability in the event of a foot and mouth outbreak and the likelihood of reducing the cost of such an outbreak by between 3 and 13 per cent. As monitoring becomes widespread, some businesses will find benefits in better flock management and monitoring of breed performance.

My Lords, I declare an interest as an owner and landlord of agricultural land. I do not know whether the Minister is aware of this, but the average net income for a sheep farmer in the United Kingdom is about £8,000 per year. The estimated cost of one of these electronic tag readers is about £8,000. Who will pay this cost and the additional costs that will be imposed not only on farmers but on livestock markets and abattoirs? Will the Minister assure us that this regulation and a compulsory scheme will not be foisted on the United Kingdom?

My Lords, working backwards, I assure the noble Lord that a regulation will be introduced by the due date of the end of December this year. I am aware that sheep farmers have modest incomes. The cost per animal is likely to be about £1. The cost of readers is likely to be £400, not £8,000. The potential full cost is £50 million. The slaughter derogation that we already have will reduce this, if accepted by the Community, to some £20 million and, if we go to critical control point, that will reduce it to something like £12 million. So while it is an additional cost, it is modest compared with the overall size of the market, which is worth £650-plus million, perhaps approaching £800 million or £900 million in the present good years.

My Lords, I was not clear from what my noble friend said—

My Lords—

My Lords—

My Lords, why do we not hear from my noble friend and then from the noble Lord, Lord Plumb?

My Lords, I was not clear from what my noble friend said who is going to pay.

My Lords, it is absolutely clear, I am afraid, that the industry and the individuals in the industry will pay.

My Lords, I declare an interest as a farmer and as president of the National Sheep Association. The Minister said that contact had been made with the industry and that many negotiations had taken place, so he will know full well the frustration, concern and anger of many sheep farmers throughout the country. This scheme is nonsensical. It is totally impractical and cannot work. As we have heard, its cost is high, which is a problem for the sheep industry, although the industry is doing a little better now than it has been. Can the Minister tell me how on earth you get 5,000 sheep off a hill to identify them electronically without leaving 30, 40 or 50 behind the bracken on top of the hill? A compulsory scheme is nonsense. Surely the Government can consider a derogation that will help the whole sheep industry.

My Lords, it would be wrong of me to pretend that I had any knowledge of this subject 12 hours ago. Equally, my knowledge of getting sheep off a hill is pretty thin. However, I have gone through this with great care and I am totally convinced that it is practicable, given the derogations and variations that we have sought. The slaughter derogation, which means that stock under 12 months going directly to slaughter are derogated out of the scheme, and the critical control points system, which we are putting forward to the industry and which we hope to be able to negotiate with Europe, would move the paperwork away from the breeder to the slaughterhouses and markets. These matters are still in consultation. There is a consultation running now with our own industry, with which we will be having further discussions, but we are working very hard to make the scheme practical.

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My Lords—

My Lords, perhaps we should hear from the noble Lord, Lord Soulsby.

My Lords, contrary to the opinions of my noble colleagues, one effective method of identifying sheep used to be ear-notching, whereby shepherds could tell precisely where the sheep had come from and so on. Despite their objection to the scheme, it is important to know where sheep come from and to follow them for disease surveillance and disease control. Therefore, as a veterinarian concerned with the control of disease in sheep, I welcome this means of identification.

My Lords, I recognise the noble Lord’s great knowledge in this area and the great contribution that he has made, and I entirely agree with the points that he makes.