Agriculture (Set-Aside)

– in the House of Commons at 4:12 pm on 14th June 1988.

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Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food 4:12 pm, 14th June 1988

With permission, Mr. Speaker, I wish to make a statement about set-aside of agricultural land.

A new European Community scheme to reduce surplus agricultural production by set-aside of agricultural land was agreed in principle at the European Council in February, together with the stabilisers package. It is compulsory for member states to introduce the scheme for the 1988–89 crop production year, but participation is voluntary for farmers. Under the scheme, farmers prepared to take 20 per cent. or more of their arable land out of production for five years will receive compensation payments, part of which will be funded by FEOGA.

In view of the very tight timetable that we face, I am announcing the broad outlines of the United Kingdom scheme now, so that farmers can start taking it into account in drawing up their plans for the next cropping year. The details of the scheme must, however, under the Community legislation be scrutinised by the European Commission, which may ask for some changes, and I will then put before both Houses a statutory instrument for its implementation.

The main components of the scheme will be, first, that premiums will be available to farmers prepared to reduce their area of supported arable crops by 20 per cent. or more. The farmer must take on an obligation for five years, but can opt out after three. Farmers setting aside at least 30 per cent. of their arable land will be exempted from co-responsibility levy on a maximum of 20 tonnes of grain sold.

Secondly, land set aside will have to be maintained as fallow with a green cover crop, put to woodland or used for non-agricultural purposes. The Community rules provide that land put to fallow must be kept in good agricultural condition, whether the fallow is permanent or rotated around the farm. In regard to non-agricultural use, land developed for residential, industrial, retail or similar purposes will not be eligible, but the scheme will not include other limitations on non-agricultural use—although, of course, planning controls will continue to apply.

Thirdly, the rates of payment will vary according to the different uses and according to whether the land is in the lowlands or in a less favoured area. For land that is managed as permanent fallow with a green cover crop, the rate will be £200 per hectare per year except in the LFAs, where the rate will be £180 to take account of their lower average yields. There will be a reduction of £20 in either case if the fallow area is rotated round the farm. Those payments take account of the cost of maintaining a green cover and the benefit of rotation.

Farmers adopting the woodland option may plant trees under the Forestry Commission's woodland grant scheme, in which case they will receive a set-aside payment of £200 per hectare per year or £180 in the LFAs. Alternatively, they may enter the farm woodland scheme, which is due to come into effect later this year under the Farm Land and Rural Development Act that has just received the Royal Assent. For non-agricultural use, bearing in mind that the land could be expected to yield some form of income to offset the costs of maintenance, the set-aside payment will be reduced by £50 per hectare.

Fourthly, there is an option under the Community rules to permit land set aside from arable crops to be grazed by livestock, subject to limits on numbers. I have decided not to take up that option in the United Kingdom because of the difficulties of ensuring proper controls and the adverse effects that such an option could have on existing livestock producers, especially in the upland areas. In reaching that decision, I took into account the many representations I received—including, in particular, the views expressed in the House.

Fifthly, set-aside payments in this and future years will be based on farmers' arable crop pattern in 1987–88. Farmers entering the scheme will be required to provide evidence of that pattern. That will create no difficulty for those entering this year, but many farmers may not wish to enter the set-aside scheme at once, and I want to safeguard their ability to enter the scheme in later years, when the evidence of the crop pattern in 1987–88 may otherwise have disappeared.

I am therefore providing for farmers who do not wish to enter set-aside this year, but wish to keep their options open, to register their 1987–88 crop pattern with the agriculture Departments this summer. Some farmers have put forward suggestions for additional payments for particularly environmentally friendly practices on the farm. We have not been able to establish whether a scheme on those lines is viable, but we will be undertaking a careful study of it. I am placing in the Library a document giving fuller details of the scheme.

As I have emphasised in the House previously, the Government regard set-aside as an important new instrument of CAP reform, complementary to action on price. Its aims are to assist in getting more arable land out of production, to provide an alternative source of income for farmers most affected by reductions in CAP support and to give reasonable payments to farmers in recognition of the environmental services they are providing to the community at large in keeping such land in attractive condition and capable, if necessary, of returning to agricultural use. I hope that farmers will now look positively at the possibilities it offers them, both in the coming and future cropping years.

Photo of Dr David Clark Dr David Clark Shadow Secretary of State, Shadow Secretary of State for Environment, Food and Rural Affairs

I thank the Minister for coming to the House this afternoon to make this statement. However, it does not begin to show the awful cost of the Prime Minister's cave-in in Brussels last February when those agreements were initially laid. It is obvious to all that the common agricultural policy is in a state of crisis and in need of drastic reform. The position has deteriorated so far that the total public resources spent on agriculture through Community national budgets have now reached a level practically equivalent to the net income of that sector. Those were the sentiments of the European Commission this year, which described the industry as being almost totally subsidised.

The set-aside proposals are no more than damage limitation measures. They seek merely to tackle the effect of surpluses, not their causes. In the way that they have been presented this afternoon, they are extremely disappointing.

The proposals are so limited that the Minister has not even taken the opportunity to link environmental and low-input farming into the system. He could have taken the opportunity to change the gear of agriculture to something less intensive. It is a great pity that he did not do that at the outset, although I am pleased that he appears to have an open mind on the matter.

In view of the new planning circular on opencast coal mining last week, will the Minister clarify whether land set aside will be eligible for such non-agricultural uses?

The Minister emphasised that the proposals are to be voluntary. Can he explain why one of his officials, Tony Lester-Card—a senior agricultural adviser—last week warned that the voluntary approach would not work and that the scheme would probably be made compulsory? Will the right hon. Gentleman clarify whether that senior civil servant was speaking for the Government, or does the Minister disagree with his remarks? After all, the report of Mr. Lester-Card's comments in Farmers Weekly last week had the credibility of containing most of the information that the Minister has given the House this afternoon.

Has the Minister any figures for the total amount that he anticipates being spent on the scheme this year? How many hectares of arable land does he envisage being taken out of production? Has he estimated the amount of slippage? Has he estimated the impact of his proposals on employment in agriculture? How many agricultural workers does he envisage losing their jobs because of the set-aside scheme? What plans, if any, does he have financially to compensate those who lose their jobs?

How does the Minister intend to ensure that his proposals are monitored effectively? Does he appreciate that it is essential that no fraudulent claims are made, because the general public simply will not stand for that? They have enough difficulty understanding why, in their view, farmers are paid for, in effect, doing nothing.

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

The hon. Gentleman has raised a large number of points, but the one with which he began is not appropriate for discussion this afternoon—that is, the wider question of tackling the causes of surpluses. We have often debated that issue and I reject the idea that there was any cave-in at the February summit. Indeed, we achieved significant reforms, a great many of which were due to my right hon. Friend the Prime Minister.

For a variety of reasons, set-aside has an important part to play complementary to those reforms. First, if we are to tackle surpluses, more land must come out of agricultural production, and we want to assist that process. Secondly, many farmers will face quite severe difficulties because of the structural changes in the industry, yet they have to manage the land. We want to give them an alternative option through the set-aside scheme, where that is relevant.

I reject the hon. Gentleman's suggestion that the scheme does not tackle a number of issues such as the environment. Although its primary purpose is to tackle the problems of surplus production, it has a substantial number of important environmental benefits. The Community insists that the land is left in agronomic condition, and we shall encourage good management in the interests of wildlife and the environment generally. There are six or seven ways in which that will be furthered under the scheme.

The hon. Gentleman knows that low-input farming is not appropriate to the scheme; nor is organic or any other form of more extensive farming. A decision was taken earlier this year to concentrate first and foremost on the set-aside scheme to get land out of production, and then to find other ways to deal with more extensive farming in arable crops and beef. However, because of its rotational and permanent fallow proposals, the set-aside scheme will have an indirect impact that should prove helpful to low-input and even organic farming.

There are a whole variety of ways in which non-agricultural use can be generated, and I shall certainly consider the hon. Gentleman's suggestion of opencast mining.

The hon. Gentleman asked about the advice that the Government had taken, and complained about the proposed level of rates. That is one of the most difficult areas to decide in a pioneering, experimental scheme, and I gave a considerable amount of thought and study to that aspect. We need to strike a balance between reasonable compensation for loss of income and the costs of farmers in managing the land, and the over-compensation that could occur for some producers. The hon. Gentleman would be immediately critical if there was over-compensation from public money.

The proposed rate is at the very top of the scale set out in the consultation document, and it was determined after expert advice from ADAS and our economists. The gentleman to whom the hon. Gentleman referred certainly was not speaking for the Government. No member state, and certainly not the Commission, is in favour of a compulsory set-aside scheme. There would be significant difficulties with compulsion, and it would not be a political proposition.

The hon. Gentleman referred to money spent this year, but I am sure that he realises that the money is spent at the end of the year in question, so I imagine that he was in fact referring to 1989–90. We have set aside—if that is the right description—what I believe to be sufficient funds, some £16 million, to deal with 1989–90. Because of the late start following delays in the European Council decisions and the discussions on drawing up the Commission's regulations, we might not meet all that this year. However, we have made adequate provision.

I have not taken a view on the number of hectares, because that will depend on the response. However, the number taken out of production actually has nothing to do with slippage—another point to which the hon. Gentleman referred—because we would not get the equivalent amount of production that we would get from the amount of land taken out. Inevitably, there will be some slippage in any set-aside scheme, and we have taken account of that in the proposed rate of payment.

It is not possible at this stage to estimate the scheme's effects on agricultural employment, but I suspect that it will be slight and may even be favourable. Given the payments to farmers for continuing to manage the land, I do not believe that there will be much reduction in employment. Indeed, by encouraging non-agricultural use, there may be quite an increase.

We shall, of course, have effective monitoring. As with all schemes, I am determined to crack down hard on any fraudulent claims. I beg the hon. Gentleman to recognise that it is not, as he concluded, a scheme to pay farmers for doing nothing—far from it. We shall be paying them to manage the land. There is a cost to farmers in managing land and keeping it in good condition and environmentally attractive. We will not be paying farmers for doing nothing; we will be paying them in recognition of the effect that dealing with surpluses will have on some farm incomes. We are also recognising that they have a role to play in keeping our countryside attractive, something that they do magnificently well. The set-aside scheme will help them to do that.

Several Hon. Members:

rose——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I realise the great importance of the statement, but I remind the House that there is another statement to follow and then a heavy day's work. I ask hon. Members to be brief.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

Is my right hon. Friend aware that his statement is welcome because of the voluntary nature of the scheme, and especially because of his decision to exclude grazed fallow, something that will be met with great relief in the grassland areas? Is he further aware that the scheme will be especially welcome to those farmers currently in difficulty because they grow only low yields of cereals? Will not the scheme also be attractive to taxpayers, whom my right hon. Friend did not mention, as they will be supporting farmers' incomes at a much lower cost than if they had been allowed to continue to create larger and larger surpluses?

Will my right hon. Friend review the acreage payments in the light of those to be paid by other member states, so that our farmers are treated with similar generosity to that shown to those in other countries?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I am most grateful to my right hon. Friend, and I pay tribute to his early and important work in developing this scheme. I listened especially to the views of people like himself when I made my decision on grazed fallow; I am glad that he supports my decision.

I entirely agree that we should be helpful to farmers with low yields of cereals. That is one of the great merits of the scheme, and the rate of payment has been particularly directed at that. I am sorry that I omitted to refer to the taxpayer in my opening remarks, but my right hon. Friend is entirely right to say that this is a very cost-effective scheme in that respect.

Finally, it would not be right to have a review of rates as a result of action taken by other member states this year. One or two member states may make larger payments in some circumstances. It is likely that the West German Government will do so because they have a different form of land classification, which enables them to gear the scheme to the different levels of profitability of different cereal farmers, whereas we cannot do that.

I do not rule out reviews of various aspects in due course. After all, I favour the principle of monitoring and evaluation of all grant schemes wherever appropriate. That would apply equally to rates, although they may have to be revised downwards as well as upwards to take account of price reductions under the stabiliser arrangements, but any reductions would certainly not apply to those farmers already in the scheme.

Photo of Mr James Molyneaux Mr James Molyneaux , Lagan Valley

Does the Minister intend this United Kingdom scheme, as he calls it, to apply automatically and simultaneously to Northern Ireland, or will the colonial regime in the Northern Ireland Office drag its feet for the usual 18 months?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

That would have to be a matter for the statutory instrument, but I have taken note of the right hon. Gentleman's comments.

Photo of Mr Ralph Howell Mr Ralph Howell , North Norfolk

Is my right hon. Friend aware that many farmers will consider these measures inadequate, and that the take-up will be very small? What will be done with the green crop cover, if grazing is not allowed? Is the exclusion of grazing not a further disadvantage to British farmers in comparison with European farmers? How does the £200 maximum compare with that which will be received by the French and German farmers?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

We had to direct the rates of payment to certain groups of farmers. The £200 figure is directed at some of the more marginal cereal producers. That will nevertheless benefit all cereal producers if it helps to cut cereal production, but the problem in setting what my hon. Friend would perhaps regard as a generous rate is that it could heavily over-compensate other producers. That would not be the best use of taxpayers' money and the public would not regard it as the right decision.

Experience of set-aside schemes in other countries has shown that, in the early period, take-up is slow because of farmers' natural caution. Through nobody's fault, we are coming forward with a scheme rather later in the year than usual, so some farmers may find that they simply cannot take decisions for the coming year. I do not expect a rapid take-up, but I hope that it will be considered favourably by those to whom the rates of payment will be attractive. Green crop cover is a Community condition of the scheme, but we have taken that fact into account when setting the rate of payment.

Photo of John Home Robertson John Home Robertson , East Lothian

Despite the fact that there is no Scottish Office Minister on the Front Bench at present, may we take it that this statement also applies to Scotland? Although I understand why the Minister has decided not to permit grazing of arable land set aside under this scheme, what is his understanding of the likely application of the scheme in other Community countries? Does he acknowledge that the exercise of that option in other Community countries could further discriminate against the British meat industry in all its forms?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

One has to make judgments about those matters and we will find that, where there is an option, member states come to different conclusions about grazed fallow and, where there are no Community conditions, will reach their own conclusions too. That is what I have done. I have listened to our farmers and all those who represent them and, in the light of those representations, have reached my decision about grazed fallow.

I closely consulted my right hon. and learned Friend the Secretary of State for Scotland on this subject and I know very well what the National Farmers Union of Scotland has been saying. I have seen a letter to my right hon. and learned Friend from the president of the Scottish NFU.

In response to that representation, I wish to emphasise that I am not closing the door permanently on that option. I would be willing to monitor the position with the industry, in which there are some divided views, to see whether the grazed fallow option should be introduced in some form at a later date, but certainly not this year. I have come to a clear decision for this year, but obviously, if conditions and people's views change, I am prepared to reconsider the matter.

Photo of Mr Alick Buchanan-Smith Mr Alick Buchanan-Smith , Kincardine and Deeside

Although I welcome my right hon. Friend's statement that fallow ground may not be used for grazing, will he confirm that the green crop grown on that land will not be allowed to be used for conservation for livestock feeding purposes, as that would drive a coach and horses through the policy? Although I welcome his policy for the United Kingdom, will it not create problems for the remainder of Europe if other European countries allow the grazing of that land by livestock or the conservation of crops for livestock purposes? Will that not shuffle off cereal problems into livestock areas and create anomalies for British livestock producers by putting them in an unfair position in comparison with livestock producers in Europe?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I confirm that the position in respect of the green crop cover is as my right hon. Friend said. There will be divided views about grazed fallow in other member states. That was clear from our discussions in the Agriculture Council, and other Ministers shared my worry and concern about the possible impact of unfair competition on their livestock producers. I am sure that there will be an active debate in the farming communities of other member states.

It is important that there should be strict conditions where grazed fallow is taken up as an option in respect of the number of livestock allowed, for the reasons given by my right hon. Friend. I insisted on that in my discussions about that option in the Agriculture Council, and there are now strict conditions regarding the number of livestock. One of the problems is how to control that. That was one of the reasons why I reached my decision. We shall watch carefully what happens in other member states.

Photo of Mr Geraint Howells Mr Geraint Howells , Ceredigion and Pembroke North

I welcome the Government's scheme. They have learnt a great deal from their mistakes in 1983, when they introduced compulsory legislation for dairy farmers. I am sure that the cereal growers of this country are glad that they have had a voluntary scheme, but I should like to ask the Minister a number of questions.

Does the Minister honestly believe that he can achieve a 20 per cent. reduction in three or four years by voluntary methods? I should like further clarification about the conditions regarding farmers opting out after three years, when the scheme is obligatory for five years. In view of paragraph 7 of the statement, I am surprised that the less favoured areas are included in the scheme. To what extent are cereals grown in the less favoured areas of this country? The figure is bound to be very small. Perhaps the Minister will reconsider withdrawing the less favoured areas from the scheme.

Finally, hon. Members on both sides of the House, and especially livestock and sheep farmers, are anxious that the Minister should give an assurance to United Kingdom sheep farmers that he will consider the scheme annually and consult the farmers' unions in each country of the United Kingdom to ensure that he produces a scheme that will benefit the farmers concerned.

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I am grateful to the hon. Gentleman for his opening remarks. I am glad that he asked his first question, because it enables me to clear up a misunderstanding in his mind, which is widely held elsewhere. The 20 per cent. limit is not designed to reduce cereal or arable production generally by 20 per cent. over a period. It offers farmers the opportunity to reduce their production if they are prepared to take 20 per cent. of their land out. It follows clearly from that that it is a voluntary scheme and that there will be some slippage in the amount of land that they take out. It also follows that the reduction of cereal production will be well short of the 20 per cent. Indeed, it was always designed to be so.

As for farmers opting out after three years, that is a Community permission. Provided that the farmer has abided by all the conditions in the three years, he will not be required to repay his premium for those three years, he would then opt out, and no longer remain in the scheme.

The answer to the question about less favoured areas is that cereals are grown there and I do not wish to deny farmers in LFAs the opportunity to participate in the scheme. I suspect that some of the more marginal growers who will be most attracted to the scheme and who are most under pressure will be in the LFAs. It would be quite wrong of us not to give them the option. The lower rate of payment—lower by 10 per cent —reflects the fact that I have been advised by all my expert ADAS advisers that, broadly speaking, yields in LFAs are 13 to 14 per cent. lower than elsewhere.

Finally, having in mind the position of sheep farmers in areas such as the hon. Gentleman's and other upland areas, I took the decision not to take up the grazed fallow option in the United Kingdom. Sheep farmers would be most concerned about the prospects of increased competition in lowland areas from people who took up a grazed fallow option.

Photo of Mr Paul Marland Mr Paul Marland , Gloucestershire West

I begin by welcoming the fact that my right hon. Friend has come to the House so early to make this statement, because it gives arable farmers the opportunity to plan for the future. I welcome also his refusal to allow the green cover, as he has described it, to be grazed. I should like to ask two questions about that. The first relates to the timing of the payments for set-aside, because cash flow is as important to farmers as it is to those involved in other businesses. If my right hon. Friend could state when the payments will be made, that would be helpful.

Secondly, when my right hon. Friend refers to 20 per cent. of a farmer's ground, what is the position if the farmer occupies more than one holding? Is it 20 per cent. of the acreage, spread over all the holdings, or can it be 20 per cent. of the entire acreage farmed, all on one holding?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I am grateful to my hon. Friend for those questions. I understand his point about cash flow, but I advise him that the payments will be made at the end of the year as that is a condition of the scheme. On his second point, I shall have to consider the kind of cases that he has in mind but, broadly speaking, it would normally be 20 per cent. of the actual holding.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Does the Minister recognise and accept that those who farm the difficult areas of this country, where grazing is the only option, will welcome the implications of the early part of his statement, but have some doubts about his reservations and his subsequent commitments to reconsider the matter? Obviously, those people have only one choice. The Minister also suggested that there might be other means of reducing crop output. Is his Department prepared to continue to consider those methods, because some may be far more environmentally acceptable?.

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

On the hon. Gentleman's main point about grazed fallow, I have made a clear decision today that we will not go for the grazed fallow option. However, I was pressed, especially by the Scottish NFU, not to close my mind permanently to that if the general view or conditions should change. This afternoon one or two hon. Members have stated their concern that we should look at what happens in the European Community. However, I am persuaded of the importance of the understandable feelings and worries, with which I agree, of farmers in upland areas, and especially livestock farmers. That was what played the biggest part in directing my mind to the conclusion that I reached. I would certainly need to be strongly convinced that there were strong arguments for changing that decision, and that would have to be the view of those in the upland areas also.

The hon. Gentleman's final point requested the type of scheme that might come in under the extensification schemes which we are committed to introducing. We are, for example, committed to introducing one for arable production from —I speak from memory—1990.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

Is this scheme as favourable to farmers as the environmentally sensitive areas scheme? If it is not, will my right hon. Friend consider increasing the number of environmentally sensitive areas?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

It is impossible to say, because each farmer must take his own decision on that in relation to his own circumstances. To some extent, the schemes have different purposes and, therefore, the rates of payment are different. In any case, ESAs are not available to all farmers. What I am doing is in the whole context of trying to get the right balance between agricultural production and the environment, in the new changed circumstances of bearing down on surpluses. I am trying to offer a range of alternatives to farmers. They can choose for themselves which they think are most appropriate to them.

We have already embarked on a large programme of ESAs in a short time. It is necessary that we review and monitor them to see exactly how they are progressing, so that we can learn lessons from their progress. ESAs are moving favourably at the moment, but we need a little more time to review their progress before we reach conclusions about any others.

Photo of Margaret Ewing Margaret Ewing , Moray

Turning again to the issue of grazed fallow, how deep were the divisions in the Community on that option? Was it a minority view, which the Minister reflected, or a majority view? When does he expect other Ministers to reach a decision on that important matter?

The Minister states that the Government had allocated £16 million for the set-aside scheme for next year. Will any of that money come from FEOGA, or is it in addition to the Government's own funding?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

On the hon. Lady's first point, one member state in particular pressed the grazed fallow option—although I suspect that there were divisions of view in the farming community in that member state also. It is difficult to say how many member states will take it up. They may change their minds when the problems that I foresee with grazed fallow start to emerge. We need a little time to see how that develops.

On the payments and the FEOGA contribution, the £16 million is what we set aside in the public expenditure White Paper. There are varying rates of FEOGA payments depending on the level at which national member states set their own payments. In the case of the payments that I have announced today, we expect a 42 per cent. FEOGA contribution.

Photo of Mr Hector Monro Mr Hector Monro , Dumfries

I warmly welcome my right hon. Friend's proposals. Returning to the grazing of fallow land, does my right hon. Friend accept that there is divided opinion in the National Farmers Union of Scotland and among Scottish farmers, because if grazing is accepted on the continent there will be a major increase in livestock there, of beef and mutton, which will discriminate against this country? Will he therefore state today that he will monitor developments, take a flexible attitude, and keep in close touch with his right hon. Friend?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I am grateful to my hon. Friend. There should not be a major increase in livestock production if other member states take it up, because there are now strict rules about what can be undertaken on grazed fallow, and on the limitation of livestock. As I said earlier, that was one point that I insisted on being included in the Community's conditions. I assure my hon. Friend that we shall monitor all aspects of the scheme, including what is happening in other member states, and I shall, of course, keep in Close touch with my right hon. Friend.

Photo of Mr Calum MacDonald Mr Calum MacDonald , Na h-Eileanan an Iar

I add my welcome to the exclusion of grazed fallow in the Minister's statement and wish to convey to him the relief and the appreciation of the crofters and the upland sheep farmers of the Highlands and Islands. I take on board what I believe the Minister said earlier, and ask him for an assurance that grazed fallow will not be included as long as he believes that it will have an adverse effect on upland sheep farmers. Will he clarify the question about green fallow and make it absolutely clear that no harvest crops —for example, mustard—will be allowed on green fallow?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

There are strict conditions about the way in which the green crop is used. It must not be used for agricultural purposes. On the hon. Gentleman's first point, I hope that I have already made it clear that I took the decision that I did on grazed fallow bearing in mind the representations from livestock hill farmers generally, and sheep farmers especially.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

Will my right hon. Friend accept that farmers in my constituency will be pleased with his original statement, but slightly less pleased with his subsequent qualification on grazed fallow—that he will not close his mind permanently to it? Will he firmly bear in mind the fact that, as far as arable farmers are concerned, the grazed fallow will merely be jam on top of the bread, but to the sheep farmers in my part of the world it means survival?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I take careful note of what my hon. Friend has said. I have heard her say it before, and I listened to her very carefully then, too. I am glad that she is pleased with the conclusion that I have reached. All I have said is that I will not permanently close my mind to an option that is available under the Community scheme if there is a change of view in the United Kingdom. But I have a very clear view, I think, of what most hill livestock farmers and their representatives, particularly in the House, feel at present about that option.

Photo of Eric Martlew Eric Martlew , Carlisle

I am sure that the Minister will agree with me that there must be something obscene about taking good agricultural land out of production while millions of people are starving in this world. There is also something ridiculous about paying farmers—not for doing nothing, it has been said, but for watching the grass grow, as appears to be the system.

Would it not have been better to look at the possibility of imposing a nitrogen fertiliser tax? A tax of 15 per cent. would have had the same effect of reducing the surpluses as the set-aside that the Minister is proposing. It would also have had great environmental benefit as it would not have polluted the water. The Government, or perhaps others in a privatised world, will have to pay to have the nitrogen taken out of the water, which will reduce the profit on the land.

My second question concerns grazing on green fallow and the suburban problem of horses. It may be a light problem in agricultural terms, but would it not be sensible to allow horses to graze on green fallow since we have not taken to the practice of eating horses in this country?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

It is a pity that the hon. Gentleman has not participated in some of our agricultural debates——

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

Well, I cannot recall his contribution. If he participated, he clearly did not listen to the debates, because we have dealt with the whole question of food aid, the position in the developing countries and the relative situation on surpluses in the Community many times, and I do not intend to come back to that today.

On the question of nitrogen, I referred earlier to the fact that there were a number of environmentally important and attractive elements in the scheme. One of them is that it will not be possible to put fertilisers on the fallow land that has been set aside. That is really there to help to deal with the water leaching.

On the question of horses, it would be perfectly possible for one of the non-agricultural uses of land set aside to be development of equestrian facilities for the community at large.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

How can my right hon. Friend ensure that those countries that take up the fallow option—I enthusiastically support his decision with regard to the United Kingdom—do not use it to establish a higher livestock base for future stabilisers or quota schemes, which would be very disadvantageous to the United Kingdom?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

The control of livestock numbers will be a very important condition in any member state that takes up the grazed fallow option. Clearly, that is something that I shall be very alert in watching and monitoring as the scheme goes along. I am sure that in other member states, too, livestock producers will be alert to the risks that they face if a grazed fallow option is available in their country.

Photo of Ms Audrey Wise Ms Audrey Wise , Preston

The point made by my hon. Friend the Member for Monklands, West (Mr. Clarke) about low-input farming was brushed aside by the Minister. Does he not realise that this is a golden opportunity to move towards low-input, organic, sustainable agriculture, which would be for everyone's benefit, not least the consumer's? Will he show some appreciation of the urgency of this matter, since changing from the present over-exploitation to a sustainable agricultural method will be a slow process?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

It was not brushed aside. The point simply is that low-input and organic farming in the sense that the hon. Lady puts it forward is not appropriate to this scheme, except at the periphery. This scheme is designed entirely to deal with getting surplus land out of production. Because of the importance of tackling the surpluses and getting land out of production, this was given priority in the European Council and the CAP reforms that were agreed then. But it was also agreed at that time that we should then look at the possibility of more extensive arable farming. We are committed to coming forward with proposals on that under the timetable set by the European Council.

Photo of Mr John Farr Mr John Farr , Harborough

Like so many of my hon. Friends, I congratulate my right hon. Friend on what he has done and ask him particularly to monitor the progress of the scheme. I was sorry to hear that he did not appear too committed to low-intensity or low-input farming. I remind him that continental countries, as I understand it, have adopted this form of low-input, low-output, farming. Is there not a chance that some of our own farmers might be disadvantaged as a result?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I can reassure my hon. Friend about monitoring. I come back to what I said a moment ago about low-input farming. We have a great deal on our plate at present in carrying through the structural changes in agriculture and introducing quite a wide range of schemes—to the extent that some people now tell me that they are beginning to be baffled by the number of alternatives available to them. That is why I am trying to keep this scheme as simple as I possibly can within the Community rules. But we shall be turning to the whole matter of low-input farming, which raises some very difficult issues that will need to be carefully thought through when we come to consider the possibilities under extensification.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

While I welcome the set-aside policy in dealing with the problems of CAP, it has some serious flaws. The Minister has already mentioned the problem of the effect of grazing. Does he not agree that, if we are putting large sums of public money into such a scheme, there ought to be some direction of the way that the land is used—particularly in managing it for conservation purposes—in terms of a return to wetland, hedgerows, and so on, and encouraging such things as woodland schemes?

Is there not a problem in that it is the marginal producers who are more likely to go for this scheme, and that the large-scale producers, who are the villains of the piece in terms of the environmental consequences of large-scale cereal farming for intervention price gain, will not be attracted by the scheme? Therefore, it is flawed in that sense.

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

In the conditions, it will be laid down that shelter belts, hedges and so on have to be maintained. There will be guidelines on environmental practices. So I can assure the hon. Gentleman that the sort of things he calls for will be part and parcel of the scheme.

Photo of Mr Robert Hicks Mr Robert Hicks , South East Cornwall

On my right hon. Friend's welcome statement about not allowing the grazing of fallow, is he aware that the west country livestock sector, and hill farmers in particular, will be disappointed by his subsequent remarks about reconsideration? My right hon. Friend mentioned that an individual applicant will have to agree to setting aside 20 per cent. of his grain. Does a minimum acreage have to be involved?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

On the second point, yes—one hectare in a block. On my hon. Friend's first point, I obviously need to reiterate that I have made a firm decision today on the grazed fallow option. What I have said in response to the request received by my right hon. and learned Friend the Secretary of State for Scotland from the Scottish NFU is that I will not permanently close my mind to a possible change. I think that everyone will agree that, in schemes of this sort, one cannot say that one will stick to a position permanently. I am well aware—I am becoming more aware as these questions continue—of the views in this House, and I have listened to them very carefully.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn

The Minister will be aware that there will be a welcome for his decision not to take up the grazed fallow option this year, but I have noted his comment that he will keep his options open for future years. One pressure that he might come under in future years could be caused by his having set the compensation limits too low. There will be pressure on him from the other sectors of the agricultural community, because enough cereal land has not been taken out of production, for the grazed fallow option to be taken up. Can he assure us that he will not go down that road and that, even if he were thinking of going down that road, he would consider raising compensation rather than taking up that option?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I have heard what the hon. Gentleman has said. I suspect that that will be the view which he will press in succeeding debates on the set-aside scheme. I must make it clear again that I do not rule out reviews of various aspects of the scheme, including rates. I made it clear earlier what the position would be on that. But I would need a great deal of convincing to change my mind about the grazed fallow option.

Photo of Derek Conway Derek Conway , Shrewsbury and Atcham

My right hon. Friend's statement will be widely welcomed as reasonable. Does he agree that farmers in Britain will accept it as long as it is seen to be fair across Europe? When considering how he monitors not only what we are doing but what our continental competitors are doing, will he ensure that we do not fall into the same trap as with dairy quotas, when the European Court of Auditors showed that six countries were cheating? Will my right hon. Friend assure my Shropshire farmers that other farmers will not cheat, as they did with dairy quotas?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

My hon. Friend knows that we are assiduous in following up areas where we think there is unfair competition or unfair use of Community measures. I assure my hon. Friend that we will continue to do that. I find that the Commission is now alert to this. I am asked to make comparisons with other countries; I shall be doing that, but it is difficult to draw conclusions. One should not draw a simple conclusion just by comparing the rates of aid in different countries. Different conditions apply to the scheme. The position may be different in different countries. For example, in West Germany they can take advantage of different rates at different levels of profitability on cereals because of their land classification system, which I do not think any other member state has. When making comparisons, one has to examine carefully all the items involved.

Photo of Joan Walley Joan Walley Shadow Spokesperson (Environment, Food and Rural Affairs)

The Minister glossed over an earlier question about opencasting. I should like an assurance that we will not have even more opencasting as a result of the scheme. What provision will there be for access to the countryside? Has he had discussions with the Ramblers Association about this? Will the monitoring that he talked about take account of the impact that this will have on footpaths, because we want to keep those that exist?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

Opencasting comes into the context of non-agricultural use. I do not think that it is possible at the moment to draw a firm line on all types of non-agricultural use. I specified in my opening statement areas of non-agricultural use which we would definitely exclude—for, I hope, acceptable reasons.

As to access to the countryside, it is important in the context of the set-aside scheme to realise that if we are to achieve proper take-up by farmers, we must keep the scheme as simple as possible within the Community rules, but there are certain things that I have had to do within Community rules. We must not encumber farmers with too many conditions which would put them off

Therefore, I do not think that it would be right to insist, for non-agricultural purposes, on farmers being asked as part of the scheme to make their land openly available to ramblers or whatever. I beg the House to realise that we do not want to put unnecessary burdens, or what might seem to be restrictions, on farmers if we are asking them voluntarily to enter into the scheme.

Several Hon. Members:

rose——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I appreciate that all the hon. Members who are standing have a strong interest in the matter, but I have to have regard to the subsequent business. I will allow questions on the statement to go on for another seven minutes. After that, we must move on. I hope that everyone can be called in that time.

Photo of James Paice James Paice , South East Cambridgeshire

May I echo the welcome that my hon. Friend's have given to my right hon. Friend's statement? My right hon. Friend will realise that the rates of payment announced will ensure that farmers with less productive land will be interested in this scheme. It will be of less interest to farmers in my constituency on grade 1 and 2 land. I should like my right hon. Friend to answer two specific points. First, will conservation strips and headlands be eligible? The second point relates to the interaction between the proposal and the farm woodlands scheme; which rates of payment can be jointly claimed?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I recognise that the scheme is not likely to be attractive to most farmers on the most profitable and productive cereal land, although some, depending on their position, may want to enter into it. It is important for the former to recognise that if a scheme makes a contribution to getting cereal production down it is helpful to them too. As to headlands and marginal strips, we have fixed a limit below which farmers cannot go, but strips will be eligible under the scheme subject always to the overriding consideration that 20 per cent. of arable land must be taken out of production. I will set out clearly in the document the inter-relationship with the farm woodland scheme.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

What are some of the six or seven ways of helping wildlife to which the Minister referred?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

The marginal strips will clearly be one way of helping conservation. The fact that green cover crops will be on farms not used for intensive cereal production will be another. The guidelines that we are giving on good environmental practice will, I hope, be a third. The preservation and proper management of shelter belts, hedges and so on will be a fourth.

Photo of David Heathcoat-Amory David Heathcoat-Amory , Wells

Is it not a great concern that other EC countries will permit livestock grazing on set-aside land? Will the cost of this not more than offset the savings which the Commission hopes to make through a reduction in cereal price? Will not those countries be able to pass the cost of the ensuing surpluses in the livestock sector to the general European taxpayer through the CAP in ways we have seen in the past?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I am alive to this. Two points in the scheme will bear heavily on it. One is the control on livestock numbers where grazed fallow is taken up. The second is that grazed fallow payments will, under the Community scheme, have to be half the level of other payments for land set aside.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

I give a broad welcome to the proposal. What consideration has the Minister given to ensuring a reasonably even take-up of set-aside across the country? Is he aware that the importance of agriculture does not depend just on income, important though that is, but on agricultural output, on which the jobs of farm workers and ancillary industries depend? What assurance can the Minister give to the north-east of Scotland, which suffered virtually a harvest failure last year, that agricultural output will not be decimated although there may be some short-term relief?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

Obviously one cannot give an assurance of an even spread throughout the country of a voluntary scheme that is designed to help particularly the marginal cereal growers. The rates of payment are directed at that. Clearly each farmer will have to make up his own mind whether he wants to enter the scheme; the position of his farm workers will be one consideration in making the decision.

Photo of Mr David Harris Mr David Harris , St Ives

Does my right hon. Friend have targets for the amount of land which he would like to see taken out of production by the scheme and for the cuts in production? Is there not a danger that those who benefit from the scheme will be farmers who increase production like crazy on land left in cereal production?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

No, I do not have targets, because it is a new scheme and we have to see how it goes. On the point about more intensive farming on the rest of the land, it will not be possible for a farmer to increase the amount of land for arable production during the period of the scheme. I have considered this carefully, particularly in relation to experience in the United States of America, which I visited recently. The conditions are different in the two countries. Inevitably there will be some slippage in the scheme, but I do not think that we will see sharply more intensive production on the rest of the land—for the very good reason that the vast majority of our farmers are extremely good farmers already and they are getting maximum production from intensive farming.

Photo of Dr Alan Williams Dr Alan Williams , Carmarthen

What will the consumer and the general public think of the scheme? If the product of coal miners, steel workers or creamery workers is surplus to requirements, they are thrown on the scrap heap, but when there is a crisis in farming, all sorts of escape mechanisms are provided. Whatever assurances the Minister may give, will not the general public have a vision of farmers being paid for doing nothing because there will be no economic product to sell in the market? Is it not the case that the only real answer to CAP surpluses is guaranteed prices? If one cuts prices, that will protect small farmers.

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

There is some illogicality in the hon. Gentleman's argument, when he complains about a scheme that will protect small farmers but says also that I must protect small farmers

It is important that the general public should understand and take the view that it would not be attractive if large tracts of our countryside went to dereliction, scrub and waste—as we saw happen in earlier generations. It is important for the general public to realise that farmers are the best conservationists we have and that they look after our land extremely well; opinion polls show that such is the view the public hold. There is a cost in managing such land, and part of the set-aside payment is designed to help farmers meet that cost, in the interests of us all.

Photo of Mr Roger Knapman Mr Roger Knapman , Stroud

As I represent the Stroud constituency, in which almost exactly half the farmers are in the Severn vale, which is almost entirely grassland, and the other half are in the Cotswolds, which are almost entirely arable, I have good reason to be very grateful for my right hon. Friend's balanced statement. Does he feel that the combination of his set-aside proposals with the likelihood of lower corn yields in the United States resulting from the current drought will mean that our arable farmers may look forward to the future with greater confidence than for some time past?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

Although I know that droughts happen, they must be considered as one-off events, and one would be unwise to rely on them as a source of long-term confidence for our farmers. We are pursuing a long-term combination of reforming the CAP so that it does not collapse under its own weight with measures designed to assist farmers in dealing with structural readjustment, while continuing to look after the land in an environmentally attractive way. As those measures take effect, I hope that farmers will increasingly see that that combination offers the stability they want. In the long run, such an approach is more likely than a one-year drought to give farmers confidence.

Photo of John Greenway John Greenway , Ryedale

Sheep farmers in north Yorkshire will warmly welcome my right hon. Friend's statement not to take up the grazed fallow option. However, the House will recognise his dilemma. I urge him to use his not inconsiderable powers of persuasion to convince our EC partners themselves not to take up the grazed fallow option—or if they do, to restrict it to such an extent that there will be no damage to or impact on our exports of sheepmeat.

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

There are considerable restrictions on livestock numbers in the grazed fallow option, by which our EC partners will have to abide. Moreover, the rates of payment are halved, and so are a good deal lower than those made to all farmers not taking up the grazed fallow option. That too will make it less attractive. It is certainly something we shall continue to monitor.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

Does my right hon. Friend accept that farmers will be concerned that the measures described in his welcome statement are properly policed, not only in Britain, but also among our EC partners? Can he tell the House what proposals he has for controlling the new set-aside policy?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

I agree that it should be policed, and we shall be policing, monitoring and evaluating the situation.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

In view of the multitude of costly disappointments on the CAP, all of which were widely welcomed by the House, will the Minister assure the taxpayer who will be financing this measure that the poor land which will be taken out of production will not be balanced by even higher yields from the land that remains? On reflection, does the Minister think it wise that the stabiliser should be fixed at a level higher than current excessive production?

Photo of Mr John MacGregor Mr John MacGregor Secretary of State for Agriculture, Fisheries and Food

We achieved considerable success in getting the stabiliser fixed at its present level. That was the result of pressure from the United Kingdom in particular. As to my hon. Friend's other point, I have considered the matter very carefully, and I believe that it certainly is a cost-effective proposition for the taxpayer.