Farming: Impact of Brexit - Question for Short Debate

– in the House of Lords at 2:30 pm on 21st July 2016.

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Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Chair, Licensing Act 2003 Committee 2:30 pm, 21st July 2016

To ask Her Majesty’s Government what assessment they have made of the impact on British farmers of the decision to leave the European Union.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Chair, Licensing Act 2003 Committee

My Lords, I am delighted to have secured this debate. I welcome my noble friend to his new position as a Minister in the department and I welcome the new team. I declare my interests as set out in the register. This debate is timely as we can discuss the implications for farmers of leaving the European Union.

We now have the result of the referendum and we have been told by the new Prime Minister, who I welcome to her position, that Brexit means Brexit, but during the course of the referendum campaign promises were made that now have to be kept. Will the Minister say whether we are sure that the successor arrangements for farming that we are seeking are actually on offer? We have it on the record from the Secretary of State for the new Department for Exiting the European Union, David Davis, who I wish well, that the UK wants to retain access to the single market and to keep control of its borders. How can we achieve that and keep farming as we currently know it going? The farming and the fruit and vegetable growing sector is heavily dependent on migrant workers. Seasonal workers do all the picking, packing and processing on a temporary basis, and there are no obvious substitutes from the UK or Commonwealth countries. The alternative—the previous seasonal agricultural workers scheme—was not without its administrative difficulties. The farming community seeks assurance that the status of existing and future migrant workers will be assured in the intervening period and in the long term.

What will our future relationship with the European Union be? I am sure we appreciate that this is like going through a very painful divorce but instead of there being one injured party, there are 27. We must approach these negotiations with sensitivity.

We must address what the level of support will be between now and when we leave the EU and beyond that period. Can the Minister give the House and the farming community an assurance that existing contractual arrangements will be met, basic farm payments will be respected and agri-environmental agreements entered into will be allowed to reach the end of their contractual period? Will the Minister assure the House that for those that are terminating early—before 2018 or 2020, the dates on which we might leave—farmers will be able to enter new agreements?

The food manufacturing sector is one of the largest remaining manufacturing sectors in this country. Food and drink account for 16% of the total manufacturing sector. It has a turnover of £83.7 billion, a gross added value of almost £22 billion a year and employs around 400,000 people, yet this country is only 61% self-sufficient. There will be huge opportunities to export to potential new markets and possibilities of substituting home-grown food for imports. I look no further than Shepherds Purse, which is across the fields from our cottage near Thirsk in North Yorkshire. It is making cheeses that will take on the best of cheese from France, such as Roquefort.

What are these new markets? Most Commonwealth countries already have a preferential arrangement with the European Union through the ACP-EU Joint Parliamentary Assembly. What will their status be in the short term? Are we seeking to peel them off one by one in individual trade negotiations? Other people prefer the Canadian model, yet it has taken at least seven years to negotiate, has not yet been signed, does not allow the free movement of workers, I understand, and has no access to services, which will damage other UK industries such as insurance and the financial services sector.

Many people look to the European Union’s agreement with Norway. It gives access to the single market, and not just free movement, but the Schengen agreement applies. However, Norway is now known as a fax democracy because communication is by fax. It is a one-way street. It is not consulted on regulations coming from Brussels and has no say over any future regulation. The most challenging scenario would be reverting to World Trade Organization agreements. That raises the spectre of tariffs or, even worse, non-tariff barriers. People who have been used to trading through the World Trade Organization know only too well that non-tariff barriers, often multiple forms and other barriers, are in place. I have absolute confidence in the negotiation skills of the Secretary of State for the Department for Exiting the European Union, but we need to know even now what the basis of the negotiations will be and that there will be minimum regulatory trade barriers.

I welcome the fact that next year Phil Hogan, the EU Commissioner for Farming, is undertaking a fundamental review of the common agricultural policy. Can the Minister assure us that we will be part of those negotiations and that the views of our farmers and growers will be heard at that point?

I am disappointed that Britain will not be taking the opportunity to take up the presidency of the European Council. Had we taken it up from July 2017, we would have been in the driving seat. We would have set the agendas, chaired all the meetings and been in a unique position to discuss our negotiations about our future relations with the EU.

There is a question mark over the relationship between the departments. What is the role of the slimmed-down Foreign Office regarding our relations with the European Union? Presumably the Department for Exiting the European Union is looking at negotiations with member states of the European Union. Who will be looking at future relations? Presumably it is the Department for International Trade, but who will have the last word? Who is in charge of negotiations and who will be conducting relations with Commonwealth countries?

What exactly will future access to the market be? Are we seeking to ensure, for example, that the French will still take our spring lambs from North Yorkshire and other parts of the UK, or will they look to Ireland and New Zealand to provide the exports that we currently provide? I argue firmly that as the current focus is on active farmers, that focus on active farmers should remain for any future support that must be extended to our farmers. Our upland and hill farmers and small farmers in lowland areas should also be protected and have support extended at the time. There is a special case to be made for tenant farmers, and indeed those graziers with rights in perpetuity who farm on common land. So there is a multiplicity of questions to discuss today regarding the present and future arrangements.

I pay tribute to the fact that since our first lady Prime Minister, Britain has been at the forefront of environmental regulation throughout the EU. Will we still be applying—and will we be consulted on revisions to—the water framework directive, the bathing water directive, the drinking water directive and the nitrates directive as applied to the UK, which have implications for our farmers?

In conclusion, the farming and the food and drink sector are among the few remaining vibrant manufacturing sectors of this country. We owe that to our farmers, who work hard in all elements and weathers to put food on our table. The one thing that is certain is that we face a degree of uncertainty, but I hope the Minister can reassure us that we will keep the level of that uncertainty to an absolute minimum.

Photo of Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer Liberal Democrat 2:41 pm, 21st July 2016

My Lords, I warmly congratulate the noble Baroness, Lady McIntosh of Pickering, not only on securing the debate but on managing to cover such a lot of crucial questions in her excellent introduction. I must say I am relieved that we will continue to benefit from having the noble Lord, Lord Gardiner, as our farming Minister in this House, with all his long experience and his dedication to giving us proper answers to the questions we ask. I am very pleased that he is still the Minister in this House.

I would find it ironic if the remnants of the Britain that all Brexiteers so nostalgically seem to yearn for were actually exterminated for ever by Brexit. I see that as a very real danger. Think of our rural fabric. There could be no more vibrant villages with pubs, bellringers or cow-filled meadows. There could be no more bluebell woods, larks ascending, hedgerows or footpaths up to sheep-grazed uplands, which I am sure my noble friend Lord Thomas of Gresford will talk about. I see a very real threat not only to the agricultural sector but to rural life, our countryside and the wider environment. That is because the £3 billion that flows into our rural areas from the EU is not something that I believe the Treasury will naturally want to continue; I think it will look to that £3 billion pot to start funding its other priorities. That is a threat to the very fabric of rural Britain, not only to our home-grown food production capacity, which as we know we should be increasing, not decreasing, but to the environment, the landscape and the wildlife.

However, it is not all doom and gloom. There could be a new settlement for farmers and for our environment. It will require a total redesign of both the legislation around the environment—80% of it has come from the EU, and it has helped to preserve much of the fabric of rural Britain to date—and a new rural settlement with farmers. Quite rightly, the British taxpaying public will expect to see much more for their money. Gone will be the days of subsidies based on landholding size, no matter how few public benefits that land produces or, worse, how many long-term costs occur—for example, in soil degradation, biodiversity loss or water pollution.

Given what a relatively small and densely populated island we are, we really cannot afford to separate agriculture from wildlife and landscape. That is the first real challenge to Defra in considering what strategies it should be employing for a post-Brexit scenario. So far it has produced separate strategies for food, farming and biodiversity. That is not going to be acceptable; it is going to have to produce a whole rural Britain strategy.

The CAP did a lot of good in enabling family farms to survive. That will be another big challenge for Defra: to ensure that the sort of incentives it produces in future will encourage young entrants into farming and enable them to access the finance in order to share some of the machinery and capital investments necessary, particularly for some of those smaller family farms. We cannot expect farmers to manage, say, footpaths, dry stone walls and hedges for nothing. The public enjoy the benefits of the countryside and they will want to continue, so we must pay our land managers—the farmers—properly for that.

Lastly, there are issues such as flood risk. A very good publication came out on Wednesday, the Wildlife and Wetland Trust report Rich in Nature, which was about making space for nature, which also brings enormous other benefits and a great return on investment. The report’s introduction explains that for every £1 invested you can expect at least £6 in return. If the Treasury plans on a post-2020 investment in rural Britain of £3 billion, with the right policies and strategies in place it could expect a return of £18 billion and an enviable level of food security.

Photo of The Earl of Kinnoull The Earl of Kinnoull Crossbench 2:46 pm, 21st July 2016

My Lords, I declare my interests as set out in the register, particularly my own farming interests and as a trustee of the Blair Charitable Trust and its 70,000 acres. I too congratulate the Minister on his new appointment. Everyone that I speak to very much feels as I do: this is a case of round hole and round peg, and it is good news for the House. I also congratulate the noble Baroness, Lady McIntosh of Pickering, on yet again enabling us to debate rural and farming affairs. I say again that I do not think we do enough of that in this House. The balance is not quite right, and I urge the usual channels to seek to address that.

I was only going to make one point today: the necessity of an early and clear communication to, and reassurance of, the farming community, particularly post-Brexit, in respect of the subsidy regime and foreign seasonal labour, so ably already put by the noble Baroness. I thought, however, that it was worth reporting on some of the many discussions I have had in farmhouse kitchens—and, in one instance, on a cricket pitch—about what Brexit means for farming. I shall distil those discussions down to three main points.

The first discussion, which was on the cricket pitch, was with a soft-fruit farmer. His business is of course labour-intensive and capital-intensive; Perthshire soft-fruit farming benefits from perfect conditions. He in particular needs foreign seasonal labour, which tends to come from poorer EU countries. He puts them up on a full-board basis, as do many other people in the area, and the arrangement is very satisfactory to everyone. His business is going so well that he would like to invest in increasing it. That is quite expensive, as it costs around £20,000 an acre to put up polytunnels and produce satisfactory irrigation and so on. He would have to invest in the accommodation as well. However, he is not going to do that because at the moment he is not confident of the availability at similar cost of skilled EU labour in future.

The second conversation was with a gentleman who has a successful livestock business, both sheep and cattle. He was thinking of an investment in his cattle court of around £100,000. He was not going to proceed either because he was not confident that the subsidy regime would be there in the future, and if the subsidy was removed from his future cash flow the returns would be so thin as to not make the investment worth while. Therefore he was holding off. Those are both examples of what I call loss of opportunity.

My final example is more worrying, because it is an example of damaging the existing business. This discussion was with the manager of a successful mixed organic farming business. This manager, whom I have known for many decades, was sitting down to fill in the forms for the overdraft renewal for his business. He was particularly concerned about the three-year cash flow that has to be included in those forms because he did not know how to fill in the third year. He had also had a discussion with his relationship manager at his major clearing bank and was under the impression that the bank was out to reduce his overdraft limit because of the uncertainties surrounding the future cash flow. If that is bank policy, it means that a constraint on cash and overdraft facilities for successful farms—and this is a deeply successful farming business—are being put in place, which damages our industry and is particularly not welcome when farm prices at the farm gate are so disappointing.

In closing, I therefore ask something similar to that asked of the Minister by the noble Baroness. When does he feel it will be possible to give clear assurances to the farming community post-Brexit, first, on the foreign seasonal workers point, and secondly, on the subsidy regime?

Photo of The Bishop of St Albans The Bishop of St Albans Bishop 2:51 pm, 21st July 2016

My Lords, I too thank the noble Baroness, Lady McIntosh, for this debate. I share the delight of other Members of this House that in the recent reshuffle it was neither an exit nor a Brexit but a clear remain vote for the Minister, and not only that but a promotion, so we are delighted and thank him.

Whatever our opinions on Brexit, it is undeniable that British farming faces a period of uncertainty and insecurity. While it is true that the decision to leave the EU will bring some new opportunities for British agriculture in the long term, it is clear that there are substantial challenges ahead. Agriculture is more intimately connected to the European Union than any other UK sector, and the process of unpicking that relationship must be done with utmost care.

British farming is of course at the heart of not just the rural economy but the wider national economy. It is integral to the security and health of our nation through food production but it brings wider public benefits: preserving the beauty of our natural environment, maintaining biodiversity and, as we just heard, helping to manage rural landscapes for the benefit of all. It goes without saying that we need to maintain a healthy, sustainable agricultural sector post-Brexit, and this will inevitably require a degree of government support and protection.

That need for protection must be reflected first and foremost in whatever trade agreements are eventually reached with Europe and beyond. British food is produced to some of the highest environmental and welfare standards anywhere in the world, which is something the British people are rightly proud of. However, these standards would be undermined and undercut were Britain to open its shores to cheap imports produced at much lower standards. While it is important that post-Brexit Britain is open to trade and exports, a policy of trade liberalisation across the board cannot be the answer. As the president of the National Farmers’ Union recently put it,

“government must not allow an open door policy to imports produced to lower standards”.

On a domestic level, it is important that the Government help to cultivate a culture of appreciation among the British public towards British farming, and to further encourage the procurement of British farm produce by schools, the NHS and catering companies, for example. Improving our reliance on domestic supply is not just good for farmers but good for us all. When only 60% of the food we consume is domestic produce, we leave ourselves open to trade disruption and food insecurity. We know that there is growing public willingness to support British farming, and I hope that the Government will support initiatives to more clearly promote food that has been produced using British farm produce.

Besides domestic and international trade, support for British farming will mean a continuation of some forms of financial support post-CAP. This is only right given the non-agricultural benefits that farming provides to the wider public. Although we probably need a degree of continuation in policy if we are to avoid the sort of problems that have afflicted payment of the basic payment scheme this time around, I hope that any future UK policy might be better integrated with the provision of these wider benefits—particularly the environmental benefits—than is perhaps currently the case under CAP. We need a UK policy that continues to promote biodiversity, the preservation of landscapes and sustainable farming; which encourages landowners to slow the flow of water in upland areas to reduce flooding further down; and which encourages the use of renewable energy while helping farmers to take steps to tackle climate change.

Of course many more challenges than these face British farmers. There are serious questions about future funding for agricultural research, future recruitment of seasonal labour and the future of small farms that may find it even harder to sustain themselves in a post-Brexit environment of farm consolidation and more intensive production. I hope that Her Majesty’s Government will continue to work across rural stakeholders as they seek to find answers to these difficult problems.

Photo of The Earl of Caithness The Earl of Caithness Conservative 2:56 pm, 21st July 2016

My Lords, I, too, congratulate my noble friend on his promotion to full Minister for Defra rather than spokesman, and I hope all this praise does not kill his career. It has been known to kill Ministers in the past; I hope it does not kill him.

It is lovely to be able to discuss farming for the second time in two weeks, and I congratulate my noble friend on putting down this debate. In the last two weeks I hope the Minister has been in full cry to pursue a joined-up strategy for farming, fisheries, forestry, food and the environment. As the noble Baroness said, there has to be a comprehensive policy. We know, from the debate two weeks ago and from what noble Lords have already said, that what the Government, farmers and the public want are often three different things. Those are big fences that my noble friend needs to jump to pull that policy together. I hope that he, like me, believes that with the correct support, UK agriculture can be a world leader in showing that environmentally positive farming with high welfare standards on the livestock side can be sustainable and deliver products that the market wants and needs.

However, to do that it needs to consult widely. During our last debate I asked about the devolved institutions, and the Minister in his reply talked about the devolved Administrations. I need to press him a bit more on that. I hope that he will talk to all the devolved institutions, not only to the devolved Administrations, and that he will whip in the country organisations that have farming to their fore, such as the CLA and NFU, just as much as the Wildlife Trusts and the RSPB. They all ought to be brought together to get the right policy.

That policy needs to be based on three things. First, it needs to be based on minimal and efficient regulation. I recall the days of MAFF, whose reputation for gold-plating regulation was not the best. The Minister will need to be firm with his civil servants so they do not go down the old road of MAFF, as that would sound the death knell of much of the policy that I am sure he and I would like to see.

Secondly, the farming strategy needs to be based on agricultural research, which I did not mention two weeks ago because other noble Lords did. Here I am concerned about our links with other European institutions. Already the universities are saying that contracts are being lost. One university has been advised that it should not join in with other EU universities because it would jeopardise their chances of getting money from the EU. Diseases such as bluetongue and others that are entering our forestry do not care a hoot about national borders. Therefore, we need to be absolutely certain that we can work with the other institutions throughout Europe on a basis that is productive for all. I am slightly worried about this because one of President Juncker’s first acts when he took up office was to sack the chief scientist, Anne Glover—she was unseated pretty quickly—and that was not a very good sign.

The third thing that Defra needs in sorting this out is the correct staff. This is hugely important. I am concerned that some of the best people in Defra will be poached for the Brexit office. Can my noble friend tell me whether any Defra staff have been taken to that office? If they have, and as the former Prime Minister said that the very best would be taken, what is the Minister doing to replace them? Is he contracting in experts from the private sector not only to fill the gaps but to help balance the policy that will be created? No other industry has to write a new policy on a blank sheet of paper. We have not had a farming policy of our own for over 40 years. It is a huge challenge for my noble friend. I know that we all wish him the very best of luck in turning it into a strategy that is acceptable to every part of the United Kingdom and to all who participate in it.

Photo of Lord Thomas of Gresford Lord Thomas of Gresford Liberal Democrat Shadow Attorney General, Liberal Democrat Lords Spokesperson (Wales) 3:01 pm, 21st July 2016

My Lords, I, too, congratulate the noble Baroness, Lady McIntosh, on obtaining this debate. Her picture of 27 injured parties in a divorce fills a lawyer like me with considerable alarm.

We are lucky to have the noble Lord, Lord Gardiner, in this House. He bashfully declares his farming interests every time he speaks and one of these days, when I have a spare hour or two, I will read his entry.

For the last few weeks, most of politics has been beyond parody. Gilbert and Sullivan could do justice to the scene: the former head of Defra has been translated to the post of Lord Chancellor, responsible for the independence of the courts; and it is with a fine sense of irony, mingled perhaps with some contempt for farming interests, that in her place the new Prime Minister has appointed Mrs Leadsom, a lady who campaigned for the leadership of the Tory party on the basis of her experience in finance in the City since 1984.

In 2007, Mrs Leadsom demanded that farm subsidies be abolished. That would be good for food production and for the environment, and it would lay waste upland Wales. Then, in a Guardian interview before the referendum, Mrs Leadsom suggested that farmers with,

“big fields do the sheep, and those with the hill farms do the butterflies”.

Hello sky! Hello trees! Hello grass! Hello butterflies!

The average net farm income for all Welsh farm types, as estimated by the Welsh Government’s Knowledge and Analytical Services Department, declined between 2014 and 2016 by 25% to £13,000 per year. Such falls in income have already had catastrophic effects on the 60,000 people employed on farm holdings in Wales and on the vast numbers of secondary businesses which are reliant on the industry. In Wales, EU support amounts to £250 million per year in direct payments to farmers, together with a programme of investment of some £500 million over the 2014-20 period.

Before the referendum, Mrs Leadsom said:

The UK government will give you the same money when we leave the EU”.

Yesterday, at the Royal Welsh Show in Builth Wells, George Eustice, the Farming Minister, told BBC Wales that the Government cannot guarantee that future agricultural support programmes will be as generous as current EU subsidies. Let us contrast that with his statement during the referendum campaign that Welsh farmers would get “as much support” as they currently do if the UK left. Brexiteers said, “We don’t need subsidies—the markets will provide”. Let us see whether Mrs Leadsom’s financial expertise can deal with the supermarkets which have no regard for the maintenance of the farming industry so long as they can keep prices down.

Now is Defra’s opportunity. We have taken control. Regulations—British regulations—can be tabled to support Welsh farmers—a new settlement, as my noble friend Lady Miller referred to it. Let us see what it does. How will it ensure that our agriculture is not undermined by cheap food imports from countries with far lesser environmental and animal health standards? That point was made very strongly by the right reverend Prelate the Bishop of St Albans a moment ago.

Many farmers in Wales cussedly voted leave because of “red tape”—that is, EU restrictions on the use of pesticides and herbicides, passed in Brussels but confirmed by the Westminster Parliament in an attempt to protect the environment. Will this Government relax controls on chemicals and fertilisers in an effort to boost food production? What would be the impact of that on our environment, on the upland Welsh watercourses that feed into England and on the wildlife in our hills? The environmental impact would be enormous.

Of course, whether or not we remain in the single market in some form or other, the 40% of our farm production that we currently sell in mainland Europe will in any event have to comply with EU standards. The noble Baroness, Lady McIntosh, asked a very pertinent question: will the Government be represented when Phil Hogan has his review of the CAP in 2017?

Welsh family farms are not to be left to cultivate butterflies. They have a critical role to play in producing food to the highest standard. They have to face up to the challenges in upland areas of climate change. They are the custodians of the countryside. Their farms must never be laid to waste.

Photo of The Earl of Sandwich The Earl of Sandwich Crossbench 3:06 pm, 21st July 2016

My Lords, I congratulate the noble Baroness on achieving a second debate so soon. Her career in another place included five years as chair of the EFRA Select Committee. I also remember her interest in Africa.

I live in west Dorset, where my wife and I manage a small agricultural estate, and have done for 30 years, depending on CAP direct and environmental payments. We are surrounded by farming families who have been on the same land for generations and who look at the new political landscape with great misgivings. As we have heard, everyone longs for the uncertainty to end.

I voted to stay in the EU and I believe that many leavers, including farmers where I live, voted out without fully realising the consequences. Many families were divided, but the majority were leavers. Generally, I think there has been considerable dismay among farmers since Brexit simply because of the threat to their farm payments. The new Secretary of State will have to persuade the Chancellor that smaller farmers and hill farmers will not be able to carry on unless they are given stronger reassurances of support. Owen Paterson said at the recent Oxford Farming Conference that,

“a sovereign UK Government, no longer constrained by EU rules, could actually increase rural payments”.

Leavers have argued that the UK should now be free to make its own trading arrangements with the EU and other countries that require our exports. Canada and Australia are often mentioned, even though they are themselves food exporters and will obviously gain from free trade agreements.

Red tape has just been mentioned. Leavers say, with some reason, that we will be able to remove unnecessary regulations while keeping those deemed necessary to maintain standards. On labour regulation, we will fall back on the seasonal agricultural workers scheme, although, as the noble Baroness mentioned, that has its own problems. Even Commissioner Phil Hogan claimed at Oxford that EU rules were too complicated and that he wanted to cut red tape or “reduce administrative burdens”, as the EU put it. But he also argued that the CAP had provided stability and was the foundation for economic growth and jobs in rural areas. The UK, like Norway and Switzerland, would have to renegotiate its relations with the EU, but it would still be bound by a large percentage of EU law without having any representation in negotiations or votes in the European Parliament.

What is clear is that this situation is unprecedented: the EU has never negotiated an exit agreement with one of its members before. The size of the UK market—62% of our total agrifood exports and 70% of our imports—requires a unique, new agreement to satisfy both sides.

In 2013, farmers received €2.6 billion under Pillar 1 and €637 million for agri-environment and rural development under “green” Pillar 2. How will HMG ensure that British farmers continue to receive these payments? We have already heard that they may not. There are fears that direct payments will be significantly less under the new Government because of the continuing need for austerity. Perhaps the Minister will clarify that. He may not know the answer yet but he will know that farmers will have to receive this level of support or the whole fabric of rural society and the countryside will collapse—we heard of the situation in Wales. The Minister could at least say that the Government will know the answer when we return in September or within a few months.

Another major worry I have picked up from the NFU in Dorset is about disease control. Now that the UK is leaving the EU, farmers fear that trade barriers will be put up against TB, which remains a scourge of West Country farmers. While the jury may still be out, farmers directly affected will want a much tougher line from this Government.

The fluctuating milk price is a continual source of grievance, and there is wide disparity between farmers supplying milk to supermarkets at 30p a pint, or close to it, and others sending milk to companies like Arla for processed milk products with a price for ever in the low 20s. This is the result of oversupply worldwide and I will not go into it now. The EU has helped with emergency payments, but can we assume that this Government, outside the EU, will do any better? I am grateful to the CLA for providing us with these facts and figures, and also to the NFU in Dorset for its advice to me.

Incidentally, forestry is always ignored. It has been mentioned once today. Could the Minister give us some more reassurance on that?

Photo of Lord de Mauley Lord de Mauley Conservative 3:12 pm, 21st July 2016

My Lords, I refer to my interests as set out in the register, including that I am a farmer and a beneficiary of the CAP schemes. I apologise for intervening in the gap. I had my name down for this debate yesterday but by this morning, miraculously, it had disappeared—perhaps the Whips’ Office knows something that I do not.

I start by congratulating my noble friend Lady McIntosh of Pickering on tabling this debate. In particular, I congratulate my noble friend the Minister on his translation to a full-time Minister at Defra—a very well-deserved one, if I may say so.

As has been the tenor of the debate today, many are concerned about the direct financial effects on farmers of the potential loss of subsidies arising from the departure of the UK from the European Union. It is surely unlikely that Her Majesty’s Treasury, once it is given back the ability to decide how UK taxpayers’ money is spent, will maintain, for example, the basic farm payment at anything like its current level. It seems to me that there is a good case for making payments in return for something, such as benefits to biodiversity or the maintenance of land in harder-to-farm environments. The Minister will know that we, like most farmers around the country, are on the edge of our chair waiting to hear what will eventuate.

There are important nuances, too, such as what happens between now and the end of the current CAP scheme in 2020, as well as the bigger question as to what happens thereafter. People need time to plan and to avoid a hard landing, such as that experienced by the New Zealand farmers when subsidies disappeared. There is a lot to be said for a gradual adjustment.

How will famers survive, especially as many of them continue to face problems that have little or nothing to do with the EU and more to do with the commodity nature of their product, the structure of their respective market, currency volatility, the weather, and disease and so on? Farmers are, if nothing else, resilient. The noble Lord, Lord Thomas of Gresford, referred to the supermarkets. The help of customers, suppliers and government, especially in producing the CAP replacement settlement, will be essential.

Today, British farmers produce about 62% of our food. That means that there is considerable scope to do more. To do that, technology will be vital and diversification will be important.

I have one final word on the replacement for the CAP. Assuming that the total amount of cash available reduces, it will be more important than ever to get this right. It is an opportunity for a complete rethink about whether we could achieve something better on biodiversity. What do we really want to achieve? Should we be emphasising creatures and plants which, although rare across Europe outside the UK, are comparatively common here? Should we be favouring bird species, for example, which although rare in the EU, are relatively common outside it? These, like many other critical questions, will need to be addressed. I hope that my noble friend’s department has the expertise that it will need.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs) 3:16 pm, 21st July 2016

My Lords, I would like to thank the noble Baroness, Lady McIntosh, for tabling this debate. I also add my congratulations to the Minister on extending his “round peg in a round hole” status.

During the referendum, I spent a great deal of time driving round the south-east of England in a Remain campaign minibus. I could not help but be aware of the numerous Vote Leave billboards that covered the farming hedgerows across the region. Therefore, a few days after the result was announced, I was perplexed to watch a series of news interviews with famers at the Kent County Show, all of whom were expressing major concerns about their future livelihoods with the loss of EU subsidies and the loss of markets for their produce. It clearly had not taken long for the penny to drop. And quite right too, because the future outside Europe is inevitably going to be tough for the farming community—there is no point in pretending otherwise.

Those who campaigned for Brexit have already committed our repatriated EU payments several times over. Indeed, if some are to be believed, it is all going to go to the NHS anyway. So farmers will have to get in line and compete with some pretty powerful lobby groups in order to win back anything like the payments that they have enjoyed up until now. As has been referred to, the new Secretary of State’s statement that she believes all farming subsidies should be phased out will cause added concern.

We need to be clear about the scale of support that farmers have recently been receiving. At the current time, 55% of UK income from farming comes from CAP support. In 2014, the UK received over €3 billion for CAP basic payments to farmers. In September 2015, the EU agreed an emergency aid package for dairy farmers hit by falling prices. The UK received more than £26 million of that, the third-largest amount of all EU states. It is not pessimistic but realistic to assume that these funds will not be protected in a post-Brexit UK budget.

It is not just about the money; it is about the legislative framework too. Farming life is currently governed by thousands of pieces of EU legislation—I am sure that farmers would like to see the back of many of them. However, at the same time, that legislation gives us, as consumers, certainty about issues such as environmental protection, food safety and animal welfare, which there will be considerable pressure to maintain.

However, the real challenge for farmers will be the decision about whether we are allowed to remain in the single market, with its 500 million customers. At the moment, 73% of the UK’s total agrifood exports are to other EU countries. Seven out of the top 10 countries to which we export food, drink and feed are in the EU. Meanwhile, our EU partners are currently making it clear that we cannot pick and mix the single market rules, so we cannot have access to the single market without also respecting the free movement of EU citizens. If this becomes a deal breaker, farmers will need to find new markets for their products outside the EU in a very competitive world.

When we debated this issue the other week, the Minister mentioned export successes such as Scottish beef, Yorkshire forced rhubarb, Kentish ale and Suffolk cheese. Of course, we would all want to celebrate those and other food export successes, but it would be hard to envisage a successful future based purely on those niche, specialist high-end products.

A number of noble Lords mentioned the free movement of EU citizens. Again, farming is an area where the benefits of access to EU seasonal labour are very real and hard to replicate. Unless we can resolve this issue and guarantee a future labour supply, there is a very real danger that crops will remain unharvested and even have to be ploughed back into the soil, along with parallel rising food prices.

The challenges of Brexit to UK farmers are intense and real. No wonder they are worried. What they want now are guarantees and certainty so that they can make plans and long-term investment decisions. I hope the Minister is able to provide at least a timetable for resolving these issues today so that farmers can begin to map out their future in a post-European world.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 3:21 pm, 21st July 2016

My Lords, I also congratulate my noble friend Lady McIntosh on securing this debate and providing a further opportunity for your Lordships to discuss agriculture, which followed that splendid debate that my noble friend Lord De Mauley promoted a few weeks ago. I hope that I will be able to encourage the Chief Whip to oblige us with many more opportunities.

It has been a thought-provoking debate and I have listened carefully. I also express my considerable thanks to noble Lords for their typically generous and kind remarks following my appointment. I am so glad that I am considered to be a round peg. I very much look forward to working with your Lordships. Noble Lords have proposed a number of questions, some of which I know they will understand that I am not in a position to answer in detail today. At this juncture, mindful of the noble Lord, Lord Thomas of Gresford, I should declare my farming interest as set out in the registers. Hay was bailed and in the barn this week and I am hoping that I shall be on a combine with the barley being cut next week.

Farming is at the heart of the UK’s identity. The right reverend Prelate the Bishop of St Albans vividly described what the countryside means. The woodlands and forests of our country mentioned by the noble Earl, Lord Sandwich, are a clear part of our identity, and the British countryside is important to so many of us for domestic or international tourism. These are all jewels in the crown. Some 70% of UK land is agricultural. We have a world-class food and farming industry that generates over £100 billion a year for our economy.

Our Great British Food Unit is promoting great British produce at home and abroad, boosting the £18 billion in food and drink that we sold across the world in 2015, and cementing Britain’s reputation as a global food nation. From Welsh lamb and Northern Irish beef to Scotch whisky and English wines—I am sure that the noble Baroness, Lady Jones of Whitchurch, will not mind me saying that I do not think any of us would consider those to be niche—we should be proud of the UK industry’s world renown for the quality of its produce and its high standards of animal welfare. I am very conscious of what the right reverend Prelate the Bishop of St Albans said about the importance of high standards and, indeed, what was said about procurement.

We know that there is great global demand for quality British dairy products. For example, the Wensleydale Creamery now exports Yorkshire Wensleydale cheese around the world, which accounts for 14% of its business. I was delighted that my noble friend Lady McIntosh also referred to her favourite Yorkshire cheese. The UK dairy industry exported to 138 countries last year, totalling £1.2 billion. Dairy exports to China have increased by more than three-quarters in value compared with 2014.

My noble friend Lord Caithness raised the matter of science. Around the globe, we are recognised as the home of agricultural research and a pioneer in food production techniques. We have one of the most technically advanced and forward-looking farming industries in the world and we have given a lead to others in the field. My noble friend also asked about research and its future. The referendum result has no immediate effect on those applying to or participating in EU research funding. We are determined to ensure that the UK continues to play a leading role in European and international research and innovation.

Indeed, data and technology have a central role to play in increasing the productivity and competitiveness of British farming. Last year, Defra announced that it would release 8,000 datasets to the public. By the end of last month, 11,007 open datasets have been published by the Defra group. This is an amazing opportunity in support of our food and farming sectors to reach their full potential.

My noble friend Lord De Mauley spoke about technology. He of course was instrumental in the advance of the agritech sector, and I am delighted that the Government committed £160 million to be co-invested with industry to address challenges in the agritech sector. For instance, Agrimetrics, the first centre for agricultural innovation launched last year, will receive funding to create a big-data centre of excellence for the agri-food system. Three others are set to be launched, including the Centre for Crop Health and Protection, the Centre of Innovation Excellence in Livestock and the Agricultural Engineering Precision Innovation Centre. These will all be great opportunities for us to help increase productivity in the livestock sector, generate enhanced crop yields, and should also lead to improving pest control and support scientific breakthroughs in such areas as nutrition, genetics and satellite imagery.

As we all recognise, the UK farming industry is a critical component of the UK’s economic success. Indeed, many noble Lords posed questions on this. We are determined to strike good and positive trade deals with the EU, accelerating our international trade negotiations. Our food and drink exports have increased by over 6% since 2010, and we wish to advance on those, particularly in non-EU countries where exports have been increasing steadily from 34% in 2010 to 40% in 2015. Surely, with global population growth expected to reach 8.1 billion by 2025, demand for food will increase, which offers enormous market opportunities for us here.

We will forge the strongest economic links with our European neighbours as well as our close friends in North America, the Commonwealth and countries such as Japan and China, where export opportunities are endless. We are building on strong foundations and work is already under way to create a modern, open approach to our business, using data and innovation to drive productivity and maximise new opportunities. As we negotiate our exit, we have an unparalleled opportunity to develop a new approach and make sure that our policies are delivering for us.

We have promised in my party’s manifesto 25-year plans for food and farming and for the environment. We are still committed to those plans, but the nature of these will change since the UK decided to leave the EU. We will consider our long-term vision for the environment, food and farming. We look forward to continuing to work with a wide range of interests—I emphasise that point to my noble friend Lord Caithness —including the CLA, the NFU, farming organisations, wildlife groups, the food industry and consumers, so that we can determine that vision and work together to deliver it.

Perhaps I may assure the noble Baroness, Lady Miller of Chilthorne Domer, that Defra will champion the countryside and the rural communities within it. As the promoter of the national pollinator strategy, I am also determined that we will see wildflower meadows in many places.

I need to make a number of further points during my brief opportunity to speak. Defra’s priority is to guarantee that we leave the EU in the best way for Britain, ensuring that Britain’s farming sector has a vibrant future. As my noble friend Lady McIntosh said, a new department has been established. Defra has a seat at the table and will play a key role in the discussions. We will be working very closely with the devolved Administrations throughout the negotiations. As has been recognised, we are relinquishing the UK presidency of the Council of the European Union next year. As the Prime Minister has said, this is in order to prioritise the negotiations for us to leave the European Union. But until we leave, it is business as usual. We continue to be a full member of the EU, UK farmers have access to the single market and they still need to comply with all that is required.

On the issue of agri-environment schemes, we recognise fully the need to offer clarity to farmers and other land managers. This is an important early challenge, and I can assure your Lordships that we are already in conversation with the Treasury.

To address a specific point made by a number of noble Lords—the noble Earl, Lord Kinnoull, was particularly clear on this—I want to emphasise the word “support” because a number of speakers have used the word “subsidy”. My view is that we provide support for what farmers do to help us, in so many ways, in the national and public interest. My honourable friend the Secretary of State has been very clear that this now needs to be looked at carefully. We are committed to working with the industry and to developing an exciting new vision for British agriculture—a vision based on sustainable, productive and competitive industry. I know that the NFU is about to launch its consultation and we look forward to hearing from many others.

Britain is a great country and we have always thrived and prospered on the world stage. International trade is at the heart of our economy and we will embrace the opportunities. Perhaps I may finish by saying that I wish all farmers as successful a harvest as possible, and indeed to your Lordships I say, “Summer well”.