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Direct Payments to Farmers (Crop Diversification Derogation) (England) Regulations 2020 - Motion to Consider

– in the House of Lords at 12:31 pm on 2nd June 2020.

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Lord Gardiner of Kimble:

Moved by Lord Gardiner of Kimble

That the Virtual Proceedings do consider the Direct Payments to Farmers (Crop Diversification Derogation) (England) Regulations 2020.

Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee

The Motion was considered in a Virtual Proceeding via video call.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

My Lords, I declare my farming interests as set out in the register. In light of the wet weather that England experienced during the autumn and winter of 2019 and 2020, this statutory instrument will remove crop diversification requirements for the direct payments scheme in 2020. This statutory instrument applies to England only, and each devolved region of the UK has introduced a comparable derogation in its legislature. In accordance with the “made affirmative” procedure, this statutory instrument came into force on 1 May 2020 to coincide with the start of the crop diversification period. It was made affirmative as it is an emergency measure introduced at pace, and the following debate is confirmatory.

It is ironic, and a stark reminder of the unpredictable conditions in which farmers must conduct their business, that we are considering a wet weather derogation today. Although farmers—perhaps other than those making hay—are now desperate for rain, only a few weeks ago this was an emergency. The endless changeability of nature and the farmer’s exposure to the elements require government to be proactive in supporting the agriculture industry through difficult seasons. It occasionally requires emergency measures such as the statutory instrument we are now discussing.

Crop diversification requirements were brought over from EU law when the UK left the EU on 31 January and require farmers managing more than 30 hectares of arable land to grow at least three different crops on that land. Farmers with smaller landholdings are also subject to crop diversification requirements and must grow at least two different crops. The removal of these requirements for 2020 means that farmers in England will not be required to grow more than one crop to receive their full greening payment. The removal of these rules is fully supported by farmers, landowners and industry representatives.

This SI is made under article 69(1) of Regulation 1307/2013, which was incorporated into domestic law and applied for the 2020 scheme year by the Direct Payments to Farmers (Legislative Continuity) Act 2020. As I said before, the SI relates to the 2020 scheme year only. That article allows regulations to be made, where necessary and justified, to resolve specific problems in an emergency. We are continuing to act in accordance with the EU legislation that has been rolled over, in line with our decision to operate an equivalent direct payments scheme for 2020 in order to maintain state aid exemptions, as laid out in the withdrawal agreement.

Extreme wet weather events over autumn and winter 2019 had an adverse impact on farming communities across England. Large areas of farmland had been under flood-water or were severely waterlogged at a principal time for drilling crops. Consequently, this left farmers with the option to plant spring crops only. Following the two storms in February 2020, the opportunity to plant spring crops was pushed back by a considerable amount of time due to further issues of land being flooded and waterlogged. Consistently from September 2019 through to February 2020, England experienced rainfall significantly higher than the long-term average. February tipped the scale at 267% of the average, as farmers were preparing to enter the spring cropping period.

These conditions created significant difficulties for cultivating crops, either because farmers could not access flooded land or because land was too waterlogged. Anyone living in the countryside will have seen with their own eyes the severity of the situation and the impossibility of farmers holding even to the best-laid plans.

The devastation wrought by prolonged wet weather and these floods clearly impacts on farmers’ ability to meet crop diversification requirements for the 2020 direct payments scheme. Failure to meet these requirements would lead to reductions and penalties for the greening element of direct payments, which accounts for approximately 30% of a claim’s total value. Having up to 30% of their payment at risk would be a significant financial burden for farmers to bear and cause considerable worry. Continuing to enforce the crop diversification requirements is not practical in light of extreme weather events. It was clearly necessary and, in our view, justifiable to absolve farmers of such a requirement for 2020.

Industry stakeholders have been clear that this derogation is very much needed. The department has frequently engaged with industry representatives on this issue at our regular stakeholder forums, and the necessity of taking action to support farmers through this difficult season has been absolutely evident. Further to farmers welcoming this approach, industry stakeholders such as the National Farmers’ Union have told us:

“This will make a huge difference to thousands of farmers in England”.

The Country Land and Business Association, CLA, has also been very supportive of our decision. This derogation will provide much-needed relief to the thousands of farmers adversely affected last year and this by severe wet weather.

The derogation we are considering today is part of a broader package of support that the Government have made available to farmers in the aftermath of these devastating floods. In addition to the crop diversification derogation that this statutory instrument will introduce, £6 million of funding has been made available through an extension of the farming recovery fund.

The costs to farmers can be overwhelming following extreme flooding, which is why the Government are taking action in supporting farmers through this difficult season, helping them back on their feet and allowing them to get on with the vital work of farming. This is about supporting farmers who have faced a very difficult season.

While I stress to your Lordships that this derogation is very much needed, it is also absolutely apposite that I use this opportunity to reaffirm and endorse in the strongest possible manner our recognition of and appreciation for the dedication and commitment of farmers, who continue to work tirelessly in the production of the nation’s food during what we all know is a challenging time. I beg to move.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs) 12:39 pm, 2nd June 2020

My Lords, I thank the Minister for his introduction to this SI. It is of course a welcome move and we support the intent behind it. The fact is that the three-crop rule has always been seen as a rather clumsy way to achieve greater environmental benefits across the European common agricultural community. It did not always fit with obvious best farming practice. As the Minister said, this has been an unprecedented winter and spring, in which it felt that it would literally never stop raining, but the roots of this problem go back to last autumn. Even then, farmers were calling out for assistance. So what took the Minister so long, and why did the Secretary of State say at the NFU conference that he was not prepared to help on this issue?

This derogation is being introduced specifically in response to flooding, as it has in the past, but we know that flooding and drought are becoming much more regular as we struggle to adapt to the climate change emergency. Could this derogation have a wider application? Will it also cover some of the current Covid-19 impacts, for example the potential loss of seasonal workers to harvest crops or the loss of market access, such as that experienced by the dairy sector?

There are obviously wider questions about going forward as we leave the EU and the Agriculture Bill comes on stream. Is it intended that a UK version of the three-crop rule will be part of the environmental land management schemes and, if not, how will we replicate the environmental benefit that our membership of the CAP was meant to deliver? What mechanisms does the Minister envisage will be in place to support farmers facing extreme weather conditions in the future? I look forward to his response.

Photo of Baroness Parminter Baroness Parminter Liberal Democrat 12:41 pm, 2nd June 2020

My Lords, there are large sums of money involved in this statutory instrument. Those figures were not mentioned in the Explanatory Memorandum or by the Minister, so I am very grateful to the civil servants for confirming to me that in 2019, the greening fund amounted to just over half a billion pounds. That is public money to deliver greening schemes to protect the environment—protection that is needed now more than ever, due to the impacts of climate change evident in the extreme weather that we have been seeing. Indeed, as the Minister said, it was the severe floods in February, which prompted the derogation in this statutory instrument; since then, we have had the sunniest May on record.

This is a pretty blunt tool to exempt all farmers from crop diversification requirements. While I accept the case for supporting farming businesses, it is not a great signal during the first year we are outside the European Union that public money is to be retained while not delivering environmental goals. The two need to go hand in hand.

Now that we are outside the European Union, I welcome the Government’s Agriculture Bill and the proposals of public money for public goods, including environmental goals. But given that the Bill has no accompanying introduction of new powers to better regulate farming and land management, building on the current baseline standards, how are we to guarantee that those environmental ambitions will be delivered? We had the Government-commissioned Stacey review of farm regulation in 2018. When will we see government proposals to ensure the delivery of the environmental ambitions that we expect farmers to undertake in future, in return for public financial support?

Photo of The Bishop of St Albans The Bishop of St Albans Bishop 12:43 pm, 2nd June 2020

My Lords, British agriculture needs all the help it can get at this moment, so this legislation is most welcome. I congratulate Her Majesty’s Government on their flexibility in responding to this need. As the National Farmers Union said earlier this year, farmers

“have found it virtually impossible to have one crop in the ground, let alone three. Without a derogation they would have been forced down the bureaucratic ‘force majeure’ route that would require case by case assessments.”

These Benches have long supported efforts to promote the environmental aspects of the three-crop rule and many other EU-driven policies, yet they must be applied to the unique British farming ecosystem. Currently, farmers talk about the large parts of the country which were drenched last winter, following Storm Ciara and Storm Dennis; now, a few months later, many of our fields are dry. One commodity trader wrote that the weather has been against the grower throughout this season, so this regulation is timely and necessary.

Recent events such as the coronavirus pandemic have brought into focus the need to support all our supply chains, especially in food. As your Lordships’ House will be aware, the Second Reading of the Agriculture Bill will take place tomorrow week. I hope that Her Majesty’s Government will show the same flexibility in responding to Members’ concerns about our dairy industry and home-grown food sustainability, along with the provision of sufficient labour for the harvest.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 12:45 pm, 2nd June 2020

I congratulate my noble friend on bringing forward this much- needed emergency measure. I join him in thanking the farmers for working through what has been a very difficult time, including a pandemic, to put food on our plates.

I applaud the investment that the Government have made in forecasting for extreme weather events. My noble friend referred to the background to this measure as one of severe flooding—not least, may I say, in North Yorkshire and the whole of the Yorkshire region. Yet now we find ourselves in a time of potential drought. Will he update us on the research and continuous fore- casting that is done, so that in future extreme weather events farmers may be better prepared for where the deluge might fall? The game changer came, as was recognised in the Pitt review in 2007, when we saw weather events that we had never seen before—in particular, deluges of rain falling in one place and not moving on, making farming extremely difficult.

While looking ahead to the Agriculture Bill, I welcome the environmental and greening aspects of the measure before us today and recognise that this currently amounts, as my noble friend said, to 30% of farm incomes. Will he give us an assurance today that future provisions will have an emphasis on crops, livestock and other food production, particularly in view of food security and self-sufficiency? At no time has that been more important than now, when we have seen all the difficulties of the Covid-19 virus.

Photo of Lord Liddle Lord Liddle Labour 12:47 pm, 2nd June 2020

My Lords, I accept the case for this derogation and thank the Minister for introducing it so clearly. However, I would like to ask him some questions.

I was a great supporter of the CAP reforms of 2013, which introduced environmental and sustainability conditions into the single farm payment. It covered permanent grassland, ecologically focused areas such as field margins and the three-crop rule to prevent monocultures taking root in Europe. When Michael Gove became Secretary of State for Defra, he made a great thing of how the Government’s intention was to be more environmental and sustainable, and that the rules would be changed to reflect that. This measure is of course temporary, but it is a retreat from that objective. I would like to be clear that the Government see this as a temporary and not a permanent thing. With what do they intend to replace the three-crop rule to achieve the objectives of that rule?

I am also concerned about what the future will hold as a result of a UK-United States trade agreement. Will that not give incentives to arable farmers to go in for more monoculture in order to stay competitive? That is a worry, so I would be grateful if the Minister would answer these points.

Photo of Lord Wei Lord Wei Conservative 12:49 pm, 2nd June 2020

My Lords, I too, like other speakers, welcome the continuation of this policy. We are in difficult circumstances as a country. Certainly, the floods, which seem a long time ago now, had a major impact, of which we need to take account. Given the time, I have only a couple of questions for the Minister.

First, given that, in addition to the floods, we are now in the midst of, and coming out of, lockdown—supply chains have been impacted and there is an uncertain picture over the coming year or so—how will this measure evolve? In particular, how do we ensure that we are prepared for what might be coming later in the year to support farmers and their livelihoods—not just to remove some regulations but to proactively enable them to weather the storm, as it were, that is coming? They are already facing that storm in terms of growing the food and I welcome that they will have more ability to focus on one crop if they need to. There is then the question of how they can get that to market and whether there is demand for that crop.

We will hear more, I suppose, in the announcements tomorrow and over the coming weeks, but what measures are being taken to ensure resilience generally throughout the agricultural ecosystem? What technology do we need and what can we do to stimulate and even pay for innovation in agriculture so that we are more resilient and less exposed to whatever it is, be it the weather, Brexit or pandemics? We need to ensure that we have, as far as possible, a sustainable, self-sufficient agricultural economy.

Photo of Baroness Northover Baroness Northover Liberal Democrat Lords Spokesperson (Foreign and Commonwealth Affairs) 12:51 pm, 2nd June 2020

My Lords, I declare a past interest as the daughter of a tenant farmer for whom grants were vital to the viability of the farm. I learned that the weather was central to our lives, whether frosts that arrived at lambing time or south-westerlies that flattened the corn at harvest time. I also learned that diversification was vital. Rape and mustard crops following harvest meant that the sheep would put nutrition back into the soil and smaller quantities of fertiliser would be needed. In addition, I learned that at any instance, one part of the farm would lose money, another might break even and, with luck, a third, whether sheep, beef or arable, would make a profit. It was impossible, however, to know from year to year which would be which; diversification, therefore, was more sustainable, but then my father had hilltops, not rich Norfolk arable land.

The aims of diversification through rotation, multiple cropping and species mixture can allow farming to become more resource-efficient with fewer inputs. It helps to defend against climate change and the degrading of the soil and promotes water and species conservation. It is ironic, if understandable, that after storms and bad weather, the Government are seeking a derogation from crop diversification here. It is clearly important to be flexible in difficult circumstances, but there is a real risk that post Brexit, and in a post-Covid-19 recession, diversification will be reduced in the long term, especially because of climate change, as we fight the global markets. Will the Minister assure us that that will not happen and that the Government are looking at the long-term future and role of farming? It needs to be sustainable in the full sense of the word, both for the industry and for all of us.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green 12:53 pm, 2nd June 2020

My Lords, in the very limited time available, I would like to raise two issues: protecting our current standards and the value of crop diversity in nature as mitigation against climate change and for promoting human health. On the first, a lot of people have contacted me extremely worried about the possible American intrusion into our farming practices and production lines. I have repeatedly reassured them that House of Lords Ministers have repeatedly assured Peers that there will be no lessening of standards, whether in production or distribution. There is also widespread concern about GMOs and I am not sure that the Government understand the danger that they pose to all of us. Therefore, we need tough standards on safeguards for imported food. We cannot allow farmers—a valuable national resource—to be undermined and undercut by imports produced to lower environmental, animal welfare and food safety standards.

On the second issue, I am well aware that less diversity in crop growing could mean less diversity nationally in the food that we grow. If we do not have some sort of national plan, I am sure that that could happen. We are all aware that we do not grow enough food to feed ourselves and we do not grow the diversity of food that we have come to expect in our diets and almost certainly never will. Food security is needed, and that can be helped by self-sufficiency, but even during the last war we produced only 75% of our own food and there was a very restricted range of foods on offer. There is also the point that less diversity can mean monocultures, which are extremely damaging. All our Bills and the strategies—on agriculture, the environment and even fisheries—need to be knitted together. I am sure that we Peers can help the Government to do that.

Photo of Lord Flight Lord Flight Conservative 12:55 pm, 2nd June 2020

My Lords, I believe there is strong cross-party support for this much-needed emergency measure, both in the Commons and in the Lords. As these are money regulations, however, decisions in the Lords are not binding. The regulations have a convoluted legal background and they aim to continue direct payments up to 31 December 2020 under domestic law. The Direct Payments to Farmers (Legislative Continuity) Bill received Royal Assent back in January. The measures are required because the EU direct payments legislation no longer applied to the UK from exit day on 31 January this year. The Agriculture Bill will not affect 2020 direct payments. Clause 8 of the Bill means that direct payments will be phased out over seven years from 2021. Their last year will be the 2027 scheme year. Do the Government propose to continue to allow for a derogation of crop diversification during the phasing-out period?

The Government’s 2018 consultation paper Health and Harmony set out phasing-out proposals for direct payments and their replacement eventually with a new environmental land management scheme, to be piloted from 2021 to 2024. I will have a lot more to say and concerns to raise regarding financial arrangements at Second Reading of the Agriculture Bill on 10 June.

Photo of The Earl of Devon The Earl of Devon Crossbench 12:57 pm, 2nd June 2020

I declare my interest as an arable farmer, though thanks to Devon’s sandy red soil, we do not need this derogation just yet. As well as being a farmer, I was once a theologian and our current agricultural challenges are biblical: unprecedented floods, a disease pandemic and now an increasingly desperate drought. Even in a normal year, these would be assaults worthy of Moses, but this is not a normal year because, at the same time, we are undertaking our own exodus from Europe. We are midway through leaving the common agricultural policy in the midst of the Red Sea, with pro-Brexit prophets promising a land fed with pasture-fed milk and wildflower honey. In the coming months we will be debating the Agriculture Bill, from which we will derive the commandments by which we will reach that promised land. However, the details remain as inscrutable as Jehovah. We wait with bated breath to see what is written; we pray that we do not face 40 years wandering in wilderness.

While often criticised for its bluntness, the three-crop rule has been an invaluable tool, ensuring cross-compliance and minimising the environmental damage of an excessive arable monoculture. Will the three-crop rule exist under the new ELMS? How will the Government ensure that environmentally beneficial crop rotation is maintained and enforced? This limited derogation is largely supported by farmers, particularly in those areas devastated by winter floods. Will the Minister specify the evidence on which the derogation is based? Defra’s briefing merely cites pressure from stakeholders, but I assume that some analysis was undertaken. How many farmers require this derogation? Where are they located? Are there plans to monitor its impact? Finally, I also understand that pressure is being applied to extend the derogation into 2021. Will the Minister state whether there are any plans to do that and, if so, why?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth Conservative 1:00 pm, 2nd June 2020

My Lords, I first thank the Minister for setting out so clearly the regulations, and join others in thanking our farmers, who, through this dreadful crisis, continue to ensure that British food ends up on British plates; they really deserve our praise.

My noble friend the Minister quite rightly said that these are England-only regulations. However, I am keen to pursue the fact that, clearly, the devolved Administrations have introduced similar regulations, as my noble friend said. I seek some reassurance that, given the nature of the challenges that we face with these regulations, and more broadly, we are engaging throughout all this in discussions and collaboration with the devolved Administrations. Clearly, concerted action is so much more helpful and productive at these times. I push the Minister on that point.

I want also to ask a question on the consultation, which is referred to in the draft memorandum at paragraph 10. It is welcome that there has been consultation, but there is reference here, in a rather folksy way, to a “rapid, oral consultation” in addition to consultation with bodies such as the NFU, which the Minister referenced. I trust that “rapid, oral consultation” will not generally be pursued; as I said, it sounds somewhat folksy. Perhaps the Minister will indicate who was consulted in this way and how he will proceed generally to pursue consultation in similar circumstances.

These regulations are welcome, given the challenges that we face, and certainly I will give them my backing.

Photo of Lord Whitty Lord Whitty Labour 1:02 pm, 2nd June 2020

My Lords, I understand why Ministers and farmers want this derogation, and I certainly do not oppose the emergency intervention, but it worries me somewhat as a signal for the future.

One of the main criticisms of direct payments based on hectarage of land farmed, rather than the previous system of production subsidy, is that the land-based system failed to incorporate sufficient environmental criteria. In recent years, the EU has, somewhat belatedly, attempted to put greater greening conditions into the receipt of single farm payments. The main reason for the diversification requirement was that it was a way—admittedly a slightly crude way—to reverse the tendency of many parts of Europe to adopt a system of mono- culture, where a single crop dominates the landscape and the farming output. In England, this is most evidenced in eastern parts of the country with substantial arable farming. What were once mixed farms 30 years ago are now acres of single crops. That has effects on biodiversity, on the look of the countryside and on rural employment, and it is also often associated with the excessive application of pesticides and fertilisers, which, in turn, affect the soil and water quality.

I accept that not everyone agrees that the diversification requirement is a very effective greening measure, and that it can be particularly onerous on some smaller farms. But until we have a better mechanism, we should not lightly abandon it. I hope that we do not do so following the Agriculture Bill. I am therefore putting down a marker: I reluctantly accept these emergency powers, but—if I may use a wasteful agricultural metaphor —as a straw in the wind, I am a bit concerned.

Photo of Lord Carrington Lord Carrington Crossbench 1:04 pm, 2nd June 2020

My Lords, I declare my interests as a farmer and landowner, as set out in the register.

While welcoming the belated decision to abandon the three-crop rule, for many farmers it was too late, as seed had been bought and other input costs incurred in order to comply with the rule. However, this unfortunate episode allows us to draw lessons which should apply to consideration of the Agriculture Bill. In particular, we need to closely look at the clauses governing intervention in agricultural markets. As drafted, intervention largely depends on events which result in actual or threatened market disturbance resulting in reduced prices. What happens if a farmer can neither plant nor harvest due to weather conditions or some other event, but prices rise rather than fall? No intervention can then apply, although the farmer may have nothing to sell. This seems illogical. Both are business risks.

Agricultural consultants Andersons currently predicts a loss due to weather conditions on arable farms of £27 per hectare, before the BPS for the harvest of 2020. Without some form of support in extraordinary circumstances, farming is on a knife-edge. I urge the Minister to look again at insurance in such circumstances, the cost of which could be borne by both farmers and government.

Finally, in an industry with so many risks—environmental and market, to name just two—how can famers plan for the future and make necessary investments to reorder their business when the full details of the reduction of current BPS payments over the transition period, and any details, including all-important cost and financial return information, on the new environmental land management schemes, are still unavailable? Does the Minister recognise the urgency?

Photo of Lord Addington Lord Addington Liberal Democrat 1:06 pm, 2nd June 2020

My Lords, with a list of this length and such quick speeches, it is not surprising that many of the points I wanted to make have been covered. But I reiterate the point made my noble friends Lady Parminter and Lady Northover: the idea of public money for public good should not be lost.

Diversity in farming has been seen as a good thing; it allows you to hedge your bets. The document in front of us suggests that we can do without diversity because of extreme conditions. Anybody who travelled around the countryside when we were still travelling—my normal journey was through the Thames Valley—will have seen fields under water for months. It is therefore understandable to make certain changes to our support system, but, following on from the point of the noble Earl, Lord Devon, I once again ask: where is the science to back up this decision? We should know that, so that future public debate can be enhanced.

We are trying to change the way we support our farmers to try to avoid the countryside either becoming a monoculture or simply not being used. If we are trying to make sure that it is used for the benefit of the whole of society—not only by providing food but by providing a better environment, and indeed leisure facilities for us—we need to know the grounds on which certain decisions and funding will be changed. Will the Minister take this opportunity to at least set out the grounds on which the changes to any existing regulations will take place and what precedent has been set? Will he give us a better idea of what we can expect, given what look to be increasingly volatile environmental and weather systems over the next few years?

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

The noble Baroness, Lady Falkner of Margravine, has scratched from the list. I therefore call the noble Earl, Lord Shrewsbury.

Photo of The Earl of Shrewsbury The Earl of Shrewsbury Conservative 1:08 pm, 2nd June 2020

My Lords, I welcome this instrument to exempt farmers in England from the crop diversification requirements for 2020. I declare an interest as a member of the National Farmers’ Union. I would like to add my congratulations to farmers in general on the wonderful work that they do.

Following the devastating and widespread damage caused to considerable areas of agricultural land by flooding in the two storms last winter, much of the land affected was rendered unfit for planting this season, and possibly for the foreseeable future in some areas. Coupled with that, although not flooded, substantial numbers of acres were simply not in planting condition for the traditional autumn-sown crops. Seeds and fertiliser had been bought and not used, but had to be paid for. With no growing crop in the ground, the damage to farmers’ cash flow has been very substantial. Those farmers who were able to plant, but much later than usual, will see a related drop in yields come harvest time in a few months. This situation has been exacerbated by the recent number of exceptionally dry weeks, especially in the West Country.

Where I live, in the Staffordshire Peak District, the silage season has just started. Those few farmers who have made silage are experiencing lower than normal yields and poorer aftermath regrowth. My neighbour, who produces milk for the cheesemaking industry, has recently been notified of a reduction in his ex-farm milk price, in part due to the drying up of demand from the catering and hospitality sectors.

For a variety of reasons, the farming community is having a pretty rough time of it financially. Therefore, any support forthcoming from the Government to ease the situation must be welcomed. I know that this exemption is only for 2020, but if matters continue as they are, I really believe that my noble friend may need to extend this exemption to 2021, especially for particularly severely affected areas.

Photo of Baroness Boycott Baroness Boycott Crossbench 1:10 pm, 2nd June 2020

My Lords, I welcome the decision to help farmers through this situation; the derogation is a very good idea for this year. Personally, I think it is a little late. Farmers are now experiencing a drought after all the rain, so they need the right support to cover this challenging year. Crop diversification is a cornerstone of a more resilient and nature-friendly farm system, and while the farmers should have flexibility in how they run their farms, they should also be strongly incentivised by the Government’s support and advice to undertake maximum diversification.

Science shows us that crop diversification, and indeed mixed farms with livestock, are better for soils, nature, the climate, natural pest and disease control, as well as much more. Growing crops in monocultures with too little variation creates huge problems, in my view creating fields that more resemble high-tech chemical factories than a farming system that is in tune with nature. Therefore, when the Agriculture Bill comes to the House for its Second and Third Readings, it is vital that we maximise its role in building a resilient and nature-friendly farming system.

However, I would caution that this derogation must be temporary. We all know that agriculture contributes hugely to the climate crisis, and the Agriculture Bill, which will support public goods and provide money for the same, must not be watered down by this temporary measure. What worries me is that we are going to experience more unpredictable weather as time goes by. This wet January and February, followed by the driest April and May, might become the pattern for years to come. Can the Minister assure me that this is a one-off for a particular year, and not the opening of a crack in the door that will allow farmers to grow monoculture crops in the future because we face similar weather disasters?

Photo of Baroness Redfern Baroness Redfern Conservative 1:12 pm, 2nd June 2020

I congratulate the Minister and thank him for confirming that the Government will relax crop-diversification requirements for direct payments under the support scheme within the framework of the CAP. It is vital that we support our farmers and growers, especially when having to contend with the adverse weather conditions of last autumn and winter, and this spring. For some farmers, trying to access their land in time to redrill was not an option, and even if it was, they now face an unusually prolonged period of drought. This instrument exempts farmers in England from the need to follow crop-diversification requirements this year. The derogation will make a huge difference to the thousands of farmers in England.

Agricultural activities are highly exposed to the consequences of climate change, which has a significant impact on the quality and quantity of food produced. I spoke to some farmers only last Friday, and they explained the concern felt by many in their communities about the adverse weather conditions being experienced. Not only had they lost crops, but many acres of cereals are likely to be of low yield. Consequently, many farmers are bracing themselves for the coming harvest.

Crops is one issue but good soil matters too: maintaining good soil is vital in order to provide us with clean water, while helping to balance ecosystems. Supporting our farmers and growers must be the cornerstone of preserving and restoring our soil, which is the basis for the good food we grow, as well as for the production of feed, silage, et cetera. Supporting good creative management is essential, because we need more land for food production now, as we exit the EU and look to be more self-sufficient in the future.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs) 1:14 pm, 2nd June 2020

My Lords, I thank the Minister for his introduction. It is clear from the number of contributions that we have a wealth of expertise in the Chamber. We all, whether or not we are farmers, suffered from the extreme weather and flooding brought on by Storms Ciara and Dennis last year. It was obvious to all those not living in cities and towns that arable land was waterlogged, and it was clear that farmers were not able to sow their crops in the usual way. They missed out on at least one crop, and, in the case of larger land holdings, two crops. I therefore have no objection to derogation of the crop- rotation conditions, in order that farmers can receive the payments on which they rely to make a living. I support this SI on the basis that it is for one year only —2020—and not beyond.

Last year was unprecedented in many respects not related to the weather. Parliament was prorogued and then it was not; then it was prorogued again. Then we had the general election. I am surprised, given the number of letters that the Prime Minister must have received from beleaguered farmers asking him to do something, that this was not one of the first things he did back in December, when the new Parliament sat. At the very least, it should have been on the agenda in January, as the noble Baroness, Lady Jones, and others have said. But here we are, six months into 2020, and only now are we providing the compensation that farmers have been asking for since the spring of 2019. My concern is that, should the country suffer a similar clutch of storms in coming years, we may be back again in this Chamber debating a similar SI in order to protect farm incomes.

We have just enjoyed two months of unprecedented hot, sunny weather, and some will say that this is due to climate change. It has certainly helped with the pain of lockdown. Those of us lucky enough to have gardens have been able to attack the weeds and plant seeds and vegetables. For the first time, I watched every day as the bare branches of trees sprouted into life. Over a period of about eight days, the biggest tree was covered in greenery and now provides much-needed shade. Usually I am in London in the week during this period, but I do remember the severe drought in 2019—not a million years ago—when the land was bone dry and farmers had to buy in fodder as the grass in their fields was just not growing and they had nothing to cut to feed to their cattle over the winter months.

I am not a meteorologist, so I cannot tell whether this period of unprecedented sun will carry on, or whether we will be blessed with much-needed rain. Farmers’ fields need rain, and domestic water butts are empty. The seeds and vegetables we planted in March and April need daily watering if they are to survive. So, too, does arable land. Will we be looking at providing compensation for farmers next year because of a 2020 drought? This scheme is emergency compensation: it is money that farmers would not get if the rules on direct payments were strictly adhered to.

Today, we are debating waiving one of the criteria for payments due to force majeure in the form of exceptionally heavy rain and flooding. I am not going to ask the Minister to look into his crystal ball and give a categorical undertaking that such a force majeure will not happen again, but I seek reassurance that the Government will think very carefully before implementing such a scheme again. Crop rotation and diversification is vital, not only for the supply of crops and food— as mentioned by the noble Baroness, Lady Jones of Moulsecoomb—but for the quality and condition of the soil, as my noble friend Lady Northover and others have indicated. In recent years, we have seen a diminution in the quality of the soil due to the amount of fertiliser and insecticide used to enhance crop yield.

I do not wish to stray into the Agriculture Bill, but, like others, I welcome the measures proposed in this Bill to enhance the biodiversity of our landscapes, while continuing to recompense farmers for maintaining their land on a more sustainable basis under the greening scheme mentioned by the noble Baroness, Lady Parminter. It is vital that soil is retained and not washed away during heavy rain, flooding our roads, clogging up highway drains and, in extreme circumstances, flooding our homes. Many flood-alleviation schemes now retain water upstream, which can be used in times of drought. I am sure we will return to this issue next week, when we examine environmental land-management schemes and their implementation, and whether the three-crop rule will continue—a point raised by the noble Earl, Lord Devon. Moving to public money for public goods is essential, as my noble friend Lord Addington said; we must implement it as soon as possible.

As the noble Baroness, Lady McIntosh of Pickering, mentioned, farmers need to be better prepared for unusual weather conditions, especially if we are to make a success of the ELMS. I am happy to support the SI, but look forward to the Minister’s comments and reassurances on the many questions that have been put to him by your Lordships.

Photo of Lord Grantchester Lord Grantchester Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy) 1:20 pm, 2nd June 2020

I thank the Minister for his introduction to the instrument. I declare my interest as a farmer in receipt of BPS payments. He gave an excellent explanation of the legislative framework behind the instrument and the effects of the wet weather over the 2019 winter and this year’s spring on good husbandry practices, making it uneconomic at best, if not impossible, to comply with crop diversification requirements.

The instrument has led to a wide-ranging debate. I am grateful to all the speakers who have contributed with many questions for the Minister to answer. I approve of the instrument and I thank him for initiating a meeting with his department’s officials last week. I understand the exhaustive legislative requirements involved in the delay to introducing the instrument. As the Explanatory Memorandum says, this derogation is applicable to only this one year, 2020.

The three-crop rule was introduced to widespread dismay in the agricultural industry as bureaucratic, market-distorting, and reducing production efficiencies, without enhancing positive advantages of crop rotations that would happen anyway as part of good agricultural practice without encouraging monoculture. At the time of its introduction, the Government claimed that they were also against this requirement but had to comply as a member state of the EU. These payments to farmers will be replaced in the Agriculture Bill, which is due its Second Reading in the House next week. Bearing in mind that the transition phase involved is to 2028, could this derogation be made multiannual through an amendment to the Direct Payments to Farmers (Legislative Continuity) Act 2020 to dispense with the requirement to be contingent on specific problems in an emergency, and could more positive arrangements be brought forward? Would it be possible for the Government to amend the rolled-over EU regulations 1305, 1306 and 1307? Will they commit to dropping the three-crop rule in all eventualities?

While I have not been specifically affected by flooding, nevertheless it was extensive and the Severn catchment area was only 30 miles away. All soil structures were at risk in cultivations, as there was no continual five-day dry period between September and March. The farming industry is grateful to the Government for introducing the farming recovery fund, the application of which was broadened to all affected areas. With the continuing unpredictability of extreme weather patterns from climate change, will the Minister examine further investments in better geographically focused metrological forecasting, as well as flood defences?

I return to the iteration of policy in the remaining years of the continuity payments. Have the Government given any consideration to the request to delay the introduction of the transition provisions necessary for payment reductions due to begin in 2021? Bearing in mind the disruption from the weather, followed by the disruption to the food chain and labour supply issues in the coronavirus crisis, and the fact that cropping decisions and farm budgets will largely be set in autumn 2020, have the Government robust reasons why they must cut farming payments immediately for 2021? Given their commitment to a £3 billion annual payment to agriculture in the Direct Payments to Farmers (Legislative Continuity) Act 2020, what will the Government transfer the savings towards? No payments under the new environment land management schemes will be accessible. Once the ELMS are operating, the phasing out of continuity payments is understandable. What will happen in the meantime to the money saved? The Government must have regard to maintaining sustainable food production.

The instrument is applicable to England only. While I am sure that there have been extensive discussions with the devolved Administrations, as the Minister said in his introduction, can he update the House on this derogation in the other areas of the UK? Will the policy derogation be operable equally throughout the UK by 15 June 2020—the delayed date for submission of applications this year?

This measure has widespread support throughout the agricultural industry and its representatives. While there are many other questions to be asked, these could be more pertinent to the forthcoming debate on the Agriculture Bill next week. Nevertheless, I would be grateful if the Minister would reply as fully as possible to all the queries raised in the debate.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 1:26 pm, 2nd June 2020

My Lords, I thank all noble Lords who contributed to the debate. I am confident that we will have considerable opportunities to discuss some of the matters raised on the Agriculture Bill, which is coming up. This statutory instrument is welcomed by the farming industry as a much-needed measure to support England’s farmers in the aftermath of the extreme weather.

The noble Lord, Lord Grantchester, asked about the agricultural transition period and its timing. We remain committed to introducing new schemes that reward farmers for producing goods that are valued by the public, while producing healthy, sustainable food, starting from 2021. The Government plan to start phasing out direct payments in England in 2021 as part of the seven-year transition to the new system of public money for public goods. I say to the noble Lord, Lord Carrington, and my noble friend Lord Shrewsbury that we believe that the seven-year agricultural transition gives sufficient time for the sector to adapt to a new model, but I emphasise to all noble Lords that we will be working extremely closely with the industry. It is in the national interest that we have a successful, dynamic and innovative farming sector.

Noble Lords have also asked how any BPS changes will be made after 2020. We will of course use powers in the Agriculture Bill. The Government intend to bring forward SIs to continue the direct payment schemes for the 2021 scheme, to begin to phase these payments out and to simplify the schemes. I fear that this will require rather more than one SI, but I have sympathy with all noble Lords looking to minimise the number of separate statutory instruments, within reason. The Government have said that the simplifications for 2021 could include removing some or all of what I would describe as burdensome greening rules. Removing these rules would, for example, avoid the need for an SI next year to derogate for crop diversification rules should—I emphasise “should”—extreme weather occur again.

The noble Baroness, Lady Jones of Whitchurch, and a number of other noble Lords, including the noble Baroness, Lady Bakewell of Hardington Mandeville, asked why we did not do this before and asked why now. It is best that I read this out: I emphasise that the threshold for considering it “necessary and justifiable” to issue a general derogation—this is our legal requirement —meant that we had to consider whether there were other reasonable alternatives first. Until the guidance was withdrawn earlier this year we signposted farmers to some of these alternatives, such as using the spring cropping period to satisfy the requirements. After the two storms in February this year and the clear evidence that extreme wet weather was experienced nationwide, we could conclusively say that a general derogation was necessary and justifiable, and promptly set about its issuance. We must be led primarily by evidence, and there is clear evidence that farmers could not be reasonably expected to comply with these rules.

The noble Baroness, Lady Jones of Whitchurch, asked whether we could demonstrate similar flexibility in other emergencies, mentioning the current Covid-19 crisis. Regarding this—and points made by my noble friend Lord Shrewsbury, and the noble Lord, Lord Carrington —earlier this month we extended the application dead- lines for BPS, environmental stewardship, countryside stewardship and woodland legacy revenue claims, all in order to help farmers. We have used a power to make necessary and justifiable provision to deal with emergencies, including an ability to derogate from certain direct payments scheme provisions to the extent or period of time necessary.

The noble Earl, Lord Devon, asked about any plans to incorporate crop diversification rules into the future ELM scheme and whether we consider crop diversification to be good farming practice—a point also raised by the noble Baronesses, Lady Parminter and Lady Northover, the right reverend Prelate the Bishop of St Albans, and the noble Lord, Lord Liddle. Although this derogation is an emergency response measure and not a reflection of views concerning crop diversification as a policy, it is generally recognised that the crop diversification rules have not delivered the environmental and climate-related outcomes that they were designed for. This view was documented in the European Court of Auditors’ 2017 special report on greening.

Turning to the issue of ELMS, I was struck by the points made by the noble Lord, Lord Whitty, my noble friend Lady Redfern and the noble Baronesses, Lady Boycott, Lady Northover and Lady Bakewell of Hardington Mandeville. It is important to emphasise that much of this consideration on the ELM will take place during the passage of the Agriculture Bill, but may I give encouragement? Looking at Clause 1(1) of the Agriculture Bill and the Secretary of State’s powers to give financial assistance, Clause 1(1)(j) is about financial assistance in

“protecting or improving the quality of soil”,

and Clause 1(1)(d) is about

“managing land, water or livestock in a way that mitigates or adapts to climate change”.

Also, I quote specifically to my noble friend Lady McIntosh of Pickering, Clause 1(4):

“In framing any financial assistance scheme, the Secretary of State must have regard to the need to encourage the production of food”.

This is where the farmer has such a vital role to play in providing food for our nation and exports of a very good standard. However, we must ensure that nature recovery comes with that, and that involves resilience.

The noble Earl, Lord Devon, also asked about environmentally beneficial crop rotation. Crop diversification and crop rotation are often separate practices. The practice of crop rotation is very well established in England. Again, a special report carried out by the European Union Court of Auditors in 2017 found that crop diversification rules do not influence farmers’ decisions to use crop rotation techniques.

The noble Lords, Lord Addington and Lord Grantchester, and the noble Earl, Lord Devon, referred to the Met Office. This derogation was based primarily on meteorological data from the Met Office and the Environment Agency, which included rainfall and river-flow data compared with the long-term average. I will take back the point made by the noble Lord, Lord Grantchester, regarding investment in the Met Office.

I should also say that we have no plans to extend this derogation into 2021. It applies only for the BPS for 2020 only. Were future circumstances to warrant a grant of derogation from the scheme rules, we would need to consider it at the time.

The noble Baroness, Lady Jones of Moulsecoomb, raised a matter that no doubt we will consider in great detail when considering the Agriculture Bill, the Trade Bill and beyond: it is the Government’s determination that standards be maintained. I was talking only last week to my noble friend Lord Grimstone about what I hope are very considerable opportunities for British farmers, for excellent produce at the highest possible standards and exports of this great food.

The noble Baroness, Lady Parminter, asked what had changed to persuade the Government that mitigations were no longer plausible and that a general derogation was needed. This refers to all the evidence that we received. Those two severe storms made it impossible for us to proceed with the advice that we had previously given and the evidence that we had.

My noble friend Lord Bourne of Aberystwyth asked about engagement with the devolved Administrations. As always, there is strong collaboration with the devolved Administrations. Agriculture is devolved, and this work is taking place across the UK, so all parts of the United Kingdom will benefit from this derogation.

Regarding consultation, this was an emergency. We had many discussions beyond the NFU, the Tenant Farmers Association, the CLA, the Central Association of Agricultural Valuers, the Wildlife Trusts, the National Trust, the British Institute of Agricultural Consultants and the Farming Community Network. Usually, the Government are constantly consulting; Defra is in particular. I take the point about the need for rigorous consultation, but in an emergency we worked with all those interested parties to ensure that there was agreement and that there was a strong desire that this would be helpful.

The SI amends for this year alone. A number of points have been made about what I think is the future dynamic of British agriculture: the importance that we must place on precision farming and integrated pest management, mindful that farmers have many tasks that we ask them to fulfil for us. We will be asking them to do ever more, and that is why we believe in the financial support for environmental advancement, in the way that we will consider in the Agriculture Bill, the way in which we want to extend productivity, the way in which we want the farmers to have a better deal within the market and the way in which we place importance on food production. Having been very closely involved in what we have been going through with food supply, no one could be more aware than I of the critical nature of food production, of good production of food at home and abroad, and good and strong standards.

There are some detailed questions. I will look at Hansard to see whether I can give a better outcome than what I have outlined, but the advancement of the environment and the production of food is a challenge, even among our great farmers in this country. It is also an enormous challenge across the world, with an increased population, with climate change and the importance of resilience. In the environmental work in air, water and in how we mitigate floods and extreme weather events and climate change, the British farmer is going to be asked to do a great deal. In this debate, we are intervening and acting for their interest, and therefore, in the national interest, I beg to move.

Motion agreed.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, the Virtual Proceedings will now adjourn until a convenient point after 2.30 pm for the Virtual Committee.

Virtual Proceeding suspended.