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Organic Farming

11.17 a.m.

The Earl of Clanwilliam asked Her Majesty's Government:

Lord Carter: My Lords, the Government wish to encourage an expansion of organic production and are looking at the best ways of achieving that. To this end the Government have this week launched a consultation exercise to seek views from a wide range of interested parties.

The Earl of Clanwilliam: My Lords, I thank the noble Lord for that very encouraging response and I congratulate the Government on their conversion to truly sustainable farming. The evidence that persuaded the Agriculture Select Committee of another place to make the recommendation was given by Mr. Patrick Holden, who recommended that a minimum increase in the organic aid scheme for support should be £200 a hectare. May I impress upon the noble Lord the importance of increasing support to that level?

Lord Carter: My Lords, I am sure the noble Earl would not expect me to commit the Government at the Dispatch Box to that level of aid. However, the Government noted the Agriculture Select Committee's view that they should consider maintenance payments to existing organic farmers, which I know has been argued. The Government need to take account of the funding implications and do not currently view

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payments for the maintenance of organic production as a priority. In the meantime, those already farming organically can receive aid if they convert new land.

Baroness Nicol: My Lords, the reason for not looking favourably on continued support is that organic farmers are expected to get a premium price for their products. However, if the scheme is successful, is it not the case that the premium price is likely to diminish quite sharply? Therefore, will there not be a need to continue with some form of support even after the five to 10-year period that has been proposed? Will the Government undertake to look again at that?

Lord Carter: My Lords, that is part of the review which we are now undertaking. At present, 0.3 per cent. of the UK's food is supplied organically. There would have to be a substantial increase on that, which would take a considerable time before there would be any marked effect on the size of the organic premium received from the consumer, which is the essential help the organic farmer needs in addition to government aid. This is just the kind of point at which the review we are suggesting, which has wide-ranging terms of reference, will be looking.

Lord Bruce of Donington: My Lords, does the noble Lord agree that it should be possible for the Government drastically to revise their priorities in this field? Is he aware that vast sums are paid every year, including £1 million to each of five individuals, under the set-aside legislation? Does he further agree that it is quite scandalous that millions of pounds of British taxpayers' money should be distributed by the EU in this way to inhibit the production of food? Is it not the case that much more needs to be done at all levels to support organic farming by all possible means?

Lord Carter: My Lords, I believe that the issue of CAP reform is just a shade wide of the Question on the Order Paper. I can assure my noble friend that, as I am sure he knows, one of the Government's objectives in their dealings with the European Union is a substantial and wide-ranging reform of the common agricultural policy. It is part of the common agricultural policy to encourage organic production and it is also part of our policy. I am not sure that we can shift the whole weight of the CAP onto the support of organic food production.

Lord Marlesford: My Lords, does the noble Lord agree that the real problem in expanding organic farming is the cost to commercial farmers to convert to that method of farming, and that very few farmers can afford to do so? Does he also agree--and this is relevant to the point made by the noble Lord, Lord Bruce of Donington--that the payments for agri-environmental purposes under the CAP are exceedingly small in comparison with other payments for agricultural support? Is the Minister aware that the proposals in Agenda 2000, which sets out the Commission's draft proposals for the reform of the CAP, are rather disappointing in that respect? Will he ensure that the study which is to be made in this country will be brought

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to the attention of the Commission, with the aim of getting greater agri-environmental payments to the countryside in general?

Lord Carter: My Lords, before the election the Labour Party produced documents setting out our suggestions for reform of the common agricultural policy. It is our intention to undertake a wide-ranging reform of the CAP. That certainly includes heavy emphasis on the need for the improvement and encouragement of environmental-friendly farming. Organic production is a part of that.

Lord Mackie of Benshie: My Lords, does the noble Lord agree that, although organic farming will never feed the starving millions of the world, it is a far better use of CAP money than putting it towards set-aside, in that organic farming will reduce the amount produced and provide a reserve in case of a real need for food?

Lord Carter: My Lords, it is certainly true that consideration of organic farming has moved a long way from the days which the noble Lord and I remember when it was regarded as, "muck, mystery and magic". It is now firmly on the agenda. I do not believe that the cost of the comparatively small proportion of production which is now devoted to organic farming, even with a substantial increase in that proportion, will provide the means for a fundamental reform of the CAP.

Baroness O'Cathain: My Lords, is it not true that, whereas we all subscribe to the theory that it is better to have more organic farming, the reality is that the consumer is not prepared to pay the real cost of the product? Does the noble Lord agree that until such time as we can get over that gap between the cost of the product raised through non-organic farming compared with the cost of the product raised through organic farming, we really have a problem? Do the Government have any plans to encourage the British consumer to pay higher prices to meet the increased cost of organic farming? How do the Government propose to convert the consumer?

Lord Carter: My Lords, we regard that as a matter for the consumer. If consumers wish to have more organic products and are prepared to pay more, they will get them: if not, then those products will not be provided. It is the marketplace at work. However, as the noble Baroness said, it is correct that the costs of organic production are higher. There is a problem. Research work shows that, with a high level of technical efficiency, one can produce organic crops and products at an economic cost. The problem is--and this has always been my view as a farmer--that both intellectually and technically it is much more demanding than conventional farming. I am not sure that we yet have the resources for the advice that farmers need.

The Earl of Clanwilliam: My Lords, is the noble Lord aware that there is enormous demand in supermarkets throughout the country for organic products? Is he further aware that they have a great shortage of such products?

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Supermarkets would sell a great deal more if the supplies were available. Is he also aware that at the moment supplies of organic products have to be imported from Germany, Holland and Denmark?

Lord Carter: My Lords, I suppose that if customers were prepared to pay more, that would produce increased supplies.

Lord Lucas: My Lords, does the noble Lord agree that the objective of CAP reform is to reduce subsidies to agriculture and not merely to shift them from one sector to another? Is he aware that MAFF research has shown unequivocally that organic farming can be profitable once the transition costs have been paid? Surely it is those costs with which we should be concerned, and not with increasing subsidies.

Lord Carter: My Lords, it is not a case of increasing subsidies. In the reform of the CAP there will be a shift of support from one area to another. But there are other areas in which reductions in costs can be achieved--for example, tobacco subsidy and fraud.

Mutual Societies and "Carpet-baggers"

11.26 a.m.

Lord Taylor of Blackburn asked Her Majesty's Government:

    What steps they intend to take to prevent "carpet-baggers" from attempting to force mutual societies to convert to banks against the wishes of the majority of the members, such as recently occurred with the Nationwide Building Society.

Lord McIntosh of Haringey: My Lords, the Government are well aware of the benefits of mutual societies. We have been looking at a number of proposals for secondary legislation put forward by the Building Societies Association. They all raise difficult issues of principle because they could frustrate the will of the members or significantly reduce the board's accountability to members. In short, they highlight the difficulties that the Government face in acting to protect mutuality without diluting the essence of a mutual organisation; namely, a society owned by and run for its members. But the Government are keeping the situation under careful review.

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