§ 5.50 p.m.
§ The Earl of Mansfield rose to move, That the draft order laid before the House on 17th November be approved.
§ The noble Earl said: My Lords, I beg to move that the draft Scottish Seed Potato Development Council Order 1981, a copy of which was laid before the House on 13th November last, be approved. This order is presented for your Lordships' approval in accordance with the Industrial Organisation and Development Act 1947. The effect of the order will be to establish a development council for the seed potato industry in Scotland.
§ This is an important industry not only for Scotland but for the whole of Great Britain, and I am glad to declare an interest in it as a producer myself. As an industry, we produce about 20,000 hectares each year of what are probably the best seed potatoes in the world. Our product is directly worth about £40 million annually with exports abroad worth about £5 million, but it provides the planting material for most ware potato crops in England and Wales, as well as many other countries especially in the Mediterranean area. So in addition to its contribution to Scottish farm incomes, the industry provides a base for an important part of the diet of very many people. The quality of our seed has made a substantial contribution to the steadily increasing yields of the potato crop.
§ I am particularly pleased to move the approval of this order, because the origin of the proposal for the establishment of a development council was made to me by the Scottish Seed Potato Association. This association was set up by the industry itself and it has collected a voluntary levy to finance its work from about half the producers, including substantial representation of the important merchant grower sector. I am a member of the association: I have paid my levy and I have given strong support for its work on every possible occasion. However, the association feels that work to promote the products of the industry should be paid for by the whole industry, and that voluntary contributions 708 would decline if the willing participants felt that they were having to carry a substantial number of "freeloaders" who would benefit along with the contributors. The Government have accepted the validity of this argument and this order makes provision for a compulsory levy to be paid by all producers of seed potatoes in Scotland.
§ The Act of 1947 requires that before establishing a development council the Minister responsible shall be satisfied that a substantial number of the persons engaged in the industry want it, and he must consult the organisations representative of people in business and in employment in the industry. To that end, we have carried out a poll of all seed potato producers in Scotland and we have consulted organisations which we considered to represent both producer and merchant interests, as well as those of employees in the industry. Of the producers who responded to the poll 62 per cent. supported the proposal to set up a council. No objections were expressed by the organisations consulted, but a number of useful suggestions were made and the present draft order incorporates a number of changes resulting from these suggestions. The main organisations concerned have been further consulted about these changes.
§ Before turning to the order itself, I should like to say something about the situation in the industry. I have already pointed out that the industry is important but it is fragmented, being made up of many small producers and individual merchants. It has long been recognised that some form of central organisation would help the industry. This was so even some years ago, when the industry was largely concerned with supplying a "captive market" South of the Border. It is much more important now when there is the possibility of competition from the European Community within the captive market, and when overseas export markets have assumed major importance as customers. Thus in both home and overseas markets, our industry faces well-organised competition which it is not organised to meet. In the other main seed-producing countries of the Community, the Netherlands and France, there are well-established national or regional organisations which can collect levies to finance their efforts to promote the sales of their products.
§ What this order will provide is a basis for an organisation by which the Scottish industry, by its own efforts and with its own money, can fight back. It will not involve any public expenditure in its creation or its operations, because it will be financed by the levies collected. Nor will it mean more civil servants, because it will engage and pay for its own staff. It could be described as a "quango", but if it is, it is one which the industry itself has asked for and which the industry itself will finance. Its powers would be limited essentially to the collection of a compulsory levy, which it would do on the basis of information which is published annually by the Department of Agriculture and Fisheries for Scotland as a register of seed potato crops. The council would not be empowered to market seed potatoes, to enter premises, to demand information from producers or merchants or to impose fines for failure to provide information. What is proposed, then, is a small representative body with very limited powers, but with important executive functions to perform. The order proposes a maximum rate of 709 levy of £15 per hectare—the actual rate is likely to be less initially. On the basis of present production, this would yield a maximum of about £300,000 annually, but this relatively modest sum would provide the potential to achieve significant advantages for everyone in the industry.
§ The order, like the council which it aims to set up, is small and uncomplicated. It provides for the establishment of a development council with specified functions. The majority of its members will be appointed from nominations of both producers and merchants (many of whom are also producers) to be made respectively by the National Farmers' Union of Scotland and the Scottish Potato Trades Association. One member will represent the interests of workers in the industry: two will be independent members, of whom one will be chairman; and, if it appears expedient, not more than two other members with special expertise in marketing and distribution may be appointed. The main provision is for the collection of an annual charge to meet the legitimate expenses incurred by the council in carrying out its assigned functions: it covers the possibility of further contributions of up to £500 annually for this purpose from interested parties, such as traders or exporters who may not be producers. Finally, provisions are included for the routine handling of the council's monies.
§ I am certain, in my own mind, that this order will be of great help to the Scottish seed potato industry in meeting a very real challenge from other seed potatoes which are aggressively and effectively marketed by its well organised competitors. I commend it to your Lordships, therefore, as a desirable and logical step forward in improved marketing which is generally recognised to be necessary. My Lords, I beg to move.
§ Moved, That the draft order laid before the House on 17th November be approved.—(The Earl of Mansfield.)
§ 5.56 p.m.
§ Lord Ross of Marnock
My Lords, I think we are grateful to the Minister, once again, for bringing in something that is fairly well agreed in the House. I was delighted to hear him saying how much he welcomed this quango, and to see how he managed to avoid the use of the words "closed shop". He might have been more careful about his use of the term "free-loaders" and about compelling anyone who will get a benefit to pay, whether they want to or not.
But there has been pressure, for at least the last 20 years, for some central organisation that would act on behalf of the Scottish seed potato industry. Of course, one section of the industry, mainly prompted from Angus, set up the Scottish Seed Potato Association which, with the achievement of this new development council, will itself go out of existence altogether. This is a very important agricultural resource. We have the facilities, we have the climate, we have the soil and we have built up an expertise and have produced what are probably, as the Minister said, the best seed potatoes in the world. There is quite a competition in another place about which part of the world merited mention, and anything from the Pentlands, from Angus and from Perthshire has got its mention today, as well as anything from Bute, and in particular, Arran. The value is about £40 million, two-thirds of which is outwith 710 Scotland, while £5 million of that represents exports abroad.
I think the feeling is that we must be careful here. We cannot rest on our laurels. There has been criticism that we are under certain pressures. There has been a shrinkage of demand. I do not know whether the Minister noticed it, but last year there was a 7 per cent. fall in the production of seed potatoes. The figure fell to, I think, 20,300 hectares. That is in addition to the fact that we are open to challenge from the EEC. We had a protected market earlier, so far as England and Wales were concerned. Now we do not have that. Then the Dutch, who export more than the whole of the Scottish production of seed potatoes, might well come in if we let things slip. For about 60 years there has been a close connection between the Scottish Office, the Department of Agriculture and Fisheries in Scotland and the industry.
We have taken steps to control, protect and improve the quality of Scottish seed potatoes but, as the Minister said, there is fragmentation. There is no commercial organisation big enough to give authority and financial backing to the kind of moves required to be made to promote exports and sales. I believe that it was the National Farmers' Union, and the Hay Committee Report which they commissioned, which pressed for this for a long time.
It is fair to say—and the Minister should tell the House—that there was not unanimity about it. Because of the very nature of the council and because of what has been laid down in respect of the levy one could not expect it. But the Scottish Office carried out a consultative referendum. I noticed that there was no mention of the figures. In fact, 65 per cent. of the people involved in the industry voted. Of that 65 per cent., 62 per cent. were for and 38 per cent. were against. If my calculations are right they might just, but no more, have got past that celebrated referendum figure of 40 per cent. which was laid down in respect of Scottish devolution.
Agreement has now been reached. It says a lot for the work that has been done that agreement has been reached. The structure of the industry demands that it should be reached. The position in which the industry finds itself and the challenge which it faces means that agreement is required, and I am glad to say that this has come about.
Now £15 per hectare should produce about £300,000. An organisation working on that basis is not going to be very "lush". Of course, it has other powers in respect of money. But is it going to be £15 per hectare? I understand that it is much more likely in the first instance to be about £10 per hectare. In a council which consists of 12 members from the producers and those in the industry, one from the employees, two independents and two special members—which comes to 17—why should the quorum be as high as nine? It means that more than half of the council are required to be present before there is a quorum. Furthermore, who is going to appoint the chairman? Am I right in thinking that he is going to be appointed by the Secretary of State and that the chairman is going to be one of the independent members? This is the kind of thing which ought to have been left to the council itself.
711 There is already in existence a Potato Marketing Board which is equally concerned about the sale of potatoes. There is also the National Seed Development Organisation whose very purpose is to look at seed varieties, including seed potato varieties, to see whether we are up to date, whether they are meeting the needs of the various markets, and what can be done. The organisation which is to be formed will be required to liaise very closely with these organisations. I do not know whether the Minister has noticed that these two organisations are to set up a company which is to be called Solanex, which means Export of Potatoes Limited, to develop markets overseas for potato varieties. These varieties are to be bred at state-aided research institutes—for instance, in Scotland at Mylnefield, in England at Cmabridge and in Northern Ireland at Lough Gall. The Northern Ireland organisation and the Scottish organisation, when it is formed, are to be invited to join. Could we be given a little more information about this and about what effect it will have upon the first year's levy? The people who are interested in this part of the industry tend to be very single-minded people. They must be very pleased indeed that this step has been taken. I certainly wish it well. But is there any question of the Potato Marketing Board extending its activities in the future and taking over this organisation? I believe that the House should give its backing to an important industry whose quality we want to retain and build up.
§ Lord Mackie of Benshie
My Lords, I, too, would very much like to welcome the setting up of the Scottish Seed Potato Development Council. It is probably overdue. The history of the promotion of Scottish seed potatoes is interesting. As the Minister said, we produce the best seed potatoes. The justification for this statement is that there has been an enormous amount of propaganda in the farming papers against Scottish seed for as long as I can remember. The Northern Irish came into the picture at the start of the war, and afterwards, with an organisation which had the distinct advantage of inspection at the ports. They had a Government organisation which was able to give an after-sales service. We did not have this in Scotland.
Despite all these disadvantages, the inherent quality of Scottish seed has held the English market. I know many extremely tough and commercially minded English farmers who swore at me about Scottish seed and the standard of dressing but who eventually went back to it. With this inherent advantage I believe that the new council has a tremendous chance to expand the business.
As the noble Lord, Lord Ross of Marnock, said, Holland exports more seed than we grow altogether She has a very disadvantageous climate. Her lowlands abound with aphids in all sorts of forms. They go to enormous lengths to control the pest and to produce a seed which they market around the world. Because of our natural advantages, this new council can do a tremendous amount to expand the trade, in particular the export trade. If we can hold up against the disadvantages of propaganda in the trade 712 with England, I am sure that we can push it into other countries as well.
May I ask the Minister why the Secretary of State is to appoint the chairman—if he is to appoint him? The chairman will be a vital part of the organisation, because this body will have to grow—obviously gradually. It will not have a great deal of money, and will have to use that money to the best advantage. As the noble Lord, Lord Ross of Marnock, said, it will have to co-operate with all the other bodies in the business in order to promote the trade as a whole.
I am sure that a body of this sort, to promote Scottish seed, is right. We cannot have a national body, like the Potato Marketing Board, representing the special interests of Scotland. It is an excellent concept. Considering the comments we heard in the last debate, the Government have moved with remarkable speed to set it up. However, it will need to be carefully watched and it will require people of the highest standard. And as it develops it will certainly need more money. I welcome its setting up.
§ The Earl of Mansfield
My Lords, I should like to thank both noble Lords who have expressed their welcome for this fairly modest measure. As I said at the beginning, it is barely a Quango if, indeed, it can be called a Quango at all. But I believe that it will do nothing but good. I was conscious when I drafted my remarks that the term "freeloader" might grate a little on the usceptibilities of the noble Lord, Lord Ross of Marnock. I appreciate that I suppose it could be said that we are going some way towards setting up what might be described as a closed shop. The difference between this and other sorts of closed shop would be that, first, we have had a poll before it was set up—and I shall come to that—and secondly, unlike other closed shops this one will not prevent individuals from working in their chosen occupation, that is to say producing and selling seed potatoes. Those who do not pay the levy will certainly not be thrown out of their job in any way, but they may find themselves liable to pay for certain useful services by virtue of a civil suit.
The noble Lord, Lord Ross of Marnock, pointed to the percentages. I do not think that a previous referendum is really comparable, but the favourable vote of 62, which I mentioned in my opening remarks, is well above the 52 per cent. which I think was the figure in the devolution poll. The proportion of the total electorate was over 40 per cent. of those who were entitled to vote, as compared with 33 per cent.
To come to slightly more serious matters, the noble Lord, Lord Ross, first asked me, in effect, whether there is a possible association with the Potato Marketing Board and the National Seed Development Organisation in Solanex. The answer in short is that, when this company was set up, a space (if I may so describe it) was left for the Scottish Seed Potato Development Council to occupy, if it wishes to do so. But of course it will be up to the Council to make its own decision. The opportunity is there if it wishes to avail itself of it.
The noble Lord, Lord Ross, then asked about the Potato Marketing Board and whether in fact it would take over the functions of the Seed Potato Development Council. As the noble Lord will realise, the Potato 713 Marketing Board, which is a Great Britain organisation, is primarily concerned with the sale and promotion of ware potatoes. It turns its attention to seed potatoes to a very small degree. I do not think it would ever want to take a leading part or indeed to have anything much to do with the promotion of Scottish seed potatoes, though, in the original thoughts and consultations which we had in the early days of this exercise, we certainly consulted the Potato Marketing Board. However, even if it did, it is not possible for it to do so under the terms of the Act.
The noble Lord, Lord Mackie of Benshie, asked in effect about the chairman. He is one of the two independent members of the council and, as with other organisations which are fairly similar to this one, the appointment will be by the Secretary of State for Scotland. I think that on reflection noble Lords will agree that this is the best way of achieving a useful body which will look after the money which it levies from potato growers in the most efficient and, one hopes, effective manner.
§ On Question, Motion agreed to.