Agriculture (Miscellaneous Amendments) (EU Exit) Regulations 2019

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Agriculture (Miscellaneous Amendments) (EU Exit) Regulations 2019.

My Lords, I declare my farming interests as set out in the register. I hope it will be helpful to your Lordships if I speak to the instruments together, given the close connection between them.

These statutory instruments primarily amend retained EU law relating to the common organisation of markets in agricultural products. They also make minor amendments to cross-cutting common agricultural policy legislation and legislation governing rural development programmes and maritime and fisheries funds. The CMO sits in Pillar 1 of the common agricultural policy and was set up as a means to meet the objectives of the CAP. Over time, it has broadened to provide a mechanism that enables the EU to incentivise collaboration between, and improve the competitiveness of, agricultural producers and to facilitate trade.

The framework legislation of the CMO, which contains the basic rules for the schemes therein, was debated in this House earlier this year. The legislation considered today is technical in nature and limited in scope, as it primarily amends legislation setting up the finer details of the CMO to ensure that its provisions can continue to work after we leave.

Bearing in mind previous discussion, I assure your Lordships that we are adamant in upholding standards and maintaining process and are keeping as close to the current system as possible. The legislation makes appropriate corrections to ensure that the current system and its processes are operable after exit.

The Agriculture (Miscellaneous Amendments) (EU Exit) Regulations 2019 primarily make operable functions contained in EU legislation relating to the CAP and the CMO currently carried out by the European Commission or member states in the reserved areas of import and export controls, international trade and regulation of anti-competitive practices and agreements. Under the amendments, those reserved functions will instead be carried out by the Secretary of State or, in one instance, in relation to contractual negotiations in the dairy sector, by the Competition and Markets Authority. Some of these functions are administrative; for instance, to recognise hop producer groups. Others are powers to make regulations to amend rules relating to particular schemes; for example, conditions for recognition. The powers conferred are limited to those of reserved competence. They include powers such as setting conditions for when an export licence may or may not be required, fixing amounts payable on exports where they are subject to an international agreement, updating standard terms for sugar sector contracts and making additional requirements with respect to customs procedures where it is necessary to do so for the purposes of CAP checks. The instrument also makes operable retained EU law concerning producer organisations, import of eggs and contractual negotiations in the dairy sector.

Examples of the amendments made are: omitting obligations to report information on producer organisations to the Commission; conferring on the Secretary of State the power to recognise producer organisations, which currently lies with member states; a requirement that the Secretary of State must make a determination of equivalence in relation to the marketing standards of eggs from a third country before eggs from that country may be imported; and providing for notifications on volumes of milk covered by contractual negotiations, which are currently provided to member states, to be provided to the Secretary of State.

The second of the instruments, the Common Organisation of the Markets in Agricultural Products and Common Agricultural Policy (Miscellaneous Amendments etc.) (EU Exit) (No.2) Regulations 2019, makes appropriate corrections to retained EU legislation relating to the CMO to ensure operability. This instrument mainly concerns areas falling within devolved competence. As such, powers and responsibilities have been conferred on the devolved Ministers and the Secretary of State in appropriate ways that respect the devolution settlements. The main CMO policy areas covered by this instrument can be broadly categorised as: aid schemes for fruit and vegetables, milk in schools and apiculture; marketing standards for olive oil, eggs, poultry, meat and wine; import and export licensing; and provision of information and notifications.

The changes made in this instrument will ensure continued operability, for example by conferring functions currently exercisable by the Commission or member states on the applicable authorities in the UK; for instance, administrative functions relating to aid schemes and powers to make regulations on wine labelling. The changes also include removing redundant provisions that will not apply to the UK after exit, for example on support schemes for the olive oil and table olives sectors. Another change is replacing EU-centric terms with the appropriate UK equivalents, such as replacing “Union” with “UK”. The approach when amending retained EU law has been to keep the effect of retained legislation close to the current system where possible.

The instrument omits two deficient references to “member states” and amends a reference to “Union legislation”. It also omits two powers that the Commission has to make secondary legislation, which are redundant after our exit, and confers on the appropriate authorities in the UK a power—currently conferred on the Commission—to make regulations altering the format of the financial instrument report to be submitted to the monitoring committee responsible for the programme in question. These are technical amendments to make operable the existing retained EU law.

The third, reserved, instrument, the Import and Export Licences (Amendment etc.) (EU Exit) Regulations 2019, makes changes to EU regulations governing the agricultural import and export licensing regime to ensure operability. Those EU regulations set out a licence system for the import and export of certain agricultural products such as rice, hemp seed and ethyl alcohol. They also set out specific provisions for the import of hemp. This instrument makes amendments to allow the Rural Payments Agency to continue to manage the import and export licences as it does currently once we have left. Other amendments include updating EU regulatory cross-references to equivalent provisions in domestic legislation, replacing references to “the Union” with “the United Kingdom”, and converting licence securities from euro values into sterling using the average annual exchange rate for 2018. The instrument also revokes some obsolete and redundant regulations in relation to the payment of export refunds in the dairy sector and on administration of EU third-country export quotas for cheese and skimmed milk powder. The instrument will ensure that the policies outlined above will continue to operate effectively, as now, after exit.

The aim of the fourth statutory instrument, the Common Organisation of the Markets in Agricultural Products (Transitional Arrangements etc) (Amendment) (EU Exit) Regulations 2019, is to make simple amendments to existing EU exit SIs to ensure that where provisions refer to a transitional period this can be realised as intended, notwithstanding the delay of exit to 31 October. The transitional periods in this SI concern the reserved area of import and export controls, specifically: import documentation for hops; certificates of conformity for fruit and vegetables issued by other countries; and imports of veal from the EU. These transitional periods were set out in an existing EU exit SI approved earlier this year. In that legislation, the end dates of these transitional periods are explicitly stated as 29 March 2021 for hops, and for fruit and vegetables, and 30 June 2019 for veal. However, the extension of Article 50 to 31 October makes these transitional periods significantly shorter. Of course, in the case of imports of veal, it has effectively removed it.

The instrument makes simple amendments to that existing EU exit SI so that, rather than using specific dates, the transitional periods are expressed as applying for a specific period from exit day. This ensures that transitional periods are drafted consistently in our EU exit SIs, helping us to convey a clear and consistent message to stakeholders on the duration of those transitional periods.

The instrument also makes some amendments to that existing EU exit SI in the reserved area of regulation of anti-competitive practices and agreements to correct inconsistencies in the drafting and minor inoperabilities. These include: clarifying and improving the text, for example changing “them” to “Secretary of State”; omitting obligations to recognise producer and inter-branch organisations in respect of products not produced in the UK on a significant commercial scale, such as olives and olive oil, silkworms and tobacco; and clarifying that the power to recognise inter-branch organisations in the milk and milk products sector will lie with the Secretary of State after exit, in line with other EU exit SIs.

I turn finally to the Common Agricultural Policy and Common Organisation of the Markets in Agricultural Products (Miscellaneous Amendments) (EU Exit) Regulations 2019. This instrument makes similar amendments to transitional periods, but in areas of devolved competence. These include: special provisions on imports of wine; labelling of wine; labelling of beef and beef products; labelling of packages of fruit and vegetables; and import documentation for hops.

As before, these transitional periods were set out in existing EU exit SIs approved earlier this year, with the end dates of the transitional periods explicitly stated as a specific date. The instrument makes simple amendments to express them instead as applying for a specific period from exit day. It also makes minor amendments to a series of domestic EU exit SIs concerning marketing standards, the horizontal CAP legislation and the rural development programmes to remove ambiguity and inconsistencies, correct typographical errors and ensure operability.

As I have referred to reserved and devolved competence, I should say that we have consulted extensively with the devolved Administrations on all the statutory instruments in this group, regardless of their reserved or devolved status. Similarly, Defra has informed and discussed with stakeholders the plans to make both retained EU CAP legislation and existing domestic CAP regulations fully operable at the point of exit.

The whole purpose of these instruments is to provide continuity. I beg to move.

I thank my noble friend for so eloquently and comprehensively speaking to this group of statutory instruments, which appear technical in nature, as he said. I have a couple of questions rather than comments.

My noble friend mentioned the exchange rate that was used. Is it set in stone or kept under review? Have his department or the Treasury taken a view about the impact on the farming community of the difference between the exchange rate used for these purposes and the general exchange rate, which we know has fluctuated wildly since the date of the EU referendum? Will it be kept under review going forward?

My second question was raised in the House of Commons in relation to one of this group of SIs. It is generally understood that the department will pursue the principle of recovering costs, which I presume will not be that great. Does my noble friend have any idea about at which stage they might be recovered?

My final question relates to the Import and Export Licences (Amendments etc.) (EU Exit) Regulations. I think there may be a role for export refunds. Have they been frowned upon by the EU Commission and the department, or are they something that may be considered? Or would my noble friend rule them out because he does not imagine that there would be any scope or role for export refunds in relation to this SI?

My Lords, these regulations are surely needed. I thank the Minister for his introduction. As ever, he was very cogent and persuasive and spoke from experience. However, to me and to others these regulations appear very complex. From the Explanatory Memoranda, it is clear that the officials of his department have helpfully gone to great trouble, but the regulations are still very complex. The Minister will not mind me asking a few questions and making a few observations.

I note that there has been considerable consultation, not least with tenant farmers, the Country Land and Business Association, the Farming Community Network and the ubiquitous and influential National Farmers’ Union. That is to the credit of the Minister and the department. These five sets of regulations cover agriculture, markets, import and export licences and the organisation of markets. They necessarily go on. The Minister mentioned the devolved Parliaments across Britain. When he replies, will he say which Ministers in each of the devolved Parliaments he or his colleagues have consulted? Notwithstanding that the devolved Parliaments have primacy, it appears that the Minister and his department have brought things together, particularly at a time such as this when Brexit is an overarching issue.