§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]
10.19 pm§ Sir Paul Bryan (Howden)I have taken it upon myself to speak for the British turkey industry because I have in my constituency the highly successful firm of Twydale Turkeys Limited, which I have watched growing over the past 30 years from a modest one-man concern into one of the largest, most go-ahead and sophisticated units in the industry. The firm employs 600 people directly and many more indirectly. It benefits local farms and compounders which supply most of the cereal feeding stuffs for the 2½ million turkeys which are produced every year. The turkeys are reared and fattened on farms all over Yorkshire.
In anything like normal circumstances, the future for Twydale Turkeys Limited would look as promising as the past. The turkey, unsubsidised in any way, has competed successfully against all other meats, most of them subsidised. New developments in the direction of further processed turkey are already a proved success. I cite the thriving Twydale company because it seems typical of the firms in the industry in its enterprising management and the modernity of its plant.
The industry is not appealing for Government help for the reasons so common to other industries in this time of recession. It is not an old, outdated industry struggling for survival. It is not like steel, doomed to contraction owing to world surplus. It is not like the many that the recession has shown to be dependent for survival on an undervalued pound. It is not an industry embarrassed, as the pig industry has so often been, by a temporary cyclical depression which will put itself right in due course. Nor is it threatened by foreign competition based on cheap labour or other inherent advantages. Britain is a perfectly appropriate place in which to produce turkeys, and our plants are among the most modern and efficient in the world.
Over the past two years, however, the industry has faced competition which is unfair in every sense of the word and which is here to stay. Last year, that competition came from America and France. The Minister has done much to correct the American threat by the adjustment of sluice gate prices.
The French threat is more menacing in that it is the direct result of the deliberately planned and determined policy of France to use its vast agricultural potential to help to pay the bill for imported energy. In less than three years, France's farm food industry has swung from a trade deficit of £600 million in 1977 to a record surplus of about 17 billion francs in 1980.
According to Michelle Debatisse, Secretary of State for Agri-business, a new Cabinet-level post created to supervise the agricultural expansion, the export performance will continue to improve. As part of this programme, according to the French Minister of Agriculture, French poultry meat production could rise by 24 per cent. during 1981—this at a time when poultry meat production is falling in every other European country.
Agricultural expansion is so unnatural in a Europe plagued by surpluses that it cannot happen without 886 vigorous artificial stimulus. Against the background of these surpluses and the competition of efficient British farms, it can be achieved only by means of heavy subsidisation to set up new units and to make the product so cheap that it is bound to flood any market on which it is dumped.
During my years as a Member of Parliament for a rural constituency, I have often heard complaints from producers—usually pig producers—about unfair subsidisation by foreign Governments, but these have always been very hard to prove. In this case, we have no such difficulty. Never has there been more detailed evidence of unfair competition and subsidisation than has been gathered, at great trouble and expense, by the British Turkey Federation. This was submitted to the Minister by Mr. Matthews, the chairman of the federation, in a letter last November. Quite apart from the £400 million douceur handed out to French farmers last December by President Giscard d'Estaing in preparation for the presidential election, it seems that there is a staggering array of grants and subsidies which virtually guarantee profitability and in some cases absolve the producer of the necessity to find any capital at all.
Mr. Matthews tells us of an aspiring Breton turkey producer who qualified for three capital grants, a 10 per cent. agricultural grant, a 25 per cent. regional development grant and a 25 per cent. discount on the cost of the land needed for the new turkey plant. On top of that, a wide range of cheap credit is available at a good 5 per cent. below the market rate. That money has to be paid back only when a profit is made.
The producer having been subsidised into a substantial way of business without any capital at all, the French Government will pay the entire wage bill for the staff for an unspecified training period. Nor are the beneficiaries of all this largesse small operators. One Breton producer, Mr. Bourgoine, is just completing a £6 million plant with a capacity equal to that of the whole British turkey industry. In addition to the grants that I have just mentioned, this gentleman benefits by a scheme under which the Government pay 90 per cent. of the average salary for six months of every worker whom Mr. Bourgoine rescues from the dole queue.
I think I have said enough to show that the British Turkey Federation is absolutely justified in raising the alarm. The first effects of the French subsidised turkey expansion have been a record build-up of frozen turkey stocks, and hence a drop in prices so severe that the industry cannot stand it for long. The future effects are so predictable and so severe that as a nation we should be very stupid if we allowed matters to take their course while watching our turkey industry disintegrate.
The turkey producers are puzzled to know why no action has yet been taken, since it is now almost six months since evidence of this unfair competition was conveyed to the Minister. Can my hon. Friend the Minister of State confirm that these subsidies, obviously objectionable, are also illegal?
Article 92 of the Treaty of Rome states that
any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.That seems to me an exact picture of what I have been describing. What is the Commission doing to enforce its 887 own rules? It seems extraordinary that on the one hand the Commission is using its funds to deal with services while on the other hand, from another fund, it is boosting production and creating further surpluses.Most farmers believe that my right hon. Friend the Minister of Agriculture, Fisheries and Food has stood up for British farming in Brussels extremely robustly. Turkey producers are anxious to learn what he has been able to do for them in their crisis. What is the latest news from Brussels? I understand that the Member of the European Parliament for Humberside, Mr. Battersby, and a group of Conservative Members have been pursuing the matter vigorously.
What can my right hon. Friend the Minister do off his own bat? The French Government appear to have no difficulty in making a grant of £400 million to their farmers. If there is to be a delay in dealing with French subsidies, would it be possible for the Minister to make a temporary grant to British producers until the matter is resolved?
I appreciate that an immediate ban on the imports of French turkeys would be illegal and, therefore, out of the question, but what of the illegality of most, if not all, of the French subsidies? These are the questions that I am being asked by my constituents and to which I ask my hon. Friend the Minister of State to reply.
§ Mr. Eric Cockeram (Ludlow)I support the plea made by my hon. Friend the Member for Howden (Sir P. Bryan). In addition to supporting the justice of his case, I have practical experience. Dales Turkeys is based in my constituency, near Ludlow. It is a highly efficient company that has expanded over the years. It employs about 1,000 people. It has been efficient and has lowered its production costs in real terms over the years. However, it is being hit by the competition that my hon. Friend outlined.
Hygiene standards are laid down within the EEC. They are supposed to be enforced throughout the EEC, but it would appear that British hygiene officers, through the British Veterinary Association, enforce them to the letter—as, no doubt, was the intention—whereas on the Continent they are observed more in the breach. The cost of hygiene enforcement is passed on to the firms involved. The local authority is responsible for standards and is entitled to reclaim the entire costs involved from firms. As a result, British firms incur higher costs than those on the Continent. That adds to unfair competition.
I took up the subject of the enforcement of hygiene standards with my hon. Friend the Minister of Agriculture, Fisheries and Foods. I received a reply from him to the effect that he was pursuing the matter in Brussels. I am sure he is doing so vigorously, and I support him. I do not wish to criticise him for doing so. However, the longer British industry is at a disadvantage compared with its Continental competitors—particularly the French—the longer we shall be squeezed out of the market. We cannot afford that much longer. Therefore, I hope that my hon. Friend the Minister of State will cover this point.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith)I am 888 grateful to my hon. Friend the Member for Howden (Sir P. Bryan) for having raised this subject. As he rightly said, it is a matter of immediate concern to his constituents. However, the subject is also of wide interest to the poultry industry, particularly the turkey industry as well as to agriculture in general.
My right hon. Friend the Minister and I share much of the concern that my hon. Friend expressed. Some of the facts and figures that he produced are very much in line with the results of our research into what is going on in the industry. The reasoned and sensible way in which my hon. Friend presented his case was impressive. My right hon. Friend and I treat his remarks extremely seriously. If things ended up in the way that one could envisage, the consequences would be serious for the turkey and poultry industries.
I am also grateful to my hon. Friend the Member for Ludlow (Mr. Cockeram) for his brief intervention. Obviously, given his experience of his constituency he shares the concern expressed by my hon. Friend the Member for Howden. My hon. Friend the Member for Bridlington (Mr. Townend) is also present. That shows the concern that exists both in that area and more widely. I agree with my hon. Friend the Member for Howden that the poultry industry, and particularly some of the firms that he mentioned, showed an extraordinary degree of enterprise, drive and efficiency in the 1970s in building up an industry that is in the forefront of Europe's poultry industry. At the same time it provides, at a good and a reasonable price, a product that is welcomed not only on our tables, but on those of other countries.
The industry's efficiency is not in question. The rate at which the industry grew during the 1970s is evidence of a considerable success story. I assure my hon. Friend that my right hon. Friend and I do not want to see that success story destroyed.
In the period of growth in the 1970s we saw a large increase in turkey production in the United Kingdom. By 1978 we had reached 106 per cent. self-sufficiency. However, particularly in recent years, we have had to face competition as industries in other parts of Europe have been developing. Italy is the major producer in Europe, at about 217,000 tonnes per annum, France follows with about 200,000 tonnes and last year we reached about 114,000 tonnes. Together we represent about 85 per cent. of Europe's total production, so we have a considerable interest in the market.
In the past year or so, the rate of growth has been levelling off. In 1981, we do not expect to see continuing growth. We are concerned on three counts. First, stocks in the United Kingdom are greater than a year ago, which would worry any industry. Secondly, prices quoted by Continental suppliers are below what we consider to be the reasonable cost of production in this country. Thirdly—and this is at the heart of the debate—French production has continued to expand. In 1979 the expansion was about 14 per cent., and the French Government are taking positive steps to continue it.
Within Europe there is free competition, with a common tariff but with certain concessions for third country supplies. Until now our industry has done extremely well, set a good example, and prospered. However, competition must be not only free but fair. The turkeymeat regime in Europe is unfair if trade is distorted and rules are not complied with. That is our fear, and it 889 stems not only from what my hon. Friend, the British Turkey Federation and the British Poultry Federation have said about what is happening in France.
It is the responsibility of the Commission to ensure that the different Governments and industries comply with the rules. Last November we received representations from the president of the British Turkey Federation. We immediately sent the Commission details of the structural aids given to the French industry. We are extremely disappointed that, so far, we have not received a definitive reply, even though many of the arguments are clear—although national aids, and particularly the industrial aspects involved in processing, are perhaps less straightforward than for other agricultural products. At the same time, we have made inquiries through our embassy in Paris to determine precisely what is happening in France. We have also had further discussions with the industry.
In March we received further representation from the British Poultry Federation, and we and the Commission discussed them. We are disappointed with the response from the Commission. My right hon. Friend the Minister has raised the matter personally with Mr. Dalsager, the Commissioner responsible for agriculture. We shall continue to press the Commission and the Commissioner until the matter is properly resolved. We must ensure that EEC aids do not distort competition. Aids on the scale introduced by the French Government distort competition and the Commission should be ready to take action.
I have dealt with the State aids brought to our attention by the British Turkey Federation last November, which are of a structural nature. But that leaves a second area to which my hon. Friend referred. The package announced in December 1980 for French agriculture amounts to almost £380 million of direct income aid. There is a poultry element within that. Immediately we knew of the package we raised the matter with the Commission, which immediately asked the French Government to provide details. The French Government did not reply until February of this year and the Commission replied to them 890 in March telling them that the package was incompatible with Community rules. We now await further action from the Commission.
I know that my right hon. Friend the Minister is not satisfied that any final action has yet been taken. We have seen only procedural steps by the Commission. We shall continue our pressure because we do not want our efficient turkey industry to suffer, which could happen if the French industry expanded through national aids. Although I express disappointment that we have not seen action by the Commission, the House and the poultry industry, especially the turkey industry, will realise that my right hon. Friend has already shown that he is prepared to act and not simply to put verbal pressure and persuasion on the Commission.
My hon. Friend is right in his remarks about the hygiene rules for the processing of turkeymeat—both the applications of the rules and their relationship to costs are unsatisfactory. Because of strong pressure from Britain, the Commission has brought forward proposals for better enforcement of the rules and for dealing with the cost aspect. That is important. The Commission has referred its proposals to the Council, and they are presently being discussed by a working group. We are also consulting the industry. In the meantime, because the position is unsatisfactory, my right hon. Friend has made available £2 million to assist our industry until there is a property harmonised scheme. That demonstrates that when my right hon. Friend is able to take action he will do so.
The same is true of third country imports and sluicegate prices, to which my hon. Friend the Member for Howden referred at the beginning of the debate. It applies equally to imports from the United States. We have seen a considerable increase in imports, and the tariff is applied to different qualities of product. Pressure has been mounted and action has been taken. That policy will continue. I am grateful for the way in which my hon. Friend's arguments have been advanced.
§ Question put and agreed to.
§ Adjourned accordingly at fifteen minutes to Eleven o' clock.