§ Dr. Roger Thomas (Carmarthen)In the few minutes that we have at our disposal, Mr. Deputy Speaker, I wish to say that the farmers of south-west Wales—many of them small and some not so small—are facing a rather bleak Christmas. Milk quotas were introduced nine months ago and, unfortunately, confusion still reigns in the minds of so many in the farming community about their future. It is a community which I and the Secretary of State represent. We have been awaiting information about the hardship cases and the secondary quotas for a long time. Many of the farmers of south-west Wales are looking ahead three months to the negotiations for 1985–86 instead of looking back nine months.
I am sure that the small village of Llangadog is indelibly fixed in the mind of the Minister of Agriculture, Fisheries and Food. It was the scene of an example of militancy among the farming community to which we are not accustomed. That militancy stemmed from frustration and the fact that the milk quotas had been introduced like a bolt from the blue. They represented a U-turn for the agriculture policy of all Governments who have held office since the war. Many of us look back to the publication of the White Paper, "Food from Our Own Resources". Until March, farmers were being urged to expand. The request was made to such an extent that in the past year milk production in Wales increased by 17 per cent. That was not far short of the expansion that took place in Northern Ireland. However, the additional quota in Northern Ireland amounted to almost double the quota that was to be made available to Welsh farmers.
We in Wales are concerned about the small farm with 40 cows or more, but not in isolation; our concern extends to all farms. The farmers have been somewhat reassured by an announcement by the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food that farms with an annual production of 200,000 litres of milk will be looked after by redistribution, but they represent only about half of the farms in south-west Wales. There are many farmers with 40 cows and upwards who are waiting anxiously to learn whether the outgoers scheme can be extended to them. If the scheme is to be successful, additional money will have to be made available. There should be some arrangement whereby farms, whatever their size, are able to surrender, in part, their milk production.
Given the confusion that has developed over the past nine months, it appears that the farmers of south-west Wales and the entire agricultural community are worried. We are worried about the future of our creameries. Due to the especially dry summer and winter, milk production in south-west Wales has fallen to the extent that some of our creameries are not getting sufficient supplies. However, farmers' wives are discovering that massive Irish product importations are now to be seen in our shops. Our farms are subject to a 9 per cent. cut in quota, but during the negotiations which took place last March the Irish Republic was allowed a 5 per cent. increase in quota. For the farmers of south-west Wales, this has been a raw deal and an unfair state of affairs.
We are anxiously awaiting what the Minister has to say. Above all, the message from the farmers of south-west Wales is that, when the negotiations take place in March 522 next year, we must put forward a case, preferably through the personal intervention of the Minister, for an additional quota for the farmers of Wales, particularly south-west Wales. If we can get that additional quota, people's fears will be eased; they will know what their future is.
At the moment, in our colleges of agriculture in southwest Wales there is a considerable drop in the number of students. Why has that significant drop taken place? The reason is that farmers cannot afford to send their sons to the colleges of agriculture. If farming is to develop in south-west Wales, it is essential that the know-how and expertise is handed down from one generation to the next.
Therefore, we should look, not back at nine months of confusion, when people have hardly known what tomorrow would bring, but forward to the negotiations that are to take place in Brussels in the early spring. If Wales does not have a better deal for the year to come, many Welsh farmers will be unable to carry on.
The truth is that the farmers of Wales cannot diversify. Farmers are committed to dairy farming. The climate and topography is such that they can carry on only that type of dairy farming. Indeed, it galls the people of south-west Wales when they watch a Sunday afternoon television programme and see farmers from East Anglia—the corn farmers—telling the farmers of south-west Wales that, as a result of the imposition of quotas, they over-reacted. I challenge the farmers in those lucrative arable areas of England to come to south-west Wales, for there they will see real hardship.
We hope that the Minister will give us a ray of optimism. We know of his connections with my part of south-west Wales and the respect that the people have for him there. We anxiously await words of optimism, because, after nine months of darkness and pessimism, the farmers in that area are surely worthy of such optimism.
§ The Minister of State, Welsh Office (Mr. John Stradling Thomas)I welcome the opportunity of this late —or early—hour to reply to the debate. In his closing words, the hon. Member for Carmarthen (Dr. Thomas) referred to my connections with the part of Wales that he represents. I am delighted to see present my right hon. Friend the Secretary of State, who also represents a similar constituency that is greatly involved in the difficulties that I freely admit the dairy industry has been passing through recently. It is still affected, as the hon. Gentleman said, by the upheaval of quotas, and he stressed that the uncertainty has caused a great deal of worry.
The uncertainty and the difficulties are due not only to the introduction of quotas but to the effects of the long, dry summer. As a result, milk production in south and west Wales has suffered an unexpectedly large reduction. However, that is not a pattern that I expect to continue. I greatly sympathise with all producers throughout the United Kingdom, not only in south-west Wales, who have been badly affected by those events, especially those who have no alternative to milk and little scope to adapt their dairy enterprises to a lower level of production.
I also fully appreciate the concern that has been expressed about the difficulties arising from the new arrangements, but I believe that the quota system does represent a significant step, in combination with price restraint, towards containing the Community surplus, which, even with the introduction of quotas, is expected to cost over £2.4 billion this year.
523 I am sure that after the inevitable period of uncertainty and adjustment, dairy farmers will be better placed to take the necessary decisions on long-term planning and future investment and that the industry as a whole will be more stable and better placed to respond to market demands.
The Government have taken positive steps to ameliorate the effect of quotas on those most harshly affected. The one-year phasing in has reduced the immediate impact, but we foresaw that there would be particular difficulties for certain areas, such as Wales, where production increased sharply between 1981 and 1983. That is why we held back a quota reserve of 2.5 per cent. to assist not just the special cases provided for in the regulations but those producers who were carrying out development plans.
Some 4,700 Welsh producers applied for special case treatment. I must take this opportunity to express our gratitude to the chairman and members of the local panel of the Dairy Produce Quota Tribunal for England and Wales for their invaluable work in processing those applications.
The Government are also making available £50 million over five years under the outgoers scheme, which is designed to help both those wishing to leave and those wishing to stay in milk production. Those leaving will receive compensation and the quotas surrendered will be re-allocated to those wishing to stay, giving priority to those who produced less than 200,000 litres in 1983 and providing an additional quota for those awarded an increase by the Dairy Produce Quota Tribunal for England and Wales in respect of exceptional hardship applications.
I am sure that that is the best way to help small producers, who represent more than half the total number of producers in south-west Wales. In addition, the aid to small milk producers scheme is being continued and a lump sum payment of £209.20 will be made to all producers who delivered not more than 200,000 litres of milk to the Milk Marketing Board in the 1983 calendar year and were still delivering milk in August or September 1984.
524 Last, but by no means least, farmers within the area added to the less favoured area whose incomes are below comparable incomes have been able to obtain higher rates of grant under the capital grant schemes on work commenced after 28 February 1984. Eligible works are the same as those which previously attracted the higher rate in the original less favoured areas —except for roads, bridges and similar items which retain the standard rates. A wide variety of investments in the new less favoured areas, including sheep pens, drainage and grassland improvements, now qualify for the higher rate.
In addition, all those in the extended less favoured areas will, if they occupy at least 3 hectares of eligible land, be able to qualify for compensatory allowances from 1 January 1985. The allowances are paid on breeding ewes and cows but not on dairy cows, although dairy farmers who run a separate livestock enterprise can benefit from allowances on the sheep and beef cows.
I should add that farmers in the less favoured areas pay a reduced rate of co-responsibility levy on milk deliveries to the dairies of up to 60,000 kg. The actual rates of compensatory allowance were announced recently and will, I am sure, benefit many dairy producers in the extended area.
The agreement reached on 31 March 1984 cannot be altered, and future allocations from the Community contingency reserve will be negotiated at the 1985–86 CAP price-fixing talks. The Commission's proposals have yet to be published, and it would clearly be necessary to look at the proposals on milk not only in their own right but as part of the complete package as it affects the United Kingdom. That being so, we shall have to decide upon priorities, once we have had a chance to study the price proposals in the light of the United Kingdom's negotiating objectives as a whole, not only on agriculture but on any wider budgetary considerations.
Even at the reduced levels of quotas which are already laid down for 1985–86—
It being Nine o'clock am on Thursday, the motion for the Adjournment of the House lapsed, without Question put.