Agriculture

HC Deb 18 April 1991 vol 189 cc599-665

[Relevant documents: European Community Document Nos. 6649/90 relating to the checks and penalties applicable under the Common Agricultural and Fisheries Policies, 6672/90 relating to irregularities and the recovery of sums wrongly paid in connection with the financing of the Common Agricultural Policy and the organisation of an information system in this field, 7320/90 relating to information on rural development initiatives and agricultural markets ( MIRIAM) and the Minutes of Evidence taken before the Select Committee on European Legislation on 16th April (HC 332-ii).]

Mr. Speaker

I have not selected the amendment in the name of the hon. Member for Thanet, South (Mr. Aitken) and his hon. Friends, but the matters covered in it may be referred to in the course of the debate.

As I said earlier, a large number of right hon. and hon. Members want to participate—[HON. MEMBERS: "Where are they?"] I therefore propose to put a limit of 10 minutes on speeches between 7 pm and 9 pm in the hope that all hon. Members who want to speak will be called. If those who are fortunate enough to be called before then will bear that limit in mind it may be possible to relax the limit.

5.5 pm

The Minister of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer)

I beg to move, That this House takes note of European Community Documents Nos. 5032/91 ADDI, ADD2 and ADD3 + CORI relating to prices for agricultural products and related measures (1991/1992), 4549/91 relating to the development and future of the Common Agricultural Policy, and the Court of Auditors' Special Report No. 2/90 on the management and control of export refunds; and supports the Government's intention to seek a price settlement that respects budgetary discipline and is consistent with the agricultural guideline, and to negotiate for further changes to the Common Agricultural Policy that make it more market-orientated, reduce its costs, lead to great integration between agricultural and environmental policies and apply fairly throughout the Community. Today we are discussing farming, which means that our debate is about the countryside, because our countryside is made by farmers, it is maintained by farmers and its future depends on farmers. So when we talk about the future of agriculture we are talking about the future of our countryside, which matters to the whole population, not just to the few who live in our rural areas.

This fundamental point is often forgotten when we debate agriculture in the House. It is easy to concentrate on the inequities of the common agricultural policy or on the changes needed to the silkworm regime, but we must not forget the role that farming plays in the life of this country. Farmers not only provide our food—they are at the heart of our rural communities and are the guardians of the landscape which is such an important part of our national heritage.

Even though most British people live in towns and suburbs, they still care deeply about our countryside—a fact that the Conservative party instinctively understands. Our roots come from the countryside, so we want to ensure that the rural part of our nation continues to give the urban and suburban parts of it the sort of green lung that is so necessary for their health.

There is no doubt that farmers face a period of great uncertainty. The hon. Member for Newham, South (Mr. Spearing), when questioning me in the Select Committee the other day, gave me the chance to remind the Committee, as I now remind the House, that the basic change that has taken place has not been our joining the European Community or any particular system or change in system—it has been the move from a world in which the West was afraid of shortages of food to a world in which those who can afford it can buy as much food as they need. The change from shortage to surplus has fundamentally altered the picture for agriculture.

Throughout the Community farm incomes are under pressure at a time when the Community has never spent more on agriculture. Therein lies the great challenge: we are spending more on agriculture than ever before, yet our farmers are finding times tougher than ever before. Continuing high levels of production, lower levels of consumption, including exports and falling world prices, are the background to spending on the common agricultural policy which is likely to be about 30 per cent. more in 1991 than in 1990.

The fact that expenditure on agricultural support can reach record levels at a time when farm incomes are under severe pressure everywhere is eloquent testimony to the bankruptcy of the Community's current policies, which clearly must change —

Mr. Dennis Skinner (Bolsover)

Not just current—always.

Mr. Gummer

I do not agree with the hon. Gentleman. The policies were designed to deal with problems of shortage, which they did extremely well, but those are the least successful sort of policies for dealing with surpluses. They are the victims of their own success.

Mr. Ralph Howell (Norfolk, North)

Can my right hon. Friend explain how it is that we spent 1 per cent. of gross domestic product on agriculture in 1960, 0.5 per cent. when we joined the European Community in 1973–74 and 0.25 per cent. now? How does that square with the claim that we are spending more than ever on agriculture?

Mr. Gummer

My hon. Friend must recognise that spending on food falls proportionately in a richer society, and that the number of people involved in farming has fallen sharply in Britain and in the rest of the Community. The proportion of GDP spent on agriculture is not a proper comparison. If my hon. Friend looks back to the 19th century, he will find that the proportion of GDP spent on agriculture was very much higher because food loomed much larger in the budget of a rural society than it does today. That is not a proper measurement.

The message that I put forward is not new. Successive Ministers of Agriculture have said the same thing. The United Kingdom has taken the lead in the Community in pressing for reform of the CAP. We have had some notable successes, but a great deal more needs to be done. This afternoon I want to spell out, in a positive manner, what needs to be done. The documents before us bear strongly on that.

The answer to the question as to what changes are needed is very clear. First, we need to analyse the Community's current policy properly and, curiously enough, there seems to be a general agreement on that analysis. Most people would agree that prices under the CAP are too high. It follows that prices need to be reduced, so sustained reductions in the overall level of support must remain central to any reform of the CAP. It cannot be sensible to allow the system in Europe continually to provide prices way beyond what is realistic.

Mr. Teddy Taylor (Southend, East)

Hear, hear.

Mr. Gummer

Despite the worry of getting such support from my hon. Friend the Member for Southend, East (Mr. Taylor), let me put my point clearly. My hon. Friend the Member for Southend, East would agree with me that world prices are no indication of the prices that could be charged, for they are merely dumped prices. We have to look for realistic prices which provide a reasonable return to those who produce food reasonably efficiently. Obviously, we cannot expect our farmers to produce food as cheaply as those who do not have pollution restrictions, consumer protection demands, planning arrangements and environmental restrictions that increase their costs. We cannot expect them to produce food at the same price as those who have none of those restrictions. Therefore, we have to have realistic prices. However, it would be ridiculous to say that the prices we have at the moment are realistic, so a continuing downward pressure on prices is a necessary part of any sensible policy for reform. That is accepted by the National Farmers Union as well as by the Government.

Secondly that reduction in support must be at a pace which permits the industry to adapt and be on a fair and equal basis across the Community. Those two considerations are essential. The pace must be one which can be accepted by the industry and the coverage must be across the entire Community. We must have no more attempts to reform the common agricultural policy by dealing with northern countries and ignoring southern countries. We must insist that the whole Community be brought under the same scrutiny. In the same way, cuts in support in the Community must be matched by reductions applied by our competitotors outside the Community which is why a GATT agreement to reduce levels of support and protection worldwide remains so necessary.

We have to remind the press in the United Kingdom yet again that we in the EC are not the only people who support agriculture. The United States of America has an enormous bill for agricultural support every year. Smaller countries such as Switzerland, Norway and Finland are among the largest supporters, proportionately, of their agriculture. Japan spends much more on agricultural support than the countries that are normally pilloried. Therefore, it is necessary to reduce all that support across the world. Otherwise, in seeking a more sensible system, the Community will simply remove its markets elsewhere. So prices must be reduced at a speed which the farmer can accept, in circumstances in which that reaches the entire Community and when there are matching cuts in the rest of the world.

Mr. Michael Lord (Suffolk, Central)

Will my right hon. Friend make it clear whether he is talking about prices to the farmer at the farm gate or prices in the supermarkets? He will be aware that there is a great difference between the two and that that is a matter of some concern to our farmers. Will he make that distinction?

Mr. Gummer

I am talking about agricultural prices in terms of the European Community, so we are discussing prices at the farm gate. My hon. Friend is perfectly right to draw attention to the fact that as a proportion of a family's spending the price of food has not risen anything like so fast as other parts of the retail prices index, and farmers have played an important part in ensuring that prices in the shops are lower than they would otherwise have been, but that does not mean that the fundamental amount of support does not now give rise to considerable worries.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Will the Minister give way?

Mr. Gummer

I shall give way to the hon. Gentleman in a moment.

Cutting prices will, of course, benefit the consumer and by reducing the cost of the CAP will benefit the taxpayer. Price cuts also provide the most economically efficient way of dealing with surpluses. In time, they would not only reduce production, but stimulate consumption. I never understand those in the European Community who tell me that we should have co-responsibility levies which would do nothing more than tax the farmer without reducing the end price so that there would be no extension of the market. Those of us who want to sell more products want to get the advantage of price cuts rather than the disadvantage of co-responsibility levies.

Of course, in today's circumstances there is no possibility of making price cuts which would have that immediate effect upon the reduction of production which would be necessary. It would be quite impossible to do that and it would be quite wrong in any circumstances. Therefore, we need measures which act directly on the level of production, but they must complement and not substitute for action on prices. There are those who try to suggest that by managing the market efficiently one can get out of the problems of having to reduce prices, but that means keeping the price up to the disbenefit of the consumer and the taxpayer without allowing the farmer to come closer to the market. Managing the market in the way which is sometimes suggested would destroy the impact of consumer preference upon the farmer and the producer. It is important for our farmers, who have the advantage of being so efficient, to be closer to the market.

We must act directly on the level of production, although that direct action must complement and help the price action rather than compete against it.

Mr. Alex Carlile (Montgomery)

Will the Minister give way?

Mr. Gummer

I shall give way in a moment to the hon. and learned Gentleman, who is a well-known agriculturist from the centre of Wales. If he does not know what I mean, it shows that he has not been present at any agriculture debates that I can remember for a long time. When I went, to his constituency and informed his constituents of this, they were most surprised as he had not mentioned it.

Dr. Godman

I am grateful to the Minister for giving way. May I point out to him that any further reductions in the price guaranteed by the European Community to the African, Caribbean and Pacific cane sugar producing countries for raw cane sugar would have a disastrous effect on those developing economies? That was put to me on Monday by representatives of Caribbean countries. I urge the Minister to look sympathetically at those developing countries.

Mr. Gummer

I have considerable sympathy for them and the hon. Gentleman should acquit me of any opposition to their cause. I have always stood strongly for them. The Ministry of Agriculture, Fisheries and Food is the only Ministry in the Community which insists that any submission to Ministers affecting developing countries should carry a compliance cost for developing countries. That is an internal rule of my Ministry and I do not think that it is paralleled anywhere in Europe. I should like to see the Commission take the same view.

The price of sugar in the Community is too high. It is proposed that the price should be reduced but it would be odd to reduce the price to our own producers and to say to producers elsewhere with whom we have an arrangement that is favourable to them—they get the same price as Community producers—that their prices will not be reduced at the same time. Many producers outside the agreement work on a greatly depressed sugar price, partly because of overproduction in the Community and Community prices. Although the hon. Gentleman's argument is superficially attractive, it must be taken in the context of the need for a very much wider change in the world's sugar system. I cannot wait for that to be corrected before doing something about the wildly unrealistic price of sugar in Europe. Quotas are the first area to be tackled in direct action on production.

Mr. Alex Carlile

I hate to disappoint the right hon. Gentleman, but whatever visit he paid to Mid Wales passed unnoticed—at any rate, less noticed than the visit by his right hon. Friend the Secretary of State for Wales, who has discussed these issues with farmers on a number of occasions. We are grateful for that but he was unable to satisfy them. What is the Minister's message to people in a constituency such as mine with a high percentage of people employed in agriculture? Is not his only message that his attitude towards farm prices means that there will be burgeoning unemployment in agriculture in Mid Wales? His message is that he intends to do nothing about that.

Mr. Gummer

The hon. and learned Gentleman should be kind enough to listen to my speech before showing his ignorance of our policy, which he has never been present to listen to or argue about. [Interruption.] The hon. and learned Gentleman should tell his constituents that his interest in agriculture is so great that he has not asked questions or been present for agriculture debates. He has been present on far fewer occasions than his hon. Friends.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

On a point of order, Madam Deputy Speaker. I took part in the last agriculture debate about six weeks ago in which my hon. and learned Friend intervened. The Minister should check Hansard because he is misleading the House.

Mr. Gummer

I greatly respect the hon. Gentleman and I am happy to withdraw my allegation for that occasion. The attendance in agriculture debates by the hon. and learned Member for Montgomery (Mr. Carlile) must be few, otherwise he would know what I am offering farmers.

Mr. Alex Carlile

On a point of order, Madam Deputy Speaker. The Minister of Agriculture, Fisheries and Food chooses to attack me for allegedly failing to attend certain debates. I ask him to withdraw that remark unless he is able to tell the House which debates he alleges I have not attended.

Madam Deputy Speaker (Miss Betty Boothroyd)

I am sure that the Minister will be responsible for his own comments.

Mr. Gummer

I have no doubt that the information that I could give to the House and will give to the hon. Gentleman would make my point quite clearly. If he listens to my speech he will have to withdraw his allegation about what I am offering farmers. To interrupt the beginning of a speech in such a way shows that the hon. and learned Gentleman does not want to hear the rest of it. That is because he knows that the Government's policies are clearly so much better than those that he propounds and that he cannot stand against them.

Mr. Alex Carlile

I am sorry to take this matter further, but I would like to make it clear to the right hon. Gentleman and to the House that my constituency depends heavily on agriculture. I am interested not in the right hon. Gentleman's fourth-form musket-style debat-ing, but in the agricultural community that I represent. His allegation is quite wrong, as my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) made clear. I ask the Minister to withdraw his remarks unreservedly and not merely assert that somewhere he might be able to find some evidence to back a quite disgraceful personal allegation.

Mr. Gummer

The hon. and learned Gentleman is trying to get out of what he knows to be true, and he does so because he made an unsuitable intervention and was not prepared to hear what I had to say about our policies on agriculture.

Mr. Teddy Taylor

Will my right hon. Friend the Minister remind the silly Liberals who claim to be friends —

Madam Deputy Speaker

Order. We are at the beginning of the debate and it is high time that we returned to the subject before the House.

Mr. Gummer

We must deal with the matter not only by price cuts but by restricting overproduction. The first area in which that can be done is the area of quotas. It is remarkable that the Community is proposing in the price-fixing arrangements to cut the dairy quotas by so much less than is necessary that it will store up future trouble for our farmers. That is a real problem. A quota system is primarily intended to bring supply and demand into some kind of balance. To have a quota system with all its disadvantages, problems and freezing and not to use it in the one way that it can be used is foolish.

Mr. Ieuan Wyn Jones (Ynys Mon)

Will the Minister give way?

Mr. Gummer

I shall not give way on that matter as I wish to make progress and you, Madam Deputy Speaker, have asked me to continue.

We must also look at new ways to restrict production, and the first of those must be an extension of set-aside. The Community proposes such an extension, but in very narrow terms which are not acceptable environmentally and do not cover the whole Community. Set-aside must be shared by the whole Community and not merely by those of us, such as the United Kingdom, who see it as necessary. I am not prepared to have parts of the United Kingdom set aside so that other Community countries can produce more. We need a system that is properly based on national targets for the area of land to be set aside in each member state. It must also be environmentally friendly.

We have already improved our own regulations and I hope that with the spreading of the countryside premium scheme to the whole country, after we have taken into account the pilot scheme in the eastern counties, we shall be able to improve it further. The Commission has so far not been prepared to go as far as it should down that route.

I have spoken about the issue of restricted production, but we must make fundamental changes in other areas. The intervention system needs to be considered, particularly for high-value products such as beef, which has been turned into a low-value product by freezing it for intervention. That cannot be a sensible way to proceed on beef production. The Community should look for an alternative system of support, and one option might be improved premium arrangements. We cannot continue to take into intervention large amounts of beef, the influence of which hangs over the market in the succeeding year. At the present rate, we shall have a million tonnes of beef in intervention hanging over the market unless we do something about the problem.

A similar problem is the tobacco regime, which costs us £1,000 million per year. It is no good suggesting that we should not discuss crops that we do not grow; on the contrary, we should consider them carefully. We know the economic and social importance of tobacco-growing to the regions involved. I have recently been to Greece and seen it for myself. But why should the Community spend money on producing unsmokable tobacco? That may have some health advantage, but I cannot think of any other advantage. At present, money is being spent to produce tobacco that no one can smoke, which is then burnt to allow more money to be spent on producing tobacco that no one can smoke. That is not a sensible policy and I wholly support the Community's desire to move from that position, both by a reduction in support for tobacco in general and by encouraging cultivation of kinds of tobacco that can at least meet the unfortunate demand of those in the Community who wish to smoke.

Action also needs to be taken to curb expenditure on the production of other Mediterranean products, such as wine, olive oil and cotton. The reform of the common agricultural policy must not be confined to the north of the Community.

Those changes are necessary but they are not, of themselves, enough. If the hon. and learned Member for Montgomery, with whom I had an unfortunate altercation earlier, had waited, he would have realised that they are only the first part of the policy that we have propounded at Question Time and in numerous debates throughout. the past year.

The second major part of our policy involves helping farmers to become protectors of the environment. The CAP will need to take much greater account of environmental considerations. We need policies that will both preserve and improve our countryside and safeguard our wildlife. Respect for the environment must become an integral part of the Community's approach to agriculture.

That is already happening in Britain but, unfortunately, the only part of the Budget that I can use for such purposes is the 20 per cent. over which I have control. The expenditure of the 80 per cent. controlled by the European Community as a whole does not yet take proper account of the environment and is not fundamentally driven by environmental concerns. I look to the rest of the Community to follow the Government's lead on environmental thinking and action. That is starting to happen. The French Government have undertaken a programme very similar to ours, albeit under a new name. The Germans and others are taking similar steps and I am pleased that the environmentally sensitive areas pioneered here are now a fixed part of the common agricultural policy.

Some progress has been made: steps have been taken —the lead has been given. But progress has been very slow, and spending on the environment still accounts for only a tiny proportion of overall spending on the CAP. There is a good case for some redirection of spending from agricultural support to measures that benefit the environment. It is essential, however, that any new environmental policies recognise the diversity of environmental features in the Community. We want common rules and principles, but we want each country to be able to make its own decisions about the kind of steps that we should like to be taken. That is necessary because of the wide-ranging environmental needs of different parts of the Community.

We must ensure not only that our environmental policies assume greater prominence but that environmental considerations are taken fully into account in the development of Community support policies. We are setting the example by greening the hill livestock compensatory allowances, and next time round they will include the new green element. We obtained permission from the Community to do that and we hope that others will follow our example.

Such policies would enable us to preserve and recreate the full diversity of our countryside—wetlands and pastures, moors and woodlands. They would provide not only better protection for the environment but a more stable framework for farming in this country and in the Community as a whole.

The Community's future agriculture policy needs also to recognise the regional diversity of the Community and the vital role that agriculture plays in certain areas where farming is the only real economic activity and source of employment. It is sad that the hon. and learned Member for Montgomery did not wait to hear this part of my speech before intervening. It is essential to maintain farming in such areas not only to preserve rural communities but to conserve the countryside. In such areas, there is a case for special help to preserve what would otherwise be unviable farms.

That is not a new policy. In disadvantaged areas, such as our own hills and uplands, the Community is already committed to maintaining agriculture.

Mr. Alex Carlile

It needs money.

Mr. Gummer

By saying that, the hon. and learned Gentleman reminds the House that he has forgotten the considerable extra amounts given by the Government to his constituency and others, which were welcomed by farmers. That is another agricultural fact that the hon. and learned Gentleman seems to have missed. In pursuit of that policy, I increased the hill livestock compensatory allowance by 14 per cent. on average this year. Total HLCA payments in the United Kingdom now amount to £142 million in a full scheme year.

Mr. Carlile

It is not enough.

Mr. Gummer

It is all right for the Liberal Democrats to say that it is not enough because they know that they will never have to foot the bill. That is the easiest argument. They argue for more and more to be spent but never bother about the bill. No doubt the hon. and learned Member for Montgomery finds this boring because I am giving the House the facts rather than the fantasies that he presents to the electorate.

I have outlined the ways in which we believe that the Community's agricultural policies should be changed. Many other ways of reforming the CAP have been suggested, but most of them would treat the symptoms rather than the cause. I have mentioned those who want to extend compulsory restrictions on production. The key element of that idea is that such restrictions would reduce surpluses without reducing prices; indeed, supporters of the policy usually want prices to be increased. But we cannot have a policy that gives farmers the right to charge ever higher prices while placing greater restrictions on the amounts that they can produce. That would not be a sensible policy. It would not help farmers react to new developments and would make farming less able to adjust to the demands of the market.

Then there is a suggestion that we ought to reduce production by means of nitrogen quotas. How would we allocate those quotas? There are wide variations in usage, as nitrogen requirements can vary widely from field to field, and even within fields. Allocation on a flat-rate basis would be unfair and allocation tailored to individual circumstances impossible to administer. We would have nitrogen-running. There would be a black market in nitrogen because it is so valuable. I cannot believe that that is a sensible answer to the problem.

Then there are the proposals put forward by Mr. MacSharry for the reform of the CAP. I do not want to enter into those discussions again because the House knows my views and because I now know that the official Opposition agree with us that the MacSharry plan is not one that we can in any way accept. I am sorry that the Farmers Union of Wales does not seem to have recognised the effect that the plan would have on its own members. It is the one body that appears to want Mr. MacSharry's views to prevail. I hope that it will think more carefully about its own membership. There is no doubt that its farming members would lose out considerably. There would be a direct transfer of help from Wales to Ireland. Those are facts, not fantasy, and I hope that the union will reconsider its view.

There is an objection to Mr. MacSharry's proposals even more important than their fundamental discrimination against the United Kingdom. MacSharry would want to try to hold up the natural changes that have been a feature of farming ever since it began. One cannot bribe people with more and more money every year to stay on wholly uneconomic plots. If we tried to do that, we would never be able to meet the bill, and we should never be able to provide the incomes which, with rising incomes elsewhere, those concerned—however distant—would demand.

Therefore, the MacSharry proposal is wrong in its fundamental principle. It does not face the fact that agriculture has been developing ever since it started and that people have been leaving the land, even in those countries that have done a great deal to support the smallest of farmers, such as we have not seen in this country for a century. Even in those countries such farmers have found increasingly that the living which they can make and the work which they have to do are not attractive any longer.

Mr. Michael Latham (Rutland and Melton)

rose——

Mr. Gummer

I will not give way as I am afraid that if I do I shall be in real trouble with you, Madam Deputy Speaker.

The number employed in farming in the Community has fallen by some 75 per cent. in the past 30 years. People simply do not want to spend their lives trying to farm small, uneconomic holdings. I am referring to holdings which we find not in this country but only in some of the southern European countries. For example, in the milk sector Welsh farms would be very much damaged were there to be a MacSharry plan. Welsh farmers would find their ability to produce transferred directly to their competitors on the other side of the Irish sea.

In the papers before us we have a wide range of issues to consider. I should not like the House to avoid consideration of the whole problem of the special report of the Court of Auditors on export refunds, which is document No. 2/90, nor Community documents Nos. 6649/90 and 6672/90 on fraud. I wish particularly to draw attention to the fact that the United Kingdom has fought hardest against fraud in the Community and that we see fraud as one of the major ways of discrediting the common agricultural policy. Therefore, we are most concerned to do something about it.

Mr. Christopher Gill (Ludlow)

rose—

Mr. Gummer

No, I cannot give way—I must make this point.

I am particularly worried about the way in which the press has reported these matters. Of course, Britain reports more effectively than any other country. We want to stamp out fraud but the press suggested that because we report more cases there must be more cases in the United Kingdom. We want to encourage other countries to report the cases of fraud which they have. Although a large number of cases are reported in this country, the amounts involved are tiny compared with those reported elsewhere.

If I may give the House the figures, in 1990 of all cases reported, 24 per cent. were from the United Kingdom but they accounted for only 1..5 per cent. of the total value involved. We must remind the rest of the Community that fraud undermines the credibility of the common agricultural policy. Therefore, it has to be dealt with much more effectively than heretofore.

Mr. Gill

rose—

Mr. Gummer

If I were to give way to my hon. Friend, others would feel much aggrieved for I have refused to give way to them.

I return at the end to the problems of price fixing. I want to explain to the House the curious argument going on at the moment as to whether the budget can be ameliorated or made easier by a roll-over arrangement. I see that my right hon. and hon. Friends have underlined that in their proposed amendment to the motion.

The cost of German reunification is substantial and it would be odd not to suggest that we do not expect it to arise again. It is a once-off cost. I also have to tell the House that it is already included in the budget. We cannot have it twice. Having agreed that it is in the budget, and having agreed only at the end of last year that we should not need an increase in the budget, we do not need to increase the budget. That is why the United Kingdom Government, with our Dutch friends, made it clear that it is not a satisfactory means of proceeding.

If the common agricultural policy is to be reformed, we must stop putting reform off until next year. We have to start this year. The CAP price review this year has to reflect the priorities which I put before the House at the beginning. I repeat to the hon. and learned Member for Montgomery that those priorities mean moving at a pace that the agricultural community can accept towards more realistic prices. They mean using mechanisms which do not counteract that for the reduction of production, including the proper use of such quotas as we have, without their extension, and the use of set-aside and of extensification. They mean turning the emphasis upon the environment so that farmers can be rewarded for the job that they do in looking after the countryside. They mean insisting that those policies which manifestly need root and branch change, like the intervention system for beef arid the tobacco regime, are so changed.

The priorities mean all those things, not next year, not the year after, not when we have got some deal from GATT, but starting the process now in the price fixing. That is why the Government have supported the vast majority of the proposals of the Commission in the price fixing. That is why we insist that we move sharply in that direction and indeed have suggested that we should move faster. It is also why we have insisted that the level playing field be established. That is why I am not prepared to have "a third, a third, a third" reduction in the agri-monetary changes.

We deserve now to get the alignment which our farmers ought now to have. That again is an earnest of the changes which ought to take place, must take place and will take place before the end of 1992 and the completion of the single market. If we do it a third, a third, a third, we shall give the Community the chance to say at the end, "We cannot solve the problems—we have no alternative to green money." That would be wrong and contrary to the agreement.

Therefore, I hope that the House, in reading and considering the documents before it, will do so with a common view that what we need is change in the common agricultural policy now—change at a pace which is acceptable, change which puts the environment much more central to the whole policy, change which respects the need for more realistic prices, change which uses mechanisms for control of production such as we have and extends that into set-aside which will benefit us all. Above all, we need change which bears on every country in the Community and not merely on the United Kingdom, and change which bears upon the Community's competitors and not just upon the Community. Such a change would give confidence and a future to British agriculture. That is the change that the Government propose and which must come about in the common agricultural policy.

5.47 pm

Dr. David Clark (South Shields)

We are having the debate on this series of Community documents against the background of an agricultural community that is very confused, that is lacking certainty and that seeks confidence. I thought that the Minister missed a good opportunity to reassure the farming community. It was only in the last five minutes or so that he showed that, slowly and surely, the arguments of the Opposition over the past four years are beginning to find fertile ground.

I am very pleased that the Minister has made some move along those lines. If there is any certainty at all in British agriculture, it is that it is in a mess; Conservative Members will accept that. At the annual conference of the National Farmers Union in February farmers claimed that their incomes were the lowest since the war.

Mr. Roger Knapman (Stroud)

rose—

Dr. Clark

I hope that the hon. Gentleman will allow me to get past my first sentence before intervening. I may give way later.

Yesterday we had the publication of the Government's own document which confirmed that there had been a reduction in agricultural incomes. For every day that the Minister has sat at his desk in Whitehall place, 16 farmers and six farm workers have left their farms. Conservative Members know that confidence and morale in agriculture are at their lowest ebb since the second world war. In addition, the balance of payments deficit on food has now reached £6 billion. In their 12 years in office, the Government have managed to double our food trade deficit. It is not a pretty picture.

The decline in farming has taken place when there has been no world trade war nor adverse climatic conditions. Therefore, the responsibility can be placed firmly and solely on the Government's shoulders. For 12 years now they have been driving farming unrelentingly towards disaster. Farmers have every reasons to complain. In fact, I know that that is the official Government view. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food is reported in the Lake District Herald of 6 April as telling the Penrith and Border Conservative Association in Wigton that that was the case. Therefore, there is no disagreement between the Opposition and the Government because we both believe that farmers have every right to complain about the Government.

The problems facing the agriculture industry are being affected not only by the Minister's individual portfolio but by the Government's general policy of maintaining high interest rates. That has probably affected the farming industry much more than any other industry, especially in view of the Government's policy in the early 1980s of encouraging farmers to borrow and over-capitalise. The Minister's speech today did not have the bravado that he showed last year and I can understand why. In the corresponding debate last year he said: The Government have presided over the largest reform there has been in the common agricultural policy, and very much greater reform than anybody thought was possible. There is no doubt that most other countries in the Community have now come to accept what was a United Kingdom initiative—that is, a common agricultural policy increasingly designed to meet supply with demand rather than supply with surplus."—[Official Report, 6 February 1990; Vol. 166, c. 792.] How hollow those claims appear today.

The Minister returned today to the theme of matching supply and demand which, as we both acknowledge, is the key to the debate. But it has not worked. Intervention stores in Europe are filling up with surplus food. For example, there are 710,000 tonnes of beef in intervention stores, 343,000 tonnes of butter, 347,000 tonnes of milk powder and so on. That is despite the fact that we have been selling thousands of tonnes of butter to the Soviet Union, with similar sales of cheese to Japan, at knock-down prices, all paid for by the poor European taxpayer.

All that has occurred before we face the inevitable changes that will be forced upon British agriculture by the GATT round and the proposed changes in the CAP that we are discussing now. There will be changes just as surely as night follows day.

The Labour party welcomes the potential changes, seeing them as an opportunity to create a more prosperous agriculture based on sound environmental principles and the supply of good-quality healthy food. I wish that the Minister had used his opportunity today to sell that line in a positive manner. The fact that the GATT negotiations have come to a head when the CAP budget reaches breaking point is, in a sense, most appropriate.

It is clear that the 1988 reforms were shallow and simply have not worked, as we predicted in the House at that time. It is interesting to read the Hansard of spring 1988 and wonder what became of the then Prime Minister's extravagant claims of achievements in the reform of the CAP. They were doomed to failure from the start, so their failure now has come as no surprise.

There is one important point on which the Labour party agrees with the Government and that is the insistence that this year the EC must not breach the CAP legal budget limit. That limit was agreed only three years ago and was announced to the House by the then Prime Minister as a legally binding document. Now, at the first puff of smoke, some EC Ministers want to breach the budget. The Government have a power of veto which I hope they will use if necessary. The Minister will have the Opposition's backing if he does so.

Mr. Richard Livsey (Brecon and Radnor)

Does the hon. Gentleman agree that one reason why the budget is being overshot is the import of beef from eastern Europe, which is swelling the intervention stores and costing the EC budget far more than was originally expected? Is it not true that that problem needs to be tackled head on because British farmers are paying, in part, for the unification of Germany?

Dr. Clark

Obviously, the import of beef from eastern Europe has caused some problems with the EC budget. However, as the Minister explained, the imports from east Germany were included in the budget. The Commissioner assured me that that was so and the Minister has agreed with it today. I concede that there may be some point in it, but It does not have the significance that the hon. Member for Brecon and Radnor (Mr. Livsey) suggests.

Mr. Gummer

I do not want to miss the one true point made by the hon. Member for Brecon and Radnor (Mr. Livsey). If people think that they can obtain beef from eastern Europe, it will have a depressive effect on the price. There is no doubt that the price of beef has been reduced considerably, not just by the imports but by the fact that people think that there could be such imports. That means that traders are able to push prices down. The hon. Member for Brecon and Radnor has a point which is outwith the budgetary considerations. It is a price consideration and it has indirectly increased the amount of produce going into intervention because of the depression in prices.

Dr. Clark

I shall not follow the Minister down that route.

I want to make the main point about the budget. It is right to remind the House of the cost of agricultural subsidies in Europe. The growth rate is truly alarming. In 1989 the cost to the taxpayer was £17.4 billion. In 1990, the cost had escalated to £21.7 billion and the figure now proposed is £23.1 billion. The Minister has already referred to an increase of one third in the budget and there was a suggestion at the meeting of Finance Ministers last week that, unless a firm stand is taken now, farm subsidies will increase by 50 per cent. in the two years between 1990 and 1992. It cannot go on. We hope that the Government will stand firm on that point.

It has been argued that the budget limit should be breached because of the unification of Germany, but that point has been answered fairly and squarely by the Minister today.

Having said that, any consensus must end because facts prove beyond a scintilla of doubt that the Government have been negligent of United Kingdom farmers and that consumers and environmentalists have suffered in the process. As the Minister knows, it is not only the taxpayer who foots the bill for the CAP, but the consumer. The consumer is the major loser in the CAP. The Organisation for Economic Co-operation and Development estimated that the total cost of the CAP in 1989 was £59.6 billion. A total of £33.1 billion was due to higher food prices and £26.5 billion was due to taxation. Consequently, the average household of four was contributing as much as £14 a week to the cost of the CAP in 1989 and since then the cost has increased.

I shall take the argument a little further. When the Minister moved the motion today he made great play of his commitment to environmental forces. That is quite right. We have argued all along that agriculture is about more than simply producing food and retaining the rural community, important though they are. It is also about preserving our environment. I wish that the Minister would match his words with actions.

I made a calculation of Ministry expenditure on environmental issues, such as on environmentally sensitive areas, research and development and capital, farm woodland and nitrate grants. It amounted to less than 7 per cent. of the total budget and it simply does not match the Minister's commitment.

I tried to find justification for that and was taken by a MAFF press release of 27 March. I thought that we had seen Valhalla, because in bold type it is headed MAFF Headquarters To Green Up Its Act". That claim was sustained by the fact that the Parliamentary Secretary, the hon. Member for Ripon (Mr. Curry), was to plant a tree—one tree to green up the Ministry.

Mr. Lord

For a start.

Dr. Clark

The hon. Gentleman says, "For a start." We are well into the 1990s; hon. Members have been arguing for more environmental measures by the Ministry of Agriculture, so we must be well past a start. The Minister will have to raise his ambitions if he expects to be taken seriously by environmentalists.

The Opposition violently disagree with the Government's policy of slashing expenditure on research and development. We have debated the Government's shortsighted policy on so-called near-market research many times. Only last week, evidence showed that the Government axe is to be wielded further. The Agricultural and Food Research Council faces a 50 per cent. cut in funds for replacement and new equipment. We learnt that the number of scientists on AFRC's payroll will fall from 2,084 in March 1990 to 1,470 in March 1992, in addition to the thousands of research scientists who have been made redundant by the Government. To destroy one seed corn is recognised as folly by farmers throughout the world and I wish that the Government would take notice of that.

Mr. Andy Stewart (Sherwood)

As a farmer, I was beginning to become rather excited because the hon. Gentleman said that farmers are not getting enough for their products. He confused me by saying that the taxpayer is paying too much. Will he increase prices so that I get more, or will he renege on what he is saying about taxpayers and make them pay more?

Dr. Clark

If the hon. Gentleman had listened, he would be aware that I was arguing that farmers have had a raw deal and that the CAP is probably the most inefficient method of delivering money to farmers. For every £3 that taxpayers pay into the CAP, only £1 goes to farmers. In theory, we could halve agriculture subsidies, and by directing them more accurately could increase some farmers' incomes. I shall develop that point later.

Another manifestation of the Government's handling of scientific research is bovine spongiform encephalopathy. I know that the Minister is upset by my comments on BSE, but I must raise the matter with him again. Last year, Dr. Harash Narang, a Government scientist working on Tyneside, felt that he could contribute to solving the problem of BSE. He is an acknowledged expert in detecting Creutzfeld-Jakob disease, having worked with a Nobel prize winner, Professor Gadjusek. Using the electron microscopy method, he had been able to detect scrapie in sheep and was confident that diagnostic techniques could be adopted for BSE. After visiting MAFF's central office at Weybridge, he was encouraged to apply for a £20,000 grant, which he did. That money was entirely for travel and subsistence; he was receiving none of it himself. After initial encouragement, his formal application was refused. Fortunately, a benevolent Tyneside business man, Mr. Ken Bell, heard about that and was so impressed that he put up the money.

The Ministry—I say this with sadness—was not to be outdone and systematically set out to scupper that research. For example, after months of delays, samples of cattle brain were offered for experimental work at £150 each. After parliamentary questions, the price was reduced to £50. I rang local abattoirs, which were happy to supply the brains for £1.50. That delay was an example of trying to price Dr. Narang out of the market.

Fortunately, Dr. Narang proceeded and his diagnosis was 80 per cent. successful. I understand that his work has been stopped because of his superiors' failure to file an application with the Health and Safety Executive for him to continue his research.

Today, I received a copy of a letter showing that Dr. Narang is seeking permission to take his work to the

United States of America. He says: I have live plaques on agar plates which are drying. This material is very valuable to me and therefore if you … have no objections I will do the necessary process at the National Institute of Health in the USA. Is the Minister trying to force British scientists abroad?

That work will be privately financed and will not cost the Government anything. As the Minister knows, Dr. Narang's diagnostic tests for BSE have proved 80 per cent. correct. He is at an advanced stage of working on DNA fingerprinting for BSE and has a scientific paper on that awaiting publication.

The Minister wrote to me today—I received the letter while I was on the Bench —arguing that he was not prepared to support Dr. Narang because, Quite simply, an effective post-mortem test for BSE already exists. The right hon. Gentleman knows that that is not true. When we pressed him on why he was not prepared to follow the recommendations of the Tyrrell committee and carry out random sampling of slaughtered cattle to judge the extent of BSE, he said that was not possible or practical because it would take too much scientific expertise and time to pursue.

I understand that, because it takes between six and eight weeks to get a positive result. Doctor Narang achieved a result within two hours of being telephoned by MAFF to pick up the brains, process them, carry out the analysis and get the result. Such scientific expertise should be encouraged rather than frustrated.

I cannot prejudge Dr. Narang's results, but I know that as so much is at stake with BSE it would be shameful of the Minister to continue to frustrate such scientific effort.

Mr. Alex Carlile

The hon. Gentleman has given a good example of the Government's attitude to ongoing scientific research. I am sure that he is aware of their attitude to research that has taken place. They decided a little time ago to give the intellectual property rights to research that they owned —patents and copyrights —to the British Technology Group. They now propose to privatise the group without taking steps to retain the intellectual property rights—invaluable research and discoveries that have been made at public expense by researchers working, to the Minister's credit, with the encouragement of the Ministry. Does the hon. Gentleman agree that, at least, the Government should ensure that those property rights do not pass as family silver when BTG is privatised?

Dr. Clark

The hon. and learned Gentleman makes a fair point, which I accept. One of the greatest condemnations of the Government is that, although they were headed for almost 12 years by a scientist, they are the most anti-scientific Government that Britain has known. We shall rue the day that we drove so many scientists abroad and killed so much scientific initiative.

The Labour party regretted—as did the Minister—the breakdown of the GATT talks early in December. It is in Britain's interests to liberalise world trade, in the industrial as well as the agricultural sphere. Whether the European Community likes it or not, there will be changes. The Government are extremely complacent and seem to have failed to comprehend the full consequence of the failure of the GATT talks and a subsequent trade war in industrial goods. Such an industrial trade war would be disastrous for Europe and the United Kingdom. Britain exports 19 per cent. of what it produces and Germany exports 26.7 per cent. of what it produces. However, Japan exports only 9.9 per cent. and the United States a mere 7.4 per cent. The United States and Japan are much more capable of withstanding a world trade war in industrial goods than Britain or the EC.

To be even more graphic, one can see the most immediate impression on Germany, especially since 6 December when Chancellor Kohl was reinstated as head of Government. He faces the problem that most of his farmers are part-time and many earn most of their income from factories. Imagine the scenario of a West German farmer employed in a plant supplying BMWs or Mercedes and faced with the dilemma of either losing his job in that factory because of a world industrial trade war or receiving reduced subsidies for his fanning. That is why the EC must make changes and why we need to have an agreement on the GATT talks.

Most nations want to work towards eliminating agricultural subsidies. The Minister was right that not only Europe but many other countries subsidise farmers— especially the United States of America. However, the difference between the United States and Europe is that the United States has offered to reduce its agricultural production support by 70 per cent. over 10 years. The EC's response was a paltry 15 per cent. over the same time limit as was laid down by other countries.

Mr. Gummer

That is not so.

Dr. Clark

The Minister knows that it is correct. If we wish to avoid a damaging industrial trade war, further concessions must be made on the agricultural subsidy fund. Faced with that problem, the EC should use the GATT negotiations as a positive vehicle for major and fundamental reforms of the CAP. The competitive position of European agriculture could then be maintained and the difficulties of European farmers minimised.

In a sense, the European Commission has covertly recognised that by approving the publication of Commissioner MacSharry's plan. The significance of the MacSharry proposals are not in the details that they contain but in the fact that the Commission is proposing fundamental changes for the first time since 1967. I happen to agree with the Minister that the detailed proposals of Commissioner MacSharry are unacceptable, not only to United Kingdom farmers but to United Kingdom taxpayers.

The Labour party differs from the Government in that we believe that Britain should take the initiative in tabling alternative proposals. In so doing, we would shift the debate to our territory. When I pressed the Minister on that at a previous Question Time he said that he could not do so because it would be unconventional and unethical.

However, it has been done previously. For example, when the Prime Minister was Chancellor of the Exchequer, trying to resolve the problems of European monetary union and a single currency, he tabled alternative proposals which changed the area of the debate. There is no principle to say that it cannot be done, so why does the Minister refuse to publish his proposals on CAP reform? Other organisations have followed the Labour party's example of publishing alternative sets of ideas—organisations as diverse as the Royal Society for the Protection of Birds—[Laughter.] The Minister may laugh at such organisations —

Mr. Gummer

No, at the Labour party paper.

Dr. Clark

—but the RSPB, the Countryside Commission, the Council for the Protection of Rural England, the Council for the Protection of Rural Wales, English Nature, the Association of National Park Officers, the National Consumer Council and—this might hurt—even the National Farmers Union, the Scottish National Farmers Union and the Farmers Union of Wales have produced alternative proposals.

The Minister often talks about what is wrong with the MacSharry proposals but does not say how he wants the CAP to be reformed. I hope that his speech was not an attempt to spell out his position on CAP.

Mr. Richard Alexander (Newark)

I have followed the debate throughout and may have missed the hon. Gentleman saying what the Labour party proposes.

Dr. Clark

I shall do so if the hon. Gentleman will give me two minutes—[Interruption.] Two minutes to get to that point.

If other organisations have found the resources to publish alternative proposals, why are not the Government prepared to do so? I am sad that the Minister appears to be unable to make up his mind. Is dithering becoming infectious?

Even the European Commissioner, who came from the ranks of the Conservative party, has a different attitude from that of the Minister. Leon Brittan was critical of the Minister's attitude toward the MacSharry proposals and said: It is quite inappropriate and indeed out of character for Britain simply to dismiss the whole plan out of hand. The Commission plan, however flawed it may appear to some eyes, does represent a serious attempt to tackle the central problem of too high prices that lies at the root of all the CAP difficulties. Why are the Government so reluctant to press for proposals fundamentally to reform the CAP? The Minister knows that the CAP is nonsense. It does not help British farmers, consumers or taxpayers. The Labour party has argued repeatedly that it is an inefficient agricultural support system. I have already explained why it is so inefficient. Our farmers and consumers get a raw deal and we end up subsidising the food of consumers in other countries that are our industrial competitors.

The Labour party believes that we should grasp the opportunity to begin a process of breaking the link between production and subsidy. The market should be the means by which farmers primarily obtain their production income—[Interruption.] The Labour party has been advocating that policy for the past four years and I wish that the Government would see the wisdom and light of our proposals, which would provide better support for farmers and a fairer deal for our consumers. Farmers might then become more responsive to consumers' demands. Moreover, we might not have to import quite so much food that can be produced in Britain. I remind Conservative Members that our deficit in food was £6 billion last year.

Mr. James Paice (Cambridgeshire, South-East)

The hon. Gentleman is wrong.

Dr. Clark

Perhaps the hon. Gentleman will explain. He refuses to do so because he knows that I am right. To be exact, the figure is £6.1 billion. About half that food could be produced in Britain. Our policy would reduce our import bills for food.

The Labour party still believes, as I think does the Minister, that we need to retain farmers in the countryside. We need to retain the aesthetic quality of our landscape. It is important for our tourist industry, for economic reasons. It is important that we keep people living in our rural areas and that we reinstate and retain the quality of our natural habitats. We must persuade farmers to pursue their activities in a less intensive and more environmentally friendly way.

We believe that a system of "green premiums" paid to farmers throughout the United Kingdom to farm in an environmentally positive way would not only be a much cheaper way of supporting agriculture but would meet wider approval in this country. British people are not getting a good deal out of agricultural policies. The beauty of pursuing this policy in Europe within a GATT framework is that it could be phased in and would be accompanied by comparable reductions in subsidy support amoung our agricultural competitors throughout the world. That is the best way of achieving the level playing field—to which the Minister referred—for which our farmers so longingly call.

Given that British farmers constantly proclaim their efficiency, I cannot see them having much difficulty in competing with the rest of the world on level terms. Furthermore, our proposals are compatible with the GATT negotiations in that provisions are made there for non-production payments to farmers under what is termed the "green box". Our proposals are also compatible with the shift of EC support systems under which MacSharry appears to be moving from production to area/direct income payments. Surely the time is now ripe to pursue and reinterpret the concept of direct payments.

Once upon a time, the CAP was the only common factor in the EC and was thus the sole symbol of European unity. Now we have many other common policies—social, industrial and monetary. Thus the symbolism of the CAP is less important. We once had a CAP of six nations, centred on France. This body will soon stretch from the Arctic circle to the shores of north Africa, from Asia Minor to the Atlantic. I doubt whether a tight common agricultural policy encompassing such diverse types of agriculture can be maintained. Changes are needed.

Already, there has been repatriation of some agricultural activity to the nation states—the Minister referred to that. We should build on it. There is no reason why the Commission should not determine how much each nation state may make available to its farmers in non-production support, with the actual terminology of what constitutes direct support in broad terms being left to the nation states. The French may choose to make social payments to retain their small peasant farmers—so be it —whereas our preferred option should be to make those payments in the form of our "green premiums" for sound, positive environmental management.

If the Minister would stop dithering and advocate a more positive and fundamental reform of the CAP along the lines which I outlined, he would do a lasting service to not only the British farmer but the British consumer and environmentalist

6.23 pm

Mr. Jerry Wiggin (Weston-super-Mare)

I have considerable sympathy for the plight in which my right hon. Friend finds himself in his role as Minister of Agriculture, Fisheries and Food. There can be no doubt that the farming community is in serious economic difficulties. Those of us who have been attending these debates for many years have heard that statement before, but I think it is acknowledged now that in almost every branch of agriculture, with the possible exception of the dairy sector, matters are extremely difficult except for those on the best land, those who own their land or those who are in special circumstances, such as horticulturists.

Mr. Gill

Is my hon. Friend aware that the hon. Member for Brecon and Radnor (Mr. Livsey) is on record as saying that farmers have cried wolf too often?

Mr. Wiggin

Like my hon. Friend, I believe little of what comes from the Liberal party. Having fought the seat of Montgomeryshire twice, I must say that one of the predecessors of the hon. and learned Member for Montgomery (Mr. Carlile) did not often come to agriculture debates either. Although we enjoyed that matter, we will not get into it now.

Madam Deputy Speaker

Order. I should like to hear much more about policy and much less about personalities.

Mr. Wiggin

I beg your pardon, Madam Deputy Speaker. However, I find that such matters occasionally get raised on the Floor of the House.

On the one hand, my right hon. Friend the Minister is expected by farmers to help them maintain a prosperity that is not being made available to them, for reasons which he clearly set out. On the other hand, he is sent to Brussels with strict instructions from our Treasury in no way to breach the agreement that was reached in Brussels by a British proposition in 1988 that the budget for agricultural produce should not be increased. My right hon. Friend made light of those difficulties. I have considerable respect for the way in which he presented the case.

My right hon. Friend the Minister set out well the merits of and reasons for keeping farmers in our countryside. This matter is not just about the prosperity of agriculture but is about people and communities, about the environment—which we used to call "the view"—and many other factors. We all agree that we must keep agriculture, forgetting that there is almost no product of British agriculture that cannot be produced more cheaply, for geographical or other reasons, elsewhere in the world. Everyone who thinks about this matter accepts that there must be some artificial support for the agriculture of northern Europe, and perhaps for that of southern Europe as well, although I confess that I am less of an expert on that area. I acknowledge my right hon. Friend's point that if the CAP is reformed it must be reformed throughout the Community as an important part of the concept of a combined Economic Community.

My right hon. Friend the Minister pointed out, and the Comissioner has been shaken by the fact, that the cost of subsidising surpluses in 1991 looks like being 30 per cent. more than in 1990. Those who attack the CAP do so on slim grounds. The CAP has been successful—far too successful. One may think back to the days when Europe was hungry, when agriculture was not prosperous. If one looks at the results of the CAP, one must say that it has achieved its objectives. But one may look at the cost of the surpluses and the damage that they have done to the world market. It must be within the wit of man to achieve the commendable objectives about which my right hon. Friend the Minister spoke and to deal with the problem of surpluses.

I fall out with my right hon. Friend the Minister on prices. I do not have a postbag full of letters from housewives complaining about the price of food. The housewife today gets a greater choice of food at a higher quality, and at what she sees as a reasonable price than at any time in history. The Community is ring-fenced with a tariff, and this is a clever way of transferring some money from the consumer to the producer relatively painlessly. Woe betide Governments who change those well-organised tax systems, as we recently witnessed elsewhere.

The Select Committee on Agriculture has visited the United States and Canada to discuss cereals. One question was difficult to answer. We were asked, "Why have you ruined the world market in cereals?" I said, "Tell me more," and was told, "We used to send 5 million tonnes of cereals to Europe each year. We do not complain if you choose to grow them yourselves—if you can—but we do complain if you then put 3 million tonnes on the world market at prices that are subsidised by the European taxpayer." The effect of doing so has halved the price of wheat on the prairies and upset the delicate balance between agriculture and industry. The GATT round highlighted that problem.

We must find some way of dealing with the surpluses. I have heard some extremely persuasive arguments which suggest that it would not only be as cheap but far more politically acceptable if we were to take much more seriously the proposition that we can convert some of those surpluses into other things, even at a cost. I acknowledge that if I were to say, "Let us burn them", that would be politically unacceptable, but there is an argument for so doing.

The plight of the British farmer, of the French farmer —indeed, of all farmers in northern Europe —should not come as a great surprise to anyone who has studied the progress of the price reviews of the past few years. What has happened has not been accidental; it has been completely deliberate. As the surpluses grew, it was envisaged that, by methods of price, one could drive out to the margins those producers who are unable to be economic. But what really happens? There is misery across the industry with young entrepreneurs, who may have borrowed the most, being in the greatest trouble. Meanwhile, the farmer who owns his land, who has become inefficient but who has a low standard of living, can continue to survive. I find it difficult to say that that is a good way of reducing our total production.

I was intrigued by the Minister's comment that one increases demand by lowering prices. I question that view in a market where there is already 100 per cent. supply. In fact, there is more than 100 per cent. supply in relation to demand because we could not eat any more if we wanted to. This country is extraordinarily well fed and, even if prices were halved, I doubt whether consumption would rise by a fraction of a per cent.

The solution in which I have had a lot of interest over a long period is to allow each producer to produce some part of his yield at a profit. I have always argued that quotas have carried out that task extraordinarily efficiently. I know that there are arguments against quotas for cereals, which are a key product, being the raw material for the production of most meat. The National Farmers Union has produced an extremely interesting paper on nitrogen limitation, which is controllable. It is possible to prevent a black market—one cannot simply set up a nitrogen plant in the backyard. Nitrogen limitation would encourage natural farming, if that is a good thing, and I am prepared to accept that it is. We should not cast to one side any of the alternatives.

In favour of quotas, I should like to point out what has happened to some special products, such as hops. Hops had a strictly controlled quota market in which the quota was saleable and transferable. That industry managed to reduce its production by half without disruption. I know that the introduction of milk quotas caused difficulty. My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) would say, "Hear, hear" to that, but it is a fact that the quotas are now working. Although the Commission is being weak in not simply turning the control to zero instead of allowing continuing overproduction, I acknowledge that it is a fine point to argue. None of my dairy farmers has complained about the quota system. That is especially true of those who sell their quota, which is now an extremely valuable asset, and I see nothing wrong with that.

Turning to sugar, I must declare an interest because I am a consultant to British Sugar. Sugar has been produced on a quota for many years and sugar beet producers will say that they would be extremely unhappy if that system were to change. I shall not speak at length about sugar because I am sure that others are better qualified to do so. However, the proposal to cut 5 per cent. off the sugar price does not bear inspection. It will not save the Commission one penny. Although the big interests—the confectioners and the brewers—would argue that a cut in the sugar price would be beneficial, I must assure my right hon. Friend the Minister that the amount that would be saved would never be reflected on the shelves in the price of confectionery or of a bag of sugar. Sugar has a competitive market in Europe. We produce only half of what we grow in this country. My right hon. Friend knows all the arguments, but, coming from where he does, I hope that he will fight that proposal more vigorously.

The hon. Member for Greenock and Port Glasgow (Dr. Godman) referred in an intervention to the African, Caribbean and Pacific countries. It is interesting that they, too, will take a massive cut in what is, effectively, foreign aid. That cut was not made up on the last occasion and the cost will have to be found. Therefore, cutting the sugar quota as proposed will actually cost money.

I know that many of my hon. Friends wish to speak, so I shall not take up any more time, except to say that if we allow our agriculture to decline, what is sure, historic and a fact is that industry after industry will follow. Agriculture is, and always has been, one of our nation's key industries, as a consumer, a supplier and as a provider of that greatest and most important of products, our food.

6.36 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North)

Over the years, I have had the opportunity of speaking in our agriculture debates and I know that many hon. Members of all parties were disappointed when the Minister lost his temper earlier and tried to discredit my hon. and learned Friend the Member for Montgomery (Mr. Carlile), who conducts his business in the House and in his constituency excellently. Now that the Minister has cooled down a little, I hope that he will write to my hon. and learned Friend to apologise for what he said.

Today is a sad day for agriculture because we have just been told by the Minister that he is in favour of further cuts in its financial support. Whatever views we hold politically, that is sad news, Nothing could better illustrate the changing fortunes of agriculture and its present crisis than a conversation that I had recently with a prominent farmer in my constituency. He is now the vice-chairman of the Cardiganshire National Farmers Union. We were discussing the state of the industry in Wales and Its effect on the social structure of the countryside, when he said, "My grandfather came to Cardiganshire as a farmworker in 1902. My father became a tenant farmer in 1939. I myself became an owner-occupier in 1986—and now my son is planning to get out of farming."

I found that story incredibly sad, but it is a pattern that is being repeated not only in my constituency, but throughout the United Kingdom, as farm incomes fall and thousands of agricultural holdings can no longer be regarded as viable units. Farming families that have established themselves over the generations are faced with having to leave the countryside. I have been told that about 100 farmers a week in Britain left the land last year, following the worst period for agriculture since the end of the second world war. In the Welsh county of Dyfed alone, about five farmers a week are giving up their farms. A report this week confirmed that 3,000 farm jobs were lost in Wales over 10 years, with redundancy figures set to increase for the foreseeable future.

That, inevitably, affects the support industries and rural services such as local shops, schools, garages and small businesses. High interest rates—although they have fallen a little—the growing cost of production and the threat of a sharp decrease in support have all added to the pressures, creating a downward spiral in agriculture and the rural economy throughout Britain.

In Wales, where most farming is in the livestock sector, farming income fell last year by 23 per cent.; that followed a decline of 28 per cent. in 1989. In the United Kingdom as a whole, incomes are at their lowest for 40 years. That is not a very good record for the present Government. Surely it is the duty of the Minister of Agriculture to go to Brussels and try to persuade his friends to look after British farming much better in the next few years. We have a long-term problem, but our short-term financial difficulties are even greater.

Mr. Lord

Let us be fair to the Minister. Did not the Minister of Agriculture have far more power to influence matters for good or ill after the last war than he has now?

Mr. Howells

I do not think so. The Minister of Agriculture is the Minister of Agriculture, and is fully responsible for looking after British farming. If he cannot do the job as well as the British farming industry wants him to, let us give the Liberal party the opportunity.

Another farmer, who also chairs the NFU in Cardiganshire, made an interesting comparison between the earnings of different people in his village. According to him, the doctor, the accountant and the bank manager all earned about £1,000 a week; he and farmers like him were lucky to earn £1,000 a month. That, too, should be food for thought for the Government of the day.

Particularly galling for those involved in the industry is the fact that British farmers are suffering the effects of factors well beyond their control. They have brought their farms up to date; they have increased production when encouraged to do so; they have tolerated milk quotas; they have generally adapted to changing circumstances. The industry has been pretty well rationalised. Now, the only item that is over-produced in this country is cereals. Production of the remaining commodities is below self-sufficiency levels, allowing for a level of imports which I consider quite substantial.

Many British taxpayers and consumers believe that our farmers are over-producing and that we are responsible for the surpluses in the Community. They take heed of what the Minister is saying, but it is not true; we are not over-producing. British farmers have been penalised by the Government's attitude. Let me tell the consumers who will read the Official Report tomorrow that we produce only 93 per cent. of the beef required in this country, 94 per cent. of the lamb and sheep meat, 98 per cent. of the pig meat, 42 per cent. of the bacon and ham, 95 per cent. of the poultry, 93 per cent. of the eggs, 81 per cent. of the milk and dairy products, 56 per cent. of the sugar from beet, 89 per cent. of the potatoes, 88 per cent. of the cauliflower, 35 per cent. of the tomatoes, 41 per cent. of the apples and 24 per cent. of the pears.

People should realise that the problem is not the fault of British farmers; it is the fault of their counterparts in Europe. It is the duty of our Minister of Agriculture, and our Government, to look after British farmers. They are to be asked again to accept a reduction in prices—I do not know what the Minister will advocate; it may be 2 per cent. or 4.5 per cent., according to what I have been told, but it is up to him to tell us when he winds up the debate —in an EC budget that has failed to take into consideration the current weakness of the dollar and the inevitable costs involved in the reunification of Germany.

Our Minister of Agriculture has enthusiastically campaigned in Europe for cuts in the budget, when he knows perfectly well that the industry at home is in the worst crisis since the war. Nothing that he has done during his time in office has been calculated to restore confidence. His belief in free-market economics overrides any concern that he may have for the future of a viable agriculture industry, and for the social fabric of rural Britain.

I am a farmer myself, and I have lived in the same village since I was a child. Over the past 20 or 30 years, every one of us farmers in that village was willing to pay a high price for every parcel of land that came on the market. We were all competing. Today, 50 acres of land is for sale in our village—accommodation land. Not one farmer is interested in buying it. That is our message to the Minister and the Government; the farmers are not interested. They have lost confidence, and something must be done soon.

The Government are letting down British agriculture badly and the Minister is not lifting a finger to stop the downward trend. He has got rid of guaranteed prices and has failed over the years to take the opportunities available to him to pay the maximum allowed under EC rules. The guaranteed-price system operated very well in this country.

Let me repeat what I said in our previous agriculture debate. I had the privilege of being vice-chairman of the British Wool Marketing Board for 11 years. We did our best for sheep producers in this country, but unfortunately the Minister of Agriculture decided to do away unilaterally with the guaranteed price for wool after this year. What will happen to our sheep producers in the next 12 months? The price of wool will be halved. There is no need for that. It is entirely the Government's policy; it has nothing to do with the EC. It is all a great shame.

The Minister has failed to take any steps to encourage young entrants into farming. Liberal Democrats take that issue very seriously. In a time of crisis and change, the right hon. Gentleman has allowed agriculture and food research funding to be drastically cut. No wonder that farmers and their families, and all who live in the British countryside, are totally disillusioned by this Tory Government. When the Monmouth by-election is called, the Minister and his colleagues will realise that Monmouthshire's farmers will not vote for the Tory candidate this time simply because the present Government have neglected them.

We all recognise that the common agricultural policy is in need of thorough reform. Indeed, it is about time that we stopped the practice of allowing 80 per cent. of the support to go to only 20 per cent. of the farmers. The Government, however, have yet to produce any constructive proposals that will ensure a healthy British agriculture within a sensible European framework.

Farmers in this country must now be helped through a period of dramatic transition and allowed to compete at the same level as other European farmers. If reductions in support are necessary, they must be achieved carefully and gradually. Resources should eventually be switched from over-production in Europe to direct income support. Help must be targeted towards the medium and small family farms.

One of the most important aims of any policy must be to stop the relentless drain of people away from the land. As a nation, we cannot afford that loss. We need the farmers as a producer of fairly priced, wholesome food, as a guardian of the environment and as one of the elements that could provide the impetus for rural regeneration.

For the past 10 or 15 years I and members of my party have been well aware that the Secretary of State for Wales has full responsibility for agriculture in Wales, just as the Secretary of State for Scotland has full responsibility for agriculture in Scotland.

Mr. Teddy Taylor

rose—

Mr. Howells

I believe that the hon. Member for Southend, East (Mr. Taylor) has full responsibility for agriculture in Southend.

Mr. Taylor

I am a friend of the Essex NFU. Does not the hon. Gentleman think that Gladstone would have been ashamed of him? We have heard realism from the Conservative Front Bench and from the Labour party, but the hon. Gentleman is living in a cloud if he believes that a policy of putting in more and more money will help farmers. Does not he realise that the Liberal party's policy would drive farming to ruin?

Mr. Howells

I remind the hon. Gentleman that the farming community is very much indebted to members of my party. If the hon. Member for Southend, East had had his way a few years ago, British farmland would today be rated. He introduced a 10-minute Bill, but even his colleagues voted with us, including the then Prime Minister. My advice to the hon. Gentleman is not to blame the Liberals, but to look after the farmers of Southend.

The Secretaries of State for Scotland and for Wales should go to Brussels. We have heard the excuse from Ministers so many times that the Minister of Agriculture, Fisheries and Food has full responsibility for Britain within the Community. We are aware of that, but the other two Ministers are duty-bound on behalf of the farmers of those two countries to go there, even if only once a year. However, they have not been, which is a great pity.

Mr. Gummer

So that the hon. Gentleman will not be unhappy, I can tell him that my right hon. Friend the Secretary of State for Scotland was with me at the negotiations in Brussels on only the previous occasion.

Mr. Howells

I am delighted at the change of heart. The Government have listened to what we have been saying for some time.

We all talk about MacSharry's plans and hon. Members of all parties condemned his present proposals during our previous debate. However, MacSharry's proposals are not dead. He will introduce new proposals in the summer and if we do not accept them there will be another set. My advice to the Minister and to everyone involved in agriculture is that we should work with MacSharry and not oppose him on every occasion. In the end, we have no alternative but to work with the Commissioner who has full responsibility for agriculture. In 1992 there will be a free market economy and we shall have to trade even more with our friends on the continent.

I wish to deal with the problem of slaughterhouses. At present Great Britain has approximately 74 export-approved slaughterhouses out of a total of over 900 plants. That is only 8 per cent. of all slaughterhouses and accounts for about 38 per cent. of throughput. That figure is clearly much lower than that for other member states. In 1987, 85 per cent. of West Germany's major slaughterhouses were export-approved. The figure was 51 per cent. in France, 58 per cent. in Belgium, 71 per cent. in Northern Ireland, 69 per cent. in the Netherlands, 100 per cent. in Luxembourg and 19 per cent. in Denmark. That covers all the largest abattoirs and the majority of total throughput. Only Italy, Greece and Spain have a smaller proportion of slaughterhouses approved than does Britain.

Unless an abattoir can be exempted as a result of derogation, it will have to be upgraded at considerable cost. Therefore, something must be done. The number of abattoirs in Britain has declined at an alarming rate as a result of changes in the agriculture industry and of general economic pressures. In the mid-1950s there were 3,500; last year that number had been reduced to 778.

The Meat and Livestock Commission predicts that only 360—less than half the present number—will remain after 1992. The future of hundreds of small abattoirs remains in the balance as the 1993 deadline for upgrading draws near.

The trend towards fewer, larger meat plants with advanced technology and added-value operations has accelerated as the date for the imposition of the new EC standards advances. According to the Meat and Livestock Commission's report, only 270 of the 778 remaining abattoirs expect to be operating after 1992. A further 200 were undecided. The Minister, who believes in a free market economy, must do something about that.

Yesterday I received a press release—as I am sure many other hon. Members have—from the Council for the Protection of Rural England. The headline reads: Explosion of `shackery' threatens to create a tatty countryside". It states: 'The fragmentation of farms, erection of shacks and small buildings, and abuse of planning freedoms threatens to create an unloved and tatty countryside.' This was the message given by Tony Burton, Senior Planner of the Council for the Protection of Rural England … to the AGM of the Farm and Buildings Centre …Mr. Burton said: "rhe 1980s saw a remarkable 15 per cent. rise in the number of small farm holdings, with over 6,000 new units under 10 hectares. The result"'— according to him— 'has been an explosion in the problems caused by small farm buildings in the countryside, unchecked by a powerless planning system."' I disagree. The reason why there are 6,000 new units under 10 hectares is financial pressure on many farmers. They owe so much to the banks that they must sell parts of their assets to repay their debts. They have sold their sheds and barns and a few acres of land to ensure that they can survive. It has nothing to do with planning—it is a matter of finance.

With respect to the Minister of Agriculture, Fisheries and Food, I wish him well in his deliberations, but he must change his attitude in Europe. He must work harder for the British farmer and, now and again, he should heed what the leaders of the National Farmers Union, other organisations and political parties in Britain say to him —please take advice from other people who love the countryside and who live for British agriculture.

Mr. Deputy Speaker (Mr. Harold Walker)

I remind the House that speeches between now and 9 pm should not exceed 10 minutes in duration.

6.59 pm

Mr. Michael Alison (Selby)

I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to make a short contribution to the debate as I represent one of the most important agricultural constituencies in north Yorkshire. As my right hon. Friend the Minister knows, I also represent the Church Commission, which is one of the largest landowners in Britain. We own more than 155,000 acres and 410 farms of more than 50 acres. From the perspective of my constituency and of the Church Commission, the view of British farming at present is gloomy.

My right hon. Friend's departmental report for 1990 says it all. Farmers were caught up in a fearful vortex of natural and man-made misfortunes which, taken together, were little short of catastrophic. There was an environment of falling real prices for output, and rising input costs and high interest rates. The only way out of the vortex for many farmers was to get out and to leave their coats behind. Farm incomes fell by 14 per cent. in 1990–22 per cent. in real terms. At the beginning of 1990, there were 189,000 farmers in the United Kingdom; by the end of the year, no fewer than 6,000 had left agriculture. Clearly the past year has been one of trauma for farming.

Nobody doubts that my right hon. Friend is deeply concerned about the gloomy scene which I have depicted, and that he is deeply committed to and engaged in the battle to safeguard the future of British farming. However, his efforts are undermined by little governmental niggles, which are not directly of his doing, but over which he may have some influence. In this year's Budget, for example, in which it was proclaimed as a virtue that rates of vehicle excise duty for cars, buses, coaches and all goods vehicles were to be left unchanged, how was it that the vehicle excise duty rate for agricultural machinery was, virtually uniquely, increased from £16 to £30? Could not that increase be dropped when we come to the appropriate stage of the Finance Bill?

Another apparent niggle is to be found in the Government's new pollution control regulations which will put severe restrictions on farmers. One farmer in my constituency has complained about one aspect—the regulations on oil storage. The new regulations will apply only to fuel stores or tanks on farms, and not to fuel stores or tanks in domestic property where probably far more oil is stored than on farms. Farmers find such discrimination, which involves potential financial detriment, discouraging in the present circumstances.

Farmers are resilient folk and are used to ups and downs. They are capable of being philosophical and of taking one year with another. However, I hope that my right hon. Friend appreciates that there is a special sense of gloom and foreboding in agriculture at present because agriculture seems to be confronted by so many intractable problems which are beyond its control.

My own Church Commission agricultural advisers have quoted to me reports that show that one farm in four is currently trading at a loss and that, in consequence, 20 per cent. of farmers will not survive five years. Such a decline in British agriculture would be catastrophic and I know that my right hon. Friend will struggle relentlessly to prevent it from occurring. It has never been truer than today to say that if the British farmer did not exist he would have to be invented. He is incomparably the best, most skilled and most reliable custodian and protector of our natural environment and heritage. Even if every scrap of food consumed in Britain were to be imported and our farmers driven off the land, our countryside could still never look better—indeed, it would look appallingly worse —than it looks today in the hands of working and productive British farmers.

In his valiant struggle to do his best for British farming, my right hon. Friend will, I hope, not think me presumptuous in sketching one or two suggested guidelines for the way ahead. First, will my right hon. Friend avoid like the plague proposals such as those that Commissioner MacSharry has advocated for protecting and compensating weaker and smaller farmers in Europe with a subsidy to produce? The sooner we can get away from production subsidies Europeanwide in any form the better, but a deliberate policy of subsidising the least efficient producer to produce output that nobody wants is a higher form of lunacy.

Secondly, there is a form of subsidy that is desirable and acceptable. There may be, for example, a reward to farmers for performing what amount to public services in preservation and environmental protection. The Minister's farm and conservation grant scheme and the farm diversification grant scheme are good cases in point. I hope that my right hon. Friend will consider extending the first scheme beyond its present three-year limit if only because it has to march in step, to some extent, with statutory pollution control regulations, which have suffered some delay in coming before the House.

Thirdly, will my right hon. Friend be eternally vigilant in the matter of competition? With fair competition, the British farmer is a world beater with an assured future, but it is not fair competition when, for example, chemicals used on cucumbers in Holland are not allowed to be used on cucumbers in Britain. There are countless similar examples that one could give. Will my right hon. Friend consider doing more to promote good marketing practice and producer co-operatives? The downside to our larger farm units in Britain, compared to those in mainland Europe, is that farmers tend to think that they are big enough to go it alone in marketing when in reality they cannot. The mini-producers in Europe know only too well that they must co-operate, which they do, so that their tortoises are, unfortunately, only too frequently beating our hares.

If output has to be restrained to keep the CAP and its budget afloat—and farmers are perfectly well aware of the necessity for that [reductions in support, to quote the Country Landowners Association, must be made only at a pace which the industry can cope with. Cuts in support must be matched by our GATT partners, and must be applied equally across the whole European Community. I hope that my right hon. Friend will be positive in his thinking, and even innovatory and radical. I was a little disappointed by the cold water that he poured on the scheme that my hon. Friend the Member for Westonsuper-Mare (Mr. Wiggin) mentioned—the idea of Community compulsory restrictions on the use of nitrogen throughout the EC. Using a fertiliser quota scheme that individual farmers could buy or sell would be a far more interesting and economical way to reduce total EC production while rewarding the efficient and profitable farmer than any of Mr. MacSharry's ideas for subsidising lame ducks. I hope that my right hon. Friend will continue to keep an open mind on that interesting nitrogen scheme.

I put on record the fact that the Church Commissioners, as substantial owners of tenanted farms, welcome my right hon. Friend's proposals for reform of agricultural tenancy law. We support what is proposed, and we will submit detailed comments in the near future.

7.9 pm

Mr. Nigel Spearing (Newham, South)

It is well known that I am Chairman of the Select Committee on European Legislation. That Committee has examined the Minister of Agriculture, Fisheries and Food on the 22 or 23 documents in the Vote Office. The value of Select Committees is sometimes appreciated outside the House. The Chairman of the Agriculture Committee has contributed to this debate. I hope that one day his Committee will get round to considering alternatives to the common agricultural policy. A Select Committee of this House would be an admirable vehicle for that purpose.

I am making this speech in a personal capacity—not with my Chairman's hat on. Twenty years ago, this House was having debates about joining what was then called the Common Market. Agriculture, of course, was one of the central themes of the debate. I remember saying to the then Member for Lowestoft and Minister of Agriculture, "Do you really suppose that a common market from Sicily to the Shetlands will be a practical proposition?" I said to colleagues who are now on the Liberal Benches, "Do you really want to hand over British agriculture policy to Brussels?" They said yes, and voted accordingly.

Let me refer to the question of sugar. At the time to which I have just referred, I was not the Member for Newham, South, so I did not have a constituency interest. However, I was very concerned about this issue, and I am even more concerned about it now.

At a meeting of the Select Committee on European Legislation last Tuesday, the hon. Member for Hertford and Stortford (Mr. Wells) questioned the Minister of Agriculture, Fisheries and Food about sugar. The hon. Member referred in particular to the African, Caribbean and Pacific countries and the 1.3 million tonnes of sugar that we get from Commonwealth territories. The Minister replied: If that means we have to rewrite the Protocol and have a whole new system, then so be it". I do not know whether that remark has been publicised. In some ways I hope that it has been, but in others I hope that it has not. If it has, it will create a great deal of fear in Commonwealth capitals—the capitals of countries such as Mauritius, Fiji and Jamaica. In exchanges with my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman), the Minister did not provide the ACP countries with very much reassurance.

Mr. Gummer

I should not like any fear to be based on that. The reason for the remark, as I hope that the hon. Gentleman will accept, is that significant reductions in sugar prices in the European market—that is the context in which the matter was being discussed—have a very real knock-on effect in associated countries in the developing world. I was suggesting that one could not just allow that to happen and that we should have to find a different way of helping those countries. It was entirely a supportive suggestion. I thought that it was not necessary when we were cutting by 5 per cent., but the question that I was asked in the Select Committee referred to the possibility of a continuing and significant cut. I was asked what I would suggest in those circumstances. In reply, I said that it would be necessary to look again at the protocol. That would be in the context of improving the situation of the developing countries—something to which, as the hon. Gentleman knows, I am committed.

Mr. Spearing

I am very grateful for the Minister's clarification. I see exactly what he means. Apart from sugar, what do those countries have to sell? Other measures that have been suggested, but not put into practice, are very doubtful indeed. I think that I have made the point. I am no longer the Member for Acton. I now represent Newham, South, which imports 1 million tonnes of Commonwealth sugar, although the employment that is provided in the constituency—I suppose that this is a vested interest—is rapidly diminishing with the ad vent of technological development.

I wish to comment briefly on the general MacSharry situation. In the first part of his report, Mr. MacSharry brutally exposed what is going on. In the past 10 years, CAP costs have doubled in real terms; 35 per cent. of the agricultural population have left the land; in the United Kingdom, 18,000 farmers have left the industry in the past 10 years, and 44,000 farm workers have lost their jobs. We all know that we do not get a very good deal for our contribution, but that is just one of the consequences of the rules of the club. As somebody once said, it is not our money. Mr. MacSharry, in his report, pointed out also that the stabilisers had failed. Held up, only three or four years ago, as the great salvation for the CAP, they have now been set aside and are hardly operative. Pensioning off, too, is marginal. Things that were trumpeted a few years ago are not working.

I want to be objective. People know my general views of the Common Market. We have been in the Community for 20 years, and we all know that there is a problem. Indeed, Britain has a dilemma. When the Minister goes to Brussels, he does not have a veto. Any 23 members, in combination, can turn down any proposal. This reminds me of someone who has driven up a one-way street and cannot get back. Such a person is in a particularly bad position if he does not have a reverse gear. But even if he were minded to get out and push the car, he might come up against some of those metal plates on the road. If things cannot be changed without one third of the membership in voting blocks, it may not be possible to find any way at all. That is a constitutional problem of which this country should be aware. Indeed, this House is only just becoming aware of it.

Let me put this fundamental question: what is the difference between the objectives of the common agricultural policy, the means and mechanisms by which those objectives are realised, and the desirable characteris-tics of the CAP? I detected from what the Minister said on Tuesday, and from what the Opposition spokesman has said, the sort of characteristics that this country wants the common agricultural policy to have. There is the question of care of the countryside and of ensuring that the impact on the environment is benign. But I wonder whether those objectives are attainable. The purposes of the common agricultural policy are to be found in articles 38 and 39 of the treaty of Rome. Paragraph 1 of article I says: The common market shall extend to agriculture and trade in agricultural products. 'Agricultural products' means the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products. Article 39(1) says: The objectives of the common agricultural policy shall be:

1. (a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;
2. (b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
3. (c) to stabilise markets;"—

three magic words—

1. "(d) to assure the availability of supplies:
2. (e) to ensure that supplies reach consumers at reasonable prices."

Of course, MacSharry pointed out that the prices would be two to three times world levels. I cannot quote the rest of the article as there is not time. Is it possible to achieve those objectives? If one has a common market, can one do the rest as well? This is a problem that must be addressed by the House of Commons and by the nation. The Minister says that we did it up until the time of our joining the common market, when there was a shortage of food in the world, and that we did it under the Williams plan and market support. I am not sure that that principle is not applicable nowadays, even in a situation of surplus. Is it possible that we could have modification to solve the problems of the common agricultural policy?

7.20 pm

Mr. Robin Maxwell-Hyslop (Tiverton)

The stabiliser policy has failed, as I told my right hon. Friend the Minister on the Floor of this House it would. I told him exactly why it would fail, because it is nothing more nor less than Christopher Soames's standard quantity policy; and one does not change the causal sequence by altering the name.

Why has not my right hon. Friend put an alternative to the MacSharry plan? It is because there is only one workable alternative, and that is quotas. My right hon. Friend does not want surpluses in store. One does not get surpluses in store with quotas unless one fixes the quota higher than consumption. That is the whole purpose. Nor does one get subsidised exports, which were tearing the general agreement on tariffs and trade apart. It is only through quotas that the support which the Community gives can go to the producers and thereby maintain the pattern of rural living which is the object of those payments, without subsidising storage, without subsidising exports, and without ruining the world economy in many countries which have a lower standard of living than ours. Sooner or later, if my right hon. Friend does not learn that, his successors will, because there is no other system capable of working.

Yesterday I flipped through Time magazine. Mr. MacSharry has been mentioned, but where does power reside in the Community? It resides with the President of the Commission, with M. Delors, who was interviewed by Time. He said: All the wise men agree that East European countries cannot join the Community immediately, but in the medium term their admission is possible. We in the EC can offer two kinds of assistance. We can help them democratize, and we should assume the burden of accepting more and more of their exports in agriculture, textiles and so on. That is the price we pay. At the same time, we must balance assistance to Eastern Europe with help for countries to our south … ". That system will collapse the whole EEC common agricultural policy. That is what the man of power, M. Delors, is saying. Does anyone believe that Mr. MacSharry is a man of power? He would never be a Commissioner if southern Ireland did not have its quota of Commission jobs. That is the only reason he is there; we all know that. This divorce from reality, which I am afraid Ministers of Agriculture seem to embrace, pretends that this is not so.

Secondly, because it is inevitable that we will come to quotas, what happens before that? What happens before that is a struggle to increase output in every country so as to establish the largest possible datum for that quota. It happened with fisheries; it happens with everything. Why should anybody doubt that? To imagine that the standard quantity policy—I beg its pardon, relabelled "stabilisers" —will reverse that inevitable precursor is lunacy and it might as well be termed such.

The third thing I want to leave with the House, because this may well be the last time that I shall have the opportunity of addressing it in an agriculture debate, as I am retiring at the next election, is this. If the common agricultural policy in its parts is not mutually capable of living together, if the parts are incompatible with each other, that policy will also collapse. And to imagine that, with a stabiliser policy—I beg its pardon; of course it is really standard quantities—which encourages people by economic necessity to increase their individual output— that is why it died the first time, because it does not discourage the individual from producing more—what happens? More goes into store or, at a subsidised price, on to world markets. That is not compatible with what the EEC is saying in the Uruguay round of GATT.

So, as we look into the predictable future, what do we see? We see that all our policies connected with the countryside will fail if they are contradictory one with the other. My right hon. Friend said that we cannot keep supporting agricultural incomes; that is bound to fail. The same argument, of course, goes for green subsidies. If they are to replace a fair market price allied to quotas, then one will have to increase ever more and more the green payments, if they are to achieve their objective rather than be gesture politics. So we do not escape from the dilemma of increasing payments by shifting it from one to the other. However, with quotas one contains the quantum of that expenditure; with other systems one does not.

That is why I ask my right hon. Friend to grasp this nettle. I am not speaking after the event. I was advocating quotas on the Floor of the House in 1976. If we had introduced milk quotas then, before the dramatic expansion in French and southern Irish milk production, our producers could have had quotas of over 100 per cent. Quotas are inevitable, but the agony of introducing them in times of surplus compares so unfavourably with introducing them before one is in surplus. If we do it before we are in surplus, we avoid aborted expenditure on expansion; we avoid living in a false world. That is why Europe, with its higher costs, particularly in northern Europe—higher costs because of less sun; that is why costs are higher—can only live with a quota system.

I will conclude with one observation, and it is this. As world oil energy runs out—we cannot tell which year it will run out, but run out it will —where is the energy to come from? It will not come in Britain from wind power because the coldest days in Britain are when a nice anti-cyclone is sitting over Britain with zero wind speed. It will come from growing carbohydrates here for inversion into hydrocarbon fuels, just as has been done over huge areas of Brazil. There it was done for foreign currency reasons. Here, as elsewhere, it will be done because the oil is not there for which it is presently the substitute where it is done.

Therefore, energy production will be in direct competition with food production; and heaven help the third world with tiny incomes then, because they will be growing carbohydrates for the richer parts of the world to turn into fuel. That will. be the pattern of agriculture. Do not let us, therefore, turn our agricultural areas into deserts, followed by the erosion that will go with that, followed by the loss of fertility of the soil, by refusing to grasp the nettle of quotas while it is still practicable to do so.

7.30 pm

Mr. Ieuan Wyn Jones (Ynys Môn)

It is always a pleasure to speak after the hon. Member for Tiverton (Mr. Maxwell-Hyslop), who is a stimulating debater and whose distinctive style will be sorely missed by the House when he retires. The length of time that he has served his constituency has represented a wonderful achievement and he will be greatly missed by his constituents.

We must consider the background against which the debate is taking place, and I shall concentrate on Wales and refer to Scotland. Since 1945, as the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said, there has been a dramatic shift away from the land. Reasons outwith the scope of the debate have been responsible for that shift. The great efficiency of agriculture, with increasing mechanisation, has played a great part in that development. Larger farms have been created because they have been said to be more efficient.

Many people have left the land because farming is a hard life. Those who want an easy source of income do not go in for farming, which involves long hours, seven days a week. My brother-in-law is a farmer and spends most of his evenings and nights at work during the lambing season. I am sure that he would earn more in another industry. Because it is a hard way of life, over the years people have found alternative ways of making a living.

The industry also gives a low return on capital invested. Indeed, almost no other industry gives such a meagre return, so it is not surprising that agriculture has suffered that drift since 1945. We have also failed over the years to attract young new entrants from outside the industry. That has meant that many youngsters who had something to give to agriculture have failed to do so because we have failed them.

Those are all reasons why there has been such a drift away from the land. There have been periods during this century when that drift has accelerated. For example, during the great depression of the 1930s, hundreds of thousands of people left the land as incomes plummeted. Stories about that time, particularly among those who live in rural areas, abound.

The great danger is that the 1990s will herald another massive drift away from the land because we have failed to grasp the problem encompassed by the common agricultural policy. I fear, in view of the way in which the Minister put the Government's case tonight, that he will accelerate that drift even further. Yet again he failed to explain the Government's alternatives to the MacSharry proposals. He rubbished them and said that they were nonsense, but he failed to spell out the Government's proposals.

A recent study published in Wales showed that, even if the 35 per cent. cuts proposed by MacSharry during the recent GATT round came to fruition, one in four Welsh farmers would have to leave the land because of the subsequent drop in incomes. Not only is that a remarkable figure, but the drift will accelerate if, added to those cuts in the GATT talks, there are cuts in price support as a result of the latest price proposals and MacSharry's reform plans are totally rejected.

We must look carefully at the background to the present situation. For example, there was a 23 per cent. reduction in incomes in Wales last year, following a reduction of 28 per cent. in 1989. How can any industry survive such a dramatic rate of reduction?

What will be the result of the Community's price proposals, for example on beef, with the abolition of the safety net intervention measure and the reduction of intervention trigger levels by 8 per cent? Nobody wants to see intervention stocks increase dramatically. There is no point in beef being taken into intervention if nothing then happens to it.

There must be special measures to reduce the current levels of intervention. But we should remember why such measures were introduced. Following the BSE scare, it was clear that there had to be a system of intervention to enable beef to be taken into store. Confidence has not returned to the beef industry, so we should retain the system, at least until confidence has returned.

As the hon. Member for Ceredigion and Pembroke, North said, we are not in surplus in sheepmeat, so it seems scandalous to be talking about further cuts in price support in that area. After all, we are referring to extremely vulnerable farmers—farmers in the uplands and on marginal land—on whose incomes no hon. Member would wish to live. We are driving farmers off the land because we are not supporting them. It is essential that we give them support, and of course we welcome the 1.5 ecu per head support in supplementary ewe premium.

I was astonished to hear the Minister say that we should be cutting the milk quota by more than 2 per cent. He should be arguing that cuts should take place in certain sectors of the milk industry, but that across-the-board cuts damage everybody, especially the small and medium-sized producer. The Government should be giving protection to the small and medium-sized family farm, which has been sorely hit in recent years.

I agree that green pound devaluation requires more careful scrutiny than is proposed by the Commission. The green pound disparity should be dispensed with immediately, and, in view of the Minister's comments on that, feel sure that he will be taking that message to Brussels on behalf of United Kingdom farmers.

In relation to reforming the CAP, the much-maligned MacSharry proposals should not be dismissed out of hand. It is easy for people to say that MacSharry proposes to prop up inefficient small farmers, but let us at least consider the principle of what MacSharry proposes. It cannot be right that 80 per cent. of support under the CAP should go to 20 per cent. of farms. MacSharry says that that is wrong. Instead of targeting aid on farmers who do not need it, we should be supporting those in need. If we targeted properly on small and medium-sized efficient units—units that would not be viable without such limited support—we might get somewhere. It is essential that farming in rural areas is maintained. If that can be achieved by targeted support on revised MacSharry proposals so much the better.

The Minister of Agriculture, Fisheries and Food virtually said that agriculture should be left to the free market. What do—more to the point, what should—the Secretaries of State for Scotland and Wales say about that?

Unfortunately, they say little, having left it to the Minister of Agriculture to make the running on the MacSharry proposals, on the GATT talks and on the price proposals.

Does the Secretary of State for Wales support Welsh agriculture and believe that Welsh farmers should be given support in the way that my hon. Friends and I have outlined? Hon. Members representing the regions of England, and Scotland and Wales say that agriculture is in a state of crisis. We demand Government action urgently.

7.38 pm

Mr. Ralph Howell (Norfolk, North)

I congratulate my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) on his excellent and powerful speech. It is sad that it may be the last that we hear from him in an agriculture debate. We shall miss him.

I agree with my right hon. Friend the Member for Selby (Mr. Alison) and with the excellent speech made by my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin). We have heard some powerful speeches criticising what has been happening and outlining the seriousness of the position in which agriculture finds itself.

I must declare an interest: I am a farmer, and I represent a constituency which depends more heavily on agriculture than almost any other in the country, especially on cereals and sugar production. Serious problems face both commodities, especially if the Government's policies go ahead. To cut the price of sugar by 5 per cent. just to keep it in line with the cut in the price of cereals is a very foolish move which must be resisted. I wholly agree with my hon. Friend the Member for Weston-super-Mare: it is quite wrong to think it sensible to cut the price of cereals. If that price is cut, what am I and my constituents to do? Are we to go further and further into the red? We shall have to do our level best to produce an extra hundredweight or two to counteract the cuts—and that will merely aggravate the situation and achieve nothing.

A great deal of misunderstanding and mythology surrounds agriculture and it is about time we clarified the situation. I was misunderstood when I intervened on the Minister earlier, when I tried to tell him, with the help of answers that he has given me, that the cost of agricultural support had fallen from 1 per cent. of GDP in 1960 to 0.5 per cent. in 1973, when we joined the EEC, to 0.25 per cent. now. But the general public do not believe that—they think that massive subsidies are being handed out. I recognise that there is a problem with expenditure in Europe, but even that is exaggerated. It amounts to only about 1 per cent. of GDP.

The Minister answered me as though I had been talking about the price of food, but even in that event he did not have a leg to stand on. The price of food is rising much more slowly than other prices generally. That means that our producers are being more efficient than the rest of the country's industries. In 1960 we spent 25 per cent. of our net disposable income on food. Now we spend less than 12 per cent., and the figure is falling all the time. So how can anyone in his right mind declare that the price of food is too high?

Mrs. Ann Winterton (Congleton)

Is it not also true that, of the diminishing amount of money spent on the priority item of food, much more of the profit element is going to those who process the food and to retailers and not to the main producers—the farmers?

Mr. Howell

My hon. Friend has just beaten me to my point. In 1979, the producers received 49 per cent. of the price of food and the processors 51 per cent. Now farmers get less than 40 per cent. and the processors more than 60 per cent. The processors and retailers—the supermarket chains and so on—are making the enormous profits and benefiting from the subsidies which are generally thought to be going to the farming community.

As Prime Minister, my right hon. Friend the Member for Finchley (Mrs. Thatcher) commended farmers for doing better than any other industry in their efforts to become self-sufficient. We were encouraged to increase our self-sufficiency in temperate foodstuffs—and we did. Self-sufficiency rose from 71 per cent. in 1979–80 to 80 per cent. in 1984–85. Measures taken since then have resulted in a fall in self-sufficiency to 74 per cent. Our balance of payments would be much better had we been allowed to follow the advice of the former Prime Minister and increase our self-sufficiency beyond 80 per cent.

Our balance of payments is an important feature of the performance of agriculture. Cereals are the most successful sector of agriculture. In 1979 our net balance in cereals was a deficit of £404 million. Cereals are now in surplus to the tune of £229 million—a change around of more than £600 million. In the same period a surplus of £46.9 million in our balance of trade in electricals and machinery has turned into a deficit of £1.677 billion. The deficit in road vehicles has worsened from £795 million to £6.932 billion. British agriculture, especially cereals, is therefore doing a great job for the economy of this country and we must stop trying to destroy it.

We are all concerned about the third world and the awful events on the Turkey-Iraq border. Britain is 120 per cent. self-sufficient in wheat; Europe is 130 per cent. self-sufficient; and America is about 220 per cent. self-sufficient. The Cairns group is even more self-sufficient in wheat. No wheat is ever wasted in the world, so if we cut cereal production just to balance the EEC budget—by quota, or by price cutting, which is impossible—more people in the world will starve. The lower we force prices of agricultural produce, the more we shall destroy farming communities not only in this country but in every corner of the earth.

7.47 pm

Mr. Martyn Jones (Clwyd, South-West)

This very afternoon I asked the Prime Minister what he intended to do to help farming and to help stop the catastrophe that is occurring on the hills of Clwyd. He replied that the Minister responsible had increased hill livestock compen-satory allowances. But a 14 per cent. increase in HLCAs cannot possibly be considered enough, given the piteous decline in prices and incomes. Incomes alone have fallen by 22 per cent., and we face crippling interest rates and high inflation.

The Prime Minister had no answer to the problem of the disposal of casualty animal carcases. What was once at least a small monetary compensation for the loss of an animal is now a complete loss. If there is no suitable area in which to bury them on a farm, farmers must pay to have them removed. I heard on Tuesday in Denbigh market that animals are already being dumped by the roadside, which could result in a grave risk to public health.

We have already heard about the problem of the doubling of vehicle duty, which was slipped through in the Budget without being mentioned in the Budget speech. There are also restrictions on the use of duty-free diesel in journeys of more than 15 miles. But we are debating the EC price proposals which, in the absence of any real effort to change the system or redirect support to farmers and away from intervention and export restitution, will result in further damage to British agriculture. The 5 per cent. cut in sugar prices, which has already been mentioned, could result in job losses in our industry and harm the developing Afro-Caribbean countries drastically.

Common agricultural policy spending needs to be reduced, but some factors are not being taken into account —for example, the inclusion of the GDR in the EC and the potential reduction in costs of exporting surplus production with a strong US dollar. Spending could be reduced while helping farmers if the CAP were reformed.

Farmers in areas such as mine cannot continue in agriculture and continue to protect the visual and amenity value of the countryside if prices are cut merely to save expenditure.

The Minister rightly attacks the MacSharry proposals, which would be highly discriminatory against British farmers and which—although some would disagree—would discriminate against Welsh farmers and other less-favoured area farmers.

Welsh farms, and probably Welsh farmers, too, are smaller than average ——

Mr. Alex Carlile

My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) is not smaller than average.

Mr. Jones

I do not believe that the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) is an average Welsh farmer.

Welsh farms are smaller than the United Kingdom average, but they are six times larger than the European average and 12 times larger than Greek or Portuguese farms. The same applies when the product is considered. For example, dairy herds in Europe average 19 cows while the average herd in the United Kingdom is 61 cows. In Wales it is 50 cows, but in Greece and Portugal it is four cows. Welsh and British farms would therefore Miss out badly. Different approaches to definition could be taken. For example, each country could set its own size definition or use labour units, but it would be far better if farming were recognised as an essential element in the maintenance and creation of environmental value. Integrated policies with agricultural and environmental objectives can encourage farming practices that lead to diverse and high-quality landscapes and will maintain ecological systems. Such practices will pay more heed to traditional husbandry methods and less to production intensity.

At present, farmers' only alternative to the economic mess that they are in is to increase production or go out of business, both of which would have a devastating effect on the local environment. A less production-oriented view of agriculture could also recognise the role of small and part-time farmers in rural areas and rural affairs.

A shift from product price support to environmental management payments is capable of simultaneously reducing agricultural output, maintaining farm incomes and populations, reducing the total cost of support to society and providing unequivocal environmental benefits such as reduced pollution, improved wildlife habits and landscapes and improved food quality.

The Minister said several times that he wanted an acceptable change —a green change—but what is he doing to achieve it? Hon. Members have already pointed out that he has made no proposals in place of the MacSharry plans. He can achieve something in Europe only if he is prepared to put forward proposals which will have some credibility with our European partners. In the absence of that, we will get MacSharry in one form or another and I do not think that will be good for British or Welsh farming.

7.53 pm

Mr. Michael Lord (Suffolk, Central)

I am delighted to contribute to the debate, coming as I do from a constituency where agriculture is absolutely vital. I start by acknowledging the achievements of British agriculture. Instead of food shortages we now have plenty of food at reasonable prices that we now take very much for granted. The agriculture industry has improved its productivity and efficiency superbly and has greatly helped with our balance of payments.

Mr. Teddy Taylor

Rubbish.

Mr. Lord

My hon. Friend the Member for Southend, East (Mr. Taylor) said "Rubbish" from a sedentary position, but I know that he will speak later in the debate, so I suggest that he remains quiet during my speech.

At the same time it has maintained a countryside which we can all enjoy. If people doubt that, they should come to Suffolk and see for themselves. Farmers have also made an invaluable contribution to the fight against inflation. The rate of inflation in recent years has been held down by the price of food, and that in turn has been held down by farm gate prices. So farmers have done more than their share in the battle against inflation. What is to be their reward for responding so magnificently to the task that the nation set them? Apparently, thanks to the CAP, their reward is to suffer either the implementation of Agriculture Commissioner MacSharry's grotesquely discriminatory plans, or to be subjected to severe cuts in the price of their products which the industry in its present state simply will not be able to stand.

Any fair-minded and reasonably informed observer is forced to conclude that the CAP, far from being the instrument that will solve our agricultural problems, is the very cause of most of them. We pay lip service to the ideas of free trading within the Community and increasingly allowing market forces to operate. We all know that those are myths. The CAP is a mixture of regulations fairly or unfairly applied, price fixing by way of horse trading at various political levels, fiddles and protectionism of various kinds and a fair quantity of sheer fraud.

I am tired of pointing out unfairnesses about which little ever seems to happen. One example concerns the egg producers. Following all the problems with salmonella, tighter regulations in Britain have meant that our egg producers are now producing the best product in Europe. Sadly, many of them have gone out of business in the process. Dutch imports have come in to fill the gap. Lorries are allowed into Britain carrying eggs that are not of the same standard as ours and are taking away the business that our producers have lost and their flocks have been slaughtered. Our eggs are now better but we are not allowed to tell people so. We cannot stamp them or market them in the way in which we should be allowed as we now have the best product.

I do not want to put the blame for our farming problems on the shoulders of my right hon. Friend the Minister of Agriculture or his team. In the circumstances, they are doing an excellent job. I know that my right hon. Friend cares every bit as much as I do for our farmers and our countryside, but his hands are tied. He is only one of 12. He has to work within the limits of the CAP and inevitably he has to horse trade. That means that, although he is our Minister of Agriculture, he cannot look after the industry as he would wish and as he should be able to do.

I was unable to be present to hear my right hon. Friend's speech at the National Farmers Union annual general meeting earlier this year, but I think that parts of it highlight his present dilemma. My right hon. Friend used the word "modulation". That is a bit of Eurojargon. He said: Modulation says that support should in future be concentrated on the smallest producers—smallest not on the UK size-scale but on the Community scale … 90 per cent. of farmers in Portugal have 12 acres or less … Italy has no less than 2 million farmers, each on average with a holding of around 14 acres. When we consider our farm sizes, we are bound to ask how can a common system be devised that will satisfactorily deal with such discrepancies of size. It is simply impossible.

My right hon. Friend continued: It has to be a truly common policy, one which embraces and caters for the needs of farmers in all parts of the Community, from Northern Ireland to Crete. And it must be a policy for the 1,000 acre farm as well as for the 10 acre micro-farm. With great respect to my right hon. Friend, I simply do not believe that is possible.

There is much discussion about whether we need controls on production or cuts in prices, more set-aside, environmental payments, social payments and so on. In my view, none of those will deal satisfactorily and fairly with our problems. We now need a radical review of the whole system.

I appreciate that the CAP, if the House will forgive the pun, is the sacred cow of the Community. But if it is not working, and if it is damaging our farmers, our trade with the rest of the world and the very fabric of the Community, surely it is time to think again. The CAP is so flawed that the money going into it does not reach our farmers but is being lost elsewhere. Surely the answer is to devise a system which will allow individual nations to organize their own agriculture as they see fit while at the same time having mutually acceptable rules within Europe and throughout the world which allow nations to trade satisfactorily in their agricultural products.

I do not seek the immediate abandonment of the CAP. However, I ask that we recognise its massive inherent failings and that it will never work properly. The different nations, climates, farming systems and sizes of farms in Europe mean that any sort of overall framework is impossible. We must acknowledge that, for the sake of our farmers, consumers and European harmony, an alternative system is needed. Most important, we must initiate a debate on those issues.

Farmers are not greedy. They want fair and stable prices. Why should we and how can we stand by and watch this vital and efficient industry slowly being sacrificed on the altar of Europeanism?

8 pm

Mr. Robert Boscawen (Somerton and Frome)

The debate has been characterised by a tremendous sense of realism, especially by the speeches of my hon. Friends the Members for Suffolk, Central (Mr. Lord) and for Tiverton (Mr. Maxwell-Hyslop) and of my right hon. Friend the Member for Selby (Mr. Alison). We have also heard interesting speeches from the Opposition. This may be one of the last occasions on which I shall speak on agriculture. I have spoken in many previous debates on the subject, but no one can deny that this debate is critical for the whole industry.

We have never had a better group of farmers. They are extremely professional, work hard and are knowledgeable, and we owe it to them to do what we can to improve the industry and secure its future. Farmers are also a great source of stability and without them Britain would be a much poorer place. I agree with a great deal of what has been said about the future of the Community. It is worrying when a good farmer on his own land makes a substantial loss, and that is a matter for a debate in itself. However, farm incomes are not the only worrying feature of the present situation. There are many factors beyond farmers' control and one is the increasing amount of interference with the farmer doing the job that he knows best.

Everyone knows that in today's world farming can no longer be pursued solely for economic ends. It must be friendly to the environment, whether natural or man-made, such as buildings. In many cases control has gone too far and much of the rhetoric condemning the depredations in the countryside labels the farmer as the chief villain. We must be careful about that. On planning issues, anti-pollution schemes, water systems and access to the countryside, the farmer is often seen as the villain of the piece and, what is worse, Governments tend to land him with the cost of remedying faults. The fines that are to be imposed on farmers who transgress pollution regulations are out of all proportion to any damage that they cause. We should make it clear that we do not see them as the villains and we must try to help them to do their job as best they can.

Let us examine the part that other European Governments play in assisting farmers. We certainly assist our farmers and we try to play by the rules, but many nations do not and examples of that have been given in the debate. It is said that we cannot believe everything that farmers tell us. That is correct, but I know from personal experience that much of what they tell us is true. We expect the Ministry of Agriculture, Fisheries and Food to do what it can to tell the Commission and our European partners that they have to play the game if they want the Community to work.

Farmers, and especially the dairy producers whom I represent, do not fully understand the reasons for proposed changes to the Milk Marketing Board. The proposals for a producer co-operative have been sent to the Minister for examination, but it is not the role of Government to decide how the industry should market its prime commodity. I am sure that my right hon. Friend the Minister understands that, but some people do not. I hope that he makes it clear that not only the board and the people who manage it, but the producers, understand the problems in marketing dairy products so that a sensible solution can be found. I remember the same debate going on in the 1930s because my father was involved in it. They must find a system that is compatibile with today's realities.

Allowing producers to sell to companies other than the Milk Marketing Board if they can get a better price may undermine those parts of the industry which rely on the board to take all the milk that they produce and sell it for a reasonable price. I hope that farmers will go to meetings and try to understand the issues affecting the future of the Milk Marketing Board, which is a tremendous force for stability in the production and marketing of one of our main commodities.

I do not blame my right hon. Friend the Minister for not outlining his negotiating position about the future of the CAP. He cannot do so and could not be expected to do so. My hon. Friend the Member for Tiverton made a remarkable spech. I doubt whether everyone would agree with everything he said, but I agreed with some of it. He said that my right hon. Friend the Minister had spoken about the possibility of improved premium schemes. Such schemes increase the price for a limited part of agriculture, and that then increases production in that area. We then encounter the problem of having to find some sort of curb on that, which may be through standard quantities. We ran into that problem with beef when the late Lord Soames was the Minister of Agriculture, Fisheries and Food and he had to end the system. Perhaps the problem can be avoided by a quota system. Although it is right, as my right hon. Friend said, to apply downward pressure to farm prices, it must be done at a pace with which the industry can work. At the same time, if we are to have an improved premium scheme for certain sectors of agriculture, that will work against the system unless production is curtailed, whether by quotas or by a similar arrangement.

There is great uncertainty. The message at the end of the Minister's remarks was perhaps the most encouraging part of his speech. He said that we want reform to start now; we must not put it off. The industry needs support now if it is to plan for the future and look forward to better times.

8.10 pm

Rev. Ian Paisley (Antrim, North)

It is only right that a voice from Northern Ireland should be heard in this debate. If there has been a cut in farm incomes on this side of the water—in Scotland, England and Wales—there has been a far greater cut in Northern Ireland. In the United Kingdom, incomes have fallen by 14 per cent., whereas in Northern Ireland they have fallen by 27 per cent. If the people here have a cold, we in Ulster are dying of pneumonia.

In this debate, the House has recognised the reality. It has learnt that its powers have been seriously eroded. It is not right to charge the Minister of Agriculture, Fisheries and Food with responsibility for all our ills. Let this House know it: his powers have been greatly reduced and are entirely different from those of previous Ministers. In the old days, Agriculture Ministers had to persuade the Cabinet. Today, the Minister has to go and fight in Europe and, at the end of the day, he may be overruled.

I have some little experience of Europe, and I can say that these matters are decided more on a political basis than in the interests of the farmers, the producers, those who sell the products or the consumers. It is a political business, and a very intensive political business at that. It is time that we learnt that.

Yesterday in Strasbourg a debate was held on the increased powers that Mr. Delors wants. He says that, for starters, he wants 40 per cent. more powers. Yet the Vote Office and the Library cannot produce the relevant document. The European Parliament, of which I am a member, could not supply my colleagues or me with a copy of the document that was being debated. That is Europe for you, Mr. Deputy Speaker; and, as the momentum gathers, the House will realise just how powerful the long arm of Europe is in regard to the affairs of this kingdom.

The Minister must face up to three problems. First, the system of agriculture controlled from Europe is not working to the advantage of our farmers and is not providing them with a level and fair playing field. There is no doubt about that. Our farmers are at a grave disadvantage. We are beginning to reap the sowing of the CAP. The Minister is right that a strategy to deal with shortages cannot be a strategy to deal with surpluses. That is why the CAP needs to be radically rethought or scrapped altogether. The proposals put to the House for the restoration of national power in the industry represent the only way of solving the problem. Proposals have been put tonight by eloquent speakers, who have shown that there is a direct contradiction and that we cannot solve the problem if we continue as we are.

The second problem is that the farmers are not getting the money that they should in terms of agricultural finance and subsidies. We have warehouses and intervention stores, and those in the big business of selling are getting most of the subsidies. Let the farmers get what they need. If farmers are to be asked to look after the countryside, somebody will have to pay them for doing it. Environmental aims will be achieved not by farmers producing anything but by their taking care of the countryside. We must face the fact that we have a duty to farmers. It would be a tragedy for our nation if the country were bereft of farmers and of people living in the countryside.

The third problem is fraud, and something must be done about it. The Minister said that, because we detect those who carry out fraud, we are blamed for having more people at the game of fraud. But the other countries are not taking the matter in hand at all. They are not going after those guilty of fraud. The Minister should start a crusade in Europe and tell his partners that they must start the work of detection. He must tell them, "This is happening. You must find out who is doing it and lay your arm of power upon them."

We all welcome the fact that the barriers between eastern and western Europe have broken down; but that means that import barriers have also broken down. Mr. Delors is encouraging that flood, but that, too, will tell against our farmers. We have heard the amazing fact that we are not overproducing—even in milk. Apparently, we do not produce enough milk to use in our own homes, yet we are subject to quotas, which have changed our outlook and have caused dissension among farmers. In my community, the hill farmers cannot go into the dairy business, but dairymen are going into the sheep business and taking away the upland farmers' livelihood. That has divided the community.

I am sure that the House was glad to hear tonight from two veteran debaters —the hon. Members for Somerton and Frome (Mr. Boscawen) and for Tiverton (Mr. Maxwell-Hyslop). I am sure that we shall remember their speeches and that we all regret that they will no longer be with us after the next election. Of course, some hon. Members who think that they will be back after the next election may be axed, and will not have had the opportunity to say goodbye. We shall remember those two hon. Members with pleasure, however, and have always listened with interest to what they have said. Knowing their record, we wish them a happy retirement.

8.18 pm

Sir Jim Spicer (Dorset, West)

I am delighted to follow my hon. Friend the Member for Somerton and Frome (Mr. Boscawen). For far too many years he was shut away in the Whips' Office and we did not hear enough from him. We are delighted to have him back and to hear his contributions, which are always of great value.

My right hon. Friend the Minister has given us a realistic assessment of the situation. I do not understand why the Opposition spokesman should have been so scathing in his condemnation. As always, the Liberal Democrat spokesman wanted it both ways. He wanted the Minister to exercise more power, yet the Liberal Democrats would be the first to pass more power to Brussels and make our Minister impotent.

We are talking not just about the problems of falling incomes or increased farm wages. We know about all that. Overdrafts have increased by 17 per cent. and the banks are getting tougher. That is part of the equation, but my right hon. Friend the Member for Selby (Mr. Alison) put his finger on another aspect which is a greater worry to our farmers —the ever-increasing costs that are being imposed on them by new legislation, which was also referred to by my hon. Friend the Member for Somerton and Frome. It is frightening. Farmers in my constituency are worried almost as much about the impact of escalating costs of the legislation as they are about anything else.

I asked a farmer who farms about 1,100 acres on three farms—one tenanted and two owned—to give me an estimate of what will happen to him this year. He wrote telling me that he had done what I asked and had produced an estimate of what it would cost his farming enterprise this year. He said: In a way I wish I hadn't done it, as to comply with the `letter of the law' it will require estimated extra costs and expenditure this year of some £94,840 of which £40,000 might be reclaimed back from MAFF via pollution control grants. I make no apology for giving some of the details because these costs are important to our farming community. In regard to the control of pollution, the farmer said: Large fuel storage may pose 'significant risk of pollution' being near to water course and will probably require concrete bund to retain any spill. Cost with work done by farm labour £2,500. For one dairy, he said: A complete dirty water irrigation system required for 180 cow dairy complete with new silage effluent tanks, roof drainage system, etc. Estimated costs including design and building to be not less than £50,000. For another smaller dairy, he said: A smaller dirty water irrigation system … Estimated cost about £20,000. For another dairy, he said: A small dirty water irrigation system … Estimated cost £10,000. Because field clamps of silage will no longer be legal, he will have to build a new clamp inside, which will cost £4,000. Under the Water Act 1989 he will need a licence to abstract water, at a cost of £25 each for two boreholes. He will also require at least two discharge consents at a cost of £350 each. To comply with the new regulations for the control of substances hazardous to health he will need to carry out dust suppression and control measures costing £3,000 and provide a new chemical store at a cost of £4,000. For all the farms the cost of extra record-keeping and health monitoring will be £1,500 per annum.

In regard to the Food Safety Act 1990, the farmer says: Extra security is now required to prevent unauthorised access to dairy plant and equipment … Total estimated cost will be about £5,000. He will also have extra expenditure under the Welfare of Livestock Regulations 1990 for a new building and veterinary certificates for casualty slaughter. I could go on and on, but my main point is that the total cost will be £94,840 in one year.

All those changes may be good news for the environment and many stem from decisions made within the Community. However, I am worried about whether we are on a level playing field. Are all the other countries carrying out the same inspections? Is there a national rivers authority going up and down the Seine, and inspecting rivers in Greece, Portugal and Spain? Are chaps rushing around dipping their "little dipsticks" into the water, checking it out and saying, "This is disgraceful. You, Greek farmer, will have to spend the same as your British counterpart on increased protection"?

The major worry is that we are not on a level playing field. I know that. As a Member of the European Parliament, the hon. Member for Antrim, North (Rev. Ian Paisley) knows that. I do not know how we will resolve the problem. If we are to switch support from direct subsidies on the farming and food production side, and if we are to favour the environment more, we should not put greater burdens on the farming community but should increase grants, where that can be done. That would not solve all the problems, but it would at least be of some help.

I urge my right hon. Friend to do all that he can to help farmers with all the additional costs, many of which are being imposed because of extremely high standards, many of which are not necessary. If a farmer is not to have any slurry spills ever, he has to meet unnecessarily higher protection standards. Surely the right answer is to say to the farmer, "If you contaminate a river with slurry, you will be hammered." The polluter should have to pay for contamination, but if too high standards are imposed, the farming community cannot carry the additional costs.

8.25 pm

Mr. Iain Mills (Meriden)

When we talk to our farmers about the conduct of the Minister in difficult situations with Commissioner MacSharry, they always ask whether he is tough enough and whether he has taken a strong enough line. I congratulate my right hon. Friend on his stance. Recently he was reported in the press as having said: You don't get out of difficult situations by pretending there is an easy way out. That was not a soft option; it was a tough option. I hope that he will continue to be tough.

Commissioner MacSharry does not endear himself to me. His proposals on CAP reform and on things like the continuation of minimum values at auctions for the export of live animals show clearly that he does not regard equality as important. I urge my right hon. Friend to ensure that cuts are shared fairly among the EC member countries. Britain must not bear an unfair burden. I know that my right hon. Friend is aware of that; in fact, he has already said so, and I shall not press him further on it.

Farming is facing great change. As the Member of Parliament for Meriden, I represent a number of farms in the west midlands between Birmingham and Coventry. Most of them are between 200 and 300 acres; some are bigger, and as large as 1,000 acres. They are all facing the pressure, as are farmers throughout the country, of high interest rates, which are coming down under a good Conservative Government, with more reductions to come later. Over the years their borrowings will diminish, but even so they are going through a difficult period.

Farmers in my area have been innovative in diversification, although perhaps in the green belt between Birmingham and Coventry there may be too many golf courses and too much wrong diversification. However, farmers see a need to pursue that as incomes increase and borrowings decrease.

I should declare an interest as a member of the National Farmers Union, although only as a very small smallholder. I appreciate the comments and briefings given to me by the NFU locally and nationally. Nationally, the view of the NFU is interesting. It felt that it would be appropriate for the Commission to propose a neutral price package. What is being put forward is a severe reduction. I do not have to be persuaded by the NFU or anybody else that there is direct discrimination in the MacSharry package against highly efficient British farmers. That may be a trite remark because many hon. Members have already referred to the point, and no doubt many others will raise it as the debate continues. I wish to register clearly that the ordinary midlands farmer has got a bad deal from Commissioner MacSharry.

We obey the rules and respect the guidelines. I shall not say that that gets my goat because it would be wrong to use that expression in an agriculture debate, but it is irksome. We always seem to be the good guys. I know that my right hon. Friend the Minister is a real toughie and I hope that he will confirm that in his reply. However, we do obey the rules and I have seen that in other industries. Our car manufacturers and car component manufacturers obey the rules, but the French and Germans find ingenious and innovative ways around them. Let us hope that our farmers, who are up against it now, will not face such practices from our European partners and friends. I am a committed European, but I hope that our partners will not use such mechanisms as Commissioner MacSharry may allow to find ways round the guidelines, thereby obtaining an advantage over our farmers.

The reservations expressed by the NFU include the fact that the guidelines were set before the former German Democratic Republic became a full part of the Community and should now be increased to offset fully the extra cost of supporting the agricultural sector of the former GDR—[interuption.] My hon. Friends are chuntering behind me, but I wish that they would not. They also include the fact that the strengthening of the United States dollar against the ecu will substantially reduce the cost of exporting EC surplus production.

The Commission's proposal to reduce the remaining United Kingdom monetary compensatory amounts by one third is inadequate according to the NFU and takes no account of the United Kingdom's commitment to a fixed exchange rate within the EMS. The NFU says that all our green rates should be aligned to a general rate so that British farmers no longer have to produce under the handicap of monetary disadvantages. I make no apologies to the House for reading out some of the details g' ven to me because they are current and important and they represent the collective view of the NFU nationally.

I shall now come to the problems facing my friends locally. My hon. Friend the Member for Dorset, West (Sir J. Spicer) mentioned a multitude of minor disadvantages which, to a farmer, are major disadvantages. The new silage and slurry regulations came into effect on 1 March and the Food Safety Act 1990 comes into effect on 1 July. Those pieces of legislation, together with the regulations on the welfare of livestock, are terribly important. They are welcomed by farmers, but they all pose additional costs at a time when farmers in my constituency are not just on the margin but, with their borrowings, over the margin.

I shall not say that more and more are leaving farming because, being good productive midlands farmers, they are trying desperately hard to continue in their occupation and support their families. However, even if they survive, the real penalty is investment. They do not have enough funds to invest. Hence, in my area we have seen the closure of a number of distributors of farm equipment. As farmers no longer buy the equipment, the distributors face problems and that works its way back to those who manufacture the equipment, including tractors and a wide variety of other equipment Therefore, problems are facing not just the farmers who are directly involved, but those in the chain who provide farmers with the mechanisms to produce the food that we need, but which is in surplus.

The position on fallen stock is most unsatisfactory. It is wrong for farmers to have to pay £50 a beast or £5 a sheep for the removal of dead stock. In addition, although it is not a large amount, the change in excise duty on tractors made the farming world extremely excited.

8.34 pm

Mr. Christopher Gill (Ludlow)

In this debate we should be considering two issues—first, the current parlous state of British agriculture and, secondly, the uncertainty about the future. That is the recurrent theme that I find when I talk to farmers. They want to know where they are going. Those two issues pose two fundamental questions. First, is the common agricultural policy the right vehicle to deal with present and future problems arising in the agriculture industry? Secondly, what can the United Kingdom Government do to help?

My right hon. Friend the Minister said in his speech to the National Farmers Union annual general meeting in February that the CAP has become an engine for its own destruction. That is hardly surprising. The CAP institutionalises the command economy—the brainchild of socialism bred by dogma out of theory. It is a managed market, which is a many tentacled creature of central control, bureaucracy, inefficiency and waste. It has one success to its credit: in eastern Europe the totalitarian states have engineered shortages, but in western Europe the CAP has engineered surpluses.

I want to invite hon. Members to look at the accounts of the common agricultural policy. We should look first at the profit and loss account. The costs of agricultural support are now impossible to contain within a budget of £23 billion. We should also look at our sales profile. For domestic consumers it is cash on the nail, but for foreign buyers there are knock-down prices and extended credit. If I wanted to be facetious, I would tell how our armed forces in the Gulf bought foreign.

The beef mountain has already been mentioned. I do not agree with the figures that have been quoted because estimates vary from between 700,000 tonnes to 930,000 tonnes. However, more than 90,000 tonnes of that beef is in the United Kingdom alone. That is quite excessive. If we consider farm incomes, we see that they are at rock bottom.

At the end of the accounts we find the auditors' report. It is a catalogue of management failures, fraud, deficiencies and uncontrolled expenditure. It is little wonder that my right hon. Friend the Minister has said that the CAP needs radical change.

My right hon. Friend the Minister knows as well as I do that significant items are not even stated on the balance sheet. The CAP has spawned a monoculture with an all too obvious effect on ecology and environment. The enouragement of agri-business has had an adverse effect on family farms. We have caused antagonism to our trading partners throughout the world by our policies of subsidised exports. Also, the barriers that we have erected around our own markets have had a devastating effect on the economies of third world countries.

I know that my right hon. Friend the Minister is somewhat constrained in what he can say because the CAP is an intregal part of the treaty of Rome. No doubt he feels inhibited by fear of sending shock waves or the wrong signals to our Community partners. I am not similarly constrained and I want to tell the House that the notion that a prosperous United Kingdom agriculture industry can emerge from reform of the CAP is a triumph of hope over experience. The CAP has had time and money enough, but it is fundamentally flawed. In contrast with other activities of the European Community, there can be no convergence in agriculture—geography, topography and climate do not respond to regulation or directive and never will. The system is not working and no amount of tinkering will make it work. Necessary decisions are not being made on time, but the system does not facilitate decision making. It cannot reach the right decisions for the various agricultural activities in the Community, and every decision, by definition, must be a compromise. Our industry—whether it be efficient or inefficient farmers, small or big farmers, upland or lowland farmers—is prejudiced as a result.

With its green currencies, its own monetary system— monetary compensatory amounts —its own programme of legislation and its own bureaucracy, the CAP is an awesome object lesson in the inevitable consequences of political and monetary union. The danger is that the CAP will yet prove to be the rock on which the European Community, as we know it, founders.

I said that I would suggest what the Government should do to help. I do not think that any hon. Member dissents from the view that the industry desperately needs a definitive and positive statement on future support arrangements such as income aid, landscape grants and commodity support. I pay tribute to my right hon. Friend the Minister for the positive comments that he made.

My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) made an important point about quotas. I ask my right hon. Friend the Minister to consider the effect of a quota system on our sheep population. He could do the industry much good by persuading his partners in the Community to nail, once and for all, the prospect of quotas for sheep or other commodities which are not already subject to quotas.

I should like to make two other suggestions to my right hon. Friend which I hope will be helpful. First, he should do all that he can to encourage co-operatives which extend beyond the farm gate. The competition that British agriculture faces from abroad is better organised, far more aggressive and taking too much of our market. Much of that competition derives from a strong and progressive producer-owned co-operative base.

Secondly, my right hon. Friend should stimulate the marketing of United Kingdom farm produce by increasing funds for the Food From Britain organisation to match those enjoyed by the French agriculture and food industries. We have good saleable products, but we must beef up their marketing and brand identity. I hope that my right hon. Friend will seriously consider whether Food From Britain can play a more important part in helping us to achieve that.

We are all, to a greater or lesser extent, opinion formers. Let us go forth from the House and sing the praises of British food and drink products. I commend that message to Labour Front-Bench spokesmen, who ran down British products so many times, which was regrettable. We can all play a tremendous part, and British agriculture will thank us for doing so.

8.44 pm

Mr. Alex Carlile (Montgomery)

We were reminded earlier how much we shall miss the debating style and eloquence of the hon. Member for Tiverton (Mr. Maxwell-Hyslop). The hon. Gentleman is one of the best debaters in the House and has the keenest cutting edge when he speaks. He never, however, descends to malevolent insults. The Minister's persuasive pugnacity, which we often enjoy, would be all the more effective if he did not descend to offensive insults. I hope that he will apologise for what he said to me earlier.

Mr. Gummer

I have had an opportunity to check the record. On the 21 occasions when we have had agriculture debates or questions, the hon. and learned Gentleman has contributed to three. Tomorrow will be the anniversary of the first question that he has asked me since I have been Minister of Agriculture, Fisheries and Food. If he feels that anything that I have said underestimates what he has done, I withdraw it, but those are the figures.

Mr. Carlile

The right hon. Gentleman will be aware, especially as I raised an agriculture matter in another debate two days ago, that I am my party's spokesman on trade and industry. I see no reason to defend my contributions record in the House.

The Minister mentioned a visit that he paid to my constituency where, he says, the views that he expressed in the House were well received by farmers. A quick check tonight with an official of one of the farming unions failed to reveal any recollection of the right hon. Gentleman's paying a visit as Minister of Agriculture, Fisheries and Food. I should therefore welcome his telling the House exactly when he was so well received by officials of farming unions in my constituency. If he would like to correct that —I extend this invitation in a genuine spirit—I should happily organise meetings in my constituency with members of the two farming unions in Wales and the Country Landowners Association. I hope that the Minister will accept that invitation.

I ask the Minister to answer a question that I put today and also on 16 April—I was hoping that the Minister might listen to this point—in the debate on the British Technology Group Bill. I hope that he will tell the House that the Government have decided not to give away all the patents, copyrights and designs that have resulted from research sponsored—and successful as a result—by the Ministry of Agriculture, Fisheries and Food. It would be quite wrong to give that intellectual property to a private investor, who may then disperse it around the world and lose for Britain the profits that could be gained from it.

The Minister referred to my contributions to agriculture debates but did not take into account comments that I may have made, for example, in the Welsh Grand Committee and elsewhere, so perhaps I should repeat some of them in what I shall call a plea from the hills. We hear much from our constituents in correspondence about protection of habitat. Whether it be newts, red kites or, dare I say it, even badgers, it is important to ensure that habitats are protected. The Government should bear in mind that the most important habitat in rural mid-Wales is that of its people. The people of mid-Wales, who populate its villages, have created that environment by their efforts as farmers, and people from the cities wish to preserve and enhance it.

In the election campaigns in the 1980s farmers in mid-Wales were subjected to advice from Ministers. Some memorable advice given in 1982 by the right hon. Member for Worcester (Mr. Walker), the then Minister of Agriculture, Fisheries and Food, was that they should produce, produce, produce. The farmers did as they were told. They almost always did exactly as they were bid by the Government because they trusted them—until recently.

Now, farming in mid-Wales faces the same situation that was faced by other great Welsh industries, such as the coal industry, which has declined from some 200 pits to three, and the steel industry, which employed tens of thousands of people and now employs relatively few. Farmers feel that agriculture is next. It is a much bigger industry than coal or steel ever were in Wales. The consequences of the Government's policy are causing a decline, referred to by several Members, including my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells), which is of a scale that makes farmers feel that the coal and steel industries were probably not so badly treated after all.

There is little else to do in parts of rural Wales other than farm. Whether one lives in the valleys of the river Hafren or the river Banwy or in the villages of Llanwnog or Derwen-las, the idea that farmers can diversify is unrealistic. Some diversification can be achieved, but the idea that in Derwen-las one can sell love-spoons carved by farmers to passing trade that never passes is absurd.

However, the Minister of Agriculture, Fisheries and Food and the Welsh Office seem to believe that diversification is an easy option, which anyone can achieve even if they are untrained for it or for any other job. It is not good enough to tell farmers who live in mid-Wales that if they go to Wolverhampton or Chester they will find jobs in factories, Marks and Spencer offices or local councils there. The Minister knows that such movement would not only disrupt the lives of those individuals, who would find it difficult to cope with the change, but alter the character and demographic make-up of a historic established community in mid-Wales.

We have the advantage of the Development Board for Rural Wales. The chairman, Glyn Davies, and his board do excellent work. However, will the Minister of Agriculture, Fisheries and Food and the Secretary of State for Wales recognise that a far more direct input by that board into agriculture and tourism, especially the building of hotels, could provide some alleviation in terms of jobs to enable people from farming families to continue to live and work in mid-Wales? My constituency has the lowest rate of unemployment but the highest rate of growth in unemployment in Wales. That trend must be reversed before we, too, come high in the unemployment league.

Farming has a future, but it needs help. I was extremely disappointed by the refusal of the Welsh Office to assist financially in the creation not only of an abattoir but a farm-to-package meat-processing plant in the Llanidloes area. That would make a tremendous difference to sheep and lamb producers in mid-Wales. Will the Minister consider the Government's abattoir policy and speak to the Secretary of State for Wales about creating, and assisting in the creation of, Euro-standard abattoirs to serve Welsh agriculture?

We all subscribe and pay lip service to schemes that will enable farmers successfully to manage the environment, for that will be the key to their survival, but although the Minister used fine words in that part of his speech today, he did not say that he was willing to finance such policies. He must use the words and pay for the policies or the greatest industry in Wales will decline and the population will decline with it.

8.54 pm

Mrs. Ann Winterton (Congleton)

This has been one of the best debates on agriculture that I have ever sat through, and I am delighted to make a brief contribution to it.

I very much enjoyed the robust contributions of my hon. Friends the Members for Antrim, North (Rev. Ian Paisley), for Ludlow (Mr. Gill), for Suffolk, Central (Mr. Lord) and for Tiverton (Mr. Maxwell-Hyslop). I mentioned my hon. Friend the Member for Tiverton last, but not least, because we shall miss his contributions in the future. I wish that he had not announced that he was making what might be his last speech because I thank that we shall have another full year in which he could make many more good, robust speeches.

Common threads have run through the speeches this evening. We all recognise that agriculture is in crisis, with spending on the CAP at its highest yet and farm incomes at their lowest since the second world war. In addition, uncertainties about the future during the reform of the CAP sap the confidence of the farming community. Because agriculture thrives on stability, it has responded positively to the support placed on food production which, in a way, has caused some of the problems that we face today. However, it is worth recalling that, as a result, this country has a supply of temperate foodstuffs available to housewives and consumers that is second to none in quality, price and choice. We have not seen a queue for bread for many years. Further vicious reductions in production will only exacerbate the problems, as farmers desperately try to produce more to maintain their incomes and remain in business. At the same time, they are thwarted by the fact that they must operate under a handicap of monetary disadvantage.

The European Commission's proposal to reduce the remaining United Kingdom monetary compensatory amounts by only one third is unacceptable and discriminatory. British farmers are being prevented from competing equally with other member states.

The livestock sector, too, is in a fragile state. Its predicament will be exacerbated by the weakening of support for beef and sheep. We have already suffered directly because of the reunification of Germany and the developments in eastern Europe. The beef industry would welcome like a hole in the head a 2 per cent. reduction in the milk quota and the resulting cow and heifer cullings.

A little has been said about the cost of German unification that is being borne by the whole Community. Will the Minister deal with that issue and say why, in the 1988 Budget, provision was made for the cost of reunification? It would have taken a wizard with a magic ball to foresee precisely what the costs would be. We know only too well that this country and others are bearing more than their fair share of that cost. Why did not West Germany pay for the cost of reunification? That is the right and proper course. It is what should have happened but, sadly, has not. We are suffering because of it.

The long-term reform of the CAP, particularly the MacSharry proposals, exercises everyone's mind. As a member of the Agriculture Select Committee, I recently went to Brussels with my colleagues to meet Mr. MacSharry as part of our inquiry into animals in transit and to discuss the future of the CAP and his proposals. He reacted in a combative and competent manner to questions put to him. He will not easily be moved from his proposals, which are fatally flawed from the point of view of agriculture in Europe as a whole and this country in particular. It makes no sense to fossilise agriculture by subsidising the inefficient at the expense of the efficient; nor does it make sense to move to a centrally controlled system of food production. We have seen that in the Soviet Union and know how disastrous it would be and to what it may lead in a few years' time.

It is important to grasp the nettle once and for all and to change from a system of support for food production to one of support for the land and the environment. The farmers who husband our greatest national resource, the countryside, need a period of stability to plan their individual businesses and to look to the future with confidence. The changeover in support should be phased in over perhaps a decade, as it has taken that long for our present problems to develop. There should increasingly be a move towards an awareness of the marketplace, with a positive attitude to the quality of production and food marketing.

We in this country produce some excellent quality food. We have proven management techniques. But we fail miserably on promoting and marketing. I am longing for the day when, for example, English or Welsh lamb is sold as a sought-after, high-value commodity in its own right in the shops and supermarkets of Europe. I am longing for the day when British farmers are rewarded directly for responding to the disciplines of the market while maintaining their land in the way that is best for future generations.

Let us face up to the fact that the CAP is based on politics and has little to do with agriculture or what is best for agriculture and its most important ancillary industries. One thing is certain: any reforms must be fair across the Community as a whole and must be seen to be fair. I suggest that any cuts in production should be equal across the Community and that national Governments should decide how to implement them in their own countries. Instinctively, I wish to go one step further, but I suspect that at this stage that will not happen. I should like national Governments to take the responsibility, once again, for their own agriculture. In the long term, that is the way forward.

9.1 pm

Mr. Malcolm Moss (Cambridgeshire, North-East)

I agree with my hon. Friend the Member for Congleton (Mrs. Winterton) that this has been an extremely good debate. I am sorry that the time available to me and to other hon. Members has been cut because the Front Benchers need to wind up, and I shall be as brief as I can.

Despite the fact that this year's EEC price review takes place at a time of falling farm incomes, the United Kingdom has had a significant trade deficit in food and drink—therein lies a glimmer of hope for our hard-pressed agriculture sector. The obvious conclusion is that United Kingdom producers are less successful than their European and other counterparts in the world in marketing their products in this country. That problem must be addressed from two angles.

I agree with my hon. Friend the Member for Ludlow (Mr. Gill) that our farmers should get together in co-operatives, as their French counterparts do so successfully. In Wisbech, in my constituency, there is a successful co-operative in the fruit-growing area. That is a way forward. Economies of scale can be gained by co-operation.

The Government have a role to play in ensuring that they promote British products and encourage the British public to buy British. They are right to be concerned at the frightening increase in the proportion of the Community budget spent on the CAP and are rightly proud of initiating the CAP reform and proper budgetary discipline. The Government would have more support from farmers in my constituency were it not for the grievance at the fact that they are not allowed to compete fairly and equally with their European competitors. The playing field is certainly not level.

United Kingdom arable farmers must work under two major disadvantages, and I was delighted that my right hon. Friend the Minister recognised them. First, for years the green rates have put Britain at a disadvantage. They subsidise imports and penalise exports. The green money system is not compatible with the single market, but our farmers cannot wait until 1992. Furthermore, the third cut that is offered in the present price review is not acceptable.

The second disadvantage is that the co-responsibility levy penalises the larger and more efficient British cereal grower. The Government say that they are completely opposed to that, but in this year's price review they propose to double the levy from 3 to 6 per cent. The Minister has an important task on his hands in ensuring that he delivers on both those counts.

It seems that the price reductions in the current review will hit arable farmers in north-east Cambridgeshire harder than most. They crop sugar beet, wheat, oilseed rape, some flax, peas and, of course, potatoes. Sugar beet will face a 5 per cent. cut in support; oilseed rape, flax and peas will each be cut by 3 per cent.; and, as I said a moment ago, wheat growers face a doubling of the co-responsibility levy from 3 to 6 per cent.

There are few alternative crops for the growers in my area. The harsh cuts in support for oilseed rape and flax will force more land back into cereal production. The cuts in sugar support prices seem unjustified since it is the growers and processors who pay levies to meet the cost of the EC regime. The only other cash crop that forms a significant proportion of many of my constituents' farm incomes is potatoes. Currently only those destined for starch come under the EC budget proposals, but that may well change post-1992.

A major problem with potatoes has only just come to light but it will affect the farm incomes of my constituents. The source of much of our seed is Scotland which, with its harsh climate, has produced excellent seed potatoes for many years. The Department of Agriculture and Fisheries for Scotland operates a classification system which complies with the EC requirements. It guarantees the buyer of the seed a virus-free and disease-free product. Last year the potato crop of one of my constituents failed totally. When he tested it, he found high levels of virus. His loss amounted to £40,000 or £50,000. As a result of the publicity that we gave to that incident, 80 farmers in my constituency tested the seed that they received from Scotland before setting it this year. Of the 80 who tested the seed at the National Institute of Agricultural Botany at Cambridge, eight had samples with virus levels of between 30 and 40 per cent. That seed is worthless and, luckily, has been replaced by the merchants.

That incident raises a number of important questions, such as who is responsible for the seed being so far removed from its classification and certification, and who is responsible for informing the farmers who have taken delivery of seed which might be infected? I have a particular case in mind. I have with me the register of last year's Scottish seed potato crop from which one can locate every farmer, every producer and even the fields in which the potatoes were grown. Two farmers in my constituency took delivery of 24 tonnes from a grower in Scotland. We estimate that his total tonnage is 621 tonnes. Where have the other 537 tonnes gone? It is likely that if 24 tonnes are infected, the whole crop will be infected.

What is happening in Scotland? There seem to be three possibilities. First, the last two mild winters may have led to the aphids which carry the virus over-wintering, but surely the Department of Agriculture and Fisheries for Scotland realised that and should therefore have introduced more rigorous testing. Secondly, the problem may be well known to growers and to DAFS and they may hope that a climatic change in the next few winters will mean that it will go away. Thirdly, perhaps there is fraud and corruption in Scotland and tickets of certification are being attached to bags of seed potatoes which are ordinary wares and not the true Scottish seed which has been properly inspected and passed.

I urge the Government to conduct a thorough inquiry into that incident in Scotland. I hope that they will liaise with the National Farmers Union and the National Association of Seed Potato Merchants to examine the sale agreement that farmers undertake because current levels of compensation are derisory. We must also examine the level of legal protection for farmers who face large losses. I ask the Ministry to use all available channels to alert all potato growers to the problem.

CAP reform is vital. We need reforms which satisfy certain conditions. Any price reductions and cuts in quotas should apply to all farmers in all areas equally—there should be no special deals for those in the Mediterranean areas. Set-aside should be used more in the arable sector. Goodness knows, my own fenland landscape could do with a few more trees, but the rate of set-aside, and the money paid, must be at the right level to encourage farmers to take land out of production. The present figures are far too low.

Environmental issues should enter centre stage. Britain wants a framework in which each country selects its own priorities. I congratulate the Minister on his forthright and robust appraisal of the problems facing the industry, and I also thank him for his positive proposals in regard to CAP reform.

9.10 pm

Mr. Ron Davies (Caerphilly)

I apologise for my husky voice. I have overused my vocal cords in the past couple of days in the cause of defeating the Cardiff Bay Barrage Bill. I am sure that the Minister will be pleased to learn that I shall not speak for as long tonight!

The hon. Members for Antrim, North (Rev Ian Paisley) and for Dorset, West (Sir J. Spicer) and the hon. and learned Member for Montgomery (Mr. Carlile) paid special tribute to the hon. Member for Tiverton (Mr. Maxwell-Hyslop), who said that his speech tonight might be the last one that he would address to the House. Let me add my tributes to theirs. The hon. Member for Tiverton, with his hon. Friend the Member for Somerton and Frome (Mr. Boscawen), has been a regular attender of our agriculture debates over recent years, and they have both contributed regularly. I have not always agreed with what they have said, but I have come to respect them as Members of Parliament who have served the House with diligence and loyalty. They have served their constituency interests to the best of their abilities, and according to their lights. I am sure that the Minister will acknowledge, when he replies to the debate, that his party will be the poorer for losing their services.

Today's debate has revealed the state of flux in which agriculture finds itself. Despite the apparent differences between the two opening Front-Bench speeches, I believe that there is a large measure of agreement between them about the essential problems of the industry. The debate was, however, given a certain spice by the hon. Member for Suffolk, Central (Mr. Lord)—a Tory Member—who suggested that his party should adopt a policy abandoned by the Labour party after the 1987 general election. Similarly, the hon. Member for Weston-super-Mare (Mr. Wiggin) suggested that the Government adopt a policy rejected by the Liberal party after their defeat, on policy grounds, in the 1983 election.

The debate has certainly been well informed, and, with the exception of the apparent disagreement between the Minister and the hon. and learned Member for Montgomery, good natured. I was, however, reassured by the hon. Member for Ludlow (Mr. Gill), who told me that the Minister's comments had been "restrained".

There is a growing consensus in Britain about agricultural politics, which must be good. If there is one thing that the agriculture industry needs, it is stability and long-term confidence. We believe that, if the growing consensus helps to bring that about, we shall all have served our country and industry well.

There is agreement about three of the principal matters that have been debated this evening. First, on the question of budgetary limits, the Minister, in his typically robust way, made it clear that he intends to resist any breach of those limits in Europe. My hon. Friend the Member for South Shields (Dr. Clark) said that the Minister would receive our support. With one or two exceptions, the House believes that the Minister is following the right cause and we wish him well in defending those budgetary limits.

Secondly, there is agreement that there must be reform of the common agricultural policy. We all recognise that and many of us believe that it is desirable. Thirdly, there is largely agreement that we must now try to change the direction of agricultural support away from commodity price support and redirect it into environmental and countryside payments. That case was put effectively and persuasively by the hon. Member for Congleton (Mrs. Winterton). I was pleased to hear that she now accepts the policies that the Labour party has advocated, at least for the previous couple of years.

If there is a disagreement between the two principal sides in the debate it is a difference in the mechanism that we think is necessary to ensure that the changes take place in an orderly way. It appears that the Government are relying over-heavily on the application of market forces. They will seek robustly—as is the Minister's way—to secure price cuts in the belief that the cuts will lead to a restructuring of British agriculture.

My hon. Friend the Member for Clwyd, South-West (Mr. Jones), the hon. Member for Ynys Mon (Mr. Jones) and the hon. and learned Member for Montgomery made it clear that that process would have a devastating effect on the rural communities that they represent. It will mean farm mergers and bankruptcies. It will also mean that farmers will continue to leave the land in large numbers and that the rural communities in their constituencies— and in many constituencies in the north and west of Britain —will be impoverished. We believe that the change must be a managed change, which takes account of the real needs of the British countryside, of the British consumer and of British farmers. We are not prepared to rely to the same extent that the Minister appears to do on the mechanism of the market.

In opening the debate, my hon. Friend the Member for South Shields pressed the Minister for details of the alternative policy that he wishes to adopt to redirect the payments for countryside management and environmental purposes. The Minister was untypically reserved in offering the House details of his policy. I was reminded of a report that I read of an address by the hon. Member for Skipton and Ripon (Mr. Curry), the Under-Secretary at the Ministry of Agriculture, Fisheries and Food, to the Oxford farming conference this year. He began with the memorable words: What I say neither is nor isn't Government policy". To judge by the Government's response to the Commission's proposal, it neither was nor was not Government policy as the Government do not have a policy for it not to be.

If we are unable to judge the Government's position from their policy for the future, we can at least examine their record over the recent past, and it is a pretty miserable record at that. Last year British farming sank further into unprecedented indebtedness now totalling £7 billion. The farmers who continued to struggle were forecast to earn real incomes only half of the levels of those in the early 1980s. In response to that domestic catastrophe, the Minister talks continuously about the importance of restructuring agriculture in other EC states. We know what he means by restructuring: he means throwing farmers off the land. It must be said that it is a subject on which he is well qualified to speak as he knows a lot about it.

During the 1980s—10 years of Conservative Government—we lost farmers at the rate of six each day. However, since the present Minister was promoted to guard our agricultural interests at Cabinet level, that steady flow has turned into a flood. Not six but 16 farmers a day go out of business. Wales and Scotland both have a higher proportion of the work force who are still involved in agriculture than has England. In Wales, we had a recent report from Professor Midmore of Aberystwyth university which warned that a further 11,000 jobs might be lost in the next two years. Two weeks ago, the Scottish agricultural college warned that half of Scotland's farm workers will be redundant by 2015.

If the Government's record is one of a huge decline in the United Kingdom's agricultural work force, can they claim that at least it has benefited the consumer? Not a bit. We all now know the figure used by the National Consumer Council in its 1988 paper, in which the cost of the common agricultural policy was identified as £14 a week for each family of four persons. The financial costs of agriculture are conventionally denominated in ecus and the inappropriately named green currencies.

Costs are also paid in environmental terms. If we were to add the environmental to the financial costs of the common agricultural policy, we should find that the true figure was far higher. There has been some tinkering at the edges in an attempt to reduce environmental damage, and some of the schemes, although limited, have been successful. Others have so far failed, largely because of the Ministry's mismanagement and lack of urgency. An example was the farm and conservation grant scheme payments for pollution control which were promised but never came. Over most of the country, we still have an agricultural policy that encourages environmental destruc-tion—the same policy which has ruined so much of our landscape, polluted our water and destroyed our wildlife habitat.

It is also a sad fact that British farmers, by and large, are held in low esteem by many members of the public. A notable exception is the hon. Member for Ceredigion and Pembroke, North (Mr. Howells). Let me hasten to say that I do not blame the farmers for that state of affairs. They are in the same position as the publicans of biblical times. I should add—and I am sure that the Minister will appreciate the analogy—that the biblical publicans were the equivalent of today's revenue men. Asked to do unpopular things, they do them as best they can. However, as they can survive only by practising a policy that is universally derided, they are bound to be criticised by the public who pay their wages. Farmers are certainly not assisted by a Ministry which is widely disbelieved by the public and which has shown itself to be incapable, as currently structured, of taking an independent regulatory role to ensure at least the safety, if not the financial wellbeing, of the consumer.

If the Ministry's record is pretty dismal—and I am sorry that the Minister finds it a source of amusement that 70 per cent. of the British public believe that his Ministry cannot be believed when it talks about food safety—can we at least pay tribute to the fact that the industry is prepared for the challenges of the single market? I am afraid that we cannot. United Kingdom farming is singularly unprepared to face 1993 with confidence. Investment levels are pitifully low. The National Farmers Union briefing on the Government publication"Agriculture in the UK:1990" said: Over the five years to 1989 farmers' annual investment in fixed capital fell by 40 per cent. Our own estimates suggest a further fall of about 15 per cent. in 1990. That slump in investment is additional evidence of the gravity of agriculture's economic crisis. It is especially worrying as 1992 and the single market approach. If private sector investment is low, can we look to the Government to provide assistance? Again, unfortunately, we cannot.

Let us consider the question of the slaughtering industry, which was raised by the hon. and learned Member for Montgomery and is of great concern to us in Wales. Last December, I asked the Secretary of State for Northern Ireland what assistance he had given to help slaughterhouses in the Province reach European Community export standards. The reply was that, over the five years to 31 March, £4.5 million had been paid for improvements to slaughterhouses in Northern Ireland. Encouraged by this, I tabled a similar question to the Minister of Agriculture, Fisheries and Food. Back came the answer that the Department does not provide any special financial assistance for compliance with EC standards in slaughterhouses. Ditto Wales; ditto Scotland.

In Northern Ireland, thanks to its relatively progressive policy of encouraging private investment, 74 per cent. of slaughterhouses meet European export standards. In Scotland, the figure is 35 per cent.; in England it is 7 per cent.; and in Wales it is a miserable 5 per cent. How on earth does the Minister expect British agriculture to compete with European agriculture and Northern Ireland agriculture in the years following 1 January 1993? Last month's excellent report on the slaughtering sector from the Farmers' Union of Wales should dispel any complacency still lingering in the Minister's mind. We have also seen the survey of all British slaughterhouses by the Meat and Livestock Commission, which showed a hidebound industry with very low investment. According to the commission's chief economist, Some abattoirs are not sure what is required of them, and some do not see 1992 as a reality. What kind of preparation for 1993 is this? What kind of lead are the Government giving to ensure that agriculture is fit to face the challenges of the single market?

I suppose that the slaughtering sector should heave a sigh of relief that all that it has suffered is malign neglect. Not so the state veterinary service. Hon. Members will be familiar with the disaster that has befallen the veterinary investigation service, involving the recent closure of another seven centres, with the loss of 52 posts—an act that the Minister describes as improvements in the quality, efficiency and cost-effectiveness of the service". It is a view that is not shared by the practitioners. Mr. A. J. C. Parker, secretary of the Cornwall Veterinary Association, writing in the Veterinary Record, said of the closure of the Truro centre: The chief veterinary officer is now expecting the profession in Cornwall to provide material for their nearest investigation centre, Starcross, which, for some areas of Cornwall, represents a 300-mile round trip. He must be joking. I do not think it is much of a joke, and I do not think that British agriculture will find it much of a joke. That is just the veterinary investigation service. Other aspects of the state veterinary service have been cut, with staffing levels now down 20 per cent. on the figure of 10 years ago, at a time of unprecedented public concern about food quality and safety—not to mention animal welfare.

Research and development has gone the same way. Just over a month ago, the Ministry issued a press notice which said: Baroness Trumpington urges food industry to invest in R and D"— and I am surprised that the notice did not have a sub-text saying, "because the Ministry of Agriculture certainly will not do it on your behalf". According to the Agriculture and Food Research Council officials, 300 further jobs in agricultural research and development will go this year.

In the Ministry's own directly-provided service—the Agricultural Development and Advisory Service—a crisis is building up. According to its director-general, Peter Bunyan, the farm and countryside service, which is responsible for the very service that the hon. Member for Congleton thinks will be at the heart of our system of agriculture, is down to a level where it is difficult for those who remain to cope with the current workloads. We have looked at the dismal state of the agricultural infrastructure in the United Kingdom. What about marketing? The difficulties here were vividly illustrated by the hon. Member for Ludlow. Last year, the food and drink sector of the United Kingdom economy had the largest deficit of all sectors. Why should this be so when the lion's share of the deficit was with countries that have climates similar to, or worse than, our own? Could this, as was suggested by the hon. Gentleman, be related to the fact that our own marketing and promotion organisation —Food From Britain—has a budget one seventh the size of that in France or Germany? Or could it be that the confidence of British consumers in domestic produce is diminished by their inability to trust the Ministry to safeguard their welfare and safety?

However, there is hope for the industry. That hope is to be found in reforming agriculture policy away from overwhelming reliance on price support as the mechanism for maintaining farm incomes. It must go towards the concept of environmental management, or green premiums.

As we refine and hone our policy, it is increasingly clear that the Labour party is a source of inspiration for the Government's position on countryside management via agricultural policy. It is a policy that we advocated two years ago. It is a policy now belatedly being accepted by this Government. The trouble is that, even though the Government are adopting the policy, they are not doing much at the moment about implementing it.

Let us look at the Government's claims about their achievements in this area. The Minister wrote in The Times on 1 April—April fool's day, quite appropriately—as follows: Support through payments linked to production must fall and there must be more emphasis on direct payments for custody of the countryside. Britain", he proudly proclaimed, has been the leader in this change. Later in the same article the Minister wrote: We must also begin to bring agricultural prices up to a more realistic level. That is an odd position to take if one believes that farmers should be paid more for countryside management and less for crop production. It is also somewhat inconsistent with the Minister's self-proclaimed pre-eminence among the price cutters in the Council of Ministers. Perhaps he can explain how higher food prices can be reconciled with food surpluses and the need to liberalise trade and reduce the gap between world and European Community prices. Nor am I sure how this fits in with the Government's proclaimed view of reducing inflation as its central economic objective.

As for the claim that Britain is in the lead in introducing environmental criteria into agricultural policy—precisely the point developed by the Minister in his opening speech —let us turn to a more impartial source than The Times. We could not have one more impartial than Agra-Europe, which commented thus three weeks ago on the same subject: The Dutch and the Danes have already agreed agricultural environmental legislation which is far in advance of that in other EC countries. So much for the Minister's claim.

The specific areas in which the Minister boasted so much for Britain were as follows: Our schemes for Environmentally Sensitive Areas set the pattern for Europe, as have our encouragement of farm woodlands and broadleaf planting, our establishment of nitrate-sensitive areas, our aid for diversification and our support for organic farming. Let us consider those points individually.

ESAs have been a success, I acknowledge that, as we have acknowledged it continually since they were adopted. However, the payment levels were fixed and have not been reviewed, and in the period since they were fixed they have been effectively devalued by 23.4 per cent. The Government have refused to maintain their value—some commitment to ESAs.

The Ministry makes great claims for farm woodlands and broadleaf planting. They are admirable schemes, but his target is 12,000 hectares per annum. The latest figures from the Forestry Commission show a planting total of barely half the target. In Wales, where we have particular problems as a result of the decline in farm incomes, we have had a grand total since the scheme has been implemented of 93 hectares over three years under the farm woodland scheme.

For diversification, one of the Minister's own schemes for the maintenance of farm incomes by encouraging alternative enterprises, the story is pretty much the same. Expenditure during the first three years of the scheme's operation totalled less than £5 million and, according to recent Ministry figures, during that period farm incomes fell by a massive £152 million.

The most ridiculous claim is the one that the Minister makes for his assistance to organic farming. He has been promising us year after year that he will shortly be announcing his organic conversion scheme. It appears to me that the Government still hold the view of the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who described organic farming as "a way to rip off the customer". We have never had a repudiation of that view from the Ministry of Agriculture. Now that the right hon. Member has forcibly left the Government and decided to spend more time with his family, perhaps the Minister would take this opportunity to repudiate that view and assert that organic farming does have a role to play.

I can imagine the Minister making that announcement, kitted out in a purple track suit. Hee would be the Government's own Mr. Green—the David Icke of the Tory party—though it would require some nimble footwork to accommodate Mr. Icke's bizarre spiritualism into the Minister's High Church Anglicanism.

I said at the outset that we had shared objectives. But our means of achieving them are very different. We agree on the necessity to redirect support away from production and towards environmental goals. We recognise that we shall in future operate within international trading constraints which may make even the regular EC budgetary wrangles seem easy and harmonious. Where we differ is in our approach to the type of assistance to agriculture which is measured not in ecus and aggregate measures of support but in our commitment to the agricultural infrastructure, to investment, to training, to research and development, to adequate veterinary manpower, to food safety measures and to marketing.

Those matters are not the subject of GATT negotiation or EC legal cases on unfair competition. Neither GATT negotiators nor EC Commissioners care two hoots about how much we support those aspects of our agriculture industries—except, in the case of the latter, the other EC members probably support the British Government's destructive line on the ground that it benefits their national agricultural industries. After all, the more damage the British Government do here, the less other member Governments have to invest to continue out-competing us.

It is in the interest of us all—farmers, consumers and environmentalists—to get our agriculture policy right. We have shared objectives on the central thrust of agricultural restructuring. But the Government must recognise that there is a role for the public sector. They must restore the cuts that they have made in investment in that infrastructure. Only by doing that shall we be in a position in 1993 to compete on a level playing field with our trading partners in Europe.

9.36 pm

Mr. Gummer

I shall reply to what has been a valuable and interesting debate. It was marked on the Government Benches by a degree of realism which was not always heard in some speeches from Opposition Members, and it was certainly not heard in the speech of the hon. Member for Caerphilly (Mr. Davies).

That hon. Gentleman, like the hon. Member for South Shields (Dr. Clark), wants to have the argument both ways. On the one hand he demands that we have considerable reductions in spending through the common agricultural policy. On the other, he bemoans the fact that British farmers have lower incomes. The hon. Member for South Shields chided the EC for not accepting the American proposition, as he put it, of a 75 per cent. cut in support. Clearly, he wants a 75 per cent. cut in support. How he ties that in with the kind, sweet remarks he makes for the farmers I do not know.

It is clear that the hon. Member for South Shields wants to have it both ways. Half his speech was aimed at farmers while the other half was aimed at consumers. The first half was designed to say how nice it would be if farmers had bigger incomes and the second half was based on the principle of how nice it would be if consumers got lower prices and taxpayers paid less taxes.

My hon. Friends and I have been honest enough to say that one cannot square that circle. We must face the fact that if we are to bring the budgetary arrangements of the CAP under control, we must move to more realistic prices, at a pace that the industry can accept. The hon. Member for South Shields proclaimed today his conversion to the market. His phrase about the market will be quoted against him in every debate in which Labour Members take part, for if only they had been converted to the market in all other respects, what a different nation Britain would have been.

I hope the hon. Gentleman does not mean by his references to the market that farmers should be deprived of all support. I hope that at least he accepts my statement that there is a continuing need for support for agriculture because we cannot ask British and European farmers to produce food under conditions which are severely more onerous than conditions that apply elsewhere in the world, and not expect to give them some support. My hon. Friends have clearly pointed out a number of areas of which that is true.

The hon. Member for South Shields discussed what he called the paltry amount of my budget that I spend on the environment. In doing so he did himself the disservice of using the figures. He mentioned 7 per cent. of the budget. It is strange that he did not mention the fact that 80 per cent. of the budget is dictated from Brussels, so the 7 per cent. of which he spoke represents well over a quarter of the budget over which I have control. When it comes to setting an example to the rest of Europe I can thus claim to be the only Minister in Europe who can point to the part of the budget over which he has control as evidence of his concern for environmental health—

Mr. Allan Stewart (Eastwood)

More than a third of the budget, in fact.

Mr. Gummer

Indeed. I was being too generous to the hon. Member for South Shields, perhaps. We in Britain are setting an example that has been increasingly followed by other countries in the Community—

Dr. David Clark

Will the Minister give way?

Mr. Gummer

On this one occasion.

Dr. Clark

I shall be brief, but it is important to clarify this matter. What I said was that over a period of years farmers should come to rely primarily for their income on the market, but that we believe that they need support. That is why we have advocated a green premium for positive management of the environment and to develop less intensive farming. If we ask them to look after the countryside, we must admit that farmers still need support.

Mr. Gummer

I remind the hon. Gentleman of his speech, in which he lauded the American proposal of a 75 per cent. cut in support over the next 10 years. With all the green premiums in the world, I do not believe that British farmers can achieve such a cut at that pace. It is not humanly possible for them to do that; and if the hon. Gentleman did not mean that, he should not have chided the Community for not agreeing to the 75 per cent. cut. The hon. Member for South Shields cannot have it both ways. If he looks at the record, he will find that what I say about his speech is correct.

I have a great deal of sympathy with and respect for the hon. Member for Ceredigion and Pembroke, North (Mr. Howells). He is a working, practical farmer who always addresses the House with the charm and wit that we have grown to love. His speech today, however, did not meet his usual standards. It is not possible to be a member of a party that is wholly committed to our membership of the European Community and at the same time to pretend that we can run an agriculture policy in Britain different from the common agricultural policy. It was not good enough for the hon. Gentleman to say, in response to a seated intervention that should not have been made, that the Minister of Agriculture, Fisheries and Food was responsible for everything: 80 per cent. of my budget is decided in Brussels. I happen to think that that is right. I support the common agricultural policy, and I wish to reform it. In that I differ from some of my colleagues, whose views on repatriation are at least credible. But the hon. Gentleman neither wants repatriation nor is prepared to accept the inevitability of a common agricultural policy, and that is not a tenable position. Never before have we accused the hon. Gentleman of running with the hare and hunting with the hounds.

One reason why I was so sharp with the hon. and learned Member for Montgomery (Mr. Carlile) was that it is my experience that his party is extremely good at saying what sounds right locally, knowing that it will never have to carry out its proposals anywhere else. I absolve the hon. Member for Ceredigion and Pembroke, North from doing that in all circumstances except this evening's debate. I hope that he will read again what he said. He cannot tell the people of Wales or of the United Kingdom that the Liberal party now favours a policy that denies the realities of the Common Market which he sought to join and of which he is a supporter. As such, he must accept its inevitable results, which are that the Community makes these decisions. If we want those changes, they have to take place within the Community.

My right hon. Friend the Member for Selby (Mr. Alison) put those points very clearly and I was pleased that he drew attention to some of the minor irritations—some of them caused by Government—which add together to the feeling in the farming community that people outside do not respect or understand them sufficiently. There is a real problem in Britain where the links between town and countryside are much less strong than they are in many other countries. Those of us who represent agricultural constituencies and who love and care for the countryside recognise that it is often difficult to explain even to some of our fellow Members of Parliament who represent urban areas quite what the problems of the countryside are. I said in response to a question in the Select Committee that there is a curious view in the House that poverty is all right so long as it comes thatched. There is a much sharper attitude towards urban poverty than towards rural poverty. Similarly, people are less interested in the difficulties of the countryside because the vast majority of people are urban and suburban. We have to find a better way of explaining to them what they need and how they depend upon those who live in our rural areas.

I know that the hon. Member for Newham, South (Mr. Spearing) disagrees with my views on the European Community, but some of the points that he made today were extremely valuable and I shall be watching them with great care.

My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), in what he told us might have been a valedictory agricultural speech, was particularly forceful. I join others in congratulating him on a long service to the House and a particular quality and directness of speech. There are few hon. Members to whom one is more careful to listen and to reply for he has a reputation which is second to none for guarding the interests of his constituents. I do not agree with him about quotas. They are the means of depriving British agriculture of its major advantages of competitiveness. I do not think that they can be borne either by the industry or by the public. They would fossilise the industry and they would be impossible for the public to accept. I know that my hon. Friend disagrees with me and I believe that we will continue disagreeing on that issue, but I honour him for the clarity and the way in which he put that forward.

I have to say to the hon. Member for Ynys Môn (Mr. Jones) that it would be of benefit if he were to look carefully at the figures and the facts before suggesting that the proposals would mean cuts for sheep producers in the hills. One reason why the Government have been prepared to accept the Commission's proposal of a 2 per cent. cut in the sheep price is the extra help that will go to sheep producers in the most difficult areas. That is why we support it. Yet the hon. Gentleman was saying that it would cut the incomes of people in those same less-favoured areas. The whole process is to try to help those in most need and that is why I increased the HLCAs by 14 per cent. and increased the suckler cow premium to the highest possible rate in those areas where it is most difficult to produce animals. That is why I have consistently supported the means by which we have helped farmers in the most difficult areas of the country.

One thing that farmers and Members of Parliament should do occasionally is show some gratitude on behalf of the industry for those things that we get right. The public as a whole react better if they feel that taxpayers' money is welcomed instead of always being asked for more. We have to get the tone right if urban and suburban people are to continue to support us.

My hon. Friend the Member for Suffolk, Central (Mr. Lord) spoke about egg producers. I still think that he is not entirely right. If our egg producers really stamped all those boxes with, "Eggs produced in Britain" and really showed that British eggs are more safely produced than other eggs, and got the Labour party to stop bashing British food, we could make our higher standards into a marketing advantage. We must try to improve those standards.

Dr. David Clark

The Minister is misleading the House.

Mr. Gummer

The hon. Gentleman says that I am being misleading. I did not take every opportunity in the House to stir up scares, problems and difficulties. I was not the one who was attacked by the hon. Member for Ceredigion and Pembroke, North for letting farming down by attitudes over beef problems. I did not recommend in the House that people should eat New Zealand apples because British apples were not good enough. I was not the one who said on television that I would not eat a British sausage. The hon. Gentleman now has reason to believe differently. The Opposition said all those things. Anyone who dares to suggest that he has any interest at all in British farming should consider what he says about British food, which is the best, the safest and the most surveyed food in the world. It does not deserve what, for several years, the Labour party has attempted to do to it.

My hon. Friend the Member for Somerton and Frome (Mr. Boscawen) again displayed his deep understanding of agriculture and his concern for those who work in it. I share his concern about pollution regulations, but if agriculture is to prove its worth it is essential that the rare instances of river pollution and so on, which have been a real scandal, should not be repeated. Farmers do not want to see their industry besmirched as it has been by a few people who have broken the law so dramatically. We provide high grants for the work that has to be done in pollution control. I am pleased that I was able to announce changes to an unnecessarily difficult part of the regulations which meant that farmers could not get a grant if they had already started on the work. The changes mean that not only will they be able to start the work before claiming the grant, but they will be able to make grant applications for work that has been completed and for which they had failed to receive grant because of the rule. I thank the House for agreeing to that and I hope that hon. Members will not mind the small element of retrospection which is fair for farmers.

My hon. Friend the Member for Somerton and Frome spoke about the Milk Marketing Board. We must enable the British farmer to receive a proper return for his products. To do that we must pay heed to the fact that in several recent years the British dairy farmer has received less for his milk and the consumer has paid more for it than in almost any country in Europe. That means that the system is not working as it should. We are now in direct competition with the rest of Europe. We are not taking the top part of the market, we are only 86 per cent. self-sufficient in butter fat, and we are still producing butter for intervention. That shows that changes in our dairy system are overdue.

I welcome the Milk Marketing Board's move. It initiated that move and is putting forward proposals. I was pleased to hear some Opposition Members say that the Government should not decide how milk should be marketed. I agree. I want the industry to publish an effective plan for marketing. I hope that it will do so and that the plan will receive industry-wide acceptance. I also hope that it will be accepted by the Community because of course the Commission also has a part to play.

The hon. Member for Antrim, North (Rev. Ian Paisley) is always a breath of air—I will not say a breath of fresh air—on these subjects. He and I have crossed swords in the past, but on this occasion I should like to pray him in aid —if I may use that term. I hope that he will defend me against the allegation by the hon. Member for Caerphilly that I have a leaning towards spiritism. I do not use the word "spiritualism", for reasons that the House will immediately see. It is spiritism that the Opposition are after. Although the hon. Member for Antrim, North may disagree with my Catholic views, I am a darned sight nearer to him on the subject than I am to Mr. Icke and the Opposition. That is about the first time that I have been able to find a religious way of getting nearer to the hon. Member for Antrim, North, although I doubt whether he will wish to advertise the fact in the north of Ireland.

We cannot usefully do anything to reform the CAP unless we ensure that the other European countries face up to the problem of fraud. People in this country will not accept a state of affairs in which they feel that they are being ripped off by large numbers of people operating in other countries. I am pleased that many countries are beginning to accept that and that there is now a considerable move to follow British advice and the British example.

My hon. Friend the Member for Dorset, West (Sir J. Spicer) talked about pollution, and I hope that he will be happy with the points that I made on that.

My hon. Friend the Member for Meriden (Mr. Mills) talked about the problems of the green pound and I remind him that we are committed to alignment in one step and not the three steps proposed.

My hon. Friend the Member for Ludlow (Mr. Gill) and others referred to the repatriation of agricultural policy, and I shall address that question directly in the last few moments available to me. I must say to my hon. Friends the Members for Ludlow and for Congleton (Mrs. Winterton) that repatriation is not a practical proposition: it will not happen; no member of the Community will support it. Moreover, I do not think that it would achieve the end my hon. Friends seek.

Repatriation of agricultural policy is proposed on the basis that one could have an agricultural policy fitted in reasonably well with other national agricultural policies in a world of surplus. But if we do not argue things out within the CAP we shall have to argue them out somewhere else. Otherwise, countries will fight them out. We may give extra support to one sector only to be countered by a French move to give extra support to another. Deals that we may do to protect our agriculture will be countered by deals done by the Germans to protect theirs. In those circumstances, the repatriation of agricultural policy would lead to more difficulties rather than fewer and we should end up with less of a level playing field. Many of our farmers would also find that countries with large farming communities—for example, Greece, with 23 per cent.—would have more pressure placed on their Governments than could be brought to bear in Britain, Denmark, Holland and France. To those hon. Members who support our agriculture, I must say that it would not do our industry any good to propose what cannot be and what would not, in any case, improve the position.

My hon. Friend the Member for Congleton is right that we must face up honestly to the need fundamentally to change the CAP. It is all very well for the Labour party to talk about the CAP, to blame the Government and to say how much better things could have been. The fact is that all the changes that have been made in favour of a more sensible CAP have been made at the instigation of the British Government. My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), in particular, led us towards major changes. It is not true that stabilisers have not worked. What has happened is that they have not worked sufficiently because we have not been prepared to take them as they should have been taken or to take the necessary compensatory measures. That is what we now have to do, and I am pressing for such action.

We all want a healthy agricultural community because only in that way can we look after our rural areas and countryside, protect our landscape and be sure of our food supplies. I am not one of those who believe that surplus is necessarily endemic. I do not believe that, in 20 years' time, the Minister of Agriculture, Fisheries and Food will inevitably be trying to deal with surpluses. All sorts of changes may take place and we may again need more production in Europe and in Britain. It is for that reason above all that we need to ensure that our food supplies are protected, our landscape is cared for and our people can rely on a healthy rural economy.

Question put and agreed to.

Resolved, That this House takes note of European Community Documents Nos. 5032/91 ADD1, ADD2 and ADD3 + COR1 relating to prices for agricultural products and related measures (1991/92), 4549/91 relating to the development and future of the Common Agricultural Policy, and the Court of Auditors' Special Report No. 2/90 on the management and control of export refunds; and supports the Government's intention to seek a price settlement that respects budgetary discipline and is consistent with the agricultural guideline, and to negotiate for further changes to the Common Agricultural Policy that make it more market-orientated, reduce its costs, lead to greater integration between agricultural and environmental policies and apply fairly throughout the Community.