Common Agricultural Policy

HC Deb 04 December 1991 vol 200 cc283-370

Mr. Speaker

I must announce to the House that I have selected the amendment in the name of the right hon. Member for Yeovil (Mr. Ashdown).

4.24 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. 8356/90, relating to agricultural production methods, 7570/91, and the Supplementary Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 13th November 1991, relating to the development and future of the Common Agricultural Policy, and 8886/91 + COR 1, 8950/91 and 9136/91, relating to amendments to the legal framework of the Common Agricultural Policy; and supports the Government's intention to seek reform of the Common Agricultural Policy which will make Community agriculture more market-orientated and efficient, will put more emphasis on environmental care, will reduce the cost of that Policy and will apply fairly throughout the Community. The Agriculture Council is now considering the proposals that we shall discuss today. It held its first discussion on arable crops, sheep and tobacco in November. Next week the Council will focus on beef, milk and the accompanying measures.

The Government have had considerable support from hon. Members of all parties in their attempts to achieve reform of the common agricultural policy. That is no new-found demand, but one that the United Kingdom has clearly made for many years. We have to start, therefore, by recognising that the Commission's acceptance that major reform is needed is itself a good thing. Unfortunately, its proposals would not, in our view, lead to the kind of reform that we seek and would not benefit the Community as a whole, as we want it to benefit.

In the short term, the Commission's proposals would address some of our current problems. There is no doubt that compulsory set-aside would cut production of cereals. Lower cereal prices would lessen the cost of exporting the remaining surplus and would reduce the tension between the Community and other cereal exporters.

In the longer term, the Commission's proposals would repeat the mistakes of the past. They are designed to keep as many farmers as possible on the land and especially to protect small farmers, as defined on the continent and not as defined in the United Kingdom, from change.

Mr. Barry Field (Isle of Wight)

Did my right hon. Friend see the article in The Sunday Times about set-aside? If so, will he tell us whether set-aside has a part to play in the proposals? I understand that the reforms are such that, even though the Isle of Wight is the smallest county in Britain, almost none of our farmers would benefit from the proposals in the MacSharry reforms.

Mr. Gummer

My hon. Friend raises a matter of considerable importance. There is no doubt that set-aside plays a part in the Commission's proposals and it is one of the issues that we shall have to discuss. I read with some concern the article in The Sunday Times. I am sad to say that The Sunday Times carried a wholly erroneous report. The House should know about that, or it cannot consider the motion with the necessary clarity because set-aside is so central to what happened.

Dr. N. Rufford, who claimed to be engaged in agriculture and to be the owner of 1.2 hectares of agricultural land, applied for and was allocated an agricultural holding number. He was not the owner of the land and he gave a fictitious name for the alleged previous owner. An agricultural holding number does not confer any rights, but merely refers to a particular piece of land.

On 6 September, signed registration and application forms for the five-year set-aside scheme were received from Dr. Rufford, who turns out to be a journalist on the staff of The Sunday Times. The application form had to be returned to him twice because he had not filled it in properly and he would not answer the question confirming that he had been farming the greater part of the holding since 1 October 1990. That is a direct question which has to be answered directly. The documents and associated map included what are clearly fictitious details of previous and current cropping. Dr. Rufford signed declarations that he had given correct answers. They were false.

Contrary to the allegations in the newspaper, officials did not accept Dr. Rufford's application. They were suspicious and decided that a physical inspection should be undertaken to verify the details. Of course, The Sunday Times said that no such inspection was needed. Dr. Rufford said that it was essential for him to accompany the inspector, but he could not find a convenient time. He appeared to find a convenient time to be photographed on the site by a Sunday Times photographer. Of course, he was trespassing on the site because it was owned by someone other than himself.

That was the position last Sunday when The Sunday Times article was published; Dr. Rufford had not received an acceptance. He telephoned the Ministry's office in Ipswich on Wednesday 27 November, claiming to be trying to arrange a date for the field inspection. He asked to be sent a copy of the approval document. He was told that an approval document had not been issued as his application had not been approved. Later that afternoon, at a time when he had been told that the officer dealing with his case would not be available, he telephoned again. He claimed to have mislaid his acceptance letter although he knew that no such letter had been issued. So that he could reconstruct his correspondence, he asked a clerk to fax him a copy. An updated, unsigned draft letter, on plain paper, was faxed to him.

Mr. Frank Cook (Stockton, North)

On a point of order, Mr. Deputy Speaker. Is it appropriate that such an obvious plant should take place in the middle of an agricultural debate?

Mr. Deputy Speaker (Sir Paul Dean)

What the Minister has said seems to be relevant to the debate.

Mr. Barry Field

Mr. Deputy Speaker, I resent being accused of being a plant. May I point out that I am a Field, not a plant. I very much resent the allegation that I am a plant.

Mr. Deputy Speaker

The Chair has no knowledge about plants.

Mr. Gummer

The matter is serious and the point that I have to make is clear. Because Dr. Rufford asked for the approval to be sent to him on the basis that he had already had it, an undated, unsigned draft letter on plain paper was faxed to him. It was the standard letter which would be sent out if the application was accepted. The application had not been accepted and would not be until the inspection took place.

This is a serious matter. That letter was reproduced in The Sunday Times report under a faked Ministry letterhead. The Sunday Times story was therefore fabricated. The application had not been approved. The inspection of the land would have revealed that the application was fraudulent. Dr. Rufford gave false information on the ownership and cropping of the land. He obtained a draft letter by deceiving a junior officer. The Sunday Times then published that letter with a faked letterhead.

I have dealt with the matter in depth after the question was asked of me because it is very important, if we are to have a set-aside system, that it is properly carried out. I am determined that it shall be properly carried out. I deeply deprecate the activities of newspapers aimed not at the Minister, the Ministry or anybody in the House but at junior staff who try to carry out properly their job. In this case two members of staff carried out their job absolutely properly. I have asked that that be made clear to them because they have been extremely upset by the action taken by the newspaper.

Dr. David Clark (South Shields)

I thank the Minister for illuminating the matter so clearly. If, as he says, a letter was forged by the use of the letterhead of the Ministry of Agriculture, Fisheries and Food, will he take the necessary steps to prosecute the individual? If he does so, he will have the full support of the Opposition.

Mr. Gummer

I thank the hon. Gentleman for that comment. It was clear to me that the editor of The Sunday Times would have been unlikely to have known the basis upon which the report was published. [Interruption.] I am sure that he would not have known and I have written to him in those terms. I shall be answering a written question and I shall ask him to quote the whole of that answer in the newspaper so that the readers of The Sunday Times may understand what happened and he can retract something of which I am sure he was not aware.

Mr. David Harris (St. Ives)

If the editor of The Sunday Times who, as he says, is an honourable man, refuses to publish such a statement, will my right hon. Friend give the House an undertaking that he will make an official complaint to the Press Council?

Mr. Gummer

If one asks an honourable man to do something, it must be without a threat. I shall. not make any threats. I shall ask him to do what I have just outlined and I am sure that he will agree.

Mr. Andrew Welsh (Angus, East)

The headed notepaper might be appropriate to what the Minister is saying, but it is hardly important to the CAP negotiations and certainly is not crucial to the agriculture industry faced with the CAP proposals and GATT and worried about eastern European imports. Will the Minister now guarantee to spend as much time quantifying the effects of the CAP proposals on agriculture? What figures does he have to show the quantitative effects of the MacSharry proposals on the industry? Will he spend as much time telling the industry about that as he has done dealing with the headed notepaper?

Mr. Gummer

I assure the hon. Gentleman that not only shall I now spend more time on that than on anything else, but I have been doing so week in week out, month in month out. Nobody in the agriculture industry or outside does not now realise from what I have said how damaging Mr. MacSharry's proposals would be to British agriculture and particularly to Scotland. They are special attacks on the real problems of the most distant parts of the United Kingdom, whether they be in Scotland or in Wales. No one can deny that I have made that case over and over again because I believe it so strongly.

I answered the question in detail, quoting from my reply today to the written question, because set-aside is necessary if we are to get to grips with the overproduction of cereals in an immediate and direct way. I am afraid that that is true. I wish that there were a better and quicker way, but there is not. Therefore, we must ensure that set-aside is properly run. I want it to be clear that I have no intention of allowing Britain to be party to a system which is not properly organised and dealt with.

I assure everyone that, although it is usual to inspect set-aside land when it has been set aside, because to look at it before it has been set aside tells us much less, when we believe there to have been a fraudulent application we seek to do so in advance. That is what we have sought to do and I do not want anyone to be unaware of that.

Mr. Michael Jopling (Westmorland and Lonsdale)

Will my right hon. Friend also encourage the newspaper to print facts which it did not print explaining that set-aside can be environmentally friendly and it can be hugely profitable for the taxpayer to pay farmers to indulge in set-aside rather than have to deal with surplus food which nobody wants and which has to be stored for many years and then disposed of, often in a parlous condition, at the end of that time?

Mr. Gummer

My right hon. Friend who was, in a sense, the inventor of set-aside, who did so much to campaign for reform of the CAP and who began that reform in a most remarkable manner, will know better than anyone that it is much more sensible to pay people to look after the land—I emphasise that—than to produce an unwanted crop which then has to be stored and subsidised in order to export it to other countries whose agriculture system is then undermined. As long as set-aside is environmentally friendly—as long as I am Minister it will be—with people being paid to look after the land, that is the right and immediate but not the long-term mechanism for dealing with the problem.

Dame Elaine Kellett-Bowman (Lancaster)

Will my right hon. Friend give way?

Mr. Gummer

No. Perhaps my hon. Friend will allow me to give way to her later.

Dame Elaine Kellett-Bowman

I wanted to refer to set-aside.

Mr. Gummer

I may return later to set-aside.

The proposals are unacceptable because they do not take into account the need to ensure that agriculture is efficient. They are designed to take European agriculture back to the past rather than forward to the future. Although the methods of support would change with the introduction of direct payments, the underlying objective —to insulate producers from market realities—would not change. The cost of the common agricultural policy would therefore remain very high.

I hope that all hon. Members recognise that the Commission's suggestions relating to costs are far from realistic. If a new group of people—pensioners—is created, one must expect them to demand pension increases year after year. That is the nature of a permanent pension. If, therefore, figures for future years are produced on which the assumption is made that the cost will magically fall, one ends up with unrealistic figures. If support is given to the proposed system, budgetary costs will increase year in, year out. Furthermore, farmers on very small plots who would have retired and amalgamated their plots with those of their neighbours will not do so. They will sit there and take the pension. The position is then fixed as it is now and the natural change which would have happened, and which is necessary if countries have badly structured agriculture, will not take place. That is what is necessary if those farmers are not to be disadvantaged.

That is one reason why I feel so strongly about the issue. It is not just that the Commission is discriminating against the United Kingdom, although that would be bad enough, but that it is saying to those parts of the Community that have not benefited from the structural changes that have taken place in England, Scotland, Wales and Northern Ireland that for ever their circumstances will not he viable and that they will become merely the pensioners of the European Community. That is not a fit choice to offer the people of Portugal, Spain, Greece, Italy or Ireland. That is not the way to protect farmers' futures. That is not proper for them, any more than it is proper for the efficient farmers of the northern European countries and Britain in particular.

Discrimination against larger commercial farms forms a key part of the Commission's plan to protect small farms from the effects of change. We are wholly opposed to that and we are supported by a number of our Community partners. Such farmers are the key to the retention of a viable and sustainable agricultural industry in the future, one that can compete in world markets. It would make no sense to penalise them for the progress that they have made by suddenly setting a premium on inefficiency. The effect would be to make Community farmers less able to compete in the liberalised world market in agricultural trade which we are trying to create in the general agreement on tariffs and trade negotiations. No wonder that the only Agricultural Minister who wholeheartedly supports Mr. MacSharry's ideas is Ed Madigan, the United States Secretary for Agriculture. He knows that if we were to carry out Mr. MacSharry's proposals we should be unable to compete with the United States in world markets and that that would do them good. I did not support Britain's entry into the European Community and I am not a great enthusiast for Europe in order to be second rate. I am an enthusiast for Europe because I want Europe to be first rate and Britain to be first rate with it. This is the way to make European agriculture second rate.

The Commission's aim is to fossilise existing farm structures in their present form and to halt the development of more viable farming sectors in the Community. That is unwelcome to those member states with a developed farming structure and it is also unwelcome to those with less advanced farm structures. The Commission's approach also ignores differences in farming conditions and structures in the Community. One cannot have a single model for European farming. Due to the nature of their climate, the Spaniards have to feed their beef animals from feed lots. To penalise them because they do not feed their cattle in the same way as cattle are fed in County Kerry is unfair to the European Community system.

Mr. Alex Salmond (Banff and Buchan)

There is little dispute about the discrimination that is inherent in the MacSharry proposals, but the Minister has rightly been criticised in previous debates for not making his own positive proposals to counter the MacSharry proposals. The Minister has published "Our Farming Future" in the last few weeks. If the proposals contained in that document were implemented, what would be the impact on net farm incomes in Scotland on the one hand and in England and Wales on the other?

Mr. Gummer

It is difficult to answer the hon. Gentleman's question when he clearly does not understand what negotiation is about. If I were to say to the House, "My bottom line consists of the following detailed matters and it will have the following result", does the hon. Gentleman think that one could negotiate a proper outcome? Has he never negotiated in his life? He is supposed to be the leader of a party. He should he ashamed of himself. Has the hon. Gentleman heard about the French, the Dutch, the German, the Luxembourg or the Greek proposals? Of course he has not. No sane Government would produce detailed proposals; they want to safeguard their negotiating position. That is why I made it clear in that document, if he read it, that these are not proposals but the general principles upon which I shall be negotiating.

The hon. Gentleman is joining the official Opposition in undermining the British Government's position in these negotiations. I am the only Minister who is negotiating on the basis that the Opposition are demanding constantly that I do something different. In this, like Maastricht, we find that the Opposition are not prepared to support the Government in their European Community negotiations. It is all very well for the hon. Member for South Shields (Dr. Clark) to grin. Just because this question was asked by the hon. Member for Banff and Buchan (Mr. Salmond) does not mean that the canker has not reached that part of the Labour party which pretends to understand agriculture. In a recently published document the hon. Gentleman said: In essence the MacSharry proposals will be accepted by the Council of Ministers. They will not be accepted by the Council of Ministers. There is not a Minister who accepts them—except, possibly, the Greek Minister. If the hon. Gentleman says that, what is he doing? He is supporting the Commission's line. He is supporting Mr. MacSharry, who is going round saying that that is what is going to happen. [Interruption.] The hon. Member for South Shields says, from a seated position, that that is what is going to happen. Week after week, month after month, we shall come back and tell him how wrong he was. If that were to happen, British agriculture would be undermined. This Government and this Minister will not allow that to happen, although on this occasion the hon. Member for South Shields will do what his leader would do at Maastricht—lie down and be tickled.

I understand that the chairman of the European Commission did not find time to see the Leader of the Opposition. Clearly Mr. Delors does not need to see the Leader of the Opposition; he knows perfectly well that the Leader of the Opposition will support whatever he says.

What goes for the hon. Gentleman's leader goes for agriculture, too. The hon. Gentleman would accept anything that the Commission put forward, for that is now official Labour party policy.

Mr. John Home Robertson (East Lothian)

Will the Minister give way?

Mr. Gummer

I dare say that if I give way to the hon. Gentleman I shall hear the alternative Labour party policy.

Mr. Home Robertson

I wish that the Minister for Agriculture, Fisheries and Food would stop trying to trivialise these debates, which are very important to many people who work for the industry in rural areas all over Britain. These are not petty party politics. We are dealing with the future of the countryside. I wish that the Minister would bear that in mind. Has he been able to put a figure on the number of farm workers' jobs that would be threatened by the proposals?

Mr. Gummer

I am sure that the hon. Gentleman is right. The MacSharry proposals affect not only farmers and large landowners but employees. They affect all sections of the community and treat farm workers as though they do not count. They regard only landowners as being suitable people to be looked after. The British farmer often employs up to three people, who have families. He is often in partnership with his brother, son or daughter, so together they look after a number of families. Yet the headage limits to which they are subject do not take that into account.

I am sorry that the hon. Member for East Lothian (Mr. Home Robertson) feels that my mentioning an official Labour document, which I think was published last Friday and which accepts that Mr. MacSharry's plan will be accepted, is trivialising the subject. I am highlighting the seriousness of the situation. Any party that cares about the future of British agriculture would not put that in a document. It would say: "The Labour party wholeheart-edly supports the Government in their battle to ensure that Mr. MacSharry's plan is not accepted."

The fact that that does not appear in Labour's document reminds us how uninterested in agriculture it is. I exempt the hon. Member for East Lothian from that criticism. It is a pity that he is not on the Front Bench, as in his previous incarnation, when we knew that Labour had at least one person who understood the problems experienced on a farm. He knew about the problems of quite large farms, I admit, but we miss his contribution.

Mr. Alex Carlile (Montgomery)

Will the right hon. Gentleman give way?

Mr. Gummer

No, I must get on. The hon. and learned Gentleman has plenty of time to make his speech.

I shall give the House the details of the proposals to show what we are up against. Farmers in the United Kingdom would have to set aside 14 per cent. of their arable land. The average for the rest of the European Community would be 9 per cent. In the rest of the Community, almost 70 per cent. of set-aside will be paid for, but only 40 per cent. in the United Kingdom. United Kingdom sheep producers would have 15 per cent. of their eligible animals excluded from the ewe premium, compared with a Community average of 3 per cent. They would bear 60 per cent. of the impact of the new headage limits, although the United Kingdom breeding flock represents only 28 per cent. of the European Community flock.

It cannot be argued that the United Kingdom flock has caused market problems in the sheep sector. Between 1984 and 1990, claims for the ewe premium in the United Kingdom grew by 36 per cent. The comparable figure for Germany was 72 per cent., for Ireland 114 per cent., for the Netherlands 170 per cent. and for Italy 746 per cent. Countries that have caused the problems in the sheep industry would barely be affected by the MacSharry plans, but this country—the traditional supplier of sheepmeat for the Community—would be almost uniquely affected. That is why the subject is serious and why I am not being trivial in showing how dangerous it is to give aid and comfort to those who propose this preposterous plan.

Mr. Alex Carlile

Will the Secretary of State give way on that point?

Mr. Gummer

I must get on. Many hon. Members wish to speak.

Mr. Carlile

On that point.

Mr. Gummer

As long as the hon. and learned Gentleman understands that I am not giving way again, I will give way to him.

Mr. Carlile

I am grateful to the Minister for giving way. I agree with everything that he said about headage limits. When he is negotiating, will he make it clear to his European colleagues that a British farmer's wife who is in partnership with her husband plays a genuine role in the farm, because in many continental countries English, Welsh and Scottish partnership law is not properly understood? We must protect our partnerships.

Mr. Gummer

Not only will I, but I have done so. I made the Commission change its proposals on that basis. The hon. and learned Gentleman is perfectly right and I shall put it clearly to Mr. MacSharry that it would be outrageous if it were possible to have a partnership with one's mistress that one could not have with one's wife. I would find it particularly difficult to propose that to the British people.

The extension of headage limits to the suckler cow premium would exclude about 8 per cent. of suckler cows in the United Kingdom—twice the Community average —and I point out to Scottish Members that the figure would be nearly 30 per cent. in Scotland.

The proposals, therefore, are unacceptable and unnecessary and do not meet the real issues. We cannot accept them because they discriminate not only against the United Kingdom but against efficiency, speciality and excellence. They make it imposssible for Europe to compete with the rest of the world, they make a distinction between northern farming and southern farming and they discriminate against particular kinds of southern farming. For example, extensive farming is necessary on the poor ground of some parts of Portugal. Is it reasonable to discriminate against that?

Mr. Kiechle, the German Minister, recently made a speech saying how much he supported the British position on non-discrimination. That is another reason why the suggestion that we shall accept Mr. MacSharry's scheme as a whole is rather wide of the mark. Mr. Kiechle said that he accepted our position on discrimination. I know why. How could the system discriminate against the poorest farmers in eastern Germany who have large farms, low productivity and a sad history?

There is natural concern among farmers which I share. We are faced with great uncertainty; we have not yet reached a solution on GATT; and we have not begun the first round on many dossiers in the discussion on CAP reform. That is another reason why I find it difficult to say that the MacSharry proposals will be accepted by the Council of Ministers. The hon. Member for South Shields cannot say that when some of the proposals are not even in written form yet. The idea that anybody could have decided to accept them or not surely is wide of the mark.

The problem for farmers is that they cannot judge where they should invest, how they should prepare for the future and what they should take into account until those decisions are made. I am sorry that the hon. Member for Banff and Buchan has left the Chamber, but perhaps his two hon. Friends would be kind enough to tell him my additional answer to his question. One reason why it is impossible to quantify the results of the negotiation is that the negotiation has not been completed. I would not wish to mislead farmers when the current uncertainty is causing much difficulty.

Mr. Andrew Welsh

Will the right hon. Gentleman give way?

Mr. Gummer

No, I will not give way again.

The only thing that would be worse than uncertainty would be to be given duff information. I certainly will not do that. However, I can tell the hon. Member for Banff and Buchan what I am seeking to achieve.

I wish to remove the proposals that discriminate against larger farms, against the United Kingdom, against northern farms, against specialists and against the position in, for example, Spain, Portugal and eastern Germany. That is the first area that must be put right.

Secondly, all the members of the Community have agreed—I think without exception—that there will be no agreement on anything until there is agreement on everything. It would not be proper to start talking about such matters in their final form until we know about olive oil, sugar and wine and the other products about which there are real issues to be raised.

Thirdly, there is a concern to explain to the Community that if there are to be compensations, we cannot create a whole new system of compensatory payments which will last for ever at a price which will never be able to be paid. I am sure that the hon. Member for South Shields will be pleased to hear that I agree with him on that. In a document which contained precious little about what he would do for the future of British agriculture, he had one crumb of comfort for the farmer. I point it out because it is hidden away in a lot of business about freedom of information and other issues about which he is so keen. In the middle of the document, he says that if the MacSharry proposals were accepted—he says that they would be—they would not last very long because they would be too expensive. That is why they must not be accepted. They would cost far too much and would be impossible for the future. That is why many countries, including, for example, Italy, are so deeply opposed to the proposals.

Of course, I cannot go into detail about what we would seek to do, but I shall give one or two indications because that is only fair to the House. In the arable sector, it is clearly important to reduce the end price and to ensure that farmers are able to continue to look after the land. That means that we must have a set-aside system. However, it would be wrong to have a system which meant that some countries set aside land so that other countries could produce more. Therefore, we seek a system which will share out the burden of set-aside between the major producers in particular and will not exclude some countries while laying the burden on others.

It is also important that we do not allow many farms to be excluded on the ground of their size. To have a set-aside system which applied only to farms in the north of Europe would discriminate considerably. I am happy to have a de minimis figure which would avoid the bureaucratic nightmare that we do not want. However, it would have to be a de minimis figure and not one inclined to exclude very large numbers of producers to the small number.

Dame Elaine Kellett-Bowman

When considering the regulations for set-aside, which is a very valuable tool in the present negotiations, will the Minister make them rather more positive by enabling farmers who have land set aside—especially, perhaps, for one year—to use the year to clean the land rather than merely to cut it? In that way, when the land eventually came back into production farmers would use fewer chemicals which would be even more environmentally friendly.

Mr. Gummer

I am certainly open to my hon. Friend's suggestions. I am not keen on one-year set-aside schemes. I do not think that one can be sufficiently environmentally friendly from one year to another. The longer scheme is widely thought to be better and I should like it to be more at the centre of the proposals, as I want the environment as a whole to be at the centre. However, I shall certainly consider whether her suggestion could be included and I am sure that she is right to suggest the positive rather than the negative.

As for the beef regime—a second area that we have not yet discussed—there is another reason why it might be thought that the hon. Gentleman was a little premature in suggesting that we had already agreed these matters. We are about to have our first discussions. The Commission's proposals on beef are absolute nonsense. They do nothing to solve the problem. Indeed, they do not begin to face the problem. They only make the problem worse in certain areas, not least in Scotland. I do not understand how we are supposed to have a system which deals best with the most difficult parts of the Community but which makes matters worse in Scotland and Wales, but that is what the scheme does. It does not work because it does not meet the problems of intervention. We must reduce the degree to which intervention plays a part and increase that to which the premium plays a part, and I am negotiating along those lines. I hope that we can find an answer.

The spokesman for the Liberal Democrats will probably agree that to go into further detail could make it less easy to get the type of consensus that we want. It will not be perfect, it will not be what I should like, but it will be better than what is before us—better in terms of our particular problem—and I hope that it will deal entirely with the discrimination.

It is unacceptable to have headage limits for sheep—I do not mean new headage limits, but the present ones—because they do not deal with the problem. It is not the number of ewes that a particular unit has which causes the problem; it is the increase in the production of ewes generally. That is a wholly different argument and it is therefore important to concentrate on it.

My priority is to get rid of discrimination and we shall have to find out which of the various possibilities will be the best alternative to that which is now proposed. I should not like to commit myself too closely to any one of them because my priority—in negotiating one must be clear about one's priority—is to get rid of discrimination. That is the one thing that really matters in the House and we must not undermine it in our negotiations.

On the cost to the European Community budget, I do not believe that it is sensible to have a system that costs more. We must have a system that uses what we spend more effectively. If, for example, we reduce the share of the system taken up by intervention in beef, we should be able to get that money more directly to the farmer. Locking beef up in a cold store, paying the storage man to look after it and then paying more to export it is not a sensible use of Community money and it does not reach the farmer. That type of change would enable one to say honestly that a redirection of the money already spent could do a great deal to improve the situation of farmers.

Mr. Eric Martlew (Carlisle)

rose—

Mr. Gummer

I am sorry, but I shall not give way. I must end because other hon. Members wish to speak. We are determined to ensure that—

Mr. Martlew

It is important.

Mr. Gummer

There is a great deal that is important, but the hon. Gentleman may catch your eye later, Mr. Deputy Speaker.

In trying to negotiate we must give considerable credence to the particular problem of the most difficult areas. Therefore, I commit myself in the negotiations to support the special financial help for farming in the less-favoured areas. Even though hon. Members disagree on many issues, I believe that the House will agree that I have tried to make that a priority within the narrow band of the 17 or so per cent. of my budget which I control directly. I have tried to do that year in, year out because I believe that in environmental terms—if in no others—keeping people, their sheep and their cattle in the hillsides is essential if the hillsides are to be kept as they should be. I am sure that hon. Members will have noticed that in the recent announcement of environmentally sensitive areas —especially those in the Lake district, Exmoor and Dartmoor—I have clearly taken that view, with regard to not only hillsides but moorland areas. I shall continue to do that.

I also believe that the common agricultural policy must be much more centred on the environment. It is not satisfactory to change a policy such as that which we have at the moment, and to have add-ons for the environment. That is not sensible and I seek to move the Community in the appropriate direction.

In the negotiations, as in so many other matters, the British attitude is in advance of others. We are the most environmentally friendly Agriculture Ministry in Europe and we continue to bring others behind us. They are copying our proposals and schemes. I hope that we shall be increasingly successful.

It would be possible and proper to provide aid for people who are especially disadvantaged by the changes —for example, the very small fanner in Portugal who wants to get out and to join his land to that of his neighbour. I want to help him to do that. I see no reason why we should not have a pension scheme connected to restructuring, but the aid is supposed to affect the very small farms directly. It would obtain to the person who had gone out and not to his heirs and successors and it would involve his going out and someone else taking on his land. That would be a restructuring aid.

It is also important to ensure that attention is paid to other areas. We cannot have a discriminatory system in milk which works so badly against the British dairy industry. We do not need the new cow premium. It would be better to operate on the present system and to get that right than to have a discriminatory cow premium.

It is important to ensure that, whatever happens, it applies throughout the Community. The tobacco regime should be properly restricted. I cannot believe that it is sensible to spend as much as we do at present per hectare on tobacco. I find it odd when it is suggested that it would be better for other people to grow the tobacco and for us to import it—as though that would help the health of the Community. I do not accept that, but we should look more carefully at the way in which we spend money on tobacco.

It is important to ensure that the negotiations take account of the whole Community and not simply the northern products that have been put on the table first. To accept those when we do not have a deal on a range of other things would not be a satisfactory result for those of us in the north.

I wish now to consider the timetable for negotiations. It is difficult to see how a sensible start can be made on the discussions if we do not know the outcome of the GATT round. If we do not know what we have committed ourselves to in the GATT round, it is difficult to know how to decide the reforms.

Signore Goria, the Italian Minister, has shown a remarkable grasp of those issues throughout the debate. He made a powerful intervention claiming that we must know where we are before we can take decisions, or we shall be paying twice—once in respect of the negotiations and then for the GATT round. That would not be satisfactory.

I cannot tell the farming community that this will be a short negotiation. Some Opposition Members might claim that the negotiations have already ended. I would love to have short negotiations because I am deeply conscious of the serious position in which the farming industry finds itself because of its lack of knowledge of where we are going. However, to pick the wrong answer—even if it was a quick answer—would be devastating for British agriculture.

We cannot agree to something which starts off by being so fundamentally discriminatory that, year by year, it becomes even more discriminatory. What begins by looking just a little off parallel might become wildly different. Anyone who considers what has happened with regard to the sugar and milk quotas or to anything else about which we felt that we should have had a different package but could not achieve it will be aware of how dangerous it is to allow the negotiations to proceed quickly when a longer discussion might result in a better solution.

I do not claim that the outcome will be perfect. However, it is the duty of the United Kingdom Government and the Minister responsible to argue the issues one by one until we reach an acceptable answer. The answer will not be perfect, but it must be acceptable.

I regret that I cannot spell out part by part and line by line exactly what I want to achieve. However, I do not believe that any hon. Member would expect me to do what no other negotiating Minister has done, is doing or will do. Can anyone expect Mr. Kiechle to stand up and explain everything that he is looking for? Would Mr. Mermaz do that? Of course they would not, because just like me they are trying to find an answer that is as close as possible to what is best for their nations and for Europe as a whole.

I hope that the House will support the motion. That would help to show the universal determination of all parties in the House to achieve an answer that will provide a proper future for British agriculture and enable me at least to be able to tell my companions in the negotiations that there are things that matter so much to us that we will sit there until we achieve them, even if it means that we will sit there for many more months to come.

5.14 pm

Dr. David Clark (South Shields)

As always, the Minister tried to be statesmanlike, but ended up being his usual partisan self. He accepted very little responsibility for the state of British agriculture. While we would not want him to show his full negotiating hand at this stage, he gave us very little information. The Minister's speech was one of little substance—

Mr. Home Robertson

And of great triviality.

Dr. Clark

Indeed, and one of great triviality, as my hon. Friend has said.

Listening to the Minister today, it was hard to appreciate that the Conservatives have been in government for 13 years. He tried to say that Labour would not negotiate. Tragically, we cannot negotiate at the moment, but that will be put right before too long.

It is rather disingenuous of the Minister to extrapolate the logic that, because someone has described a situation, that means that he necessarily agrees with it. Whether the Minister likes it or not, I believe that it is probable that MacSharry's notions will be accepted. That does not mean that I or the Labour party agree with those proposals. We do not and I hope that the Minister will accept that we have stated repeatedly that we do not believe that the MacSharry proposals are good for British or European agriculture.

Mr. Gummer

If that is the case, would it not have been better for the hon. Gentleman to keep his own counsel when he stated publicly that we were bound to fail in our negotiations? Would it not have helped British farmers if he had said that he was determined to support us and ensure that we succeeded? That is not being disingenuous: that is asking for the kind of conduct that used to be normal on both sides of the House.

Dr. Clark

I made it plain that we oppose the MacSharry proposals. I hope that the right hon. Gentleman will accept that. That does not mean that we accept all the Government's negotiating stances. We believe that the negotiating position has not been particularly clever.

Contrary to the Minister's partisan approach, I want to begin by taking a consensus view. British agriculture is in crisis. That is argued by the National Farmers Union, the Farmers Union of Wales, the National Farmers Union for Scotland and all informed farming opinion. The Minister said nothing today that will reassure the farming community.

We need only consider the scene. The Minister avoided all the details. Every day last year, 19 farmers and 14 farm workers left the land. Nineteen farmers voted with their feet every day last year and left their occupation. That is not a happy position. Farmers' incomes are at their lowest level, but the price of food to consumers is not falling.

Modern agriculture requires investment to survive, but investment has fallen by more than half since the Government took office. The Minister made great play of environmental issues. However, the Government's own Institute of Terrestrial Ecology produced figures in October which show that hedgerow removal between 1984 and 1990 is greater than that in the period 1978–1984. In addition, as much as 10 per cent. of our total stock of hedgerows was destroyed between 1984 and 1990.

So, the economy of agriculture is in dire straits and the environment is suffering, but I am afraid that the position on animal health is even more dire. In September the Minister's own chief veterinary officer painted an optimistic scenario of the problem of bovine spongiform encephalopathy, with the result that the farming press ran the banner headline, Goodbye to the BSE scourge". Tragically, I have to wish that that was the case because today's figures do not give us much ground for comfort, but, as long as the Minister continues his present style of trying to hype up and to trivialise every issue, that is what will happen to our agriculture. Far from the BSE scourge easing, exactly the contrary is happening. The number of confirmed cases of BSE until November of this year totalled 15,698, whereas for the whole of last year they amounted only—I use the word "only" relatively—to 14,322. The total number of confirmed cases of BSE is now in excess of 41,000, despite the Government's estimate in 1989 that the cumulative total would peak at 20,000 cases. We still await the peak. It does not do any good to try to run away from reality or to trivialise these issues.

Blue ear disease in pigs has been allowed to run unchecked by the Government who in September closed their veterinary investigation centre in Lincoln, which is where work into that type of disease was carried out.

Sheep dipping has been decontrolled by the Government and self-notification has been introduced. The result is that farmers are not dipping their sheep. Scab will increase.

It is not really surprising that animal diseases are increasing when we consider the Government's deliberate run-down of their veterinary service. In 1979, 580 veterinary officers were employed by the service, but there are now only 337. That is a decline of 42 per cent. As a result, we had to import 402 vets last year. I repeat that, as a result of the Government's policy, we had to import a vet every single day of last year to try to keep on top of animal diseases.

The legacy for agriculture of 13 years of Tory government is little short of disastrous in the economic, environmental and animal health areas. Never have I known a time when farmers were more fearful of the future, and never has that fear been more justified. I thought that those were wise words when I read them and was delighted to find that they had been written by the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, the hon. Member for Penrith and The Border (Mr. Maclean) in The Lake District Herald only this week. He was right. There has never been a time when our farmers have been more fearful of the future. I found it strange that those words had come from the Parliamentary Secretary because, when I read them, I thought that they had been written by the Labour candidate, John Metcalfe, because there was no other indication that that article had been written by a Minister of the Crown who is responsible for this country's agriculture. When Ministers are faced with such unpalatable facts—and they are facts—they tend to blame the common agricultural policy, but those are domestic decisions. Every one of those decisions affecting British agriculture was taken by the Government.

At the EC level, and after 13 years in power, the Government cannot escape responsibility for the operation of the CAP. After all, the Minister is always returning to the House to tell us what a wonderful deal he has got for the British farmer and consumer. He has done it time and again—

Mr. David Nicholson (Taunton)

Yes, my right hon. Friend has got such deals time and again.

Dr. Clark

I hear mutterings from the Conservative Back Benches to the effect that the Minister does return with good deals, but if one asked the British farmer, that is not the message that one would hear.

Mr. David Nicholson

Before the hon. Gentleman gets stuck into the CAP, on which matter I hope that he will be as robust as my right hon. Friend in defending the interests of the British farmer, may I advise him that I was interested to note that he began his speech by talking about animal diseases and BSE? Does he think that he is helping our farmers in their genuine plight by highlighting such diseases in this debate? Although the beef market is now in a better position, does not the hon. Gentleman realise the damage that he has done to beef consumption and to our farmers in the past year by constantly highlighting that issue on radio and television?

Dr. Clark

We do not solve problems by refusing to acknowledge them. Indeed, if the Government had faced up to the reality of BSE earlier and had accepted the Opposition's proposal for 100 per cent. compensation for suspected cases instead of being dilatory for 18 months, the problem would have been contained much more quickly. I must advise the hon. Gentleman, however, that the phrase in Big Farm Weekly, Goodbye to the BSE scourge was not mine, but that of the chief veterinary officer. If the hon. Gentleman is seeking to make a charge against me, he must make that charge equally against the chief veterinary officer for raising that issue in the first place.

I should appreciate being allowed to return to the issue of the CAP. I begin by reminding hon. Members of the reforms that the Minister has brought back to the House. It is because of those reforms that it is right for us to be sceptical about some of the claims that the right hon. Gentleman has made today. I recall that in February 1988 the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), went to Brussels to discuss agriculture and returned to the House trumpeting the reforms that would radically change the CAP. In our debate on that, the hon. Member for Wealden (Sir G. Johnson Smith) challenged me for daring to challenge the Prime Minister about whether the system would work. I expect that not only can the hon. Gentleman remember that, but that he will recall that we warned at that time that the reforms were illusory and would not work. We have been proved right. The reforms have failed. The CAP still takes up two thirds of the EC budget, but only £1 in every £3 gets through to the farmers.

The whole point of those reforms was to get rid of the food mountains. Conservative Ministers told us that they would disappear, but they have not. Indeed, those mountains of food are continuing to grow. At the end of October, there were 494,000 tonnes of skimmed milk powder in intervention; 446,000 tonnes of butter in intervention; 850,000 tonnes of beef in intervention—the amount is growing—and 15.5 million tonnes of cereals in intervention. The overall position now is worse than in 1988, yet we were assured by the Government in 1988 that we should leave it to them. They said, "We have got you a good deal. The problems will be solved." Those problems have not been solved—just as we said that they would not be—because the Government did not take the issue seriously enough and did not press as they should have pressed for the substantial reforms that were needed. Furthermore, the right hon. Member for Finchley had the opportunity to do just that because at that time she had the right of veto. I am afraid that the right hon. Lady sold this country short on that occasion.

Mr. Gummer

How does the hon. Gentleman square his enthusiasm for the right of veto on that occasion with the decision of the leader of his party that he would give way at Maastricht on all the issues that are now being discussed? Is it still true that the hon. Gentleman is an anti-European although his party is now pro-Europe? The House must ask that question, given that the hon. Gentleman is asking about vetoes while his party is in favour of lying down and being rolled over.

Dr. Clark

It is no good the Minister, whenever he is found to be wanting and to be wrong, starting to hurl abuse across the Chamber or making allegations that have absolutely no substance. My right hon. Friend the leader of the Labour party has never said what the right hon. Gentleman has suggested—and the right hon. Gentleman knows that that is the case.

One of the key mechanisms of the Conservative party's CAP reforms was set-aside. At the time we warned that it would not work. It has not worked. When the Minister announced the scheme I described the measures as no more than damage limitation measures. They seek merely to tackle the effects of surpluses, not the causes."—[Official Report, 4 June 1988; Vol. 135, c. 182.] That is what the Labour party said in 1988 and we have been proved right.

The mere concept of set-aside is wrong. Even though land has been set aside, production of cereals has increased. It increased by 2 per cent. last year, even though over 131,000 hectares have been set aside in the United Kingdom. The simple reason for that is that farmers put their most marginal and least productive land into set-aside. One has only to travel by train from the north-east of England to see the land which has been set aside, squeezed between the railway lines, to realise what the farmers are doing. Last year in its Official Report the EEC confirmed the failure of set-aside. It said: the land left fallow in almost all Member States was of very low productive level. Yet, in spite of that, set-aside is one of the key points of the MacSharry proposals.

The operation of set-aside is even worse than the concept. In a parliamentary answer to me the Minister told me that he had identified 18 serious irregularities and a number of additional cases involving minor breaches of the scheme rules. Payments were withheld or recovered in full or in part in 39 cases."—[Official Report. 18 November 1991, Vol. 199, c. 1.] The Minister's Department now concedes that it cannot check every farm in every year. The problem that we identified is only the tip of the iceberg. They were only the cases that have been uncovered. We do not know the extent of the abuse or misuse.

I fully accept the point that the Minister made about The Sunday Times. I accept his statement as the word of a right hon. Member of this House. He said that The Sunday Times journalist made a fraudulent claim and forged the heading of a Ministry letter. The matter is serious because if one inspects the photocopy of the letter one sees that he forged not only the heading but the "Dear Dr. Rufford".

Mr. Gummer

I made the matter clear and I do not want anyone to misunderstand. I explained exactly what happened. The letter was the standard letter that would have gone out if the claim had been entertained. The letter was prepared but would not have gone out until the land had been seen. Therefore, the letter was on plain paper. What has been added is the heading "Ministry of Agriculture". [HON. MEMBERS: "Ah!"] No, I made it clear. Hon. Gentlemen should be clear about it. I made no claim other than that. It is a serious matter to add a letter heading because it hides the fact that the document was a draft letter which was ready to go out if the claim was entertained. The claim was not entertained. The land could not be inspected because Dr. Rufford did not own it so he made sure that the land was not inspected.

Dr. Clark

I am grateful to the Minister for that intervention. This is a serious issue. I hope that, if there was a fraudulent claim, the Minister will prosecute. If he does not, he will bring the scheme into disrepute. May I check with the Minister his actual words, which I have in front of me? He said: That letter was reproduced in The Sunday Times under a faked Ministry letterhead. The Minister agrees that that is what he said. If the letterhead was faked, surely, as he says, not only was the story fabricated but the application was fraudulent. I hope that the Minister will take the necessary legal action. Certainly, the Opposition will be only too pleased to support him in that respect.

The reason why I take such a strong line on the set-aside scheme is not merely that it is right so to do. It worries us that many farmers appear to be paid for doing nothing.

The public are worried about that. They regard it as a racket. How can we justify rich landowners taking public handouts while making their farmworkers redundant? It has been estimated that one farmworker loses his job for every 750 acres of set-aside. The farmworker receives only a pittance in pay-off—perhaps £2,000 in redundancy pay —whereas the owner of the land may receive thousands of pounds for several years. That does not seem equitable.

The list of those who receive set-aside payments in The Sunday Times article reads like the pages of "Burke's Peerage". Will the Minister confirm that at least one Government Minister receives money from the set-aside scheme? Was The Sunday Times right in that assertion? That part of the story, not the fake letters, is the key point.

Many regard set-aside as an alternative form of social security for the landed gentry, yet the workers who are made redundant receive very little. But the problem with set-aside is not only those who receive it or the fact that set-aside does not reduce production. Has the Minister seen the excellent work of the Council for the Protection of Rural England'? It uncovered the fact that 60 per cent. of non-agricultural use of land set aside in the EEC is in Britain. Does the Minister have any comment to make on the reference by the CPRE to the EC Commissioners on the issue?

From the Government's own figures, the CPRE seems to have a justifiable case. Does the Minister recall that in an answer to me on 17 January this year he said that 536 undertakings for set-aside related to horse-based activities; 46 were for golf courses; 24 were for sports grounds; and 15 were for recreational facilities including camping sites. That was in only the first two years of the scheme. We worry about farmers getting paid set-aside and then using their land for other commercial activities. That is not fair to other business men who are not farmers.

Many of the non-agricultural uses for set-aside land require planning permission. The Minister is coy on that point. I asked him to clarify how many applicants had applied and obtained planning permission for non-agricultural use. He said: Applicants for set-aside are not required to give this information."—[Official Report, 1 March 1990; Vol. 168, c. 330.] However, the Minister should look at his own form. I have a copy here. Question 3 says: Have you applied for or obtained planning permission for this use? Yet the Minister will not supply Members of Parliament with the information and says that applicants are not required to give it. The Minister does not even know the details that are requested when people apply for set-aside. He does not want to know because he does not want the public to know the extent of set-aside.

In view of all the publicity, will the Minister carry out an inquiry into the operation of the set-aside scheme? After all, in this financial year he anticipates that he will spend £27 million on it. Will he also recall that in an answer to me this summer he said that he would publish the report by Reading university on set-aside before the end of the year? May I remind him that there are not many weeks of this year left? Will the report be published before the end of the year, as he promised?

The Minister was right to spend some time on set-aside, because it is one of the main planks of the MacSharry proposals. But this time it is to be compulsory and not voluntary. The Minister has made it plain in the past that he is not in favour of compulsory set-aside. Is he now prepared to accept compulsory set-aside within the MacSharry regime? MacSharry envisages 4.4 million hectares being set aside in Europe, in spite of the fact that it has been shown not to work.

We have been critical and sceptical of the Government's negotiating position and abilities. Obviously we would not expect the Minister to declare his negotiating hand, so the only way that we can judge his negotiating ability is to look at the record, which is not very good. What has become of the Minister's somewhat bragging statement in the House? He told us: 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 simply with surplus." —[Official Report, 6 February 1990; Vol. 166, c. 792.] That is what the Minister told the House in 1990 he had achieved in his negotiations. The record has proved him wrong and that is why we have a right to be sceptical about what he is trying to argue for now.

I only hope that the Minister will approach the final stages of negotiations on the MacSharry proposals with a little more objectivity and humility. I admit that the signs this afternoon are not especially good.

Mr. Alan Amos (Hexham)

Does the hon. Gentleman agree that the alignment of the green pound with the market exchange rate was a tremendous success, against all the odds? Will he give my right hon. Friend the Minister credit for that?

Dr. Clark

The hon. Gentleman is right—the green pound realignment has been a great benefit to the British farmer. We have said so before and I am happy to repeat it now. However, when we are talking about detailed, in-depth reform, about reshaping agricultural support in this country, we have the right to inquire of the Minister and to press him on those issues.

When the MacSharry proposals mark one were published in February 1991, the Minister—in what I can only describe as one of his well-known tantrums in the House—went over the top. He denounced them in graphic terms saying: We start by saying that we oppose Mr. MacSharry's proposals. We hate them. We condemn them."—[Official Report, 14 February 1991; Vol. 185, c. 1021.] Strong words which, predictably, have proved somewhat counter effective with MacSharry, for when the mark two proposals were published in July 1991, the Government's protestations had achieved very little.

Two or three weeks later the Minister—quoted in the Financial Times—described the new plan as being "biased" against the United Kingdom farmer.

Mr. Paul Marland (Gloucestershire, West)

That was right.

Dr. Clark

Absolutely correct. The Parliamentary Secretary, the hon. Member for Penrith and The Border, elaborated on the Government's attitude when he said in the House in July: Our objectives for reform can be met only if MacSharry's proposals are modified … Reform along the lines that MacSharry proposes would not encourage efficient farming, but would let budget costs go up even further … MacSharry is rightly treading the path of reform but he has lost his way and we believe that we should get him back on course."—[Official Report, 22 July 1991; Vol. 195, c. 1005.] The hon. Member was right on that occasion. That is certainly the view of the Labour party.

At the Tory party conference in October the Minister went further in his condemnation of MacSharry's proposals when he said: The CAP was never designed to deal with surplus. Indeed until recently I did not think it was possible to produce a system which was worse equipped to deal with new problems of agriculture than the CAP. That was before MacSharry"— strong clear words. Now we know where the Minister stands. He repeated some of those words today. He described the MacSharry plans as "preposterous". He said that the beef regime was "nonsense", and the sheep regime was "unacceptable". Those are the words which he acknowledges that he used.

During the general discussions of three of the six agricultural regimes—I appreciate that they were only general discussions—at the Council of Ministers meetings in October and November it does not appear that the Minister has won many friends. But we shall see.

Mr. Gummer

The hon. Gentleman must understand that in all those general discussions the spokesmen for other countries supported precisely and specifically the issues which we find acceptable. I know that because I was present. He cannot know it because he was not.

Dr. Clark

We shall await the results of the MacSharry proposals before we find out what the final judgment is and who is correct on those issues.

Mr. Gummer

The hon. Gentleman must accept this —by stating what he does not know he undermines the position by suggesting that somehow or other we are not winning the argument when we are. The hon. Gentleman ought to be supporting his country rather than constantly undermining it.

Dr. Clark

That was an interesting intervention. Am I right in my understanding of what the Minister has told the House—that he has won his points on the sheepmeat regime? Has he persuaded his colleagues in the Council of Ministers to support him on the sheepmeat regime?

Mr. Gummer

The hon. Gentleman should have listened carefully to what I said. I said that we are winning the argument. There are now people who support us who did not support us before. I want to continue to win it. We shall not have won it until we have agreed the whole package. In the meantime, it would help the United Kingdom if the official Opposition would stop trying to make small party political points and would get behind Britain's arguments. They are the only opposition party which thinks that it is clever to argue about international negotiations within the European Community—no other opposition party in Europe does that. The Opposition have done that over Maastricht and over the CAP reform and the hon. Gentleman should be ashamed of himself.

Dr. Clark

I do not think that one observer in this country would listen with a straight face to the Minister accusing someone of making petty party political points. That is my only comment on his remarks.

The Parliamentary Secretary acknowledged honestly that the Government had failed to win when he wrote again this week in The Lake District Herald that the MacSharry proposals are "horrendous". He went on to say that the Government condemned them because they fail on every count. That is the Government's position.

We hope that next week at the Council of Ministers meeting the Minister will fight more successfully for British farmers, consumers, taxpayers and for the environment. I emphasise that we think that the MacSharry proposals will be disastrous for all those people in the British economy. We equally believe that the Minister has set himself an uphill task by his refusal to table counter proposals. He has repeatedly told the House that he could not table counter proposals, but other Agriculture Ministers have done so and have also tabled detailed amendments. The Minister denies it, but I have here the proposals tabled by the French Minister of Agriculture.

Mr. Gummer

No proposals have been tabled by the French Minister of Agriculture. There is no mechanism by which proposals can be tabled, and so there cannot be any. The French Minister has made a number of generalised suggestions about these issues, as I have done, and bas put them forward around the table, as I have done. The hon. Gentleman does not understand the rules under which the Community operates.

Dr. Clark

I accept that the Minister has made some suggestions, but the French Minister has not only tabled amendments, but circulated them within the Council of Ministers and throughout the Community. Therefore, it is possible to have a detailed debate on those French proposals. I have them here.

The right hon. Gentleman has refused to table such amendments and therefore the debate has centred on the details of the MacSharry proposals, which we believe to be extremely harmful to United Kingdom interests. As a result, the Minister, almost certainly—I hope I am wrong —will lose the battle for our interests. The House should note that the MacSharry proposals are condemned on every count by the Government's declared policy.

The Labour party believes that the reform of the CAP is vital. The Opposition reject the MacSharry proposals because we believe that they do not represent a fundamental reform of the CAP; they are a mere revision. The proposals will fail as surely as did those advocated so strongly by the right hon. Gentleman in 1988. At the very best the MacSharry proposals represent transitional arrangements.

Mr. MacSharry has admitted that his proposals will increase the spending of the CAP for the next seven years at least—the Minister and I are at one on that. We believe that those reforms will not last that long. Mr. MacSharry will still retain intervention boards and export restitutions. Little wonder that the authoritative publication Agra Europe shares the Opposition's opinion of those proposals. It states: There is a real danger that the Community could end up not only with an expensive new form of support, but also with no real reduction in surplus production and in the need for subsidised exports. The MacSharry proposals on accompanying measures are just as worrying as they include such important schemes as those on pre-retirement pensions, forestry and environmental protection. The Labour party believes that they are all vital parts of any reform, but MacSharry sees them as bolt-on extras. He does not believe that they represent an integral part of the reform package. As a result, national Governments would have to pay up to half the costs; frankly, certain nations will be unable to do so.

Mr. George Walden (Buckingham)

The hon. Gentleman is not doing well in countering my right hon. Friend's charge about the national interest—that is what the debate is all about. The hon. Gentleman referred to "bolt-on" extras. One such extra is the ill-treatment of animals because of a loophole in the present law. In a recent case in my constituency the owner of animals, convicted of their ill-treatment, was able to continue ill-treating them after that conviction because of that loophole. I hope that the Labour and Liberal parties will join everyone else in the House to push for that loophole to be closed, because, although the second conviction is coming up on the same person, his animals are still being ill-treated.

Dr. Clark

Obviously we give such support. We believe that Britain should take the lead in Europe on animal welfare. My hon. Friend the Member for Caerphilly (Mr. Davies) has done a great deal of work in that respect.

I accept that things have been done, but there is much more to do. I am not seeking to be divisive and I accept that the Government have taken the lead on some of the animal welfare issues. The Labour party has never hidden that fact. However, Conservative Members are sensitive about this because they know that the Minister hypes things up and does not make much progress when it comes to the precise details.

Mr. Gummer

I wonder whether the hon. Gentleman might be a little more gracious by acknowledging that we have achieved protection for British horses and ponies in terms of their live export. We have extended the British live export of animals arrangements throughout the Community. We have now got the Community to accept, in advance of Maastricht, a proposal to deal with animal welfare. We have done more than any other British Government to promote animal welfare. However, when the hon. Gentleman was discussing our bad negotiating techniques he did not mention those successes.

Dr. Clark

The Minister's intervention makes my point.

Only today my hon. Friends and I in the Opposition Front-Bench team tabled an early-day motion congratulating the Government on their efforts relating to the export of horses and ponies. That early-day motion is in the Table Office and our support for the Government is in print. The right hon. Gentleman has proved my point, because he lets his mouth override his mind.

The CAP, which is a highly centralised, rigid agricultural support system, is in need of reform. The moneys saved need to be diverted to enhance regional and social funds to aid the rural infrastructure so that it can be improved in a meaningful manner. We should seek value-added components to agriculture. That is the future for advanced societies.

In 1956 we recognised that the CAP had relevance and represented the sole common policy of the EC. Now that we have new common policies relating to the single market, economic and monetary union and environmental and social issues, the symbolism provided by the CAP is no longer required.

The CAP made sense when we had a Community of six, centred around France, but it does not make sense in a Community of 12. The problems would be even worse in a Community of 17 or more covering an area from the Arctic circle to north Africa, from Asia Minor to the shores of the Atlantic.

We accept that the agricultural policy must operate within a European framework, but we believe that it should operate in a looser regime of freely traded agricultural goods within the Community. More decisions could be made at national and regional level using the European concept of subsidiarity. In that way countries would be freer to utilise the finances available for agriculture in a way that better reflected the needs of their societies, their farmers and their environment.

We would favour giving support to environmentally sensitive farming in the United Kingdom, but we might wish to give support to other countries in the form of direct income or through other measures designed to support farmers and to keep them on the land.

Mr. Michael Lord (Suffolk, Central)

Is the hon. Gentleman's bottom line that the Labour party would support the complete abandonment of the CAP?

Dr. Clark

I appreciate that it is not always easy to assimilate what is said. No, we believe that there would still need to be a European agricultural regime. The main decisions and guidelines would be issued in Brussels, but, through the use of subsidiarity, more decisions could be taken within the Community framework at the national or regional level. That is the concept we are advocating.

The logic of our argument is now finding friends. Chancellor Kohl of Germany recently referred to the need for more decisions in agriculture to be taken at a regional or Lander level. The average size of farm in the old West Germany was a mere 17.6 hectares, whereas the new Landers of the old East Germany have farms with an average size of 3,700 hectares. No wonder Chancellor Kohl is beginning to appreciate that the policy one might want to apply in Bavaria is not necessarily the same as that which can operate in the new Länder of Mecklenburg.

The debates on the future of agriculture in the United Kingdom are vital for farmers, consumers, taxpayers and the environment. So far, however, the Minister has given a typical display—he did so again today—which is high on hype, but short on application. He appears to have made more newspaper headlines than progress. Those debates, along with those in GATT, are the most important for agriculture in the United Kingdom since we entered the EC. There is little time left. We urge the Minister to go to Brussels and mend a few fences. He should come back with a deal that helps, not hinders, British farming.

5.59 pm

Mr. Paul Marland (Gloucestershire, West)

I congra-tulate my right hon. Friend the Minister on his robust defence of British interests and the way in which he has outlined the need for careful negotiations because, at this stage, we can leave nothing to chance. Like other Conservative Members, I wish him the best of luck in those difficult and protracted negotiations. His speech was in stark contrast to that of the hon. Member for South Shields (Dr. Clark), who spent nearly 40 minutes whining about the problems in the EC and the common agricultural policy. In the last few seconds of his speech, he glossed over the Labour party's alternatives so quickly that we could hardly even hear them.

Earlier in his speech, the hon. Gentleman spoke about the need for an inquiry into set-aside and for more meat inspectors—I doubt whether that will find its way to the heart of many British farmers—and about the need for a detailed, in-depth reform of the CAP. He had ample opportunity to express the Labour party's views, but we heard nothing except a prize example of his total lack of understanding of how the whole system works. He was wrong to say that the French Minister supported reasonable alternatives and amendments, because those were put forward informally, so he has completely misunderstood the situation. No farmer—with the possible exception of constituents of the hon. Member for East Lothian (Mr. Home Robertson)—would be foolish enough to vote for the policies suggested by the hon. Member for South Shields.

Mr. Home Robertson

Would not farmers in Gloucestershire agree with those in East Lothian that the industry always does better under a Labour Government?

Mr. Marland

We are talking about the common agricultural policy, and I am sure that farmers in Gloucestershire and non-biased farmers in East Lothian will see what an appalling mess the hon. Member for South Shields would make were he allowed anywhere near the negotiating table. It is not true to say that farmers would do better under a Labour Government.

Mr. Ron Davies (Caerphilly)

Will the hon. Gentleman give way?

Mr. Marland

No. I shall give way to the hon. Gentleman later.

This debate is most timely, because we are discussing the future of Europe. The only genuine common policy in Europe is the common agricultural policy. However, that policy has now degenerated into a mess and needs to be looked at in considerable detail, and I congratulate my right hon. Friend on taking the serious nature of the problem on board.

As my right hon. Friend said, he controls only 17 per cent. of the United Kingdom's farming budget, while the remaining 83 per cent. is controlled from Brussels. To make changes, my right hon. Friend must have the agreement of the Greek, Italian and Irish Ministers. Our Minister is mightily persuasive, but imagine trying to get Sicilian slaughterhouse owners to agree to adopt European standards when the Italian Government have yet to introduce dairy quotas.

The CAP is now out of control. It is massively expensive, does not achieve what it was designed to do and is riddled with fraud. The case of Dr. Ruffard is merely the tip of the iceberg, for the problem goes much deeper. The CAP no longer achieves the aims for which it was set up and those affected—the British farmers—are fed up with it. They feel discontented and desperate.

I have received four telephone calls from farmers in my constituency today, saying what a desperate situation they find themselves in. Our farmers find that they are disadvantaged as a result of the national animal welfare measures that have been introduced and the high hygiene standards that are insisted on in our slaughterhouses and elsewhere. Those measures are laudable—I do not knock them—but where we lead others do not follow, with the result that our producers and operators are disadvantaged.

The environmental controls that are introduced with laudable objectives cost our farmers and our industry generally a great deal of money. Other European countries are not following our lead, not only in farming but in other industries. We lead the EC on controls on pollution, noise, smell and other matters.

There are some absurd anomalies that emphasise the position. For example, we determined to stamp out salmonella in eggs. We slaughtered thousands of chickens, and many producers went out of business. But millions of eggs that had not been tested for salmonella flowed in through our ports from Europe. Very few of them were tested for salmonella when they entered this country and many eggs that may have been humming with salmonella found their way into our supermarkets. They were repacked and labelled "Packed in Britain", and unsuspecting housewives bought them thinking that they were salmonella-free. British egg producers want fair treatment.

In slaughterhouses, we implement high Euro-standards and adhere to extensive and frequent veterinary inspections, while others ignore them. A Member of this House has a cottage in France, and his neighbour is a French farmer who kills his own cattle with his own hands in his own buildings. When the hon. Member concerned asked him, "What about the European regulations on slaughtering animals?", the French farmer shrugged his shoulders and said, "Those regulations are only for the British." British farmers want fair treatment.

Lorryloads of British lamb are being held up and burned illegally by French farmers. They put spikes across the roads to stop vehicles loaded with lamb proceeding to their destination. The French police simply stand around with their hands in their pockets shrugging their shoulders. Is that communautaire or fair?

I agree with my right hon. Friend the Minister that careful negotiations are needed to find a way forward Our over-zealous application of Euro-directives is causing trouble in Ramsgate. Mr. David Pettit, a greengrocer and local councillor in Ramsgate, described his cabbages and peas as "local". Although they were grown locally, officials told him that he could not describe them as such, and he had to change their description. I doubt whether French officials would have bothered to check up on French cabbages described as "local".

The co-responsibility levy and stabilisers on milk and cereals are fatuous taxes that simply make farmers produce more to maintain their margins. We all agree that those should go. A farmer receives £115 on the farmgate price of his cereals, but ultimately receives £100, thanks to the co-responsibility levy and stabiliser. Perhaps the abolition of those levies and stabilisers is part of my right hon. Friend's secret negotiating package—I hope so.

Part of my constituency is the royal forest of Dean, where we have been growing English oaks since time began. We are proud of that history. We are now told that we must grow Euro-oaks approved by the European Parliament. Our British sausage has been under attack, as have prawn cocktail flavoured potato crisps. Even paperboys are now threatened by faceless men from Brussels who say that they must give up that way of earning a few pence before they go to school.

All that builds great resentment of Europe and the faceless men in Brussels. To put it mildly, British farmers are stamping mad with the European Community. They regard themselves as being seriously disadvantaged in Europe. Farmers' incomes have fallen like a stone. Despite the fact that they use their ingenuity to add value and pursue alternatives, many of them are going broke. In the meantime, the money that is meant to help farmers under the CAP is siphoned off by others, often by fraudulent deals and double-dealing. That is a flavour of the confusion and frustration in the CAP.

In the European negotiations, we should use the CAP as an awful example of European co-operation. I am glad that the Government have recognised that fact in their leaflet, "Our Farming Future" and highlighted the mismatch between ever-increasing expenditure on subsidies and declining farm incomes, which demonstrates clearly that the CAP does not operate in the interests of producers, consumers or taxpayers, and that further reform in essential. That is a start—a radical reform is needed.

I shall remind the House of the cost of the CAP. In 1991, the European agricultural budget was £25 billion. In addition, the national budgets for agricultural support amounted to a further £18 billion, giving a total of £43 billion. That means that every acre farmed in the European Community costs EC taxpayers £162 in support. Put another way, had the United Kingdom share of that money been divided equally between the 220,000 British farmers, they would each have received a cheque for £20,445. Despite that vast support, farm incomes are being reduced: and net farm incomes in 1990 were only 42 per cent. of net farm incomes in 1984. The trouble is that the money is not being used to provide agricultural support for the farmers for whom it is intended.

Turning to the future, I like the idea of area payments, which are now being used for oilseed. I believe that that proposal will find favour with a number of farmers. It will reduce the price of the end product, and the deficit will be made up for the farmers through area payments. Lower prices for cereals—if and when area payments are used on cereals—could make the alternative cereal imports much less attractive than they are at present.

The EC grain production surplus amounts to 30 million tonnes, which is the amount of cereal substitutes imported into the EC. Lower cereal prices and lower prices generally may reduce fraud and ensure that the money goes directly to farmers, rather than to fraudsters.

Farmers have lost much purchasing power over the years. In 1964, 100 lambs bought a new medium-powered David Brown tractor. In order to buy the same machine today, the farmer has to sell 600 lambs. Mr. MacSharry's plans have given rise to great concern in this country about quota cuts and limiting flock sizes. That worry is aggravated by the fact that, if farmers cannot make a living at today's prices, and the future offers only a reduction in prices and in the amount that farmers are allowed to produce, there is no hope. Any cuts that are introduced must be fair and equal. I am glad that my hon. Friend the Minister has said that he will have no truck with modulation and reductions in output that are not absolutely fair.

British farmers are always being urged to become more orientated. I believe that the time has come for us to look carefully at European national aids to food processors, because I think that that is where the trouble lies. In the United Kingdom, the total amount of national aid given to farmers is just under £1 billion. In Spain, the figure is £1 billion, in Italy it is £2.7 billion, in Germany it is £3.2 billion and in France a massive £8.5 billion is given to food producers and food processors. The different figures are distorting the market.

Competition within Europe now occurs in food and drink processing, which is hugely encouraged through national aids. Food from Britain, under the excellent leadership of Mr. Paul Judge, has highlighted a trade gap in food and drink of £7 billion per annum, which emphasises the need for better marketing.

Page 17 of the booklet "Our Farming Future" shows a graph of how much our agricultural produce is sold through voluntary co-operatives compared with other European countries, and there is no doubt that we lag far behind. The co-operatives are not big enough. If they want to hire decent employees, they must pay them good money. Voluntary co-operatives need a minimum turnover of £10 million a year to be able to attract the right sort of employees. Food from Britain said that we have six representatives in Spain, whereas Food from France has 60 representatives in Spain. Food from Britain has four representatives in Paris, whereas Food from France has 32 representatives in London. There is no doubt that there is a massive imbalance.

Some 80 per cent. of our trade deficit consists of food and drink imports. In 1980, we imported 6,000 tonnes of mushrooms. Today, we import 34,000 tonnes of mushrooms, many of them from southern Ireland. It is difficult to believe that mushroom producers in Ireland are more efficient than those in this country—I cannot believe it. Three years ago, our poultry imports were nil; today, the value of poultry imports is £250 million. The birds are not imported merely as dead carcases, but with substantial value added. Ministers should begin to consider that issue, once they have sorted out Mr. MacSharry. They were right: we hate his proposals, and do not like what he has to offer; we shall probably end up with a derivative of his proposals, but we must ensure that they are fair.

Our farmers do not fear competition from genuine farmers competing with them on the same basis, but we are now being disadvantaged nationally because of the benefits given to farmers of other countries to help them market and add value to their goods. Our farmers are efficient and can compete, but their day-to-day plight is desperate. The current position of United Kingdom farmers is not their fault, but the result of the devious manipulation of the CAP rules by our partners at taxpayers' expense to add value to food once it is outside the farm gate.

I shall finish as I began: I wish our Ministers the best of luck in their negotiations with the dreadful MacSharry proposals. I wish them godspeed.

6.17 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North)

I beg to move, to leave out from "legal framework of the Common Agricultural Policy; and" to the end of the Question, and to add instead thereof: 'believes the Government should make every effort to restore the confidence, stability and profitability of the British agricultural industry by introducing a ten-year plan for farmers, giving them the opportunity to compete on equal terms with their European counterparts and introducing measures to safeguard the future of the family farm in the United Kingdom'. I have received many calls during the day from farmers and union leaders in Scotland, Wales and England who are pleased with the amendment. I give the Government and the Minister due warning that, unless they accept the amendment, we shall divide the House later tonight.

My hon. Friends and I believe that today's debate on agriculture is the most important debate that we have had for a long time. I believe that British agriculture is at a crossroads; we face the talks on the general agreement on tariffs and trade and the reform of the common agricultural policy. I know that the Government are about to take heed of what the Liberal Democrats have said over the years. I was delighted that, after I had tabled a question the week before last, the Secretary of State for Wales eventually went to Brussels last week on behalf of Welsh farmers. His action was long overdue, but the pressure is now on.

Like every other Smithfield week, this one has been an excellent time for assessing agriculture. Thousands of farmers and their families have converged on London to visit the show, which is one of the high spots of the farming year. As usual, I have been there to admire the splendid animals, wonder at the gleaming high-tech machinery on display and, above all, to talk freely to farmers from all parts of Britain. The show is excellent, and I recommend anyone who has not already been there to visit it and see the high standards attained by our livestock industry.

Mr. Alex Carlile

Did my hon. Friend win any prizes?

Mr. Howells

I shall deal with that later.

This year, there is something different about the show. There is not the air of cheerful optimism that usually abounds. Could it be that, among farmers, the talk is of rising production costs and very low returns, of huge bank overdrafts and of farms being abandoned? Do I sense an air of quiet desperation on the machinery stands, reflecting perhaps the drop in sales over the past year? I understand that, in Wales, tractor sales have dropped by about 30 per cent. and that, although in Scotland and the east of England there was a smaller drop, no one expects to see a great improvement in the near future.

There is much to worry farmers today. Not only have farm incomes plummeted in the past year by 10 per cent., bringing them to their lowest level since the second world war, but there is a nagging fear about the MacSharry proposals and the GATT negotiations on world trade. The recession has bitten savagely into the industry's viability, and this year alone, about 7,000 farmers and about 5,000 workers are known to have left the land. I am afraid that others will soon follow if present trends continue.

Somehow or other, British agriculture has lost its way. There is no conception of what the long term holds in store. There is no framework in which to make decisions. Many factors contribute to the malaise. The country's general economic climate has not benefited any industry, and farmers, with their heavy capital outlay, have fallen foul of high interest rates and increasing prices.

Although our products are second to none, our marketing has never kept pace with production. We have a market of 380 million people in the EC, and it is time that we adopted a more aggressive approach towards exports as well as selling in the home market. That requires a degree of support from the Government, which to date has been sadly lacking compared with the efforts of other EC Governments, and a readiness by farmers to co-operate in modern selling practices.

Some of the blame for the uncertainty in the industry can be placed at the door of the Government, whose agricultural policies have been negative to say the least, and whose response to the crisis in the industry has been slow. For example, time and again they have delayed payment of hill livestock compensatory allowances to hard-pressed hill farmers. They have refused to pay the maximum rate of suckler cow premium while other countries in Europe are pressing for increases. They have refused to implement the useful EC outgoers scheme for dairy farmers, which was designed to obtain milk quotas from those who wanted to give them up and redistribute them among the remaining farmers. That has been widely carried out in other EC countries, and has shielded their producers from a 3 per cent. quota cut imposed by Mr. MacSharry.

The Government have shamefully cut research and development. I could give many other examples. One of their latest failings is their blinkered attitude towards reform of the common agricultural policy. Does the Minister think that his total rejection of the MacSharry proposals has benefited our farmers in any way, or does he think that a more measured and thoughtful response could have gained valuable concessions for us? We accept that, as the proposals stand, there are distinct disadvantages for British farmers. But is there not an argument for looking at the principles involved and adapting the details to national circumstances?

It is plain that the CAP must be fundamentally reformed to cope with a situation that has changed beyond all recognition since the CAP was established. It is clear that there is no longer any justification for encouraging production with reference to demand. It is also ridiculous that, while CAP support increases year by year, farm incomes have dropped and look set to deteriorate. It is wrong that, because of the linking of support to the volume of production, those who benefit most are the larger farmers, who on balance have least need of the support.

Liberal Democrats believe that a healthy, prosperous farming industry is absolutely necessary in this country, and we must find a suitable framework within which it can operate. Our farmers, who are probably the most efficient in Europe, deserve our support, because on their well-being depends the health of our rural economy and the natural environment.

Mr. Lord

Perhaps I could put to the hon. Gentleman the question that I put earlier to the Labour spokesman. Is the hon. Gentleman, as the agriculture spokesman for his party, about to present the framework that he suggests should replace the CAP?

Mr. Howells

My colleagues and I have decided to go to Brussels in the near future to meet Mr. MacSharry. I hope that we will be able to persuade him to accept the policies that our party has pursued for the past 10 years. If he does not accept them all, perhaps he will accept some of them. On another day, I might tell the hon. Gentleman our policies.

It is now time to restore the confidence that has been lost during the difficult times of the past few years, and to do that we must first introduce a 10-year programme for agriculture which will ensure that farmers are able to plan ahead without worry. The chopping and changing of policy over the past couple of decades has contributed greatly to the present state of the industry. Whatever our views on the milk quotas, confidence has not been restored since they were introduced in the early 1980s.

It is essential to ensure that the British farmer is allowed to compete on equal terms with his European counterpart at all levels. The Government must fight for our farmers in negotiations and, at the same time, give more practical assistance. An NFU briefing states: If British farmers and growers are required to operate within the EC market at a competitive disadvantage, the consequences for our economy and counytryside would be disastrous.

Mr. Martlew

Will the Liberal Democrat proposals cost more than the present policy being pursued in Europe?

Mr. Howells

Times are difficult, but it is important to keep part-time and full-time farmers in the countryside. People must remain there as custodians of the land.

The iniquities resulting from the present system of support should be removed, and financial resources should be redirected to family farms. They are, after all, the background of the rural community, and as such should be actively encouraged to stay in business. The Farmers Union of Wales is forward-looking on agriculture policies, and in response to the European Commission proposals it said: The Farmers Union of Wales is fearful that this failure to discuss and negotiate reform of the CAP and to positively discriminate in favour of family farms will result in an intensification of the restrictive price policies of the past few years which clearly will have a much greater impact, in the absence of any compensating direct subsidies, on the family farms that prevail in Wales. In the absence of targeted support and suitable social measures, the current recession in the industry will not only continue but accelerate, accentuate an already deteriorating farm income position and a decline in the rural economy as a whole. I agree with that conclusion, and believe that it applies not only to Wales but to a large part of the British agricultural economy. There must be a move towards forms of direct support aimed at improving the environment and achieving social goals. Every effort should be made to keep the farmers on the land.

I shall say a few words about sheep farming. I was delighted to hear the Minister say that he is against the MacSharry proposals. The EC proposes to introduce a limit on premium eligibility based on the numbers of ewes in the flock in 1990. In addition to roughlands flock limitation, it is proposed that no premium will be paid for more than the quota of 750 ewes for the less-favoured areas, and 350 ewes elsewhere. If that policy were implemented, it would have a disastrous effect on sheep farmers in Wales, and perhaps an even more disastrous effect on large farms in Northumberland, the border counties and the Scottish highlands. Many farms in the north of England and in Scotland employ six or seven shepherds, so that would have a disastrous effect on the economy of the area.

Mr. Richard Livsey (Brecon and Radnor)

Does my hon. Friend agree with me that, as the Minister has said that Britain is responsible for more than a quarter of the sheep production for the entire EC—he gave a figure of 27 per cent.—the right hon. Gentleman must be in a strong negotiating position to change that policy, which discriminates against British sheep farmers? I believe that the limits are far too low, especially for hill farming areas.

Mr. Howells

My hon. Friend has made a worthy point, and I am sure that the Minister will take heed of it.

This afternoon, I received a note from the National Farmers Union of Scotland. That organisation sums up the situation to the best of its ability, and I could not improve on what it says. It sent out a questionnaire; and said: On 101 of the 264 Borders farms surveyed, there are 67,000 LFA"— that is, less favoured area— ewes, in excess of the MacSharry 750 ewe proposed limit, which may not receive SAP"— sheep annual premium— and LFA supplement. This could represent a reduction in income on these farms of over £1.3million. They are talking about only 101 farms, so, if the policy were pursued, I do not know what effect it would have on the countryside of Scotland and on other parts of the country.

Mr. A. J. Beith (Berwick-upon-Tweed)

I am sure that my hon. Friend knows that the first effect would be that employed shepherds would cease to be employed. Shepherds are the backbone of much of rural life in Northumberland and the borders, and they have already been put out of work by the effects of headage limits, so if the policy is not changed it will disastrously affect the structure of rural life.

Mr. Howells

In addition, the National Farmers Union of Scotland says: 123 of the 264 farmers who completed the survey, indicated that, if the MacSharry II proposals are implemented, they would have to make a total of 135 men redundant. Shepherds will have to be made redundant in the hills of Scotland and in the north of England, which could have a devastating effect on the land and the families involved.

The Government made a big mistake last year, but I am delighted to see that the pressure brought about by the early-day motion on the wool board guarantee tabled by my hon. Friends and myself has been beneficial. I can claim a success for that. I was vice-chairman of the British Wool Board for 11 years and did my utmost to carry on the financial agreement between the Government and the board. Unfortunately, two years ago the Government decided to do away with the guaranteed price. It was a unilateral decision, made without consulting their friends in Europe.

Today, the farmers of Britain receive only 50 per cent. of their wool clip cheque three months after delivery. They have to wait another 12 months for the other 50 per cent. That has a disastrous effect on many hill farms. I hope that the Government will take heed of what I say on behalf of the wool producers of Britain. They could do with that money. They need it, and it is the Government's duty to provide the mechanism whereby farmers will get it when it is due to them.

I could refer to many other aspects of the MacSharry proposals, but now I shall mention the Liberal Democrats' farmers charter. That says it all; it says what should be done, and I hope that my parliamentary colleagues on both sides of the House will listen to it and agree. Hon. Members are aware that we are now winning many rural seats, and that is because of our agriculture policy.

I hope that others will agree with us about Reform of CAP so that farmers are paid proper prices for the goods which they produce", and about Government action to ensure that the MacSharry proposals do not discriminate against British farms for being, on average, larger than their European counterparts … Action in the GATT talks to ensure that any reduction in agricultural support which is negotiated does not penalise European farmers". Our best suggestion to the farmers of this country and to the Government is: Well-resourced Countryside Management Agreements, based on whole farm plans and available to all, to encourage sustainability and safeguard wildlife and landscape". As I said at the beginning of my speech, the farmers of this country need their confidence restored to give them the stability and profitability to enable them to invest in the land. Then we shall ensure that the next generation will stay on the land, will farm and will conserve the countryside for the benefit of others.

6.38 pm

Mr. Michael Alison (Selby)

The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) will excuse me if I deviate a little from his constituency. He made a wide-ranging speech on many agricultural topics and products, and I shall want to follow him under one or two of those headings during my short speech.

However, I start by congratulating my right hon. Friend the Minister on the firm, skilful and constructive role that he is playing in the negotiations on the reform of the common agricultural policy. I especially congratulate my hon. Friend the Parliamentary Secretary, who was kind enough to send me a note saying that he would have to slip out for a few minutes, on his role in the negotiations. He is a skilful and expert practitioner in the area, and he has a relevant professional background. He spends immense periods with his face locked into the mire of the common agricultural policy in Brussels. We owe him an enormous debt for his work. We can all endorse our objective in the negotiations, which is to save the common agricultural policy from itself and to save the British farmer from the common agricultural policy, if it is branded by the hallmark of the current MacSharry proposals.

A good deal of gloom and doom is forecast for British agriculture. The hon. Member for South Shields (Dr. Clark) reflected that in his speech, as did the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) to some extent. It is commonplace in the House that our agriculture is going through a difficult and black period, in terms both of its prospects and of the current restrictions. Agriculture is not helped in that contingency by uncertainty over the general agreement on tariffs and trade and over the reform of the CAP, because it also faces declining prices and there is no sign of its costs going down in the same way.

However, we must be careful not to undermine unnecessarily national confidence or farmers' confidence in agriculture. We all aim to close the gap between our home food production and our home food consumption. We shall not close that gap between what we import and what we produce at home if we all talk about the burial of British agriculture or about its imminent demise On the contrary, we all expect it to improve its output, which is the object of every party's policy.

Agriculture is staggeringly successful. About 100 years ago, after the abolition of the corn laws when American agricultural, especially cereal, output rocketed, Britain imported three quarters of all its grain. Today, we are not only the world's sixth largest grain exporter, but the world's second largest exporter of sheepmeat. Viewed in that context, British agriculture is to British industry what German manufacturing is to German industry. We are at the top of the league. Against that background, it is a great mistake to regard British agriculture as a lame duck which is staggering haltingly towards an early demise.

Mr. Martlew

I could not let pass the right hon. Gentleman's comment about German manufacturing industry in comparison with our agriculture. Is not the right hon. Gentleman aware that German manufacturing industry has massive surpluses, whereas we are running a deficit in both food and drink?

Mr. Alison

I have some sympathy with the hon. Gentleman's point that there is a gap that our producers could fill. Agriculture is a tiny sector in terms of the number of people it employs–2.3 per cent. of our total work force. We can be excused for having a modest gap in contrast to what the Germans are able to do with manufacturing. However, we aim to close that gap, and we should all cheer on agriculture as it seeks to do so.

I am a Church Commissioner, and the Church Commission has the second largest agricultural estate in England after the Crown. We have more than 156,000 acres and about 500 farms under tenancy. Our agents tell us that farm incomes generally in our estate are holding up reasonably well this year on the back of a good harvest. This has been reflected in our rates which in broad terms have remained level this year. Reductions on some arable farms, especially in Lincolnshire, have been counter-balanced by small rent increases on dairy farms. On the whole, things are not quite as bad as some might suggest.

In focusing again on the reform of the common agricultural policy, I want to reiterate the objections expressed by hon. Members of all parties to the MacSharry proposals as they now stand, especially with their support for the smaller farmers. There is a double disadvantage in the policy. First, it backs the inefficient small farm unit and does nothing to improve farm structure and output. Secondly, it is grossly unfair in human terms—the very area that MacSharry seeks to magnify. Many British farmers with a far larger acreage than the small units in different parts of the continent about which we have been hearing, such as the 17.6 hectares in west Germany, have as few people running and managing them as the tiny units on the continent have.

If one is trying to help the human dimension, there is no point in tackling that in terms of acreage. With modern farming techniques and conditions, very small numbers operate very large acreages. It is nonsense and illogical, therefore, to focus attention on the small acreage farms, ignoring the numbers of people who operate large acreages with few individuals. Such farms are often family farms, although they are several times bigger than their equivalents on the continent.

Various different formulae have been advanced for real reforms in agriculture. Perhaps we should at least consider taking off the shelf and dusting down our earlier pre-Common Market techniques of agricultural support involving especially the old standard quantities and the associated deficiency payments. Those schemes could be applied transitionally for farms under a certain acreage or a certain level of output.

Such schemes have many advantages. They are progressive in tax terms because they would go directly on to a budgetary Exchequer cost and have no effect on farm prices, thus taking the burden of support off the poor consumer. They would dispense with intervention, support buying and restitution for exports, and they would be an alternative in certain circumstances for large-scale set-aside proposals. Individual farms might be offered the option of a large set-aside or deficiency payments for a standard quantity which would keep everyone employed on the farm, but would make the farm restrict its output to some extent. I hope that my hon. Friend the Parliamentary Secretary or my right hon. Friend the Minister will give some. consideration to reintroducing those schemes as one of the formulae for reform.

I will pick up a point made by my hon. Friend the Member for Gloucestershire, West (Mr. Marland) about mushrooms. I know that my hon. Friend the Parliamentary Secretary has a particular interest in and knowledge of mushroom production. Mushrooms are now the largest of all United Kingdom horticultural crops. Middlebrook Mushrooms in my constituency is the largest individual fresh mushroom producer in Britain. However, it faces the severe competition to which my hon. Friend the Member for Gloucestershire, West referred, especially from Ireland. I believe, as do many involved in British mushroom production, that the foreign competition is unfair. My hon. Friend mentioned the huge increase in imports in the past few years. As much as 53 per cent. of mushrooms is now imported. That is far too high a proportion for a crop which we could produce on a much bigger scale.

I want to draw to the attention of the Parliamentary Secretary what is happening in Ireland. The Republic of Ireland has quite recently considerably enlarged its mushroom production through extensive regional and Government assistance in all sectors of production. The three entrepreneurs involved in the Republic have received aid for compost production, packaging facilities, transport and promotion. They have been accepted within the so-called trading houses scheme, so that they pay only 10 per cent. corporation tax instead of 43 per cent.—a major financial benefit.

British growers can compete, given fair competition. A major concern for the British mushroom industry is compliance with health, hygiene and environmental legislation. The industry has no criticism of the need to introduce protective measures, but they add costs, which affect the competitiveness of the product. In other EC countries, the implementation of the regulations has been delayed, or they may not even be applied. In the United Kingdom, some unfair advantage is gained through the implementation of the regulations being delayed by up to three years in Northern Ireland.

If my hon. Friend is not aware of the distorting supportive measures in the Republic of Ireland and, indeed, Northern Ireland, I hope that he will allow me to submit a memorandum on the topic which he will consider carefully so that he can take whatever steps are necessary to restore a level playing field.

However, we should be proud of the industry, which has great potential. I am sure that it will close the gap and remain a great leader in British industry.

Mr. Robert N. Wareing (Liverpool, West Derby)

On a point of order, Madam Deputy Speaker. I am sorry to intrude on the debate in this way, but, before the speech of the right hon. Member for Selby (Mr. Alison), the House was addresed by the hon. Member for Ceredigion and Pembroke, North (Mr. Howells). I believe that it is a convention of the House that, when a Member speaks, he waits to listen to the subsequent speaker. There were five Liberal Democrat Members present, including the hon. Member for Ceredigion and Pembroke, North. Has the Liberal party broken a convention, or was it merely a display of bad manners that they left the Chamber immediately after their spokesman had finished?

Madam Deputy Speaker (Miss Betty Boothroyd)

I consider that a genuine point of order. I would have wished that the Liberal Democrats might have remained in their place, especially as their amendment is now before the House for debate. I am pleased that the hon. Member for Liverpool, West Derby (Mr. Wareing) has brought the matter to the attention of the House. I hope that it will be noted by those who read the Official Report tomorrow.

6.52 pm

Mr. William McKelvey (Kilmarnock and Loudon)

It will probably be understood that I wish to make my remarks in the context of the Scottish agricultural scene. Under the MacSharry proposals Scotland would suffer disproportionately to not only other EC countries but other countries within the United Kingdom. Before I take issue with the quantities on which the subsidies within the MacSharry proposals are based, may I remind the Minister of what farming means generally in Scotland.

The gross output of farming in Scotland in 1990 was £1.5 billion. Around 50,000 people are engaged directly in farming and a further 140,000 work in the support and service sectors of Scottish agriculture. Agriculture accounts for 14 per cent. of the value of Scottish non-oil output and 6 per cent. of employment. Those who know the geography of Scotland will understand that the latter percentage is much higher in rural areas where there is no other employment. The figures show that agriculture represents a major industry for Scotland.

Like all other areas of Great Britain which are involved in agriculture, Scotland has seen a slump of 10 per cent. in farm incomes this year on top of a massive 21 per cent. slump last year. The MacSharry proposals, if implemented in anything like their current form, would decimate Scottish agriculture because Scottish farms are generally well above the average size of farms in the EC and in the rest of the United Kingdom, for historical but mainly geographical reasons.

Compensation is based on the small farmer or the peasant farmer in the EC. To find out how it affects Scottish farmers one need go no further than my constituency. Although Kilmarnock is an industrial area, there is a large rural area in the constituency in the heart of Ayrshire. All hon. Members will know the reputation of the Ayrshire farmer.

About three quarters of dairy herds in EC member states qualify for full compensation. In Ayrshire, with some world-famous herds, the larger farms would receive less than 5 per cent. of the compensation. The same problem applies to the new proposals, which are based on compensating flocks that are far lower than the Scottish average.

The Scottish Agricultural College did a survey to find out what would happen if the MacSharry proposals were to be implemented in the Borders region. The in-depth research programme showed that farm incomes in the region are likely to suffer a direct loss of between £6 million and £6.5 million per annum, depending on how responsive farmers are in meeting the stocking density limits. The table which the college provides shows clearly that half the losses would be experienced by cereal farmers, a quarter by sheep farmers and the rest by farmers with beef, suckler cow and dairy herds.

The grain trade in the Borders region is very important not just for the region itself. The turnover is about £6.5 million per annum. At current prices the cereal farmers will experience a £2 million per annum contraction immediately and there will be a further contraction as farmers reduce output in response to lower prices.

There will be a knock-on effect. United Distillers distils some of the finest whiskies in Scotland and supplies Johnnie Walker whisky to my constituency, where we have the biggest bottling plant in Europe. The whisky is bottled there and dispatched abroad, earning a great deal of money for the coffers of the Chancellor. It is company policy to buy barley in Scotland. It would all he from Scotland if there were sufficient supplies of appropriate barley. The barley which is grown in the Borders is particularly useful to the whisky industry because it has a high starch and low nitrogen content. Its abilities to germinate are exactly those required for the mashing of our marvellous golden liquid. We could not afford to allow the Borders farmers to suffer the terrible experience of stopping farming or reducing drastically their supplies of barley to the whisky industry.

I have read with interest some of the Minister's statements. When the Secretary of State spoke to the House on 14 February he opposed the MacSharry proposals vehemently. On that occasion he used the example of their effect on Welsh farmers. The Minister has told us today that he does not want to let us know what his proposals will be when he goes into negotiations. No poker player will sit with a man at his back or show his hand, but nor will a poker player have a cocky attitude to the game. Sometimes at the Dispatch Box the Minister displays not just a cocky attitude—on occasions I could be accused of that myself—but almost an arrogant attitude. Such an attitude often hardens the attitude of those with whom one negotiates. Sometimes the negotiating game can be played a little more skilfully.

We hope that the Minister will get the best deal that he possibly can to protect our farmers and we would support him in achieving that objective. But the deal must be seen to be fair to all farmers in the United Kingdom because their circumstances vary depending on the country and the area in which they farm. It is important that the negotiations should be successful.

I do not know whether the Minister will come back with the news that the farmers want. As has been said before, there is a general gloom about the farming industry. They have suffered tremendous losses in income. I often speak to the farmers in my area and they are seriously concerned about whether they can continue. Moreover, their sons are loth to follow their fathers into farming. If they do not go into farming, there is real reason for gloom because it could well mean the end of the Scottish farming industry. Therefore, their spirits must be lifted.

It is not me who distrusts the Minister's ability to negotiate, but the farmers I met today who doubt whether he can deliver the goods. Because of that, the National Farmers Union of Scotland gave me a lengthy and accurate brief. I do not wish to take up much time other than to remind the Minister of the five-point agenda with which the NFU would like him to be armed in the poker games of Europe. It says: (1) The British Government must stand by its anti-discrimination pledges—no second thoughts. There must be no letting up. It goes on: (2) The CAP negotiations must build on reasonably broad agreement on the principle of resource withdrawal in the shape of arable set-aside. (3) The negotiations must also develop constructively the common thread of agreement on the environment, and on the need for permanent measures to compensate for the disadvantages of farming in Less Favoured Areas. (4) Import policy must not undermine sensible CAP reform. The Minister of Agriculture has said that he is 'not going to have land set-aside in Britain so that the rest of Europe can produce more'. He's right. But the logic must not stop there. Land set aside in the EC must not be the green light for imports from other countries either—whether from countries in the GATT negotiations, or from Eastern Europe. The Minister has also said that 'it' is no good raising standards here so that our farmers pay the cost—while others use the old methods and flood our markets with crueller but cheaper food'". I support that. The NFU and the Opposition want action to deal with Britain's £6 million trading deficit in food and drink which, rightly, concerns the Government, the farmers and the British producers and certainly concerns me.

The fifth point says: There must be detailed negotiations on how we would be affected by the detailed introduction of new commodity support arrangements. In other words, farmers must know the results of the negotiations and must not be left to wonder in some kind of vacuum how the negotiations will affect their income. There can be nothing worse for those employed in any industry than to have their incomes drastically reduced for two years on the trot and then be left twirling their thumbs wondering whether at the end of the next year they will still be in business—whether they can continue to be farmers and produce the food that Britain can use. Milk produced throughout Scotland can be consumed in Scotland. Therefore, I agree with the milk producers that there is no need to reduce the production of milk in Scotland.

The Minister of State must make the Minister aware of the state of Scottish agriculture and of its importance to the Scottish economy. I remind him of the disproportionate harm that the MacSharry proposals would cause and seek his assurance that he will bear in mind the Scottish farmers and all those elsewhere in Britain when he represents the interests of the British Government and the British farmer in Europe.

I am as aware as all Scottish farmers that reform is needed. They understand that reform is needed, but they wish to ensure that overproduction is halted and that EC farmers are ready and able to compete in world markets when the Uruguay GATT round is finally resolved. We are also aware of the need to halt the environmental degradation that overproduction brings in its wake.

I understand the desire to protect the small rural communities which rely on agriculture. However, the MacSharry proposals look only in the most narrow, blinkered way for solutions. I offer the Minister the NFU's five-point agenda, of which I hope he has taken note. It will stand him in good stead when he comes to argue against the MacSharry proposals.

7.6 pm

Sir Geoffrey Johnson Smith (Wealden)

I was interested to hear about the state of the Scottish agriculture industry. As a frequent visitor to Scotland I have formed a great admiration for the Scottish farmer's skills, particularly in animal husbandry and the attention that he pays to the production of a crop of whose product I am a not infrequent consumer. I hope that all that goes well.

The problems reflected by the hon. Member for Kilmarnock and Loudon (Mr. McKelvey) are part of the general pattern of agriculture, not only in Britain but elsewhere. The French do not revolt because they have nothing to revolt about. We may not like the fact that they stop exports—they affect some of the exports of my constituency—but they are bloody-minded because they think that they, too, are getting a rotten deal from the CAP. So do we all. That is why during the next few weeks we shall be embarked on considering the extent to which we can change it to the benefit of all.

I congratulate my right hon. Friend the Secretary of State and my hon. Friend the Parliamentary Secretary on their able work. My right hon. Friend is on the right lines. I mean no disrespect to the hon. Member for South Shields (Dr. Clark), but, apart from his whinge against my right hon. Friend's personal qualities, I did not detect that he would do anything fundamentally different were he in my right hon. Friend's shoes. However, as usual when one is in opposition, particularly close to an election, one has to shout and scream trying to pretend that there is a big difference when there is not. We heard nothing particularly constructive. If we were in opposition we would do exactly the same.

I heard the hon. Gentleman at 6 o'clock this morning and he was just as bad then as he was this afternoon. When he was told that what he had said was all very well but a bit negative, he fell back on the 13 wasted years that he has been in opposition. He had not a clue. Agriculture is not like defence—a matter of being privy to private information; it is splattered all over the journals. However, he tried to give as good as he got. He is a fair-minded bloke on occasions—at least he has been to me.

I want to concentrate on my constituency, but before I do I shall make two points. The first concerns something that we can do ourselves. We all recognise that the British farmer is having a rough time. I do not want to dwell on it; we know it to be true. In my constituency we have a sad picture to paint. But there is one thing on which all can agree. There is a tremendous deficit between what we import and what we export.

My hon. Friend the Member for Gloucestershire, West (Mr. Marland) paid tribute to Food From Britain. He said that it is doing a good job. I believe that it is. It promotes the idea both in this country and abroad that we should consume British food, but some people think that what Food From Britain does is enough and that the rest will follow.

No one will buy British food because somebody tells them that it is better than their own. Sometimes they do not believe it and, if they believe it, how can they get hold of it? They would also want to know who markets the food and its price. Twenty five years ago I became the Member of Parliament for East Grinstead. Its name has now been changed to Wealden. At that time I had some interest in advertising and marketing, so I decided to get people I knew in some of the big stores to come down to one of our towns. I managed to get local National Farmers Union branch members to come to listen to what they had to say. Their message, 25 years ago, was the same message as today: "We won't be able to sell your goods unless you market them to us properly." Again and again we hear the cry go up, "We must get down to marketing." Good Lord! How many more years shall we have to wait before we have as up and running and as efficient a marketing system for British products as they have in France, Holland and Denmark?

A few co-operatives have been set up during the last 25 years. Some companies are doing very well. Farmers have got together and specialised, with the result that there are some very good success stories. That is typical of Britain. We hear about good success stories in manufacturing, but I am talking about the broad base. There are not sufficient people who are good enough at organising the sale of their products. I wish my right hon. Friend luck in his negotiations over the common agricultural policy, but I do not believe that if it were modified, as a result of my right hon. Friend's efforts, to suit all our needs, the British farming industry would be able to take sufficient advantage of the improved conditions if its own marketing arrangements had not also been improved. That is one reason why we look forward to some progress being made with the Milk Marketing Board so that it becomes a real marketing institution. I do not believe that that has anything to do with the Government. It has everything to do with farmers and those involved in the food industry.

My right hon. Friend knows that set-aside has been regarded primarily as a restraint on production. That is why it is criticised. People do not like to see land set aside, with someone appearing not to be doing very much with the land set aside and getting paid for it. My right hon. Friend said today that he would like set-aside to be much more environmentally based. I am sure that he is right. The Ministry is due shortly to take over the countryside premium scheme. I hope, therefore, that it will look at the opportunities for expanding the scheme.

The most important problem, however, that set-aside presents us with—I know that my right hon. Friend will relish tackling it—is that Mr. MacSharry must be told that any reform of the common agricultural policy must ensure that set-aside takes environmental factors much more into account. I wish him luck in the negotiations that he will vigorously pursue towards that end.

The ordinary man in the street looks to farmers to combine production of food with care of the countryside. I do not believe that there needs to be any inherent conflict between those aims. I am sure that my right hon. Friend will continue to encourage the reconciliation of agricultural environmental objectives through a combination of advice—which is obviously needed—regulationwhich is also needed—and incentives.

However it may be modified, the common agricultural policy will be the biggest single influence on farming practices in Europe. Some of the funds that are now flowing from the CAP—not always put to as good a use as we should like—should encourage rather than discourage environmentally friendly farming. If my right hon. Friend succeeds in gaining enough support for his efforts, the European Community will set up a framework of support and it will be up to individual countries to decide, within that framework, how they wish to use the funds.

My constituency, Wealden, includes the High Weald which extends beyond my constituency eastwards into Kent. Sussex land is heavy; much of it is clay. Sussex is hilly. There are few big fields. There are lots of hedges that need to be clipped. There are copses and woods. It is a heavily wooded county. It provides a great contrast to many other parts of England. Sussex probably has more trees per acre than any other county. It is not, therefore, the easiest land to farm. In the 18th century the trees were used for shipbuilding and in the iron ore industry. Dairy farms predominate. Farmers grow some wheat and barley for their cows. Many of those farmers have gone out of business. I understand why. The quota system did it; there was a milk glut. Other countries have had to face up to that problem.

Some of the farms have been split up into smallholdings. They are used for a bit of horticulture and, increasingly, for a bit of "horseyculture"—and the horses do not half make a mess on the ground! There is also the livestock. Some farmers have beef cattle, some for breeding purposes or for showing purposes. A few wealthy people do that. It is a drain on their resources. Others do it on a very small scale. It is a hobby for local gentleman farmers. That is what they like to do with their few acres and it is of some benefit to us. Many farmers are now engaged in rearing sheep on a commercial basis. I do not know how long that will last.

All this takes place in an area of outstanding natural beauty. Not all of it is beautiful, but the countryside as a whole looks attractive. That has not prevented diversification. The Government have encouraged farmers to diversify. One finds that a barn has been converted into a smart office where a chap is working hard on his word processor; he has a nice set-up with computers.

I visited one farm that obtained permission to convert a barn for use as a place to pack boxes. Voluntary workers help to supervise mentally handicapped people to pack the boxes. That provides them with some work and pocket money. They are extraordinarily good workers. That enlightened policy is much to be welcomed.

As it is an area of outstanding natural beauty, much of the diversification can take place only in limited areas—close to the towns and bigger villages. It is not surprising, therefore, that incomes have dropped severely during the last few years, with the result that we are now beginning to see signs of dereliction. I do not like to see thistles growing in the fields. I do not believe that the people who own that land have set it aside. I think that they have just opted out; they cannot afford to look after their land. That is worrying. The spread of weeds can have a very serious effect on neighbouring farms.

There is an alternative. A nice piece of land could be cleared. People in London want to play golf, but there is a shortage of golf courses. We have one of the newest and finest championship courses in the land, developed on 250 acres. There are two 18-hole golf courses. I forget how many golf courses there are in my constituency, but there must be about 10. At the last count, 15 planning applications were outstanding. We cannot go on like that. The county has a view about golf courses—that if there is to be such a development it is better for them to be sited not on good farming land, or in naturally beautiful areas, but on the outskirts of towns. There is a limit, therefore, to what can be done in that respect.

We must try to help ourselves to come to terms with the changes in farming, but if the present position persists, farmers in rural areas will not be seen to be working in line with the avowed aim of my right hon. Friend the Minister of a good environmental policy mixed with good farming. Therefore, I should like to make a suggestion, which I know will be regarded as special pleading. The Government recently announced the establishment of a further dozen environmentally sensitive areas, which included one close to my constituency on the south downs. That area is not as tough as areas of Scotland or the Welsh hills but it is hard farming land. My plea is that if the Government want to maintain its environmental quality and ensure that people work it they will consider including the High Weald as an ESA. Such a policy of extensification would avoid food mountains and ensure that our land was properly looked after by farmers who want to work and who expect a reasonable return for their efforts.

I received a letter this morning from a farmer about the MacSharry proposals. He said that there would be preference funding for smallholdings. He believes that the proposals discriminate against the bulk of United Kingdom agriculture. He adds these words, which I ask my right hon. Friend to pass on to our right hon. Friend the Chancellor of the Exchequer: However, there is a recognition that some responsibility for securing fair competition lies with the Chancellor of the Exchequer. To take two examples, the French farmers receive some £90 per acre for set-aside land whilst we receive less than £50. Italian farmers can claim a 50 per cent. grant to buy machinery for conservation uses. Such discrepancies can only be bridged by national funding. I do not know whether that is the answer but, as my right hon. Friend the Member for Selby (Mr Alison) said, in too many cases the playing field is not level enough.

Finally, I should like to mention my friends on the Milk Marketing Board, to whom I pay tribute for their efforts to reform the board's structure. They have told me about the effect that price cuts can have on the dairy sector. The stocking density hurdle would exclude 30 per cent. of dairy farms in England and Wales from receiving any compensation. Since 1983, we have had to reduce our milk output more than many countries that are far more self-sufficient than we are. We have achieved self-sufficiency of 90 per cent., but other countries have achieved more.

I hope that if my hon. Friend the Minister has time he will deal with those points in replying to the debate. If he cannot do so, perhaps he will drop me a line.

7.22 pm

Mr. Eric Martlew (Carlisle)

I always enjoy listening to agriculture debates and especially to Conservative Members, because that is the only time when we do not hear any free market claptrap. We hear about farm subsidies and the social wage. [Interruption.] The hon.

Member for Cambridgeshire, North-East (Mr. Moss) shakes his head. I shall happily give way if he wishes to intervene.

The problem is that Conservatives are not consistent in their policies. I understand that 500 jobs losses have been announced by Bass breweries today. The situation is drastic, but I suspect that we will not hear special pleading for Bass workers from Conservative Members. I accept that we need to keep people on the land. That Conservatives are free-marketeers on everything but agriculture can, at least, be said in their favour.

The milk industry is in a terrible position. We have some of the most efficient dairy farms in not only Europe but probably the world and an effective milk-processing system; so we should have, because we have good climatic conditions and, perhaps with the exception of New Zealand, the best pasture in the world.

Our serious problems have been caused by the deals that have been negotiated by the Government. Milk quotas are not working in the United Kingdom's favour. There has been much debate on the imbalance in food and drink. I think that it was £6 billion last year, or £15 million every day that the Minister has been in office. The United Kingdom is only 86 per cent. self-sufficient in milk and dairy products. We know that the Minister will negotiate another cut in the quota. What will that do to the imbalance? We shall be down to 80 per cent. self-sufficiency, or perhaps less. That will depend on how good he is on the day. I hope that he is better that day than he was today. Milk quotas do not work, and in some ways a bit of market forces might have helped the United Kingdom because we are efficient producers.

Hon. Members have expressed deep concern about the plight of the sheep farmer, especially the hill farmer, on whom milk quotas have a direct effect. A farmer friend—I do have some—said to me, "You realise that as soon as the quota was introduced dairy farmers put more sheep on land that previously was used for cows." We are a major exporter of sheepmeat because of the quota. Hill farmers, who could not change to dairying because their land was unsuitable, are suffering because of such distortions.

I am glad that the Minister does not appear to be accepting a quota system for other products, but how will he deal with our not being self-sufficient? Will we get more milk from France? Previously, the Minister has said that we still have a surplus of dairy products, which is true, but there is not a steady weekly or monthly supply of milk. There is what one calls a flush in the spring—that could upset those who do not understand dairy terminology—which always leads to a surplus. That will be overcome only if the industry has enough confidence to invest in plant to find new milk products to sell.

As there is no confidence in the supply of milk, the dairy processing industry is looking for new ways of selling dairy products. More of our ice cream is being imported from France, not because of the quality of our product but because of the shortage of milk.

When the Minister announced set-aside in June 1988, I accused him of introducing a scheme to pay farmers for watching the grass grow. Little did I know that not only were we paying farmers to watch the grass grow but were paying The Sunday Times reporters for watching somebody else's grass grow. At first, the Minister was straightforward in saying how wrong The Sunday Times article was, but later he started to flannel a little. I am not

suggesting that he would deliberately mislead the House, but I should like to see The Sunday Times reply before offering him my wholehearted support. There are ways of interpreting things, and he was becoming a bit shifty.

The failure of the set-aside policy is a cause of great concern. It is not popular with anyone apart from those people who have horses. In urban areas there is often a great demand for somewhere to keep horses and to use them for recreation, as mentioned by the hon. Member for Wealden (Sir G. Johnson Smith). It might be popular in such areas, but in France I suspect that the horse is an agricultural beast because they eat horses over there.

The set-aside regime will not work and I think that we must accept that. I recently asked the Minister whether he would consider a nitrogen fertiliser set-aside policy, as advocated by Friends of the Earth among others. He turned it down, and I was very concerned that he did so, out of hand. One argument was that it would be hard to police, but the present policy is hard to police if we are to judge by what is happening at the moment. Such a policy would have the advantage of reducing inputs and production and it would prevent the anomaly that exists in some areas whereby nitrogen is getting into drinking water and creating a health hazard. A nitrogen set-aside policy should be considered seriously. It is important and would, I believe, be acceptable to the general public. It is certainly acceptable to the environmentalists, but I accept that it might be difficult to police.

We have talked a great deal today about surpluses, but the reality is that there is not a surplus of food in the world; there is a lack of money. As we cannot get the world's economics right, we are unable to transfer food from the European Community to the areas of the world that need it. There are many problems, because we could undermine farming in some countries, but we must be very careful about reducing production. We must get the world's economics right.

I am deeply concerned about what used to be the Soviet Union. I have not seen the news today—by tonight it may no longer be the Soviet Union. On Friday I shall attend an independence celebration of the Ukranian community in my constituency. That community has been there since the last war and has made a useful contribution to our community. We shall celebrate with it on Friday, but what concerns me is whether the people of the Ukraine and other parts of the Soviet Union will still be celebrating at the end of the winter. I suspect that there will be major food shortages there. I also believe that the Government are doing very little—or nothing at all—to help. It is not a good idea in the short term to send our major retailers there to see how they can set up branches of Tesco and Sainsbury, an idea in which the Government take pride. The way in which those companies make their profits in this country might not be a good idea for the Russian system.

In the short term we must ensure that the Soviet people get through the winter. We must begin to direct food—a lot of food—to that country. We cannot merely talk about it going through Europe. I understand that the Government are putting about £20 million worth of grain into the St. Petersburg—or Leningrad—area to stop the people there killing their animals this winter. That will not be enough. We must launch a major food aid campaign to feed the people of eastern Europe and especially those of the Soviet Union because that would also be enlightened self-interest.

Mr. Frank Cook

Is my hon. Friend aware of the basis on which the west was able to help the eastern bloc countries last year? We learnt on a military tour this year that the basis of food supplies that went from west to east to help to sustain the people throughout the winter was from military stocks that had been stockpiled to feed the armies if they had come westwards. But because the armies were returning to the Soviet Union, we were able to pick up the supplies and send them back. The stocks are no longer there, so the point that my hon. Friend makes is even more starkly visible.

Mr. Martlew

That was a one-off which cannot be repeated. I have been to the Soviet embassy in London to talk over this issue, which is of great concern. I hope that when he replies to the debate the Minister will say that the Government are taking note of the problem. We have massive surpluses and the Soviet Union will have massive shortages. Let us ensure that our surpluses get there.

I understand that some food aid organised through the European Commission was produced in the United Kingdom this summer. When the German haulage company came to collect it, it was told that there was no hurry because the food had a nine-month delivery time scale. I suspect that the food is still in a German warehouse. I hope that the Government will take the issue seriously.

Let us return to the MacSharry proposals and the Government's attitude to them. The Minister told the House what a good deal he has made. Some of us were sceptical and we were right to be so. I wonder whether the Minister carries on in the Council of Europe in the way that he has in the Chamber. If so, he makes me ashamed to be British because of his childish performance of a type that we rarely see. I asked a civil question during the previous agriculture question time about the Milk Marketing Board and he leapt into a tirade of party political propaganda which did not go down very well with the dairy farmers. If he behaves like that, it is little wonder that our farmers are worse off today than they have been at any time since the second world war. The sooner that we replace the Minister with my hon. Friend the Member for South Shields (Dr. Clark) the better—the grasp of the subject that he has shown today and the cool way in which he dealt with the nine or 10 interventions from the petulant Minister would stand us in good stead. I am sure that my hon. Friend could go to Brussels to negotiate a good and sensible deal for the British farmer.

7.36 pm

Mr. Michael Lord (Suffolk, Central)

I am pleased to take part in this important debate, and although I shall not take up all the points made by the hon. Member for Carlisle (Mr. Martlew), his concern for the Soviet Union is a matter with which I shall deal in a moment.

I congratulate the Minister on the very tough stance that he has taken on this difficult issue. We know that he is battling hard and that he understands all the problems faced by our farmers. He has our support for all that he is trying to do. Having said that, I believe that the MacSharry proposals are absolutely disastrous. They discriminate against the large and efficient farmers—who, it has been generally acknowledged today, are our farmers. The proposals promote and preserve the small and the inefficient, and they are totally unacceptable.

Rev. Ian Paisley (Antrim, North)

Will the hon. Gentleman remember that there are efficient small farmers in Northern Ireland—they are the best in the United Kingdom—and that in any overall settlement they must also be kept in mind?

Mr. Lord

I appreciate the hon. Gentleman's point, but there are small farms and small farms. When we talk about small farms in Northern Ireland, we arc not talking about the small farms that are being propped up in some parts of the European Community. Many small farms in Northern Ireland would be regarded as quite large by Mr. MacSharry.

We must set the debate in context. As many hon. Members have said, farmers' prices are down and falling even further, but costs are up. Several hon. Members have said that farmers' profit margins are now the lowest since the second world war, and there is absolutely no doubt that the prospect of bankruptcy is very real for many farmers.

The effect of that on our rural economy would be disastrous, not only for the farmer, but for all the other services which depend on them. The providers of fertiliser, the feed and corn merchants, the village shops and the whole rural economy are now in grave danger. My constituency in the east of England has very few large industries and depends enormously for its livelihood on farmers and the farming industry.

The last thing that I want to see is the kind of dereliction about which we often speak, but which many of us do not believe could actually occur. However, I suspect that there are hon. Members in the Chamber today who are older than I and have seen derelict land in this country. Not so very long ago, farms in East Anglia were almost given away and land could be rented for next to nothing. We do not want those bad old times to return.

I feel very strongly about the MacSharry proposals. They are children of the CAP and I believe that the CAP is the real problem. I am sure that my right hon. Friend the Minister of Agriculture, Fisheries and Food will battle hard in Europe for us. If he succeeds in defeating many of the proposals that discriminate against our farmers, he will simply succeed in spreading the nonsense more evenly.

I do not believe that the CAP can be reformed sensibly. It is becoming more and more detached from reality. Other hon. Members have referred to the food mountains, storage costs and the problems with set-aside, quotas and Euro-oaks to which my hon. Friend the Member for Gloucestershire, West (Mr. Marland) referred.

I am quite fond of trees. In fact, I am president of the Arboricultural Association. Although there are many nonsenses in Europe, I can assure the House that our English oaks are not in danger from Europe. Indeed, they are perhaps one of the few things that are not. However, I believe that the CAP must be abandoned and an entirely new system must be devised.

The CAP was never going to work with 12 different nations with different cultures, languages, agricultural systems, markets, climates and soil types. How could one system, one inflexible framework, ever serve all those nations? It is not surprising that we now have grain mountains and wine lakes.

Pursuing the wine analogy for a moment, there is a television programme entitled "The Last of the Summer Wine". Of the three gentlemen who feature in that programme regularly, one is called Compo, another is called Clegg, but I cannot remember the name of the third. [HON. MEMBERS: "Foggy".] Thank you.

I have not watched the programme very often, but, as far as I can recall, those gentlemen specialise in putting together at the beginning of the programme some quite absurd proposal. They then spend the rest of the programme trying to make it work, while the audience dissolves in laughter. That is what is happening in relation to the CAP. We are trying to make the impossible work, and it is now becoming pure farce. Pure farce may be entertaining in the Whitehall theatre, but it is not entertaining for my Suffolk farmers. They have now had enough.

Some people say that the CAP is the flagship of Europe. There are those of us in this place who know what sometimes happens to flagships—[Interruption.]That was a joke against myself. There can be little point in continuing the sad and expensive experiment of the CAP. which, as we have heard, is taking up two thirds of the Community's budget.

The hon. Member for Carlisle referred to the problems of the Soviet Union. It would be madness if we tried to impose on our 12 nations the kind of command structure that existed in the east and which was so rigid and created problems for food production and distribution, just when those eastern countries want to participate in our agriculture and trade. How could they join then? How would such a system work? I believe that it would not work very well.

The CAP has now become regimented. Almost all Ireland's production is geared to intervention and not to sensible markets or people's needs. Instead, it is geared to serving the artificial framework that we have created. I am not advocating a totally free market in agricultural products worldwide. That could never happen, because Governments could never reconcile themselves to such a market—nor should they. I also believe that the idea of world food prices is a myth. We often talk about the real or world price of food, but that is nonsense. Governments will always interfere with food production for a variety of reasons, some of which are good and some bad.

Accepting that agricultural prices will always be to some extent artificial, I suggest that we should scrap the CAP in its entirety. We should allow individual nations to deal with their own farmers and agriculture in the way that they see fit. My right hon. Friend the Member for Selby (Mr. Alison) has already referred to the value of deficiency payments and the way in which we used to do things in this country a few years ago.

We should also construct sensible international agreements for trade in agricultural products between all nations. Finally, we should build into all those agreements the very real need to look after the third world, and that includes its immediate needs in terms of hunger and the longer-term needs of agricultural stability. That is part of the picture.

I am certain that the days of the CAP are numbered. How long will it take for those responsible for it to recognise the truth? I wish my right hon. Friend the Minister well in his negotiations. He knows just how much is at stake for our farmers. He, as Minister of Agriculture, Fisheries and Food, should be given back the responsibility for our farmers. I urge him to consider the fundamental changes that I have suggested, for the sake of the long-term future and stability of this vital industry.

7.46 pm

Mr. Ieuan Wyn Jones (Ynys Mon)

I listened with great interest to the views of the hon. Member for Suffolk, Central (Mr. Lord) about scrapping the CAP. He said that we should allow our Parliament to decide policy for our farmers. However, he must recognise that we are debating the future of the CAP when European integration is to be considered at the intergovernmental conference at Maastricht next week. This is an appropriate time for us to discuss the issue, because our farming industry has long regarded Europe as its marketplace. Since 1973, decisions affecting the industry's future have increasingly been taken on the European stage.

I have no hesitation in claiming that farmers in general are much more knowledgeable about the European debate than any other sector of United Kingdom industry. Farming politics have for so long been dominated by issues such as the green pound differentials, ecus and the merits or otherwise of the European monetary system and monetary compensatory amounts. I remember as far back as 1976, when the debate about whether sheepmeat should come into the Community's sectoral structure, the sophisticated and mature way in which farmers considered the arguments. Whatever the public at large have felt, farmers have never doubted that we needed to be at the heart of Europe. They led the debate in 1973 and in 1976.

Many of the issues that we have debated in the past 20 years have centred not on whether we should be moving towards greater European integration—that has always been understood in agriculture—but on creating a level playing field between farmers in Wales, Scotland, England and Northern Ireland on the one hand and our counterparts on the European mainland on the other. That is why the arguments about the green pound and MCAs were so significant and why eliminating differentials became a dominating issue.

We in Plaid Cymru have always argued, within the European context, that Welsh farmers need a specific and clear voice in negotiations. Our farmers are aware that small countries in the European Community, such as the Republic of Ireland, have a direct voice in the Council of Ministers—the decision-making process—while we have none. They also have many more Members in the European Parliament than we have.

As I said during Welsh questions on Monday, we very much welcome the initiative of the Secretary of State for Wales in going to Brussels to talk to Commissioner MacSharry, but we fear that the ultimate decision about the negotiations will be in the hands of the Minister of Agriculture, Fisheries and Food. It is not possible for the right hon. Gentleman to present with justice the case for the differing and sometimes conflicting interests of the farmers in each country or region of the United Kingdom.

I shall concentrate my remarks on the parlous state of the industry in Wales—even without the cuts proposed by the Commission. Aggregate farming incomes in Wales at current prices dropped by 23 per cent. in 1990. That followed a drop of 18 per cent. in the previous year. The 1990 figure was 25 per cent. below the average for the period 1981–85. Gross profits declined during a period of escalating costs, thus eroding a weak capital base.

Dr. Peter Midmore, of the economics department at the University College of Wales, Aberystwyth, predicts that, if current trends are not reversed, by the turn of the century 12,000 employment opportunities in Welsh agriculture will be lost and that a further 12,000 jobs will go in the ancillary industries. That is the measure of the catastrophe that faces rural Wales. A disaster of monumental proportions is staring us in the face.

Let us remember that rural Wales dies without agriculture and that agriculture dies without support. The relationship between agriculture and its ancillary and dependent industries on the one hand and our rural communities on the other is profound. This is not about statistics; it is about people, their families, homes, schools, village shops, community centres, youth clubs, rural societies and all the other organisations that comprise rural life and make it such a rich tapestry. All that is under threat. Our whole way of life is in jeopardy. Wales particularly faces a threat to its language and culture. That principle at least—I say "principle" because I shall come to the detail later—is recognised in the Commission's plans. We need to keep people on the land if we are to maintain the fabric of rural society. Unfortunately, that principle was noticeably absent from the Government's response.

Let me make one thing clear. I am not saying that Welsh farmers, any more than any other sector of industry, want state handouts simply to prop up an ailing economy. However, they do say that they are entitled to support to take account of the special difficulties that they face in terms of soil quality and climate. There is a vision of farmers living a life of luxury on handouts from Brussels. That may be true of some, but the vast majority of the farmers whom I and my colleages represent—the small or medium-size family farmer—have faced considerable difficulties in the past two or three years and some even face ruin.

On the hills of Wales, the reality is not of vast profits, but of simply eking a meagre living from shallow soil in an inhospitable climate. On the hills of Wales, there are no alternatives to sheep production and, even on the better land, dairy farmers are disposing of their milk quotas in an effort to improve their cash-flow problems. They are cashing in on a valuable capital asset simply to reduce an ever-increasing overdraft. That can be only a temporary respite.

That is the reality that we bring to this debate—and I make no apology for arguing as strongly as I can, using every line of argument I can muster—that the Secretary of State for Wales has to present the case for Welsh farmers even if that puts him in conflict with his right hon. Friend the Minister of Agriculture, Fisheries and Food. The industry expects no less than that tonight.

In the dairy sector, I note that quotas are to remain beyond 1992. It would be helpful if the Commission could tell us how long it envisages the quotas remaining in operation. I am told that they might remain until the year 2000. Perhaps the Minister will deal with that point when he replies. I support plans to ensure that there are no cuts in the quotas of the medium-size and small farmers, provided that the Government establish a fully operational cessation scheme. Any quota cut would also take into account the self-sufficiency in dairy products of each member state.

It is recognised that margins in the beef sector are low. That is an argument for reducing the intervention mechanism and replacing it with a system of more direct support. However, although I am happy that the Minister is prepared to fight the Commission in discussions, I must advise him that if he loses that argument and the price is reduced by 15 per cent., as is envisaged in the current proposals, the phasing-in of stocking rates should follow the phasing-in of compensation payments in support of the beef special premium. As my Liberal Democrat colleague the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) has said, the greatest difficulty is in the sheep sector. The Commission has given a quota figure to qualify for support of 750 for the less favoured areas and of 350 elsewhere, but that is far too low. Those figures discriminate against Welsh and Scottish farmers. They should be increased to at least 1,000 and 500 respectively and should apply to each partner, not per holding. That is the issue that discriminates most against Welsh farmers. It must be changed.

We support the idea that farmers should be given proper retirement schemes to release land for their successors or for use in conservation schemes where appropriate. However, there appears to be some confusion in the Commission's proposals. A literal reading of the text of the proposals suggests that the scheme would assist farmers in retirement only in cases where, if they left land to their successor, that would increase the area of land that the successor would take over. That seems clear enough —the holding would have to be amalgamated with another before the retiring farmer could benefit. However. when the Commission was asked to explain the rationale behind that, it claimed that the scheme would operate in cases where members of the family took over the existing holding.

I ask the Minister to seek clarification on the point because it is vital that the scheme operates for the benefit of families in the way I have just described. The scheme should not apply only where there is amalgamation. Far too many farms in Wales have been amalgamated in recent years. We want to maintain the fabric of our rural society and our small and medium-size farms, provided, of course, that they are viable units, because that means that we can keep more families on the land.

We also support the environmental action programme which encourages farmers to use production methods that do not affect the environment. That is important in Wales where stocking ratios have to be reduced. In that regard, I renew my plea to the Secretary of State for Wales that the whole of my constituency should be designated an environmentally sensitive area, given its unique network of wetlands, marsh and other wildlife habitats. I know that the Secretary of State has included Ynys Mon on his short list and I urge him to include us in his final selection.

I hope that my short speech has demonstrated what is really at stake for Welsh agriculture in this debate. We are talking about sustaining a viable industry in rural Wales that cannot survive without support. We fear that the Government regard the whole exercise as one of cutting support across the board—that has been the thrust of the Minister's attitude to reform from the outset—but that would damage the interests of the farmers I represent and the communities in which they live.

I remind the Minister of his speech to the annual conference of the National Farmers Union earlier this year when he said: We must stop these proposals in their tracks". The right hon. Gentleman has failed to do that and a second round of proposals is now on the table. I cannot imagine that they will be torn up so that we can start again. We are not in that position. We want the Minister to enter the negotiations positively and to take his right hon. Friend the Secretary of State for Wales with him if necessary. If the Government fail to do that, they will not only pay a heavy electoral price, but the interests of the communities that we represent will be damaged.

7.58 pm

Mr. David Harris (St. Ives)

One point on which I agree with the hon. Member for Ynys Môn (Mr. Jones) is that farmers, whether Welsh, English, Scottish or Northern Irish, are extremely well-informed about all things European as they affect the agriculture industry. I think back to the days when I was first a Member of the European Parliament some 12 years ago. I could get away with murder when I spoke to local National Farmers Union branches. I certainly cannot do so now. When I speak to my NFU branch this Friday I shall be well aware that I shall have to be careful of the facts as I present them and the views that I express. As the hon. Gentleman said, farmers are now extremely well informed, and that is all to their credit.

The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) spoke on behalf of the Liberal party. I draw attention to the amendment that he and several of his hon. Friends have tabled and particularly to the idea of a 10-year plan. The amendment says that the Liberal Democrats want to look 10 year ahead so that farmers can approach those 10 years without worry. O that it were so easy! The hon. Gentleman has great Welsh charm, but he will not con the agriculture industry in Wales, England or Scotland with such a simple solution.

Mr. Geraint Howells

rose—

Mr. Harris

I see that the hon. Gentleman is anxious to intervene, so with the greatest pleasure I will allow him to do so.

Mr. Howells

With respect, does the hon. Gentleman agree that the majority of farmers in his constituency and mine and in the rest of Britain would like to have their confidence restored? Does he accept that one way in which that can be done is to produce a 10-year plan to ensure that the industry knows exactly which way it is going?

Mr. Harris

Of course, the hon. Gentleman's farmers, my farmers and the farmers of every right hon. and hon. Member would love to have their confidence restored. I agree that there is a lack of confidence. But what on earth does the hon. Gentleman suggest should be the basis of that 10-year plan? A few moments ago the hon. Member for Carlisle (Mr. Martlew) said that he did not know what the position in the Soviet Union would be by the end of t he week. None of us does. Can anyone build a 10-year plan that has any meaning whatever without knowing, for example, what the structure of the European Community will be at the end of the decade?

The hon. Member for Ceredigion and Pembroke, North does not have a clue what the structure or mechanisms of the European Community will be by the end of the decade. Of course he does not. Yet those are vital ingredients in planning the future. Does the hon.

Gentleman really want a 10-year plan such as the Soviet Union used in its approach to agriculture? I doubt it. The hon. Gentleman shakes his head. Of course, he does not. The amendment is a bit of Liberal Democrat connery. I do not think for one moment that his farmers or those of any other hon. Member will be taken in by it.

However, the hon. Member for Ceredigion and Pembroke, North is right to say that there is a lack of confidence in the future. Despite the difficulties in foreseeing the future, the Government must do something to restore confidence. I, or any hon. Member, would be a fool if we tried to pretend that everything was wonderful in agriculture. We know that all our farmers are going through one of the most difficult periods that the industry has faced, certainly within the memory of most hon. Members in the Chamber today. The difficulties are enormous. We all know about the pressure on incomes. Farmers are leaving the industry. Oh that they were not! But any party which holds out the prospect, as the Liberal Democrats seek to do, that no one would leave the industry in the next few years if this or that panacea, a 10-year plan or whatever, were implemented, is not being honest with farmers. Above all else, we must be honest with the members of the industry.

In these changed circumstances, I was heartened to read in the current edition of the NFU magazine British Farmer an article by the President, David Naish. It said: Traditionally the NFU has devoted its efforts largely to maintaining UK and EC support for our members as producers. Now, with the launch of our 'Food from the Countryside' initiative, we are looking increasingly to promote your interests"— that is the farmers' interests— as sellers in the market-place. This is an important change of emphasis. The NFU was right to make that change of emphasis. Although better marketing is not a panacea, it is undoubtedly a contribution to helping our farmers. That has been a recurrent theme in the debate.

I was delighted with the Ministry of Agriculture's document "Our Farming Future", which was published a few weeks ago. I was particularly pleased with the pledge

that the Government intends to offer Group Formation Grants to encourage the establishment of producer marketing groups". As we know, some £5.4 million will be allocated for that purpose over the next three years. I hope that there is a good take-up of that money. Indeed, it is one way in which we can give back some confidence to the industry.

Another recurring theme of the debate has been environmentally sensitive areas. The hon. Member for Ynys M00F4;n wanted the whole of his constituency to be designated an ESA. Some years ago I served on the Standing Committee which considered the Bill that introduced the concept of ESAs and I was quick to realise the potential that they offered.

Dame Elaine Kellett-Bowman

The hon. Member has gone already.

Mr. Harris

Yes, indeed, he has gone already.

I was anxious that part of my constituency, Penwith moors, should be designated an ESA and I was delighted that it was part of the first wave. There is a proposal to extend that ESA and I hope that it will be considered sympathetically by the Government. I understand that extensions of existing ESAs are to be decided in the near future. Perhaps my hon. Friend the Minister will be able to give us some information on the timescale. I am talking about not the creation of new ESAs but the extension of existing ones.

However, I will speak about the creation of new ESAs. The Isles of Scilly, which are also in my constituency, have made a case to be designated an ESA. The interest that is being shown in the concept is a tribute to the Minister, who pioneered the idea of ESAs and persuaded the European Community to adopt it. It is interesting that so many areas now see designation as an important aid in correcting the present position in agriculture.

The impact of imports from eastern Europe was touched on briefly during the debate. I have dropped a note to my right hon. Friend the Member for Blaby (Mr. Lawson) telling him that I intended to make a passing reference to him if I was able to catch your eye, Mr. Deputy Speaker. In his speech in the historic two-day debate on the European Community before Maastricht my right hon. Friend said: The Community should be devoting much more attention to what it can do to open its markets to the produce of those countries,"— he was referring to eastern Europe— especially their farm produce."— [Official Report, 21 November 1991; Vol. 199, c. 468.] I nudged my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). She immediately took the cue and, being a bolder person than I, interrupted our distinguished colleague and took him to task.

Of course we must help the countries of eastern Europe—they are in a desperate state. However, it should not be done at the expense of our farmers. I feel very strongly—the hon. Member for Carlisle mentioned this—that the right way to approach the issue is to make aid available from the European Community and partly from this country, so that the countries of eastern Europe can help feed themselves and help feed the Soviet Union. Opening our doors to eastern European agricultural products would be wrong and would be to the detriment of our hard-pressed farmers. I hope that the Government will take that message to heart.

Dame Elaine Kellett-Bowman

There has never been a flow of goods from eastern Europe to us—the flow of goods has always been to Russia. However, eastern European countries are so short of hard currency that they cannot sell food to Russia, which has no hard currency. If we supply them with hard currency they can send food to Russia and our farmers will not be harmed.

Mr. Harris

I could not agree more.

Finally, I join all those hon. Members who have congratulated the Minister on his approach to MacSharry. When one strips away all the flummery from the other side, there is little difference between us in our support for his approach on that issue.

Like other hon. Members, I came with a list of issues provided by my local NFU branch. I do not need to go through them because my right hon. Friend the Minister dealt with them in his opening speech. I was especially reassured about what he said regarding the so-called partnership rules.

8.11 pm

Mr. Martyn Jones (Clwyd, South-West)

About two weeks ago I attended the annual general meeting of the Cymdeithas Defaid Mynydd Cymreig Dinbych—the Denbigh Welsh Mountain Sheep Society—held in Pentrefoelas in my constituency. They naturally took the opportunity to voice their concerns about the present state of farming generally, but especially about the problems of livestock farming in the difficult conditions of the Welsh hills, and I know of those problems. I am sure that other hon. Members will also be aware of the loss of the sheep variable premium and the problems with interest rates and prices.

Since 1980 farm incomes have fallen overall by 39 per cent. It is fair to say that farmers in constituencies such as mine have borne the brunt of such falls. In markets serving north Wales, recent prices for sheep were the same as they were 10 years ago and therefore do not allow for inflation.

I have here two British Wool Marketing Board payment advice slips for one of my farmers—one from 1980 and one from 1990. For every grade of wool the pence per kilo figure is higher in 1980 than in 1990. If we take total inflation into account, it should not be surprising that farmers are going bust and that six farmers and 16 farm workers have left the industry every day since the Government took office.

Farmers would not be quite so annoyed if they did not find the lamb that they received perhaps £15 for being retailed in a local supermarket at £80, albeit in nice, neat, little packages. It is hardly surprising that they should be unhappy at other problems such as the delay in paying ewe premium—which in my area is undoubtedly due to the closure of the Ruthin Welsh Office agricultural department—the redefinition of the less favoured areas, the increase in the MLC levy and, last but not least, the MacSharry proposals for the reform of the common agricultural policy. It is generally acknowledged that the CAP desperately needs reformation—65 per cent. of all EC funds are spent on it and, of the money spent, most is spent on the richest farmers or on storage and export restitution.

What are the Government doing to reform the situation? In the Orders of the Day the take—note motion purports to suggest that the Government have an intention to seek reform of the Common Agricultural Policy which will make Community agriculture more market-orientated and efficient putting more emphasis on environmental care and reducing the cost—words with which I cannot disagree. However, is not the reality somewhat different?

How can we stand any chance of changing the system without tabling alternative proposals—a suggestion turned down by the Government in their evidence to the Select Committee of the other place? Surely we should be giving specific alternatives to the proposals—changes to MacSharry—for example, to the headage limits proposal which is terribly damaging to farmers in my constituency.

Perhaps the Minister has the priority to remove discrimination but the important question is how. Why does he not propose a fundamental change? Why not argue for repatriation of substantial parts of the policy within overall production control targets?

Many of my Welsh mountain farmers thought that the MacSharry proposals would help them. They considered themselves to be small farmers. It is fair to say that they now realise that in EC terms they are not small. They are not small in hectarage or in headage terms, but they are very small in profit and they are desperate for a change which would allow them and their families to farm and to have a future in farming.

Other hon. Members have already referred to the meeting of the Select Committee this morning. We heard about the horrendous balance of trade deficit that this country has, not in manufactured goods, but in food that we can grow ourselves, such as eggs. For example, we heard that mushroom imports have increased from 6,000 tonnes to 34,000 tonnes in the past five years.

We need a level playing field and support for our producers. The Minister pretends that he cannot reveal his hand in the negotiations but it is not playing into the hands of other negotiators to reveal alternatives. This evening we have heard about mushrooms. The Minister is treating our farmers to the mushroom system—keeping them in the dark and dropping them in the manure.

Our EC partners do not seem to worry about giving alternatives. France is putting its views to other members. We should tell the Community that the "common" should be dropped from a CAP policy which cannot possibly cope with agriculture as diverse as that of Sweden and the almost subsistence agriculture in eastern Turkey.

If we took the "common" out of the CAP, we could ensure that our farmers would not be penalised but would be protected and would have a level playing field and a future.

8.17 pm

Mr. Malcolm Moss (Cambridgeshire, North-East)

It is a pleasure to follow the hon. Member for Clwyd, South-West (Mr. Jones), with his beautiful constituency. He has the mountains and hills of north Wales and I have the flattest part of Europe if not the flattest place between here and the Urals.

Farming has faced many challenges and never more than the list that we have heard today. Like any industry, agriculture must take account of international develop-ments in this rapidly changing world. Markets are growing more dynamic, more demanding and less protected. They will become even more influential in what has been a rather over-managed sector of the economy.

There are three elements of the international dimension, some of which have already been touched on in the debate: the general agreement on tariffs and trade round of negotiations; the problem of produce from eastern Europe, which my hon. Friend the Member for St. Ives (Mr. Harris) brought to the attention of the House; and reform of the common agricultural policy, the subject of tonight's debate.

In my opinion, GATT must come first. I was delighted that the Minister took the same line in his excellent speech. There are two reasons. First, GATT is a more comprehensive negotiation than MacSharry, because it takes into account the products of southern Europe which are not covered by the MacSharry proposals. Secondly, it is believed that we are more likely to get a reduction in support price, which is closer to our model and not that of MacSharry.

It is recognised by the House, the people—certainly those involved in argiculture—and by the EEC that reform of the CAP is necessary. The United Kingdom contributes £3.5 billion to the CAP and we are somewhat puzzled when our farmers ask us what they get in return. There is no ready answer. It is certainly not "common" in the sense that it applies equally everywhere. My hon. Friend the Member for Gloucestershire, West (Mr. Marland) drew attention to the huge subsidy of £8.5 billion provided in France. In Germany that subsidy is worth £3.2 billion. Those figures compare with the support provided in the United Kingdom of just under £1 billion.

The CAP is full of hidden national subsidies and my farmers may well ask where is the so-called level playing field. We heard the amusing story about mushroom production in Ireland—there was a hint of a hidden subsidy behind that production. Given the figures of national support for agriculture in different countries, it is not surprising that our farmers sometimes attempt to battle on an uneven playing field.

It is also important to consider the various factors at work in the United Kingdom, for example, cost recovery, which is expected by the Treasury. On poultry, the full cost recovery for salmonella inspections and the inspections of abattoirs is required under our rules, but not in any other Community country.

Through our negotiations we must not impose on agriculture a structure that reduces the ability of farmers to compete effectively. That might mean large increases in the CAP expenditure and could increase the probability of trade disputes.

The MacSharry proposals have been debated at length today. They are utterly opposed by the Conservative party and by my farmers in north-east Cambridgeshire. Those proposals are anti-economic because they penalise the larger and more efficient farm. The average size of a farm in this country is 69 hectares; in Cambridgeshire it is 80 hectares. There are about 6.8 million farmers in Europe, but the average farm is only a paltry 16.5 hectares. The MacSharry proposals will discriminate against British farmers, and certainly against the farmers of my constituency.

The proposal for set-aside presumes three size bands—up to 20 hectares, 20 to 50 hectares and more than 50 hectares. The set-aside limit will be 15 per cent., which is the rate of the existing scheme. That means that, on average, my farmers will have to set aside 4.5 hectares, for which they will receive no compensation. The exemption from set-aside on cereal holdings works out at 5 per cent. throughout the United Kingdom as against 40 per cent. in the Community. Uncompensated set-aside for cereals works out at 54 per cent. for the United Kingdom and 27 per cent. for the Community, and the cereal area to be set aside amounts to 14 per cent. of the farmed area in the United Kingdom as opposed to 9 per cent. in the Community.

The MacSharry proposals will hit north European farmers, not those of the south, because products such as wine, olive oil and cotton are not involved. MacSharry also proposes to create a class of farm pensioners, technically in receipt of social security, in order to maintain existing social and economic structures. Those proposals would cost a fortune—about 4.5 billion ecu a year more than the present overblown budget. They do not establish a clear link between support and environmental enhancement.

The arable farmers of north-east Cambridgeshire expect the Minister to negotiate CAP reform so that they are not discriminated against. They also want set-aside to be voluntary. It makes little sense to set aside some of the best-quality land in the whole of Europe if we want to retain that land in production for many years to come. They want a progressive reduction in the level of prices and other support at a pace which will enable efficient farmers to adjust. They also believe that the targeting of direct aid should be selective and they want transitional compensation.

The developments on GATT and CAP reform will increasingly force farmers here and elsewhere to be aware of, and knowledgeable about, market conditions. The negotiations on CAP reform should resist policies that place unnecessary constraints on the industry.

Many producers are exploring new ways in which to organise and co-operate. They are helping to build better ties with customers and they are looking to add value to their produce. However, as has been said, EC farmers are already competing successfully for our home market. The imports of temperate foodstuffs significantly exceed our exports of such products to EC partners.

The most forward-looking farmers are already responding to changing market needs by providing quality, volume and continuity of supply. However, one fundamental difference, which was highlighted by my hon. Friend the Member for Gloucestershire, West, between this country and our EC partners is the small percentage of United Kingdom farm production that is marketed through co-operative and other types of collaborative organisations.

I was encouraged to read in the publication "Our Farming Future" that the Ministry has set up a market task force to help to define and identify product areas for new and expanding opportunities. My hon. Friend the Member for St. Ives mentioned the group formation grants—about £5.5 million will be set aside—and they will help farmers get into groups to consider their marketing practice. That is extremely welcome and those grants will be readily taken up by farmers, certainly by those in my constituency.

Whenever I speak in a debate on agriculture I always refer to the vexed question of the potato industry. I am grateful to the Parliamentary Secretary for the tremendous help he has provided to my farmers in the past 18 months by ensuring that the seed potato industry produces products of quality that farmers will continue to want to buy in the future.

The potato industry is big business in this country. Cambridgeshire produces 9 per cent. of the total crop. In the United Kingdom 98 per cent. of households eat potatoes. Production is worth £500 million at the farm gate and with added value potatoes are worth £2.5 billion in retail sales.

Unfortunately, there are still misconceptions about the role of the Potato Marketing Board. It operates a commercially free market. There are no restrictions on imports from the Community, but the board maintains a high level of home market penetration, and that has helped to keep imports down. It is also argued, however, that far too much money is siphoned off to the producer and not passed on to the consumer by cost savings. The producer share of the final retail price on loose potatoes is 33 per cent., on pre-packed potatoes it is 28 per cent. and for frozen and chipped potatoes the share is 10.5 per cent. and 2 per cent. The import penetration of processed potatoes is not due to the United Kingdom price of potatoes, since the potato itself represents a small percentage of the final price.

Processors sometimes criticise the Potato Marketing Board because they believe that it places them at a disadvantage. They argue that if there were no supply management there would be surpluses and lower market prices. However, would the retail price to the consumer differ? If we had a lower market price the people who would suffer would be the farmers of my constituency.

The Government keep a close eye on the Potato Marketing Board. They set down three conditions that the board had to implement by the 1990s. First, they asked for non-growers representation in market management decisions. That has been brought about by the joint consultative committee, which has proved effective. Secondly, the Government asked for more flexibility in supply management to assist the development of new market opportunities and, through the introduction of the leasing system and research and development, to expand the market. That, too, has been honoured by the board. Thirdly, the board was asked to reduce its administration costs, which it has done by more than £1 million.

Do we need an EC regime for potatoes? The publication, "Our Farming Future", says that the Commission has said that it would like common arrangements in place by the end of 1992. However, it goes on to say: It is understood to favour a light regime to primarily establish common competition arrangements with no intervention. Such a regime would have no place for acreage quota controls or support buying functions as at present operated by the PMB". Those words have struck fear into the hearts of farmers in my constituency, who often rely on potatoes as their main cash crop.

Is the change absolutely necessary given that we already have free trade in potatoes, if we accept that potato markets differ from country to country—nowhere else in Europe consumes the same volume as we do—and if the Committee on Professional Agricultural Organisations principles put forward by our European partners have been accepted by our board? The present system in this country has worked remarkably well for both consumer and producer interests. I hope that, in his negotiations on CAP reform, the Minister will fight strongly for the board and the potato producers of this country.

8.31 pm

Mr. Andrew Welsh (Angus, East)

The hon. Member for Cambridgeshire, North-East (Mr. Moss) has just delivered a thoughtful and wide-ranging speech. I agree with his starting point about the three swords that now hang over our agriculture: GATT, CAP, and the potential threat of eastern European imports. However, I differ from him in thinking that the CAP rather than GATT comes first. I hope that, when the Government make their decisions, they will do so in the best interests of agriculture rather than because they have been pressed or forced to adopt a timetable brought on by the need to agree CAP before GATT. The quality of the end product, rather than the pressure of timetables, is crucial.

I am only too well aware that the future of agriculture and, even more than that, of our rural areas is at stake. If we get it right, the quality and ability of our agricultural industry will allow the industry to take on, compete and beat any of its rivals. But if we get it wrong, there will be a clearance of people from the upland hill and rural areas of this country.

I cannot stress too much the importance of agriculture for Scotland. Its annual gross turnover is some £1.5 billion, it represents more than 14 per cent. of Scotland's non-oil revenue output, and it is a major employer. It has a massive knock-on effect on transport and ancillary industries, spilling over into schools, the provision of shops and the infrastructure of rural areas. I know how a Scottish Minister would negotiate in Europe, and I deeply regret the fact that, sadly, the future of agriculture and our country are in the hands and at the mercy of others who may not realise the importance of agriculture to Scotland's economy.

What do the Government want of agriculture? Where is their plan for its future structure? What future and desired structure do they envisage as the industry approaches the year 2000? Where are the Government's medium and long-term plans toward which the industry is being directed? I look in vain, and see only an industry that faces uncertainty through a maze of short-term, unstructured negotiating stances as we move toward the CAP negotiations.

I certainly do not want the industry to be restructured through bankruptcy. Through its own record, agriculture has shown that it will do what Governments ask it to do. It is about time that we had sensible long-term planning, given the nature of an industry that cannot be turned on and off like a tap. It has enough unknown factors to deal with without the added complexity of a Government with no long or medium-term plans for its future.

Agriculture faces the uncertainties of CAP, GATT and eastern European imports at a time of crisis and weakness. Farm incomes are at their lowest levels in real terms since the war, and are now at half their level of the early 1980s. I am told that farm investment is now half its level of 10 years ago. In allowing that to happen, we are simply storing up problems for the future. Income problems are spread across the whole industry, and every sector is affected. The hills, uplands and lowlands have seen input costs and borrowing levels rise at a time of high interest rates and falling incomes.

That is the background against which the CAP and GATT negotiations are taking place. It places an even heavier obligation on the Minister to negotiate suitable and favourable agreements. It is obvious that the CAP must be reformed, but MacSharry's current proposals are completely unacceptable and must be rejected. Under the proposals, the size, efficiency, success and strength of Scottish agriculture will lead to massive discrimination against Scottish farmers.

The National Farmers Union has detailed just how catastrophic the proposals would be. On cereals, 78 per cent. of the land set aside in Scotland would receive no compensation, compared with 27 per cent. in the rest of the European Community. More than 40 per cent. of the EC's 12 cereals area would qualify for full compensation for price cuts without participation in set-aside, whereas the figure is a mere 7 per cent. in Scotland.

Furthermore, 55 per cent. of European beef herds will have full access to special beef premiums, for all qualifying animals, under the 90 head per annum limit, yet less than 10 per cent. of Scottish herds will have access to the premium. The picture is building up of the massive problems that those proposals will cause in discriminating against Scotland.

There is a new limitation of 90 head per annum on suckler cow premiums and the application of the new stocking density limits. Moreover, 27 per cent. of hitherto eligible animals in Scotland will no longer qualify if those are implemented, whereas, in the EC, the figure would be a mere 8 per cent. The imposition of a limit of 750 head per holding on payment of annual ewe premiums would disqualify 16 per cent. of all ewes in Scotland, yet there would be virtually no impact anywhere else in the Common Market.

All sectors are affected. For example, 72.6 per cent. of EC dairy herds would qualify for full compensation for price and quota cuts, yet in Scotland the figure falls to a tiny 5.8 per cent.

Those examples clearly show that the MacSharry proposals would have a devastating effect on Scottish agriculture, individual farm incomes and the competitive position of our industry. The Minister has given no figures or details whatsoever of how he will negotiate, but he can rest assured that he will be judged on how he delivers on his previous anti-discrimination pledges. The proof of the pudding will be what he delivers in Europe.

Because of Scotland's large herd and flock sizes, together with the proposed stocking density levels, the proposals of 90-head limits would exclude 25 per cent. of male beef cattle and 27 per cent. of suckler cows from premiums. Because of the structure of Scotland's industry, it will be hit much harder than any other part of the United Kingdom. What estimates does the Minister have of the impact of the MacSharry proposals, or even of his own proposals in the document, "Our Farming Future"?

We have a right to know—the Minister should have those figures. He has civil servants to back him up, and the figures should be available. If he does not have them, it is quite disgraceful—[Interruption.]—even though the hon. Member for Lancaster (Dame E. Kellett-Bowman) makes clucking noises. If the Government do not have the figures, the NFU certainly does. The NFU has clearly shown the devastating effect on our industry of the MacSharry proposals.

Dame Elaine Kellett-Bowman

The hon. Gentleman rudely referred to "clucking noises". I was merely expressing my astonishment. If the hon. Gentleman had listened to what my hon. Friend the Minister said, he would know that my hon. Friend made it absolutely clear that he is fighting the proposals hard, but he cannot possibly say at this stage what the result will ultimately be. He made it abundantly clear—and has done through-out—that he is fighting tooth and nail.

Mr. Welsh

It is the ultimate result that worries the living daylights out of me, especially if the Parliamentary Secretary is arguing for us. He could tell us the background effects of the MacSharry proposals and the Government's estimates of those effects on the industry. On that matter, we have had a devastating silence. If the Minister cannot tell us, the NFU, which is doing the Minister's work for him, can. It has carried out a Borders survey and found that the ewe premium would result in an income reduction of £1.3 million from the pockets of Borders farmers. The survey found that there would be a loss of £400,000 on the annual sheep premium. Could not the Government tell us that?

Mr. Salmond

I ask my hon. Friend to think of any reason why detailing the savage discrimination of the MacSharry proposals and their impact on Scottish agriculture would weaken the Minister's hand when negotiating. I should have thought that detailing the effects would have strengthened his hand. How on earth would it affect his negotiating position if he were to give the net farm income figures on the impact of his own proposals set out in "Our Farming Future"?

Mr. Welsh

My hon. Friend sets out the reasons why I wish we were negotiating in Europe, not the Government. If the Minister were to detail the matters, he would strengthen his position in Europe by showing the massive discrimination and harm that would be done to the Scottish agricultural industry. I should have thought that, given the clear unfairness involved, that would strengthen his case when arguing for improvements in Europe. However, the Minister's silence is ominous and unfair on our farmers.

If the Minister does not know the details, I direct him to the NFU survey on the Borders. It showed that the £90 limit would lead to a loss of £250,000 income and the compulsory cereal set-aside proposals would lead to a £2.8 million loss. Does he not know that? Can he not tell us that? Outlining those figures in Europe would strengthen his negotiating hand. The NFU survey shows the devastating loss of a total of £6 million to our agriculture as a direct result of the MacSharry proposals. They would lead to an estimated 135 redundancies among farms in the Borders alone.

The Minister does not know the figures, but I shall tell him what farmers in Orkney found when they made simple inquiries. They found that the proposals would result in net farming incomes falling by an estimated £11,000 or £12,000. They expect that overdrafts would rise an average of about £15,500 upwards. Those are the figures that the NFU found on making simple inquiries. Why do we not hear of the Government's estimates, even of their own proposals, never mind the MacSharry proposals?

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. David Curry)

I have never heard anything as pathetic as this form of statistical necrophilia. The farmers want to know that we are fighting the proposals. It serves no earthly use to recapitulate the damage that they do, and which we know they do. We have as many figures as we need to prove that to Brussels, and we are doing so. The hon. Member for Angus, East (Mr. Welsh) is merely parading the great terror in front of the farmers for his own purposes. I have never heard anything so irresponsible and silly; he does a great disservice to farmers, who rightly put their confidence in the Government, not him, to get it right.

Mr. Welsh

The Minister has brought the matter into the open. He is accusing the farmers of being irresponsible and silly, because the figures I have given are the farmers'. If the Minister had bothered to listen to the submissions made to him or if he cared one iota for the industry, he would know that the figures come from the farmers. I hope that, from up in the Gallery, farmers will notice how little the Government care.

The Minister's talk of statistical necrophilia shows that the Government document is not about our farming future but sadly, in many cases, our lack of farming future because of his lack of action. The proof of the pudding will lie in the deal that he wins in Europe. If he argues there as he does in the House, heaven help our farmers.

The final deal must take into account every sector of an all-industry package, because every sector of the industry is affected. The package must treat the hills, uplands and lowlands as an integrated unit—one complete industry. I look for medium and long-term planning, not the short-termism that we have seen too often, and I shall happily support the amendment.

The Scottish larger herd and flock size must be paramount. Employment and keeping people on the land, in rural districts and in family farms must be paramount in the negotiations. I want us to achieve increased secondary value for existing products, not to lose any of our market share. When we have a £6 million food and drink deficit, it is no use reducing Scottish production to replace it with cheap imports form eastern Europe. There is no sense in helping eastern European farmers while reducing and destroying our own industry.

There should be no major reconstruction of the industry while we are in the middle of a recession, which is the worst time for such a reconstruction. All we would do is transfer people from rural districts to the ranks of the unemployed in urban ones. I do not wish to see reconstruction through bankruptcies. Our environmental goals should be an opportunity for us, not a hindrance. We should not rely simply on price mechanism alone, but reduce output and link it to markets to balance supply and demand. Scottish farmers have shown the Minister how he should negotiate. I hope that he will listen to their submissions, and, for once, do something. I have seen the results that he has achieved on fishing, and I am disgusted by them—I hope that they do not set a precedent.

There is no single solution, no quick fix; we need a balanced package of measures across the whole of agriculture. The future of our agricultural and rural districts is at stake; we simply must get it right this time.

Mr. Geraint Howells

On a point of order, Mr. Deputy Speaker. Earlier in the debate, I was rightly pulled up by Madam Deputy Speaker because I left the Chamber after moving the amendment. I apologise to her, to the Chair and to all hon. Members.

Mr. Deputy Speaker (Mr. Harold Walker)

I thank the hon. Gentleman for that apology.

8.47 pm

Mr. Christopher Gill (Ludlow)

I suspect that I am not the only hon. Member in the Chamber with a sense of déjà vu when we debate European affairs. We have setpiece debates on the European Community budget—we had one in only 90 minutes last week, which worked out at a rate of about half a billion pounds per minute of our debate. The extraordinary factor in such debates is that at the end of them we get the feeling that there is little that we can actually do to alter the course of events. We receive the Court of Auditors' report—a well-presented and well-documented publication—and all sorts of platitudinous noises are made about it, but little action results.

Tonight we are having another ritual debate on the common agricultural policy. We also have many other futile debates on directives and regulations. At all times we have a sense of not being able to achieve any change of direction on how the European Community conducts its affairs. More and more, hon. Members will have responsibility for these matters without the direct authority to do anything about them. Is that the shape of things to come? If we advance to a single currency and monetary and political union, will we, as Members of Parliament directly answerable to the electorate, have responsibility without authority? Perhaps some hon. Members will be quite content to say to their constituents that they understand their problems and sympathise, but that there is nothing that they can do about them as the matter is out of their hands. That prospect does not appeal to me. I entirely reject it because I want to be able to help my constituents to achieve their natural and legitimate aspirations. Above all, I want to help my farmer constituents towards a prosperous future.

Such a prosperous future will not be possible under the common agricultural policy, which is fundamentally flawed and incapable of the satisfactory reform that the Government would like to see. I can certainly see no future prosperity while there is intervention and absurd support for beef under the special beef premium scheme, which is simply a further incentive to produce what the market does not want, either in quantity or quality. There can he no progress while for sheep there are headage payments which simply prop up our less efficient competitors in mainland Europe. Milk quotas which deny Britain the opportunity to be self-sufficient in milk and dairy products are also a hindrance, as are FEOGA grants which accelerate the progress towards overcapacity.

I had hoped that there was some special significance in holding the debate in Advent. It is usually held in October or November and I thought that holding it today perhaps heralded better news or that we were on the brink of a breakthrough or a decision. I was quite sad to hear my right hon. Friend the Minister of Agriculture, Fisheries and Food say that he was prepared to sit in the negotiations for months. My concern about that prospect is the effect that it will have on our erstwhile healthy, prosperous and progressive British agriculture. That period of uncertainty and the postponement of decisions that are vital to farmers will have a debilitating effect on United Kingdom agriculture.

On a more positive note, I remind the House that my right hon. Friend said that he sought the redirection of money and that available funds should be much more centred on the environment. The objective must be to achieve a solution that satisfies the public about the way in which the countryside is preserved and maintained. It must enable farmers to continue to do the job that they are trained and best qualified to do, which is producing essential food for the nation, at a price that the taxpayer is prepared to pay.

I should like to hark back to a comment by my hon. Friend the Member for Cambridgeshire, North-East (Mr. Moss) who instanced how, in other European nations, the amount of money provided by the national Government to domestic agriculture was very much greater than in this country. He gave the amounts per annum, which were: France £8.5 billion; Germany £3.2 billion; and the United Kingdom somewhere below £1 billion per annum.

I welcome the Minister's recent announcement about a new environmentally sensitive area in my constituency which will be known as Shropshire hills. It will be greatly welcomed by farmers and the general public. It holds out worthwhile prospects in that lovely part of Shropshire.

I urge my right hon. Friend to study the interesting proposals by the Royal Institution of Chartered Surveyors. They cover the whole spectrum of agriculture and forestry and deal with the necessity to arrive at a situation where we no longer talk about a common agricultural policy but a common rural policy. I agree with my hon. Friend the Member for Suffolk, Central (Mr. Lord) about the common agricultural policy. The CAP cannot survive because it is totally unrelated to the realities of a free market. I am sure that Opposition Members will be delighted to hear me speak about the free market because they were in some doubt about whether it would be possible for Conservative Members to mention that. I am proud to do so, because it holds out very much more opportunity for resolving our problems than the centralist control of which the Opposition are so fond.

The second reason why the CAP cannot survive is that all practical considerations are subordinated to political expediency. The regime is abstract in concept, political in intent and largely insensitive to practical consequences in a highly practical industry.

8.56 pm

Mr. Alan W. Williams (Carmarthen)

It is a pleasure to follow the hon. Member for Ludlow (Mr. Gill), who launched a scathing attack on the common agricultural policy. I noted that several hon. Members, not only Opposition Members, were highly critical of the CAP and called for urgent reform. We all know about the crisis in agriculture which has been well described by many hon. Members. Yesterday's issue of The Guardian stated: farmers saw their incomes in real terms plummet 21 per cent in 1990 to their lowest position for 50 years. Yesterday, the NFU warned that 1990 figures would reveal a fresh 10 per cent. cut. I do not follow The Guardian's statement about farm incomes being at their lowest for 50 years, because many farmers whom I know now have two cars, quite tidy houses and a reasonable lifestyle. However, during the past three or four years there has been a gross deterioration in farmers' incomes. It has occurred at a time when expenditure on the CAP is again almost out of control and increasing all the time. It poses an appalling dilemma for us all, because more and more money is spent on the CAP but the people at the receiving end do not seem to be any better off. It is a black hole into which the consumer, the taxpayer, is pouring more and more money.

I am glad that, under the pressure of the GATT negotiations, there is now serious talk of fundamental reform of the CAP. We believe in trade. Britain invented world trade when we had an empire 100 or 200 years ago. We were the big trading nation, and even today we are the second largest by way of the percentage of GDP exported and imported—we are second only to West Germany. We believe in trade and in the aims of the GATT negotiations.

If it is possible to free trade in agricultural produce we must strongly support the negotiations. The side effects of the CAP in its present form include the dumping of surpluses on third-world countries, which undermines their economies. Let us hope that we can bring that to an end through GATT.

Under the pressure of the GATT negotiations, the MacSharry proposals have been produced. They have been severely criticised by almost all hon. Members during the debate. I am not quite so hostile to them as other hon. Members are. They have some good features, especially the principle that in dire straits, where there is hardship and cuts are to be made, the broadest backs should carry the greatest burden. The cuts under the MacSharry proposals would fall most heavily upon the very big millionaire farmers—we do not have those in Wales. Furthermore, there would be protection for small farms. That principle is right, for social and environmental reasons, because small farms are more environmentally friendly.

My main criticism of the proposals is that the reforms that they suggest are far too complacent and conservative. I understand that at the GATT negotiations, for example, we may eventually settle for a 30 per cent. cut in export subsidies. The United States initially demanded 90 per cent. If we are to move towards freer trade, all those export subsidies must go, yet in the negotiations we are compromising. The reform is not sufficiently dramatic.

The other aspect of the MacSharry proposals is that the compensation terms are incredibly generous. It is amazing that, although agriculture in general faces cuts, if the proposals were adopted the CAP could cost more over the next seven years than it does now. That is an appalling position.

I do not know whether fundamental reform of the CAP will ever come about. We need to change its structure and I agree with the hon. Member for Ludlow about the need for fundamental reform—indeed, there was a strong contribution to that effect from another Conservative Member. There are too many vested interests among the 12 countries. Perhaps the Franco-German axis is too strong for us on this issue. We must start thinking in terms of reform for Britain—national and regional variations on the best way forward. The interests of Britain are different from those of France, Germany and Italy, and even more different from those of the southern European states such as Spain, Greece and Turkey, which are joining as the Community expands.

Agriculture is different from making videos, cars or whatever. Manufacturers of those can build their factories in Portugal, south Wales or Germany, and the product will be the same. But in agriculture, because the climate, crops and farm sizes are different, we should think in terms of national variations of the MacSharry plan—a national and regional flavour to any reforms.

In our proposals we mention subsidiarity. That is an important principle in all our discussions in Europe—at Maastricht, and so on. We pass on only the powers that need to be passed on. We keep as much power as we can in Britain and we devolve as much of that as we can to our regions. The interests of Wales, Scotland and other regions are different because our geography, the nature of our agriculture and the size of our farms are different.

The principle of subsidiarity means that we should build into the reform of the CAP a large dimension of national freedom. As the hon. Member for Ludlow said earlier, in France and Germany there is substantial national support for their systems of agriculture. We do not have that in Britain and we need to build it into any changes.

The other major factor in reform of the CAP must be the environment. We now realise the importance of hedgerows, of small fields, of clean rivers and of less intensive agriculture. We must move towards environ-mentally friendly agriculture. Over the next 10 years, we need to move away from a production-based support mechanism to a mechanism that supports environmental protection. If the support for farmers—£2 billion or £3 billion a year or whatever we need—went to finance green premiums, to help the environment or to help less intensive agriculture, the consumer would support it. The British people are willing to pay something towards preserving an attractive landscape.

I want the size of holdings in Britain to be preserved in their present form. The amalgamation of farms has gone much too far in Britain—much further than it has in any other European country. We need to preserve our present structure and ensure that it is viable. Support mechanisms should be based on environmental protection rather than on production.

9.5 pm

Mr. Alan Amos (Hexham)

There is no doubt that agriculture is going through a difficult transition period, continually hampered by a serious lack of direction and strategy from Brussels. The incomes of my hill livestock farmers are under real pressure.

British farmers are the victims of their own success. They are the most efficient in Europe, and they supply good quality produce and make a large contribution of £3.5 billion to the balance of payments. We are 75 per cent. self-sufficient. Food prices have consistently risen less than the retail prices index. Farmers' activities, which are the backbone of the rural economy, are vital to the survival of whole communities. However, there are now real problems and the solutions to them can no longer be delayed or fudged.

The CAP budget, already two thirds of the total EEC budget, is again about to breach its strict guidelines. The application of technology and over-generous subsidies, together with a decline in demand for some commodities, such as red meat, have led to levels of surplus whose financial and structural consequences for EEC farmers must now be addressed.

There is a need for a number of immediate short-term palliatives, as well as for a radical and bold long-term solution. I congratulate my right hon. Friend the Minister of Agriculture, Fisheries and Food on fighting his corner with such determination, vigour and success for British farmers.

Let us consider what he has achieved, for example, for my farmers in the less-favoured areas. First, the green pound has been aligned with our market exchange rate. The elimination of the green pound and the absurdity of monetary compensatory amounts, which tax our exports and subsidise our imports, was a major achievement which brought considerable financial advantages to my farmers. No longer will Northumberland farmers be at an artificial competitive or financial disadvantage.

Secondly, the level of the suckler cow premium was raised to the maximum allowable under EEC rules. That money goes directly into farmers' pockets. Thirdly, there is strong support for the hill livestock compensatory allowances, amounting to £142 million in a full year. Again, that money goes directly into the farmers' pockets.

Fourthly, for the second year running, there have been two advance payments of the annual ewe premium, including the whole of the 4 ecu per ewe supplement which is worth £39 million in the less-favoured areas to help farmers' cash flows.

Fifthly, there is marketing. The Select Committee on Agriculture, of which I am a member, is about to launch a major inquiry into Britain's food trade gap, which is estimated to be about £6 billion. Over half of that can be eliminated by buying British, so marketing can produce considerable improvement and it takes on a new and dramatic urgency. The high level of import penetration of high value added products, such as Danish bacon, can be halted and reversed.

At a recent meeting with some of my local farmers, I was most encouraged to see that they gave a far higher priority to and had a greater awareness of the need for better marketing. Their role is wider than just being producers of good-quality meat. They have to widen their skills to sell and market their produce.

The market is one of growing complexity, dynamism and openness. The industry must become more responsive to consumer needs. We need an imaginative and flexible response in a situation where there are few automatic markets left for British produce. Therefore, the Government's recent announcement of £5.4 million of new grants to encourage the formation of producer marketing groups to help them get closer to the market, and the establishment in the Ministry of Agriculture of a new market task force, are to be warmly welcomed. In that regard we must ensure that food labelling throughout the food chain from the farm gate to the supermarket contains the country of origin so that British consumers can buy British.

Sixthly, on environmental controls, I congratulate the Government on their more sensible and practical approach. Unlike the Liberal and Labour parties, which would suffocate my farmers to extinction with an endless stream of unnecessary and unreasonable controls over every aspect of production, thereby putting many of them out of business, the Conservative Government have appreciated the need to protect the environment while giving proper priority to the needs of the agricultural community to remain economically viable.

Payments to upland livestock farmers through hill livestock compensatory amounts and proposals for an improved farm woodland scheme are two examples of the Government's common-sense approach. If society is to impose extra burdens on farmers' costs of production in order to preserve or go back to an idyllic view of the countryside, which may never have existed anyway, it must pay for it. As always, the Liberals try to have it both ways, but they are up against canny farmers. They will have to choose between pretending to be friends of the farmer and lackeys of the environmentalist.

There are areas that deserve further consideration, in particular, the problem of fallen stock, the costs of which are falling heavily and unfairly on farmers. The problem might be covered by environmental grants. Also, with the present demographic structure of farmers, together with their greater willingness to consider such matters, an early retirement or outgoers scheme would address the problem of over-supply, as well as allowing for mobility within the industry, and would encourage more young people to enter farming.

On the maintenance of a flexible and dynamic industry, reform of the agricultural tenancy legislation is overdue. In Northumberland, half the farmers are tenant farmers and we need a greater supply of land for rent to ensure the continued prosperity of the tenanted sector, with new entrants being able to come into agriculture. The farm business tenancy is a helpful way forward.

Of course, a number of measures must be taken while more long-term structural reform is implemented. For example, assistance might be given for diversification into tourism, to which Northumberland is ideally suited, as tourism is dispersed, small-scale, labour-intensive indu-stry. The farm and conservation grant scheme and the farm diversification grant scheme are both helpful measures, as is the new farm woodland premium scheme. Equally, if farmers are to be more subject to market forces, the planning system must be flexible and sensitive enough to enable farmers to diversify. The planning process must not be used to stifle sensible development.

Another important aspect of diversification is the need for retraining in which the agricultural training board has a dynamic role to play. Extensification also has a limited role and the pilot beef and sheep extensification scheme is a useful start. Set-aside schemes must be voluntary and must facilitate the entry of young people into the industry. No scheme will be worth much if farmers are allowed merely to give over their least productive land. Quotas by definition rigidify and distort the market, so we must resist absurdities such as nitrogen and other input quotas which merely serve to raise the cost of production and undermine our ability to compete. Our job is to harness technology, not to prevent farmers from being able to sell their products.

No discussion of reform of the CAP can ignore the likely outcome of the GATT talks which may involve price cuts of at least 30 per cent. Nor should we ignore the fact that in the not-too-distant future eastern Europe and Russia will be able to realise their massive agricultural potantial once they have become fully harnessed to a market economy. Reform of the CAP will be difficult, but there must be reform.

The Government's policy statement "Our Farming Future" is a serious attempt to outline the ingredients of a prosperous British agriculture industry, which is part of the United Kingdom economy and the United Kingdom way of life. Successful reform will include elements of continuity and change. Only fundamental and radical reform of the CAP can stem its rising and unjustifiable cost. Any system that costs the British taxpayer more than £2.5 billion, only half of which reaches farmers, is an absurdity and must be abolished.

However, the aim of the reform must include four key elements. First, EEC agriculture must be made more efficient and competitive, with the objective being to get down as near as possible to the marketplace and world prices, however they are defined. We must face up to the harsh fact that the present social and economic pattern of farming in the EEC can no longer be maintained.

Although many people do not like talk of market forces, the plain fact is that in the real world we simply cannot ignore them. It is precisely because market forces have in the long run caught up with the operation of the CAP, as they inevitably would, that we are in such trouble. Only an agriculture industry set free within the framework of market forces operating more closely to supply and demand will have a secure and prosperous future. The GATT talks make that abundantly clear. We can neither perpetuate excessive levels of support, nor penalise the most efficient producers. The CAP costs the taxpayer and the consumer more than it need, through excessively high taxes and prices. It does not protect the farmers since so many are now in difficulties and the long-term trend has been for many to leave agriculture altogether. CAP reform must cut costs and prices and encourage structural rationalisation.

The fundamental problem with the CAP is that, in an attempt to keep farmers on the land, the price mechanism has become so distorted that none of its objectives is now being realised, and at a high cost. There is still gross confusion in the pursuit of the CAP's conflicting objectives. We must clearly separate the CAP's economic, social and environmental aspects.

On the economic side, there is no doubt that price support must be reduced to nearer world levels. On the social side, the desire to keep farmers on the land should be dealt with via a direct income support or other aid measures, such as voluntary set aside, which do not distort the price mechanism, for a transition period.

Other measures such as nitrate quotas would badly undermine competition. Quotas would only ever be properly and legally enforced by the United Kingdom and, again, would interfere with our competitiveness on world markets. Both should be fiercely resisted. We must give the small, inefficient, part-time continental farmers an option to leave the industry, not a subsidy to produce.

The fundamental point is that, although the cost of buying and storing surplus output is high, the largest item is the unbearable burden of export subsidies or refunds. Therefore, the nearer that we can get to world prices, the lower will be the cost of those export subsidies, and hence the cost of the total CAP.

It is precisely because British farmers have a competitive advantage in the production of sheepmeat, beef, cereals, dairy and other produce that it is in our interests to have a truly and genuinely single free and open common market in the EEC in agriculture produce.

The strength of our comparative advantage is shown by the fact that 75 per cent. of British lamb exports go to France. The abolition of the clawback will enhance our position and 1992 must become a reality of fair competition and free movement of goods without any artificial restrictions. We must abolish the green currency system and the MCAs altogether. That is not something that my farmers need fear, but rather a challenge and an opportunity to be welcomed and grasped. If the EEC is to compete in post-GATT world markets, it is not the number of farmers which matters but rather the quality of their output.

Limitations on the output of the most efficient will prevent them from taking advantage of technology and size, thereby inhibiting further productivity gains. The only effect of that would be to raise the costs of the CAP and prices. Therefore, headage limits must be fiercely opposed as they are particularly anti-British. The MacSharry package would reduce headage limits for ewe premiums in less-favoured areas from 1,000 to 750 ewes. In the United Kingdom it would mean that in the LFAs 10 per cent. of holdings would be affected and up to 15 per cent. of eligible ewes would be excluded from payment. They discriminate against extensive farms on poor lands.

If farmers are unfairly forced out of business in the less-favoured areas, the social objectives, let alone the economic objectives, of the common agricultural policy cannot be met. The whole concept of quotas should be abandoned because of the economic damage that they cause by preventing the proper and flexible use of farmers' resources and assets and by preventing technological innovation.

The burden of reform must be borne fairly throughout the Community, both between and within member states, regardless of size and location, bearing in mind the paramount need to ensure the survival of the most efficient producers. The MacSharry proposals, which discriminate against the larger and more efficient British farmer, are totally unacceptable and must be firmly and unequivocally rejected. The MacSharry package will hit specifically those farmers most able to compete on the world market. At an average of 163 acres, British farms are five times bigger than European Community farms, at 33 acres. Specialist sheep producers in the less-favoured areas would be particularly badly hit by the package.

Reductions in support levels should be carried out at a pace that gives efficient farmers time to adjust and diversify. I warmly welcome my right hon. Friend's commitment to continue financial support for the less-favoured areas in general and the hill livestock compensatory allowances in particular, where there are fewest opportunities for diversification.

Finally, farmers must be encouraged to get closer to the marketplace and be market oriented. One of the problems with the MacSharry proposals is that, instead of bringing agriculture closer to the market, they will perpetuate existing excessive levels of support for the majority of farmers. The cost of the common agricultural policy would go up, not down, so taxpayers, consumers and farmers would all lose out. We must establish a dynamic industry that is readily able to adapt to changes in the market.

Reform of the common agricultural policy is vital for farmers, consumers and taxpayers, but the proposals as they stand are not acceptable. While we must get closer to the market, the proposals continue to ignore the reality of market forces in a misguided attempt to solve undesirable social objectives. In the post-GATT world of liberalised trade we must encourage our efficient producers to compete in a more open world trading system. We want a developing, dynamic and flexible rural economy, not some stagnant, idealised rustic world— which has never existed —stifled by environmental controls. We do not want fossilised museum pieces of countryside but communities with jobs and a living, dynamic and healthy social fabric. Reform must be fair to all, equally applied by all.

9.22 pm

Mr. Frank Cook (Stockton, North)

I congratulate the hon. Member for Hexham (Mr. Amos) on the vitriolic quality of his criticism of the common agricultural policy. I commend his appreciation of the need for a social dimension in any reforms that may take place. I commend his outlook to the House when we discuss issues relating to the social charter. Acceptance of a social charter might lead more easily to the achievement of the goals to which the hon. Member referred.

I apologise for the fact that I heard only about 40 minutes of the Minister of Agriculture's speech. I had to leave the Chamber to attend a Select Committee and did not return here until halfway through the speech of my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey). I may therefore not have heard points made to which I wish to refer.

The Minister made a robust speech, in which he outlined his support for and his defence of the British farmer. I heard no reference to the industries that support the British farmer, in particular the fertiliser industry. It will surprise no hon. Member to learn of my interest in fertilisers. ICI plants are to be found in my patch. Brunner-Mond came to Billingham for the anhydride deposits which it could process into nitrates. The company has been there ever since—thank God, in view of the employment that it has created in the area. To that extent, I declare a vested interest.

I have received representations from Mr. Higgs, the director general of the Fertiliser Manufacturers Association. He makes some valid points that I should like to bring to the House's attention. The FMA maintains: The CAP is too costly and is producing no winners: not farmers, not consumers and tax payers, and not those, such as us, who supply agriculture. Food surpluses beyond those necessary to maintain strategic reserves are a nonsense and we fully accept that reduced agricultural output will mean reduced fertiliser sales … The important part to be played by the market is well recognised by most people as is the need to safeguard small producers and to protect rural communities and our landscape and environment. What is often not appreciated is the need also to provide a stable and profitable agriculture that can support the infrastructure it needs … There is a danger that farmers will not be given adequate incentives to grow produce efficiently and environmentally responsibly. They may either be discouraged from having to care about the quantity or quality of what they produce, as their income will be guaranteed regardless or, conversely, they may be less concerned about the quality of the inputs they use, or the agricultural practices they employ, because they will be driven to compete on price in the market against imports dumped or produced to lower environmental standards … If the EC demands higher environmental and animal husbandry standards than elsewhere, it must not 'export' its problems by importing produce from these sources. Similarly, there must be also a risk that some imports of agricultural inputs (such as fertilisers) will be cheap because they too are either being dumped or produced without due regard for the environment: those from Eastern Europe already pose a particular threat." Those threats have been highlighted in the debate. The FMA maintains that cross-compliance in the environmental standards of production is essential. It concludes: If sustained improved economic performance is not achieved there is no prospect of existing nitrogen fertiliser manufacturing capacity being replaced. We"—

the country— would then gradually become totally dependent on imported fertilisers with very serious consequences for both EC balance of payments and EC food security. I entreat the Minister of Agriculture, Fisheries and Food to take those points with him to the negotiations.

Mr. Gummer

indicated assent.

Mr. Cook

He indicates his attention by nodding his head. In my experience, which is considerable, negotiation is based on an ability to heed, hear and respond, not abrasively but with some charm and intelligence, which is not always apparent from Ministers.

Will the Minister also make representations on this side of the water? I am referring to other hidebound attitudes that cripple some producers, and I am referring specifically to ICI. The world market in fertilisers is changing. The world is producing food more efficiently and is feeding itself better. Fertilisers are more effective, so fewer are necessary. The environmental groups have also launched effective campaigns against the level of nitrates in water tables, so ICI's position in the world market is somewhat difficult.

However, in seeking to preserve its production centre in Billingham in my constituency—and thereby to preserve the jobs involved—ICI came to an agreement with Kimera which, I concede, is a Finnish-based company. It agreed that Kimera should take over the unit as a productive concern and keep it going, thus maintaining jobs for the British workers and a share for British-manufactured fertilisers within a world market—because Kimera has a major market share.

That agreement was effectively scuppered by the Minister's colleague—the Secretary of State for Trade and Industry—who, on the basis that Kimera was a state-owned company, would not allow the agreement to stand. Such a doctrinaire attitude prejudices not only the jobs of my constituents but the market share that could come to a United Kingdom-based production unit. I ask the Minister to make representations on that basis to his colleagues.

I leave the Minister with a thought—my "finally", if I may use that term—on the common European currency which has already received attention. It might interest the Minister to know that ICI estimates its costs each year for the negotiation of fiscal exchanges to be as much as £60 million, and probably as much as £80 million. If that is the cost to ICI, the cost to other British industries—regardless of the merits or demerits in other aspects—will be considerable.

9.31 pm

Rev. Ian Paisley (Antrim, North)

The Government spokesman who will be replying to the debate tonight knows Europe very well because he served as a member of the European Parliament, was chairman of the European Agriculture Committee and now serves on the Council of Ministers. He knows exactly what Europe is about and what is being done in Europe.

It would be a good thing if this debate were to be settled in Europe on the merits of agriculture, on the merits of farmers' needs and on the merits of establishing a viable agriculture industry across the whole of Europe. However, if anybody in the House believes that that is how it will be settled, he is living in a fantasy world. It will be pure politics that will settle this matter in Europe and all the arguments—however credible—will not alter political decisions that have already been taken. In introducing his proposals Mr. MacSharry seems to have very strong backing from the Commission and, at the end of the day, is really a spokesman for it.

The common agricultural policy lends itself to gigantic unfairness and colossal fraud. The House would do well to realise the amount of money that is squandered and lost to the Community because of colossal frauds. There has been an exposure in the Irish Republic which has shaken even the Government and has put into question the future of the Taoiseach. I refer to the Goodman controversy.

The Meat Trades Journal refers to the record of a Goodman accountant called Patrick McGuinness. The journal reports that he told the inquiry into the Irish beef processing industry that he had gone public with his allegations of irregularities to save the company from further financial difficulty. That is an amazing confession. The report continued: He claimed that because of its reliance on intervention abuses, the company had lost focus in dealing with the business in a commercial sense. It was no longer a commercial propostion. It was guided by the need to manipulate the structures of intervention to make vast profits.

Mr. McGuinness said that a group known as the "A-team" was employed illegally to re-box intervention beef and aids to private storage. It seems that Larry Goodman's beef undertaking in the Irish Republic has a system of re-boxing intervention beef and aids to private storage beef. That says something about how the structure lends itself to fraud.

Mr. McGuinness also pointed out that tax-free payments of IR£3 million were made to the employees in one year. How can that occur without some Government winking at what is happening?

Sir John Farr (Harborough)

What is the equivalent of IR£3 million in sterling?

Rev. Ian Paisley

The punt is not as valuable as the pound. However, as I come from a part of the United Kingdom, I do not really know, but I think that the punt is worth perhaps 90p or 98p. It is not far from the pound sterling.

Mr. McGuinness also said that accounts were kept from the company's auditors to hide those payments to the employees. Bogus stamps were used to upgrade carcases and increase their value. Weights on intervention documents were increased and decreased to record required yields after deboning. Larry Goodman, the chief executive, was present at one meeting when the practice of altering weights was discussed. It was accepted that that was the thing to do.

That is a colossal fraud in the Irish Republic under the CAP. It is so serious that one must conclude that there must have been some connivance with the officials who should have been monitoring the position.

Mr. Gill

There is a strong body of opinion in the House that, to prevent such massive abuse and fraud in the system, we should appoint more inspectors and accountants to check on the details. Does my hon. Friend believe that that is the right way to proceed, or does he believe that the system is impossible to control and should be abandoned?

Rev. Ian Paisley

My conviction is that that is impossible to control. It is a fact that when that fraud was being carried out at the Goodman-owned air-freeze coldstore in Dublin in 1988, the supervisor admitted that no one from the Department of Agriculture was present. The officer who should have been there was conveniently absent. As I said, that looks like connivance.

I have a large meat producer in my European constituency. When I visited that firm to see its operations some time ago, I noticed a group of men standing around. I asked who they were and was told, "Those are the veterinary men. We must have them here to look after Common Market interests." I believe that there were six of them in one room. I wondered how many veterinary officers I would find if I went to France. When I was in France the other day, I was told that there are none at all in some French factories and that they do not even know of their existence. When that type of thing is going on, how can we have any faith in the common agricultural policy?

National Governments are supposed to deal with fraud, but if they have neither the ability nor the will to deal with it, how can we ever have a common agricultural policy that is acceptable to us all?

The Minister of Agriculture, Fisheries and Food has an impossible task. If he was in charge of agriculture and answerable to this House, he could take care of the different regions that make up the United Kingdom. One hon. Member tonight said that he represents the flatlands. He spoke of the difficulties facing his farmers. We have also heard hon. Members representing Welsh constituen-cies talking about the uplands and their difficulties. We then heard a voice from Scotland underscoring the peculiar difficulties of farmers there. I am a voice from Northern Ireland and say simply that our farming operations are also greatly different—for example, we do not have tenant farmers. On the point about small farms, I advise the House that Ulster has always had family farming units. I know that the continent has what are called "small farms", but they are pocket farms located in back gardens. They are not really farms.

I should like to put my worries about agriculture in Northern Ireland to the Minister. Perhaps he will tell the House how many times he has met the Minister from the Northern Ireland Office who is responsible for the interests of Northern Ireland's farmers. How many times when negotiations are taking place has the Minister had serious discussions with his colleague about the specific needs of Northern Ireland's farmers? As hon. Members represent-ing Scotland and Wales have said, there is a fear that the voices of the different parts of the United Kingdom are not being heard.

The Minister of Agriculture, Fisheries and Food is in an impossible position because he is not master in his own house. Indeed, this House is not master of the situation and never will be, given the present set-up. That is why it is difficult to achieve a settlement that will help our farming communities.

The tragedy is that farming in Northern Ireland has suffered such a cut because of the common agricultural policy. Northern Ireland has intensive pig and poultry farming. The pig industry has been cut to almost a third of what it was. The laying flock has been reduced by millions of laying hens. We are being cut back simply because we could not buy feedstuffs on the world market as reasonable prices.

Those reductions took place, but the farming community took up the struggle and did everything that the Government told it to do. It was encouraged to borrow money at the bank and concentrate its efforts on beef and milk. It did that so well, that we now have surpluses. Now it is told, "You did it too well so we will fine you." The alarming proposal, made from some sections of the House, is that in some way the farmer is to be punished.

If the farming community must ease off from farming, it must have proper compensation. If farming is to have some regularity and viability, we must take that easing off at a reasonable pace. The farmers must be cushioned against serious financial pressure. I have farmers going out of business every week. I have talked to bank managers who encouraged those farmers to go ahead and do this, that and the other thing. Now that the dark day has come, farmers are being pushed off the homesteads which had been in their families for generations. The House has a responsibility to those people. Where do we put them? Where do they go? We do not have employment for them in Northern Ireland. No part of the United Kingdom has employment for them. The position is difficult and such factors must be kept in mind when we are discussing it.

The farmers in Northern Ireland have been efficient and have the best record in animal health of any part of the United Kingdom. They have worked hard and carried a heavy load. I make a plea tonight on their behalf and I trust that their case will not be forgotten in the negotiations.

I happen to believe that there should be a plan for farming. We cannot sit here and say, "All the difficulties are so great that we cannot make any plan." The Government should have aims and objectives and should tell us what they are. We should aim for the achievement of those objectives, no matter how difficult. I trust that the Minister will give some encouragement to the farming community. It needs encouragement and something to give it hope in this dark night on which it cannot see any stars. I trust that the Government will be a star to it to guide it to a better daybreak, if that is possible. I see great disbelief on the faces of the Scottish contingent tonight.

9.48 pm

Mr. Huw Edwards (Monmouth)

It is a privilege to be called in. a debate in which so many speeches have been made. One of the notable features of the debate has been the agreement between Back-Bench Members on both sides of the House. Another feature is that up to six Welsh Members of Parliament, representing the Labour party, Plaid Cymru and the Liberal party, have spoken but not one Conservative Welsh Member has spoken.

Mrs. Margaret Ewing (Moray)

Are there any?

Mr. Edwards

There are now only six as a result of the famous by-election victory last May in Monmouth. It is significant that the Welsh farmers can no longer look to the Welsh Conservative party to represent their interests.

I have the privilege to represent a beautiful area of south-east Wales which has a fine agricultural tradition. Not only is the Monmouth constituency a beautiful area but it contains within it one of the designated areas of outstanding natural beauty to which several other hon. Members have drawn attention.

The aims of an area of outstanding natural beauty are to ensure that the environment is protected and enhanced. Protection of the environment takes precedence over development. I hope that hon. Members from both sides of the House will be keen to support the early-day motion that I have tabled to protect areas of outstanding natural beauty and to draw people's attention to their significance.

The area of outstanding natural beauty in my constituency is beautiful for one reason—because of the role of farming. We owe a special debt to the farming community in all constituencies where the environment is beautiful as a result of their work.

Most of us object to MacSharry's proposals and when discussing those and reform of the common agricultural policy we should consider new forms of support for farming, which will protect and enhance the natural environment and will reward farmers for their vital work in maintaining the countryside—for which they get little recognition and scant reward.

We cannot discuss the CAP without referring to the Government's economic policy. Agriculture policy is inextricably linked to economic policy. The problems that farmers face are inextricably linked to the fact that they have been the victims of the Government's inept economic management in recent years.

Farmers are worried about potential loss of income under the MacSharry proposals, which will exacerbate the loss in income that they have suffered due to the Government's economic policies.

In recent years Welsh Office Ministers have boasted about an economic miracle in Wales—it was short lived. There was an economic miracle in manufacturing and new technology for a short while, but it never benefited the Welsh farming community.

The state of Welsh farming has been clearly spelt out in recent publications. Research by the department of agricultural economics at University college, Aberystwyth shows the significance of agriculture as a form of employment in rural Wales. It states: In many parts of rural Wales between a third and a half of the economically active population depend at least partly on the farm community for their incomes. But it also says: Total farm incomes in Wales have fallen by 17 per cent. between 1977 and 1990 when all costs including wages, rent and debt servicing are taken into account. According to Peter Midmore of University college, Aberystwyth: The main reason for the acute fall in total farm incomes has been high interest rates", which were imposed by the Government. Interest rates may have decreased in recent months, but that does not alter the fact that many farmers are in trouble because of the Government's absurd policy of increasing interest rates for so long.

The farming labour force in Britain has declined from 71,000 to 67,000. The number employed full time in agriculture has declined by 13 per cent., but there has been an increase in the number of part-time workers, who now constitute 55 per cent. of the farming work force. That trend may be inevitable because of changes in farming, but it has worrying implications for the future, for example, for the social security and pension entitlements of people who only earn their living on a part-time basis.

The MacSharry proposals have been widely criticised in the House. They aim to reduce agricultural support, yet protect smaller farmers. As hon. Members have said, farms in this country are likely to lose out because they are generally "too large" in MacSharry's terms.

The Commission's proposals will discriminate against efficient family farms in Monmouth. I acknowledge the findings of the National Farmers Union, which estimates that the proposals will cause farm incomes to fall by 30 per cent.

Farmers in Monmouth believe that it is essential that the limits on milk and beef quotas are removed. Farmers in my constituency do not benefit from less-favoured area payments—the average farm size is much larger than the size that will be protected under the MacSharry proposals. It is always sad to hear from farmers or members of their families about the dim prospects that they now envisage for their industry and their family businesses. That applies not only to the sons of farmers, but to their daughters, many of whom would like to maintain the farming tradition. It is sad that there is little prospect of their being able to do so.

Even if many people are unable to continue directly in farming, they would like to continue to make their livelihood in the countryside. There is a tremendous challenge to redirect resources into training and away from direct agriculture to countryside management and environmental protection. The training and enterprise councils and educational institutions face the challenge of offering young people new employment and educational opportunities in the countryside.

Labour's proposals to introduce green premiums to reward farmers for their vital work in countryside management will greatly help to encourage diversification. Farmers tell us that they are usually better off under a Labour Government. In a few months' time we will have that Labour Government and the farmers in my constituency will welcome that.

9.55 pm

Mr. Ron Davies (Caerphilly)

It is a pleasure to follow my hon. Friend the Member for Monmouth (Mr. Edwards). He came to the House as a result of a by-election in June, and this is the first time that we have had an opportunity to debate agriculture. During the by-election campaign, I know that my hon. Friend worked hard to secure the confidence of the agricultural community of Monmouth. I am pleased to note that he is determined to represent it in debates. I am sure that, when the general election comes, he will find that his rural community repays the work that he has put in and that he will be returned as the Member for Monmouth.

My hon. friend the Member for Monmouth was right to say that there has been a great deal of agreement in the debate. Central to it is opposition to the MacSharry proposals. We oppose them because they discriminate against the United Kingdom and damage our interests.

We accept in good faith that both Ministers will negotiate to the best of their abilities in Brussels. We accept that they will do their best to secure the best interests of Britain and Britain's farmers. The final judgment will be given once we know the outcome of those negotiations. I am sure that the Minister of Agriculture, Fisheries and Food will co-operate to ensure that we have an opportunity to debate those proposals, when agreed. That debate will provide a sharper examination of them and the negotiations.

I was interested at the way in which the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) moved the amendment on behalf of the Liberal Democrats. I have a great deal of sympathy with the spirit behind his speech because he speaks as a true representative of farming interests in his constituency and throughout Wales.

I believe that the Liberal Democrats have made an error in the way in which they have framed the amendment. Their amendment would delete the last five lines of the Government motion, which means that all references to environmental care would be removed. However, there is no reference in the Liberal Democrat amendment to providing payment or support for farmers in respect of their work in caring for the environment.

We must try to square a circle, because we must decide how to provide support for farmers without encouraging over-production. No one has suggested the means of doing that other than by making environmental payments. I do not know whether the Liberal Democrats made an error when drafting their amendment or whether it represents an oversight. Perhaps they are trying to have it both ways.

I believe that the Liberal Democrats would serve the interests of the House well if they recognised the error of their ways and withdrew the amendment without pushing it to a vote, because I accept what the Minister of Agriculture, Fisheries and Food said. He felt that if we were to show opposition to his stance we would somehow weaken his negotiating position. The Opposition are not prepared to take any action that would weaken the Minister's negotiating position, so if the amendment is pressed to the vote, we shall join the Government in defeating it. We shall take whatever course of action is necessary to ensure that we demonstrate our support for the Government to strengthen their negotiating position.

My hon. Friend the Member for Monmouth referred to the fact that no Conservative Members representing either the Principality or Scotland were present in the debate. The debate has shown that there is now a considerable malaise within the Tory party. Tory Members have been thin on the ground in this debate, and I was particularly saddened to note that no Welsh Office Minister has been present throughout the debate. Their sole representative of Scottish interests was the hon. Member for Stirling (Mr. Forsyth), who drifted in and drifted out again without even listening to the debate.

There has been not a single contribution from a Scottish or Welsh Conservative Member. For most of the evening, there have been more Opposition Members present than Members on the Government Benches, which shows that the Conservative party no longer represents farming interests in the House of Commons.

As my hon. Friend the Member for Monmouth said, there have been speeches from the Labour party, the Liberal Democrats, Plaid Cymru, the Scottish National party and the Democratic Unionist party, but we have heard no voice from the Tory party representing the far-flung reaches of the United Kingdom.

The hon. Member for Gloucestershire, West (Mr. Marland) was the first to speak in the debate. He refused to give way to me, which I understand and for which I do not bear him any malice or ill will—

Dr. David Clark

Why not?

Mr. Davies

Because I think that he is a jolly nice chap —an opinion that I formed a long time ago. He fought the parliamentary seat of Bedwellty in 1970 and lost by only 23,000 votes, but he believed that he would come back and win it at the next election. Since then, he has always had a spirit of optimism and, to do him credit, he was looking on the bright side tonight. He used to be the Minister's Parliamentary Private Secretary, and I sincerely hope that he gets his job back—I mean no disrespect to the hon. Member for Ryedale (Mr. Greenway).

The sterling qualities of the hon. Member for Gloucestershire, West are that he is even-tempered and good-natured. If he were sitting behind the Minister, some of those qualities might flow over the Benches. We might then find that the Minister is less irascible than he was tonight.

Before I do the hon. Member for Gloucestershire, West too much good, may I tell the Minister that he missed the hon. Gentleman's concluding remarks. The hon. Gentleman is very close to the farming community, and he said that he accepted that we shall end up with a MacSharry derivative. However strongly the Minister intends to oppose the MacSharry proposals, he has not yet convinced the former PPS to the Minister for Agriculture that we shall end up with anything other than a MacSharry derivative.

The hon. Gentleman also said that the farmers in his constituency were very angry. I know they are, because they rang me today and asked me to address a meeting in the hon. Gentleman's constituency. I am going along to it next Tuesday. If the hon. Gentleman thinks that farmers in his constituency are angry now, he should wait until Wednesday morning, when they will be even angrier. If the hon. Gentleman is free next Tuesday, I extend an invitation to him to come along. If he is short of a pair, I shall have a word with my hon. Friend the Member for Ogmore (Mr. Powell) and we can make a mutual arrangement so that the hon. Gentleman and I can pair and discuss agriculture in his constituency.

The farmers in the constituency of the hon. Member for Gloucestershire, West are angry, and they have every reason to be so, because farm incomes in Britain have fallen to an all-time low. Confidence and investment in the industry have almost collapsed. Our agricultural infrastructure has been undermined, our markets have been exposed to European competition, and precious little has been done to equip us to compete with them for our and their main markets.

Agriculture now faces a perilous future given the uncertainty caused by the CAP reform, talks on the general agreement on tariffs and trade and the productive potential of the former eastern bloc. The man almost uniquely responsible for that state of affairs, the present Minister, has excelled himself tonight in the complacency with which he approached the debate. During the past 10 years, when he took time off from his post as chairman of the Conservative party, this man was the Parliamentary Private Secretary to the Ministry of Agriculture, and Minister of State, MAFF, and, for the past couple of years, he has been Minister of Agriculture, Fisheries and Food. If there are any deficiencies in the state of British agriculture, and if there is one person to blame for its decline in the past 10 years, the Minister certainly cannot excuse himself.

The hon. Member for Ceredigion and Pembroke, North referred to the Smithfield show. On Monday, the president of the National Farmers Union said at the show: We are limping into fiercer competition which lies ahead —with potentially disastrous effects on the efforts we are making to reduce the present adverse trade gap in food. I think that we can accept that, in those circumstances,the president spoke with authority. Of course, he does not do so when he speaks as the Conservative candidate for the local county council—but the Minister will have to take up that matter with him.

Mr. David Naish, the president, said that the NFU estimates suggested that, for the second consecutive year, farming incomes had fallen in real terms to a new post-war low and were now less than half those of the early 1980s. He said that that fact ruled out an early recovery in farm investment, which had sunk to half the level of 10 years ago. That lack of investment is inflicting long-term damage on the ability of Britain's farming and the food industries to compete. Faced with economic difficulties and uncertainty about the industry's future, farmers are unable to plan ahead, at a time when investment and new initiatives are crucial to survival. The Government's inaction has caused the representatives of the industry to cry out for leadership. It is a matter of much regret that the Minister has not shown such leadership this evening.

The reorganisation of the CAP was inevitable; we have advocated and welcomed it. We do not expect the Minister to take sole responsibility for the drop in farm incomes that resulted. Only last February, at the annual general meeting of the NFU, the Minister said: we must spell out how we want to reform the CAP. We are still waiting for him to do so, and we have asked him about it tonight. Month after month, we have asked him to spell out how he intends to reform the CAP, but we are still waiting.

At the heart of the matter lies our gross contribution in 1991 of £2.4 billion to the CAP. Some £1.6 billion was returned—that averages £9,000 for each British farmer, although not every one of them received that amount. The Government have failed to manage the change, give coherence to Britain's agricultural strategy or ensure value for money.

We should have common objectives in the House. We are agreed on the need to ensure the continuation of the family farm, maintain efficiency in the industry, protect the environment, ensure food quality and maintain the structure of family farming intact. On all those tests, by any objective standards, the Government have failed farming during the past 10 years. According to the NFU, for the second consecutive year farming's real income will fall significantly this year. The industry's income is now at its lowest level in the post-war period and is about half the average that it was in the period 1980–85. The NFU president speaks of the industry's "bleeding to death", with the cost of inputs continuing to rise and the value of agricultural products standing still or falling.

Using 100 reached in 1985 as the constant enables us to see the dramatic fall in real terms in British farm incomes compared with those of France and Germany. These are valid comparisons, because farmers all over the country ask me what is so unique about Britain's representatives. They say that it is always British industry that gets the rough end of the stick, while French and German representatives can protect their interests.

British farm income has dropped from 118.8 in 1984 to 93 in 1990—a fall of 18.8. In France, income has increased from 100 in 1984 to 107.5 in 1990, an increase of 7.5. In Germany, farm income has increased from 102.5 in 1984 to 115 in 1990, an increase of 12.7. Our farmers have been suffering and going out of business while those of our main competitor countries have been making hay at our expense, if I may use that expression.

Anyone who doubts that agriculture is moving deeper into recession should consider the number of people leaving the industry. Over the 10 years to 1990, the industry has cut its whole-time hired labour force by 30 per cent.—a loss of about 43,000 rural jobs. The June census conducted by the Ministry confirmed another large loss in farm employment this year. The national farm is losing full-time jobs at the rate of 1,200 per month.

While farming income and jobs are decreasing, food prices and supermarket profits are increasing. In real terms, using 100 reached in 1985 as the constant, British food prices have increased from 100 in 1985 to 125 in 1990. In France, the increase has been 16.2 per cent., but in west Germany it was only 4.9 per cent. Britain has averaged an increase of 4.7 per cent. a year in food prices over the past six years, France has averaged 3 per cent. and west Germany has averaged 1 per cent. However, unlike French and German farmers, our farmers have not had any increase in income over the past five years. They have been losing income.

We are entitled to ask who is benefiting from these quite dramatic food price increases, and the answer must be the supermarkets, whose owners have been described by one of my hon. Friends as the law-breakers, the people that the Government refuse to make comply with the law of the land.

Mr. Alison

If the hon. Gentleman's figure of 3 per cent. a year for France is correct, it adds up to a higher figure than the total increase that he has just quoted.

Mr. Davies

If the right hon. Gentleman looks at the figures that I quoted, he will see that that is not the case.

Mr. Andy Stewart (Sherwood)

Add them up.

Mr. Davies

I have added them up, and I spent a great deal of time today carefully working them out. If the hon. Member for Sherwood (Mr. Stewart) wishes to take issue with me on that, I am prepared to give way to him.

The supermarkets have benefited at the expense of agriculture. Let us examine Sainsbury. Sainsbury's profits have increased from £45 million in 1980 to £787 million in 1990. In that time, it has increased its profit margin from 3.7 per cent. to 9.6 per cent. Who is being squeezed for that tripling of profit? The answer is the private producers. The people being squeezed are the farmers who see the prices of their products at auction being driven down by the supermarket buyers. The same applies to Tesco, whose profit margin has doubled, while Argyll's profit margin has tripled.

As I have said, reorganisation of the CAP was inevitable, but the way in which British farmers have been failed in so many other ways, especially the way in which the Government have neglected the rural and agricultural infrastructure, was not inevitable.

To be successful in the modern competitive world, all industries have to research and develop new products and techniques. Agriculture is no exception, yet, as a conscious act of public policy, the Government set about cutting the resources devoted to agricultural research and develop-ment. The money spent on R and D at the Agricultural and Food Research Council has declined by 30 per cent. in real terms since 1979, with a cut of more than 1,200 AFRC scientists in the past decade. The Government have halved the number of scientists employed at the Institute of Food Research since 1986.

Over the past year, in the run-up to the single market, with all the pressures of competition, the need for new product lines, the new demands for animal welfare and the continued demand for greater efficiency and environmental awareness, the research budget has been cut yet again.

The twin pressures of declining incomes and a reduction in public support for the infrastructure have been responsible for the great insecurity and uncertainty that face our farming industry.

The sheep sector illustrates the difficulties experienced over the past 10 years. It was mentioned by my hon. Friend the Member for Clwyd South-West (Mr. Jones) and is close to the heart of the hon. Member for Ceredigion and Pembroke, North, who moved the amendment.

In 1981, the auction price of new season lamb was £1.81 per kilo, and the equivalent joint in Sainsbury's would have cost £3.35 per kilo. Last week at auction, the average price was £1.44 per kilo—83p at 1981 prices—while at Sainsbury's this week the price was £5.25 per kilo. Not only has the auction price for lamb decreased in both cash terms and real terms, but Sainsbury's has increased its retail leg price from 85 per cent. above the wholesale price in 1981 to a massive 264 per cent. higher than the market price. That is a clear sign of how the return to farmers has been depressed and the supermarkets are making profits directly at their expense. The Government have sat idly by and watched that exploitation happen. It is about time that they started examining the role played by supermarkets in the food chain as a whole.

I shall finish soon, as I understand that Ministers are becoming a little restless. I shall consider not so much the views that have been expressed in the House—destructive though those are of the Government's reputation—as the comments made by other people about the Secretary of State and the way that he runs his Department.

The right hon. Gentleman was a little upset about The Sunday Times earlier in the debate. I can understand why he has something of a vendetta against the media, because they do not think very highly of him. I am not sure whether he and his hon. Friends have seen the quotation in Farming News on 20 September 1991, but an article under the name of Jim Padfield, about the Secretary of State's cricket box, makes interesting reading: Now, many of you might have missed this—it's a busy time of year—but apparently John Gummer does have, in his office, a filing cabinet containing all his policies. This is indeed known, in civil servant circles, as John's cricket box. However, I have been assured that this designation has not arisen because it contains halls, as rudely suggested by the media. I can understand why the Minister is a little upset—[HON. MEMBERS: "No."] I am referring to cricket balls, and I hope that hon. Members were not suggesting anything else.

Their Lordships are upset by the Minister. The Duke of

Westminster attacked the Tory attitude. An article says: The Duke of Westminster took a swipe at the government during a prestigious farm awards ceremony this week over its attitude to the farming industry. Perhaps our Government is simply not aware how serious the problems are that are facing our industry, the landscape and the people working in it', he told guests at the NatWest NFU Venturecash award ceremony in London on Monday. The comment appeared to be a taste of things to come in the Duke's report on rural businesses". The Tories are not very happy with the Minister. I was delighted to read in an edition of Countryweek on 28 November the views of Lord McAlpine, a distinguished former treasurer of the Tory party. I know that many farmers are concerned that the Minister of Agriculture says one thing in public and negotiates another in private. Lord McAlpine was the treasurer of the Conservative party when the Minister was the chairman of the Tory party. Lord McAlpine says, talking about the removal of the former Prime Minister—[HON. MEMBERS: "No."] This is very relevant. Lord McAlpine says: Mr. Selwyn Gummer—why did he behave like this, first plotting the downfall of Mrs. Thatcher, then crying all over the place after the event"— [HON. MEMBERS: "No."] I am quoting the words of Lord McAlpine. They are relevant to the Minister's attitude in the agriculture debate.

Sir Hal Miller (Bromsgrove)

Does the hon. Gentleman recall that I was vice-chairman of the Conservative party at the time to which he refers? I assure him that Lord McAlpine spent almost no time at No. 32 Smith square, and could therefore have had only extremely scant knowledge of what went on.

Mr. Davies

That may be. As my hon. Friend the Member for Carlisle (Mr. Martlew) said, all this demonstrates the deep divisions within the Conservative party. I refer to Lord McAlpine's account, because it gives a clear insight into the Minister's negotiating techniques. He is involved in delicate negotiations at this moment. The quotation is brief, and I have already read half of it, so I hope that I shall be allowed to finish.

Mr. Marland

rose—

Mr. Davies

One sees how confused the Conservative party is.

Mr. Speaker

Order. May we have the brief quotation? It does not seem to be very relevant. I have no doubt that the hon. Member for Gloucestershire, West (Mr. Marland) may then wish to comment.

Mr. Davies

That is sensible, and I am happy to follow your guidance, Mr. Speaker.

Lord McAlpine says: Mr. Selwyn Gummer—why did he behave like this, first plotting the downfall of Mrs. Thatcher, then crying all over the place after the event? This seems to me entirely within the parameters of his character as I know him. I remember his dealings in the downfall of Cecil Parkinson and how he treated Cecil at that moment"— [HON. MEMBERS: "No."] I am about to come to the punch line.

Mr. Speaker

Order. This has nothing to do with the subject of the debate. It does not seem to be very relevant.

Mr. Davies

When I give the punch line, Mr. Speaker, you will see precisely how relevant it is.

The punch line is: Entirely typical of the chap. Mr. Major, do not go for a walk in St. James's Park with this man, let alone the jungle. One can understand why the farmers are upset.

Mr. Marland

The hon. Gentleman told the House that he had a special invitation earlier this evening to speak to farmers in my constituency. I beg that, when he goes to my constituency, he makes a speech exactly the same as the speech he is making now, so that my return to this place after the next election will be guaranteed.

Mr. Davies

I am delighted that the prospect has crossed the hon. Gentleman's mind that he might lose his seat and one day might have to revert to doing an honest day's work.

Mr. Martlew

Is it not a fact that, on one occasion, the hon. Member for Gloucestershire, West (Mr. Marland) said in the House that salmonella was a dangerous orgasm, and that we should not take too much notice of what he says?

Mr. Davies

I think that I had better stick to my own speech rather than be led down these attractive by-ways.

The Government have lost the confidence of the British farming industry. We can see the depth of the divisions within the Conservative party. We can see that the Minister of Agriculture is not capable of adopting a tone and a method of argument to unite the House to strengthen his negotiating position. Their Lordships are throwing up their hands in distress at the actions of the Minister of Agriculture. The media are turning against him.

The National Farmers Union disapproves totally of the way in which the Minister of Agriculture is conducting his affairs. I refer briefly to an article in Big Farm Weekly of 17 October 1991. It is headed "Naish opposes calls to snub John Gummer." Naish of course, is the president of the National Farmers Union. The article said: John Gummer should not be invited to address the NFU AGM, say many of the union's council delegates. … One council delegate said that people must be blind and stupid not to see through Mr. Gummer's 'weasel words'. I suspect that that anonymous NFU delegate speaks for many farmers in Britain in 1991.

10.26 pm

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. David Curry)

I shall do my best to say twice as much in half the time. I do not think that that should prove too difficult a task. For a minute I thought that the hon. Member for Caerphilly (Mr. Davies) was going to rise to the occasion. He said that he opposed Mr. MacSharry's proposals in that they were discriminatory. He said that he trusted my right hon. Friend and myself to negotiate to get the best in the interests of British farmers and he said that he would vote with us tonight. We are grateful for that. It is important that a message goes from the whole House and we shall count carefully to see how many have stayed to take part in the vote.

Having got to the big moment, the hon. Gentleman collapsed in a heap. We then had an irrelevant knock-around for 20 minutes which I hope will be read by the farming community so that farmers may see what constructive proposals were put forward about the prospects they would face in the unfortunate event of there being a Labour Government.

The hon. Member for South Shields (Dr. Clark) never fails to disappoint. He remained true today. He repeated that the essence of MacSharry would be accepted. I wonder whether in his heart he would like it to be accepted because that would make his political task so much easier. He repeated his horror story about all the things we cannot eat, about meat and BSE. In every speech he talks about the disasters in that area. Farmers know that he is a great disaster-monger.

I keep a note of all the Opposition's spending promises. The hon. Member for South Shields reproached us for not checking every farm every year for set-aside. There are 3,500 farms. I take it that it would be Labour policy to check every farm every year. I would be interested to know the cost and the number of officials who would be required to do that. I wonder whether farmers would welcome that increase in the burden of bureaucracy.

The hon. Gentleman then attacked the best part of the set-aside programme, the conversion and diversification schemes. It must make sense to do our best to get land more permanently out of production, remembering that technology always endows us with an underlying yield increase of 2 per cent. per year.

The hon. Gentleman accused my right hon. Friend of aggression and later of irascibility. The hon. Gentleman offers his own alternative—a farmer-friendly, animal-friendly, environment-friendly, consumer-friendly, Euro-friendly, Uncle-Tom-Cobbleigh-friendly alternative—an-onymity. He is the Doctor Who of the Labour Front Bench.

If the hon. Member for South Shields failed to rise to the occasion, I was genuinely disappointed by the remarks of the hon. Member for Ceredigion and Pembroke, North (Mr. Howells). I give him credit for being genuinely concerned about these matters. Where he has felt that the Government have performed well he has never failed to give us credit for it, and we are indebted to him for that. I know how genuine is his concern that we should he able to give farmers some signposts. We all recognise that they live in a world in which uncertainty appears to be compounded by uncertainty.

But a 10-year plan is not a realistic option. What assumptions can be built into it? What assumptions should be built in about how many member states there will be in the EC; the GATT outcome; the situation in eastern Europe and the level of liberalisation for imports into the Community; the development of biotechnology, one of the greatest developments in agriculture; and dietary and consumption trends? A 10-year plan cannot be anything other than a wholly speculative document.

But better was to come. The hon. Gentleman said that he would take his hon. Friends to Brussels to persuade Mr. MacSharry to adopt his party's proposals. One of my hon. Friends asked what they were. I listened carefully to the response because we were all anxious to know. He said: "At another day I might inform the hon. Gentleman what our policies are". That is a reassuring statement. We are all deeply reassured to know that at another day we will know what are the Liberal Democrats' policies. That is what is known as precision.

Mr. Geraint Howells

It is unbelievable that history is repeating itself in the House. The two major parties are defending each other's policies against the wishes of the Liberal Democrats and the majority of British farmers who want confidence to be restored, stability in agriculture and a 10-year plan. If the Government do not look after the interests of the agriculture community, we will do so.

Mr. Curry

I should have thought that if the Liberal Democrats wished to restore farmers' confidence, it should seize the occasion of what is virtually the annual agriculture debate in the main debating forum in the land to reveal their policy. But the hon. Gentleman did not do that. When the hon. Gentleman was challenged by Labour Members on the cost, he said, "It is very difficult". That is the summary. We shall find out what the Liberal Democrats' policy is later and it is difficult to give the cost. That is a song to sing in the valleys and I shall make sure that it is known fairly far and wide.

It is curious that from a party which proclaims its adherence to the federal principle we get the great exposition of the disaster story which is MacSharry. If there was a party which should be predisposed to accept those proposals it is the Liberal Democrats. For them the F-word is "fraud".

I am grateful to my right hon. Friend the Member for Selby (Mr. Alison) for his kind remarks. As he knows, we have been concerned about the fate of the mushroom industry in his constituency. I shall devote my attention to that in future. I realise that it is an important matter and I note that he will send me some information on it which I undertake to examine immediately I receive it.

The hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) mentioned the whisky industry. He listed the Scottish NFU's five points, with which we agree. There is no dispute between us on that and I know the importance of the excellent beverage to which he alluded.

My hon. Friend the Member for Wealden (Sir G. Johnson Smith) made an important point about marketing. He will know that we have introduced a marketing scheme. The idea is to tell farmers to get away from the idea that somehow they must be turned into French farmers, to co-operate in a French style. We are looking for something different, for something British. We are looking for something that does not have the overtones of the French-style co-operatives. We do not want them to be retailers or processors; we want them to be more efficient farmers by farming for the market. That is the entire message of the marketing initiative, which has received an extremely good response. I am delighted that the NFU has complementary proposals, which will enable us to marry our ideas to their ideas and to get a response from farmers on this important matter.

I noticed that the hon. Member for Carlisle (Mr. Martlew) winced when one of my hon. Friends mentioned the damage that horses do to fields because I think that he has a family interest in horses. Once again, he defended the present status of the Milk Marketing Board. It is indefensible in its present form and the board knows it. It is the board which initiated the process of reform. If we said that we were going to defend the status quo, it would deeply damage farmers' interests. Therefore, we are saying to the board, "You must promote the change and we shall help you to do so, but it is your industry and you must decide what you want to do with it." What farmers do not want to do is to hold it back.

My hon. Friend the Member for Suffolk, Central (Mr. Lord) said that he would like to repatriate the common agricultural policy. That is not what the debate is about. If the United Kingdom is to be at the heart of the debate, there is no point in espousing ideas that immediately put us on the margins of the debate. We had that trouble in the past. We do not intend to repeat it. That does not mean that we accept the CAP, despite all its blemishes; it means that we must negotiate our way to a better system. There is no effective alternative.

As for the speech of the hon. Member for Ynys Môn (Mr. Jones), we defend the interests of Welsh, Northern Ireland, Scottish and English farmers. We do not stand for any sectional interest; we stand entirely for the interests of British agriculture. That is our sole purpose in the negotiations. I give a clear undertaking that we make no distinction between farmers in fighting to defend their interests against proposals which we feel damage them universally. There is no sector of British agriculture which has been miraculously insulated from the effects of the proposals.

My hon. Friend the Member for St. Ives (Mr. Harris) mentioned the importance of environmentally sensitive areas. I take note of what he said. I recognise, too, the concern about eastern Europe. We cannot say to eastern Europe, "Sorry, go away." It is important to us that we should give them a helping hand. Trade liberalisation is the most economically sensible way to go about it. It would be foolish to pretend otherwise. However, we must ensure that it is done in a sensible, orderly and measured way, since it is important to ensure that we create a fair marketplace.

The hon. Member for Clwyd, South-West (Mr. Jones) referred to repatriating the common agricultural policy. He made the sensible point that the small Welsh farmer was not excluded and that the CAP would adversely affect him.

The hon. Member for Angus, East (Mr. Welsh) made the sort of remarks that I would expect from a member of his party. He wanted me to go round the country telling farmers how awful the MacSharry proposals are. They know how awful they are. What they want is an assurance that we are going to fight them, improve them and ensure that we obtain a package that is acceptable to farmers. That is our message to farmers and it is just as true for Scottish farmers as for any other farmer in the United Kingdom. We shall defend their interests with as much vigour as we defend the interest of any other farmers in the United Kingdom.

Mr. Andrew Welsh

Will the Minister give way?

Mr. Curry

No, because I have nearly finished my speech.

My hon. Friend the Member for Ludlow (Mr. Gill) said that the common agricultural policy could not survive and that we should get rid of it. The conclusion that I draw from that is how mistaken it is to arrive late. If we had been members of the Community earlier, we should not have the CAP as it is now. The conclusion which I draw is that if the Community were to propose other exciting ventures that would have an enormous influence on how the Community develops, it would be very sensible for the United Kingdom to be in at the beginning, otherwise the penalties for this country might be very great.

The hon. Member for Carmarthen (Mr. Williams) referred to the millionaire farmers who would have to bear the burden of MacSharry. I will take him to meet the millionaire farmers in my constituency and throughout the country. We shall spend a long time looking for them. They no longer exist. I should be delighted to let him just talk to them—

Mr. Martlew

How can he, if they no longer exist?

Mr. Curry

—so that they can tell him how well they are going to do under the MacSharry proposals, which is what he said. The hon. Member for Carmarthen is misleading the farmers in his constituency if he thinks that the small farmer is insulated. That is not the case. Small farmers will suffer just as much as anyone else.

My hon. Friend the Member for Hexham (Mr. Amos) referred to tenancy reform. That is crucial. As my hon. Friend knows, we have got that matter in hand. He mentioned its importance to the whole of the rural community. We all say amen to that.

The hon. Member for Stockton, North (Mr. Cook) said that industry depends on agriculture. It is an important issue. We are just as mindful of that as we are of agriculture as a whole.

The hon. Member for Antrim, North (Rev. Ian Paisley) referred to the Goodman case. It is being investigated in the Republic and I do not intend to comment upon it.

The hon. Member for Monmouth (Mr. Edwards) referred to discrimination and corrected what his hon. Friend the Member for Carmarthen said. He talked about the family tradition of countryside livelihoods. With my constituency, I cannot but share his very real concern.

Farmers must face up to three interlocking negotiations —the eastern European negotiations, the MacSharry negotiations and the GATT negotiations. They touch on each other and sometimes they ricochet off each other. They are all crucial to this country, to the future of the European Community and to the world trading system.

My right hon. Friend and I have made it absolutely clear that in all the negotiations we shall defend the British farmer and we shall not relinquish that task.

Question put, That the amendment be made:—

The House divided: Ayes 28, Noes 152.

Division No. 22]	[10.39 pm
AYES
Alton, David	Loyden, Eddie
Ashdown, Rt Hon Paddy	Maclennan, Robert
Beggs, Roy	Michie, Mrs Ray (Arg'l & Bute)
Beith, A. J.	Molyneaux, Rt Hon James
Bellotti, David	Paisley, Rev Ian
Campbell, Menzies (Fife NE)	Ross, William (Londonderry E)
Carr, Michael	Salmond, Alex
Cryer, Bob	Skinner, Dennis
Ewing, Mrs Margaret (Moray)	Stephen, Nicol
Fearn, Ronald	Taylor, Matthew (Truro)
Godman, Dr Norman A.	Welsh, Andrew (Angus E)
Howells, Geraint	Wray, Jimmy
Hughes, Simon (Southwark)
Jones, Ieuan (Ynys Môn)	Tellers for the Ayes:
Kennedy, Charles	Mr. Archy Kirkwood and
Livsey, Richard	Mr. Alex Carlile.

NOES
Alexander, Richard	Davies, Ron (Caerphilly)
Alison, Rt Hon Michael	Davis, David (Boothferry)
Amess, David	Day, Stephen
Amos, Alan	Dixon, Don
Arbuthnot, James	Douglas-Hamilton, Lord James
Arnold, Jacques (Gravesham)	Dunn, Bob
Baker, Nicholas (Dorset N)	Dykes, Hugh
Barnes, Harry (Derbyshire NE)	Farr, Sir John
Bennett, Nicholas (Pembroke)	Favell, Tony
Boscawen, Hon Robert	Fishburn, John Dudley
Bottomley, Peter	Forman, Nigel
Bowden, Gerald (Dulwich)	Forsyth, Michael (Stirling)
Bowis, John	Forth, Eric
Braine, Rt Hon Sir Bernard	Franks, Cecil
Brandon-Bravo, Martin	French, Douglas
Bright, Graham	Fyfe, Maria
Browne, John (Winchester)	Galloway, George
Buck, Sir Antony	Gill, Christopher
Burt, Alistair	Golding, Mrs Llin
Carlisle, John, (Luton N)	Goodhart, Sir Philip
Carrington, Matthew	Goodlad, Alastair
Channon, Rt Hon Paul	Greenway, Harry (Ealing N)
Chapman, Sydney	Greenway, John (Ryedale)
Chope, Christopher	Gregory, Conal
Clark, Dr David (S Shields)	Griffiths, Peter (Portsmouth N)
Clarke, Rt Hon K. (Rushcliffe)	Gummer, Rt Hon John Selwyn
Conway, Derek	Hague, William
Coombs, Simon (Swindon)	Hamilton, Neil (Tatton)
Cope, Rt Hon Sir John	Hargreaves, Ken (Hyndburn)
Couchman, James	Harris, David
Currie, Mrs Edwina	Hayes, Jerry
Curry, David	Hayhoe, Rt Hon Sir Barney
Davies, Q. (Stamf'd & Spald'g)	Haynes, Frank

Hicks, Mrs Maureen (Wolv' NE)	Page, Richard
Hicks, Robert (Cornwall SE)	Paice, James
Hordern, Sir Peter	Patnick, Irvine
Howarth, G. (Cannock & B'wd)	Pattie, Rt Hon Sir Geoffrey
Hughes, Robert G. (Harrow W)	Peacock, Mrs Elizabeth
Illsley, Eric	Pendry, Tom
Irvine, Michael	Pike, Peter L.
Jack, Michael	Porter, David (Waveney)
Janman, Tim	Portillo, Michael
Johnson Smith, Sir Geoffrey	Powell, Ray (Ogmore)
Jones, Barry (Alyn & Deeside)	Raison, Rt Hon Sir Timothy
Jones, Martyn (Clwyd S W)	Ridsdale, Sir Julian
Kellett-Bowman, Dame Elaine	Rumbold, Rt Hon Mrs Angela
Key, Robert	Ryder, Rt Hon Richard
Kilfedder, James	Sackville, Hon Tom
King, Roger (B'ham N'thfield)	Shaw, David (Dover)
Knapman, Roger	Shaw, Sir Giles (Pudsey)
Knight, Greg (Derby North)	Shelton, Sir William
Knowles, Michael	Shepherd, Colin (Hereford)
Latham, Michael	Shersby, Michael
Lawrence, Ivan	Skeet, Sir Trevor
Lee, John (Pendle)	Stevens, Lewis
Lightbown, David	Stewart, Allan (Eastwood)
Lord, Michael	Stewart, Andy (Sherwood)
McAvoy, Thomas	Stott, Roger
McLoughlin, Patrick	Sumberg, David
Madel, David	Summerson, Hugo
Malins, Humfrey	Taylor, Mrs Ann (Dewsbury)
Mans, Keith	Taylor, Ian (Esher)
Marland, Paul	Taylor, John M (Solihull)
Marshall, Jim (Leicester S)	Thurnham, Peter
Martin, David (Portsmouth S)	Trippier, David
Martlew, Eric	Waller, Gary
Mawhinney, Dr Brian	Wardle, Charles (Bexhill)
Maxwell-Hyslop, Robin	Wells, Bowen
Miller, Sir Hal	Widdecombe, Ann
Mills, Iain	Wilshire, David
Mitchell, Andrew (Gedling)	Winterton, Mrs Ann
Mitchell, Sir David	Winterton, Nicholas
Monro, Sir Hector	Wood, Timothy
Moss, Malcolm	Younger, Rt Hon George
Needham, Richard
Neubert, Sir Michael	Tellers for the Noes:
Nicholson, Emma (Devon West)	Mr. Tim Boswell and
Norris, Steve	Mr. Timothy Kirkhope.

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That this House takes note of European Community Documents Nos. 8356/90, relating to agricultural production methods, 7570/91, and the Supplementary Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 13th November 1991, relating to the development and future of the Common Agricultural Policy, and 8886/91 +COR 1,8950/91 and 9136/91, relating to amendments to the legal framework of the Common Agricultural Policy; and supports the Government's intention to seek reform of the Common Agricultural Policy which will make Community agriculture more market-orientated and efficient, will put more emphasis on environmental care, will reduce the cost of that Policy and will apply fairly throughout the Community.