HC Deb 27 May 1993 vol 225 cc1087-95

2 pm

Mr. Colin Shepherd (Hereford)

I am grateful to my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food for being present to debate what I consider to be an important subject, not only for my part of the world, but for the United Kingdom consumer and for the United Kingdom poultrymeat industry.

I have a constituency interest relating to a successful concern known as Sun Valley Poultry. It hides its light under a bushel, as it does not advertise on television in the same extrovert manner as other poultrymeat producers, but it is a success story. The poultrymeat industry as a whole is a success story. The figures show that in 1981 it accounted for 21.9 per cent. of total meat consumption; in 1991, 10 years later, it was 30.1 per cent. and the figure is still increasing. I admire Sun Valley for the way in which it has developed its business, and for the way in which it has survived and continued to perform steadily throughout the recession. It is a success story without doubt.

The national poultrymeat industry employs some 50,000 people and a further 150,000 people depend on it for their jobs. Almost as importantly from an agricultural point of view, when agriculture is under distinct stress, the industry is a massive consumer of feed wheat. Considering the amount of cereals grown in Herefordshire, my farmers are greatly indebted to Sun Valley and to the poultrymeat industry for enabling them to grow a crop for which there is a market. They are very effective, as is Sun Valley, and that success is reflected across the country.

Having shown that the industry is such a success story, one might ask why I should raise the subject at all. Normally, the purpose of Adjournment debates is for a grievance to be raised, not for a success to be praised. However, there are important reasons for raising the matter this afternoon. On the positive side, I am raising the matter because I want the industry to be able to build on its success. There are storm clouds around, to put it mildly. In 1988, only five years ago, imports of poultrymeat into this country comprised 7 per cent. of consumption. By 1991, imports had gone up to 18 per cent. By 1992, if one extrapolates beyond 15 September, we see a figure of 20 per cent. Even after the devaluation effects, we find that imports are sustaining a level of 18 per cent.

If we have a success story, we should be trying to create a climate in which the industry can deploy the results of that success. We should build up our exports and be positive in the Community, rather than being seen as an export opportunity by fellow members of the EC. It is right that we should ask why it is not happening in that way. Why are we sustaining an import level of 18 per cent. when, given how successful we are, we should really be a net exporter?

A straw in the wind—a straw in the storm, perhaps —was the decision by Cargill to locate its new plant just south of Orleans in France. As the House knows, Cargill is the owner of Sun Valley Poultry. It is very big internationally in the poultrymeat and cereals market. It is a multinational company and it knows its business. It has decided to put a plant down in France even though the expertise that led it to purchase Sun Valley Poultry in the first place lies here in the United Kingdom. Why? The answer lies in a letter sent to me by one of my constituents, which I have passed to Ministers. Apparently, the vice-president of Cargill reflected to a study group of United Kingdom farmers visiting Minnesota that Cargill was a world trading organisation but that—and here is the crunch— nowhere in the world had Cargills encountered so much self-destructive bureaucratic red tape, which was rapidly strangling the United Kingdom poultry industry. That is the view from outside and it has made capital investment move out of this country into another country. However good a European I may be, I feel that the home team is being deprived of an opportunity and that we ought to address ourselves to the reasons why.

Without doubt, the answer lies here in the United Kingdom. Nowhere in the Community is legislation as rigidly and nitpickingly interpreted as it is here. There is no reason why legislation should not be interpreted and followed, but, if it is not, once again, one must ask why. I know full well that my hon. Friend the Minister has been engaged in a consultation exercise with the poultrymeat industry with the objective of getting rid of unnecessary regulation wherever possible. The poultrymeat industry has responded with a long list of niggling points. I emphasise that I shall not go through them all today.

I want to make absolutely clear the commitment of the United Kingdom industry to quality. In his letter to me on 19 January, my hon. Friend the Minister referred to his reluctance and, indeed, determination not to compromise the high level of protection at present afforded to consumers of United Kingdom poultrymeat". In that, my hon. Friend and the industry are on entirely the same wavelength. There is no way that the industry wishes to compromise its standards. In fact, it has been ahead of the legislation for 20 years. It has not waited for legislation but has got on with the job. The industry is also fully committed to the implementation of the Food Safety Act 1990. I make that clear because it is easy to misunderstand the poultrymeat industry.

Poultrymeat inspection has to be the first handicap that the industry faces. I congratulate Ministers at the Ministry of Agriculture, Fisheries and Food on having used the United Kingdom presidency of the Community last year to secure a new poultrymeat hygiene directive. In a letter on 23 March, I was told: We will be announcing in due course our plans for implementing this new Directive. Having been told that the directive is being worked out and implemented, I am concerned to discover that it will not come into force this year or next year. In fact, it will not come into effect before 1995. That is an extraordinary length of time when we consider that we continually face the threat of imports. We should not doubt the fact that French producers look to the United Kingdom market whenever there is an opportunity.

If the poultrymeat industry is at least a generation ahead of the red meat industry, why must we wait for the red meat industry? As the mechanisms are already in place for the poultrymeat industry when they might not be for the red meat industry, why can we not establish the necessary arrangements to enable the poultrymeat industry to get on with the job, on an equal basis with its Community competitors, without having to wait until 1995?

The local authorities involved face difficulties. I am given to understand—that is probably the best way to put it—that they are not receiving advice from the Ministry about what they should be doing. They are therefore reluctant to compromise their arrangements. Indeed, the agendas of many local authorities are different from that of the industry.

For example, Hereford city council has a major responsibility for poultrymeat inspection. I am pleased to say that even now, at 2.10 pm, the local authority is discussing with Sun Valley the arrangements that it might be appropriate to establish. I am pleased that that is happening. That has come about as a consequence of prodding from the company, from me and from my hon. Friend the Minister.

However, certain local authorities are not rushing to sort out the problem. They take a view, like Hereford city council takes a view, that there should be a policy of no redundancies. That is not necessarily the industry's view and it is not necessarily the correct view. We should consider the industry which should be served.

I should like confirmation from my hon. Friend the Minister that the arrangements for the poultrymeat industry will go ahead flat out to remove the handicap from United Kingdom producers in terms of the poultrymeat inspection costs. My hon. Friend the Minister is as aware as I am that the problem is urgent. The charging directive is not being implemented evenly throughout the Community. It is cost neutral in the United Kingdom and, as such, I am given to understand that it works out at twice the standard figure set out in the directive.

The French, however—and I must always look across the channel because that is where the immediate threat is —are talking in terms of only 64 per cent. of standard charges. Germany, Belgium, and Holland take a standard view and pick up the difference if there is any. Spain, which is quite capable of looking to our shores to place products, implements the charging directive only in certain regions. In Ireland, the cost is below standard.

Furthermore, the directive is not even implemented in Italy, Greece, Luxembourg or Portugal. I have been assured by industry representatives—a view wider than simply that of Sun Valley—that the product in Italy is good. The inspection is good, but it is not carried out with the same bureaucratic cost as it is here. The product is not necessarily bad because it does not have the same inspection costs. It is simply cost advantaged.

I want now to consider the Medicines Act 1968 and press my hon. Friend the Minister on the Veterinary Medicines Directorate and its terms of reference. Under the 1968 Act, drugs or vaccines should comply with safety, quality and efficacy requirements. However, I find that the requirements in other countries apply only to safety and quality. Surely it is for the industry to determine what is effective in terms of cost efficacy; it is not for the Veterinary Medicines Directorate. The VMD can say whether something is safe and has the right quality, but, if it has a lot of cost, producers can make up their minds whether to use it.

At present, the United Kingdom industry is at a disadvantage in terms of Marek's disease and has had to stampede the Ministry to take steps to overcome the problem. The Minister has responded by giving the vaccine an animal test certificate, but it does not have anything more than provisional approval. With regard to Gumboro disease—we are talking about losses of broilers of 1 per cent. plus a year—the VMD is reluctant to clear the hotter vaccines that are more effective and in use in the Community at present.

With regard to infectious bronchitis and the chick anaemia virus, there is always a delay. At the same time, our competitors are able to get a better crop by using vaccines that our producers are not permitted to use. Similarly, we find that the Zoonoses directive is not in place. What pressure is being brought to bear on Community countries to put the directive in place? Sometimes we are two years ahead and that involves costs which our competitors do not have.

Those matters are important in the single market. My hon. Friend the Minister was dismissive of the report by David Gosling and published by the Templeton Fellowship. We have a price disadvantage. The Ministry estimates that to be 3.5p and the industry estimates it to be between 4p and 6p. The report cannot be neglected. The market for whole frozen birds is driven purely by price. It does not matter whether birds are marked grown, produced or whatever in England or Britain—price rules the consumer in that sector. Two items of product can be side by side on a supermarket shelf with one labelled "grown in Britain" and the other "import". The imported product does not necessarily carry the same cost as the United Kingdom bird. Different vaccines are used and that is not necessarily wrong. Different qualities of inspection are used and that is not necessarily wrong, provided the product is up to the mark. However, the price differential cannot be ignored. I make a strong plea to my hon. Friend to get the matter sorted out.

2.16 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Nicholas Soames)

I congratulate my hon. Friend on securing this important debate on an industry about which he knows a great deal and in which he is a formidable representative of the interests of an important corporation in his constituency, which, as he rightly said, provides in knock-on terms a vast amount of prosperity in the farming community of Herefordshire. The poultrymeat industry is unassisted in a way which many other parts of the industry are and it deserves every credit in sight. My hon. Friend made a forceful case on the industry's behalf and I propose to deal with that.

The poultrymeat industry is a significant sector of our agricultural industry—indeed, it can serve as a model for other sectors. Since the second world war, poultrymeat has moved from being an occasional treat for the consumer to part of our everyday diet as the volume of production has grown and prices, relative to other foods, have come down. The industry has also been highly innovative in introducing a wide range of value added and convenience foods based on poultrymeat, which has also improved the consumer's lot and range of choice. My hon. Friend was right more generally to praise the size, breadth and scope of what is an extremely important industry in our agricultural infrastructure.

As my hon. Friend said, the United Kingdom industry earned more than £100 million in exports last year. We also benefit from thriving ancillary industries, especially our producers of breeding stock who are world leaders. British poultrymeat companies are also venturing abroad to increase their sales or engage in joint ventures. All that has been achieved without the market support mechanisms that are available to other agricultural sectors.

Of course, the industry—as my hon. Friend knows better than most of us—has not been immune from the difficulties that all businesses have experienced in the past couple of years. But just as the economy generally is looking up, so, too, are the prospects for the poultry industry. Imports, which have been a growing competitive threat in the past year or so, appear to have fallen back in recent months.

Increasingly, the multiple retailers are stocking British chicken and other poultrymeat marked as such. Feedstuff prices have also risen in sterling terms, due to devaluations in the green pound, but market prices have firmed considerably since Christmas so that margins are currently healthy.

We also have the first benefits of the CAP reform package to look forward to in July when, as my hon. Friend knows, the prices of feed grains will fall by about 25 per cent. This will mean a significant fall in the price of poultry feed and, I hope, an improvement in profitability for a hard-pressed industry.

We are concerned to create the right environment in which the industry can flourish. My hon. Friend rightly lobbied vigorously in his speech for that to happen. We accept the importance of everything that he sand. For example, the poultry industry continues to benefit from our research and development programme, with particular emphasis on animal health and welfare matters.

My hon. Friend's remarks about Cargill moving to open a factory in Orleans, I understand largely to supply chicken for McDonald's, is indicative of the itinerant nature of a sophisticated industry.

Mr. Colin Shepherd

The point is that the French market is currently being supplied effectively from Hereford. Why on earth should I see it go to Orleans?

Mr. Soames

I agree with my hon. Friend. My point was that we have to create the environment to make it simply not worth Cargill's while to do so. But Cargill is a major international corporation. It is an extremely successful, well-run company. It will rightly make a shrewd commercial judgment based on several factors. I take my hon. Friend's point that the environment in Britain must be in every way conducive to Cargill not only to remain in Britain, but to enhance its investment and open other factories here.

Mr. D. N. Campbell-Savours (Workington)

Will the Minister give way?

Mr. Soames

No. The hon. Gentleman must forgive me. This is an Adjournment debate.

As my hon. Friend will know, the Ministry of Agriculture, Fisheries and Food is actively taking forward the Government's deregulation programme by looking to see where legislation is either unnecessary or excessive. He can be assured that we shall seek to make appropriate changes, where this is found to be the case.

There is a commonality of interests, as my hon. Friend rightly said. Our aim is to protect the rights and proper concerns of the consumer as well as those of the industry, which wants only to produce a high standard product. As he knows, we have to bear in mind the need to protect the consumer and others. So there are some areas in which the industry has to, and indeed does, accept a degree of regulation. I know that that can be seen as a problem by the industry. My hon. Friend forcefully mentioned Cargill's vice-president's remarks about regulation in Britain. But clearly in these cases the Government and industry need to work together to seek solutions to these problems. We spend a great deal of time listening and taking an interest in how we may better create a proper environment for the growth of businesses.

Two areas of particular concern that my hon. Friend mentioned are the meat hygiene inspection arrangements and the approval of veterinary medicines. The control dealing with poultrymeat hygiene lays down the responsibilities of the industry and the Government. That ensures that poultrymeat is produced under hygienic conditions and is inspected before it reaches the consumer.

My hon. Friend the Member for Hereford will know that the old EC directive on poultrymeat hygiene, dating from 1971, was replaced last year by a new directive as part of the single market programme. The United Kingdom played a leading role in negotiating what I believe are significantly improved requirements, which were welcomed by many when the directive was agreed last Christmas. Under the old directive, every bird was required to receive an official inspection by a trained poultrymeat inspector. In the United Kingdom we have abided by this requirement, but I believe that it has not always been so scrupulously observed by our competitors on the continent, as my hon. Friend said.

The new directive, however, recognises the central role that industry plays in ensuring the safety of its product. Trained members of company staff will be able to carry out on-line inspection, under the supervision of an official inspection team employed by the local authority. I noted what my hon. Friend said about Hereford city council and perhaps we can have a chat about that on another occasion. Suffice it to say that my Department is, as my hon. Friend is aware, in touch with that council.

I hope to receive very shortly the detailed recommendations of a working group, on which the industry and those responsible for enforcement were represented, on how the new arrangements should operate in practice. I hope that it will be possible to take much of what they recommend into account. When we draw up our proposals, we will ensure that their opinions are included in the directive. We will, as my hon. Friend requested, press ahead with the new arrangements with great vigour.

I understand that there have been anxieties, both in the industry about the continuing burden of inspection costs, and among poultrymeat inspectors and local authorities over the reduction in jobs which will occur in those plants where company staff assume responsibility for inspection work.

I am anxious that we should proceed with care—my hon. Friend must allow this to happen, if he will—taking account of the discussions that have already taken place, to produce detailed proposals. Those will provide a basis for producers to begin the training of their staff. They will also provide an opportunity for local authorities to discuss with their own employees, the Government and the industry how the new arrangements will be phased in and the numbers of official inspection staff who will be required in the future.

Mr. Colin Shepherd

Can we be certain that when our arrangements are put into operation equivalent ones will be enforced in other European countries?

Mr. Soames

My hon. Friend has my unequivocal guarantee that that will be our aim in all the talks. There is no point in having the single market rules unless they are enforced across the Community. He may be assured of our determination to see that that happens.

My hon. Friend also spoke about production costs being cheaper in other EC member states. He will be aware that the industry has made estimates of that sort, despite the difficulty of comparing like with like. We do not take lightly the figures that were given to us, but they are rather on the high side and include costs that are not due to Government regulation. Nor do they take account of all the costs in other member states, such as French social security charges. They take no account of the action that we have taken to eliminate the differences, such as the recently agreed directive on Zoonoses, to which my hon. Friend referred, which harmonised the testing of broiler breeding flocks, or the work that we have done on meat hygiene inspection.

My hon. Friend also referred to important issues relating to veterinary medicine, Gumboro disease and other diseases. I share his concern about the losses that those diseases can cause and the distress to the birds that can result. There is a view in the industry, however, that there are wonder vaccines out there waiting to be taken up—in some cases they are apparently already available across the channel—and that only our licensing system stands in the way. Unfortunately, that is not true and, as is so often the case in life, it is rather more complicated than that.

For more than 20 years, the need for drug companies to meet the internationally recognised licensing criteria of safety, quality and efficacy has proved its worth. That is recognised in the harmonised licensing arrangements applicable in the Community from 1 January 1993. They require that no veterinary medicines may be marketed in a member state unless a licence has been issued against those criteria by that member state. Animals and producers alike have benefited from the knowledge that licensed veterinary medicines are of good quality, safe and do the job that they are supposed to do.

By their nature, vaccines are more hazardous than other medicinal products and it is therefore essential that we establish the benefits under United Kingdom circumstances to set against any potential risks. For example, with Gumboro vaccine real safety fears still exist —the products being tested are not called "hot" vaccines for nothing. If we get it wrong, we may find that the birds' immune system is irreparably damaged—the vaccine organism spreads in large quantities to unvaccinated birds on neighbouring farms, which would make matters far worse—and that birds are subject to other harmful effects.

Not everyone agrees that those risks are worth taking. Representations have been made recently by poultry experts to the effect that Gumboro disease can be controlled by the correct administration of less virulent vaccines, together with good husbandry conditions, and that hot vaccines should not be licensed.

Nevertheless, the Veterinary Products Committee, the independent scientific body which advises Ministers, considered last week whether the existing small-scale trials with hotter vaccines should be expanded. My right hon. Friend is considering the committee's advice on this question and expects to make an announcement very shortly.

Believe me, we understand the industry's concerns. Staff at the Veterinary Medicines Directorate are committed to assessing any applications where a disease problem is known to exist as quickly as possible, and have demonstrated that in practice.

I cannot accept any criticism of the slowness of either the directorate or the licensing system. The issues involved are not straightforward and need careful consideration. There are limits to the short cuts that can and should be taken.

The Government are in no doubt, as I hope that my hon. Friend is aware, about the importance of the poultrymeat industry in his constituency and throughout the country, whether as an employer, or, as my hon. Friend eloquently said, as a major consumer of cereals. Certainly it represents a significant part of the economy.

I am confident that the industry, as it has proved in the past, has the expertise, commitment, drive and entrepreneurial flourish to continue to build on its achievements. As the economy revives, and with the forthcoming fall in feed prices, the opportunity is there to do all this. We, for our part, will do all that we can to ensure that this opportunity can be taken.

In the time remaining to us, may I say, on behalf of the great unreshuffled, what a pleasure it was to have this opportunity to debate these matters with my hon. Friend. I hope that Cargill will go from strength to strength in Herefordshire.