§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jamieson.]8.51 pm
§ Mr. Oliver Letwin (West Dorset)
I read in the summary agenda that is now helpfully provided that we have until 10.30 for this debate, but I hasten to reassure both you, Mr. Deputy Speaker, and the Minister who kindly attends that I have no intention of dragging out my remarks for any such period.
Just before the recess, perhaps somewhat mischievously, I asked a question—at what should have been Prime Minister's Question Time, but turned out to be questions to the Deputy Prime Minister due to the absence of the Prime Minister on more important business—about whether there was a place for dairy farming in particular in the Prime Minister's vision of cool Britannia. I was reassured to hear the Deputy Prime Minister tell us that, in the view of Ministers', there was a place for dairy farming.
I asked that question partly because of my experiences in West Dorset of the current state of farming and of allied industries, and partly because of the evidence, which I think is mounting, of the attitude of Ministers in the relevant Department to that state of affairs, and their vision of how it might evolve. It is those two points that I want to deal with this evening.
The first of those concerns—the concern about the actual state of farming and of allied industries in West Dorset—is born in on me, as I am sure it is on many of my hon. Friends and many Labour Members, almost daily by correspondence, meetings and visits to farms. As the Minister will be aware, West Dorset is a constituency that happens to contain an economy that, apart from some high-tech activity and tourism, depends almost entirely on the welter of services that administer to farming, and on farming itself. Therefore, for anyone representing such a constituency, what is going on in farming in such a place is of urgent concern.
The pattern revealed in the dry statistics, where we are frequently reminded that farm incomes have dropped by between 30 and 40 per cent., is not the pattern in West Dorset, where it is far more exaggerated. I hope that, without unduly trying the Minister's patience, I can do something that I fear, from my experience in Whitehall and perhaps from his experience as a Minister, too seldom happens: to try to bring home to him and to his Department issues that come to a constituency Member directly, but that often for a Minister are filtered through layers of charming and intelligent bureaucrats, to the point where perhaps some of the poignancy is evened out.
I quote just a few of what are in fact several hundred such letters from West Dorset farmers and people in industries connected with farming there. A well-known farmer writes:
We … rear first class, quality beef, pork and lamb and we can assure you that the fluctuations in the livestock market over the last year have crippled our business. Over the last twenty years our situation has never been more difficult.Another equally well-known farmer writes:
We are established farmers"—564 we are talking here of a substantial farm—
working hard against the odds to avoid going out of our profession and becoming a drag on the public purse.We are talking here not of a diminution of income, but of making losses and going out of business.
A third farmer writes:
My own farm income"—this is a smaller farm—
is so reduced that after all the long hours worked by myself and my family—I am sure that the Minister will not want to deny that farmers are a hard-working breed—
at the end of the day our business is running at a loss.How long can we carry on like this?However, it is by no means true that such letters come only from farmers. I have one from a concern that perhaps even in the Minister's view and certainly in that of the Deputy Prime Minister and Prime Minister, might have nothing to do with farming: structural engineers, steel stockholders and building contractors in my constituency. It says:
I also remind you of the problems in the rural areas of the traders and people who run businesses and employ people serving agriculture. Farmers are the first to reinvest in the economy when they have the opportunity but clam up when things go against them. This results in terrible hardship for support industries.Nowhere is the case more poignant than in relation to dairy farms in my constituency. One writes to me:
the milk price has dropped.That has resulted in a fall of income of £85,000 in our business.Currently our milk is trading at 5 p a litre less than 12 Months ago and we certainly expect 1998 … will be dramatically worse.Another dairy farmer writes to me:
If things do not improve in the foreseeable future, I may possibly have to move to Greece … This would not be an easy decision to make as my family have been farming in Dorset for at least 3 generations.Therefore, a group of small and medium farmers and people who work in industries supporting farming, who are well-established, hard-working people, operating fairly efficient businesses—often very efficient businesses—face not a drop of a third or so in their incomes, but, perhaps because they have borrowed from the banks, leased quota or some combination, or because they have a debt burden stretching back some years, which they are now unable to finance, the likelihood of going out of business in the near future. The problem extends not just to them but to large farms.
One farm in my constituency comprises more than 900 acres, and has a dairy herd and considerable cereal crops. Its owners have presented me not only with anecdotes but with accounts, as have many other farmers. They are experiencing a drop in income not of 30 per cent. but of 80 per cent. for 1997 compared with 1996. As the Minister will realise, that is for a year which by no means reflects the full effects of the pound on farming in general. In 1998, we can expect that the 900-acre farm, which is perhaps one of the larger and more efficient general farms in the United Kingdom, will be making a loss.
§ Mr. Robert Walter (North Dorset)
My hon. Friend and I both represent Dorset, and many of the businesses to which he referred cover both our constituencies. Like him, I have received many letters, and I should like to 565 read briefly from a piece written by a firm of chartered surveyors which has offices in both our constituencies. It states:
There is a sense of impending agricultural recession and gloom. Farmers by nature have for many years complained about prices and the weather and to some extent I feel have "cried wolf' but now the wolf has arrived … farmers accounts which in many cases end on 31 March will show a significant difference for this year compared to last. For instance I have seen accounts from a 240 acre farm which is farmed by three brothers and their wives; last year they made a profit of £60,000, this year they expect half this … this is only £10,000 a family which is very little return compared with all the work put in and the capital employed.I hope that that helps my hon. Friend, and makes it clear that the problem he is outlining is common throughout the county of Dorset.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. I do not want the debate to spill beyond the borders of West Dorset.
§ Mr. Letwin
I am grateful to my hon. Friend, because he makes clear a situation that is poignantly felt in West Dorset. I shall not try the patience of the House, but I could echo many times over the sentiments that he describes. I have presented only a small selection of the several hundred letters that I have received.
I referred to the attitude of Ministers. I in no way accuse Ministers of bad faith or irrationality, but I do not think that I am speculating or being unfair in what I am about to say, because the evidence is mounting that they have adopted a clear and ostensibly rational position which is remarkable, and quite contrary to that adopted over the past 50 to 100 years by Ministers concerned with agriculture. The evidence comes not only from their public statements but from what they have said in private when visiting my constituency, and from what they have said to the National Farmers Union when discussing such matters with it.
It is clear that Ministers believe that farming, and, I suppose it has to be said, all the allied trades, have to be seen in much the same light in which Baroness Thatcher once saw the coal mines. At least, that is how we see it in West Dorset.
Ministers appear to believe that farms in constituencies such as mine—farms ranging from perhaps 50 to 1,000 or 2,000 acres—are intrinsically uneconomic. They believe that such farms have been propped up by years of unfair subsidy, and that, in a new wave of Blairite Thatcherism, they should be driven out of business by a harsh but entirely scrupulous and detailed attention to economic reality. I think that Ministers feel that farmers need to be made to face that harsh cold reality, just as Baroness Thatcher felt that it was necessary to make the miners face reality when she removed the subsidies that propped up their pits.
It is not ignoble for Ministers to wish to create circumstances in which businesses—farms are certainly businesses—have to face economic reality. I suppose that I have spent the whole of my so far paltry political life supporting that general view, but I fear that an error is now being made. Perhaps it stems from the fact that Ministers have not attended closely enough to the origins of the theory that they so devoutly espouse.
When Baroness Thatcher and others attacked the subsidies that propped up uneconomic industries, they did so precisely because they believed that those industries 566 were intrinsically uneconomic. Therein lies the vast gulf between the coal mines and fanning. I cannot speak for all of them, but the vast majority of the farms in West Dorset are not intrinsically uneconomic. They can compete on a level playing field and in an open market, and, to my considerable surprise, I find that they are willing to do so.
When I was first chosen as a candidate in West Dorset, and when I was subsequently elected, I thought that I would face a near lynch mob when I addressed farmers and I espoused free market principles. I found the very opposite—farmers in West Dorset are quite content to face a genuine open market on a genuine level playing field. However, there is not a level playing field; there is not an open market.
On the contrary, the Agriculture Minister constantly tells us that it is part of his agenda to undo the common agricultural policy. Therefore, Ministers must have fully realised that there is such a thing as the CAP. What is it? It is a massive array of props and subsidies, in the main for farmers on the continent, who are much smaller and less efficient. They are being kept in business by that array of subsidies. It is against those farmers—not wholly, but predominantly—that the farmers of West Dorset must compete. There is no open market or level playing field; there is a multifarious and hugely complex system of changing subsidy.
In fact, the situation is worse than that. My farmers have to face other obstacles, quite apart from the subsidies enjoyed by farmers against whom they are competing—they have to face particularly intense environmental, health and safety, and animal welfare legislation. If it would not try the patience of the House, I could read out letter after letter on those issues. My farmers daily find, when they compare their lives and working habits with those of their competitors, that they are constantly at a disadvantage.
I shall cite just one example, but it is a striking one. When the whole vexed issue of beef on the bone arose, the Minister of State and the Minister of Agriculture had the opportunity to insist that beef could be imported only if it satisfied the ultimate test that would have ensured that it could not have infected ganglia, if we are to believe the Spongiform Encephalopathy Advisory Committee report. The Minister could have insisted that only beef under 30 months old could be imported, because the SEAC report makes it perfectly clear that only beef over 30 months old has shown any trace of infected ganglia.
Had the Minister done that, he would have had to ban all imports from all countries that have had the slightest trace of bovine spongiform encephalopathy, other than the United Kingdom, because no other country where there has been BSE has instituted an over-30-months scheme. The Minister chose not to do that, and so failed to remedy one of the aspects that we can describe only as a non-level playing field.
The over-30-months scheme happens to have attached to it the subsidies that make it tolerable for my farmers, but there are many other cases of schemes, rules or laws being introduced—sometimes European directives being enforced too vigorously by our officials—that make it extraordinarily difficult for our farmers to compete on a fair basis against, for example, Italian farmers, who benefit from a somewhat more lax—some may say more realistic or less rigorously proper—application of European directives.
567 The burden of my argument is that West Dorset farmers are not in the position suggested by dry statistics. They are not suffering a one-third drop in income—in many cases they are suffering drops of 70 to 80 per cent.—
§ Mr. Owen Paterson (North Shropshire)
I heartily congratulate my hon. Friend on bringing this matter to the attention of the House. I, too, represent a farming constituency, and the problems are the same in Shropshire as they are in Dorset.
Is it not incredibly frustrating for dairy and beef farmers that world demand for their products is increasing in a straight line? Indeed, world demand for dairy products is increasing annually at a rate of 10 to 15 per. cent. Because of the astonishing improvement in the nutritional demands of the huge Chinese population, demand for beef is growing. [Interruption.] The hon. Member for Dumbarton (Mr. McFall) is making sceptical gestures. He is ignoring the reality that, given a free market and an unshackling of the appalling burdens placed upon them, farmers in Shropshire and Dorset could prosper and take advantage of an expanding world market for their products.
§ Mr. Letwin
I am grateful to my hon. Friend, as that is exactly the burden of the second part of my argument. My farmers could prosper in an open market, but they do not face an open market—it is a rigged market in many different respects. It is partly rigged by things beyond Ministers' immediate control, such as the CAP and the failures of the World Trade Organisation, and partly by things which are, to a degree, within Ministers' control—our regulations.
Together, those matters mean that the farmers of west Dorset—and hence the chain of suppliers that depend upon them—are not the intrinsically uneconomic coal miners whom the noble Lady Thatcher wished to deprive of their subsidies. They are a different breed. They have been reduced to their present state by Government and intergovernmental action. It therefore behoves the Government to take action to remedy the problem.
Within the CAP are the means to remedy, in part, the particular deficiencies from which my farmers suffer. For example, there is agrimonetary compensation. I hate the CAP in all its devices. I hate nothing more than the device of the green pound, which I associate—emotionally and partly intellectually—with single currencies and other abhorrent devices. However, the green pound had the one great advantage of having associated with it agrimonetary compensation. That was an effort to ensure that, in this "Alice in Wonderland" world of subsidies—and hence intrinsically unlevel playing fields—the playing field could be relevelled by adjusting for exchange rate differentials.
I do not suppose for a moment that Ministers wish to continue with the CAP, and nor do 1. However, neither they nor I can do anything about the fact that the farmers of West Dorset must live with the CAP. Ministers can and ought to play the game by the crazy rules which have been set. It is only if one plays by all the rules that some of the craziness is removed. Ministers ought to be applying for full agrimonetary compensation, but they are not doing so. The Minister of Agriculture has said that he has applied for a small amount of compensation, but it is not enough.
568 Ministers could try not to impose any further regulatory burdens on my farmers—which stretch back, inevitably, to the supply industries which serve them—which are not suffered by their competitors at this time of the high pound and the failure of agrimonetary compensation. My farmers regard with dismay the proposition that fertiliser or pesticide levies might be imposed. They see all these moves as an effort not to deal fairly with them and not to try to put them in a position where they could compete, but to try to pretend that they can absorb an infinite amount of regulation when their competitors have far less, and to pretend that they can absorb a situation in which "Alice in Wonderland" subsidies prop up their competitors but corresponding subsidies are not provided for them.
That situation will not last. The Minister of State and his right hon. Friend may believe that farmers are, by and large, rich people with large cars or Range Rovers, who have a wealth of capital to fall back on. They may believe, genuinely, that, in the end, they can squeeze the oranges until the pips squeak, and it will all be all right with a bit more efficiency. In West Dorset, it will not be all right, because of three factors: small farmers will quickly go out of business; the supply industries will disappear permanently from west Dorset; and middle and large-sized farmers will be consolidated into great going concerns.
Over time, the face of West Dorset, and its society, will crumble. That inheritance is terribly precious—not just to farmers and suppliers in my constituency, but to people throughout the country. West Dorset is a special kind of society, which works in social terms. People know and support one another. Children grow up in such a way that they become decent people. As they are growing up, people around them look after them in a way that is seldom seen in our cities and is difficult to replicate except in a deeply rural society.
That is a model which the Ministry does ill to attack, and which the country should support. That is why, without the slightest trace of shame or any sense of special pleading, I argue that the Minister should reconsider the Government's attitudes and policies, which will drive the society in places such as West Dorset out of existence, never to be recreated.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker)
I congratulate the hon. Member for West Dorset (Mr. Letwin) on securing this debate, and on being fortunate enough to have more time than perhaps he envisaged—I welcome that. I shall not operate Parkinson's law and expand my comments to fill the time available, but I shall try to answer his points. He has raised these matters with the Deputy Prime Minister, and was active at Agriculture questions on 19 March, although the answer that he was given about extra Government compensation was not as he described it.
I make it absolutely clear that, contrary to what the hon. Gentleman suggested, the Government do not have the slightest intention of doing to farming what the previous Government did to coal mining. Indeed, the analogy somewhat diminishes his case, especially as he was a special adviser in the Prime Minister's policy unit between 1983 and 1986—at the time of the year-long 569 strike—actively seeking to close down the coal mining industry. The Government make no analogy between the two industries, and he does himself a disservice in suggesting that we do.
The hon. Gentleman represents a beautiful part of the country. Indeed, I was almost there today—I found myself in Hampshire, on campaigning, rather than ministerial, duties. However, Dorset is different from the surrounding counties in respect of the dairy herd. It has a high proportion of dairy herds, which account for some 20 per cent. of the dairy cattle in the county—it is second only to Cheshire in that respect—so it is a very important part of the dairy industry, and we pay tribute to the work that goes on there. There are 90,000 dairy cows in Dorset, which is 5 per cent. of the total in England. The dairy industry there makes a substantial contribution to the economy.
Obviously, farms come into and go out of business. For the avoidance of doubt, I should point out that, between the middle of 1996 and the middle of 1997, 20 farms in Dorset ceased milk production, which is in line with what we would expect in terms of the national average. Because of pressures on the industry, that trend is likely to continue.
We are well aware, and we do not shy from the fact at the Dispatch Box—we say the same things privately—that there has been a fall in farm incomes. Agriculture is going through a very difficult time, and the past year has been a bad one for farm incomes generally and for the livestock sector in particular.
The income from farming is estimated to have fallen by 37 per cent. in real terms in 1997. I accept that average figures are always misleading—some sectors fare better than others—but there has been a fall across all sectors. On average, the fall in income in the dairy sector has been 36 per cent. in one year, and some of those engaged in lowland cattle or sheep farming have faced a drop in income of 63 per cent. in one year. Those figures are in real terms, and I accept that they are substantial.
The principal cause of the across-the-board fall in farm incomes has been the lower prices attracted by all commodities, particularly the major commodities. The relative strength of sterling over the past year has had a major effect on the prices attainable in the United Kingdom—we do not seek to deny that. Unfortunately, while sterling remains high and while there are structural surpluses in most agricultural sectors in the European Union, the prospects for increased commodity prices and improved incomes in the short term are not good.
We have spoken in the House and outside about commentators who have predicted that in 1999 there should be an upturn in farm prices and incomes on the back of a weakening in sterling and more buoyant world markets. Those are the forecasts for 1999 by independent commentators and some banks. The current situation is expected to be temporary.
§ Mr. Rooker
It is expected that the situation in agriculture will be temporary. For the past year, farm incomes have been bad, and expectations are not good for this year. As I have said, independent commentators have looked at the figures, and have forecast a different situation in 1999.
570 I accept that there are difficulties in all sectors of agriculture, but we expect them to be temporary. In the five years from 1990 to 1995, farm incomes and agricultural prices were looking up. They were five good years, but I do not use that as an excuse for saying that one has to take the rough with the smooth. However, to take one year in a large industry and react to it as if it reflected the long-term future is not sensible in economic terms, and it would not be good Government conduct.
I accept that farm incomes this year are bad, and I shall deal with the serious consequences of that fall, which, as the hon. Gentleman rightly said, affects not just farmers.
Since we came to government, we have discovered that myths are perpetuated in parliamentary and departmental questions. It is not generally appreciated that, after the 20 March 1996 statement about BSE and new variant CJD, the previous Government laid a statutory instrument on, I think, 16 or 19 April—I cannot remember the exact date—banning the import of beef from animals aged over 30 months from wherever they came. The idea that there is not some sort of level playing field for imports is incorrect, because the previous Government legislated for that.
The Spongiform Encephalopathy Advisory Committee advice, which I shall not go into in great detail because it has been done before, was to de-bone meat from animals of more than 30 months. The previous Government went beyond that, on a precautionary principle, and said that 30 months would be the limit for all beef. They took powers to stop the import of beef from animals that were over 30 months. Therefore, whatever the hon. Gentleman has been told, it is not right to say that vast imports of beef are not subject to the over-30-months rule. Different countries have different rules, and about a dozen countries are BSE-free.
The Government took unilateral action on 1 January on specified risk materials, which requires that point-of-sale imported beef should comply with the same rules as home-grown beef. There is a requirement on the producer and the seller to make sure that that is the case. In that respect, there is not unfair competition, but, of course, we suffer from the inability to export our products. We have laboured consistently on that, and hope fairly soon to start exporting from Northern Ireland.
I shall now deal with the impact of falling farm incomes.
There is no question that there has been a dramatic fall in farm incomes in West Dorset. Detailed figures on a constituency basis are not available, but I fully accept that the hon. Gentleman has reported to the House the footprints or fingerprints of his constituents, and I understand what they say about their individual circumstances. Government cannot collect information in a detailed fashion, but we know that a dramatic fall in incomes in West Dorset occurred simply because of its dependence on dairy production.
We must keep a sense of perspective in looking at the damage to the industry as a whole. There were five good years, when sterling was relatively weak and commodity prices were firm. The hon. Gentleman talked about farmers' debt, but in fact 45 per cent. of all farm businesses carry no debt whatever, although that is not an 571 excuse to create more debt. We expect the present circumstances to be temporary. Debt will rise in the farming industry, but it is not massive.
§ Mr. Letwin
I am doubly grateful to the Minister for giving way again. Does he accept that those figures can be misleading? In my constituency, many farmers are severely burdened with off-balance-sheet debt in the form of leased quota, which can be just as important to a dairy farmer as debt on the balance sheet.
§ Mr. Rooker
I fully accept that. Some farmers will be badly hit by extra investment or debt that they did not expect, because they did not foresee the ban, the drop in commodity prices or the strength of sterling. I freely accept that debt will vary enormously: I have simply given an overall figure, and draw no general point from it.
The effect of last year's fall in farm incomes may not be so dramatic in the long term. There is good reason to believe that most farmers—I will not argue about semantics: by most, I mean the majority, or more than half—will be able to ride out this difficult period. We are not being complacent, but we must take a rational, long-term view of the industry's prospects.
I take on board what the hon. Gentleman said about allied industries. To my astonishment, I was the first Minister ever to visit the only British plough producer, in Warwickshire. It is a real success: a family business less than 30 years old that exports ploughs to Japan. It survives on exports, and is obviously desperate for more, simply because it can foresee a decline in home orders because of the drop in farm incomes; when those go down, farmers naturally order less capital equipment.
There is a knock-on effect on allied industries, some of which are wholly involved in agricultural production, while others have a wider spread of customers, so it is not always easy to track exactly what happens. I know from my time in manufacturing industry that there is a downturn when one's customers are suffering because of particular problems in their own industry. I accept that point fully.
The hon. Gentleman mentioned agrimonetary compensation, which is a bit of a mouthful.
§ Mr. Rooker
No. I want to make the point about agrimonetary compensation. I have answered enough questions from North Shropshire, and I want to stick to West Dorset for the moment.
I know that there is a desire for us to pay more of the compensation that is available under the schemes, but the money is not free. More than most Conservative Members, the hon. Member for West Dorset knows that it is not free money. My right hon. Friends the Chancellor and the Minister of Agriculture do not simply have to pick up the phone and ask for the money: there is a massive contribution from the British taxpayer. It is worth repeating that it is not free money, there for the taking at no cost to the taxpayer.
I am not going down the byways with this. Everyone knows of the public expenditure limits and constraints that we freely entered into in our contract with the electorate. 572 That contract is what we are sticking to, and there is a downside to restricting public expenditure, in terms of collateral damage.
I understand the concern among farmers about the possibility of further green rate revaluation, but we have to look at the wider picture. The agrimonetary compensation system has provided protection for the United Kingdom farmer against the consequences of the strength of sterling. It is difficult to say that the money is in pocket, but the freeze in green rates for direct payments has benefited farmers by about £400 million in the past two years, and that is not always fully appreciated.
The hon. Gentleman referred to the package of measures that my right hon. Friend the Minister announced initially in December, and reaffirmed, slightly adjusted, in February. The grand total of £85 million was the same, most of which went to the beef sector with a minority to sheep.
The livestock industry faces exceptional circumstances and we had to go to the European Commission to get approval for our proposal. Most of the payments have now been made. We intended to get them all paid by Easter, and I regret that we have not fully complied, but most of the cheques were in the post to farmers early in March. However, that package was exceptional, and must be seen against a tight background on public expenditure. We will keep the situation under review. We have promised to do so, and will do it at each step in the process.
The hon. Gentleman referred to the milk price and the difficulties that his dairy farmers have suffered as a result. The Government do not control the price of milk. He, more than most Conservative Members, must know that the dismantling of the milk marketing boards and going for market prices for milk has had consequences. One is that Ministers do not fix farm prices.
I understand that many farmers rightly look at the prices of goods in supermarkets. Raw materials make up a smaller proportion of our food prices than they used to because of the massive amount of food processing and we have to consider the problem in the round. We have to take account of the fact that supermarket prices are largely determined by competitive pressures, which in the main are good, as competition brings greater efficiency and lower prices to consumers.
I accept that there can be a downside for the original producers, but we live in a market economy, constrained, of course, by our membership of the European Union and by the common agricultural policy.
§ Mr. Letwin
The Minister has been extremely patient, and I am grateful to him for giving way again. I cannot resist asking him whether, in the light of his remarks, he will take special care to join those of us who have been urging the Monopolies and Mergers Commission in its current inquiry into the milk market to consider not merely the wholesale but the retail part of the market. There is an abundance of evidence to show that margins have not responded in the way that competitive pressure should have suggested, and that in fact supermarkets have been taking an increased margin at the expense of farmers.
§ Mr. Rooker
It would be unwise of me to give a detailed response off the top of my head. I think that the Minister of Agriculture has sent a note to the inquiry, although I could stand corrected, and if I am wrong I will 573 write to the hon. Gentleman. I should not comment on the details of the MMC inquiry. I see that the hon. Member for North Dorset (Mr. Walter) wants to intervene; I will give way to him, as he also represents Dorset.
§ Mr. Robert Walter (North Dorset)
I thank the Minister for giving way. Does he agree that the value of sterling and world prices expressed in sterling have a far greater effect on prices than competition in the domestic market—whether in milk or other products—the effects of supermarkets or the milk regime? It is the value of sterling that has had the significant effect.
§ Mr. Rooker
No, the value of sterling has an impact, but it is not the sole impact. From where the hon. Gentleman sits, it might look easy to target the one area that he thinks the Government might be responsible for. It is not like that. The value of sterling does not stand alone: other factors are at work, on which I touched earlier.
I want also to touch on aspects of reform of the common agricultural policy, to which the hon. Member for West Dorset rightly referred. A central plank one of our key manifesto commitments is to seek reform of the CAP. We cannot demand or impose such reform; we can get it only by consent. The Agenda 2000 document was tabled by the Commission. It is the only game in town, and it is the one we have to run with. That is what my right hon. Friend the Minister of Agriculture is seeking to do. It does not go far enough for us, particularly on milk quotas.
We oppose milk quotas, and find extending them to 2006 unacceptable. We want them abolished. They stand directly in the way of the British dairy industry competing in world markets with world-quality first-class products that would sweep the board in many countries if only we could get into them. We have said that repeatedly. That is why we are pressing for reform and the abolition of quotas. We cannot impose it unilaterally, given our membership of the European Union. We have made clear the ends to which we are working. We fully understand that the quota system stands in the way of our quality dairy industry making the best of its business.
We need substantial reform of the CAP, to move it away from production-related support mechanisms. We have to get to a more market-oriented policy for agricultural products. We have no fear of that. We could then redirect much CAP money—not all of it, and we do not have a figure or anywhere near one at the moment—to the rural environment and agri-environment measures.
I was a bit upset that the hon. Member for West Dorset said that his farmers were upset about animal welfare legislation, and thought that it stood in their way. I am 574 unaware of complaints from farmers that animal welfare legislation approved by this House stands in the way of their running their businesses properly.
We are not prepared to bend the rules on animal welfare. I am not au fait with the point that the hon. Member was making, because he did not give a specific example, but read out a list of barriers, one of which was health and safety. During a recent spot check in one county—not West Dorset—on 4,000 farms by the Health and Safety Executive, 40 tractors were seized and taken off the land because they were unsafe. There will be no diminution of health and safety rules. The farming industry is highly dangerous in some ways. We have no policies for cutting animal welfare legislation. I am not au fait with his point. If he has a particular point, perhaps he will write to me.
The Government have left no one in any doubt that one of our main priorities is reform of the CAP. That is not to say that, within the CAP, we are powerless to do anything. We have shown that by our announcement of the £85 million—extra money that did not come lightly and had a consequence for the British taxpayer—and by our other measures announced a few weeks ago in respect of the Government picking up the tab for the full start-up costs of the cattle tracing system and the first year's costs as well. That is an important measure. The system will benefit the cattle industry. We will have it up and running—going live—this summer. That will greatly benefit the industry.
We have taken on board some of the costs of the specified risk material controls in the abattoirs. We understood the pressures that were piling up on the industry. They were put there not by this Government but by lower commodity prices, the strength of sterling and other factors. Where we could take action, such as with the £85 million and imposing lower costs on the industry, we did. I do not expect a lot of thanks for that, but it is the reality.
We recognise the concern of farmers about the pressure on their industry. I and my colleagues in the Ministry meet farmers regularly, as well as food producers and food consumers. We are working to ensure a long-term future for the UK farming sector.
We are not seeking to put farming out of business—far from it. We want it to be viable. If we came along today or next month with a cheque for whatever amount, that would stop a problem for a week, a month or a quarter, but it would do nothing at all to improve the industry's long-term prospects. We are determined to make sure that we have a long-term viable agriculture.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-one minutes to Ten o'clock.