HC Deb 07 July 1999 vol 334 cc1053-96
Madam Speaker

I have selected the amendment in the name of the Prime Minister.

4.26 pm
Mr. Tim Yeo (South Suffolk)

I beg to move, That this House notes that, since 1st May 1997, the farm gate price of milk has fallen by over a quarter, the price received by farmers for cull cows has fallen by over one third and the income of dairy farmers has collapsed; condemns the Government's failure in recent CAP negotiations to secure any immediate increase in milk quota for mainland Britain whilst conceding increases for other EU countries; deplores the delay in publishing the Monopolies and Mergers Commission report on Milk Marque, thus needlessly damaging confidence in the industry; expresses concern that outbreaks of TB have risen substantially; and urges the Government to remedy this crisis by addressing these issues, ending its disgraceful neglect of the dairy industry, strengthening Milk Marque and implementing the Krebs Report without further delay". I welcome the presence not only of the Minister of Agriculture, Fisheries and Food but of the Secretary of State for Trade and Industry. It is rare for not just one but two members of the Cabinet to attend an agriculture debate—although both represent urban seats. [Interruption.] Who knows? Perhaps in a week or two the Government will dredge up someone with a rural seat to speak on these matters.

I shall have a word to say to the Secretary of State in a moment, but I shall start with the Minister. It is almost exactly a year since his appointment to his post, and I think even he would acknowledge that it has been a year of appalling crisis for agriculture. British farmers today face worse conditions than farmers have faced for a generation. Total income from farming has halved since Labour came to power, and the agony has been spread throughout the industry. Cereal prices have fallen by a third, livestock prices by a quarter and milk prices by well over a fifth. Collapsing prices mean collapsing incomes; they mean the destruction of family farms; they mean the loss of jobs in the countryside. There is not much of a new deal there.

Astonishingly, during this year of crisis the Government have not arranged a single agriculture debate. The only debates initiated by them in which the Minister has taken part have been on quarantine and on the Food Standards Bill. Not a moment of Government time has been used to allow Parliament to consider the plight of British farmers. The Minister may be a good listener outside, but he has not been keen to listen to Parliament. I suppose that, in that respect, he is following the example of his leader.

Although the Opposition control only a fraction of parliamentary time, this is the third occasion on which they have raised the problems of farming in a full-scale debate. Sadly, it is all too typical of Labour's attitude to the countryside that it should try to ignore this crisis completely. Labour's contempt for agriculture was exposed in its recent paper "Rural England: a discussion document", which set out the party's so-called vision for the countryside—a vision that occupied a whole page of that rather brief publication. Labour's vision for the countryside includes not a single mention of farming or of farmers.

I think that, to be fair, we can partially exempt the Minister from these criticisms. Occasionally, I have heard him, both inside and outside the House, offering sympathy to farmers. He seems at least to have impressed the Duke of York. Perhaps that is why we read that the Prime Minister is to move the Minister on. Perhaps the Prime Minister fears that, if the Minister were to stay another year, his sympathy might even be turned into action; or his warm words might be matched by some daring deeds; or comparisons between his predecessor's extravagance and his own rather admirably frugal travel and entertainment spending may be causing embarrassment to the Cabinet enforcer.

Today, we shall focus on the dairy sector. In spring 1997, just before the general election, farm gate prices for milk were about 14p per pint. The latest farm gate prices for milk are less than 10p per pint. In the past two years, the value of Britain's milk production has fallen by more than £750 million, and the impact on dairy farmers has been devastating.

Ms Jackie Lawrence (Preseli Pembrokeshire)

The hon. Gentleman mentioned milk prices in spring 1997. Statistics from the Ministry of Agriculture, Fisheries and Food show that, in spring 1997, the price was 11.65p a pint; and that the current price is 9.96p a pint. That is a 10 per cent. decrease. Between July 1995 and the 1997 general election, however, the price per pint fell by a massive 24 per cent.

Mr. Yeo

Unfortunately, the hon. Lady is quoting from exactly the same sheet from the Library as I am. She has chosen—if she cares to tell the whole truth—the April 1997 figure, which was 11.65p per pint. However, at no time in the previous three years—I have the monthly figure for every month of those three years—did the price fall below 13p a pint. In January, February and March 1997, the price was 13.7p, 13.5p and 13.46p per pint. Furthermore, as I said, for the whole of the previous three years, the figure was as I have just quoted it.

If the hon. Member for Preseli Pembrokeshire (Ms Lawrence) is trying to make a point by so selectively using statistics, I am grateful to her for giving me the opportunity of proving absolutely clearly that the milk price for the whole of the latter period of the previous Government was substantially above even the level that I have quoted.

Mr. Andrew Robathan (Blaby)

It is true that, when the previous Government were in office, farmers complained to me—as they complained to my hon. Friend—about many things. However, the one thing that they never complained about was dairy farming, as dairy farmers did incredibly well under the previous Government.

Mr. Yeo

My hon. Friend must talk to different farmers, because I have never met a farmer of any type who does not complain about something.

The Prime Minister likes talking about hard choices. Unfortunately, when it comes to farming, the choices that Labour makes are hard not for Ministers, but for farmers. Farmers in the dairy sector are used to long hours, but they are now having to get used to small rewards.

Earlier this year, the Government had a chance to help dairy farmers. On 11 March, Agriculture Ministers completed their discussions on common agricultural policy reforms. I am sure that the Minister remembers it well—I think it was late at night. According to The Times of the next day, the Prime Minister's spokesman said that the outcome is not satisfactory as far as we are concerned". I think that, for once, we can all agree with him.

The deal proposed that milk quotas—which currently prevent Europe from responding to growing world demand for dairy products—should continue until 2006, and that, although Britain's milk quota should be frozen until 2003, four other countries—Greece, Spain, Ireland and Italy—should enjoy higher milk quota next year. Increased Irish milk quota damages Britain. Imports of dairy products from Ireland will rise, and thereby undermine British dairy farmers. The deal was bad enough, but when the Prime Minister discussed it with Heads of other Governments later that month, they decided that quotas should stay not until 2006 but until 2008.

Mr. Dale Campbell-Savours (Workington)

May I ask the hon. Gentleman a question that requires a simple answer? Is it the position of the Conservative party that milk quotas should be completely ended?

Mr. Yeo

Yes. The position is clear. We believe that milk quotas cannot continue in the long term if we are to meet World Trade Organisation obligations and if Europe is to take advantage of increasing market opportunities for selling dairy products. Britain cannot continue to be penalised by allowing Ireland an immediate increase in milk quota next year while ours is frozen for four years.

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Yeo

No. The hon. Gentleman has been noticeable by his absence from agriculture debates over the past year. He has had his chance to intervene.

The deal is bad for Britain. We have some of the best dairy-producing land in Europe, but our farmers are prevented from meeting the demand even of home consumers. In recent years, around a third of our butter and cheese requirements have been met by imports. More than 10 per cent. of dairy products are imported. Ireland, by contrast, produces four times the amount of dairy products needed to meet its home demand.

Farmers might have hoped that the Prime Minister would bat for them and for Britain when he negotiated with his European colleagues, but he has bowled them out instead. With his eyes fixed on the headlines that he wanted about Britain's budget rebate, he allowed the deal, which his own spin doctors had already rubbished, to be made even worse. That is new Labour at work. If there is a chance to help the foreign farmer, new Labour take it. If there is a chance to hit the British farmer, new Labour take it. At the very moment the Minister of Agriculture, Fisheries and Food was telling farmers that he supported them, the Prime Minister was bashing them.

Mr. Lindsay Hoyle (Chorley)

Following his announcement about ending milk quotas, does the hon. Gentleman realise that removing all quota would make the milk price plummet? He would completely flood the market.

Mr. Yeo

That is not necessarily so. Farmers will be allowed to produce where there is local demand. By their nature, milk products do not travel great distances, and transport costs make it uneconomic too. It is not satisfactory that Britain, which has the potential to produce high-quality dairy products, should be forced to import them because of quotas.

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Yeo

The hon. Gentleman has had his chance. He has shown more interest in agriculture today than over the whole of the previous year.

Labour's common agricultural policy reforms will mean more food imports against which British farmers cannot compete because of quotas. It is no surprise that Labour has not organised a debate about dairy farming. Previous Conservative debates have helped farmers, forcing the Government to act. On 4 November, during an earlier Conservative debate, the Minister heralded an announcement made 12 days later of an emergency aid package for farmers, worth more than £100 million. On 21 April, during our debate on the livestock sector, the Government announced that specified risk material removal charges would be postponed for a year, resulting in an extremely welcome £21 million reduction in the burden on slaughterhouses, even though the high cost of regulation continues to inflict serious damage.

Today, the Government were forced to act even before the debate had started. Yesterday, the long overdue Monopolies and Mergers Commission report on Milk Marque was published. It had been delivered to the Secretary of State for Trade and Industry on 26 February. More than 18 weeks later, the announcement of an Opposition Day debate was required before the report came out. Even the printers thought that it would come out earlier. The title page of my copy has a sticker on it, saying "July 1999"—but it is stuck over the words "June 1999". The publication of the report is welcome, but publication is not enough. So I trust that when the Minister speaks he will have more to offer.

Mr. Patrick McLoughlin (West Derbyshire)

Does my hon. Friend agree that July was chosen rather than June, which may have been the Secretary of State for Trade and Industry's preferred date of publication, because it is well after the European elections; and that spin doctors who were acting in party political interests blocked No. 10 and prevented publication of the report?

Mr. Yeo

My hon. Friend makes a telling point. There is no doubt that the Government realised that the report was likely to produce a hostile reaction in many rural areas where they were afraid of doing even worse than they actually did in the recent elections.

Mr. John Bercow (Buckingham)

Given that we have had to wait even longer for the publication of the MMC report than we customarily have to wait for the Prime Minister to provide a straight answer to a straight question—specifically, 130 days—does my hon. Friend agree that it will be an additional source of anxiety and damage to the British dairy industry that the Secretary of State is giving the Director General of Fair Trading some six months to come up with proposals for reforming the system? Does that not threaten a substantial increase over and above the existing forecasts of the likely decline in the number of producers in the sector?

Mr. Yeo

My hon. Friend is quite right. It is intolerable that yet more uncertainty has been heaped on the sector after having to wait for so many months. It is now one and a half years since the inquiry began.

I now turn to the contents of the report, which has suffered from having spent too long addressing a fast-moving target. Milk Marque's share of the supply of milk in Britain fell from almost 50 per cent. when the MMC started considering the issue to under 40 per cent. in the current year. That huge reduction is continuing, yet the report's conclusions seem to be largely based on the 50 per cent. figure. In such a fast-moving environment, the long delay in publication has further devalued the document. Despite having wasted so much time, Labour has drawn the wrong conclusion, because the overriding need is for Milk Marque to be able to match its European counterparts and invest in processing.

Producer organisations are important in most large milk producing countries. To remain viable in the face of international competition, they need the benefit of the vertical integration which is currently denied to all farmers who have voluntarily decided to remain in the co-operative that constitutes Milk Marque. Instead of allowing Milk Marque to compete with other bodies at home and abroad, the Secretary of State has dithered. He has stopped short of absolute refusal and is saying instead, "Well, no—unless the Director General of Fair Trading decides that Milk Marque can carry out more processing," thus creating more uncertainty and more scope for bureaucratic intervention.

Mr. Eric Martlew (Carlisle)

I remind the hon. Gentleman that I regularly take part in agricultural debates. I also know that the motion on the Order Paper was written yesterday. Given the fact that the MMC found that Milk Marque had exploited the situation, does he still believe that it should be strengthened, as proposed in the motion?

Mr. Yeo

I certainly do, as I wrote the motion myself. I am not persuaded by the allegations in the report that Milk Marque has exploited the situation. Admittedly, I have not read all 580 pages of the report, but I have studied it overnight. I do not find the evidence compelling, nor do many of the people whom I spoke to this morning. I hope that the Minister will tell us what he thinks of that and what effect it will have on dairy farmers.

While I welcome the commonsense decision of the DTI not to split up Milk Marque, which was scarcely necessary given the fact that its market share was declining so quickly, the whole thrust of the document and the Government's response to it is to put downward pressure on prices. Even farmers who are not part of Milk Marque will be astonished by the claim that its activities have kept farm gate prices artificially high. Instead of responding to an alleged but unproven monopoly, the Government should look at why processing costs are higher here than they are in Europe.

Mr. Tim Collins (Westmorland and Lonsdale)

I invite my hon. Friend to ignore the comments of the hon. Member for Carlisle (Mr. Martlew). Having spoken this afternoon to members of the Cumbrian NFU, I can assure him that the hon. Gentleman does not speak for Cumbria; indeed, on the basis of the local and European election results, he will not speak for Carlisle much longer either.

Mr. Yeo

My hon. Friend makes a powerful point. The swing in the local elections was indeed startling.

The Government should examine why lower farm gate prices are not replicated on the supermarket shelf; why in some shops milk costs less than water; and why in British shops milk is often cheaper than abroad, unlike some other food items.

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

I want to reinforce a point that the hon. Gentleman made earlier. Is he aware of the complaint of dairy farmers in my constituency that, having been prevented from operating a vertically integrated producer co-operative, their alternative now is to sell to a company that is a subsidiary of a Danish co-operative which has 95 per cent. of its home market?

Mr. Yeo

The right hon. Gentleman is right, and the present situation will simply reinforce such absurdities.

The Government should examine the disparity between the fall in farm gate prices and the much smaller fall in supermarket prices, even if it means upsetting some of their friends, old or new, in the retail industry. Lower farm gate prices mean more dairy farmers going out of business, others working for less than the minimum wage, and more reliance on imports, which could become more expensive if the pound weakens. That would not be in the interests of farmers, consumers or retailers.

A Milk Marque free to invest in processing would improve competition; a weak Milk Marque, shackled by Government restrictions, cannot do so. Eventually, Milk Marque may no longer be able to act as the buyer of last resort.

Mr. David Drew (Stroud)

I agree with much that the hon. Gentleman has said about Milk Marque. Why did not the Conservative Government of whom he was a member set up a slightly different system so that many of the problems that we have to deal with did not arise?

Mr. Yeo

When Milk Marque started, it exercised a near monopoly. Because of its evolution in the past four years, we should move to the next stage and give it the commercial freedom to act as similar organisations in other European countries do, successfully and without detriment to competition.

If Milk Marque is not able to act as the buyer of last resort, some dairy farmers may find that there is no one to buy their milk. We need a small number of viable producer groups competing vigorously, and Milk Marque should be one of them. I hope that the Minister will be able to persuade his colleagues to see sense.

Dairy farmers have been damaged by the Government's failure to achieve a resumption of beef exports. Last November, the Minister triumphantly announced in the House that the beef export ban was being lifted, but eight months later not a single ounce of beef has been exported from the British mainland. The calf processing aid scheme is due to end at the end of July. Scrapping the scheme before beef exports restart is simply wrong. It will lead to huge calf surpluses and cut farmers' returns once again.

Even at this late stage, I urge the Minister to consider extending the scheme. If he really believes, as he said a couple of days ago, that beef exports will start again very soon, why not allow the scheme to run if only for another three months? Does he not recognise that not doing so means that some farmers face the prospect of rearing calves that are worthless, which itself may have animal welfare implications?

Another serious problem for dairy farmers is the growing threat from tuberculosis. Last year, there was a 45 per cent. increase in tuberculosis, but the Government have been slow to implement the Krebs report. Only two out of 10 triplet areas have so far commenced trials, which means that it will be 2004 before the trials are completed.

That go-slow on Krebs is needlessly prolonging the period before decisions are taken on how to tackle the problem. The vast majority of farmers are law-abiding and responsible, but if they see years of delay ahead before the Government make up their mind, a few may be tempted to take matters into their own hands.

Farmers are naturally concerned by recent reports that the European Commission plans to scrap school milk subsidies. The subsidy scheme allows primary schools to provide milk to millions of children across Europe. Although the response has been disappointing in other countries, the scheme has been taken up enthusiastically here.

The European Commission apparently does not regard that as a sufficient reason to continue the scheme. Will the Minister say what the current position is? I hope that he will be willing to act on the matter, as he has not been willing to do on some other European issues. Belgium's failure to inform Britain about possible contamination of Belgian dairy food products passed almost without criticism from the Minister, except for a brief reference in his statement to the House on 8 June. After his missing weekend, the Minister himself was one of the last to know.

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown)

In fact, I described the matter in the House as a scandal. My remarks were widely reported in the Belgian press, so the hon. Gentleman's suggestion that it passed without comment is very wide of the mark.

Mr. Yeo

I shall be interested to see the press cuttings on a matter that the Minister says was widely reported in Belgium.

The new Food Standards Agency will not be able to do much to protect British consumers if other countries do not bother to tell us about the possible contamination of imports. If the Minister is so willing to criticise the Belgians, why has he not written a strong letter of protest to his Belgian counterpart? Can he imagine what would have happened if the roles had been reversed? Does he not realise that a written protest might at least encourage the Belgians to contact us more promptly in future?

The issue of labelling has also featured regularly in debates about farming, and it is relevant to dairy farmers. Last month, The Daily Telegraph revealed that Sainsbury supermarkets were selling butter labelled as pure, slightly salted English butter when in fact it contained Belgian ingredients. That is just the latest in a long line of cases in which British consumers have been misled and British farmers penalised.

I know that the Minister acknowledges that the need for better labelling is very urgent. British consumers are too often in the dark about the true origins and contents of the food that they buy and about the methods by which it is produced. Milk quotas prevent Britain from meeting its dairy product needs. Imports will be a fact of life until the quota system is changed, so let us at least have clarity and honesty about which products are imported and which are genuinely produced at home.

Dairy farmers throughout the country will study the Minister's speech today. For some, his remarks will decide whether they remain in business. He must give the House five pledges today to reassure dairy farmers that they have a future. He should pledge that he will fight for an immediate increase in Britain's milk quota; that he will allow Milk Marque to invest in processing; that he will extend the calf processing aid scheme until beef exports resume; that he will start the remaining Krebs trials at once; finally, that labelling of dairy products will be simple, clear and honest.

Any—and preferably all—of those measures would have the Opposition's full support if they were announced today. I commend the motion to the House.

4.53 pm
The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: recognises the economic difficulties faced by the dairy industry; supports the Government's efforts to reform the Common Agricultural Policy during the recent Agenda 2000 negotiations in order to move towards a freer, more competitive market; welcomes the publication of the Monopolies and Mergers Commission report on the supply of raw milk; notes its conclusions and looks forward to a new selling system being in place which meets the needs both of consumers and the dairy industry; endorses the Government's view that the industry itself must help shape its own future; and congratulates the Government for its support for industry initiatives to achieve this. I am grateful to the hon. Member for South Suffolk (Mr. Yeo), the Opposition spokesman, for again securing Opposition time for a debate on agriculture. He is right to say that Government time has not been used for such a debate, but, whenever I ask our business managers for a debate in Government time, they tell me that a debate in Opposition time is coming up and suggest that I make my announcements then. The hon. Gentleman is also right to say that I have taken full advantage of that in the past, and the Government intend to do so again now—hence my gratitude to the hon. Gentleman.

The shadow Cabinet is clearly approaching this topic in a singled-minded way. When I looked at the motion, I thought that the speed with which the shadow Cabinet was disowning the approach that the Conservatives adopted to these matters when they were in government was quite breathtaking. In his speech, the hon. Member for South Suffolk attempted to correct the Opposition's position, although their motion gives no hint of that.

In any event, the debate gives us two important opportunities. First, it gives the House the opportunity to debate the way forward for the United Kingdom's dairy industry, which is our largest agricultural sector. Secondly, and more specifically, it gives my right hon. Friend the Secretary of State for Trade and Industry the opportunity to deal with the questions that have been raised by the Competition Commission's report on Milk Marque, and to respond to it. The whole House will be grateful to the Secretary of State for winding up the debate on behalf of the Government and for referring specifically to that report. I will leave that aspect of the motion to him and concentrate on the other matters that the Opposition have raised.

Before I do so, the House will want to know that I have agreed to meet Milk Marque on Monday and the Dairy Industry Federation later that day. I am meeting Mr. Ben Gill, president of the National Farmers Union, immediately after the debate. I also intend to hold discussions with agriculture Ministers representing the devolved Administrations, and with other producer representatives, particularly those from dairying communities.

Mr. Robert Jackson (Wantage)

Before he moves on to another topic, will the Secretary of State recall his warm words to me in answer to a question about the importance of encouraging the co-operative principle in agriculture? Will he draw the attention of the Secretary of State for Trade and Industry to that important consideration, because it is absolutely fundamental to enabling Milk Marque to compete on a level playing field throughout Europe's processed dairy products market?

Mr. Brown

I strongly believe in producer co-operation. I am an advocate of it. Indeed, I echoed my remarks to the hon. Gentleman in my comments at the royal show on Monday. I said that those points would be taken into account when the Government responded to the competition report and that a statement was imminent.

Mr. Peter Luff (Mid-Worcestershire)

There is one important issue in relation to the forthcoming milk round. It is important to clarify it now, given that the Minister will not speak at the end of the debate. Will he confirm that the forthcoming milk round, in which only 36 per cent. of milk sold will pass from Milk Marque, will be unaffected by the recommendations that he announced yesterday?

Mr. Brown

The short answer is yes. The Secretary of State for Trade and Industry intends to deal specifically with that point in his winding-up speech.

Mr. Nick Ainger (West Carmarthen and South Pembrokeshire)

I am grateful for the clear consultation on which my right hon. Friend intends to embark, literally in the next few hours and days. Once he has met the industry representatives to whom he referred to earlier, will he agree to meet a delegation from west Wales and other parts of Wales, which have the highest proportion of Milk Marque members, who are clearly directly affected by the publication of the Monopolies and Mergers Commission report?

Mr. Brown

I am mindful of the responsibilities of the devolved Assembly and of the Minister there. Nevertheless, if my hon. Friend wishes to bring a delegation of his farmers to meet me, I shall be willing to see them. I make the offer, in as much as I reasonably can, to other hon. Members as well. Although I am willing to meet representative groups, please do not place me under siege. I accept that it is my responsibility to get the industry through. I accept the responsibility that goes with my office.

Mr. Paul Tyler (North Cornwall)

I welcome what the Minister has said. He will recognise that Cornwall does fall within his area of responsibility—we have no delegated government there yet. I can confirm that, after possibly Pembrokeshire, Cornwall has the largest number of Milk Marque suppliers.

Mr. Brown

I fully appreciate that. During my visits to Cornwall and the west country, that point was made to me over and again. I understand the anxiety. If the hon. Gentleman wishes to see me with some of his farmers—I can see what I shall be doing next week—I am willing to see them as well. This matter is important for the dairy industry because livelihoods are at stake. It is right that the Government not only set out their response to the report but help the industry to get through. I promised the dairy industry that I would work with it to get it through these difficult times, and that is exactly what I am doing.

The Opposition motion begins by referring to the fall in milk prices, the prices received for cull cows and dairy farm incomes. Of course, those are not all one issue. As we have discussed, the problem is partly cyclical and partly structural.

Mr. Christopher Gill (Ludlow)

I am grateful to the right hon. Gentleman for giving way. Before he moves on to the generality of the points that he has outlined, may I ask him about the Monopolies and Mergers Commission report? He must realise the great significance of the report to the dairy industry, for which he is responsible. Is he mindful of the fact that, when we talk about milk, we are talking about a commodity? Does he realise how difficult it is, particularly in a modern, competitive world, to handle all the problems associated with a commodity? Having been involved in another commodity for most of my working life, I must say that it is now imperative that anyone in a commodity business is allowed to add value, otherwise, one simply cannot survive. The right hon. Gentleman must have strong words with the Secretary of State for Trade and Industry, make that point and win it.

Mr. Brown

The hon. Gentleman will have heard me say, in the general context of difficulties in the livestock sector, that one way forward is producer co-operation and co-operation to achieve added value, which means vertical integration. That issue is at the core of the problems that we are tackling. We need to see how that can be achieved in the dairy sector and be compatible with competition policy.

My right hon. Friend the Secretary of State will have more to say about that when he replies, but please do not think that I have changed my views, or that I will move from trying to help the dairy industry get through what I acknowledge are difficult times, as I have helped other sectors—the hon. Gentleman knows about the pig sector—to what I hope will be better times, to return to profitability and to ensure that those who work so hard in agriculture get a return on their investment and hard work. That is my objective.

Miss Anne McIntosh (Vale of York)


Mr. Brown

I will give way, but I am conscious that the Opposition were generous enough to allow a Government statement on an Opposition day, which is unusual. Obviously, it is an important statement. I will take interventions, as I know that there is much interest in the House, but I do not want to keep hon. Members out of the debate.

Miss McIntosh

I am grateful to the right hon. Gentleman. When he and my constituent, Ben Gill, meet, I am sure that the plight of dairy farmers in the Vale of York will not be far from their thoughts. Milk Marque has made a major investment in its first presence in the Vale of York. Will he ensure that that investment is secure for the foreseeable future?

Mr. Brown

That matter is better left to my right hon. Friend the Secretary of State for Trade and Industry. I want to ensure that Milk Marque gets through the competition report and that it is possible for dairy farmers to work co-operatively together, through producer organisations, so that, if they decide to do so—these are market judgments for them—they can take advantage of vertical integration. Having seen the report, I doubt whether they will be able to do so with Milk Marque entirely in its present form. I do not want to hold out hopes. However, those are matters for the Secretary of State.

Mrs. Ann Winterton (Congleton)

I am grateful to the right hon. Gentleman for giving way on this important issue. Further to the intervention by my hon. Friend the Member for Ludlow (Mr. Gill), is it not a fact that the industry desperately needs new investment in processing? Is not one reason for the state of processing in this country the fact that there has been no real investment? If we are to compete satisfactorily, we must have more investment.

Mr. Brown

I certainly think that adding value and, therefore, investing in processing, is an important way forward for the domestic industry. I am not pessimistic about the industry's future. Part of the problem is cyclical, and part structural. Clearly, using the opportunities of vertical integration is one way for dairy farmers to proceed. What the hon. Lady says is right.

Mr. Bercow


Mr. Brown

I will give way to the hon. Gentleman, but then I would ask Opposition Members to allow me to complete my speech, unless some matter arises out of it.

Mr. Bercow

I am grateful to the right hon. Gentleman for giving way. He will be aware that the long-term trend had been towards a 3 per cent. reduction in the number of dairy producers, until the Lloyds TSB report in 1997, which forecast that, between 1997 and 2000, the figure would be 14 per cent. In the light of the announcement by the Secretary of State for Trade and Industry that the Director General of Fair Trading will have six months in which to produce recommendations for changed procedures, can the right hon. Gentleman confirm that he has discussed that matter with his right hon. Friend and made him aware of the possible increase in the number of producers who would go out of business in the interim?

Mr. Brown

Views are shared within government, but decisions on this matter of the competition authorities are for the Secretary of State for Trade and Industry alone. The responsibility is not shared. [Interruption.] I am afraid that that is how it works—and how it worked under the previous Government. Of course I am able to express an opinion within government, just as other Ministers can. What the hon. Gentleman says about the long-term trend is right. There is a tendency for farm businesses to amalgamate and to grow larger, and that is particularly pronounced in the dairy sector. There is nothing new about that. The economic cycle may exacerbate that trend. It is my responsibility to ensure that the Government have a policy that helps small and medium farmers get by where they can, as well as concentrating on more market-oriented business operations.

Although the hon. Member for South Suffolk rightly set out the fall in farm incomes and related it to the dairy sector, he did not make very much of the Conservative Government's deregulation of the industry and the intensive competition among processors to secure supplies of milk, which was the immediate consequence of deregulation and which, of course, forced up milk prices. Those pressures have now eased and prices have consequently weakened in the marketplace.

The motion uses the word "collapsed" in the context of dairy farmers' incomes, yet there is still a market for dairy quota. Agricultural land for dairy farming is still traded at a rate of about 2.5 per cent. of farms for sale per annum—a figure that has remained reasonably static since 1993. The size of the national dairy herd has declined only slightly in recent years. Indeed, agricultural land values are rising.

The Government monitor total agricultural bankruptcies, which peaked at about 500 in 1992 and fell back to 222 in 1998. Bankruptcy is, of course, a measure of last resort. Most farmers leaving the industry do so in an orderly way by selling up and realising their assets, including the value of milk quota. There is a steady, long-term trend in the sector towards fewer large dairy farms.

Mr. James Gray (North Wiltshire)

Will the Minister give way?

Mr. Brown

The hon. Gentleman should let me finish my point; I know what he is going to come back on.

Many people envisage a future for the industry. There is a perfectly proper debate to be had about the industry's shape and structure, and the way in which the common agricultural policy and national Governments should provide continuing support to the sector, as the Government are committed to doing.

Mr. Gray

The industry and the House will be appalled by the complacent nature of the remarks that the Minister has just made about the dairy industry. In my speech, if I am lucky enough to catch your eye Mr. Deputy Speaker, I shall expand on the poverty and hardship among dairy farmers in my constituency. In the short term, does the Minister accept that the 8p a pint that farmers in my constituency get for their milk is the lowest price since Labour was last in power in 1979? Is not that a mark of how awful the situation is in the dairy industry?

Mr. Brown

I have accepted that prices are depressed. Indeed, we explored earlier, with the hon. Member for South Suffolk, the Front-Bench spokesman, whether it was Conservative party policy to keep prices artificially high by accepting what is called the traditional European model of agriculture with quotas and tariffs, or to work towards a rational, market-oriented solution. To his credit, the hon. Gentleman endorsed the policy that the Conservative Government followed, which was to work towards a market-orientated solution.

The hon. Member for North Wiltshire (Mr. Gray) said that, because I explained that there are people who still have confidence in the industry, the Government are complacent. There is nothing complacent about expressing confidence in an industry and saying that the Government will do their best to get it through difficult times.

Mr. Gray

Farmers are going bust.

Mr. Brown

The figures that I have just quoted—I checked the point about bankruptcy—show that farm bankruptcies were at a peak in 1992, not now. That responds to his point.

Several hon. Members


Mr. Brown

I shall give way first to the right hon. Member for Bridgwater (Mr. King).

Mr. Tom King (Bridgwater)

I sympathise with the right hon. Gentleman on one problem. He is dependent on the information that reaches him. A lot of the statistics and information that he receives are out of date. In some cases, there is a considerable time lag before the effects of recent events become evident in the statistics. I have represented farmers in this House for 30 years and I have never been more deeply worried about the situation for dairy farmers. I have had the most distressing meetings in farmers' kitchens with farmers and their sons asking me about their future and whether they should stay in dairy farming or sell up now while they can, while their land, their animals and their quota still have some value. As there are no longer any regional advisory boards, I hope that the right hon. Gentleman has a more immediate finger on the pulse of the dairy industry than the statistics that reach him. The industry may be facing a more serious situation than he realises.

Mr. Brown

I accept what the right hon. Gentleman says. He makes his points sincerely and well. He is right to say that there is a lot of uncertainty in the marketplace, particularly in the dairy sector. My duty is to give as much certainty as I can about the public support regime and ensure that people are properly advised on what would be a rational business decision for their future. To say that the entire dairy sector faces ruin, which is the thrust of the Opposition motion, is wrong and goes too far. There are difficulties, we are going through a period of restructuring and the issues have to be dealt with rationally, but it is not right to go further than that and instil fear where it is not necessary.

Mr. William Cash (Stone)

I endorse the comments of my right hon. Friend the Member for Bridgwater (Mr. King). My dairy farmers in Staffordshire are deeply worried, but it is not just a local phenomenon. In the 15 years that I have represented my area, I have never seen anything as bad. Cheques are bouncing, people are in despair and young people are saying that they have no future. I am still waiting to hear something constructive from the Minister. He has given us a lot of words, but no policy. I have heard nothing in response to the charges made by my hon. Friend the Member for South Suffolk (Mr. Yeo). I have heard no answers to any of the questions asked by any of my hon. Friends. It is important that the Minister understands the urgency of the situation and the need for action.

Mr. Brown

I understand the seriousness of the situation. Farm incomes have fallen for two years running and prices are depressed. That is the core problem. I have something to say about those points, but I have also been generous in giving way. The hon. Gentleman cannot have it both ways.

Mr. David Lock (Wyre Forest)

I shall be as brief as I can. I, too, have met farmers who are very concerned, but I am sure that they would be far more concerned to hear the Opposition's proposals to remove quotas and reduce prices to world levels. Does my right hon. Friend agree with paragraph 2.17 of the Monopolies and Mergers Commission report, which suggests that a cut of 30 per cent. would be needed to bring EU prices down to world levels? Would not the removal of quota and a reduction to world prices inevitably produce the collapse in prices that the Conservatives are complaining about?

Mr. Brown

What the motion says and what the hon. Member for South Suffolk has said are not quite the same. The motion refers to an immediate increase in CAP quota. I shall have something to say about that in a moment. We do not know what the world market price for milk is. The CAP supports production in the European Union. The other major suppliers also have support regimes for their products. The totally liberalised market in New Zealand cannot supply the entire world market at the competitive price that everyone says that it would. The big regimes in the United States and the European Union will continue to support the dairy industry, at considerable cost, for many years.

Mr. Andrew George (St. Ives)

The picture that the Minister painted earlier is not reflected in my constituency. The farmers whom I have spoken to in recent weeks and months are on their knees. I should be grateful for some advice. The conditions should be right. We have the highest average dairy farm sizes in Europe, the safest milk with the highest bacterial quality in Europe and an ideal environment for low-cost fodder production, yet we have the lowest farmgate milk prices. With the best environment for a competitive dairy industry, why is confidence at an all-time low?

Mr. Brown

A range of factors is involved. The explanation is partly cyclical. People are also wondering where the outcome of the CAP round will lead the industry in the medium term. The point about prices being lower in the United Kingdom than in the rest of the European Union is true, but it has been true since 1985.

Mr. Campbell-Savours

Will my right hon. Friend comment on the response of the hon. Member for South Suffolk (Mr. Yeo) to the intervention of my hon. Friend the Member for Carlisle (Mr. Martlew)? The hon. Member for South Suffolk made it clear that the Tories want to do away with quotas. When he was asked whether that would lead to a collapse in prices, he said that it would not, because farmers would be allowed to sell only in local markets. [HON. MEMBERS: "No he did not."] Check the record. He said that they would be allowed to sell in local markets, which implies a restriction. There is no conceivable restriction that can be used other than quotas. We have blown a hole in Conservative policy on milk pricing. I hope that the farming industry notices what the Conservatives are saying.

Mr. Brown

The Government are not contemplating issuing end-user certificates with dairy quota. As I have explained before, I believe in a reformed dairy regime within the CAP, worked out in discussions with our major trading partners to restructure our support for agriculture.

Mr. Luff

Am I right in saying that the Government—constructively and rightly—formed an alliance with other member states, including Italy and, I think, Denmark to secure the abolition of milk quotas in the most recent CAP round?

Mr. Brown

I am going to move on to that. I see that Conservative Members are so eager with excitement that they are going to sit still, not intervene and let me get to the point.

The flaw in the Conservative motion—although not in what the hon. Member for South Suffolk said to the House, which was closer to the position that the Conservatives adopted in government—is that it complains about the weakness in the domestic market and the fall in the milk prices, then goes on to demand that more dairy quota should be issued immediately in Great Britain, which would increase supply and bring prices down. The motion contradicts itself.

Mr. Yeo

indicated dissent.

Mr. Brown

If the hon. Gentleman believes that issuing extra dairy quota would somehow put prices up, I am willing to hear his explanation.

Mr. Yeo

The purpose of including that in the motion was to draw attention to the fact that, disastrously, the Prime Minister and the right hon. Gentleman agreed to Ireland getting an immediate increase in its quota, which will send more imports into this country, depressing the prices in Britain. If Britain's farmers were not shackled by the quota for another four years, they would be able to meet that demand. An increase in quota would not reduce prices; it would replace imports.

Mr. Brown

The hon. Gentleman is on to a good point. He is right to complain about the issue of extra dairy quota, especially to Ireland. The Irish Government's case cannot really be said to have been founded in merit. In fact, it was founded on an agreement made by the Heads of Government in the early 1980s. The beneficiaries of the agreement remembered, and held the rest of us to it. I agree with the hon. Gentlemen that the agreement should not have been made, but let the House remember who made it.

Being stuck with it, I did the only thing that I could in the circumstances, and argued for an equivalent and proportionate allocation of quota for Northern Ireland. My success in achieving that unprecedented concession has been welcomed by the industry in the Province. When did any Conservative Government achieve such a thing?

The United Kingdom Government's great success in the dairy regime element of the CAP negotiations was to make a start on reform, anticipating the changes in world markets that are moving remorselessly towards the European Union's industry. I have said to the House before and I repeat it now, that I would have preferred to have gone further down the reform road and on a shorter timetable.

I believe that the radical proposal for dairy reform made by Italy, Denmark, Sweden and the United Kingdom was the right way forward for the European Union. I confidently expect us to be returning to those issues in the coming years. I attach great importance; as I told the Select Committee, to the review clause that we set for 2003 and to the work that we will put in hand leading up to that watershed.

I welcome the Finnish Agriculture Minister's intention of making the European Union's approach to the agricultural component of the upcoming World Trade Organisation round the main topic for discussion at the informal meeting of European Agriculture Ministers this September.

The reform road is a difficult one for the industry. The alternative, no matter how attractive it may seem in the short term, is to risk being overwhelmed by external market forces. To their credit, the previous Conservative Government recognised that. The Conservative party's motion today represents a significant change in position, but I accept that, during his speech, the hon. Member for South Suffolk pulled back from the worst implications of the motion. The motion implies that the industry should be placed in a straitjacket at the risk of eventually being overwhelmed by market forces.

I notice that the hon. Member for South Suffolk did not spell out what the motion means by "strengthening Milk Marque", but the implication is that it advocates the continuing exercise of unjustified monopolistic practices in the marketplace, in complete defiance of the views of the independent Director General of Fair Trading. I accept that the hon. Gentleman has not yet had an opportunity to study the report in full. I have not had that chance either, but I have the advantage of getting the executive summary from my civil servants and there are matters to which Milk Marque will have to respond.

Mr. Yeo

What I meant by "strengthening Milk Marque" was allowing it to integrate vertically, as other comparable organisations do in other European countries. That would be a strengthening of Milk Marque and that is what the Minister has said that he cannot do.

Mr. Brown

The issue is whether the competition authorities will think it right and fair for the whole of Milk Marque, whether or not it meets the other criticisms, to become processors or whether some other adjustment will be necessary before producer co-operatives can be processors. That is the issue that we must work through with the industry in the coming weeks. I pledge to take a constructive interest in those matters and to do what I can to get the United Kingdom's dairy industry through. That is a perfectly proper thing for the Minister of Agriculture, Fisheries and Food to want to do.

Mr. Drew

I understand the spirit in which my right hon. Friend will move forward. Does he agree that the way in which Milk Marque and the industry was set up was confrontational and that the only way that we can resolve this is by putting them together around a table and negotiating our way out of this mess?

Mr. Brown

I have repeatedly told those in the food chain that there is no future for any of us in a confrontational approach. I have argued for each section of the food chain—the retailers, the processors, the food producers and even the caterers—to take a constructive interest in each other's well-being and long-term future. Those in the food chain need each other and I have done what I can to encourage co-operation.

The Krebs report is important. The previous Government invited Professor Krebs to undertake that valuable study, and I guess that only a cynic would say that they did that in order to avoid difficult decisions in the run-up to the general election.

Mrs. Angela Browning (Tiverton and Honiton)

On a point of information, I was one of the Ministers who felt that the Krebs report was important and we were only too well aware that it had been many years since there had been an independent report carried out by people who would be regarded, not just politically but in the scientific world, as having the information and qualifications necessary to produce such a report. It was nothing to do with the forthcoming general election. The report was commissioned long before the general election.

Mr. Brown

Nobody would charge either of us with cynicism, but the Conservative Government had 18 years in which to embark upon this and chose to do so in the run-up to the election.

The Krebs report is of value and I hope that it has been able to inform debate throughout the House. My predecessor had asked Professor John Bourne, a distinguished director of the Research Council Institute for Animal Health, to advise on how the report's recommendations could be implemented. I received Professor Bourne's recommendations when I became the Minister last July and decided straight away to accept his advice and press ahead with the trials. The Government are determined to see the trials through and, at the same time, to take action against tuberculosis in a number of other areas such as a combined package of research which includes the trial, vaccine development, advice on animal husbandry and cattle testing.

I want to make two points absolutely clear to the House. First, hindering or disrupting the trials is in nobody's interest. I urge everyone with an interest in this to co-operate with the trial group. The results, once evaluated, will be shared with everyone with a legitimate interest and, for the first time, we will have a scientific basis on which to proceed.

Secondly, I regard TB in dairy cattle as an animal welfare issue just as much as TB in badgers. The Government are determined to find rational solutions to the problem and not to allow TB to spread in the national dairy herd.

Let me say directly that those who are disrupting the trials are significantly narrowing the range of options available to the Government. Let me say clearly that this is not even in their own narrow sectional interests. Clearer than that I cannot be.

I am making use of this Opposition day to make an announcement. Dairy farmers have asked me whether the Government would agree to an industrywide levy to fund a generic advertising campaign. I am strongly of the view that the most important factors in this consideration are the views of dairy farmers. I can therefore announce to the House that, subject to working out the necessary details with the different parties in the dairy industry, I intend to launch a poll in early September with a closing date six weeks later.

In the United Kingdom, we have the ideal climate for milk production, the highest standards of animal welfare and product safety and some of the finest dairy products in the world.

Mr. James Paice (South-East Cambridgeshire)

It is now several months since the National Farmers Union presented to the Minister a series of proposals to address the problems of TB outbreaks outside the triplet areas while the studies are taking place. When will he respond to those proposals and provide some hope for the dairy farmers outside the study areas?

Mr. Brown

I do not want to set a date. These are important matters. Significant consideration is being given to the suggestions that have put to me by the dairy industry. Clearly, the points that have been made require a response, and they will get one. I can give the hon. Gentleman the assurance that the Government will not back down from their responsibility to deal with the problem of TB in the dairy herd. If one solution will not work, we shall have to look at the remaining options.

I have been very taken with the point made in the Krebs report that the evidence of a link between TB in the dairy herd and TB in the wild badger population is compelling. That is the phrase used in the report, and that would be the starting point. I would prefer the starting point to be the results of the scientific trial, because we could then all share the evidence and use it as a basis of discussion. However, if that is to be denied me, it does not remove my responsibility to tackle the problem. I give the hon. Gentleman that clear assurance.

Mrs. Diana Organ (Forest of Dean)

We are all aware of the controversy about the Krebs trial. I wholeheartedly agree that any interference with the trial only hinders the gathering of the knowledge that we need to address that dreadful disease in cattle. However, there is concern among dairy farmers in my area that the trial is slipping: Professor Krebs suggested a five-year trial, and we do not want it to become a seven or 10-year trial. We need the trial to proceed apace. My other point—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. In view of the shortage of time available, the hon. Lady must not be greedy.

Mr. Brown

I can give my hon. Friend the assurance that she seeks. The Government are determined to push on with the trials and to do what is necessary to secure a worthwhile piece of scientific work that will inform the debate once and for all. That is the Government's preferred way forward. However, if that way forward is denied me, and it becomes impossible for us to carry out the trials, I shall still be left to deal with the problem, and I shall have to base solutions on the evidence currently available to us.

Let me draw my remarks to a close. We in this country have a high level of producer expertise and commitment, which is underpinned by strong research and development support from my Ministry.

Mr. McLoughlin

I thought that the Minister was going to make several announcements this afternoon but, so far, if I have heard him correctly, he has made one announcement about conducting in September a poll of dairy farmers that lasts for six weeks. A focus group could have sorted that out for him—is that the only announcement that he is going to make?

Mr. Brown

That is a ridiculous point. Opinions on whether or not the industry should fund a generic advertising campaign for milk should not be taken from a focus group. The people whose opinions matter are dairy farmers, which is why they are to be asked for their opinions in a poll.

Matters arising from the competition report overshadow this debate and, as I said at the start, those will be dealt with by my right hon. Friend the Secretary of State for Trade and Industry when he winds up the debate. I had formed a clear impression that the whole House accepted that report as being not only reasonable and right, but generous on the part of the Government. I do not know whether the hon. Gentleman was here at the start of the debate—

Mr. McLoughlin

indicated assent.

Mr. Brown

He is twitching on the Back Bench, but I cannot tell whether he was present or not.

Mr. Hoyle

My right hon. Friend is known for listening to farmers and the poll is welcome. However, will he also consider visiting constituencies such as Chorley to meet local farmers and so ensure that their voice is heard?

Mr. Brown

Nice try—I can see how this is going to go. I said that I would do my best to visit farmers, especially in areas where dairying is a strong sector.

Mr. Douglas Hogg (Sleaford and North Hykeham)


Mr. Brown

I now stand ready to respond to the invitation from my distinguished predecessor.

Mr. Hogg

Before he sits down, will the right hon. Gentleman deal with the question of cull cows? He will know that food chain was fully insured after August 1996; that being so, is there not a real case now for announcing that the 30-month rule will not apply in respect of cattle born after August 1996? That would be reassuring to dairy farmers.

Mr. Brown

I cannot make the announcement now that the right hon. and learned Gentleman seeks, but I can give him the assurance that advice on the 30-month scheme is being prepared for me. As he knows, the matter is not entirely in my hands, but is one of several conditions set for us by the European Union. However, there is logic in his remarks: the 30-month period has now passed, so it is right to consider the future of the scheme. That matter is now under consideration and I await advice before taking it up with others. The right hon. and learned Gentleman's point is well made, but I cannot make an announcement today.

Let me now bring my remarks to a close. We in this country have a strong retailing structure and a catering industry that is now, rightly, regarded as world class. The real challenge facing the dairy industry is the increasing liberalisation of world markets and progress on common agricultural policy reform. The Government's achievement is to be regarded by our European partners as a constructive ally and to be highly valued by our partners outside the European Union for the role we play in that debate. I invite the House to vote for that approach and to reject the approach outlined in the motion tabled by the official Opposition.

5.35 pm
Mr. Paul Tyler (North Cornwall)

As usual, I find the Minister's sympathetic tone very attractive, and I suspect that other hon. Members do as well. However, the content of his speech was bitterly disappointing. I hope that the speech of the Secretary of State for Trade and Industry at the end of the debate will be of greater substance, and that he, too, has been imbibing the milk of human kindness that was the hallmark of the Minister's speech.

Seventy per cent. of UK milk is processed by 10 companies and 90 per cent. of the butter is processed by just six companies—that is where the real cartel and the real monopoly lie. The previous Conservative Government totally failed to address that situation, although they did introduce a piece of legislation. I am sorry that the hon. Member for Workington (Mr. Campbell-Savours) is not present, because, like me, he sat through the Committee on that legislation. Neither many on the Treasury Bench nor any on the Opposition Front Bench saw that legislation all the way through its stages. I make no apology for referring to that legislation—the Agriculture Act 1993—because it forms the background to this debate.

Despite that Act, which was intended to address the problem, we still have a market that is dominated by big buyers, not big sellers. As a result, farmers' share of the retail milk price has fallen 10 per cent. since 1994—during the lifetime of Milk Marque. Farmers now receive less than lop per pint for their milk, which compares badly with consumer prices of about 25p per pint in the supermarkets and 40p per pint delivered to the doorstep. Dairy farmers have been squeezed continually over the past four or five years, and the Monopolies and Mergers Commission report does little to address that problem. It contains nothing on ways to improve the return to the average dairy farmer.

I acknowledge—and dairy farmers will welcome—the fact that the Secretary of State did not accept the recommendation to dismantle Milk Marque. However, our confusion is increased by that decision, because the logic of that huge report leads to such a recommendation, and removing that recommendation makes the logic of the report's argument extremely weak. The confusion is deepened by the Secretary of State's partial approach to the recommendations, because, having rejected the logic for dismantling, he accepts the so-called interim measures, set out on page 98, which were intended to secure the argument for dismantling Milk Marque. The Secretary of State must state at the end of the debate what structural adjustment he seeks to achieve through those interim measures; if none, they have no validity whatsoever.

The current position demonstrates the total failure of the 1993 Act to bring about a right balance between farmer, retailer and processor. During the period since the Act, the middlemen have creamed off all the profits available in the market for milk, but neither consumers nor producers have benefited proportionately.

Livestock farmers in my part of the country, to which my hon. Friend the Member for St. Ives (Mr. George) referred, are mostly small-scale producers. They are extremely vulnerable and they need effective co-operatives to survive, so I was glad to hear the Minister reiterate his support for co-operatives. However, from reading the report, let alone the Secretary of State's announcement, one would not believe that that was Government policy.

It is essential to have a successful Milk Marque if the milk sector is to survive, let alone prosper. We must be able to benefit from the EU common agricultural policy, just as farmer co-operatives do in every other member state. The report provides no endorsement of that objective.

In the current sale period, if sufficient milk is available, of course, the dairy companies will purchase about 90 per cent. of it. The remaining milk will be sold on the short-term daily or monthly market. Expressed as a proportion of the EU milk target price, United Kingdom product prices are now the lowest in the whole of the EU, and they are deteriorating. That is the background to the MMC report before us today.

The Agriculture Act 1993 was far too protective of the huge dairy companies, with their oligopolistic tendencies. Curiously, and ironically—Labour Members may find this difficult to believe—the Conservative Government were egged on by the Labour Opposition to listen to the Dairy Trade Federation, which represents some of the biggest commercial operators in the country. I am sorry that the hon. Member for Workington has left the Chamber. On Second Reading, in Committee and on Report, he kept arguing the case for restricting the freedom of manoeuvre of a producer co-operative in favour of the huge intermediaries.

In my speech on Second Reading, I said: We want a producer-co-operative, but not as a fallback position: we want a potential ground breaker which will establish itself as a strong marketing co-operative to match those in other member states. From our experience of agriculture in other member states, we know how effective producer co-operatives are. They are prepared to use their marketing muscle in the market place and to prevent the sort of domination of buying power which results in this country from a small number of processors and supermarkets. A co-operative with the ability to compete in the world of the giants—the supermarket chains and food processors—would be a benefit to producers and consumers. By cutting back on the bargaining power of the middle men, there is no reason why retail food prices should not fall."—[Official Report, 23 March 1993; Vol. 221, c. 828.] In Committee, the three parties adopted sharply different attitudes to milk producers and their collective potential. I made a similar point in Committee about the importance of making Milk Marque a success not only for its sake but for the sake of the consumer. However, the hon. Member for Workington, speaking for the Labour party, wanted to restrict still more its room for manoeuvre. He said: I only put the proposition that Parliament has the right to decide whether Milk Marque should be capped if it wants to go into processing activities. A later amendment might attempt to cap Milk Marque even if it does not want to go into processing activities.… We are not convinced that Milk Marque will not be able to abuse its position in the market place."—[Official Report, Standing Committee F, 15 April 1993; c. 12–13.] The Labour party's emphasis was on protecting the big boys—the intermediaries in the chain—not helping the producer co-operatives, namely, the dairy farmers. I hope that now that it is in government it has seen the light.

Mr. Drew

Will the hon. Gentleman give way?

Mr. Tyler

I hope that the hon. Gentleman will take a better attitude than that of his predecessors.

Mr. Drew

To hear co-operation mentioned so many times in so short a period is music to my ears, as a Co-operative Member. However, compared to the large producer co-operatives on the continent, our dairy companies are small beer, if the hon. Gentleman will excuse my mixing metaphors.

Mr. Tyler

I endorse that view. I am grateful to have the hon. Gentleman's support and I hope that we will continue to have that support in the coming weeks and months, when the issue will be of considerable importance. That is precisely why Milk Marque should not be compared with the large co-operatives in some of the other member states, with which we compete, as my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) said.

Mr. Andrew George

Further to the point raised by the hon. Member for Stroud (Mr. Drew), does my hon. Friend agree that, under the terms of the Competition Act 1998, from March next year Milk Marque will not hold a dominant position in the market, as it will have a share of less than 40 per cent. of the liquid market. It should not be affected by the Act as it is not in a dominant and monopolistic position.

Mr. Tyler

That is true. I am grateful to my hon. Friend. Since we are relatively near neighbours, he may be reading my mind. I shall come to that point shortly. I wish to deal first with the Agriculture Act 1993.

I regret that the right hon. Member for Skipton and Ripon (Mr. Curry) is not in his place, although I had a conversation with him yesterday on this matter. He was the Minister when the Agriculture Act went through the House. He said in Committee: Our job as Ministers is to ensure that the arrangements which are capable of asserting that Milk Marque will not overstep the mark are able to function effectively. If that happens, the sign up rate, whether it be 17 per cent. or 70 per cent., will be less of a material consideration."—[Official Report, Standing Committee F, 15 April 1993; c. 28.] In other words, it is not whether one has a monopoly but what one does with it that is critical.

I do not believe that the case that has been made by the MMC stands up to scrutiny. I have spent a great deal of time reading it in the past 24 hours. The definition of a monopoly in this context is not relevant and I do not believe that an abuse has been demonstrated.

Let us take a comparable situation. I understand that Express Dairies has recently announced the purchase of Glanbia's liquid milk business, giving Express a potential 30 per cent. share of the market. Will that be referred to the competition authorities? It certainly should be. Will the Minister insist that while the matter is being examined, Express Dairies is not permitted to continue recruiting farmers who produce milk and taking them away from Milk Marque?

Our experience since the Agriculture Act 1993 has been deplorable. Milk Marque now markets less than 40 per cent. of Great Britain milk production. That is much less than at the time of the report. It is likely to be as low as 36 per cent.—a point made earlier by the hon. Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Select Committee—in the forthcoming selling round. The MMC did not adequately examine the traumatic events of the summer 1998 and spring 1999 selling round. It is not in the report. I have been through it and there seem to be some quick references to it, but despite the delays in publication, the MMC has not taken that into account.

As hon. Members will know, in both selling rounds, the buyers effectively held the producers to ransom. They have used their monopoly power twice in the past 12 months. The cartel was in place over those few days. The buyers were able to prevent the proper market from operating. The report is stuck in the early or mid-1990s. It has not taken into account the later 1990s. I see hon. Members on both sides of the House from agricultural constituencies agreeing that that is the case. The Secretary of State for Trade and Industry must acknowledge when he returns to the Chamber that the report is in a time warp.

The experience of those two selling rounds has convinced Milk Marque that there must be some attempt to address the full extent of the market power of the buyers, which is now held by a very small number of major dairy processing companies. Milk Marque has rightly recommended to us that the way forward must be to develop the sale of milk on more one-to-one contracts—a much more direct contractual basis—and on normal commercial terms. That would allow farmers to invest in the necessary processing capacity, and prevent milk from having to be exported, as it was in spring 1999, simply because there was insufficient manufacturing capacity in this country.

Of course it is true that the market in raw milk is naturally limited by time and transport—it is a commodity that cannot be hung about with—but it was folly for the MMC and the Government to ignore the importance of the EU-wide milk processing market in this context. The two are linked. If there is a surplus in the raw milk market, the milk that goes for processing, which is now Europe-wide, if not worldwide—

Mr. Richard Livsey (Brecon and Radnorshire)

Will my hon. Friend give way?

Mr. Tyler

I must make progress because I am conscious of the fact that the Labour and Conservative Front-Bench spokesmen took more than an hour and I want to leave time for other hon. Members to get in.

A large factor in the collapse of daily farmers' incomes has been the strength of sterling, to which proper reference has not been made today. However, that is an additional reason—I do not want to divert attention from the critical structural problems of the industry—for the Minister to come to the aid of this sector. The considerable gap that has opened between the retail prices for milk and the prices paid to producers must be addressed now; otherwise, more dairy farmers will go to the wall.

The Minister gave some figures, and it is true that there have not been as many bankruptcies—thank God—as one might have anticipated. One reason is that the amalgamations have proceeded at such a pace that there are, frankly, fewer people in the industry, so there are fewer to go bankrupt. However, I give this warning. If the indecision that is likely to follow this report for many months continues, and if there is no clear signal from both Departments that they take seriously the deterioration in the situation since the report was drawn up, there will be many more farmers whose bank managers will be dragging them into the office to say, "We know that you have hung on by your fingertips. You were waiting for the report, but frankly we see nothing in it which would give us the confidence to maintain your overdraft or borrowing requirement."

These farmers may have been able to hang on through the winter, but they will not be able to do so for much longer. As a result of the report, the likely selling price over the next few months in the selling round that is just about to start will be lower again, because of the lack of confidence in the market.

Frankly, I believe that the Secretary of State for Trade and Industry has fudged the issue of tackling the cartel behaviour of the buyers. I am sure that the Minister, who does his very best to represent the views of farmers, has done his best to influence the Department of Trade and Industry. I have to say that I wish we had been able to get to him earlier to strengthen his resolve and his arm.

In Committee, I made what I fear was an all-too-accurate forecast. I said: The restrictions on the possible future of Milk Marque may prove to be its undoing. It will not be as effective, powerful or useful to producers as it might be."—[Official Report, Standing Committee F, 11 May 1993; c. 253.] That is what the report has highlighted, and that is what we are debating.

I was delighted to hear the hon. Member for South Suffolk (Mr. Yeo) say on behalf of the Conservative party that he believes that Milk Marque was shackled. That is a retreat, or a U-turn, from the position of the previous Government, but it is a recognition of the facts which I genuinely welcome. I hope that all parties will now address that issue.

I wish to make brief reference to the issue of bovine TB. As the Minister knows, my constituency is at the epicentre of one of the worst outbreaks of bovine TB, and has been for many years. It is an appallingly difficult problem with which to grapple. Having examined the issue from all sides for a long time, I believe that we are, as a result of the Krebs report, at last grasping the nettle—but what a tragedy that we have had to wait 25 years for that to happen. Successive Ministers, for political or other reasons, have left it late in the day.

We now know that the impact and the cost of TB on the industry continues to grow. Dairy herds are accounting for approximately 50 per cent. of the breakdowns. The National Farmers Union has estimated that, by 2006, the number of TB breakdowns will grow to nearly 4,000 a year. The annual cost of TB to the farms is expected to rise to almost £140 million. This is like the BSE crisis coming back and back again, without any sign of an end. I welcome what the Minister has said, and I hope that it will not be too long before we have a firm statement in relation to the representations made by the NFU on the issue, which cannot be left.

The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) said that some fallout from BSE remains to be dealt with, notably in relation to cull cows and the end of the calf scheme. I hope that it will not be too long before we get an answer to those questions. August is not far away and, as the Minister rightly responded to the right hon. and learned Gentleman, that is when we ought to be clear that the 30-month scheme has outlived its usefulness.

That ought to be the case—unless the Minister suggests again that maternal transmission is potentially a real problem. If it is, let him be clear about it, and let him tell farmers. That will fill them with horror.

In the meantime, the Phillips inquiry is an extremely important analysis of what went wrong. The skeletons falling from the Whitehall cupboards are fascinating, and will provide the raw material for some interesting academic studies. However, I hope also that this House can take advantage of the inquiry not only to identify what went wrong, but to ensure that the lessons are learned.

I have referred previously to the problems that those in the dairy industry—and particularly the specialist cheese makers—are having as a result of the use by the Department of Health of the sledgehammer of emergency provisions to deal with hygiene problems with cheese. I invite the Minister, if he has not done so already, to look at the judgment in the case of the Department of Health v. Aldridge. Clearly, there was a complete over-reaction by the Department of Health, which has important repercussions for specialist food producers—especially those processing milk products.

Mr. Bercow

The hon. Gentleman rightly alludes to a particularly harrowing situation. Is he aware that Mr. Aldridge has yet to receive any apology for the scandalous way in which he was treated at the hands of the Minister for Public Health?

Mr. Tyler

It would be inappropriate for me to go into great detail, but the hon. Gentleman may know that I have twice debated this issue in the House, and we still have not had in the House an apology for the way in which Mr. Aldridge was treated. I understand that the Government are paying the legal costs of the case. That is something, but it does not compensate for the appalling loss of business suffered by Mr. Aldridge—nor for the slur on the reputation of Duckett's cheese in Somerset.

The pledges sought by the Conservatives this evening were valuable and welcome, but of far more value was the way in which the hon. Member for South Suffolk recognised the failure of the 1993 legislation on the marketing of milk. I hope that we can have all-party agreement across the House this evening that it is time to re-examine the legislation. I hope that we can have a pledge from both Front-Bench teams that they will commit themselves to a review and to reform.

Effectively, the MMC report is a confession of failure. We would not be doing our duty by the dairy farmers, the industry generally or the rural communities that depend on the industry if we did not recognise that fact and address it urgently.

Mr. Deputy Speaker

It will be painfully obvious to the House that there is a very short time left for Back-Bench speeches in what has necessarily been a truncated debate. May I make a special plea for brevity? If hon. Members could confine themselves to about five minutes apiece, it will be possible to get a reasonable spread of participants in the debate.

5.58 pm
Mr. Mark Todd (South Derbyshire)

I will do my best to be brief, Mr. Deputy Speaker. There are many dairy farmers in my constituency who are all too painfully familiar with the falling price of raw milk and the falling returns on their hard work.

Our task today, which has not been helped by the motion, is to try to help the industry to reform. I shall refer briefly to some fundamental facts and then to some of the methods we could use to address them.

First, much of the UK offers the best circumstances for milk production in the European Union. We currently produce more raw milk than we use. As in most industries, economy of scale helps—the bigger the herd, the more productive each beast is. That process has increased productivity by 22 per cent. in the past 15 years. However, this, and the decline in the volume of drinking milk consumed, has accentuated price pressures and strengthened the need for product development.

Secondly, although milk quota reform has been deferred, it remains a certainty in the medium term. Any reform should loosen the EU market and benefit the competitive suppliers that we have.

Thirdly, milk and milk products are increasingly international commodities. Currently, UK and EU prices are uncompetitive. The next World Trade Organisation round will almost certainly free the market somewhat. Although the costs of transport and the perishability of the raw product will prevent that from having much impact on drinking milk, it will have a major impact on the industry that uses milk for processing, as processors will increasingly source from global suppliers.

Fourthly, our milk processing sector is already fragmented and inefficient. Reference has been made to the monopoly nature of that sector, but the case is not proven. Of the 10 biggest European processors, none is British. The Office of Fair Trading showed in its earlier study that a dairy processor in the UK cost 4.5p per litre to perform a task carried out in Holland for 2.6p per litre. In Denmark and Holland, vertically integrated farmers co-ops dominate the market.

We are abysmal at product development in this country. Investment has gone into processing, but it has been focused largely on the replacement of antiquated and, sadly—because of the demise of doorstep deliveries—increasingly unwanted bottle plants, not on the development of added value product.

Cheese consumption in the UK is growing. Although we consume a little less than half as much as the French, we produce only one fifth of the amount that the French industry generates. Nevertheless, the profitability of our processing sector is increasing, in marked contrast to that of farmers. This is where the point about monopoly tendencies can be argued.

Finally, the other activities of the dairy farmer have been blighted by BSE. We have discussed that, so I shall not dwell on the matter.

As part of the solution, we need first to encourage the various parts of the milk food chain to discuss together the threats and opportunities that they face. For far too long, the debate has ranged narrowly around the activities of Milk Marque and its machinations. Holstein UK, the representative body of many dairy owners in this country, suggests that there is a need to actually progress, rather than paying mere lip service to adding value to UK milk production, by product modification, diversification and especially new product development. Some supermarkets have already started to identify opportunities. Let us ensure that they are met by British milk products. Organic milk remains difficult to source. There are opportunities for longer-life milk products, short of UHT. We have, as I mentioned, a substantial problem in supplying our local cheese market, in which there is a trade deficit, and the same is true of yoghurts.

Secondly, we must help the chain to explore ways in which its processes can be made more efficient and abbreviated. The Minister touched briefly on the role of collective marketing. The role of the Milk Development Council should be reviewed and its brief widened to marketing, if that is what the industry wants it to do.

Thirdly, we must recognise that farmers have to be allowed up the value chain if they are to thrive. By locking Milk Marque out of processing, we may hinder that, and farmers will remain weak sellers in a concentrated market. Falling producer membership, now covering below 40 per cent. of production, as several hon. Members have noted, may anyway break the monopoly relationship to processing, but Milk Marque must recognise its customers' concerns. That is one of the telling criticisms. Traceability of product and consistency of supply are critical in the new marketplace.

Fourthly, we should review the other costs in the chain. The funding of quota purchase and leasing adds about 2.5p per litre to costs. Should we freely allow non-farming quota holders to make a return on an essentially public property? The dairy hygiene inspection charges, like our other agricultural charges, must be compared to those of our EU competitors. We will also need to observe and support the industry's transition from the loss of the calf-processing scheme, and resolve the future of the 30-month scheme. In the medium term, reform and, in my view, eventual abolition of milk quota is essential.

Finally, we must rapidly resolve the remaining uncertainties from the Monopolies and Mergers Commission inquiry. That involves further reform of the sale procedures and precise definition of when Milk Marque will cease to be a monopoly supplier, preventing its moving into processing. We should also prepare advice on voluntary steps by Milk Marque that might allow vertical integration to proceed.

Let us look to the future of the sector, which should be a star performer in UK agriculture. Much of the work that I have outlined lies in the industry's hands, but the Government have some crucial tasks. I look forward to the Minister's response.

6.5 pm

Mr. Patrick McLoughlin (West Derbyshire)

It is no exaggeration to say that the countryside is in crisis. I agreed with much that the hon. Member for South Derbyshire (Mr. Todd) said. I shall not deal now with the points on which I disagreed with him as time is short and others want to take part in the debate.

The Minister of Agriculture, Fisheries and Food has established a reputation for going around the country, talking and listening to farmers. At the beginning of his speech today, he gave the impression that he would make some important announcement on the future of the dairy industry. Having listened to his whole speech, I was disappointed. The only thing that he promised dairy farmers was a ballot, starting in September and lasting six weeks, on whether there should be a levy for the promotion of milk. No wonder the right hon. Gentleman cannot get the Government business managers—a position that he formerly held—to allow him to make a statement of that magnitude in the House. Perhaps that is surprising, given the way that the Government treat the House of Commons.

If the Minister believes that such a levy will help the long-term future of the dairy industry, he is living in cloud cuckoo land, along with the rest of the Government. The countryside is facing a devastating crisis.

We have heard much about the Monopolies and Mergers Commission report. Yesterday the Secretary of State for Trade and Industry rejected its main conclusions but accepted other parts. As the hon. Member for North Cornwall (Mr. Tyler) said, that is not logical. In the 24 hours since the report was published, I have not managed to study it in detail but I have listened to those who have.

By announcing that he rejects the main conclusions but accepts others, the Secretary of State continues to sow doubt in the dairy industry. The problem is what will happen to dairy prices before he tells us the director general's final recommendation. The time scale on which he has so far dealt with the matter gives great cause for concern.

Let me deal more generally with the crisis in the countryside. I have the privilege to represent a good piece of the Peak district national park and some of the outstandingly beautiful areas of Derbyshire. We have such beautiful countryside because of the way our fanners have looked after and farmed it. I have great fears for the future of the countryside if farmers do not believe that they can earn a living from their farms.

There is a notion that farmers are wealthy people. Some of them are very wealthy, but many are not. Many tenant fanners are finding it extremely difficult to sustain a living off the land. If they were subject to the national minimum wage, the Government would probably close down the farms because they would not meet the criteria.

After a 40-minute speech, the Minister proposed a ballot on a levy to take more money off the farmers. The farmers will be reluctant to see any more money come off their milk price, not because they do not want their industry to be a success but because they fear for their own survival in the long term. What they feel is not annoyance with the Government, but frustration because they can see no way out.

I respect the Minister, but I have to say that I found his speech highly complacent in respect of the position in which a lot of my constituents who are in the dairy industry find themselves—they are struggling to survive. In the Bakewell area, more than 10 have gone out of production in the past few months. Farmers cannot afford to continue producing milk at the prices that they are currently receiving.

Mr. Nick Brown

May I ask the hon. Gentleman candidly what remedy he is urging on me?

Mr. McLoughlin

Some of those that have been mentioned. From the Front Bench, my hon. Friend the Member for South Suffolk (Mr. Yeo) raised five points on which the Minister ought to act—the calf processing scheme is one of them—and my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) referred to the 30-month scheme, which he could address shortly. Representations on a number of points have been made to him in the debate and I hope that, because of the number of Members who want to speak, he will not mind if I do not repeat them all.

The fact that the Minister is seized of the growing concern about tuberculosis, which has spread across the north Staffordshire border well into Derbyshire, has come across in the debate. The disease is causing tremendous concern among farmers. I have seen the National Farmers Union letter forecasting the expected growth in TB, but what I have learned about its spread and growth in my constituency suggests that the NFU has probably underestimated the problem we will face. Tuberculosis is a growing problem in north Derbyshire and in various areas below Ashbourne, and it is creeping down to the constituency of the hon. Member for South Derbyshire, which is not too far away. Although I realise that it will take time to get the results of tests, we need them urgently and the Minister ought to consider establishing more trial areas so that conclusive recommendations can be made more speedily.

I want to say a lot more, but we are short of time and many Members want to speak. I say to the Minister and the Secretary of State for Trade and Industry that we have not raised these matters only because we want to discuss agriculture continually in the Chamber. We think that the Government are getting it wrong in many ways, and the future of the countryside that we love and enjoy is at stake. It is all very well to talk about the protection of sites of special scientific interest, trying to green-up the environment and giving people the right to roam. The way the Government are going, people will have the right to roam because the fields will not be farmed and the countryside will not be in the pleasant state that we expect it to be in. I urge the Government to take action quickly.

6.13 pm
Mr. David Lock (Wyre Forest)

I am grateful for the opportunity to take part in the debate. I freely admit that I am not an agriculture expert and I have spent much of my time in the House dealing with legal reform and working with the legal profession. However, that has given me some insight and I can spot special pleading; when claims are made about the public interest, they are often based on sectional interest.

I have two substantial interests in agriculture. First, there are many farms and agriculture workers in my constituency. Wyre Forest does not contain only trees and towns; it is a beautiful rural area of Worcestershire. When I met the National Farmers Union and dairy farmers last week, they urged me to press Ministers to disclose the Monopolies and Mergers Commission report because that would be the best way to achieve confidence in the agriculture industry. I met my right hon. Friend the Secretary of State on Monday and the report was published on Tuesday, although I cannot go back to my NFU members and claim that I had any responsibility for its publication.

My second interest is that I represent about 90,000 people in all, including children. I have been worried about that throughout the debate because the vast majority of my constituents consume milk products. It is tempting to say that consumers have been totally ignored in the debate. Milk is a product; it is put on the market to be sold to consumers. I am concerned that our discussions have centred on the interests of the producers. Consumers have rights as well, the most important of which is the right to a proper, well-regulated and safe supply of milk.

Last year, I had the privilege of visiting the United States. I went to a "Save Family Farms" rally in rural Minnesota. Farmer after farmer complained that his livelihood was being ruined by the collapse of world prices. Two clear points emerged. First, a group in the United States was demanding free trade, flexibility and liberalised markets from every other country in the world, but it complained when those same principles came back to them and were inconvenient. Secondly, complaint after complaint was made against companies that were buying up land and farming at what were freely admitted to be prices with which family farms could not compete. There was opposition to structural change that was taking place in the market and causing enormous damage to family-run farms, but changes in the industry were reducing prices and putting enormous pressure on farmers. Having talked to my farmers in great depth, I wonder whether we are seeing the same sort of structural reform here. That is one reason why there is a price crisis at the moment.

The farmers in my constituency have repeatedly told me that prices are poor. They are—that has been well documented by other hon. Members so I shall not go through the figures—but my farmers also told me that the milk market is being rigged by the dairy companies and the supermarkets. The situation is not straightforward because most of the world trade is in butter and derivative milk products rather than in milk, but paragraph 2.17 of the MMC report confirms that European Union support prices are above world prices and that a cut of 30 per cent. will be needed to bring prices here down to world levels.

Prices in Britain are substantially higher than world prices. Our consumers are paying more, although I have not heard a voice being raised on their behalf. In the years ahead, change will come through the World Trade Organisation and reform of the common agricultural policy. World prices will inevitably come down.

Mr. Gray

Irrespective of what might have happened to consumer prices recently—for all I know, people in this country may be paying the highest consumer price at the supermarket—does not the hon. Gentleman accept that farmers are demonstrably earning less than they have ever earned? Although the supermarkets and the intermediaries may be to blame for the high price to the consumer, farmers are definitely not to blame.

Mr. Lock

I entirely accept that that is right. I urge the Government to listen to the views of my hon. Friend the Member for South Derbyshire (Mr. Todd), who suggested that the way forward is to allow farmers and farmers' co-operatives to add value to their products so that they can retain more of the value that is in the raw milk. They would thus be able to get a true share of the value of what they produce.

Having looked at the MMC report in as much detail as one can overnight, it is interesting that the basic allegation of collusion between the main dairy producers and the supermarkets to keep prices down in the various bidding rounds has simply not been accepted by those who have gone into that matter in enormous detail. I find it astonishing that the report has been rubbished by a number of speakers this afternoon, given that it is doubtful whether anyone has had a chance to look at its detailed substance.

Mr. Tyler

Does the hon. Gentleman accept that work on the report ceased before the latest selling rounds, in which there was clear evidence of the cartel operations of the buyers? I see Labour Members nodding.

Mr. Lock

I obviously accept that that is correct. None the less, the report examined allegations of cartels which were made at that time and then found wanting. Those allegations may be repeated and they may be justified this time.

I want to discuss my farmers' bitter complaints about the cost of quota. Quota has been sold and leased. This is the price that farmers in my constituency are having to pay as part of the overheads involved in the production of milk. It has no benefit for the farmer, or for the consumer; it is purely a price imposed by the system chosen by the last Government in order to introduce quota.

May I make an urgent plea? I feel that, when my right hon. Friend the Secretary of State for Trade and Industry considers his response to the report and when my right hon. Friend the Minister of Agriculture considers reform of the quota system, their first priority must be to ensure that the cost goes out of the system. What the farmer receives at the farm gate must surely be the price that he receives to meet his legitimate costs. A process that involves buying or renting quota from a retired farmer, or a middle man who may never have had anything to do with farming in the first place, is simply rigging the market and adding a cost to agriculture that benefits no one except the tiny proportion of people who have quota.

I urge my right hon. Friend the Minister to do all that he can to get rid of that cost, and to ensure that the licence to produce is there only for those who are actually producing.

6.21 pm
Mrs. Ann Winterton (Congleton)

I shall try to be brief, because I know that many hon. Members wish to speak.

I believe that Cheshire farmers have been cheated this afternoon, and that the Government have pulled a fast one by announcing what almost amounts to Government business in Opposition time. In normal circumstances, we would have expected a full statement on the Government's response to the MMC report, and an opportunity to question Ministers; but the subject has been pushed into today's debate. The Government may wish to consider devoting a day's debate to this important issue in their own time. Most hon. Members have not had time to read fully and to absorb the MMC's complicated report, and they would like an opportunity to debate the issues contained in it.

Hon. Members on both sides of the House agree that the dairy industry is experiencing a crisis. Its income is lower than it has been for 60 years, and farming incomes are in free fall. Farmgate milk prices have fallen by nearly a quarter over the last two years—by more than 3p a pint. The situation is disastrous: consumers are not benefiting, but dairy processing companies—the fat cats of the industry—are profiting. The gap between the retail price, which is 25p in stores and approximately 40p for milk delivered to the doorstep, and the price paid to producers—about 10p a pint—has widened dramatically.

Dairy farmers have been disadvantaged by a particularly aggressive market. Some success has been achieved by dairy farmer co-operatives such as Milk Marque, but they face increased concentration of milk processors and retailers. Fewer than 12 major processing companies now exist in the United Kingdom, and there are only four major multiple retailers.

I believe that farmers themselves need to develop processing capacity, and to be able to make the investment that is necessary for the provision of not only world-class processing facilities, but innovation for the future. That investment is also necessary to give producers and farmers a place at the negotiating table. At present, they are excluded from the chain that takes milk from the farm to the shop. That is particularly important in the light of the decision to allocate more milk quotas from 2005 onwards, and the longer-term possibility—I put it no higher than that—of an end to the quota system. We were disappointed recently that the United Kingdom received no increase in quota. Four other countries succeeded—including Eire, which is one of our major competitors.

I am pleased that, at long last, the Secretary of State for Trade and Industry has published his response to the MMC report, and I am especially pleased that he has rejected the recommendation for Milk Marque to be broken up. Milk Marque does not hold a dominant market position: its share of the raw milk market is only 38 per cent. in the United Kingdom, and only 4 per cent. in European Union terms. What justification is there—what justification could there possibly be—for preventing further moves into processing?

I understand that Milk Marque has been described as a complex monopoly, and that the rules that exist today were established in 1973. The MMC acknowledges that Milk Marque's current processing activities have not been used to enhance its scale monopoly. On what basis do the MMC and the Government conclude that any further advance into processing by Milk Marque would produce a different result? Perhaps the Secretary of State will tell us when he winds up the debate.

Like many others, no doubt, I want a fair deal for farmers, but let us face it: the industry has been left in limbo for many months while the MMC inquiry has been in progress. Nothing erodes confidence in the future more than uncertainty—not knowing what that future holds. Once a decision has been made for better or worse, at least people can plan. At present, however, the industry is in limbo, because the Secretary of State for Trade and Industry has kicked the ball back into touch.

Producers are willing to co-operate with processors and retailers alike, and to work together on a commercial basis to bring about the best conclusion for the United Kingdom as a whole. I hope that the Minister, the Secretary of State and others in Government will work towards that end.

I want to refer briefly to two issues that are particularly important to the fanning community in Cheshire. The first is the calf processing aid scheme, which has already been mentioned today and whose continuation I consider to be essential. The lifting of the beef export ban was announced in November last year. Since then, not one carcase has been exported to the continent, and the calf processing aid scheme will apparently cease at the end of this month. I think it vital for the scheme to continue until normal export markets have been resumed, and I hope that the Secretary of State or the Minister will give assurances in that regard.

The alternative to rearing calves that would have entered the processing aid scheme would be slaughtering them on farms—not something that any of us would contemplate with an easy mind. That in its turn would lead to a dramatic increase in on-farm burials and, potentially, to animal welfare problems.

There is another compelling reason why the calf processing aid scheme should be retained for the present. Its retention would enable farms that are subject to tuberculosis outbreaks, and therefore to herd restrictions, to prevent overstocking by removing surplus calves, thus avoiding associated animal welfare problems. That factor becomes more telling as the problem with badger tuberculosis becomes increasingly acute.

Those of us who represent dairy industries know of dairy farmers' anxiety about the spread of TB. My hon. Friend the Member for West Derbyshire (Mr. McLoughlin) said that TB was spreading into the Peak district and into his constituency; my area has also experienced outbreaks in Staffordshire and in Cheshire. The problem is growing at an alarming rate. I hope that the Government will continue to support research into the development of a cattle vaccine, and to investigate all aspects of the origin and transmission of bovine tuberculosis. I endorse all that Opposition Front Benchers have said about that today.

All hon. Members are concerned about what is happening in rural areas. In Cheshire, we have the United Kingdom's foremost dairying county—although I accept that other areas in the United Kingdom might think that they hold that position. In my own area in Cheshire, we farm very productively and very close to large population centres, such as Stoke-on-Trent, the Potteries, the Manchester area, Liverpool and the midlands.

One of the problems facing Milk Marque is the cost of transportation, and the fact that it collects milk from every part of the United Kingdom, including south Wales and the west country. It is very easy for more local dairies to pick off local farmers, as their cost of transporting milk from Cheshire farmers to a dairy in Manchester, for example, is minimal compared with Milk Marque's costs. However, those dairies do not cover the entire United Kingdom.

I hope that more investment will be made in processing, which is a vital element for the future of our dairy sector. In the past, there has been very little such investment and, currently, the private dairy companies are making very little of it. I trust that that situation will be put right.

For all hon. Members who support rural areas, and the part that those areas play in our country—no one could have summed that up better than my hon. Friend the Member for West Derbyshire—I should simply like to say that we are concerned; we wish to see action; and we trust that the Government will, as a priority, act to address our concerns.

6.31 pm
Mr. Alan Hurst (Braintree)

I am pleased to be called to speak—albeit it latterly and speedily—in this very important debate. This morning, I was speaking to a dairy farmer in my constituency, Nick Loftus, who told me of his grandfather, who had farmed a dairy farm in the Fylde, near Blackpool, in the 1920s—when, he said, similar problems existed in the dairy industry. Local dairy farmers had been threatened with a reduction in the milk price from 1¾d to 1½d per gallon. Those local farmers took it into their hands to fight the local dairy by feeding the milk to pigs or pouring it into the drains.

At that time, that method worked, and the dairy backed down. I suspect, however, that such methods would not work now, as the cartel of dairy processing companies would have milk from other locations on site within hours. Over the years, the position of producers has been weakened considerably.

I should say that one is often confused when giving examples from the dairy industry, as some people talk in litres, whereas others talk in pints. Nevertheless, Nick Loftus farms about 1,000 acres, employing five men. Those who are familiar with arable farming will realise that five men are about five times as many as one would have on a comparable-sized arable farm. His farm is in Essex, near Finchingfield, which is alleged to be the most beautiful village in Essex, if not in East Anglia. Nevertheless, although the aspect may be pleasing, the economic returns are very poor indeed.

Nick Loftus's view is quite simply that, if producers are to be strong in the market, they have to combine and to have a processing arm. Throughout history, producers have been in a weak position, but processors and retailers have been in a strong one.

Recently, we received the Monopolies and Mergers Commission's report on Milk Marque. If Milk Marque is a monopoly, it is a very poor one—as its market share has now been reduced to less than 40 per cent. I should much prefer the whole matter to be referred to a body, if there were one, called the cartel commission, so that those who are really milking the system—the producing dairy companies, and perhaps even our friends the supermarkets—might be dealt with. The retail price remains constant, but the producer price falls, and that pattern is occurring not only in the dairy sector.

Whatever faults Milk Marque might have in some aspects of its operation, it is not the key to the problem. It is very surprising to hear suggestions that it would be quite wrong for producers to have a processing arm. As we have heard in the debate, Denmark's milk co-operative has more than 90 per cent. of the Danish market, and it not only produces, but processes.

Moreover, the Danish co-operative—which is now the owner, or part owner of M and D Foods—is processing not only in Denmark, but in my own constituency. Therefore, it is vertically integrating not only in Denmark, but in the United Kingdom. Our own producers are being discouraged from vertically integrating, from adding value and—to put it into English—from going into a profitable part of the sector, so that they might be able to spread their costs and risk.

I am reassured that my right hon. Friend the Minister of Agriculture will be examining the matter further, and talking to the interested parties. However, I am sure that I am not alone when I say that we hope that producers will get a fair deal in the sector, and that profits will not simply be skimmed off and taken from producers—not to the benefit of consumers, but to the advantage of those who go between producers and consumers.

6.36 pm
Mr. Dafydd Wigley (Caernarfon)

I should first declare an interest, as I am the president of a creamery in my constituency. However, I am an unpaid president, with no pecuniary interest in the business.

I follow the hon. Member for Braintree (Mr. Hurst) in saying that, currently, we should be concerned primarily about producers, who are going through a very difficult time. If there are no producers, there will be no consumers. I do not have to remind the House how important the dairy sector is to Wales, as it constitutes 30 per cent. of Wales's agricultural gross domestic product. In the past 20 years, the number of dairy holdings has been more than halved, from 9,000 to 4,000. Two years ago, there were 4,576 such holdings; now, there are 4,078.

Unquestionably, there is a crisis in the dairy sector. Last year, the sector's net farm income fell by 25 per cent. In the past two years—combining the dairy and livestock sectors—average annual net farm income has dropped from £18,527, to £11,524 in 1997–98, and, now, to a mere £6,854. Needless to say, some farmers must be below that average.

The average weekly net farm income is only £130. We cannot build an industry—or expect young people to go into an industry—with those figures. Something has to be done. The net margin per cow is a telling figure—from £333 in 1995–96, to £93 in 1998–99.

At the South Caernarfonshire Creamery, we are concerned that, recently, the market value of our cheddar has decreased by £500—or 20 per cent.—per tonne. The decrease is a consequence partly of imports, and partly of our inability to export because of the value of the pound, which has already been mentioned by other hon. Members. Ironically, in dealing with United Kingdom agriculture's difficulty in competing with Europe's agriculture, only the United Kingdom dairy sector is receiving no European Union agrimonetary compensation.

Plaid Cymru Members welcome the fact that, yesterday, at long last, the Monopolies and Mergers Commission report was issued. I am not sure what delayed the report, but at least we have it now. Our reaction to the report must be mixed. We welcome the fact that Ministers will not split up Milk Marque, as now is not the time to add additional uncertainty. Although there may be arguments for considering the matter in the future, we should not consider them now.

We regret very much that the report seems to favour denying Milk Marque the right to develop new processing plant, as such plant is greatly needed. A two-year scheme is about to proceed in Felinfach, investing millions of pounds and creating 70 new jobs, but it seems likely that that scheme will be undermined by the Government's decision. We should very much regret that.

A number of issues have to be addressed urgently. We all understand the problems caused by the high value of the pound—it is hitting not only the dairy sector, but others—but something has to be done about it. We also have to extend processing capacity. We therefore believe that that matter will have to be rethought by both the Secretary of State for Trade and Industry and the Minister of Agriculture, Fisheries and Food.

The calf processing scheme, which is due to end on 31 July, must clearly continue because of the difficulties that face the industry. The Government must fund the British cattle movement service beyond 30 September. We also need an urgent review of the anti-competitive impact of the supermarket chains, which is causing farmers great difficulties, but from which consumers do not appear to benefit. Now that the report has been published, I hope that action will follow.

6.40 pm
Mrs. Angela Browning (Tiverton and Honiton)

I have two unremunerated interests to declare. I am a vice-president of Devon young farmers—[Interruption.] The Secretary of State for Trade and Industry may laugh, but there is youth in me yet. Secondly, six months ago Milk Marque put into the public domain an application for a processing plant in Cullompton, giving me a keen constituency interest in the report.

Given the report's importance and the number of questions tabled by both sides of the House, a statement from the Secretary of State would have enabled him to answer questions, and that would have been better than tagging himself on to the end of a Conservative debate on the dairy trade. I shall listen carefully to what he has to say.

We have sought to persuade the Minister of Agriculture, Fisheries and Food of the urgent situation facing the dairy trade. The Minister has a reputation for listening, and I felt that he was trying to respond to the crisis when he spoke. My right hon. Friend the Member for Bridgwater (Mr. King) and my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) testified to the devastating experiences of their constituents, and I could add to what they said. My first Trade and Industry question from the Dispatch Box flagged up the urgency of the problems facing dairy farmers, many of whom see this month's selling round as the time at which to decide whether to stay in business or call it a day.

Mr. Geoffrey Clifton-Brown (Cotswold)

Does my hon. Friend accept that dairy farmers hanging on by their fingernails and preparing to decide during the next week or two whether to remain in business will be dismayed by the Monopolies and Mergers Commission report, which creates another six months of uncertainty over the structure of Milk Marque?

Mrs. Browning

Indeed; my hon. Friend is right. The Government's response to the report is inconsistent, and further delay faces farmers. The Secretary of State for Trade and Industry should take the opportunity provided by the debate to unlock the grip on the industry and to set some fears to rest. I hope that his response will be long on action and short on rhetoric.

Raw milk processing is a large industry, but we have been slow to change in favour of the culture of farmer co-operatives adopted in many European countries. Labour Members may think it strange that mere Conservatives should praise co-operative movements, but my advocacy is not new. My background is in marketing, and in considering how value can be added to products brought to market, I have admired examples from across the channel of farmers coming together to invest in packaging, marketing and transport in order to take a larger share of the single market. Lessons can be learned from those examples, and my hon. Friend the Member for Congleton (Mrs. Winterton) was right to say that farmers in the dairy trade are increasingly prepared to work that way.

The Minister of Agriculture said that vertical integration should be encouraged at the core of industry. I agree. Milk Marque makes a good case for wanting to process. A presentation in support of Milk Marque notes that there is no UK dairy processor in Europe's top 10, despite the UK position as the third largest milk-producing country in the EU behind France and Germany. Of the top 10 EU processors, six are farmer-controlled co-operatives. It is a tried and tested path.

The UK produces 14 billion litres of milk a year, but no UK company processes even 2 billion litres. By contrast, in Holland, a country that produces only 11 billion litres of milk a year, two companies—Friesland Coberco and Campina Melkunie—dominate the scene. Both are co-operatives, vertically integrated from farm to factory. In Denmark, the same pattern applies, with 90 per cent. of milk produced on Danish farms and processed and marketed in that way. Our sector is asking to operate on the same level playing field, and it is unbelievable that we must wait to find out whether the Secretary of State for Trade and Industry will let British farmers and companies take their product to market. If the single market is to mean anything, our farmers must have the same opportunities as others.

The Minister of Agriculture questioned our motion's desire to strengthen Milk Marque. There is nothing ambiguous in that. My hon. Friend the Member for South Suffolk (Mr. Yeo) has pointed out, and I shall reiterate, that Milk Marque wants to process so that it can take products to market with value added. The Government's amendment says that the industry itself must help shape its own future". What more can it do? It has not come to the Government with a begging bowl, but is asking to be allowed to compete and to develop its product in the same way as its competitors.

The Prime Minister was questioned on that point by my right hon. Friend the Member for Fylde (Mr. Jack) this afternoon. It was extraordinary to hear him say that the contents of the report meant that allowing Milk Marque to expand and to process its own product would involve Government subsidy. The Minister will want to put his Prime Minister right, as the latter seems not to be up to speed. There is no question of Milk Marque's asking for public money.

Mr. Nick Brown

I am trying to follow the hon. Lady's argument. Is she urging the Government to reject the MMC report?

Mrs. Browning

In considering breaking up Milk Marque, the Secretary of State for Trade and Industry must consider carefully whether or not to accept the report. It is in his gift to decide. I ask him to consider Milk Marque's request on processing, which would allow it to take its place in the market.

When it comes to import substitution, value-added products will appear on supermarket shelves, which are a huge growth area for the dairy sector. If those products are not British, they will be imported products. Some may even have been produced from UK milk. Earlier this year, the Dutch bought liquid milk from the UK—there are no borders because we are in a single market—but the UK consumer and producer will find those products back on our supermarket shelves.

When new Labour came to power two years ago, Labour Members' bleepers continually told them to repeat two words at us in every speech from the Front or Back Benches—fairness and justice. Milk Marque and British dairy farmers are asking for no more than fairness and justice. They want fairness in the marketplace so that they can compete on a level playing field, and justice so that United Kingdom producers have the opportunity—it is down to them at the end of the day—to put their products on the supermarket shelf so that we do not have to buy from foreign competition.

I hope that the Secretary of State will use the opportunity to release the industry from its shackles, as it is in his gift to make sure that the industry can compete and is viable so that British dairy farmers can look to the future instead of considering whether to call it a day.

6.50 pm
The Secretary of State for Trade and Industry (Mr. Stephen Byers)

I begin by congratulating the hon. Member for Tiverton and Honiton (Mrs. Browning) on her promotion to shadow Secretary of State for Trade and Industry. I am sure that the whole House is pleased that her personal circumstances allow her to accept a well-deserved promotion and take her rightful place on the Opposition Front Bench

The MMC report is a substantial document. I welcome the opportunity of accounting to the House for my decision on the report on the supply of raw milk in Great Britain and of answering some of the questions that have been raised during this afternoon's debate.

Let me start by explaining to the hon. Lady why I did not make a statement to the House yesterday. She will be aware that when an MMC report contains commercially sensitive information, it is not the subject of a statement to the House, since the City would have notice of such a statement's being made and that might not be appropriate. That practice has been adopted by successive Governments.

The MMC report was clear. It found that Milk Marque was operating in a way that was against the public interest. In my view, that related to the conduct of its sales procedure. The MMC identified two possible remedies to address the abuse by Milk Marque of its monopoly position. It recommended an enforced break-up of Milk Marque. I rejected that recommendation. However, I accepted the view that we should address what I consider to be the key issue—the selling process that Milk Marque has operated.

It was not an easy decision, as it not usual to disagree with a clear recommendation from the MMC. It is one reason why the report took longer to publish than I would have liked; I understand the concerns expressed by many right hon. and hon. Members this afternoon and by the farming community, particularly the dairy farmers, about the delay in its publication. I wanted to publish the report as soon as possible and I have done that. I would have liked it to be sooner, but I wanted to make sure when it was published and I had put on record my decision that all avenues had been properly investigated.

When I gave evidence to the Select Committee on Trade and Industry some two and a half months ago, I said that I would ensure that the report was published by the summer recess. I am pleased to say that I have managed to do that with some two weeks to spare.

I was not prepared to accept the MMC recommendation to enforce the break-up of Milk Marque because I believed that it would lead to a period of uncertainty. That would be the last thing the dairy industry wanted after the uncertainty of recent weeks.

Mr. Hilton Dawson (Lancaster and Wyre)

I am grateful to my right hon. Friend. Although I applaud his decision not to break up Milk Marque, at least a break-up would have allowed the various companies within it to develop processing. Will he look again at the serious issue of allowing Milk Marque to carry out processing?

Mr. Byers

I shall address processing and vertical integration specifically as the issue has been raised by several right hon. and hon. Members this afternoon. The hon. Member for Congleton (Mrs. Winterton) referred to the need for diversification and vertical integration in the processing industry.

In 1992, the Conservative Government decided not to allow Dairy Crest, the processing subsidiary of the former milk marketing boards, to be transferred to Milk Marque. They decided that it would not be appropriate to allow vertical integration. Since then, vertical integration has occurred in two areas. The MMC specifically addressed the point of whether vertical integration should take place, concluding: Although we did not find that Milk Marque was exploiting the scale monopoly situation in respect of its current vertically integrated processing activities, we consider that the planned enlargement of its vertically integrated processing capacity will give Milk Marque the ability to exploit still further the scale monopoly situation in its favour and it may therefore be expected to operate against the public interest. In the light of that clear recommendation, I decided that there should be no expansion of its milk marketing operations unless sanctioned by the Director General of Fair Trading.

Mr. Tyler

What level of market share can or should Milk Marque fall to before the right hon. Gentleman is prepared to review the position?

Mr. Byers

As the hon. Gentleman will be aware, the review is decided by the director general of Fair Trading. The rules were established by the previous Government. It is a matter for the director general to refer Milk Marque to the competition authorities. That power was conferred on him by the previous Conservative Administration.

I turn to the point that was raised by the hon. Member for North Cornwall (Mr. Tyler) about the difficulties that would be created by the adoption of the interim remedies that I have put in place. I was particularly aware of the difficulties caused by the report's being published at this time, just as the new selling round was about to commence. I have received strong representations, including from Mr. Ben Gill, the president of the National Farmers Union, about the difficulties that would be created if we were to implement the interim remedies immediately. I have taken the view that it would be unfair to impose them at such short notice. I therefore propose that the interim remedies recommended by the MMC should not apply to the selling round that is about to begin. However, I shall require the director general to report to me within three months of the publication of the report on the undertakings received from Milk Marque.

Several hon. Members have also raised concerns about the six-month period in which I have asked the director general to discuss with Milk Marque and other interested parties the reform of the selling process. It is not a maximum of six months. If agreement can be reached sooner rather than later, I shall be pleased to receive recommendations within the six-month period. It would be great for the industry if agreement were reached before the next selling round early next year, and if the industry and the director general made some positive proposals. I hope that Milk Marque recognises that opportunity. I look forward to the day when it proposes a selling round and a process that can be agreed by the director general, since that would make an important contribution to ensuring that Milk Marque had a strong future ahead of it.

As our amendment makes very clear, we wish to strike a balance between the interests of the dairy industry and the interests of consumers. It would have been totally irresponsible of me, as Secretary of State for Trade and Industry, and in the light of the MMC report, to ignore its findings. By rejecting the imposed break-up of Milk Marque, but by allowing further time for consultation and discussion about the selling process, I have sought to balance those—sometimes conflicting—interests.

I look forward to the time when, in partnership, we can meet the consumer's interests through a healthy and thriving dairy industry. I believe that the decisions that we have taken following the Monopolies and Mergers Commission's report will provide us with the facility to do precisely that. I urge the House to reject the motion and support the amendment.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 176, Noes 326.

Division No. 227] [7 pm
Ainsworth, Peter (E Surrey) Gill, Christopher
Allan, Richard Gillan, Mrs Cheryl
Amess, David Gorman, Mrs Teresa
Ancram, Rt Hon Michael Gorrie, Donald
Arbuthnot, Rt Hon James Gray, James
Atkinson, Peter (Hexham) Green, Damian
Beggs, Roy Greenway, John
Beith, Rt Hon A J Grieve, Dominic
Bell, Martin (Tatton) Gummer, Rt Hon John
Bercow, John Hamilton, Rt Hon Sir Archie
Beresford, Sir Paul Hammond, Philip
Blunt, Crispin Hancock, Mike
Body, Sir Richard Harvey, Nick
Boswell, Tim Hawkins, Nick
Bottomley, Peter (Worthing W) Heald, Oliver
Bottomley, Rt Hon Mrs Virginia Heathcoat—Amory, Rt Hon David
Brake, Tom Heseltine, Rt Hon Michael
Brand, Dr Peter Hogg, Rt Hon Douglas
Brazier, Julian Horam, John
Breed, Colin Howard, Rt Hon Michael
Brooke, Rt Hon Peter Howarth, Gerald (Aldershot)
Browning, Mrs Angela Jack, Rt Hon Michael
Bruce, Ian (S Dorset) Jackson, Robert (Wantage)
Burnett, John Jenkin, Bernard
Burns, Simon Keetch, Paul
Burstow, Paul Key, Robert
Cable, Dr Vincent King, Rt Hon Tom (Bridgwater)
Cash, William Kirkbride, Miss Julie
Chope, Christopher Kirkwood, Archy
Clappison, James Lait, Mrs Jacqui
Clark, Dr Michael (Rayleigh) Lansley, Andrew
Clarke, Rt Hon Kenneth (Rushcliffe) Leigh, Edward
Collins, Tim Letwin, Oliver
Colvin, Michael Lewis, Dr Julian (New Forest E)
Cormack, Sir Patrick Lidington, David
Cotter, Brian Lilley, Rt Hon Peter
Cran, James Livsey, Richard
Dafis, Cynog Lloyd, Rt Hon Sir Peter (Fareham)
Davey, Edward (Kingston) Llwyd, Elfyn
Davis, Rt Hon David (Haltemprice) Loughton, Tim
Donaldson, Jeffrey Luff, Peter
Dorrell, Rt Hon Stephen MacGregor, Rt Hon John
Duncan, Alan McIntosh, Miss Anne
Duncan Smith, Iain MacKay, Rt Hon Andrew
Evans, Nigel Maclennan, Rt Hon Robert
Fabricant, Michael McLoughlin, Patrick
Fallon, Michael Major, Rt Hon John
Fearn. Ronnie Malins, Humfrey
Flight, Howard Mates, Michael
Forsythe, Clifford Maude, Rt Hon Francis
Forth, Rt Hon Eric May, Mrs Theresa
Foster, Don (Bath) Michie, Mrs Ray (Argyll & Bute)
Fowler, Rt Hon Sir Norman Moore, Michael
Fox, Dr Liam Morgan, Alasdair (Galloway)
Fraser, Christopher Moss, Malcolm
Gale, Roger Nicholls, Patrick
Garnier, Edward Norman, Archie
George, Andrew (St Ives) Oaten, Mark
Gibb, Nick Öpik, Lembit
Page, Richard
Paice, James Taylor, Ian (Esher & Walton)
Pickles, Eric Taylor, Rt Hon John D (Strangford)
Prior, David Taylor, John M (Solihull)
Randall, John Taylor, Matthew (Truro)
Redwood, Rt Hon John Taylor, Sir Teddy
Robathan, Andrew Thompson, William
Robertson, Laurence (Tewk'b'ry) Tonge, Dr Jenny
Roe, Mrs Marion (Broxbourne) Townend, John
Ross, William (E Lond'y) Tredinnick, David
Ruffley, David Trend, Michael
Russell, Bob (Colchester) Trimble, Rt Hon David
St Aubyn, Nick Tyler, Paul
Sanders, Adrian Tyrie, Andrew
Sayeed, Jonathan Viggers, Peter
Shephard, Rt Hon Mrs Gillian Wardle, Charles
Shepherd, Richard Webb, Steve
Simpson, Keith (Mid—Norfolk) Wells, Bowen
Smith, Sir Robert (W Ab'd'ns) Welsh, Andrew
Smyth, Rev Martin (Belfast S) Whittingdale, John
Soames, Nicholas Wigley, At Hon Dafydd
Spelman, Mrs Caroline Willis, Phil
Spicer, Sir Michael Wilshire, David
Spring, Richard Winterton, Mrs Ann (Congleton)
Stanley, Rt Hon Sir John Winterton, Nicholas (Macclesfield)
Steen, Anthony Woodward, Shaun
Streeter, Gary Yeo, Tim
Stunell, Andrew Young, Rt Hon Sir George
Swayne, Desmond
Syms, Robert Tellers for the Ayes:
Tapsell, Sir Peter Mrs. Eleanor Laing and
Mr. Geoffrey Clifton—Brown.
Abbott, Ms Diane Campbell—Savours, Dale
Ainger, Nick Cann, Jamie
Ainsworth, Robert (Cov'try NE) Caplin, Ivor
Alexander, Douglas Casale, Roger
Allen, Graham Caton, Martin
Armstrong, Rt Hon Ms Hilary Cawsey, Ian
Ashton, Joe Chapman, Ben (Wirral S)
Atherton, Ms Candy Chisholm, Malcolm
Atkins, Charlotte Clapham, Michael
Austin, John Clark, Rt Hon Dr David (S Shields)
Barnes, Harry Clark, Dr Lynda (Edinburgh Pentlands)
Barron, Kevin Clark, Paul (Gillingham)
Battle, John Clarke, Charles (Norwich S)
Bayley, Hugh Clarke, Rt Hon Tom (Coatbridge)
Beard, Nigel Clarke, Tony (Northampton S)
Beckett, Rt Hon Mrs Margaret Coaker, Vernon
Begg, Miss Anne Coffey, Ms Ann
Bell, Stuart (Middlesbrough) Coleman, Iain
Benn, Hilary (Leeds C) Colman, Tony
Bennett, Andrew F Cook, Rt Hon Robin (Livingston)
Benton, Joe Corbett, Robin
Bermingham, Gerald Corbyn, Jeremy
Berry, Roger Cousins, Jim
Best, Harold Cranston, Ross
Betts, Clive Cryer, Mrs Ann (Keighley)
Blackman, Liz Cryer, John (Hornchurch)
Blears, Ms Hazel Cummings, John
Blizzard, Bob Cunliffe, Lawrence
Blunkett, Rt Hon David Curtis—Thomas, Mrs Claire
Boateng, Paul Dalyell, Tam
Bradley, Peter (The Wrekin) Davey, Valerie (Bristol W)
Bradshaw, Ben Davies, Rt Hon Denzil (Llanelli)
Brinton, Mrs Helen Davies, Geraint (Croydon C)
Brown, Rt Hon Nick (Newcastle E) Davis, Terry (B'ham Hodge H)
Browne, Desmond Dawson, Hilton
Buck, Ms Karen Dean, Mrs Janet
Burden, Richard Denham, John
Burgon, Colin Dobbin, Jim
Butler, Mrs Christine Dobson, Rt Hon Frank
Byers, Rt Hon Stephen Donohoe, Brian H
Caborn, Rt Hon Richard Doran, Frank
Campbell, Mrs Anne (C'bridge) Dowd, Jim
Campbell, Ronnie (Blyth V)
Drew, David Keeble, Ms Sally
Drown, Ms Julia Keen, Alan (Feltham & Heston)
Eagle, Angela (Wallasey) Keen, Ann (Brentford & Isleworth)
Eagle, Maria (L'pool Garston) Kemp, Fraser
Edwards, Huw Kennedy, Jane (Wavertree)
Efford, Clive Kidney, David
Ellman, Mrs Louise Kitfoyle, Peter
Ennis, Jeff King, Andy (Rugby & Kenilworth)
Etherington, Bill Kingham, Ms Tess
Field, Rt Hon Frank Kumar, Dr Ashok
Fisher, Mark Ladyman, Dr Stephen
Fitzpatrick, Jim Lawrence, Ms Jackie
Fitzsimons, Lorna Laxton, Bob
Flint, Caroline Lepper, David
Flynn, Paul Leslie, Christopher
Follett, Barbara Levitt, Tom
Foster, Rt Hon Derek Lewis, Ivan (Bury S)
Foster. Michael Jabez (Hastings) Lewis, Terry (Worsley)
Foster, Michael J (Worcester) Liddell, Rt Hon Mrs Helen
Fyfe, Maria Linton, Martin
Gapes, Mike Livingstone, Ken
Gardiner, Barry Lock, David
Gerrard, Neil Love, Andrew
Gibson, Dr Ian McAllion, John
Gilroy, Mrs Linda McAvoy, Thomas
Godman, Dr Norman A McCabe, Steve
Godsiff, Roger McCafferty, Ms Chris
Goggins, Paul McCartney, Rt Hon Ian (Makerfield)
Gordon, Mrs Eileen Macdonald, Calum
Griffiths, Jane (Reading E) McDonnell, John
Griffiths, Win (Bridgend) McGuire, Mrs Anne
Grocott, Bruce Mclsaac, Shona
Grogan, John McKenna, Mrs Rosemary
Gunnell, John McNulty, Tony
Hain, Peter MacShane, Denis
Hall, Patrick (Bedford) Mactaggart, Fiona
Hamilton, Fabian (Leeds NE) McWalter, Tony
Hanson, David McWilliam, John
Heal, Mrs Sylvia Mahon, Mrs Alice
Healey, John Mandelson, Rt Hon Peter
Henderson, Ivan (Harwich) Marsden, Gordon (Blackpool S)
Hepburn, Stephen Marsden, Paul (Shrewsbury)
Hesford, Stephen Marshall, David (Shettleston)
Hewitt, Ms Patricia Marshall, Jim (Leicester S)
Hill, Keith Marshall—Andrews, Robert
Hinchlifle, David Martlew, Eric
Hoey, Kate Meacher, Rt Hon Michael
Hood, Jimmy Merron, Gillian
Hope, Phil Michael, Rt Hon Alun
Hopkins, Kelvin Michie, Bill (Shef'ld Heeley)
Howarth, George (Knowsley N) Mitchell, Austin
Howells, Dr Kim Moffatt, Laura
Hoyle, Lindsay Moonie, Dr Lewis
Hughes, Ms Beverley (Stretford) Moran, Ms Margaret
Hughes, Kevin (Doncaster N) Morgan, Ms Julie (Cardiff N)
Humble, Mrs Joan Morley, Elliot
Hurst, Alan Morris, Ms Estelle (B'ham Yardley)
Hutton, John Mudie, George
Iddon, Dr Brian Mullin, Chris
Illsley, Eric Murphy, Denis (Wansbeck)
Jackson, Ms Glenda (Hampstead) Murphy, Jim (Eastwood)
Jackson, Helen (Hillsborough) Naysmith, Dr Doug
Jenkins, Brian O'Brien, Bill (Normanton)
Johnson, Alan (Hull W & Hessle) O'Hara, Eddie
Johnson, Miss Melanie (Welwyn Hatfield) Olner, Bill
Jones, Rt Hon Barry (Alyn) O'Neill, Martin
Jones, Mrs Fiona (Newark) Organ, Mrs Diana
Jones, Helen (Warrington N) Osborne, Ms Sandra
Jones, Ms Jenny (Wolverh'ton SW) Palmer, Dr Nick
Jones, Jon Owen (Cardiff C) Pearson, Ian
Jones, Dr Lynne (Selly Oak) Pendry, Tom
Jones, Marlyn (Clwyd S) Pickthall, Colin
Jowell, Rt Hon Ms Tessa Pike, Peter L
Kaufman, Rt Hon Gerald Plaskitt, James
Pollard, Kerry
Pond, Chris Stewart, Ian (Eccles)
Pope, Greg Stinchcombe, Paul
Pound, Stephen Stoate, Dr Howard
Powell, Sir Raymond Straw, Rt Hon Jack
Prentice, Ms Bridget (Lewisham E) Stringer, Graham
Prentice, Gordon (Pendle) Stuart, Ms Gisela
Prescott, Rt Hon John Sutcliffe, Gerry
Prosser, Gwyn Taylor. Rt Hon Mrs Ann (Dewsbury)
Purchase, Ken Taylor, Ms Dad (Stockton S)
Quin, Rt Hon Ms Joyce Taylor, David (NW Leics)
Quinn, Lawrie Thomas, Gareth (Clwyd W)
Radice, Rt Hon Giles Thomas, Gareth R (Harrow W)
Rammell, Bill Timms, Stephen
Raynsford, Nick Tipping, Paddy
Reed, Andrew (Loughborough) Todd, Mark
Reid, Rt Hon Dr John (Hamilton N) Touhig, Don
Roche, Mrs Barbara Trickett, Jon
Rooker, Jeff Turner, Dennis (Wolverh'ton SE)
Rowlands, Ted Turner, Dr Desmond (Kemptown)
Roy, Frank Turner, Dr George (NW Norfolk)
Ruddock, Joan Twigg, Derek (Halton)
Russell, Ms Christine (Chester) Twigg, Stephen (Enfield)
Salter, Martin Vaz, Keith
Sarwar, Mohammad Vis, Dr Rudi
Savidge, Malcolm Walley, Ms Joan
Sawford, Phil Wareing, Robert N
Sedgemore, Brian Watts, David
Shaw, Jonathan White, Brian
Sheerman, Barry Whitehead, Dr Alan
Sheldon, Rt Hon Robert Wicks, Malcolm
Shipley, Ms Debra Williams, Rt Hon Alan (Swansea W)
Short, Rt Hon Clare Williams, Alan W (E Carmarthen)
Simpson, Alan (Nottingham S) Williams, Mrs Betty (Conwy)
Singh, Marsha Wilson, Brian
Skinner, Dennis Winnick, David
Smith, Rt Hon Andrew (Oxford E) Winterton, Ms Rosie (Doncaster C)
Smith, Angela (Basildon) Wise, Audrey
Smith, Miss Geraldine (Morecambe & Lunesdale) Wood, Mike
Smith, Jacqui (Redditch) Woolas, Phil
Smith, Llew (Blaenau Gwent) Worthington, Tony
Soley, Clive Wray, James
Southworth, Ms Helen Wright, Anthony D (Gt Yarmouth)
Spellar, John Wright, Dr Tony (Cannock)
Squire, Ms Rachel
Starkey, Dr Phyllis Tellers for the Noes:
Steinberg, Gerry Mr. David Clelland and
Stevenson, George Mr. Mike Hall.
Stewart, David (Inverness E)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House recognises the economic difficulties faced by the dairy industry; supports the Government's efforts to reform the Common Agricultural Policy during the recent Agenda 2000 negotiations in order to move towards a freer, more competitive market; welcomes the publication of the Monopolies and Mergers Commission report on the supply of raw milk; notes its conclusions and looks forward to a new selling system being in place which meets the needs both of consumers and the dairy industry; endorses the Government's view that the industry itself must help shape its own future; and congratulates the Government for its support for industry initiatives to achieve this.