HC Deb 20 October 1999 vol 336 cc444-98
Madam Speaker

We now come to the first Opposition motion on the Order Paper. I have selected the amendment which stands in the name of the Prime Minister.

3.39 pm
Mr. Charles Kennedy (Ross, Skye and Inverness, West)

I beg to move, That this House notes with dismay the plight of British farmers whose incomes have plummeted to record lows in the last four years, as a result of higher costs and lower farm gate prices producing rapidly increasing losses, despite continually high supermarket profit margins and costs to consumers; further notes that the extra costs imposed through regulation and public health protection that fall directly on the industry should more properly come from the public health budget; deplores the failure of the Government to provide an adequate response to this national food crisis; and therefore calls on the Government to recognise that its latest financial package is insufficient to tackle the fundamental restructuring of UK and EU agriculture policy, necessary for a secure future for British farmers, consumers and the countryside. I notice from the Order Paper that we have the obligatory amendment from Her Majesty's Government, but that we do not have an amendment from the Conservative party. We shall find out in due course whether Conservative Members will support our motion. I hope that they will, but it seems unusual that one of the other Opposition parties has not put down on the Order Paper its views on such an important issue.

The importance of this issue is self-evident to all of us who have a constituency concern, a parliamentary concern or a public policy concern in terms of rural Britain generally. Indeed, that has been further recognised by the Government, who have come forward with additional financial support. The Minister of Agriculture, Fisheries and Food has been the first publicly to recognise in the media, in public prints and in discussions with my hon. Friends and with others representing the agricultural community, the extent of the difficulty that is being faced. That is why with the resumption of Parliament after the summer recess the Liberal Democrats were determined to take the earliest possible opportunity to give the House an opportunity to express the concern that has been made clear to all of us from all parties over the summer months about the degree of difficulty and, although it is a much overused word in politics, the degree of crisis that is facing the rural sector, rural interests in general and the agricultural sector, in particular.

Let us consider some of the basic headline facts. The National Farmers Union has estimated that net income has fallen by 75 per cent. in the past two years and is certainly on a continuing downward spiral. It is estimated, if we take the figures for England alone, that the average net farm income for 1998–99 is a mere £8,000. It is not possible to run a business or a family enterprise on that level of income nowadays. After a recent audit of 5,000 farmers, the NFU estimates that we are now entering the worst agricultural depression since the 1930s. For all those headline reasons, it is essential that Parliament should be seen to be debating the issue.

We should also be seen to be debating and discussing the issue because there is a much wider public policy that goes beyond the immediate difficulties that are being confronted. On a European level, there is a broad agreement among member states, the United Kingdom included, and the Government, with all-party support, that we must seek and achieve further reform of the common agricultural policy, and that there will have to be a further emphasis or shift in the balance of approach away from direct sector support in terms of prices and price maintenance and towards environmental husbandry and countryside management.

Is there not a great contradiction? If the family farm as a base unit within this country continues to implode, what will happen? More and more amalgamations will take place. We shall end up with a structure of family farming that will be more like that in North America than in the UK at the moment. We shall not then have the custodians of the countryside who for generations have been working, managing and looking after it to deliver the very environmental and countryside objectives that as a country and as a European Union we want to see achieved. It is surely of fundamental importance that in tackling the farming crisis we put it in a broader context and get across to the Government, and the Government get it across to the decision makers and policy makers at a European level, that unless something is done with even more urgency to redress the catastrophic state of income and the depressed state of morale among our fanners, we shall thwart the longer-term policy that we all think is a sensible way in which to move.

We welcome the package with which the Government have come forward but what further policy objectives should they as an Administration within a UK context be pursuing? My hon. Friend the Member for North Cornwall (Mr. Tyler) and some of my other colleagues met the Minister fairly recently and rehearsed some of the arguments that we feel and argue as Liberal Democrats should be put forward.

First, there should be a Government-funded calf disposal scheme. That is surely essential given the difficulties in that sector. Secondly, there should be a national ewe cull scheme. Given the efforts made recently by my party colleague, Ross Finnie, in his capacity as a Scottish Agriculture Minister, and given the rebuff that he suffered at the hands of the European Commission, I shall be grateful if the Minister or whoever responds to the debate will give some further indication of what further discussions, if any, have yet taken place with the Commission to see what else can be achieved.


Dr. Julian Lewis (New Forest, East)

I thank the right hon. Gentleman for his courtesy in giving way. He mentioned Scottish agriculture. Will he explain to the House why his colleagues in Scotland are keen that the Government should maintain the ban on beef on the bone?

Mr. Kennedy

My colleagues in Scotland are operating, as indeed are the Government here, on the advice of the relevant chief medical officer. The Agriculture Minister and the Deputy First Minister, my hon. and learned Friend the Member for Orkney and Shetland (Mr. Wallace), made it clear that the objective must be the earliest possible lifting of that ban. That remains the policy and the approach.

That is what devolution is all about. I appreciate that the hon. Gentleman has a healthy interest in constitutional matters of one kind and another, both internally and in relation to Europe in the broader sense, and that he pursued an honourably consistent argument against devolution, but those of us who have argued consistently for it have always been quite happy with the fact that devolution, by definition, means that there might be different policies running in different parts of the United Kingdom. We should lose no sleep about that. It is a healthy democratic development, for which we should make no apology.

Mrs. Ann Winterton (Congleton)

The right hon. Gentleman is very gallant, and I am grateful to him for giving way. Will he explain to British farmers, and my farmers in particular, how the policy evolved? Will he explain how the Liberal Democrat party in Scotland or elsewhere can still support a ban on beef on the bone, against all the best scientific advice? Can he further tell me how the Minister for Agriculture can try to kick the French into touch, when he is being undermined by the Scottish Parliament?

Mr. Kennedy

I am beginning to lose the plot, but perhaps the hon. Lady lost it earlier than I did, in the course of her question. The Minister can speak for himself in due course, but I do not think that he feels that the Scottish Parliament, by any of its efforts or activities, is undermining the legitimate legal recourse, which we strongly support, that he is pursuing against the quite unacceptable activities of the French with regard to British beef.

Mr. Desmond Swayne (New Forest, West)

Will the right hon. Gentleman give way?

Mr. Kennedy

I shall give way to the hon. Gentleman in a minute. I just need to work up to that moment. I am sure that the House shares my sense of anticipation.

To return to the serious point made by the hon. Member for Congleton (Mrs. Winterton), I reiterate to her that within a devolved United Kingdom set-up, there can be differences of approach in different political circumstances. That does not remove the basic Liberal Democrat commitment, which we share with the hon. Lady and her colleagues: we would never have imposed the beef on the bone ban in the first place. She may remember that when I moved the opposition to that on the Floor of the House, we were delighted to have Conservative support. I look forward to being even more delighted to receive further Conservative support from the hon. Member for New Forest, West (Mr. Swayne).

Mr. Swayne

I thank the right hon. Gentleman for his courtesy. I followed entirely the logic of his answer to my hon. Friend the Member for New Forest, East (Dr. Lewis), but will he recognise that it generates frustration and is clearly not devolution, as the right hon. Gentleman calls it, when the policy of the Liberal Democrat party and the party of government in Scotland is allowed to force the beast ban—the beef ban—to remain in England? Our policy is being driven by the policy of the devolved regions.

Mr. Kennedy

It would be almost unparliamentary for me to speculate why the hon. Gentleman might be against beast bans. However, I simply say to him that if one is serious about the devolutionary process—this party certainly is serious about that and about moving towards a more federally constructed constitution for this country—people in this place such as he and I are no longer in a position to discuss whether a different coalition is on the move in Edinburgh or a different set of political circumstances are in place in Cardiff. It is no longer our job to second guess.

I am going wide of the motion, and you may soon upbraid me, Madam Speaker, but I say to those Conservatives who care and are concerned about these matters that, although we may disagree, the sooner the Conservative party in this place accepts the new reality of British politics and starts to apply its mind collectively and constructively to that, the better. We would stop wasting time on exchanges such as this and get on with serious policy issues that Westminster should be concerning itself with. That is what the argument has to be about.

Dr. Norman A. Godman (Greenock and Inverclyde)


Mr. Kennedy

I shall give way to the hon. Gentleman, who is an old pal, and then I must make progress.

Dr. Godman

I am glad to be described as an old pal.

I am not on my feet to defend that remarkable Agriculture Minister, Mr. Ross Finnie, but I say to the right hon. Gentleman—my old pal across the way—that I have every sympathy for the hill farmer, the crofter and the small farmer. May I point out to him that the richer farmers have had a hell of a lot more out of Brussels than, for example, our fishermen? I hope that, on another occasion, he will argue with the same vigour on behalf of his fishermen constituents in Ullapool and elsewhere.

Mr. Kennedy

We can happily give that guarantee. One need only look at the spread of seats represented by the Liberal Democrats to understand the inherent importance of the fishing industry, whether in Cornwall, in Berwick, in my own part of the country or wherever. We will come back to that issue on another occasion, but I am sure that the hon. Gentleman understands that on the first day in the job, in a parliamentary sense, one cannot do everything.

I am delighted that my hon. Friend the Member for South-East Cornwall (Mr. Breed) will be winding up the debate on our behalf. He has already established a track record on this issue, which has had a direct impact on the Office of Fair Trading. There are further searching questions to be asked of the role of the supermarkets in all this. Why are prices so depressed at the farm gate when the consumer, far less the farmer, sees no merit or benefit accruing from that? I know that that has been looked at in terms of competition policy, but it is essential that the Minister redoubles his efforts to get some of the supermarket chiefs—the big hitters who are calling so many of the shots—in for discussions and to call them to account.

I hope that some of our Select Committees will look at that matter in the new Session of Parliament. The Select Committee on Welsh Affairs has already considered it and it is absolutely essential that the supermarkets are called to account with greater rigour and greater vigour, because common sense and our own local experience tells us that there is something fundamentally remiss when the income level is dropping, the purchase level is collapsing and the supermarkets do not seem to be passing any of the effects of that on with the interests of the consumer in mind.

Mr. Richard Livsey (Brecon and Radnorshire)


Mr. Kennedy

I know that my hon. Friend has been much involved in this issue.

Mr. Livsey

I thank my right hon. Friend for giving way. The Select Committee on Welsh Affairs made its report 18 months ago and our family farmers have experienced depressed prices for the past three years. Is not a resolution of this problem long overdue? There is no income and farmers are in a great state of personal depression because they are making no profit whatever on our family farms. This urgent matter must be resolved immediately.

Mr. Kennedy

I agree with my hon. Friend and pay tribute to the role that he played in the Select Committee's work on that report. The Minister and his Department have to get motoring. We can all issue complaints and constituency press releases and we can have debates on the Floor of the House, but the Ministry is best placed to tackle the issue. There is no doubt that there is cross-party agreement that something is wrong. Consumers perceive that a rip off is taking place and it is high time that those responsible were called to account. I hope that the Minister will do that.

In addition to the decline in income that is being suffered, the Government are piling on the charges, which is a perverse thing for any Administration to do, given that there is not the income base, in a family-run farm business, to sustain those charges. As my hon. Friends have told the Government on many occasions in recent times, it would be sensible to postpone, if not abandon, the policy of cattle passport charges. Why load more costs on the industry at a time when it cannot sustain them?

Mr. Bob Russell (Colchester)

Stick the charges on the supermarkets.

Mr. Kennedy

That is an idea worth looking at. Perhaps the Minister might like to respond to it.

The second issue is that of importation. It is crazy that we load regulations and standards on ourselves and our domestic producers, which we cannot impose, on an equivalent basis, on some of our European competitors who provide lower quality importation products. Because of insufficient labelling, those products are then passed off to British consumers. That is a daft state of affairs. We have asked the Government repeatedly to do something about that. They need to move with more alacrity.

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

Has my right hon. Friend noted today's press release about chicken imports from Thailand? It says that EU inspectors approved a number of chicken factories there without visiting them, and that the potential use of antibiotics in Thailand is not regulated, known about or exposed to our consumers.

Mr. Kennedy

I am grateful to my right hon. Friend for that. I read those reports this morning. Given that this party supports the Government when they are positively engaged in Europe, we should use that positive engagement to insist that such ludicrous states of affairs are not allowed to be maintained. I could not agree with my right hon. Friend more.

This is a short debate and I am anxious that as many hon. Members as possible from all parties can contribute. I wish to deal with two other issues. The first is that of genetically modified products, which is capturing people's imagination and triggering anxiety—and rightly so.

The Government have inherited a series of contractual relationships and decisions from the previous Administration. That is understood. However, they must recognise that the GM issue goes much wider than the rights and wrongs of the issue itself. Scientific input is essential for any Administration. It would be highly irresponsible to suggest otherwise. Clearly, however, the Government are not carrying consumer confidence with them. It would therefore be best to opt for a five-year ban on the commercial exploitation of GM foods. The Government should recognise the extent of public opinion and the fact that they are not carrying public opinion with them on this issue. Ultimately, that will do more damage to the general credibility of agriculture and the food chain, which will benefit nobody, least of all farmers.

The second much broader issue is that of the single currency. I am glad that Britain in Europe campaign was launched last week and that it has a healthy degree of cross-party support, which is important. The Government must recognise, however, that there has been a significant change in grass-roots farming opinion on this matter. My view is based on discussions that I have had in the past couple of years. Because of the strength of the pound over the past period, the increasing perception among the agricultural community in this country is that a commitment on the part of this country to a single currency would be in the long-term interest of UK agriculture.

Mr. Christopher Gill (Ludlow)

Will the right hon. Gentleman give way on that point?

Mr. Kennedy

I can hardly not give way to the hon. Gentleman on that issue, but may I finish this point first?

I appreciate that the Minister is constrained by the policy of the Chancellor, the Foreign Secretary and the Prime Minister, who from time to time seem to have the same policy on this issue. None the less, I hope that he will acknowledge that there will be real long-term benefits to British agriculture if we are coherently and sensibly part of a single trading currency zone within Europe.

Mr. Gill

Does the right hon. Gentleman accept that many people, himself included, who should know better and probably do, know that the rate at which the United Kingdom would be permitted to join the single currency would be as laid down by the treaties? It would not be a figure plucked out of the air that would suit the British farmer. Is it not time that the House faced the reality and told the British farmer that the single currency is not the panacea for all ills because we will have to go in at the mid-point of the exchange rate mechanism, which is DM2.95?

Mr. Kennedy

No one who has considered the issue sensibly would argue that the single currency is the panacea for all ills in the agricultural sector or elsewhere. Of course it is not. It is a technical as well as a political and a constitutional judgment. On balance, it brings merits and benefits and that is why I am in favour of it for agriculture, as for other things.

I would gently point out to the hon. Gentleman, as I do not necessarily concur with him but respect his views and the consistency with which they are argued, that equally if one is trying to take a balanced view of the problems afflicting agriculture, one must agree that they did not all begin on the stroke of midnight of 2 May 1997. Many of the endemic difficulties affecting countryside and rural issues predate the advent of this Administration by some considerable way and I am afraid to say that some of the guilty people are now sitting on the Opposition Front Bench and used to sit on the Government Front Bench. That is an important political point of which we must never lose sight.

On behalf of my right hon. and hon. Friends, I conclude by saying that, first, it is important that Parliament is seen today, here and now, to draw attention to the extent of the crisis. Secondly, it is important that all of us in all parties and all parts of the country reflect what we have heard from our constituents during the summer recess about the depth of the depression and the extent of the doom and gloom out there in the agricultural community.

Thirdly, in considering the broader issues—labelling, importation, GMOs and so forth—we will face an even bigger problem in time to come if we cannot take consumers with us. That is essential both to underpin our domestic agricultural production base, but equally to instil a new sense of confidence in what those in politics and behind public policy are telling the people. That is what lies behind our debate and our motion and I commend it to the House.

4.3 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 difficulties faced by agriculture and the wider rural economy as a result of the depressed level of farm incomes; approves of the special measures the Government has taken to assist the industry through three aid packages plus EU agri-monetary compensation worth in total £742 million; endorses the establishment of industry-led working groups to examine urgently the regulatory burdens on agriculture; supports the Government's promotion of collaborative working throughout the food chain to add value and generate the price premium that high-quality United Kingdom produce deserves, while noting that the Competition Commission's investigation of supermarket pricing includes an examination of trading practices throughout the supply chain; welcomes the Government's achievement of significant reform of the Common Agricultural Policy in the interests of producers, consumers and taxpayers; and fully supports the Government's commitment to the future of United Kingdom agriculture as a competitive, flexible and diverse industry, and the use of options available under Agenda 2000 to help secure this. First, I offer my congratulations to the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) on his election to the leadership of his party. I also congratulate him on having selected a debate on food and farming for his debut in the House as leader of his party. I also pay tribute to him for the interest that he has taken in this subject in his time as the Liberal Democrat spokesman and for his constructive approach in what are difficult times for the sector. For completeness, I also welcome the hon. Member for South-East Cornwall (Mr. Breed) to his new Front-Bench responsibilities.

These are important issues and it is right that we should debate them today. We are not quarrelling, I hope, about the facts. Certainly I have no quarrel about the key fact, which is that farm incomes have fallen dramatically in the past three years and now stand at one of the lowest levels for the past 25 years. The Government see helping farmers through the deep and enduring depression in farm incomes that they are experiencing as one of their priorities. There is no doubt that the whole industry, and the livestock sector in particular, is facing severe difficulties. We are still feeling the effects of the unavoidable implications of the BSE crisis. That runs not only through the beef sector, but throughout livestock.

Mr. Norman Baker (Lewes)

Will the right hon. Gentleman give way?

Mr. Brown

I will first list the difficulties. I promise to give way to the hon. Gentleman when I come to the response to them.

The recession in the far east and the collapse of the Russian economy have increased pressures. While the strength of the pound, particularly in relation to the euro, to which the right hon. Member for Ross, Skye and Inverness, West referred, is a reflection of the strength of the wider UK economy, it makes agricultural exports more difficult, draws in imports and reduces the real value of support payments to farmers under the common agricultural policy.

Mr. Baker

I welcome the right hon. Gentleman to the House this afternoon and thank him for the statement that he recently made about giving more money to the farmers. That has been very welcome to the farmers in my constituency. May I remind him that there are still major concerns among farmers and that they see the money as a sticking plaster rather than a long-term solution. He may be aware that I have written to his office to ask him to come to my constituency office to meet my farmers. Can he give me an assurance this afternoon that he can fit that into his diary?

Mr. Brown

I am under enormous pressure to make constituency visits and to meet local groups of farmers. I try to meet as many farmers as I can. It has helped me in undertaking my responsibilities to have farmhouse meetings with groups of farmers. A number of Members have invited me to their constituencies. I make no distinction between political party because by and large these issues are not party political, or at least they should not be. I am happy to take the hon. Gentleman's invitation, put it with the other invitations and come when I can. I should like to do so.

Mr. Tim Boswell (Daventry)

The Minister adopts a characteristically conciliatory tone. One of the problems is Ministers themselves. Is it more arrogant to act as the Welsh Minister of Agriculture has done and refuse to leave the field even for a veggie burger when she has been given out by the umpire, or to act as he has done in relation to the ban on beef on the bone? He no longer has English scientific advice compelling him to continue with the ban and he is maintaining it simply for the convenience of his colleagues in other parts of the United Kingdom. Is it not legally perilous to withhold trade in circumstances in which he no longer has advice to maintain the ban?

Mr. Brown

I do not agree with the thrust of either of the hon. Gentleman's points. I think that it is right to lift the ban on beef on the bone. I have said consistently since becoming the Minister that I wanted to lift the ban as soon as I could. I have relied on the advice of the United Kingdom chief medical officer, who now tells me that he believes that it would be right to lift the ban for retail sales, but not for manufactured products. That is what I want to do, but I want to lift the ban across the whole of the United Kingdom. It is perfectly rational to allow a short pause for reflection for other authorities with devolved competence to see whether we cannot lift the ban together in a uniform way before Christmas. I hope that that is a complete answer to that part of the hon. Gentleman's intervention.

As for the hon. Gentleman's point about the Ministers with devolved responsibility for agriculture, I have no quarrel with them for exploring schemes to help farmers through difficult times. That is a perfectly proper thing for them to do. I accept, exactly as the right hon. Member for Ross, Skye and Inverness, West accepts, that it is implicit in devolution that we get different outcomes in different parts of the United Kingdom where there is devolved competence. The fact of the matter is that it is difficult to devise schemes on the supply side that supplement the supply-side measures of the CAP. But why on earth people have fallen to complaining about the Welsh Minister and the Scottish Minister for trying to do so, and for trying to do their best, beats me. Of course, I was aware of the difficulties, and, in our discussions, we candidly discussed them, but the Welsh Minister set out to try to overcome them. The fact that she has tried for farmers but on the specific cull ewe scheme has not succeeded reflects no discredit on her at all. I am surprised that she has come in for the criticism that she has. She has tried to help, and that is a perfectly honourable thing to have wanted to do.

Mr. Swayne

Will the Minister give way?

Mr. Brown

This is a Liberal Democrat Supply day. I hope that there will be other opportunities to discuss these matters in the House before long. I do not want to eat into the time of Back-Bench Members, but I give way.

Mr. Swayne

I shall be brief. Can the right hon. Gentleman clear up the confusion? Is he telling the House that the policy of maintaining the ban on beef on the bone is his policy and is not a consequence of his being driven by the policies of the devolved regions?

Mr. Brown

My policy is to lift the ban in a co-ordinated way throughout the United Kingdom. Because competence in this area has been devolved, clearly the policy requires the consent of others as well; others examine the issue, too.

This is not the consequence of devolution. When the original decisions were taken in government, and when Liam Donaldson's report in January was discussed within government, there were discussions between Agriculture Ministers—those representing Scotland, Wales and Northern Ireland—as well as myself as the UK Minister, so there is nothing new in this. Since the early 1980s, with regard to the sale of unpasteurised milk, there has been separate legislation in Scotland from the legislative arrangements in England and Wales. There is nothing new in having different legislation in this respect. We might do so in the future, but it is more desirable that we proceed on a UK-wide basis. That is why I pause before advocating an England-only policy or one for some parts of the United Kingdom and not others.

The fact that there is devolved competence and people can do different things does not mean that we should always want to do different things just for the sake of it. In this regard, it is sensible for us to discuss the evidence and make the decision together; but for the Scottish authorities that has to be consistent with the advice that they receive from their chief medical officers, and the same applies to the other devolved authorities, just as it does to me. If the hon. Gentleman can bear to contain himself for a little longer, we will achieve the outcome that he wants.

Let me return to the farm income difficulties which, in some sectors—for example, the beef sector—it is fair to describe as at crisis point. I take the beef sector first. We have been denied export markets for more than three and a half years and that has had dramatic consequences for the beef industry. Those markets will be hard to recover, particularly at retail level, but now that the ban has been lifted—at least in 13 of the 15 states in the EU, and a 14th is in the process of lifting the ban—exports have recommenced and we are starting to rebuild our markets.

As all hon. Members will be aware, we are pressing the French to lift their illegal ban. I hope that we can come to a resolution soon, but, if we do not, I assure the House that we will press home our claim with all the rigour, vigour and means open to us. Initially, we look to the Commission to defend its decision and our corner in the matter, but that does not pre-empt us from taking other action.

Mr. Malcolm Bruce (Gordon)

I am sure that the Minister knows that he has our full support in ensuring that the French observe their responsibilities in lifting the ban. None the less, does he accept that the once prime beef exporters in my constituency are telling me that, whether or not the ban is lifted by the French, we will not achieve the sale of a single kilo of Scottish beef until we can be competitive on prices? Will the Minister undertake to continue to work with the industry to ensure that the costs that have been imposed to deliver the conditions for the lifting of the ban are brought down to a level that will make it possible to develop new export markets?

Mr. Brown

I shall have something to say about the regulatory burden later. I am alert to the point. I work closely with the Meat and Livestock Commission and others with responsibilities for the beef sector, but clearly, a precondition of being able to export is to obtain the lifting of the ban, which was implemented worldwide, which the EU has done, to ensure that our partners in the EU implement that decision where it is enshrined in their domestic legislation—not all countries did enshrine it in their domestic legislation—and then to go out and build the markets. Although the ability to transport through France is not the main issue, it is an important one. The transport ban is important, alongside the actual ban on sales. All we are asking for is the right legally to offer for sale a product that is among the safest in the world and commanded a premium price—this is especially so of the Scottish sector—because it is a premium product. We want to get back to that state of affairs, and I will not be happy until the markets are working normally again as they do in the rest of the European Union. That is my objective.

As we know, the market for lamb is in severe difficulties for the third year in succession. Key problems include the strength of sterling, the apparent decline in export demand and the surplus of cull ewes and light male hill lambs. In the past, there has been good export demand for those animals in southern Europe, but, given the strength of sterling and the loss of overseas markets for sheepskins, it is becoming difficult to find sufficient export outlets. That has meant that the product has spilled over onto the domestic market.

An additional cost is associated with necessary BSE-related controls, which require the splitting of ewe carcases to remove the spinal cord. Given the current state of the market, that is a significant issue because of the proportionate effect on producer margins. I shall take a hard look at what can be done about that within the law and consistent with the need to protect the public.

Similar issues affect the pig sector, which we have discussed on several occasions. The position is grave because prices are depressed below costs and have been for almost two years. I have had three meetings with industry representatives in the past fortnight, and we are working closely on a range of measures to help. I hope to have something to tell the House in the next few days, but similar pressures now exist in all UK agricultural sectors, including dairy, poultry and horticulture.

Mr. Oliver Letwin (West Dorset)

Before the Minister leaves the subject of pigs, does he envisage some relief on the some £5 a beast that it costs the industry to undertake the measures inspired by the BSE crisis, which have nothing to do with the pig industry?

Mr. Brown

The hon. Gentleman makes a good case: BSE has no direct connection with the pig industry, but that sector has to bear the costs of the recommendations from the Spongiform Encephalopathy Advisory Committee about meat and bonemeal to protect against the dangers of cross-contamination. I am taking a hard look at what can be done on that specific point.

The hon. Gentleman offers one way forward. It is not the only possible way, and we are examining whether it is possible to return an economic value to the product by going back to SEAC and examining its objections. The hon. Gentleman will recall that I have done that once already, and SEAC confirmed its belief that the rules should remain in place. It set out its reasons, but I intend to return to SEAC, in a November meeting with the Meat and Livestock Commission, to explore our proposals for meeting its objections. We have also explored informally with the Commission how far the Government can assist in that sector. The news is disappointing, because the initial outcome was not hopeful. Any intervention would constitute state aid in what is otherwise a light regime, but discussions are continuing.

Sir Geoffrey Johnson Smith (Wealden)

Will the Minister also take into account the position of the egg-producing industry? My constituency contains Stonegate Farmers Ltd., which has a turnover of £100 million, with farms in Sussex and elsewhere. It is suffering badly. The cage, food and hygiene standards regulations have been imposed on it, but not on those who market eggs from abroad. If that situation continues, the industry will go out of business.

Mr. Brown

Separate issues affect the poultry meat and the laying hen sectors. I shall meet the industry soon for a summit to examine all those issues and to consider what can be done. However, as with the pig sector, the regulatory regime in the European Union—the right hon. Member for Ross, Skye and Inverness, West rightly pointed out the overarching impact of the CAP on the different regimes—is light, and I can do little by way of direct state aid, which is what people tend to ask for first. However, we shall explore all that in some detail.

I shall take two other interventions, but I am conscious that I am using up the time of the House on what is, after all, an Opposition Supply day. I shall give way to the hon. Members for Buckingham (Mr. Bercow) and for Somerton and Frome (Mr. Heath), and then that is it.

Mr. John Bercow (Buckingham)

I am most grateful to the Minister for giving way. A young pig farmer in my constituency—Mr. James King of Cowley farm, Preston Bissett, near Buckingham—expressed concern about the Belgian report on dioxins in Danish and Dutch meat. [Laughter.] This is a matter of the utmost seriousness and should not arouse levity among Liberal Democrat Members. What specific representations has the Minister made to Danish and Dutch Ministers about this crucial matter?

Mr. Brown

Nobody takes this important issue lightly, and the Liberal Democrats have devoted one of their Supply days to discussing it.

I can tell the hon. Gentleman that I am looking hard at implementing the advice on labelling regimes emanating from my Department. I hope to have something to say about that matter to the House shortly, but any proposals would deal specifically with the question of country of origin.

Mr. David Heath (Somerton and Frome)

I wish to return to the vital issue of how we can help the pig industry. The Minister suggested that any support to deal with what are effectively public health issues would be interpreted as state aid. The Belgian Government's actions in relation to dioxins appear to have been accepted without challenge, so why cannot the Minister act similarly to help our hard-pressed pig industry?

Mr. Brown

The rules allow for action in what the European Commission deems to be exceptional circumstances. In the case of Britain, BSE was deemed to be an exceptional circumstance. The over-30-months scheme is a very good example of the regimes in this country that protect the public. That scheme, which is also a powerful market intervention measure, is a European Union regime that is unique to the United Kingdom. Similarly, the effect of the dioxin crisis on the Belgian markets persuaded the Commission to allow the Belgian authorities to introduce unique state aids to deal with that crisis. However, it will not be possible for me or any of my counterparts in other countries to argue that a sustained downturn in price comes within the definition of a crisis.

I hope that that answers the question. The fact that I know the answer illustrates that I have had a hard look at the problem. I want to do all that I can to help the sector get out of the deep trouble that it has been in for some time. We thought that what we achieved in the spring and early summer, when we secured the 20 per cent. premium in the marketplace, would be enough to lift the industry to the break-even point. Disappointingly, the gap between the UK price and the continental European price narrowed. Worse followed when the price started to fall again.

The problem requires a further considered response from the Government. I am working very hard on it, and hope to have something new and comprehensive to tell the House in a matter of days.

I shall now deal with what the Liberal Democrat motion has to say about farmgate prices and the prices that show up in the supermarkets. The motion alleges that profiteering takes place. The Government's approach to the problem is to rely on the investigation of supermarket pricing by the Competition Commission. However, it is worth noting that, although that investigation will look at prices to consumers, it will also scrutinise trading practices throughout the food supply chain. If market power is being exploited anywhere in the chain, the Government will respond very strongly.

In that respect, I repeat what the House will have heard me say before: I am convinced of the importance of getting all elements of the food chain working together collaboratively and co-operatively. I have set up a food chain group of senior figures from the industry, which will report on how best to improve understanding of the chain and how the different parts can best work together for mutual advantage. Part of the way forward lies in adding value and seeking out market premiums for UK produce.

I shall meet the British Retail Consortium shortly, and have arranged a series of meetings with senior management of all the large retailers and major caterers in the UK. [Interruption.] I am being invited to get on with it; I am getting on with it, and have been for some time. I regularly meet representatives of the retail, processing and distribution sectors as well as representatives of farmers and farm businesses.

The National Farmers Union strongly suggested when I met representatives recently—the suggestion is included in the Liberal Democrat motion—that the burden of Government regulation was making a bad situation worse. In response to that generalised charge, the answer to which will be found in the detail rather than in general charges, I have, in partnership with the NFU, set up an industry-led review of the regulatory burden on agriculture. I hope that that review will go across government, not being confined only to matters for which the Ministry of Agriculture, Fisheries and Food is responsible. I have the support of my ministerial colleagues on that.

Mr. Gill

Will the Minister give way?

Mr. Brown

Let me finish my point and then I shall give way, despite what I said earlier about not taking more interventions. The hon. Gentleman is an old hand at agriculture debates, and it would be wrong to keep him out.

We want to minimise bureaucracy. We want to find out how to do things better and to root out all unnecessary restrictions. I have set up three working groups, chaired by representatives of the industry, to examine what the NFU and I felt were the three most urgent—though not the onlyߞareas for review. One group will consider the operation of the integrated administration and control system and on-farm inspections. The second will look into the meat hygiene rules and slaughterhouse regulations. The third will examine the workings of the intervention system.

Mr. Gill

I am most grateful to the right hon. Gentleman for giving way. He has spoken of understanding the problems of over-regulation and the added burden of costs on the industry. Will he therefore take this opportunity to tell the House that he will abandon the pesticides tax?

Mr. Brown

If I were the Chancellor of the Exchequerߞgiven the promotion of the hon. Member for South Suffolk (Mr. Yeo), there is hope for us allߞI would willingly do so. I am not the Chancellorߞ[HON. MEMBERS: "Split."] I am giving no secrets away here. The whole world knows that I am an opponent of a pesticides tax. Tax policy is, however, a matter for the Chancellor, not me, although my views are widely known and loudly put.

Dr. Godman

In fairness to the Liberal Democrats, I remind my right hon. Friend that the motion welcomes the Government's achievement of significant reform of the common agricultural policy in the interests of producers, consumers and taxpayers. The Minister and his colleagues have achieved reform, but does he agree that the CAP is badly flawed? Among other things, it protects and promotes the interests of richer farmers and presents formidable problems for the enlargement of the European Union.

Mr. Brown

My hon. Friend is absolutely right. As we go into the detail of these matters, we must not lose sight of the fact that the CAP is the overarching policy instrument for agriculture and farmers. The case that my hon. Friend makes for reform is also the Government's case. He is right to put it. Not only does the policy impact on how farm business decisions are taken, but it is bound to influence our ambitions for enlargement of the EU. It favours those who produce most because it is essentially a production subsidy. About 20 per cent. of farmers receive 80 per cent. of CAP subsidies. That is logical because of the way the system is structured: it is intended to be a production subsidy.

The case for reform and for moving away from the crude link with production towards the second pillar of the CAP-the rural development measures-as a way of getting moneys to farm businesses and the rural economy is clearly the right way forward. The Government have made a start on all that. In our negotiations, we secured the largest ever reform of the CAP and, more than that, we got each and every regime moving in the right direction. Should we have done more? Of course, I would like to do more, but I am in the vanguard on all this and I have to carry others with me.

Mr. Lembit Öpik (Montgomeryshire)

Will the right hon. Gentleman give way?

Mr. Brown

I shall have to call a halt soon, but I will take some interventions and curtail my speech.

Mr. Öpik

Some of the changes to Milk Marque may not be helpful in achieving the Minister's goal. Does he agree that, for a long time, Milk Marque has defended the interests of the small farmer?

Mr. Brown

I worked closely with the Milk Marque leadership through what I acknowledge has been a difficult time for it. I also met representatives of the dairy processing industry and tried to act as an honest broker through a time that was difficult for both sides of the industry, but particularly difficult for the producer side when producer incomes have been low. I yield to no one in my support for farm and producer co-operation in the dairy sector. The leadership of Milk Marque, given the Competition Commission report, which I know farmers do not like, has been right—indeed, brave—to respond in the way in which it has. This is the right way forward for dairy producers.

Mr. John Burnett (Torridge and West Devon)

I am delighted to hear that there is to be a review of bureaucracy in agriculture. Will the Minister assure the House that it will consider the introduction of an appeal mechanism against the decisions of the Ministry of Agriculture, Fisheries and Food, which currently acts as judge, jury, prosecutor and defender in giving decisions to individual farmers?

Mr. Brown

It is not for me to tell the review what response I want from it. My understanding is that that issue is being considered, and certainly I have considered it within the Department. The difficulty is that the rules are very rigid and there is a risk of disallowance with substantial penalties if they are not rigidly followed. In our country, there is a tradition, in most aspects of our administrative life, of being tolerant of genuine errors. The European Union rules are much more rigidly drawn because they have to apply across the whole European Union. Within the constraints that the rules place on us, we are looking at what could be done and, in particular, whether it would be possible to operate a workable appeals mechanism. However, I do not think that an appeals mechanism under the CAP schemes could ever deliver as much as something devised more generally to suit public administration in the United Kingdom. The constraints are very tight.

I said that I would curtail my speech because I have taken interventions. I think that that is what the House wanted. I do not want to eat into the time of other hon. Members, but it is right to respond to some of the key points made by the right hon. Member for Ross, Skye and Inverness, West and to the specific ways forward advocated by the Liberal Democrats. They are right to identify the overarching importance of the CAP and the case for reform. The motion is light on advocating specific remedies, although the right hon. Gentleman advocated some in his speech. He mentioned the calf disposal and cull ewe schemes.

I looked hard at the representations that I received from the Meat and Livestock Commission, among others, on the cull ewe disposal scheme proposition. It is being considered by Ministers in other Agriculture Departments, in Scotland, Wales and Northern Ireland. Alongside that is the request for a modified calf disposal scheme. Both schemes come up against a difficulty with which many of us will be familiar: the Commission's attitude to extra and unlawful state aidsߞstate aids additional to the CAP. As a general point, we all want to help agriculture to get through what are acknowledged to be difficult times, in some sectors more than in others. It would be better to put our efforts into devising workable schemes on the demand sideߞI shall say a little about that in a momentߞrather than trying to supplement the supply side of the CAP. That is the hurdle at which these ideas have fallen.

The only alternative would have been to reopen the whole calf-processing aid scheme in abattoirs in parts of the country, or perhaps throughout the whole country, until the end of the year. I thought carefully about that, and listened carefully to the representations that I received from the NFU when the scheme was due to close last November, because that was the position that I inherited. Hon. Members will know that I managed to obtain money from the reserve to continue the scheme until April, when I used moneys that I was able to draw together within the Department to continue the scheme, at a reduced rate, for as long as I could. I would have liked to reduce the rate further and to continue the scheme for longer in order to provide a market signal and a period of transition towards the eventual ending of the scheme EU-wide. That will happen at the end of this year. Some EU countries have closed the scheme; others still use it.

The Commission took the view that it could allow only a modest variation in the EU-wide scheme for any individual member state. It relied on the figure of 20 per cent. It would be difficult to get the Commission to agree if we tried to introduce a scheme with a variation of more than 20 per cent., but, in any event, any EU scheme, under the CAP, must be open to all. Under the CAP, it is not possible to bring in partial schemes unless they are specifically permitted. Of course, the calf-processing aid scheme is not such a scheme.

I pay tribute, as I have done before, to the Ministers with responsibility for agriculture in Scotland, Wales and Northern Ireland for trying to help the industries, in their Administrations, through difficult times. It is wrong for parliamentarians to criticise them for trying.

I have already dealt with other matters that were mentioned by the right hon. Member for Ross, Skye and Inverness, Westߞsupermarkets and the regulatory burden. I intend to say something about labelling soon; I am currently considering the regulations. In relation to standards abroad and at home, it is not legal to offer for sale goods, whether produced at home or imported, that do not meet our health and hygiene standards. I warn the whole House against trying to go down a protectionist road, with the use of instruments such as article 36—the example that is usually quoted by the Conservatives—as somehow allowing us to ban the import of produce from abroad that does not meet domestic welfare standards. I have sought the best possible available advice on that point, and I intend to put it in the Library so that we can all share it. However, it is clear that article 36 will not serve for that purpose. I intend to put the evidence in the Library; more than that I cannot do.

The right hon. Member for Ross, Skye and Inverness, West raised the issue of genetically modified materials.

Mr. Tom King (Bridgwater)

Will the right hon. Gentleman give way?

Mr. Brown

I really must come to a conclusion.

Mr. King

Will the right hon. Gentleman give way?

Mr. Brown

I am a soft-hearted character; I shall give way to the right hon. Gentleman.

Mr. King

Everyone understands the Minister's difficulty in trying to impose a ban on imports from countries that do not share our animal welfare standards. Although we want the highest welfare standards to apply in this country, when any new requirement is introduced is it not important to bear in mind the fact that that requirement cannot be imposed on other countries and that we are unable to prevent imports from countries whose producers do not have to bear the same costs as ours?

Mr. Brown

I made exactly that point in almost the same way at the Council of Ministers meeting that discussed that issue in relation to the poultry sector. I was one of several Ministers who advocated taking forward the trade aspects of animal welfare in the coming World Trade Organisation round, and I received the support of other Ministers in that. Moreover, we got the toughest ever statement from the Commission on the subject of farm animal welfare.

The right hon. Gentleman has correctly identified one of the dangers, which is that we insist on the highest standards, but find that, by so doing, we have exported the industry and so end up with neither a victory for animal welfare nor an industry. In my view, that would be a foolish course of action and I said so at the Council of Ministers. However, I do not conclude from that that we should resile from our ambitions for farm animal welfare. We should fight to obtain a premium for higher farm animal welfare standards in the domestic marketplace and take a hard look at how farm animal welfare issues can be accommodated within the CAP. The matter will inevitably come up for discussion during the WTO round. It is early days yet, but no one should doubt the line that I shall pursue. In the meantime, I am alert to the impact on the domestic market, especially in a time of difficulties.

The right hon. Gentleman will remember that, in 1991, when we introduced changes in the pig sector, including the stall and tether ban, we allowed an eight-year conversion period. I make no political point: those, including myself, who voted for those measures believed that what we were doing was right in terms of animal welfare and that the industry could accommodate the changes. If we had asked pig farmers in 1995 and 1996 whether the industry could accommodate the changes, they would have said yes, of course, in part because, for a range of reasons, the new production systems were better than the old ones. Now, when margins are pinched or non-existent—producers in the pig sector now sustain losses—the effect of those changes on those who invested and are carrying debt is hard to bear. I want to find a way forward that specifically addresses the circumstances of the pig sector.

The right hon. Member for Ross, Skye and Inverness, West raised the subject of genetically modified organisms. He is right to emphasise the scientific impact and the need for the Government to stick to the science and to ensure that we are professionally advised. He is also right to say that consumer confidence has been badly shaken. We are setting up the Food Standards Agency to ensure that the professional advice given to Ministers, including me when I attend policy meetings of the Council of Ministers, is seen to be independent of ministerial or departmental government and to have been cast in an independent and scientific setting. I accept that it will take time, but I hope that the creation of that agency and the drawing together of the public protection work undertaken within government will have an impact on consumer confidence and trust. That trust has been shaken, and it is the duty of Government to restore it.

I have been generous in giving way and I do not want to take up other hon. Members' speaking time, so I shall draw my remarks to a close by drawing the House's attention to some of the ways forward. As I said, we should look more at the demand side and less at the supply side when trying to help the industry through difficult times. There are good prospects for farmers' markets, a movement that is in its infancy in this country. I lay great personal emphasis on the farm assurance schemes, such as the Meat and Livestock Commission's British meat pork mark, which give the consumer the opportunity to purchase goods that have been produced to the higher United Kingdom standards. I should be willing to give my support to marketing schemes that emphasised the advantages of farm-assured produce.

The recent growth in the organic sector, prompted by support from my Department, is welcome. So popular is the scheme that not only is it oversubscribed for the current year, but the waiting list for next year is now oversubscribed. I am considering how we can take that forward. We doubled the support given to the sector, and even that has proved insufficient to meet demand.

There are great possibilities in making use of regional speciality food endorsements and in trying to link the food industry, especially the farmgate food industry, with regional tourism. There are opportunities there, and we can also make use of the European Union legal protection of registered names.

Diversification will continue to be important. About 40 per cent. of all farm businesses have a significant non-farm-based income stream, and I expect that to continue. I do not want to see the eastern part of the country turned into a prairie or the western part into a single ranch, but the trend for farm businesses to merge and grow larger is remorseless, and I expect that to continue. However, we must ensure that it does not become the dominant outcome.

I believe in producer co-operation, and everything that I have said about the dairy sector underpins that. I believe in producer clubs, too, and the joined-up food chain with producers, processors and distributors recognising their community of interest and the long-term nature of the investment that they put into their businesses. In summary, the future is with the demand-side measures, rather than struggling to supplement the common agricultural policy on the supply side.

We are going through a period of change. In 10 years' time, the position will not be the same as it is now. I am committed to working in a non-political way with the industry and others affected by it. Many of the issues are economic rather than political, and it is important that we find a response that is rational and will work and will help the industry through the difficult times that are partly cyclical, but partly structural as well.

I welcome the contribution that the right hon. Member for Ross, Skye and Inverness, West has made to our discussions of such matters in the past, and the constructive attitude taken by his party towards those issues. Nevertheless, I urge the House to support the amendment.

4.47 pm
Mr. Tim Yeo (South Suffolk)

I congratulate the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) on his elevation to the leadership of his party; I am sure that he will provide us with plenty of entertainment in that role in the months and years to come. I have not tabled an amendment to his motion because I agree with many, in fact most, of the sentiments in it. I shall therefore not ask my hon. Friends to vote against it at the end of the debate.

I welcome the chance to debate the crisis in agriculture and in the countryside, and to examine the solutions that the Government have so often ignored or rejected. I was disappointed by the Minister's speech; it was similar to many of the offerings that we have heard over the past year, and can be summed up as follows: "I'm frightfully sorry about the ghastly mess, chaps, but there's nothing I can do about it."

As usual, we are debating agriculture in Opposition time. In April and July we had Conservative Opposition day debates on agriculture, and I welcome the Liberals' decision to use their first available half-day for that purpose. Only the Government consistently refuse to debate agriculture in their own time, perhaps because Labour policies have made the crisis in agriculture worse, not better—or perhaps because they refuse to recognise the central role of farming both in the rural economy and in the protection of the environment.

Only today we read in The Times about a Cabinet Office proposal to end the protection of prime agricultural land. Here is a litmus test for Labour. Any weakening in the restrictions on developing prime farmland will not only be disastrous for the environment, but will send a chilling signal to farmers that the Labour party does not believe that agriculture has any long-term future in modern Britain, and that cool Britannia means covering prime farmland with houses and theme parks.

On 20 September, the Minister announced a package of measures to which he made little or no reference during his 45-minute speech.

Mr. Nick Brown

The only reason that I did not refer to the package of support that I announced for the industry is that I told the House that I would curtail my speech so that I could take interventions, and that was precisely the part of the speech that was curtailed.

Mr. Patrick Nicholls (Teignbridge)

That shows what the Minister thinks of the package.

Mr. Yeo

As my hon. Friend suggests, the fact that the package found no place in the Minister's 45-minute speech suggests that he does not attach much importance to it. It is fortunate that I shall now deal with the matter.

Many of the individual measures were very welcome, but as so often happens with the Labour party, the reality did not live up to the spin. The package's cash value to farmers was not as high as the Government implied. Perhaps the Home Secretary had a hand in preparing the figures. Most of the money is European Union agrimonetary aid, paid directly from EU funds, which had been agreed before the announcement. Only £150 million of the package remained, and that consisted partly of a postponement of specified risk material removal charges and charges for cattle passports. In other words, those were decisions not to increase existing burdens on an almost crippled livestock sector for the purpose of swelling the Treasury's already overflowing coffers. The third element was a decision to maintain hill livestock compensatory allowances at the current rate for another year. In other words, that was a decision not to withdraw help from an extremely hard-pressed sector.

Against that background, it is understandable that farmers were less than ecstatic. It is hard to quarrel with the verdict in the leader in the Farmers Guardian, which said that the package would not make any real difference across the farming industry as a whole.

Mr. Brown

The hon. Gentleman has been a Minister, and he will know that the £150 million is new money. It ensures that burdens that were to be placed on farmers will not be placed on them. There is new money also in the hill livestock compensatory allowances, which are easily the best way to help the livestock sector in the uplands, where the key problem for sheep farmers lies. When I announced the £60 million last year, I said that it was a one-off and that the allowances could not continue in the future. I said that it was a specific programme designed to help people who needed it immediately. As the problem endures—indeed, it is proving to be intractable—the Government decided to make the aid available again. That is new money, which I was careful to ensure people did not anticipate because the allowances were intended to last for one year.

Mr. Yeo

The Minister is a little sensitive on that point. I cannot find many farmers who think that deferring the imposition of an additional charge for cattle passports represents the provision of new money. The Government have decided not to take from farmers as much money as they had intended at a time when the Minister has himself acknowledged that farm incomes are lower than at any time during the 18 years of the previous Government. I welcome that decision, but it does not qualify for the Minister's generous description of it.

A particularly startling aspect of the package is its complete failure to mention pigs. I wonder whether the Minister, when he made his announcement, realised the severity of the problems with which pig farmers are grappling. British pig producers are teetering on the brink of disaster. The British sow herd is contracting, in contrast to the herds of Denmark, Spain, Germany and Holland. British imports of pigmeat from the rest of the European Union are rising. The British pig industry is now being exported, partly to countries that have lower animal welfare standards than ours. Week by week, the Government's policy of malign neglect is destroying the British pig farmer. I urge the Minister to take further action before it is too late.

The first step must be to introduce honesty in labelling. It is outrageous that British consumers are sold items of pigmeat that may be labelled British even though the pigs were reared abroad, under conditions now considered too dangerous or cruel to be allowed in this country. The fact that those imports are produced in ways that are illegal in Britain need not even be disclosed at the point of sale to the consumer. Every food item should be labelled with the country of origin—showing where the food is grown, not where it is processed—and with the method of production, so that those consumers who want to do so can support high standards.

Mr. Brown

What the hon. Gentleman says is very fair, and I am looking very hard at the discretion that I have within the labelling regimes. However, could tell the House the constraints that there were on the previous Government in doing what he now advocates?

Mr. Yeo

I shall tell the Minister the exact position. Under the previous Government, the British pig industry was not being exported. The need for desperate measures has arisen because of the present crisis in the pig sector. If I took the Minister to any pig farmer in the United Kingdom, he would say, "We would love to get back to where we were before May 1997." Desperate measures are now needed as a result of the Government's neglect of the issues, their hostility to the countryside and their contempt for agriculture.

This debate is being listened to extremely carefully by pig farmers throughout Britain, many of whom have been in touch individually with me and with my hon. Friends over the past few days, and they will be dismayed to hear the Minister falling back on a cheap party political point at a time when they will be calculating—possibly even this evening—how much longer they can continue in business. We now know the truth about how much Labour really cares for pig farmers.

Mr. Keith Simpson (Mid-Norfolk)

Hon. Members frequently use the word "crisis" and it becomes almost meaningless, but I fully concur with what my hon. Friend says. This summer in my constituency, I have met dozens of pig farmers who are facing bankruptcy in the next few weeks. What we are looking for from the Minister—I accept that he hopes to announce some proposals next week—are some real, hard proposals to lift this crisis from the pig industry. Good words and phrases will not be sufficient. Many pig farmers will go bust in the next few weeks.

Mr. Yeo

My hon. Friend is absolutely right.

The second step that is needed is to block the imports of food that has been grown in ways that are not allowed in this country. The Minister mentioned that in his speech. I welcome the fact that he will publish the advice that he has received. We shall study it with great interest.

This week, the Minister wrote to me saying: Member states cannot introduce a unilateral import ban or impose national standards unrelated to public or animal health". If our ban on feeding meat and bonemeal is not related to public or animal health, what on earth is it related to?

The third step that is needed is to prevent the public sector from buying pigmeat that does not meet British standards. The Minister has told the House: I have on my desk draft letters waiting to go out to the major public authorities—the prisons, the health authorities and local authorities—not via other Departments but directly, urging them to source products of the highest welfare and animal hygiene standards".—[Official Report, 1 July 1999; Vol. 334, c. 422.]

Before Agriculture questions in the House tomorrow, will the Minister place in the Library copies of those letters and the replies that, in the past three and a half months, he has received from the recipients of his letters, so that the pig farmers can see precisely which authorities are ready to support them?

Mr. Brown

I shall not do that; I shall make my own announcement in my own time in the next few days.

Mr. Yeo

When the Minister makes his announcement, will he publish those letters so that we may see exactly whom he wrote to and exactly who bothered to reply?

The fourth step that is needed—which has been mentioned—is to help pig farmers meet the extra costs of offal disposal. The Select Committee on Agriculture made a recommendation on that subject in January 1999, and in the past few weeks the British pig industry support group has again raised the subject. That is another burden that many competitors overseas do not bear. Recently, Belgium secured European Union approval for the help that it has given to its pig farmers in the wake of the dioxin crisis, and I hope that Britain will be able to do the same.

The beef on the bone ban was imposed by the Minister's unlamented predecessor, and we know what has happened to him in the past 10 days. The ban has exposed Labour's disastrous combination of weakness and muddle more clearly than any other issue. The Minister keeps saying that he cannot lift the ban because of the scientific evidence. However, last month, as he has acknowledged, the chief medical officer for England said that the ban on the retail sale of beef on the bone could be lifted. Nevertheless, the Minister still will not act. Apparently, this is because officials in Wales and Scotland do not agree with the CMO. Does devolution mean that the UK is a convoy that can travel only at the speed of the slowest ship? Does it mean that unelected bureaucrats in Cardiff and Edinburgh now make the policy that applies to England? Does it mean that the Minister is too weak to stand up for the rights of English consumers? How can he expect the French Government to have confidence in British beef when the British Government do not have it?

It is almost 11 months since the Minister announced to Parliament: We have achieved a major objective of our policy towards Europe in the lifting of the beef export ban."—[Official Report, 25 November 1998; Vol. 321, c.190.] On 17 December, the right hon. Gentleman referred to that as a major breakthrough reflecting months of dialogue within the European Commission and with our European partners. He made a confident prediction about the timing. He said: I anticipate that we will be able to start exporting deboned beef by the spring of next year."—[Official Report, 17 December 1998; Vol. 322, c. 1091.] That timetable has slipped a bit. However, on 21 April 1999, during an Opposition debate on the crisis in farming, the right hon. Gentleman was at it again. He said: We are on target towards the lifting of the beef ban. We are on timetable."—[Official Report, 21 April 1999; Vol. 329, c.991.] Three months later, he was back in the House announcing once again the lifting of the ban. This time we were given a date—1 August. When I had the temerity to suggest that it might be well into August before exports actually started, the Minister slapped me down in a rather uncharacteristically petulant way. He said: 1 August is the start of August. How can that possibly be grudgingly described 'as well into August?"'

For the record, the first beef to be exported—not sold but taken abroad for a promotional lunch—was on 23 August. For anyone who wondered how this great achievement was secured, the Minister told us, again on 14 July, that Labour leadership in Europe and our constructive approach towards our European partners has clearly been shown to succeed."—[Official Report, 14 July 1999; Vol. 335, c. 405-07.] So now we know. However, three months later hardly any British beef has been sold abroad. When the Minister came to Parliament to boast of his success in lifting the export ban, he had not even checked with the French authorities that they would accept British beef.

Mr. Brown

We get used to this bombastic twaddle, but I shall correct one factual point. As the hon. Gentleman says, those who are watching the debate and following what he says may think that he is making a serious contribution. Incidentally, there is not a word of apology from the hon. Gentleman about the BSE crisis nor a reference to the Government who presided over it in the first place. There is not a word of apology from him about the previous Government's misguided and disastrous approach to the negotiations within the European Union when they were in charge.

As I have said, I shall correct a factual point, which is important to the industry and important also to those who may be following the debate. The fact is that beef on the bone has nothing to do with the export of British beef through the date-based export scheme—the arrangements for which were devised under the previous Government—which is for de-boned beef. The hon. Gentleman knows that because he read it out. He should not mislead people into believing that somehow the two issues are connected. They are not.

Mr. Yeo

I think that even the Minister acknowledged in one of his previous statements on this subject that the agreement of the European Commission was secured on the basis of the terms set out at the Florence summit, when Conservative Ministers were negotiating the details. I welcome the fact that the Minister has been able to continue that process, but I deplore the fact that on several occasions he has raised the hopes of British beef farmers that the export ban was about to be lifted. On too many occasions, those hopes have been dashed.

It is deplorable that the Minister made a statement in the House without having established clearly with France—which, incidentally, abstained at the Council last November, so he was on notice that it would need more persuading than some other countries—that one of our most important markets was ready to take British beef. That had nothing to do with the Conservatives. It was the Minister's statement, for which he must take responsibility, just as Labour must take responsibility for the absurd ban on beef on the bone, which, like it or not, is damaging confidence in a British product at home and abroad.

The truth is that the statements made by the Minister on the subject at regular intervals, just like the statements of the Prime Minister himself, are not designed to help Britain's beef farmers. They have been designed to win Labour headlines, like the rest of the Government's agricultural policy. It is about spin, not substance. The price of that obsession with headlines has been paid week in, week out by Britain's farmers.

To help the Minister to learn the facts of life, I invite him to join me on a fact-finding visit to France in the very near future, to learn at first hand about French attitudes towards British beef and about food standards in France, especially those relating to meat.

Beef is not the only issue on which the Government have been undermining our farmers. That has happened in the dairy sector as well. The Minister will recall that discussions about the common agricultural policy reforms were concluded in March, and that after the settlement the Prime Minister's spokesman was quoted in The Times as saying that the outcome was not satisfactory as far as we are concerned. That deal proposed that milk quotas, which currently prevent Europe from responding to growing world demand for dairy products, should continue until 2006. While Britain's milk quota will be effectively frozen until 2003—I know that there is a very small increase—four countries, including Ireland, which is already four times self-sufficient in dairy products, will receive a substantially higher quota next year.

The direct result of that negotiation will be that Britain's dairy farmers, already struggling with low prices and denied the chance to meet the needs of British consumers, will be further undercut by cheap Irish exports next year, while they remain prevented by quota limits from increasing their own production, despite having some of the best dairy-farming land in the whole of Europe.

If that was not bad enough, the Prime Minister, chasing his headlines about Britain's budget rebate, made it clear to fellow Heads of Government at Berlin that farming did not matter to him, so they gratefully accepted the offer to sell British farmers down the river and they extended the quota regime for a further two years, till 2008.

Mr. David Drew (Stroud)

I thank the hon. Gentleman for giving way. Unless the Opposition have changed their minds over recent months, I understand that it is Conservative policy to end the quota. Given that there is currently a surplus of milk in Europe, how do they intend to keep prices up if the quota regime is removed?

Mr. Yeo

Ending the quota is a necessary objective if we are to allow Britain's farmers the opportunity to compete, as they should, against other dairy farmers. I do not suggest that ending the quota would suddenly have some miraculously upward effect on the milk price. Of course it will not, but it is not intended to do that. It is intended to allow Britain to take advantage of the conditions that we enjoy in this country to compete more freely than we can do at present against dairy farmers in other EU countries.

Labour's milk policy has not ended with the damage done in the CAP reforms. In July, the much delayed Monopolies and Mergers Commission report was published. Labour decided to prevent Milk Marque, the largest dairy farming co-operative in Britain, at least at that time, from doing what other European countries encouraged their dairy farm co-operatives to do—to invest in processing and to use vertical integration to give farmers a chance to benefit from higher value added products. At the very time that it is preaching to farmers about the need to be more market oriented, Labour is blocking dairy farmers from moving in that direction. As usual, Labour is saying one thing and doing another.

In the interests of time, I also shall omit some of what I wanted to say, but I gather from the Minister's remarks that we may get another opportunity to debate these matters in the House before long. I shall touch briefly on three subjects. Badgers and bovine tuberculosis are a growing problem that is a real threat for many farmers. My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) wrote to the Minister over a month ago asking about the progress of the Krebs trials. He is awaiting a reply. There are worrying reports about laboratories being shut down. Ignoring the problem certainly will not make it go away, and I hope that Parliament will be informed of the steps that the Government are taking to address it.

On abattoirs, the much-delayed publication of the Pratt report on the impact of meat inspection charges confirmed what everyone knew, except perhaps the Minister and his officials. The report states in its conclusions: It is clear that … the British meat industry is seriously disadvantaged compared to other member states through a whole range of costs to do with meat inspection". When another slaughterhouse closes down every week, forcing fanners to send animals on ever-longer journeys, and when the costs and burdens on slaughterhouses cut the prices paid to farmers for their livestock, still further action is needed at once. I and many others have warned for months of the damage that over-regulation and excessive costs are inflicting on the industry. The Minister's reaction—the announcement of yet another review—is simply too little, too late.

Mr. Bob Blizzard (Waveney)

A few moments ago, the hon. Gentleman said that he would omit part of his speech. Is he planning to omit his solutions to the problems that we have been discussing? All I have heard so far are four proposals for pig farming: two are illegal, one is already being implemented by the Government and one, concerning labelling, was not implemented by his party when it was in government. Then there was a lot of hot air about the beef on the bone ban, which is irrelevant, and criticism for delay—[Interruption.] It is irrelevant to the lifting of the beef ban, which he is criticising the Government for delaying. Their policy is an absolute success compared with the policy of non-co-operation in Europe, or "PONCE", that his Government pursued disastrously for this country and which got us into this mess.

Mr. Yeo

I hope that every consumer and farmer in the Waveney constituency notes carefully the hon. Gentleman's statement that the ban on beef on the bone is irrelevant. I was going to omit, but shall now reinstate in my speech, the fact that last November, when the Minister made the first of the many statements about the lifting of the beef export ban, the hon. Gentleman told the House that champagne corks were popping in his constituency. I hope that he will now apologise to those farmers, who are still unable to sell beef on the bone to the customers who want to eat it, for reacting so absurdly and ignorantly.

Mr. Blizzard

Will the hon. Gentleman give way?

Mr. Yeo

Not again; we have had enough nonsense from the hon. Gentleman.

Mr. Nicholas Soames (Mid-Sussex)

Will my hon. Friend ask the Minister to prepare a scheme whereby any further regulation in the agriculture sector will be tested against the overbearing and overarching costs that are driving farmers to the wall? I understand that the dairy herd tags are to be changed yet again, putting another obligation on already hard-pressed dairy farmers. What on earth could have prevailed on the Ministry to make it insist on a further change?

Mr. Yeo

My hon. Friend is absolutely right and I welcome his suggestion, which is made with the benefit of his period as a Minister at the Ministry of Agriculture, Fisheries and Food. We need to test regulations much more carefully for their impact, particularly on the small businesses that dominate the agriculture sector. I also suggest—this arises directly from the Pratt report—that we should stop interpreting these regulations over-zealously. It is clear that even those regulations that we have accepted for perfectly good reasons are interpreted wholly differently in Britain, and usually much more onerously in respect of farmers, than in many other European Union countries.

Mr. Brown

I make the hon. Gentleman an offer: if he can give me a specific example of that, I shall have it looked at, at once.

Mr. Yeo

The ban on beef on the bone and abattoirs. I refer the Minister to the Pratt report. His officials should be following up its recommendations and finding out exactly how the inspection regime is operated in other EU countries. I know that they tried to suppress the report for several weeks, because they were embarrassed about the conclusions, but now it is in the open I hope that there will be a systematic response to find out exactly where we are going further than other EU countries. I shall certainly respond to the Minister's suggestion in more detail after the debate.

The debate is timely because the crisis in agriculture became significantly worse during the parliamentary summer recess. The British pig industry is being destroyed; dairy farmers are being driven out of business; beef farmers suffer as muddle and incompetence put off the day when the task of rebuilding confidence in their product can begin; sheep farmers are reduced to the heartbreaking task of shooting their own flocks; and cereal farmers are threatened with new burdens, though I welcome the Minister's statement about his opposition to the pesticide tax and hope that he will not be forced to resign should the Chancellor of the Exchequer overrule him. Horticulture farmers face an arbitrary and ineffective climate change levy and slaughterhouses disappear week by week, but all he can offer is a package postponing the imposition of yet more burdens and yet another round of consultation and review.

All that has taken place against a background of a recommendation from the Cabinet Office that prime agricultural land should be taken out of production so that it can be used for housing. The Minister needs to understand that his failure to respond to those challenges and Labour's neglect of agriculture and the countryside is leading directly and rapidly to a rural crisis so severe that the damage from it will take generations to repair. Only a change of Government will avert that crisis and, for the sake of the countryside, the sooner that happens the better.

5.17 pm
Mr. Mark Todd (South Derbyshire)

It will not be too difficult to rise above that contribution.

In the European context, British farming has many natural advantages, certainly in terms of scale and climate, yet we have a struggling sector. The Opposition's response is that the problem is lack of Government intervention, and that we need further protectionism and cash support. Uncomfortable though it is to say this, I firmly believe that farming needs less Government intervention, rather than more, and that cash support needs to be reduced over the long term and transferred to payment towards social, environmental and welfare goals.

Subsidising production—particularly inefficient production offering no other gain—is harmful to farming. Regulating and organising the sector through state and parastate bodies stifles innovation, discourages market awareness and encourages dependence. Such regulation as we require should be constantly reviewed against tests of effectiveness and competitiveness. I shall concentrate on what we are achieving by what we are doing and on what impact we are having on the competitiveness of the sector that we are supposedly trying to help.

Much the most significant feature of the welcome recent aid package was the announcement of a series of joint working groups to examine the weight and cost of regulation in the sector and its impact on competitiveness. That represents a change of stance by the Government. I have pursued this issue relentlessly in my time as a Member. Early last year, I tabled a parliamentary question asking the Minister of Agriculture, Fisheries and Food if he will publish comparisons of charges made to ensure public health in the slaughter process in the United Kingdom with those prevailing in other EU states", to which the answer was: The information requested is not available"—[Official Report, 12 February 1998; Vol. 306, c. 373.] The response added that this issue was essentially a concern of individual member states and that it was for the European Commission to pursue any discrepancies. At the end of that month, when I pursued the matter further and asked pursuant to his answer … concerning charges for veterinary inspection and controls, if he will make it his policy to collect the information necessary to allow comparisons of charges across the member states of the European Union. the former Minister of State, who is always a straight man, replied: No. Given the flexibility of the EC rules"—[Official Report, 26 February 1998; Vol. 307, c. 317.] He then gave the same explanation, which was that this was a matter for individual member states and the responsibility of the European Commission.

Mr. Letwin

The hon. Gentleman makes a serious and important point. Does he agree that, if the idea of a regulatory impact assessment were being taken seriously, in relation to all the regulations that he describes, the regulatory impact assessment would inevitably also look at the comparative costs of the countries with which we compete.

Mr. Todd

Yes, I agree with the hon. Gentleman. I would extend that view to my experience of regulation in other sectors. I spent my career in the private sector before joining this House, and I have puzzled over the process of regulatory impact reviews and their effectiveness. The hon. Gentleman therefore makes a fair point.

Fortunately, the Government's attitude changed, and in the autumn of last year a review—perhaps partly prompted by my further letters to the Minister saying that the matter needed to be looked at further—produced a study of comparative costs and approaches to regulation within the European Union for the slaughter sector. The study, which lies in the House of Commons Library, reveals that some countries openly subsidise the slaughter sector, and that Government subsidies are available to the various slaughter operators. For other countries, the information was so hazy that it was hard to say exactly what was going on. In Spain, for instance, the study says—it is couched in careful wording—that Anecdotal evidence suggests there may be considerable variation in the pursuit of charges. Information received from unofficial sources suggests that charges may not be collected in all regions. Evidence to support this has not been provided. Sadly, a picture emerged of extremely incomplete information about the regulations and charging structure in that sector, and certainly of substantial variances from the British practice. I am glad to say that that has been built on by further Government research demonstrating that that is indeed the case, and that the matter has been pursued with the European Commission, which is responsible for ensuring that regulations are imposed evenly across the European Union.

That is welcome, but the next step, in which the Government are engaged in their latest review, is to involve the industry in looking closely at how the regulatory burden works, and the costs associated with it in the competitive context, which is the real world of much of our livestock sector. We trade most of our livestock products internationally—although sadly not fully in beef as yet—and we must face the fact that the costs borne by our producers are also experienced in different forms by our competitors. If we choose to levy different burdens, that has an impact on our competitiveness.

That is a welcome and realistic recognition of the significance, in both financial and morale terms, of the perceived inequities in the burdens faced by the sector. Farmers constantly tell me of the burdens which they think other member states' farmers face, and of the lack of regulation in other member states. We need truth and transparency, which is what we are gradually working towards.

I also welcome the hold placed on increased charges in the last package pending a full appraisal of their competitiveness impact and a review of their effectiveness in achieving public health goals. That is an important initiative, which is belittled by Opposition Front-Bench Members, who say that the Government are putting off a charging regime which perhaps should not have been imposed at all. The announcement is much larger than that and looks at deferring the charges and at the effectiveness of the whole regime. That is welcome, too.

I also commend the review of common agricultural policy administration conducted within MAFF last year. That is another subject that produces laughable anecdotes from farmers whom I represent about how inspection regimes operate in other member states. The review highlighted both significant savings that might be available in the administration of the CAP and the potential reduction in the bureaucracy that faces farmers in carrying out their tasks and conforming with the regime.

It is perhaps regrettable that it took that review, which was conducted externally by Coopers and Lybrand, to recommend establishing something as obvious as a best practice unit to identify the best ways to implement the rigours of the common agricultural policy across the various regional centres through which MAFF delivers the CAP process. It is surprising that such an initiative needed to be made and had not been identified previously.

Properly addressing the concerns of over-regulation is one strand of a strategy for assisting farming, but there are others. As parts of farming move progressively from being regulated and directed, farmers need specific help. The recent MAFF publications on how to use the additional flexibility after Agenda 2000 make some interesting suggestions on how we should develop current initiatives and look at other ways of assisting farmers. Early retirement, support for marketing initiatives, training and retraining for farmers and support for co-operatives all feature, and those are steps that I would commend. I would add to those the encouragement that could be given to joint ventures along the food supply chain, which the Minister mentioned in his speech.

We must consider how to improve the supply chain throughout its length. Let us take milk as an example, and step into a future in which we have no quotas. I agree with the Opposition spokesman that we should move in that direction, although the hon. Gentleman is not sufficiently economically literate to understand its implications in terms of pricing. Nevertheless, efficient and well-organised British farmers would welcome that prospect. We must look at how to take maximum advantage of that freedom and the particular strengths that we have in Britain, which would enable us to have a highly competitive dairy sector. It is crucial to look at the various links in the supply chain, and at the inefficiencies that exist.

There is clearly a problem with the efficiency of our dairy processing sector, whose costs—in raw terms—are probably twice as high as those of its foreign competitors. We could not possibly sustain that in an open marketplace. It would be a burden on our sector and would hinder innovation and competitiveness. We must focus our efforts on attempting to improve our performance. Part of that improvement can come from a bottom-up process of encouraging farmers to move further up the food supply chain and take more responsibility for processing and retailing.

That is one area where further work is required. Let me give a specific example of another way in which we could proceed.

Mr. James Gray (North Wiltshire)

If the hon. Gentleman believes that dairy farmers should move up the supply chain as he describes, will he explain why the Government have taken great steps to tell Milk Marque, which produces only 38 per cent. of milk, that it may not be a processor?

Mr. Todd

Indeed. Milk Marque's mistake was to attempt to integrate the processing of milk, in which it was making commendable and intelligent steps through the acquisition of Aeron, for example, and other businesses, with the collection, transport and selling of milk. Obviously, that would place the sector at a disadvantage.

Mr. Paul Tyler (North Cornwall)

Will the hon. Gentleman give way?

Mr. Todd

Will the hon. Gentleman allow me first to finish my answer to the previous intervention?

The major purchaser and seller of milk would also be processing the milk in one corporate environment. In discussions with Milk Marque, I suggested to it that it should put the processing sector in a separate co-operative under separate management, thus freeing up the relationship between the purchasing and transport operation and processing. That would have solved many of the problems.

Mr. Tyler

I seek to help because neither the hon. Gentleman nor the hon. Member for North Wiltshire (Mr. Gray) who just intervened were involved in the previous Parliament in producing the legislation on which the decision about Milk Marque was based. It was entirely owing to Conservative legislation that the mess occurred. The failure of milk marketing is entirely due to the previous Government's failure to understand the need to free up the co-operatives to enable them to perform effectively.

Mr. Todd

I welcome that contribution. Perhaps I am insufficiently party political to be able to make such points freely. Essentially, I took them as read—perhaps the hon. Member for North Wiltshire (Mr. Gray) had forgotten that piece of history and I did not want to waste time reminding him of it, but nevertheless it is true.

As the Minister rightly said, the Government have substantially increased the aid given for the conversion of farms to organic produce. Those of us familiar with the sector recognise the problem. Farmers go through a period of no or minimal income as they convert their farms to an appropriate organic environment. Clearly, they have cash flow problems during that time.

What has puzzled me is why the retail sector, which is doing extremely well with organic produce and is seeking more of it, has not been more active in assisting farmers in going down that path. It is assisting farmers by looking at longer-term contracts to try to ensure that those making the change can be confident of a market for their produce later, but the cost of dealing with that gap in production has been left very much to the Government to support, together with the farmers themselves.

I see no reason why the Government should not encourage the retail sector to engage in cost-matching the conversion process. Increasing the amount of organic produce available to customers is very much in the interests of the British retail sector. That is what customers want and, as far as one can tell, the retail sector should be able to achieve good margins from selling such produce. It should be in its interests to move down the value chain to assist that process of change and to make up for the present gap in production. That is my concrete suggestion.

The development of regional economic strategies, which offer huge potential. I particularly commend the east midlands draft strategy, which places the food sector at the heart of the document with an innovative proposal for a university for food to combine the research, educational and industrial interests of the sector. Those regional strategies are developing only as a result of the Government's policies. That particular development is welcomed and has been commended by farmers in my constituency as clear support for the long-term health and success of the food sector in the east midlands. I have also heard of the Welsh food strategy—again, a welcome initiative to highlight and build on the brand strengths of regions.

Those are the ways ahead for agriculture. As hon. Members will recognise, most of them are the responsibility of the industry. Farming has been ill-served in the long, if not the short, term—many farmers remind me of the times that they have received aid packages of some scale, which are sometimes not even needed, from Governments. In the long term, farming has been ill served by state controls and misdirected aid.

I have found it puzzling—I have found this in meetings of the Select Committee on Agriculture—to have to defend free enterprise and entrepreneurial skills in farming to the Conservative party, which spends much of its time advocating protectionism, state aid and additional controls. That is a puzzling position, but it is one to which I have become accustomed.

Farming and food need more enterprise and entrepreneurs, not further Government controls or misdirected aid.

5.37 pm
Mr. Oliver Letwin (West Dorset)

We seem to have had a general tour d'horizon of some of the ghastly circumstances that we all face and most of the points that need to be made about the crisis have been made. The Minister rightly said that in many respects it can only be described by that term. However, four points have not been covered and I intend to deal with those.

The first matter results from direct experience of fanning in west Dorset. Two years ago—even as recently as a year ago—my farmers were complaining and upset, but they had not reached the end of the road emotionally. They thought that they would grit their teeth and get through. I am sure that the Minister must have gained this impression from his visits, but certainly this summer there has been a detectable change of mood. Many of those farmers who have struggled and survived—that includes some who are remarkably efficient when compared with their peers—have come to think that they may have reached the end of the road. That applies in particular in the pig sector, which has been much discussed and to which I will refer again, but it is also true more widely.

One part of the explanation is odd. Having to kill their calves as they emerge, after having spent the night bringing them to birth, has brought home to farmers emotionally something that the economic difficulties they were facing did not.

The Minister spoke—rightly, I am sure—about the likely results of the problems. If nothing is done, a large number of farmers will go out of business. If they do not do so, it will be their children who suffer because they will not take over the farms.

West Dorset is a land not of small but of medium-sized farms of 100, 500 and sometimes 1,000 acres, many of which could survive in an open market under the right circumstances. That will change if nothing is done but there are three ways in which it could change. First, the area could change into a wasteland and I do not think that any of us would welcome that. The environmental consequences would be permanent. We would return to a sort of countryside that this country enjoyed—suffered would probably be a better description—before the 10th century. That is not a realistic prospect for a civilised nation.

We learned the second possibility today and my hon. Friend the Member for South Suffolk (Mr. Yeo) referred to it. The Cabinet Office may be considering it. I never know whether to trust leaks from the Cabinet Office, but from my experience of working in Downing street the leaks are often more accurate than the announcements. Perhaps there are people in the Cabinet Office who think that it would be advantageous if land such as that in west Dorset changed its nature, stopped being agricultural and was used for housing. I do not share that view and neither do the local people. Much more importantly, the country as a whole does not share it because the countryside is not there merely for those who live in it. I suppose that this will sound overblown, but it is our most precious resource. The thing about this country that makes it most tolerable to live here is that we can get out of our necessarily rather ghastly cities—for all their cultural merits, they do not look very beautiful—into a place that feels different. If we lose that, we shall have lost an irreplaceable part of our civilisation.

It is not just a matter of trying in a nimbyish way to protect my constituents against acres and acres of ghastly new housing. Goodness knows under the Government's present policies and, I regret to say, the policies of Administrations past—now, thank goodness, my own party has come to its senses, long ahead of the Government—we have enough housing already. To move to a world in which agricultural land, which is the last land that has been protected against housing, suddenly becomes the new bonanza for house builders is to move to a world that is culturally desperate.

The third possibility is the one to which the Minister gestured. In his usual way, he gestured towards it a great deal more nicely and gently than his predecessor, but his predecessor was very straight about it. On many occasions from the Dispatch Box—it was one of my first experiences on coming to the House—I heard him talk in very robust tones about the necessity to sweep away large tranches of small farms and end up with some big ones which he thought would be efficient. Now it is perfectly true that there has been a secular movement from smaller to larger farms and that we benefit economically, or we would do if it were not for the Alice in Wonderland world of the common agricultural policy, from having on the whole larger farms than many of our competitors.

However, the society of West Dorset—there must be many hon. Members on both sides of the House who have similar constituencies—does not depend alone on having farms. It depends on the numbers of farmers in the place. Rural life would not be rural life as we know it if it consisted of 30,000-acre, huge farm management operations with no farmers. The fact is that farmers are not just farmers. They and their wives are the school governors in my constituency, the people who keep the womens institutes open, who go round and collect for the Royal National Lifeboat Institution, the people who keep the place what it is. If they go, and they really are going now, we will not replace them. We will not have the same kind of place. Yes, there may still be, thank God, open fields instead of housing, if the Cabinet Office does not have its way, but those open fields and the villages and towns that are supported by rural life as we know it at the moment, will not feel the same when the rest of the population goes to visit it, and we will still have lost a precious asset.

Worse, we shall have destroyed the one part of our society that really works. West Dorset is a place that has schools that are schools. They have never had all the nonsense of the 1960s. They are places to which middle-class people, without having to move and buy expensive houses, are happy to send their children. West Dorset has almost no crime. I exaggerate slightly, but it has one of the lowest rates of crime in the whole of the United Kingdom and always has had. Why? It is because of the character of the society, and that depends incredibly on the existence of a fabric of small and medium-sized yeoman farmers and their families and the network of social support that they provide. One could run a whole university course on the sociological advantages of a farming community. All of that stands to be lost not in the next year or 10 years, but in the next few months. That is what I mean when I say that this a crisis.

Much has been said this afternoon about the beef ban, the ban on beef on the bone, the slaughter of calves and cattle passports. All of those are important, but I should like to draw the attention of the Minister and the House to the long-term problem that the calf sector faces. It is not just a short-term problem. We may get sex-based semen; we may have some new ovulation techniques. I do not know. I do not know how long they will take to be introduced or how far, if the Minister will forgive me, the bureaucrats will let them be introduced. It may be that we do not have a huge pile of surplus calves five years or even two or three years from now.

Barring those developments, something has to be done with the bull calves. We do not have an indigenous veal industry. We do not have the right to export the live animals. I would welcome a scheme to enable us to export them. That would require the Minister to go and do business in places such as France and make agreements which would enable people to check on the survival of the dam six months after the export, or five months if export takes place when the calf is one month old, to ensure that the BSE rules have been complied with. I am sure that that is achievable.

Even if that were done, the amount of live export is never going to be very great. If I can put it in these terms, the sandals brigade, who are actually the poll tax protesters and anti-nuclear protesters repackaged, will be out there throwing stones in the apparent pursuit of animal welfare and making the life of the calves hell as they approach the dock. It will be very difficult to get a live export scheme going again.

So the only long-term solution, unless we can move to sex-based semen or whatever, is an indigenous veal industry. I have not seen any sign of the Meat and Livestock Commission or the Minister putting their hand to the task of trying to develop such an industry. I speak from a vested interest because half of the United Kingdom's veal producers are located in west Dorset, but the whole of the dairy sector would benefit if the Minister directed his attention that way.

Mr. Gray

Does my hon. Friend agree that the likelihood of any such live calf export scheme being introduced by the Government becomes even more remote if one considers the precedent of beef on the bone? Even supposing Europe thought that the Minister's scheme was a good one, he would have to consult his colleagues in the Scottish Parliament and the Welsh Assembly, and the likelihood of them giving him permission to do what he wanted seems extremely remote.

Mr. Letwin

I agree that that is a bizarre consequence of devolution. My hon. Friend knows that I spent a large part of the first year of my tenure in the House arguing about devolution, albeit not with this Minister but with others. We never spotted that one of the consequences could be the ruling of England not by a majority founded on Scottish Members—the well-known West Lothian question—but indirectly by Ministers in other parts of the kingdom. My hon. Friend is right. There is a problem.

An indigenous veal industry would not cause such problems. We could create one in England and, I am sure, in the UK as a whole, with universal support. I press on the Minister the need to take that seriously.

Much has been said about pigs this afternoon, and rightly. I want to make one or two ripostes to the Minister's assertion, which I take to be the kernel of his argument, that it would be an improper state aid to do something about offal disposal costs. I understand that it would be a state aid. We must not be confused in debates about state aids by the words "state aid". A state aid is a classification. It is not ipso facto a definition of something that is illegal or improper. Manifestly, the Commission and the treaties allow all sorts of state aid, as is proper, if they are properly notified and fall within certain rules.

The question is whether providing aid for offal disposal costs would be an improper state aid. The Minister said that aid would be introduced only to deal with exceptional circumstances. If the disappearance of our pig industry due to exogenous influences, namely the BSE crisis, is not an exceptional circumstance, I do not know what is.

Mr. Nick Brown

If that is right, why did the then Government not introduce some state aid when the restriction was imposed in 1996?

Mr. Letwin

The honest answer is that I have not the foggiest clue, but I do not think that the fact, if it is a fact, that a mistake was made by legal advisers and by Ministers then, ought to deny us the possibility of rescuing the industry today. I am perfectly prepared to admit—God knows I have to admit—that we made very many mistakes. I do not think that they ought to be repeated.

Mr. Drew

That is a new doctrine.

Mr. Letwin

I believe that we benefit from the splendid doctrine of conceding and moving on. That is exactly what I am doing here. It is in the interests of Britain that we should do that.

Mr. Anthony Steen (Totnes)

Is my hon. Friend aware of a draft European directive which could put an enormous additional cost on pig suppliers in Britain in that it sets technical, non-mandatory standards for vehicles transporting livestock, the actual cost of which will fall on the pig producers? Does my hon. Friend agree that the Government should do everything possible to make sure that that directive, which at the moment is voluntary, does not become mandatory, so that additional costs do not fall on our pig producers?


No, I was not aware of that. One of the defects of the Alice in Wonderland world in which we live is that one can hardly live another day without hearing of another proposed directive or regulation. My hon. Friend is obviously right. Any additional mandatory burden on pig producers today would be a nail in a coffin to be resisted.

I come to the second part of the Minister's defence against action in this sphere, because it is important. He based part of his argument on the assertion that to subsidise offal disposal costs would be an improper state aid because, in some important way, such a subsidy is not similar to the cattle passport subsidy. Incidentally, I do not quite regard it as a subsidy because I have never been able to understand, on the basis of pocket handkerchief calculations, how the real cost of a cattle passport could be £7. Other countries appear to be able to provide that for £2. I beg the Minister to ask someone in his Department, or perhaps outside it, to investigate how the resource cost of a cattle passport could genuinely be £7. However, that is by the by. No doubt it has a cost and the Minister is subsidising it, which is splendid.

The question is what is the relevant disanalogy between the subsidy of the cattle passport cost and the subsidy of offal disposal costs. Both are regulatory costs which apparently arise for health and safety reasons. We would not have cattle passports if there was no health and safety reason for them. We clearly have a health and safety reason for the offal disposal costs being imposed in the first place. They seem directly analogous, in which case I cannot understand what the relevant disanalogy could be.

I admit that the legal gums in the Ministry of Agriculture, Fisheries and Food and in the Foreign and Commonwealth Office will have their views on what is or is not a proper state aid, but I beg the Minister to consider that the whole experience of the UK Government during the past 10 or 15 years is that we have been peculiarly timorous in stretching the boundaries of what we can get away with vis-á-vis state aids, or anything else, in the EU. That is one of our disadvantages.

There is a matter of realpolitik here. If this was an open and shut case, if such a subsidy was clearly an improper state aid, I would not recommend this course of action, but if, as I deeply suspect, there is ground at least for legal argument, and if the Minister were to take the action of funding these costs only for the Commission later to decide to take him to court, it would be one, two or three years down the line before the matter was determined, and by that time we would have a pig industry. In a similar environment in Paris, that would hardly need to be said because everyone would know that that was the way one played the game. But for some reason it sounds odd to English ears.

I welcome that it sounds odd to English ears because I welcome the fact that we still have—although the Government are still trying to destroy it, in co-operation with their colleagues from other countries—an English judicial system and a respect for it. Therefore, we are attuned to the idea of not taking—the Government in particular—the slightest risk. The Treasury Solicitor's Department is peculiarly well organised to help the Government to avoid ever taking the slightest risk. Spiritually, as an Englishman, I welcome that. But here we have a national crisis and a possible means of solving it, and there is a practical way of doing that if the Minister will take it.

Mr. Nicholls

Should we not also pray in aid of what my hon. Friend says the fact that, if the Minister was concerned that, given that legal advice suggested that he probably would not get away with it, he might be at some political risk as a result of an application under article 36 of the treaty, my hon. Friend the Member for South Suffolk (Mr. Yeo) has made it abundantly clear from the Dispatch Box on a number of occasions that, if a challenge under article 36 were to fail, far from criticising the Minister for his venture, we would praise him for the attempt?

Mr. Letwin

My hon. Friend is right, we would, and it would be disgraceful if we did not. Therefore, the Minister has some political choice. I am sure that Liberal Democrats would take the same view. This is a national concern. The Minister was right to say that it was not a party political concern. It is difficult for anyone who has been captured for any Department to see the matter in quite the same way as it appears to the rest of us, and, in this case, the outsider's perspective is closer to reality than that of the insider.

I come now to pesticides and the pesticides tax. The infamous leak from the Cabinet Office suggests that, after all, the pesticides tax, to which the Minister so nobly objects, may be on the agenda. I do not have the slightest idea whether it is or is not, and it may be that the Minister does not either. But for a long while it looked as if it was, and the only person standing out against it was the Minister. That was an odd situation. I cannot recall a time in the recent past when an important member of the Cabinet avowedly opposed something and yet it continued to be spoken of as it was about to be introduced.

Then there was a ray of hope because one of the Minister's colleagues, the Minister for the Environment, was rumoured in the media to have sprung to the astonishing perception that the time was not quite right for the introduction of the new and swingeing tax. Hurrah. It is marvellous that the Minister for the Environment should have spotted it. If the Minister played any part in enlightening him on that, we owe him a deep debt of gratitude.

But now we have the Cabinet Office. Like most hon. Members, I know something about how government works. I have sat for endless hours with that little coven of witches in No. 10 Downing street and I know that when the Cabinet Office, or someone in Downing street, starts to cook up a proposition it is a powerful device. One never knows what will happen next. The Minister might find that the Chancellor has announced a pesticides tax without telling him in a Budget statement that was too secret to be let on about until two hours beforehand.

There is a real danger that we will have a pesticides tax and there is a real problem with it. I apologise for making a party political point, but the Government are brilliant at introducing stealth taxes. The phrase has become so common that someone recently asked me why the Conservatives were not going on about stealth taxes. The phrase has become common property now.

The first characteristic of a stealth tax is that no one notices it until it has happened. A pesticides tax would be like that because most people in the UK do not have the slightest idea that there are pesticides in the first place. In fact, roughly £1,000 million worth of pesticides are used each year, as the Minister knows. Therefore, a pesticides tax qualifies as a stealth tax in that regard.

The second characteristic of a stealth tax is that it almost never achieves the effect that it purportedly attempts to achieve, and this is exactly such a case. A bizarre feature of a pesticides tax is that it will not achieve a reduction in the use of pesticides. Farmers cannot use fewer pesticides. If the organic aid scheme, instead of being cut off for the next two years, were slightly larger than a pocket handkerchief, farmers might be able to stop using pesticides. However, we have intensive farming. The hon. Member for South Derbyshire (Mr. Todd) made a rational case for a more rationally disposed market—he did not mention that we would have to get rid of the CAP to do it, but I was with him all the way, cheering inwardly—and he said that farmers should be economically rational and that, I regret to say, implies intensivity and, inevitably, pesticides.

Farmers the length and breadth of Britain have to use pesticides. One cannot imagine a farmer using more pesticides than he needed. If farmers had to meet a bill of £1,000 million simply because they liked throwing the stuff around, they would be carted off to a lunatic asylum. Farmers use the least amount of pesticide that they can get away with. The stuff is jolly expensive.

When the tax comes along, when the other Mr. Brown, the Chancellor, the much less nice Mr. Brown, stands at the Dispatch Box to make the pre-Budget announcement on 8 November, or whatever, and tells an expectant House that he has managed to find another £5,000 million of our money with which to swell his coffers in order to do we know not what, yet, £200 million or £300 million of which a year will come from the pesticides tax, he will not say that that is £200 million or £300 million which will come from the farmers without a single drop of pesticide less being used in Britain. That would not be an environmental measure. If the Minister for the Environment had really considered the issue, he would have said not that it is not a good time to impose such a tax but that it would never be a good time. If the Government wish to reduce pesticide use, they would do much better to subsidise organic farming more.

I hope that the Minister will pick up the telephone when he returns to his office and talk to his right hon. Friends the Chancellor of the Exchequer and the Prime Minister. He should say to them, "Whatever you do to surprise me, for goodness sake do not surprise me with a pesticide tax." The farmers will never forgive this Government if at this time, of all times, that tax, of all taxes, is imposed.

6 pm

Mr. David Drew (Stroud)

I am happy to follow the hon. Member for West Dorset (Mr. Letwin) because I agree with several of the remarks in the middle of his speech, although less with his causes and conclusions. Several hon. Members have mentioned the supposed leak, which appeared in The Times, from the Cabinet Office about a relaxation of Labour's attitude to the countryside—presumably in relation to planning policy.

We can all agree that farmers face difficulties at the moment, and the high price of land is one of the reasons. Of course, agricultural land is measured in terms of development value. I do not suggest that a crash in land price in agricultural areas is what is needed, but it is difficult for farmers to envisage a recovery with land prices so high. That causes many problems, because better-off farmers still seek to buy land, and they keep up the price of land for agricultural use. The alternative is to consider other uses for the land, but the development potential of land keeps the price up. That is an economic argument, not a political or moral one, but it is one of the paradoxes that farming faces and that causes many of the present difficulties. The hon. Member for South-East Cambridgeshire (Mr. Paice) looks quizzical, but it is an economic concept, and not one on which I seek to find argument.

The crisis in farming has a knock-on effect on the whole rural economy, although we must be realistic and accept that farming is now a relatively small part of that economy, and we do not face a rural crisis caused by the decline in agriculture. However, the agricultural situation is not helping the rural economy, and its difficulties, which are caused by a galaxy of different factors, need to be addressed.

We now face the impact of the integration of the supply chain, which was to some extent encouraged by farmers, some of whom have come to rue that attitude. They have started to realise how they have lost control of the food chain and are angered and disillusioned by the way in which that has removed their ability to control what they produce and the price at which they are able to produce it. We need to learn from those mistakes, which go back decades, not just two years. We must learn lessons and reach for radical new solutions.

One factor is the globalisation of the food chain. Different countries are now able to supply this country much more easily. Indeed, until the BSE crisis, we were able to supply internationally, particularly in sectors such as beef. We may understand that point, but doing something about it is more difficult—if only we could wave a magic wand and persuade the French to rethink their position. I am sure that my right hon. Friend the Minister is doing everything that he can, but the problem is not only Governments but the way in which consumers react. I understand the farmers' frustration, but causing a massive upsurge of unrest will not persuade consumers. Instead, it will draw attention to the continuing crisis.

We are indebted to an earlier Liberal Democrat debate on BSE for the realisation that we must also deal with the impact of the north Americans and what they would like to do, as well as our friends across the channel. We know from experience that what starts as a reaction soon becomes a retaliation. The danger is that understandable reactions become retaliatory policies that cost millions of pounds in lost revenue and threaten jobs that have nothing to do with the immediate cause of the dispute. Nobody gains from such situations. However, I do not argue that we should throw in the towel: we should vigorously do all we can to make the French see reason. There is no reason why British beef should not be sold on the continent and throughout the wider world. We have argued our case, successfully so far, with the Commission which has accepted that it is wrong for individual Governments to do what they are doing. It is still true that the negotiations are difficult and tortuous, and I wish my right hon. Friend the Minister every success.

Unlike the Conservatives, I welcome the proposals that my right hon. Friend the Minister made in the summer. It has been argued that they were too little, too late, but the whole package is important. No one has yet argued that the package should be rejected, and certainly all the money will be taken up. The distribution of funds will always be disputed, and I heard an argument—at the conference in Dartington, Devon attended by my right hon. Friend—that lowland farmers also needed help and too much aid went to the highland areas. However, we must be realistic and recognise that the crisis is most deeply felt in highland areas. Immediate action was needed to help those farmers at the sharp end at the earliest possible opportunity.

It is recognised on both sides of the House that we should move towards environmental payments rather than producer payments, so that subsidies are not directed at increasing the amount of food produced. Progress in that direction has been disappointing, and the need for that change in farming has been lost sight of in the immediate crisis. I am disappointed that we have not been able to put more money into environmental payments. The issue is one of helping not only the environment but those who farm and manage the land. We have managed to find £100 million to allocate so far, but—and it is difficult to say so—that is not a great sum in terms of the billions of pounds spent on other support measures. However, that is because we do not start with a blank sheet of paper. My right hon. Friend the Minister is nodding, and he knows far better than I do that we are stuck with existing procedures, partly because the previous Administration did not see the issue as a priority.

It does seem daft. One of the things that is wrong with the CAP is that we are always stuck with history: because something was not done in the past, we cannot do it in the present, let alone in the future. That has to be changed, but it explains why it is so difficult to introduce new agricultural and environmental measures. Historical constraints mean that not enough money is available for those purposes.

It is easy to talk about modulation, cross-compliance and the need to find national envelopes that will provide greater flexibility for individual countries to do what they want. However, these are difficult matters as we are locked into the CAP negotiations and cannot simply do our own thing, however much we might wish to.

I hope that I can help my Front-Bench colleagues by setting out my personal views about how to move matters forward. As I have said already, the problem is that the whole sector is full of paradoxes. For example, food safety is very important to consumers. That is shown by their reaction to BSE and to the introduction of genetically modified organisms. I too have sometimes been critical of the Government's approach, which I do not believe has always been sufficiently rigorous in its opposition to GMOs. How that rigour might be achieved is a difficult problem, but such matters are part of the attempts by consumers to exert sovereignty over the food that they buy.

Ordinary consumers, however, are also interested in the price that they have to pay for food, which at present has never been lower, in relative terms. Much less is spent on the ordinary person's food budget than ever before, yet we have failed to crack the problem of food poverty—the very poorest people now spend a greater proportion of their income on food than previously. That is another of the paradoxes that remains to be solved.

I very much welcome some of the approaches that the Government have adopted. My right hon. Friend the Minister mentioned farmers' markets, of which the one in Stroud is a successful example. It was founded by a lady called Clare Gerbrands, and her enthusiasm and effort have attracted farmers to participate in the venture. More would be welcome, however.

It is another paradox that, although it is relatively easy to attract people who want to sell craft goods and knick-knacks to such markets, it is hard to attract farmers. That is not because farmers are unwilling to try such markets, but because they lack the ability to market themselves successfully. Also, because they have been so driven towards the centralised food chain, it is difficult for farmers to lock into a localised food chain. We should provide money, help and advice to make it easier for them to make the change to localised markets, because in that way everyone can gain: farmers win by having access to a local market, and consumers tend to trust locally produced food.

Moreover, retailers can also benefit from such a system. My hon. Friend the Member for South Derbyshire (Mr. Todd) is not in his place at present, but he intimated that retailers should provide support for conversion by farmers to organic methods. That is a thoroughly good idea. Those of us who are Christians may not like the idea of shops being open seven days a week, but farmers and consumers alike would benefit if shop space were reserved for locally produced food. My challenge to the supermarkets is that they should set up attractive spaces in which people can see the benefits of locally produced food.

People want good-quality, wholesome food at a price that they can afford. The GMO debate has shown that people are interested in what they eat. Professor Tim Lang, professor of food policy at Thames Valley university, spoke in my constituency a few weeks ago. He said that the threat from GMOs is minuscule compared with that posed by what he called functional foods—for example, foods produced for specific sports or dietary needs. How will we cope with such foods when they enter the food chain?

Perhaps that development will be the solution to all our problems. People may be able to eat exactly what they want to eat, because all their food will have been specially prepared for them. However, the threat is that there will be an even greater centralisation of the production, processing and distribution of food.

Debates on these matters must be held: hon. Members must ensure that farmers can remain in business and that consumer needs are served. Those two aims should not be mutually exclusive. We must therefore look at new structures.

I am a Co-operative Member and a co-operative person, and it gladdens my heart to hear co-operation and collaboration being talked about in this place. Yet how can we achieve such co-operation when 20 per cent. of farmers receive 80 per cent. of the available support? Tenant farmers are always vulnerable and at a particular disadvantage. I mentioned land prices earlier, but they affect tenant farmers too, as they are keen to get the best return from their annual rent. Theirs is therefore a difficult existence. We may need to make a special allowance to ensure that tenant farmers, who are the backbone of the farming industry, can continue to exist. In the main, they are smaller farmers, often in difficult locations. However, they are important because they are the ' ones who implement the agri-environment schemes and who look to go organic.

If tenant farmers were to disappear, the impact on the countryside would be entirely negative, yet the present structures are especially disadvantageous to them. That is why we may need to examine measures to ensure their continued existence. The problem is that tenant farmers are not common in Europe. The small farmers tend to be owner-occupiers, or part of co-operatives. How do we persuade our friends in Europe that our tenant farmers are an important part of our social fabric as well as of our agricultural industry? We have managed to skate around that question on many occasions, but now we really must try to find a solution.

I could speak about Milk Marque, but I shall say only that it was set up by the previous Administration. I can tell my right hon. Friend the Minister that I would not wish on anyone the problems that he faces with regard to bovine tuberculosis. That enormous problem is devastating our milk industry, and it can be resolved only by means of science. It may not be as great as BSE, but it will have a big impact on the milk industry unless solutions are found soon. Magic wands and loads of money will not provide those solutions; only science will discover why TB arises in the countryside and how it is spread.

Mr. Owen Paterson (North Shropshire)

I am sure that the House endorses the hon. Gentleman's faith in science, but the Government stated that 10 triplet areas were to be set up to study TB. However, so far only two such areas have been established. Is the hon. Gentleman satisfied with that?

Mr. Drew

I am not satisfied, as I believe that the priority is to develop solutions to the problem. However, I want to choose my words carefully. I understand—as I am sure the hon. Gentleman does—some of the reasons why it has proved more difficult than expected to get the trials under way. For example, there has been a great deal of opposition to and, at the same time, pressure for the drastic culling of badgers. Yet the difficult problem of bovine TB, which also affects milk industries in other countries, must be solved.

Mr. Letwin

I accept what the hon. Gentleman says about the difficulties associated with establishing the tests for bovine TB, but does he not understate the case slightly? Bovine TB is approaching the status of a huge crisis. Is not it necessary to ensure that all the stops are pulled out to implement the recommendations of the Krebs report as fast as the science permits? Surely no impediment should be allowed to delay that.

Mr. Drew

I do not disagree. All hon. Members have faith in the Krebs report, and in the Bourne group that has actioned it. However, I have always been somewhat sceptical about the possibility of producing speedy solutions. I wish it were that easy, but it is not—this is a very difficult problem. Although I do not disagree with the hon. Gentleman, I urge caution when it comes to going full speed ahead with the trials. The question of how they should be implemented is not at all easy.

I have covered a wide range of the issues and paradoxes with which we must deal. We have to consider radical solutions, asking whether we have gone as far as we could. Some of us would argue that we have not done so when it comes to the centralisation of the food chain. Is it good, or should we encourage supermarkets to look back towards local supply and sourcing, which could benefit everyone? We must reform the CAP. Dare I suggest that we need to see how it can be reformed for our national needs as well as for Europe as a whole?

We must remember that Europe is changing. In Poland yesterday, I saw some of the ways in which agriculture will seek to feed people in western Europe. Whether that is good or bad, it will happen and it will have an impact on us. I was told that a major processing company is investing in a new plant in Hungary which will dwarf some British processing. Whether or not we want that, it is happening. We cannot persuade ourselves otherwise.

Agriculture is in crisis and there are no short-term solutions. We must consider how to dig ourselves out of the crisis, taking the farmers with us but not avoiding the paradoxes that we must face up to. We can do all that only by travelling the route outlined by my right hon. Friend the Minister. Important wider issues must be taken into account, and I hope that the White Paper due early next year will allow us to put agriculture in its proper context as an important part, but not the only part, of what happens in rural Britain.

6.22 pm
Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

I shall be brief because I do not want to take up too much of the Liberal Democrats' day.

One issue not addressed so far is the problem of fallen stock in the countryside. Some weekends ago, the Sunday Post—not, perhaps, a mass circulation newspaper down here, but one which percolates into the north of England—carried a picture of a farmer shooting lambs on his farm. We all know why farmers have been dragged into doing that, but the picture and the report omitted the next stage of the process—how farmers get rid of stock that dies or is shot.

Before BSE, the system was that the knacker—there were yards in many areas—would collect fallen stock. After collecting cattle, the knacker often picked up sheep for no charge. The cattle were taken back to the plant and stripped of usable material for pet food and other things. What the knacker could not dispose of, the renderer collected—even, in good times, paying for it. That material went to the renderer's plant to be disposed of as bonemeal or tallow. The system allowed and encouraged sensible disposal of fallen stock without damage to the environment. It also created some employment in rural areas.

Today, of course, the market of the renderers—for bonemeal and tallow—has almost totally disappeared, although some tallow may return. The renderer must now charge the knacker if he is to collect what the knacker disposes of. The knacker, who also faces high investment in pressure cookers if he is to produce for the pet food industry, must charge the farmer for the collection of fallen stock. Meanwhile, farmers are less able than ever they were to pay the charges that the knacker is imposing.

Farmers faced with the lowest incomes in generations—often negative incomes—will bury stock on their farms. As far as I can ascertain, provided that a farmer disposes of stock away from water courses, there is no regulation to stop him disposing of stock on his land, although the practice is banned in most other European Union countries. If fallen stock goes to the renderer, it is classified as high-risk material, but if it stays on the farm, it is simply classed as agricultural waste. We may wish to ponder that anomaly.

One consequence is unemployment: knackers have gone out of business, and the one in my constituency closed some time ago. Then, there are consequences for both health and the environment. Other EU countries do not allow such burial. Recently, the Scottish Environment Protection Agency produced a report on the matter, which said: Fallen stock does not yet pose a problem but difficulties may be expected in future years due to cumulative effects of increased disposal. In view of the changing circumstances which are likely to lead to more on-farm burials and the unknowns relating to the environmental issues of larger-scale burials, it is recommended that alternatives to on-farm burial are encouraged. I believe that the agency is being too mild in saying that there will be a problem and that we must do something once it arises. The time to do something is now—a lesson we should perhaps have learned from past agricultural crises.

We should not underestimate the scale of the problem. Figures are not available for the number of stock buried. We have passport and traceability systems, but traceability ends when the animal dies. No one knows what happens to animals then. In Dumfries and Galloway alone, I estimate that we dispose annually of 9,000 cattle and 36,000 sheep. The possible consequences of burying those animals in pits in the countryside are fairly horrible to contemplate.

Even if, suspending disbelief, we assume that we can continue to bury a large number of stock in the countryside without environmental problems, we still have to remember the effect on public perceptions. We are trying to get across the message that we have high-quality agriculture that we want to keep. How can we do that if we are burying large numbers of fallen stock in the countryside? Does the Minister see any prospect of a scheme for collecting fallen stock so that stock is picked up, without payment to the farmer, to be taken away and disposed of safely and in an environmentally sensitive way?

The pig industry receives virtually no support from the CAP. We have one of the world's most modern pig industries, but it is suffering burdens due to events outside the industry and bearing costs that are nothing to do with the industry. People in the industry believe that they face imports from regimes that are less strict, and labelling problems too. All that has combined to mean that pig farmers are going out of business. The remaining pig farmers must believe that the Government want to allow the industry to compete fairly with competitors abroad.

I am glad that we are debating agriculture and that another debate will be held shortly. Agriculture is important to the economies of many of our constituencies. Some 25 per cent. of gross national product produced in Dumfries and Galloway is tied up in agriculture. We heard earlier about structural funds, but the area receives almost three times as much from the common agricultural policy as from structural funds.

Every industry occasionally needs to restructure and to adapt to changed circumstances. In agriculture, however, that process seems to be happening by default, not design. Farms, especially in less-favoured areas, cannot simply be closed, then reopened a few years later when things get better, as if they were factories making widgets. The Government must do more to address the agricultural industry's justifiable concerns.

6.29 pm
Mr. David Heath (Somerton and Frome)

In the brief time left, it is not possible to cover all the difficulties of agriculture, but all of us who represent rural constituencies know the depth of the crisis—that is not an exaggeration—that affects not only agriculture, but the downstream industries. That is the crucial point. This is no longer about farmers. The people losing their jobs and going bankrupt in the first instance are the agricultural engineers, the people who do the books for farmers, and those who run the shops. This is fast escalating into a major economic downturn in rural areas.

There has, properly, been a tendency to concentrate on the upland areas, but the crisis also affects the lowland areas, such as my constituency in Somerset, where people do not farm enormous ranches. On Monday, I was sitting at a table with a farmer who farms 40 acres. He has 17 cows plus followers, which is near marginal agriculture, yet nothing is being done to support such farmers.

Mr. John Hayes (South Holland and The Deepings)

Will the hon. Gentleman give way?

Mr. Heath

No, I do not have time. We have had hours of the Conservatives in this debate.

Our pig and poultry sectors are suffering to the same extent. Pig producers are losing £12 per finished pig and poultry producers are losing £2 a bird. Those losses are not sustainable. Analysing the reasons is not simple; manifold reasons are evident to anyone who looks at the problems. There is BSE and its consequences, such as the lack of confidence. There is the strength of the pound and the imports that displace home-produced material. There are still serious question marks over the attitude of the supermarkets.

On occasion, Government action, not necessarily in the Minister's Department, has made matters worse. We need only consider the delay at the Department of Trade and Industry in producing the Milk Marque report and the conclusions that were reached. That was extraordinary and had a serious effect on the dairy industry in my area. When the newspapers talk of the possibility of the agriculture industry being absorbed by the DTI, we must say, "Nick, please tell us it ain't so." That would be a desperately disadvantageous position in which to put agriculture.

There is also unfair competition. Farmers often tell us about that, and they are right because different welfare and health standards apply in other countries—but there are few barriers to such products reaching our supermarket shelves. We heard earlier about the move away from antibiotics in chicken production in this country and the openness of our markets to birds from Thailand, Brazil and around the world that are not produced under the same amount of regulation.

We have a great deal of regulation in our industry. I hear what the Minister says about the working party that has been set up. It is a welcome approach to the problem, but it would be more fundamental and useful if the Ministry applied tests before making regulations to determine whether they would have a negative effect on the competitiveness of our industries and could be justified by their result.

We have had a brief discussion of the common agricultural policy. I make no bones about it: the CAP is a disgrace and needs complete remoulding and drastic reform. What happened in the intergovernmental conferences was a very small movement. It is welcome and, as the Minister said, it goes across several sectors, but we have only to look at the results in the dairy sector to see that it is unsustainable. It will not survive the World Trade Organisation round, let alone anything else. It must be returned to time and again.

Further problems with the WTO were mentioned by the hon. Member for Stroud (Mr. Drew): bovine somatotropin and its American corporate backers. I have a long history of battles with Monsanto, whose representatives I met back in 1986 to complain about bovine somatotropin. Nothing seems to have changed. The Americans are determined to foist upon European markets products with which we are not happy.

There is also the Government package. We have not had sufficient debate in this Session on its parameters. I join other hon. Members in saying that it is welcome that the Minister has responded. Equally, few pints of cider were drunk at Frome market on the day of the announcement when people worked out what it meant for areas such as mine. Much of it was deferred gratification, or whatever the reverse of that is, in that it prevented something awful from happening that the Government had had in train. Its prevention was welcome, but it would have been better still had it not been there in the first place. Examining the consequences for lowland farmers shows that there is very little that is of direct benefit in the here and now.

I want to use my remaining five minutes to discuss positive suggestions about what might help. I do not want to deal in the hyperbole of political argument, because that is not the point of today's debate. We are looking for ways in which we can help the agricultural industry and the rural economy. We need what the Government often boast about in other matters—joined-up Government. We are dealing with a crisis of the rural economy that cannot be handled within MAFF. Other Departments must pay the same attention to the rural economy. They must converse with one another and produce cross-departmental thinking that will address the issues.

We need to deal with some of the immediate problems. One matter not mentioned today was the over-30-months restriction. The scheme is reaching the end of its life, but the restriction is still in place. I question the logic of that. If it was right that cattle over 30 months old eight months ago should be caught in that net, surely the limit should now be 38 months. Any logician applying his mind to the matter would accept that. There are dangers in that approach. We could flood the beef market with culled dairy cattle. That is not a sensible solution, but the matter should be examined.

We need to reconsider calf slaughter, which many hon. Members mentioned. The Minister of State, Ministry of Agriculture, Fisheries and Food, the right hon. Member for Gateshead, East and Washington (Ms Quin), attended the south-west dairy industry dinner with me a few weeks ago. I do not think that it was an entirely pleasant experience for her. There was widespread surprise when she appeared to say that everything was now all right with calf slaughter. I do not think that she meant it, but that is how it was taken. As the hon. Member for West Dorset (Mr. Letwin) said, some people understand the desperation and futility of their industry when they have to spend all night calving a bull calf only to shoot it in the morning. There is no method of disposal and we must address that.

On the pig and poultry sectors, we have already discussed why we do not use the latitude that the Belgians are happy to use in dealing with dioxin to deal with the animal welfare and health restrictions placed on those industries as a result of BSE and other matters. I agree that we need to test the parameters of what is permissible within law. We are far too well behaved in this country on such matters. We do not take a sufficiently rigorous view and so do not find out what we can do to support our industry. I also accept that if, two years down the road, it is proved to be an unlawful act, it is a great shame, but we would have saved our pig industry, and that is the primary responsibility of the Government and this place.

We have mentioned the cull ewes scheme, for which we will continue to argue, but we should also consider specified offals in cull ewes. Was there a scientific basis for that or was it part of the package put together to convince others of the safety of British meat? If there is no scientific backing, let us reconsider whether we are putting an irreducible cost on the industry that bars export possibilities.

We need to deal with the whole question of bureaucracy. I agree with my hon. Friend the Member for Torridge and West Devon (Mr. Burnett) about the need to be able to challenge MAFF decisions. We need an agricultural ombudsman who can deal with the issues sensibly.

We need to deal with some of the over-officious regulation that we sometimes see. There is a strong suspicion that, having given green-top milk the all-clear rather banning it, there is now an alternative move to kill it by over-regulation and additional cost. I invite the Minister to examine that matter.

We have already talked about the essential element of labelling in relation to imports. With exports, we must of course lift the beef on the bone ban at the earliest opportunity, but we then have to do far more on marketing. MAFF will not do that well; indeed, MAFF should not do it at all. We need to use marketing experts for generic marketing and for regional and brand-name recognition. In Somerset and the south-west, we have extremely good names for our produce, which are recognised as meaning good produce. We do not make sufficient use of them. We need to examine the corporate structures—to make co-operatives work better so that they are more suitable for the job we want them to do. We need to reconsider agricultural credits.

Finally, if we are to make progress in reforming the CAP in the direction that we want, we need allies; we need a coalition of interests. I invite Ministers to set aside the domestic agricultural aspect and establish bilateral relationships with countries that have similar agricultural profiles to our own—perhaps the countries of northern Europe, for instance, the Swedes—so that we can arrive at a commonality of interests that will win us some of these arguments. One could bet one's life that the mediterraneans are doing just that in their councils, but we have always failed to do so. It is essential that we make progress.

The right hon. Gentleman has a reputation as a rational and listening Minister. He has shown that again today. The problem is that we now need much more action. I do not criticise him for some of the things that he cannot achieve, but some things that he can achieve would make life a lot easier for an extremely hard-pressed industry.

6.42 pm
Mr. Colin Breed (South-East Cornwall)

We have heard wide-ranging and thoughtful contributions to the debate. I am especially pleased that we have been able to initiate a debate on agriculture so soon after the recess. I do not want to repeat what has been said because I agree largely with all of it; there is much consensus in the House.

We have not touched on one small part of the farming industry, and although it is small, the people in it will not want to be left out. That is the free range egg industry, which has also had its income slashed enormously—up to 25 per cent. The producers have met, continue to meet, and often exceed Government demands on welfare, food safety and traceability, but those farmers now face operating losses. It is not difficult to understand why.

There are no imported free range, farm-assured eggs sold in the supermarkets. There is no evidence of a significant over-supply, yet the contract price for a dozen free range medium eggs with a typical packer has dropped from 69p to 43p in a year. In an industry with capital inputs of about £20 a bird, to meet the high standards that we require, that price cut is absolutely devastating and cannot be sustained. A medium egg, for which the farmer receives less than 4p, can sell for up to 19p in the local supermarket. A mark-up of 475 per cent. between a packer and a supermarket on the sale of an unprocessed product is unbelievable. When the Minister meets industry representatives and the supermarkets, perhaps they could explain where that mark-up goes and who receives it.

These debates are often characterised by what farmers want and by farmers' demands. Perhaps we could concentrate on what farmers do not want. They do not want a continual diet of subsidy and grant to sustain their businesses. That is all right in an emergency or for the short term, but it is now almost continuous. Farmers do not want that. No self-respecting business man wants to be dependent for his whole livelihood on a hand-out, subsidy or grant. Farmers do not want to have to compete with their hands tied behind their back all the time—sometimes even with their legs tied together. They do not want to see a joint of meat with a whopping great union jack on it in their local supermarket, knowing that it has not come from a British animal. That is abhorrent to them.

Farmers do not want any more interest rate rises. The Chancellor may support the tough action of the Monetary Policy Committee, as we read in today's papers, but not only will interest rate rises increase the costs of farmers' bank borrowing, they will further strengthen the pound and there will be another round of uncompetitiveness. Farmers do not want any more regulation or costs in the immediate, foreseeable future; they cannot cope with what they already have.

Farmers do not want to continue in business, getting up every morning in fear of what will come in the post—a letter from the bank or a bill from a supplier—and living from day to day, with their whole livelihoods, their homes and their families under threat. That is what drives so many of them to suicide.

I agree with the Minister that we need to concentrate more on what we should do on the demand side. The industry will improve and will give a secure future by providing a demand side commensurate with what can be produced.

First, we talked about the promotion of farmers markets, which should certainly be considered. However, they are fragile and fragmented—run voluntarily in village halls and so on. We need to be properly organised and licensed so that we can set up farmers markets in appropriate places. What could be more appropriate than many of the markets that are falling into disrepute in our market towns? They would often provide an ideal location. Not long ago, in my town, we tried to set up a market, but we were told that, because of a charter of 1760-something in a nearby city, we were not allowed to do so. That is wholly ridiculous. We need concerted action to provide a framework within which farmers markets can flourish. We need to strengthen co-operatives and farmer-controlled businesses.

Secondly, we need to restore premiums for the quality of the products. At one time, they existed in pigmeat, but they have gradually been eroded. We must find a way to restore those premiums—perhaps as a part of education—for all the hard work and investment that has gone towards attaining the quality that we have.

Thirdly, we rightly referred to the beef ban, but we sometimes tend to forget that our special-relationship friends across the Atlantic still have no intention whatever of lifting their ban on our beef. I should like some pressure to be put on that part of the world market. Instead of suffering their genetically modified products and goodness knows what else, we should push our good beef into their markets.

Fourthly, we talked about labelling. That is a difficult issue, but there must be labelling for ready identification by the housewife, the purchaser and the consumer. It does not need legislation; the supermarkets dictate what is on every part of every label. They can be made to ensure that what is on the label demonstrates what the product really is.

Fifthly, we talked about the organic side. There is no doubt that the organic sector is the one sector that is receiving premium prices for its products. I cannot understand why we cannot expand what is clearly a successful scheme—there is a waiting list. If so many people want to go into it and it is a demand-led route, providing premiums for the work, surely that is something that we can do.

I have referred to five aspects of the demand side, which could start to turn matters around. However, all that will be to no avail if there is no industry; we are talking about weeks, not years. Today, I learned that seven pig producers in Devon and Cornwall went into receivership over the past 10 days. At that rate, there will be no industry to provide those demand-side facilities. I know that the Minister is aware of the crisis and that the Government have the money. We need the will and the action to address it.

6.49 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin)

Overall, this has been a good and serious debate. I welcome the chance given to us by the Liberal Democrats to debate these issues at such an early opportunity after the resumption of Parliament. There have been many good contributions from both sides of the House—perhaps with the exception of that by the hon. Member for South Suffolk (Mr. Yeo).

As a new Minister at the Ministry of Agriculture, Fisheries and Food, I had not previously heard the hon. Gentleman's contributions to agriculture debates and so was unaccustomed to what my right hon. Friend the Minister described as the hon. Gentleman's usual "bombastic twaddle". The hon. Gentleman's speech was not worthy of the seriousness of the occasion, nor of the fact that we are all looking for ways to address the difficulties affecting the agriculture sector.

The hon. Member for South Suffolk said that our decision to defer the charges for cattle passports for the next three years was unimportant. In my first few weeks as a Minister, that issue was raised with me at every meeting, so I know that the decision to defer those charges was extremely welcome—[Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord)

Order. Such interruptions are not worthy of a Front-Bench spokesman.

Ms Quin

Thank you, Mr. Deputy Speaker. Other hon. Members, among them Conservative Members, have made more measured speeches and interventions than the hon. Member for South Suffolk.

As I said, I could not fail to appreciate in my first few weeks in office as an Agriculture Minister the severity of the difficulties facing several sections of the agriculture sector. The right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) spoke of the audit recently prepared by the National Farmers Union. I have looked at the figures and at some of the facts that lie behind those figures, especially the stress caused by financial difficulties that is experienced by farmers throughout the country.

In my first few weeks, I have also been struck by the way in which the common agricultural policy has developed in the past 10 years. Ten years ago, when I was a member of the European Parliament's Agriculture and Rural Development committee, the CAP was a monster, but it has become even more complex since then. It does not surprise me that farmers raise with the Ministry problems of bureaucracy and red tape. That is why I attach importance to the review announced by my right hon. Friend the Minister and the short time scale given for it. We do not want that exercise to be long drawn out, but to bring speedy results.

The views of farmers in this country on the common agricultural policy have changed greatly: there used to be far more support for the CAP than there is today. One of the encouraging developments in the medium and long term is the way in which Government and industry can work together to press for the changes we want to be made to the CAP. I welcome the comments of my hon. Friend the Member for Stroud (Mr. Drew) and others on how that policy should develop.

It is no surprise that today's debate has focused on current problems, but we have also looked ahead. The hon. Member for South-East Cornwall (Mr. Breed), whose speech contained many good points relating to our approach to the future, said this morning on "Fanning Today"—essential listening for new Ministers—that Ministers had failed to look at the medium and long term. I do not accept that: the consultations on Agenda 2000 and the way ahead signal clearly that we are looking to the medium and long term as well as concentrating on current problems. We have a responsibility to do so, and I accept that responsibility.

Hon. Members have raised many issues which it will not be possible for me to answer in the few minutes allotted to me, but we shall have opportunities to explore those issues in the coming weeks. We have questions on agriculture tomorrow and I expect that there will be further opportunity for debates in the near future. The issues thoughtfully raised by Labour Members give a clear lie to the ridiculous claim which is sometimes made, that the Government are not interested in farming or countryside issues. Since we entered office, there have been many occasions on which that claim has been proved false, whereas the sparsity of Conservative Members present in the Chamber does not indicate huge interest on their part.

The right hon. Member for Ross, Skye and Inverness, West did not appear to be aware that we had decided to defer cattle passport charges, so let me make it clear that, as part of the aid package announced by my right hon. Friend the Minister, the Government will not impose such charges before 2002–03 at the earliest. Those charges include the charge that would have been levied at abattoirs for the checking of passports by the Meat Hygiene Service.

It is not surprising that many hon. Members raised the issue of the French attitude toward the lifting of the beef export ban. I am glad that my right hon. Friend stressed so strongly the impeccable legal grounds on which we are objecting to the French action. The French scientific committee has come up with no new evidence and we believe that the Commission has every reason to pursue an action against the French if they refuse to lift their ban.

I have to tell the hon. Member for South Suffolk that we reject the Conservatives' pick-and-mix approach to Europe and their argument that we should apply all sorts of import restrictions even if those are against European law—it was said that we could do that and, even though the European Court might get us in the long run, we should not worry about the consequences. That would be a disastrous approach if it were adopted by all European Union countries, because it would jeopardise the single market. Given that we export a great deal, we could find that, by such action, we had harmed our own agriculture industry as well as many other industries in this country.

Mr. Letwin

Does the Minister not recognise that some of us drew a distinction between open-and-shut cases such as the French ban, in respect of which we should certainly not act in such a fashion, and other cases in which there is wide scope for legal argument?

Ms Quin

I certainly accept that some Conservative Members took a far more measured approach than others, but the official Conservative policy of pick and mix would damage the EU internal market on which we all depend. If other countries adopted such a policy, the internal market would fall apart. I assume that that is not what the Conservatives want to happen.

The hon. Member for West Dorset (Mr. Letwin) asked about veal production and I assure him that we are working with the NFU and others to build up domestic veal production. We are not ignoring the issue.

Mr. Paterson

I wrote to the Minister of Agriculture, Fisheries and Food about the calf scheme on 19 August. On 30 September, I received a reply from Baroness Hayman that revealed abysmal ignorance of why there are so many male dairy calves. Dairy farmers breed calves and cannot choose to produce only cow calves, but the Minister in the other place clearly does not understand that male calves are an inevitable by-product of breeding cow calves.

Ms Quin

We believe that some of the better quality calves are now finding a market. That also answers in part the hon. Member for Somerton and Frome (Mr. Heath), who said I did not appear to be aware of farmers' difficulty in disposing of calves. I am fully aware of that difficulty, but in the speech to which he referred I was making the point that the better quality calves are now starting to find a market, and we must build on that for the future.

There are many other issues that I would like to talk about, but time does not permit. I shall pick up one point that was made about the importance of regional sourcing by supermarkets, and of giving a boost to regional and local production. Last week I was involved in an initiative of that kind in the south-east of England; a supermarket was making precisely such a commitment. That is the kind of initiative that we want to pursue with the supermarkets in the coming weeks and months.

Price is not the only factor affecting the purchase of food. We know that organic produce commands a premium, and that is also possible for regional and speciality food. I endorse what various Members have said about the importance of regional and local branding of products, which can be an important asset in the production of diverse and quality products for consumers to buy.

Several hon. Members rightly emphasised the importance of rural issues as part of the regional development strategies being worked out by regional development agencies. I strongly endorse that. It is vital that RDAs see the importance of agriculture and rural issues, and see the rural economy as part of their regional development packages and strategies. I attach particular importance to that, so it is especially regrettable that the official Opposition are committed to dismantling the regional development agencies, which could play an important part in the regeneration of the rural economy in various parts of our country.

The debate as a whole has shown the Government's commitment to agriculture both as a key industry on its own, and as part of the wider rural economy and the overall national economy. For that reason, and for the other reasons advanced by my right hon. and hon. Friends, I commend our amendment to the House.

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

The House divided: Ayes 50, Noes 326.

Division No. 274] [7.2 pm
Allan, Richard Jones, Nigel (Cheltenham)
Ashdown, Rt Hon Paddy Keetch, Paul
Baker, Norman Kennedy, Charles (Ross Skye)
Ballard, Jackie Kirkwood, Archy
Beggs, Roy Livsey, Richard
Beith, Rt Hon A J Llwyd, Elfyn
Bell, Martin (Tatton) Maclennan, Rt Hon Robert
Brake, Tom Michie, Mrs Ray (Argyll & Bute)
Breed, Colin Moore, Michael
Bruce, Malcolm (Gordon) Morgan, Alasdair (Galloway)
Burnett, John Oaten, Mark
Burstow, Paul Öpik, Lembit
Cable, Dr Vincent Rendel, David
Campbell, Rt Hon Menzies (NE Fife) Russell, Bob (Colchester)
Salmond, Alex
Chidgey, David Sanders, Adrian
Cotter, Brian Smyth, Rev Martin (Belfast S)
Taylor, Matthew (Truro)
Davey, Edward (Kingston) Thompson, William
Donaldson, Jeffrey Tonge, Dr Jenny
Ewing, Mrs Margaret Tyler, Paul
Fearn, Ronnie Webb, Steve
Forsythe, Clifford Welsh, Andrew
Foster, Don (Bath) Willis, Phil
George, Andrew (St Ives)
Harvey, Nick Tellers for the Ayes:
Heath, David (Somerton & Frome) Sir Robert Smith and
Hughes, Simon (Southwark N) Mr. Donald Gorrie.
Abbott, Ms Diane Campbell, Alan (Tynemouth)
Adams, Mrs Irene (Paisley N) Campbell, Mrs Anne (C'bridge)
Ainger, Nick Campbell, Ronnie (Blyth V)
Ainsworth, Robert (Cov'try NE) Campbell-Savours, Dale
Alexander, Douglas Caplin, Ivor
Allen, Graham Casale, Roger
Anderson, Janet (Rossendale) Caton, Martin
Armstrong, Rt Hon Ms Hilary Cawsey, Ian
Ashton, Joe Chaytor, David
Atkins, Charlotte Chisholm, Malcolm
Austin, John Clapham, Michael
Barnes, Harry Clark, Dr Lynda (Edinburgh Pentlands)
Barron, Kevin
Battle, John Clark, Paul (Gillingham)
Bayley, Hugh Clarke, Charles (Norwich S)
Beard, Nigel Clarke, Eric (Midlothian)
Beckett, Rt Hon Mrs Margaret Clarke, Rt Hon Tom (Coatbridge)
Begg, Miss Anne Clelland, David
Benn, Hilary (Leeds C) Clwyd, Ann
Benn, Rt Hon Tony (Chesterfield) Coaker, Vernon
Bennett, Andrew F Coffey, Ms Ann
Bermingham, Gerald Coleman, Iain
Berry, Roger Colman, Tony
Best, Harold Connarty, Michael
Betts, Clive Cook, Frank (Stockton N)
Blackman, Liz Cook, Rt Hon Robin (Livingston)
Blair, Rt Hon Tony Corbett, Robin
Blears, Ms Hazel Corbyn, Jeremy
Blizzard, Bob Corston, Ms Jean
Blunkett, Rt Hon David Cousins, Jim
Boateng, Paul Crausby, David
Bradley, Keith (Withington) Cryer, Mrs Ann (Keighley)
Bradley, Peter (The Wrekin) Cryer, John (Hornchurch)
Bradshaw, Ben Cummings, John
Brinton, Mrs Helen Cunliffe, Lawrence
Brown, Rt Hon Nick (Newcastle E) Cunningham, Jim (Cov'try S)
Brown, Russell (Dumfries) Dalyell, Tam
Browne, Desmond Darling, Rt Hon Alistair
Buck, Ms Karen Darvill, Keith
Burden, Richard Davey, Valerie (Bristol W)
Burgon, Colin Davidson, Ian
Butler, Mrs Christine Davies, Rt Hon Denzil (Llanelli)
Byers, Rt Hon Stephen Davies, Geraint (Croydon C)
Davis, Terry (B'ham Hodge H) Jones, Mrs Fiona (Newark)
Dawson, Hilton Jones, Helen (Warrington N)
Dean, Mrs Janet Jones, Ms Jenny (Wolverh'ton SW)
Dismore, Andrew
Dobbin, Jim Jones, Jon Owen (Cardiff C)
Donohoe, Brian H Jones, Martyn (Clwyd S)
Doran, Frank Jowell, Rt Hon Ms Tessa
Dowd, Jim Kaufman, Rt Hon Gerald
Drew, David Keeble, Ms Sally
Dunwoody, Mrs Gwyneth Keen, Alan (Feltham & Heston)
Eagle, Angela (Wallasey) Kelly, Ms Ruth
Eagle, Maria (L'pool Garston) Kemp, Fraser
Edwards, Huw Kennedy, Jane (Wavertree)
Efford, Clive Khabra, Piara S
Ellman, Mrs Louise Kidney, David
Ennis, Jeff Kilfoyle, Peter
Field, Rt Hon Frank King, Andy (Rugby & Kenilworth)
Fisher, Mark King, Ms Oona (Bethnal Green)
Fitzpatrick, Jim Kingham, Ms Tess
Fitzsimons, Lorna Kumar, Dr Ashok
Flint, Caroline Ladyman, Dr Stephen
Flynn, Paul Lawrence, Ms Jackie
Follett, Barbara Laxton, Bob
Foster, Rt Hon Derek Lepper, David
Foster, Michael Jabez (Hastings) Leslie, Christopher
Foster, Michael J (Worcester) Levitt, Tom
Foulkes, George Lewis, Ivan (Bury S)
Fyfe, Maria Lewis, Terry (Worsley)
Galloway, George Liddell, Rt Hon Mrs Helen
Gardiner, Barry Linton, Martin
Gerrard, Neil Livingstone, Ken
Gibson, Dr Ian Lloyd, Tony (Manchester C)
Gilroy, Mrs Linda Love, Andrew
Godman, Dr Norman A McAllion, John
Godsiff, Roger McAvoy, Thomas
Goggins, Paul McCabe, Steve
Golding, Mrs Llin McDonagh, Siobhain
Gordon, Mrs Eileen Macdonald, Calum
Grant, Bernie McDonnell, John
Griffiths, Jane (Reading E) McFall, John
Griffiths, Nigel (Edinburgh S) McGuire, Mrs Anne
Griffiths, Win (Bridgend) McIsaac, Shona
Grocott, Bruce McKenna, Mrs Rosemary
Grogan, John McNulty, Tony
Gunnell, John Mactaggart, Fiona
Hall, Patrick (Bedford) McWalter, Tony
Hamilton, Fabian (Leeds NE) McWilliam, John
Hanson, David Mahon, Mrs Alice
Heal, Mrs Sylvia Mallaber, Judy
Healey, John Mandelson, Rt Hon Peter
Henderson, Doug (Newcastle N) Marsden, Gordon (Blackpool S)
Henderson, Ivan (Harwich) Marsden, Paul (Shrewsbury)
Hepburn, Stephen Marshall, Jim (Leicester S)
Heppell, John Martlew, Eric
Hewitt, Ms Patricia Maxton, John
Hill, Keith Meacher, Rt Hon Michael
Hinchliffe, David Meale, Alan
Hoey, Kate Merron, Gillian
Hope, Phil Michie, Bill (Shef'ld Heeley)
Hopkins, Kelvin Milburn, Rt Hon Alan
Howarth, George (Knowsley N) Miller, Andrew
Hoyle, Lindsay Moran, Ms Margaret
Hughes, Ms Beverley (Stretford) Morgan, Ms Julie (Cardiff N)
Hughes, Kevin (Doncaster N) Morris, Ms Estelle (B'ham Yardley)
Humble, Mrs Joan Mudie, George
Hurst, Alan Mullin, Chris
Hutton, John Murphy, Rt Hon Paul (Torfaen)
Iddon, Dr Brian Naysmith, Dr Doug
Jackson, Ms Glenda (Hampstead) Norris, Dan
Jackson, Helen (Hillsborough) O'Brien, Mike (N Warks)
Jamieson, David O'Hara, Eddie
Jenkins, Brian Olner, Bill
Johnson, Alan (Hull W & Hessle) O'Neill, Martin
Johnson, Miss Melanie (Welwyn Hatfield) Organ, Mrs Diana
Osborne, Ms Sandra
Jones, Rt Hon Barry (Alyn) Palmer, Dr Nick
Pearson, Ian Southworth, Ms Helen
Pendry, Tom Squire, Ms Rachel
Pickthall, Colin Steinberg, Gerry
Pike, Peter L Stevenson, George
Plaskitt, James Stinchcombe, Paul
Pollard, Kerry Stoate, Dr Howard
Pond, Chris Strang, Rt Hon Dr Gavin
Pound, Stephen Straw, Rt Hon Jack
Powell, Sir Raymond Stringer, Graham
Prentice, Ms Bridget (Lewisham E) Stuart, Ms Gisela
Prentice, Gordon (Pendle) Sutcliffe, Gerry
Prescott, Rt Hon John Taylor, Rt Hon Mrs Ann (Dewsbury)
Primarolo, Dawn
Prosser, Gwyn Taylor, David (NW Leics)
Purchase, Ken Temple-Morris, Peter
Quin, Rt Hon Ms Joyce Timms, Stephen
Quinn, Lawrie Todd, Mark
Radice, Rt Hon Giles Touhig, Don
Rammell, Bill Trickett, Jon
Rapson, Syd Truswell, Paul
Reed, Andrew (Loughborough) Turner, Neil (Wigan)
Robinson, Geoffrey (Cov'try NW) Turner, Dennis (Wolverh'ton SE)
Roche Mrs Barbara Turner, Dr Desmond (Kemptown)
Rooker Jeff Turner, Dr George (NW Norfolk)
Twigg, Derek (Halton)
Rooney, Terry Tynan, Bill
Ross, Ernie (Dundee W) Vis, Dr Rudi
Roy, Frank Ward, Ms Claire
Ruane, Chris Wareing, Robert N
Russell, Ms Christine (Chester) Watts, David
Ryan, Ms Joan Whitehead, Dr Alan
Salter, Martin Wicks, Malcolm
Sarwar, Mohammad Williams, Rt Hon Alan (Swansea W)
Savidge, Malcolm
Sawford, Phil Williams, Alan W (E Carmarthen)
Sedgemore, Brian Williams, Mrs Betty (Conwy)
Shaw, Jonathan Wills, Michael
Sheerman, Barry Winnick, David
Sheldon, Rt Hon Robert Winterton, Ms Rosie (Doncaster C)
Shipley, Ms Debra Wise, Audrey
Singh, Marsha Woolas, Phil
Skinner, Dennis Worthington, Tony
Smith, Rt Hon Andrew (Oxford E) Wray, James
Smith, Angela (Basildon) Wright, Anthony D (Gt Yarmouth)
Smith, Miss Geraldine (Morecambe & Lunesdale) Wright, Dr Tony (Cannock)
Smith, John (Glamorgan) Tellers for the Noes:
Smith, Llew (Blaenau Gwent) Mr. Greg Pope and
Snape, Peter Mr. Mike Hall.

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 difficulties faced by agriculture and the wider rural economy as a result of the depressed level of farm incomes; approves of the special measures the Government has taken to assist the industry through three aid packages plus EU agri-monetary compensation worth in total £742 million; endorses the establishment of industry-led working groups to examine urgently the regulatory burdens on agriculture; supports the Government's promotion of collaborative working throughout the food chain to add value and generate the price premium that high-quality United Kingdom produce deserves, while noting that the Competition Commission's investigation of supermarket pricing includes an examination of trading practices throughout the supply chain; welcomes the Government's achievement of significant reform of the Common Agricultural Policy in the interests of producers, consumers and taxpayers; and fully supports the Government's commitment to the future of United Kingdom agriculture as a competitive, flexible and diverse industry, and the use of options available under Agenda 2000 to help secure this.