HC Deb 22 April 2004 vol 420 cc421-3
2. Mr. Adrian Flook (Taunton) (Con)

If she will make a statement on the effect of single farm payments on dairy farmers. [167004]

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw)

The Government took the decision to include dairy payments in the single farm payment from 2005. As a result of earlier reforms, the dairy sector was running behind those covered in the 2003 reform, and this has made the position more complicated. There will be a net reduction in the support for dairy. Within that, some of the more intensive dairy farmers will receive less than they currently do, and some of the smaller, less intensive farmers will receive more. The eight-year transitional period should give time for dairy and other sectors to adjust.

Mr. Flook

Under the single farm payment, dairy farmers in Somerset who currently get £350 per hectare will receive only £220. Given that they get only 17p per litre for milk that costs them 20p per litre to produce, does the Minister agree that that spells disaster for Somerset's dairy farmers?

Mr. Bradshaw

No, I do not. The amount that dairy farmers currently receive depends, of course, on their stock densities. It is not just the flat rate payment that will bring the dairy industry closer to the market, thereby helping it to become more profitable and market oriented, rather than subsidy oriented; the measures that we have introduced—not least the one announced today by my right hon. Friend the Secretary of State and the adjustments to the areas will prove helpful to the hon. Gentleman's constituents.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab)

A dairy farmer in my constituency whom I met last week farms an area of land 55 per cent. of which is categorised as disadvantaged, yet he has a herd of 170 cows and a thriving business. However, when the new payments are applied he may well receive far less than that received by farmers six miles away, who farm good land. It seems perverse that a man who has built up a sustainable business should lose out because his farm happens to be situated on what is called disadvantaged land. Will my hon. Friend look seriously at how we can help such farmers, and consider an appeals procedure?

Mr. Bradshaw

That is exactly why my right hon. Friend the Secretary of State announced a change in the boundaries as originally proposed in February. When my hon. Friend studies them, he will realise that they will help the very dairy farmer he mentions.

Mr. David Cameron (Witney) (Con)

During a recent meeting in Witney, the National Farmers Union pointed out to me that because of the different regimes that will exist in Scotland, Wales and England, Scottish and Welsh dairy farmers could buy a market in milk quota. Does the Minister share the NFU's concern that that could lead to an even greater reduction in dairy production in England, and if so, what does he propose to do about it?

Mr. Bradshaw

I certainly accept that such a thing is possible. It is the result of devolution, and of Scotland and Wales having taken different decisions on the implementation of common agricultural policy reform—but we still believe that our decision to implement it on a flat rate basis is the right one for England. We are aware of quota moving over the border, but to judge by the reports we have received so far, that will not be a serious problem.

David Taylor (North-West Leicestershire) (Lab/Coop)

Has the Secretary of State responded to the letter of 19 March from the Dairy Industry Association Ltd. on this topic? It points out the paramount need for dairy farmers to restructure their businesses in order to survive in the news commercial environment created by a reduction in support, and it fears that—even in the light of today's announcement on the new areas—sub-moorland farmers in severely disadvantaged areas will struggle to survive in their traditional way.

Mr. Bradshaw

I am afraid that I cannot say whether the Secretary of State has yet to respond to that letter, but in today's announcement she certainly took on board the concerns expressed by the dairy industry. Indeed, the changes announced today were supported by the dairy industry and by virtually all sectors of the agriculture industry. However, that is not all that the Government are doing to help the industry. As my hon. Friend probably knows, my noble Friend who speaks for the Government in the other place chairs the dairy supply chain forum, which is working with the dairy industry to try to do exactly what my hon. Friend wants: to make sure that the industry has a healthy and secure future, but one that is market oriented, not subsidy oriented.

Andrew George (St. Ives) (LD)

Is the Minister prepared to admit that because his Department has treated the House as a notice board rather than a debating Chamber, crucial issues of scrutiny have not been completed? Substantial issues affecting dairy farmers, tenant farmers and others have been unresolved, so the Government have had to back pedal and make today's statement—a written statement about severely disadvantaged areas.

In a written answer of 17 March, Hansard column 279, the Minister's colleague said that all the assessments that I had asked the Government to publish would be produced in a document "shortly", but it is now 10 weeks since that answer. Does the Minister admit that those assessments and the statement were made without any proper assessment at all?

Mr. Bradshaw

No, I do not, and it sounds as though the hon. Gentleman, who is usually more reasonable in these matters, is accusing the Government of having listened to the concerns of the industry—which is exactly what we have done. It would be fair to say that many people within the industry had not expected the Government to adopt a flat rate payment for the implementation of CAP reform and were unready to consider the consequences of such an implementation. It was precisely after the announcement in February that concerns were raised by the industry. We have taken them into account and made an announcement to Parliament at the earliest opportunity—today.