Farm Produce: Prices (Hansard, 7 March 2001)

§ Lord Geraint
asked Her Majesty's Government:
Whether they have any plan to introduce legislation prohibiting the purchase of farm produce for less than the cost of production from British farmers.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman)
My Lords, the Government recognise the serious difficulties facing the farming industry. They have introduced a number of measures to assist farmers, injecting some £1.35 billion into the sector since 1997. The Government are anxious to see fair and equitable relationships between supermarkets and their suppliers. We urge all members of the supply chain to act responsibly, especially in the current difficult circumstances. However, we have no plans to intervene in the market by introducing legislation of the kind suggested.

§ Lord Geraint
My Lords, I am sure that the farmers of this country will be very disappointed with that reply. Is the Minister aware that at the moment some supermarkets are paying 50 pence per kilo less for beef than they did a fortnight ago, but, on the other hand, they are charging consumers 40 per cent more for the same meat? That is deplorable. What do the Government intend to do about it?

§ Baroness Hayman
My Lords, the reason for not supporting legislation of the kind suggested is wide-ranging, not least because of the likelihood that it will not be effective in helping the farmers for whom the noble Lord, Lord Geraint, has many concerns. Of course, I recognise that concern exists with regard to the prices received by farmers who are participating in the limited reopening of the supply chain. As I said, my right honourable friend has made clear that we believe that the whole chain should act responsibly, one towards the other. Today, the Meat and Livestock Commission is carrying out a survey of participating abattoirs, and I understand that it plans to resume normal reporting of prices soon. I hope that that will bring transparency into what is at present not a normal market place.

§ The Lord Bishop of Portsmouth
My Lords, are the Government aware of the great extent of the concern among farmers in relation to this matter? I believe that we all appreciate that legislation needs to be responsive 198 rather than reactive. However, I wonder whether bland urging is sufficient for people who are feeling very vulnerable at this time.

§ Baroness Hayman
My Lords, I believe that we should respond and we are doing so. Indeed, following the Competition Commission's thorough investigation of the relationship between all parts of the food chain, a code of conduct is being drawn up. It is currently being put out for consultation with producers. I do not doubt the strength of the concerns that have been expressed, and I am fully aware of those concerns within the farming community. What I doubt is whether a measure of this sort would be effective. It has been tried in a limited way in, I believe, only two other countries—France and Ireland—with very dubious results.

§ Lord Lea of Crondall
My Lords, does my noble friend agree that a wider problem exists in relation to this matter? I refer to the common agricultural policy. There is the prospect of EU enlargement and the associated trend towards the renationalisation of subsidies. In addition, of course, there are pressures from the WTO. Is not reform of the CAP the key to a real solution to this problem in the medium term?

§ Baroness Hayman
My Lords, I believe that our farmers would benefit from a radical restructuring of the common agricultural policy. That has been the policy of this Government. We have been working with other member states who are reform-minded, and the new ministerial lead in Germany gives us added opportunities to work towards that. A restructuring that moves away from production support towards valuing the many things that farmers do—not least their stewardship of the countryside—would be of great benefit.

§ The Countess of Mar
My Lords, has the noble Baroness seen and heard the widespread reports, both in the press and on the radio, that the exceptionally low prices being paid to farmers by abattoirs are due to the high charges raised by the Meat Hygiene Service and the veterinary charges incurred because of the extra vigilance required? If that is the case, it is a matter in which the Government can take a hand. Will she please do her utmost to ensure that farmers at least receive a fair price? At the moment, they have no bargaining power.

§ Baroness Hayman
My Lords, I have, indeed, seen the reports. However, this scheme has been operating, not fully, for only 24 hours. I do not believe that a considered analysis of the factors that are influencing pricing throughout the chain can take place yet. She is right to point out the additional veterinary costs. Those are appropriate because we do not want to spread disease. However, it will be necessary to look at how those are absorbed and by whom. Equally, production through the abattoirs will be slower, not least because of the additional precautions that must be taken. Cleansing and disinfecting will take much 199 longer, and there will be many single trips. All those factors will lead to a distortion of the normal price mechanisms.

§ Baroness Byford
My Lords, while I agree with the noble Lord, Lord Geraint, about the purchasing power of the supermarkets, do the Government not agree also that they should be equally concerned about the purchasing power of the catering trade, which, in terms of quantity, purchases more than the supermarkets?
Secondly, what are the Government going to do about the extra production costs borne by our UK farmers over and above those of farmers in the EU and worldwide; namely, higher veterinary costs, our Meat Hygiene Service costs, farm machinery, fertiliser and fuel costs and many others?

§ Baroness Hayman
My Lords, as the noble Baroness knows, on each of those issues we are undertaking work to ensure that we have a level playing field for our farmers as against competitors. It is interesting to note from the standing veterinary committee meeting yesterday that controls very much like our own were imposed throughout the Community in regard to foot and mouth in order to harmonise the conditions for the livestock industry throughout member states.
The noble Baroness made an important point about the catering trade. Members of the catering trade are very large consumers and important players in the chain. We bring together all the elements of the industry, and have done since the outbreak of FMD, having regular meetings once or twice a week with all of them.

§ Lord Jenkins of Putney
My Lords, surely the only way of avoiding the consequences of joining is by not joining?

§ Baroness Hayman
My Lords, there are many wider issues to be debated arising out of foot and mouth disease. At the moment, we should try to concentrate on trying to fight the disease and to get production back into some sort of normality.