Livestock Industry

HL Deb 17 April 2002 vol 633 cc944-84

3.5 p.m.

Lord Plumb

rose to call attention to the state of the livestock industry; and to move for Papers.

The noble Lord said: My Lords, I welcome this opportunity to call attention to the state of the livestock industry. I declare my interest as a livestock farmer and stock breeder for many years of my life. In more recent years, my involvement has been in the food and agricultural trade, both in Europe and throughout the world. That experience was largely focused on the difficulties in such a volatile business, where disease and pestilence can determine market demand and can disrupt trade overnight.

The concern of livestock farmers is the direction which production has taken in economic terms for a substantial number of years. Government have made a great deal of effort to understand the complexities of the industry and the difference between the sectors and to try to get to grips with a fiendishly difficult set of conundrums, aggravated by BSE, by foot and mouth disease, by the increasing problem of tuberculosis, mid by animal welfare problems which continually raise their heads—all of which may have caused a lack of confidence in the future on the part of many livestock producers.

If the solution to our problems were easy, then clearly it would have been found a long time ago. The fact that these problems have only got worse due to the constant turning of the financial and economic screws is significant. It suggests that the matter requires an in-depth examination, following the lessons that we have learnt—and I hope that we have learnt many over the last year in particular—bringing with it the confidence that has not yet been restored, given the refusal of a full and open inquiry into last year's problem.

Farming businesses have become fewer and larger. The very size of some of them has resulted in a dramatic change in the face of the British landscape and in the natural balance of British agriculture. However, let us not get confused about these observations and implications. One can deal with large arable farms by allowing fields to expand and by using larger machinery tied into co-operative marketing systems. In terms of efficiency, therefore, it is a natural development. However, the environmentalists prefer fields to be smaller, and the conservationists prefer to see a greater spread of bio-diversity—as was recently emphasised in the Curry report—and it changes the whole structure of village life and family farming.

However, when we look at the livestock sector, especially at extensive livestock, we are confronted with quite a different world. The so-called intensive farming areas of livestock production—mainly pig and poultry—have not been in a good state for some considerable time. The clearest possible evidence of the malaise in this sector is the vast reduction in productive capacity which has taken place over many years. Confidence in the future of the business has been considerably reduced, due to two inter-related influences. First, the pressure of controls has created more red tape. That was dealt with in the report produced a while ago by the noble Lord, Lord Haskins. I am delighted to see that he is speaking after me. Maybe he can answer that point and tell us where his report got to. We are looking for a considerable reduction in red tape.

Secondly, there is the influence of global trading and the pressures that create competition with countries that are able to trade at much lower costs. Recent figures show that the overall costs of production in the United States are 40 per cent lower, due to a smaller legislative burden. Lower costs result in higher incomes.

Moreover, methods of pig farming that involve tethering sows and using sow stalls are banned in this country, but they are still allowed in many of the countries with which we compete. Those countries have lower production costs, giving them considerable economic advantages over United Kingdom producers purely on the basis of the method of pig farming. It is not surprising that such countries are receiving an increased proportion of global business, leaving British producers with a considerably smaller slice of the overall market.

A similar situation has arisen in the poultry business. An ever-increasing percentage of the poultry that we consume is imported from many other countries. Labelling, including country of origin, would help. Those issues are of concern to the consumer and, particularly, to the producer.

The overall picture shows an extremely serious mixture of negative influences on farming in general. The likely implications for the future of our country deserve more than a passing thought, for many reasons. First, the fact that the two sectors have been under such pressure has resulted in much more of their production being transferred to other countries, with a consequent negative effect on the United Kingdom grain market. Whereas traditionally many pig and poultry units used home-grown cereals, that demand is now diminishing, which means that grain producers have to find a market in other countries. The logic—or the illogicality—of that situation seems far from clear. We are likely to export our grain to feed pigs and poultry in other countries, but once our products have been consumed, those countries send their end products back to us. That makes little sense in environmental terms. In financial and competitive terms, in the context of the transport pollution argument, it becomes total nonsense. Secondly, the foreign importer buys our grain, taking full advantage of the strength of the pound and the United Kingdom importer of finished pig and poultry meat gets a better deal when he buys products in those countries.

Either way, the United Kingdom livestock industry loses. It is not difficult to see why. We have the worst balance of payments—a massive —30 billion deficit on imports—since records began, with a deficit in food trade that has risen from —6 billion three years ago to —10 billion today. That is a third of the total negative balance of payments. The slogan that I used to use regularly, "Why import it when we can grow it?" seems to have changed into "Why grow it when we can import it?". I am told that 2,000 refrigerated containers full of food come through Dover every day, with a number of unrefrigerated containers as well. That makes it impossible to check food safety. That seems strange. We say that we cannot stop products coming in from those countries, yet there are other countries not far away from us that continually block the products that we are trying to send to them.

Thirdly, let us look at the dairy sector. Last year, in a similar debate in this House, I drew attention to the situation of a young farmer who had taken over his father's farm, with an investment in excess of £1 million. He had great difficulty keeping his head above water, despite working very long hours. At that time, he was selling his milk for approximately 20p a litre. Today, about 10 months later, he tells me that he will be lucky to sell it for 15p a litre. At the moment some people are getting only 13p or 13½p a litre for it. To break even, paying his debts to lenders and covering all his overheads, he has calculated that his farm should give a return of £45,000 this year. That would include his own salary. That is impossible when he is trying to sell milk at 15p or possibly 13p a litre. That milk is then processed, packaged and sold to the consumer at 75p a litre, which is even less than the equivalent price for bottled water. That is bordering on economic suicide for the producer. Would any other industry face such a situation?

I realise that academic economists may think, "Well, that's his problem". Does not that example justify our reasons for serious concern? A British farmer has to compete with other countries offering imports at low prices solely because the exchange rate works in their favour and no duty is payable on their aviation fuel and so on. If the young man whom I mentioned as an example goes out of business, we, as the managers of this country's economy, must consider our responsibility.

Do we say that it is none of our business, as our American friends said some time ago when they got rid of all forms of aid and subsidy? Now they have stepped back in to help farmers to survive. Many of your Lordships might be surprised to know that the subsidies that many American farmers receive are higher than those received by European farmers.

When the constant drive for cheapness at the farm gate does not allow a proper return on investment to cover the labour and expertise that are required, the livestock industry could be faced with a development of incalculable damage. The issue has to be addressed urgently, honestly and without spin or rancour. A fair deal in the marketplace is all we ask. This is not a cry for more subsidies.

Then we come to the extensive grazing livestock, the sheep and stickler cow business. I declare an interest as president of the National Sheep Association. I shall come to that section last. It is not my intention to speak of the camelid and goat sectors. I hope that the latter will he effectively dealt with by the noble Countess, Lady Mar, who is an accomplished keeper and a specialist cheesemaker.

That the beef sector has gone through an extremely difficult period does not need to be emphasised. In the context of this debate, we should reflect on issues such as the strength of the pound, which continues to put pressure on the whole sector. It is worth noting that 765,000 head of cattle were lost through a combination of anti-FMD culling and the livestock welfare disposal scheme.

The sheep sector used to be a net exporter, but the number of people involved in it has gone down by 25 per cent over the past 10 years. Today, it is something like 75 per cent self-sufficient. That still leaves approximately 70,000 people involved, but the level of confidence is extremely low, with new entrants a very rare commodity.

The state of the livestock industry paints a fairly depressing picture. We must understand the implications of that not only for livestock producers but for the entire UK economy. The grazing animal in particular has a vital part to play in the continual grooming of the countryside. We must ask what the consequences would be for flora and fauna and for the environment, ecology and general biodiversity if the grazing animal were removed.

People also need to understand that the continual pressure on family farms, and almost all livestock farms of that ilk, puts enormous pressure on individuals such as the young farmer who cannot take a holiday with his family; the older couple who must raid their nest egg and pension to keep their business running; and the wife who, having worked all day, must take on an extra job at night. Regardless of the minimum wage or the maximum number of hours worked in a week, the list of people facing such pressure is endless. Last year alone, with the more than £9 million we had collected, the Royal Agricultural Benevolent Institute helped more than 8,000 farming families. This year, many of those families are coming back for assistance. Although they were not necessarily all victims of foot and mouth disease, they are all very needy cases.

We need to examine the extent to which a well-farmed, well-groomed countryside forms the base of a healthy tourist industry. We need to examine which part of our livestock industry is relevant to the balance of payments equation. We need to question the true cost of importing from other countries, of the eco-toxicity issue, of the loss of UK jobs, and of the potential loss facing the whole of the rural economy. I noted with interest that 25,000 rural businesses are challenging the Government on the losses which their operations suffered because of foot and mouth disease.

We have a duty to care for our country and for our citizens. We have every reason to alert the public to the fact that we are thoroughly examining the causes of and solutions to a potentially considerable disaster that cannot he ignored.

One consequence has been that people in retail and catering have been forced to depend increasingly on imports from other countries. Such imports account for approximately 40 per cent of estimated UK consumption in 2002, compared with 22 per cent in 2000. Some time ago, after our debate on the Animal Health Bill, the noble Lord, Lord Whitty, sent Me a letter providing those quite revealing figures. The letter also contained a table on meat imports which involved, FMD susceptible species [cattle, sheep, pigs, goats and reindeer] between Oct 2000 and Sep 2001 from countries where FMD is endemic".

The Countess of Mar

My Lords, I am sorry to interrupt the noble Lord, but the time limit is 15 minutes. He has now spoken for 17 minutes.

Lord Plumb

My Lords, I thank the noble Countess and I shall come to a conclusion. However, I wanted to deal with those particular figures, which are of considerable importance. The 108,000 tonnes of meat which came into this country during the foot and mouth disease outbreak is of considerable concern to all of us.

We shall have to rely on the benefit of the links between the various organisations, and more research and development will have to be done. Above all, we do not want to be a dumping ground for meat products produced below the high standards expected in British production. I beg to move for Papers.

3.24 p.m.

Lord Haskins

My Lords, I feel obliged to declare my many and somewhat contradictory interests in this subject. Until recently, I was chairman of one of Britain's largest food manufacturers, Northern Foods—a smaller bête noire of the agricultural industry. I have also been in some partnership relationships with supermarkets for some years—a much larger bête noire of the British agricultural industry. On the other hand, I am the father of two farming sons. I also have an Irish connection, which gives some suspicion to certain people. I have recently retired as the "better regulator", which gives a lot of suspicion to a lot of people. I am also for the most part a supporter of the current Government as well as having given them some advice on recovery from foot and mouth.

All of that suggests that in today's world, because the suspicious might argue that I am merely arguing my vested interests, I should he debarred from engaging in this debate. I shall try, however, to avoid the trap. Moreover, my interests are so contradictory that I have every expectation that I shall upset everyone—which has been my achievement in recent months.

The noble Lord, Lord Plumb, has vividly and convincingly stated the situation of the British livestock industry, which is a very serious matter. I have my own concerns, the first of which is uncertainty. Uncertainty applies right across British agriculture. The industries with which I have been involved, when faced with uncertainty, became frightened and refused to invest. In this case, however, it all comes down to British agriculture's uncertain relationship with the euro and the uncertainty surrounding the pound. That seems a fundamental issue. The other great uncertainty is the continuing debate about where the common agricultural policy will lead. We must sympathise with farmers about that uncertainty in trying to plan their future.

Putting the matter in perspective, however, the Government have offered substantial compensation for BSE in the past five years. There are those who argue that some of the compensation for foot and mouth disease may prove to have been overgenerous rather than undergenerous. Substantial funds are still being provided because of the common agricultural policy. Remarkably—because they are either idiotic or very prudent—the vast majority of culled-out farmers have returned to the business from which they were removed. They have restocked. It is an interesting picture. Breeding stock prices are increasing remarkably. Three weeks ago, the Perth bull sales achieved unprecedented prices—another sign of confidence in the future.

Export demand in pig breeding—a business which I know very well—has been very strong. As soon as the restraints were lifted, foreign buyers wanted to buy our high-quality breeding pigs. That is very encouraging. As I have gone round the country, despite all the difficulties and the concerns about milk prices which the noble Lord, Lord Plumb, rightly mentioned, I have found many farmers investing substantially to increase yields and throughputs and to reduce costs. Those are all good, very businesslike developments.

It is all a bit puzzling. My advice to farmers is not to overstate the crisis. The Treasury loves an overstated case that it can demolish. To overstate one's case when dealing with the Treasury is very bad tactics.

The three groups to which we look to deal with the crisis must be, first, the European Union, secondly, the British Government, and, thirdly, farmers themselves. I shall deal with each very briefly. At the top of the European Union's agenda in the next six months approaching enlargement must be radical reform of the CAP—costly, bureaucratic, corruptible and imposing unnecessary restraints on progressive farmers. The second priority, which I think will he dealt with following the French elections, is a lifting of the French ban on British imports. I suspect that that will happen in the next few weeks. Thirdly, we need a more co-ordinated European approach to controlling animal disease. That approach must deal with imports, research, and the vexed question of vaccination against foot and mouth disease.

We come next to the role of the British Government. First, the Government must not directly intervene in the exchange rate; no British Government seeking to do so have succeeded. However, the moment that the exchange rate is compatible—when sterling is 10 to 15 per cent below its current level against the euro—the Government should seriously consider entering euroland. If there is one group in this country who will benefit, it is British farmers. There may be questions and disadvantages elsewhere, but British farmers must see that it is in their interests.

The noble Lord, Lord Plumb, mentioned my role in regulation. We submitted a very compelling report to the Government about the need to simplify and codify and to make inspection simpler. The Government have had to deal with foot and mouth disease. However, I beg them to return urgently to that report and to implement its many sound findings. The Government must continue to press very strongly for reform of the CAP. I know they are doing so.

More cash is not the solution to the problem. If that was the case, we would not have a problem. The British Government must encourage British farmers to help themselves. How? First, farmers can themselves tackle huge inefficiencies. The spread between the best and the worst British farmers in any sector would he unacceptable in any other industry. It is amazing that the worst farmers survive. That issue has to be faced.

Secondly. British farmers must learn to co-operate in the way they buy, in the way they share their assets and, above all, in the way they market. We are far behind all our major competitors in the area of cooperation. Thirdly, any industry which is not investing is going backwards. Despite the uncertainty, I plead with British farmers to invest, to raise standards, to improve quality, to get better yields, to rationalise, to increase throughputs and to improve animal welfare.

Fourthly, British farmers must replace the 40 year-old culture of dependency with one of enterprise and recognise that the world has switched from a producer-led market to a consumer-led market. The days when the president of the NFU could go in all his pomp to Whitehall to ask for, and expect to get, large handouts from a grateful government are, I am afraid, over. We have to live with the reality that farmers, like everyone else, have to learn to stand on their own feet. I am confident that British farmers can do just that.

3.31 p.m.

Lord Geraint

My Lords, in my view livestock farmers will never survive unless they have a realistic price for their end product. I am sure that the noble Lord, Lord Plumb, agrees with my views. I also thank him for initiating this debate and for his excellent, informative opening speech. I hope that the Minister will now take the necessary action to help our ailing industry.

I have been involved with the agriculture industry all my life. I have exported and imported meat from Europe and I am proud to be the patron of the Welsh livestock auctioneers who have looked after the interests of farmers in Wales for generations. I will challenge anyone who believes that there is a better system of marketing livestock than the present auction system. The producer has the final say whether the auctioneer can sell his stock. He will know exactly how much he will get for his sheep and cattle. Many firms of auctioneers pay on the day of the sale. What else can you ask for?

The Government are still failing to prevent a new outbreak of foot and mouth disease by refusing to allocate extra financial resources towards stamping out illegal meat imports. Welsh farmers have been at the forefront of efforts to stop illegal meat imports and to close a loophole allowing people to bring in a kilo of meat from abroad for their own consumption. However, the growing illegal trade, believed by many experts to be supported by large criminal gangs, poses an increased risk to health in this country.

The media have highlighted the potential dangers from bushmeat entering this country for over a year, yet virtually nothing has been done to prevent this meat reaching the United Kingdom. Last year's outbreak of foot and mouth disease was imported into this country from abroad. Who is to say that other diseases, such as the deadly human Ebola virus, will not be next? I believe that the Government must commit greater law enforcement resources to crack down on this illegal trade.

According to Bob Parry, the President of the Farmers Union of Wales, Gangs and individuals who smuggle illegal, potentially diseased, meat must be dealt with in the same way as heroin or cocaine traffickers". I wonder whether the Minister agrees with the president's comments. Time will tell.

Mr Clive Lawrance of Ciel Logistics at Heathrow is the company manager transporting for inspection products of meat origin into Heathrow. Mr Lawrance is concerned about the ineffectiveness of the powers to search just granted to Customs and Excise officers. He says that they omit the power to stop and search, so that officers are not empowered to stop a moving vehicle, and that shows a lack of urgency by the Government to deal with the problem. Mr Lawrance believes that the revenue to run an effective enforcement authority at all ports of entry should be raised through a tax on all passengers of, say, £1 per passenger. Some 65 million passengers a year pass through Heathrow alone so you get some idea of hat sums could be raised through a tax of this sort.

Not only would such revenue be used to fund a proper enforcement authority, but the amounts raised at the larger ports such as Heathrow and Dover could subsidise developments at smaller ports. Mr Lawrance firmly believes that the poster campaign introduced at ports last January stipulating that illegal meat importers can he fined up to £5,000 or gaoled for up to two years is unenforceable due to lack of staff. The reluctance of the Home Office to deport culprits back to their home countries is another problem.

As the noble Lord, Lord Plumb, said, 2,000 refrigerated containers arrive in Dover daily and 6 million containers arrive in Britain every year. I urge the Minister to persuade DEFRA to get its act together over what has become a major topical issue.

We have strict livestock movement controls in this country following the foot and mouth outbreak, but nothing has been done to control the importation of illegal meats. What we need now is action, not words. The Minister responsible for agriculture, Margaret Beckett, has promised to help the agriculture industry, yet DEFRA seems to me to be slow to act on her proposals. Farmers are desperate to move forward and produce good, home-produced food at a reasonable price for the consumer. Concerted effort must he made to stop foot and mouth entering this country from abroad in the future. I ask the Minister, is there any glimmer of hope in his view that things will get better and improve during the year to help those who are desperately calling out for help and guidance?

3.37 p.m.

Baroness Masham of Ilton

My Lords, I thank the noble Lord, Lord Plumb, for instigating this debate. I declare an interest as I have three breeds of sheep and a pony stud.

I can say from first-hand experience that there ale many worries at this present time with livestock farming. Time, energy and dedication have to go into producing livestock. I hope that this debate will also help to educate some people who do not appreciate what goes into producing a litre of milk: the early rising; keeping the cows and equipment clean; the feeding and grass management; the fencing; keeping all the records; covering for farmer or staff illness and vets' bills. It is endless.

So many people are still living in the shadow of foot and mouth disease. In the past two weeks there have been two scares in North Yorkshire. The fear of many different diseases hitting the livestock industry seems to be ever with us. I quote from this week's Farmers' Weekly, After F&M comes bovine TB crisis. Bovine TB is the forgotten disease of UK stock farming. While the nation focused on F&M a TB time bomb began ticking". The National Beef Association's Beef 2002 event has switched venues to Wooler in Northumberland after the discovery of possible TB reactors on the original farm site. Bovine TB could end beef and dairy farming on the South Downs if the fears of a West Sussex producer are realised. He believes that a rapid rise in badger numbers is responsible for the first TB outbreak in the county for six years. Wales and the West Country also have a problem. There is a serious debate about how bovine TB is passed from cattle to cattle—or does it come from badgers?

Robert Forster, the chief executive of the National Beef Association said, if badger protesters truly have the interests of their species at heart and genuinely wish to guard its welfare, they must protect it against TB". I ask the Minister: what progress there is on this matter across the country, and is there a problem of bovine TB in other European countries?

The recent outbreak of foot and mouth disease in the UK has highlighted the dangers of illegally imported meat, as has been said. It is thought that that is how the disease entered the country. Other diseases, such as Ebola, anthrax, swine fever, salmonella, E. coli, sheep pox, pseudorabies, African horse sickness and Nipah virus—that causes agonisingly painful death in pigs and humans—could be introduced into the UK via meat. Those diseases are present in countries that illegally export bushmeat to Europe and the US. That threat is very real. Last year, the UK suffered from swine fever and foot and mouth. In 2000, there was an Ebola scare at Heathrow airport when the carcasses of 15 monkeys were found hidden in a cargo of fruit and vegetables, along with an anteater and some tortoise legs. Fortunately, that was just a scare. Another time, we might not be so lucky.

More than 1,000 tonnes of meat is illegally imported into the UK each year. There are about 200 airport seizures a month but it is thought that airports detect at most one-tenth of illegal meat. About 90 per cent of passengers on flights from West Africa are illegally importing meat into Britain. The trade in bushmeat does not just jeopardise wildlife populations; it also poses a very real threat to human and animal health in Africa. Europe and the US. Should we not have far more sniffer dogs at our airports? I am told that the concentration span of a sniffer dog is about 20 minutes. There would need to be teams of dogs that work on rotas.

Knowing that this debate was to take place, I was asked by someone who recently flew to Australia and New Zealand and complied with their strict regulations—they prevent the entry of any form of disease into their countries, whether plant life or animals would be affected—why no such regulations were in place in Britain. We continue to fear for the protection of the livestock industry from many diseases, let alone ourselves.

Does the Minister agree that our rare breeds are part of our heritage and need preserving? I am a member of the Rare Breeds Survival Trust. It exists to conserve rare and threatened breeds of our indigenous farm livestock and has, over nearly 30 years, worked in many different ways to achieve that. The trust does much to protect the nation's stock of rare breeds of farm livestock from disease. The RBST does much work educating the public and supports its members. The farming industry feels that it is not wanted or understood by the Government. I hope that the Government realise that without farming and livestock the countryside will become a desolated wilderness.

3.44 p.m.

Lord Soulsby of Swaffham Prior

My Lords, the House should be grateful to my noble friend Lord Plumb for initiating this important debate. He said that livestock agriculture in the United Kingdom will never be the same. That is absolutely true. That is the result of devastating diseases such as BSE, swine fever, foot and mouth disease and so on. Agriculture in the UK—livestock agriculture in particular—has always been resilient. Britain's livestock agriculture is characterised by the fact that it can respond to various needs, as we saw during the Second World War.

According to the National Farmers Union, only about 6 per cent of holdings that were affected by foot and mouth disease have no plans to restock. The rest will do so and will not leave the industry. Those who remain will carry out the valuable task of rebuilding and maintaining the livestock industry. They will work within important strictures, which include environmental demands, food quality, exports, feed additives and so on. It is contingent on Her Majesty's Government to assure the livestock industry that the devastating diseases that we have suffered during the past couple of years do not occur again and that domestic diseases, from which there have been great losses, will be enormously reduced.

There has been much concern about animal welfare. Animal disease is often linked to poor health among animals and is a major cause of poor welfare. Indeed, in my own profession—the veterinary profession—large animal work increasingly focuses on animal health and productivity rather than merely on the "fire brigade" work of attending to the individual animal that is ill. In order to do that, the profession needs appropriate tools for surveillance, early diagnosis, appropriate treatment and preventive action, such as vaccines.

Surveillance, especially of exotic diseases—several noble Lords have already mentioned that—is not as good as it should be. Not only do we not place curbs on the introduction into this country of food products from all over the world, although other countries, such as the USA, Canada, Australia and New Zealand, do so, but major quantities of foodstuffs are imported into this country and we have no idea where much of it comes from. Bushmeat, for example, has been mentioned.

Surveillance also applies to our domestic diseases. There is a particular need to get vets back on farms. Many livestock farms never see their veterinarian from one year to the next. The surveillance of disease is therefore very poor. A programme by which local veterinarians served as veterinary health welfare officers would he valuable. One way to do that would be to revisit the old Veterinary Investigation Service, which was once a major jewel in the crown of disease control in this country but which has been whittled away. Although it is now effective as the Veterinary Laboratory Agency, its manpower situation is not good.

Another approach is to designate certain livestock veterinary practices as sentinel practices, which are charged with overseeing animal health and management in their area so that they can report periodically on the general health status of livestock in their area. A somewhat similar recommendation was made in the Phillips report, which recognised the great need for increased surveillance of BSE.

Critical to disease control is early diagnosis. We know from the outbreak of foot and mouth disease that if we had had an adequate early diagnostic test we should have been in much better shape than we were. Again, this issue requires research but, unfortunately, the research capacity of the veterinary profession is not as good as it should be. Although he is not in his place this afternoon, my noble friend Lord Selborne chaired a very important committee which looked into this matter for the Royal College of Veterinary Surgeons.

Disease prevention is, of course, an issue which is particularly addressed by vaccination, as mentioned earlier by noble Lords. Again, we need effective vaccines that are easily administered, can be produced in large amounts, remain active for a long time and can differentiate between vaccination and infection. With the modern biotechnologies of genomic characterisation, we should be able to do that.

In all of this, I would say that the price of freedom from disease is eternal vigilance. We must take that on board. If noble Lords will permit me, perhaps I may finish by making one positive comment on what I consider to be such vigilance. A meeting was organised on Monday and Tuesday this week by DEFRA to look at antibiotic resistance in animals and animal feeds. It was a most impressive congress. I congratulate DEFRA on setting it up and initiating important research in this area. To my mind, that is an example of appropriate vigilance. I hope that it can be extended to other livestock areas where the needs are just as obvious as those relating to the misuse and imprudent use of antibiotics.

Baroness Byford

My Lords, I apologise for interrupting as the noble Lord, Lord Fyfe, is about to speak. As two speakers on this side of the House took longer than their allotted time, perhaps I may remind noble Lords that we are each limited to six minutes.

3.52 p.m.

Lord Fyfe of Fairfield

My Lords, I thank the noble Baroness for the reminder. I shall be brief. I, too, thank the noble Lord, Lord Plumb, for initiating a debate on such an important subject. At this point, I declare an interest. Until recently I was chairman of the Cooperative Group, the CWS, which owns Farmcare. It is the largest active farmer in Britain, operating more than 90,000 acres.

Farmcare has substantial livestock interests, particularly in the dairy sector, milking more than 3,000 cows. But we also face some of the current difficulties in terms of falling firm-gate prices for milk. As part of a recent strategic review, Farmcare moved out of some livestock production, particularly pig production, when frankly we had neither the scale of operation nor the expertise to compete on an added-value basis with our global competitors.

Among other reasons, that is why I believe that the Curry commission's proposals that an English collaborative board be established is sensible. It is a very welcome step in the right direction and could realise the potential of the farming and food chain with co-operation between them. It could also have significant benefits for the livestock industry. I am hopeful that the Government will adopt that recommendation as part of their agricultural strategy. Indeed, it has received the support of my noble friend the Minister.

In many other parts of the world—other EU states, the United States of America and New Zealand—cooperation and collaboration have long provided a proven business model which can lead to prosperity for agricultural producers. In Scotland, for example, formal structures to promote and develop success in farmer co-operation already exist with the Scottish Agricultural Organisation Society taking the lead. Tile Western Isles Livestock Initiative was launched a couple of years ago to help crofters in Lewis, Harris, Uist and Skye to bring their lambs up to marketable weight and condition by placing them on east coast feeding farms. In Wales there has been the launch of the Red Meat company, which brings together Welsh livestock farmers in marketing their meat, particularly lamb.

Perhaps I may refer again to Farmcare. We have—I should say "they have" but I cannot help referring to Farmcare as still being part of my organisation; my heart is still there—put our money where our mouth is. Two experts have been recruited to spearhead new-style farm co-operatives in Cumbria, where livestock farmers face particular problems in rebuilding their markets following the devastation of foot and mouth disease.

I believe that farmers should work together on a collaborative and co-operative basis. Indeed, my noble friend Lord Haskins has already referred to that. I do not believe that the solution to the industry's long-term problems lies in parading down Whitehall begging the Government for relief. I believe that farmers are self-willed and self-reliant enough to make a success of their own industry by working hard together in collaborative and co-operative terms. There are sound, sensible and logical reasons for that. It means a basis for mutual benefit by sharing knowledge and equipment, benchmarking, setting up joint ventures and funding and developing new added-value markets.

Four minutes have elapsed. I am compensating for the over-run of some noble Lords. I believe that cooperation and collaboration are the future for the farming industry in the UK. They are also in the national interest.

3.57 p.m.

Lord Beaumont of Whitley

My Lords, much of what is wrong with the livestock industry is what is wrong with farming as a whole, as many speakers have already pointed out. Therefore, I must start by clearing the ground and saying briefly what the Green Party would do about farming as a whole.

We believe that the most basic problem lies in the free trade set-up and the international agreements to enforce it. We believe that every nation is entitled to food security and that, therefore, agriculture should be taken out of GATT. Thus, we look forward to an end to monoculture and the existence of a populated countryside filled with small mixed farms.

We do not believe that that is pie in the sky, and a start might be made by our Treasury making a U-turn in actively encouraging the European grants for our farmers instead of, as at present, discouraging them in order that they should not have to match them. At present, the result of their attitude, as Richard North has tirelessly pointed out, is that our farmers are up to 40 per cent worse off than their opposite numbers on the mainland—a position by no means wholly due to the strength of the pound.

I now turn to the more specific livestock side of farming. Here one of the most difficult problems is that of humane farming. I believe that there has been a shortage of input into this debate about the welfare of the livestock about which we are talking and to which we owe a debt of moral duty. When I entered the Chamber, I saw four Bishops on the Bench opposite and I had great hopes that they would contribute to the debate. Alas, that is not to be, although one is still present and will no doubt carry back the message.

One of the most difficult problems is that of humane and economic farming. Your Lordships will know that I view with abhorrence all forms of factory farming. I have introduced into your Lordships' House Bills for the prevention of cruelty to broiler hens and pigs. At present, there is before your Lordships a Bill concerning the welfare of ducks.

I pay tribute to the tireless work of Peter Stevenson and Compassion in World Farming in not only campaigning for the welfare of animals, but also in setting up a dialogue with farmers who, for the most part, have consciences and really care.

Among civilised people, it must be possible to feed a nation in such a way that we also treat our animals humanely. If the economic system prevents that, the economic system must be changed. As noble Lords have said, this is a time, in the aftermath of the foot and mouth outbreak, to start on some of the obvious steps that will allow for more civilised farming. One of the easiest ways is to refrain from resuming the export of live animals for slaughter. Whatever regulations are, in theory, in force, in practice it allows for an enormous amount of animal suffering.

Another method is the increase in labelling requirements, as mentioned by the noble Lord, Lord Plumb, to whom we are grateful for instigating the debate. That would allow customers an informed choice, which I believe will increasingly be an informed moral choice. Another is the establishment of a channel for the voice of farmers other than the National Farmers Union, which is the voice of the agricultural industry—something else altogether. I have high hopes that that may soon emerge.

This debate is to call attention to the state of the livestock industry and I hope that I have called attention to the state of the livestock. I believe that this has been a necessary contribution and I hope that it will inform the thinking of the Government in the future.

4.1 p.m.

Lord Monro of Langholm

My Lords, I thank the noble Lord, Lord Plumb, for introducing the debate and for putting the case for farming so starkly. According to Farming and Food—the Curry report—farming is on a path that is not sustainable; the CAP is unacceptable: farming is still in crisis: farm incomes are on the floor; and output is falling. That is a pretty dreadful state for any industry. The Government give the impression that they are not particularly interested in farming.

This week I received on my desk from the Secretary of State a document entitled Essentials for Life. It is full of visions and aspirations. At present, "vision" appears to be the buzz word of the Government. What does it mean in practice? When and what will happen to the CAP? Under the present CAP farmers will receive more than under any other system. That is why Eastern Europe is so keen to join the European Union at the present time. When will there be discussions on changes to the CAP? Can the industry be more involved before Europe comes up with more damaging directives?

The air is full of political advice, but not advice on how to produce quality food at a moderately profitable price. Farmers deserve a fair return on capital invested and on farming, a subject about which they have knowledge. They should not be expected to diversify into all kinds of odds and ends for which they are not trained.

Both the Government and the various agencies appear to have gone daft on modulation. Already it is reducing subsidy payments and it is accelerating. Modulation means less production subsidies—the first pillar—and more for rural development—the second pillar. Farming will lose out, which is serious, particularly for the less favoured areas. In passing, I ask why I have not received my LFA payment by mid-April when it should have been paid in mid-March?

I demonstrate the point with the countryside stewardship scheme and I lean heavily on the comments made by Jim Walker, the excellent president of the National Farmers Union of Scotland. In Scotland there are 380 farms in the scheme: 266 farms in environmentally sensitive area schemes and 125 receiving organic aid. That is 771 farms receiving rural aid out of 30,000 farms. That shows that the vast majority of farms receive nothing whatever for any effort made to support the environment.

As an alternative to going down the route of modulation, which drives most farmers mad, particularly the calculations on the number of livestock units that they have, the Government could enter a new scheme of a national envelope, as allowed by the European Union under the farm budget. incentives can he given, but that can be argued only by British Ministers in Brussels. Can the Minister tell the House whether we are to do that? I believe it has to be done this month if at all.

The National Farmers Union of Scotland, like other unions, is against modulation as a blunt instrument to fund the second pillar on rural issues. If it has to be imposed it must be universal across the European Union and not just with this country carrying most of the burden as usual.

As well as beef, milk is also in crisis. Another drop of 3 pence per litre will he made in the near future. The competition policy will be seen to have failed farmers. The situation is serious indeed. The Government must consider the exchange rate which is a major problem in milk and they must activate the agri-money option, which they can if they wish to. Again, that must be done in April.

Like others in my part of the world, I lost my sheep flock because of foot and mouth. I have two questions for the Minister. Unlike this Government, the European Union set up an inquiry and has been taking evidence. Was the Minister correct to say the other day to that inquiry that the Government had full legal rights to cull on the "3K" scheme—the contiguous scheme—livestock that was free of foot and mouth?

I also notice that some authorities have been criticising the Army for taking so long to take over logistical control. Can the Minister confirm that the Army was ready and waiting for three weeks before the Government would give authority? The noble Lord, Lord Geraint, and the noble Baroness, Lady Masham, have rightly raised the issue of imports, which is a burning issue with farmers. They are very concerned indeed. Do we have sufficient meat inspectors? When will the Government do something about airports? I travel to and from America and on coming into this country no one appears to care two hoots from where one has travelled. What, in the near future, will the Government do about that?

I commend the Meat and Livestock Commission which appears to take positive steps to try to help farmers with their action plan. I hope that the Government will give all the support that they can. There is much to do and the Government have to make early decisions if farmers are to get out of the dreadful hole that the Government have dug for them.

4.8 p.m.

Lord Williamson of Horton

My Lords, I also want to thank the noble Lord, Lord Plumb, for giving us the opportunity to take our minds off the Budget and to debate the state and future of our livestock industry. Today the livestock industry may be a small part of our GDP, but it is an important factor as the provider of food for our population, as the user of much of our land, as the shaper of much of our environment and as a source of income, either directly or indirectly not only for farmers but also for many other businesses and people in the United Kingdom.

I declare an interest as a non-executive director of Whitbread, a company with a large number of restaurants and hotels and as a member of the Wessex regional committee of the National Trust, which is a substantial landowner.

I want to indicate some reasons why, if we look after our own interests, we should not be pessimistic. One should understand that, because of low prices and the disastrous effects of animal disease, the livestock industry today is in a depressed state, with the value of the production of pigs, cattle and sheep down in 2001. Part of that production may have been lost permanently, but part of it may represent the necessary restocking. Poultry production, as befits a nation whose national dish is chicken tikka masala, is holding up pretty well, but we are losing some share of a growing market. We would not choose to start from here, but this debate gives us a chance to look forward and I do not see all gloom.

It is many years since the noble Lord, Lord Plumb, and I negotiated deficiency payments. It was not an idyllic age then. The same problems arose in relation to balancing public expenditure with a sound agricultural industry. I do not want to look backwards but to concentrate only on where we are now and how to stabilise and improve the prospects for the industry and hence for the supply of food in the shops.

I shall mention three points but develop only two. First, I draw attention to the natural advantages in the UK for livestock and animal products. I believe that in the recent climate of crisis we may be forgetting some of those advantages. We shall remain competitive at the production level if we do not shoot ourselves in die foot by importing animal disease, by over-regulation, by accepting disadvantages in the setting of support prices because we are outside the euro-zone and by other distortions resulting from agricultural policy It is the duty of government to see that we do not shoot ourselves in the foot.

Secondly, I want to draw together, as effectively as possible, the various strands of future agriculture policy which may result from the continuing reform of the policy in the European Union and from the good analysis set out in the report of Sir Donald Curry's commission—Farming and Food—which I view very positively.

Thirdly, it is obvious that we cannot recover a good position in the livestock industry unless in the future we do better on animal disease than we have in the recent past.

I turn first to our advantages. I do not want to overstress the point, but I believe that we have quite considerable advantages in our farm structure for integrated meat and beef production. We have developed an efficient system for lamb production. Those advantages remain, even though perhaps at the present time we are 80 per cent or less self-sufficient for lamb because of foot and mouth disruption.

Those of your Lordships who travel on the Underground—that is all of you I imagine—will have seen a poem which reads: I am the grass; let me work". I remember that when I am at home in Somerset. It is good for our livestock industry.

Turning to the future, we shall not necessarily be competitive at the final level, even if we are competitive at the production level, unless we look at marketing. The Curry commission suggests that the marketing chain for red meat is too long and should be examined. I hope that the Government will look favourably at that recommendation.

Secondly, I turn to the main issue, which is the development of agricultural policy in the European Union with the much greater emphasis which we want to put on agriculture as the manager of a living and attractive countryside. The Countryside Stewardship Scheme is very good, but I agree with the Curry commission that as we aim to switch resources to environmental objectives, we should opt for a new, broad and shallow stewardship tier, open to as many farms in the United Kingdom as possible, with a simple whole farm plan. I ask the Minister whether the Government are favourable to that approach. I argue for it because I think that the management of environmental change is important for us all. We exaggerate sometimes the environmental damage. The British landscape looks probably better now than it ever did in my 67 years. But we need to manage environmental change. I am in favour of a wide scheme of stewardship.

Another reason why I should like a wide and shallow stewardship scheme is that I think that it would tie in with the continuation of a safety net for livestock farmers, to which I attach very considerable importance, if prices collapsed to very low levels. We are committed by the Treaty of Rome to, ensure a fair standard of living for the agricultural community". We now need to move to a combination of the wider stewardship scheme with a simple fixed grant if prices collapse. I am strongly against the abolition of the safety net. We need it. We can control the cost if it is properly capped. The cost of the common agricultural policy is currently 1.2 per cent of public expenditure—I repeat, 1.2 per cent of public expenditure—in the Union and its member states. That is a good deal, but under a revised system it would probably be less.

We can do many of the things that we seek to do. We need to look to our marketing. We need to develop a wider policy for a wider stewardship grant. and back it with a genuine safety net if prices collapse.

4.15 p.m.

The Earl of Caithness

My Lords, I too thank my noble friend Lord Plumb for instituting this debate.

The noble Lord, Lord Haskins, said that the farming industry should not overplay its hand with the Treasury. I do not know a single farmer in this country who would not wish to have a government that supports the farming industry like other governments of other European countries have supported their farming industry.

I declare my interest as a trustee of the Queen Elizabeth Castle of Mey Trust. We have two pedigree herds. We have a pedigree herd of Aberdeen Angus cattle and a pedigree flock of North Country Cheviot sheep. I want to speak entirely about the pedigree sector which has long been neglected. The pedigree livestock sector, as your Lordships will he aware, is the seed stock for the entire livestock industry of the United Kingdom. It is a high-risk business. It is much higher risk than normal farming. Some years are good; most years are awful. Unless that sector is preserved and maintained we will be subject to the vagaries of questionable and variable meat coming in from other countries where its origin is uncertain and the welfare standards, to which the beasts have been subject, is also uncertain.

Shows are the lifeblood of the pedigree sector. I am grateful to the noble Lord, Lord Whitty, for his press release of 11th April and the resumption of livestock at agricultural shows. Of course that comes with a downside; it comes with increased bureaucracy. There are 28 pages of guidance notes. Attached to the 28 pages are seven sets of appendices that people have to plough through. So we win by getting our shows back; we lose by a great deal more bureaucracy.

I turn to the important aspect of genetics in pedigree breeding. The export of genetics has been a significant revenue-earner for this country. The trade is a two-way process. Many breeds have relied heavily on the importation of new genetic lines from overseas.

In October the EU intervened. It imposed a ban on the importation of embryos and live cattle from a list of countries, including our most important supplier—North America. That has severely disadvantaged many of our traditional beef breeds. Aberdeen Angus is one of the breeds affected. If one breeds Charolais, Simmental, Limousin or other non-indigenous breeds of cattle one has a much wider genetic pool than the traditional homebred breeds of Aberdeen-Angus, Hereford, Shorthorn and Galloway.

Cattle from the Americas have been imported into this country for many years. There is no evidence of any vertical transmission of bovine spongiform encephalopathy (BSE) in any of their offspring, if indeed their parents or grandparents were ever exposed to mammalian derivative protein sources. The continuation of this ban is morally and scientifically unjustified and should be revoked with immediate effect. I hope that the Minister will give me some reassurance that he is taking action on that front.

Turning to the sheep flock, one of the problems that we face in common with others is the genotype grading under the National Scrapie Plan. In simple terms, there are five categories under that plan. Category 1 is the best and category 5 is the worst. The category that affects most hill breeds—not only hill breeds in Scotland such as the North Country Cheviot, but hill breeds and rare breeds in this country such as Herdwick sheep—is category 3. If one's ram or tup is tested in category 3, one can continue to sell that animal until 31st December 2004 and to breed from it until 31st December 2007. However, that poses a great many problems, because many flocks fall into that category. It is the very timescale that is deterring owners of flocks from joining the National Scrapie Plan. There is also a significant loss for the breeder. On one day his tup may be worth £2,000, say, but on the next, because of the draconian dateline, it is worth nothing. Northern flocks face many problems as a result, which are especially serious for those in Shetland.

For pedigree breeders, there is another knock-on effect. From now on, people who want to purchase pedigree stock will look not for the best sheep for their flock or for the bloodline, but for sheep that are category 1 or 2 under the scrapie plan. We may produce the wrong sheep for the future. Will the Minister reconsider the dates and set back both the 2004 and 2007 dates by three years?

4.21 p.m.

Lord Mackie of Benshie

My Lords, I suppose that I, too, must thank the noble Lord, Lord Plumb, although he must be a little tired of all the congratulations and would prefer action.

The figures that I—and most noble Lords—received from the National Farmers Union are most significant. The product of the livestock industry—I am not sure if this figure is for England and Wales alone—is down by about £600 million since 2001. The situation is serious and the Government must do something about it. I accept what the noble Lord, Lord Haskins, said: it is up to farmers to do a great deal. But farming is an industry in such a state and so subject to variation in world trade that it needs some government regulation.

When we consider that foot and mouth disease cost the industry £9 billion—again, according to the NFU—we realise that we need proper control, as other noble Lords have said, of the import of meat from countries in which foot and mouth is an indigenous disease. That must mean one simple thing: the Government must employ many more people at ports to check not only where meat comes from but that proper regulations concerning the removal of certain parts from the carcass have been enforced. That is an important part of what the Government must do.

Regulations must be enforced across the European Union. They must be regularised, because we all have experience of the fact that different conditions are insisted on here as regards, for example, pig farming, than elsewhere.

Fish meal is still banned, I understand, for use by ruminants, but fish meal fed to ewes and lambs has a most beneficial effect and produces good lambs. I cannot understand what harm fish meal can do if it comes from countries that have supplied it to us for many years.

Those are things that the Government can do. Another is to help co-operation. I look back on the happy days of the Milk Marketing Board and greatly regret that it has departed. The Government controlled that body and did not allow it to take advantage of its position, but it ensured a reasonable price for farmers, whereas now Milk Marque, which was an endeavour by the industry to organise marketing, is split into four. That is a difficult situation when the buyers, the supermarket chains, seem to cooperate happily in trying to keep down the price.

The Government must take an interest in all of those matters, but I entirely agree with the noble Lords, Lord Haskins and Lord Fyfe, that eventually the remedy must come from farmers themselves. A tremendous amount is being done in all kinds of fields. No one can obtain a return on growing grain at present prices, although I suppose that it is an advantage to a livestock farmer to have cheap grain. To take advantage of that needs co-operation, help from the Government and advice.

I have always taken the view that supermarkets market beef badly. Their whole philosophy is that everything should go out of the door as quickly as possible, whereas we all know that good beef needs to be hung. It costs a certain amount to hold it during that time, but it makes a big difference. In that respect, many breeders, such as the Aberdeen Angus breeders, are doing much to promote at good prices the excellent beef that we produce in this country.

Farmers can help themselves—they are, in all kinds of ways—but they need a regular and fair atmosphere in which to operate. I shall finish by criticising the noble Lord, Lord Haskins, a little. He made a good speech, but spoilt it at the end by saying that farmers should stand on their feet, like the rest of us. I constantly hear cries from every industry for government help, so farmers are not as bad as all that.

4.27 p.m.

Baroness Gibson of Market Rasen

My Lords, I hope that the noble Lord, Lord Plumb, is not too bored with receiving thanks, because I, too, want to thank him for initiating this debate, which is of great importance to our farming community and, indeed, our nation.

Many speakers here today are highly knowledgeable on the subject, and I do not pretend to be up to their standard. But I want to say a few words because of my great interest and belief in our rural areas and the people who live there. Many lessons were learnt from the outbreak of foot and mouth disease, which must teach us all, but especially the Government, how to plan for the future—as they are doing.

When I saw that this debate was on our agenda, I guessed that there might be a fair bit of criticism of the Government, and I have not been disappointed. However, being optimistic, I want to bring a glimmer of light to our debate. I shall give a few examples of what the Government are doing for the livestock industry, and shall then turn to something that has not yet been mentioned: the Meat and Livestock Commission.

Agreement has been reached at EU level on a package of measures to assist member states' sheep industry by helping to address environmental problems, including overgrazing, and by improving production and marketing of sheep meat. For a long time, the Government have been pledged to more efficient administration of the Common Agricultural Policy. With the establishment of the Rural Payments Agency, for the first time everything related to that issue is under one administration.

Protecting public health from diseases transmitted by livestock and the prevention and control of animal disease must be a key part of the Government's strategy, and it is. The Government believe that an integrated animal health regime will be vital. That will depend on involving shareholders, stakeholders, including the livestock industry, veterinary practitioners, government—especially DEFRA and the Department of Health—and the EU. Perhaps I may pause here and ask my noble friend the Minister whether he can tell us at the end of the debate the current position as regards the Animal Health Bill.

The lessons of foot and mouth show the need for an updating of the existing operational contingency plans, and this is being effected. The operational response regime, developed during the recent outbreak of foot and mouth, is being further developed. It will cover national and local disease control centres, including their staffing and resources, the provision of disposal facilities, and the updating of current veterinary operating procedures. All the latter were obviously lacking in some respects during our recent foot and mouth epidemic.

I turn to the work of the Meat and Livestock Commission, which plays an important part in the livestock industry. As a butcher's daughter, I have a natural inclination towards eating good, red meat. I believe that nothing is better than British good, red meat. Obviously, with the foot and mouth epidemic, the MLC recognised the need to sustain the willingness to eat meat in this country. By and large, the evidence shows that it has been generally sustained. However, as has already been mentioned, there is currently less red meat produced in Great Britain, and consumer requirements are becoming more diverse.

The Meat and Livestock Commission sees its main challenges to be: to ensure that British products are eaten rather than imports, as has already been stressed; to ensure that the products are nutritious, quick and easy to prepare; and to help the British livestock industry in its efforts in the area. On 7th March, the Industry Forum, which includes the MLC, DEFRA, the Institute of Grocery Distribution and the NFU, held a conference. The results of that conference echoed those of the Curry commission on the future of food and farming, and highlighted the need to improve the industry's competitiveness, profitability, and quality of products.

Research carried out by the Meat and Livestock Commission identified a number of key trends in meat consumption. Individuals are moving away from set, traditional meals: they are eating what they want, when they want. Diets have changed and people are reassessing what they eat. The time that most consumers are prepared to spend shopping, cooking and eating is going down in their list of priorities—hence the need for quick and easy preparation. However, although traditional cooking skills are in decline, cooking for pleasure has become a leisure pastime as people experiment with new tastes and flavours.

All such changes have vital implications for the livestock industry. The production of meat and its presentation has to respond to demand. The MLC is working with those in the livestock industry on such issues as the size of packs of meat; ready-made or ready-to-prepare meals; assurances of health and safety of the meat produced; the market for luxury or premium meat products; selecting better breeding stock; and the development of products that fit into current diet and lifestyles.

There is no doubt that the future of the livestock industry depends on all stakeholders recognising and accepting the need to work together for its future. And the Government are the key players in that future.

Lord Bassam of Brighton

My Lords, before the noble Lord, Lord Kimball, commences his contribution, I rise simply to say that we are now running so far behind the clock as regards the timing of the debate that, if we continue at the same rate with the next group of speakers, the noble Earl, Lord Ferrers, will be prevented from partaking in the proceedings. That, of course, would he a terrible shame for your Lordships' House. Therefore, perhaps I may appeal to the remaining speakers on the list to curtail their speeches for the benefit of the noble Earl, Lord Ferrers.

4.34 p.m.

Lord Kimball

My Lords, it is a great pleasure to follow the noble Baroness, who used to he one of my constituents—hence she developed the taste for good, red meat. We are all most grateful to my noble friend Lord Plumb for initiating the debate.

Many people are reporting on the livestock industry, but I wonder what is actually being done about it. We had the Policy Commission of Sir Donald Curry for a "thriving and sustainable rural economy", which dealt principally with modulation. We also had a policy commission on food and farming, which emphasised the need for farmers to develop their own industry and farmers' markets. Then we had the rural payment agency, the rural development service and the integrated administration and control system, as well as the report by the Rural Task Force under the chairmanship of the noble Lord, Lord Haskins, on the future of our country. However, I believe that the noble Lord was rather misguided in his thinking about organic grazing.

In every area of local administration we currently have a regional director, a rural affairs forum, a regional development agency, a local countryside agency, and blow me down if we do not now have a new concept called the "vital village programme", which has just been introduced. All that is spin, and summed up in one particular document that was sent round to all of us at no charge to anyone, entitled the Essentials of Life, as mentioned by my noble friend Lord Monro. It claims on page 23 that the Government are "rural proofed". But they fail to acknowledge what has had the most profound effect on the English countryside; namely, hunting with hounds. That has had the most amazing effect on the whole way that our countryside is developed.

At present, a period of negotiations is in process. But what is really needed in the future is a statutory hacking for the independent hunting authority. A map must he re-drawn so as to remove the hounds, as the noble Lord, Lord Burns, suggested, from areas where they are an irritation. I should like to view the map that is issued every year showing the density of population. I believe that we should withdraw the hounds from areas where the population exceeds 600 persons per square kilometre.

It seems wrong not to realise the contribution that is being made by livery yards, by horse breeding establishments and by hunting. They are all part of the livestock industry, and no subsidy whatever is involved. If you want to think in terms of the Essentials al Life, the livestock industry is what keeps the English countryside alive. It is most encouraging to observe the desire of all stockmen to return to the job that they know best. The Cumberland survey was issued just the other day. A few people in the industry thought that they would like to retire, but, as a whole, most farmers have paid off their overdraft, taken the wife on a holiday, and now want to get back into the business that they know really well.

During the foot and mouth difficulties, 4.4 million sheep were slaughtered. A high proportion of those ewe lambs were kept back from the previous year's lambing—2001—and retained for breeding. I am certain that a similar situation will now apply. However, following the reform of the sheapmeat regulations, DEFRA will make use of the newly-gained independence to reduce the support payments to English sheep farmers. Scotland and Wales are using their discretion to maintain the payments of the annual sheep premium at £22, but DEFRA is considering reducing the amount to £20. When he responds to the debate, can the Minister clear up that point? We do not need to distort the sheep market; we need to ensure that our small lambs are exported to Spain, and that we recover the market in France for our other lambs.

4.39 p.m.

The Countess of Mar

My Lords, in deference to the request made by the noble Lord, Lord Bassam of Brighton, I have taken all the frills out of my speech. The noble Lord, Lord Plumb, has already declared my interests for me; and if I start to talk about goats I know that I shall overrun any time that I may have.

I understand that DEFRA has convened a working group with a membership drawn from the livestock and insurance industries. Its brief is to look at means of insuring the livestock industry against future outbreaks of infectious disease. My attention has been drawn to the fact that cheese makers who produce cheese from the milk of their own animals are in an unusual position, should they be affected by an outbreak of infectious disease such as foot and mouth disease. They stand to lose their animals and their cheese stocks. Can due regard be given to finding an insurance policy that will cover both, not just the animals? The specialist cheese industry in this country has been built up over the past 15 years. It now provides valuable exports, as well as the domestic market, and must be supported.

We have lost the knackers who used to destroy injured animals for us and take their bodies away. We are about to lose the hunts, who used to come to kill animals humanely and incinerate them for us. Because of the SBO regulations, that job has become too expensive. I am concerned on two grounds. On welfare grounds, I am concerned that there is no one to kill the animals. We all know that veterinary euthanasia is extremely expensive, and farmers are not skilled slaughtermen. Sick or injured animals may he left to die in pain, instead of being quickly dispatched. Dead animals may be buried or may be left out for scavenging creatures such as the fox. There is a disease risk in that. The situation is not satisfactory, and I ask the Minister whether DEFRA is addressing the problem.

The noble Lord, Lord Monro of Langholm, said that the Minister apparently told the European Parliament's FMD inquiry that a contiguous cull had been carried out with the approval of the European Union and that its legality had been tested in the courts. If that is correct, can the Minister kindly give the House the exact reference to European approvals, as the relevant directives make no mention of the slaughter of animals not exposed to disease? Will lie also tell us which are the relevant court cases?

I fully understand that the Minister was a trifle upset at the result of the Division on the Animal Health Bill. As a hereditary Cross-Bench Peer who does not vote often and has had next to nothing to do with the hunting debate, I was a little disturbed by the incontinence of the Minister's remarks to the media on the day following the debate about my motives for voting as I did. As a Cross-Bencher, I am not whipped; nor am I Lobby fodder. As noble Lords know, I take my duties in the House seriously. I vote when I have listened to a debate and have been able to make up my mind or when I already have a firm opinion on the subject on which the House wishes to divide. I am sure that my colleagues do likewise.

4.42 p.m.

The Earl of Onslow

My Lords, I add my query about what the Minister said to the European Parliament to those raised by the noble Countess, Lady Mar, and the noble Lord, Lord Monro of Langholm.

It is pointless to think that we can learn the lessons for the future of the livestock industry unless we have a proper, deep, full public inquiry into the outbreak of foot and mouth disease. When he is asked about that, the Minister tends to get cross. I get cross, too. I am reminded of what de Gaulle said about Churchill: When I am right, I get cross. Churchill gets cross when he is wrong. We are cross at each other much of the time". That is the Minister's attitude to the public inquiry. It is also the attitude of the rest of the Government; after all, the Minister is only—I nearly said lickspittle, but that would be unkind—a hewer of wood and drawer of water on the Government Front Bench.

I should have declared my interest. I have a few Dartmoor grey-faced sheep, some Hebridean sheep and some black Berkshire pigs with white feet and black bodies.

In the European Parliament in Strasbourg, the Minister made two claims about the contiguous cull. First, he claimed that the cull was legal and had been tested in the courts. Secondly, he claimed that the policy had been approved by the European Union. I believe that there was only one operative court case, which included a wretched pig called Grunty. Mr Justice Harrison ruled that DEFRA was not entitled to apply a blanket slaughter policy and had to take specific circumstances into account. He ruled that the animals had shown no signs of disease and that it was sufficient that they were monitored and tested. Mr Justice Harrison refused DEFRA leave to appeal and awarded costs of £40,000 against the Government.

Although that case applied to what DEFRA considered to be a dangerous contact, rather than a contiguous cull, the key element of the judgment was that the Minister had no power to order a blanket policy of slaughter and had to take specific circumstances into account. In this context, where Schedule 3 to the Animal Health Act 1981 authorises slaughter "in any case", the wording of the Act seems to support the contention, to the effect that, if the power relates to "any case", a judgment must be made in respect of every case. There would seem to be no power for a blanket contiguous cull policy.

The indications are, therefore, that there has been no legal challenge that supports the Minister's contention that the contiguous cull was legal. I echo the words of the noble Countess, Lady Mar, and ask for details of the cases to which the Minister referred that support his contention and for details of the judgments in those cases.

The operative EU instruments are Council Directive 85/511/EEC, as amended by Directive 90/423/EEC and Council Decision 90/924/EEC on veterinary expenditure—I was briefed on this, by the by. In respect of Directive 85/511/EEC, Article 5 is relevant. It states that, all animals of susceptible species on the"— infected— holding shall be slaughtered"— and that, the competent authority may extend the measures provided for in paragraph 1"— which authorises the taking of samples and the carrying out of examination— to adjoining holdings should their location, their configuration, or contacts with animals from the holding where the disease has been recorded give reason to suspect possible contamination". On the face of it, the directive appears to authorise only testing and examination. That is endorsed by Article 8, which requires surveillance to be maintained on holdings where, foot and mouth disease could have been introduced from other holdings". However, Article 11(4) of Council Decision 90/424/ EEC states that, Without prejudice to the measures to be taken in the context of the common organisation of the market"— the relevant financial contribution shall cover compensation for, (i) the slaughter … of animals, (ii) the destruction of milk. (iii) the cleaning … of holdings, (iv) the destruction of contaminated feedstuffs … (v) losses incurred by farmers as a result of … emergency vaccination. It shall also cover, (b) where applicable, the transport of carcases to processing plants"— and, (c) any other measures which are essential for the eradication of the outbreak of the disease". That reference to "any other measures" could be taken to mean legalisation of a contiguous cull, as it appears to indicate that there is provision for measures additional to those set out specifically in 85/511. However, for such additional measures to be eligible for compensation, the article goes on to state—this is the vital point—that the Commission shall, in accordance with the procedure provided for in Article 41 of 90/424, define their nature. That requires an application to the Standing Veterinary Committee and approval by the Commission by way of a decision. Of the many decisions promulgated by the Commission during the foot and mouth epidemic, all of which have been published, none appears to apply to the UK's contiguous cull policy.

My speech has been detailed and, possibly, I have been more boring than I would normally be. There have been too many slashes. However, I ask when and under what terms did the EU approve the UK's contiguous cull policy? What documents attest to that approval? Can the Minister make those documents available to the House?

4.50 p.m.

Earl Ferrers

My Lords, I should explain to noble Lords that I was expecting to speak in this debate. In order to facilitate that, I called the Government Whips' Office because I thought that that would be the easiest thing to do. Either the inarticulation of the speaker, the difficulty in hearing on the part of the speaker, or the inadequacy of the telephone communication system, resulted in the name of the noble Lord, Lord Fellowes, being put on the speakers' list as opposed to "Earl Ferrers". That was bad luck for the noble Lord, Lord Fellowes.

I declare an interest in that I have been involved with agriculture all my life. It is sad to see agriculture now in total decline and I think that the livestock industry has been hurt more than most. Before BSE in 1996, we were 113 per cent self-sufficient in beef and were great exporters. Now we are only 66 per cent self-sufficient and are major importers. The United Kingdom was the largest sheepmeat producer in the European Union, but in 2000 we were net importers of sheepmeat and this year we are only 80 per cent self-sufficient. That percentage is the lowest for almost 20 years.

Of course, as people eat more, there is a greater demand for meat, in particular beef. Thus we shall become less and less self-sufficient. British people want to eat British beef. They want to eat locally produced food sold at a reasonable price. Furthermore, they want animals to be kept in proper conditions. But what happens is that we import food from all over the world. Bacon comes from Denmark, pork from Romania and chicken from Thailand. Much of that food is produced in conditions that would be totally unacceptable in this country. The result is that the conditions maintained by our producers are put at such a premium that they become less competitive against imported meat.

When imported pork or chicken is cut up in this country, simply because it has been cut here it is then labelled as "British food", which of course it is not. As any schoolboy would say, that is "unfair". It is right for the Government to take action. All this militates against farmers and British agriculture.

I listened to the remarks of the noble Lord, Lord Haskins, with—if I may say so—incredulity. The noble Lord said that farmers ought not to "overstate the case". I do not know how you can overstate the case for going bankrupt. On another occasion he said that farmers ought to "stop grumbling" and be "more competitive". Today he said that they ought to "invest", "raise standards" and "improve efficiency". That is all fine, but how can you invest when you do have not the money to do so? Even if you do find the money to invest, having done so, what is to be done about an inadequate return?

I have told noble Lords on previous occasions that potatoes may cost £150 per tonne, but when they are sold in the supermarkets, they are sold for £8,500 per tonne. That makes one wonder who ought to take on the competitive element. A loaf of bread may cost 50p, but it contains only 3p worth of wheat. The notion that farmers ought to be more competitive and lower their prices further is, I believe, misdirected. The fact is that the supermarkets have a stranglehold on British producers by purchasing from anywhere in the would at the lowest possible prices.

Some five years ago, the price of milk was around 25p per litre. It then fell to 13½p per litre. The price rose again but, as my noble friend Lord Plumb pointed out, it is now falling again to somewhere around 13½p per litre. Those are crippling factors. With the greatest respect, it is no use for the noble Lord, Lord Haskins, to say that people ought to compete. You cannot compete like that; you will go bust. If that is the view of the noble Lord, Lord Haskins, then it worries me that he is actually advising the Government. I suggest to the noble Lord, Lord Whitty, that he should take the advice of his noble friend with great care and that he should take some advice from me as well.

Despite the fact that milk prices can drop to 131/2p Dr 15p per litre, supermarkets now sell six pints of milk for £1.37p. That amazing figure demonstrates quite clearly that British agriculture is going through the most appalling time.

A bereft livestock industry passes on its misery to others. If we have 5 million fewer cows to feed, then less cereals are required for livestock feed. Therefore the arable farmer is hit. Two years ago the price of' wheat rose to £75 per tonne, but today it is likely to be around £55 per tonne. According to the noble Lord, Lord Haskins, we ought to be more "competitive". Given those kinds of prices, I do not see how one can be any more competitive.

Some £42 million worth of European funds were made available in April 2001 to take account of alterations in the rates of exchange. The Government never took them. Then £57 million worth were made available in October 2001. Again, the Government never took them.

It is often said that the common agricultural policy ought to be reformed. I quite agree, but the fact is that I do not believe that it will ever be reformed because too many bees are buzzing around the honeycomb. As the European Union grows larger, so more and more people want to pursue what benefits can be had from it.

I recall visiting New Zealand some 17 years ago. Commonwealth preference was being wound down and the New Zealander farmers were in despair because their government were going to remove all farming subsidies. They said that it could not be done. Around eight years ago I happened to return to New Zealand. I sat next to the same person who some years previously had said that subsidies ought to go. He told me that New Zealand agriculture had never been in a better condition. That was because all subsidies had been removed, and thus the bureaucracy and mess that goes with them went as well. I hope that the noble Lord, Lord Whitty, and the Government will try to do the same rather than simply divert European funds towards bugs and beetles. Rather they should try to put British agriculture back on to a proper footing.

4.56 p.m.

Lord Carlile of Berriew

My Lords, I start by declaring an interest as a non-executive director of a medium-sized company which manufactures and sells feed and other products to farmers. Perhaps I should also declare the interest of being a barrister who, over a good many years, has derived enormous professional satisfaction and occasional personal advantage from the litigiousness of farmers, in particular in North Wales.

I congratulate the noble Lord, Lord Plumb, on initiating this debate. The noble Lord and others have reminded us of the scale of the livestock industry. Livestock production remains the major stakeholder in the United Kingdom's agriculture industry and therefore the major stakeholder in the countryside. That remains the case despite the dramatic loss of beef and sheepmeat production which we suffered between 2000 and 2001 as a result of the foot and mouth outbreak.

Unsurprisingly, some noble Lords have spoken of the effects of foot and mouth. In the time available, from these Benches I would simply express the hope that Her Majesty's Government will take the best steps available to guard against any repetition and to enable us to deal with any repetition, if it occurs, far better than last time. In that context, in my view it remains regrettable that, welcome as diverse inquiries from different viewpoints are, there is not to be one comprehensive inquiry—informed by those other inquiries, by academic and by international expertise—to devise an action plan for critical events in the future. It will be inexcusable if, or perhaps when, we suffer another crisis of this kind, but there is no ready action plan available. There must be better ways of tackling outbreaks of foot and mouth disease than those used over the past year or two. As my noble friend Lord Mackie of Benshie pointed out, estimates of the cost of that outbreak have been put as high as £9 billion. Surely we can do better than that.

As was mentioned by my noble friend Lord Geraint, the livestock markets have an important role to play. They have fulfilled an important role in the history of the livestock industry, but they have a future as well. Such markets are major employers and they are the hub of much of the business life of hill-farming communities. Incidentally, they also provide an important point of social contact between often isolated farmers, their spouses and families, who go to market in order to make that social contact. The markets are struggling to source sufficient livestock because of the 20-day standstill rule. I invite the Government to look at this with great care.

Noble Lords, including my noble friend Lord Geraint, have referred to the inconsistent enforcement of control measures by our European Union partners. Imported carcasses carrying specified risk materials are still being found in the United Kingdom. The noble Baroness, Lady Masham of Ilton, spoke of dangerous imports of other kinds. That is a very important issue. Because we have lost to disease our self-sufficiency in beef and sheepmeat, the risks posed by imports have increased and therefore the vigilance with which we police such imports must be increased.

As my noble friend Lord Mackie remarked, the Government must take a firm line over the improvement of inspection procedures and in ensuring that offenders, whether individuals or governments, face real sanctions. Furthermore, I would ask DEFRA to examine the facilities available to port officers. If one visits ports, as I have, one finds that officers often work with completely inadequate office facilities and do not have the space in which to carry out all the inquiries needed. That matter requires attention.

The noble Lords, Lord Haskins and Lord Fyfe, referred to co-operation among farmers. Farmers have co-operated for hundreds of years, and to imply that farmers do not co-operate is not fair. However, there is always room for improvement and there are initiatives for improvement. The industry forum, the findings of which were published in March this year, was an example of co-operation between different parts of the industry and, indeed, DEFRA. It is an example of good practice.

The industry forum identified an obvious, but not always expressed, conclusion, which was described by the noble Baroness, Lady Gibson. To ensure that shoppers buy British meat, it must be butchered and prepared in a way compatible with modern aspirations and lifestyle. Frankly, usually it is not so butchered and presented. The butchery industry has quite a lot to answer for in this regard because of the unattractive way in which it often prepares its produce as compared to imports. One has only to look at the average high street butcher's shop in a small French town and the average high street butcher's shop in a small English town to see the difference in presentation.

Welsh shoppers, for example, want to know where their meat comes from. My noble friend Lord Hooson, who was in his place earlier, is a distinguished and celebrated producer of Welsh black beef, and yet I would not be able to identify his Welsh black beef in a butcher's shop in Montgomeryshire where we both live.

The noble Earl, Lord Ferrers, said that there are issues about labeling—indeed, there are scandals about labeling—which anyone who, like myself, has practised in the trade descriptions area of the law will have seen time and time again. The Government should take steps to ensure that food is labelled in a way which identifies accurately where it comes from—including the country of origin and, if possible, more specifically the source—so that British shoppers can buy and enjoy local produce, preferably well cut.

The noble Lord, Lord Fyfe, referred to Farmcare and pig production. If the CWS, through Farmcare, cannot make economic pig production and sell British pig meat in a profitable way, no one can. Therefore, as the noble Lord said, there is a great need for a cooperative venture to ensure that there is a strategy for pig meat production. Anyone who has dealt with pig farmers over the years will have seen highs and lows—a kind of manic depressive market—which have never ensured consistency and have guaranteed that pig farmers are the risk takers among the farming community.

I turn now to the issue of local killing and local abattoirs. Local killing is attractive to purchasers. Small abattoirs have an important part to play in the supply chain at both ends of the market: for choosy shoppers who, as I said, want to buy local meat; and to deal locally and quickly with casualties. The continuation of small abattoirs could be easily achieved, particularly if, as the noble Lord, Lord Soulsby, said, the veterinary service is available on a proper basis around the country.

The noble Lord, Lord Plumb, rightly referred to the landscape as a part of the picture derived from the livestock industry. He referred to the livestock industry "grooming" the landscape. I would put it in a similar way. Livestock farmers are the gardeners of the landscape—or, at least, their animals are the gardeners of the landscape. If we do not have sheep and cattle on the hills, dereliction will follow. There is nothing more ugly or more derelict than a derelict countryside. It is every bit as derelict as a derelict industrial area, but it is much more obvious to everyone.

That brings me to an old cliché about villages and rural communities. It is a valid cliché and I make no apology for using it. In recent years there have been more farm bankruptcies than ever before. The level of depression and other mental illness among farmers is very high. For example, there is three times the level of suicide among farmers than among doctors, who have every-day access to lethal drugs. It is a very disturbing picture. I applaud the rural stress action plan—the Government have done a lot to help farmers who are depressed, isolated and suffering from mental illness—but, when one has a picture of a very high proportion of suicides and a high proportion of bankruptcies, one has to be concerned about the future of rural communities.

For rural communities, where there is livestock, there is hope. The Government can ensure that there is continuing hope by supporting a strong livestock industry in the future.

5.5 p.m.

Baroness Byford

My Lords, I thank my noble friend Lord Plumb for his excellent and thought-provoking speech which drew the Minister's attention particularly to the question of imported meat, both legal and illegal. I declare a family farming interest. We are pig farmers—although we are getting out of pig farming—and cereal growers.

It is a scandal that a huge amount of illegal meat continues, largely unchecked, to enter this country when the Government have had evidence regularly brought before Parliament, both in debates and Written Questions. The Minister surely cannot say that he is unaware of the problem.

The Government's latest response is the working party announced by Margaret Beckett two weeks ago. A working party is the last thing we need. We need enough inspectors to stop the trade immediately It would be even better if one person were to take sole charge of the situation. As other noble Lords have said, Clive Lawrence has produced evidence of this illegal trade, but what have the Government done? How many arrests have been made? How much illegal meat has been prevented entering through Heathrow? Do the Government have any idea of how much more is coming in through other ports of entry?

This issue is of vital importance because such trade threatens to bring infection into our country. It is a major concern not only for animal welfare hut, as other noble Lords have said, for human welfare too. The Government have totally failed to act. Perhaps the Minister will tell us more today.

Noble Lords have referred to many extremely important issues today. I dare not run over my allotted time, so I hope that your Lordships will forgive me if I do not refer to each point individually. Pedigree breeding, modulation, import controls, labelling, uncertainty over future business, the need for cooperatives, the risk of a recurrence of TB, the use of livestock as an important part of our wonderful biodiverse countryside, the use of fallen stock, which has been taken by the hunts in the past and is of crucial importance to the future—so many topics have been raised by your Lordships. I apologise that I shall be unable to touch on them all.

Let us not forget, nor ignore, that the recent foot and mouth outbreak, about which we have spoken many times in the House, hit hard not only those whose farms were infected and culled out, but also those who were not culled out but who could not move their animals; who could not make sales; who could not have animal pregnancies, and who received no compensation. Much of their subsidiary income disappeared. There was no renting out of their grazing land; no farmhouse bed and breakfast; no local produce sold to bed-and-breakfast businesses; and no contracting. But their costs were still there—their feed costs, their fertiliser costs, their medicines, their inspections, their investments to meet legislation and their Meat and Livestock Commission levies. I forget the saying about a sinking ship—but "the band played on".

As to regulation, I am delighted to see the noble Lord, Lord Haskins, in his place. I thank him for taking part in the debate and for his report on better regulation. I wish that some action had been taken on it already. Some 439 European regulations relating to agriculture were promulgated in 2001—not quite so bad as the 615 in 1997, or the 617 in 1998. There were also some 25 directives in 2001, most of them still requiring legislation in the UK. Is it any wonder that our business is on its knees? As we have heard from other speakers, farming incomes are on the floor. Yet more and more regulations are being piled on to producers.

In UK farming as a whole, income per full-time equivalent person fell from an average of £23,000 in 1996 to £8,492 in 2000. On that basis, each individual suffered a loss in income of over £48,000 over the four years from 1997 to 2000, compared with the figure for 1996. On top of this disastrous situation, the MLC's publication. Key Trends in Meat Consumption, indicates an increase in imports of red meat as a percentage of home production. Home production fell from 50.1 per cent in 1970 to 28.9 per cent in 1990. Other noble Lords have referred to the down-grading of home- produced meat and the increase in imports. That is especially true in relation to pigs and poultry.

That brings me to the problem of processed food. Our farmers are expected to conform to the highest standards. According to Written Answers that I received on 30th June 1999 and 28th March 2002, there was only one—I repeat, one—instance of spinal cord being found in a UK-slaughtered bovine carcass in the past 68 months. Yet UK farmers are still having to pay for special inspections in all abattoirs, with the obvious extra cost to our own producers. At the same time, there have been many cases of imported meat containing spinal material. I raised the matter recently with the Minister.

I want matters to move forward. The Government produced a rural White Paper in November 2000, but no time has been given to debate it, although it was deemed to be an important document. The report on better regulation by the noble Lord, Lord Haskins, has neither been debated nor acted upon. More recently, the Policy Commission on the Future of Farming and Food, chaired by Sir Don Curry, has reported. Its recommendations will require money, time and effective effort. Doing nothing is not an option. The crisis in the countryside is still acute. I wonder whether, while we have been debating the matter this afternoon, any money has been allocated in the Budget to help to implement the recommendations set out in the Curry report.

The Minister will doubtless point to the effort spent by his department in dealing with the foot and mouth outbreak. I accept that demands were made. But if he could arrange for even a small proportion of that effort to be put into stopping disease coming into the country in the first place, we might at least be more confident about the future. The question of confidence was raised by a number of speakers.

A year ago in this House I despaired publicly of the Government. They seemed indifferent to the crisis facing farmers, uncaring as to whether food is produced by UK farmers or whether it is imported. It was not until foot and mouth struck, the countryside closed down and overseas visitors cancelled bookings, that the Government began to understand the link between a healthy farming business and rural business and tourism. The fact that industry was haemorrhaging, with bank borrowings at an all-time high, investment at an all-time low and thousands leaving the industry did not register. No wonder the rural community accuses the Government of a miserable record.

The Curry report gives us hope for the future. It contains a variety of practical ideas. It deals with the question of what we can do. It agrees that some of the requirements need EU and WTO agreement. But, even within that stricture, there are things that the Government can do. Do the Government have the will to tackle regulation? Do they have the will to promote nutritious food and to tackle the long-term problems of obesity which are already affecting the younger generation? Do they have the will to ban food imports from countries which produce food to lower standards than those required of our farmers? I believe that they should do that.

Will the Government recognise that promoting fair trade between producer and supermarket through the food chain centre, as recommended in the Curry report, does not cover catering and processing, and is not, therefore, of direct help to some of our food producers?

Finally, with all these things left undone and with the challenges that lie ahead, is it inappropriate for the Government to answer to a public inquiry abroad, and yet to fail to hold a full public inquiry in this country? Why is it important to do that overseas, when there is a refusal to do it here?

Our farmers are willing to take up the challenge, but they must be given the freedom to do so. They must be enabled to move forward. In relation to co-operatives, I hope that no restrictions will be placed on our farmers in terms of the percentage that they are able produce together, as indeed the Commission prevented in the past.

5.16 p.m.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)

My Lords, I thank the noble Lord, Lord Plumb, for initiating the debate and for introducing it in such a wide-ranging and forward-looking way, while at the same time analysing the difficulties sector by sector in a succinct and telling way. Coming to farming, as I do, several decades later than the noble Lord, it is clear to me that although there are some common themes across the sectors—and most sectors have been in serious difficulty over the past few years—there are different problems which need to be addressed somewhat differently.

However, there is, both in the debate and out there, cause for hope and cause to celebrate the prospects for British farming over the medium term. I entirely agree with the noble Lord, Lord Williamson, that we have a competitive advantage in livestock farming which we ought to exploit. I agree with my noble friend Lady Gibson, that the taste, quality and nutritional value of British food—even though, as the noble Lord, Lord Carlile, indicated, it is not always well presented or well marketed—is the best in the world. We ought, therefore, to build on that advantage.

My noble friend Lord Haskins, whose speech I agreed with to a significant degree, usefully divided the debate into the areas of responsibility where the future well-being of the British livestock industry rests: the CAP, the UK Government, and the industry itself. I shall therefore attempt to organise my remarks in that order. I shall also refer to the issue of disease, which has clearly overshadowed the industry. I refer not only to foot and mouth but to the results of the BSE crisis, which hit the reputation of British livestock farming—a problem from which we have yet to recover.

So far as concerns the CAP, the Government strongly support the general thrust of the recommendations of the Curry report. We believe that the present CAP is expensive and that it distorts both farming production methods and farmers' relationship with their customers. We want, therefore, to shift the balance of support for farming, across Europe, away from production-related subsidies and into support which ensures that the farming sector meets the land management, environmental and rural development objectives set out in the report and in the Government's policy.

There are a number of different ways in which that can be done. Some will be longer term; some can be addressed in the mid-term review of the common agricultural policy, on which negotiations are just about to begin; and some are already available to us. One way that is already available is modulation. It was the one issue over which there was a degree of controversy when the Curry report was published. The broad sweep of the report was welcomed, both in farming and in the rest of the food chain. Putting its recommendations into operation may be more difficult. Nevertheless, its initial reception was positive, apart from the issue of modulation.

Modulation is a means which already exists of taking some money away from production subsidies and putting it into broader forms of support. It presents some difficulties. The matters on which the money can be spent are fairly restricted by European law, and there is also the slight difficulty of requiring match funding from Her Majesty's Treasury, and therefore it has to take its place alongside other public expenditure requirements which will not be addressed today but will be addressed in the spending review in the summer, which was always the intention.

Modulation provides us with an existing mechanism whereby we can move in a direction that will be of long-term benefit to the way in which we farm and to British taxpayers, British consumers and the rural environment. It enables us to take some money out of production subsidy and put it into the broader rural development and environmental management of the countryside.

Earl Ferrers

My Lords, does the Minister agree that modulation, which involves removing money from the growing sector and putting it into land management, worsens the position of traditional farming?

Lord Whitty

No, my Lords. The bulk of the support would be to allow farmers to produce food and rear livestock in an environmentally sensitive way. Modulation does not stop them doing that and make them take a lawnmower to mow the hillside instead. The aim is to ensure that their production methods meet certain standards. The point of the broad and shallow system that Curry advocates is that if they meet those standards, they will qualify for support. As many noble Lords have said, including the noble Earl, current environmental schemes often have a high overlay of bureaucracy and administrative costs to farmers. The broad and shallow scheme will be much more accessible and will relate to methods across all sectors of farming. Many smaller farms would benefit from that and there would be a decrease in the over-intensive areas of farming, such as over-grazing.

Besides modulation, there are other existing mechanisms. The noble Lord, Lord Kimball, attacked one of those—the more flexible use of the national envelope under the sheepmeat scheme that was negotiated in December. As well as a more stable figure for the overall price of sheep support, flexibility was given back to each nation on how it could use roughly 2 euros of that support. The Welsh and Scottish administrations have already decided to add that to the existing premium. We are looking, immediately or in the longer term, to use that flexibility to ensure a better structure and a more environmentally sensitive form for sheep farming. We shall make that decision within the next few weeks. That mechanism already exists.

We have been criticised under the CAP head for not picking up all the available agrimonetary compensation to compensate for the major problem of the sterling-euro exchange rate, which is a large part of the reason for the relative decline in income in the British livestock industry in recent years. Again, that is three quarters paid for by the British taxpayer and any call on it has to be judged against other forms of public expenditure. Your Lordships should recognise that since this Labour Government came to power, a total of £785 million has been drawn down in agrimonetary compensation. The system will no longer exist after this year. That is a substantial level of support, mostly financed by the British taxpayer.

The second area that the noble Lord, Lord Haskins, identified was the specific role of the UK Government, over and above their European responsibilities. Much of that is epitomised in the Curry report. We have broadly accepted that report and have already announced a number of measures covered by it, including the establishment of a food chain centre, which will look at the problems of producers getting such a low proportion of the value added in the food chain and of the price that the consumer ultimately pays. That involves relationships all down the chain. As my noble friend Lord Fyfe and others have pointed out, it also involves collaboration within the industry and a change in the balance of power between the farmers and the other economic movers to whom they sell and from whom they buy. That must be an important part of reversing the decline in farm incomes over recent years. If we can restore some balance to the farmers and have some fair trading in that system, we can achieve a lot.

We also need to ensure that farmers address the other problem referred to by my noble friend Lord Haskins— the relative spread of efficiency within farming. We want to get the poor farmers up to the average and the average up to the good. The Government still take responsibility for advice and support to the farming industry on productivity and production methods that we do not take for other industries. For example, we are establishing a fourth agricultural development scheme with £5 million of government money to improve marketing performance and competitiveness. There are other schemes on the production side. We are already moving rapidly on some of the measures in Don Curry's report. The central measure, as the noble Baroness, Lady Byford, and others said, is modulation and the CAP, which will he addressed over the summer.

I deny some of the suggestions about what we are trying to do to the structure of the industry. If I understood him correctly, the noble Lord, Lord Geraint, suggested that we were against the market system. That is not the position of the Government, although we believe that a greater proportion of markets will probably be dead meat markets rather than livestock markets. Nevertheless, both play an important part in the industry. Beyond the market, the farmer must look more at the ultimate consumer, both directly through direct selling and by getting further down the food chain to get more of the profit.

Another responsibility for the Government relates to imports. A number of comments have been made about the adequacy of the present import checking system. Sometimes people confuse the level of imports with their quality. We are not in favour of going backwards on trade. We believe that the figures for self-sufficiency that people are talking about—66 per cent and 80 per cent—are pretty good achievements for the agriculture sector in an increasingly globalised economy in which trade is likely to be more liberalised rather than less. The question is not whether liberalisation will occur, but on what terms and how rapidly. We cannot go backwards on that.

We accept that the Government have a responsibility for doing more to check the quality of imports, particularly with regard to disease. My right honourable friend Margaret Beckett has taken further initiatives in that respect, although a considerable amount of additional intelligence gathering and co-ordination of checks has taken place on the commercial and passenger trade in recent months. We also need a proper overall assessment of the risks posed by illegal imports of meat. We need greater cooperation between the various agencies involved—the public enforcement agencies and the private sector, such as airlines and port authorities. We need greater enforcement powers, some of which we are already enacting, and we must ensure a tighter and more co-ordinated approach at European level on regulations such as the 1 kg maximum import allowed for passengers.

Baroness Byford

My Lords, what progress has been made on that subject? The Minister is talking about generalities. Where have we got to now? How many meat imports have been stopped? It would be helpful if he could share that information with the House.

Lord Whitty

My Lords, there is a high level of checking of the commercial container trade. That has stopped a number of imports. The higher profile issue is passengers at Heathrow and other airports. Much of the trade that has been stopped and identified by recent checks could not carry FMD. There were other problems in those cases relating to bush meat, endangered species and probably organised crime, but they do not relate specifically to the diseases that have broken out in Europe. Several hundred tonnes have been identified, indicating that there is a bigger problem that needs to be addressed.

Whenever we discuss imports, I also point out that there is a tendency for some in the industry to argue that tighter import controls are the totality of what we need. We need tighter import checks, but that is not an alternative to surveillance, internal biosecurity measures and controls on internal movements. All countries, even Australia and America, have some imports of illegal meat, despite their substantial checks. The point is that, in Australia and New Zealand in particular, if something gets through it is rapidly stamped out. The problem in the recent foot and mouth epidemic was that we did not cut it out as quickly as we could.

I have talked about responsibilities within the CAP and the responsibilities of government. There is also a huge responsibility on the industry itself to face up to some of these problems. For those coming to it from outside, it is a strange industry in many respects. It is a mixture of huge self-reliance and individualism, with a great desire to work as hard as possible and not to be dependent on others. In reality, however, when the industry is in difficulty, there is an awful degree of dependence on government and a tendency to come to government for help and money. We have to change the psychology in that respect. That means both greater co-operation, as my noble friend Lord Fyfe said, and, as my noble friend Lord Haskins said, a reduction in the degree of dependence on government to sort out the industry's problems.

The industry itself can deal with most of the problems of structure such as the need for a shorter food chain, more value added and greater cooperation. Nevertheless, the Government will endeavour to support those changes and to help in other matters referred to by noble Lords, such as labelling. Labelling is partly a Government and EU responsibility. It is also a matter of farm assurance. The Curry report made a very substantial recommendation on boosting the awareness and effectiveness of the red tractor scheme, to ensure that consumers understand that meats and other products produced to British standards are not only high value but meet high environmental and safety standards.

The Government are therefore acting in Europe and in relation to our own responsibilities on trade and the internal structure. We are ensuring that we facilitate changes that the industry itself needs to make.

shall use my remaining time to make a few points on the disease, which has cast a shadow over the debate and about which a number of points have been made. The noble Lord, Lord Carlile, said, "Never again". I think that we would all say amen to that. However, we have to ensure that it does not happen again. We have initiated an unprecedented level of inquiries into the disease. I do not really want to go into the public inquiry issue now; the noble Earl, Lord Onslow, correctly said that I get slightly irritable on that point. However, we have an inquiry into the science, an inquiry into the organisation and the logistics, and an inquiry into the finances. We have answered to the Select Committees of the UK Parliament. We have answered to the Temporary Committee in the European Parliament. We also answer questions time and again in your Lordships' House. We could not be more open, nor could we have a system that will deliver anything closer to the truth.

The proof of the pudding—for those who are still highly sceptical, which I appreciate includes a number of noble Lords—will be in the quality of the reports from the Royal Society in June/July and over the summer. The Government already accept that we would do some things differently; I have made that clear to the House and elsewhere. There will be more recommendations to the Government and to the industry during the course of those inquiry reports.

Various issues were raised in the debate, the most acute of which was the legality of the cull. I shall cite just two cases: MAFFv Winslade, which we won in the English courts; and Westerhall Farms v Scottish Ministers, which we won in the Scottish courts. The British courts' and the EU endorsement therefore fully support the comments that I made in Strasbourg and have repeated today. The legality of the cull is not in doubt.

We do, of course, recognise that the powers that we have are not necessarily sufficient. That is why we brought the Animal Health Bill before your Lordships' House, and why I very much regret that, for whatever motive, your Lordships voted down that Bill. The Bill would have given us powers effectively to deal with an outbreak of the disease before a full reassessment of the situation following all the British and European-level inquiries. However, the Bill was defeated. We recognise that, in terms of the procedure of the House, that decision cannot be directly overturned. Nevertheless, the consequence is that, were there to be an outbreak of the disease over the summer, the British Government would not have the powers that we believe we need. In such circumstances, the responsibility would therefore be shared by all noble Lords. I think that we should face up to that responsibility.

Baroness Byford

My Lords—

Lord Whitty

My Lords, before the noble Baroness intervenes, I should say that I shall write to her, to Liberal Democrat Front-Benchers and to the noble Lord, Lord Moran, who moved the Motion, indicating that, in the light of that decision, were there to be another outbreak, we would hope to see co-operation in introducing emergency powers. Regrettably, that option could be pursued only when Parliament was sitting, and we would have a problem if Parliament were not sitting. Nevertheless, in those limited circumstances, we would look to the House for co-operation in ensuring that we have the powers that we and the House believe we should have.

Baroness Byford

My Lords, I thank the Minister for his confirmation on that point, and we have indicated that he would have our support. I have, however, to challenge him on one point. He said that the contiguous cull was legal, but I thought that that was his only fear about being able to control a new outbreak.

Lord Whitty

My Lords, the contiguous cull was legal. However, it was inhibited and ineffective because we were unable to enter certain premises due to resistance based on the current legal position.

My time is up, so I must finish there and allow the noble Lord, Lord Plumb, to reply.

5.35 p.m.

Lord Plumb

My Lords, I thank everyone for their contribution to the debate, which has been excellent. It is also a continuing debate. I particularly thank the noble Lord, Lord Carlile, and the noble Baroness, Lady Byford, for their replies. I also thank the Minister for his reply. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.