HC Deb 15 June 2004 vol 422 cc157-64WH

11 am

Dr. Andrew Murrison (Westbtury) (Con)

It is probably timely that this debate should follow one about the manufacturing industry in Devon. In commenting on the food industry in west Wiltshire, I shall also deal with the manufacturing base in the south-west.

The number of jobs in the food and beverage manufacturing sector has shrunk significantly since 1997. Between 1997 and 2002, 35,000 jobs were lost in the UK and more than 7,000 were lost in the south-west. Those losses are not necessarily reflected in Government employment figures, which show a robust employment market that is largely driven by jobs in the public sector. However, we should be worried about our shrinking manufacturing base, and that is particularly true of the south-west, with its heavy reliance on food production and processing.

I want to discuss three recent examples of food industry closures and job losses in my area. They are in slightly different sub-sectors, but they exemplify the general problems faced by many people in the sector in my area. The first example is the Nestlé plant at Staverton, which. we have been told, is relocating to France. The second is Westbury Dairies, which is an industry leader, with the most up-to-date processing plant in Europe. The firm faced the threat of closure last year when its owners went into receivership, but it was successfully redeveloped by a consortium of co-operatives and is now helping to stabilise the dairy producing industry nationwide. I believe that it is a success story.

The third example is the Pork Farm Bowyers factory in Trowbridge, which produces high-quality Melton Mowbray pies for retailers and high-street supermarket names. In this case, the problem is the European Union's protected food names scheme, which was designed to protect Europe's rich heritage of specialty foods, but which is in danger of being manipulated to divide commercial markets and force arbitrary rules on producers. There are severe problems with the scheme, and I hope that Ministers will use the Pork Farm Bowyers example and others in the it negotiations with Europe to secure an amendment to it. Otherwise, it is likely to damage the UK's competitiveness, fragment the internal market, offer customers poor value and—this may well happen in my are—damage jobs.

The closure of Nestlé's Staverton plant, which is to wind up production later this year, is a blow not only to the 150 workers who will have to move elsewhere but to the whole dairy industry. As the Transport and General Workers Union noted, the plant was viable and increasingly profitable. It produced value-added products, which are essential if the troubled dairy sector is to diversify and flourish.

The closure will exacerbate the UK's balance of trade deficit in the dairy sector, although it is extraordinary that this country should have a deficit in that sector. We export primary products of processed milk, but we import value-added products, such as cheese, yoghurts and chilled desserts. The market for value-added products is expanding, and they are becoming increasingly important to consumers as people globally become wealthier.

The relocation of the Nestlé plant to France will mean that its demand for up to 1 million litres of fresh cream, which was met by the UK dairy industry, will now be met by French farmers. The impact on local dairy farmers will be significant, but it will, thankfully, be offset by the restructuring of local dairy processing, which will reduce some of the worst effects of this and similar closures. That will allow farmers to negotiate a better price for their output.

Co-operatives are benefiting the dairy industry throughout the UK, which the Select Committee on Environment, Food and Rural Affairs recently recognised in its report on milk pricing in the UK. A good illustration of that is the successful acquisition of Westbury Dairies by a consortium of co-operatives, after United Milk, its original owner, went into receivership last year. That is an example of cooperatives working together to secure the future of a large concern, while assisting the community of producers as a whole. The factory at Westbury is one of the most up-to-date milk processing plants in Europe, with the ability to handle huge volumes of milk efficiently and profitably. In the hands of the three cooperatives, the plant has performed on budget for its first six months of trading and is achieving the original goal of stabilising the market and benefiting the hundreds of dairy farmers who are members of those cooperatives.

Ministers need to find ways to facilitate such structural innovation. The dairy industry is currently on a knife edge, and further regulation puts it at severe risk. The impetus for change and modernisation must, of course, come from the industry itself. The sector has recognised that and is generating changes by itself, but the general environment is heavily influenced by the Government, who must encourage diversification and processes that add value. It is noteworthy that the Department of Trade and Industry budget has increased significantly on most things, except innovation, on which spending has remained about what it was in 1998. I make no comment about the DTI's general spend, but it is interesting to note that, within that general spend, the spend on innovation has stagnated. That is a particular pity in the dairy sector.

The recent Environment, Food and Rural Affairs Committee report on milk pricing was a good analysis of the state of the dairy industry and the problems of the past. The report more or less echoed what farmers and industry groups have said for some time, but it was short on solid recommendations for the future. It highlighted the fact that farmers are not told why the price that we pay for our milk is not seen in the farm-gate price. Cooperatives can help to overcome that lack of transparency, but the Government also have a part to play, by ensuring that initiatives such as the code of conduct agreement between supermarkets and producers are properly observed.

It is all very well to have land stewardship, and I am sure that the Minister is keen to encourage it as an alternative means of using the land and ensuring that farmers can support their businesses. However, as the National Farmers Union in my constituency recently put it to me, farmers are not park keepers. Farmers are principally in the business of producing food. We all want British farmers to make a profit from food production. The Government's job is to help them to do so, by getting a fair deal for British agriculture in the EU and the World Trade Organisation, encouraging beneficial changes in the home market, managing regulation more efficiently and having effective disease control strategies. The record to date, however, is somewhat mixed.

Pork pies are produced in large numbers in Trowbridge, in my constituency. However, the Pork Farm Bowyers factory, which employs 700 people and has for decades been making high-quality meat and pastry products, including the celebrated Trowbridge Melton Mowbray pork pie, is under threat. The threat to the continued production of that excellent product emanates from the EU protected food names scheme, which was designed to safeguard speciality products from competition from cheap alternatives that are not governed by strict quality control measures. We would all say that that was a good thing. Consumers need to know that what they are buying under the guise of a quality mark, such as Melton Mowbray pork pies, is a good product. The irony is that the EU protected food name scheme does not necessarily deliver such protection. One of its headings is a geographical indicator that would allow products to be made pretty much in any way, provided that they were made within a certain radius of, in this case, the borough of Melton Mowbray. That does seem rather strange. Given the choice, most consumers prefer to know that a traditional product has been made in a traditional way rather than that it has been made within a certain radius of the place with which its name is associated.

There are many examples of protected names: Newcastle brown ale, Dorset blue cheese, Whitstable oysters and Shetland lamb. The list goes on and on. The scheme offers different degrees of protection for different products. It bases protection sometimes on the area of origin and sometimes on detailing the production process that needs to be met for the product to be recognised. I understand that the Melton Mowbray Pork Pie Association has decided that it needs the protection that the EU protected food name scheme gives to products described as Melton Mowbray pork pies. Its application has the endorsement of no less a figure than Mr. Jamie Oliver.

The application for Melton Mowbray to be a protected name for a type of pie indicates a new phase in the scheme. We are talking no longer about primary products but about recipe-based products. The new applications are not for basic foodstuffs that are sourced and processed in a defined region but for products that are heavily processed and heavily value-added. This is a new phase in the evolution of the use of the scheme. There would clearly be a case for protection if the quality and processes used in these products were specified with an eye to protecting artisans, in the borough of Melton Mowbray, for example. I am perfectly happy to accept that that was the intention of Ministers when they considered this application. In the Melton Mowbray case, however, it seems that the Department of Environment, Food and Rural Affairs may have been misled or may have mishandled the application by encouraging one part of the industry to advance its own proposals. The result is an application that may exclude other manufacturers unfairly.

It is worth pointing out that the chief beneficiary in this case will be one of the major competitors of Bowyers, the parent organisation of which is Northern Foods. That competitor produces the vast majority of pork pies in the area designated by the Melton Mowbray Pork Pie Association. The pies are produced on an industrial scale and not as an artisan-based baking industry. The result would be anti-competitive and the 700 jobs in my constituency would be threatened. People who buy Melton Mowbray pork pies tend to be the large high-street retailers, who will look for the Melton Mowbray descriptor because that is what the consumer wants. Clearly, if the application is accepted, consumers will look to the competitor of the firm based in my constituency to provide this product. It will not be the small producer, which the Melton Mowbray Pork Pie Association would like Ministers to believe is at the forefront of its thoughts, that will benefit, but the large industrial-scale manufacturer, which is a direct competitor of Bowyers in my constituency.

I support the idea of protecting producers of specialised foodstuffs against producers of inferior and cheaper products who use a name the reputation of which has been built up through centuries of refining techniques and using the best quality ingredients. However, the problem with the EU food name scheme is where it will all end. We already have applications from the makers of Cornish pasties and other food types that have a greater or lesser connection to a particular area. It will be a pity if small manufacturers such as bakers, restaurants and butchers cannot make their products in a traditional way merely because they do not happen to be within a stone's throw of, say, Melton Mowbray or the county of Cornwall. Most consumers will want to know that the product that they are buying is what they generally understand to be a Cornish pasty or a Melton Mowbray pork pie. That does not have a great deal to do with precisely where it was produced, but more with how it was produced and the ingredients used.

Lord Haskins, of course, takes a particular view. He has advised the Government on rural issues and has also been closely associated with Northern Foods, the parent company of Pork Farm Bowyers. However, I suppose that he can be relied on to be a critical friend of the Government. I have no doubt that the Minister will have read The Observer on 23 May, where Lord Haskins described the decision-making process of his friends in Government as a "complete cock-up". I hope that Ministers will bear that in mind, as well as the further thoughts of Lord Haskins, who went on to say that the Government really haven't thought this through. What will be next? Bakewell tarts, Cornish pasties or Cumberland sausages … These products have been made for generations outside their geographical area. There is no reason to change that now. That puts it in a nutshell. The EU protected food name scheme may be well intentioned, but it is doubtful whether it is of great benefit to our domestic food production industry. It looks as though it may fragment the market, introduce anti-competitive practice, act against the interests of consumers and destroy jobs, not least in my constituency

11.16 am
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael)

I congratulate the hon. Member for Westbury (Dr. Murrison) on securing the debate and on the informed way in which he has introduced the subject.

When it comes to employment in rural areas, we have seen a greater increase in employment—a greater fall in unemployment—in rural areas. We have seen a fall in employment in some specific sectors, but improvements in the employment situation in rural areas have been good since 1997 and are running ahead of those in urban areas. Manufacturing now provides a greater proportion of employment in rural seas than in urban areas. As well as referring to sectors In general, the hon. Gentleman referred to some specific issues that the industry ought to deal with, as he rig illy acknowledged. I shall come in a moment to the Government's specific responsibilities—for example, our responsibilities for the milk industry and for the pork pie industry, as he specifically raised those issues.

First, I will say something about the regional food industry in general. The Government have acted decisively to support and encourage a flourishing regional food industry. Not only is the strategy for sustainable farming and food driving forward change, but its significance in the south-west is given tangible form in the delivery plan for the south-west produced jointly by the Department for Environment, Food and Rural Affairs' team in the Government office and the regional development agency, with a wide range of partner organisations. I hope that the hon. Gentleman is familiar with that document—if not, I recommend it to him as it gives a tangible agenda for the way forward for the food industry in the south-west.

Our success in moving forward on common agricultural policy reform, to which the hon. Gentleman made a passing reference without the enthusiastic endorsement that one might expect, is also significant in reconnecting the food industry and farming with consumers. The key drivers behind our support for the sector are supporting the rural economy, helping producers add value to their products, increasing their returns from the market and increasing their competitiveness. In other words, we want to nurture a successful and productive industry.

Regional food producers create jobs and prosperity for the local work force, which is predominately rural. Research that we commissioned last year shows that sales turnover for the English quality regional food sector is in the region of£3.7 billion. More than 55,000 people are employed in the sector.

The sourcing of ingredients for regional food is predominantly local, which helps keep money in the local economy. Raising the profile of regional food helps to inform consumers about the origin and authenticity of food. The theme of reconnection informs what we are doing to encourage a flourishing regional and local food sector by creating the right conditions to help producers meet the growing demand from consumers for food and drink products with a clear regional provenance. The measures that we have established for doing that recognise the need to help our producers meet the growing demand and overcome barriers to the market—such as distribution, the lack of processing facilities and, sometimes, issues relating to training.

What we are doing to support the sector falls into two categories: support for the sector as a whole and the more direct help that we can give through our various grant schemes to food and drink producers. One of the main ways in which we are supporting the sector as a whole is through Food from Britain, which is the lead support agency for the promotion of UK regional foods. To enable it to do that, we made available an additional £1 million pounds last year, for this year and the next. With that additional funding, Food from Britain is taking forward a programme of activities focusing on trade development, consumer awareness and business competitiveness.

In addition, regional development agencies are deploying their own resources according to the needs and priorities of their region. Production and supply of locally sourced food can be encouraged through food hubs and shared facilities as well as linking local producers with local retailers and tourist businesses. Help is also available under the England rural development programme grant schemes and the agriculture development scheme. Funding under those schemes has supported activities such as farmers' markets and other direct sales outlets, local branding initiatives and co-operative or collaborative groups to market produce.

Within the west Wiltshire area we have provided funding to help producers market their organic produce locally; supported the expansion of facilities at a maltsters; and provided a number of farmers with training grants aimed at helping them to improve standards. It is worth saying that the branding of regional food in the south-west has been a particular success story, not least because in the south-west regional branding has been made to fit well with the county and more local branding, in a way that many other regions of the country regard, I think, as an exemplar.

Our public sector food procurement initiative, which was launched last year, is designed to encourage public sector bodies to procure their food in a manner that promotes sustainable development and encourages more small and local farmers, producers and suppliers to compete to supply them with food. For a while there was a mythology that Europe somehow made local procurement difficult, but it does not. It requires it to happen on a proper, open and competitive basis, but the advantage of local production and procurement must be clear to all.

We want the buying power of the public sector in England—£1.8 billion on food and catering services—to help to deliver the principal aims of the Government's strategy for sustainable farming and food in England. The south-west is well represented in the area of public sector food procurement. A south-west public procurement group has been set up to co-ordinate the strategy, research and funding needed to increase the procurement of south-west local and regional food and drink into the south-west public sector.

The hon. Gentleman specifically referred to the milk industry. I understand why that was a priority for him in discussing his constituency. The milk industry has gone through, and continues to go through, a difficult time. I am glad that the hon. Gentleman recognised that the industry must lead change to create a profitable future for itself. He also acknowledged the capacity of cooperative approaches to improve the quality of the return to farmers as the primary producers. However, he suggested that the Select Committee report was weaker on solutions than on identifying problems.

There is a difficulty, because there are problems with the farm-gate price of milk. The reasons are complex and include at different times, and in different combinations, exchange rates, the prices of world community markets and commodity markets, as well as domestic supply and demand. However, those factors do not completely account for the fact that farm gate prices in the UK remain among the lowest in the EU 15.

The report by KPMG on prices and profitability in the Great Britain dairy chain highlighted a number of factors that might explain why UK farm-gate prices compare unfavourably with the EU average, including the low value of the product mix and the low level of product innovation within the UK compared with some member states, as well as the structure of the UK dairy industry and dairy co-operatives. However, the Government have sought to help the industry through such complex issues. Most of the causes of low farm-gate prices identified in the KPMG report are for the industry to address, but the Government can and have taken action in line with their strategy for sustainable farming and food to facilitate that. For example, the Minister for Farming, Food and Sustainable Energy, Lord Whitty, has chaired meetings of the dairy supply chain forum, which has been considering collaborative solutions to improve supply chain efficiency as well as other issues.

The Government have made a grant of nearly £500,000 to enable the food chain centre to examine how to improve dairy supply chain efficiency and we have established English food and farming partnerships to encourage co-operation and collaboration across all agricultural sectors.

Price negotiations between producers and processors, or processors and supermarkets, are commercial matters, in which the Government cannot and should not get involved, so long as competition rules are respected. However, we are acting to support the industry and to help it in facilitating change which, as the hon. Gentleman rightly said, has to be led by the industry.

The hon. Gentleman referred to pork pies and regional food brands. The difficulty is that neither we nor the hon. Gentleman can say that it is a good thing to protect food names without there being in place a proper framework for the consideration of what should be approved and protected. There is such a framework, and there is always special pleading. That is common to both sides of the argument and between countries. For instance, a local delicacy can be seen as worthy of the strongest possible protection in one country, but as merely another commodity in others. There are occasions when the debate seems to be not so much about pork pies as about pork barreling. I am sure that the hon. Gentleman would agree that we need a proper framework within which to consider such matters.

The application to register the Melton Mowbray pork pie as a protected food name has been put forward to the European Commission only after careful consideration of the arguments put forward by both the applicant group and the opposing parties. There will be further opportunities for both sides to be heard. Meanwhile, producers not covered by the application can continue to label their pies as Melton Mowbray pork pies. The hon. Gentleman rightly says that the parent company, Bowyers, as Northern Foods, applied for permission to seek judicial review on our decision to forward the Melton Mowbray pork pie application for protected geographical indication status to the European Commission. Permission has been granted to argue the case and the hearing takes place next month. It would be inappropriate to say more in advance of that. However, there is a process, and I underline the fact that both sides will have further opportunities to argue their perspective on the case.

Taking the food industry more generally, the food chain beyond the farm gate faces challenges requiring separate consideration. Our commitment is to work with all sectors of the food industry to develop a comprehensive food industry sustainable strategy to provide strategic direction and to set priorities. The idea of a sustainable sector is important—the sector needs to supply what the public wants, and to supply intelligently into the regional retail trade, tourist establishments and the catering industry. A broad-based working group chaired by Lord Whitty and comprising the food industry, consumer, trade unions and bodies such as the National Consumer Council and the Sustainable Development Commission is developing a strategy to address sustainability issues affecting the whole food and drink industry, post farm gate—food manufacturers, wholesalers, distributors and retailers, and caterers.

The food and health action plan, led by the Department of Health, is linked to the wider consultation on public health through the document "Choosing Health?" announced by my right hon. Friend the Secretary of State for Health on 3 March. The aim is a healthier diet for everybody. It will include clear policy objectives on nutrition, setting out arrangements for co-ordination on nutrition work across Government and in other sectors, national, regional and local.

The reform of the CAP will provide the right conditions for a flourishing regional food industry that is competitive and sustainable and for a level playing field across Europe. That can only be good for the farming industry in this country.

11.30 am

Sitting suspended until Two o'clock.