| Previous Section | Index | Home Page |
10.12 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I congratulate the right hon. Member for Maidstone and The Weald (Miss Widdecombe) on securing this important debate. She is right to seek to raise the issues. Hon. Members on both sides of the House accept the picture she paints, although they may not agree with all her florid language. She has described, on behalf of her constituents, the problems in respect of farmers' incomes. We have freely admitted that--we have made no secret about it in terms of the information that we have published--and she is right to bring the matter to the attention of the House, as other hon. Members have done recently.
In view of the nature of the hon. Lady's constituency, I was not certain whether her speech would go much wider. The subject of farmers' incomes is as long as a
piece of string. I suspected that she would raise the difficulty that growers in Kent suffered last May because of the onset of an unusually hard frost. That has been the subject of parliamentary questions and correspondence with the Ministry ever since. The answer is the same as it has always been: we cannot and will not legislate for the weather. What happened was most unfortunate. Recently, farmers in Spain, Portugal and Italy suffered droughts, earthquakes and floods, but no aid has been given especially because of those unique weather conditions.
Miss Widdecombe:
Does the Minister acknowledge that the Conservative Government compensated farmers after the 1987 hurricane, to the extent of £2 per tree? We were able to do that, so why cannot he?
Mr. Rooker:
I do not remember compensation being paid, but I remember the events of 1987. People who watch Michael Fish's weather forecasts are constantly reminded of them, as I was last weekend in Kew by the mural of the devastation caused by the hurricane. I do not have the details of any compensation to hand, and I cannot deal with that matter tonight.
The Government are aware that agriculture is going through a difficult time: we have made that abundantly clear. There is no doubt that the past year has been a bad one for farm incomes generally and, as the right hon. Lady said, for the livestock industry in particular. There are various definitions of total income from farming, but there is no argument about the figures she gave. Farm income fell by 37 per cent. in real terms in 1997. Some sectors--
Mr. Paul Tyler (North Cornwall):
Will the Minister give way?
Mr. Rooker:
I must say a little more. I have a fair bit of time--rather more than I had in my previous Adjournment debate.
Some sectors have fared better than others, but averages can be misleading. The 25 per cent. fall in incomes for the general cropping sector is much less than the 51 per cent. fall for mixed farms, while that in the lowland sheep and cattle sector is 63 per cent. There is no question but that the principal cause of the across-the-board fall in incomes is the lower prices attracted by major commodities. As the right hon. Lady rightly said, the relative strength of sterling throughout 1997 has also had a major effect on prices attainable in the United Kingdom.
While sterling remains at its current high level, and there are structural surpluses in most agricultural sectors caused by over-production within the European Union, prospects for increased commodity prices, and therefore improved incomes in the short term, are not good. Everyone knows--I claim no special privilege--that Barclays bank has reviewed the prospects of agriculture. Its report notes the cyclical nature of farm incomes over the past 30 to 40 years. While agreeing with our short-term prognosis, and with the reasons behind it, Barclays predicts an upturn in the industry's fortunes in 1999.
I recognise the impact of the fall in farm incomes. The decline has been dramatic, particularly last year, and prospects are not good for this year. Although the decline has attracted the headlines and the difficulties are real, we must retain a sense of perspective when considering the damage to the industry as a whole.
Incomes fell dramatically last year, but that fall followed several good years; some were very good. Incomes rose steadily from 1990, peaking in 1995. At columns 91-92 of yesterday's Hansard, there is a written answer to my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams)--I apologise for my pronunciation. For example, in one farming sector, general cropping, net incomes in real terms at 1997 prices, deflated by the retail prices index, varied a great deal. The figures are: roughly £43,000 in 1989-90; £34,000 in 1990-91; £30,000 in 1991-92; £31,000 in 1992-93; £38,000 in 1993-94; £60,000 in 1994-95; £72,000 in 1995-96; £37,000 in 1996-97; and, provisionally, £28,000 in 1997-98.
There has been a great deal of variation in real terms. Some years were very good, others were modest, and there was a fall last year.
Mr. Tyler:
The Minister will agree that farmers have long memories, and that they do not think that everything went wrong from 2 May. I hope that he is not saying that all sectors of the industry enjoyed the same profitability, as those figures imply. As a direct result of the previous Administration's cuts in support, livestock hill farmers have suffered incredible losses for several years. The cumulative effect is damaging. Barclays may be right to say that there will be an upturn in 1999, but some farmers will not make it to 1999.
Mr. Rooker:
Hon. Members can look at Hansard. I gave information relating to dairy farms, cattle and sheep in less favoured areas, cattle and sheep in the lowlands, cereals, general cropping, pigs and poultry, mixed farming and all types of farming, excluding horticulture.
I chose the example I gave--in fact, I had marked it before the right hon. Member for Maidstone and The Weald spoke--because I thought it more relevant, in general, to farms in the Kent area. It would be unfair for me to quote upland and less-favoured-area prices, which are worse. Nevertheless, the fluctuation is there.
There will be business failures in agriculture, just as there are in every other sector of commercial activity. Such failures, wherever they take place, are regrettable, but they are part and parcel of business life. It is not current income levels that determine whether an individual farm stays in business; that will vary according to individual circumstances, and what happens to the farm will relate more to indebtedness than to current income.
According to much of the information that is available, because of the number of good years that there have been recently, the level of indebtedness in agriculture is much lower than that in most other industries. There will always be examples in particular cases, but indebtedness--which is more likely to lead to bankruptcies than one year's low income--is much lower in agriculture than it is in industry as a whole. We must take a rational, long-term view.
Mr. William Cash (Stone):
May I ask the Minister to answer a question that has not been addressed in this important debate? Does he not agree with my point about the reform of the common agricultural policy? In practice, the real problem is that we are dealing with an artificial
Mr. Rooker:
Yes. Indeed, I intend to do so a couple of paragraphs later in my speech. The hon. Gentleman is right: we are not in a completely free and open market, and the rules that would apply in such circumstances do not apply here. No one claims that they do. The Government, however, cannot change the rules on their own. We are members of a single market; we are a member of the European Union; we are constrained enormously by the disparity between what we can do and what we want to do.
We were elected on a platform that made it clear that one of our key aims was to seek reform of the common agricultural policy. The CAP is a disaster, in terms of its effect on the British economy and food prices in Britain. It has almost been designed to stop, for example, our dairy industry competing in the world market, because of the quota system. We are opposed to quotas: we want them to be lifted. We have modest proposals for change on the table in the form of agenda 2000. They are all that is on the table, and, although they do not go far enough, they are what we must adopt and proceed with.
There is no common view--if I may use that term--in the member states of the European Union in favour of reform of the CAP. The United Kingdom and Sweden stand out as beacons in their support of sensible reform of the policy. Many other EU economies that are on the leading edge of competitive markets, science and high technology do not want change in the CAP. That constrains us in seeking an agreement with our partners in the European Union, and we cannot deal with the matter alone.
There is no time to go into the matter in detail, but parts of the industry differ. I did not say this earlier, but pigs and poultry are quite different from sheep and cattle, in that they are in a much freer and more open market. I invite hon. Members to read the written answer to which I referred earlier. If they do so, they will see that, by and large, over the period between 1989-90 and the present year--in real terms--in areas where there were no subsidies, incomes were much higher than in areas where there were subsidies. It is not all one-way traffic in respect of the CAP. The CAP is a problem, however. It is a constraint within which we have to work, and the hon. Member for Stone (Mr. Cash) was right to mention it.
Because of that problem, as shown by my right hon. Friend's statement of 3 December 1997, we must secure permission to make the payments that we wish to make to our farmers--not so much from our own Chancellor of the Exchequer, which would be right, as from Brussels. As everyone knows, Brussels did not accept the way in which we wanted to proceed as announced on 3 December. We kept the total package the same--£85 million of support. I accept that that was only to cattle and sheep farmers, and it probably will not affect much of the right hon. Lady's constituency, but the pattern changed between the two announcements. That was because of the need to get the agreement of Brussels.
The right hon. Lady raised other issues, which I would love to deal with if there were more time. She did not quite attack the proposed food standards agency, but
Conservative Members will make up their minds when the legislation comes before the House, either when it is here in draft form, as we intend, or later. The agency must be paid for. It will be paid for--as everything is--by the consumer, one way or the other. The item in the White Paper, on which there is still consultation, was only an example. We said that, if the 600,000 food establishments in this country, which did not include farms, paid a levy of £100, it would bring in £60 million of new resources to assist with the agency's operation. One cannot argue that £60 million is a small sum--and I would not do so--but I would argue that £100 is a fairly small and modest sum.
If the right hon. Lady is arguing that using traceability to protect our food supply is not the future, she is wrong. [Interruption.] It appears that she does not argue that, so we agree that traceability must be the order of the day. In the end, it will probably apply throughout the whole of the food chain and in all sectors. I have made no commitments in that respect, but I think that that is the way in which we are going. With organic sheep farmers, for example, we have traceability. Sheep are tagged all the way through the system, but we do not have traceability in the rest of the sector.
| Next Section
| Index | Home Page |