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Mr. Hayes: Will my hon. Friend give way?
Mr. Luff: I should love to give way, but, as I have only 10 minutes, I do not have time, for which I apologise--I wish that we had more time for this debate.
I draw the attention of the House to some of the Committee's main recommendations. Direct compensatory payments are made to compensate farmers for reduced levels of price support, so we feel that, by definition, they cannot be permanent. They must be used to help farmers to adjust to new circumstances. Moreover, they must be time-limited and decrease over time--they must be, to use an ugly word, degressive. They must also be fully decoupled--they must provide no incentive to increase production.
The term modulation causes much confusion. In fact, two types of modulation are under discussion--differentiation and ceilings. I see the attraction of differentiation--varying the amount paid on the basis of a farm's characteristics--but, as we see no long-term role for the payments, we do not believe that that is the right way in which to deal with the concerns about the interests of smaller farms, for example. We believe that separate policy instruments are needed to deal with those concerns.
Similarly, what is the point of cross-compliance on environmental conditions to payments if the payments are to be stopped? If they are not to be stopped, we believe that conditions should be attached provided that they are satisfactory and can be imposed without requiring a huge new bureaucracy in the CAP. Better still, let us get rid of the payments.
The other form of modulation is the imposition of ceilings to limit payments to a farm. I think that that would have very adverse consequences for UK farmers, so I hope that the Government will strongly oppose the proposal, as they said they would.
I had hoped to speak in some detail about the individual commodity sectors, but I do not have time. I am grateful to the Government for agreeing with the Committee's views on the arable sector, on which the Commission proposes only partial decoupling, which does not go far enough, although it is a welcome step in the right direction.
I am also grateful for the Government's endorsement of the Committee's views on beef, but I draw the attention of the House to our third report, in which we highlighted the need for restructuring--another ugly word--the domestic beef sector, but only as part of EU-wide restructuring. There is no doubt that the British beef industry is taking too much of the pain of the necessary restructuring across Europe--we must ensure that that does not continue. There is overproduction in Europe, so Europe as a whole, not only this country, must face the consequences of that. That must be one of the Government's major negotiating objectives in the debate on Agenda 2000.
On dairy farming, the Committee believes that the Government are right to seek the abolition of milk quotas--we hope that that will be one of their principal objectives in the negotiations. I am glad that the Government are making progress in building a coalition
of support for that proposal, including countries such as Italy, which was previously opposed to the abolition of quotas. Abolition will create problems for UK farmers; as has been said, quotas are the major capital asset of too many farmers. Currently, British farmers are producing milk close to world market prices, but they cannot produce as much as they want to; they have the worst of both worlds--low prices and lower production than they can manage. I hope that the Government succeed in ensuring that something is done.
I also hope that the Government are successful in their proposals to reform the tobacco regime, although I suspect that that will be a difficult objective, especially when it comes to building coalitions to secure our other objectives.
The future of the CAP clearly lies in agri-environmental and rural policy. It is a matter of great regret that Agenda 2000 is based not in rural policy proposals, but in agri-rural proposals, so to speak--it does not deal with the wider rural dimension. I hope that the Government will do something to correct that shortcoming. That is why, in the next stage of its examination of Agenda 2000, the Select Committee will consider rural development in detail. As the hon. Member for Shrewsbury and Atcham said, rural development will be one of the key components of the CAP in the future--which, incidentally, is a good reason for giving the Ministry of Agriculture, Fisheries and Food a wider remit than agriculture alone, as MAFF Ministers will have to negotiate rural policy in the years ahead.
On CAP and the consumer, the Committee found it unacceptable that the Commission had failed to provide any estimate of the benefits that could accrue to consumers from reform--that was an extraordinary omission. It was left to the UK Government to make the assessment. They noted that, if lower market prices fed through to the consumer, there could be savings to consumers of up to £1 billion a year in the UK alone, and of up to 10 billion ecu--£6.77 billion--across Europe. I hope that the Government will keep the consumer firmly in mind. As my right hon. Friend the Member for Skipton and Ripon said, all interests, including the consumers, march together on this.
Mr. Mark Todd (South Derbyshire):
I shall focus on the longer-term future of the UK's agriculture industries, but first I make an assumption: because of the changes imposed through the next World Trade Organisation round, the increasing ideological bias against market intervention, and declining consumer and taxpayer tolerance, I believe that, within a dozen years, British agriculture will have no--or almost no--production-based subsidies or quotas from either United Kingdom or European sources. Any support will have to be based on other public policy criteria--care for the environment, higher standards of animal welfare than the global market demands, or employment and rural development goals.
Given the varied nature of UK agriculture, its future will be diverse. In mapping our futures, we need to understand the present, but we badly neglect research on it. We need a proper understanding of the strengths and weaknesses of our agricultural economy. I compliment the National Farmers Union on its initial report on the competitiveness of the UK farming sector, but much more needs to be done.
We must answer questions such as in what sectors we are already competitive in continental and global terms, and how those strengths and weaknesses are evidenced in our regional economies. We need far stronger research on how our food chain industries fit together to produce a competitive economy for the export sector.
Mr. David Drew (Stroud):
Does my hon. Friend agree that one of the ways in which farmers can achieve success is by the localisation of supply, especially through the consequent reduction in transport costs, but also through initiatives such as organic farming? Could British agriculture get back on the world stage in that way?
Mr. Todd:
Yes, I agree entirely.
Some sectors, such as horticulture, poultry and pigs--industries which are substantial contributors to the South Derbyshire economy--already compete without support. We have heard tales of gloom and woe, and I do not doubt their truth, but we should also talk about our successes: industries that thrive and prosper in a competitive market.
Some larger producers in the protected sectors could survive without protection. Smaller producers and those in less-favoured areas will face the prospect of radical change, towards niche production, in which quality and added value are critical, volume is less important and extensive methods are viable; environmental maintenance and protection; merger with larger, more competitive producers; diversification into other compatible industries; supported departure from the land, with the land returning to a managed nature; or a combination of those.
Government should ensure that our farming communities have genuine choices. We need to identify the role of Government in the process. In most industries, restructuring would be driven by the market alone, but the historical role of the United Kingdom Government before the common agricultural policy and the European Union came on to the scene, distorting the market and managing much of our agricultural decision making, means that there is a legitimate demand for Government assistance for change.
That assistance can be won only if there is a clear strategy, a clear methodology for implementing it, and an exit point for Government, leaving its role confined to the public policy objective that I set out earlier. Government assistance can then focus on transitional support and initial risk sharing; skills development; international marketing assistance to regain markets that we may have lost; ensuring that public policy concerns do not impinge unduly on competitiveness; and backing all that up with appropriate research.
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