House of Commons Hansard Debates for 21 May 1998 (pt 23)

Dr. Ian Gibson (Norwich, North): Does my hon. Friend agree that the new genetic technologies give us a great opportunity to produce good-quality foods, with good regulation? If we do not do that on a European basis, the Americans will be well ahead of the game, so European co-operation and CAP reform are very much part of producing new quality food.

Mr. Todd: I agree entirely.

We must concentrate on reform of the CAP on the basis that I have set out. The EU reforms are extremely disappointing and limited: tariff measures remain; there is a substantially increased role for national determination that may lead to inconsistency in the implementation of the measures in individual member states; compensation for price cuts appears to have no time limit or phase-out; continued price support and quotas are inconsistent with likely World Trade Organisation directions; capping may work against the most market-oriented producers and discourage farm mergers; further complexities have been added to an already arcane and bureaucratic system; milk quota increases are targeted at the most marginal producers or new entrants; and continued bureaucratic intervention stifles innovation in a sector that desperately needs it.

There has been useful recognition of environmental obligations, rural development goals and job creation measures, but it is predictable that we will fail in the WTO round to occupy an area that we can defend adequately.

It would have been far better to have a range of agri-environmental and rural development measures that were accessible to some degree to most, if not all, farmers; a focus on area payments rather than price supports or quotas; much more active support for diversification, training and early retirement, perhaps with subsidised insurance and marketing support to aid transition; and an identification of the best in European agriculture, using policy tools to support the transition to a free market. Instead, some reforms foster the least efficient forms of farming. It seems likely that the reforms will have a short life span, perhaps taking us up to the WTO round.

We all subscribe to the protection of the rural environment, without even knowing what we mean by it. In most places in Britain, we have to combine our aspirations for the environment with the need to earn a living and feed our people from the land. When society places those obligations on a farmer, beyond the norm of good practice--I recognise that most UK farmers care deeply about the environment--society should pay the costs.

We must accept that there may be some areas in which it is no longer appropriate to attempt commercial farming; define where they are; and devise measures to allow farmers to withdraw or to transfer to environmental maintenance. We must define what we are seeking to protect in our farmed environment; how we will measure the achievement of that protection; and how policy tools can be devised to secure that protection.

To me, the opportunity is great. We already have, overall, the most competitive farming concerns in Europe. Demand for quality food is growing world wide as

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economies mature. Every year, we commit about £4 billion as taxpayers, and a further £3 billion or so as consumers, to a byzantine bureaucracy and subsidy process, controlling individual entrepreneurs at micro- level, in a way not attempted in much of the former Soviet bloc. Poland, which is about to be admitted to the European Union, had a private sector agricultural system throughout the time of Soviet domination. It probably had, and has, a less controlled agricultural sector than the European Union.

Could we not spend the money better and achieve far superior outcomes for both producers and consumers? Few politicians welcome the idea of drip feeding an industry into the future. I have set out an exit strategy that I think will work, and I commend it to the House.

7.16 pm

Mrs. Caroline Spelman (Meriden): I want to demonstrate accurately the full scale of the crisis that faces British farming. Agenda 2000 ought to have been a bold expression of what the Commission set out to do in 1995 in reforming and moving towards greater trade liberalisation in agriculture, but I agree that the proposals are timid.

I cannot agree with the Minister, who described the beginning of the negotiations as a powerful start. Several members of the European Union have already rejected the proposals, so it is difficult to understand how that could be called a powerful start. While Europe delays, our competitors make hay--to use an agricultural analogy--and the United States in particular is exploiting the opportunity of greater liberalisation and the decoupling of agricultural support to take advantage of its greater farm size; of its economies of scale; and of better public acceptance of technology that delivers greater productivity in farming.

The tragedy is that, on the face of it, British agriculture, with its large farm structures by comparison with the rest of Europe, would be well placed to take advantage of such decoupling and reform. Despite those advantages, no other member state in the European Union goes into the Agenda 2000 negotiations from such a poor base.

The damage caused by the high pound, the ban on beef exports and the industry's loss of confidence in its Minister have produced a state of despair. Without over-dramatising the situation, I had a letter only last week from the National Farmers Union county secretary noting that one of my constituents, a small dairy farmer, had taken his life because he could see no way forward.

We know that the Minister questions why agriculture should be treated differently from any other industry. No one in private business expects to be bailed out, but politicians have set the framework within which these businesses try to thrive. The framework has many constraints, quotas and regulations. It is only right that farmers should hold us politicians to account if they find that the framework is not serving them well. It is not only the straitjacket of the CAP that is causing problems. They are within their rights to call their Minister to account when our domestic economic policy is making it even more difficult for them to compete and secure livelihoods from their farms.

Part of our effective opposition must be to try accurately to assess the scale of the crisis. We have conducted a comprehensive survey of all parts of the

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United Kingdom, which reveals that every farm sector and region is affected by the crisis. The answers that we received from our correspondence identify the most serious impact of any decision by the new Government that has adversely affected farming and related industries as that of the Government's refusal to act against the high pound.

Export companies are obviously the most seriously affected. The cereal sales of Ellingham Grain Ltd. in Suffolk are down 80 per cent. Its sales of beans have been halved. A less obvious, but telling, example involves a company affected by imports sucked in by the high pound. A small family mushroom supplier on the Leckford estate in Hampshire is finding it difficult to remain in business because of mushroom imports.

Another telling example was given to me by my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe). A Kentish hop grower is struggling to survive in the international marketplace with the high pound. He stored hops on his farm for two years, receiving no income from them. Meanwhile, cheap imports of hops are flooding into the UK from the United States and former eastern bloc countries. There has been a slight weakening of the pound in recent weeks, but the short to medium-term prospect is of continuing difficulty for British farmers. They are deeply frustrated because they know that the Minister has a tool at his disposal to compensate under the CAP, but it lies idle on his desk.

How is the industry responding to that cold shoulder? Like the good business men they are, they are forced to tighten their belts. Milton Mills engineering in Dorset has frozen pay, made one mechanic redundant, and stopped donating time charitably. Agropharm in High Wycombe has not replaced retiring staff, and has reduced overheads to contain erosion of its profitability. Many farmers are considering amalgamating into larger units to survive the crisis, reducing the number of the traditional family farms to whose support the Government pay lip service.

For others, it is already too late. My hon. Friend the Member for East Yorkshire (Mr. Townend) told me of the Agrisystems company in Boroughbridge, which has gone into receivership. Knight Farm Machinery has shed 11 jobs. Robert D Webster is closing a depot, and John Wood and Son is closing a branch. Those are examples from the real world. It is not only farms but the companies on which agriculture depends that are badly affected.

It does not matter where one goes--north, south, east, west, livestock, arable or horticulture--the picture is the same. The full extent of the problem can be appreciated only when we consider businesses that serve agriculture. Philip Moss and Son in Cheshire told me that farmers do not have the finance to buy even second-hand farm machinery from it. When we asked those businesses whether they felt optimistic or pessimistic about the future, a classic MORI-type question, the answer was overwhelmingly the latter.