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Mr. Oliver Letwin (West Dorset): I have a great deal of sympathy with what the hon. Gentleman is saying. Does he agree that a most helpful statement on a related matter that the Minister could make today--his doing so would cast light also on the beef issue--would be to ask the Monopolies and Mergers Commission specifically to investigate both the retail and the wholesale sides of the milk market?
Mr. Llwyd: I fully agree with the hon. Gentleman. That market also is a very great concern, and I urge the Minister to deal with that matter in his reply. Huge swathes of rural areas in the United Kingdom are under extreme pressure. His point was well made.
The Welsh Affairs Committee concluded that there was a very strong case for an in-depth independent study of the retail pricing of meat products to be conducted. Perhaps the Office of Fair Trading could conduct such a study and really delve into the matter, to establish the exact nature of the problem and whether we are being informed of the true situation. Our report stated that research commissioned by retailers--however impartial it may be--will not be convincing.
Ironically, at the same time as we are dealing with the retail problem, producers' bargaining power is being limited--indeed, greatly weakened--because of the development of so-called producer clubs in which farmers sell animals straight from the farmyard. As soon as a sufficient number of farmers have joined such clubs, cattle auctions will close and a near-monopoly will be established, directly affecting prices. The hon. Member for Forest of Dean (Mrs. Organ) mentioned those points, and I fully agreed with her.
Earlier today, there was a lobby in the other place, in the Attlee Room. I should like to apologise--I cannot apologise any more publicly than in Hansard--for not being there. [Interruption.] I was waiting to be called. The lobby was advocating that we should ensure that we keep our cattle auctions and a reasonable price floor, both of which are extremely important.
Let us not make any mistakes about the matter. Even if the ban is lifted tomorrow--I hope that it will be lifted very soon--the market will not recover overnight. Sterling's strength has already been mentioned in this debate, and I shall not deal with that issue again. However, we have also lost markets to other producer parts of the world. The loss of those markets should bring home to the Minister the importance of marketing. Marketing is key, and it is vital that we get on with it as soon as possible. Improved marketing is how we will recover our markets in the medium term.
A few weeks ago, I had the privilege of meeting the Austrian and Irish ambassadors, as part of a programme initiated by Plaid Cymru to try to urge our colleagues on the European mainland to help in lifting the ban and getting things moving. I was pleasantly surprised when not only those ambassadors but others said, "You in Wales, rural England, Scotland and Northern Ireland have an excellent product. You have a truly green product that is properly reared. But people in Europe don't realise that."
The Austrian ambassador said, "Welsh, English, Scottish and, of course, Northern Irish branding is very important. You could split it up in that way." She said that some small Austrian valleys produce one type of cheese, whereas neighbouring valleys produce a completely different brand. All their products are to serve a discerning market. We have to emphasise such branding and markets in developing our marketing strategies. However, I agree also that--as has been said in this debate--we haveto encourage everyone in Britain to insist on home-produced meat.
We have been told that red meat consumption has been declining. We will therefore have to diversify our products and put more value-added products on the shelves.
I ask the Under-Secretary of State for Wales, the hon. Member for Bridgend (Mr. Griffiths) when the all-Wales environment scheme will come on line. Although the scheme was--rightly--much trumpeted in last year's royal show, we are still waiting for it. There have been no details about it. May I urge him, with respect, to ensure that the scheme is financially attractive to farmers. If it is not attractive, it will wither on the vine and be of absolutely no use. I am sure that that one small step could be taken.
In opening the debate, the hon. Member for Mid-Worcestershire (Mr. Luff) said that the Agriculture Committee had been very successful because at least two of its recommendations had been implemented while the report was at the printers. The report perhaps should be included in "The Guinness Book of Records". Alas, the situation has not been the same with the Welsh Affairs Committee's report. We said in our report of 12 May:
We have heard much about agrimonetary compensation. Although it is true that a sum has been drawn down from Europe, more could be drawn down. I fully understand the Fontainebleau protocol,which--when boiled down into ordinary people's
language--means that 71p in each pound of compensation will have to be paid by the British taxpayer. I tell British taxpayers that the whole of the UK's rural economy is suffering a real crisis. I am sure that British taxpayers could be persuaded that the help that is needed should be provided. A crisis deserves crisis management or an answer that solves the crisis. Simply saying that the taxpayer will not accept something is no answer at all.
Some weeks ago I was at Ysbyty Ifan in my constituency to speak to a group of young farmers. There must have been in the region of 40 or 50 youngsters there. Incidentally, Ysbyty Ifan is probably one of the most Welsh villages in Wales. It is a very well established community that goes back many centuries. I was speaking about life on the Westminster farm which can be pretty dirty, although it is clean this evening--at least, I do not have my wellington boots with me tonight.
A youngster of 14 or 15 had a piece of cake and a cup of tea with me. He told me that his parents, their parents and three or four generations of his family had farmed in Ysbyty Ifan. This youngster, in my presence and in the presence of 40 or 50 other people, had tears in his eyes when he asked what the future held and whether I thought that he and his little brother would be able to take over the farm. I said that I was sure it would all come right, but that it would need much hard work.
The Minister of Agriculture is not here today, but with all due respect--I do respect him--his response to the crisis has not been worthy of him. He may be constrained by the Treasury or by something else--I know not--but I think he could have done more. It is no use sitting on the fence any longer. I know that something has been done, but it is not enough. I plead with Ministers, because the clock is ticking. We need to get things moving as soon as we can. If more is not done in the short term, the electorate will be confirmed in their view that new Labour either does not understand rural life or does not care. I am not sure which is worse.
Mr. David Drew (Stroud):
In the spirit of the debate, I shall keep my remarks brief, so that everyone who wishes to contribute has the opportunity to do so.
The introductory sentence of the report by the Select Committee on Agriculture is prophetic, not to mention stark:
Another aspect of the problem is the loss of sales. In the United Kingdom alone, at the peak of the crisis there was a 30 per cent. fall in sales. Overnight, the introduction
of the beef ban, not only by the European Union but by other interested parties, led to some £500 million in exports being lost. However, the real impact of the crisis, which has taken up most of the debate, is the cost to individual producers.
We all know that there has been a massive fall in farm incomes. Labour does not hide from that fact. Indeed, my hon. Friend the Member for Burton (Mrs. Dean) waxed lyrical in explaining exactly what that fall means, and Opposition Members highlighted how the industry has faced the decline, even though it has been difficult.
The strength of sterling has also been well documented. Although we could argue with the analysis of Opposition Members, what sticks in our craw is their rhetoric. It is easy to outline the problem, but they offer no solutions. We all know that the problem with the pound at the moment is that it is being used as a hedge against the euro, whether the euro works or not, and that is something we have to face. Whatever the Government's strategy, the euro debate will be held in due course, and we shall continue to face the problem of the rising value of the pound until there is clarity on all sides of the debate.
I shall speak briefly about the third reason for the crisis, as identified by the Select Committee. It has been mentioned, but it is difficult not to underestimate it--it is the changing nature of the beef industry itself. On the one hand, beef producers feel sore and are asking for more support. On the other, the Government--and, to be fair, the previous Administration--have put considerable resources into the industry to support it.
There have been several initiatives: the over-30-months scheme, the cull, the calf processing aid scheme, agrimonetary compensation drawn down at Christmas, help in setting up the cattle traceability scheme and the decision not to pass on the specified risk material control costs to the industry. Specific help to, for example, the hill livestock compensatory allowance areas, and help with marketing via the Meat and Livestock Commission, have always been part of the support that the industry has received from Governments of all colours. That help continues to be offered, but, as the Select Committee makes only too clear, we are considering an industry that is experiencing long-term change, if not decline. We cannot hide from that.
It is good to hear that the consumption of beef is recovering. We can play about with the statistics, but in terms of agricultural output, the beef industry is of greater importance in this country than the EU average. That puts the matter into context, but there has been a fall in the consumption of red meat for a long time. Consumer tastes are somewhat fickle. I was pleased to hear the right hon. Member for Skipton and Ripon (Mr. Curry), who is no longer in his place, mention consumer resistance to genetically modified organisms and to the use of antibiotics for livestock. Consumers are increasingly aware of what they are being asked to buy, and if they do not like something, they will not purchase it. We cannot escape how those factors have affected the industry.
If one reads all the documentation that has become available, one cannot but be confused about how the food chain operates for the beef market. It is convoluted and difficult to understand, and perhaps change is long overdue. We do not have to go as far as the hon. Member
for Meirionnydd Nant Conwy (Mr. Llwyd) suggested--he spoke about producer clubs--but we can nevertheless understand that rationalisation of the industry is long overdue.
It is good to see the symmetry between the Government's response and the Select Committee's original report. Often, a Government's response and the recommendations of a Select Committee are at variance, but that is not so in this instance, which has already been mentioned.
There has been a lack of progress in one respect--it has nothing to do with the Government, but is connected with drawing down money from Europe--and that is the retirement scheme. As has been said, greater efficiency will not solve the problem, as it could result in increased surplus production of beef. Many producers simply want a way out, and they should be allowed to retire gracefully. We hope that others will come into the market as it recovers.
Two further considerations should be borne in mind. The first, which has been touched on in the debate, is the overall price of food. I am not frightened to say that the price of food has probably bottomed out. We cannot combine quality and price reduction. We learned an awful lesson from the BSE crisis. We drove down prices to such an extent because of the belief that imports could be reduced, and we have borne the consequences.
"There is immediate need for emergency aid to enable farmers to survive."
We await that emergency aid. Nothing has appeared so far, although the crisis is deepening daily. I urge Ministers please to do what they can to get the industry and the Government moving, because there is a crisis.
"The beef industry in the UK is in a critical condition, because of the BSE crisis, the strength of sterling and the long-term decline in consumer demand."
The first two of those three reasons have been well rehearsed, but it is worth reminding the House that the cost to the Exchequer, as outlined in the National Audit Office report, will be something over £4 billion by 2000. Even on the day that we heard about the comprehensive spending review, that is a seriously large figure.
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