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7.31 pm
Mr. Huw Edwards (Monmouth): I am grateful for the opportunity to speak in the debate, which has been well informed and based on two authoritative reports. I am a member of the Welsh Affairs Committee, which produced a report on the crisis in the livestock industry in Wales. I congratulate my hon. Friend the Member for Clwyd, South (Mr. Jones), who chaired the Select Committee. We interrupted another inquiry in order to undertake this one, and we worked on it for six months to produce an authoritative report that criticises much of what has been going on. It is an honest report, and I commend it.
I gave a presentation on the Select Committee report to the National Farmers Union in Monmouthshire recently. There is a significant farming interest in my constituency. Indeed, farming is probably the largest single industry in Monmouthshire. I am also grateful for the briefing material that the NFU and others have supplied.
All but two of the hon. Members on the Welsh Affairs Committee represent constituencies with significant farming interests. We took evidence from the main farming unions and from the Welsh Office. I am grateful to the Under-Secretary of State for Wales, my hon. Friend the Member for Bridgend (Mr. Griffiths), for listening to the debate this evening. We also had the opportunity to question the supermarkets--Tesco, Sainsbury, Safeway, the Co-op and Marks and Spencer. We tried to reflect the concerns of farmers in our constituencies about what was happening in the supermarkets and the allegations of profiteering.
Having heard the evidence--sometimes in confidence--we remained unconvinced. I do not wish to make accusations, although I know that they have been made against Tesco, which claimed that it has not made any money from selling meat for five years. Tesco will shortly be opening a new store in Chepstow in my constituency, which is welcome. The Tesco distribution centre in Magor employs 400 people, many of whom are my constituents, so I do not want to join the bandwagon criticising certain supermarkets.
The Select Committee made a number of visits to food producers in Wales and obtained a considerable amount of evidence. We looked into the crisis affecting farmers, the meat supply chain and the changing relationship between producers, prices and imports. We discovered that, if there is a crisis in the United Kingdom industry, it is worse in Wales. The decline in farm incomes has been 37 per cent. in the United Kingdom and 44 per cent. in Wales. The Select Committee concluded:
The Select Committee stated:
We concluded that the industry is in crisis, and in Wales it is harder hit than elsewhere. The crisis strikes at the heart of Welsh rural life. We do not condone the violence that occurred in some of the ports, but we sympathise with the frustration that led to it. The Select Committee called for immediate help, to enable farmers to avoid bankruptcy. On the basis of the available evidence, we could not tell whether supermarkets were profiteering, but there was some scepticism about the costs that they claimed were being borne in the retailing of meat.
The Select Committee recommended that the Government should aid the long-term development of the meat industry. We were particularly concerned to find
that there was no freezing facility in Wales. Frozen food manufacturers claimed that they got all their lamb from New Zealand because they could not get the quantity or quality that they required in Wales. If Wales has an abundance of anything, it is certainly lamb, but the frozen food manufacturers are not using it because there is no freezing facility in Wales. I urge the Government to consult other organisations and bodies to find out whether that is an important aspect of rural economic development.
I welcomed the Government's announcement before Christmas of £85 million for Wales. It was more than some of us had feared it might be, but it was not as much as many of us had hoped. Some of the farmers in my constituency have received very little of that money. The Government's paying the start-up costs of the cattle traceability system has been welcomed, as has the fact that the charges for specified risk material will not be borne by the industry.
The introduction of the beef labelling scheme to ensure that beef is not inaccurately labelled, and the establishment of the Food Standards Agency, have also been welcomed, as has the lifting of the beef ban in Northern Ireland. I urge my right hon. and hon. Friends who will be involved in the negotiations to do their best to ensure the lifting of the beef ban as soon as possible.
The Select Committee recommended that more could be done to satisfy the demand for organic produce and to help farmers form co-operatives, and that the lack of a freezing facility for lamb should be remedied.
Tonight there is a reception on behalf of the livestock auctioneers and markets. There are two livestock markets in my constituency, in Abergavenny and in Monmouth. They are part of the culture of those towns. I should hate to see them lost, especially to new supermarkets, as that would make the situation worse. Next week, my hon. Friend the Member for Clwyd, South and I will be attending the royal Welsh show along with other right hon. and hon. Members.
Mr. Michael Jack (Fylde):
This has been an extremely good debate, with the House of Commons on its best behaviour debating well-informed Select Committee reports. I congratulate all right hon. and hon. Members who have made informed contributions to this serious subject. Anyone standing at either Dispatch Box must take seriously what the Select Committees have to say about an industry that, as my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) said in his excellent opening remarks, is worth some £1.7 billion.
Beef is a serious industry. It is crucial to the United Kingdom's rural fabric. As the two reports acknowledge, its difficulties cannot be ignored. The Meat and Livestock Commission has told me that 327,000 people are employed on holdings on which there are cattle. The importance of the beef industry should not be underestimated.
I am glad that my hon. Friend the Member for Mid-Worcestershire drew attention to the fact that the measures taken against BSE--the problem that underpins the crisis in the beef industry--were aimed at protecting public health. Before the awesome announcement on 20 March 1996, the previous Government had maintained beef markets in Europe open, with expenditure of£240 million, as the National Audit Office report reminds us. Only after that did new science illustrate some of the problems, and the cost of BSE rose towards £4 billion. That money was not shovelled into farmers' pockets and did not make them rich. Perhaps some of it could have been spent better, but the need to act quickly in the interests of public health drove the policy of the previous Government.
I was interested in the Government's reply to the Select Committee. Some hon. Members have talked about the asymmetry between it and the Select Committee report. I was saddened by the lack of vision, passion or enthusiasm for the beef industry in the Government's cold words. When I talk to those involved in the livestock industry, their passion and commitment comes through. It is their life. The BSE crisis has been one of their most traumatic experiences. They have seen many good animals that they have raised go to slaughter. That has not been easy. The Minister has referred to that many times, and I pay tribute to him for doing so.
Like my hon. Friend the Member for North Wiltshire (Mr. Gray), I have spent time with beef producers in preparing for the debate. I should like to repeat the questions that they are asking. I asked them what they wanted to know from the Government in response to the Select Committee. They want information about the lifting of the beef ban, a clear indication on the calf processing scheme, some guidance about the over-30-months scheme, answers to queries about the operation of cattle passports and, above all, a clear statement from the Government of their confidence in British beef.
Reference has been made to 70 local authorities--of which 64 are Labour-controlled--that are not serving beef. That shows the job to be done. When I rang Birmingham city council's direct service organisation--I thought that the Minister's influence would move his council--I found a schizophrenic situation. I was told that the council had made no decision to approve and endorse the serving of beef, but in pursuit of better value the direct service organisation was going to try to reintroduce it to schools. That is just one local authority. When I asked whether it would help if the Government made an announcement that would help to boost confidence, the clear answer was yes.
I appreciate that the MLC has a vital task in rebuilding confidence in British beef and helping to turn back the tide of declining beef consumption. Whatever the Minister and the Minister of Agriculture, Fisheries and Food can do to help reaffirm the safety of British beef will be a service to all the farmers, I have met and, to the beef industry.
Raising the beef ban must be the number one issue. I know that the Government have been working hard toget other European heads of state to agree that the Florence requirements--an agreement that the previous Government negotiated--have all been implemented.
I wrote to the other 14 member states to find out what the barriers were. I wanted to show them that we have done everything we have been asked to do, and to know why they do not agree to the lifting of the ban.
Sadly, some of the comments in the European press made by people in France and Germany when the Commission agreed that we had met the requirements and that the ban should be lifted leave me with a nagging worry about how long other Governments will keep up the pretence that we have not done all that we have to do. In an article entitled "Vache Folle" in Le Monde on11 June 1998, a French Minister was reported as saying that the French Government would examine the proposal to ensure that the safety first principle of the Florence agreement was respected. What on earth does he mean by the safety first principle and respecting it? I thought that we had done everything.
It would be helpful if the Minister could tell us where we stand. I share the concern of other right hon. and hon. Members that not until the German elections are out of the way will we stand the remotest chance of getting the ban lifted. The CDU representative, Mr. Boge, who chairs the German Parliament's BSE investigation committee, was reported in the Frankfurter Allgemeine Zeitung as wanting BSE exterminated before he would contemplate the lifting of the ban. Sadly, there is still scepticism among our continental partners, despite the huge efforts that have been made.
Many of the speeches we have heard this evening have referred to the impact on the economics of farming. Two figures stand out from the Ministry's data on the income of livestock producers. This year's figures show a drop in income on last year of 63 per cent for livestock producers in the less favoured areas and, more seriously, of 76 per cent. in the lowlands.
Mr. Robert Foster, a much respected commentator on livestock, has told me that he fears for lowland livestock producers, not so much from the economic point of view as because of the disruption for the rest of farming if they go out of beef production. Many of them may adjust their farming practices, which will affect others. Mr. Foster was also concerned that animals may be produced in the wrong places, with food moving to the animals rather than the other way round. I hope that the Minister will consider that sage advice from so worthy a commentator.
The Government's comprehensive spending review covered the calf processing scheme. Will the Minister clarify the Government's position? In their consultation document, they said:
"The prices that farmers get for their animals has fallen dramatically . . . prices now barely--and in some cases do not--cover the cost of production. Cattle prices in Wales have fallen by 30 per cent. in two years and lamb by 39 per cent. The price of milk has fallen by 17 per cent. in a year."
Welsh agriculture is dominated by livestock production. The beef, sheep and milk sectors account for 87 per cent. of the gross output in Welsh agriculture and 80 per cent. of Wales is designated less-favoured areas where 40 per cent. of farms returned incomes of under £10,000. One in four jobs in rural Wales are in agriculture, and for each job in agriculture there are four to five in related ancillary industries. Farming is at the heart of Welsh life and at the heart of Monmouthshire life.
"It is no exaggeration to suggest that much of Welsh agriculture will be destroyed within a decade unless urgent action is taken to reverse the decline."
We took evidence from the Meat and Livestock Commission, which showed that the price spread for British beef increased from 48.6 per cent. in 1996 to54 per cent. in November 1997.
"The Government's initial view is that the CPAS should be closed in the UK on 30 November 1998. It is recognised that this will have implications for calf producers' returns."
Later, the document says:
"No final decision has yet been taken and views are invited,by 2 July 1998."
The livestock producers to whom I have talked accept that the scheme has to change. Many would like a phased reduction in the current aid so that the price of pure beef-bred calves was lowered, finishers' input prices were lowered and we could start getting the economics of the industry back into some order. They also see dairy bull crosses, with the lower price of calves, as a way of encouraging home-produced processing beef, turning back some of the tide of imports resulting from the strength of the pound. The expenditure review talks about
the calf processing scheme ending. The terminology is ambivalent, and it would be useful to know whether the Minister is still of a flexible mind or whether the Treasury has made his mind up and the scheme will close with no further debate.
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