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Mr. Morley: I did not say that.
Mr. Nicholls: The hon. Gentleman will want to check Hansard. I made a careful note of what he said. This is not the first time that we have heard the Government say, "We would like to help, but we cannot help because of Europe." We want a commitment from our Government to stand up and fight for this country's interests in Europe. It is no good the Government saying that they represent a bridge into Europe, if their idea of a bridge is simply to lie down so that other people can walk over them.
I want a commitment from the Government to get the right deal for British farmers in Europe, in the same way as the Spaniards seek the best deal in the interests of their fishermen.
I recognise that the Government are taking measures, and that part of the problem is the cyclical nature of the farming industry--there are good years and bad years. However, one overriding issue distinguishes this crisis in agriculture from any other: the Government's mismanagement of the economy. The pig, livestock and poultry sectors are all feeling the effects of a pound that is so strong not as a result of deliberate Government action, but as a result of deliberate Government mismanagement of the economy.
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley):
I regret that the hon. Member for Teignbridge (Mr. Nicholls) has tried to make a partisan point in what has been a good debate about the real crisis facing agriculture. He suggested that that crisis is a result of the Government's economic mismanagement, when we know very well that much of the pressure on agriculture is due to the collapse of traditional markets, the strength of our currency--although that has devalued by 10 per cent. in recent months--and to a significant increase in production in certain agricultural sectors. There has been a 16 per cent. increase in pig sector production over the past two
I congratulate the hon. Member for Ribble Valley (Mr. Evans) on a very good and knowledgeable speech, which outlined the pressures that his farming constituents--particularly those in the pig industry--face. I shall try to answer the various points raised in the debate in the limited time available.
Several hon. Members mentioned the supermarkets. They will know that the Office of Fair Trading is investigating the supermarkets and examining such things as the disparity between the prices of goods on the shelves and the prices paid to producers. That report will be published next year.
The Minister and I have met the banks--I understand that there will be further meetings--to discuss the current farming situation and emphasise the need for support. In my discussions--I did not meet all the banks, but certainly some of the major agricultural lending institutions--it was made clear that the banking sector has confidence in agriculture and will support farmers, their customers, during this difficult time.
The banks also made several predictions that have so far proved to be quite accurate. At a meeting earlier this year, the banks predicted that the pound would fall in the fourth quarter of this year and that interest rates would peak and decline, and that has occurred. The hon. Member for Teignbridge claimed that interest rates had risen, but they have fallen recently, and the long-term borrowing rate is currently at a 30-year low. The banks also predicted that farm incomes would fall last year and this year, but they are predicting an upturn in 1999. Several factors bear out that prediction.
Mr. Evans:
The long-term borrowing rate is mentioned time and time again. Will the Minister concede that farmers borrow not on the long-term rates but on the commercial rates that are available today and those that have been available for the past two years? That is the problem.
Mr. Morley:
I think that some farmers do borrow on long-term rates: it depends on their commercial judgment and the size and nature of their operations. I do not think that the hon. Gentleman can rule that out.
Several hon. Members mentioned European Union directives. I emphasise that we comply with those directives in this country, and it is not fair to say that other countries do not do likewise. We have repeatedly told several industry sectors that, if they are aware of disparities within the EU, we will not hesitate to investigate them, raise them with the Commission--the hon. Member for Bury St. Edmunds (Mr. Ruffley) made that point--and press for immediate action in cases where other member states are not implementing regulations in the same way as we are. I give the House that absolute guarantee.
Mr. Ieuan Wyn Jones (Ynys Mon):
Some pig producers have claimed that France, in particular, is subsidising its domestic industry. Will the Minister challenge that practice in the Council of Ministers?
Mr. Morley:
I was about to come to that. We have already challenged it, together with other member states,
I touched upon the issue of competitive advantage earlier by way of intervention. The House may not be aware that United Kingdom exports of pigmeat to Europe this year increased by 17 per cent. on last year, which was a record year. Some 236,000 tonnes of pigmeat was exported from the United Kingdom to the EU. We have some marketing advantages that we can exploit--indeed, we exported pigmeat to Denmark, which is quite an achievement.
Offal control imposes extra costs, and I would not want to pretend otherwise. However, we all know that that is a result of bovine spongiform encephalopathy--the worst crisis to hit agriculture in the history of this country. We are determined to eradicate BSE from the United Kingdom and deal with those problems. Unfortunately, that means that we must have offal control.
Mr. Edward Garnier (Harborough)
rose--
Mr. Morley:
I hope that the hon. and learned Gentleman will forgive me, but I want to try to answer the points that have been raised in the five minutes remaining.
The review of antibiotics is an EU issue, and it is being approached in that context. Any change in antibiotics will take the form of an EU, and not a unilateral, measure.
My hon. Friend the Member for Braintree (Mr. Hurst) adopted a very reasonable approach based on significant knowledge of the industry. I welcome his support, and I shall reassure him about storage aids in a moment. The hon. Member for Bury St. Edmunds referred to labelling, supply and flagging up standards in the industry. We certainly intend to address those issues.
Any imports into this country must comply with the law, but we can set higher standards if we choose to do so. We have done that in relation to welfare standards in the pig industry, and I emphasise that that has marketing advantages in terms of meat and bonemeal.
My hon. Friend the Member for Stroud (Mr. Drew) emphasised the importance of consumer choice and marketing. I agree with him absolutely. The hon. Member for Tatton (Mr. Bell) made a powerful case on behalf of his constituents. I assure him that the Government fully recognise the impact of the present difficulties on the agriculture industry. That is why we introduced the recent package, which is in addition to the package introduced
last year and the regular subsidies that I will mention in a moment. The hon. Member for South Holland and The Deepings (Mr. Hayes) made several sensible points, particularly regarding marketing and co-operation. The Government will consider how to take those matters forward in the near future.
We have announced a package of £120 million for the livestock industry. The sum is additional to the overall subsidy for the agricultural sector, which is the equivalent of £50 for every man, woman and child in this country. That is a significant amount. I emphasise that the pig industry--on which this debate has focused--is unsubsidised and is a very light EU regime. We have held talks with the United Kingdom pig industry and, although it has certainly requested a package of support measures and equal treatment and raised several points that were mentioned in the debate, it has not asked for any subsidy. The industry asked the Government to take action against French and German state aid to their domestic industries. We have acted on both counts, and neither Germany nor France is supplying state aid to its pig industry. We are trying to ensure that all member states abide by the rules.
Time is limited in terms of compiling a package of measures for the pig industry, but a further increase of 30 per cent. in the rate of export refunds on fresh and frozen carcase meat was agreed on 15 October. At yesterday's meeting of the pig management committee in Brussels, the decision was taken to increase the level of export refunds from 40 to 70 ecu per 100 kg for fresh and frozen cuts and carcases that are exported to Russia. That is a generous increase that reflects both the economic problems in Russia and the position of the EU pig market. In respect of the EU pig industry, the total package of storage aids, which apply in our country, is the equivalent of more than £100 million. That is going towards helping the pig industry now.
I make it clear that considerable financial support is being given to the pig industry, and in practical terms we have raised continuously that industry's high standards. The British Retail Consortium statement was welcome; the major supermarkets have made it clear that they will be sourcing only fresh pigmeat and bacon, and sourcing their own-process brands--including sausages, pies and so on--from systems that produce stall-free, meat and bonemeal-free pigmeat; and we will be meeting the branded manufacturers to find out whether we can extend that to a wider range of products to assist the pig industry.
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