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Dr. Clark : Indeed. The Minister has always shown the House of great deal of courtesy ; he has always explained his views at great length and allowed himself to be cross-examined. I have not seen this important report yet, but I believe that it may show that up to 20, 000 cases of BSE- infected cattle exist, and that there may be a link between the disease and the Creutzfeld-Jakob disease in humans. So the Minister should have taken wiser counsel and dealt with some of the questions that right hon. and hon. Members want to ask him. Will the Minister assure the House that the research into the cattle disease BSE will not be held up, as it has been in the past, by the central veterinary laboratory, because of lack of funds? We feel offended that the Minister will not answer such questions--

Miss Emma Nicholson : I am not sure whether the hon. Gentleman is aware of the answer to a question that I put down last Thursday which the Minister has given me today and which concerns the research consultative committee looking into BSE. Perhaps he has not yet seen a copy?

Dr. Clark : I thank the hon. Lady for intervening again ; she always helps me and I appreciate that. She has underlined the point I was making. I know that she has tabled a number of questions about this subject, because her part of the country has been much affected by BSE, which was first discovered in the southern counties. She

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has been interested enough to table such questions--that one was on last Thursday's Order Paper, but there was no answer to it--which emphasises my point that there is great interest in this on both sides of the House, and that the Minister should have subjected himself to questions about it.

I hope that the Minister will confirm that there will be more research into this disease, as Sir Richard Southwood recommended. In view of the seriousness of the disease and its implication for human health, is it not time that the Minister banned the sale of sheep and cattle brains to the public? He knows that it was probably infected sheep brains which first caused BSE in cattle a number of years ago. That is Sir Richard's conclusion. He knows, too, that the brains of calves and sheep are used in the manufacture of brawn, meat pies and mock turtle soup. Yesterday's colour supplement of The Observer contained a recipe for a soup made of sheep's head, a traditional food for people in the north of England in the past. This disease is now endemic and remains latent in sheep and cattle for a long time, so the Minister should give us the benefit of the doubt and ban the sale of sheep heads. I am happy to give way to him now if he wants to announce that the Government are prepared to do that. Sad to say, he does not appear to want to.

Rather belatedly, 18 months after the event, the Minister made BSE a notifiable disease and announced compensation. But 50 per cent. compensation is not enough. Surely, to deal with a matter that is vital to human health, the Minister should propose 100 per cent. compensation for farmers ; if he does not, temptation will remain-- [Interruption]. The hon. Member for Sherwood (Mr. Stewart) denies that, but anyone who talks to farmers knows that when they are faced with the risk of losing £350 per beast, they may well send a cow to market even if they are in doubt and it should perhaps have gone for testing. Faced with such a loss, farmers will be tempted to do that. We suggest that it would not be very costly to double compensation to 100 per cent. In that way we would catch almost all cattle with the disease and start to eradicate it. We must go to the root cause of the problem, as we have done with other diseases of this nature. I hope that the Minister will deal with the problem of feeding animal protein to other animals, an issue that was also outlined in the Southwood report. It would be courteous if the Minister intervened to answer these small points at this stage, before he goes off to the press conference to tell the world. By not doing so, he is failing to treat the House with the respect that it deserves--

Mr. MacGregor : From memory, I think I made at least four statements to the House about BSE last year--all in written form. That seemed acceptable to the House. The House and the public want the publication of the Southwood report in full and as quickly as possible after my receipt of it. That is what I have done today, and I have shown the action that the Government are taking in the light of the report. It is a detailed matter, and I hope that there will be many opportunities to return to it in the House.

On compensation, there is no evidence that farmers have evaded their responsibilities. But that is something that we monitor. The compensation relates to 50 per cent. of the full market value. Cows that are clearly showing

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symptoms of BSE will no longer be worth anything like the full market value, so it is a generous rate of compensation in all the circumstances. There is no evidence that the rate is causing farmers not to bring forward cattle for slaughter and compensation.

Dr. Clark : We are grateful for the fact that the Minister has published the document in full, as he said he would in last Tuesday's debate. But just as he is right to say that it was important to publish the report in full, he should have come to the House and allowed us to put questions to him. I am sorry that even at this stage he has not answered some of our points.

We accept that there is no evidence, except for strong anecdotal evidence from people in the industry. But the Minister fails to understand the free market economy if he says that cows which have the disease are worth only 50 per cent. of their market value. If farmers send animals about which they have doubts--we must remember that it is a creeping disease--the purchaser may not be aware of the condition, and the market value will be 100 per cent. The NFU will confirm that it has cost farmers an extra £350 or £400 per cow.

Mr. Richard Livsey (Brecon and Radnor) : May I reinforce what the hon. Gentleman is saying? A farmer in my constituency suspected that an animal had BSE, but could not afford, and did not have the right transport, to take the animal on a 40-mile round trip to the veterinary investigation laboratory. The local vet wanted him to take at least the animal's head to the investigation centre, but in the end the animal did not get there. As far as I know, the animal got into the food chain. That is a serious state of affairs. Encouragement should be given to farmers to resolve the problems.

Dr. Clark : The hon. Gentleman makes a telling point. The Government have the Nelson approach of putting the telescope to the wrong eye. Just as they say that there is no evidence of fraud in Britain, so they say that there is no evidence of those problems. But we know that infected cattle are entering the food chain. It is time that the Minister answered that point and took action to eradicate this possibly terrible disease from the animal entering human food chains.

Mrs. Ann Clwyd (Cynon Valley) : Does my hon. Friend agree that if farmers had been given 100 per cent. compensation for every cow found to have BSE, it would have cost the Government only £1.25 million? That is a very small sum compared with the £18 million made available to egg producers.

Dr. Clark : My hon. Friend has made a good point. I hope that the Minister will listen to us and to some Conservative Members, among whom there is much sympathy for our argument : where there is a serious risk to public health, the benefit of the doubt--especially as this is a relatively small matter in financial terms--must be given to human health.

The Minister, having failed to achieve a fundamental reform of the common agricultural policy, was left with set-aside and stabilisers as the instruments to try to reduce surpluses. Only last Wednesday, he was explaining the success of his set-aside initiatives, expecting that about 1,820 farmers will take about 58,000 hectares out of production. Having seen the provisional effects of the scheme, may I ask the Minister whether he is still confident

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that the initiative will be sufficient to take enough cereals out of production to stop the intervention stores being filled up again? It would be helpful if the Minister would give us an idea of his assessment of the position.

Is the Minister aware of a practice which, to many people, appeared to be an abuse of the scheme? We know of several examples where farmers opt for set-aside, receive money for doing little--I will not say for doing nothing --and then make their farmworkers redundant. One farmworker in Suffolk has already been made redundant after working on an estate for 21 years. That was because his boss, the Leader of the other House and a former Conservative Agriculture Minister, opted for the set-aside scheme. We also know of a case in Scotland, where three farmworkers were made redundant when their boss opted for the scheme and set aside almost all his farm. There is no justice in that farmer being paid about £200,000 of taxpayers' money for doing little while his employees are made redundant.

Set-aside is likely to fuel the loss of farmworkers' jobs, which have dropped by more than 7,000 in the past year and by a staggering 37,000 since 1983. We do not say that the scheme is completely useless, given the difficulties into which the Minister has painted himself, but we believe that he should introduce a complementary scheme to allow special redundancy payments to be made to farmworkers who lose their jobs because of the scheme. In the name of equity and justice, that would be a much fairer way of improving the efficacy of the system.

Sir Nicholas Bonsor (Upminster) : I cannot see the difference between a farmer who decides on the set-aside scheme making his staff redundant and a farmer who goes from one method of operation to another making his workers redundant. It is very sad, and I accept the hon. Gentleman's point about Government money, but I doubt whether it makes much difference to the farmworker who loses his job. How can we differentiate between the two?

Dr. Clark : It is a matter of degree. Of course there is always a risk that a farmer might diversify from labour-intensive to capital- intensive production. That is a commercial risk which he takes on his own judgment. The difference is that he has not been encouraged to do so by the Ministry of Agriculture, Fisheries and Food. With set-aside the Minister has said to farmers, "If you will take out of cereal production more than 20 per cent. of your land, we shall pay you an amount annually for doing so." I do not disagree with the concept, but if no alternative work can be found for the farmworker, he should be given compensation for losing his job, just as compensation is paid to the farmer for taking his land out of production.

Before I leave the subject of set-aside, may I deal briefly with extensification--as the Minister said, a horrible word--or low-input farming. The Opposition want the Government to take a more positive approach to what we think would be another useful instrument in the Minister's battle to contain surpluses. The Minister will find that the concept strikes a chord not only with many farmers who would like to use the system but with many consumers, who would like food to be produced using less intensive methods.

Sir Richard Southwood has concluded that we should reconsider some of our techniques of animal feeding. I note that he says in his conclusion :

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"We question the wisdom of methods which may expose susceptible species of animals to pathogens, and ask for the general issue to be raised."

One has a great deal of sympathy for the German Agriculture Minister, Herr Kiechle, who complained of lack of enthusiasm for such voluntary production -curbing techniques.

Indeed, it is sad to note that the extensification programme has been delayed yet again. I know that the Minister is somewhat of a magician, and I thought that there was a sleight of hand in the way he presented to the House today the extensification discussion in the Council of Ministers. He said that it had been a great success. Of course, it was not a success ; as he knows, it was a compromise put forward by the Spanish presidency. The sad thing is that it was a compromise for delay, and, saddest of all, the Minister was not able to support his German colleague, who was on his own in voting against the compromise proposal because he wanted the original

extensification proposals to come into operation this year and not be postponed under two pilot schemes. As I have said, it is very sad that, again, the Minister wanted to play for delay. If he is trying to tackle the problem of surpluses, he should be using all the instruments at his disposal. We feel that extensification is one such instrument whose use he has delayed.

I was impressed by the Minister's statement today that--as I understood it- -he is prepared to bring in this year a pilot scheme for beef. I think I am right in saying that that is obligatory in any case--he has got to bring in some pilot schemes. Can he advise us whether he has similar proposals for sheep? That is something which may also be of interest. Having mentioned sheep, perhaps I should refer to the whole question of the sheepmeat regime, which causes Members on both sides of the House a great deal of anguish because it has ramifications far wider than the production of lambs. I made the point--I think my hon. Friend the Member for Caerphilly (Mr. Davies) had the same impression--that the Minister was actually admitting defeat.

Mr. MacGregor indicated dissent.

Dr. Clark : I am glad that the Minister denies it. Certainly he gave the very clear impression that he had thrown in the towel.

Mr. Home Robertson : He has done a Frank Bruno.

Dr. Clark : As my hon. Friend says, he has done a Frank Bruno. However, I am afraid that he did not last even five rounds--he seemed to throw in the towel almost before he had started.

Can the right hon. Gentleman give us a categorical assurance that he will fight to retain the variable premium, which, as he knows, has served the upland sheep farmer and the consumer very well over the years? Certainly it would be a retrogressive step if we were to lose that. The Minister admitted that the two-tier stabiliser regime already discriminates against the British producer. When pressed on the question of the income of the upland farmer--I think this was reported in The Guardian of last Friday or Saturday--he gave the rather dismissive reply that, if they had difficulty in making ends meet, they could simply go on social security. I find that offensive in the extreme. There is an avenue to help those upland farmers if the Minister chose to use it. He knows that the upland areas

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of this country face immense problems in terms of farming viability. Many small hill farmers, especially in Wales, are on incomes of less than £5,000 a year.

This is a real problem. My hon. Friend the Member for Workington (Mr. Campbell-Savours), who represents one of these constituencies in the Lake District national park, and my hon. Friend the Member for Clwyd, South-West (Mr. Jones), who represents a similar area in north Wales, know how difficult it is for the small upland farmer. The only animal that the farmers can rear is the sheep. If this is made uneconomic, the prospect is simply either insolvency or afforestation. I submit to the Minister and to the House that neither of those alternatives is the correct option for some of the most cherished landscapes in the United Kingdom. Those upland areas would simply remain unfarmed. They would go into a state of dereliction. They would become scrubland. Indeed, the tourist industry, which is so important as a provider in such areas, would lose its impetus, and many jobs would be lost.

I come back to a point that we have pressed on the Minister time and time again : why does he reject out of hand the direct income aids that are possible under the CAP rules? They have been agreed by the Council of Ministers, and he could bring them in. I submit to him that many farmers who look after our most attractive upland areas would accept direct income aids and would not find them as offensive as the Minister's suggestion that they could go on social security. The Minister may regret having made that statement--indeed, I think that, having thought about it, he realised that he had not meant it. I will deal now with the issue of sugar-- [Interruption.] Hon. Members may not be interested in sugar or the ACP countries--though, when they think about it, they probably are. The Minister spelled out his attitude in a little detail. Perhaps we can tease a little more from him about the 5 per cent. cut in prices. He knows that there is considerable concern that the Commission's proposal for a 5 per cent. cut in prices will have a dire effect on the economies of some of the producer countries.

The current sugar regime is widely acknowledged--the Minister himself acknowledges this--as one of the best forms of trade with some Third world countries. Indeed, it has been a cornerstone of the economic well-being of the ACP countries, and the very basis--and this is the irony of the situation--of their attempt to do what we keep telling them to do : diversify their activities into other economic spheres. We have calculated that the Commission's proposals would reduce the earnings of the ACP countries by £23 million a year. I know that compensation is mooted. Can the Minister say what level of compensation is being talked about?

Furthermore, bearing in mind that the whole of the European Commission obligations under the sugar protocol are carried out largely by Tate and Lyle at Greenock and at Silvertown, is he confident that that company will be able to discharge these important obligations if the price cuts go ahead? This is a very important point.

Mr. MacGregor indicated assent.

Dr. Clark : The Minister is nodding his head. I know that it is a matter that he will include in his brief when he

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goes back to Europe. I hope he will fight for this, because it is important that, whatever arrangement is reached in respect of the sugar regime, we honour our obligations--negotiated very hard in years gone by--to the ACP countries.

The Minister mentioned pigmeat. He said that it was his conclusion, and the conclusion of the Commission, that the difficulties experienced by the pig producers in recent years were due largely to the problems of too rapid expansion and over-supply. He had come to the conclusion that the only way to regulate this was by the free play of supply and demand. I must tell him that that view is not shared by many people involved not only in pig farming but in other branches of agriculture in this country.

The Minister knows that the pig producers have had a raw deal under the agrimonetary system of the CAP. They have not, in their terms, been allowed to play on a level playing field, in spite of the fact that the support system for pigmeat is minimal in the extreme. It seems illogical that the British pig farmer, even bearing in mind the point about expansion and over -supply, and bearing in mind the rumoured--and I think that, on occasions, the rumour has been well founded--subsidies given by the Dutch and Danish pig producers, does not feel that it is simply a question of over-supply and over-expansion, I thought it was a pity that the Minister, who, in the past I had thought, had understood the plight of the British pigmeat producers, now seems not to share that point of view. During the past 10 years the Government have failed to give agriculture the necessary lead. It is amazing that, after 10 years, we are still awaiting a White Paper on its future. We do not know which way the industry is going. We know that the Government pay lip service to the National Farmers Union, but these days the Government are in the pockets not of the NFU but of agribusiness and the big chemical companies.

This Government have failed consumers and farmers. The differences between the world and EC prices are wide, as the Minister freely acknowledges. Subsidies are far too large. Why should the British consumer pay 58p for a 250 gm pack of butter when the world price is 25p? Similarly, why should the British consumer pay £1.18 for a pound of beef when the world price is 60p? The truth is that food in the EC is often twice as expensive as it should be, yet both consumers and farmers are losing, and much of that money disappears in fraud. It is only under Labour that both consumers and farmers get a fair deal. As a farmer in the Minister's constituency recently said : "Agriculture is doing infinitely worse now than at any time that I can remember. There had to come a backwash and this is it. A lot of farmers say they do better under Labour."

That is right.

5.31 pm

Mr. Ralph Howell (Norfolk, North) : I must declare an interest, as I have been a farmer for 43 years. There is greater uncertainty in the industry now than I can remember in the whole of that 43 years. I have listened to two Front Bench speeches. The speech of the hon. Member for South Shields (Dr. Clark) did nothing to reassure me. It is obvious that the Labour party has no answer to our problems. Neither am I satisfied with what I have heard from my right hon. Friend the Minister. He and I are fellow Norfolk Members and

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once shared a common constituency boundary. I consider him to be a great friend. I realise the immense difficulties under which he is labouring. Not only have the Government got agriculture wrong, but so has the EEC and the United States. My right hon. Friend is facing tremendous difficulties, added to which he has had a little bit of sniping from another Ministry.

We must rethink the whole of our agriculture policy. I should like to begin by giving the House extracts from a speech which my right hon. Friend the Prime Minister made when she opened the Royal Show in 1981. She said :

"I wish to pay tribute to the remarkable contribution which British agriculture has made to our prosperity over many years. If only the whole of industry had performed as well as agriculture, the economy of this country would have been transformed. You now produce 64 per cent. more than you did 20 years ago ; a performance that is twice as good as that of our manufacturing industries ; labour productivity has increased by over 150 per cent.--virtually three times the increase in productivity generally."

The Prime Minister had more to say :

"Twenty five years ago, our farmers provided only 60 per cent. of the foods we need which can be produced here : today, the figure is 75 per cent.

This improvement alone is now saving some £1 billion per year on our food import bill, but there are still many foreign imports which we can replace."

She also said :

"In paying this tribute to British agriculture I am not being complacent-- nor will you be. There is still plenty to be done. We can raise production still further."

British agriculture did exactly what it was asked to do. In 1981, we were producing 75 per cent. of the temperate foods we need and we increased it to 82.5 per cent. of self-sufficiency. It has been slipping back ever since, and it now stands at less than 73 per cent. That has created tremendous uncertainty and unprofitability within our industry and damaged the balance of payments considerably. We must find a way to restore confidence to agriculture soon. What has brought about this great U-turn in agriculture? I can only conclude that the Treasury has swallowed, hook, line and sinker, all the false information put about by the Cheaper Food League, and particularly by my hon. Friends the Members for Southend, East (Mr. Taylor) and for Holland with Boston (Sir R. Body). The time has come when we must recognise that the position has changed rapidly. If we carry on as we have been in the past two or three years, we shall endanger our agriculture and do grave harm to the environment as a whole.

Why on earth should we not be an exporter of grain? No other country can produce grain better than the eastern part of England. The Commission and the Americans are telling us that somehow we should not be in the exporting business. That is absolutely wrong. I wish that the Minister were listening. It is unfortunate that he is not, especially as he is my Member of Parliament. These matters need serious thought. We should be encouraged to produce grain to feed those parts of the world which have it in short supply. I cannot understand why, when the West has grain which the eastern bloc needs so vitally, we have to subsidise it to sell it to them. The whole approach to the export of grain has been wrong.

I recognise that the common agricultural policy is by no means perfect and is in need of reform, but the sort of reform that we are getting--of either depressing prices all round or freezing them while all other costs increase --is damaging. That is to put agriculture in this country and

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the wider advanced world--the United States and the rest of Europe--on a serious course which can only damage the economic health of the whole of the western world.

The question of sugar will be important, especially in Norfolk, which is the biggest sugar-producing county. There is no reason for the cut in the payment to growers. It is being done merely to bring the prices into line with the depressed prices which are being forced upon the cereal growers in some pretence that it will stop growers going into sugar production. Everyone knows that there is a quota system for sugar, so that cannot take place. I believe that Ministers will be in great difficulty if they go along with those proposals. The scare about listeria in soft cheeses has done great damage to the whole of our cheese production industry. The French have gone quiet on this matter, so I can only conclude that the Minister has assured them that no harm will be done to them. However, it is well known that harm has been done not only to the producers of soft cheeses, but also to those of hard cheese in this country. That, coupled with the egg scare which has caused the killing of thousands of hens, will have one effect only--the consumers will have to pay higher prices than they would have had we not had so much nonsense from the scientists. I agree with the Minister that the time has come to put fewer resources into scientific research, because during the past few months scientists have caused a great deal of trouble in trying to justify their existence.

I believe that a fundamental reappraisal of our attitude to food is necessary. According to the latest set of figures--they have been rehashed this year so they are new to me--in 1984 we were spending 14.5 per cent. of our disposable domestic income on food, but we are now spending 12.2 per cent., while in 1979 it was 17.8 per cent. It has therefore been cut by one third.

In her speech in 1981, the Prime Minister made the point that the price of food had risen less than that of other goods which we purchased and, therefore, food is extremely cheap. I wonder, however, whether that is a good objective. One of our principal problems is that the Treasury believes that there is a lot of cheap food out in the wide world which would be a much better buy than supporting agriculture. Of course, if the 56 million people in this country depended on food from abroad, the Treasury would soon find out that there was no cheap food, and that we were at the mercy of the world for our food supplies.

How is it that the countries which have a different food policy--such as Japan, Switzerland and West Germany, which I include although it is part of the EEC, yet is always trying to defend its food production industry--are the countries which have the strongest economies? We must think again.

In my intervention in the Minister's speech I mentioned that the report of the Food and Agriculture Organisation of the United Nations must be taken seriously. We know that our stocks of milk powder have gone down to virtually nil. I am not sure how those countries of the Third world, which we were able to help with skimmed milk powder, will fare. The fact that the world is consuming 100 million tonnes of grain more than last year's production is a very serious matter. There are reasons to believe that the weather problems in the United States may not be one-off, but could occur again.

The time has come for a thorough reappraisal of our agricultural policy and it should be appraised in such a

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way that those engaged in the industry can understand what that policy is. I believe that it is fair to say that all the people involved in agriculture to whom I have spoken have not a clue what the Government's policy really is.

5.45 pm

Mr. Richard Livsey (Brecon and Radnor) : I wish to make a number of points about the price proposals for 1989-90 and to respond to some of the Minister's points. I am especially pleased that the price proposals have been produced early this year, which is quite an achievement. As a former lecturer in farm management, I was often having to explain to students a week before their examinations that there had been many nights of negotiation at Brussels in the previous two months. However, we must look at the background against which the proposals were being discussed. It is a serious matter that farm incomes in the United Kingdom, in real terms, are the lowest since the second world war. I believe that that was partially responsible for the National Farmers Union, at its annual general meeting earlier this month, giving in effect a vote of no confidence in the Government's agriculture policy.

In 1988, there was a 25 per cent. drop in farm income, which is a 28 per cent. drop in real terms. According to a farm management survey in my country of Wales, small dairy farmers are trying to exist on net incomes of £4,992 per annum. It is an extremely tall order to expect them to survive in that situation, but one way or another they do. Over the past few years there has been a fall of 9 per cent. per annum in farm incomes.

The problems in the livestock sector are becoming more acute, although I fully realise that in 1988 the weather badly affected the arable sector too. Much money has been borrowed by farmers--in fact, £6.5 billion-- and the annual interest rate bill is £700 million. As we know, the Chancellor's present policy of high interest rates is hitting agriculture hard.

I believe that macro policies of the kind which the Chancellor is using to tackle credit card spending power in the high street are inappropriate, because that problem bears no relationship to those of farm incomes and long-term investment, which is what concerns farming. At the same time, the Government have failed to join the European monetary system, which undoubtedly would stabilise interest rates. Farm accounts, especially those of farmers who have joined the industry in the past 10 years, show that one of their highest costs is interest rates. The Chancellor must deal with that problem, not only for farmers, but for other small businesses which are also being hit hard.

The situation in the less-favoured areas must be protected and supported. There is still scope for more support, certainly for suckler cows and for hill ewes.

The loss of the beef variable premium as a result of an agreement struck in the new year will mean a considerable loss of income to beef farmers. The introduction of the beef premium scheme for steers and male animals-- heifers do not receive the premium--means that there will be an overall loss of income. The new scheme is equivalent to 3.3p per kg, whereas, when the variable premium operated, 10p per kg was paid out in certain circumstances. Those figures illustrate the substantial loss caused by the new scheme.

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I am pleased that the Minister has addressed the problem of the sheepmeat regime. Britain is in the driving seat when it comes to sheep because 70 per cent. of the EEC's sheep population are found in the United Kingdom. Sheep are crucial to upland Britain, especially when one considers that half the ewes of Britain reside in Wales and Scotland and that those countries are dependent on them. The north of England, the south-west and other areas, mostly in the west midlands, are also dependent upon sheep. Sheep are crucial in the less-favoured areas where farm incomes are low--in fact, in terms of disposable income, the income of the general populace of the rural areas is low.

The Commission's proposals to tackle some of the problems appear inappropriate, especially in relation to variable premiums on sheep, which have encouraged quality lamb production ; this has been an extremely good thing. If the Commission wants to abandon the open-ended variable premium, that should be discussed, rather than it taking a decision to cut off the variable premium completely. I am sure that there is room for negotiation on that matter.

Mr. Christopher Gill (Ludlow) : I am grateful to the hon. Gentleman, my neighbour, for giving way. Does he consider that the support mechanism that we have experienced for the past 10 years has worked against the producers of livestock, because, for obvious commercial reasons, they have produced meat for the intervention stores and against the seasonal price scale, rather than for the end user, the housewife feeding her family? In a perverse way, the support mechanism has had a bad long-term effect upon farming. We should all exhort the industry to get back on to a basis where it is producing food that will be consumed. In that way, we shall be encouraging the industry to become a much healthier and profitable one. I know that it is debatable, but I should be interested to know the hon. Gentleman's views.

Mr. Livsey : I entirely agree that the intervention system has not been appropriate and has been wasteful in terms of expenditure, but that applies to the beef and cereal sectors, not to the sheep sector that I am discussing. The danger is that, if we abandon variable premiums, we may well end up putting sheepmeat into intervention stores, and I do not want to go down that road.

Mr. Gill : I submit that sheepmeat is a prime example of the divergence of opinion between what the consumer wants to eat and what the producer is producing. Now the producer has an incentive to produce lamb into the new year, when the seasonal price scales are at their highest. By that time, the quality of the lamb is less than it would have been in the autumn of the previous year and, in strict parlance, it is no longer lamb. Traditionally, the consumer is not in the habit of seeking to buy and eat lamb in the new year.

Mr Livsey : I am sure that the hon. Gentleman will accept that the variable premium system could be manipulated in such a way as to accommodate such marketing.

The Commission has proposed headage payments only, and I believe that great ewe premiums will encourage too much expansion of sheep production. Currently production is held at a level which means that we are 20 per cent. short of self-sufficiency. I was pleased that the Minister

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said that there was a possibility of easing the stabiliser system for sheep in Britain. The Commission has some curious ideas about the stabiliser system and the payment of ewe premiums on headages--payment will be made for 1,000 ewes on hills and 500 ewes on lowlands. I do not believe that those proposals are acceptable. I have heard Eurocrats talk as though everyone has a flock of 10,000 ewes, but in this country the average ewe flock is well below 400. The Europeans must recognise that.

The Minister's statement was not half strong enough. I felt that he was talking about the demise of the variable premiums, when I believe that they should be fought for tooth and nail. We should not accept the current unsatisfactory situation regarding the freezing of sheepmeat prices. The Minister intends to have negotiations about the European sheepmeat regime. I believe that the current regime is satisfactory and, although we might have to adjust the variable premiums to some extent, we should not abandon them. The alternative is a vast expansion of the sheep flock with a subsequent kickback to the less-favoured areas and the only enterprise that those areas can successfully run at the moment. Such a kickback is an appalling prospect.

When the Minister is negotiating with the Council of Ministers on the sheepmeat regime, he should abandon those talks and walk out if he cannot get satisfactory proposals from the Commission. So many livestock farmers depend for the living on sheep in Britain and, largely, they reside in the poorer areas. The Minister must take this matter extremely seriously, because there is an awful lot at stake. The proposed price freezes represent a reduction in price because, currently, the stabiliser system is biting. As a result, the sheepmeat market has been rather depressed. Obviously, there is scope for green pound stabilisation, although that is now minimal, but in the long term it is hoped that we can abandon the green pound. That policy is absolutely right. Because of the rise in value of sterling, there is almost parity between that and the green pound, so there is little scope for reducing the green pound. As a result, the full brunt of the price reductions will be felt by our livestock industry and the small and medium-sized farm businesses will be undermined, especially as they are finding life extremely difficult now. An alternative is available to the Government, although they have not decided to take it up, and that is direct income support. The Under-Secretary should state why the Government are not prepared to consider that option especially when one considers the plight of the small and medium-sized farmer. Wales is heavily dependent on the livestock industry. The Farmers Union of Wales has calculated that farm incomes have dropped by £15 million in real terms in comparison with 10 years ago. That represents an awful lot of money. Now that the retail prices index is more than 7 per cent., it is clear that input costs will rise. However, the Minister has said that prices are frozen. I hope that I have shown that they are reducing. The European price proposals for 1989-90 do not hold out good prospects. Falling prices will hit our smaller producers. If the Government are not prepared to look at income support, what will they do? We cannot continue with a base interest rate of 13 per cent. which results in a further squeeze on farm incomes. As a result, less food will eventually be produced in certain areas, and that could lead to higher consumer prices and more rural depopulation.

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The Government should accept that they cannot wholly rely on the market place to solve their problems. Why do they not accept that most advanced nations support agriculture and intervention? I mean that in the broadest possible sense, and not in the narrow EEC sense. Many countries use Government intervention to support agriculture. The Government should implement policies that are commensurate with that. It is important for farm incomes to be maintained and our rural populations must be kept in the countryside. Failure to do so is a negation of good government.

6.1 pm

Dame Elaine Kellett-Bowman (Lancaster) : For many years, I supported the importation of butter and sheepmeat from New Zealand, and I did so because of the contribution of the New Zealand forces in the 1914-18 and 1939-45 wars. When New Zealand ceased to make a full contribution to the defence of freedom by refusing to allow British warships to enter its ports for any purpose, including repairs, unless they publicly declared that they were non-nuclear, my support ended. We should look after our own farmers, especially now that their incomes have been much reduced. The sole criteria should be the interests of our farmers and consumers and the interests of New Zealand should be set entirely on one side.

Before the Minister spoke, I was worried about the unfairness of having a separate stabiliser for United Kingdom sheepmeat production. I was almost reassured when the Minister referred to the ending of this unfair stabiliser which applies only to the United Kingdom. My anxiety was half reawakened by his response to my hon. Friend the Member for Basingstoke (Mr. Hunter). I hope that the separate Great Britain stabiliser is on its way out, because that is where it jolly well deserves to be.

In terms of beef, I regret that a ceiling is to be imposed on herd numbers. I appreciate the Minister's efforts in getting the limit raised to 90. However, I wish that a way could be found, without encouraging fraud in other countries, to enable support to be extended to clean heifers which are an important part of the United Kingdom's farming pattern. Since we are losing our beloved beef variable premium, which everybody in Britain liked, it is important to ensure that the special premium is available on the maximum number of cattle and that the suckler cow premium is paid at the maximum allowable rate.

In all previous agriculture debates, my hon. Friends and I have urged the Minister to devalue the green pound. The strength of the pound makes that unnecessary today, but if it should weaken, I hope that the Minister will take immediate action to prevent our farmers being placed at a disadvantage. The Minister rightly put much emphasis on eliminating fraud. As he recognised, nothing does more to damage the Community image throughout the EEC than the feeling that taxpayers are being milked by fraud. We police our agriculture and, indeed, our other industries much better than other countries ; that means that, in Britain, the scope for fraud is limited. That makes it all the more galling when we see fraud running riot in other countries.

There has been a great deal of fraud in the production of olive oil. It is pointless to try to monitor olive oil production by aerial photographs, because an irrigated olive tree produces 10 times as much oil as an unirrigated one, and no aerial photograph will reveal that. It would be

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far more sensible to tie the receipt of Community money for olive oil to tax returns. That would mean that, if income were under-reported, subsidy receipt would be reduced pari passu. I agree that it would undoubtedly be in the interests of farmers for the CAP to be reformed, but being done good to can be a painful process. I hope that the Minister will not administer such large doses of reform that farmers will disappear and everybody will go hungry.

6.5 pm

Ms. Joyce Quin (Gateshead, East) : Many issues are being covered in the debate. Like many hon. Members, I went to the Vote Office to collect the documents relevant to the debate and was filled with great alarm when I saw how many policy areas we were supposed to consider. The main aspect of the debate, however, is the agriculture price review and the eventual settlement that will be decided by the EEC. On the whole I welcome the Commission's proposals and hope that their main thrust will not be weakened in the coming weeks when some member states will have to take rather difficult political decisions at a time when the European elections are not far off.

Like many hon. Members, I believe that agriculture is vital and important for the health of our economy and that of the EEC. However, the interests of agriculture have to be balanced against other considerations. In the past, although it is less true today, the interests of large-scale agricultural producers semed to outweigh other considerations.

I am interested to see that the hon. Member for Skipton and Ripon (Mr. Curry) is in the Chamber, because he and I are members of the European Parliament and are on the Agriculture Committee. When I first joined that Committee I was astonished to see the strength of the farming interests among its members. If my memory serves me right, on the Committee there were beef farmers, pig producers, dairy farmers, olive oil growers, wine growers and on one occasion a buffalo farmer. That became apparent when we considered the importation of frozen buffalo meat from Australia. We realised that that would run counter to the interests of one member of the Committee who was a buffalo farmer from Italy.

Nowadays there is a better balance and other interests are being fully considered. I support the work of the newly appointed European Commissioner for consumer affairs who seeks to make sure that in all issues affecting the running of the EEC the voice of the consumer is heard. More such reform would be useful. For example, does the Minister agree that consumers and agricultural processors should be given a bigger say in some of the agricultural advisory committees in the Commission? Other current suggestions include the creation of an EEC food and drugs agency. That would be a useful initiative. Are the Government also prepared to support the idea put forward by consumer groups for an EEC food hygiene directive?

Within the better balance that I am talking about we need to make sure that we have effective and well targeted help for agriculture. I particularly support help for the less well-off areas--the upland areas that are difficult to farm but which provide many benefits for our society, not least in terms of advantages for the environment and for industries such as tourism.

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Within the EEC, there are several schemes that will change the pattern of farming--for example, the set-aside scheme, which has already been mentioned. While this can make a contribution, I share the reservations expressed about it by my hon. Friend the Member for South Shields (Dr. Clark), particularly those concerning farmworkers, who may find that their livelihood is dramatically affected by this move. Extensification is a valuable measure, but I am concerned about the slowness with which it is being implemented. I hope that we shall be prepared to learn from countries that want to move faster down that road, and, at least within the EEC, there can be a useful sharing of experience.

I strongly support the measures that are being suggested to develop agriculture in an environmentally friendly manner. This will be particularly important in the years ahead. However, I regret that severe cuts in funding for some of the useful agricultural research, and for research into the effect of modern agriculture on the environment that the Government have been prepared to allow. It is important for farmers, in Britain and in the rest of the EEC, to move away from the products that have traditionally caused the largest surpluses, but we have to be careful about how this process takes place. There is always a danger that, in response to the latest move in Brussels, farmers respond in a particular way. A few years ago we were all amazed, and not particularly pleased, by the enormous areas that were suddenly cultivated with oilseed rape, and the dazzling yellow fields of spring. While it is necessary to give incentives to farmers to move out of surplus production sectors, the effect on different parts of the EEC and different countries needs to be carefully monitored.

For example, I should not like to see farmers move over to forestry to such a huge extent that many of our upland areas become afforested. I am glad that we have turned away from some of the harmful coniferous plantations that have disfigured our uplands. We seem to be making further advances down the right road in England, but I wish that the Government would take on board the need to reduce the amount of coniferous plantations in Scotland and Wales, about which many environmentally minded people are rightly concerned. I would not like to see the natural diversity of the countryside and the rural areas in the EEC eliminated by the latest directive or proposal to move into the production of certain products. It is important to help the poorer agricultural areas and I am glad that, under the EEC structural funds regulations, some progress is being made towards that. I know that the Government have agreed with Brussels that three areas in the United Kingdom should be helped by the structural funds- -the Highlands and Islands, parts of rural Wales and parts of Devon and Cornwall. However, how did the Government decide on these areas? What were the criteria by which suitability for these funds was decided? Do those criteria apply equally to other areas that might be in need of special support, such as the north Pennines? I do not think that objective criteria were used in determining the areas to be helped. While I would not like to detract from the help that those areas will receive, I should like to know whether other areas fit the criteria and might be considered at future meetings between the Government and their EEC partners. Several hon. Members have spoken about fraud, and, when EEC money is being allocated we want to be sure

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