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Mrs. Clwyd : Obviously the hon. Gentleman does not know about the vast amounts of milk powder or butter that are kept in intervention stores, both of which can be used in the preparation of airline meals.

Sir Nicholas Bonsor rose --

Mrs. Clwyd : No, I shall not give way a second time.

With regard to the physical control of intervention stores, the Community believes that the system is self-controlling. The theory is that the Community's financial interest in the stocks is adequately safeguarded as to quantity and quality by the fact that the prices at which transactions take place are determined by the opposed interests that exist at points of entry and release between storekeeper, seller and buyer respectively. The member states are financially responsible to the European agricultural guarantee and guidance fund for "any quality or quantity losses that exceed natural tolerances" However, that reasoning does not adequately take into account the risks inherent in public storage operations. I do not need to spell out the main risks to the Minister, because he knows them only too well.

The quality of a product accepted into intervention storage may be overstated and may even be substandard. That point is clearly made in the Hillingdon council report. The report also states that deterioration of the quality of a product as a result of inadequate care taken during storage is possible. It also speaks of

"the substitution of the product accepted into intervention which may be brought to the market with a similar product of a lower quality at some stage during storage".

The report also describes

"manipulative discrepancies between ingoing and outgoing qualities, which can pass unnoticed because even for an important deterioration of quality it is difficult to distinguish the effects of time and weather from other factors which lead to the deterioration of a product being stored".

The report underlines that the risks

"are accentuated in any one or more of the following situations ; a combination or an association of interest on the intake side". The obvious case is an intervention centre run by a producers' co-operative, but it can also be a matter of local business structures and relationships that render the storekeeper more or less dependent and perhaps impair his objectivity.

It is also clear from the report that food aid deliveries and free food distribution schemes provide outlets for the direct human consumption of such products. We know only too well that

"recipients are not of course in a position to compare the quality of the product received with the quality shown in theory in the records of the intervention agency. In practice they are unlikely to complain".

No action is taken by the Commission services in respect of quality control unless member states report

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"abnormal quality deterioration or complaints are received from dissatisfied buyers of intervention commodities"

As to the member states' arrangements for quality control of intervention stocks :

"Important differences in nature and intensity exist between member states and between products. Quality control at entry, for example, sample-taking and physical chemical analysis, is in practice carried out by the intervention agency's own technical staff, officers of specialised technical Government services, including state laboratories, experts of specialised commercial firms, including private laboratories or the storekeeper's technical and laboratory staff"

Obviously we are discussing the systems of surveillance of storage conditions that are put into practice by member states and it is clear that storage conditions for the same product vary from one member state to another and cover important technical differences. That point is clearly made in the report from Hillingdon council, which concludes :

"The great variety in technical instructions issued by the intervention agency to the storekeepers in respect of the quality surveillance of some of the intervention stocks differences in the minimum freezing temperature for butter prescribed by national regulations as opposed to the case of beef meat the Community regulations give no standard of freezing temperature storages for butter. While in most member states minus 16 deg. C is the norm, there are countries which allow less--one country even up to minus 10 deg. C."

Obviously there are great differences in the quality control of storage. The report continues :

"Sample-taking procedures on butter in some countries is surrounded by more professional ritual than others."

It is clear from the report that the quality rating systems are more elaborate in some countries than in others and that, in general, quality testing differs by definition, because no common definition exists for the storage of butter even within the Community. It is not surprising that all sorts of problems have been shown up in the Hillingdon reports. For instance, it states that the surface colony counts of bacteria are in excess of limits in certain airline meals :

"High counts in certain foods could be attributed in part to one of the following reasons"--

I am sure that the Minister will want to respond to this "The presence of ingredients which naturally contain large numbers of organisms due to production methods used for that food, for example, fermented food such as salami, parma ham or yoghurt, or the presence of raw garnishes or vegetables which may contain large numbers of organisms.

In this survey each dish was examined as a single composite sample and not as individual ingredients. The requirement of airlines for meats to be served pink and vegetable crisp on the aircraft requires the flight caterers to part cook the foods with the remaining cooking regeneration taking place on the aircraft. Thus, at the point of sampling the main course dishes were undercooked."

A frightening disclosure is that many of the foods were prepared by the cook-chill method, which has been implicated in many of the recent cases of listeria food poisoning to which I had to draw the attention of the Minister by way of a Standing Order No. 20 application at the beginning of January. The report continued : "Twenty-four per cent. of the foods tested harboured 1 million bacteria per gramme, 100 times more than the maximum recommended by the Department of Health for cook-chill food used by hospitals and schools. Salmonella was found in four dishes, which included a chicken appetiser, and an excessive level of E. coli, the bacteria associated with faecal contamination, was found in 209 separate dishes. Those most often contaminated were sandwich snacks, salads, pate s, beef dinners and rice desserts."

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It is incredible that foods were contaminated with a bacteria that is associated with faeces. I am sure that the Minister will be worried about that and will want to do something about it very quickly. I hope that he will tell us precisely what he will do.

Mr. Michael Jack (Fylde) : Could the hon. Lady reassure the House about the statistical information she has given on food contamination in airline meals? Does any of her evidence refer specifically to meals originating in the United Kingdom?

Mrs. Clwyd : I am sorry that the hon. Gentleman did not hear the beginning of my speech. We are talking about catering outlets serving Heathrow. That means that the origin of the contamination was this country.

Flight catering uses a cook-chill system and a minor element of cook- freeze. All the environmental health officers involved in this important survey found that the caterers were reluctant to adopt a formalised system of cook-chill as specified by the guidelines laid down by the DHSS. The environmental health officers concluded : "The problems identified in this report would be greatly reduced if caterers would adopt the procedures laid down in the guidelines for pre-cooked"--

Mr. Deputy Speaker (Sir Paul Dean) : Order. I am finding it a little difficult to relate the hon. Lady's speech to the European Community matters that we are discussing. The debate is on various European documents and I think that the hon. Lady is straying into other matters.

Mrs. Clwyd : I am coming to the end of my speech, Mr. Deputy Speaker. We have talked about the common agricultural policy, and the European Community, intervention stores and many other matters related to the EEC documents. It is of great concern to the Opposition that those who have to argue for reform in the common agricultural policy and who have to travel regularly by air to Luxembourg, Brussels and Strasbourg are at their fittest when they are arguing into the small hours of the night the case for reform of the common agricultural policy and for other changes in the Community.

Mr. Geraint Howells (Ceredigion and Pembroke, North) : I have been listening to the hon. Lady with interest for a long time. She knows the state of Welsh agriculture because of family connections. Does she attribute any of the blame to Welsh producers? If she does, I should like her to clarify the position at once.

Mrs. Clwyd : The hon. Gentleman is a client of my brother-in-law who, as the hon. Gentleman knows, has a great interest in agricultural problems. I am certainly not attributing any of the blame to Welsh producers, who work to the highest standards. Last week, the Minister said that food safety was an international problem. It is an international problem on airlines and it is important for Ministers to remain in good health. As the Minister is partially responsible for food safety, may I ask him to tell us what he intends to do about the worrying problem that I and my hon. Friend the Member for Workington have brought to his attention?

8.26 pm

Mr. David Curry (Skipton and Ripon) : I hope that I shall not be regarded as idiosyncratic if I attempt to talk about agriculture. Parts of the debate have shown an

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underlying concern about agriculture and the changes that it faces, and there has been a tendency to defend the status quo. I should like to break with that consensus and suggest that it is not necessarily in our interests to defend the existing system. I shall be the devil's advocate on the sheepmeat regime and firmly suggest to my right hon. Friend the Minister that I do not want him to go to Brussels and bat to maintain the variable premium in its present form.

I recognise that there are problems with the alternative suggested by the Commission, and I do not suggest that the Minister should buy that off the shelf, but there are cogent arguments for suggesting that the variable premium has now achieved the purpose that it set out to achieve and that it is now becoming a problem rather than an asset for British producers. The first reason for that is the operation of the standard quantity as it applies to Great Britain, which means that, as the numbers of ewes increase, the revenue earned by the producers declines. There is no benefit to the producer in simply persisting with the present system, because there will be a continuing decline in his returns. I am especially concerned about farmers in the breeding business because I have many of them in my constituency. Hill breeders can only benefit from being part of the Communitywide standard quantity system rather than the British quota.

The present system of marketing is nonsense. The upper limit to qualify for variable premium is 26.5 kg. The market asks for lambs with a weight of 17 to 19 kg, yet hundreds of marts across the United Kingdom must have lambs of 25 kg that receive variable premium. Those lambs are not wanted by the export trade or by the domestic trade. We cannot blame the farmer, who will obviously rear to the weight that will maximise his return. If the politicians are fools enough to allow him to do that, it is to his credit that he takes advantage of the system. It cannot be maintained that the variable premium is serving the interests of the consumer either, because it encourages the farmer to produce something other than what the market wants.

Mr. Livsey : Does the hon. Gentleman agree that, although the parameters are not correct, the policy could be amended to allow variable premiums to concentrate on the weight limits demanded by the market?

Mr. Curry : The hon. Gentleman would be right, but for my next three points, which I believe will meet that argument. First, we face a problem with the clawback. Barely a molecule of British lamb gets to France because the clawback operates as an effective barrier to imports, and the French have perfectly good access to alternative supplies from Ireland and Spain where the clawback does not operate. The United Kingdom therefore has insuperable problems in getting lamb into that market, and it is on that export market that the fate of our lamb-rearing industry depends. Domestic consumption is declining and the variable premium may have arrested it. We cannot prove statistically that that is so, but the growth market is on the continent and, above all, in France.

The second reason is the competitive position of lamb in relation to other meats. I have a great deal of sympathy with the pig producer, who gets little support from the Community and does not want it. The situation is increasingly hard for those sectors which get little support,

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or where the regime has already been reformed, as is the case for beef, and the new regime will apply from 3 April. Although many producers are not sure how it will apply, there is still a level of support of £840 per tonne. In other words, the equilibrium in the meat sector is being distorted by the existence of both reformed and unreformed regimes.

Thirdly, the regime is now an extremely expensive affair. In 1988, the estimate of expenditure was 1 billion ecu and it was necessary to add 300 million ecu to that. This year, the allocation is 1.45 billion ecu and my information is that at least 220 million ecu will have to be allocated to meet the commitment. There are reasons for that. In 1988, that budget had to cover advance payments which would otherwise have been made in 1987 because of the crisis in the budget. The number of uses for which application has been made has also increased significantly, partly because the system on the continent uses the French premium as its market premium. That premium, of £15 or £16, is of great assistance to Mediterranean producers in particular and gives them a greater incentive both to claim and to rear.

We must also remember that the goat element in the system is becoming more important. My hon. Friend the Member for Basingstoke (Mr. Hunter) said that we were now taking only 35 or 30 per cent. of the revenue from the sheepmeat regime. A few years ago, we were taking about 90 per cent. of the revenue from the system. The change is the result of the Iberian accession to the Community, which has diluted the share that the United Kingdom had. It has also reinforced those who might be able to live with the status quo.

The variable premium in its present form is difficult to support either in budgetary terms or in terms of consumer interest, and it is no longer an infallible support for the producer. There is a good case for saying that the British interest, which lies in access to the continental market place, is no longer served by a system that has become a barrier to access to that market. I know that my right hon. Friend the Minister will say that all the cards are still to play and that most countries do not know quite what they want from the new system, and I accept that that is the case. However, I would not wish him to leave the debate with the impression that there is a unanimous belief that we should defend the variable premium to the last. I for one no longer believe that its maintenance is in the interests of the United Kingdom.

I urge my right hon. Friend to press on with the policy of stabilisers, with those additional ancillary measures such as set-aside and the woodland scheme which are designed to soften its impact and provide relief for farmers with particular difficulties. The reason for this is to do with the international situation, the background being the GATT talks with the United States. The United States has made a major error of negotiating policy in putting forward the zero-zero option, which has let Europeans off the hook. Nobody will negotiate seriously from that starting point. Even the Australians say that it is an untenable negotiating position. At some stage, the American negotiator will agree to abandon that objective because it is no longer obtainable, and many people, including some hon. Members, will applaud that magnificent gesture. But he will then say to the Community, "We want to remove your trade-distorting measures." That is where the Community must get into the real negotiations. The trade- distorting

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measure, in the American definition, is the double pricing system that lies at the heart of the CAP. The Community will not negotiate that away. It is inconceivable that a majority in the Council of Ministers will agree to give the Commission such a negotiating mandate. If we cannot negotiate on that, we must prove that we shall continue the process of gradual reform, or we shall find ourselves in a major clash with the United States.

One can illustrate this by the demands made, particularly by the German Minister, for cereals. I hope that my right hon. Friend will take the opportunity to say what a ludicrous idea that would be. The philosophy behind the quota is that, if one limits the quantity, the price can rise, but if the price of cereals rises we shall become more vulnerable to the cereal substitutes which enter the Community without any restraint on quantity and with a relatively small tariff that is bound by GATT.

Sir Nicholas Bonsor (Upminster) : My hon. Friend is right in that, but does he agree that one of the problems is that no farmer can control his cereal ouput? He cannot know what it is until after the harvest is brought in, so any attempt to control that by way of quota is doomed to failure because all that it will do is to put the cereal farmer in a still worse position.

Mr. Curry : I am grateful for that intervention. My hon. Friend has made an additional point that I shall add to my list of arguments against the imposition of a quota. I am sure that he will be aware that there are people on the continent, and in the United Kingdom, who want the security of the quota system. That is not compatible with liberal world trading arrangements, for the reasons that I have already set out. If we limit quantity and seek to raise prices, we shall become more and more uncompetitive in comparison with the substitutes coming into the Community. As a result, we would have either to cut the quota progressively or limit imports. If we limit imports, who will pick up the bill for the 55 million tonnes of substitutes that come into the Community? That is when we would really get into a shooting war with the Americans.

The international situation determines the nature of the reforms that the Community is able to undertake. However, there are other reasons to pursue the policy on which we have embarked. The first is the fragility of the world market. Hon. Members have referred to the Soviet Union as the principal importer of grains from world market places. On average, the USSR loses 12 per cent. of its grain crop between the field and the silo every year. That is roughly 24 million tonnes of grain, which is about what the Community exports in a year. In other words, the equivalent to the total Community export perishes because of inefficiency in the Soviet agricultural system. If Mr. Gorbachev ever gets his agricultural reforms, that is one major sector of the world market that will slip away from everybody, including the European Community.

Another reason to continue the policy is that underlying technical improvements are still feasible. Leaving aside the average 2 per cent. per year increase in grain yields, without doing one extra jot of research the potential for increase in yield by the end of the century is between 5 and 10 per cent.--equivalent to about 15 million hectares' worth of production. That is why turning down

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the wick, going a little more carefully and taking the pressure off is not a valid long-term option in the interests of agriculture. The final reason is the demography in the sector. Half the Community's farmers are over 55, and half of them have no natural successor. That means that there will be a process of consolidation of farms and the building of more efficient units. It also means that moving towards a more market-oriented policy becomes more acceptable in social as well as agricultural terms.

It is worth applauding the fact that this farm price proposal falls within the financial guidelines set a year ago at 28.62 billion ecu. The actual forecast is 26.74, and that is on the hypothesis of a dollar worth 0.81 ecu. Over the past six months--the year runs from August to July for the purpose of the calculation--the average value of the dollar has been 0.88 ecu, so there is a potential saving of 800 million ecu on the purely monetary factor by the summer of this year.

The importance of that, the importance of the reforms that were instituted a year ago, and the importance of the system of stabilisers, which at the time were derided as being almost nominal in effect and of no significance- -stabilisers plus the Almighty in the form of weather have had a much sharper effect than many realise--is that for the first time Community policy is predictable. It means that there is a chance for premeditated change. It means that the improvised, botched and budget-dominated changes which have been seen over a number of years need no longer be the norm in the Community. I hope that my right hon. Friend the Minister will bear one or two issues in mind during his negotiations in Brussels. I hope that he will reaffirm his opposition to the co-responsibility levy, including that on milk. I know that the regime is expensive, but a quota system plus co- responsibility is a logical nonsense. Many farmers would prefer a quota reduction to the present bizarre way of penalising farmers without benefiting consumption. It would be preferable to have a price reduction than the mechanism of a co-responsibility levy.

The same applies also to cereals. I know that the Minister has fought gamely on our behalf and I know that he will continue to do so. I hope that he will give what reassurances he can on the continuation of the quota system after 1992. Farmers contemplating the purchase of quota cannot afford to see assets disappear within a few years. I hope that my right hon. Friend will reaffirm his determination, in so far as he is able, to have zero monetary compensatory amounts when we arrive at 1992. That is especially important. I hope, too, that my right hon. Friend will do his best to ensure an increase in the suckler premium when we reach the time of year when he would normally decide at what level payments are to be made for the following period.

We are now quite a long way through the period of extremely difficult change. Now that we are on the threshold of a sensible, premeditated reform, it should be understood that a diversified range of policies will enable only some farmers to find new sources of incomes while remaining true to their main purpose as producers of foodstuffs. We have this opportunity, but I hope that we shall go for the last push and ensure that there is sensible reform rather than accept the process that we have seen develop over so many years until recently. That process has made it clear that the task has been undertaken with

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reluctance. It was pursued with hesitation and abandoned before it was complete ; simple multiplication of the policies then ensued. 8.42 pm

Mr. Win Griffiths (Bridgend) : The debate takes place against an ever blackening background for farmers in the United Kingdom and, indeed, for farmers in many countries across the Community. The farming community in the United Kingdom finds that inflation is running at over 7 per cent., with the likelihood that it will increase during the year. Interest rates are high and are likely to go higher. At the same time, farm incomes are dropping. It is undeniable that it is necessary to maintain control of spending on agriculture. Given the various forms of support that now exist, farmers in Britain cannot look forward to brighter times. However good the demolition by the hon. Member for Skipton and Ripon (Mr. Curry) of the variable premium with the sheepmeat regime, and irrespective of his comments about the number of farmers aged 55 in the Community, the hon. Gentleman's observations were aimed at 15 or 20 years hence, instead of being directed at the problems with which farmers have to grapple now. The problems for farmers with relatively small holdings are even more acute and desperate than those which face those with larger farms. Farmers with more substantial holdings have the option of being able to switch from crop to crop, or from livestock to arable and back again. They have many more options than those which are available to farmers with 50, 100 or 150 acres, which are the sort of farms that might typically be found in many parts of Wales.

Stabilisers have been reasonably successful in helping to remove the peaks and troughs from agricultural spending, but they do not augur well for farmers in future. They will not guarantee farm incomes. Instead, they will tend to put the squeeze on farmers. Given the developments within the sheepmeat regime, farmers in the hill country will experience greater and greater difficulties. I note that some Conservative Members are shaking their heads in disagreement, and in response I can only say that it might be possible to return to this issue in a year's time, when it will be easier to make a judgment.

There is a need, inevitably, to control spending under the CAP. Farmers' incomes will be damaged, and we must consider how we can help those with smaller farms. The difficulties will become greater on the hillsides and there will not be a welcome in the valleys for across-the-board policies to control expenditure. As we have grappled with the existing systems and advanced reasons why they must be changed, there has not been evident a great deal of long-term thinking about what we should put in their place.

Conservative Members have been extolling modern technological developments in the countryside. They have emphasised how important these were in increasing food production during the years when that increased production was needed. There is no doubt, however, that the intensification of modern farming methods is inflicting severe and untold damage on to the countryside. We are witnessing wholesale pollution, especially with nitrates running off the land into water courses. The expression of the hon. Member for Sherwood (Mr. Stewart) suggests that that is not a problem, but in Wales more and more

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rivers are being polluted, and that is the position throughout the United Kingdom. Water authorities everywhere are expressing concern about nitrate pollution in particular.

We are aware of the intensive methods of factory farming. There is the raging spread of salmonella. There was a television programme yesterday--it appeared on the screen shortly before my lunch, unfortunately--on bovine brain disease and how it is spreading. In the pursuit of higher production, we are putting at risk the health of the people.

Many of us are aware of the way in which systemic pesticides are used. There is good evidence that pesticides remain in crops after they have been harvested, and that they are a potential danger to the consumer. It would not be too much of an exaggeration to state that factory farming at the moment is producing a festering cauldron of potential fever, plague and food poisoning in the countryside. The ever-increasing demand for higher yields on a given acreage is threatening the health of the general public. There is no doubt that, as the days go by more and more dangers are being exposed. The CAP should now be trying to ensure that there are reasonable levels of production without using methods which are potentially harmful to consumers' health. I know that the Minister has immense problems in grappling with the CAP to keep spending under control. However, it would be nice to hear that the Commission is looking at major alternatives to current agricultural support, so that we can look forward to a safer future in terms of the food that we eat. On the programme yesterday to which I have referred there were some pitiful scenes of farming in the countryside. I saw a cow reeling about helplessly. At times it was waddling along or sliding on its stomach because it no longer had any control over its muscles. We must take these problems seriously and not try to push them to one side or say that this or that cannot be proved. Undoubtedly there are problems, and I hope that the Minister will tell us today what, apart from the steps that are being taken to bring the immediate problems under control, in the long term the Government and other Community Governments intend to do about the system of agricultural support. I hope that he can tell us what they will do to end this headlong rush into making continually higher yields from the land, so that we are not placing our lives in danger by eating farm produced food. In his scintillating demolition of the variable sheep premium, I waited in vain for the hon. Member for Skipton and Ripon to offer us an alternative which would make sense to the British farmer and in particular to the Welsh farmer who relies on that premium. I do not deny that there are obvous needs for change in the variable sheep premium. It is obvious that a new problem is being created when we watch the flocks coming down from the hillsides into the valleys in areas where it is not traditional for sheep to be farmed. Perhaps the Minister can tell us whether the Ministry has any thoughts about a better system of support. I am sure that farmers in Wales look forward to his comments on that.

8.53 pm

Sir Nicholas Bonsor (Upminster) : With one exception, this has been an extremely useful debate, and one in which the House has largely been agreed. I declare an interest, in

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that I am a farmer. In the light of some of the contributions from Opposition Members, perhaps I should also declare that I am chairman of a food hygiene and advisory service. I do not believe that that should be strictly relevant to this debate, but it is relevant to some of the contributions that have been made.

I will confine my contribution to farming and to its future. I would be extremely grateful if the Minister will consider several areas of concern ; if he cannot deal with them today, perhaps he would write to me later.

My first concern relates to the method of control which my right hon. Friend the Minister and the Government appear to favour, particularly in terms of cereal farming, which is the price mechanism. I cannot understand how the price mechanism will solve the problem of the European Community surplus without ruining the country's cereal farmers. I was worried that the Minister made no mention of the cost of production or the way in which the price control mechanism can be kept at a level which will be above that which it has cost the farmer to produce the product.

Mr. Micawber would be more than a little worried at the state of British farming. It is costing 20s 6d to produce 20s-worth of goods in most areas. That applies to cereals, most livestock and throughout the farming community generally. However, it is particularly and increasingly true of cereals.

I want to consider whether cereals can be controlled by quota. As I tried to make clear in my brief intervention during the comments made by my hon. Friend the Member for Skipton and Ripon (Mr. Curry), I do not see how quotas will work. A quota on cereals might be introduced in one or two ways : it could be introduced to limit the amount that a farmer can produce and receive full pay for or we could limit the amount of land which he was allowed to sow to achieve his output. As my right hon. Friend the Minister is aware, there is no way in which we can assess what a farmer will produce until after he has produced it, by which time it is too late to solve the problem. If the quota level is set wrongly, it will either be extraordinarily expensive or ruinous for the farmer. Either way, we are losers.

My next area of concern relates to fair competition with our European partners. I have culled a few brief examples from my experience about ways in which we are currently at a disadvantage compared with our European partners. First, we are at a disadvantage with regard to the MCAs. My right hon. Friend the Minister has said that he hopes to bring that under control to achieve parity by the end of 1992. To be perfectly honest, I think that it is most unlikely that he can achieve that. If he can, I will be the first to welcome it.

Cheap loans are available to farmers in France, but there is no system of subsidised loans in this country. It is impossible, particularly for smaller farmers and those who wish to start up in the business, to compete effectively against French farmers while that disparity remains. The French also have access to a much cheaper supply of fertilisers than is available in this country, largely because of the quantities which can be ordered by the vast farms in northern France. That gives the French a completely uneven advantage in comparison with their British competitors.

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As my right hon. Friend is aware, Germany can buy livestock feeds from East Germany, because it has an exception from the general rules for buying animal feedstuffs from outside the European Community at world prices. West Germany has access to East Germany and by exemption is therefore able to buy animal feed through East Germany at world prices, and it can then undercut other member states. The subsidies enjoyed by states in southern Europe--Portugal, Spain and Greece--clearly come from the more prosperous states in northern Europe. It is extremely hard to understand how Britain can benefit by putting far more into the subsidy system than we shall ever be able to take out of it. I am not sure how my right hon. Friend will deal with that problem, but I hope that he will bear it in mind in his negotiations.

As my right hon. Friend knows, West Germany is heavily funding research into all forms of agricultural activity--in terms not only of hygiene, but of productivity and efficiency. If Germany continues subsidising that aspect of its activities, it will have a substantial advantage over Britain. It is extremely unfortunate that the Government are cutting agricultural research at this moment. I hope that my right hon. Friend will review the Government's proposals and will give more support to research than is intended. ADAS has given invaluable service and its research capacity has been second to none. I do not believe that the agricultural community, in its present state, is in a position to provide the business backing for research that the Government clearly wish it to do.

Finally, I do not believe that the farm woodlands and set-aside schemes and so on can do more than scratch at the problems facing the future of British agriculture. Unless we can find a way in which the support level for the production of our goods remains above the cost of producing them, in the next few years, we shall have no proper agricultural business left.

9 pm

Mr. Calum Macdonald (Western Isles) : I apologise for not being present to hear the opening speeches in the debate. This morning, I travelled to Inverness on a train that broke down and left me stranded in Kingussie for one hour and 40 minutes, thereby causing me to miss my plane to London.

In that connection, I was interested to hear the remarks of the hon. Member for Skipton and Ripon (Mr. Curry), when he said that 12 per cent. of Russia's grain production spoiled before it reached its market. I understand that one of the major reasons for that is the terrible state of Russian roads. They are so badly pot-holed that much of the grain falls off the back of the trucks and rots at the roadside. It appears that infrastructure is a major obstacle to the development of Russian agriculture. After my experiences this morning, I fear that it is also a major obstacle to developing the agriculture of the Highlands and Islands.

I shall concentrate on the sheepmeat regime. It is a subject that I broached in previous debates, and I return to it without apology because it is one of major importance to my constituents in particular, and to the economy of the Highlands and Islands as a whole.

Sheepmeat production in the Highlands and Islands is worth £52 million annually, excluding all Government support and EEC grants. It is important not only in terms

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of its sheer monetary value but because the terrain and land of the Highlands and Islands are such that there are few viable alternatives there to lamb farming. The land is unsuited to most other types of use. Crofters in particular face a change in the sheepmeat regime with considerable concern, not only because of the industry's value to them but because of their fear that recent changes in other areas of agriculture--particularly in the lowlands--will cause their incomes to suffer as a result of increased lamb production. Because of the nature of the terrain in the Highlands and Islands, crofters have no viable alternatives in the face of increased competition for lamb production from areas that enjoy better soil and climate--in simple practical terms, better lambing percentages.

The latest figures I have from the Scottish Crofters Union suggest that, if lamb flocks in the lowlands continue to increase to the extent that they have in recent times, crofters will suffer a cut in the value of the support they receive from the sheepmeat regime of as much as 12 per cent. over the next four years. That is clearly very worrying.

One solution suggested by the Scottish branch of the National Farmers Union is to introduce two stabilisers, one for the less-favoured areas and another for the more-favoured low-ground areas. The Scottish Crofters Union, while not necessarily opposed to such a solution, feels that, so great is the difference between the terrain in the Highlands and Islands and that in even the worst of the less-favoured areas in the rest of the United Kingdom that a third stabiliser for the Highlands and Islands alone might almost be justified. Such a solution, however, would cut across the grain of current developments in the Community and the CAP : there is a wish for increased simplicity rather than increased complexity. I feel some sympathy with the attacks by the hon. Member for Skipton and Ripon on the variable premium, and his support for the principle of a single European stabiliser. Crofters in the Highlands and Islands would, I think, accept the loss of the variable premium, although they can see that it has led in recent years to improved quality and efficiency in their sheepmeat industry, feeling that perhaps the time has come to adopt a single European stabiliser. They would accept it, however, only with a caveat. First, they would demand an enhanced ewe premium in the less-favoured areas ; secondly, they would like the Government to put much more thrust behind the marketing of sheepmeat in the Continent--a point also made by the hon. Member for Skipton and Ripon.

Let me return to the point with which I began. The inadequacy of transport, communications and infrastructure between the Highlands and Islands and the continent suggests that, unless a determined effort is made to boost Scottish lamb products in the Common Market--and those from the Highlands and Islands in particular--we will be the losers.

I understand that the EEC has suggested restricting eligibility for the ewe premium to a certain number of ewes per farm--500, I believe. The Scottish Crofters Union has made a suggestion that I find very interesting : that, as well as the restriction on numbers--which would be altered according to whether the farm was in a less favoured area or on low ground--a device should be built into the premium to reward, encourage amd promote increased employment. Farms that employed more shepherds would also receive a higher premium. That would provide a bonus not only for less-favoured areas but for farms, sheep

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stock clubs and other kinds of sheep breeding practice that led to the creation of more jobs, thus keeping more people in rural areas. That is important if such areas are to flourish.

Hon. Members on both sides of the House have pointed out that the CAP needs to be changed because of its costs, but that cost must be seen in perspective. Although it eats up the lion's share of the Community budget, it is only a tiny percentage of Community GDP. The real problem about the CAP is not so much the amount of money involved as how it is spent. Hon. Members of all parties have suggested that we need to get away from spending that amount of money on increasing production while retaining the objective of income stability and trying to achieve parity of income for all farmers. Rather than trying to increase production, we should direct the same amount of money to projects on farming practices and on increasing employment in rural areas. If we used that principle when approaching the changes to the sheepmeat regime, farmers in my constituency would be a lot happier, and the operation of the regime would be a lot more satisfactory all round.

9.10 pm

Mrs. Gillian Shephard (Norfolk, South-West) : I am delighted to be able to contribute to the debate, although I do not have a personal interest to declare, save to say that agriculture is of vital importance to my constituency of Norfolk, South-West. The debate is of particular significance, given that 1988 saw a 25 per cent. drop in farm incomes. We all know that that figure conceals a wide diversity of farm incomes across the country and that that diversity is recognised by the industry. As my right hon. Friend the Minister of Agriculture, Fisheries and Food said in Oxford, it matters when farm incomes fall as they did in 1988. It matters especially in Norfolk, South-West, where one sixth of our jobs depend directly on agriculture because the prosperity of agriculture underpins our whole rural economy.

Today's debate was given particular point for me because of three meetings that I had at the weekend. The first was with directors of Barclays bank who began by expressing their deep disquiet about farm incomes locally, especially in the light of cereal prices and last year's bad harvest. They said that their accountants had no record of any previous year in which no farmer had made a profit on a cereal harvest, but that 1988 was such a year.

The second meeting was with a grain merchant, who not only corroborated the concerns of the first, but said that, because of bad European harvests and droughts in North and South America and in China, the world currently has stocks of grain for up to 100 days. That point was also made by my hon. Friend the Member for Norfolk, North (Mr. Howell).

The third meeting was with a smallholder, who works a holding of 55 acres on which he was born and which his father had before him. That man, who is in good health, has seven or eight years before he reaches retirement, and is waiting to see whether there will be the threatened cut of 5 per cent. in the price of sugar before he decides whether to give up his holding next Michaelmas.

Those three meetings illustrate the practicalities of what we are discussing. There has been great concern about the

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technicalities of this issue, but I remind the House that we are not talking academically or technically ; we are talking about real people, real anxieties and a real industry.

One unfortunate thing about agriculture is that many of those who pronounce on it believe that eggs come out of boxes. They are stuck in the attitudinal time warp of the 1950s and believe that farmers are still feather-bedded. To all those people I say that during the past five years agriculture has absorbed as much change as any industry could be expected to absorb. As my right hon. Friend the Minister said in Oxford, agriculture faces

"the challenge of the speed of change today, in technology, production processes, ever higher quality, new ways of presenting products and so on".

Responsible farmers have long accepted that change. They have long accepted the fact that CAP policies encourage costly surpluses and that that policy needs to be changed. One result would inevitably be a drop in farm incomes- -that is the pain that was mentioned earlier by my right hon. Friend.

Moreover, these same responsible farmers have taken advantage of the many useful measures introduced by the Government, such as diversification, environmentally sensitive areas--one of them is largely in my constituency- -and set-aside. I have been a little disappointed by the extent of set- aside take-up in East Anglia. Obviously, it is easier to set aside land from larger holdings, but it is a pity that good land should be taken out of production. I would have hoped that more would have been taken out of production from marginal land.

It is in this atmosphere of change that I would like to plead for the retention of two areas of stability so that we might, in my right hon. Friend the Minister's words, ease the process of change for farmers. The two crops involved are sugar and potatoes. Norfolk produces 32 per cent. of all beet sugar in the United Kingdom. The Wissington sugar factory in my constituency employs 450 people. Sugar is vitally important because as a crop it helps to cushion farmers against price falls and bad harvests in other crops.

The Commission proposes a 5 per cent. price cut. I understand that its reasons are, first, that this will make sugar more competitive with artificial sweeteners. That seems a curious argument because I thought that competition would be on calorific value not on price. Secondly, the Commission said that a price cut would discourage over-production. Again, that seems curious, given that the crop is subject to quota. Thirdly, it said that a price cut would save the EC money. That cannot be so, because the EC price cannot be reduced without reducing the ACP price, and to compensate the ACP countries would be in breach of the Chirac-Godberg compromise agreed by the Council of Ministers. There is unusual unanimity between British Sugar, Tate and Lyle and the ACP countries, which speak with one voice on the matter, as do the producers, who rightly point out that there has been a six-year price freeze.

Beet production brings stability for untold numbers of farmers. I listened carefully to what my right hon. Friend the Minister said in his opening remarks, which were, perhaps, a little delphic. However, I believe that they hold a glimmer of hope because my right hon. Friend continues to consider the position. He may wish to refer to my plea and that made by other hon. Members during the debate.

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