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Column 807green pound that hovers over us, completely distorting the market, making support prices in Britain lower than those of all other member states of the EC apart from Spain and Greece. Can anyone honestly agree that it is fair to maintain a system that taxes our exports and at the same time gives a subsidy, through MCAs, to imports into this country?
A Scottish farmer who is a correspondent of mine writes : "It is absolutely crazy to be subsidising Irish beef into this country and charging the same equivalent on our exports through the MCAs".
He points out that, in his area in the north of Scotland, local producers are getting £120 per head on average, less than in November 1989, and he reports that one of the bigger fatteners in that area is looking at a loss of £70,000 on his buying bill since autumn 1989. That will obviously have a knock-on effect on hill-weaned calf sales this autumn.
Areas such as Scotland and Wales, where the industry is mainly concentrated on livestock, are particularly at a disadvantage, and it is that sector that the Minister must move to protect. It is essential for the future of our rural areas that a satisfactory level of farm income is maintained.
I have received many letters, like all my colleagues from Scotland, England and Wales, about the plight of the industry at the present time ; we can only pass that view on to the Minister in the hope that he will take heed of the requests of all farmers in Britain.
Mr. Alex Carlile (Montgomery) : Does my hon. Friend agree with me that there must now be grave concern about the future of farming because it is so unattractive and difficult for able young people to enter? With that in mind, does he fear for the future of agriculture unless the Government take dramatic steps to at least provide survival incomes for hill farmers?
Mr. Howells : I am grateful to my hon. and learned Friend for raising that important matter. As the Minister is sitting and listening to his comments, I am sure that he will take heed of what my hon. and learned Friend has just said. Something must be done to help young farmers before it is too late.
The point has been made again and again that, while other industries gain export advantages at a time when sterling is low, agriculture suffers as a result of a fixed green rate. Farming at the moment is losing about £600 million in extra costs. If the gap were closed now, it would mean an increase in support payments for sheep of about £2.60 a ewe, in suckler cow premium by about £6.40 and in beef special premium by about £3.82.
The present EC proposal to close the green pound gap by one third is simply not enough at this stage. The industry needs action to close the gap completely and immediately. That is the only way to restore confidence and to ensure that our farmers are allowed to compete on an equal footing with their counterparts in Europe. I take heed of what Mr. Deputy Speaker said earlier. One could speak on many issues such as the environment and other topics that are relevant to agriculture, but I shall go down the same avenue as some other Members and refer to BSE.
Another cause of great worry to farmers, particularly in view of the uncertain livestock market, is the inadequate compensation for BSE cases. The export ban imposed by
Column 808West Germany is bad enough, and it is likely to cost the industry at least £10 million. I am pleased that the Minister is dealing with the issue in his usual forthright manner, but there is a strong case for fully compensating the farmer for his losses. Not only will that encourage more vigilance and promote more confidence in the industry, but it would reassure the consumer that no suspect meat is being allowed into the food chain.
The term "mad cows" has been used for a short period in this country, but people who understand cattle and have seen this disease are aware that the cows do not go mad. The disease affects the nervous system and the cow just collapses. It is a great pity that many people, including politicians, are frightening many of our consumers so that they will not eat beef. I admire the Minister's stand. He has to be firm during the crisis. He has expressed the views of the top veterinary officers in this country. There is no more that he can do except stand up for the industry and make sure that this disease will be eradicated.
The hon. Member for South Shields (Dr. Clark) said that BSE has come about during the past five or 10 years, but I have been about for many more years than the hon. Gentleman, and I would say that it has been prevalent in Britain for the past 50 or 60 years, and I have seen plenty of cases in various markets throughout Wales. It is nothing new. The only reason why we have more cows with this disease today is that dairy farmers are feeding more concentrates to the dairy cattle than they did 20 or 30 years ago.
Mr. Howells : Of course. It is well-known in the agricultural industry that the disease has been in Britain for 40 or 50 years, and the previous Labour Government knew about it, just like the present Government. Anyone who disputes that does not know much about cattle.
It is worth making the point that research into the control and eradication of such diseases should be a top priority and that the Government should reconsider their policy of ruthlessly cutting down research establishments. It would also reassure farmers to know that the Government would consider full compensation for those 1,500 small farmers whose businesses have been practically wiped out by the lead contamination scare and the consequent restrictions.
Finally, there are two important issues if we are to safeguard the structure of British agriculture in the 1990s and into the next century. Many people, some perhaps within the House, and leaders of industry, believe that we should do away with the Milk Marketing Board. But it would be a great mistake to change the statutory powers of the Milk Marketing Board. Producers have been well served by the board over the years. It is unnecessary to change an institution that has been a strong support to the small family farm for more than 50 years and has ensured their survival in difficult and changing times.
The Minister and the Government made a mistake last year when they did away with the financial agreement for the British Wool Marketing Board, of which I had the privilege of being vice-chairman for 11 years. The British Wool Marketing Board is facing a crisis. Everything was going well when the board could sell wool at a high price a year or two ago, but trade has now collapsed. I criticised
Column 809the Government for doing away with the financial agreement which has been the backbone of the sheep producers over the past 50 years. They decided to do so, but perhaps they will think more seriously before they upset the statutory powers of the Milk Marketing Board. Let me give politicians in the House one piece of advice, whatever it is worth, about the sheep industry. A quota system operates in the dairy industry. Dairy farmers were not very pleased when it was introduced in 1983, but the majority of those farmers today are probably in favour of a quota system because it is worth more than the farm itself.
Just imagine the effect of the introduction of sheep quotas in the 1990s in the mountainous areas of Scotland, Wales and England. If those quotas were worth the same as the milk quotas, farmers of my age living in the hills and in the less favoured areas could be offered a large sum of money for their quota by farmers from the lowland areas, and then they would sell. There is no alternative to sheep farming on the mountains of Britain, other than to grow trees. My advice to whoever is in charge of Britain's sheep sector for the next 10 years is to be careful not to introduce quotas, or we shall for the first time see vast depopulation in those areas. We have seen it happen before, and we do not want to see a repeat performance in the late 1990s.
I hope that other hon. Members who take part in the debate will discuss seriously the short-term issues facing the industry at present. There is no point today in debating whether we should be a member of the Community. The important issue is today's survival. I hope that, when the Minister next goes to Brussels, and on each occasion in the next year or two, he will take with him the Secretary of State for Wales, because he has full responsibility for agriculture in Wales. The Secretary of State for Scotland should also go.
The matter is so serious that all Ministers with responsibility for agriculture should go to Brussels with the Minister of Agriculture, Fisheries and Food. I wish the Minister and his colleagues the best in their deliberations in Brussels to safeguard the interests of agriculture.
Mr. Robin Maxwell-Hyslop (Tiverton) : The saddest thing to me about the debate is, looking round the House, to realise how few, if any, of our colleagues on either side of the House who do not represent an agriculture constituency apparently realise the importance of a healthy income structure in the agriculture industry to other industries in Britain--the manufacturing industry, the chemical industry and the textile industry. Agriculture does not exist in a vacuum, and when agriculture is depressed the effects are not confined to agriculture ; they spread through the country. There are many examples of that. Look at the decline of the agricultural machinery industry in Britain over the past 10 years and the declining demand for many of the products of the petrochemical industry. If the leaders of those industries are asked whether they care about the
Column 810income of our agriculture industry, they leave one in no doubt at all about their perception of the interconnection. It is sad to me that those who want to speak in the debate are so clearly almost entirely confined to those who represent agricultural areas.
It is right that Ministers going into negotiations on the continent should be encouraged to do everything within their power to get rid of the green pound gap. The Commission reads the official reports of agriculture debates in Britain and in other countries, so it is important that it should know that Ministers are speaking for the House of Commons, not to the House of Commons, and that when they speak abroad they come with the anger as well as the interests of those whom they represent.
For many years now I have been disturbed by how many people in our agriculture industry think that 1992 means 1 January, rather than 31 December. Many people who should have been better informed have said that at least the agony will end on 1 January 1992. It will not. The level playing field, as it is referred to, will come into being on 31 December 1992, if those who oppose it do not find some way of blocking it. Hopeful as I am, my hope is not matched by my confidence because in many other aspects, particularly in the financial services industry which employs more than 3 million people in Britain, it is clear that there will not be equality of trading conditions--to coin a more appropriate phase--even by 31 December 1992.
I support what the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said about the importance of the Milk Marketing Board to producers. It has been subjected to some unfair criticism in that it has been necessary for it to import milk at times of minimum output in Britain so that it can sustain the regular market for its own manufactured products. We cannot turn off and on established patterns of trade. If we want British butter to be sold in British shops, we cannot leave the retail and wholesale outlets bereft of it at certain times of the year.
In some respects, we have been unenterprising. For example, in many areas people who want unsalted butter must buy foreign because there is no British unsalted butter on the market. The English Milk Marketing Board, unlike its Scottish counterparts, has not given enough attention to seeing that the growing market in unsalted butter--growing because people have anxieties about the
interrelationship between salt and heart disease--is met by home production by promoting the sale of unsalted English butter and ensuring that when people visit their supermarkets, they see British unsalted butter at eye level on the shelves.
I support the plea for 100 per cent. restitution in respect of cattle which are, rightly, destroyed when found to be suffering from BSE. There is strong opinion in the veterinary profession--those who read the Veterinary Record know this to be the case--that the present 50 per cent. compensation rate is not adequate to give the necessary degree of confidence.
The claim for 100 per cent. restitution can be even more justified on the ground that the Government consented to
Column 811lowering the boiling point in the rendering industry. The Treasury should accept some responsibility in the matter and agree to a compensation level of 100 per cent. The public would perceive that as being in their interest as well as in the interest of farmers. I do not know any farmers who would not rather have their cattle and sheep free of disease than have to claim subsidy of that type.
In examining the industry, we need to concentrate not on any one feature. For example, although as the hon. Member for Ceredigion and Pembroke, North said, rightly, high interest rates produce problems for farmers, if the rates were brought down now we would probably increase the green pound gap, because that is related to interest rates. In other words, we should never recommend one course of action which undercuts a different course of action that is also being recommended. In any event, when we get rid of the green pound system completely, the problem will no longer exist.
I am anxious not to overrun the time for speeches that Mr. Speaker has recommended, so I will comment only briefly on the devastating consequences of the gales, and they have been devastating in many ways. For example, consider the plight of farmers who are paying the community charge and who are in some cases paying the charge for their employees, too.
A hideous cost will fall on county councils in repairing damage to buildings caused by the gales. It has been said in relation to the Bellwin formula that the Government will pay 75 per cent. of the cost above a penny rate. That is not the case in respect of damaged buildings, a distinction which the Minister did not make clear. Some counties pay enormous insurance premiums for the buildings that they own, and that cost must be added to the community charge. Over the years, Devon has found it better to have balances. Some ignorant people--including some ignorant Members--criticise balances but, taken over a period of time, they result in lower costs to the ratepayer, now the community charge payer, than paying insurance premiums. After all, insurance companies are in business to make a profit. Sometimes they get their calculations wrong, but their intention when they set their premiums is to make a profit. Considering that the Minister speaks not just for his Department but for the Government, I urge him to tell the Secretary of State for the Environment that if the Bellwin formula does not embrace the cost of damage to buildings, an intolerable burden will be placed on those who live in areas of dispersed population, our rural areas, which are also our agricultural areas.
Had time permitted, I would have covered many other points, but I always try to honour the requests made for short speeches. 6.55 pm
Mr. Ted Garrett (Wallsend) : I was interested to hear the hon. Member for Tiverton (Mr. Maxwell-Hyslop) say that there were not many farmers present for tonight's debate. Some older hon. Members will recall that in the past when we debated agriculture, the Conservative Benches were well filled with farmers or landowners.
It is also interesting to reflect, Mr. Deputy Speaker, that you, the hon. Member for Tiverton and I are former engineers. That is not to say that we are ignorant of farming problems. I live in the constituency represented by the hon. Member for Hexham (Mr. Amos), who is in his
Column 812place and who hopes to take part in the debate. Whatever one's interest, one listens, learns and acquires knowledge of the farming industry.
Hon. Members may also be interested--or perhaps bored--to learn that I was a member of the first Select Committee on Agriculture, and I believe that the hon. Member for Dumfries (Sir H. Monro) was also a member. That Select Committee was abolished by the incoming Labour Government in 1966 because they sought the truth, and the truth about agriculture was not acceptable to the then Leader of the House, Richard Crossman, and we were fired. Those of us who were members of that Select Committee did not take kindly to the decision. In addition to having been for 12 years a member of the Parliamentary Assembly of the Council of Europe, I am on that body's Agriculture Committee. When the Minister opened this debate, he was urbane and smooth, as always. He was quick to react when provoked, but he had nothing to say about how he sees agriculture in the future.
The Agriculture Committee of the Council of Europe is way ahead in its thinking about the potential for farming in Europe in the years to come. Today, we think of farming in Europe in terms of central, eastern and western Europe. If a fraction of the money that is spent on the CAP was diverted to help the resources of the Council of Europe, it would be money well spent. The hon. Member for Southend, East (Mr. Taylor), who is not in his place, would probably agree with me about that.
We in that committee in the Council of Europe have already arranged for politicians and other speakers from Poland, Hungary and Czechoslovakia to become members of the committee. They already take part in some of our debates, and I assure the House that we debate not merely forestry and fishery problems affecting the whole of Europe, vast though those problems are--I had hoped that those matters would have been raised in this debate-- but the whole question of food surpluses. One of the problems in the countries that have been totalitarian is food--not the shortage--
Mr. Garrett : Yes, the distribution. There has also been a lack of variety of food in countries such as Czechoslovakia. However the basic tenet remains. The land is there and can be cultivated, but those countries must be helped in the marketing and distribution of food when it reaches the huge cities. We are talking also about cleaning the rivers. Rivers do not stop when they reach the boundaries of the 12 European Community countries ; they go on. The worst pollutants are in eastern Europe. We have to skirmish on environmental matters and the question of how water can damage agricultural products.
I should like more of the time of the House to be devoted to the various aspects of agriculture. A debate such as today's, of this duration, cannot fulfil that objective. The Agriculture Committee of the Council of Europe should be given more publicity. It has completed reports on the changes in the quantity and quality of agricultural products, as well as the problems of processing, marketing and distribution of food products.
Last Tuesday, there was an animated debate at the Council of Europe on the question of the land set-aside policy. Hon. Members will not be surprised to hear that that idea was ferociously opposed by continental farmers. I took the opportunity to explain Britain's modest
Column 813proposals for an agricultural set-aside policy, some of the results that have been achieved, and how, in the long term, it would be foolish for the Council of Europe--or the European Economic Community--to throw aside the basic concept of set-aside land. I know that there is hostility to that proposal in some areas of the farming community, but it is one of the first steps towards overcoming agricultural surpluses. Modest though it is, the Government deserve some credit for taking that initiative. However, I have a word of warning. The policy is established and is starting to work, but we must recognise that there has to be a system of surveillance to ensure that farmers are honouring the agreement. The farmers receive an annual sum of money for setting aside their land for five years and for honouring the obligation to cultivate the land and to keep it and its surroundings in good condition. At the back of my mind is the fear that not all farmers will live up to the responsibility that has been imposed upon them, and for which they are receiving financial reward. When the Minister replies, he should give that matter serious consideration and, if necessary, produce a report on the success of surveillance.
I am also conscious that we are on a time schedule, so I conclude by saying that I welcome this debate and the wide contributions that have been made to it. I think that the quality of debate in the House on agricultural matters is much better than it was some years ago. Several Hon. Members rose --
Mr. Christopher Gill (Ludlow) : Thank you, Mr. Deputy Speaker, for calling me so early in the debate. I am sorry that my right hon. Friend the Minister is not in his place to hear me praise his robust and responsible speech. I am sure that the message that he gave the House this afternoon will be well received by farmers and by those in the countryside generally.
Mr. Andy Stewart : I concur, as did my hon. Friend the Member for Gloucestershire, West, (Mr. Marland), with my hon. Friend in congratulating my right hon. Friend the Minister on his excellent speech. I care about agriculture. Soon the Leader of the Opposition will speak at the National Farmers Union annual dinner, but he has not given a speech on agriculture for 15 years. Who does my hon. Friend think should write his speech?
Mr. Gill : A number of names occur to me but, sadly, they do not include the hon. Member for South Shields (Dr. Clark). He made a poor contribution to this afternoon's debate because he missed no opportunity to undermine the confidence that the British public have in British agricultural products. He took a swipe at British apples, British beef and British eggs. He had a wonderful opportunity to say that, after all the regulations that have been brought in by the Government recently, British eggs are the safest in the world. He missed that opportunity and that is distressing.
Column 814British eggs are tested to a higher quality than Dutch eggs and therefore we should--in words that are much used in the House--ensure that the British poultry producers have a level playing field. I am sorry that that point did not get through.
Mr. Gill : I am sorry, but that point did not get through at all. Many outside the House will be critical of what the hon. Gentleman did say. That is in complete contrast to my right hon. Friend the Minister, whose grasp of the subject and understanding of the problems is complete. He left the House in no doubt that he would tackle the problems.
Today two Ministers have made commitments to eliminate the green currencies. My right hon. Friend the Prime Minister made her declaration on that subject during Prime Minister's questions, and later in the day my right hon. Friend the Minister of Agriculture, Fisheries and Food said that green currencies would be eliminated as soon as practicable. My concern is about what will happen in the meantime.
Farmers' returns are inadequate for the increased costs that they bear. Their products have scarcely risen in value during the past seven or eight years, whereas during the same period a 100-horsepower tractor has increased in cost by about 35 per cent., from £18,500 to £25,000. In addition, farmers have inadequate earnings to service debt. It is interesting to note that this year the interest bill in agriculture has gone up by no less than 38 per cent., to nearly £1 billion. The returns are inadequate for the investment that farmers must make for the future--there has been a 40 per cent. reduction in investment in the five years to 1988. Of course, their inadequate returns have also led to a fall in rural employment--about 23,000 full-time jobs have been lost in agriculture since 1982. That is not to mention the incomes or earnings of the farmers themselves. I have two concerns--first, for the future of this great industry and, secondly, for the countryside. My concern for the industry is that it is not reinvesting at the level that it should be ; it is not reinvesting at the level that it should be ; it is not reducing indebtedness--quite the reverse--and it is not generating the cash resources that it will need to tide it over until 1993. It is currently suffering from a crisis of confidence--not in its own ability, but in the sheer impossibility of competing against unfair monetary compensatory amounts.
At this point, I allude to the comments of the hon. Member for Wallsend (Mr. Garrett), who introduced into the debate a note of caution about eastern Europe. There is no doubt that, once eastern European people who work on the land taste the enterprise culture and are given motivation and incentive for increased agricultural production, the competition and scope for agricultural surpluses in Europe will be increased immeasurably. We dare not under-estimate the effects of that. I plead unto the Minister to argue our case, as I know he will, very strongly in Brussels. The total elimination of monetary compensatory amounts would cost about 45 million ecu, or about £35 million, in a full year. The net cost to the United Kingdom would be approximately £120 million, not as a continuing cost but as a one-off cost. The effect on the retail price index would be between 0.25 per cent. and 0.5 per cent.
British agriculture is by anyone's reckoning a major industry and the envy of many of our European partners. They do not want us to get rid of MCAs, because the
Column 815longer they can keep them the better their competitive advantage and the greater their chance of reducing the United Kingdom's ability to compete in the future. Although agriculture is the second biggest industry in the United Kingdom, second only to oil, it is the biggest industry in rural areas with inputs of about £7 billion a year in capital and other purchases and £2 billion in the annual wage bill, and with the lion's share of all agricultural spending going into the rural economy. That is very important because there is no doubt that, without a thriving, prosperous and vibrant agriculture, the whole rural economy is greatly prejudiced.
Our Minister must break the logjam. We cannot accept that he must wait for three years before we get a complete amelioration of the problems besetting us today. Three years in any industry is a very long time, especially for cash flows to be so seriously undermined. The elimination of MCAs will not release a torrent of cash, a windfall, that will boost farm profits, but it will give agriculture its just deserts. I hope that my right hon. Friend the Secretary of State will be 100 per cent. successful when he goes to Brussels to argue for the complete elimination of MCAs here and now.
Mr. John D. Taylor (Strangford) : This is a debate on United Kingdom agriculture and the Minister is responsible in Brussels for the whole of the United Kingdom, even though in the Northern Ireland Office we have a Minister and an Under-Secretary responsible for Northern Ireland agriculture. We never have the opportunity of debating Ulster agriculture here, so that Under-Secretary is not answerable either to the people of Northern Ireland or to this Parliament, and I am sorry that once again the Northern Ireland Office is failing to show its interest in agriculture in Northern Ireland and is absent from the debate.
I thank the Secretary of State for the way in which he began his speech, because, although he mentioned the significant increase in farm incomes last year, he went out of his way to say that he was not going to use that to his advantage because it varied depending on which sector one looked at. There are some regions in the United Kingdom, such as Northern Ireland, which are particularly based on one sector--grass : 60 per cent. of Ulster agriculture is in either beef or milk production.
This morning in Northern Ireland it was announced that the price of milk had been reduced yet again by the Northern Ireland Milk Marketing Board, to 17p per litre. It was 20p last October, so in the space of four months we have had a 15 per cent. reduction in the price of milk. In January, we had an intervention system for butter which was operated in different ways in the United Kingdom and the Republic of Ireland. In the Republic, intervention applied below 96 per cent. of the intervention limit, but in the United Kingdom one had to go below 94 per cent. That gave an unfair advantage to milk producers in the Republic.
I ask the Secretary of State always to watch these things when they apply to the Republic of Ireland as well as the United Kingdom, because the United Kingdom has only one foreign country on its borders, the Republic of Ireland, and a disparity like this works to the disadvantage of United Kingdom producers in Northern Ireland.
Column 816Now that we have managed to reduce the milk surplus in the European Community, the Community should take in hand the complete abolition of the co-responsibility levy in the milk industry.
Mention has been made of the future of the five milk marketing boards in the United Kingdom. With the decline in milk production, rationalisation is now taking place in the milk industry, and that has brought about the combination of various milk operations in Northern Ireland. Several co- operatives have recently decided to become limited companies, and then one has taken over the other. In particular, I refer to the recent takeover bid by Leckpatrick Co-op for Killyman Co-op, both in the county of Tyrone. The Northern Ireland Milk Marketing Board also made a bid for the Killyman Co- op which was higher than that of Leckpatrick, yet Leckpatrick won the takeover battle because the Northern Ireland Milk Marketing Board, which was created by the Ulster Unionist Government at Stormont, has now reached the point when people are uncertain of its survival. So although it was offering more money to the milk producers, the private company won the battle.
I ask the Secretary of State to make a statement about the future of our milk marketing board in Northern Ireland. The producers need to know whether they can place their confidence in the board in the years ahead. it was because of lack of confidence in Northern Ireland in recent weeks that the takeover of Killyman was carried out by a firm offering less than the milk marketing board : people were not sure whether, if they sold to the board, it would still be there in a few years.
The Secretary of State and his Department are well aware of beef prices in Northern Ireland which have been influenced by various general factors, such as the new restrictions on intervention and the abolition of the variable premium, and, more recently, by the decline in sterling and the problem created by the green currencies, something mentioned by many speakers in the debate. Here again, the problem is exaggerated by the border ; once again we have unfair competition with the Republic. We in Northern Ireland stress the necessity of getting rid of the green currencies as soon as possible. The present proposal is for a reduction of 33.3 per cent. We seek a reduction of 100 per cent.
I want to make special reference to the pigmeat industry, because it is one of the major intensive sectors in Northern Ireland. It is subject to great market fluctuations and always has been--that has always been one of its characteristics. I appeal to the Minister to seek a mechanism for stabilising the pig meat market in the United Kingdom.
The debate has also seen an attack on British apples. I want to defend the British apples grown in Northern Ireland, especially the Bramley, of which we have 10,000 acres. The hon. Member for Skipton and Ripon (Mr. Curry) joined me five years ago in defending the Bramley in Europe to the European Parliament and the Commission. I ask the Department to fight for apples once again and to make sure that there is no reduction in the buying-in price for apples in May this year.
Cereals are a problem for us in Northern Ireland because we are a deficit- producing country. We produce only 18 per cent. of the cereals that we require. We know that cereals have been doing badly elsewhere. I would ask that the co-responsibility level on cereals be removed as
Column 817soon as possible, because the damage that is being done to the industry in Northern Ireland is dramatic--especially in that small part of our industry which is the specialist part.
I wish to refer to the campaign to introduce a common time zone throughout the European Community. We in the Ulster Unionist party consulted not only agriculture and the fishing industry but the building and construction industry and business and trade generally. I wish to make it clear that the parliamentary Ulster Unionist party will oppose any suggestion that time should be uniform throughout Europe. The one-hour differential must remain.
I join the hon. Member for Wallsend (Mr. Garrett) in asking about the threat from eastern Europe. Of course we want eastern Europe to advance to freedom and a market economy and we want to assist the countries financially, but we do not want them to cease to be self-supporting in agriculture and start exporting cheap agricultural products into the European Community, the further to undermine our farmers' position.
The former Minister of Agriculture, Fisheries and Food, the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), visited Northern Ireland in his capacity as the Minister responsible for agriculture matters for the whole of the United Kingdom. I hope that the present Minister will find an opportunity to come to Northern Ireland as soon as possible to see what the problems are--especially in the beef and milk industries--and take on board the specific problems that arise because of competition from a neighbouring EEC country--the Republic of Ireland. I invite him to come to Northern Ireland at the earliest possible opportunity.
Mr. Malcom Moss (Cambridgeshire, North-East) : This is one of the most important agriculture debates that we have had for a long time. It comes at a critical time for some--I emphasise "some"--sectors of agriculture. I congratulate my right hon. Friend the Minister of Agriculture, Fisheries and Food on a most positive and helpful speech and voice my disappointment at Opposition Members'
contributions--particularly the speech from the Opposition Front Bench by the hon. Member for South Shields (Dr. Clark) which was long on words and short on substance, with veiled promises of more handouts by a future Labour Government. I found the hon. Gentleman's comments on BSE most unhelpful and I know that they will be considered as such by beef producers in east Anglia.
The sector of agriculture that is most under pressure at present is the cereal growing sector, and that is the principal enterprise of the fens in my constituency. Those with root crops--sugar beet and potatoes--are surviving, but morale among pure cereal growers is at rock bottom. I am sure that my right hon. Friend has been apprised of the situation, but I must nevertheless convey to him in the strongest possible terms the feelings of farmers in my constituency. The reasons for low morale are clear. The farmers are suffering falling incomes and falling profitability, a low price and high interest rate squeeze, pressure from environmentalists and food faddists, some of it quite outrageous in its disinformation, the aftermath of the
Column 818salmonella and eggs issue and now, of course BSE, and tighter controls and regulations on the use of pesticides and the training that has to go with them.
The final straw is the ban on straw burning. Some farmers on heavy land in my constituency who use only a wheat and oilseed rape rotation cannot see how they can continue to cultivate, given the ban on burning. My right hon. Friend's unequivocal statement on the green pound--that he was "absolutely committed" to its "total
dismantling"--will not only reassure my constituents of his complete commitment to the farming cause but will help them to understand that he has their best interests at heart in his negotiations on the pricing mechanism.
Cereal farmers' problems start with interest rates. Nationwide, the industry's bill rose 38 per cent. last year and now stands at a staggering £949 million, compared with £1,400 million of farming incomes. The gearing of borrowings in this industry is larger than farming's gross product, whereas the norm for other industries is about 33 per cent. Bankers are now asking farmers in my constituency whether they think that they really ought to go ahead and drill next year. It has come to that.
The second problem is investment. Nationally, in the five years to 1988, annual investment in fixed capital dropped by 40 per cent. and last year there was a further cut of 7 per cent. At this rate, 1992 may never come for some of my cereal farmers. Even if it does, many of them will not have the necessary new capital investment in machinery to compete on a level playing field with their European counterparts.
The most serious problem is falling incomes. Although statistics show that real farm income is set to rise by 8 per cent. in 1989, after a fall of about 27 per cent. the previous year, they hide regional variations and variations between different farming enterprises in the same region. The cereal farmers had two disastrous years in 1987 and 1988, and 1989 looks as though it will prove to have been equally bad.
The chief culprits are the green pound and the co-responsibility levy. The green pound penalises my fen farmers at a rate of £20 per tonne for their wheat. For a reasonable farmer on a reasonably sized farm, that can total between £20,000 and £30,000 of lost income over the year. As a business man myself, I would not contemplate going into such an unprofitable business. Only recently I was shown two statements from a local grain merchant. In November 1989, a farmer in my constituency obtained £112 a tonne for wheat, less the co-responsibility levy of £3.66 and netted the handsome total of £108.34. The November 1980 statement showed the figure of £107 per tonne for wheat. That means that in real terms income from cereals has decreased to about 15 per cent. of what it was in 1983. My farmers are also puzzled by the new definition of income from farming that the Ministry has employed. They understand what farm income is, but they are somewhat perplexed to learn that the assessment under the new terms concludes that farmers earn only 60 per cent. of their income from farming. That figure is not accurate when applied to farmers in the fens of Cambridgeshire. The fens are the grain basket of the United Kingdom. All the land in my constituency is grade 1 or grade 2 land ; we have no inferior land, and historically we have the highest agricultural land values in the country.
What are the options available to us? First, there is diversification. We have a flat and featureless landscape.
Column 819With all due respect to my beloved constituency, it is not the kind of landscape that one would want to put on the front of a chocolate box. The opportunities for tourism are obviously limited. It is a sparsely populated area. We have no country houses and estates. No yuppies from the City come up to the fens to buy estates and act as absentee landlords.
The farmers in the fens are worker farmers and they have been since they started to farm the land after drainage. Ours is a unique area. If we did not drain the fens, they would soon disappear under several feet of water. I am quite prepared to lose my constituency at an election ; that might be regarded as a misfortune. To lose it under 8 ft of water could look like carelessness. My farmers also have to contribute to the drainage of the land. That is an additional item of expenditure that they have to bear.
Woodland is not an alternative, because one is not allowed to plant woodland in the fens, where all dikes and drainage courses must be free of obstructions so that they can be cleaned out. We cannot change to grasslands because we do not have enough rain, and set-aside rates are just not high enough to make the position viable. I ask my right hon. Friend the Minister why the additional payments for set-aside agreed under FEOGA--the European Agricultural Guidance and Guarantee Fund--and taken up by the French and German Governments were not allowed in this country. That is certainly a question that my farmers have put to me.
Fen farmers now have to worry about rhizomania, of which there have been two outbreaks--one in Suffolk and one in Norfolk. If rhizomania takes a hold, the sugar beet crop in the fens will disappear in consequence. As many hon. Members have said, the root cause of this country's problems in agriculture--cereal growing, in
particular--arises from the prices of commodities, and the problems are exacerbated by the green pound and the co-responsibility levy. I welcome my right hon. Friend's commitment to negotiations on the green pound, but the logic is that, if it is to come off in 1992 because it is unfair and unreasonable, it ought to come off this year. Why is that not going to happen? I urge my right hon. Friend to stand firm in his negotiations, and I wish him luck. Certainly he has the support of my constituents.
Much has been said about level playing fields. I remember the days when I played rugby in Redruth in Cornwall, which is famous for a pitch that slopes about 30 ft from one end to the other. I remember that when I was playing at the bottom end the wind was always in my face, and the rain driving horizontally. But, of course, at half time we changed round. The message from my constituents to my right hon. Friend is : "Bring out the oranges ; the half-time whistle has just gone."