House of Commons Hansard Debates for 18 Apr 1991

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Mr. Howells : I believe that the hon. Member for Southend, East (Mr. Taylor) has full responsibility for agriculture in Southend.

Mr. Taylor : I am a friend of the Essex NFU. Does not the hon. Gentleman think that Gladstone would have been ashamed of him? We have heard realism from the Conservative Front Bench and from the Labour party, but the hon. Gentleman is living in a cloud if he believes that a policy of putting in more and more money will help farmers. Does not he realise that the Liberal party's policy would drive farming to ruin?

Mr. Howells : I remind the hon. Gentleman that the farming community is very much indebted to members of my party. If the hon. Member for Southend, East had had his way a few years ago, British farmland would today be rated. He introduced a 10-minute Bill, but even his colleagues voted with us, including the then Prime Minister. My advice to the hon. Gentleman is not to blame the Liberals, but to look after the farmers of Southend.

The Secretaries of State for Scotland and for Wales should go to Brussels. We have heard the excuse from Ministers so many times that the Minister of Agriculture, Fisheries and Food has full responsibility for Britain within the Community. We are aware of that, but the other two Ministers are duty- bound on behalf of the farmers of those two countries to go there, even if only once a year. However, they have not been, which is a great pity.

Mr. Gummer : So that the hon. Gentleman will not be unhappy, I can tell him that my right hon. Friend the Secretary of State for Scotland was with me at the negotiations in Brussels on only the previous occasion.

Mr. Howells : I am delighted at the change of heart. The Government have listened to what we have been saying for some time.

We all talk about MacSharry's plans and hon. Members of all parties condemned his present proposals during our previous debate. However, MacSharry's proposals are not dead. He will introduce new proposals in the summer and if we do not accept them there will be another set. My advice to the Minister and to everyone involved in agriculture is that we should work with MacSharry and not oppose him on every occasion. In the end, we have no alternative but to work with the Commissioner who has full responsibility for agriculture. In 1992 there will be a free market economy and we shall have to trade even more with our friends on the continent.

I wish to deal with the problem of slaughterhouses. At present Great Britain has approximately 74 export-approved slaughterhouses out of a total of over 900 plants. That is only 8 per cent. of all slaughterhouses and accounts for about 38 per cent. of throughput. That figure is clearly much lower than that for other member states. In 1987, 85 per cent. of West Germany's major slaughterhouses were export-approved. The figure was 51 per cent. in France, 58 per cent. in Belgium, 71 per cent. in Northern Ireland, 69 per cent. in the Netherlands, 100 per cent. in Luxembourg and 19 per cent. in Denmark. That covers all the largest abattoirs and the majority of total throughput. Only Italy, Greece and Spain have a smaller proportion of slaughterhouses approved than does Britain.

Unless an abattoir can be exempted as a result of derogation, it will have to be upgraded at considerable cost. Therefore, something must be done. The number of

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abattoirs in Britain has declined at an alarming rate as a result of changes in the agriculture industry and of general economic pressures. In the mid-1950s there were 3,500 ; last year that number had been reduced to 778.

The Meat and Livestock Commission predicts that only 360--less than half the present number--will remain after 1992. The future of hundreds of small abattoirs remains in the balance as the 1993 deadline for upgrading draws near.

The trend towards fewer, larger meat plants with advanced technology and added-value operations has accelerated as the date for the imposition of the new EC standards advances. According to the Meat and Livestock Commission's report, only 270 of the 778 remaining abattoirs expect to be operating after 1992. A further 200 were undecided. The Minister, who believes in a free market economy, must do something about that.

Yesterday I received a press release--as I am sure many other hon. Members have--from the Council for the Protection of Rural England. The headline reads :

"Explosion of shackery' threatens to create a tatty countryside". It states :

" The fragmentation of farms, erection of shacks and small buildings, and abuse of planning freedoms threatens to create an unloved and tatty countryside.'

This was the message given by Tony Burton, Senior Planner of the Council for the Protection of Rural England to the AGM of the Farm and Buildings Centre Mr. Burton said : The 1980s saw a remarkable 15 per cent. rise in the number of small farm holdings, with over 6, 000 new units under 10 hectares. The result' "--

according to him--

" has been an explosion in the problems caused by small farm buildings in the countryside, unchecked by a powerless planning system.' "

I disagree. The reason why there are 6,000 new units under 10 hectares is financial pressure on many farmers. They owe so much to the banks that they must sell parts of their assets to repay their debts. They have sold their sheds and barns and a few acres of land to ensure that they can survive. It has nothing to do with planning--it is a matter of finance.

With respect to the Minister of Agriculture, Fisheries and Food, I wish him well in his deliberations, but he must change his attitude in Europe. He must work harder for the British farmer and, now and again, he should heed what the leaders of the National Farmers Union, other organisations and political parties in Britain say to him--please take advice from other people who love the countryside and who live for British agriculture.

Mr. Deputy Speaker (Mr. Harold Walker) : I remind the House that speeches between now and 9 pm should not exceed 10 minutes in duration.

6.59 pm

Mr. Michael Alison (Selby) : I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity to make a short contribution to the debate as I represent one of the most important agricultural constituencies in north Yorkshire. As my right hon. Friend the Minister knows, I also represent the Church Commission, which is one of the largest landowners in Britain. We own more than 155,000 acres and 410 farms of more than 50 acres. From the perspective of my constituency and of the Church Commission, the view of British farming at present is gloomy.

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My right hon. Friend's departmental report for 1990 says it all. Farmers were caught up in a fearful vortex of natural and man-made misfortunes which, taken together, were little short of catastrophic. There was an environment of falling real prices for output, and rising input costs and high interest rates. The only way out of the vortex for many farmers was to get out and to leave their coats behind. Farm incomes fell by 14 per cent. in 1990--22 per cent. in real terms. At the beginning of 1990, there were 189,000 farmers in the United Kingdom ; by the end of the year, no fewer than 6,000 had left agriculture. Clearly the past year has been one of trauma for farming.

Nobody doubts that my right hon. Friend is deeply concerned about the gloomy scene which I have depicted, and that he is deeply committed to and engaged in the battle to safeguard the future of British farming. However, his efforts are undermined by little governmental niggles, which are not directly of his doing, but over which he may have some influence. In this year's Budget, for example, in which it was proclaimed as a virtue that rates of vehicle excise duty for cars, buses, coaches and all goods vehicles were to be left unchanged, how was it that the vehicle excise duty rate for agricultural machinery was, virtually uniquely, increased from £16 to £30? Could not that increase be dropped when we come to the appropriate stage of the Finance Bill?

Another apparent niggle is to be found in the Government's new pollution control regulations which will put severe restrictions on farmers. One farmer in my constituency has complained about one aspect--the regulations on oil storage. The new regulations will apply only to fuel stores or tanks on farms, and not to fuel stores or tanks in domestic property where probably far more oil is stored than on farms. Farmers find such discrimination, which involves potential financial detriment, discouraging in the present circumstances. Farmers are resilient folk and are used to ups and downs. They are capable of being philosophical and of taking one year with another. However, I hope that my right hon. Friend appreciates that there is a special sense of gloom and foreboding in agriculture at present because agriculture seems to be confronted by so many intractable problems which are beyond its control.

My own Church Commission agricultural advisers have quoted to me reports that show that one farm in four is currently trading at a loss and that, in consequence,20 per cent. of farmers will not survive five years. Such a decline in British agriculture would be catastrophic and I know that my right hon. Friend will struggle relentlessly to prevent it from occurring. It has never been truer than today to say that if the British farmer did not exist he would have to be invented. He is incomparably the best, most skilled and most reliable custodian and protector of our natural environment and heritage. Even if every scrap of food consumed in Britain were to be imported and our farmers driven off the land, our countryside could still never look better--indeed, it would look appallingly worse-- than it looks today in the hands of working and productive British farmers.

In his valiant struggle to do his best for British farming, my right hon. Friend will, I hope, not think me presumptuous in sketching one or two suggested guidelines for the way ahead. First, will my right hon. Friend avoid like the plague proposals such as those that Commissioner MacSharry has advocated for protecting and compensating weaker and smaller farmers in Europe

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with a subsidy to produce? The sooner we can get away from production subsidies Europeanwide in any form the better, but a deliberate policy of subsidising the least efficient producer to produce output that nobody wants is a higher form of lunacy. Secondly, there is a form of subsidy that is desirable and acceptable. There may be, for example, a reward to farmers for performing what amount to public services in preservation and environmental protection. The Minister's farm and conservation grant scheme and the farm diversification grant scheme are good cases in point. I hope that my right hon. Friend will consider extending the first scheme beyond its present three-year limit if only because it has to march in step, to some extent, with statutory pollution control regulations, which have suffered some delay in coming before the House.

Thirdly, will my right hon. Friend be eternally vigilant in the matter of competition? With fair competition, the British farmer is a world beater with an assured future, but it is not fair competition when, for example, chemicals used on cucumbers in Holland are not allowed to be used on cucumbers in Britain. There are countless similar examples that one could give. Will my right hon. Friend consider doing more to promote good marketing practice and producer co-operatives? The downside to our larger farm units in Britain, compared to those in mainland Europe, is that farmers tend to think that they are big enough to go it alone in marketing when in reality they cannot. The mini-producers in Europe know only too well that they must co-operate, which they do, so that their tortoises are, unfortunately, only too frequently beating our hares.

If output has to be restrained to keep the CAP and its budget afloat--and farmers are perfectly well aware of the necessity for that--reductions in support, to quote the Country Landowners Association,

"must be made only at a pace which the industry can cope with. Cuts in support must be matched by our GATT partners, and must be applied equally across the whole European Community."

I hope that my right hon. Friend will be positive in his thinking, and even innovatory and radical. I was a little disappointed by the cold water that he poured on the scheme that my hon. Friend the Member for Weston-super- Mare (Mr. Wiggin) mentioned--the idea of Community compulsory restrictions on the use of nitrogen throughout the EC. Using a fertiliser quota scheme that individual farmers could buy or sell would be a far more interesting and economical way to reduce total EC production while rewarding the efficient and profitable farmer than any of Mr. MacSharry's ideas for subsidising lame ducks. I hope that my right hon. Friend will continue to keep an open mind on that interesting nitrogen scheme.

I put on record the fact that the Church Commissioners, as substantial owners of tenanted farms, welcome my right hon. Friend's proposals for reform of agricultural tenancy law. We support what is proposed, and we will submit detailed comments in the near future. 7.9 pm

Mr. Nigel Spearing (Newham, South) : It is well known that I am Chairman of the Select Committee on European Legislation. That Committee has examined the Minister of Agriculture, Fisheries and Food on the 22 or 23

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documents in the Vote Office. The value of Select Committees is sometimes appreciated outside the House. The Chairman of the Agriculture Committee has contributed to this debate. I hope that one day his Committee will get round to considering alternatives to the common agricultural policy. A Select Committee of this House would be an admirable vehicle for that purpose.

I am making this speech in a personal capacity--not with my Chairman's hat on. Twenty years ago, this House was having debates about joining what was then called the Common Market. Agriculture, of course, was one of the central themes of the debate. I remember saying to the then Member for Lowestoft and Minister of Agriculture, "Do you really suppose that a common market from Sicily to the Shetlands will be a practical proposition ?" I said to colleagues who are now on the Liberal Benches, "Do you really want to hand over British agriculture policy to Brussels ?" They said yes, and voted accordingly.

Let me refer to the question of sugar. At the time to which I have just referred, I was not the Member for Newham, South, so I did not have a constituency interest. However, I was very concerned about this issue, and I am even more concerned about it now.

At a meeting of the Select Committee on European Legislation last Tuesday, the hon. Member for Hertford and Stortford (Mr. Wells) questioned the Minister of Agriculture, Fisheries and Food about sugar. The hon. Member referred in particular to the African, Caribbean and Pacific countries and the 1.3 million tonnes of sugar that we get from Commonwealth territories. The Minister replied : "If that means we have to rewrite the Protocol and have a whole new system, then so be it".

I do not know whether that remark has been publicised. In some ways I hope that it has been, but in others I hope that it has not. If it has, it will create a great deal of fear in Commonwealth capitals--the capitals of countries such as Mauritius, Fiji and Jamaica. In exchanges with my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman), the Minister did not provide the ACP countries with very much reassurance.

Mr. Gummer : I should not like any fear to be based on that. The reason for the remark, as I hope that the hon. Gentleman will accept, is that significant reductions in sugar prices in the European market--that is the context in which the matter was being discussed--have a very real knock -on effect in associated countries in the developing world. I was suggesting that one could not just allow that to happen and that we should have to find a different way of helping those countries. It was entirely a supportive suggestion. I thought that it was not necessary when we were cutting by 5 per cent., but the question that I was asked in the Select Committee referred to the possibility of a continuing and significant cut. I was asked what I would suggest in those circumstances. In reply, I said that it would be necessary to look again at the protocol. That would be in the context of improving the situation of the developing countries-- something to which, as the hon. Gentleman knows, I am committed.

Mr. Spearing : I am very grateful for the Minister's clarification. I see exactly what he means. Apart from sugar, what do those countries have to sell? Other measures that have been suggested, but not put into practice, are very doubtful indeed. I think that I have made the point. I am no longer the Member for Acton. I now

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represent Newham, South, which imports 1 million tonnes of Commonwealth sugar, although the employment that is provided in the constituency--I suppose that this is a vested interest--is rapidly diminishing with the advent of technological development. I wish to comment briefly on the general MacSharry situation. In the first part of his report, Mr. MacSharry brutally exposed what is going on. In the past 10 years, CAP costs have doubled in real terms ; 35 per cent. of the agricultural population have left the land ; in the United Kingdom, 18,000 farmers have left the industry in the past 10 years, and 44,000 farm workers have lost their jobs. We all know that we do not get a very good deal for our contribution, but that is just one of the consequences of the rules of the club. As somebody once said, it is not our money. Mr. MacSharry, in his report, pointed out also that the stabilisers had failed. Held up, only three or four years ago, as the great salvation for the CAP, they have now been set aside and are hardly operative. Pensioning off, too, is marginal. Things that were trumpeted a few years ago are not working. I want to be objective. People know my general views of the Common Market. We have been in the Community for 20 years, and we all know that there is a problem. Indeed, Britain has a dilemma. When the Minister goes to Brussels, he does not have a veto. Any 23 members, in combination, can turn down any proposal. This reminds me of someone who has driven up a one-way street and cannot get back. Such a person is in a particularly bad position if he does not have a reverse gear. But even if he were minded to get out and push the car, he might come up against some of those metal plates on the road. If things cannot be changed without one third of the membership in voting blocks, it may not be possible to find any way at all. That is a constitutional problem of which this country should be aware. Indeed, this House is only just becoming aware of it.

Let me put this fundamental question : what is the difference between the objectives of the common agricultural policy, the means and mechanisms by which those objectives are realised, and the desirable characteristics of the CAP? I detected from what the Minister said on Tuesday, and from what the Opposition spokesman has said, the sort of characteristics that this country wants the common agricultural policy to have. There is the question of care of the countryside and of ensuring that the impact on the environment is benign. But I wonder whether those objectives are attainable. The purposes of the common agricultural policy are to be found in articles 38 and 39 of the treaty of Rome. Paragraph 1 of article 1 says :

"The common market shall extend to agriculture and trade in agricultural products. Agricultural products' means the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products." Article 39(1) says :

"The objectives of the common agricultural policy shall be : (

(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour ;

(b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture ;

three magic words--

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"(d) to assure the availability of supplies :

(e) to ensure that supplies reach consumers at reasonable prices."

Of course, MacSharry pointed out that the prices would be two to three times world levels. I cannot quote the rest of the article as there is not time. Is it possible to achieve those objectives? If one has a common market, can one do the rest as well? This is a problem that must be addressed by the House of Commons and by the nation. The Minister says that we did it up until the time of our joining the common market, when there was a shortage of food in the world, and that we did it under the Williams plan and market support. I am not sure that that principle is not applicable nowadays, even in a situation of surplus. Is it possible that we could have modification to solve the problems of the common agricultural policy?

7.20 pm

Mr. Robin Maxwell-Hyslop (Tiverton) : The stabiliser policy has failed, as I told my right hon. Friend the Minister on the Floor of this House it would. I told him exactly why it would fail, because it is nothing more nor less than Christopher Soames's standard quantity policy ; and one does not change the causal sequence by altering the name.

Why has not my right hon. Friend put an alternative to the MacSharry plan? It is because there is only one workable alternative, and that is quotas. My right hon. Friend does not want surpluses in store. One does not get surpluses in store with quotas unless one fixes the quota higher than consumption. That is the whole purpose. Nor does one get subsidised exports, which were tearing the general agreement on tariffs and trade apart. It is only through quotas that the support which the Community gives can go to the producers and thereby maintain the pattern of rural living which is the object of those payments, without subsidising storage, without subsidising exports, and without ruining the world economy in many countries which have a lower standard of living than ours. Sooner or later, if my right hon. Friend does not learn that, his successors will, because there is no other system capable of working.

Yesterday I flipped through Time magazine. Mr. MacSharry has been mentioned, but where does power reside in the Community? It resides with the President of the Commission, with M. Delors, who was interviewed by Time. He said :

"All the wise men agree that East European countries cannot join the Community immediately, but in the medium term their admission is possible. We in the EC can offer two kinds of assistance. We can help them democratize, and we should assume the burden of accepting more and more of their exports in agriculture, textiles and so on. That is the price we pay. At the same time, we must balance assistance to Eastern Europe with help for countries to our south ".

That system will collapse the whole EEC common agricultural policy. That is what the man of power, M. Delors, is saying. Does anyone believe that Mr. MacSharry is a man of power? He would never be a commissioner if southern Ireland did not have its quota of Commission jobs. That is the only reason he is there ; we all know that. This divorce from reality, which I am afraid Ministers of Agriculture seem to embrace, pretends that this is not so.

Secondly, because it is inevitable that we will come to quotas, what happens before that? What happens before that is a struggle to increase output in every country so as

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to establish the largest possible datum for that quota. It happened with fisheries ; it happens with everything. Why should anybody doubt that? To imagine that the standard quantity policy--I beg its pardon, relabelled "stabilisers"--will reverse that inevitable precursor is lunacy and it might as well be termed such.

The third thing I want to leave with the House, because this may well be the last time that I shall have the opportunity of addressing it in an agriculture debate, as I am retiring at the next election, is this. If the common agricultural policy in its parts is not mutually capable of living together, if the parts are incompatible with each other, that policy will also collapse. And to imagine that, with a stabiliser policy--I beg its pardon ; of course it is really standard quantities--which encourages people by economic necessity to increase their individual output--that is why it died the first time, because it does not discourage the individual from producing more--what happens? More goes into store or, at a subsidised price, on to world markets. That is not compatible with what the EEC is saying in the Uruguay round of GATT.

So, as we look into the predictable future, what do we see? We see that all our policies connected with the countryside will fail if they are contradictory one with the other. My right hon. Friend said that we cannot keep supporting agricultural incomes ; that is bound to fail. The same argument, of course, goes for green subsidies. If they are to replace a fair market price allied to quotas, then one will have to increase ever more and more the green payments, if they are to achieve their objective rather than be gesture politics. So we do not escape from the dilemma of increasing payments by shifting it from one to the other. However, with quotas one contains the quantum of that expenditure ; with other systems one does not.

That is why I ask my right hon. Friend to grasp this nettle. I am not speaking after the event. I was advocating quotas on the Floor of the House in 1976. If we had introduced milk quotas then, before the dramatic expansion in French and southern Irish milk production, our producers could have had quotas of over 100 per cent. Quotas are inevitable, but the agony of introducing them in times of surplus compares so unfavourably with introducing them before one is in surplus. If we do it before we are in surplus, we avoid aborted expenditure on expansion ; we avoid living in a false world. That is why Europe, with its higher costs, particularly in northern Europe--higher costs because of less sun ; that is why costs are higher--can only live with a quota system.

I will conclude with one observation, and it is this. As world oil energy runs out--we cannot tell which year it will run out, but run out it will-- where is the energy to come from? It will not come in Britain from wind power because the coldest days in Britain are when a nice anti-cyclone is sitting over Britain with zero wind speed. It will come from growing carbohydrates here for inversion into hydrocarbon fuels, just as has been done over huge areas of Brazil. There it was done for foreign currency reasons. Here, as elsewhere, it will be done because the oil is not there for which it is presently the substitute where it is done.

Therefore, energy production will be in direct competition with food production ; and heaven help the third world with tiny incomes then, because they will be growing carbohydrates for the richer parts of the world to

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turn into fuel. That will be the pattern of agriculture. Do not let us, therefore, turn our agricultural areas into deserts, followed by the erosion that will go with that, followed by the loss of fertility of the soil, by refusing to grasp the nettle of quotas while it is still practicable to do so.

7.30 pm

Mr. Ieuan Wyn Jones (Ynys Mo n) : It is always a pleasure to speak after the hon. Member for Tiverton (Mr. Maxwell-Hyslop), who is a stimulating debater and whose distinctive style will be sorely missed by the House when he retires. The length of time that he has served his constituency has represented a wonderful achievement and he will be greatly missed by his constituents.

We must consider the background against which the debate is taking place, and I shall concentrate on Wales and refer to Scotland. Since 1945, as the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said, there has been a dramatic shift away from the land. Reasons outwith the scope of the debate have been responsible for that shift. The great efficiency of agriculture, with increasing mechanisation, has played a great part in that development. Larger farms have been created because they have been said to be more efficient.

Many people have left the land because farming is a hard life. Those who want an easy source of income do not go in for farming, which involves long hours, seven days a week. My brother-in-law is a farmer and spends most of his evenings and nights at work during the lambing season. I am sure that he would earn more in another industry. Because it is a hard way of life, over the years people have found alternative ways of making a living.

The industry also gives a low return on capital invested. Indeed, almost no other industry gives such a meagre return, so it is not surprising that agriculture has suffered that drift since 1945. We have also failed over the years to attract young new entrants from outside the industry. That has meant that many youngsters who had something to give to agriculture have failed to do so because we have failed them.

Those are all reasons why there has been such a drift away from the land. There have been periods during this century when that drift has accelerated. For example, during the great depression of the 1930s, hundreds of thousands of people left the land as incomes plummeted. Stories about that time, particularly among those who live in rural areas, abound.

The great danger is that the 1990s will herald another massive drift away from the land because we have failed to grasp the problem encompassed by the common agricultural policy. I fear, in view of the way in which the Minister put the Government's case tonight, that he will accelerate that drift even further. Yet again he failed to explain the Government's alternatives to the MacSharry proposals. He rubbished them and said that they were nonsense, but he failed to spell out the Government's proposals.

A recent study published in Wales showed that, even if the 35 per cent. cuts proposed by MacSharry during the recent GATT round came to fruition, one in four Welsh farmers would have to leave the land because of the subsequent drop in incomes. Not only is that a remarkable figure, but the drift will accelerate if, added to those cuts

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in the GATT talks, there are cuts in price support as a result of the latest price proposals and MacSharry's reform plans are totally rejected.

We must look carefully at the background to the present situation. For example, there was a 23 per cent. reduction in incomes in Wales last year, following a reduction of 28 per cent. in 1989. How can any industry survive such a dramatic rate of reduction?

What will be the result of the Community's price proposals, for example on beef, with the abolition of the safety net intervention measure and the reduction of intervention trigger levels by 8 per cent? Nobody wants to see intervention stocks increase dramatically. There is no point in beef being taken into intervention if nothing then happens to it.

There must be special measures to reduce the current levels of intervention. But we should remember why such measures were introduced. Following the BSE scare, it was clear that there had to be a system of intervention to enable beef to be taken into store. Confidence has not returned to the beef industry, so we should retain the system, at least until confidence has returned.

As the hon. Member for Ceredigion and Pembroke, North said, we are not in surplus in sheepmeat, so it seems scandalous to be talking about further cuts in price support in that area. After all, we are referring to extremely vulnerable farmers--farmers in the uplands and on marginal land-- on whose incomes no hon. Member would wish to live. We are driving farmers off the land because we are not supporting them. It is essential that we give them support, and of course we welcome the 1.5 ecu per head support in supplementary ewe premium. I was astonished to hear the Minister say that we should be cutting the milk quota by more than 2 per cent. He should be arguing that cuts should take place in certain sectors of the milk industry, but that across-the-board cuts damage everybody, especially the small and medium-sized producer. The Government should be giving protection to the small and medium-sized family farm, which has been sorely hit in recent years.

I agree that green pound devaluation requires more careful scrutiny than is proposed by the Commission. The green pound disparity should be dispensed with immediately, and, in view of the Minister's comments on that, feel sure that he will be taking that message to Brussels on behalf of United Kingdom farmers.

In relation to reforming the CAP, the much-maligned MacSharry proposals should not be dismissed out of hand. It is easy for people to say that MacSharry proposes to prop up inefficient small farmers, but let us at least consider the principle of what MacSharry proposes. It cannot be right that 80 per cent. of support under the CAP should go to 20 per cent. of farms. MacSharry says that that is wrong. Instead of targeting aid on farmers who do not need it, we should be supporting those in need. If we targeted properly on small and medium-sized efficient units--units that would not be viable without such limited support--we might get somewhere. It is essential that farming in rural areas is maintained. If that can be achieved by targeted support on revised MacSharry proposals so much the better. The Minister of Agriculture, Fisheries and Food virtually said that agriculture should be left to the free market. What do--more to the point, what should--the Secretaries of State for Scotland and Wales say about that?

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Unfortunately, they say little, having left it to the Minister of Agriculture to make the running on the MacSharry proposals, on the GATT talks and on the price proposals.

Does the Secretary of State for Wales support Welsh agriculture and believe that Welsh farmers should be given support in the way that my hon. Friends and I have outlined? Hon. Members representing the regions of England, and Scotland and Wales say that agriculture is in a state of crisis. We demand Government action urgently.

7.38 pm

Mr. Ralph Howell (Norfolk, North) : I congratulate my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) on his excellent and powerful speech. It is sad that it may be the last that we hear from him in an agriculture debate. We shall miss him.

I agree with my right hon. Friend the Member for Selby (Mr. Alison) and with the excellent speech made by my hon. Friend the Member for Weston- super-Mare (Mr. Wiggin). We have heard some powerful speeches criticising what has been happening and outlining the seriousness of the position in which agriculture finds itself.

I must declare an interest : I am a farmer, and I represent a constituency which depends more heavily on agriculture than almost any other in the country, especially on cereals and sugar production. Serious problems face both commodities, especially if the Government's policies go ahead. To cut the price of sugar by 5 per cent. just to keep it in line with the cut in the price of cereals is a very foolish move which must be resisted. I wholly agree with my hon. Friend the Member for Weston-super-Mare : it is quite wrong to think it sensible to cut the price of cereals. If that price is cut, what am I and my constituents to do? Are we to go further and further into the red? We shall have to do our level best to produce an extra hundredweight or two to counteract the cuts--and that will merely aggravate the situation and achieve nothing.

A great deal of misunderstanding and mythology surrounds agriculture and it is about time we clarified the situation. I was misunderstood when I intervened on the Minister earlier, when I tried to tell him, with the help of answers that he has given me, that the cost of agricultural support had fallen from 1 per cent. of GDP in 1960 to 0.5 per cent. in 1973, when we joined the EEC, to 0.25 per cent. now. But the general public do not believe that--they think that massive subsidies are being handed out. I recognise that there is a problem with expenditure in Europe, but even that is exaggerated. It amounts to only about 1 per cent. of GDP.

The Minister answered me as though I had been talking about the price of food, but even in that event he did not have a leg to stand on. The price of food is rising much more slowly than other prices generally. That means that our producers are being more efficient than the rest of the country's industries. In 1960 we spent 25 per cent. of our net disposable income on food. Now we spend less than 12 per cent., and the figure is falling all the time. So how can anyone in his right mind declare that the price of food is too high?

Mrs. Ann Winterton (Congleton) : Is it not also true that, of the diminishing amount of money spent on the priority item of food, much more of the profit element is going to those who process the food and to retailers and not to the main producers--the farmers?

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Mr. Howell : My hon. Friend has just beaten me to my point. In 1979, the producers received 49 per cent. of the price of food and the processors 51 per cent. Now farmers get less than 40 per cent. and the processors more than 60 per cent. The processors and retailers--the supermarket chains and so on--are making the enormous profits and benefiting from the subsidies which are generally thought to be going to the farming community.

As Prime Minister, my right hon. Friend the Member for Finchley (Mrs. Thatcher) commended farmers for doing better than any other industry in their efforts to become self-sufficient. We were encouraged to increase our self-sufficiency in temperate foodstuffs--and we did. Self-sufficiency rose from 71 per cent. in 1979-80 to 80 per cent. in 1984-85. Measures taken since then have resulted in a fall in self-sufficiency to 74 per cent. Our balance of payments would be much better had we been allowed to follow the advice of the former Prime Minister and increase our self-sufficiency beyond 80 per cent.

Our balance of payments is an important feature of the performance of agriculture. Cereals are the most successful sector of agriculture. In 1979 our net balance in cereals was a deficit of £404 million. Cereals are now in surplus to the tune of £229 million--a change around of more than £600 million. In the same period a surplus of £46.9 million in our balance of trade in electricals and machinery has turned into a deficit of £1.677 billion. The deficit in road vehicles has worsened from £795 million to £6.932 billion. British agriculture, especially cereals, is therefore doing a great job for the economy of this country and we must stop trying to destroy it. We are all concerned about the third world and the awful events on the Turkey-Iraq border. Britain is 120 per cent. self-sufficient in wheat ; Europe is 130 per cent. self- sufficient ; and America is about 220 per cent. self-sufficient. The Cairns group is even more self-sufficient in wheat. No wheat is ever wasted in the world, so if we cut cereal production just to balance the EEC budget--by quota, or by price cutting, which is impossible--more people in the world will starve. The lower we force prices of agricultural produce, the more we shall destroy farming communities not only in this country but in every corner of the earth.

7.47 pm

Mr. Martyn Jones (Clwyd, South-West) : This very afternoon I asked the Prime Minister what he intended to do to help farming and to help stop the catastrophe that is occurring on the hills of Clwyd. He replied that the Minister responsible had increased hill livestock compensatory allowances. But a 14 per cent. increase in HLCAs cannot possibly be considered enough, given the piteous decline in prices and incomes. Incomes alone have fallen by 22 per cent., and we face crippling interest rates and high inflation.

The Prime Minister had no answer to the problem of the disposal of casualty animal carcases. What was once at least a small monetary compensation for the loss of an animal is now a complete loss. If there is no suitable area in which to bury them on a farm, farmers must pay to have them removed. I heard on Tuesday in Denbigh market that animals are already being dumped by the roadside, which could result in a grave risk to public health.

We have already heard about the problem of the doubling of vehicle duty, which was slipped through in the

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Budget without being mentioned in the Budget speech. There are also restrictions on the use of duty-free diesel in journeys of more than 15 miles. But we are debating the EC price proposals which, in the absence of any real effort to change the system or redirect support to farmers and away from intervention and export restitution, will result in further damage to British agriculture. The 5 per cent. cut in sugar prices, which has already been mentioned, could result in job losses in our industry and harm the developing Afro-Caribbean countries drastically.

Common agricultural policy spending needs to be reduced, but some factors are not being taken into account--for example, the inclusion of the GDR in the EC and the potential reduction in costs of exporting surplus production with a strong US dollar. Spending could be reduced while helping farmers if the CAP were reformed. Farmers in areas such as mine cannot continue in agriculture and continue to protect the visual and amenity value of the countryside if prices are cut merely to save expenditure.

The Minister rightly attacks the MacSharry proposals, which would be highly discriminatory against British farmers and which--although some would disagree--would discriminate against Welsh farmers and other less-favoured area farmers.

Welsh farms, and probably Welsh farmers, too, are smaller than average--

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