House of Commons Hansard Debates for 4 Dec 1991

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he is not in favour of compulsory set-aside. Is he now prepared to accept compulsory set-aside within the MacSharry regime? MacSharry envisages 4.4 million hectares being set aside in Europe, in spite of the fact that it has been shown not to work.

We have been critical and sceptical of the Government's negotiating position and abilities. Obviously we would not expect the Minister to declare his negotiating hand, so the only way that we can judge his negotiating ability is to look at the record, which is not very good. What has become of the Minister's somewhat bragging statement in the House? He told us :

"the Government have presided over the largest reform there has been in the common agricultural policy, and very much greater reform than anybody thought was possible. There is no doubt that most other countries in the Community have now come to accept what was a United Kingdom initiative-- that is, a common agricultural policy increasingly designed to meet supply with demand rather than simply with surplus."--[ Official Report, 6 February 1990 ; Vol. 166, c. 792.] That is what the Minister told the House in 1990 he had achieved in his negotiations. The record has proved him wrong and that is why we have a right to be sceptical about what he is trying to argue for now.

I only hope that the Minister will approach the final stages of negotiations on the MacSharry proposals with a little more objectivity and humility. I admit that the signs this afternoon are not especially good.

Mr. Alan Amos (Hexham) : Does the hon. Gentleman agree that the alignment of the green pound with the market exchange rate was a tremendous success, against all the odds? Will he give my right hon. Friend the Minister credit for that?

Dr. Clark : The hon. Gentleman is right--the green pound realignment has been a great benefit to the British farmer. We have said so before and I am happy to repeat it now. However, when we are talking about detailed, in-depth reform, about reshaping agricultural support in this country, we have the right to inquire of the Minister and to press him on those issues.

When the MacSharry proposals mark one were published in February 1991, the Minister--in what I can only describe as one of his well-known tantrums in the House--went over the top. He denounced them in graphic terms saying :

"We start by saying that we oppose Mr. MacSharry's proposals. We hate them. We condemn them."--[ Official Report, 14 February 1991 ; Vol. 185, c. 1021.]

Strong words which, predictably, have proved somewhat counter effective with MacSharry, for when the mark two proposals were published in July 1991, the Government's protestations had achieved very little.

Two or three weeks later the Minister--quoted in the Financial Times -- described the new plan as being "biased" against the United Kingdom farmer.

Mr. Paul Marland (Gloucestershire, West) : That was right.

Dr. Clark : Absolutely correct. The Parliamentary Secretary, the hon. Member for Penrith and The Border, elaborated on the Government's attitude when he said in the House in July : "Our objectives for reform can be met only if MacSharry's proposals are modified Reform along the lines that MacSharry proposes would not encourage efficient farming,

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but would let budget costs go up even further MacSharry is rightly treading the path of reform but he has lost his way and we believe that we should get him back on course."--[ Official Report, 22 July 1991 ; Vol. 195, c. 1005.]

The hon. Member was right on that occasion. That is certainly the view of the Labour party.

At the Tory party conference in October the Minister went further in his condemnation of MacSharry's proposals when he said : "The CAP was never designed to deal with surplus. Indeed until recently I did not think it was possible to produce a system which was worse equipped to deal with new problems of agriculture than the CAP. That was before MacSharry"

strong clear words. Now we know where the Minister stands. He repeated some of those words today. He described the MacSharry plans as "preposterous". He said that the beef regime was "nonsense", and the sheep regime was "unacceptable". Those are the words which he acknowledges that he used.

During the general discussions of three of the six agricultural regimes--I appreciate that they were only general discussions--at the Council of Ministers meetings in October and November it does not appear that the Minister has won many friends. But we shall see.

Mr. Gummer : The hon. Gentleman must understand that in all those general discussions the spokesmen for other countries supported precisely and specifically the issues which we find acceptable. I know that because I was present. He cannot know it because he was not.

Dr. Clark : We shall await the results of the MacSharry proposals before we find out what the final judgment is and who is correct on those issues.

Mr. Gummer : The hon. Gentleman must accept this--by stating what he does not know he undermines the position by suggesting that somehow or other we are not winning the argument when we are. The hon. Gentleman ought to be supporting his country rather than constantly undermining it.

Dr. Clark : That was an interesting intervention. Am I right in my understanding of what the Minister has told the House--that he has won his points on the sheepmeat regime? Has he persuaded his colleagues in the Council of Ministers to support him on the sheepmeat regime?

Mr. Gummer : The hon. Gentleman should have listened carefully to what I said. I said that we are winning the argument. There are now people who support us who did not support us before. I want to continue to win it. We shall not have won it until we have agreed the whole package. In the meantime, it would help the United Kingdom if the official Opposition would stop trying to make small party political points and would get behind Britain's arguments. They are the only opposition party which thinks that it is clever to argue about international negotiations within the European Community--no other opposition party in Europe does that. The Opposition have done that over Maastricht and over the CAP reform and the hon. Gentleman should be ashamed of himself.

Dr. Clark : I do not think that one observer in this country would listen with a straight face to the Minister accusing someone of making petty party political points. That is my only comment on his remarks.

The Parliamentary Secretary acknowledged honestly that the Government had failed to win when he wrote

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again this week in The Lake District Herald that the MacSharry proposals are "horrendous". He went on to say that the Government "condemned them because they fail on every count."

That is the Government's position.

We hope that next week at the Council of Ministers meeting the Minister will fight more successfully for British farmers, consumers, taxpayers and for the environment. I emphasise that we think that the MacSharry proposals will be disastrous for all those people in the British economy. We equally believe that the Minister has set himself an uphill task by his refusal to table counter proposals. He has repeatedly told the House that he could not table counter proposals, but other Agriculture Ministers have done so and have also tabled detailed amendments. The Minister denies it, but I have here the proposals tabled by the French Minister of Agriculture.

Mr. Gummer : No proposals have been tabled by the French Minister of Agriculture. There is no mechanism by which proposals can be tabled, and so there cannot be any. The French Minister has made a number of generalised suggestions about these issues, as I have done, and has put them forward around the table, as I have done. The hon. Gentleman does not understand the rules under which the Community operates.

Dr. Clark : I accept that the Minister has made some suggestions, but the French Minister has not only tabled amendments, but circulated them within the Council of Ministers and throughout the Community. Therefore, it is possible to have a detailed debate on those French proposals. I have them here.

The right hon. Gentleman has refused to table such amendments and therefore the debate has centred on the details of the MacSharry proposals, which we believe to be extremely harmful to United Kingdom interests. As a result, the Minister, almost certainly--I hope I am wrong--will lose the battle for our interests. The House should note that the MacSharry proposals are condemned on every count by the Government's declared policy.

The Labour party believes that the reform of the CAP is vital. The Opposition reject the MacSharry proposals because we believe that they do not represent a fundamental reform of the CAP ; they are a mere revision. The proposals will fail as surely as did those advocated so strongly by the right hon. Gentleman in 1988. At the very best the MacSharry proposals represent transitional arrangements.

Mr. MacSharry has admitted that his proposals will increase the spending of the CAP for the next seven years at least--the Minister and I are at one on that. We believe that those reforms will not last that long. Mr. MacSharry will still retain intervention boards and export restitutions. Little wonder that the authoritative publication Agra Europe shares the Opposition's opinion of those proposals. It states :

"There is a real danger that the Community could end up not only with an expensive new form of support, but also with no real reduction in surplus production and in the need for subsidised exports."

The MacSharry proposals on accompanying measures are just as worrying as they include such important schemes as those on pre-retirement pensions, forestry and environmental protection. The Labour party believes that they are all vital parts of any reform, but MacSharry sees them as bolt-on extras. He does not believe that they

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represent an integral part of the reform package. As a result, national Governments would have to pay up to half the costs ; frankly, certain nations will be unable to do so.

Mr. George Walden (Buckingham) : The hon. Gentleman is not doing well in countering my right hon. Friend's charge about the national interest--that is what the debate is all about. The hon. Gentleman referred to "bolt-on" extras. One such extra is the ill-treatment of animals because of a loophole in the present law. In a recent case in my constituency the owner of animals, convicted of their ill-treatment, was able to continue ill-treating them after that conviction because of that loophole. I hope that the Labour and Liberal parties will join everyone else in the House to push for that loophole to be closed, because, although the second conviction is coming up on the same person, his animals are still being ill -treated.

Dr. Clark : Obviously we give such support. We believe that Britain should take the lead in Europe on animal welfare. My hon. Friend the Member for Caerphilly (Mr. Davies) has done a great deal of work in that respect.

I accept that things have been done, but there is much more to do. I am not seeking to be divisive and I accept that the Government have taken the lead on some of the animal welfare issues. The Labour party has never hidden that fact. However, Conservative Members are sensitive about this because they know that the Minister hypes things up and does not make much progress when it comes to the precise details.

Mr. Gummer : I wonder whether the hon. Gentleman might be a little more gracious by acknowledging that we have achieved protection for British horses and ponies in terms of their live export. We have extended the British live export of animals arrangements throughout the Community. We have now got the Community to accept, in advance of Maastricht, a proposal to deal with animal welfare. We have done more than any other British Government to promote animal welfare. However, when the hon. Gentleman was discussing our bad negotiating techniques he did not mention those successes.

Dr. Clark : The Minister's intervention makes my point. Only today my hon. Friends and I in the Opposition Front-Bench team tabled an early- day motion congratulating the Government on their efforts relating to the export of horses and ponies. That early-day motion is in the Table Office and our support for the Government is in print. The right hon. Gentleman has proved my point, because he lets his mouth override his mind.

The CAP, which is a highly centralised, rigid agricultural support system, is in need of reform. The moneys saved need to be diverted to enhance regional and social funds to aid the rural infrastructure so that it can be improved in a meaningful manner. We should seek value-added components to agriculture. That is the future for advanced societies.

In 1956 we recognised that the CAP had relevance and represented the sole common policy of the EC. Now that we have new common policies relating to the single market, economic and monetary union and environmental and social issues, the symbolism provided by the CAP is no longer required.

The CAP made sense when we had a Community of six, centred around France, but it does not make sense in a

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Community of 12. The problems would be even worse in a Community of 17 or more covering an area from the Arctic circle to north Africa, from Asia Minor to the shores of the Atlantic.

We accept that the agricultural policy must operate within a European framework, but we believe that it should operate in a looser regime of freely traded agricultural goods within the Community. More decisions could be made at national and regional level using the European concept of subsidiarity. In that way countries would be freer to utilise the finances available for agriculture in a way that better reflected the needs of their societies, their farmers and their environment.

We would favour giving support to environmentally sensitive farming in the United Kingdom, but we might wish to give support to other countries in the form of direct income or through other measures designed to support farmers and to keep them on the land.

Mr. Michael Lord (Suffolk, Central) : Is the hon. Gentleman's bottom line that the Labour party would support the complete abandonment of the CAP?

Dr. Clark : I appreciate that it is not always easy to assimilate what is said. No, we believe that there would still need to be a European agricultural regime. The main decisions and guidelines would be issued in Brussels, but, through the use of subsidiarity, more decisions could be taken within the Community framework at the national or regional level. That is the concept we are advocating. The logic of our argument is now finding friends. Chancellor Kohl of Germany recently referred to the need for more decisions in agriculture to be taken at a regional or La"nder level. The average size of farm in the old West Germany was a mere 17.6 hectares, whereas the new La"nders of the old East Germany have farms with an average size of 3,700 hectares. No wonder Chancellor Kohl is beginning to appreciate that the policy one might want to apply in Bavaria is not necessarily the same as that which can operate in the new La"nder of Mecklenburg.

The debates on the future of agriculture in the United Kingdom are vital for farmers, consumers, taxpayers and the environment. So far, however, the Minister has given a typical display--he did so again today--which is high on hype, but short on application. He appears to have made more newspaper headlines than progress. Those debates, along with those in GATT, are the most important for agriculture in the United Kingdom since we entered the EC. There is little time left. We urge the Minister to go to Brussels and mend a few fences. He should come back with a deal that helps, not hinders, British farming.

5.59 pm

Mr. Paul Marland (Gloucestershire, West) : I congratulate my right hon. Friend the Minister on his robust defence of British interests and the way in which he has outlined the need for careful negotiations because, at this stage, we can leave nothing to chance. Like other Conservative Members, I wish him the best of luck in those difficult and protracted negotiations. His speech was in stark contrast to that of the hon. Member for South Shields (Dr. Clark), who spent nearly 40 minutes whining about the problems in the EC and the common

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agricultural policy. In the last few seconds of his speech, he glossed over the Labour party's alternatives so quickly that we could hardly even hear them.

Earlier in his speech, the hon. Gentleman spoke about the need for an inquiry into set-aside and for more meat inspectors--I doubt whether that will find its way to the heart of many British farmers--and about the need for a detailed, in-depth reform of the CAP. He had ample opportunity to express the Labour party's views, but we heard nothing except a prize example of his total lack of understanding of how the whole system works. He was wrong to say that the French Minister supported reasonable alternatives and amendments, because those were put forward informally, so he has completely misunderstood the situation. No farmer--with the possible exception of constituents of the hon. Member for East Lothian (Mr. Home Robertson)--would be foolish enough to vote for the policies suggested by the hon. Member for South Shields.

Mr. Home Robertson : Would not farmers in Gloucestershire agree with those in East Lothian that the industry always does better under a Labour Government?

Mr. Marland : We are talking about the common agricultural policy, and I am sure that farmers in Gloucestershire and non-biased farmers in East Lothian will see what an appalling mess the hon. Member for South Shields would make were he allowed anywhere near the negotiating table. It is not true to say that farmers would do better under a Labour Government.

Mr. Ron Davies (Caerphilly) : Will the hon. Gentleman give way?

Mr. Marland : No. I shall give way to the hon. Gentleman later. This debate is most timely, because we are discussing the future of Europe. The only genuine common policy in Europe is the common agricultural policy. However, that policy has now degenerated into a mess and needs to be looked at in considerable detail, and I congratulate my right hon. Friend on taking the serious nature of the problem on board.

As my right hon. Friend said, he controls only 17 per cent. of the United Kingdom's farming budget, while the remaining 83 per cent. is controlled from Brussels. To make changes, my right hon. Friend must have the agreement of the Greek, Italian and Irish Ministers. Our Minister is mightily persuasive, but imagine trying to get Sicilian slaughterhouse owners to agree to adopt European standards when the Italian Government have yet to introduce dairy quotas.

The CAP is now out of control. It is massively expensive, does not achieve what it was designed to do and is riddled with fraud. The case of Dr. Ruffard is merely the tip of the iceberg, for the problem goes much deeper. The CAP no longer achieves the aims for which it was set up and those affected--the British farmers--are fed up with it. They feel discontented and desperate.

I have received four telephone calls from farmers in my constituency today, saying what a desperate situation they find themselves in. Our farmers find that they are disadvantaged as a result of the national animal welfare measures that have been introduced and the high hygiene standards that are insisted on in our slaughterhouses and

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elsewhere. Those measures are laudable--I do not knock them--but where we lead others do not follow, with the result that our producers and operators are disadvantaged.

The environmental controls that are introduced with laudable objectives cost our farmers and our industry generally a great deal of money. Other European countries are not following our lead, not only in farming but in other industries. We lead the EC on controls on pollution, noise, smell and other matters.

There are some absurd anomalies that emphasise the position. For example, we determined to stamp out salmonella in eggs. We slaughtered thousands of chickens, and many producers went out of business. But millions of eggs that had not been tested for salmonella flowed in through our ports from Europe. Very few of them were tested for salmonella when they entered this country and many eggs that may have been humming with salmonella found their way into our supermarkets. They were repacked and labelled "Packed in Britain", and unsuspecting housewives bought them thinking that they were salmonella-free. British egg producers want fair treatment. In slaughterhouses, we implement high Euro-standards and adhere to extensive and frequent veterinary inspections, while others ignore them. A Member of this House has a cottage in France, and his neighbour is a French farmer who kills his own cattle with his own hands in his own buildings. When the hon. Member concerned asked him, "What about the European regulations on slaughtering animals ?", the French farmer shrugged his shoulders and said, "Those regulations are only for the British." British farmers want fair treatment. Lorryloads of British lamb are being held up and burned illegally by French farmers. They put spikes across the roads to stop vehicles loaded with lamb proceeding to their destination. The French police simply stand around with their hands in their pockets shrugging their shoulders. Is that communautaire or fair ?

I agree with my right hon. Friend the Minister that careful negotiations are needed to find a way forward. Our over-zealous application of Euro- directives is causing trouble in Ramsgate. Mr. David Pettit, a greengrocer and local councillor in Ramsgate, described his cabbages and peas as "local". Although they were grown locally, officials told him that he could not describe them as such, and he had to change their description. I doubt whether French officials would have bothered to check up on French cabbages described as "local".

The co-responsibility levy and stabilisers on milk and cereals are fatuous taxes that simply make farmers produce more to maintain their margins. We all agree that those should go. A farmer receives £115 on the farmgate price of his cereals, but ultimately receives £100, thanks to the co- responsibility levy and stabiliser. Perhaps the abolition of those levies and stabilisers is part of my right hon. Friend's secret negotiating package--I hope so.

Part of my constituency is the royal forest of Dean, where we have been growing English oaks since time began. We are proud of that history. We are now told that we must grow Euro-oaks approved by the European Parliament. Our British sausage has been under attack, as have prawn cocktail flavoured potato crisps. Even paperboys are now threatened by faceless men from Brussels who say that they must give up that way of earning a few pence before they go to school.

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All that builds great resentment of Europe and the faceless men in Brussels. To put it mildly, British farmers are stamping mad with the European Community. They regard themselves as being seriously disadvantaged in Europe. Farmers' incomes have fallen like a stone. Despite the fact that they use their ingenuity to add value and pursue alternatives, many of them are going broke. In the meantime, the money that is meant to help farmers under the CAP is siphoned off by others, often by fraudulent deals and double-dealing. That is a flavour of the confusion and frustration in the CAP.

In the European negotiations, we should use the CAP as an awful example of European co-operation. I am glad that the Government have recognised that fact in their leaflet, "Our Farming Future" and highlighted the mismatch between ever-increasing expenditure on subsidies and declining farm incomes, which demonstrates clearly that the CAP does not operate in the interests of producers, consumers or taxpayers, and that further reform in essential. That is a start--a radical reform is needed.

I shall remind the House of the cost of the CAP. In 1991, the European agricultural budget was £25 billion. In addition, the national budgets for agricultural support amounted to a further £18 billion, giving a total of £43 billion. That means that every acre farmed in the European Community costs EC taxpayers £162 in support. Put another way, had the United Kingdom share of that money been divided equally between the 220,000 British farmers, they would each have received a cheque for £20,445. Despite that vast support, farm incomes are being reduced : and net farm incomes in 1990 were only 42 per cent. of net farm incomes in 1984. The trouble is that the money is not being used to provide agricultural support for the farmers for whom it is intended.

Turning to the future, I like the idea of area payments, which are now being used for oilseed. I believe that that proposal will find favour with a number of farmers. It will reduce the price of the end product, and the deficit will be made up for the farmers through area payments. Lower prices for cereals--if and when area payments are used on cereals--could make the alternative cereal imports much less attractive than they are at present.

The EC grain production surplus amounts to 30 million tonnes, which is the amount of cereal substitutes imported into the EC. Lower cereal prices and lower prices generally may reduce fraud and ensure that the money goes directly to farmers, rather than to fraudsters. Farmers have lost much purchasing power over the years. In 1964, 100 lambs bought a new medium- powered David Brown tractor. In order to buy the same machine today, the farmer has to sell 600 lambs. Mr. MacSharry's plans have given rise to great concern in this country about quota cuts and limiting flock sizes. That worry is aggravated by the fact that, if farmers cannot make a living at today's prices, and the future offers only a reduction in prices and in the amount that farmers are allowed to produce, there is no hope. Any cuts that are introduced must be fair and equal. I am glad that my hon. Friend the Minister has said that he will have no truck with modulation and reductions in output that are not absolutely fair.

British farmers are always being urged to become more orientated. I believe that the time has come for us to look carefully at European national aids to food processors, because I think that that is where the trouble lies. In the

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United Kingdom, the total amount of national aid given to farmers is just under £1 billion. In Spain, the figure is £1 billion, in Italy it is £2.7 billion, in Germany it is £3.2 billion and in France a massive £8.5 billion is given to food producers and food processors. The different figures are distorting the market. Competition within Europe now occurs in food and drink processing, which is hugely encouraged through national aids. Food from Britain, under the excellent leadership of Mr. Paul Judge, has highlighted a trade gap in food and drink of £7 billion per annum, which emphasises the need for better marketing.

Page 17 of the booklet "Our Farming Future" shows a graph of how much our agricultural produce is sold through voluntary co-operatives compared with other European countries, and there is no doubt that we lag far behind. The co-operatives are not big enough. If they want to hire decent employees, they must pay them good money. Voluntary co-operatives need a minimum turnover of £10 million a year to be able to attract the right sort of employees. Food from Britain said that we have six representatives in Spain, whereas Food from France has 60 representatives in Spain. Food from Britain has four representatives in Paris, whereas Food from France has 32 representatives in London. There is no doubt that there is a massive imbalance.

Some 80 per cent. of our trade deficit consists of food and drink imports. In 1980, we imported 6,000 tonnes of mushrooms. Today, we import 34,000 tonnes of mushrooms, many of them from southern Ireland. It is difficult to believe that mushroom producers in Ireland are more efficient than those in this country--I cannot believe it. Three years ago, our poultry imports were nil ; today, the value of poultry imports is £250 million. The birds are not imported merely as dead carcases, but with substantial value added. Ministers should begin to consider that issue, once they have sorted out Mr. MacSharry. They were right : we hate his proposals, and do not like what he has to offer ; we shall probably end up with a derivative of his proposals, but we must ensure that they are fair. Our farmers do not fear competition from genuine farmers competing with them on the same basis, but we are now being disadvantaged nationally because of the benefits given to farmers of other countries to help them market and add value to their goods. Our farmers are efficient and can compete, but their day-to-day plight is desperate. The current position of United Kingdom farmers is not their fault, but the result of the devious manipulation of the CAP rules by our partners at taxpayers' expense to add value to food once it is outside the farm gate.

I shall finish as I began : I wish our Ministers the best of luck in their negotiations with the dreadful MacSharry proposals. I wish them godspeed.

6.17 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North) : I beg to move, to leave out from "legal framework of the Common Agricultural Policy ; and" to the end of the Question, and to add instead thereof :

believes the Government should make every effort to restore the confidence, stability and profitability of the British agricultural industry by introducing a ten-year plan for farmers, giving them the opportunity to compete on equal

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terms with their European counterparts and introducing measures to safeguard the future of the family farm in the United Kingdom'. I have received many calls during the day from farmers and union leaders in Scotland, Wales and England who are pleased with the amendment. I give the Government and the Minister due warning that, unless they accept the amendment, we shall divide the House later tonight.

My hon. Friends and I believe that today's debate on agriculture is the most important debate that we have had for a long time. I believe that British agriculture is at a crossroads ; we face the talks on the general agreement on tariffs and trade and the reform of the common agricultural policy. I know that the Government are about to take heed of what the Liberal Democrats have said over the years. I was delighted that, after I had tabled a question the week before last, the Secretary of State for Wales eventually went to Brussels last week on behalf of Welsh farmers. His action was long overdue, but the pressure is now on.

Like every other Smithfield week, this one has been an excellent time for assessing agriculture. Thousands of farmers and their families have converged on London to visit the show, which is one of the high spots of the farming year. As usual, I have been there to admire the splendid animals, wonder at the gleaming high-tech machinery on display and, above all, to talk freely to farmers from all parts of Britain. The show is excellent, and I recommend anyone who has not already been there to visit it and see the high standards attained by our livestock industry.

Mr. Alex Carlile : Did my hon. Friend win any prizes?

Mr. Howells : I shall deal with that later.

This year, there is something different about the show. There is not the air of cheerful optimism that usually abounds. Could it be that, among farmers, the talk is of rising production costs and very low returns, of huge bank overdrafts and of farms being abandoned? Do I sense an air of quiet desperation on the machinery stands, reflecting perhaps the drop in sales over the past year? I understand that, in Wales, tractor sales have dropped by about 30 per cent. and that, although in Scotland and the east of England there was a smaller drop, no one expects to see a great improvement in the near future.

There is much to worry farmers today. Not only have farm incomes plummeted in the past year by 10 per cent., bringing them to their lowest level since the second world war, but there is a nagging fear about the MacSharry proposals and the GATT negotiations on world trade. The recession has bitten savagely into the industry's viability, and this year alone, about 7,000 farmers and about 5,000 workers are known to have left the land. I am afraid that others will soon follow if present trends continue.

Somehow or other, British agriculture has lost its way. There is no conception of what the long term holds in store. There is no framework in which to make decisions. Many factors contribute to the malaise. The country's general economic climate has not benefited any industry, and farmers, with their heavy capital outlay, have fallen foul of high interest rates and increasing prices.

Although our products are second to none, our marketing has never kept pace with production. We have a market of 380 million people in the EC, and it is time that we adopted a more aggressive approach towards exports as well as selling in the home market. That requires a degree of support from the Government, which to date has

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been sadly lacking compared with the efforts of other EC Governments, and a readiness by farmers to co-operate in modern selling practices.

Some of the blame for the uncertainty in the industry can be placed at the door of the Government, whose agricultural policies have been negative to say the least, and whose response to the crisis in the industry has been slow. For example, time and again they have delayed payment of hill livestock compensatory allowances to hard-pressed hill farmers. They have refused to pay the maximum rate of suckler cow premium while other countries in Europe are pressing for increases. They have refused to implement the useful EC outgoers scheme for dairy farmers, which was designed to obtain milk quotas from those who wanted to give them up and redistribute them among the remaining farmers. That has been widely carried out in other EC countries, and has shielded their producers from a 3 per cent. quota cut imposed by Mr. MacSharry.

The Government have shamefully cut research and development. I could give many other examples. One of their latest failings is their blinkered attitude towards reform of the common agricultural policy. Does the Minister think that his total rejection of the MacSharry proposals has benefited our farmers in any way, or does he think that a more measured and thoughtful response could have gained valuable concessions for us? We accept that, as the proposals stand, there are distinct disadvantages for British farmers. But is there not an argument for looking at the principles involved and adapting the details to national circumstances?

It is plain that the CAP must be fundamentally reformed to cope with a situation that has changed beyond all recognition since the CAP was established. It is clear that there is no longer any justification for encouraging production with reference to demand. It is also ridiculous that, while CAP support increases year by year, farm incomes have dropped and look set to deteriorate. It is wrong that, because of the linking of support to the volume of production, those who benefit most are the larger farmers, who on balance have least need of the support.

Liberal Democrats believe that a healthy, prosperous farming industry is absolutely necessary in this country, and we must find a suitable framework within which it can operate. Our farmers, who are probably the most efficient in Europe, deserve our support, because on their well-being depends the health of our rural economy and the natural environment.

Mr. Lord : Perhaps I could put to the hon. Gentleman the question that I put earlier to the Labour spokesman. Is the hon. Gentleman, as the agriculture spokesman for his party, about to present the framework that he suggests should replace the CAP?

Mr. Howells : My colleagues and I have decided to go to Brussels in the near future to meet Mr. MacSharry. I hope that we will be able to persuade him to accept the policies that our party has pursued for the past 10 years. If he does not accept them all, perhaps he will accept some of them. On another day, I might tell the hon. Gentleman our policies.

It is now time to restore the confidence that has been lost during the difficult times of the past few years, and to do that we must first introduce a 10-year programme for

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agriculture which will ensure that farmers are able to plan ahead without worry. The chopping and changing of policy over the past couple of decades has contributed greatly to the present state of the industry. Whatever our views on the milk quotas, confidence has not been restored since they were introduced in the early 1980s. It is essential to ensure that the British farmer is allowed to compete on equal terms with his European counterpart at all levels. The Government must fight for our farmers in negotiations and, at the same time, give more practical assistance. An NFU briefing states : "If British farmers and growers are required to operate within the EC market at a competitive disadvantage, the consequences for our economy and counytryside would be disastrous."

Mr. Martlew : Will the Liberal Democrat proposals cost more than the present policy being pursued in Europe?

Mr. Howells : Times are difficult, but it is important to keep part- time and full-time farmers in the countryside. People must remain there as custodians of the land.

The iniquities resulting from the present system of support should be removed, and financial resources should be redirected to family farms. They are, after all, the background of the rural community, and as such should be actively encouraged to stay in business. The Farmers Union of Wales is forward-looking on agriculture policies, and in response to the European Commission proposals it said : "The Farmers Union of Wales is fearful that this failure to discuss and negotiate reform of the CAP and to positively discriminate in favour of family farms will result in an intensification of the restrictive price policies of the past few years which clearly will have a much greater impact, in the absence of any compensating direct subsidies, on the family farms that prevail in Wales. In the absence of targeted support and suitable social measures, the current recession in the industry will not only continue but accelerate, accentuate an already deteriorating farm income position and a decline in the rural economy as a whole."

I agree with that conclusion, and believe that it applies not only to Wales but to a large part of the British agricultural economy. There must be a move towards forms of direct support aimed at improving the environment and achieving social goals. Every effort should be made to keep the farmers on the land.

I shall say a few words about sheep farming. I was delighted to hear the Minister say that he is against the MacSharry proposals. The EC proposes to introduce a limit on premium eligibility based on the numbers of ewes in the flock in 1990. In addition to roughlands flock limitation, it is proposed that no premium will be paid for more than the quota of 750 ewes for the less-favoured areas, and 350 ewes elsewhere. If that policy were implemented, it would have a disastrous effect on sheep farmers in Wales, and perhaps an even more disastrous effect on large farms in Northumberland, the border counties and the Scottish highlands. Many farms in the north of England and in Scotland employ six or seven shepherds, so that would have a disastrous effect on the economy of the area.

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