House of Commons Hansard Debates for 4 Dec 1991

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suggesting that he would deliberately mislead the House, but I should like to see The Sunday Times reply before offering him my wholehearted support. There are ways of interpreting things, and he was becoming a bit shifty.

The failure of the set-aside policy is a cause of great concern. It is not popular with anyone apart from those people who have horses. In urban areas there is often a great demand for somewhere to keep horses and to use them for recreation, as mentioned by the hon. Member for Wealden (Sir G. Johnson Smith). It might be popular in such areas, but in France I suspect that the horse is an agricultural beast because they eat horses over there.

The set-aside regime will not work and I think that we must accept that. I recently asked the Minister whether he would consider a nitrogen fertiliser set-aside policy, as advocated by Friends of the Earth among others. He turned it down, and I was very concerned that he did so, out of hand. One argument was that it would be hard to police, but the present policy is hard to police if we are to judge by what is happening at the moment. Such a policy would have the advantage of reducing inputs and production and it would prevent the anomaly that exists in some areas whereby nitrogen is getting into drinking water and creating a health hazard. A nitrogen set- aside policy should be considered seriously. It is important and would, I believe, be acceptable to the general public. It is certainly acceptable to the environmentalists, but I accept that it might be difficult to police.

We have talked a great deal today about surpluses, but the reality is that there is not a surplus of food in the world ; there is a lack of money. As we cannot get the world's economics right, we are unable to transfer food from the European Community to the areas of the world that need it. There are many problems, because we could undermine farming in some countries, but we must be very careful about reducing production. We must get the world's economics right. I am deeply concerned about what used to be the Soviet Union. I have not seen the news today--by tonight it may no longer be the Soviet Union. On Friday I shall attend an independence celebration of the Ukranian community in my constituency. That community has been there since the last war and has made a useful contribution to our community. We shall celebrate with it on Friday, but what concerns me is whether the people of the Ukraine and other parts of the Soviet Union will still be celebrating at the end of the winter. I suspect that there will be major food shortages there. I also believe that the Government are doing very little--or nothing at all--to help. It is not a good idea in the short term to send our major retailers there to see how they can set up branches of Tesco and Sainsbury, an idea in which the Government take pride. The way in which those companies make their profits in this country might not be a good idea for the Russian system.

In the short term we must ensure that the Soviet people get through the winter. We must begin to direct food--a lot of food--to that country. We cannot merely talk about it going through Europe. I understand that the Government are putting about £20 million worth of grain into the St. Petersburg--or Leningrad--area to stop the people there killing their animals this winter. That will not be enough. We must launch a major food aid campaign to

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feed the people of eastern Europe and especially those of the Soviet Union because that would also be enlightened self-interest.

Mr. Frank Cook : Is my hon. Friend aware of the basis on which the west was able to help the eastern bloc countries last year? We learnt on a military tour this year that the basis of food supplies that went from west to east to help to sustain the people throughout the winter was from military stocks that had been stockpiled to feed the armies if they had come westwards. But because the armies were returning to the Soviet Union, we were able to pick up the supplies and send them back. The stocks are no longer there, so the point that my hon. Friend makes is even more starkly visible.

Mr. Martlew : That was a one-off which cannot be repeated. I have been to the Soviet embassy in London to talk over this issue, which is of great concern. I hope that when he replies to the debate the Minister will say that the Government are taking note of the problem. We have massive surpluses and the Soviet Union will have massive shortages. Let us ensure that our surpluses get there.

I understand that some food aid organised through the European Commission was produced in the United Kingdom this summer. When the German haulage company came to collect it, it was told that there was no hurry because the food had a nine-month delivery time scale. I suspect that the food is still in a German warehouse. I hope that the Government will take the issue seriously.

Let us return to the MacSharry proposals and the Government's attitude to them. The Minister told the House what a good deal he has made. Some of us were sceptical and we were right to be so. I wonder whether the Minister carries on in the Council of Europe in the way that he has in the Chamber. If so, he makes me ashamed to be British because of his childish performance of a type that we rarely see. I asked a civil question during the previous agriculture question time about the Milk Marketing Board and he leapt into a tirade of party political propaganda which did not go down very well with the dairy farmers. If he behaves like that, it is little wonder that our farmers are worse off today than they have been at any time since the second world war. The sooner that we replace the Minister with my hon. Friend the Member for South Shields (Dr. Clark) the better--the grasp of the subject that he has shown today and the cool way in which he dealt with the nine or 10 interventions from the petulant Minister would stand us in good stead. I am sure that my hon. Friend could go to Brussels to negotiate a good and sensible deal for the British farmer.

7.36 pm

Mr. Michael Lord (Suffolk, Central) : I am pleased to take part in this important debate, and although I shall not take up all the points made by the hon. Member for Carlisle (Mr. Martlew), his concern for the Soviet Union is a matter with which I shall deal in a moment.

I congratulate the Minister on the very tough stance that he has taken on this difficult issue. We know that he is battling hard and that he understands all the problems faced by our farmers. He has our support for all that he is trying to do. Having said that, I believe that the MacSharry proposals are absolutely disastrous. They discriminate against the large and efficient farmers--who,

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it has been generally acknowledged today, are our farmers. The proposals promote and preserve the small and the inefficient, and they are totally unacceptable.

Rev. Ian Paisley (Antrim, North) : Will the hon. Gentleman remember that there are efficient small farmers in Northern Ireland--they are the best in the United Kingdom--and that in any overall settlement they must also be kept in mind?

Mr. Lord : I appreciate the hon. Gentleman's point, but there are small farms and small farms. When we talk about small farms in Northern Ireland, we are not talking about the small farms that are being propped up in some parts of the European Community. Many small farms in Northern Ireland would be regarded as quite large by Mr. MacSharry.

We must set the debate in context. As many hon. Members have said, farmers' prices are down and falling even further, but costs are up. Several hon. Members have said that farmers' profit margins are now the lowest since the second world war, and there is absolutely no doubt that the prospect of bankruptcy is very real for many farmers. The effect of that on our rural economy would be disastrous, not only for the farmer, but for all the other services which depend on them. The providers of fertiliser, the feed and corn merchants, the village shops and the whole rural economy are now in grave danger. My constituency in the east of England has very few large industries and depends enormously for its livelihood on farmers and the farming industry.

The last thing that I want to see is the kind of dereliction about which we often speak, but which many of us do not believe could actually occur. However, I suspect that there are hon. Members in the Chamber today who are older than I and have seen derelict land in this country. Not so very long ago, farms in East Anglia were almost given away and land could be rented for next to nothing. We do not want those bad old times to return.

I feel very strongly about the MacSharry proposals. They are children of the CAP and I believe that the CAP is the real problem. I am sure that my right hon. Friend the Minister of Agriculture, Fisheries and Food will battle hard in Europe for us. If he succeeds in defeating many of the proposals that discriminate against our farmers, he will simply succeed in spreading the nonsense more evenly.

I do not believe that the CAP can be reformed sensibly. It is becoming more and more detached from reality. Other hon. Members have referred to the food mountains, storage costs and the problems with set-aside, quotas and Euro-oaks to which my hon. Friend the Member for Gloucestershire, West (Mr. Marland) referred.

I am quite fond of trees. In fact, I am president of the Arboricultural Association. Although there are many nonsenses in Europe, I can assure the House that our English oaks are not in danger from Europe. Indeed, they are perhaps one of the few things that are not. However, I believe that the CAP must be abandoned and an entirely new system must be devised.

The CAP was never going to work with 12 different nations with different cultures, languages, agricultural systems, markets, climates and soil types. How could one system, one inflexible framework, ever serve all those nations? It is not surprising that we now have grain mountains and wine lakes.

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Pursuing the wine analogy for a moment, there is a television programme entitled "The Last of the Summer Wine". Of the three gentlemen who feature in that programme regularly, one is called Compo, another is called Clegg, but I cannot remember the name of the third. [ Hon. Members :-- "Foggy".] Thank you.

I have not watched the programme very often, but, as far as I can recall, those gentlemen specialise in putting together at the beginning of the programme some quite absurd proposal. They then spend the rest of the programme trying to make it work, while the audience dissolves in laughter. That is what is happening in relation to the CAP. We are trying to make the impossible work, and it is now becoming pure farce. Pure farce may be entertaining in the Whitehall theatre, but it is not entertaining for my Suffolk farmers. They have now had enough.

Some people say that the CAP is the flagship of Europe. There are those of us in this place who know what sometimes happens to flagships-- [Interruption.] That was a joke against myself. There can be little point in continuing the sad and expensive experiment of the CAP, which, as we have heard, is taking up two thirds of the Community's budget.

The hon. Member for Carlisle referred to the problems of the Soviet Union. It would be madness if we tried to impose on our 12 nations the kind of command structure that existed in the east and which was so rigid and created problems for food production and distribution, just when those eastern countries want to participate in our agriculture and trade. How could they join then ? How would such a system work ? I believe that it would not work very well. The CAP has now become regimented. Almost all Ireland's production is geared to intervention and not to sensible markets or people's needs. Instead, it is geared to serving the artificial framework that we have created. I am not advocating a totally free market in agricultural products worldwide. That could never happen, because Governments could never reconcile themselves to such a market--nor should they. I also believe that the idea of world food prices is a myth. We often talk about the real or world price of food, but that is nonsense. Governments will always interfere with food production for a variety of reasons, some of which are good and some bad. Accepting that agricultural prices will always be to some extent artificial, I suggest that we should scrap the CAP in its entirety. We should allow individual nations to deal with their own farmers and agriculture in the way that they see fit. My right hon. Friend the Member for Selby (Mr. Alison) has already referred to the value of deficiency payments and the way in which we used to do things in this country a few years ago.

We should also construct sensible international agreements for trade in agricultural products between all nations. Finally, we should build into all those agreements the very real need to look after the third world, and that includes its immediate needs in terms of hunger and the longer-term needs of agricultural stability. That is part of the picture.

I am certain that the days of the CAP are numbered. How long will it take for those responsible for it to recognise the truth ? I wish my right hon. Friend the Minister well in his negotiations. He knows just how much is at stake for our farmers. He, as Minister of Agriculture, Fisheries and Food, should be given back the

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responsibility for our farmers. I urge him to consider the fundamental changes that I have suggested, for the sake of the long-term future and stability of this vital industry.

7.46 pm

Mr. Ieuan Wyn Jones (Ynys Mo n) : I listened with great interest to the views of the hon. Member for Suffolk, Central (Mr. Lord) about scrapping the CAP. He said that we should allow our Parliament to decide policy for our farmers. However, he must recognise that we are debating the future of the CAP when European integration is to be considered at the intergovernmental conference at Maastricht next week. This is an appropriate time for us to discuss the issue, because our farming industry has long regarded Europe as its marketplace. Since 1973, decisions affecting the industry's future have increasingly been taken on the European stage.

I have no hesitation in claiming that farmers in general are much more knowledgeable about the European debate than any other sector of United Kingdom industry. Farming politics have for so long been dominated by issues such as the green pound differentials, ecus and the merits or otherwise of the European monetary system and monetary compensatory amounts. I remember as far back as 1976, when the debate about whether sheepmeat should come into the Community's sectoral structure, the sophisticated and mature way in which farmers considered the arguments. Whatever the public at large have felt, farmers have never doubted that we needed to be at the heart of Europe. They led the debate in 1973 and in 1976.

Many of the issues that we have debated in the past 20 years have centred not on whether we should be moving towards greater European integration-- that has always been understood in agriculture--but on creating a level playing field between farmers in Wales, Scotland, England and Northern Ireland on the one hand and our counterparts on the European mainland on the other. That is why the arguments about the green pound and MCAs were so significant and why eliminating differentials became a dominating issue.

We in Plaid Cymru have always argued, within the European context, that Welsh farmers need a specific and clear voice in negotiations. Our farmers are aware that small countries in the European Community, such as the Republic of Ireland, have a direct voice in the Council of Ministers--the decision-making process--while we have none. They also have many more Members in the European Parliament than we have. As I said during Welsh questions on Monday, we very much welcome the initiative of the Secretary of State for Wales in going to Brussels to talk to Commissioner MacSharry, but we fear that the ultimate decision about the negotiations will be in the hands of the Minister of Agriculture, Fisheries and Food. It is not possible for the right hon. Gentleman to present with justice the case for the differing and sometimes conflicting interests of the farmers in each country or region of the United Kingdom.

I shall concentrate my remarks on the parlous state of the industry in Wales--even without the cuts proposed by the Commission. Aggregate farming incomes in Wales at current prices dropped by 23 per cent. in 1990. That followed a drop of 18 per cent. in the previous year. The

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1990 figure was 25 per cent. below the average for the period 1981-85. Gross profits declined during a period of escalating costs, thus eroding a weak capital base.

Dr. Peter Midmore, of the economics department at the University College of Wales, Aberystwyth, predicts that, if current trends are not reversed, by the turn of the century 12,000 employment opportunities in Welsh agriculture will be lost and that a further 12,000 jobs will go in the ancillary industries. That is the measure of the catastrophe that faces rural Wales. A disaster of monumental proportions is staring us in the face.

Let us remember that rural Wales dies without agriculture and that agriculture dies without support. The relationship between agriculture and its ancillary and dependent industries on the one hand and our rural communities on the other is profound. This is not about statistics ; it is about people, their families, homes, schools, village shops, community centres, youth clubs, rural societies and all the other organisations that comprise rural life and make it such a rich tapestry. All that is under threat. Our whole way of life is in jeopardy. Wales particularly faces a threat to its language and culture. That principle at least--I say "principle" because I shall come to the detail later--is recognised in the Commission's plans. We need to keep people on the land if we are to maintain the fabric of rural society. Unfortunately, that principle was noticeably absent from the Government's response.

Let me make one thing clear. I am not saying that Welsh farmers, any more than any other sector of industry, want state handouts simply to prop up an ailing economy. However, they do say that they are entitled to support to take account of the special difficulties that they face in terms of soil quality and climate. There is a vision of farmers living a life of luxury on handouts from Brussels. That may be true of some, but the vast majority of the farmers whom I and my colleages represent--the small or medium-size family farmer--have faced considerable difficulties in the past two or three years and some even face ruin.

On the hills of Wales, the reality is not of vast profits, but of simply eking a meagre living from shallow soil in an inhospitable climate. On the hills of Wales, there are no alternatives to sheep production and, even on the better land, dairy farmers are disposing of their milk quotas in an effort to improve their cash-flow problems. They are cashing in on a valuable capital asset simply to reduce an ever-increasing overdraft. That can be only a temporary respite.

That is the reality that we bring to this debate--and I make no apology for arguing as strongly as I can, using every line of argument I can muster-- that the Secretary of State for Wales has to present the case for Welsh farmers even if that puts him in conflict with his right hon. Friend the Minister of Agriculture, Fisheries and Food. The industry expects no less than that tonight.

In the dairy sector, I note that quotas are to remain beyond 1992. It would be helpful if the Commission could tell us how long it envisages the quotas remaining in operation. I am told that they might remain until the year 2000. Perhaps the Minister will deal with that point when he replies. I support plans to ensure that there are no cuts in the quotas of the medium- size and small farmers, provided that the Government establish a fully operational cessation scheme. Any quota cut would also take into account the self-sufficiency in dairy products of each member state.

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It is recognised that margins in the beef sector are low. That is an argument for reducing the intervention mechanism and replacing it with a system of more direct support. However, although I am happy that the Minister is prepared to fight the Commission in discussions, I must advise him that if he loses that argument and the price is reduced by 15 per cent., as is envisaged in the current proposals, the phasing-in of stocking rates should follow the phasing-in of compensation payments in support of the beef special premium. As my Liberal Democrat colleague the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) has said, the greatest difficulty is in the sheep sector. The Commission has given a quota figure to qualify for support of 750 for the less favoured areas and of 350 elsewhere, but that is far too low. Those figures discriminate against Welsh and Scottish farmers. They should be increased to at least 1,000 and 500 respectively and should apply to each partner, not per holding. That is the issue that discriminates most against Welsh farmers. It must be changed.

We support the idea that farmers should be given proper retirement schemes to release land for their successors or for use in conservation schemes where appropriate. However, there appears to be some confusion in the Commission's proposals. A literal reading of the text of the proposals suggests that the scheme would assist farmers in retirement only in cases where, if they left land to their successor, that would increase the area of land that the successor would take over. That seems clear enough--the holding would have to be amalgamated with another before the retiring farmer could benefit. However, when the Commission was asked to explain the rationale behind that, it claimed that the scheme would operate in cases where members of the family took over the existing holding.

I ask the Minister to seek clarification on the point because it is vital that the scheme operates for the benefit of families in the way I have just described. The scheme should not apply only where there is amalgamation. Far too many farms in Wales have been amalgamated in recent years. We want to maintain the fabric of our rural society and our small and medium-size farms, provided, of course, that they are viable units, because that means that we can keep more families on the land.

We also support the environmental action programme which encourages farmers to use production methods that do not affect the environment. That is important in Wales where stocking ratios have to be reduced. In that regard, I renew my plea to the Secretary of State for Wales that the whole of my constituency should be designated an environmentally sensitive area, given its unique network of wetlands, marsh and other wildlife habitats. I know that the Secretary of State has included Ynys Mo n on his short list and I urge him to include us in his final selection.

I hope that my short speech has demonstrated what is really at stake for Welsh agriculture in this debate. We are talking about sustaining a viable industry in rural Wales that cannot survive without support. We fear that the Government regard the whole exercise as one of cutting support across the board--that has been the thrust of the Minister's attitude to reform from the outset--but that would damage the interests of the farmers I represent and the communities in which they live.

I remind the Minister of his speech to the annual conference of the National Farmers Union earlier this year when he said :

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"We must stop these proposals in their tracks".

The right hon. Gentleman has failed to do that and a second round of proposals is now on the table. I cannot imagine that they will be torn up so that we can start again. We are not in that position. We want the Minister to enter the negotiations positively and to take his right hon. Friend the Secretary of State for Wales with him if necessary. If the Government fail to do that, they will not only pay a heavy electoral price, but the interests of the communities that we represent will be damaged.

7.58 pm

Mr. David Harris (St. Ives) : One point on which I agree with the hon. Member for Ynys Mo n (Mr. Jones) is that farmers, whether Welsh, English, Scottish or Northern Irish, are extremely well-informed about all things European as they affect the agriculture industry. I think back to the days when I was first a Member of the European Parliament some 12 years ago. I could get away with murder when I spoke to local National Farmers Union branches. I certainly cannot do so now. When I speak to my NFU branch this Friday I shall be well aware that I shall have to be careful of the facts as I present them and the views that I express. As the hon. Gentleman said, farmers are now extremely well informed, and that is all to their credit. The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) spoke on behalf of the Liberal party. I draw attention to the amendment that he and several of his hon. Friends have tabled and particularly to the idea of a 10-year plan. The amendment says that the Liberal Democrats want to look 10 year ahead so that farmers can approach those 10 years without worry. O that it were so easy! The hon. Gentleman has great Welsh charm, but he will not con the agriculture industry in Wales, England or Scotland with such a simple solution.

Mr. Geraint Howells rose--

Mr. Harris : I see that the hon. Gentleman is anxious to intervene, so with the greatest pleasure I will allow him to do so.

Mr. Howells : With respect, does the hon. Gentleman agree that the majority of farmers in his constituency and mine and in the rest of Britain would like to have their confidence restored? Does he accept that one way in which that can be done is to produce a 10-year plan to ensure that the industry knows exactly which way it is going?

Mr. Harris : Of course, the hon. Gentleman's farmers, my farmers and the farmers of every right hon. and hon. Member would love to have their confidence restored. I agree that there is a lack of confidence. But what on earth does the hon. Gentleman suggest should be the basis of that 10- year plan? A few moments ago the hon. Member for Carlisle (Mr. Martlew) said that he did not know what the position in the Soviet Union would be by the end of the week. None of us does. Can anyone build a 10-year plan that has any meaning whatever without knowing, for example, what the structure of the European Community will be at the end of the decade?

The hon. Member for Ceredigion and Pembroke, North does not have a clue what the structure or mechanisms of the European Community will be by the end of the decade. Of course he does not. Yet those are vital ingredients in planning the future. Does the hon.

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Gentleman really want a 10-year plan such as the Soviet Union used in its approach to agriculture? I doubt it. The hon. Gentleman shakes his head. Of course, he does not. The amendment is a bit of Liberal Democrat connery. I do not think for one moment that his farmers or those of any other hon. Member will be taken in by it.

However, the hon. Member for Ceredigion and Pembroke, North is right to say that there is a lack of confidence in the future. Despite the difficulties in foreseeing the future, the Government must do something to restore confidence. I, or any hon. Member, would be a fool if we tried to pretend that everything was wonderful in agriculture. We know that all our farmers are going through one of the most difficult periods that the industry has faced, certainly within the memory of most hon. Members in the Chamber today. The difficulties are enormous. We all know about the pressure on incomes. Farmers are leaving the industry. Oh that they were not ! But any party which holds out the prospect, as the Liberal Democrats seek to do, that no one would leave the industry in the next few years if this or that panacea, a 10-year plan or whatever, were implemented, is not being honest with farmers. Above all else, we must be honest with the members of the industry.

In these changed circumstances, I was heartened to read in the current edition of the NFU magazine British Farmer an article by the President, David Naish. It said :

"Traditionally the NFU has devoted its efforts largely to maintaining UK and EC support for our members as producers. Now, with the launch of our Food from the Countryside' initiative, we are looking increasingly to promote your interests"--

that is the farmers' interests--

"as sellers in the market-place.

This is an important change of emphasis."

The NFU was right to make that change of emphasis. Although better marketing is not a panacea, it is undoubtedly a contribution to helping our farmers. That has been a recurrent theme in the debate. I was delighted with the Ministry of Agriculture's document "Our Farming Future", which was published a few weeks ago. I was particularly pleased with the pledge that

"the Government intends to offer Group Formation Grants to encourage the establishment of producer marketing groups". As we know, some £5.4 million will be allocated for that purpose over the next three years. I hope that there is a good take-up of that money. Indeed, it is one way in which we can give back some confidence to the industry.

Another recurring theme of the debate has been environmentally sensitive areas. The hon. Member for Ynys Mo n wanted the whole of his constituency to be designated an ESA. Some years ago I served on the Standing Committee which considered the Bill that introduced the concept of ESAs and I was quick to realise the potential that they offered.

Dame Elaine Kellett-Bowman : The hon. Member has gone already.

Mr. Harris : Yes, indeed, he has gone already.

I was anxious that part of my constituency, Penwith moors, should be designated an ESA and I was delighted that it was part of the first wave. There is a proposal to extend that ESA and I hope that it will be considered

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sympathetically by the Government. I understand that extensions of existing ESAs are to be decided in the near future. Perhaps my hon. Friend the Minister will be able to give us some information on the timescale. I am talking about not the creation of new ESAs but the extension of existing ones.

However, I will speak about the creation of new ESAs. The Isles of Scilly, which are also in my constituency, have made a case to be designated an ESA. The interest that is being shown in the concept is a tribute to the Minister, who pioneered the idea of ESAs and persuaded the European Community to adopt it. It is interesting that so many areas now see designation as an important aid in correcting the present position in agriculture.

The impact of imports from eastern Europe was touched on briefly during the debate. I have dropped a note to my right hon. Friend the Member for Blaby (Mr. Lawson) telling him that I intended to make a passing reference to him if I was able to catch your eye, Mr. Deputy Speaker. In his speech in the historic two-day debate on the European Community before Maastricht my right hon. Friend said :

"The Community should be devoting much more attention to what it can do to open its markets to the produce of those countries,"-- he was referring to eastern Europe--

"especially their farm produce."--[ Official Report, 21 November 1991 ; Vol. 199, c. 468.]

I nudged my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). She immediately took the cue and, being a bolder person than I, interrupted our distinguished colleague and took him to task.

Of course we must help the countries of eastern Europe--they are in a desperate state. However, it should not be done at the expense of our farmers. I feel very strongly--the hon. Member for Carlisle mentioned this- -that the right way to approach the issue is to make aid available from the European Community and partly from this country, so that the countries of eastern Europe can help feed themselves and help feed the Soviet Union. Opening our doors to eastern European agricultural products would be wrong and would be to the detriment of our hard-pressed farmers. I hope that the Government will take that message to heart.

Dame Elaine Kellett-Bowman : There has never been a flow of goods from eastern Europe to us--the flow of goods has always been to Russia. However, eastern European countries are so short of hard currency that they cannot sell food to Russia, which has no hard currency. If we supply them with hard currency they can send food to Russia and our farmers will not be harmed.

Mr. Harris : I could not agree more.

Finally, I join all those hon. Members who have congratulated the Minister on his approach to MacSharry. When one strips away all the flummery from the other side, there is little difference between us in our support for his approach on that issue.

Like other hon. Members, I came with a list of issues provided by my local NFU branch. I do not need to go through them because my right hon. Friend the Minister dealt with them in his opening speech. I was especially reassured about what he said regarding the so-called partnership rules.

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8.11 pm

Mr. Martyn Jones (Clwyd, South-West) : About two weeks ago I attended the annual general meeting of the Cymdeithas Defaid Mynydd Cymreig Dinbych--the Denbigh Welsh Mountain Sheep Society--held in Pentrefoelas in my constituency. They naturally took the opportunity to voice their concerns about the present state of farming generally, but especially about the problems of livestock farming in the difficult conditions of the Welsh hills, and I know of those problems. I am sure that other hon. Members will also be aware of the loss of the sheep variable premium and the problems with interest rates and prices.

Since 1980 farm incomes have fallen overall by 39 per cent. It is fair to say that farmers in constituencies such as mine have borne the brunt of such falls. In markets serving north Wales, recent prices for sheep were the same as they were 10 years ago and therefore do not allow for inflation.

I have here two British Wool Marketing Board payment advice slips for one of my farmers--one from 1980 and one from 1990. For every grade of wool the pence per kilo figure is higher in 1980 than in 1990. If we take total inflation into account, it should not be surprising that farmers are going bust and that six farmers and 16 farm workers have left the industry every day since the Government took office.

Farmers would not be quite so annoyed if they did not find the lamb that they received perhaps £15 for being retailed in a local supermarket at £80, albeit in nice, neat, little packages. It is hardly surprising that they should be unhappy at other problems such as the delay in paying ewe premium--which in my area is undoubtedly due to the closure of the Ruthin Welsh Office agricultural department--the redefinition of the less favoured areas, the increase in the MLC levy and, last but not least, the MacSharry proposals for the reform of the common agricultural policy. It is generally acknowledged that the CAP desperately needs reformation--65 per cent. of all EC funds are spent on it and, of the money spent, most is spent on the richest farmers or on storage and export restitution. What are the Government doing to reform the situation? In the Orders of the Day the take--note motion purports to suggest that the Government have an

"intention to seek reform of the Common Agricultural Policy which will make Community agriculture more market-orientated and efficient"

putting more emphasis on environmental care and reducing the cost--words with which I cannot disagree. However, is not the reality somewhat different?

How can we stand any chance of changing the system without tabling alternative proposals--a suggestion turned down by the Government in their evidence to the Select Committee of the other place? Surely we should be giving specific alternatives to the proposals--changes to MacSharry--for example, to the headage limits proposal which is terribly damaging to farmers in my constituency.

Perhaps the Minister has the priority to remove discrimination but the important question is how. Why does he not propose a fundamental change? Why not argue for repatriation of substantial parts of the policy within overall production control targets?

Many of my Welsh mountain farmers thought that the MacSharry proposals would help them. They considered themselves to be small farmers. It is fair to say that they now realise that in EC terms they are not small. They are not small in hectarage or in headage terms, but they are

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very small in profit and they are desperate for a change which would allow them and their families to farm and to have a future in farming.

Other hon. Members have already referred to the meeting of the Select Committee this morning. We heard about the horrendous balance of trade deficit that this country has, not in manufactured goods, but in food that we can grow ourselves, such as eggs. For example, we heard that mushroom imports have increased from 6,000 tonnes to 34, 000 tonnes in the past five years.

We need a level playing field and support for our producers. The Minister pretends that he cannot reveal his hand in the negotiations but it is not playing into the hands of other negotiators to reveal alternatives. This evening we have heard about mushrooms. The Minister is treating our farmers to the mushroom system--keeping them in the dark and dropping them in the manure.

Our EC partners do not seem to worry about giving alternatives. France is putting its views to other members. We should tell the Community that the "common" should be dropped from a CAP policy which cannot possibly cope with agriculture as diverse as that of Sweden and the almost subsistence agriculture in eastern Turkey. If we took the "common" out of the CAP, we could ensure that our farmers would not be penalised but would be protected and would have a level playing field and a future.

8.17 pm

Mr. Malcolm Moss (Cambridgeshire, North-East) : It is a pleasure to follow the hon. Member for Clwyd, South-West (Mr. Jones), with his beautiful constituency. He has the mountains and hills of north Wales and I have the flattest part of Europe if not the flattest place between here and the Urals.

Farming has faced many challenges and never more than the list that we have heard today. Like any industry, agriculture must take account of international developments in this rapidly changing world. Markets are growing more dynamic, more demanding and less protected. They will become even more influential in what has been a rather over-managed sector of the economy.

There are three elements of the international dimension, some of which have already been touched on in the debate : the general agreement on tariffs and trade round of negotiations ; the problem of produce from eastern Europe, which my hon. Friend the Member for St. Ives (Mr. Harris) brought to the attention of the House ; and reform of the common agricultural policy, the subject of tonight's debate. In my opinion, GATT must come first. I was delighted that the Minister took the same line in his excellent speech. There are two reasons. First, GATT is a more comprehensive negotiation than MacSharry, because it takes into account the products of southern Europe which are not covered by the MacSharry proposals. Secondly, it is believed that we are more likely to get a reduction in support price, which is closer to our model and not that of MacSharry. It is recognised by the House, the people--certainly those involved in argiculture--and by the EEC that reform of the CAP is necessary. The United Kingdom contributes £3.5 billion to the CAP and we are somewhat puzzled when our farmers ask us what they get in return. There is no ready answer. It is certainly not "common" in the sense

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that it applies equally everywhere. My hon. Friend the Member for Gloucestershire, West (Mr. Marland) drew attention to the huge subsidy of £8.5 billion provided in France. In Germany that subsidy is worth £3.2 billion. Those figures compare with the support provided in the United Kingdom of just under £1 billion.

The CAP is full of hidden national subsidies and my farmers may well ask where is the so-called level playing field. We heard the amusing story about mushroom production in Ireland--there was a hint of a hidden subsidy behind that production. Given the figures of national support for agriculture in different countries, it is not surprising that our farmers sometimes attempt to battle on an uneven playing field.

It is also important to consider the various factors at work in the United Kingdom, for example, cost recovery, which is expected by the Treasury. On poultry, the full cost recovery for salmonella inspections and the inspections of abattoirs is required under our rules, but not in any other Community country.

Through our negotiations we must not impose on agriculture a structure that reduces the ability of farmers to compete effectively. That might mean large increases in the CAP expenditure and could increase the probability of trade disputes.

The MacSharry proposals have been debated at length today. They are utterly opposed by the Conservative party and by my farmers in north-east Cambridgeshire. Those proposals are anti-economic because they penalise the larger and more efficient farm. The average size of a farm in this country is 69 hectares ; in Cambridgeshire it is 80 hectares. There are about 6.8 million farmers in Europe, but the average farm is only a paltry 16.5 hectares. The MacSharry proposals will discriminate against British farmers, and certainly against the farmers of my constituency.

The proposal for set-aside presumes three size bands--up to 20 hectares, 20 to 50 hectares and more than 50 hectares. The set-aside limit will be 15 per cent., which is the rate of the existing scheme. That means that, on average, my farmers will have to set aside 4.5 hectares, for which they will receive no compensation. The exemption from set-aside on cereal holdings works out at 5 per cent. throughout the United Kingdom as against 40 per cent. in the Community. Uncompensated set-aside for cereals works out at 54 per cent. for the United Kingdom and 27 per cent. for the Community, and the cereal area to be set aside amounts to 14 per cent. of the farmed area in the United Kingdom as opposed to 9 per cent. in the Community. The MacSharry proposals will hit north European farmers, not those of the south, because products such as wine, olive oil and cotton are not involved. MacSharry also proposes to create a class of farm pensioners, technically in receipt of social security, in order to maintain existing social and economic structures. Those proposals would cost a fortune--about 4.5 billion ecu a year more than the present overblown budget. They do not establish a clear link between support and environmental enhancement.

The arable farmers of north-east Cambridgeshire expect the Minister to negotiate CAP reform so that they are not discriminated against. They also want set-aside to

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