House of Commons Hansard Debates for 12 Jun 1992

Mr. Malcolm Moss (Cambridgeshire, North-East) : I am most grateful for this opportunity to contribute early in the debate. In so doing, I proffer my apologies to you, Mr. Deputy Speaker, and to the House. As I have a pressing engagement in my constituency, I may not be present for the winding-up speeches. Unlike Opposition Members--there are now only three Back-Bench Opposition Members and two Front-Bench Opposition Members present--some of us are keen to contribute to debates on agriculture. When such debates are flagged, we make arrangements to cancel meetings in our constituencies, important as they may be, because we believe that contributing to these debates in our constituents' interests takes precedence over everything else. I will address my remarks to the impact of the CAP reforms on the arable farming sector in my constituency, so I will concentrate on the cereal side rather than on the other sectors. I ask the House to consider my remarks in the context of farming in the fens of north -east Cambridgeshire. Given a free market in agriculture, there is no doubt that my farmers would be the most competitive, the most efficient and the most productive in

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the United Kingdom, if not in Europe as a whole, because of their singular advantages of soil, climate, terrain and opportunities for irrigation.

Let us consider my right hon. Friend's achievements from his very successful negotiations in the latest round. This has been a major triumph for my right hon. Friend because, for the first time, the emphasis has been shifted away from financing a surplus of agricultural products to ensuring that any subsidy payment is directed to the farmers themselves as income to their bank accounts. The new arrangements remove the discrimination against the British farmer, especially the larger arable farmers of East Anglia, which was inherent in the original MacSharry proposals. They will also remove soon the unfair and iniquitous co-responsibility allowance and my farmers especially welcome that negotiating success.

We are told that the cost of the reformed CAP will be kept within the agricultural guidelines. All my constituents welcome that change which my right hon. Friend has negotiated. However, I point out to my right hon. Friend that it may be the biggest test he will have in future years.

The price reductions which have been negotiated will benefit consumers and should enable the negotiations on the general agreement on tariffs and trade to progress to a successful conclusion. The place of environmental protection within the CAP has been strengthened. That has been a primary plank of my right hon. Friend's negotiating position, and the House and the country congratulate him on that.

Those achievements have been recognised by many involved in agriculture, and reference has already been made to the comments of the National Farmers Union. To reinforce the point, I quote the NFU, which said :

"The NFU has welcomed the achievement of British Ministers in obtaining the removal of the main discriminatory elements in the EC's original proposals".

The Country Landowners Association

"congratulates the Government and Mr. Gummer in particular for removing these discriminatory proposals."

The CLA president, the Hon. John Fellowes, a well-known and much respected Cambridgeshire farmer, said the other day :

"The discrimination against efficient UK farming in the original proposals for arable set aside has been removed, and John Gummer is to be applauded for being so resolute on this major point. We are also pleased to see the replacement of the discriminatory dairy cow premium with price based measures in the milk sector."

To my ears and those of my constituents, that sounds like a ringing endorsement. What more praise can a politician expect--even one as skilful and successful as my right hon. Friend?

The achievements are endorsed not only by bodies representing landowners and farmers, but by farmers themselves. I was interested to hear the hon. Member for South Shields (Dr. Clark) quote the words of Oliver Walston, who is a famous Cambridgeshire--but

socialist--farmer. In an article in The Sunday Telegraph on 24 May, he said :

"The uprooting of the Common Agricultural Policy as we know it has, not surprisingly, made taxpayers, consumers and the Government happy. British farmers should also join the celebrations. For the first time in 30 years the link between subsidies and production has been cut, so no longer will it mean that the more wheat I grow the more subsidy I receive. Since our farms are larger and more efficient than Continental farms, British farmers are uniquely equipped to flourish in this brave new world. But to do so we must forget the past."

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Those are wise words from another eminent Cambridgeshire farmer. Despite the positive achievements, there is a down side for many of my farmers, the most critical part of which is the impact on their farm incomes. The NFU's view is that agriculture's total revenue will be down by £400 million in 1995-96. The price of inputs will continue to rise. That will be offest by lower cereal prices in feed costs, but the net effect will be a 16 per cent. fall in farming incomes. After taking inflation into account, there will be an estimated fall of 28 per cent. in real terms by 1996.

It is estimated--the figures are not yet definite--that arable farmers could face a cut of £12 per acre after compensation is paid for set- aside. That view is reinforced by Mr. John Nix, who is a respected agricultural economist. In a recent publication, he said : "farm incomes per hectare in the UK are now well below half the mid 1960s figure in real terms, while national average earnings of the rest of the population have risen by about a third."

The changes will affect not only farm incomes directly, but the rural economy as a whole. A response is required at two levels ; first by individual farmers, and secondly by the Government. How will individual farmers respond? Their first idea will be to cut labour. Fewer people will be required with 15 per cent. set-aside. If the EC directives on working hours go through, the problem will be exacerbated, because there will be less flexibility in farm working hours. Farmers will also cut their purchases of farm machinery, fertilisers and sprayers. The knock-on effects on the rural economy will be fairly serious.

In the future, there will be fewer jobs in agricultural ancillary trades. Less grain and oilseed will be transported from the farm gate to the processing plant and market. Many small road haulage firms in my constituency will feel the effects of those changes. Fewer tractors and farm implements will be purchased, and that will have a knock-on effect on the farm machinery trade, which will decline further and exacerbate the effects of the current recession. I have some questions for the Minister, which he may be able to answer later today, but, if not, I am sure that the answers will be forthcoming. My farmers have spoken of taking land into set -aside from their oilseed rape and pulse acreages, but not from their wheat acreages. I share the concern of the hon. Member for South Shields that the grain mountain will not be reduced if such a set-aside facility is still available. In addition, compensation payments will be based on average yields for the country, but perhaps we could negotiate something on a regional basis.

There is no question but that the farmers of East Anglia, and Cambridgeshire in particular produce the highest wheat yields in the country. Ten years ago, the yield was 5 tonnes a hectare ; now, it is nearer 9 tonnes. We expect that yields will increase with technological developments. Therefore, any loss of wheat yield through set-aside may be offset by the development of better strains, yielding higher output.

A constituent recently pointed out--again, this is not the direct responsibility of the Minister--that if we put 15 per cent. of our land to grass or just mowed it, that would tempt travellers and gipsies to occupy it. The county already has a severe problem with such people. If land is set aside in that way--if it is not ploughed or is left bastard fallow which I understand is the technical term for land

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that is partially ploughed and kept in good order ready for seeding next year--and the land is left as grass, encampments of gipsies will be attracted to it.

No decision has yet been made on the quality standard for intervention prices for feed wheat in particular. That forms a considerable proportion of the wheat output in my constituency. This year, the harvest is likely to be early because the season is well advanced and my farmers are asking for early decisions so that they can make the correct decisions on set-aside land and on which portions of their farms to nominate for that.

There is an option under the CAP agreement to provide a pre-pension scheme to encourage farmers to retire early. The United Kingdom has decided to opt out of that scheme because the Government believe that it is aimed at those countries with many small farms and that it is an attempt to encourage restructuring.

In Cambridgeshire, the average size of farm is 200 acres. The owner of such a farm is likely to receive £1,500 less income next year as a result of the CAP changes. Those farmers are already under pressure ; they are under-capitalised and unable to reinvest out of their profits and their bank charges are accumulating. It is well known that a farm of 200 acres will not be viable in the near future--if it is now. There is a need for restructuring to increase the size of such farms to 250 or even 300 acres. If that is the case and we want profitable arable agriculture, the Government should consider ways in which they can influence people to retire from smaller farms so they can combine to form larger, restructured farms.

I also ask the Minister to use every means at his disposal to negotiate an enhanced sugar beet quota for this country's arable farmers. Sugar beet is an important cash crop, not only in my constituency, but in the rest of East Anglia. If the Government can negotiate a larger quota, that will offset some of the cuts faced by other sectors.

I also ask the Minister to protect the position of the Potato Marketing Board. Potatoes are another important cash crop and although they are not covered by the CAP, the Commission is considering altering the board's structure. However, it is doing an excellent job and my farmers want it to continue to do so. I have referred to the problems that the reforms will pose for farmers' incomes. I believe that the changes will have a widespread impact not only in my constituency, but throughout the farming economy. It is important that a high priority is given to co-ordination between different Departments so that as labour is lost from agriculture and other problems surface, the rural economy is given all the help and assistance that it needs.

In that respect, greater powers should be given to the Rural Development Commission, which has an important role in providing alternative employment. Road building in rural areas should also be given a higher priority. In my constituency, the dualling of the A47 and the A10 will have an important effect as it will open up the region and help to prevent increased unemployment. The enterprise agencies, which have an important role in rural areas, should also be given greater consideration and, perhaps, receive better funding. The wide-ranging CAP reforms will be welcomed by taxpayers and, to an extent, by my efficient farmers, but

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problems will arise. I hope that my right hon. Friend will address those problems in the detailed negotiations that are to follow. Several Hon. Members rose--

Mr. Deputy Speaker : Order. I must remind the House that a 10-minute limit on speeches will operate between 11.30 and 1 o'clock.

11.27 am

Mr. Martyn Jones (Clwyd, South-West) : I add my protest to that of my hon. Friend the Member for South Shields (Dr. Clark) at the fact that we are holding such an important debate on a Friday morning. I understand why the Minister chose to make a statement on the completion of those negotiations on a Friday, because it was an admirable opportunity to accentuate the positive before hon. Members had time to analyse properly the implications of the reforms. That same defence does not apply today. The CAP reforms will have a greater long-term effect on our constituencies than anything that was discussed in prime parliamentary time this week.

This morning I should have been at a governors' meeting of Llysfasi agricultural college. It would have been nice if I had been able to attend and report on the clarification of the CAP reforms. Tonight, I am to attend an important and long-advertised public meeting in Glyn Ceirog--a lovely village a long way from London. That means that I, too, will be unable to remain for the entire debate, for which I apologise to the House. I shall study in detail the Minister's reply in the Official Report, not least because many of the measures in the reform ageement require United Kingdom action.

When the Minister made his recent statement to the House, I asked about the possible knock-on effect of the proposed cuts in cereal prices on grass- reared red meat production. I trust that the Minister will give a more considered reply to that problem today than he has previously. Already poultry and pigmeat production is growing at the expense of beef and lamb.

It would be churlish not to acknowledge that some farmers have apparently been helped by measures different from those in the original MacSharry package. However, many questions remain. Will the quota and set-aside measures be adequately policed in other EC countries, or here, without increasing bureaucracy for farmers or by increasing numbers of Ministry officials? That will be difficult in my area, because the Agriculture Department of the Welsh Office has closed its office in Ruthin. Farmers will be uncertain about their future until details of the administrative arrangements, especially details of the environmental part of the package, are known. I understand that the Minister will have powers to introduce a long-term habitat management scheme. When will such a scheme be introduced, and will he consider ways to ensure that it will be beneficial?

We must hope that the agreed measures will lead to a reduction in overall budget costs. I also hope that food prices will go down and that the reductions will be passed to the consumer and will not add to the inflated profits that our supermarkets already make compared with their European counterparts.

I should like to deal with some issues specific to the predominant type of farming in my constituency. The headage limit retention is welcome. The transferability of

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sheep premium rights may be good, but my farmers are worried about the movement of saleable quota out of areas such as mine or less-favoured areas. I do not know which criterion the Minister will use, although it would be interesting to know. I am delighted to note that he is taking an anti-free market interventionist approach to the issue.

In the context of the sheep annual scheme, why is an eligible ewe restricted to the application period, which means that it must have lambed by 7 January 1992? That will be very restricting. Could that be changed to a retention period to allow claims for ewes lambing up to 17 April 1993? As we have heard, in its press release the Country Landowners Association welcomed the reforms with one and a half cheers. When we see all the detail, and if the welcome inclusion of environmental considerations works, I sincerely hope that farmers and consumers will be able to raise three cheers.

11.32 am

Mr. Peter Atkinson (Hexham) : I am delighted to speak for the first time in the House. I add my congratulations to those that have already been extended to the Minister on bringing back this package of reforms from Brussels. The Minister is popular with farmers in my Northumbrian constituency. I understand that the National Farmers Union has given the package one and a half cheers. Those of us who know the NFU know that that is equal to a standing ovation of the sort given to Pavarotti.

Popularity is unusual for a Minister of Agriculture, Fisheries and Food in Britain, and I urge my right hon. Friend to make the most of it : to make hay while the sun shines. He deserves to be popular for what he has gained. I do not make light of the problems facing farmers, especially those in my constituency, because, despite the package, they will suffer a considerable reduction in future income. However, they can face those difficult times in the knowledge that the enormous discriminatory handicap contained in MacSharry stage 1 has been dropped. They are grateful for that.

Farming and forestry are the cornerstone of industry in my constituency, which covers more than 1,000 sq miles--I understand that it is the second largest in England. It extends from the Scottish borders to the Durham border in the south, to Cumberland in the west and to the city of Newcastle in the east. It has some enormous natural prominences, including Britain's largest man-made forest and the Kielder reservoir, which is the largest man -made reservoir in Britain.

My constituency is spectacular and remote, and the countryside is wonderful. That brings disadvantages, because it is hard to make a living, especially in the hills. Sheep and hill cattle dominate in the north, and cereals and dairying dominate in the valleys and river valleys and in the beautiful remote valley of Allendale in the south. Apparently there are three sheep to every person in my constituency. The town of Hexham has a large livestock mart and dealers and buyers from all over the country come to it. They also come there from South Shields.

Recent comments by the hon. Member for South Shields (Dr. Clark) about BSE and the Government's secrecy, as he called it, about that disease was not well recieved in Hexham mart. Some letters from butchers are winging their way to him. I hope that the hon. Gentleman can explain his allegations, because they are seriously damaging the meat trade in my constituency.

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Of course, farming is not the only industry in my constituency. Since the war, improved communications have made the Tyne valley villages and Ponteland and Darras Hall centres for commuters to Newcastle and other parts of Tyneside. I am lucky to count among my constituents many people who make a significant contribution to life in the region. The industry is mostly rural and many small businesses have been set up in the past 13 years. I am glad to say that the Government attitude towards such business has encouraged many of them, even in these difficult times, to become vital middle-sized businesses which the constituency needs.

The constituency is full of history. Hadrian's wall is still among the great monuments of the world, even though enterprising and efficient locals removed a great deal of stone. It no longer serves to keep people out : on the contrary, we welcome visitors and tourists.

Hexham is a lively and ancient market town, with a spectacular abbey. There are plenty of castles, notably the one at Prudhoe, and there are many smaller fortifications dating from the turbulent border wars. George Stephenson's workshop is at Wylam, and Thomas Bewick was born at Cherryburn. Those names are a testament to the engineering and cultural history of the constituency. History lives on in the people, many of whom bear the surnames of the great riding or reiving families of the border wars.

For many years, Northumberland was one of Britain's best-kept secrets, but, thanks to the efforts of the Northumbrian tourist board, tourism in now one of the constituency's major industries. Tourists come for the magnificent scenery, the history and the unrivalled sporting facilities. Bloodstock and racing are important in the constituency ; Hexham has a marvellous racecourse, with one of the best national grandstands of any racecourse in the country. However, racegoers need a fairly heavy pair of shoes on windy days. I pay tribute to my predecessor, Alan Amos, who represented the constituency from 1987. He set a fearsome example as a hard-working constituency Member and I shall have to work hard to do as well. Many of my constituents are grateful to him and I suspect that many Ministers remember his terrier-like pursuit of problems. Another of my predecessors is Lord Rippon and some senior Members may recall Sir Rupert Speir, who is alive and well and hale and hearty in the constituency. He offered me much good advice during and after the election campaign. He told me, "For God's sake don't make a long maiden speech."

The hon. Member for South Shields spoke about the impact of the reforms on wildlife. There is no doubt that intensive arable cropping has not been friendly to wildlife. These reforms have the ability to change that--once again, I disagree with the hon. Member for South Shields. They switch support from yields to production--one of the demands made many years ago by the Game Conservancy Trust, which understands much about these matters, as a way to make modern farming much more friendly to wildlife. Those who produce more than the average for their region will reduce yields, which we hope will lead to less use of the non-essential pesticides that attack the insects on which many ground-nesting birds, including game birds, and other wildlife depend.

Most important is the rotational set-aside, which will bring back to the English landscape one of its lost features--the winter stubble fields that some of us remember from

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our youth. As we now know, winter stubble is a reservoir for many beneficial insects ; that is why the new scheme of rotational set-aside will be of immeasurable benefit to wildlife and game birds.

I know that the Minister has a keen interest in this, but I hope that he seeks advice from organisations such as the Game Conservancy Trust on the best way to manage rotational set-aside, because in the detail and the fine print of management lies the benefit of wildlife.

11.40 am

Mr. Paul Tyler (Cornwall, North) : It is a great pleasure to congratulate the hon. Member for Hexham (Mr. Atkinson) on an eloquent and charming speech. He said that Northumbria had been one of the best-kept secrets of the country, but I feel certain that he will make sure that the House is not allowed to forget his constituency. As we are permitted only a short time, I shall concentrate on some of the main elements of the package that the Minister has outlined. I intend to give credit where credit is due. It is not to the benefit of the House if we look always at the disadvantages and never at the achievements of the Government. Therefore, I give credit to the Minister and his team of officials for the way in which they have managed to exclude some of the discriminatory features of the previous packages.

I and some of my parliamentary colleagues went to Brussels to meet Commissioner MacSharry early this year and we were able to cover some of the issues on which the Minister touched. We had a long meeting and I know that Commissioner MacSharry welcomed our evidence that it is not simply the party in government that was concerned about the way in which the United Kingdom's farmers would be affected and that others shared its view.

The debate is about not just agriculture but the rural economy and the rural environment. The Minister may agree that it is unfortunate that his remit is concerned precisely with production and not with those wider issues. In a smaller party, I am lucky enough to have a remit that covers all rural issues, so I can look rather more widely at the implications of the package. I am tempted to suggest that the common agricultural policy should no longer be so described. Instead, it should be described as a policy for the common agricultural and rural environment, or CARE, because a number of the features that the Minister described are as much concerned with the environment, the economy and the employment patterns of rural areas as they are simply with agriculture.

Another beneficial side to the package, which we should be ready to acknowledge, is that if prices drop and we stop dumping subsidised products on the world market, we can do much more to help the developing world than aid will ever achieve. We should give credit to the Council of Ministers for that. If--it is a very big "if" and, as a number of hon. Members have implied, the jury is still out on this--the disastrous slide in farm incomes in recent years is reversed, the Council of Ministers should have credit for that, too. An even greater doubt is whether this package will fulfil the requirements of the GATT round. We all know that the GATT round is in doubt because of the American attitude in the run-up to their election in November. President Bush is unlikely to agree to any major advances.

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There is real doubt whether, even if this package is allowed to fall into the green box, a large amount of American support will similarly be allowed. Clearly, there has to be a quid pro quo. The criteria that GATT has prepared do not seem, in my view and that of many other commentators, to permit the present package to fall into that box. Earlier this year, Agra Europe said : "Compensatory payments under the EC's MacSharry plan and US deficiency payments quite clearly cannot be classified as green box' decoupled payments."

I accept that there have been changes--the Minister may describe them as nuances--but this is still in doubt, and it is of critical importance that we maintain momentum on the GATT round. I can only agree with the NFU when it says :

"The progress towards reform that the package represents should be used by EC negotiators to reach a satisfactory settlement of the GATT trade talks."

It recognises that this is but a first step, not a conclusion. A number of hon. Members on both sides of the House have rightly paid a great deal of attention to set-aside, in which there has been a massive increase. The Minister has made it clear that it is not yet possible to know for how long this will be necessary. We know, because he has been quite frank about this, that he has misgivings. We need to know whether this is intended to be a transitional or a long-term solution. If it is the latter, the package is not adequate to meet the task, because it does not fulfil the essential requirement of positive environmental features. We know that the Minister will have a lot of room for manoeuvre on that, but it will be important very early on for farmers to know what will be involved in terms of countryside management and stewardship schemes. We all understand that there are major problems. The hon. Members for Cambridgeshire, North-East (Mr. Moss) and for Hexham referred to the differences between rotational and non-rotational set-aside. We have major problems with rotational set- aside, which does not offer the environmental opportunities offered by non- rotational set-aside. We understand the difficulties and we hope that the Minister will be able to say, quite clearly and quite soon, how this hybrid arrangement will work.

The release of extra nitrogen automatically and naturally into the soil may be counter-productive with rotational set-aside. We want to link set-aside to explicit extensification. That is the most important advantage that we can gain here, particularly as it will increase the permanent natural habitat.

In my area, the great Duchy of Cornwall, in the past 10 years alone 70 miles of hedgerow and an area of wildlife habitat twice the size of Penzance have been lost. Those who know the area will know that Penzance is quite a sizeable town. Rather than just using financial considerations, set -aside should be considered against that background.

The obsession with set-aside will not please anybody. It does not please the farmers--their training, their experience and all their instincts are against it. It does not please the conservationsts unless it has built into it real environmental benefits. It does not please the consumer, who will not see any great advantage. Most important of all--the Minister has been frank about this--taxpayers will find it difficult to accept that they will have to subsidise the farmer for doing nothing. It is difficult enough to

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persuade them to subsidise greater productivity in years of surplus, but to subsidise dereliction will look like featherbedding--the accusation of yesteryear.

We feel strongly that the room for manoeuvre that the Minister has in the present package, which we hope he will retain, should be used as fully as possible to encourage greater habitat conservation and creation and also to enable public recreation and access to be extended. That has to be the right answer.

You will see, Mr. Deputy Speaker, that I am industriously turning over pages of my notes in an effort to keep within your time limit. The Minister referred to the need to try to improve the level playing field within the Community. It is familiar to us all, in terms of animal welfare, food hygiene and a number of discretionary schemes, that our farmers, for various reasons, have either not had the same benefits as their competitors or have been disadvantaged in other ways. We welcome the opportunity, which the Minister has said he intends to take during the United Kingdom presidency, to tackle the problem. It is to be hoped that, at the end of the year, the present situation will be much improved.

As I said at the outset, the package involves the entire rural economy. As the details come forward, the Minister's room for manoeuvre must be considered on an interdepartmental basis. It is--

Mr. Deputy Speaker : Order.

11.50 am

Mr. John Greenway (Ryedale) : I congratulate my hon. Friend the Member for Hexham (Mr. Atkinson) on his witty and interesting maiden speech. He and I have already established that we have several things in common. Our constituencies are similar, and the sheep-to-people ratio to which he referred is similar in both constituencies. We both share the experience of having the chance to come to the House because of the misfortune of others. It is clear from what my hon. Friend has said that Hexham will be as well represented while he is its Member as it has been in the past.

I had the lucky privilege of being one of the two parliamentary private secretaries at the Ministry of Agriculture, Fisheries and Food for about the final year of the previous Parliament. That experience taught me a great deal, quite apart from the obvious advantage that it gave me an inside view of the work of the Ministry, which I am happy to confirm to the hon. Member for South Shields (Dr. Clark) is not run like a secret society.

I also had a chance to learn a great deal about two remarkable people. First, there was my right hon. and noble Friend Lady Trumpington, who served for five years at the Ministry and who was a great credit to it, to the Conservative party and to the Government. She did a great deal for British agriculture. In saying that my right hon. and noble Friend had a personality that was larger than life, I must refer also to her charming and commanding presence. During the election campaign she kindly came to Ryedale. We went to visit a farm and as we arrived in the yard we say that about 20 farmers were present. The car door swung open and my right hon. and noble Friend's left leg emerged. "Hi, boys," was the greeting. It was an object lesson on how to disarm a

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potentially difficult audience. The farmers would not have been difficult, however, as they recognised how much my right hon. and noble Friend had done for them.

I had a fascinating insight into how my right hon. Friend runs his Ministry and I learnt of his determination to ensure that reform of the common agricultural policy would not mean discrimination for United Kingdom farmers. During the general election I was able to say to all the farmers in my constituency that there would be no sell-out, no discrimination, no back-door acceptance and no disadvantageous reform package. I could say all that with conviction and sincerity because it was true.

I was wrong on one count, however, because I predicted that CAP reform would probably have to wait until United Kingdom presidency. The reform package came rather sooner than I anticipated. My right hon. Friend told the House, extremely graphically, that that was because Mr. MacSharry and some of our colleagues in the other member states were hoping for a different outcome of the general election on 9 April.

In a different sense, perhaps I was right after all. We have an outline package and we have in place the principles for reform, but we can see increasingly that the agreement reached last month is by no means the conclusion of the reform agenda. Indeed, it is only the beginning. Considerable detail still has to be agreed. There is much for my right hon. Friend to do during his presidency of the Agriculture Council, which will begin on 1 July. I am sure that the House and United Kingdom agriculture as a whole wish him well. The National Farmers Union, the Country Landowners Association and the Tenant Farmers Association have provided excellent briefs in advance of the debate. Given the shortage of time, there is no need for any of us to restate their conclusions except to underline the congratulations that they offer my right hon. Friend. They have itemised their concerns and I wish to draw attention to only two matters of detail before mentioning five points of principle. First, on detail, when we are considering the arrangements that we need to ensure that quota is not transferred from sensitive areas, we should not do so on the basis that sensitive areas and less-favoured areas come within the same definition. There are areas such as the wolds in north-east Yorkshire--I am sure that there are other such areas in other parts of the country--that are not less -favoured areas but in which sheep farming is crucial to the livelihoods of farmers. Secondly, I ask my right hon. Friend to do everything that he can to ensure that the quality threshold for intervention for cereals applies to feed wheat and feed barley. If it does not, there will be disastrous consequences for United Kingdom cereal producers. I move on to my five points of principle. First, it would be a downright scandal if the extremely significant advance and progress of EC farm policy reform that was agreed last month does not lead to an early settlement of GATT. The Americans must move. Their reaction--that of a threatened trade war-- reinforces our suspicion that there may have been a lack of commitment or of political will in the first instance.

Secondly, when it comes to progress with CAP reform and our assessment of it, we must set in context other recent developments within the EC, with particular reference to the Maastricht treaty. The principles upon

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which the reforms are based are essentially non-discriminatory. Farmers want and deserve fair and equal terms, and that demands that other countries play by the rules. Unfortunately, we know all too well of many examples of other member states not doing so. Strengthening the rule of law within the EC, as agreed at Maastricht, is an essential item which we must not lose in any renegotiation or modification of the Maastricht treaty. It seems to many of us that it is scandalous that strengthening the rule of law in the Community is the only way of ensuring that other member states keep their promises.

Thirdly, there is the effect of the package on the consumers. It would be a gross misunderstanding of the effect of farm prices on retail food prices if we were to expect from the package any material reduction in food prices in the shops, perhaps with the exception of pigmeat and poultry. All the evidence seems to point in the opposite direction. In cash terms, farmers' prices are what they were 10 or more years ago. That is why food prices have risen less than the rate of inflation. If farm-gate prices had kept pace with inflation, food prices would probably have done much the same, or would have become even more expensive in real terms. The non-discriminatory aspect of the reform package is to be welcomed, but it seems certain that farm incomes will fall. That is extremely serious. Undoubtedly some farmers will leave the industry. In time market prices must provide a more realistic return to farmers if they are to make a satisfactory profit out of farming the land.

Fourthly, this significant debate coincides with the Rio summit. We still have much to do to secure the long-term future of our own environment. My right hon. Friend always rightly insisted that environmental features should be central to farm policy. There are important advantages in the CAP reform package, especially the arrangements for stocking limits. That is an important and significant advance, and the way that the limits are implemented will have far-reaching consequences both on the way that large rural areas are farmed and on the viability of farms.

I have never been in any doubt that the best way to keep our landscape as it is is to keep farmers farming the land. That means much more than environmental sweeteners. It means a viable, competitive and profitable agriculture industry--an industry confident in its future. The CAP reform package is a first step towards ensuring that that confidence can be restored.

12 noon

Mr. Nick Ainger (Pembroke) : I add my congratulations to those already offered to the hon. Member for Hexham (Mr. Atkinson) on his maiden speech. I appreciate the position that he was in when he made it, as I was in the same position only a couple of weeks ago. This so-called reform package has been trailed as a great victory for the Minister. It is interesting that Conservative Members were selective in their quotations from press releases from the Country Landowners Association and the National Farmers Union. The hon. Member for Cambridgeshire, North-East (Mr. Moss) quoted John Fellowes in his congratulations to the Minister. However, he did not complete the quote, which continued :

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"However, an immensely complicated array of bureaucratic quota controls now faces our beef producers. Even in the arable sector, the arrangements will be excessively complex. This bureaucracy will add to the costs of the industry and to the costs of the consumer." A reform package that will add to the costs of industry and the consumer is no reform ; it simply compounds the problem. Currently, the CAP costs £14 per week per family, and even Conservative Members have said that in real terms farmers' incomes have been falling radically. Indeed, every day 26 people--farmers, farm workers and ancillary industry employees --leave the industry. Conservative Members laughed when my hon. Friend the Member for South Shields (Dr. Clark) mentioned state aid for family farmers, yet I know many farmers who are having to apply for family credit because their basic incomes have fallen below the means-tested levels. Some £5,000 or £6,000 a year for a seven-day, 52-week-a-year job is no real income. In 1984, west Wales was dealt a terrible blow with the imposition of milk quotas. They were quite literally imposed overnight. Not only were the farmers hit, but so was the ancillary industry, especially milk processing. Two creameries in Dyfed closed within 12 months, with a loss to the rural economy of hundreds of jobs. We have not recovered from that.

I am worried about the detail of the reform package. There are relatively few details in the statement that the Minister deposited in the Vote Office. Although there is no planned increase in milk quotas, in 1993 it is possible that there will be another 1 per cent. cut, with yet another 1 per cent. cut in 1994.

Mr. Gummer : I made it clear in my speech that I do not expect any such cuts, which would happen only if market conditions demanded it. As there is to be a significant cut in milk production in Spain, there will be a greater importation into Spain from the remainder of the Community. Therefore, it is unlikely that there will be any cuts in the quotas.

Mr. Ainger : I would welcome the right hon. Gentleman's statement if it contained a categorical guarantee. The farmers of west Wales have not recovered from the 1984 imposition of milk quotas. I hope that they will not be put in the same position in 1993 and 1994. It is all very well to say that it is hoped that they will not be put in that position, but what happens if the market is not as expected and the farmers are told that there will be a cut ? Farmers have to plan, so it is not fair just to say that there is a possibility of further cuts but that the Minister will do his best to ensure that they do not happen.

The rural economy of west Wales is suffering from deprivation, yet rural areas have not traditionally suffered the hardships of inner-city areas. The highest levels of unemployment in Wales are now generally in rural rather than urban areas. The possibility of a cut of 15 per cent. in the price of beef will have a knock-on effect, and it will not be compensated for by cheaper feed prices. That will hit beef-raising areas. The possibility--and I put it no more strongly than that, in view of what the Minister has said--of another 1 per cent. cut in milk quotas is simply going too far.

Wales expected far more from the so-called CAP reform package. It has not dealt with the fundamental problem of only £1 of every £3 spent on the CAP going back to the farmers. The Country Landowners

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Association implies that there will be more, rather than less, bureaucracy, so the possibility of a switch from bureaucratic expenditure to the farmers' pocket--which is what is needed-- seems remote. Indeed, it will be the reverse.

We need an increase in Government or European expenditure in west Wales, directly into the pockets of farmers. That would have a significant spin- off in the rural economy. Unfortunately, there is nothing in the reform package that would achieve that. There would be a continuing closure of family farms with more and more people leaving the industry. Because MacSharry's proposals appeared to be so draconian, and because they have been mitigated and some of the discriminatory elements have been altered to the benefit of Britain, people view the reform package with a great sense of relief. Unfortunately, there is still a great deal of pain because it does not solve the problems mentioned by hon. Members on both sides of the House. It is a pity that the Minister could not come back with a far better deal.

12.8 pm

Mr. Nicholas Winterton (Macclesfield) : I congratulate my hon. Friend the Member for Hexham (Mr. Atkinson) on his maiden speech. He described his constituency in a most sensitive and colourful way and rightly paid tribute to his hard-working predecessor. We look forward to many more speeches from him in our debates.

Farming is in crisis in the United Kingdom, in Europe and in north America. In a quarter of a century in public life, I have never known a period when agriculture was so concerned about its future. I represent an area-- Macclesfield, in Cheshire--which has some of the finest grasslands and grazing in the country. My family firm--not that I have worked for it--of auctioneers, valuers and surveyors has been associated with farming for 150 years. Therefore, I hope that my hon. Friends on the Treasury Bench will not doubt my pedigree for making the remarks that I do.

Farming is not just a quaint, old-fashioned pastime adopted by those living in rural communities, to make them more attractive to the residents of our towns and cities who visit them for day trips and holidays. Farming is an important industry and a vital way of life. It is at the heart of our rural economy and a major contributor to our nation's wealth. It directly and indirectly employs millions of people, provides food for us all, and improves the natural environment--which is increasingly important.

Farming shapes the countryside and the character of our nation, but it is at a crossroads at home and in the rest of the Community. Worldwide pressure to reduce protectionist measures will continue unabated, and the need to contain the cost of the common agricultural policy will remain high on the political agenda.

In general, I warmly welcome the common agricultural policy package won by my right hon. Friend the Minister, but some of the finer details remain to be worked out. I await their revelation with some interest. I warmly welcomed my right hon. Friend's assurance that United Kingdom milk quotas will not be reduced--I hope he meant for the foreseeable future. British farmers, particularly in my constituency, have been badly treated in respect of milk quotas. It would be ridiculous to accept

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further cutbacks, given that we are nowhere near self-sufficient in liquid milk, let alone in that required by creameries and cheesemaking plants.

It would also be crazy further to increase our balance of trade deficit in a product that we can probably produce better than any other country in the Community. United Kingdom farmers can meet the challenges that my right hon. Friend described today. Pressures mean that they must continue to adapt to the new conditions and demands that will be placed on them. Such changes are not easily assimilated, but it is the role of the Government of the day and of the local Member of Parliament on all occasions to defend the interests of British farmers.

No mention has been made of the future of the milk marketing boards, although changes are being forced through because of pressures from the Community. I accept that change is necessary, but there is deep concern, not because farmers do not acknowledge the need for it, but because of fears that under a voluntary co-operative system some dairies will undoubtedly seek to buy farmers away from the boards. That is already happening in Cheshire, with Bodfari.

Farmers who enter into a direct relationship with a dairy will have no protection if it seeks to drag down the price of milk. The downward pressure on prices could cause real difficulties. My hon. Friend the Minister of State shakes his head, but perhaps he does not understand the situation. Unlike many other commodities, milk must be sold immediately. Farmers do not have the luxury of being able to bide time while they find a better price. If they do not sell at the day's going rate, the milk is wasted. Those problems will affect many areas where dairying is so important.

One cannot abandon a regulated market. The unfettered free market ideology has its disadvantages. It is naive and dangerous, for farmers and consumers alike, to believe that it is possible to sustain a free market ideology. My message holds equally true in respect of the wider trade in food and agricultural products. Protectionism is not necessarily bad if its intention is to ensure stability, continuity of supply, and fair and free trade. Nowhere is that more clearly true than in the poultry sector. Our own producers are subject to the most stringent health

regulations--but imported eggs are not. The inevitable result is that imported eggs are cheaper. That is not free trade, and it is certainly not fair trade. Similarly, New Zealand lamb is undermining British prices substantially, yet New Zealand farmers are going out of business because of lack of profitability. I am sure that my hon. Friend the Minister of State is aware that a collapse in the spring lamb trade in this country would have a knock-on effect on the autumn store lamb sales and would create even more trouble the following year. That is an example of where, in the medium to long term, superficially free but unfair trade will not benefit farmers as producers, or consumers.

Dairy farms are cleaning up at great expense to rid themselves of effluent. Even after grant assistance, the investment required is massive. One farm in my constituency had to borrow £60,000 for that purpose. I tell my hon. Friend the Minister of State that that takes some paying back--and all the time our farmers are undercut by countries having few if any controls. Is that free, fair trade? The hon. Member for South Shields (Dr. Clark) mentioned that the big supermarkets and superstores have established a dominant position in the distribution and

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