House of Commons Hansard Debates for 25 May 1993

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) : On a point of order, Mr. Deputy Speaker. Has Madam Speaker received a request for a statement from the Minister of Agriculture, Fisheries and Food or the Secretary of State for Scotland, both of whom are represented here tonight, following the blockade of the fisheries protection vessel Morven in Girvan harbour by Girvan fishermen who are understandably frustrated by the effect of the tie-up scheme and want the Government to reconsider it urgently? Can we have a statement tomorrow, if not tonight, on this very important matter?

Mr. Deputy Speaker (Mr. Michael Morris) : I can report that Madam Speaker has received no such request.

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Wool Prices

10.42 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. David Curry) : I beg to move

That the British Wool (Guaranteed Prices) (Revocation) Order 1993 (S.I., 1993, No. 1184), dated 29th April 1993, a copy of which was laid before this House on 30th April, be approved.

I shall deal briefly with the five issues that arise from the statutory instrument : the need for the statutory instrument, the impact on farm incomes, farm welfare, the wool textile industry and the role of the British wool marketing board. They will encompass most of the worries that are likely to be expressed in the House. The statutory instrument itself is necessary because of the relatively late passage of the Agriculture Bill. The Bill provides for the abolition of the financial guarantee. We had hoped that it would be given Royal Assent by the end of April, before the start of the new clip year. As the House will know, the Bill was "Maastruck" or "Maastricken", whichever is the past participle of Maastricht. The Bill now provides for the end of the guarantee at Royal Assent, whenever that is given.

The statutory instrument revokes the requirement for Ministers to fix annually a guaranteed price for wool. It does not pre-empt the Bill where the substantive issue of the legislative existence of the guarantee is considered. It merely ensures that there will be no rate fixed for this year. That is the constitutional position. As for farm incomes, it was never the aim of the wool guarantee to offer long-term support to farmers. It was designed to achieve price stabilisation. In the 1960s and 1970s the guarantee provided 10 to 15 per cent. of a sheep farmer's income, but the figure now is less than 5 per cent. The reason for that, of course, is the development of European Community schemes that have pushed money to all producers of sheep, via the ewe premium, and especially to upland producers, via the combination of the ewe premium, the special supplement for upland sheep and the hill livestock compensatory allowances. This year, the support through the ewe premium has been amplified by the currency changes and the depreciation of the pound. The sheep annual premium, plus the HLCAs, is worth £495 million to sheep producers in the United Kingdom--and that is against a background of much healthier prices for the commodity itself. One must not forget that getting a price from the marketplace is as important as receiving a subsidy. The ending of the guarantee will therefore have a minimal effect on farm incomes. The welfare argument is that farmers will not shear their sheep, but the fact is that in the United Kingdom sheep are reared for meat. The farmer will get his ewe premium, plus his HLCA--farmers in the uplands receive more than £30--and the value of the quota, which is the value of the right to keep the sheep. The few sales that have taken place suggest that that represents a substantial capital value. The farmer will also get the value of the crop of lambs produced by the ewes. In order to qualify for that support and that benefit from the market, a sheep has to be both alive and healthy. If it is not, the farmer will not receive the benefits, so it is not in his economic interest to allow the welfare of the sheep to deteriorate.

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Mr. Michael Jopling (Westmorland and Lonsdale) : Has my hon. Friend examined the problem in the very high hills? I have received a letter on that subject from an extremely prominent farmer in the Lake District--he is a good farmer, too. As my hon. Friend will know, the only sheep that will survive on the very high hills are the Herdwick and the Swaledale, especially the Herdwick. The farmer tells me that, without the guarantee, the value of the wool would pay only 50 per cent. of the cost of shearing and handling the wool. There is a real danger that some farmers on the very high hills--not the good farmers, but those who are in serious difficulties --may be tempted not to incur the expense of shearing the sheep and handling the wool.

Will my hon. Friend give some thought to the possibility of introducing a further order allowing the present system for the Herdwick and the high hill Swaledale sheep to continue for a further year, because of the severe difficulties that the order will cause farmers on the very high hills? Perhaps he would be kind enough to write to me.

Mr. Curry : I hear what my right hon. Friend says, but he would be the first to recognise that farmers on the very high hills--albeit that they farm Herdwicks--receive significant sums in support. If those sheep are not kept alive and healthy, the support will diminish. It is true, and I acknowledge the fact, that shearing and the other forms of wool production, taken separately from the production of meat and the other purposes of rearing, are non-remunerative activities, because of what has happened on the world market. However, the substance of my case is that that should be set against the value that the farmer receives both from direct support and from the value of the product. Herdwicks now command quite good prices in some continental marketplaces, because of the excellence of their meat, and the wool has become a more marginal factor in the overall value of the commodity to the farmer. Of course I shall write to my right hon. Friend, but he will understand that in promising to do so I cannot make a commitment at the Dispatch Box. I do not believe that it will be in any farmer's interests not to shear his sheep, even leaving aside any consideration of his preoccupation with welfare. In the worst circumstances--I accept that this would be in the worst circumstances for some maverick farmers--under the Agriculture (Miscellaneous Provisions) Act 1968, it is an offence to cause unnecessary pain or unnecessary distress to livestock and a schedule of penalties is set out.

Dame Elaine Kellett-Bowman (Lancaster) : Is this perhaps not the most ideal time at which to introduce the order when there is a huge overhang of wool on the world market ?

Mr. Curry : There is a huge overhang of wool on the world market. It would take a sage or a very unwise prophet to forecast when that overhang will disappear. If I were looking for an argument for saying that it was a propitious time, I should argue, first, that there has been a significant increase in Community-directed support to farmers and, secondly, that the depreciation of the pound has added an unlooked-for supplement to that, which has been a bonus-- [Interruption.] Let us say the truth. It has been a bonus to farmers. They have benefited directly from it. Market prices have been far more buoyant after a long period in which they were very depressed. In those

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circumstances, recognising that wool is a marginal part of the income of sheep farmers, it is not a bad time at which to be doing this.

Mr. Alex Salmond (Banff and Buchan) : The Minister seems to be saying that if there had not been the devaluation of sterling he would not be introducing the measure. Is that the case ?

Has the Minister any conception of the resentment that his policies are provoking in the interest groups and industries that he is meant to promote ? As we have heard, fishermen are being pushed into blockading because of the Minister's policies. Why does he think that he is causing so much resentment among the people who work in the industries for which he is responsible ? What is it about his policies or his attitude that is causing so much chaos in farming and in fishing ?

Mr. Curry : That is a pretty pathetic intervention. If I am causing resentment among sheep farmers by directing £30.55 in ewe premium, its supplements and the HLCAs to farmers in the most difficult conditions in Britain, I have yet to hear about it. If I have caused resentment even by this measure, I have yet to hear comments from my constituents. I have not had a single letter from my constituency, which is one of the main sheep- producing areas in the country, telling me that this measure is not sensible. The wool marketing board may have thought that there was something fundamentally wrong, but Mr. Alun Evans has not arrived on my doorstep to make representations to me. The hon. Gentleman should have one small star for trying hard, but he needs to try a great deal harder before he gets off early from class.

I am extremely alive to the concerns of the wool textile industry. The industry says that if the farmer shears the sheep, he will either chuck the fleece over the fence or he will sell it away from the board. I recognise that that is a concern. First, let me make it clear that the board keeps its statutory powers as a buyer. Many people have not recognised the fact that we have decided to keep those statutory powers. The board buys and grades the wool, which is an essential job. It does that before selling to the textile industry. That is the difference between it and a body such as the milk marketing board, which buys a raw material and sells it on as lightly transformed, if transformed at all, raw material. Producers are required to sell to the board. Any farmer selling to anyone other than the board is selling illegally and is subject to action against him by the board, which is enforceable through civil law. The penalty is the fine of the recovery of half the value of the wool sold. The only wool that is not covered by the board is wool that comes from animals that have been slaughtered in

slaughterhouses. That remains the case.

The order merely removes the fixing of the guarantee. The only thing that the Agriculture Bill will do, when it eventually becomes law, will be to remove the existence of a guarantee. The statutory power, the obligation to sell through the board and the board's functions remain in place. There is clearly a need for

rationalisation and for restructuring if there are gains in efficiency. The board has had management consultancy studies and it has made certain proposals as a consequence. We should have liked to able in the Bill to give the board some assistance by

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allowing it to appoint non-executive directors and to widen the scope of its directors. However, those measures were ruled to be outside the scope of the Bill.

We are still ready to give the board all the assistance that we can to address its new situation. I have constant contact with Mr. Alun Evans--we have a strong and sensible working relationship. He recognises that the board is able to face the new challenges and the new situation and that we gave a warning four years ago that this would happen. This has not been sprung on the industry. It has not jumped fully armed from the councils of Government. Four years ago, we gave a warning about it and it has been accepted by the industry. The position of the industry has changed. The essential support for farmers comes not from wool but from the European Community and the marketplace. That is especially true of the hills, which are strongly represented in my constituency. From the point of view of the farmers and customers, the decision that we have taken should be implemented so that people know where they stand. It is right and necessary and I commend the order to the House.

10.55 pm

Mr. D. N. Campbell-Savours (Workington) : We have heard a most unconvincing speech from the Minister. His responses to Conservative Members were less than satisfactory. This is a shabby and sad little order which arises out of a grubby little deal that was done between Treasury Ministers and Agriculture Ministers. Agriculture Ministers needed money to fund the further development and expansion of environmentally sensitive areas and have taken money away from the wool guarantee.

At no stage was the effect of this order properly measured on, first, domestic wool production and exports from the United Kingdom ; secondly, employment in the wool processing industry in the United Kingdom ; thirdly, the balance of payments ; fourthly, the maintenance of quality standards of wool in the United Kingdom ; and fifthly, and most importantly, the whole question of animal welfare. I shall go into animal welfare in detail this evening.

The wool industry is to be Gummered or, as they say in the slaughtering industry, effectively knackered because that is what will happen to it in the coming years. Let me explain what the problem is, in case the Minister does not understand. At present, the guaranteed price for wool is 117p per kilo. The farmers' share of that is 90p per kilo and the rest goes to the wool board to cover marketing, handling and storage costs. For nearly 40 years, the price of wool has rarely been below the guaranteed price. Until 1989, the overall cost to the taxpayer was almost nothing. Indeed, in 1988, the industry felt so confident about its future that it was prepared to accept the phasing out of the guarantee. In 1990, the international wool market totally collapsed. The effect of the collapse was to trigger the Government's guarantee with a taxpayer contribution and the price paid to the farmer was maintained at 96p per kilo in the 1989-90 year. Let there be no doubt in the minds of hon. Members that, if the guarantee is abolished tonight, the price to the farmer will drop from more than 90p per kilo to only 40p per kilo. That is the difference to the farmer.

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Mr. Tony Marlow (Northampton, North) : If the hon. Gentleman is right, it is a difference of 50p per kilo. How many kilos are there in an average fleece? What is the price of lamb this year compared with the price last year?

Mr. Campbell-Savours : There are 2 kilos in an average fleece and the price of lamb this year is higher than last year. The critical question is : will low-paid sheep farmers continue to shear their sheep? What are the consequences of failing to shear? The answer is that some sheep farmers will no longer shear because they will say that it is no longer profitable. Indeed, it will be unprofitable. What is the evidence for that?

Average shearing costs are 27.5p per kilo. The British wool marketing board's calculations show that for certain breeds--the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) referred to this--the costs incurred in shearing sheep will exceed the price received for the wool when it is sold to the board. In the case of Swaledales and dark and light Herdwicks, farmers will lose money if they shear. In the case of Herdwicks, they will lose 50p per animal. Several other breeds are on the margin of profitability.

So what are the consequences of a reduction in the wool clip? I have here a letter from a company called D. B. Holdsworth Ltd., which will be known to Ministers as one of the most important wool merchants in the United Kingdom. What it says about the consequences on jobs of the reduction in the clip is interesting :

"In the scouring and combing sectors, there are some 2,500 jobs which are directly at risk. Approximately 50 to 55 per cent. of the British wool clip is exported direct--largely in this form. There are a further 21,000 jobs in wool textiles, which would also be directly affected, mainly in carpet spinning Any reduction in the British wool clip would undoubtedly result in the increase, by importation, of wools from overseas--mainly New Zealand. Value added at present to British wool which is in the form of yarn and cloth would be lost." On marketing the company says :

"Prior to the advent of the British Wool Marketing Board, there were 270 merchants collecting wool. The clip was badly graded,"-- a function of the British wool marketing board, as the Minister said--

"or not graded at all. Contamination and damage was prevalent and wool left on the farm (in some cases for years)."

Are Ministers prepared to accept that we should go back to the bad old days before the introduction of the wool guarantee?

Mr. Curry : The hon. Gentleman persists in debating as if farmers produced sheep for wool and nothing else. But he knows that that is not true. Farmers produce sheep for meat and the wool is a by-product of that. Therefore, even though the shearing of the wool might not be economic in present circumstances, it is still in the farmer's interest to keep his animals healthy and alive because he receives a large degree of support for them. What is more, he receives a good market price for them. It is entirely counter-productive and self-destructive for the farmer not to shear his sheep. It is not an isolated sector. It is part of the production of that animal.

Mr. Campbell-Savours : The Minister is right. Yes, the farmer will get his price on the market. But the point is that the incentive to shear is lost. If he believes that he can still get the price on the market without shearing, he will proceed to do so.

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Mr. Marlow : Has the hon. Gentleman ever kept sheep? If he kept sheep, would he shear them or not?

Mr. Campbell-Savours : Of course I would shear them. But I remember a Conservative Member of Parliament who could not even look after his sheep and was taken to court and prosecuted. He paid £1,000 in court costs and £1,500 in fines. So let us not talk about constituency of approach by people in the United Kingdom on such matters. The issue of jobs was referred to by D. B. Holdsworth Ltd. Let us consider the position in the Minister's constituency. In Skipton and Ripon two large companies are involved in wool processing. One is Hayfield Textiles, which has 235 full- time employees. It is a large user of British wool in its spinning processes. It has several thousand customers in the United Kingdom and it exports British wool products all over the world. It has markets for British wool in the United States of America, Scandinavia, the far east, Australia and Japan. Their export markets are threatened by any reduction in the clip. Indeed, the introduction of a new product line using naturally coloured wool from hardy varieties--the very varieties to which the hon. Gentleman was referring--is directly threatened as the clip will no longer be profitable to shear.

Dame Elaine Kellett-Bowman : The hon. Gentleman is doing farmers a grave injustice. I do not know a single farmer who would allow his sheep to suffer by not being sheared. None of the ones round my way would allow that.

Mr. Campbell-Savours : I hope that the hon. Lady is right, as indeed does the whole House. But the reality is that some farmers will not shear. We will wait and see what happens and when it happens I will be able to draw it to the attention of the hon. Lady. Another company, Gaskell Carpets, in the Minister's contituency employs 50 full-time staff to make a 100 per cent. British wool product, a very fine product indeed. It produces only from British wool and I argue that its supplies are at risk if there is any reduction in the clip.

Does the Minister wish to contest what I am saying?

Mr. Curry : Yes, absolutely ; I contest it totally. The hon. Gentleman has not taken into consideration the fact that sheep numbers in the United Kingdom are a great deal higher than they were four or five years ago. Even if what he forecasts were to happen, we have still got more sheep and would still get a bigger clip than we did four or five years ago. But it will not happen.

Mr. Campbell-Savours : Has the Minister consul? Did they express concern? Does he want me to give way again?

Mr. Curry : If they have such concerns, they see me in my surgery or write to me.

Mr. Campbell-Savours : A £700 million export business in the United Kingdom is threatened as a result of the withdrawal. I am not saying that it will be destroyed, but it will be undermined. The continuity of supply of British wool, particularly certain varieties, to British wool processors will be affected.

Mr. Jopling : I am extremely grateful to the hon. Gentleman, who is my neighbour in the Lake District, but

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he is getting on to a rather bad point. I would guess that the firms that he is mentioning will be laughing all the way to the bank as a result of this order, because it will mean that the wool clip will remain much the same as it has been. All farmers will do as he said that they would do--as did my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). They will continue to clip their sheep whether or not it is profitable. That will mean that the firms to which he referred will have a bonanza, because they will get nearly the same amount of wool, but much cheaper. So they will make big profits.

I wish that the hon. Gentleman would confine his remarks to the farmers, because they are the ones who will lose out on this.

Mr. Campbell-Savours : The hon. Gentleman would do well to consult the National Farmers Union in Cumbria, because it agrees with what I am saying. His constituency is covered by that branch of the NFU. If the trade implications are damaging, the animal welfare implications are appalling. I have a very interesting letter here from an organisation called the National Office of Animal Health Ltd. I understand that this organisation is the trade association of the animal medicines industry. This is what it has to say on the whole question of shearing :

"We are extremely concerned about press speculation that, due to the low price of wool, farmers will be tempted not to shear their sheep this summer. This prospect offers a considerable threat to the welfare of individual sheep and the health of the nation's flock." Ministers gasp when I read this. It is not me speaking, it is not the Labour party speaking, it is the National Office of Animal Health which specialises in these matters and is dealing with medicines in this area.

The letter continues :

"failure to remove the wool creates a number of serious problems. Sheep, particularly in rough terrain, can be cast', falling and unable to rise, because of the weight of the fleece eventually resulting in starvation and death. The presence of a heavy fleece in hot summers can cause direct stress to the sheep. The fleece as it becomes old, dirty and matted, forms an ideal habitat for a wide range of external parasites which can infest the fleece and burrow into the animals flesh. Blow fly, lice and keds can all flourish. Apart from regular dipping, shearing offers the best protection against summer parasite attack. Parasite attack can damage the hide as well as the fleece Sheep scab, sadly no longer a notifiable disease in Great Britain, has exploded throughout the British sheep population. The British Leather Confederation report 10 per cent. of hides showing evidence of scab attack Not only does shearing remove the cover under which scab and other parasites can operate, but the act of gathering in flocks and shearing means that every sheep has a thorough inspection every year. Furthermore, the presence of an old, matted fleece prevents proper penetration of dip".

Ministers and Government Back Benchers may laugh, but that is the view expressed.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : Will the hon. Gentleman give way ?

Mr. Campbell-Savours : No. The hon. Gentleman is a potato producer and does not rear sheep.

That is the view of the animal welfare lobby, the trade association to the animal medicines industry, the British Wool Federation and a number of other bodies which regard themselves as experts. The only people who do not agree with the argument are Ministers, who do not want to

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fork out taxpayers' money to maintain the guarantee into the future. [Interruption.] It may well be a good enough position for Ministers, but we are concerned about the implications for jobs, for exports and for animal welfare.

Mr. Clifton-Brown : Will the hon. Gentleman give way ?

Mr. Campbell-Savours : I promise that I will give way on the amendment to the Agriculture Bill, if it is selected, in three weeks' time when we are discussing the wool guarantee.

Finally, let me say a few words about the wool marketing board. It recognised that the writing was on the wall in 1988 when it accepted the principle of the guarantee being phased out. It undertook a major rationalisation pre-empting what is about to happen. It cut its marketing, grading, advertising and promotion costs. It reduced its work force by 30 per cent. and the number of depots from 29 to 22 over a three-year period. It generated a capital reserve of £10 million which, unfortunately, was not sufficient to see it through a very difficult period with a huge overhang in the international wool market, a major overhang certainly in Australia where 4 million bales of wool which cannot be sold are gathering dust. It pleaded with the Government for a phased period for the withdrawal of the guarantee, first over a three-year period, then over a two-year period. Next week I shall plead on behalf of the wool marketing board for a one-year period on the back of a particular amendment, if it is selected.

When the board failed in all those areas, it came back to ask for Government support with marketing costs for wool because there are problems bringing wool in from marginal producers in parts of Scotland and Wales, and smaller producers are worried because in the new circumstances it will be difficult to fund the collection of wool. It has received no response or help from the Government. It has made every effort in the matter and it is clear, from what the Minister said and from the comments of the hon. Member for Lancaster (Dame E. Kellett-Bowman) and others, that there is concern in the north of England about the way in which it has been treated. The industry should be helped, not punished. I invite hon. Members in all parts of the House to vote against the measure in protection of the British wool industry.

11.15 pm

Mrs. Elizabeth Peacock (Batley and Spen) : We may have somewhat differing views about the order. As chairman of the all-party wool textile group, it would be remiss of me not to put forward some views.

The Minister will recall that when I spoke about the guaranteed wool price and other issues on Second Reading of the Agriculture Bill [Lords] on 23 March last I made certain statements. I make no apology for reiterating them tonight. As I recall, he was not listening too well when I adduced them originally, although he assured me that he read the Official Report of my speech later. I said that one aspect of the Bill would have a serious effect on the wool industry and producers and would, in turn, affect our textile industry. The main purpose of the guaranteed price has been to give stability to wool producers and, as we have heard, it has done that for over 40 years. The cost to Government has been very small and that stability continued until world wool prices collapsed in 1990. As I said on Second Reading :

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"The stability created by the guaranteed price has allowed the British wool clip to improve in quality and image, and turn itself into an internationally recognised fibre. There are licensees all over the world, and there is representation in Japan, which is now one of the biggest consumers of British wool. The existence of the guranteed price has helped to develop an efficient structure for the collection, distribution and promotion of British wool. That structure is the envy of many European countries and it was the basis of the system now operating in South Africa. The guaranteed price has served producers in the less-favoured and remote areas of this country particularly well".

There is concern in the board about collecting small parcels of clip in remote areas. It is thought that it will not be profitable for collection under the new system. I said :

"The existence of the guaranteed price has been of great value in preserving the environment and countryside".--[ Official Report, 23 March 1993 ; Vol. 221, c. 830.]

So we are not talking about the industry.

I listened carefully to the Minister saying how well off sheep farmers were. Undoubtedly, those on hill farms, particularly in his constituency, which I know well, are receiving lots of money. But a sheep farmer who I know in Bedfordshire tells me that he receives less for a whole lamb, plus its fleece, than I pay for a leg of lamb at the butchers. That is a difficult argument to defend.

Mr. Curry : I do not want to quarrel with my hon. Friend. I did not say that sheep farmers were very well off. I said that there was a significant flow of Community support to them, that the quota was bringing a capital value and that the value of cropping the lambs was significantly better than it had been for a number of years. I accept that it is from a low base. I simply say that the trend has been positive and we are grateful that that is the case because it needed to be positive after what happened in previous years.

Mrs. Peacock : I accept that the trend is more positive than it has been, but my hon. Friend will recall that I asked him for an assurance on Second Reading that the issue would be examined thoroughly in Committee. When I read the Official Report of the Committee proceedings for the morning of 11 May, when the matter was discussed, I was sorry to note that only the hon. Members for North Cornwall (Mr. Tyler) and for Workington (Mr. Campbell-Savours) and the Minster took part. That was not much of a discussion. At about the time when that discussion was taking place, hon. Members were receiving letters from Donald Holdsworth of D. B. Holdsworth. He is the chairman of the British Wool Federation and he wrote to several hon. Members as follows :

"We agreed to the ending of the guaranteed price in 1988 but since then the picture has changed dramatically (which could not possibly have been envisaged ) We are convinced that it is in the interests of both producers and the Wool Textile Industry to have the guaranteed price phased out over three years rather than ended so abruptly in these difficult circumstances."

So it was agreed, in better times, that the guaranteed price should be phased out ; the chairman merely asks for a reconsideration now. The situation--the world glut, the marketing of wool, and the circumstances facing those who depend on their wool cheque--has changed dramatically. I insist that some farmers need their wool cheque, just as they need the money from milk and meat. I ask the Minister carefully to consider the changes that have occurred. To say that a

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handful of farmers may be producing wool, but most are producing meat, and wool is a by-product of that industry I suggest is insulting to many of our wool farmers--

Mr. Curry : It was a pure statement of fact. How can my hon. Friend possibly deny it? Most production, in hills and lowland, is of meat. Wool is a by-product. Good luck to farmers : I hope that they make as much money as they can from this, but it is not their main source of income.

Mrs. Peacock : I hear what the Minister says, but to suggest that only a handful of farmers have an interest in wool is an insult to those who do have such an interest. They have supported much of our wool textile industry. Their wool may not go into our fine cloth, because we import the wool for that, but it certainly goes into our carpet yarn. The Minister may know more about sheep than I do, but I certainly know a little more than he does about carpet yarn. He might allow hon. Members some knowledge of industries. I may not chase sheep around the hills, but I do know a little about this subject. I hope that the Minister will tell us how he sees the future not just of sheep on the hills, but of our wool textile industry, which is very important to many areas of the country.

11.22 pm

Mr. Paul Tyler (North Cornwall) : I am delighted to follow the hon. Member for Batley and Spen (Mrs. Peacock), but I should like to take her argument a stage further.

There is no immediate pressure to remove this guarantee. We do not have to do it because of the European Community. We are not forced into it by the GATT negotiations. It is entirely down to the Minister's timetable and the Minister's motives.

Still less is there any pressure from the industry. The British Wool Federation and the board agreed that in due course it might be desirable to remove the guarantee. That was agreed in 1988 when, as the hon. Member for Workington (Mr. Campbell-Savours) said, there was a rough equilibrium in the world market--hence, the transition would have been easy. Not so today, when the amount paid to producers would be halved. The Minister says that his farmers are cheerful at the prospect, but I notice that a large number of Conservative Members look far from cheerful. I suspect that that has as much to do with the timing as with the order itself.

The question that the board and the federation are asking is : why now? Why no transition? Why no two or three-year transitional period? What is the hurry? Clause 50 of the Agriculture Bill provides for the Minister to take the necessary steps to abolish the guaranteed price. Why do we have to jump ahead of that? Why, on the eve of the clip season, should we push ahead with this proposal? The world market, as we know, means that, if we go straight into it, the price per kilo for the farmer will be reduced from 90p to 40p. Many hon. Members may be surprised to hear that, when added up, that is quite a large sum : £26 million will be taken out of the income of the agricultural community. According to the Minister's own figures, the very modest increases that have taken place among the hill livestock farms have not extended to all those in the sheep farming sector ; in Scotland in particular, those incomes have fallen for the second year running.

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I spent some time with my sheep farmers in the Hallworthy market in Cornwall on Friday. Of course, it is true that the proportion of their farm income is less than it was five or 10 years ago, but that does not mean that it is totally worthless ; I suspect that some hon. Members, if they suddenly found that 10 per cent. of their income were removed, would still feel that that was an appreciable sum. [ Interruption.] Hon. Members may not realise that the average figure, which is about 5 per cent., is not the figure that I am quoting. For a hill farm, it is often a larger percentage of the total income. That is why last year--as we saw from the Minister's own figures--particularly in the less favoured areas, many sheep farmers' figures showed a larger percentage.

Mr. Curry : It must be a lesser proportion in the hills. In the hills, a farmer in a particularly disadvantaged area with a hardy breed receives £30.55 ; a farmer in another area, who does not receive the same benefit, receives £17.48. By definition, as the price of wool is constant, the amount must be less in the hills than in the lowlands.

Mr. Tyler : Using the Minister's own figures for last year, there was a reduction in Scotland for the second year running among hill livestock farmers, whereas in England and Wales there was only a modest increase. In those circumstances, it must surely be clear that removing part of the income will mean a substantial figure which will affect those concerned.

The right hon. Member for Westmorland and Lonsdale (Mr. Jopling)--who has now left the Chamber--made it clear in an intervention that it is the farmers who will lose out

disproportionately. Some farmers, in some parts of the country, are clearly benefiting from the devaluation of the green currency. It may well be that in some areas--where Conservative Members represent comparatively large farms--this will not be a major problem ; but for Liberal Democrat Members who represent a large number of smaller sheep farmers, it will represent a substantial cut in their incomes. Whether it is 5 or 10 per cent. is neither here nor there for those who are already making very small profits, or none at all. [Interruption.] The Minister says the average is 5 per cent., and I take his word for it. I am going by the average figure. I believe that many of those farming in marginal areas with marginal returns cannot yet take any more knocks than they have taken already. Only a few months ago, many hon. Members who were present for the debate represented those affected by the cuts in the HLCAs. Surely the argument then was that, when a marginally profitable level already operates, every cut will be damaging. That surely is why this is the wrong time and the target is wrong.

I believe that the Minister should be listening to the views of the British Wool Federation and the National Farmers Union. Their view is clear : they believe that the order improperly anticipates Royal Assent of the Agriculture Bill. Indeed, it improperly anticipates our discussion of clause 50. The National Farmers Union said : "In view of these extraordinary factors, the NFU, together with the British Wool Marketing Board, believe clause 50 of the Agriculture Bill should be amended to provide for the wool guarantee to be continued until 1995 (by which time the wool market is expected to be in better balance), or phased out over two years as was discussed with MAFF officials in early 1992."

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The Minister said that there had been no such discussions or representations. The NFU also said :

"At minimum, the wool guarantee should continue for a further full clip year, that is until 30 April 1994, in order to avoid disruption to marketing and possible differential treatment between farmers." The Minister has told us that all is sweetness and light, that everybody has agreed, that it is simple and that we can move quickly to the new circumstances. That is not the burden of the representations that have been made by all sectors of the industry. If the order is approved, the Minister owes it to the House and to the industry to guarantee that the shortfall in income, particularly for those at marginal levels of profitability--

Mr. Marlow rose--

Mr. Tyler : I am about to conclude. The hon. Gentleman can make his own speech in a moment.

If the Minister wants to ensure that his assurances are not just paper assurances, he must guarantee that all the other forms of support to which he has referred, including HLCAs, are increased to compensate for the removal of this important element in the total income of hill and other sheep farmers.

11.31 pm

Mr. Dafydd Wigley (Caernarfon) : I want to say a word on behalf of the poor, benighted sheep farmers. My county of Gwynedd has more than 2 million sheep, and it has had a rough time in recent years. In addition to the other economic problems that hon. Members from sheep-raising areas will be aware of, we have had the acute experience of Chernobyl, which continues to affect 350 farms and 250, 000 sheep in my part of Wales. Sheep farmers can well do without any further knock. This knock is unnecessary and could have been avoided, at least for this year. The Minister should take to heart the representations of the NFU, the Farmers Union of Wales and others for phasing. There is no need to move with such speed. I appeal to him, even at this late stage, to consider the matter again.

The most recent figures which I have for farm incomes for hill and upland livestock farms are for 1991. They show that in Wales no fewer than 65 per cent. of hill and upland livestock farms had a net income of less than £5,000. That compares with 30 per cent. in Scotland. Those people are working on the margins and they can ill afford any reduction. The reduction in the wool guarantee will make a difference. I do not pretend that it will make a massive difference, taking the industry as a whole, but for those on the margins it could make the difference between surviving and not doing so. I calculate that in my county we would lose about £1 million.

In 1991, the year which I quoted for net farm incomes, the guarantee was 130p per kg and the average price for wool at auction was 61p. Now it is well below that. A difference of 50p could have an enormous effect on the farmers. Therefore, in Wales, with 11 million sheep, compared to 20 million in England and about 10 million in Scotland, it will make a difference to those who are most vulnerable. Even at this late stage I appeal to the Minister to heed the voice of the industry and at the very least to give a 12-month period of grace.

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