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House of Commons

Wednesday 14 January 1998

The House met at half-past Nine o'clock


[Madam Speaker in the Chair]

Agriculture (Wales)

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Jamieson.]

9.34 am

Mr. Dafydd Wigley (Caernarfon): May I wish you a happy new year, Madam Speaker. This is my first opportunity to do so. I thank you for this opportunity to discuss agriculture in Wales so soon after the Christmas break. It was soon after coming back in the autumn that we felt it necessary to raise the subject in the House, and you were kind enough then to accord a debate to my hon. Friend the Member for Ceredigion (Mr. Dafis). It is a reflection of the continuing crisis in Welsh agriculture that we once again have to return to the subject.

We departed for the Christmas break to the sound of the ministerial statement on Monday 22 December. We return with its echoes still ringing. The concern of farmers in Wales remains equally acute. I represent a largely rural constituency, where the traditional family farm is the backbone not only of the agricultural industry but of rural life in general. The collapse of the family farm would lead to a collapse of the fabric of rural Wales and cause not only economic problems but environmental and social problems.

The industry in my constituency is mainly livestock. Much of it is on hill or marginal land. Much is subsistence farming with relatively low incomes. It has been said that 40 per cent. of eligible families in agriculture receive family credit in my constituency. That is a reflection of the level of income of farmers and their families. I can personally testify that the present crisis is the worst in agriculture in my 24 years in the House. It is the worst in living memory for many people. The figures for 1997 that have been estimated by the National Farmers Union show that there has been a 47 per cent. reduction in farm incomes in 1997 in real terms. That reflects the size of the problem.

The crisis is all the more acute because so many sectors seem to have been hit simultaneously. In previous difficult periods, some farmers were able to move from one sector to another--perhaps dairy to beef, or beef to sheep. Today, there is no scope for such action. All the sectors are in acute depression. To make things even worse, several factors have come into play together, as if conspiring to hit farmers when they are down. They include the direct and knock-on effects of the BSE crisis, the continuing ban on beef exports and the grossly over-valued pound, which brings in cheaper imports, makes it more difficult to export and adversely affects the parity of the pound against the green pound. The price of

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milk to farmers has fallen by more than 20 per cent. in the past year, and the loss of compensatory and support measures has also hit farmers. There have been increases in several, if not all, input costs, and costs have been imposed by the Government on farmers and continue to escalate. On top of all that, this Christmas, many farmers, especially in my constituency--this is especially true of dairy farmers--have been hit by electricity failures which prevented them from operating milking machines and keeping milk at the required low temperatures. I shall refer to each of those areas of difficulty in turn.

The beef export ban must be lifted. Welsh beef is as safe as any produced anywhere in Europe. It is safer than much that is imported from other countries. Cattle prices in Wales in November 1997 were down 27 per cent. compared to November 1995. I have a graphic example from a farmer in my constituency, Mr. Harri Parry of Glanllynnau, Chwilog near Pwllheli, who came to see me in my surgery last Wednesday. I have his permission to quote his case. He farms 182 acres of lowland just outside Pwllheli and is mainly involved in finishing cattle; he has some sheep as well. He has given me examples of the prices that he has paid and what he has received for his finished product. For example, a steer bought in November 1996 for £245--after the BSE crisis had started--was sold in December 1997 for £304. During that period, Mr. Parry had to meet the cost of feedstuffs at £80, transport costs of £18 and interest on the capital cost of the animal at £25. In other words, if one takes all those costs into account, he made a loss of £64 on that animal. That loss was made even before he had paid anything towards the rent on his farm or towards his labour.

That example is a reflection of the problems that face many farmers. My constituent told me that, two years ago, he just about broke even. Last year, he made a net loss of £15,000, and this year he expects things to be as bad, if not worse. He survives because his wife is a teacher and they take in some visitors during the summer. His case reflects the size of the problem that faces farmers, and quite frankly the Government's package of aid announced in December will not help that farmer by one penny.

The BSE crisis has been a major shadow behind the difficulties encountered by farmers in the past 21 months. I should be grateful if the Minister could tell us about the progress that has been made so far in Brussels, and possibly the progress that may be made today to lift the ban on beef exports from Northern Ireland. I should be grateful to know the possible effects that that may have on progress towards lifting the ban in Wales and elsewhere.

It is also important to consider the impact of beef imports from the European Union. Between January and August 1997, they increased by 63 per cent. compared with the same period in 1996. Resentment is felt in the agricultural fraternity and elsewhere that imports of beef of doubtful quality are coming to this country from other parts of the world. It is also important to consider the policy that is followed by public sector purchasers of meat in Wales, such as schools and hospitals. I urge them to purchase home-produced products rather than imports.

Mr. David Hanson (Delyn): I am sure that the right hon. Gentleman will welcome the news that I have received today that the Glan Clwyd hospital trust,

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which serves my constituency, has announced that it will buy only British beef this year. It is trying to secure such products in future years.

Mr. Wigley: I welcome that statement from the trust. I heard a similar statement from Ysbyty Gwynedd acute hospital trust when I visited it last week. We need to exert pressure on public service purchasers to buy British beef.

It is outrageous that the Ministry of Defence, which plays its war games over the land of the Welsh farmers, should buy its meat from overseas. That matter caused controversy just yesterday, and I know that it has resulted in incidents in the constituency of my hon. Friend the Member for Ceredigion.

There is a strong feeling that the pound is over-valued and that has had a hard-hitting effect on other sectors as well as agriculture. I believe that over-valuation is a direct result of interest rates that are set too high. Again, that hits farmers with capital borrowings. Farmers are suffering in all directions not only because of what they have to pay for their loans to facilitate their work, but because the high value of the pound also hits exports and encourages imports. The Government should change their economic policy to reduce the parity of the pound, which would help the manufacturers of food products to export as well as improve the position of the green pound parity.

In the meantime, we must try to obtain the maximum benefit possible from the compensation available from the European Union. There is a fund of £980 million of aid on offer over a three-year period; half of that money is payable from the EU whether or not the United Kingdom contribution has been paid.

Mr. Richard Livsey (Brecon and Radnorshire): Does the right hon. Gentleman agree that it is also ironic that British taxpayers have paid out for some of that compensation in their contributions to other countries in the EU? Does he agree that meat exports from the EU are having a hard-hitting effect on Welsh farmers because British taxpayers are subsidising European producers to undercut our domestic market?

Mr. Wigley: Yes, that is absolutely incredible. All other eligible EU member states have taken advantage of that benefit package, which, as the hon. Gentleman has rightly said, is partly funded by United Kingdom taxpayers. The message from Welsh farmers to the Government about that EU fund is, "Go for it." That possibility should have been stressed far more strongly in the measures announced in the December package.

The dairy sector is also facing a crisis as a result of the reduction of about 5p per litre in the price paid to many dairy farmers compared with the price paid in the best time last year. No other industry could absorb a cut of such magnitude. The price of some animal feed may have dropped by between 1 and 2 per cent., but other component costs such as transport have increased.

Farmers will be driven from milk production unless there is some change in policy. Young people are just not prepared to enter an industry where long hours, sometimes anti-social ones, are required if the rewards are not guaranteed. They would have to be on the farm constantly, day-in, day-out, week-in, week-out because of

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their obligations towards their dairy herds. They are not willing to enter such an industry when the rewards are so low--they may just break even.

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