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6.38 pm

Mr. David Curry (Skipton and Ripon): I am tempted to begin by recommending to the Government that they take a firm stand against any type of common agricultural policy reform, on the ground that most reformed CAP systems cost more than their predecessors. I recommended to the previous Government that they take that unique stand in their general election manifesto. Although I was not successful in getting that suggestion accepted, history may show that there may have been a grain of truth in the idea.

Even if we were to take the stand that I suggested, we would be in a wholly untenable position, as two great juggernauts are bearing down on the CAP. The first one is enlargement, with which Agenda 2000 attempts to deal. The key element in enlargement is Poland. In determining the future shape of agriculture in Europe, Poland is more important than all the other countries put together.

The second, and more important and inescapable development, is the Singapore round of the general agreement on tariffs and trade, or the World Trade Organisation. It is important to realise the extent to which the decisions that we shall have to make in that round

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have already been conditioned by the decisions that we made in the previous round. The framework has already been set by those decisions.

If the European Union wants to attack world markets and be free to take advantage of, for example, consumer opportunities in south-east Asia and of the productivity gains that remorselessly occur in agriculture--whether or not they are convenient--it must free itself from its dependence on export subsidy. While the EU is dependent on export subsidy, it is locked into having fixed quantities to put on the world market. We effectively have no choice if we want our agriculture to look outwards, towards an international competitive environment.

Of course, farmers will react differently. There will inevitably be a generation gap in agriculture. For some in the dairy industry, particularly elderly farmers who are locked into farm tenancies in difficult areas, the milk quota is their pension. They would be reluctant for quotas to disappear because that is the only pension to which they can aspire. Their sons might well consider the milk quota an imprisonment that prevents them from getting more productivity out of their farm. They may face having to de-intensify and produce less because of the cost problems of having to hire extra staff.

An important third force, which is just as powerful and must be understood, is consumer demand and what the marketplace is asking for within our shores. The demands for traceability, farm assurance, better welfare standards, health undertakings and environmental protection and conservation represent, initially, costs to the farmer; but they are also conditions that he must meet so that the marketplace is willing to take, and will be satisfied with, his product.

Farmers may rail, as I know they do from time to time, at what they see as the iniquities of Tesco and Sainsbury's, but that is futile because the supermarkets are at the cutting edge of consumer demand. They provide one of the major outlets for farmers, and it is in farmers' long-term interests to work alongside the supermarkets and produce what they require.

It is interesting that, in the present circumstances, those pressures come together in a series of outcomes to reform. A move to direct aid divorced from production is, first, the essential policy underlying Agenda 2000. Secondly, it is the key formulation required to achieve a successful outcome in the World Trade Organisation. Thirdly, it is the outcome which most commends itself to environmental and consumer interests. For once, we have the opportunity to square the circle--or, at least, the triangle--by having a method of sustaining agriculture that meets with the approval of consumers and taxpayers, conforms with the requirements of GATT and opens the way for the enlargement of the Community and the eastward extension of the liberal society, which is what almost every hon. Member desires.

We need to work out the scenarios by which we can achieve an effective construct of non-production aids. We have a great deal of experience with relatively small-scale schemes, such as the environmentally sensitive areas and countryside stewardship. I know that in Wales there are schemes that work very effectively. We need a codification or a menu of those schemes, so that, before we take part in the GATT talks and consider the outcomes, we have an idea of the offers that we will be able to put before farmers. That might help us to come

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out of the GATT round with a clear idea of how to use those schemes constructively. That is a proposal which the Select Committee could consider, but it will not be easy.

In the Yorkshire dales, in my constituency, it is obvious that we would want to preserve environmental assets such as stone walls, barn roofs, meadows and woodlands--and in Somerset, the water meadows--but it is less obvious in Cambridgeshire and parts of East Anglia. It is important to begin setting out what environmental aid farmers would be eligible for as we move towards greater dependence on that aid and away from production aid.

I am not an enthusiast for cross-compliance because it is too linked to output, and the two should be divorced. However, I understand that it has attractions as a transitional instrument.

There are implications for reform, and on that point I agree with the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy). We shall inevitably see the development of more corporate agriculture, which, with the demand for agricultural investment, the possibility of expansion, the pressures on costs--including labour costs--and inputs, and the requirements to conform to quality standards, represents a push towards greater size in agriculture.

That development is occurring in the dairy sector, where about 11,000 producers now account for well over 50 per cent. of output, and in pig production, where 80 per cent. of pig meat is produced by 2,000 mainland British producers out of 10,000. It can also be seen in the continuing change in the arable sector: when a farm comes up for sale, the land is sold to the neighbouring farmer and the household to an individual.

Conversely, an expansion of part-time farming is also likely. That trend is already occurring on farms where the income depends on a second source that is not identified with production. We need to sustain and support such agriculture. Agriculture should not be viewed as an activity unto itself, divorced from the wider needs of the rural economy, or as a religious practice, separate from the wider rural community.

The long-term future must depend on market orientation for agricultural output and, therefore, the ability of farmers to bid into programmes. I would not object if we experimented with competitive programmes to deliver environmental and other assets. Indeed, I should be interested to examine--I know that this idea is being discussed in Wales--the possibility of developing social assets, such as farmers' employment and housing, to be capable of being delivered or safeguarded as part of the wider reform of agriculture. I wanted to focus on the long term because I thought that much of the debate would necessarily focus on the immediate concerns.

In the short term, we need for agriculture, as for much of business, a clear path to the single currency set out by the Government. We have a pound that is too high and volatile. We have five tests set by the Chancellor--only one matters, but getting five ducks in a row is not possible for anybody at any time. We have an uneasy triangle between the Prime Minister, the Chancellor and Mr. Murdoch. We have doubts over the period of exchange rate stability before we are eligible to join a single currency.

We desperately need clarification and an indication to the market of the Government's intentions, because the market takes note and deals with the currency in the light

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of those. At the moment, the market does not know what intentions to attribute to the Government. That is a major problem for everybody in the United Kingdom, and farmers suffer most immediately because of the green pound effects. Change is inescapable, but the present coruscating crisis can be alleviated only by the Government accepting their responsibilities.

6.48 pm

Mr. Paul Marsden (Shrewsbury and Atcham): When I read the official Opposition's amendment to the motion, I wondered who had written it because it is misleading and full of errors. I then listened to the right hon. Member for Fylde (Mr. Jack) and realised that he must have had a hand in it because his tub-thumping speech--which was completely devoid of reality--was meant simply to rouse farmers and farming communities by rhetoric, not fact.

I was also amazed at the Opposition's proclamation that the common agricultural policy should be brought under stricter financial control. I agree with that, but I found it a little strange coming from the right hon. Member for Fylde, because, over the 18 years of Tory Government, the UK contribution to the CAP rose by 79 per cent., which meant a net outflow of £2.1 billion from this country. Obviously the right hon. Gentleman has a short memory. I hope that my hon. Friend the Minister can start correcting some of the horrendous mistakes in those finances that date from the Tory past.

Under Agenda 2000, I shall focus on the plight of the rural areas. That, too, has been caused by the Tory Government. Rural areas have been left with 29 per cent. of parishes not having a village hall, while 43 per cent. have no post office. Under the Tory Government, who withdrew investment from local authorities and did not care, post offices, shops and schools closed, and the bus route network collapsed. The Labour Government are now trying to turn that situation round, and I urge the Minister to continue with his endeavours towards an integrated rural policy within Agenda 2000.

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