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The Prime Minister: That is absolutely right, and I thank my hon. Friend for her support. She is right to draw attention to the work that Jeremy Greenstock did in the United Nations over the weekend. He and the team there were quite magnificent and played a great part in securing the result that we wanted.

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Agriculture (Aid)

4.31 pm

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): From swords to ploughshares.

During oral questions on 12 November, I told the House that I would wish to make a statement early this week about the Government's intentions on additional aid to United Kingdom agriculture. I stand here to honour that undertaking.

Since I took office as Minister of Agriculture, Fisheries and Food in July, my colleagues and I have had wide-ranging discussions with farmers' leaders and with working farmers around the country about the problems being faced this year, and how we might reasonably address them. It has become clear that all sectors, but particularly the livestock sector, have been adversely affected by a marked deterioration in market conditions.

The weather has made it difficult to grow adequate supplies of feed for the coming winter and to finish stock. In consequence, animals have had to be kept for longer than usual, and are now coming on to an over-supplied market. The collapse of export markets in Asia and in Russia has exacerbated that situation, leading to further pressures on the United Kingdom market from supplies from countries which would otherwise export to those markets.

Within the constraints imposed by the common agricultural policy, the Government have already taken many steps to offer extra support to farmers. We paid £85 million in agrimonetary compensation to suckler cow and sheep producers at the beginning of this year. We supported the introduction of a European Union private storage aid scheme for pigmeat in the face of a fall of about 50 per cent. in the producer price of pigs. Additional action was taken in Northern Ireland.

We have relaxed the rules on the moisture content of cereals eligible for purchase into intervention, in recognition of the difficulties caused to cereals producers by the wet summer. We successfully lobbied the European Commission to grant two blocks of private storage aid for sheepmeat to help to move lamb on the market. With effect from 8 October, we removed the obstacles to the export of whole sheep carcases to France, and on beef we have successfully negotiated the introduction of the export certified herds scheme in Northern Ireland, and soon expect a partial lifting of the ban for Great Britain.

In addition, we have persuaded the European Commission and other member states to increase beef premium advances from 60 per cent. to 80 per cent. for this year, thereby considerably easing farmers' cash flow problems. We have met the costs for one year of Meat Hygiene Service enforcement of controls on specified risk material from cattle and sheep, and we have met the start-up and first-year running costs of the new cattle tracing system.

I have had useful talks with the retailing sector, resulting in positive undertakings on origin labelling of meat, and on the welfare and feeding standards to apply to purchases of meat, which will be particularly helpful to pig producers. I have also made representations to public sector purchasers of meat.

Not all those initiatives cost money, but those that do have been worth, in total, more than £150 million to the industry, in addition to the continuing support that it

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receives from the common agricultural policy. Discussions with industry representatives, at both ministerial and official level, have persuaded the Government that more should be done to support United Kingdom agriculture in what are proving to be exceptionally difficult times. In recognition of these extremely difficult circumstances, the Chancellor and Chief Secretary have, exceptionally, allowed me access to the reserve for this financial year, and I am grateful to them for that.

In spring of this year, the Government drew down £85 million of agrimonetary compensation for the beef and sheep sectors. There remains the possibility of drawing on a further £48.3 million for the beef sector in the current year. I have asked officials to notify the European Commission today of the Government's intention to draw this sum, and to make it available to producers on the same basis as the beef element of the spring package--that is, to suckler cow producers in proportion to their 1996 premium claims. I do not anticipate any difficulty in persuading the Commission to approve that arrangement. We expect the eventual rate of payment to be about £29.50 per head.

Although those additional payments to the suckler cow sector will be of some help to hill farmers, the Government recognise that more needs to be done to help that fragile sector. We have decided that, subject to approval from the European Commission, we should increase hill livestock compensatory allowances for the 1999 scheme year by £60 million. Although precise headage rates have still to be worked out, we estimate that, broadly speaking, that will allow us to put up rates across the board by about 55 per cent. As is normally the case, the vast majority of producers will receive the increased rates of allowances during February and March 1999.

In the longer term, the European Commission has proposed replacement of the hill livestock compensatory allowance scheme as part of a range of measures in the Agenda 2000 package to assist the rural economy. I intend to undertake full consultation with farmers' leaders and environmental groups on the shape of the successor arrangements.

On 29 July, I announced the Government's intention to close the calf processing aid scheme when the obligation to run it lapses on 30 November. We considered that the scheme was drawing too many calves from the market and squeezing beef producers' margins. However, the Government were asked to reconsider this matter by farmers, who argued that, in the absence of an export market for British beef, closing the scheme now could have adverse consequences for the market.

We therefore encouraged the Commission to review the rate of aid payable under the scheme, and to fix it at a level that would attract the poorer-quality calves from the dairy herd, while leaving the better-quality calves from that herd and those calves from the beef herd to find their own price level on the market. I am pleased to tell the House that the Commission broadly accepted our arguments in this regard, and will shortly publish a regulation fixing a special rate of aid for the United Kingdom under this scheme of 80 ecu, which is around 70 per cent. of the current rate.

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The new rate will come into force on the first Monday following publication of the regulation, which will be either 30 November or 7 December. In view of that, we have decided to continue to operate the scheme for the remainder of the present financial year at the new rate. We shall keep the scheme under review with the industry. I know that maintenance of the scheme will be welcomed by dairy farmers.

This aid package for the livestock sector is worth some £120 million in 1999. In assembling it, the Government have concentrated on those areas to which farmers and their leaders attached the greatest priority.

We also need to think of the longer-term future. Government and all associated with food production in the United Kingdom need to work co-operatively to develop a blueprint for a successful, viable agriculture sector. That means, in particular, securing reform of the common agriculture policy--reform that must create conditions to allow sustainable and competitive European Union agriculture to operate effectively on world markets, reduce the burden currently imposed by the CAP on consumers and taxpayers, and free up resources to offer scope for better-targeted measures to support the rural economy and enhance the environment. That will mean significant changes in the way in which we support agriculture, and will require imagination, flexibility and enterprise on the part of all concerned.

My colleagues and I intend to undertake--in close consultation with all interested parties--a thorough review of the Government's long-term strategy for the rural economy. It will develop policies offering the rural areas a secure future. Over coming months, we shall consult widely on a range of issues. Trading conditions will remain tough in the months ahead, but I hope that this package, and the commitment to generating a vision for agriculture, will give the sector the boost that it needs to face the future with confidence.

Mr. Tim Yeo (South Suffolk): The whole House, and the whole farming community, will warmly welcome the Government's recognition that a grave crisis faces agriculture in general and livestock farmers in particular--a crisis that threatens the survival of many farm businesses. I welcome the Minister's statement, and congratulate him on listening to farming organisations, to many individual farmers, and, indeed, to the Opposition. In a motion that we tabled two weeks ago, we specifically highlighted three measures that he has announced in regard to the calf processing scheme, HLCAs and agrimonetary compensation. I am delighted that he was able to use the intervening period to secure the Treasury's support for those proposals.

We would, however, be failing farmers, and the country as a whole, if we did not point out that, although the measures are necessary palliatives, they will treat the symptoms rather than the causes.

Does the Minister agree that this second farm rescue package in a year is needed because the downturn in farm incomes, like the downturn in the whole economy, was made in Downing street? Does he agree that the level of the pound during the last 18 months has been a far more important cause of falling farm incomes than the weather? Will he confirm that the total value of the package barely matches the underspend on the agriculture budget during the past two years? In other words, the money that he won

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from the Treasury this weekend is really just what had been saved from the total farm budget since Labour came to office. It is welcome, but it must be seen in the context of a drop of more than £2 billion in farm incomes.

Will the Minister confirm that the package will actually be worth less than £2,000 to each of the 60,000 United Kingdom farms that are in less-favoured areas? Will he confirm that, in England, the National Farmers Union estimates that the income of the average farm in a less-favoured area has fallen by £4,700 in this year alone? Will he confirm that many who work on farms in less-favoured areas are earning less than the minimum wage? According to figures relating to the west country, those earnings can be under £1 an hour. Does the Minister realise that farmers need not just cash help, but the level playing field that the Conservative fair deal for farmers would create?

The Minister will be aware of the concern among pig farmers about the contradictions caused by recent conflicting statements from his Ministry and the British Retail Consortium. I fear that his announcement today has added to the confusion rather than ended it. Will he tell us precisely what the positive undertakings he mentioned amount to? For how much longer will British consumers be sold imported meat products that have been produced by methods that are illegal in this country? Why cannot that be stopped now?

Is the Minister saying that, in future, any product that is labelled as British will be grown in Britain, not merely processed here? Does he agree that the poultry industry is also suffering? What does he propose to do to stem the flow of imported poultry from the far east, some of it containing growth promoters that have been banned for years by the European Union? Does he realise that little in his statement clears up the anxieties felt by dairy farmers? Why has he still not announced a lifting of the absurd and unjustified ban on beef on the bone? We wish him well at next week's Council meeting--[Laughter.] Yes, we do. It may be a matter of mirth to Labour Members, but we believe that the country's interests will be served if the Minister can persuade his EU colleagues to lift the export ban.

In that context, will the Minister confirm that, at best, the lifting of the ban will be only partial, and that the export of beef on the bone will continue to be banned? Will he confirm that, in the light of the experience of Northern Ireland, the recovery of our export markets will take some time? As Northern Ireland was helped with export promotion, will he make similar help available to the rest of the United Kingdom?

Does the Minister agree that the heavy burden of regulation on slaughterhouses, for which the industry itself is increasingly having to pay, will lower livestock prices in the future? Is he satisfied that British farms and slaughterhouses are not operating at a disadvantage relative to their European counterparts? Does his statement mean that, from September next year, farmers will be charged for the new cattle tracing scheme? If so, how much will they have to pay?

The package is a helpful aid to the survival of farmers in the short term; but farmers still face huge uncertainties, with Agenda 2000 discussions looming. When will the

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Minister make the Government's position clear on Agenda 2000, and explain to farmers just what role the Government envisage for them in the future?

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