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12.1 pm
Mr. Howard Flight (Arundel and South Downs): I am grateful for the opportunity to refer to seven issues that have been raised by the horticulture industry in my area. West Sussex is one of the largest areas of activity in the industry, with several thousand employees, many of whom are from my constituency. The area concentrates on the glasshouse side of the industry, which requires heavy capital investment. The smaller producers can survive only in a niche environment. Many of the large producers, who already use robotics and other new production methods, are trading at very narrow margins, despite having taken all the business decisions that they can to survive.
The minimum wage and working time directive have added substantial costs to the industry and brought confusion and conflict with the Agricultural Wages Board. Those problems need to be sorted out. The glasshouse industry feels that the Agricultural Wages Board is no longer relevant to it.
Finance at universities has been mentioned. The Ministry of Agriculture, Fisheries and Food has contributed £1.5 million a year and PhDs have been regarded as crucial conduits into the new technology aspects of the industry. That finance is being phased out, but the same conduit is needed if we are to keep up.
I am advised that there are delays in getting new and better pesticides because of the high cost of label registration, which can be up to £50,000 per registration in this country, as against £6,000 in France and only £1,000 in Spain. There should be no political divisions over EU harmonisation on that issue. As has already been said, the industry does not regard the proposed pesticide tax as necessary, because it is already minimising the use of pesticides. There is a particular problem with methyl bromide, the steriliser of land, which was to be phased out in 2005. The Government have advanced the date to 2000, but there is no replacement for that product. If one is not available by 2000, the ban will have to be deferred.
We have had problems of foreign produce, grown with pesticides, appearing in local boxes and being mistested in supermarkets and identified as UK-sourced. Surely supermarket testing should be done at the depot so that it is clear where produce has come from. The rules on pesticides are more lax elsewhere. Consumers should know whether the food that they buy in the supermarket has been grown under the higher standards in force in the UK or has come from somewhere else with lower standards.
I am delighted to hear that the Scilly flower industry is doing well. Flowers are a huge growth industry at outlets, increasing by more than 30 per cent. per annum, but UK grower participation is stagnant, if not declining, because of the different levels of VAT in Europe. I believe that 11 member states have substantially lower VAT rates on flowers, making it hard for our producers to compete. The high-tech flower growers in my part of the world have margins of less than 2 per cent. They will not be investing any further capital. We have also heard about clear cases of planning getting in the way of productivity.
Mr. John Hayes (South Holland and The Deepings):
I am delighted to be able to contribute to the debate. I thank my hon. Friend the Member for Daventry (Mr. Boswell) for securing it.
My constituency is richly horticultural. It can justly claim to be the food production centre of the UK, although other hon. Members might contest that--I see one or two waving their heads about--and claim an equal share to that title.
As well as food, my area produces a large number of bulbs and cut flowers. Many people are familiar with the Spalding flower parade and festival. The skills, enterprise, energy and initiative that contribute to that advertisement for my constituency are also prevalent in the horticultural enterprise there. A great deal of innovative and imaginative work is going on in the cut flower and bulb industries, from both glasshouse and outdoor producers.
Against that background, I should like to raise three points in the few minutes at my disposal. The first concerns research and development, which has already been mentioned. I am sure that all hon. Members share my welcome for the Government's commitment to the Horticultural Research Institute at Kirton. However, I have two questions for the Minister. How does that £1.7 million investment compare with our principal competitors; and will the project be extended when it reaches the end of its life? We are in the fourth year of a five-year programme. What plans are there to extend the project or replace it with something similar?
My second point is on marketing. We have heard a lot about the need for collaborative marketing, which I endorse. Although the UK is the home of gardening, the industry is sometimes seen as small scale and peripheral compared with those in Holland and other countries, so it requires Government support. I think that the industry would acknowledge that the HDC is doing an excellent job, even though levy-based organisations are never particularly popular. However, we need marketing funds and programmes to allow our industry to take advantage of some of the export opportunities in Europe and elsewhere. The HDC should be given a boost by Government support.
My third point is about competition. Part of the problem is that many of our competitor countries enjoy more indulgent fiscal regimes. Payment terms are more generous and it is easier for their industries to start up, to survive and to export. Spanish producers of apples, strawberries and cauliflowers are nibbling away at the edge of our market because of their climatic advantage and putting our producers under enormous pressure.
Some say that the answer is to opt for niche market specialism, but that makes producers more fragile. Relying on a targeted niche market means that a producer cannot go in and out of a product according to economic circumstances. The ability to switch products year by year has always given growers and farmers financial and economic insulation. The focus, targeting and capital investment that niche market production necessitates removes that.
Finally, on the subject of retailers, I can say little that has not been said already, but I want to amplify some of the comments made by hon. Members on both sides of the House. Surely it is wrong that the profit margin of a typical retailer, for example, a supermarket, in the ornamental cut flower market can be between 25 and 30 per cent. when the pre-packer and the grower are making between 2 and 5 per cent. profit--a generous estimate in many cases. It is nonsensical that contracts setting retail prices cover periods of between six months and 18 months, regardless of any changes in cost prices; and that the consumer therefore pays the same price, regardless of the plight of the producer.
Mr. James Paice (South-East Cambridgeshire):
I congratulate my hon. Friend the Member for Daventry (Mr. Boswell) on having obtained this debate--I cannot remember when we last had a debate solely on horticulture. The industry is a large one, running from field-scale vegetables and salad crops--for example, hundreds of acres of celery, lettuce and other salad crops are grown in my constituency--to ornamentals and nursery stock. There are many issues that affect the industry; some are unique to individual sectors, whereas others are more general.
Let us examine the overall health of the industry. As my hon. Friend said, it operates mainly in the free market. It receives little or no support from the British Government or from any other European Government, although the European aid for marketing schemes for producer groups is welcome and I am glad that the take-up rate has been high. This week's edition of "Horticulture Week" reports that the findings of the latest Plimsoll portfolio analysis of horticulture show that 27 per cent. of companies failed to make any profit in 1997; and that an examination of accounts from slightly more than 2,000 horticultural companies shows that 591 companies have above-average borrowings and three quarters of the latter are in financial difficulties. The overall picture of the horticulture sector is not entirely one of blooming roses, although some sectors have done better than others.
Horticulture is important to the British economy and to trade--the figures have already been quoted, so I need not repeat them--but some sectors have now been contracting for several years. That contraction is most severe in the top-fruit sector: apple output has declined by almost one third over the past 20 years, and the area covered by apple orchards has almost halved. Apples were once grown extensively in my constituency, but there are now only a few vestiges left of the old orchards. This country is now only 36 per cent. self-sufficient in apples. Tomato output is fairly stable, but our self-sufficiency is now only 28 per cent. and continues to decline, despite huge investment in new glasshouses, such as the one opened last summer by the then Minister of Agriculture, Fisheries and Food, the right hon. Member for Copeland (Dr. Cunningham), which is the largest in the United Kingdom. We have to look for ways both to arrest the decline in those sectors and to help other sectors to thrive.
Yesterday, the National Farmers Union ran its "proud to serve British" reception in the Members' Dining Room of the House of Commons. At that event, Lord Donoughue, the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, lauded British produce, which was welcome; however, as my right hon. Friend the Member for Fylde (Mr. Jack) said, the Minister's record on supporting horticulture on other occasions is lamentable. An article in the journal "Fresh Produce" dated 16 October 1998 starts:
Our fair deal for farming campaign applies equally to horticulture. Imported fruit and vegetables should be produced to the standards required here: no produce should be imported into this country for British consumers if it has been treated with chemicals that are banned in this country. I hope that the Government will take action to ensure that that happens.
That brings me to the subject of the pesticides tax. We realise that that proposal is driven by the Treasury and the Department of the Environment, Transport and the Regions, but I hope that the Minister will tell us what MAFF's attitude is. In Whitehall, is the Ministry standing up for farmers and growers? Is it being made clear to the Treasury that no farmer or grower uses expensive pesticides unnecessarily; and that a tax will not reduce pesticide usage, but will merely raise growers' costs? It should also be borne in mind that consumers might not want the misshapen or slightly less attractive produce that may result if the use of pesticides is reduced or abandoned.
The main issue mentioned by almost every speaker today is the impact of the minimum wage and the working time directive, especially in respect of casual workers, who are extremely important to the horticulture industry. Such workers have been recognised by the Agricultural Wages Board for many years. They are engaged to work by the hour or by the day; there is no continuity of work guaranteed; and they are paid by the day, often through
piecework rates. Only if they are employed continuously for 20 weeks do they become classified as being in regular employment.
Such workers are drawn from sections of the population who actually want to work in that way. Many of them are itinerant people: in my area, travellers coming to pick crops in the right season are part of our history. However, there is a particular group, mentioned by my hon. Friend the Member for Faversham and Mid-Kent (Mr. Rowe), of workers who operate under the terms of the seasonal agricultural workers scheme. They are foreign students, mainly from central and eastern Europe, who come to this country with Home Office consent under a scheme that is registered by the Home Office as a youth mobility and cultural exchange scheme. Ten thousand such students come each year and many employers, including some in my constituency, employ tens or even hundreds of them, often providing accommodation for them as well. Without those workers, lettuces would not be cut and fruit would not be picked.
The simple fact is that those students want to work. They are motivated by a good work ethic and by sums of money that they could never dream of earning at home. The money they can earn in one summer here can set them up for life, enabling them to buy a house in their home country. It has been impossible to obtain British workers for those jobs, despite sterling efforts by the Employment Service, which I encouraged when I was a Minister in the Department of Employment.
That scheme is now under threat: the AWB proposes that, after 13 weeks, such workers should cease to be classified as casual and the working time regulations and the minimum wage be brought to bear. Let me quote from a briefing kindly given to me by Boxford Suffolk Farms Ltd., which is a large producer of top-fruit used for Copella apple juice. In 1998, it employed more than 1,500 people under the scheme to help with the harvest. The company states:
"Probably the least surprising feature of next week's Marden Fruit Show is that horticulture minister Lord Donoughue will not be attending."
It notes that the Minister
"has consistently dodged trade events . . . since he took up office."
That does not smack of great support from the Minister with responsibility for the industry.
"The present procedure is for the worker to sign the Daily Work Sheet on the field at the beginning of the day, but they are then free to work the hours that they want, when they want and for however long they want. If they feel like walking away and not returning then they are free to do so . . . This is how the majority of the casual workers like it, it gives them flexibility.
The company also sent me a costing, although the House will be relieved to hear that I shall not go into the details, because I must allow time for the Minister to respond to the debate. Based on the 1998 statistics, the company has worked out that there would be an overall increase in the per head cost of employing such students of 34.5 per cent. No business can afford that, so the proposed changes jeopardise the industry's ability to get the crops harvested.
However, if we are now to pay holiday pay then this will have to be carefully monitored thus adding cost and administrative burden to the operation. If, indeed, it is possible to police at all."
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