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Mr. Brown: I never lecture people on how to run their businesses. It is the Government's responsibility to set the framework of public sector support to enable businesses to flourish within it. We have to set the support lines rationally. Last week, I announced extra support for the organic sector and it has been widely welcomed.
Mr. Robert Jackson (Wantage): In the spirit of constructive proposals, I am concerned about the role of the banks in relation to the pig industry. Economists talk about the hog cycle. We are now at the bottom of the hog cycle, which is at a very depressed level. The banks are being accommodating to pig producers at the moment, partly because the stock, if it were to be sold, would be valueless. However, it is possible that when the cycle begins to move up, as it will, the banks will foreclose. I invite the Minister to take the initiative and try to persuade the banks not to foreclose. If they do, they will simply accentuate the peak of the hog cycle and make the situation worse.
Mr. Brown: The hon. Gentleman has raised a very important point. I have met the heads of the agricultural divisions of most of the main high street banks and most specialist banking institutions. There is one important exception, but I am having a meeting there next week. I find it easier to meet banks individually rather than collectively because discussions are more candid. At each meeting, we have taken a hard look at the issues that the hon. Gentleman has raised and I have made my representation that it is important to take account of the whole cycle. As prices rise in some sectors and producers return to profitability, debts will have to be repaid, not least to the suppliers of feedstuffs. I shall continue to make these points. I should say that the response from the banking community has been very constructive.
Mr. Andrew Welsh (Angus): Will the Minister address the problem of unfair competition? How can our pig industry compete with cheaper imports which are not subject to our animal welfare regulations? What can he do, especially at a time of European over-production, to create the fair and level playing field that we all seek?
Mr. Brown: Let me set out my analysis of the problems before making some specific comments about the pig sector. I recognise that of all the livestock sectors, the one that is most deeply in crisis and which has been through the most difficult time is the pigmeat sector. I want to do what I legally can to help, and I have some proposals in my speech. I hope that the hon. Gentleman will forgive me if I make my analysis in order.
First, I shall deal with the external factors to which Governments have a duty to respond. We cannot directly shape them. The loss of key world markets and, in particular, the impact for the United Kingdom beef sector of the continuing ban on exports are significant factors in the present difficulties. There are also difficult terms of trade in European Union and world markets, and for some sectors--such as sheep finishers--weather and farming conditions have posed additional difficulties. However, we also have to recognise that the difficulties reflect in part structural surpluses on the market, which have highlighted the effects in some sectors of the normal production cycles. Although those issues are notoriously difficult in the livestock sector, there can be no solution which leaves supply in excess of demand.
The Government have taken a series of steps--I absolutely reject the charge of complacency--within the constraints posed by the common agricultural policy to address the difficulties faced by the livestock sector. Our policy is underpinned by three key principles. First, where short-term financial help has been needed, we have given it, but in a form not likely to stimulate further over- supply; secondly, wherever possible we have taken steps to champion and underpin the undisputed quality of British produce; and, thirdly, where we could reasonably make trading terms easier, we have done so.
We have provided financial help, using the mechanisms at our disposal to offer special aid to the livestock sector in January 1998 and again in November 1998, to a total of £200 million for the beef, sheep, dairy and hill sectors. In individual sectors, we have eased the conditions of trade by removing the obstacles to exporting whole sheep carcases to France, and we have supported and actively pursued the European Commission in its action to underpin the pigmeat market. I shall say more about that in a moment.
We succeeded, where the Opposition failed, in securing political agreement among our European Union partners--first, to the export certified herds scheme for Northern Ireland, and then to the date-based export scheme. This paves the way for the resumption of beef exports from the UK.
We have responded to market developments. In February, recognising the continuing difficult conditions faced in the dairy sector, we extended to the end of July 1999 the calf processing aid scheme. That controversial decision was welcomed by the dairy sector and is worth some £9 million to the industry. In answer to the hon. Member for South Suffolk (Mr. Yeo), I cannot hold out the prospect of it being further extended.
We have acted on an EU decision allowing us to make early payment of some £100 million in EU subsidy to beef producers--a step which I know helped to ease the cash flow difficulties suffered by many. We have championed the quality of UK products, bringing together all the sectors of the food chain with a view to ensuring that UK producers secure the premium that they deserve for their products, and securing valuable agreements from the British Retail Consortium on the labelling of meat and the sourcing of pigmeat.
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy):
With regard to the date-based export scheme, my understanding is that only three out of 12 abattoirs have shown an
Mr. Brown:
The scheme will of course be driven by market judgments. We have made a good start. The Meat and Livestock Commission inspected three abattoirs last week--one in England, one in Scotland and one in Northern Ireland. I accept that there is not one in Wales, but as exports resume and the export market grows, I am sure that others will become interested, and we stand ready to facilitate their entry into the date-based export scheme. Some in the industry, however, are stepping back and waiting to see how the markets develop before making a decision. It is important for us to make a start and we are proceeding on our timetable. The key hurdle was to achieve the political agreement to make a start and we did that last November.
The December Council of Ministers agreed to reform the agrimonetary regime, which this year is worth some £95 million to UK recipients of CAP livestock direct payments in measures to smooth the transition to the single currency. Over its lifetime, depending on currency movements, it might be worth some £140 million to the industry. The agreement was quite hard to achieve and we should be proud of achieving a 100 per cent. deal for the United Kingdom, as we could hardly do better.
In March, we secured an additional 100,000 head in beef special premium rights for the UK, to apply from 2000 and to remain as long as restrictions on export from the UK beef market persist. The UK beef industry identified that as a priority when we consulted it on the Agenda 2000 proposals. We made it a negotiating priority and achieved it.
I have looked hard at the burden of costs on the industry. I have no quarrel with the hon. Member for South Suffolk for raising the issue. My predecessor ensured that the Government met the costs in 1998-99 of Meat Hygiene Service enforcement of controls on specified risk material from cattle and sheep at a value to the industry of £35 million, and bore the start-up and first-year running costs of the new cattle tracing system--a system underpinning key guarantees on the quality of British products--at a value to the beef and sheep industry of a further £35 million.
We have successfully lobbied the Commission--in recognition of exceptional weakness in the sheep sector--to open tenders for private storage aid in the UK on two occasions during the 1998 marketing year. This provided support to the UK market for lamb to the extent of about £3 million.
We have committed £1.85 million in grant aid over three years to the assured British meat scheme--an initiative to drive through new baseline standards in the red meat sector, from farm to plate. I attach enormous importance to that and I invite the hon. Member for South Suffolk to join me in supporting the farm assured schemes. It is not a political matter. The hon. Member called for clear labelling to enable consumers to identify produce that is UK-sourced. The labelling scheme launched by the Meat and Livestock Commission does
exactly that.This is not a party political point; we should be able to join in support of the MLC's work.
Mr. Richard Livsey (Brecon and Radnorshire):
I agree with the Minister on the farm assured scheme. The problem in the livestock industry is that prices are still depressed and farm incomes are low. The Minister will visit the Farmers Union of Wales shortly. The farm management survey shows that some categories of beef and sheep farms in Wales earned only £48 last year. My calculations for some of the upland farms show that earnings are £2.60 an hour, £1 lower than the national minimum wage. What will he tell them about how market prices will improve so that their incomes improve?
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