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1 Feb 2000 : Column 172WH

Pig Industry

12.30 pm

Miss Anne McIntosh (Vale of York): I am grateful for the opportunity to initiate an Adjournment debate on the crisis in the pig industry. This is my debut appearance in this Chamber. Today's debate is especially timely, because it coincides with the National Farmers Union annual conference. Pig farms face unprecedented hard times and a complete lack of sympathy and understanding of the crisis in the countryside from the Government. That was displayed most recently by the Prime Minister this weekend, although he was, perhaps, slightly more sympathetic in his speech at the conference today. I invite the Prime Minister, as part of his tour of the countryside, to visit the Vale of York, meet local pig producers and witness their plight for himself. A glimpse of the reality in North Yorkshire would quickly change his tune.

The British pig industry is the innocent victim of the bovine spongiform encephalopathy regime. Simply removing meat and bonemeal articles from the animal food chain adds a cost of more than £5 per pig. Prices in the United Kingdom are depressed, as the Prime Minister today recognised. We face cheaper imports and a strong pound. The Government have failed to pay agrimonetary compensation for the high pound and the weak euro.

In addition, on 1 January, the UK unilaterally imposed a sow stall-and-tether ban. All other European Union countries, including our main competitors, Denmark and Holland, will face the ban only six years hence, on 1 January 2006. The cost to the UK producer of that one measure alone is estimated to be £220 million. That is unfair, and puts UK producers at a competitive disadvantage, as Dutch, Danish, Belgian, French and German producers are not expected to comply.

As a result, pound for pound and kilo for euro, British pork prices will increase, and the price of continental competitive imports will be reduced. Those disadvantages are aggravated by the increasingly strong pound and the crippling additional costs of implementing the European Union integrated pollution prevention and control directive, which will have a singularly negative impact on the UK pig industry. Early conservative estimates suggest an initial start-up cost of £18,000 a farm, and annual running costs thereafter of £6,000, equating to £1,200 a day, which will add an extra £2.50 to the production of each pig in this country. The annual cost of implementing the integrated pollution prevention and control directive in this country alone is estimated to be £13 million.

A three-pronged attack is the very least that the Government should consider. A one-off Treasury grant should be made to pig producers in order to restructure the pig sector--not to subsidise pig farmers' incomes, which is strictly forbidden under EU competition rules. The Prime Minister invites pig producers to diversify, but how can they afford to do so in the present crisis? They merely want a Treasury grant on a strictly comparable basis to those provided in other EU countries, such as the Belgian national aid provided to restructure the market in the wake of the dioxin scandal.

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The aid scheme that pig farmers envisage would offset the cost of BSE-related measures that have been imposed on the pig industry on public health grounds. There was a general belief, which the Government encouraged, that the Commission received such a package from the Government last year. I received a letter from the European Commission dated 11 November last year, formally notifying me that no such package had been received. A gentleman whom I am sure the Minister knows extremely well, Mr. Legras, the director general for agriculture, wrote:

There has been some movement today. BBC News Online states that the Prime Minister said in a speech to the National Farmers Union conference this morning that he

    "did not rule out the possibility of cash help for the beleaguered pig industry" and was

    "prepared to listen to ideas." However, he went on to say that

    "while investment could help, it had to be tied to long-term change and reform."

Commissioner Franz Fischler, in correspondence with pig farmers nationally, had indicated that such a package would be favourably viewed, provided it did not cause distortion to the market. In his letter of 9 December 1999, he set out the acceptability of state aid being granted to compensate British pig producers for higher production costs for pigmeat resulting from restrictions on disposal of offal. In the past, such aid from the UK to pig farmers was authorised by the Commission under article 87(2)(b) of the treaty, as an exceptional occurrence intended to make good the damage caused by the BSE crisis. If the Government are to reintroduce such aid, they must prove that the losses that are being incurred by UK pig producers are the direct result of an exceptional occurrence recognised by the Commission, and are not due to other factors.

I am dwelling on the matter in some depth because I was a trainee in the Commission's competition directorate, and perhaps more familiar with the terminology than are many hon. Members. In his letter of 9 December, Commissioner Fischler set out an alternative head of aid. He stated that aid to facilitate development of the pig sector must be justified under article 87(3)(c) of the treaty--that is, to help to restructure the industry to meet changed market conditions.

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There seems to be some convergence between the Prime Minister's hopes and aspirations for pig farmers and the requests that pig farmers wish to submit to the Government. I fully accept that aid that is simply intended to offset current trading losses is unacceptable. Given the exceptional circumstances that those in the pig industry have endured for at least the past six months, I make a plea to the Minister--and, through her, to the Prime Minister--to demonstrate the Government's big heart by making a one-off payment to the industry, subject to the European Commission approval that I outlined. That would enable pig farmers to deal with the unprecedented and uncompetitive conditions that they face, satisfy EU criteria and give pig farmers a means of earning their living, now and in future.

Mr. John Swinney (North Tayside): Will the hon. Lady give way?

Miss McIntosh : I welcome the support of the hon. Gentleman, and that of other hon. Members who are here, but unfortunately he did not advise me or the Minister that he wished to intervene.

Will the Government be big-hearted and brave-hearted enough to show an understanding of the crisis and of the despair in the countryside? That would be very welcome in the Vale of York and elsewhere. Today, the Prime Minister invited farmers to diversify, but they simply do not have the funds to do so.

Today's speech by the Prime Minister suggested that there may be some movement in favour of positive animal welfare-friendly labelling. That was welcome. If pork is imported and processed here, the label should say so. Marking the country of origin of pork would assist consumers in choosing which meat to buy. If it does not meet this country's stringent animal welfare criteria, the label should say so, and consumers should be allowed to decide for themselves. Cheaper pork of inferior quality, which is produced under less humane conditions that do not meet our animal welfare specifications, could be introduced.

Working within the parameters of agenda 2000 and the new objective 2 funding I accept that objective 5b status has gone. The possibilities of rural development funds will apply increasingly in the future. North Yorkshire qualifies for a generous allocation of new objective 2 funding. I hope that all hon. Members can work together to ensure that objective 2 benefits North Yorkshire and other regions that have been badly affected by problems in the pig sector. I hope that consideration will be given to certain aspects of rural development policy, and especially to areas threatened by abandonment. I hope that we make an imaginative application of the limited funds available.

I shall now conclude to allow other hon. Members to speak before the Minister's reply. I urge the Minister to agree that there is a crisis in the countryside, and nowhere more visibly than in the pig sector. I invite the Minister to work closely with the pig industry to agree a one-off grant of assistance with the approval of the European Commission. That is not a novel idea; it was successfully pursued by the Irish Government in June 1998, the Belgian Government in July 1999, and the

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French Government, who submitted a £17 million application this year. Farmers in the Vale of York have been heavily involved in the application to the Government, and I would like to pay tribute to Stewart Houston, who farms at Thornborough in Bedale. He said:

    "The industry believes we can put forward a scheme for support which is legal and operable and which Brussels would support." I therefore urge the Government, and the Minister, to save our pig industry and show their human face in recognising the plight of the countryside in general, and of pig farmers in particular.

12.41 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin) : First, I congratulate the hon. Member for Vale of York (Miss McIntosh) on securing this debate on an important subject. She referred to the importance of the industry to her constituency and to her part of the world, of which I am well aware. That is because I have visited the area on a number of occasions, and because of the way in which she and other hon. Members, including some of my hon. Friends, have raised these issues in recent weeks and months. I am also aware not only of the number of pig farmers in her area but of the related pig processing industries and of the work involved in delivering pigmeat and pork products to our supermarkets.

I share the hon. Lady's concern about the pig industry and I hope that, on some points at least, I can respond in a positive manner. I believe that the Government have done a great deal in recent weeks and months to address concerns in the pig industry, although it is true that some of the ideas that have been put forward are difficult to implement. The hon. Lady and I will be especially aware of the reason for that, as we have both been Members of the European Parliament and know the European Commission and the European system. Some of the constraints in agricultural sectors do not receive high levels of intervention and market support. The pig industry, of course, does not come under such provisions. The hon. Lady also referred to certain significant events, especially the annual conference of the National Farmers Union, in London, and the Prime Minister's speech to the NFU this morning.

The pig sector is in serious difficulties; there is no way of disguising that. It is acknowledged by hon. Members on both sides. Although the industry has had to contend with peaks and troughs on many occasions in the past--the cycle of the pig industry is well known--the current crisis is deeper and we must take certain special factors into account.

Miss McIntosh : As the Minister said, pigmeat is not a supported sector in the European Union. Would it not be appropriate for the Government to look kindly on the provision of one-off aid? Most of the cost to the pig industry has been imposed by the ban on sow stalls and tethers, by the IPPC directive and by the so-called BSE tax.

Ms Quin : In responding to the hon. Lady, I shall mention each specific sector in turn. The Government

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have proposed specific schemes in recent months, notably the agricultural development scheme. Furthermore, in December the Minister of Agriculture, Fisheries and Food made an announcement about the future direction of agriculture under the rural development regulation.

An important aspect and asset of that development regulation is that it is a way of helping sectors not traditionally supported under the common agricultural policy regime. We welcome the flexibility in the rural development regulation to look at all sectors of agriculture and not only those that have traditionally received a great deal of public support through the common agricultural policy. That point needs to be placed firmly on the record.

UK pig producers contributed to the production increases in Europe in 1996 and 1997. In 1998, our pigmeat production reached a level not achieved for many years. However, when prices started to fall, producers here responded in the way in which they always have, by cutting back on production. That would normally have resulted in shortages of pigmeat, which would in turn have resulted in higher prices. That did not happen for a number of reasons. Production continued to rise in some countries, and, even now, after nearly two years of crisis, production levels in countries such as Denmark, Ireland, the Netherlands and France have only just started to fall. Consequently, large quantities of pigmeat are available on the market at very low sterling prices. The hon. Lady mentioned the problems for pig producers caused by the high level of sterling and the low level of the euro during the past year.

UK production still attracts a premium, and we are still net exporters of pork. It is important that those calling for disruptive action against legal imports should bear that in mind, as they may not realise that any retaliation would affect many pig producers still exporting pork products.

Mrs. Teresa Gorman (Billericay): Can the Minister confirm that the competition from abroad is not subject to the same humane restrictions that are imposed on our pig industry? Will she also confirm that, since those restrictions are imposed by our own Government's requirements, there is a strong case for the industry to be given special support?

Ms Quin : I shall come to those points, which the hon. Member for Vale of York raised in her speech.

Mr. Swinney : I wish to develop the point raised by the hon. Member for Billericay (Mrs. Gorman). Will the Government consider raising consumer awareness of the higher quality of produce created in this country? That would enable shoppers to make a more discerning choice between pigmeat produced here and imports from overseas that may be of inferior quality.

Ms Quin : That is an important point on an issue on which we have been active for some time. I hope, if time permits, to list the initiatives that we have taken in that direction.

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The industry in Britain faces problems that our competitors in the European Union and the rest of the world do not. There is no doubt that the BSE crisis has caused the pig industry difficulties. Ironically, at the beginning of the crisis the pig industry, which the hon. Member for Vale of York described as an innocent victim, was an innocent beneficiary. As we know, for a considerable time there was much lower confidence in beef, and many consumers switched to pork and pigmeat. We are all glad that British consumer confidence in the beef industry has been restored, but that has involved a switch in consumption back to beef, which has added to the pig industry's difficulties.

The BSE crisis also resulted in strict health controls that are not mirrored in other countries. There has been a great deal of discussion with the European Commission to look at ways of assisting the industry to combat the effects of the BSE tax, as the pig industry has started to call it. Indeed, the hon. Lady referred to what my right hon. Friend the Prime Minister said in his speech to the NFU this morning about the pig industry.

However, the hon. Lady did not give a fair account of our contacts with the Commission. She quoted a letter that she had seen from the European Commission. Another from Commissioner Fischler to the head of the NFU confirmed our contacts in the autumn. However, even that letter did not convey the whole picture, because I had meetings with the National Pig Association in December, and further contacts took place subsequently between the United Kingdom permanent representative in Brussels and various Commission officials.

My right hon. Friend the Minister of Agriculture, Fisheries and Food, the Minister for Agriculture and Rural Development in the Northern Ireland Executive and I met Commissioner Fischler only a week ago, at the time of the Agriculture Council in Brussels, specifically to talk about the pig industry. There have been a number of contacts and we continue to be willing to work with the industry to find ways forward, but the rules cause difficulty. I do not want to be partisan, but in many ways it is a pity that the effects of the BSE crisis on the pig sector were not identified in contacts with the European Commission at the beginning of the crisis in 1996. As a result, it has been much more difficult to argue for aid subsequently, as it was not part of the crisis measures relating to BSE that were introduced at the beginning.

Miss McIntosh : Will the Minister give way?

Ms Quin : I am sorry, I shall not give way, because I want to refer to some important issues that the hon. Lady raised.

The consumer is a significant factor to take into account. In an intervention the hon. Member for North Tayside (Mr. Swinney) referred to the quality and standards of our pigmeat production, and the hon. Member for Billericay (Mrs. Gorman) talked about our animal welfare standards. As we are part of the European market and net exporters of pork, we cannot and do not want to take illegal action against imports. However, although the animal welfare regulations, which are important in the pig sector, were introduced with cross-party support in the House--one of the

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colleagues of the hon. Member for Vale of York, the hon. Member for Boston and Skegness (Sir R. Body), introduced them in 1991--if we are to introduce stringent and welcome animal welfare regulations, it is sensible to agree them as soon as possible, at least at European level. If we impose stricter, although welcome, standards on ourselves, given European rules, our producers may find themselves with higher costs than our competitors. I welcome the fact that the laying hens directive is an animal welfare regulation that we are taking via the European route, rather than simply via the national route. It is important to bear that in mind.

We have taken a lot of action on misleading labelling. Labelling is crucial, as the hon. Lady said. I commend the work of our verification officer in the Ministry of Agriculture, Fisheries and Food and Mike Roper, who has been working with supermarkets, caterers and retailers to tighten the labelling on British pork and has worked for wider recognition of the quality and welfare standards of our own product. I believe that we have made progress in recent months. During my ministerial visits to supermarkets and retailers, I have been conscious that the pork quality mark is being used more often and that consumers are more aware of the issues than they were. However, a lot more can be done.

At the National Farmers Union conference this morning, my right hon. Friend the Prime Minister said that the Secretary of State would announce a change in the guidance on country of origin marking to avoid consumers being confused by misleading labels and to give them genuine choice. Consumers have no choice if they are misled by wrong information on labels. Consumer choice is precious and we want to advance it. In his speech this morning, my right hon. Friend the Prime Minister gave an example and said that the changes being introduced will mean that Danish pork can no longer be labelled "British" or "Produced in Britain" simply because it had been cured here. We are aware that people believe that it is wrong to label something as having been made in Britain, if only the packaging or the final part of the process is dealt with here.

In response to an intervention, I referred briefly to the agricultural development scheme and the possibilities under the rural development regulation. The agricultural development scheme initially provided £2 million, which has been used by the pig industry to introduce some interesting and worthwhile applications that have been approved. I pay tribute to the work done by Ladies in Pigs--an organisation that has been active in drawing the attention of consumers to our quality standards and providing them with information when they are shopping about labels and the importance of our standards on pork and pigmeat. I am pleased that a successful project under the auspices of the National Pig Association has been approved under the agricultural development scheme. It involves an interesting innovation in training in the pig sector.

Discussions with the industry continue on how to use additional marketing promotional money for the pig sector, particularly in support of a welfare-linked promotion campaign, which is relevant to the points made by the hon. Member for North Tayside in his intervention.

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A number of initiatives show that the Government want a thriving and prosperous pig industry. No Government have a magic wand to make that happen. Pig production is a global industry, but it has

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tremendous marketing opportunities based not just on the price of the product but on quality and the methods used in production. I believe that our industry can put itself into the position to provide that.

        It being One o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

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