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5.58 pm

Mr. John Hayes (South Holland and The Deepings): The debate has been characterised by an acknowledgment on both sides of the Chamber of the nature and the severity of the crisis facing agriculture. To give the Government credit--it pains me to do so--the Cabinet Office report on rural Britain, which was published in February this year, acknowledges that

There is no doubt about the severity of the crisis.

I am surprised, however, that the report does not address the issue of sparsity in the countryside and specifically does not accept the need--the Government show no sign of recognising this--to allow sparsity to be given greater significance when it comes to the allocation of Government grants and the provision of public services.

Not all the problems are of the Government's making. There is no question but that there are long-term structural problems in agriculture across Europe. Some sectors have

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over-supply--supply exceeds demand--and the beef sector springs to mind. There is unfair competition across Europe and most European countries are unwilling seriously to reform the CAP. Whenever CAP reform is mentioned, we seem to end up with the lowest common denominator or the option to which people are least hostile, rather than the most favoured or acceptable one.

There is no better example of that than Agenda 2000, which was heralded as a great change and significant improvement to the CAP structure, but ended as a fudge and muddle in which the Government are complicit. Agenda 2000 was supposed to bring about a shift from production-led subsidies in agriculture to environment-led payments, but did no such thing, so all the good intentions and exaggeration came to nothing. Amazingly, however, the Berlin summit watered down an already diluted package.

The decision to delay dairy reforms for two years has already been mentioned and was condemned by the Select Committee on Agriculture. Whatever the Minister says, the Select Committee described the decision as disappointing and a bad deal: one does not use such terms except in condemnation. Condemned by the Select Committee, the Berlin summit was an indictment of the Government's ability to argue Britain's case fairly, squarely and successfully in Europe.

The Minister made great play of the CAP's second pillar of rural development. However, there is no clarity about the shift from production-led subsidies to good environmental schemes and measures. Farmers have not been made aware of any comprehensible and enforceable schemes which they can embrace and which can make a seismic change for them.

Many Labour Members--not all--do not understand that farming is more than a business. It is a business, of course, subject to all the normal pressures, challenges and constraints on profitability and cost-effectiveness, but it is also something more, comprising the fabric of our nation and our national identity. Farmers have husbanded and conserved our landscape. Their asset or capital resource is our rural idyll. We must face up to and accept that, and all policy must be founded on that acceptance.

The Government are culpable of certain things, to which they must own up and for which they must take responsibility. One such matter was raised earlier, but I make no apology for amplifying points made about the hyping of aid packages offered to farmers. The first package last September gave nothing to poultry or pig farmers or the arable sector--that is relevant to my constituency, which is principally an arable farming area. The package promised not to impose more charges, but financial aid does not mean saying to someone, "Part of that aid is a charge that I am not going to make, as opposed to what I shall give you." Frankly, presenting an aid package in that way is disingenuous.

Promises were made and expectations raised. The substance, however, was less impressive than all the usual spin that preceded it. This March's package, once again, contained precious little for arable farmers. I do not begrudge hill farmers the support that they have had, as they deserve it. However, little was offered to the arable sector and nothing to cereal farmers facing cereal prices equivalent to those 25 years ago.

Imagine the plight of a tenant farmer. "Diversify," is the Prime Minister's response. Does he not understand that diversification is predicated on location--the type of

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soil or land that one is farming? One cannot grow any crop on any soil. I would have expected the Prime Minister to consider that before speaking in grand terms about diversification, and to ponder the insensitivity of his remark to tenant farmers who have very few options. I accept, however, that that was acknowledged by the hon. Member for South Derbyshire (Mr. Todd) in his most enlightened contribution to our debate.

The Government can also be indicted for their failure to address the retail problem, by which I mean the supermarkets. Farmers and farmers' leaders cannot say so because the supermarkets are their customers. However, it is an open secret that, time after time, supermarkets are unfair and unreasonable with producers. They frequently cheat consumers as well, and have created undiscerning consumers who--with the greatest apologies to Oscar Wilde do not know the price or value of anything and do not even know where it comes from. I shall give a single example: potatoes. When Cornish potatoes and Lincolnshire new potatoes are available, the supermarket buyer's response is to stay out of the domestic market and buy Majorcan potatoes until such time as the British price falls to the point where it is uneconomic for British farmers to produce and sell their product. I could cite scores of similar cases.

Ministers have held long discussions with the British Retail Consortium and Lord Sainsbury is a member of the Government, but they have delivered precious little in terms of obliging supermarkets to treat producers fairly. I refer to the Adjournment debate of 11 March last year, introduced by my hon. Friend the Member for North Norfolk (Mr. Prior)--who I know came to the Chamber when he heard that I was speaking. He described how supermarkets frequently broke the links between local producer, local retailer and local consumer. He described the work of Lady Caroline Cranbrook, whose study found that local shops in Suffolk often bought from local producers, but that large supermarkets frequently did not. The Government must address that problem.

There is no long-term plan for agriculture: we do not know how many producers the Government want there to be in five or 10 years' time; how much production they want; or what relationship they envisage existing between those two elements. The Government have produced no credible business plan for agriculture, and because what plans have been drawn up are not communicated clearly and fairly to farmers, they are left guessing, not knowing what the Government are going to say or do next. The Government give the impression of merely reacting to every new imperative, usually emanating from Europe.

My hon. Friend the Member for Eddisbury (Mr. O'Brien) levelled the next indictment against the Government when he introduced a private Member's Bill that would have enforced proper labelling and obliged retailers to show both country of origin and method of production. It does the Minister of State no credit that she talked out that Bill, which would have provided encouragement to our producers and farmers, clarity to our retailers and satisfaction to our consumers.

The Government are also guilty of frightening rural Britain. The people of rural Britain perceive in the Government a lack of empathy and sympathy with their needs, their aspirations, their customs and their way of life. That might just be a case of bad public relations management--the Government are not particularly good

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at PR and they have been getting worse lately--but it is what the people of rural Britain believe, what they feel in their heart.

That brings me naturally to my conclusion. There has always been a romantic thread running through rural life, inspiring a wealth of literature by writers such as Wordsworth, Coleridge, Hardy and Surtees. However, rural life is also hard, and making a living in the British countryside is tough. People in rural Britain, especially farmers, are dependent on variables that are outside their control, especially the weather. They can live with all that chance and all that risk, but they cannot live with an unsympathetic Government and a meddling bureaucracy in Europe.

The Government's lack of sympathy might result from the fact that their perceptions and character are essentially metropolitan. Perhaps they do not support rural Britain because rural Britain cares about the collective wisdom of ages and about time-honoured habit and custom. However, in the rich earth of my constituency, my fens, my England, there is indeed a richer dust concealed: the dust of generations of farmers, who have built communities, provided gainful employment and, as custodians of our countryside, husbanded our landscape. We owe them a debt, and when that debt is called in, we must not be found wanting.

6.9 pm

Dr. Gavin Strang (Edinburgh, East and Musselburgh): I am happy to follow the hon. Member for South Holland and The Deepings (Mr. Hayes), even though time does not allow me to respond as fully as I should have liked to some of the points he made, a few of which were over the top. However, I agree with him that farming is more than a business. It is vital to rural communities throughout our country; more than that, it is vital to British society, to the British economy and to the quality of our lives and our countryside. It is no accident that, even before we were in the common agricultural policy--of course, all the major decisions are now made at European level--successive Governments of both parties recognised the need to intervene and support British agriculture.

To his credit, my right hon. Friend the Minister of Agriculture, Fisheries and Food acknowledged the depth of the crisis, which is now in its third year. He was right in his analysis of the reasons, as the whole House will acknowledge. First, there is the background of low prices for agricultural commodities worldwide. Secondly, there is the severe disparity between the strength of sterling and the weakness of the euro, which is a double whammy for British agriculture. The Prime Minister rightly acknowledged this week that the situation damages manufacturing industry. It damages agriculture, too, because it makes imports cheap and our exports expensive, but there is an additional factor in that it reduces the amount that farmers get in subsidies.

Thirdly, we have the aftermath of the BSE crisis, which we will be able to discuss when the report comes out. When I had the privilege, as a junior Agriculture Minister, of representing the United Kingdom during the British presidency in the late 1970s, I successfully argued for a derogation on an animal health matter on the grounds that we had higher animal health standards than the rest of the

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European Union. We were able to exploit the fact that we were separate from the continent and had a reputation for having the best livestock in Europe. I hope that our objective will be to re-establish that. It will take time, as our reputation has been severely damaged by BSE, but we should aim to be able to exploit once again the fact that we are an island people.

My right hon. Friend rightly emphasised what is called the rural pillar. There is probably consensus across the House on the general shift of money into supporting the development of the rural economy in its broadest sense. One of the key objectives is to have thriving rural communities. We must not lose sight of the crucial importance of agricultural production. The vast bulk of that production is food but, as we all know, the land can also contribute to our energy needs, and that relatively small sector is likely to grow.

Production is vital. The hon. Member for South Holland and The Deepings can visit a coleslaw manufacturer in his constituency providing 100 or 200 jobs, all of which depend on the raw material that comes from the land in Lincolnshire. Agriculture's importance to the economy, because of the importance of food, should never be undervalued.

We now include organic farming in the rural pillar budget. I congratulate the Government on the additional support that they have given to organic farming, which I am sure hon. Members on both sides of the House will welcome. I address a word of caution to the strong advocates of green policies. Organic farmers have to get the bulk of their income from the market, and the premium that their produce commands over conventionally produced food is vital. It is much more important than the subsidy, which after all is only temporary.

If organic production is expanded too fast, especially through artificial means, the danger is that the premium will be eroded, leading to a regression in organic production. It is true that we import a lot of organic products at present, so there is scope for increasing UK production, but some of the figures that are bandied about--including in an early-day motion that I saw a few months ago--make me think that those with ecological concerns should bear that danger in mind.

I want to pick up a point raised by my hon. Friend the Member for Clwyd, West (Mr. Thomas) and the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd). I refer to the word "modulation". I do not know whether we have Mr. Fischler to blame, but it depresses me that the word has been used to apply to the environmental objectives. I support those objectives, but "modulation" is a technical word. In the development of the common agricultural policy, all the arguments--not just during the early years of the present Commissioner, but under previous Commissioners--were about whether we should limit the amount of subsidy going into large agri- businesses--very large farms.

The proposals for modulation that were put forward in those years were never acceptable to the UK, because a small farm in the UK would be a relatively large farm in some continental countries. However, in my view, that was not an argument for abandoning the policy of modulation. We should consider whether it has a part to play, and recognise that it has been our policy in the

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Labour party for some years to support as many people on the land as practicable--farmers, tenant farmers, owner-occupier farmers and farm workers.

We are making a value judgment. We are saying on social grounds that we want to encourage local farming. We prefer the workers and the farmers to live in the local communities, rather than our land to be farmed by some huge landholding company based in London, with the contractors coming in from 50 miles away and disappearing after a couple of days on the land. I hope that we will not lose the argument.

Large sums of money are going into British agriculture, and there is a case for saying that the issue of modulation, as it was, should not be removed from the agenda. I put it no more strongly than that. A change in the use of the word has no doubt occurred, but the policy and the question whether we should continue to treat large farmers in the same way as small farmers for the purpose of subsidies should be brought back on to the agenda.

With regard to farm workers, reviews are being carried out by the agricultural wages boards. The review by the Scottish Agricultural Wages Board is the responsibility of the Scottish Executive and the Scottish Parliament. Its consultation period has ended before that for England and Wales, but I presume that there is some co-operation, as I understand that both administrations--the Ministry of Agriculture, Fisheries and Food and the Scottish Executive--are using sets of consultants to examine the matter further.

I strongly urge that we should not miss the opportunity provided by the review. We must keep the Agricultural Wages Board. It is vital in terms of skills, and there is no case for arguing that since the introduction of the minimum wage, the board is no longer needed. That was never our policy in opposition. Indeed, I remember campaigning with the Liberal party against a proposal by the Conservative Government to abandon the agricultural wages boards.

I trust that we will maintain the boards, and give careful consideration to suggestions that will be made by the Transport and General Workers Union on behalf of the agricultural workers about the possible scope for extending the Agricultural Wages Board coverage to other groups of workers in the countryside.

Finally--I know that several hon. Members still hope to speak in the debate--with regard to the development of the CAP, we must all recognise that although some useful changes have been made, the challenge remains as to how we reform the CAP to accommodate enlargement. I remember the challenge being posed by Baroness Thatcher when she was Prime Minister, and it has not yet been met.

There is one option that we should not pursue, and from which it seems the EU is now moving away. I hope that it is. It had been suggested that producers in the old European Union, in countries such as Britain, France and Germany, should be eligible for subsidies and investments in their enterprise that would not be available to the new entrants. I do not believe that that is sustainable. It should not be possible in the EU for a large farmer in France, for example, to get a grant for investment while a smaller farmer in Poland was denied such a grant. I hope that that will not be part of the package.

In meeting the challenge, we must recognise the fundamental importance of sustaining our own industry. It is vital to this country. We need a level playing field

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as regards competition. We know that in some European countries, charges are paid that were paid in the past by producers in this country. The Government have gone some way towards correcting that, against the background of the present crisis.

In the last century, British agriculture was a huge success story. It is still a huge success story, although it is going through a terrible period of recession, and I am sure no one would underestimate the hardship and suffering experienced by some families. We must maintain our vision: we must continue to see British agriculture as a key industry throughout the century. We, as a Parliament and as a country, must maintain that vision throughout this century.

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