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Organic Farming

5. Mr. Ben Chapman (Wirral, South): What his Department's planned expenditure is on research and development into organic farming methods in the current financial year. [127035]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): The budget for MAFF's dedicated programme of research into organic farming methods is £2.1 million in this financial year. In addition to the annual funding of research, the Government have committed from central

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funds an increase of £300,000 in this financial year and £1.9 million in the next financial year to create a new European centre for organic fruit and nursery stock. MAFF also spends £8 million on biological control, which of course has implications for the organic sector.

Mr. Chapman: I welcome those figures, but does my hon. Friend agree that the ability to buy organic vegetables is a choice that consumers may increasingly want? Against that background, does he welcome the decision by the Iceland chain of shops to purchase, reputedly, 40 per cent. of the world's crop and make it available to consumers at prices similar to those of other vegetables? Does he believe that the increased demand for organic vegetables will be met by UK farmers or by imports, and is he satisfied that the money for conversion to organics will be sufficient to meet that demand?

Mr. Morley: The Government have substantially increased the money available for organic conversion, including doubling the conversion rate. We have made some £12 million available for this financial year, and a further £18 million is available for the next financial year. Clearly, Iceland has made its decision based on market conditions, but that demonstrates that there is a strong demand for organic produce in this country, and although a great deal of fruit and vegetable produce is imported, we are almost 100 per cent. self-sufficient in some sectors, such as meat and eggs.

Mr. Michael Fabricant (Lichfield): Does the Minister agree that the success of the organic market is dependent on the purity of the product, as perceived by the consumer and by the Soil Association? How does he reconcile that with the comments on GM crops by his colleague, Baroness Hayman, who said to the Agriculture Committee:

Does not that destroy the very purity that the organic sector is attempting to market?

Mr. Morley: No, it does not. The issue at stake is thresholds. Although we are discussing with the organic sector how to tackle matters such as crop trials and separation distances, organic producers cannot at present guarantee that there is no spray drift from pesticides used in adjacent farming activities, so the issue is the acceptable threshold. Thresholds have to be kept to a minimum, while ensuring the purity of the organic food by keeping spray drift to negligible amounts.

Milk Prices

7. Mr. Laurence Robertson (Tewkesbury): If he will make a statement about the current level of farmgate milk prices. [127037]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): The Government recognise the considerable problems currently facing the dairy industry. A combination of factors have reduced milk prices and

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had a consequential effect on incomes in the sector over the past two years. The farmgate price for milk in April 2000 was 15.25p per litre.

Mr. Robertson: The Minister mentions that several factors have affected milk prices, and those include the weak euro and the recent depressed prices of skimmed milk and butter. A third factor is structural problems. Does the Minister now regret encouraging the break-up of Milk Marque, and if so, will he explain what he will do to put the situation right?

Mr. Brown: Of course I did not encourage the break-up of Milk Marque; it resulted from an independent report by the competition authorities--the sole ministerial responsibility of my right hon. Friend the Secretary of State for Trade and Industry. If the hon. Gentleman is implying that the Government of the day, regardless of party, should put the views of the competition authorities to one side, I have to say that I completely reject that view. The board of Milk Marque responded very responsibly to the difficult situation in which it found itself; it has devised successor arrangements that will endure, and it has my support in that. Where the Government can provide support to the dairy industry we are doing so, as the Prime Minister's farming summit has shown.

Mr. Lawrie Quinn (Scarborough and Whitby): Will my right hon. Friend join me in praising the producers of the very good TV commercial that promotes milk, using well known milk drinkers such as George Best? Has he made any assessment of how that will help farmers by affecting farmgate prices?

Mr. Brown: I was wondering whether my hon. Friend was about to invite me to take part in the campaign on the same basis. I support the generic promotion of milk, and think that it is a way forward for producers.

Mr. David Heath (Somerton and Frome): I also support generic milk marketing. I hope that it will increase the overall volume of milk sold, but increasing the volume will not help the primary producers if the margin at the farm gate is still too small for them to be viable. Is not it important that yet again, we tell the processors and the supermarkets that the health of the whole dairy industry depends on farmers getting a fair return for their milk, and do we not need a joint approach by the Ministry, the processors, the retail trade and the farmers themselves?

Mr. Brown: The whole supply chain has a vested interest in the health of its component parts. I make that point to everyone involved every time I meet them, but I cannot order people to adjust the commercial arrangements in the chain, because that is ultimately a matter for the private sector, not for Government.

Wheat Prices

8. Mr. James Clappison (Hertsmere): If he will make a statement on the price of wheat in (a) 1980, (b) 1990 and (c) currently. [R] [127109]

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The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): The average price of UK wheat in 1980 was £105 per tonne, rising to £120 per tonne in 1990. It is currently about £80 per tonne. However, in real terms, adjusting for inflation, the price of wheat has declined overall on a constant basis since 1980. Low prices for grain currently apply throughout the world, and are largely the result of oversupply following a run of good harvests and a downturn in consumption caused by the recent financial turbulence in Asia.

Mr. Clappison: Does the Minister of State agree that those figures are desperate, and are reflected in farm incomes? Is she aware that the Ministry's statistics show that the income of cereal farmers has gone down by 72 per cent. since the Government took office, and that many believe that farming today is in its worst state since the second world war--probably worse than the 1930s? Ministers may be sympathetic, but if that continues there will soon not be much left of British farming. Against that background, should Ministers not do all they can to help British agriculture? Could not they make a good start by looking at the workings of the Intervention Board, because reform of that would help to give British farmers a better deal?

Ms Quin: The hon. Gentleman is wrong to suggest that we have given only sympathy to British agriculture. The results of the farming summit on 30 March and the previous packages of support that the Government announced show that we have given practical and financial assistance to agriculture, as well as sympathy. Although it is true that wheat prices are lower than they were years ago, they are now much closer to world prices. In our new direction for agriculture, we want to reduce the artificial difference between European and world prices and to support agriculture differently. The amount of public money that goes into the cereals is considerable; as I announced in reply to an earlier question, it is about £1 billion a year.

Mr. Peter L. Pike (Burnley): In view of the reductions in subsidies as a result of the World Trade Organisation arrangements over the next two to three years, is my right hon. Friend satisfied that we are fully prepared for the changes that have to take place to ensure that the industry can survive in this country?

Ms Quin: The Government are fully preparing for the pressures that will affect European agriculture in the next few years. My hon. Friend is right to mention the pressures caused by the WTO, but there are also budgetary pressures in the EU--and, of course, the important matter of enlarging the EU to take in new member countries.

Miss Anne McIntosh (Vale of York): Having regard to enlargement and the next round of WTO negotiations, what message can the Minister of State give wheat growers to show that they will have a future in the United Kingdom?

Ms Quin: We believe that our growers, and indeed our agriculture generally, are in a position to be good competitive performers in the EU. I believe that if we

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manage to move further away from the production-related subsidies of the past and ensure that those decisions are applied uniformly across Europe, British agriculture will be in a good position to compete.

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