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Dairy Regime

8. Mr. Kelvin Hopkins (Luton, North): What his priorities are for the next reform of the common agricultural policy dairy regime. [131270]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): The Government's priorities for reform of the dairy regime are clear and well known. We want an orderly removal of milk quotas in combination with a reduction in the European Union support prices to world levels. We will press the European Commission and our EU partners for that in the run-up to the review of the regime in 2003.

Mr. Hopkins: I thank my right hon. Friend for that answer. Does he agree that the provision of free school milk is a valuable service? May I take this opportunity to congratulate him on seeing off a European Commission proposal to abolish the subsidy of free school milk? May I also ask him whether he will take the action necessary to ensure the continued provision of free school milk?

Mr. Brown: I was very pleased that, working with partners on the Council of Ministers, I was able to persuade the Commission to change its mind on the school milk proposal. Rather than abolishing the measure entirely, which was the Commission's original proposal, or moving to co-financing on a 50:50 basis, which was the Commission's next proposal, we were able to negotiate that upwards to the proposal that was agreed on Monday at the Council of Ministers.

I am very pleased that that was a successful outcome for the United Kingdom. It just goes to show the value of working with our partners in the European Union and putting a measured case before the Commission, rather than adopting the alternative approach, which is to fall out with everyone else and try to thwart everything that happens, even if it is to our national advantage.

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Mr. John Bercow (Buckingham): Given that the reform deal was described by the Select Committee on Agriculture as a bad deal, that the right hon. Gentleman himself declared that it was disappointing, and that fraud is pervasive throughout the system, why does not the right hon. Gentleman now acknowledge that the CAP no longer stands for common agricultural policy, but for charter for amoral pilfering?

Mr. Brown: There is actually a good point beneath all that eurosceptic nonsense. The fact is that there is a sound case for a common agricultural policy across the EU. The important thing to do is to secure reform of the current structures so that they are not so oriented towards the supply side. The point to which I would draw the hon. Gentleman's attention is that, despite our many differences in this place, there is near unanimity around the Government's proposals for reform of the dairy sector.

Mr. Dale Campbell-Savours (Workington): If milk quotas went, would there be over-production of milk?

Mr. Brown: I think that the market would quickly deal with that question, although we are in a relatively strong position compared with our European Union partners.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale): Does the Minister agree that the only ones who seem to make money out of the current quota system are the quota brokers?

Mr. Brown: One of the unattractive features of the current quota regime is that the quota itself--the permit to produce--has an economic value. That is an inevitable outcome of the current structure and a part of the underpinning of the case for reform.

Mr. Peter L. Pike (Burnley): Will my right hon. Friend confirm that it is absolutely essential that we reform the current milk quota system before admitting other countries to the European Union? Will he also confirm that, at times, the current milk quota system has led to our importing too many added-value milk products which we could have produced in this country had there not been a milk quota system?

Mr. Brown: Those are very important points. There are enormous advantages for the industry domestically in reform of the dairy regime. Although I do understand why some diary producers are nervous about it, it is the right way forward. I also think that it is the most intellectually appropriate way of dealing with the problems that are posed by the agricultural component of enlargement of the European Union. The two big questions seem to me to be the digressivity of direct payments and reform of the dairy regime.

Mr. Nicholas Winterton (Macclesfield): I come from one of the prime dairy counties of the United Kingdom--Cheshire, which is in the north-west. Nevertheless, does the right hon. Gentleman accept that the whole of the United Kingdom has the perfect climate to produce good grass, and that good grass is the basis of good milk? Does he agree that any reform should take account of the fact that the United Kingdom as a whole is the right area for milk to be produced? Will he assure me, the House and

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my constituents that any reform will take that into account--so that the countries which can produce good milk because of their climate and grassland are able to do so, and no system is put in place that will discriminate against us?

Mr. Brown: I agree with absolutely everything that the hon. Gentleman has said.

Mr. Richard Livsey (Brecon and Radnorshire): Does the Minister agree that one of the biggest effects on the profitability of dairy farming has been the disastrous drop of the price of milk by a third in the past two years? Does not the fact that there is a 20 per cent. advantage to supermarkets in importing milk, because of the euro, mean that the quickest way to get dairy farming back into profitability would be for Britain to join the euro?

Mr. Brown: The hon. Gentleman is right to say that the price per litre that the food chain pays the producer is at the heart of the present difficulties in the dairy sector. I have done everything that I properly can to alleviate the burdens on the industry, such as the hygiene charges. We have used agrimonetary compensation to its fullest extent as a countervailing measure. I know that the industry has welcomed cattle passports as well. Further, I have made representations to the retailers and processors--important players in the chain--to try to get them to understand that every component of the supply chain has a vested interest in the well-being and commercial returns of other elements in the chain. Further than that, as a Minister, I cannot go. I have certainly gone as far as I can.

Farmers' Co-operatives

9. Mr. Huw Edwards (Monmouth): If he will make a statement about Government support for farmers' co-operatives. [131271]

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): Co-operatives and other forms of collaborative activity can provide a significant boost to the competitiveness of our farmers and growers. Government and industry are working together in a number of ways to facilitate and promote such working together.

Mr. Edwards: Does my hon. Friend agree that the Farmers First co-operative has done a great deal to help the industry, especially with the opening of a new abattoir in Kenilworth, which is used by many of the farmers in my constituency? Does he agree that the objective 1 funding that the Government have secured for Wales provides great opportunities for further co-operative work in investing in abattoirs and other new infrastructure that is needed to support the industry?

Mr. Morley: I strongly support my hon. Friend. The Government have been supporting the development of collaborative marketing and co-ops through the agricultural development scheme, and further funds will be available through the rural development programme. Match funding has been provided for objective 1 programmes. The nature of the programmes is a matter for local people to determine, but there is no doubt whatever that there are great advantages for farmers and

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growers in coming together to try to add value and market their produce so as to get a greater share of the market. Objective 1 funds are certainly one way of helping them to do that.

Mr. Owen Paterson (North Shropshire): The great dairy processors of the world, such as Parmalat, Danone and, recently, MD and Arla in Scandinavia, all began as farmers' co-operatives. What is the Ministry's view of co-operatives and farmers' groups attempting to buy Unigate?

Mr. Morley: One of our views is that the previous Government should have thought a little more carefully about the effect on the dairy sector before they destroyed the Milk Marketing Board. There are, however, issues to be considered here. The hon. Gentleman will know that the Competition Commission conducted an investigation that was responded to by allowing the development of three co-ops with the freedom to invest downstream in processing. There is no doubt that that brings advantages for dairy producers.


10. Mr. John Grogan (Selby): If he will make a statement about his policy towards small and medium-sized abattoirs. [131273]

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): The Government recognise the importance of small and medium-sized abattoirs to the rural economy and have therefore put in place a number of measures to help, including the deferment of charges for specified risk material removal; freezing of Meat Hygiene Service inspection charges last year and maintaining them at no more than the rate of inflation this year; promoting with the European Union Commission a risk-based approach to meat hygiene legislation; reviewing the level of inspection in low-throughput abattoirs; and setting up a taskforce to explore a capping approach to meat hygiene charges for small abattoirs.

The taskforce report--the Maclean report--has just been presented to the Government. Together with colleagues in other Departments, we are now considering its recommendations on the way forward for this sector of the abattoir industry.

Mr. Grogan: Does my right hon. Friend recognise the urgency of the Government and the Food Standards Agency responding to the Maclean report on veterinary inspection charges, which recommended a change from hourly payments to headage fees? Given that such a change would benefit small and medium-sized abattoirs and give them a real bonus for their future, will she give the matter some real priority?

Ms Quin: I assure my hon. Friend that we will do so. Obviously, that involves different agencies and Departments considering the Maclean report recommendations, but we are very conscious of the importance of those recommendations to a vital sector of the industry.

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Mr. Christopher Gill (Ludlow): I am aware that Agriculture Ministers are looking at alternative approaches to charging for meat inspection in small and medium-sized abattoirs, and I endorse everything that the hon. Member for Selby (Mr. Grogan) said. For many abattoirs, the sands of time are running out. According to figures recently provided to me by Health Ministers, there has been a pronounced acceleration in abattoir closures during the past six months. I am also told by Health Ministers that, ironically, at a time when abattoirs are being forced out of business, the number of veterinary officers employed in the veterinary service has increased from an average of 486 in the first six months of 1999 to an average of 516 in the last six months. In other words, there are 30 extra vets at a time when operators are being driven out of business by the imposition of charges that they simply cannot sustain.

Ms Quin: I recognise the personal interest that the hon. Gentleman has taken in the issue and I welcome the number of times that he has raised it. Perhaps he should have raised it with his right hon. and hon. Friends when they were in government and presided over a huge number of abattoir closures--far more than the present Government. I hope that he welcomes the recent statements by Commissioner Byrne on moving towards risk-based assessment and being sensitive to some of the cost implications of the European system. We can help to solve some of the problems and redress the balance in terms of future costs by working with the Commission and responding to the recommendations in the Maclean report.

Mr. Simon Thomas (Ceredigion): The growth of organic farming, particularly in my constituency, means that there is a real need for locally based abattoirs selling directly to the market and producing the added value that we want in Wales. Will the Minister seriously consider the move towards headage payments and bear in mind the lack of clarity in respect of other European countries? If I can put it this way, it seems that other European countries are getting away with it in respect of the hygiene standards that we apply and that there is no level playing field in respect of abattoirs in other countries.

Ms Quin: On the hon. Gentleman's final point, I know that Commissioner Byrne is very much focused on the need for a level playing field, and that approach partly lies behind some of the initiatives that he has announced. Obviously, there is an important responsibility for the devolved Administration in Wales. The hon. Gentleman and others will want to know that we are supporting the development of mobile abattoirs, particularly in remote rural areas, and that we are working with the Humane Slaughter Association to help bring about that service.

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