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Mr. Nick Hawkins (Surrey Heath): I do not know the particular circumstances of what the hon. Gentleman described as his dairy. However, I know that farmers throughout the country are angry. I declare an interest in that I come from a farming family. I have listened to what the hon. Gentleman said about shake-outs, but does he not realise that farmers are angry because of the inaction and incompetence of the Government whom he supports?

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Mr. Drew: I wish I had not taken that intervention because it is so far from the truth as to be unreal.

If we are to have an effective national food chain in this country, the different sectors must come together. There is no more obvious example than the dairy industry, where there has been a poisonous atmosphere in the recent past. That has to be overcome, but the situation is not helped by farmers demonstrating, trying to shut down a dairy and intimidating people who, in the main, are paid much less than many of them, even in these difficult circumstances. I condemn that, as I hope the Opposition will. It is important that we find a way forward, and that will not be achieved by demonstrations and intimidation.

We understand the way in which the Government's policy is proceeding. There are matters on which I have something in common with the Opposition. There is a case for considering early retirement. I understand the arguments about dead weight and how it will be financed, and I know that my right hon. Friend the Minister considered that carefully. If we are to help those who are, unfortunately, to leave the industry, whether temporarily or permanently, or to work part-time, we must give them the means to make that move successfully.

There is a need for retraining, and I am pleased to hear about the Small Business Service and rural development regulations. We have to encourage more diversification. The environmental side of farming must be paid for by the Government, and the tourists who want to visit our wonderful countryside should contribute to its management.

Much is being done to help agriculture, and the industry has not been and will not be isolated, but is being viewed as part of the wider rural economy. That agenda has a cost. I am pleased that the Opposition have now agreed to ring-fence support for agriculture, along with health, education, defence and law and order. If they were given the opportunity, I should like to see them manage the Budget, given that they are also talking about tax cuts.

Mr. Huw Edwards (Monmouth): My hon. Friend made an interesting point confirming that the hon. Member for South Suffolk (Mr. Yeo) said that the Opposition would ring-fence the agriculture budget. Has he heard any confirmation of that from the shadow Chancellor?

Mr. Drew: No, but I am sure that in the days to come many Labour Members will be quizzing the hon. Member for South Suffolk about the spending commitment that he will have to meet.

There is much for the Government to be proud of, despite the current crisis. However, it was said earlier that farmers must not be given false hope. We have to provide them with a realistic way forward, and that will involve structural changes. The argument concerns how we fund those changes and ensure that agriculture can survive not only these immediate problems but long into the future.

Mr. Deputy Speaker (Mr. Michael Lord): Before I call the next Member to speak, I say to the House that although there is not a 10-minute limit on Back-Bench speeches in this debate, many Members are seeking to catch my eye, and it would be helpful if contributions were as brief as possible.

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5.58 pm

Mr. David Heath (Somerton and Frome): I am pleased that we have another opportunity to discuss agriculture, and I congratulate the official Opposition on providing that opportunity.

There is no doubt that we are still in the depths of a major crisis. Anyone who doubts that has only to look at the recently released estimates of farm income. Whatever slight improvement there may have been in the pig and poultry sectors, and possibly even in hill farming, one has only to look at the base from which they are improving to realise that they are still in the depths of a recession.

In other sectors, the problems are still getting worse. The net farm income in the dairy sector is only 20 per cent., in real terms, of what it was a decade ago. In cereals, the figure is only 25 per cent. Even more telling are the figures for cash income, which relate to farmers who work their own farm and do not pay a wage bill. Dairy farmers have experienced a 15 per cent. drop in their cash income since last year, and cereal farmers have suffered a 25 per cent. drop.

Mr. Paul Tyler (North Cornwall): Has my hon. Friend noticed that the worst changes took place pre-BSE? The BSE disaster was not the cause of the present problem, although it has obviously aggravated the situation. Farm incomes have fallen by two thirds from 1995 onwards, pre-BSE.

Mr. Heath: My hon. Friend is right. There has been a long-term decline in farming. It is almost impossible now to gain a living wage by working a small or medium-sized farm, without dipping into capital. The average income per farmer is £8,500, which is the lowest ever in real terms since records began. If we consider the comparators, only Sweden--I suspect that the figures for Sweden are not entirely accurate--and Portugal have lower average farm incomes than those in the United Kingdom. That is bad for the owner farmer, but at least he has capital employed in his farm. It is even worse for the tenant farmer, who does not have the satisfaction of knowing that he has assets on which he can call. We still wait for a retirement scheme that would allow many such farmers, especially those in late middle age, to retire with dignity.

Institutional landlords could play a part in ensuring that agricultural rents are a genuine reflection of agricultural profitability. I am not convinced that some institutional landlords, even those with a clear social intent such as the Church of England, have got their minds round what is required. It is not only agriculture directly that is involved--many other industries depend upon it.

The Government's responses, certainly during the period in office of the current Minister for Agriculture, Fisheries and Food, have been largely well intentioned. I congratulate the right hon. Gentleman on the assiduity with which he has listened to what many of us have had to say in the Chamber, as well as, more importantly, to what many outside the House who are directly involved in agriculture have had to say.

Good intentions are not enough. Often schemes have been announced that have taken time to come to fruition. Often they have not delivered what was claimed for them. Some of the schemes to which the Minister referred are not in place and are not delivering. There is

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incompleteness about the Government's response. The good intentions of the Ministry are not necessarily matched by other areas of government.

We do not have joined-up government. We do not always have the co-operation of the Treasury, the Department of Trade and Industry and the other Departments that play a part. That is why we still have rather malign chuntering about the pesticides tax, which would be disastrous for cereal farmers were it to be introduced and implemented now. We still have the DTI taking what I think is a perverse view of Milk Marque. We still have the Treasury causing obstructions to carry-forwards, which are needed if the Minister is to do the job that he wants to do.

Mr. Livsey: My hon. Friend has referred to the Department of Trade and Industry, which today announced, sadly, the loss of 6,000 jobs in the steel industry. Is he aware that in Wales, between 1998 and 2000, 6,000 farmers left the land?

Mr. Heath: I am grateful to my hon. Friend. His intervention underlines the depth and scale of the problem that we face. Individual farmers do not show up in the statistics in the same way as a major plant closure. However, they are no less important because of that, and we should pay the same attention to them.

There is still uncertainty about the Government's intentions. There was a debate in serial fashion this afternoon on the future of agrimonetary compensation. I hope that the Minister will make an early announcement that he does intend to draw down on that. There may be a temptation to wait until three or four days before an election to make the point. I hope that he will not do that, and that there will be an earlier announcement.

I also hope that the Minister will give serious consideration--it is a point that I have raised repeatedly in debates on agriculture--to what will succeed the agrimonetary compensation mechanism. It is not good enough merely to hope that something will turn up. That is not doing our best for farmers. We are currently outside the eurozone. We are the only country that will be in such a position because of the weakness of the Swedish kronor and the fact that the Danish kroner is pegged to the euro. Our position is therefore unique, and we must persuade other EU countries that we need a mechanism to cope with it.

I should like to deal briefly with agricultural sectors. The dairy sector is close to my own heart, and is important in my Somerset constituency. I shall re-examine the scale of the milk problem. Output value is down by £273 million--10 per cent. of its value. That is the real problem: its beginning and end are the price that the farmer can get for the milk that he sells. Until we get that right, any amount of marketing and promotion will not cure the problem.

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