Third Standing Committee on Delegated Legislation
Thursday 1 March 2001
[Mr. Jim Cunningham in the Chair]
Draft Pig Industry Development Scheme 2000 (Confirmation) Order 2001
The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): I beg to move,
That the Committee has considered the draft Pig Industry Development Scheme 2000 (Confirmation) Order 2001.
The House has already debated many aspects of the outbreak of classical swine fever in East Anglia. Hon. Members know that strong action by the state veterinary service, backed up by the essential co-operation of pig producers, limited the scale of the outbreak to 16 confirmed cases. That was a remarkable achievement and all those involved in the pig industry will be grateful for the efforts that were made.
Today's debate deals with one important remaining element to help producers affected by that outbreak: the industry's financial contribution to pig producers who suffered during the outbreak because of the consequences of movement restrictions that were put in place to control the spread of the disease. As hon. Members will know, pig producers who did not have classical swine fever on their premises, but were caught by the movement controls found themselves with a difficult animal welfare problem. Animals do not stop being born or growing merely because movement controls are in place, a matter of which we are all conscious at the moment. Overcrowding and adverse welfare conditions can result. To help deal with those problems, the Government introduced the pig welfare (disposal) scheme. In the period between 31 August and 31 December last year, the scheme involved public money of more than £14 million, £9 million of which was direct payments to producers.
As part of the agreement to change the payment structure of the scheme, the industry agreed to provide a top-up payment to those making use of the scheme, by way of a levy fund. The Government welcomed that recognition by the industry that, although movement controls affected the few, their introduction benefited the entire industry. The Government were also pleased by the commitment given by the National Farmers Union to work with my Ministry and the Treasury on the longer-term implications for disease control in modern industry conditions. The group carrying out that work, the working party on the commercial impact of animal disease controls, is expected to report in the next few weeks, although obviously it will be reporting in much more dramatic circumstances than was originally envisaged.
It quickly became apparent that the only mechanism available to introduce a compulsory levy on pig producers is a Meat and Livestock Commission development scheme under the Agriculture Act 1967. The difficulty was that the procedures for introducing a development scheme were lengthy and complex. However, we have now reached an advanced stage in that process by debating the order introducing the scheme.
The aim of the scheme is to build an industry fund to be used to provide advice, services, facilities and financial assistance to pig producers to help them in the prevention and/or limitation of the spread of an outbreak of pig disease. It will be collected in the form of an industry levy set initially at 20p per pig slaughtered, although the order allows a maximum of £1 per pig to be charged. The first use of the fund will be the industry top-up to the payments already made under the pig welfare (disposal) scheme to producers faced with classical swine fever movement restrictions.
Like the pig welfare (disposal) scheme, the scheme constitutes a state aid, and therefore had to be cleared by the European Commission before introduction. Although we still await final formal clearance, we are informed that that will be forthcoming shortly. The two-month deadline for Commission comments has passed. The formal clearance, therefore, is simply thata formality.
It will take some time to build the fund to a level whereby payments to producers can be made. To help remedy that, my right hon. Friend the Minister of Agriculture, Fisheries and Food is investigating authorising a loan from the Aujeszky's fund to the development scheme fund to allow an upfront payment to be made. The industry supports such a move. Indeed, a formal request from the Aujeszky's fund board has now been received and is being considered.
The Meat and Livestock Commission may also consider seeking a commercial loan to help to build the development scheme fund to allow early payment of money to producers. It is worth while pointing out that an interest-free loan from the Government to finance the fund would constitute another state aid and would therefore require Commission clearance. That is why the Meat and Livestock Commission is investigating the commercial loan option.
The scheme is for Great Britain only and does not apply to Northern Ireland, where different arrangements are in place. Classical swine fever was, as we know, within Great Britain. The statutory instrument requires the consent of the Scottish Executive, which is recorded in the statutory instrument, and the approval of the Welsh Assembly. The Assembly has already approved the scheme, subject to European Union state aid clearance.
The Committee will understand that the complexity surrounding the development scheme has resulted in it taking some time to reach this stage. Nevertheless, the scheme offers assistance to pig producers and is being introduced with the full involvement and support of the industry. I therefore commend the order to the Committee. The producers have requested that we proceed with the scheme as quickly as possible.
Mr. James Paice (South-East Cambridgeshire): I thank the Minister for the way in which she has introduced the order. I intend to maintain in these proceedings the equanimity with which we dealt with matters allied to this yesterday. As she rightly said, the classical swine fever outbreak was confined to East Anglia. However, it was an awful experience for those involved: not only the farmers whose herds of pigs were destroyed, and who were compensated, but the many more who were faced with restrictions that cost them dearly because the pigs grew beyond the appropriate weight for slaughter and were subject to overcrowding measures.
We welcome the pig welfare (disposal) scheme that the Government introduced at the time. I do not expect the Minster to accept thisfor obvious reasonsbut it was a way of channelling help to the industry. Although it was introduced ostensibly for welfare purposes, there were other benefits, and I welcome the innovative way in which the Government approached that matter. Today's order is to support that.
I have doubts as to why the scheme should be levy funded, but I know that the industry put forward that proposal. Representatives told me that they did not have much option. Nevertheless, they agreed to the proposal, so we are now considering how the fund should be raised and applied.
Bearing it in mind that the process has taken time, as the Minister rightly stated, can she tell us how many pigs were slaughtered under the pig welfare (disposal) scheme? Given that five months have passed, what calculations have been done to determine the total sum required to fund the 20 per cent. of the value of the disposal scheme to be paid for out of the levy? From that figure, it is possible to work back to discover what levy is necessary. The order sets the maximum levy at £1, but one assumes that considerable leeway is allowed in the calculations. Will the Minister tell us what levy the commission is expected to decide upon?
I welcome the fact that a loan is being sought from the Aujeszky's fund of some £750,000. What proportion of the total necessary sum would that constitute? I must be one of the few people in the room who remembers the Aujeszky disease outbreak in East Anglia and elsewhere in the industry and the reasons why the fund was established. Is it strictly necessary to maintain the fund and board as a separate entity? In the light of the order, which does not seem to be finiteit will last as long as the House decides that it shouldis there not a logic in eventually absorbing the Aujeszky's fund into this fund?
I welcome what the Minister said about the commission looking for a commercial loan to bring forward the day on which payments can be made to the producers who suffered from the delays and restrictions last summer.
Paragraph 6 of the order states that it
``shall not be the function of the Commission under this scheme to give financial assistance by way of compensation for pigs slaughtered or anything seized under the Animal Health Act 1981.''
I presume that that simply means that those pigs will be compensated for in other wayssome are, sadly, being dealt with at present.
I press the Minister, as I did last night on the Floor of the House, about the relevance of the order to pig farmers dealing with something like the foot and mouth crisis. The purpose of the order and the pig welfare (disposal) scheme that bequeathed it was to overcome the welfare problems caused by pigs accumulating on farms as a result of restrictions, which is happening today, too. Pig farmers throughout the country are accumulating pigs on farms because of movement restrictions, so the same welfare problems will arise. The longer the foot and mouth outbreak goes on, the worse they will become, although that is subject to whatever the Minister announces tomorrow by way of a licensing scheme for movement. We are experiencing deja vu; we are almost back to the situation in East Anglia last summer, but this time it involves the whole of the pig, sheep and cattle industry.
Will the Minister tell us something about availability? Will the order, which I have studied carefully, be used as a vehicle to provide help to the pig industry in its present problems? The problems for the producer are identical to those in East Anglia last summer and early autumn.
I understand that what we are considering is primarily a levy-funded system. In today's circumstances, every pig farmer is affected and paying for himself would not be sensible. There is nothing in the order to prevent the Government from putting money into the system for distribution, under the same mechanism, to the industry, as it is currently affected. The Minister may say, ``That would be state aid.'' I understand that, of course, but we must take advice from the Commission on the subject. Mr. Michael Erhart said that it had become apparent that we might be able to compensate farmers who had suffered losses as a result of movement restrictions on livestock. He said, too, that farmers whose animals had been taken out of the food chain could be compensated, but he would not rule out compensation for those who had experienced a decline in profitsor, dare I say, worsening lossesas a result of restrictions on movement. He said that state aid rules in agriculture were quite vague and, as a result, the Commission would have to look into the application very carefully.
Although Mr. Erhart could not remember a case where farmers were compensated for a delay in their sale of livestock that eventually entered the food chain, his interpretation of rule 11.4.5 did not immediately rule out the possibility of compensation falling within the state aid legislation. That is, perhaps, a slightly garbled report of the conversation that one of my European colleagues had with Mr. Erhart. Nevertheless, it gives us grounds for hope, and, over the past few days, Commissioner Fischler has, in principle, been supportive of the idea that some help could be provided for pig farmers.
Obviously, the issues apply to cattle and sheep producers, too. I do not want observers of our discussions to think that I am concerned only with the pig industry. That is not the case, but, this afternoon, I can talk only about the pig industry. I hope that the Government are looking constructively at ways in which the order can be used to help in the current crisis. I have read it carefully and it is wholly applicable to the present situation, just as it was to classical swine fever.
I hope that the Minister is in a position to respond today, or can do so by correspondence subsequently. I am anxious for the order to be approved so that procedures of the levy collection can be set up and we can help the pig farmers in East Anglia, who suffered six months ago.
As the Minister rightly said, the world has moved on. I am anxious that we help all pig farmers in the current crisis and hope that the Minister will quickly confirm that my thoughts about the order are valid for today's situation. All that would be necessary is EU approval as a state aid and, of course, funding from the Treasury. I do not belittle that issue, but, as I said in the House last night, Opposition Members believe that such a national crisis deserves a draw-down on the contingency fund. I hope that the Government will do that and, through the order, channel some extra help to the pig industry, which is wholly frozen in time and is likely to remain so for a considerable period.
We hope that tomorrow's licensing arrangements will help, but none of us in our wildest dreams expects them massively to open up the supply chain; nor should they in many ways, because of the risks that would be associated with that. It will be some time and, in another week or two, the overcrowding and cash-flow problems will be extremely bad on many pig farms. The problems that we saw on a relatively small scale in the autumn will be far worse throughout the country. I hope that the Minister will take my words as constructive and helpful and consider whether she can find a way in which to help.