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12 Feb 2003 : Column 989—continued

Mr. David Heath (Somerton and Frome): That is a desperately important point for dairy farmers, in terms of the asset value of quota and the revenue stream from milk prices, which are still far too low. Does my hon. Friend agree that one problem is the oligopoly in the supermarket sector, which will get worse if Safeway is taken over by one of the other big players? Does he agree that Safeway's acquisition needs to be put to the Competition Commission straight away?

Andrew George: I entirely agree. There is no point pussyfooting around. It is essential that the Government seek to intervene, make their view clear and ensure that the matter is referred to the Competition Competition. Whichever of the interested parties goes forward with the purchase of Safeway, that acquisition is likely to have a detrimental effect on farmers and farm-gate prices.

My concern is that the Government are lurching forward piecemeal, with no real vision or passion for farming. They are timid and uncertain in negotiation and insufficiently bold and brave to make clear beforehand how they will deliver a clear vision for the future of agriculture in this country. It is not that I believe that the Secretary of State or the Minister lack commitment or do not have a passion for farming, but the real Secretary of State for agriculture is the person appointed to the post of rural tsar by the Prime Minister—Lord Haskins. The Minister and the Secretary of State are merely the managers of the

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Department and the real vision comes from Lord Haskins, who was recently dubbed the villain of the countryside by Country Life magazine, perhaps appropriately.

We have serious concerns about the proposals in the mid-term review. It is an inadequate and timid fudge. UK farmers have lost out and will do so further unless we have an even playing field, especially in relation to modulation. We are concerned about the fundamental divorce of agriculture from the rural community if we let reforms go ahead that would result in the prairie and the ranch. Many of us fear the ranching of the British countryside.

We have not been given enough time to debate these important changes, which are fundamental to the future of our rural communities. Matters need to be resolved by June, and I urge the Government to give us more time to debate the issues before the Council of Ministers meets to resolve them.

7.57 pm

Mrs. Angela Browning (Tiverton and Honiton): I wish to add my voice to the others tonight that have urged the Minister to set out a clear path for the future of UK agriculture. It is not clear what the Department's view is when it enters negotiations on the CAP reforms. The Minister touched briefly on some aspects of agriculture, especially the dairy sector, to which I shall return, but farms are businesses and they have been through a horrendous time, what with BSE, foot and mouth and other animal diseases.

I am concerned about planning for the future and how we can sustain the family farm. We need to address the shape of agriculture in the future. Ranching is a concern, but east and mid-Devon do not have much arable farming, because the good grass that we grow is well suited to livestock farming. I would hate to think that the countryside of Devon would be overtaken by conifers or some such commodity. As much as possible, we should provide the food that we eat ourselves, and that must include meat as well as grain.

The Department's latest figures show that farm incomes have risen by 14 per cent. in real terms in 2001, although that is still 62 per cent. below the 1995 figures. Worryingly, that increase depends on £140 million of net production subsidy, with only an extra £20 million coming from the marketplace. Whatever package of reform the Government produce, I hope that they will bear in mind the fact that although the dairy sector provides 95 per cent. of our own liquid milk production, it loses out time and again in the production of value-added dairy products because we suck in masses of imports.

Mr. Morley: The hon. Lady has correctly identified one of the problems with milk, and I do not disagree with her. On prices and incomes, she is right that incomes rose by nearly 15 per cent. last year. That was the second successive year in which farm incomes rose. I do not want to be complacent about the problems facing the farming sector, but the hon. Lady and the hon. Member for South Holland and The Deepings (Mr. Hayes) both used 1995 as the baseline year. That year was very unusual, in that price cuts in arable aid meant that compensation was paid for price falls that

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did not take place. That element of double subsidy in 1995 means that it is a very artificial base year to use as a comparison for price falls.

Mrs. Browning: I am quoting figures provided to south-west MPs by the south-west branch of the National Farmers Union. The information provided is excellent, and is said to be "according to DEFRA". I am therefore putting into the public domain information from the Minister's own Department.

The farm business survey shows that only two sectors are in decline. Dairy is one, and it is down 21 per cent. The situation for the dairy farm is dire. In my part of Devon, dairy farms are mainly family farms. I intervened on the Minister earlier to refer to a couple with bought-in quota. They still own that quota, because they hoped that their son would keep the farm on. He has now gone to live abroad. That is typical of many families in Devon, as the next generation of people look at what their parents went through. They consider the future of farming, and decide that it is not for them. That will have a huge impact on the shape of the countryside, its environment, and our ability to produce our food.

I have flagged up to the Secretary of State, in response to recent Government papers on agriculture, that there has to be competition and that we need good quality food. We also need to know about food's production standards and origins. However, countries in the single market covered by the CAP should not sign up to policies that would lead to their ability to produce the basic commodity and the finished product being leached away. That would mean that the UK would suck in more of those imports, with all the value added.

The Government's plan for CAP reform must set out where we can diversify, add value, and make sure that there is sustainability. Farming businesses need to be able to plan. The Minister will be amazed to learn that I am a vice-president of the Devon young farmers club, some of whom are not so young. When I talk to farmers, I am encouraged by the enthusiasm of many young people. They know that they will have to do things differently, but they want to know where the industry is going. They will give up if the direction and planning are not there.

My plea to the Minister is as follows: will he ensure that the country and the House know what the national plan is? When the Government negotiate at the heart of Europe, we will then have an idea of what the future will be for farmers and for the production of own food.

8.3 pm

David Burnside (South Antrim): I start by referring to the Register of Members' Interests, in which I make it clear that I receive an annual rent from my home farm.

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Mr. Beggs: Will my hon. Friend give way?

David Burnside: Very well.

Mr. Beggs: I thank my hon. Friend, but I want to take this opportunity to declare my own interest. Although I will not have time to make a speech, I have made a number of interventions, so I want to draw the attention of hon. Members to my entry in the register.

David Burnside: If we do not look at CAP reform in a much more radical way, we will encounter many problems. We joined the common market in 1970, and the two biggest losers have been the farming industry and the fishing industry.

I am the son of a farmer, and I remember that the yield on barley was about 40 cwt an acre 20 years ago. Farmers received £120 a tonne in those days, without any subsidy. They now get up to 50 or 55 cwt an acre, and receive about £60 to £70 a tonne, plus a £40 top-up. They cannot cover their costs. At present, milk hovers at around 17p, 18p or 19p, but it costs 17p to produce.

We have had the wettest winter in history, which has destroyed hay and silage production and increased the cost of feeding during the wet period. I have asked the Secretary of State for Environment, Food and Rural Affairs whether she will press for wet weather aid, but I have had no response. Farmers deserve special wet weather aid.

International comparisons are always a bit superficial, and I am sure that the Minister will have read the report produced by the Select Committee on Environment, Food and Rural Affairs after our visit to New Zealand, which is often held up as the glowing example of freeing the market. Of course that market was freed after a currency problem in the early 1980s; people did not say, "We must free farming". The currency market created a reduction in subsidises across the board in a country with a very different climate and scale of farming.

The Ulster Farmers Union makes representations to me as the Ulster Unionist farming spokesman, and it is not happy with the deal. We will lose out because of the £340 million reduction between 2006 and 2012. The system will still be semi-subsidised. Farming is in a dreadful state. The pig industry in the United Kingdom is in an absolutely dreadful state. Dairy farmers cannot cover their costs, and no one can make money from barley.

Fudging around with this type of French-German deal on CAP reform is not in the interests of British farmers. Somewhere along the line, we will have to take hold of Europe by the neck, rather than being at its heart. We will have to take hold of the Commission and get a radical reform in the EU, because British farmers can be efficient.

We have to alter the scale of farming. I am afraid that we in Northern Ireland have to learn that the 60-acre has to become the 200-acre farm; the 80-cow dairy herd has to become the 250-cow herd—the minimum herd size in New Zealand—with a man and his wife, normally, farming.

Labour has declined on farms. On my father's family farm, we employed six to seven farm labourers—farm workers, as they are now called—20 years ago. In

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Northern Ireland, 32,000 farms are owned by 22,000 farmers, but there are now only 2,200 farm workers. In New Zealand, farmers can make money for 10 years, sell up and go on holiday, but it is difficult to persuade a son or daughter that it is a good idea to go into farming.

Farming is a very serious state, and I am afraid that there are not enough votes in fishing and farming for this Government. That is the problem, but it is time we had a radical review of the whole system of support because it is damaging farming. We are just surviving at present. I hope that the disease problems—obviously, foot and mouth and the other diseases that have had a short-term effect on us—will not come back. We are just about hitting our production levels at present, but those in some sectors are going out of business. We need a radical reform of the CAP, not the tweaking at the fringes that is currently being done.

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