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19 Jan 2005 : Column 303WH—continued

19 Jan 2005 : Column 304WH

Sugar Beet

4.12 pm

Dr. Richard Taylor (Wyre Forest) (Ind): It is a great privilege to gain this Adjournment debate to raise the concerns of a large industry and, particularly, of some of my constituents. I am pleased to see the Minister responding, and I know he will engage with a lot of my points. Is he pleased to be here, out of the rough and tumble of the main debate, which has come quite by coincidence?

I have lived in Kidderminster for over 30 years, downwind of a sugar beet factory. Every October we noticed the aroma, which went on without fail until January. To begin with, I thought it was appalling and could not stand it. Towards the end, I began to think it was like roast beef and did not mind it. The factory closed relatively recently, and I talked to some farmers to find out the impact that had had on them. To my surprise, they were not at all fed up that the factory had moved. There were very few job losses, and instead of the labour of loading up their own 14 tonne trailers and taking masses of loads, they were able to use hauliers with 30 tonne lorries, which was much easier. However, as the Minister will know, their worry was the proposals from the European Commission for sugar sector reform.

All parties I have talked to accept that some reforms are necessary. It is the scope, speed and severity of the proposals that alarms people. I will talk first about the local significance, secondly about concerns with the proposals and thirdly about the consequences if the proposals go through as they stand. I shall finish by asking the Minister specific questions.

On the question of local significance, I realise that the west midlands is a relatively small part of the beet-growing picture across the country. I also realise that, in the global picture of agriculture, beet accounts for only about 2 per cent. of the output and about 4 per cent. of the cropped area. Beet growing is therefore not a huge industry or a huge part of the agricultural economy, but in my area alone, the relatively small growers have been the ones who have coped with the sugar beet. Some 20 farms are dependent on sugar beet and average production of only about 1,000 tonnes a year. One of the largest farms grows about 4,900 tonnes a year, and the farmer hopes to yield about 60 tonnes per hectare. He contracts out his machinery to the smaller firms, making the point that the smaller farms are on a very tight rotation and that a third of their land may be used for growing sugar beet.

On the concerns to which I referred, all the people to whom one speaks, whether it is the National Farmers Union, British Sugar, the British Beet Research Organisation or my local farmers, agree that some changes are necessary, but that the proposed changes are not necessary and should not be implemented so rapidly, because one must be fair to the efficient producers in this country and to the growers in other places such as Africa, the Caribbean and the Pacific. Concerns about biodiversity have also been expressed, particularly by English Nature and by the Royal Society for the Protection of Birds.

I shall talk briefly about the concerns of farmers, which are very well known. The first concern relates, of course, to the price cut, which is 25 per cent. for the first
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two years and 37 per cent. thereafter. The farmer of the largest farm in my area tells me that his growing costs are about £18 per tonne, which is extraordinarily good as the average is between £20 and £25. A 37 per cent. cut would wipe out all profit and immediately make it uneconomic to grow beet, so the price cut is desperate.

On cuts in quota, all point out that the UK grows only about 50 per cent. of our needs. The rest comes from the Caribbean countries and elsewhere. We have a balanced market and are helping the other countries. In contrast, some of the countries in mainland Europe are overproducers, and it seems only fair that the quotas of overproducers should be cut more and sooner than those of our producers.

On compensation, I believe that it is proposed that compensation of 60 per cent. be paid to all farmers, including the non-beet growers, which strikes me as incomprehensible. Compensation of 100 per cent. must be paid, but only to beet growers who are forced out of the market. There is also the problem of the time scale. I understand that radical reforms are not required until July 2006, but the aim is to introduce them by July this year.

I shall move on to the consequences. Many farmers, particularly small ones, will face difficulties. British Sugar will face the difficulty of too many factories, so some factories—including, presumably, the one in the Shropshire in the west midlands—will have to close. That will make it even more difficult for growers to go on growing beet in my part of the country, even if they want to, so choice is removed.

The loss of employment may not be as great as it might be because the factories are relatively low employers as a result of automation, as we discovered when our factory moved from Kidderminster. I believe that in 2002 about 7,200 individuals had contracts with British Sugar to grow beet. Obviously, hauliers and the extra workers needed in the factories during the campaign will be affected.

I turn now to something that I know a little more about. For information on the farming industry, I rely on friends at home and on many of the briefings that I receive. I turn to the natural side of things and to the loss of habitat, particularly the loss of food for the birds. Sugar beet is the ideal break crop. It provides broad-leaf, fairly open cover, particularly in the breeding season. It seems amazing that farmers should say that they welcome good weed growth, but those broad-leaf weeds provide food, seed and cover and the cover goes on late into the year, as does the food supply.

In Worcestershire, unfortunately, we do not see much of the stone curlew—it was last seen in that county in 1996—and we do not get many pink-footed geese, but we still get a few. Those, of course, are the prime species dependent on sugar beet in East Anglia. To me, Worcestershire is the skylark and the lapwing. As a lad, I remember walking in the country, and wherever I walked it seemed that the skylarks took off and soared singing into the sky. Skylarks are now listed by BirdLife International as a species of conservation concern in Europe. Their population has suffered a massive decline, down in Britain by 54 per cent., with a loss of 1.5 million breeding pairs. They are insectivores in the
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breeding season and vegetarian in winter and they are territorial. I did not know that a pair apparently needs between 2 and 8 hectares. They dislike the winter-sown cereals, but beet is ideal.

Lapwings, too, are in decline. Again, in the days when there were lots of lapwings around, if one was lucky enough to be below them while on a country walk, when they were wheeling and circling above, one could hear the scrunch of their wings. That is what gives them their Latin name of Vanellus, or little fan.

The consequences abroad are even worse. Prices will go down in the Caribbean, and the only place likely to profit is Brazil, which has cheap labour and virgin land. One forecast is that the Brazilian sugar industry has expansion plans to take over 90 million hectares of virgin savannah. I have also read that, by using only 14 per cent. of that land, Brazil could meet the world's entire need for sugar. If sugar production is thrown open without sustainability safeguards, we will be risking the destruction of an amazing habitat, one which I am told is home to 837 species of bird and 14,425 species of three orders of insects alone, including butterflies and moths. The consequences if the proposals go through unchanged are possibly very serious.

I move on to my specific questions. First, I am sure that the Government are taking this challenge seriously. I should like the Minister to confirm that and to tell us about the plans that the Government have to oppose these changes, in so far as they are drastic, severe and rapid, and to modify them into something acceptable to all who agree that some changes are necessary.

Are there alternative crops, including non-food crops, as opposed to winter wheat and winter barley? What crops with the same sort of financial rewards and with equal benefits to biodiversity could replace beet?

I am aware of the questions that the Secretary of State answered last week and looked at the impact study she mentioned from Cambridge university and the Royal Agricultural College. I cannot say that I read every word, because it was a huge tome. It does give alternatives; what can happen with a 25 per cent. cut in quota, with a 25 per cent. cut in price and with a 40 per cent. cut in price. All of those alternatives have pretty awful consequences, particularly for small-scale sugar beet growers.

To conclude, I cannot avoid going back to the skylark, because it is such a treasured feature of the English countryside. The skylark was celebrated by Spenser, George Meredith, A.E. Housman and Shakespeare himself. One of my favourite quotes is from a sonnet written by Shakespeare when he is extremely down in the dumps and thinks of his love:

What a picture.

I am appealing not only on behalf of the lark, but on behalf of biodiversity as a whole and on behalf of the African, Caribbean and Pacific countries—which must not be disadvantaged—and our growers at home, particularly mine in Worcestershire, who may have as much of a third of their land under sugar beet.
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4.27 pm

The Minister for the Environment and Agri-environment (Mr. Elliot Morley) : I begin by congratulating the hon. Member for Wyre Forest (Dr. Taylor) on obtaining the debate and on the well-informed case he made on behalf of his constituents. I have listened carefully.

I hope that I can touch upon some of the points the hon. Gentleman raised in the detail of my reply. I regret that a lot of the detail is still under negotiation, so I cannot give him definitive answers on all of them. He raised issues on biodiversity and I shall touch on those, but there is one point that I want to respond to right away—the issue of Brazil is not in my notes and I do not want to forget.

There has been some misunderstanding about the issue of Brazil. There is no doubt that Brazil is a major and efficient producer of sugar. What people need to understand is that even with the Commission proposals, sugar prices in the EU will still be double the world rate. There will still be tariffs in place, and the only countries that will be exempt will be those African, Caribbean and Pacific countries that have access to the EU. That does not include Brazil. When people talk about Brazil gearing up, that is more speculation than fact, although I do not dispute that it is an extremely efficient grower.

I quite understand the point that the hon. Gentleman made about the importance to his constituents who are sugar beet growers. I have a few growers in my own constituency, in north Lincolnshire, where sugar beet is a major crop. I also share his fondness for sugar factories. There was one in Brigg, which was very important for seasonal employment to many of the rural communities that I represent. The beginning of the campaign was part of the seasons to me. I was very sorry when Brigg closed and production shifted to Newark—a similar case, with similar effects, to the hon. Gentleman's experience.

This is not the first time in recent months that the House has debated sugar sector reform, and I understand the reasons—particularly because the issues are being discussed in the absence of detailed legislative proposals from the European Union. We do not expect to see the detail of those proposals until May or June. That makes it difficult for the Government to give a detailed response at this stage. The honest truth is that we do not know; we have not seen all the details and we have not formulated a detailed response. We shall have to do that in due course.

I also understand the point that the hon. Gentleman made about the time scale, but we believe that the issue needs to be resolved as soon as possible. Farmers and processors need to know exact details, and the implications for their businesses, as soon as possible, so that they can make decisions accordingly.

Sugar beet reform has implications well beyond beet-growing in this country, because it is a complex negotiation, which also takes into account the effect on ACP countries and cane production. I accept that there are also more general economic and environmental implications, as the hon. Gentleman said. Reform also has an impact on trade and development policies and our international obligations, in the World Trade Organisation in particular. We have a difficult balance to reach in relation to the Commission proposals.
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I must be honest and say that the current regime is 36 years old; it is seriously out of line with other reformed sectors and remains the most distorting and protectionist element of the entire EU common agricultural policy. I know that people accept that there is a need for reform, because of those factors. EU sugar prices are three times the world level. That is not sustainable and it affects other sectors—particularly food manufacturing and confectionery, which are big exporters. There are many jobs in that sector as well. That is not to say that we underestimate the importance of the reforms and the effect on the growers, but we must recognise that other players are involved. They do not always speak with the same voice; there is not a lot new about that where different sectors are involved.

The pattern of the CAP has been changed by the June 2003 reforms, which we very much welcome. Overall, the CAP reforms benefit the environment. I was very impressed by the hon. Gentleman's knowledge of skylarks; the Latin was particularly interesting. I assure the hon. Gentleman that we recognise the biodiversity issue, but we are attending to that through the CAP reform, cross-compliance measures and expansion of our agri-environment measures. Many of those are geared towards trying to reverse the decline in numbers of farmland birds in particular.

Farmland bird species are one of the Government's indicators of sustainability—we take that seriously—and of quality of life, for the reasons that the hon. Gentleman articulately outlined. I am pleased to tell him that from our latest figures it appears that the downward trend in farmland bird numbers, which has continued for a long time, has stopped. The trend has bottomed out. There appear to be welcome signs of an upward trend, although it is too soon to say. We need to be a bit cautious, but the easing of the downward trend is very welcome, and I am sure that the hon. Gentleman welcomes it too.

The reform of the sugar sector should be consistent with the principles that we have already agreed on CAP reform. The hon. Gentleman will know that the European Commission published a communication on sugar in July 2004, which set out the reform principles. The point was made that the existing regime is unsustainable and that early and radical decisions are needed. That, incidentally, was also the view of the Environment, Food and Rural Affairs Committee, which recently went into the issue of sugar reform and produced a helpful report. It was certainly very thorough and has been of great interest to the Government.

There is consensus that doing nothing is not an option. There must be change and reform. I regret that negotiations have been moving slowly in the EU. That is partly because the EU is awaiting the outcome of an appeal against the findings of a WTO panel on sugar. Incidentally, as those findings stand they reinforce the need for action. However, that is an added complication for the Commission when bringing forward its detailed proposals.

When the proposals are published, the Government will publish our own regulatory impact assessment of their effect on various sectors of the sugar industry, including the effect on sugar beet growers in the west midlands and elsewhere in England, so that we can have some kind of evaluation of that. We will also launch a
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second full public consultation once the proposals have been published, so that we can get some reaction from the people who are affected. It is important that we recognise the significant implications for UK beet growers.

It is possible that the industry will not continue at its current level, as the hon. Gentleman said. Farmers who receive the single farm payment decoupled from production may choose not to continue to grow sugar beet at all, if other crops appear more profitable. That would be a rational response to market signals, allowing resources to be used to the best effect.

The hon. Gentleman asked about alternative crops. There is a range of alternative crops, and the Government are putting a great deal of funding into research and development: for example, into energy crops and industrial crops. I visited the Central Science Laboratory, where I saw a range of products that had been produced with materials such as flax and hemp. I saw what looked like a denim jacket, which had actually been made from nettle stems. I saw car dashboards and door panels made from hemp. Farmers have some quite interesting potential alternative crops, with new markets and developments. As a Government, we are funding the work, the development and the research into that, which is quite well advanced.

There may well be options, but in the end it is surely better to have a system where farmers are free to make judgments in relation to what they grow, where their markets are and who their customers are, according to the demands of their own priorities, skills and land. That must be the right way forward, and that is the position that we want to be in.

The hon. Gentleman also mentioned the independent research commissioned from Cambridge university, which looked at the implications for the UK of EU sugar reform. I think that that is helpful, as it gives us an idea of the implications and their extent. We have made that publicly available.
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As I have said, we need to take account of all the players in the equation, including the cane refiners, industrial sugar users, consumers, taxpayers and of course the EU's actual and potential suppliers from developing countries, especially the African, Caribbean and Pacific countries, who have been sending cane sugar to the UK for refining for a long time. That is the historical reason why, as the hon. Gentleman rightly states, some EU countries have a much larger quota for sugar beet. Since before we joined the EU, as a country we have always made a large proportion of our market available to Commonwealth countries such as New Zealand and the ACP countries. When we joined the EU, that was recognised and protected so that our traditional links and markets were reflected in our membership. That explains the quota situation.

Our aim remains to achieve liberalising reform in line with what has been agreed in other sectors—a simplified, decoupled, market-based approach that is consistent with our sustainability policies. I am confident that that is in the long-term interest of all concerned, including sugar beet farmers and processors. The hon. Gentleman will be aware that the Commission is thinking of elements of compensation to reflect the general changes in agriculture, and in sugar beet in particular. We will have to take into account the detail of that when we see the Commission's proposals.

The hon. Gentleman has articulated concerns that are widespread in the sugar beet sector, which I also hear as a constituency MP. I have letters written to try to give my farmers an update on where we are. I regret that I am unable to go into a lot more detail, as I would prefer to do and as the hon. Gentleman deserves, because there is still a range of unknowns in the negotiations and the detail from the Commission. I can assure the hon. Gentleman that, as I said, the sugar beet sector will have the opportunity to comment on the Commission's proposals and the Government's reaction to them, and we will of course listen carefully to its submissions.

Question put and agreed to.

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