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9 Mar 2005 : Column 501WH—continued

Farming (Lewes)

3.28 pm

Norman Baker (Lewes) (LD): I am pleased to have the opportunity to raise a matter that is important for my constituency. Mine is a rural constituency that stretches from the coast up to the borders of Haywards Heath and Uckfield, and it covers a wide area. The number of farmers may be relatively small compared with the rest of the population, but what they do is important—beyond their numbers—in social, environmental and economic terms. In fact, according to the Library, they comprise 6.3 per cent. of my constituents, including spouses and partners.

There is uncertainty among local farmers about what the future holds for farming generally and for them in particular. That is not simply driven by the faster speed of life and the changes that are coming to the common agricultural policy. It is also about what strategic role the Government have in mind for farmers and farming in the 10, 20, 30 and 40-year scenario. Is it the Government's view that there should be a move towards self-sufficiency in food production or, at the other extreme, do they think that it does not matter whether we produce food, because world trade will take care of us? What is their view on that strategic matter?

For what it is worth, my view is that, in this uncertain world, we do not know where we will be in 20, let alone in 50, years' time. It would therefore be prudent for us to be more self-sufficient in food and energy than we currently are, in order to ensure that we are able to cope with potentially unstable geopolitical situations in the longer term. I am interested to hear the Minister's comments on that. We certainly do not want farmland to be transformed into housing estates and golf courses in such a way that any withdrawal of agricultural land cannot be undone in the future.

As for what the Government and the European Union are doing, I welcome the move towards a single   farm payment. That is a sensible innovation, and I hope that it will be useful for farmers and for the   environment. However, it is important to make the point that, for that system to work, there needs to be prompt payment to farmers. The Minister will be aware that there have been complaints over the years—indeed, I have written to him myself on some occasions—about the performance of the Rural Payments Agency.

If we are to get ownership of the single farm payment from the farming community, it is important that there are prompt payments. That means that payments should be made in December, rather than in January or February as is currently suggested. Will the Minister consider an arrangement for the historic element of the single payment scheme to be paid as an advance payment? Have the Government examined that and is he able to say something positive on it?

I also welcome the environmental stewardship scheme, which, again, is useful in providing both some sort of continuity for farmers and continuity of income. The only criticism I have is that the paperwork, particularly for the entry-level scheme, seems to be enormous. I spoke to some farmers this morning and they told me that they were concerned that they had to fill out lots of forms in order to qualify. In their view, that was a deterrent, although they will probably go
 
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along with the scheme. Of course, the Minister must be rigorous, to ensure that there is no fraud and to ensure that all the necessary points are covered. However, there is always a balance between proper rigorous control and not overburdening people with paperwork. I hope that he will bear that in mind as the scheme unfolds.

I want to discuss another important point. To prepare myself for this debate, I spoke to a range of farmers in my constituency. It is strange how many of them came up with the same points. That suggests that the points that I am making today are of general concern in my constituency and, perhaps, beyond.

One such point, which the Minister will be familiar with, is the uneven relationship that exists between the farming community—the suppliers—and the purchasers of their goods, particularly the supermarkets. That uneven relationship means that while the price paid to farmers for their produce has stagnated or fallen, supermarket profits have rocketed. For example, he will know that the price of a litre of milk in my part of the world was about 25p a litre in 1996 and it is now down at about 18.9p a litre—and that represents a marginal increase in the past year or so. That price is way below the price of almost 10 years ago. That is clearly not an economic situation that can be sustained indefinitely.

Let us consider the finished cattle prices situation. The Minister might know that in 1993, there was an average price of 128p a kilogram, which decreased to 90p a kilogram in 2002. As for the relationship between the suppliers and the supermarkets, there is, in my view at least, a damning statistic. In terms of finished cattle prices—the farm-gate prices—in 1988, 67 per cent. of the retail price was related to the producer. That percentage had dropped to 47 per cent. in 2003, which meant a further squeeze on producers and more profits for the supermarkets.

Of course, no one is against profits. We all adhere to a capitalist society these days. However, it is worth pointing out that Tesco is scheduled to make £2 billion this year and it will make a profit of some £115,000 in the time taken by this short half-hour debate. In other words, it will probably make more profit in five minutes than some of my farmers will make in an entire year. That is a rather uneven relationship—one that the Government ought to correct.

The Minister will be aware that the Office of Fair Trading has been involved in this matter and that it concluded the last time it considered the matter in a rather peculiar manner that, although there was a problem, the OFT was going to do nothing about it. It has now done some further work, as he will know. Perhaps he will enlighten me on that in his response. Part of the work involved obtaining information from supermarkets by conducting a focused compliance audit of each of the four supermarkets, dealing with suppliers.

I welcome that approach, because clearly no one will complain directly about the supermarkets—not because there is not a problem, but because they are frightened of being squeezed out if they do so. They think that they will be picked on if they make a complaint. It is therefore important that an independent rigorous way of analysing the trade between supermarkets and suppliers exists, to pick up what most people think is going on, which is that supermarkets are exploiting their suppliers, particularly the farmers. I hope that the
 
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Minister will be able to say something positive about that. I wonder whether he has considered the idea of either a food trade inspector in the OFT, which my party supports, or a buyers' charter, which the National Farmers Union has put forward as an alternative.

The consequence of the uneven relationship is that some farmers wonder why they are in the business at all. They look at the money that they are earning and what they are paying their employees; they see that they are not able to provide money for reinvestment and they do not feel that they are getting a fair wage. One tenant farmer said to me this morning that he may as well hand back his land to the landowner. That is a sad state of affairs.

We want our tenant farmers to survive and we want a diversity of farmers in this country, rather than a decreasing number of ever-bigger farmers. That is the way to help social cohesion as well as to provide diversity in the agricultural sector. Does the Minister agree that we should not necessarily welcome the move towards fewer and fewer farms and fewer and fewer owners?

As for local matters, which follow on from that point, we must try to protect the local infrastructure, so far as we can, and we must also ensure that it is expanded wherever possible. There used to be a number of abattoirs in my constituency, but they have all closed. It is a long way to go to the abattoir in Guildford or the one in Broad Oak from my constituency. The ones in Wivelsfield and Ringmer have closed.

Consequently, animals are now being taken further to slaughter, which is bad, for animal welfare reasons. It is bad for the farmer for economic reasons and bad for the environment generally because it causes extra lorry journeys. The closure of small abattoirs and the need to travel further to have animals slaughtered has no benefit. What are the Government doing to encourage smaller abattoirs to open to serve local needs? The situation in this country is vastly different from that in France, where there tends to be an abattoir in each local area. Farmers are far more connected in that way to their local market.

The Minister will know the controversy that there has been over the possible closure of Hailsham market, which is a cattle market that serves my constituents, although it is based in the constituency of the hon. Member for Wealden (Charles Hendry). That market has had a sword hanging over its head. It is important that it survives, for the same reasons that I think local abattoirs should survive.

Local suppliers are important in other ways as well. A farmers' market takes place on the first Saturday of the month in the pedestrianised precinct in Lewes. It is tremendously popular and hugely successful. People like to have local markets and they like to buy local produce. They support such efforts in vast numbers and   they are disappointed when they go to their supermarkets and find that they can buy one or two varieties of apples only, as opposed to the vast number of varieties that there used to be when there were greengrocer shops. Some of the varieties have come from France and elsewhere. Why is it not possible for supermarkets to have far more local produce? Why do none of the supermarkets in my constituency have a Sussex food counter? What is the Minister doing to
 
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encourage the retail trade to buy more products locally and to support local producers far more than it has done?

One consequence of not supporting local producers is that supermarkets ratchet up huge amounts of lorry miles transporting food hither and thither across the world. The supermarkets in our country alone accrue 670 million miles in lorry movements every day; that is the equivalent of two return trips to the moon. That statistic comes from data from the supermarkets themselves; I secured the information from them, and it is included in a report on supermarkets that is on my website. That is a gigantic amount of travel; it is unsustainable in environmental terms, as well as being undermining of local supply and produce.

It would be helpful if the country-of-origin labelling rules were tighter, so that people who want to buy British food can do so. Will the Minister look into that? Can things that are imported and then packaged in this country properly be described as British? I understand that that sometimes happens.

All the farmers I spoke to raised the matter of tuberculosis in cattle. It is a serious issue, particularly in my constituency and the Sussex area. One farmer who wanted to be identified—his name is Paul Collinson—tells me that he has a closed pedigree herd, but there are always TB cases in it so he cannot sell his pedigree cattle, expect to the Minister's Department. Testing takes two days, which slows matters down, as well as having a cost. He says that the Department no longer tests badgers, as it used to do some years ago. He also questions what the policy should be on the removal of   roadside badgers. He tells me that the Ministry of Agriculture, Fisheries and Food—as the Minister's Department was then known—had a policy of removing such badgers until 1991, but that now, in Sussex at least, that is left to the farmers themselves to deal with, which is an extra cost to them. I do not know whether that is true, but perhaps the Minister can enlighten me.

There seems to be a proven link between TB in badgers and TB in cattle—I should point out at this point that I am my party's animal welfare spokesman. Does the Minister accept that that link is now established? We have been testing for a long time—we have had the Krebs report and other investigations—but nothing much seems to happen. What are the Government going to do to deal with TB in cattle? There are three possible ways forward; either the Minister must find a proper vaccine for cattle, which is my   preferred solution if it can be achieved, or he must   introduce a badger cull, which the farmers believe is necessary—although many people would be uncomfortable with that—or he must introduce compensation payments to recognise the fact that the Government are not solving the problem and that farmers are significantly out of pocket. Please will the Minister tell us what is the Government's policy on TB in cattle, with particular reference to my constituency, as my farmers would welcome hearing that?

I turn to a few small environmental matters that affect farmers. The Minister will be aware that new regulations will be introduced to deal with farm waste. As an environmentalist, I support the idea of ensuring that we deal with our waste properly, but can the Minister assure me that he has thought through the consequences of the regulations in relation to farm plastics? Will he
 
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ensure that there is a system in place to deal with farm plastics, including a national collection system, before the regulations come into force? We do not want a repeat of the fallen stock fiasco, which occurred when regulations and a system were in place. Will those regulations be in place? Will the National Farmers Union and others be properly consulted about them?

There are two further small environmental matters. Biomass has the potential to provide an income for farmers, particularly on set-aside land. I welcome that, and we should offer further encouragement to farmers to go down that road where that is appropriate. However, some of my farmers feel that the Government are not doing enough to promote that. What more will the Government do to promote the take-up of biomass on set-aside land?

Lastly, the Minister will be aware of an issue I raised in respect of the Clean Neighbourhoods and Environment Bill. Fly-tipping on farmland—and, indeed, on private land generally—is a significant problem. In a letter of 3 March, the Minister's colleague, the Minister for the Environment and Agri-environment said:

"The current defence of not knowingly caused or permitted will remain to protect innocent victims of fly tipping."

That is true up to a point, but there is still a requirement to remove the material, and I fail to see why farmers should pick up the bill for something that they have not done.

This has been a run-around-the-houses speech, but these are important matters for the farmers in my constituency. I look forward to hearing the Minister's reply.

3.45 pm

The Minister for Rural Affairs and Local Environmental Quality (Alun Michael) : I welcome this opportunity to respond to what the hon. Member for Lewes (Norman Baker) referred to as a run-around-the-houses speech. I congratulate him not only on securing this debate, but on managing to pack in a whole series of questions, each of which would justify a short Adjournment debate on its own. In the last few minutes alone, he referred to biomass and fly-tipping. We have had exchanges on those issues, and I understand that they are important, but the hon. Gentleman has covered so many topics that I doubt that I can do justice to them all. All I can say is that I will write to him after this debate to deal with any topics that I do not have time to address now.

The hon. Gentleman began by asking a large strategic question about the future of farming. He related that to farmers in his constituency, but in order to answer it one has to look at the wider picture, as, indeed, he invited me to do. The Government's view is that our farmers need to be sustainable in terms of their income and viability for the future and need to be entrepreneurial in order to achieve that. The Government want to support farmers to act effectively as businesses, as many of them already do, instead of looking backwards to the period of subsidy, which led to a dependence culture, rather than an entrepreneurial one.
 
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I am sure that the hon. Gentleman agrees with the   steps that we have taken to work with the industry   through the strategy for sustainable food and farming. This year is a year of massive change for the   farming industry. It is the first year of applications for the new single payment scheme, to which the hon.   Gentleman referred. The new environmental stewardship scheme will also be introduced, as will the whole farm approach, later in the year. Those are three vital building blocks as we move towards creating a sustainable future for farming and for food industries. In 2002—which is not that long ago, although it sometimes feels like long ago—we set out our vision for the long-term development of the industry. The theme of reconnection runs through that vision; reconnecting farming with the enhancement and protection of the environment, and reconnecting farmers with both their markets and the needs of society through higher animal health and welfare standards and higher food safety standards. It is an approach that has sustainability and sustainable development at its core.

I recognise that change is accompanied by challenges as well as opportunities. Not all farmers will find that transition easy; some farmers will have to change from their traditional approach, or make choices about whether they want to continue in farming. The hon. Gentleman is right to highlight that. However, although some farmers will find it difficult to adapt, creating a market-focused and environmentally and socially responsible industry—which does things that the public want and that bring public benefit, but which is also market-orientated in terms of producing what the consumer wants—will offer great rewards for farming and society alike. We must not lose sight of the long-term outcomes that we seek to deliver.

3.49 pm

Sitting suspended for a Division in the House.

4.2 pm

On resuming—

Alun Michael : I was explaining how change is both challenging and beneficial to the farming industry. It is worth underlining the fact that the groundbreaking deal that we secured on the reform of the common agricultural policy removed the link between production and subsidy for the first time. That decoupling is integral to the vision of reconnection that   I referred to earlier and will help to deliver an increase in returns from farming.

Economists from the Department for Environment, Food and Rural Affairs estimate that on average farm incomes could rise by about £100 million relative to what would have happened in the absence of a single payment scheme. That represents about 3 per cent. of total income from farming in 2003. Many small farms are also very competitive and are being developed by farmers as effective businesses.

The hon. Gentleman's suggestion that we should not simply sit back and allow farms to increase in size is understandable, but an increase in size is one way to achieve efficiency and sustainability in parts of the farming industry, although there are alternatives. Diversification is one, and increasing returns to the farm as the primary producer is another.
 
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I would cite two examples in Sussex. The first is the Sussex Downs Conservation Board, which is working with a number of farmers to produce south downs lamb   as part of a range of locally branded products being developed under the south downs landscape enhancement initiative. The project aims to boost the sale of local products and help sustain the south downs habitat, so there is an economic benefit to the farmers and an environmental benefit to the area. We have helped that through the rural enterprise scheme.

The second example is the Sussex producers consortium, a group of livestock producers working together to process and market their meat and meat products. They have taken a 50 per cent. share in a meat   pie making company, ensuring that they get a   better share of the retail price and enabling local produce to be sold locally. Those are two examples, and there are many other ways in which farmers can ensure that they get a better return for their work.

The hon. Member for Lewes welcomed the development of the single payment and referred to the   welcome received by the high level stewardship scheme in the last week or two. He asked about prompt payment. It appeared to me that he was talking about early, rather than prompt, payment. The Rural Payments Agency was engaged in a considerable period of change when it was given the task of implementing the CAP reforms. It faces a challenging time, but neither it nor we have underestimated that challenge and we are confident that the RPA will deliver.

It must be pointed out that the payment window for the single payment scheme is from 1 December 2005 to 30 June 2006. That means that a payment on 28 June would not be a late payment. However, that is not what we are aiming for. We are aiming for payment as early as possible within the window, but we need to be realistic. The agency will aim to make as many payments as possible as early as practicable within the time scale. That remains the case. Payments are likely to be made from February 2006 onwards, well within the payment window. In response to the hon. Gentleman's question, we have asked officials to investigate the options for interim payments, and they are due to report back to me shortly.

The benefit is that as a result of the changes it should be possible to make payments in future years even earlier in the payment window and to give greater certainty to farmers as to when they should expect those payments, because this is the year of transition and great challenge. We have a transitional year in which we want to help farmers to as great an extent as we can, and are investigating ways to do so. We will announce the outcomes of our deliberations as soon as we can. We are working closely with the industry and the representative bodies on those issues.

The hon. Gentleman also referred to concern about the power of supermarkets. We share that concern. The issue is what one can do to make sure that we achieve a fair outcome without damaging competitiveness. That is why we were keen to encourage the Office of Fair Trading to undertake its review of the operation of the supermarkets' code.

The hon. Gentleman was right to say that the outcome of the review was disappointing in that it did not point to specific actions. However, that is why the
 
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OFT commissioned a focused audit of supermarkets' dealings with suppliers following the review. That is due to be published in the next few weeks, and we should consider its findings and recommendations carefully. I   have no doubt that Members such as the hon. Gentleman, who represent seats with a considerable farming element, will want to look at those recommendations and debate them with Ministers as soon as the report becomes available.

It is also worth pointing out that for the most recent months where figures are available, the price of milk is 19.12p per litre. Despite fears about what would happen, the average farm gate price—18.56p per litre—was actually higher in 2004 than 2003. That was the highest since 2001. The University of Manchester report, "Economics of Milk Production, England and Wales, 2002/03", found that 60 per cent. of milk produced in the UK was produced at a profit, but that that production was by 40 per cent. of dairy farmers. Clearly, there is a huge disparity in the costs of production and profitability. Figures going back further than the past few years show that over a longer period the issues of profitability in the milk industry form a pattern that requires close scrutiny.

The hon. Gentleman referred specifically to TB. Bovine TB is one of the most difficult animal health problems facing Government and the farming industry in Great Britain. We are committed to finding the best way to combat the disease, backed by available evidence and taking account of all interested parties, including the taxpayer. Some 5.7 per cent. of herds were affected by TB restrictions at some time during 2004 and 2003.

The number of new incidents in 2004 was slightly up on 2003; 3,313 compared with 3,220. Those are the provisional figures that we have. Several key measures are being introduced, including the emphasis on keeping areas clean and reducing TB in hot spot areas, the new surveillance measures announced last autumn, and the work with the farmer-chaired stakeholder group to finalise a detailed proposal to implement pre-movement testing of cattle. Those proposals will be subject to further consultation.

It is worth remembering that in 2003–04 we spent more than £15 million on research, covering among other things the transmission of bovine TB within and between species. Research included the randomised badger culling trial, improved diagnosis and vaccine development. I know that the hon. Gentleman has asked in the past about the possibility of vaccine development as a means of dealing with the issue.

A limited road traffic accident survey is being conducted in seven counties of England. They are the   lower-incidence-comparative counties of Cornwall, Devon, Gloucestershire, Herefordshire, Worcestershire, Shropshire and Dorset. Farmers outside those areas can submit badger carcases for private post mortem at the Veterinary Laboratories Agency, but that involves a cost. The fact is that dealing with bovine TB is far from easy, and the trouble is that some outcomes of the work done in Northern Ireland have been presented in some parts of the media as if they provide an instant solution. I think the hon. Gentleman will be aware that they do not. There were considerable reservations about some of the conclusions that the industry jumped on.
 
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One point I would make to the hon. Gentleman is that the sorts of examples I gave earlier about how the farming industry is making itself competitive nationally, and locally, by getting a more effective return for the   farmer, require the industry to take the lead. The purpose of government is to work alongside and support the industry to become more effective and   competitive, but the ownership of becoming truly competitive and effective must lie with the industry. Many farmers are demonstrating what can be done to change and become successful.

We are committed to supporting the farming industry through the current period of change in order to leave it well equipped to succeed in the future. In particular, we will launch a business advice service aimed at getting farmers to grips with the business implications of CAP   reform. That will complement existing technical advice on issues such as cross-compliance, pollution minimisation, and conservation. Such headings indicate the sort of adjustments with which farmers have to cope.

We are also supporting bodies such as the Food Chain Centre, English Farming and Food Partnerships and the dairy, red meat and cereals industries forums to   help the farming industry improve its own competitiveness. The methods for that must be collaboration, co-operation, benchmarking, and the sharing of best practice, as well as the identification of solutions to sector-specific issues.

The hon. Gentleman referred to fly-tipping on farmland as one of his specific queries. Again, there is a considerable amount of detail, so I repeat my offer to write to him about some of the issues I have been unable to cover in full during this short debate. The Government are committed to tackling the problem of illegally deposited waste or fly-tipping. It is a huge antisocial problem, affecting local authorities, the Environment Agency, other organisations, landowners and farmers.

The hon. Gentleman referred to the key component of the Clean Neighbourhoods and Environment Bill, which is with the House of Lords. I hope that its provisions will assist the Environment Agency, local authorities and victims of fly-tipping, including farmers, and reduce that nuisance.

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