A number of hon. Members have mentioned the proposals by the Competition Commission to have an ombudsman for the grocery trade not only for farmers, but for other small producers who supply large retailers. That issue is much broader than agriculture but it is
important none the less. The recommendation has been made and the Minister has a role to play in talking to her Government and Cabinet colleagues to see how it can be progressed. Recent research by an academic from Cardiff university indicated that the net cost of the proposal could be as little as £6 million. That is minute in terms of the total financial turnover of the supermarkets. It is interesting that some supermarkets seem to oppose the idea of having an ombudsman, but others, who we perceive as being more benign in their relationship to primary producers, welcome it, because they believe there would be fewer adverse referrals of their behaviour compared with some of the more aggressive supermarkets.
I shall quickly discuss one or two other topics. A number of hon. Members have raised the issue of pesticides and the European Union decision. Following the vote in the European Parliament, it appears that Ministers in this country have said that they will not pursue the matter as vigorously as some of us would wish. There is undoubtedly evidence that if the matter were pursued in detail, the end consequences would be a large-scale reduction in arable production in this countryparticularly of crops such as carrots and parsnips, which depend upon specific chemicals. I urge the Minister to be active in ensuring that if the regulations have to be introduced, the needs of horticultural production in this country are taken into account. If the regulations have to be introduced, it should be done over a long period, so that alternative products can be brought in.
Agriculture is often almost inexplicably contra-cyclical to the economy at large. At a time when the economy is on the downturn, agriculture is relatively buoyant because commodity prices are higher, the exchange rate is advantageous to agricultural exports and interest rates are lower. We have already heard that the average dairy farmer probably has borrowings of about £200,000, so a reduction in interest ratesparticularly if it is passed on by the banksis of advantage to that and other agricultural sectors. I urge the Minister and other agriculture Ministers regularly to meet the major banks in this country to ensure that the interest rate cuts are passed on. Although agriculture is going through a relatively benign period, it does not mean that the Minister can sit back and relax. Indeed, there is a real opportunity to work with those in the agricultural industry to ensure that they can use the skills and resources availableparticularly in the west country, where we know the industry is so productiveto produce food.
The hon. Member for North Wiltshire (Mr. Gray) mentioned the inquiry of the Environment, Food and Rural Affairs Committee, on which we both sit. The terms of that inquiry relate to securing food supplies, not food securitythere is a difference between those two approaches. World pressuresI will not stray too far down that linemean that Britain has a duty and a role to play in not only supplying Britain but the greater world with food. We do not want some great five or 10-year plan from DEFRA, but we want encouragement and to ensure that regulation is kept to a minimum. That will allow farmers who have both the energy and the enterprise to produce food of a high standard and in an economical way to go forward and carry out that purpose. When sustainability became an in-topic, we were told to think globally and act locally, and that is what agriculture has the opportunity to do in the south-west, if it has the support of DEFRA Ministers.
Mr. James Paice (South-East Cambridgeshire) (Con): I, like the hon. Member for Brecon and Radnorshire (Mr. Williams), remind the Chamber of my declaration in the Register of Members Interests, and I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on achieving the debate. I, too, was going to refer to the fact that it is a very long time since we had had any debate in Government time about agriculture. A few Opposition day debates have taken place more recently than the debates to which the hon. Gentleman referred, but, of course, they were not in Government time, and that is a great shame. I draw a contrast with the subject of fisheries, which is dealt with by the same Department, the Department for Environment, Food and Rural Affairs, and on which we have an annual debate, around the time of the annual Fisheries Council just before Christmas. We should at least achieve something similar for agriculture. We had the health check decisions only six weeks ago and there was no debate about them, yet they have a much more profound impact on agriculture than any Fisheries Council meeting has on the fishing industry, important as it is.
The hon. Gentleman made a number of points about farming in the south-west, most of which I identify with. I shall not try to go through all of them, because there are one or two other points to make, but I shall start with the most important issue, bovine TB. I am sorry that the hon. Member for Stroud (Mr. Drew) has left the Chamber, not because I agree with him, as, generally, I do not on this issue, but because I know that he takes a close interest in it. There is no logic in continuing, year after year, to slaughter increasing numbers of cattle without addressing some fundamental problems. We cannot go on the way we are; the cost to the taxpayer is increasing year on year, and every time it goes up, the Government look at ways of paring the costs, and they do. We have seen it happen with compensation payments, because the Government have had to cut back to save money owing to the increase in the total cost of compensation. The Government are appealing against the Partridge case, in which the court held that the Government were wrong not to pay more money for the high-value, pedigree animals that were the subject of the case. We await the outcome of the appeal, but it could have further cost implications for the Government.
Hon. Members described how the incidence of bovine TB is getting worse year on year. The animal health section of what DEFRA calls its west regionincorporating more than the south-west, because it includes Hereford, Worcester and Shropshirestates that in the first nine months of 2008, 17,300 cattle were slaughtered as reactors, compared with 15,500 during the whole preceding year. Projected to a full year, that shows an increase of about 30 per cent. in the west region, and we cannot go on like that. I, like hon. Members who have spoken, have never pretended or suggested that culling badgers is the only answer, because it is certainly not; however, I think that to pretend that it is not part of the necessary package of measures is akin to hiding ones head in the sand.
The Government should have accepted the Environment, Food and Rural Affairs Committees recommendation, and they should also have used the opportunity to try to find a selective cull process. It is interesting that Professor
Kings thesis was not to eradicate all the badgers in a particular area; simply reducing their population density would reduce the diseases ability to survive in the long term, and that is very important. Those who accept, as I do, the need to cull badgers must make it clear that they are talking about not eliminating every badger area, but simply reducing the population to a level at which the disease cannot survive.
Mr. Gray: My hon. Friend is absolutely right. Professor Kings thesis about the over-population of badgers is backed up by a direct correlation between a sharp increase in outbreaks of bovine TB in areas such as my constituency and a vast over-population of badgersand of ill badgers. Every night, when I drive through my constituency, I see dead, dying and ill badgers on the road; they are incredibly common. I see more badgers than blackbirds. Badgers are everywhere. There is vast over-population and there are huge quantities of TB, and Professor King is absolutely right.
I fully recognise that the right hon. Lady took up her post only recently and has not yet had a chance to make an impact on what I know she accepts is a serious issue; however, I am astonished by the way in which DEFRA and the Treasury work out their funding and, in particular, their public service agreements. It is astonishing that DEFRAs public service agreement with the Treasury, PSA 9, involves an incremental trend of 17.5 confirmed new incidents per annum. When I looked into what that meant, because, like a lot of these things, it is not easy to understand, I found that it meant that the rate of increase could rise annually by 17.5 confirmed new incidents. If, for example, there had been 250 confirmed new incidents in new parishes last year, and that is not far from the reality, this year there could be another 250plus 17.5. In other words, the rate of increase could rise. Fortunately, the rate in reality is going the other way and the number of confirmed new incidents has declined over the past few years, for which we should all be pleased. However, it does not negate the fact that the PSA is absurd, and it is almost impossible to conceive of the Department failing to meet it. At the same time, there is the point that my hon. Friend the Member for North Wiltshire (Mr. Gray) made about the disease spreading at 10 or more miles a year, which brings me to a part of what I believe is an essential package: dramatically stepping up the testing process in what I have always called the frontier areas of the countrythe areas into which the disease is movingto try to identify and halt its progress, while addressing it in particular areas.
The hon. Member for Somerton and Frome spent some time discussing the dairy sector, because it is so important in the south-west, and he rightly said that that sector and, indeed, most of British agriculture is currently sheltered by the collapse in the value of sterling, primarily against the euro, but against other currencies, too. World commodity prices in the dairy industry have dropped by anything up to 50 per cent., and there has been a huge collapse in the price of skimmed milk and whole milk powders, and in the mild cheddar market. We are protected from that, but, as a result, I fear
further price cuts, because, for other reasons, we hope that sterlings collapse will not last forever. It may well reverse and, indeed, there are indications that it is beginning to.
That brings me to the issue of the power of the supermarkets, with which I always associate the power of the producer because I think that they are opposite sides of the same equation. I shall not go into any more detail about the issue of an ombudsman, because other Members have made the point and I support the approach; however, we must look at the share of the retail price that the producer receives. I draw a comparison with Germany, where, over the past 10 years, the retail price of milk has risen gradually but the supermarkets share has remained the same. Reports in this country indicate that while the retail price of milk has risen, the supermarkets share has gone up far faster than the retail price, to the detriment of the producer. When I look at the reasons, I cannot help feeling that we arrive at the issue of the power of the producers, through co-operatives, farmer-owned businesses or wherever we want to call them, which are much more powerful in Germany than they are in this country.
Mr. Heath: The hon. Gentleman is absolutely right; the issue is about the power of the producer. However, that power is amplified not only by horizontal integration through co-operatives, but by vertical integration through links. Is that not also a failure of this countrys structurethat we have such weak vertical integration?
Mr. Paice: The hon. Gentleman is absolutely right. Not every dairy producer likes the comment that I am about to make, but I have made it before: the industry is still paying the price for the immense security that it achieved under the milk marketing boards, which stultified both innovation and any need for the industry to become competitive. We are also paying the price for falling behind Europe in innovation and the development of new products. So many of the high-value dairy products on supermarket shelves are imported because we are years behind in innovation and highly efficient modern production techniques, although the situation is improving.
On the power of producers, it seems odd that although the EU is constantly striving to put its fingers into all sorts of areas of national life, we have completely uncommon approaches to competition law. This is not a debate about the future of Europe, but the Minister and I will be debating another issue this afternoon where it is ridiculous that the EU is getting involved. Not everybody is aware that Arla, the big Danish milk co-operative, commands in excess of 80 per cent. of production in Denmark. Nothing of the sort would be allowed in this country. Even New Zealand, which is held up as the epitome of the free market, has co-operatives with huge market shares that would be prevented by the Office of Fair Trading in this country. Much more work must be done in that area.
I will mention quickly a couple of issues before giving the Minister plenty of time to respond. The hon. Member for Somerton and Frome mentioned the important issue of food labelling. I am relieved and pleased that the Minister and the Secretary of State have come round to recognising the strength of the argument. I was astonished at the Secretary of States speech on the subject at the Oxford farming conference because for
years DEFRA has resisted any effort by the Opposition and individual hon. Members to address the issue. I hope that the conversion of DEFRA Ministers will lead to action.
As has been said, my hon. Friend the Member for South Norfolk (Mr. Bacon) is reintroducing the Food Labelling Bill that has already been blocked four times by this Government. I hope that they will give it a fair wind and that we can have the legislation on honest labelling about the country of origin that we need. If the Government block the Bill again, it will demonstrate the vacuousness of the Secretary of States remarks last week in Oxford.
The issue of set-aside has been raised. I strongly support environmental measures in agriculture, but we have become too committed to the regulatory approach. I fear that that is down to the attitude of Natural England. Set-aside produced environmental gains by accident. It was not the intention. It is important that those gains are retained. However, it would be far better to do so through encouragement and stimulus such as the entry-level stewardship, than through the threat of a stick if a certain percentage of land is not set aside, as the Government are suggesting.
Nitrate vulnerable zones make a nonsense of the concept of regulation. Four national muck-spreading days are laid down in statute. Regardless of the weather, the land, the slope and so no, muck-spreading must be done on the allotted day and not on the day before, even if the weather is more propitious. That is absurd. The Government should have done a far better job of getting derogations in Europe. I accept that the measure is based on the nitrates directive, but in my view that is obsolete and should be updated as soon as possible and the changes backed up with modern science.
Finally, I endorse what has been said on pesticides legislation. I credit the Secretary of State, who has been robust in his comments on the subject in this country. We are not privy to his comments in Europe. However, I exhort the Minister to ensure that DEFRA seeks every opportunity to mitigate the impact of that legislation on British agriculture. The impact would be devastating for all specialist crops, such as field-scale vegetables and salads, and for mainstream arable crops. That would be bad for the south-west, for British farming and for the British consumer. The biggest absurdity is that it would still be legal to import products produced using those chemicals from outside the EU. That drives a coach and horses through the whole enterprise. I urge the Secretary of State and the Minister to maintain their robust approach.
The Minister of State, Department for Environment, Food and Rural Affairs (Jane Kennedy):
I grew up not in the south-west, but in Gods own country in the north-east. I lived in a small village outside Darlington that has sadly become a suburb. I shall explain why this is important to the south-west in a moment. It was surrounded by market gardens and by arable and dairy farms. My next-door neighbour raised Labradors as a hobby so we
would occasionally visit the large Winyard estate on Teesside. My happiest childhood days were in the summer months, when the sun always seemed to shine. We would cross neighbouring farmland dressed in T-shirts, shorts and wellies with at least four Labradors who, for a bit of extra excitement, would occasionally set up a rabbit. I must add that they never caught them. That is one reason why it was such a great joy to be invited by the Prime Minister to serve as the Minister with responsibility for agriculture in this House. The post allows me to get involved in issues of intense personal interest.
Having listened to this debate, I understand that these issues are of immense interest to hon. Members who represent rural constituencies. I compliment the hon. Member for Somerton and Frome (Mr. Heath) on securing the debate. He and the hon. Member for South-East Cambridgeshire (Mr. Paice) among others have drawn attention to the lack of debate on such matters in Government time. We now have time that can be allocated to such debates. There will be a debate in Government time on food on 29 January. I am happy to make representations through the usual channels that more Government time be provided to discuss agriculture.
My able predecessor, Lord Rooker, brought to the job not only a tremendous level of experience, having served in the post for a number of years, but a depth of understanding for and empathy with farmers, which was much appreciated. Having a Minister responsible for this policy area in this House means that we will have more opportunity to debate these issues. I will make such representations to my good friends in the Whips Office.
At the outset, I acknowledge the essential job that farmers in the south-west do for us all. They have a strong tradition of producing quality food that we all enjoy. I accept that they often work under difficult conditions. The hon. Member for Somerton and Frome began by commenting on the weather. I know that last years harvest was particularly difficult with about twice the normal level of rainfall in the region. He alluded to the serious flooding in October and December. He may know that a small Environment Agency project is underway to gauge the extent of the problem and to discover how changing the management of agricultural land could control run-off when there is heavy rainfall. If he does not know about that, I can provide him with details after the debate.
But it is not all bad news. Despite the poor weather, we estimate that wheat and barley production in the region have increased by almost one quarter, to 1.4 million and 611,000 tonnes respectively. As the south-west has approximately 1.8 million cattle, half a million pigs and 3.2 million sheep, livestock diseases are a serious issue for the region.
Hon. Members have not touched on bluetongue, but the threat is still present. The Government and the core group of industry stakeholders still believe that mass vaccination is best and will be rapidly achieved through a voluntary approach. Farmers must continue to vaccinate. Significant quantities of vaccine are still available, but, as I said at oral questions last week, farmers also need
carefully to consider the risks and check the health and vaccination status of animals they buy from within the UK and from abroad.
I accept that bovine tuberculosis is a serious problem for farmers in the south-west. I take the matter seriously and am committed to tackling the disease. Soon after coming into the Department, I asked that among the visits to farmers and the farming community that were being discussed for me, at the very earliest opportunity I be given a chance to meet farmers who have been affected by the disease. Consequently, my second visit was to the constituency of my hon. Friend the Member for Stroud (Mr. Drew), who has left the Chamber, at which time I had the opportunity to listen to a group of farmers from mixed backgrounds, both tenant farmers and farm owners, who described the impact of the disease on them and their businesses.
Mr. Heath: I am glad that the right hon. Lady is speaking directly to farmers who are affected. May I suggest that it might be a good idea to reinstate what was a matter of practice every year a few years ago, which was that agriculture Ministers attended the Royal Bath and West show? The Minister would have direct contact with a large number of dairy farmers who have been directly affected, and her presence would be appreciated. The practice seems to have gone out of fashion in recent years, but it could be usefully reinstated.
Jane Kennedy: I am interested in that invitation and shall ask my officials to get details about the show. I hope to visit the south-west soon. Given the distance, it would seem sensible to spend more than one day there, if parliamentary responsibilities allow it. We have discussed several issues this morning that affect the south-west in particular, so the visit would focus not only on the impact of bovine TB although that would be one of the focuses.
I realise that the decision taken by my right hon. Friend the Secretary of State not to allow the licensed culling of badgers is unpopular with many farmers. Hon. Members may disagree with it, but they will know that it was based on a wide range of factors, including scientific evidence, the practicalities of delivering a successful cull, discussions with farming, veterinary, wildlife and conservation groups, the conclusions of the independent scientific group on cattle TB, and the Environment, Food and Rural Affairs Committee report.
The Government do not deny the link between cattle and badgers. There is no denying that the badger species is susceptible to the disease and reacts to bovine TB. Measures in place that aim to reduce the spread and incidence of the disease include regular testing, zero tolerance of overdue tests and pre-movement testing.
I listened carefully to what the hon. Member for South-East Cambridgeshire said. I shall look again at the public service agreement targets to which he alluded. I understand the stark reality of the thousands, if not tens of thousands, of cattle that are being slaughtered, and the fact which farmers have pointed out to me on numerous occasions that some cattle do not actually have the disease but react to the tests. There is added grief for owners if perfectly healthy cattle have to be destroyed.