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"There needs to be a code of practice properly enforced, but whether that requires a freestanding ombudsman which would be a new bureaucracy is not clear."
Mr. Paice: That is absolutely astonishing nonsense. We have done exactly what I said at that time. We have said that we will appoint an independent ombudsman, not in a separate office with all the paraphernalia-a reception and a new set of office rates and so on-but within the OFT. We want an independent, discrete unit within the OFT in order to keep the costs of providing an ombudsman down, but he would none the less be independent.
I would be interested know whether the hon. Gentleman supports the principal spokesman for the Liberal Democrats on such matters. The latter says that we should have not an ombudsman but a price regulator who would fix prices, which would be totally contrary to European Union and World Trade Organisation law. The hon. Gentleman is completely deceiving farmers in this country if he believes that a Liberal Government-God forbid that one should ever exist-could actually fix the prices that supermarkets paid farmers for their milk or anything else. I look forward to his response to that.
The "Food 2030" document refers to the need for better and more friendly regulation. That from a Government who introduced national muck-spreading day and put in statute the date when farmers may go and spread their muck!
The Department for Environment, Food and Rural Affairs has a target to reduce its administrative burden by 25 per cent. by May, but it will not hit it. The expectation is that at best it will reach 20 per cent., but even so, that is 20 per cent. of the wrong target, because targeting administration costs completely ignores the capital costs on businesses of meeting DEFRA regulations. The nitrate-vulnerable zone storage regulations cost tens if not hundreds of thousands of pounds to each and every livestock farmer in the country. The cost of regulation is still huge. Even if the Department declares in a few months' time that it has decreased the administrative burden by 20 per cent., I do not expect many farmers to have noticed the difference.
I am most grateful to my hon. Friend for mentioning NVZs and the increased capital costs faced by farmers, particularly dairy farmers. However, the milk industry is clearly part of a chain where the market is not working properly. Farmers cannot sell
milk for a greater price than it takes to produce it. What is the answer to the problem of reviving the dairy industry in this country?
Mr. Paice: I obviously do not have time to retail a long list. We have two debates on the dairy industry in the House and Committee next week, when my hon. Friend might want to go into a bit more detail. Many dairy farmers are making a profit: part of the problem is the 6p or 7p a litre difference between the highest and lowest prices paid. The other issue is the cost of production. In a market in which the Government no longer-rightly-set prices, they are bound to do what they can to reduce the input costs, and that is part of what I am addressing, especially on regulation.
On the issue of regulation, can the Minister bring us up to date on the situation with battery cages? We are hearing many stories of backing down on the 2012 ban, and we know that most European countries have hardly begun to introduce the enriched cages. What will the Government do to protect our industry and those farmers who have made significant new investment, but face egg imports from countries that have not done so?
The Minister also referred to public sector food procurement. He mentioned improvement, but there has been precious little of that. This country should be predominant in supply of orchard fruit, given the industry in Kent and parts of the Welsh marches, but domestic supply fell from 46 per cent. in 2006-07 to 30 per cent. in 2007-08. The Government are consulting on a pilot healthier food mark, but does the Minister agree that that should involve the Red Tractor, or is it true that they propose to drop it from their proposals?
Animal health is critical if we are to compete with other countries, especially in the grazing sector. The Government have announced their responsibility and cost-sharing proposals and appointed Rosemary Radcliffe to look into the issue and produce a report in November. However, we will have a draft Bill this month or next. What can be in that Bill if we will not have the substantive proposals from Ms Radcliffe until November? We cannot talk about increasing production and ignore the fact that some 40,000 head of cattle were culled last year because of bovine tuberculosis, up from 3,000 head a year when the Government took office.
Mr. Paice: Conservative policy is to attack this disease with a comprehensive strategy using all available measures and, yes, that does include recognition that will require selective culling in certain hotspots, but not across the whole of England, as the hon. Gentleman implies. We will continue to study the science as it develops over the next few weeks and months. A vaccine that is of any use-an oral vaccine, in other words-will not be available until 2014 and, at the current rate of expansion anything between 80,000 and 100,000 head of cattle could be slaughtered each year by then. I suggest that we cannot wait until 2014 for any improvement.
With your indulgence, Madam Deputy Speaker, I wish to ask the Minister about another animal health issue not directly related to food-at least not in this country. It relates to the outbreak this week in Wiltshire
of equine infectious anaemia in two horses imported from Romania. My understanding is that EU law has, since 2007, required testing prior to export. I hope that the Minister can tell us what has gone wrong, whether those animals were tested and how they got to Wiltshire before being detected.
The Minister also referred to energy and waste reduction. He may not be aware that over the past few weeks I have tabled questions to every Department about food waste and only the Department for Environment, Food and Rural Affairs has been able to give me any figures. Almost every other Department has said that it does not collect those statistics. I suggest that the Government start leading by example and collecting those statistics. The Government talk about spending £10 million on anaerobic digesters as demonstration plants, but that ignores the fact that many are already in place and running, based on renewable obligations certificates. We now find that the Department of Energy and Climate Change proposes to renege on those certificates and there will be no grandfather rights for existing plants. However, DEFRA proposes more regulations on the size of store that will need a licence-another difficulty for anybody who wants to set up an anaerobic digestion plant, even though this country is already way behind in that area and needs to improve.
When it comes to the Government's document, rarely can there have been so much hype over so little substance. The Government seek credit for admitting that they have got this issue completely wrong for the past 12 years, because domestic food production does matter. That is in the face of the fact that the farming and food industries have been saying for years that the Government's policy was wrong. The Conservative party has consistently called for food security, but the Government rubbished it. The Conservative party called for honest labelling and country-of-origin information, and the Government blocked that. The Conservative party is committed to public procurement, but we have a pale imitation of that from this Government. We are committed to an ombudsman, and all we have from the Government is a consultation. For years, the real interests of the countryside, farming and the food industry have been pursued by the Conservatives, not by the Government. For years we have been setting the agenda that the Government are belatedly beginning to follow-
Andrew George (St. Ives) (LD): Like the hon. Member for South-East Cambridgeshire (Mr. Paice), I am pleased that the Government have provided time to debate this important issue. I welcome the Government's belated statement on 13 January. I should also declare an interest as someone who has chaired an organisation called Grocery Market Action Group for the past four years. It has cross-party support and representatives from the National Farmers Union, the National Farmers Union of Scotland, Friends of the Earth, ActionAid, Traidcraft, the British Brands Group, the Association of Convenience Stores, the British Independent Fruit Growers Association and several other organisations with an interest in a competitive and effective food industry in the UK and in fair trade with suppliers in developing countries.
It is important to note that those organisations and others, who have watched how this sector has developed over the past 11 years of various inquiries by the Office of Fair Trading and the Competition Commission, and the original voluntary supermarket code of practice, are not criticising the supermarkets and their behaviour as being in some way criminal. Indeed, their activities have been entirely rational. It would be surprising if anyone in the position of the Sainsburys, Tescos and Asdas of this world did not take the fullest possible advantage of their impact on market-the OFT has described them as able to dictate market conditions. They are in a very powerful position and their behaviour is entirely rational. The issue that the competition authorities have considered over the years is whether those firms' use of power in the marketplace has turned from effective and clever into an abuse. The important work of the Competition Commission in an excellent report published in April 2008-and the length of time since then is one reason why people are getting frustrated-demonstrated that we are talking about a level of abuse. The Minister himself in his opening remarks referred to the transfer of excessive risk and unexpected costs, and that has been clearly demonstrated by the thorough inquiry by the Competition Commission. The inquiry stated that it has
"an adverse effect on investment and innovation in the supply chain and ultimately on consumers."
Philip Davies: The hon. Gentleman is working on the premise that there are big, horrible, nasty supermarkets screwing poor, small suppliers into the ground. If that is the case, as he seems to think, and if his ombudsman is to deal with it, the only upshot will be that prices will have to go up for the consumer, because supermarkets pass on those savings to the consumer. How much extra is he happy for his constituents to pay in their shopping bills to meet his desire for an ombudsman?
Andrew George: That is a complete misapprehension and fails to understand how the market works. The Competition Commission has clearly shown that there are abuses within the supply chain and that suppliers are being pushed to the wall. That is during the deepest recession when the largest supermarkets are now posting record profits. It is not entirely unknown for the supermarkets to achieve record profits. Yes, there is a benefit for someone-and we all know where it is going. Whether that is, as the Minister said, the impact of retrospective changes in the unwritten contracts, the lack of notice in delisting, the holding of suppliers liable for losses due to shrinkage, or other overriders within the system itself, the fact is that the whole thing needs a serious review.
In January last year, we commissioned Roger Clarke of the Cardiff business school to undertake an independent investigation into the cost impacts on the supermarkets resulting from the application of regulation. He has since published a report for us. He made himself clear:
"While the creation of an Ombudsman will involve some cost (estimated at about £5-6 million per year) this is likely to be small relative to consumer benefits as a whole. As noted by the CC, the
actual size of the food retail industry in the UK is £110. 4 billion and a 0.1 per cent. price fall for the largest 4 retailers is equivalent to a reduction in consumer expenditure of £80 million a year".
"the costs are likely to be minor compared to the benefits for consumers that arise."
Dr. Murrison: Does the hon. Gentleman agree that there might be some benefits for the British food industry in, for example, labelling, which supermarkets currently use in an adverse way? I mentioned the pork industry in my earlier intervention and the fact that the implication to consumers is that some products are British-sourced when in fact they are not. That clearly needs to be sorted out. Had supermarkets done that already, and not behaved as I am afraid that they have, perhaps some of us would be less enthusiastic now for an ombudsman to sort it out.
Andrew George: I am grateful for that extremely helpful intervention. One of the knock-on effects of the proposals would be greater transparency through the groceries supply chain, which would be to the enormous benefit of suppliers, and I think the supermarkets are now waking up and recognising that it would be in their interests as well. While there remains this uncertainty and while supermarkets continue to be accused of treating their suppliers in an adverse manner, the existence of an ombudsman would be of clear benefit to the supermarkets, because it would give them a clean bill of health-if there were no findings against them in a particular year. There would be a big benefit to them.
I know that the supermarkets have expressed concerns about a slippery slope and explained that it would result in further regulation. However, I do not think that that would be the case. I am concerned that the Government are opting for further consultation after 10 years. Clearly the supermarkets want to string this out for as long as possible. To reassure the hon. Member for South-East Cambridgeshire (Mr. Paice), this is not a price-sensitive initiative. Although my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) will continue to float ideas, I welcome the measure and hope that we can introduce it as soon as possible.
Alistair Burt (North-East Bedfordshire) (Con): I am delighted to have the chance to speak in this debate. I echo the comments made by my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice). It is good to have such a debate in Government time and to welcome this belated food strategy. Many of the component parts, and certainly several of the good component parts, follow long-standing policy initiatives and issues set out by my hon. Friends on the Front Bench, in particular by my hon. Friend the Member for South-East Cambridgeshire, who has done such a tremendous job in his position over the years and speaks with knowledge and great integrity.
I would like to set out the background to this debate. As we know, British agriculture has had some difficulties over the years and trends in self-sufficiency have been poor. We reckon that we have lost self-sufficiency in indigenous food of about 9 per cent.-from 82 per cent. in 1998 to 73 per cent. in 2007. Most of us who represent rural and agricultural areas know of the problems
with livestock, the declining numbers of beef and dairy cows, and the pig industry. Many Members will remember the lobby by the pig industry a couple of years ago, which tried to alert the Government to the issues and problems, including the loss of 40 per cent. of the national herd between 1997 and 2008.
The background to the problems with food, farming and agriculture are well known to us and have over the years caused great distress to those who represent these areas. However, I would like to demonstrate the resilience of all parts of the food chain by looking at one particular constituency-my own-and seeing how, in many aspects of the Government's core objectives in the food strategy, my own constituency illustrates what can be done. It is simply a symbol for other areas that can do the same.
I start, however, with a matter that is particular to my constituency. I am lucky to have Peter Kendall, the National Farmers Union president, as a constituent of mine. He farms a well-known family farm in Eyeworth-a popular family and a popular man-and has been a far-sighted leader of the NFU. He has done some terrific things to accentuate the positive aspects of farming and to get the farming industry and farmers to proclaim what they can do, instead of always being seen sitting on the sidelines saying what cannot be done.
Jim Fitzpatrick: I am pleased to put on the record my personal commendation of Mr. Kendall and to endorse the sentiments outlined by the hon. Gentleman. However, given that there is an NFU election at the moment, I would not want to prejudice Mr. Kendall's chances or give any indication that there is a Government candidate in the election. I offer the hon. Gentleman an opportunity to say that this is a politically neutral election and that it is for the NFU members to make up their own minds.
Alistair Burt: The Minister has absolutely said what needs to be said. As Peter Kendall's Member of Parliament, I am entitled to give a more rounded endorsement that will not be coloured by any sense that it comes either from the Government or the official Opposition. It is simply a recognition of a man who has been an outstanding farmer in his own area and has taken those skills to the national level.
I remember the first speech that Peter gave to the NFU dinner in his home area after he became NFU president and how proud people were of him. He picked out a series of points that he said he would major on over the following few years. They included an understanding of the global issues facing agriculture, the number of people who needed to be fed over the next 30 to 50 years and the disappearance of agricultural land across the world. Not only was that an issue in itself, but it required us to think again about science and the relationship between science and farming. There were some easy things that people could say, but some hard issues to be faced by people who needed food, not warm words. He was very conscious of the UK's own food production and the issue to which I referred earlier-our self-sufficiency.
Above all, Mr. Kendall emphasised to the local NFU, to which I shall return in a moment, the importance of projecting a positive image of farming. I believe that he has done all those things. He was also keen to talk not only about UK farming, but about the EU, and to recognise the importance of the UK's relationship
with the EU and how important it was to think of the EU collectively, as well as in relation to our national interest.
That issue is particular to my constituency, given Peter's position, but I want to illustrate how some of the companies and other businesses in the area work to fulfil the objectives of "Food 2030". We have Jordans in my constituency, which puts Biggleswade on the map-a town that, as all hon. Members present will know, is a fulcrum in Bedfordshire. Jordans was innovative in realising many years ago that food tastes-and particularly breakfast food tastes-were changing. People wanted a different, healthier breakfast cereal and they wanted it delivered in a different form, through energy bars and cereal bars. The family went out and developed them, and they built an extraordinary business.
Jordans has a great relationship with farmers, as all food producers must. The company pays a premium to farmers to plant 10 per cent. of their land with nature-friendly habitats to conservation-grade standard. Jordans has been a pioneer, it works in healthy food, it is innovative, and it relates to its consumers. The current campaign on its website is about encouraging its customers to think about putting spare food into a compost bin at the end of day, instead of throwing it away. Jordans recognises the importance of the food chain right the way through.
As we are talking about vegetables and food waste, let me say that I recognise what my hon. Friend the Member for South-East Cambridgeshire said about the need to use energy, through the work of Biogen and anaerobic digestion. Biogen is one of the companies he talked about that is taking a lead on the issue, turning food waste into power. The company is based in Milton Ernest in my constituency. Through pig slurry and food waste, it produces 1 MW of electricity a year-enough to provide continuous power and electricity to 800 or 900 houses. That is a perfect example of small-scale microgeneration. When we hear the big arguments about onshore wind, for example, we say to people, "There may be an alternatives. Renewables are not all about wind farms. There are other ways to go about it." Plants that use anaerobic digestion-the conversion of waste into methane and, ultimately, electricity-is a perfect example. I therefore share the concerns that my hon. Friend expressed about regulation.
Mr. Paice: I just want to clarify that the company to which I was referring in my speech was indeed Biogen, because it has contacted me-as I am sure it has my hon. Friend-to express its great concern that the Department of Energy and Climate Change is proposing to renege on its agreement on renewables obligation certificates. That means that the financial deal that the company entered into, and on the basis of which it made its original investments, no longer necessarily holds. Those investments would never have been made on that basis, and certainly none will be made in future.
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