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Lord Mackie of Benshie: My Lords, will the noble Lord give figures for the difference between British and European prices instead of world prices?

Lord McIntosh of Haringey: My Lords, it is increasingly a global market for many of these products, particularly beef from Argentina. I shall gladly write to the noble Lord about the difference between European and British prices. As the noble Lord knows, European prices, like British prices, are very much affected by the common agricultural policy in its present formulation. Despite what the noble Lord, Lord Mackie, said, the Government believe that fundamental reform of the common agricultural policy is inevitable, given world trade pressures and costs to consumers and taxpayers. The European Commission is expected to publish its proposals shortly, but we believe that reform will be evolutionary and there is scope for debate about the likely pace of change. But the direction is clear. It is essential that Welsh agriculture starts to adapt now to help safeguard the future of our industry and our rural communities.

I know the way forward will be difficult but, as so often with changes, they do offer opportunities. My ministerial colleagues firmly believe that Welsh agriculture has tremendous potential. We agree with the outgoing chairman of the National Farmers Union in Wales, Mr. John Lloyd Jones, who has already been quoted. In his new year message he argued that the way to keep Wales farming successfully into the 21st century was by producing the best.

The Government want to see Welsh farmers and food processors producing more premium products, which can command premium prices, with a greater degree of value being added in the food supply chain in Wales. Consumer concerns offer potential opportunities in terms of farm assured and organic production for which Wales is ideally suited. We need to make the most of these opportunities. As with any business, agriculture will prosper only if it responds to the needs of its consumers.

The Welsh food strategy is central to helping the industry respond to the needs of consumers and become more competitive. Our aim is to develop much stronger food supply chains in Wales, with closer links between farmers and food processing, to secure greater added-value production in Wales. A great deal is already being done to this end, through support for branding and marketing generally and through farm assurance and traceability schemes by Welsh Beef and Lamb Promotions Limited and Welsh Food Promotions Limited. We will continue to support and develop this work in the future. I am again grateful to the noble Lord, Lord Geraint, for his support for improved marketing.

I can give many more examples, but I do not have time to do so. The approach that I have been describing is to review and develop the Welsh food strategy. We shall be establishing working groups from the industry, including the unions and the farmers themselves, in

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formulating plans for the development of the industry. We shall also consult widely with other interested parties, including the local authorities and the development agencies.

Action is needed urgently to start our response to the needs of the agricultural industry in Wales. We plan to constitute the working groups and to commission consultancy support very quickly.

Listening to consumers applies not only to what farmers produce, but how they produce it. A number of noble Lords, notably my noble friend Lord Williams and the noble Lord, Lord Elis-Thomas, referred to the need for balancing the production of food with environmental measures that will continue to conserve the countryside. Farmers are rightly recognised as being the custodians of the countryside, which the public so enjoy. While reform will take time, it is clear from the commission's Agenda 2000 proposals that there is a move in thinking towards farmers delivering environmental goods in return for support payments. The new agri-environment scheme, which we are setting up to cover the whole of Wales, will put our farmers well on track to taking full advantage of any European moves in that direction.

Perhaps I may take a moment or two to respond to specific points that have been made. The second question of the noble Lord, Lord Hooson, concerned the under-spend of £190 million of the sheep annual premium. I believe that he will recognise that that is somewhat arcane. I shall have to write to him about it, as I will on his question about agri-compensation. The short answer is that it is in livestock and milk, but I shall send the noble Lord more details.

My noble friend and a number of others referred to suicide rates. Every suicide is a tragedy, but suicides among farmers in 1995 and 1996 were in single figures for each year. So without in any way saying it is not a serious problem, we must put it in context.

My noble friend Lord Williams referred to the bureaucratic problems with ESAs. I shall have to write to him on that point. I believe that I have responded to the points made by the noble Lord, Lord Elis-Thomas, about agri-environmental policy in Europe. I shall look again at what I have said. I do not agree with the noble Lord, Lord Geraint, about a Royal Commission. I believe that what I have been describing today and what we are doing is much more important than the results of a Royal Commission, which would inevitably take a considerable amount of time to report. I am right in believing that county councils can close down rural schools now, but they will be unable to do so in the future without the permission of the Secretary of State. I do not know how many farmers there will be in the year 2006 and I do not believe that anyone does.

The noble Lord, Lord Kenyon, referred to rural transport. There are new transport grant arrangements for local authorities. There will be a threshold of £5 million, but integrated transport bids can be as little as £1 million, so that it will be more accessible to rural local authorities.

I would like to have responded to the noble Lord, Lord Roberts of Conwy, in more detail, but it is always difficult at the end of a debate. However, I am grateful

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to him for giving me advance notice of his speech by its publication in the Western Mail this morning. That was particularly helpful in my thinking about the whole issue.

I hope that I have demonstrated in too long a speech the concern that the Government have about these issues and the positive way in which we are tackling both the financial and social issues. I know it will not be easy, but we recognise that it is vital. We are determined to see that appropriate action is taken. The outcome is crucial to Wales in so many different ways, including economically, culturally, socially and environmentally. We shall do our best to help Welsh agriculture meet the challenges to come.

5.28 p.m.

Lord Hooson: My Lords, I am most grateful to all noble Lords who have taken part in this debate and for the very good attendance here from noble Lords who live in other parts of the country and some who are not country dwellers at all. They have taken a great interest in the debate. I was particularly impressed by the fact that the former Prime Minister, the noble Lord, Lord Callaghan, sat through most of the debate. I discussed the debate with him the other day. I believe that he represents an element in the Labour Party which understands the countryside. The Government could do worse than to have a word with him about the present situation. In fact, as was adverted to in the debate on 21st January, there was a very good tradition of Labour Ministers of Agriculture from Tom Williams in 1949 on through Fred Peart and afterwards, the noble Lord, Lord Cledwyn of Penrhos. I hope that the Government are not going to disappoint us now by showing a lack of sensitivity as regards agriculture, particularly the present Minister.

I turn now to the speech made by the noble Lord, Lord McIntosh. I am most grateful to him. I know that he appreciates the part of the world about which we are speaking because he knows it. However, I did not find his contribution at all reassuring. I do not want to be in any way offensive in saying that. The noble Lord told us that the Prime Minister was concerned about this matter. I remind him that, save for two Liberal Democrat seats and four Plaid Cymru seats, the Labour Party represents the whole of the rest of Wales, including most rural areas.

Urgent ameliorating measures are needed. That point needs to be appreciated by the Government. The noble Lord mentioned the grant for suckler cows. I think that it comes to £44 per head. The grant for sheep comes, I believe, to 70p per head. I have already adverted to the price that sheep are fetching in the market at present.

I am with the Government on their long-term objectives and on so many of the matters to which the noble Lord referred. I am sure that the farming community will accept those objectives, but where I think that the Government have failed is in the fact that farmers have been encouraged to grow and farm intensively. I entirely agree that the country is over-stocked with cattle and sheep, but until very recently farmers were encouraged to do that by MAFF.

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Turning that policy on its head in a matter of months has terrible consequences for part of the rural community. Of course, well padded farmers will survive; frugal farmers will survive and others may survive, but thousands of people's livelihoods and homes are at risk in the immediate future. That is why ameliorating measures are needed now.

If I judge the Prime Minister correctly, I am pretty confident that if he knew of, and understood, the position properly, he would respond. I am sure that the noble Lord, Lord McIntosh, will make every effort to get through to the Government how we in rural Wales feel about the immediate future because it is urgent amelioration that is needed.

I am most grateful to all noble Lords who have participated and I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

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