Dairy Industry (Northern Ireland)

Opposition Day – in the House of Commons at 9:39 pm on 7th June 1984.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]

Photo of Mr Jim Nicholson Mr Jim Nicholson , Newry and Armagh 10:27 pm, 7th June 1984

I am grateful for the opportunity to bring before the House the difficulties facing Northern Ireland dairy farmers and producers. Farming at the best of times can be a difficult occupation, no matter what enterprise might be pursued by the farmer.

Farming is hard enough when one has to battle against the elements, without having to defend oneself against those whom one would expect to be on one's side. I must place the responsibility on the Minister because when the final negotiations were over we had and still have complete chaos. At times I doubted whether even the Minister knew to what he had agreed. The farmer must live with decisions made far away in Brussels.

All the assurances that were given by the Prime Minister and the Minister about Northern Ireland, before and after the negotiations, quickly disappeared once it was realised what the agreement was and what was supposed to happen in Northern Ireland.

In recognition of the Northern Ireland farmers' dependence upon the grass-based sector they were to receive an extra 65,000 tonnes. That would have meant a cut for the dairy industry but one that could perhaps have been much more easily accepted. What happened was that Northern Ireland farmers did not receive the whole of the extra allowance to which they were entitled. I do not propose to deal with that in any depth. It is a burning issue in Northern Ireland, and has given rise to serious concern. It has been denied repeatedly by the Minister. the Secretary of State and others. I have to be frank, fair. firm and straight, because, no matter what has been said, it has not been believed.

When allocating the United Kingdom quota to the various regions of the United Kingdom, the Government decided to equalise the level of hardship in each region by giving England and Wales, Scotland and Northern Ireland a quota equal to the 1983 milk output minus 5·82 per cent. Not only did this clearly deny Northern Ireland the special treatment that we rightly expect to receive, but in my view Northern Ireland will be more harshly treated than England and Wales or Scotland. This can be supported by an examination of the United Kingdom 1983 December census figures on milk and milk production for the first three months of 1984. It may be enlightening to the House to hear that the increase in cow numbers in December 1983 in England and Wales was 1·8 per cent., in Scotland 1 per cent. and in Northern Ireland 7 per cent.

As to milk output, in January 1984 in England and Wales, the figure was minus 1·6 per cent., in February, minus 1·1 per cent., and in March, minus 2·8 per cent. In Scotland, the figure was minus 0·3 per cent. in January, minus 0·1 per cent. in February, and minus 0·2 per cent. in March. In Northern Ireland, in January, the figure was plus 3 per cent., in February, plus 3·9 per cent., and in March, plus 3·9 per cent. Northern Ireland dairy farmers had, therefore, made a much greater investment in terms of cattle housing facilities and stock than their counterparts in the rest of the United Kingdom. A quota of 1983 milk production minus 8·5 per cent. will have a much more serious effect on produce in Northern Ireland.

I fully accept that the quota system will bring hardship to producers in the rest of the United Kingdom. However, I am satisfied, after giving serious consideration to the figures, that the level of hardship will be that much greater in Northern Ireland.

The aid proposals recently announced by the Minister will most certainly be of great assistance, but they still do not give enough to help the Northern Ireland farmer. The amount allowed will not cover the hardship cases. Let us examine what the aid proposals will mean to the farmer. The 3 per cent. reserve held back, as part of the 9 per cent. cut in production will mean approximately another 8,500 cows. The buy out scheme, if a sufficient number of farmers decide to make use of it, will mean another 13,500 cows in Northern Ireland, approximately 22,000 cows in total.

At present, I am reliably informed that we have over 2,000 development plans in Northern Ireland. Those schemes are already in operation, and farmers are in the middle of developing and pursuing the schemes. It is nowhere near sufficient to meet their needs, never mind the needs of those who have other special circumstances to meet in the year such as disease, illness in the family or some occurrence that seriously affects milk production in the course of the year.

The proposals presented by the Minister for Northern Ireland mean only a redistribution of the existing quota, and not one litre more to farmers in Northern Ireland. It means that small farmers must get out to make way for larger ones.

In that respect, the sale of quotas has been advocated in some quarters. We must give serious consideration to that before going too far down that road. How will a young man starting out in agriculture stand a chance if, in addition to purchasing land — or, in this part of the United Kingdom, perhaps renting land—and building a herd, he must first, before even beginning to build up his milk production, buy a quota?

The trouble with this whole scheme is that it has been ill-considered, and, in my view, the buy-out scheme has been rushed through when it deserved far more consideration. Farmers with fewer than 40 cows are being hit the hardest. They must be safeguarded because they have no alternative means of surviving. Further, they have not been responsible for the massive surplus of milk.

Many such farmers depend totally on milk production for their livelihood, and we must bear in mind that the Northern Ireland herd average is 38 and that 65 per cent. of Northern Ireland's dairy farmers have fewer than 40 cows. The average herd size in England and Wales is 65 while in Scotland, I am reliably informed, it is 88.

It is interesting to note the average herd sizes in each of the six counties of Northern Ireland. These figures show how affected are farmers in hill areas and small farmers generally. In county Antrim, the average herd size is 41; in county Armagh, my home county, it is 30; in county Down it is the largest, at 53; in county Fermanagh it is 20; in Londonderry it is 40; and in county Tyrone it is 32. The average for Fermanagh, Tyrone and Armagh — the counties with the smallest herd sizes — would be 27 cows. These figures show that Northern Ireland deserved more consideration than it received when the Minister was allocating the quota.

The Northern Ireland dairy industry has suffered because of its price disadvantage and as a result of the much lower proportion of our total output used in the liquid market, and it is worth comparing milk production in Northern Ireland with the rest of the United Kingdom.

In England and Wales, 45 per cent. of milk goes into the liquid market; in Scotland, the figure is 42 per cent.; whereas in Northern Ireland, 14·5 per cent. goes into the liquid market. In England and Wales, 55 per cent. goes for manufacturing, 30 per cent. for butter, 15 per cent. for cheese, 6 per cent. for fresh cream and 6 per cent. of other products. In Scotland, 58 per cent. goes to manufacturing, 21 per cent. to butter, 21 per cent. to cheese, 6 per cent. to fresh cream and 10 per cent. to other products. In Northern Ireland, a massive 85·5 per cent. of production goes to the manufacturing end of the milk industry, 55 per cent. goes to butter, 20 per cent. to cheese, 1·5 per cent. to fresh cream, and 9 per cent. to other products.

The Northern Ireland dairy farmer also receives on average 3p per gallon less for his milk than his counterpart in the rest of the United Kingdom. It is all very well for the Minister to speak of equalising the burden, but the Government must learn that they cannot say when it suits them that we shall be treated in the same way as any other part of the United Kingdom, but when it suits them, say, "Ah, but you are different." We are not different when it comes to this and it suits the Government to equalise the burden throughout the whole of the United Kingdom. Then we had to have equal rights. On every other occasion, we are told that we are different. That is the crunch issue in this debate.

If the Minister wishes to equalise the burden, he must also be prepared to equalise the price, because Northern Ireland milk producers receive much less than their counterparts in the rest of the United Kingdom. It is a galling exercise to watch the Republic of Ireland with its extra quota—ill negotiation again. On every farming programme on television, and every agricultural newspaper, the leaders of the Republic of Ireland's farmers are warning them that they may not be able to produce the extra quota, and they are encouraged to produce more, while other farmers throughout Europe and the United Kingdom are being told to cut back. That is an indictment and shows the unacceptable face of the European Community. That will either have to be changed drastically, or we shall have to get out.

Why should Northern Ireland be treated any differently from any other part of the United Kingdom? I hope that I have outlined the reasons why I believe that Northern Ireland should have had better, more reasonable and fair treatment, such as the small average size of our farms, which are mainly owner-occupied and run by family units that depend totally on the production on their land. The problem also has social aspects, as anyone forced out of milk production by the quotas—as some will be—has few alternatives.

I can give an example of a producer whom I know well. He is supporting himself, his father and his mother on 18 cows and 25 acres. He is happy with his living, which he has had for the past eight years, during which he has not had one cow extra. However, he has been told that he must decrease by 9 per cent., just like everyone else. Is that not wrong? How does one justify that?

Since the entry of the United Kingdom into Europe, and the demise of the intensive sector, farmers in Northern Ireland cannot, and have not, any way in which they can change to alternative enterprises.

Photo of Mr Roy Beggs Mr Roy Beggs , East Antrim

Does my hon. Friend agree that in Northern Ireland, with 120,000 persons unemployed, there is no alternative for the small farmer who may be put out of business?

Photo of Mr Jim Nicholson Mr Jim Nicholson , Newry and Armagh

I could not agree more with my hon. Friend. Many will be put on the dole queue. Some will have to apply for family income supplement or other assistance. We have to look at it the other way as well. The farmer with 18 cows who cuts by 9 per cent. the size of his herd will be left with only 15 cows. He will miss those cows terribly, but the producer with 200 cows who cuts the size of his herd by the same percentage, by about 20 or 30 cows, will still make a good living while the other gentleman has no chance of making a living. I thank my hon. Friend for his intervention.

The farmers were encouraged to expand, to build new facilities, new silos and new milking parlours, and to produce more and more milk. They did so most efficiently and effectively — so much so that they are now being punished for it. Many farmers who are now suffering most from the quota are those who listened to the Department's advice. Many of them are producing milk not knowing what their quota will be and what price they will receive for that milk. Some are having to provide housing for their additional cows. They have no alternative—they have bank overdrafts and are wholly committed. The scheme was introduced too hastily and without proper and effective thought.

Agriculture's importance to Northern Ireland is paramount. It must be sustained and allowed to grow gradually. The Government must accept that our dependence on agriculture must receive due and proper consideration and the recognition that it deserves. The Government will not be allowed to run away from what they were responsible for creating.

I wish to refer to some of the remarks made by Lord Lyell during a recent speech to the Ulster Farmers Union annual general meeting. I accept that the noble Lord is new to the position of responsibility for agriculture in Northern Ireland, but he showed a great lack of understanding of the needs of the industry. He suggested that the super-levy would cut 1983 production by 6 per cent; it would reduce our milk sales accordingly; it would demand marginal adjustments for many milk producers; would cause excruciating pain for others; and that it was not the end of the world.

I suggest that the Under-Secretary tells his noble Friend that it will be the end of the world for some of the producers in Northern Ireland if there is no improvement on the present position.

I congratulate the Department on the effective way in which it informed the farmers of the quota. It said that farmers would be given individual advice with computer models representing their farms. What a load of nonsense when men are losing money hand over fist. The Government are taking away their livelihoods and telling them that they will have computer models.

I welcome the Under-Secretary to the House tonight. I appreciate that the subject is not part of his usual duties. I wait with great interest to hear what he has to say.

Finally, I plead with the hon. Gentleman to inform the Secretary of State and the Minister of State that farmers in Northern Ireland and indeed throughout the United Kingdom need to know where they are going and what they are getting very soon and not in August, September or October when it will cost them even more. They have big bills for the milk that they have already produced and they need to know now. The sooner the Minister knuckles down and faces the problem that he has created, the better.

Photo of Mr Chris Patten Mr Chris Patten , Bath 10:49 pm, 7th June 1984

Following the comment of the hon. Member for Newry and Armagh (Mr. Nicholson), I must confess that this is indeed the first time that I have taken part in a debate on agriculture. I apologise for the fact that the Minister of State, my hon. Friend the Member for Bosworth (Mr. Butler), cannot be here to reply to the debate as he is in North America trying to encourage industrial investment in the Province. I believe that the hon. Gentleman's original Adjournment debate was the victim of the all-day, all-night discussions on the future, or lack of it, of the Greater London Council. Having put his coin in the slot again he has unfortunately got three lemons. My hon. Friend the Minister of State would have replied incomparably better and more knowledgeably, given all the work that he has done for Northern Ireland agriculture and industry. I hope that if I fail to answer any of the hon. Gentleman's points today that he will have an early reply from my hon. Friend the Minister of State.

I think that most hon. Members agree that something had to be done to curb overproduction of milk in the European Community and to reduce the crippling cost of the CAP milk regime.

Photo of Mr Roy Beggs Mr Roy Beggs , East Antrim

I apologise for interrupting the Minister so soon, but will he make it clear that there is still not overproduction of milk in Great Britain as a whole?

Photo of Mr Chris Patten Mr Chris Patten , Bath

I hope to come to the general scene in Great Britain later in my remarks.

We could not allow the continued production of massive surpluses which were a drain on the European Community budget and the United Kingdom taxpayer. In 1983 alone, disposal of milk surpluses cost £3,000 million of which Britain's share would have been about £600 million. We should not forget that the United Kingdom also contributes to the stocks of butter and skimmed milk powder in intervention stores and must play its full part in cutting the overproduction of milk. As the House knows, a supplementary levey was not' he Government's preferred: means of dealing with the problem, but we have had to accept it and it is important that we all work together to ensure that it is successful in bringing milk production throughout the Community under control.

It is well known to the House that the allocation of quotas among member states was, with some exceptions, on the basis of 1981 production plus 1 per cent. For the allocation within the United Kingdom it is clear that a 1983 production basis would have been favourable to Northern Ireland but disadvantageous to producers in England and Wales. On the other hand, an allocation based simply on 1981 production levels would have been entirely unacceptable for Northern Ireland, giving a 15 per cent. cut in output as against 1983 or a cut of more than 10 per cent. after taking account of the 63 million litres allocated to Northern Ireland from the special Community reserve. A simple 1981 base would also have been hard on Scotland. That is because deliveries in Northern Ireland and Scotland increased proportionately more between 1981 and 1983 than deliveries in England and Wales. Therefore, a compromise had to be reached and adjustment was made to reflect the trend in deliveries in different parts of the United Kingdom. As well as the full benefit of the 63 million litres from the Community reserve, a further allocation was made to Northern Ireland so that the reduction on 1983 deliveries would be no more than in other regions of the United Kingdom.

As the hon. Gentleman made clear towards the end of his speech, a 6 per cent. cut in milk production will of course cause the Province many difficulties. That is a matter of common concern to us all and I put on record how vigorously and eloquently the hon. Gentleman has brought those difficulties to the attention of the House in the presence of and with the support of so many of his right hon. and hon. Friends.

Other regions of the United Kingdom, however, will also face problems. It may be exceedingly small comfort for Northern Ireland, but it is certainly true that the situation could have been a lot worse. To put the Northern Ireland position in perspective, the hon. Gentleman should look at the quota in comparison with production in previous years. It represents an increase of 12·5 per cent. on 1981 and 2·5 per cent. on 1982, whereas England and Wales will take a cut of over 3 per cent. on 1982.

However, I do not want to minimise in any way the problems faced by the Northern Ireland industry. I fully appreciate the difficulties that the new situation will create for both producers and processors. They have been pointed out to me, even though I have no direct ministerial responsibility, on a number of my visits to district councils including my visit the other day to Omagh.

The Government recognise that the supplementary levy scheme presents special difficulties to small milk producers who have no alternative to milk and little scope to adapt to a lower level of production. My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) announced on 25 May the arrangements for an outgoers scheme to pay compensation to farmers who wished to give up milk production. Strong representations have been made to the Secretary of State by the Ulster Farmers Union and the Northern Ireland Assembly's agriculture committee, and above all by hon. Members, for emergency aid for the industry. The Government accept that there are likely to be a proportionately greater number of special cases in Northern Ireland than in Great Britain, as well as a higher proportion of small dairy farms. I am glad to say that the outgoers scheme reflects the representations made to us—not least by the hon. Gentleman — and recognises the potentially greater problems in northern Ireland.

Up to £8·5 million will be available for Northern Ireland over five years, allowing up to 5 per cent. of quota to be bought up in the Province compared with 2·25 per cent. in Great Britain. There will be sufficient flexibility in the Northern Ireland arrangements not only to enable the quota raised through the outgoers scheme to be used to help small producers but also to assist special cases, assuming that there is sufficient take-up of the outgoers scheme. Compensation payments will be offered to eligible applicants at the rate of £650 per 5,000 litres of quota and payable in equal instalments over five years. Those accepting compensation payments could be required to give an undertaking that they will give up milk production for at least as long as the quota scheme, or any successor scheme, continues, and will not directly or indirectly return to milk production.

We are consulting the interests concerned on the detailed arrangements for the implementation of the scheme, and the necessary legislation will be sought as soon as possible. Detailed arrangements on how the scheme will operate, and how to apply, will be announced shortly.

The Community regulations make provision for two main categories of special situation to be taken into account when milk quotas are being allocated. First, there are those producers whose milk production during the reference year——

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at three minutes to Eleven o'clock.