The fortunes of the glasshouse industry have been steadily improving since the disastrous year of 1981 when all commodities in the sector traded very badly. Despite the fact that current trading profits are marginal, significant renovation and rebuilding of glasshouse structures, improvements in the efficient use of fuel and advances in marketing initiatives and co-operation have helped the industry to face the future with increased confidence. Much of that has been the result of enterprise by growers, but I stress that Government grant aid to the industry has also played a significant part.
However, the trading position of growers is getting worse in relation to foreign competition. The figures for penetration of imports are worrying. Between 1976 and 1985, imports of cucumbers and tomatoes nearly doubled and those of lettuces and endives became seven times as great.
The Lea Valley produces 43 per cent. of the United Kingdom's output of cucumbers. Indeed, two thirds of growers' acreage is given over to them and such an increase in imports is bound to damage the industry. Similar figures can be given for imports of carnations, chrysanthemums, roses and other cut flowers.
The biggest worry for growers is the accession of Spain and Portugal to the EC. Although there will be a 10-year transitional period, during which the trade harriers between Spain and the Community will be dismantled, the horticulture industry still feels that it will be at a significant disadvantage at the end of that period. The reasons are obvious. The Spanish industry is far larger, Spain enjoys substantial climatic advantages, so crop heating is riot significant, and labour costs are lower.
Ancillary to the problems caused by the enlargement of the EC are the additional arrangements being made with Mediterranean countries outside the EC in respect of imports of horticultural produce into the Community. That adds problems to a situation in which many horticultural products in this country are often in a state of seasonal oversupply.
Two examples illustrate the difficulty. In early April this year, the Community reference price for tomatoes was not published. A large quantity of Canary Islands and other third country tomatoes flooded our market at a time when demand was low owing to exceptionally cold weather and at precisely the time that the United Kingdom grower requires high prices to compensate him for the high energy use that winter and spring necessitate. The high countervailing duties now imposed illustrate the degree to which those imports were undercutting United Kingdom prices. Added to that problem was the fact that there were insufficient Her Majesty's inspectorate staff to ensure that the quality of tomatoes was properly maintained.
Secondly, in the week before St. Valentine's day, such large numbers of flowers were imported from Israel that the market for United Kingdom growers was ruined and it has also been regularly disrupted on other occasions. It was an extreme example of the difficulties faced by growers when imports depress prices to such an extent that those growers cannot compete and stay in business.
The accession of Spain and Portugal to the EC is a fact. There can be no question of trade barriers within the Community. But the industry needs to know what attitude the Government have towards EEC Commission proposals to give further concessions to non-EEC Mediterranean countries. In order to give sufficient protection to Community growers, there should be quantity limits on all products which benefit from tariff concessions and there should be an effective price safeguard for those products not covered by the reference price system.
With regard to the expansion of the EEC, it is worth examining in what ways the industry can be assisted so that when the full impact of the membership of Spain and Portugal is apparent, growers are in the best position to compete.
There are already a number of mechanisms for the support of United Kingdom horticulture. United Kingdom growers voted substantially in favour of a Horticulture Development Council, and I welcome the setting up of the council to finance horticultural research and development. The council will have a majority of grower members—that is only right since it is growers who will pay the levy. It is heartening to see the commitment that growers have shown to the future by investing in research and development. Horticulture is setting an example to the rest of agriculture.
The Government, too, should demonstrate their commitment to the industry's future through publicly funded research, development and advisory activities. The Lea Valley growers very much regretted that the Government did not fully consult the industry before making cuts in ADAS activities such as the recently announced closure of the plant pathology unit and a reduction in other work at the Lea Valley Research Station. They hope that in future there will be close cooperation between the public sector decision takers and the industry—as represented by the National Farmers Union and the Horticulture Development Council—over such matters.
As I mentioned earlier, schemes for grant aid have been a crucial factor encouraging investment in the glasshouse industry over the last five years. Current schemes come to an end in 1988, and while much work has been done, the task of bringing the industry up to date will take much longer. I hope that arrangements to provide grant aid beyond 1988 can be made. I should like to raise one point for consideration within that.
There is a trend towards rationalisation in the industry, as larger operations are more competitive and are better placed to face the future. Given this, the current investment limit, for the purposes of grant, of £136,000 is not appropriate. It is barely enough to rebuild one and a half acres of glass, which is not significant for growers with a larger acreage. I therefore urge the Government to try to persuade other Community members to adopt a more realistic grant ceiling.
Other incentives should be given through the tax system. In the United Kingdom, the depreciation allowance for tax purposes of glasshouses is set at an annual rate of 4 per cent.; for plant and equipment, it is fixed at 25 per cent. The small budget concession that on sale or destruction the remaining value of buildings can be written off is welcome for agriculture, but it is not significant for the glasshouse sector, especially when placed alongside arrangements that exist in competitor countries.
In Holland, the Dutch may write down annually 18 per cent. on glasshouses, 23 per cent. on heating systems, irrigation and other machinery, and 30 per cent. on lighting, CO , generators, thermal screens and climate control computers. Those figures give a proper incentive to gear up and modernise, and we would do well to consider something similar. Perhaps this problem can be addressed in conjunction with the discussions between glasshouse manufacturers and the Ministry of Agriculture, Fisheries and Food relating to a new British Standard for glasshouses which will redefine both specifications and the life-span of buildings.
A final point needs to be addressed. With the defeat of the Shops Bill recently, hopes for sensible arrangements for nursery and garden centre trading hours received a severe setback. I need not run through the arguments with which we are all too familiar. Suffice it to say that Sunday is the most important day of the week for garden centres.
Gardening is a major leisure activity, a fundamental part of the modern family Sunday. The enterprise of growers who sell their produce and the so-called inanimate products that go with it such as peat, compost, tools, fencing and other things, should not be stifled under the weight of more contentious arguments. The expansion of the industry, the jobs of those who work in it and the satisfaction and pleasure that their produce bring, all depend upon reform. I hope that the Ministry of Agriculture will give firm backing to any proposal to achieve such reform.
Yes. Mr. Deputy Speaker. I shall be brief.
I support my hon. Friend the Member for Broxbourne (Mrs. Roe) in all that she has said. She has described her Adjournment debate as being limited to her own constituency, but everything she has touched upon affects horticulture throughout Britain.
Although under the rules of the Adjournment debate we cannot ask for legislation, it is open to Back Benchers to bring in ten-minute Bills or behind-the-Chair Bills and such like under our own steam. I hope that my hon. Friend the Member for Broxbourne or some other hon. Member will endeavour to remedy the defects that my hon. Friend spoke about in the last few sentences of her admirable speech.
The present Sunday trading ban is deplorable in its effect on horticulture, because horticulture is suffering from increasing competition from agriculture generally, and all our friends in horticulture are fearful of the pressures coming upon them. It behoves the House as a legislature in whatever sphere of activity it is operating to assist that sector of agriculture that gets minimal support from Government. The people in the industry are not using taxpayers' money but are doing a good job and they need our support.
I congratulate my hon. Friend the Member for Broxbourne (Mrs. Roe) on her fine speech and on the skilful way in which she brought the glasshouse industry in the Lea valley and the challenges it is facing to the attention the House.
I am also mindful of the comments of my hon. Friend the Member for Maidstone (Sir J. Wells). He was assiduous, as was my hon. Friend the Member for Broxbourne, in defence and support of horticulture. The Government are, of course, aware of many of the points mentioned by my hon. Friends and I am glad to have this opportunity to explain the Government's attitude to them.
I assure the House that the Government are fully aware of the value of a healthy and prosperous glasshouse industry, both nationally and particularly to the local economy of the Lea valley. Of course, the industry operates within a market economy and the prime determinant of its success is the ability and enterprise of those directly engaged in it. I congratulate the industry on its contribution to our economy, both nationally and in the Lea valley, where it is especially important. While the Government can help in particular ways, I regard our role mainly as one of ensuring that the industry is able to operate in conditions of fair competiton to meet the demands of the market place in terms of both quality and quantity.
I should like to mention some of the specific ways in which the Government provide help to the glasshouse industry. They provide capital grants, the full repayment of excise duty on oil used for glasshouse heating and soil sterilisation, a concession not available to any other sector, a comprehensive programme of research and development and technical advice through ADAS.
In the context of Government aid I should like to dwell a little on capital grant schemes. In our manifesto we made a particular commitment to
help the glasshouse industry to sell more fruit and vegetables, and to make use of the best possible arrangements for heating and insulation".
In November 1983, my right hon. Friend announced that enhanced rates of grant would be available for a limited period to encourage the more efficient use of energy in the glasshouse sector. Such grants cover the replacement or improvement of existing heated glasshouses, including thermal insulation. Grants of up to 50 per cent. are available for this work within an investment ceiling, as my hon. Friend quoted, of up to £136,000. Although grants on machinery and plant and equipment generally were removed at that time, those for boilers and energy-saving equipment for glasshouses and facilities for the market preparation of harvested horticultural produce being sold fresh were retained. The House will be aware that last October new capital grant regulations were introduced to implement the new EC structures directives. Although the general rate is 15 per cent., with an investment ceiling of £50,000, we were very pleased to be able to continue the favourable rates and the ceiling available to horticulture.
We introduced these grants in recognition of the special needs of the glasshouse industry to re-equip itself with modern energy-efficient glasshouses. The situation of our glasshouse industry did improve, as my hon. Friend agreed, but last year I am afraid that it suffered from the poor summer. The demand for salad crops depends very much on the weather, and last year's miserable summer made one more inclined to eat hot-pot than salads. The poor demand led to low prices in 1985; and with the sharp rise in energy costs during the heating season of 1984 it was a poor year and many growers lost money on the crop. This season's growing costs have been reduced by the substantial reduction in oil prices, and with normal market conditions we would expect financial returns to be significantly better. The cool weather up to a few weeks ago gave the growers a poor start, but the great improvement in the last few weeks has made the salad crop very popular. I am sure we all hope that the summer continues to favour that crop, for the growers' sakes as well as for our own.
My hon. Friend mentioned one particular concern of the glasshouse industry: the effect of the accession of Spain and Portugal to the European Community. We are mainly concerned here with the beginning and the end of our growers' marketing season for protected crops, when there is an overlap with production in the Iberian peninsula. As my hon. Friend is aware, various measures have been taken to ensure a smooth transition to full membership of the Community for Spain and Portugal. The main element of these measures is an extended transition period of 10 years for fruit and vegetables, as opposed to seven years for most other sectors.
During the first four years of this transition there will be annual reductions of 10 per cent. in tariffs, but the reference price system, which is effectively a minimum import price system, will continue to apply. In the second phase of six years the reference price system will be phased out in six stages. However, I hope that my hon. Friend will draw reassurance from the fact that during this second phase there is provision for what is described as a "supplementary trade mechanism" to be introduced so as to regulate any increase in Spanish and Portuguese exports of fruit and vegetables into the Community to avoid disruption to markets.
Those of us who know the horticulture industry are constantly impressed by the innovation and enterprise shown by our leading growers, and I feel confident that they will meet the challenges of competition from Iberia.
I know, too that some growers are concerned about the negotiations going on in Brussels about the trade agreements with Mediterranean third countries. As the House will know, the Community has close political and economic links with non-member countries in the Mediterranean area. Last year the European Council issued a declaration that the Community would seek to negotiate revisions to the agreements aimed at maintaining traditional trade flows. The discussions going on now are to prepare a revised mandate for the Commission's second round of negotiations with Mediterranean third countries.
I know that some concern has been expressed that these discussions are going on behind closed doors, but I am sure the House will appreciate that details of the Community's negotiating position have to be kept confidential. Nevertheless, my officials have met the NFU to show the way in which the discussions are going and to ensure that we are fully aware of its particular concerns. The point I should like to emphasise most strongly to my hon. Friends is that we have been very mindful of our growers' interests in the negotiations. My right hon. and noble Friend the Minister of State has taken a close personal interest in the progress of these negotiations—as I may say he does in all matters horticultural. At present the negotiations have become bogged down by Spanish demands for special measures to help the Canary Islands. I can assure the House that on this, as on other aspects of the negotiations, we shall take all possible steps to safeguard our growers' position.
I applaud my hon. Friend's support for what the Government regard as a major development in the horticulture industry. I refer to the establishment of the Horticultural Development Council. Less than two weeks ago the order setting up the council received support from both sides of both Houses, and I and my right hon. Friends are delighted that Mr. Frank Thomlinson has agreed to become the first chairman. We are in the process of appointing other members, and we hope that the council will be able to have its first meeting within the next two or three weeks. I wish the council well in the task of commissioning research and development work to benefit the horticultural industry, including the glasshouse sector.
My hon. Friend mentioned the Commission's failure to set a reference price for tomatoes on 1 April. The Commission claims that, because of the Easter holiday, it was unable to have the regulations translated and published in time, and we have left it in no doubt that we are not impressed by its performance. As it happens, the Canary tomatoes that came to the United Kingdom when the reference price should have been in operation were not sold below the reference price levels.
My hon. Friend was concerned about the flower prices in the run-up to St. Valentine's day, and she was right to say that they were poor. The Israeli suppliers were partly to blame, and this was a misjudgement on their part. They have no interest in selling at very low prices, because they have to pay a tariff of 17 per cent.
My hon. Friend was concerned about the changes at the Cheshunt pathology unit. I can assure her that that work will in future be provided from the regional office in Cambridge. There are good communications between these two centres, so the quality and the speed of service will not be affected. The Cheshunt office, although it loses a scientific officer, has three horticultural advisers, who will be retained, and thus the unit will continue to provide a full glasshouse advisory service to growers in the Lea valley.
My hon. Friend referred to the Sunday trading Bill, but she will not expect me to enlarge on that, as the House has defeated the Bill, and it is not for me now to be defending it.
I hope that what I have said goes some way to assuring the House and my hon. Friends about our concern that horticulture in the Lea valley continues and its profitability improves. The hard work and enterprise of those with businesses there certainly deserves success, and I have no hesitation in joining my hon. Friends in wishing them that success.