Agriculture

Part of the debate – in the House of Commons at 8:05 pm on 23 April 1987.

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Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor 8:05, 23 April 1987

I think that we are in some danger of developing complacency in this debate about the situation confronting our agriculture. The position of many small producers is desperate. Some Members recognise that and have said so and others have failed to acknowledge it. Some producers are at the eleventh hour. The hon. Member for Merionnydd Nant Conwy (Mr. Thomas) mentioned the possibility of hillbilly type farming in Wales. I can tell the House that it is being practised already, and in some measure. It is the only way in which some individuals are making out. That is a sad state of affairs for a great industry.

Agriculture is the United Kingdom's most important industry and food production must remain the most important activity that takes place in the countryside. We shall forget that at our peril. Farm incomes are declining and we are in danger of having two farming nations, with one in which some farmers do very much better than others. The livestock sector has been especially badly hit. There have been some significant bankruptcies of farmers in Wales and others are receiving family income supplement. It is not good enough to have farmers on incomes of £60 or £80 a week when they have to live on that and, in many instances, finance interest payments. There is no alternative employment to be found in many areas. Indeed, alternative employment opportunities have declined in the past two years, especially since the invocation of milk quotas.

The average income of farmers is 40 per cent. lower now—I take the period 1984 to 1986—than during 1973 to 1976. This is extremely serious, because at the same time there is record borrowing within the industry, amounting to about £6 billion. The Community's proposals for structure support and direct income aid need seriously to he considered. These proposals offer possibilities for supporting small farmers, who are now literally on the breadline.

There are particular difficulties in the less-favoured areas, where livestock producers are having a struggle, especially in the beef and sheep sectors. When the members of the Select Committee on Agriculture visited Brussels recently they were informed that this summer there would be a major review of the sheepmeat regime. Many hon. Members have rightly stressed the importance of the regime to British agriculture. We must resist the proposal that there should be cut-offs of 1,000 ewes in less-favoured areas and 500 on the lowlands in the implementation of the ewe premium. These proposals must be thrown out neck and crop, for they would discriminate against British farmers. The sheepmeat regime, the variable premiums and the hill land compensatory allowances that go with it are vital to many livestock areas.

We must also examine the problem of the balance of sheepmeat production between upland and lowland farmers. What are we going to do? What proposals have the Government for ensuring that sheep production remains profitable in the less-favoured areas? What proposals have they for restricting in some way the possible vast expansion of sheep production on the lowlands? With the December agreement proposals, decreases in the milk quota and reductions in beef prices, many farmers on the lowlands, with the cereal sector too coming under pressure, are considering going into sheep farming. There is a real danger that farmers in the less-favoured areas will be hit in one of the few commodities that arc profitable at the present time.

Looking at the December agreement, the 13 per cent. reduction in beef intervention prices will lop off approximately £60 per head on beef animals sold. We see inadequate devaluation of the green pound and refusal by the Government, in another context, to raise hill land compensatory allowances in the current year for beet' production.

I congratulate the Government on retaining the variable premium. It is absolutely essential to keep this. It keeps food prices down. I reject wholly what has been said by an Opposition Member that the alliance is in favour of putting value added tax on food. This is an outrageous suggestion. We are absolutely and totally opposed to that.

Under the December agreement, we are likely to see over the next two years an 8·5 per cent. reduction in milk quotas, and the knock-on effect of that in the dairying areas will be immense. In Wales, the north-west and the south-west this is a reduction which producers are unable to accept, and they must be compensated much more adequately for that loss in milk quota. Certainly we are extremely concerned about this, because many farms will lose their viability. This will mean that more farmers will leave the land and more creameries will close. As has already been said, in Wales alone we are likely to lose a further 1,300 creamery workers as a result.

The Commission's proposal for a 4 per cent. reduction in the green pound is absolutely pathetic in the current state of British agriculture. We must have a 16 per cent. devaluation. This is the best possible way that we can help British farmers. It is calculated that for every 1 per cent. devaluation of the green pound there is an increase in income to British farmers of £30 million. This is an important way in which farm incomes can be boosted at the present time.

I ask the Minister to tell us why it was that his right hon. Friend's predecessor, the right hon. Member for Worcester (Mr. Walker), was able in the first two years of the Conservative Government, from 1979 to 1981, to wipe out the unfair discrimination from green pound distortions to parity. Why is it that his right hon. Friend is unable to do that in 1987 to produce a fair situation for farmers? That question needs to be answered.

In the long term we need to take a much more radical look at the European monetary system. I make a particular plea that Britain should join the European monetary system as soon as possible. We know that this is in the best long-term interests of this country. By joining the EMS we will have a real chance to sort out the distortions that take place in the money markets.

We in the alliance see that as a move towards a unified European currency. One would hope that one day. when the price settlement is made in Brussels, it will be made in European currency units that will apply right across the board to every country in the Community. We shall then know what we are talking about, instead of having to face the horrible distortions of MCAs and calculations of other kinds whose effects are almost impossible to work out. Indeed, in joining the EMS we would see an immediate 2 per cent. reduction in interest rates and a saving of £240 million for British agriculture.