Agriculture

Part of Motor Trade (Consumer Protection) Bill – in the House of Commons at 7:04 pm on 6th February 1990.

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Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow 7:04 pm, 6th February 1990

I am sorry, but that point did not get through at all. Many outside the House will be critical of what the hon. Gentleman did say. That is in complete contrast to my right hon. Friend the Minister, whose grasp of the subject and understanding of the problems is complete. He left the House in no doubt that he would tackle the problems.

Today two Ministers have made commitments to eliminate the green currencies. My right hon. Friend the Prime Minister made her declaration on that subject during Prime Minister's questions, and later in the day my right hon. Friend the Minister of Agriculture, Fisheries and Food said that green currencies would be eliminated as soon as practicable. My concern is about what will happen in the meantime.

Farmers' returns are inadequate for the increased costs that they bear. Their products have scarcely risen in value during the past seven or eight years, whereas during the same period a 100-horsepower tractor has increased in cost by about 35 per cent., from £18,500 to £25,000. In addition, farmers have inadequate earnings to service debt. It is interesting to note that this year the interest bill in agriculture has gone up by no less than 38 per cent., to nearly £1 billion. The returns are inadequate for the investment that farmers must make for the future—there has been a 40 per cent. reduction in investment in the five years to 1988. Of course, their inadequate returns have also led to a fall in rural employment—about 23,000 full-time jobs have been lost in agriculture since 1982. That is not to mention the incomes or earnings of the farmers themselves.

I have two concerns—first, for the future of this great industry and, secondly, for the countryside. My concern for the industry is that it is not reinvesting at the level that it should be; it is not reinvesting at the level that it should be; it is not reducing indebtedness—quite the reverse-and it is not generating the cash resources that it will need to tide it over until 1993. It is currently suffering from a crisis of confidence—not in its own ability, but in the sheer impossibility of competing against unfair monetary compensatory amounts.

At this point, I allude to the comments of the hon. Member for Wallsend (Mr. Garrett), who introduced into the debate a note of caution about eastern Europe. There is no doubt that, once eastern European people who work on the land taste the enterprise culture and are given motivation and incentive for increased agricultural production, the competition and scope for agricultural surpluses in Europe will be increased immeasurably. We dare not under-estimate the effects of that. I plead unto the Minister to argue our case, as I know he will, very strongly in Brussels. The total elimination of monetary compensatory amounts would cost about 45 million ecu, or about £35 million, in a full year. The net cost to the United Kingdom would be approximately £120 million, not as a continuing cost but as a one-off cost. The effect on the retail price index would be between 0–25 per cent. and 0.5 per cent.

British agriculture is by anyone's reckoning a major industry and the envy of many of our European partners. They do not want us to get rid of MCAs, because the longer they can keep them the better their competitive advantage and the greater their chance of reducing the United Kingdom's ability to compete in the future. Although agriculture is the second biggest industry in the United Kingdom, second only to oil, it is the biggest industry in rural areas with inputs of about £7 billion a year in capital and other purchases and £2 billion in the annual wage bill, and with the lion's share of all agricultural spending going into the rural economy. That is very important because there is no doubt that, without a thriving, prosperous and vibrant agriculture, the whole rural economy is greatly prejudiced.

Our Minister must break the logjam. We cannot accept that he must wait for three years before we get a complete amelioration of the problems besetting us today. Three years in any industry is a very long time, especially for cash flows to be so seriously undermined. The elimination of MCAs will not release a torrent of cash, a windfall, that will boost farm profits, but it will give agriculture its just deserts. I hope that my right hon. Friend the Secretary of State will be 100 per cent. successful when he goes to Brussels to argue for the complete elimination of MCAs here and now.