Relevant documents: European Community Documents Nos. 7570/91 and the Supplementary Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 13th November 1991 relating to reform of the Common Agricultural Policy and 5534/92 ADD 1 to 3 relating to the prices for agricultural products and related measures for 1992–93.
The United Kingdom has always been the leading proponent of common agricultural policy reform and has always been clear about the principles on which that reform must be based. During the negotiations, I was pressed by the Labour party and by other commentators to convert these principles into a detailed blueprint covering every last facet of a reform policy—what many referred to as an alternative to the MacSharry plan. They suggested that if I did not produce such an alternative, MacSharry was bound to win. The hon. Member for South Shields (Dr. Clark) said that, whether the Minister liked it or not, it was probable that MacSharry's notions would be accepted.
I always resisted this approach, not because I was unclear about what I wanted but because I knew that I would not get what I wanted by setting out a shopping list from the start. Negotiators do not tell those with whom they are negotiating their bottom line before they start. With the exception of the hon. Member for South Shields, the agreement has been widely welcomed. It is based on principles that, it was claimed, we could not uphold and which were spelt out last year in "Our Farming Future".
Let me remind the House what we said there. We said that efficiency was vital to a competitive agriculture, and that support policies must be geared to the needs of the real market. This agreement, by cutting prices and reducing the role of intervention, will bring farming nearer to the market and encourage farmers to pay much greater attention to the demands of the consumers. Moreover, we have been able to change many of the anti-competitive elements in the Commission's original proposals. Where quotas have been introduced, we have ensured that the new arrangements will be operated flexibly and without fossilising existing farm structures.
We insisted that the burdens of reform must be borne equitably across the whole Community. In particular, we insisted that reform must not be biased against larger, more efficient farmers. Again, we were successful. None of the Commission's discriminatory proposals has been carried through to the final agreement.
We insisted that the objectives of the CAP should be adjusted to give greater recognition to the importance of environmental protection and we have secured a Council declaration—an integral part of the final agreement—that clearly embodies this need.
We insisted that support for farming in the less-favoured areas must be maintained. The changes we secured to the beef premium arrangements and the defeat of the Commission's proposal for discriminatory new headage limits for the suckler cow and ewe premiums have guaranteed continuing support for farming in our hills and upland areas.
Above all, we said that any agreement must reduce the resource costs of agricultural support in the Community. This, too, we have achieved. Overall, the cost to the consumer and taxpayer will be lower under the reformed CAP. We now expect the burden imposed on consumers by the CAP, once the reforms have been fully implemented after three years, to be lower by some £8,000 million—£1.90 per week for every family in the Community. Of course, this is not to say that prices will immediately fall by this amount. The reductions will take place over a period, and during this time other elements in the final retail price of food will be changing. Nevertheless, the savings in resource costs are real—£8 billion from consumers' pockets that would otherwise have been spent on the CAP.
The Opposition cannot have it both ways. Last time we met, the hon. Member for South Shields argued that high support prices imposed massive costs on consumers. He then claimed that reducing those prices would have no effect on consumers. He cannot have it both ways. The fact is that £8,000 million which consumers would otherwise have directed to the CAP will not now be so contributed.
This is the principal point of the proposal. Will the Minister assure us that the £8,000 million comes not just out of the pocket of food prices—that is what he, perhaps inadvertently, implied—but could also be a reduction in the actual amounts from budgets of national member states to the CAP? When does he think that the additional money that we will now have to pay to introduce the scheme will cease? At what date, or in roughly what range of time, will that £8,000 million less begin to take effect?
It will begin to take effect from the start of the changes. The changes start differently, depending on the season. It takes rather longer for the arable changes to come into operation than it takes for livestock. The whole complete package will be finished in between three to four years, depending on the season. By the time that we come to the end of that process, we shall have implemented the reductions in price that work through in the £8,000 million. If the hon. Gentleman is patient, he will hear me go through the consequent effects. No doubt we can have a further discussion if he feels that I have not covered the points as he would like me to.
Given the drastic reduction in farming that has taken place in recent years, and the consequent loss of jobs for agricultural workers, how does the right hon. Gentleman see the significant reduction that he still believes these changes can achieve being reflected in farm incomes? How does he see the future of farming in that situation?
If the hon. Gentleman is patient, he will see the other side of the coin. The £8,000 million reduction in the consumer spend is reflected nothing like as much, but the changes will be seen in the direct payments from the taxpayer to the farmer, which is precisely what the House is constantly demanding. It has constantly said that an awful lot of money in the CAP never gets to the farmer.
The hon. Gentleman and I have said the same thing again and again. We have always tried to ensure that there is a simple, direct method whereby we can support farming, ensure that the land is looked after and protect our food supply. That is what we have sought to change. If he will bear with me, I will go through that part of it. However, I start by making the clear statement that this is £8,000 million out of that which otherwise the consumer would have been contributing to the common agricultural policy.
These savings to consumers are a result of a significant change in the way that the CAP supports farmers—a shift away from support paid for by consumers to support paid for by taxpayers. In lieu of price support, we have direct payments to farmers. This is a sensible change when one moves from shortage to surplus. When one is in shortage, it is sensible to support pricing, because that draws more production through, which is what we wanted to do.
The CAP is a sensible policy, because it produced the food that we needed. The problem has been that, for some years, we have not been in that position. We need a system of support for agriculture in the countryside that does not increase production. The only way to do that is to move the mechanism of support from the consumer—the way that is bound to increase production—to the taxpayer, who is then able to direct the support to ensure that farm incomes are sufficient to keep farmers in the countryside, the countryside cared for and the food that we need produced, but not in such excessive quantities that the cost escalates beyond any kind of payment.
There is, inevitably and rightly, a change, and the cost to the taxpayer will increase, but by significantly less than the saving to the consumer. Overall, the cost of the CAP to consumers and taxpayers when put together will fall, and fall substantially. It will fall even if we assume that what we spend now under our existing policies would not have increased year by year as a cost to the taxpayer.
It is a major saving even if we say what no one here believes, that there would not have been an increase to the cost to the taxpayer under our present system. [Interruption.] The hon. Member for South Shields laughs to cover up the fact that he does not understand the system. He has done this for the past three years and will no doubt do it until he ceases to perform his role, as I imagine will no doubt happen this autumn.
Who actually believes that the experience of generations would have been reversed? Had we actually allowed high green prices to continue to generate surpluses, the cost to the taxpayers would have inevitably have risen sharply, with no offsetting savings to consumers. To return to the point made by the hon. Member for Berwick-upon-Tweed (Mr. Beith), those extra costs would not have gone to the farmer, because the mechanism then was that we would pay increasingly for storage and for selling surpluses off to countries that did not need them, and so would not accept them except at knockdown prices. All those things do not, except in part, give the farmer returns and support farmer income, which is what we are about.
Let me run through the key elements of what we agreed. More details are available in the briefing note that I have had placed in the Vote Office. Hon. Members should be aware, however, that it contains a clear note that it is the detail as far as we have it. Discussions are still continuing —[Interruption.] It is amazing. Opposition Members know so little about the system that they think that what I have said is surprising.
We have agreed all the major principles. The United Kingdom wants to ensure that all the details of the enabling legislation shall be exactly right. It seems that Opposition Members do not remember that our consideration of legislation involves Second Reading, examination in Committee and on Report and Third Reading. In this instance, the main principles have been clearly enunciated. The detailed matters—for example, which year we shall use as the base year and exactly how measurements will be made—are being properly discussed at this moment. Opposition Members should know that and should not giggle to cover their ignorance.
My hon. Friend is right. In fact, they have already complained. I have been asked on radio and television why we are having the debate today and not on some other day. Opposition Members try to have it in every possible way except the right one, which is to welcome what we have before us, what we have been asking for for a long time.
I wish to extract some information. We are discussing what is supposed to be a grand design, but I am sure that the Minister knows that I am concerned about three specific families who do not have a set-aside scheme and who will probably not get one. The families were producing dioxin-contaminated milk, and it is about a year since they were stopped from doing so.
Are there any proposals that, if implemented, will enable those three families to continue in production? At present, they are not allowed to produce because of atmospheric pollution and pollution as a result of the production of coalite and from other sources. How will these families be paid? I heard recently that an official from the Ministry told them that there is no more money.
I want to know whether there is anything in the proposals that we are discussing that will enable the three families to continue to farm. They should be paid in one form or another. What are the proposals?
I think that the hon. Gentleman knows that the issue that he has raised has nothing to do with reform of the CAP. The farmers to whom he refers have been paid money over the past year while we have investigated the reasons for their problems. Their problems have not been caused by agriculture as a whole, by the Ministry of Agriculture, Fisheries and Food or by the Government. The farms have been polluted and I have stopped the farmers producing food that might be detrimental to public health.
I know of no hon. Member who would be quicker to demand my resignation if I had not protected the public good than the hon. Member for Bolsover (Mr. Skinner). The hon. Gentleman has misused the opportunities that have been given to him to raise this matter by failing to say how much the Ministry has done for the families for the past three years. I met two of the farmers and went through their problems personally. The hon. Gentleman knows perfectly well what the situation is.
Central to the reforms are the changes to the cereals regime. Perhaps the basic mistake—
Central to the reforms are the changes to the cereals regime. Perhaps the basic mistake of the designers of the original CAP was to set cereal prices too high. It is understandable that they did so because there was a real fear of famine. In the longer term, however, changes to the regime should have been introduced much more rapidly. For the past 30 years, high cereal prices have encouraged over-production. Through the effect on feed costs, they have pushed up livestock prices, with the result that production has been encouraged and consumption depressed.
Moreover, the surpluses in cereals that this policy has produced have been dumped on world markets with the aid of high export subsidies. This has damaged the Community's relations with other cereals exporters and has added to the growing cost of the CAP while undermining the poorest producers in the third world.
I hope that we shall realise the importance of the change that is to be made for the third world. The mechanism that produced over-production at a time of surplus also produced subsidised production in Britain and the rest of Europe, the outturn of which was put on world markets. Producers in the poorest areas were unable to compete. I have seen Belgian rapeseed oil on sale in bazaars in Cameroon at a price which was cheaper than locally produced palm oil. That was a serious distortion, and it has been overcome as a result of the changed policy.
In the agreement that we reached last month, the Community has at last grasped the nettle. Over the next three years, from the 1993 harvest, cereal prices will be cut by 29 per cent. Indeed, if prices fall below the new target price to the intervention price, which they will do if the Community market remains in surplus, the reduction will be closer to 35 per cent. In other words, the mechanism means that, if the surpluses continue, the price itself significantly reduces further. There can be no doubt that reducing prices by about a third in only three years will have a major impact on the economics of cereal production, reducing the incentive to expand production.
I hope that we shall not underestimate the importance of the change or the difficulties that it presented to countries in the Community. Few hon. Members thought that we could make such a radical alteration. After all, Germany has departed from the principle of high grain prices, which was a constant of its agriculture policy since Bismarck. It has utterly changed what was its central agriculture policy throughout most of modern history. That shows how seriously these matters have been examined. The agreement marks a fundamental change in European agriculture policy, a change which was championed by the United Kingdom.
As I have said, I want to respond to the question of the hon. Member for Berwick-upon-Tweed.
As a result of the price cuts, every cereal producer will find his return from growing cereals reduced. To make up for this, producers will be offered a direct subsidy on an area basis, provided that they agree to set aside 15 per cent. of their arable land. I think that it is called combinable crop land, but for most of us arable land is the nearest phrase.
I must stress that the new arrangements differ fundamentally from our present and much more limited set-aside scheme. Under the new scheme, set-aside will become a normal feature of the production pattern on most cereal farms. It will have a much greater impact than our present piecemeal arrangements.
I know that many hon. Members dislike set-aside on principle. I acknowledge that it does have many disadvantages. Given time, there are much better ways of bringing supply and demand into better balance, but time is precisely what we do not have. With the current level of Community production, and the prospect of surpluses of, perhaps, 30 million tonnes after this year's harvest, only an effective Europewide set-aside can tackle overproduction rapidly enough.
There are moments when the best is the enemy of the good, and that is true here. A longer-term system that was better prepared over many years is the answer that we would have liked. That we failed to achieve years ago. Now we have an answer that will work. Indeed, it is the only answer that can work in the time that it has to work.
The Minister has come to a critical aspect of the renegotiation. When will he be able to spell out the detailed conditions and administrative arrangements for set-aside that will be made for farmers? The right hon. Gentleman will be aware that they will be starting to harvest next month. If they are to change the entire pattern of their farming programme by the autumn, they will need to know the new conditions and arrangements very quickly.
The hon. Lady is right. I shall do what she says as rapidly as possible. When I say that, I am not being restrictive in any way. The farmers will have those things that are immediately possible under the regulations as they are written. We shall produce them as soon as we can, which means in the next day or two. The rest of the changes will come as quickly again, as they are decided. Discussions are still continuing.
We are trying to make it as simple as possible—which has always been our aim—consonant with everybody in Europe doing it in the same way. That is what we are trying to achieve and I promise the hon. Lady that I shall achieve it as quickly as is humanly possible.
Let there be no mistake: the measures that we are adopting will go a long way towards dealing with over-production. A 15 per cent. set-aside requirement does not mean a 15 per cent. fall in cereals production. Not all producers are subject to set-aside; those with only small areas of arable crops are exempt. There is bound to be some slippage, but it will be limited.
The 15 per cent. requirement assumes that farmers will rotate their set-aside land, which will make it impossible for them to set-aside only their worst land. If they do not choose rotational set-aside—and, at our insistence, they do not have to do so—they will have to set aside a higher percentage of their land. The exact percentage will be decided later, but the aim will be to ensure that both forms of set-aside have the same overall effect in production reduction.
Obviously, it would be unfair for a farmer to say that he will not rotate set-aside, resulting in a smaller cut in production, but with the same support from the Community. The new, non-rotational set-aside will be fully supported, but it will require of farmers a sufficient additional set-aside to ensure that the production effect is similar.
The House should not forget that the percentage set-aside for the Community is set by the Council. If set-aside proves less effective than expected in reducing production, the Council will be able to increase the percentage. The Commission has made it clear that, in its view, the set-aside percentage should be used in that way as a mechanism to regulate and stabilise production levels.
For all those reasons, I am confident that set-aside, together with the cuts in price, will make a significant contribution towards tackling over-production. Even so, I would not have agreed to the new system if it had not met our main objections to the Commission's original proposals.
First, in the original proposals—Labour Members said that we would have to give in to them—the Commission said that much of the land set aside by large producers should not be subject to compensation. Because farms in the United Kingdom are, on average, significantly larger than those elsewhere in the Community, that proposal would have discriminated massively against British farmers. Only 40 per cent. of set-aside would have been paid for, compared with 70 per cent. elsewhere in the Community.
When we debated the proposals in December, I made it clear that that was not acceptable and would be resisted. I am pleased to say that that resistance was successful and that all planned set-aside under the new system will be paid for at the full rate.
Secondly, the Commission's proposals required all set-aside to be rotational. That was not acceptable, because such a requirement would prevent us using set-aside in ways that would be of long-term benefit to the environment—a matter about which most in the House are concerned. In addition, rotational set-aside in itself would cause significant environmental problems, such as nitrate leaching.
As I have said, the agreement we reached will enable set-aside to be on a non-rotational basis. It would be for individual member states to set a management condition to set-aside in the light of national circumstances. We are determined to ensure that, in the United Kingdom, those take full account of environmental factors and that we take advantage of the environmental opportunities offered by set-aside.
The hon. Lady may be assured that, as soon as I am able to present our proposals, I shall do so. However, we must get it right when we set the conditions for the United Kingdom—for Scotland, England, Northern Ireland and Wales. Generalised conditions would not be appropriate, because, for example, the environmental problems in Spain are so different from those in France or Scotland.
Thirdly, the Commission proposed that each individual farm in the arable sector should be given an individual base area, which would have determined its eligibility for the new area aid and its set-aside obligation. That would have been phenomenally difficult to deal with administratively, and I was not prepared to have a Domesday book scenario. Such a system would also have been inflexible, because changing patterns of agriculture could not have been accommodated. I am pleased that we have managed to remove that proposal.
Although the new payments will not be made until next year, to qualify for them farmers will have to set aside land from this autumn. That gives farmers less notice than we would have liked, especially as the detailed rules for the new scheme have yet to be agreed. We are working urgently on that matter and we will be carefully consulting on the implementation of the new scheme in the United Kingdom, consonant with our ability to produce those results and details as quickly as possible.
I have described the new system for arable crops at some length; indeed, during our last debate it was suggested that I should do so. It is essential that the reforms are agreed, because they are basic to the whole of the remainder of agriculture. The reforms in the arable sector will have a major effect on the livestock sector. By cutting feed costs, the costs of production for pigs and poultry will be significantly reduced, which is bound to have a knock-on effect in other parts of the meat industry.
It was in recognition of that that we agreed to reduce the support price for beef by 15 per cent. over three years from 1993. However, because the benefits of lower feed prices will not he felt by those producing beef from grass, we also agreed a significant increase in the beef special premium and the suckler cow premium.
To ensure that the main benefit of the new premium levels goes mainly to grassland producers, they will be made subject to stocking limits. Payments will be ma de up to those limits. but any amounts beyond them will not receive premiums. In addition, producers who farm beef extensively will be able to claim an additional premium of £24 per head under both premium systems. Those provisions will benefit the environment, because they will help to ensure that the new higher rates of premium do not encourage over-grazing.
I am glad to tell the House that the Commission's original proposal to make payment of a suckler cow premium subject to a headage limit of 90 animals was not adopted. That was another of the proposals that would have hit the United Kingdom especially hard—and among its countries would have hit Scotland even harder. Again, we succeeded in securing its removal.
To ensure that expenditure under the new arrangements is kept under control, both types of premium have been made subject to overall ceilings. For the beef special premium, it will take the form of a cap on the number of claims that can be paid in a particular region. I hope that the hon. Member for Moray will not mind my using England as an example, on the basis of its being designated as one region. However, the same would be true for Scotland, Wales, Northern Ireland or any region upon which we decide.
The ceiling will be based on the number of claims paid out in that region in a previous year. We can choose the year—1990, 1991 or 1992. If the total number of claims does not exceed that figure, they will be paid in full. If they exceed it, the total amount is shared out in proportion and each claimant receives less. That is a much more flexible system than a quota system on the animals, as was originally proposed.
Individual producer quotas will be introduced for the suckler cow premium, which will be subject to the same flexible rules on quota transfers as we secured for the ewe premium, with which I will deal in a moment. Before I leave the subject of premiums, I should mention one further innovation. It will explain why I mentioned Scotland, not Northern Ireland, in connection with an earlier point.
An additional premium of almost £50 a head will be paid in member states where a high proportion of beef cattle are slaughtered in the autumn. I was able to gain a specific assurance that that new premium will be paid in Northern Ireland. That will be of considerable help to the Northern Ireland economy and will remove what would otherwise have been a discrimination between the north and the south.
I am sorry to ask a technical question, but it appears that politics has reached every nook and cranny of agriculture. Is it the view of my right hon. Friend and his team that increasing the beef premium scheme also increases the prospect of providing good-quality beef to the British housewife? Is he convinced that it is sensible to continue increasing that premium, which essentially encourages the production of beef from the dairy herd rather than from the specialised beef herd?
I am grateful to my hon. Friend for his technical point. We reached every nook and cranny of agriculture long before it was a European concern, when we had our own system in this country. We did it even more extensively and widely. My hon. Friend cannot suggest that it has anything to do with Europe. The extra premium for the suckler cow herd is specifically designed to bring forward the best beef in the best circumstances, and in the most extensive grazing situation. My hon. Friend will find that the mix is much better than he fears, and it will achieve precisely what he wants.
The United Kingdom has always been deeply opposed to the intervention system for beef. The point that my hon. Friend made would have been true in that respect. It is a change for the worse in the Community sector. I have never been afraid to point to those aspects that could be improved. The intervention system is wasteful and inefficient, and ruins good beef to the benefit of neither the farmer nor the consumer. The Commission shied away from making proposals in that delicate area. It was left to the Council, led by the United Kingdom, to devise realistic measures to curb intervention.
The amount that can be bought into intervention each year will be limited. While the possibility of safety net intervention will still exist, it will become a genuine measure of last resort instead of the regular daily activity that in some countries becomes the basis of the whole production, producing for intervention. That will no longer be possible. The new beef arrangements move support away from the storage of beef to those who raise and finish beef cattle—particularly those most dependent on grass in areas such as the south-west. We have long argued for changes of that kind.
I am sure that the House recognises that, in all these proposals, the demands for CAP reform that we made year in, year out, have been secured. The more that the House examines the proposals, the more it will be seen that they are our solutions, increasingly implemented in our way within the Community.
For sheep, our principal priority was to defeat the Commission's discriminatory proposals on sheep headage limits. If they had been implemented, up to 15 per cent. of eligible animals in the United Kingdom would have been excluded from premium, against some 3 per cent. in the rest of the Community. The effect in remote areas could have been devastating—not least in Wales and Scotland, which are particularly dependent on sheep production. That is true also of Northumberland and the backbone of England, and of highlands everywhere. It is not only the producers themselves but the nature of the countryside that depends on the retention of the sheep in the hills. Again, we were successful and the existing arrangements will remain unchanged.
The Council agreed, however, to make the premium subject to individual producer quotas. The cost of the sheep regime has increased sharply in recent years and it was clear that something had to be done. The annual ewe premium is the single most important and costly element in the regime. We cannot ask for reductions in spending elsewhere if we are not prepared to accept restrictions on spending in areas that are particularly beneficial to the United Kingdom. Quotas will set an individual limit on the number of animals eligible for ewe premium in future and that should go a long way towards bringing the costs of the sheep regime under control.
From the outset of the negotiations, I was determined to accept quotas in that sector only if I was sure that they would provide sufficient flexibility for the industry to continue to develop and to adjust to the needs of the market. It is one thing to say that one does not want costs to escalate or over-production to result, but quite another to fossilise particular production in particular areas, in the particular circumstances of a particular year. The final agreement meets that condition.
Producers who transfer or sell their holdings will be able to transfer all their premium rights to their successors. A producer will also have the right to transfer a quota to another producer without also transferring the holding. However, where a quota is transferred without the holding, a proportion will be siphoned off to a national reserve to be allocated to new entrants and other priority producers. I was able to ensure also that the final agreement provides for quota leasing.
Although a flexible quota transfer system is essential, we must make sure that quotas are retained in marginal areas, where farmers have few alternatives to sheep. I was concerned that, if one asked as part of the environmental package that the sheep remained on the hills, one must not create a system so flexible that the areas in which one most wants sheep to live are denuded of them because the quotas are sold.
For that reason, I secured a provision enabling member states to stop the transfer of quotas away from sensitive areas particularly dependent on sheep production. It is clear also that the transfer of quotas by tenants has potential implications for others, including landlords. I therefore secured provision for problems in that regard to be addressed in the negotiations on detailed rules.
That is another example of the issues that we are working on now. They may provide a source of amusement for the Opposition, but they are essential to tenants and landlords in difficult areas. It is not surprising that Labour was not elected in those difficult areas.
We face a major task in implementing the new system and allocating quota to individual producers. We will of course consult the industry and other interested parties.
Is the Minister saying that there will be transfers of sheep quota and that there will be a monetary value attached to quotas in areas other than those that he designates as sensitive? Is there any provision for quotas to be transferred across national boundaries? That is a narrow technical point, but it would be helpful if the Minister could answer it.
None of the provisions allows for quotas to be transferred across national boundaries. I happen to believe that those changes would be very good, and that is how it should be across our whole quota system. That is my personal view, but so far it is not one which has commended itself. We will work on and I hope that one day we will have that kind of transfer.
Of course there is a value in quotas. It is ridiculous to suggest that there is not. A quota must be valuable to be able to receive a premium on an animal. There is no mystic way—this is the point about money: it is an index of value. It is only those who do not face up to the reality of what money really is, and when it ceases to be that, that things go wrong. A quota can be transferred, and in transferring it one gains a benefit. That benefit must have a price.
That decision is for national Governments, and the proportion is between 1 and 15 per cent. We must have a percentage and it will be for us to decide. It will be an important decision. There are considerable arguments in both directions. Much as I want a new entrants scheme, young farmers, and all the rest of if, that is the most difficult thing in the world, because one ultimately has to choose between people and that is not an easy task. However much we might like something in principle, it may be difficult to achieve in practice.
Mr. MacSharry's milk proposals would have been particularly damaging to the United Kingdom. The dairy cow premium would have discriminated against larger and more efficient milk producers and quota cuts would have further reduced our ability to serve the domestic market. I hope that those who represent Welsh constituencies will remember that. Some in Wales argued that they could accept MacSharry's proposals, but the Welsh milk producer would not have enjoyed the benefit received by the average Irish milk producer. The Welsh producer's support would have been transferred from Wales to Ireland, which would have been discriminatory to a considerable extent. I believe that that is now accepted even by those who suggested otherwise before the election.
I am glad to report that we got rid of the dairy cow premium. There will be no cut in quota this year. We secured a cut in the butter price of less than we wanted, but the balance of the agreement is right—a cut in price rather than in quota.
Both in Britain and elsewhere in the Community, there is a great deal of anger about the fact that, whereas some member states have fulfilled their quota obligations, cutting production and paying fines for over-production, others have not. The different treatment that the Council has afforded to Spain and Italy shows the strength of that feeling. Spain would undoubtedly have been granted a higher quota in its accession negotiations if the correct figures for Spanish milk production had been known. We have agreed that, at present, Spanish milk production is some 1–3 million tonnes more than the quota allowed.
Spain is a net importer of milk, which means that it is not only producing but consuming that milk. Spain has agreed to cut its production by 800,000 tonnes. The Community has agreed to increase Spain's quota to cover the other 500,000 tonnes when that has been achieved. That will mean a net cut in milk production not only for Spain but for the Community as a whole because, as Spain is not self-sufficient even now, it will have to look elsewhere if it is to meet its demand for milk.
We are inclined to blame others and talk of others' failure to do what we would like them to do. I hope, therefore, that the House will recognise that an 800,000 tonne reduction represents a major commitment, and the Spanish will not get the quota increase until they have achieved that end.
We insisted that the implementation of future cuts in the milk quota should depend on the state of the market. I cannot now see any reason why there should be a further cut in quota in the next two years.
Italy also sought an increased quota, but the Italian case is utterly different. Although perfectly able to introduce quotas, and committed to do so since 1984. Italy offered no remotely acceptable proposal for a reduction in production. The Council therefore refused to accept the Italian case and is now looking to Italy to implement the quota rules on the same basis as the rest of the Community.
The package included a significant reform of the Community's arrangements for supporting tobacco. I know that many hon. Members feel that the Community has no business supporting tobacco production. I must say that I find that argument difficult to uphold. People say that we should not have tobacco production in Europe but should allow people to go on smoking and import the tobacco from elsewhere.
We would then have to spend money on keeping the families who used to produce tobacco where they are, as we cannot have them flooding into towns where there is no work for them. We must accept that, with 800,000 people on 200,000 holdings dependent on tobacco production to a greater or lesser extent, it is not feasible to end support for tobacco production.
There can be no doubt that the new system is a definite improvement on the current regime. Support for tobacco will be made subject to a global quota, which by 1994 will have fallen to 350,000 tonnes—100,000 tonnes below the level of production last year. Moreover, there will be a further review of the tobacco regime in 1996.
From the start of the negotiations, I insisted that environmental considerations must form an integral part of the final agrement. It was as a result of our pressure that the Council agreed a statement in the final compromise recognising that environmental protection requirements must be pursued as an integral part of the CAP and calling on the Commission to make early proposals to that end. The Commission has agreed to do that. Moreover, we have already made a start, as I said earlier, in prescribing the new arrangments for set-aside and the beef premium. But it is only a start. We must now ensure that the initiative is carried forward and we have made our own commitment clear in a United Kingdom declaration, recorded in the Council minutes, which emphasises the importance of applying environmental conditions to the various direct payments to farmers.
The agri-environment action plan—an ugly name for a helpful and useful scheme—which forms an important part of the final package will also be of great benefit to the environment; it will require all member states to operate programmes for environmentally sensitive farming. It will build on the success of our own environmentally sensitive area schemes and provide scope for further schemes, such as a scheme to encourage extensive livestock farming where it will be environmentally beneficial.
During the negotiations, we secured a number of important changes in the Commission's original proposals— the addition of provisions to encourage organic farming, to encourage farmers to manage their land for public access and to help to protect water quality. We also secured the removal of proposals that would have dislocated the ESA scheme. Member states now have a year in which to draw up plans to implement the new programme, and we shall consult widely in doing so.
I am sorry that I am taking so long, Mr. Deputy Speaker, but last time we debated the CAP, it was suggested that these important and detailed proposals should be explained as clearly as possible.
At the Council meeting, agreement was also reached on support prices for the 1992–93 marketing years. The Commission proposed—under Britain's guidance, because we pressed the matter in the first place—that prices generally remained unchanged pending decisions on CAP reform, although, for cereals, prices will be cut by 3 percent. under the stabiliser mechanism agreed in 1988. For cereal farmers, the effect will be offset by the Council's decision to terminate the cereals co-responsibility levy, currently set at 5 per cent. of the intervention price, from the start of the 1992 marketing year.
Both the United Kingdom farming industry and the Government have long opposed the continuation of the levy: it is inequitable, discriminatory and unsatisfactory, increasing costs to farmers without decreasing prices paid by consumers. I am sure that the industry and the nation will welcome its disappearance. That is another example of the CAP's being made to conform with the model that Britain thinks right, in which the consumer is the driving force.
The agreement will not only affect the Community. The fact that it makes a settlement in GATT more attainable means that its effects are likely to be felt worldwide. I am therefore extremely disappointed that the United States has decided on action which, if taken, will be illegal under the GATT procedures.
The European Community changed its policies on oilseeds and produced an alternative that we thought would meet the GATT panel's requirement. The panel decided that it was not satisfactory, and the next stage should be negotiation. It is wholly unacceptable that the United States should move not to negotiation but to retaliation, and I hope that the United States Government will think better of a move which I fear has more to do with internal policies than with external concerns.
The agreement is remarkable—a reform that has fundamentally changed the nature of farm support. It met all our major objectives; it met the major concerns of farmers and their representatives; it benefited the consumer; it confounded our critics who said that this could not be done; it safeguarded the future of farming in the United Kingdom and in Europe as a whole.
At root, all this was made possible by the fact that, at the general election two months ago, the country elected to government a party which understands the countryside, knows how the countryside works, believes in and supports agriculture and recognises that it is the key to the future of the countryside and is prepared to fight for the interests of the United Kingdom.
It would have been a different story had the hon. Member for South Shields had the opportunity to apply his skimpy knowledge of the industry to the negotiations, which came to a head so soon after the election. We know why the negotiations were concluded within weeks of the election. It is not, of course, a party political matter—[HON. MEMBERS: "Oh no."]— but I was interested to note that Farming News let the cat out of the bag. It said of the result of the reform:
The Commission gambled on a change of Government in Britain to secure a deal closer to its original proposals.
The Commission thought that it would be dealing with the hon. Member for South Shields and it knew what that would mean: the hon. Gentleman would have let Mr. MacSharry have his way. Of course he would. Mr. MacSharry said that he was going to have his way, that there was no point in arguing it and that it would go through. The Labour party spokesman sold out in advance. He knows little about agriculture and cares less. He would have sold out the United Kingdom's interest.
I do not want to leave out the Liberal party. It would have supported Mr. MacSharry, as it always does. The Liberal spokesman at the time—I personally am sad that he is no longer with us, for he is a man with a real concern for agriculture—told us that all that was necessary was a bit of nuancing. I shall listen to what the Liberal spokesman says today about nuancing. In my view, it is a foreign word and a foreign concept, but it comes well from a federalist party.
I am not 100 per cent. sure what nuancing means, although it has a rolling feeling about it that worked extremely well at meetings throughout the country when we were preparing for the defeat of Liberal candidates from constituency to constituency. I have a very good idea, though, what it means. I am sure that, if we had it, we should not like it and that we should now be regretting it.
So goodbye to nuancing. We shall look forward to another new Liberal party policy on agriculture. It is at least an annual event; it may now become a six-monthly event. We shall watch, for we have one or two seats to win back and one or two seats to win. I am looking at the hon. Member for Berwick-upon-Tweed, because he is top of my list.
This is a solid agreement, won by hard negotiation in the Community, in which the voice of the United Kingdom is increasingly heard and respected. It is an agreement which shows that the European Community, with its disparate systems of agriculture, different sizes of farms and contrasting rural histories, works. It shows that a solid agreement can be brought about for the benefit of the United Kingdom with a majority voting system.
Together we have reformed Europe's common agricultural policy, to the benefit of the people of Europe—farmers, consumers and taxpayers. It is an agreement for Europe, in Europe and by Europe. It is an agreement which I wholeheartedly commend to the House.
I am tempted to say that it is the way the Minister tells 'em, but perhaps I should not.
I begin by protesting about the fact that we are having this debate on a Friday. [HON. MEMBERS: "Oh."] Hon. Members may say, "Oh," but the Opposition happen to think that agriculture is very important. There are those who believe that arguably this is the most important agriculture debate since 1947. The Minister knows that we are right. Important Government debates are never held on a Friday, except in an emergency. The fact that the Government are holding this debate today shows that they have little interest in the consumer. Now that the votes have been gathered in after the election, they have little interest in the farmer, either.
Can the hon. Gentleman explain his interest in the consumer when there are only seven Members of his party on the Opposition Benches, whereas large numbers of my hon. Friends care enough about the consumer to have come here for this debate? Just because Labour Members have been too lazy to turn up seems to me a curious reason for attacking us.
Hon. Members in all parts of the House have made it known to me that they would have liked to take part in the debate, but many of them have constituency engagements that they have been unable to cancel. It was underhand of the Minister to make that point. Usually there are more Labour Members than Conservative Members present for debates on agriculture.
Another reason why we should not be holding the debate today is that the information that is needed by the farming community and by all hon. Members is not available. All that we have had from the Minister is the headline stuff. Even the National Farmers Union, not exactly a friend or supporter of the Labour party, shares our view. It says:
Key details within the agreement's framework have yet to be decided.
We simply do not have the information. Even the Ministry's memorandum says that the debate must take place against a background that is based
on our latest understanding of what was agreed.
The Minister does not know what was agreed.
The Minister says "Oh!" I refer him to his own document which he laid before the House. It says that it is based
on our latest understanding of what was agreed.
Does the Minister not know what has been agreed? If he does, why did lie not tell the House? Is he trying to keep information from the House? I suspect that he is, a point to which I shall return in a moment.
The farming community, Members of Parliament, journalists and the Minister do not know what the right hon. Gentleman has agreed. Therefore, we can legitimately ask, why the haste for this debate? The answer is that the Minister realises that, far from this agreement being the triumph that he tried to portray in the House on 22 May, it is a rather unpalatable dish. It will introduce a farming regime that will be unpopular and, more importantly, will not work. The regime will provide little benefit for the consumer but will cost the poor old British taxpayer even more than the extortionate amount that he already pays to support an inefficient agriculture regime.
Any independent observer will realise that we are holding this debate on a Friday because the Government have entered into a damage-limitation exercise. They are trying to sneak this agreement through at a time when there will be no publicity about it and the full horrors of it will not be realised. Perhaps the Minister was hoping that the European Community's Court of Auditors' opinion on CAP reform would not be widely available, but when we look at it we realise that the Court of Auditors is sceptical about the effect of CAP reform. It says:
There is an urgent need to review the cost effectiveness
of the scheme. It talks about the weaknesses of financial management being
apparent at all stages of the evolution of measures, from initial conception to implementation.
The Court of Auditors then says:
It is not surprising … that the economic cost of measures in relation to their stated objectives in some cases borders on the absurd.
The hon. Gentleman makes an important point. [Laughter.] Yes, absolutely. The interesting point is that the hon. Gentleman is talking about headlines, not about the detail. The CLA's press release says:
One and a half cheers for the … agreement.
That is not exactly fulsome praise for the agreement. I have the press release here. Perhaps I can read out a. little more of it to the hon. Gentleman, as it just makes the point.
One and half cheers for the CAP reform agreement.
It congratulates the Government not on the agreement but on removing some of its discriminatory effects. It is almost as if they had lost a football match six-nil and had said, "It could have been 12-nil.
The hon. Gentleman should listen: that is exactly what I said. I give way now to the hon. Member for Stamford and Spalding (Mr. Davies).
It congratulates the Government on removing the discriminatory effects. That is the point that I have been making. It is headline stuff, but the details do not bear out the allegations of Conservative Members.
Labour believes that the Government are obsessed by secrecy on this issue, just as they were about BSE, Chernobyl and every other issue with which they have dealt. The Minister seems to run the Ministry of Agriculture, Fisheries and Food like a secret society that would make the freemasons seem open. In every case, the Government try to hide information from the public, as they have done on this occasion.
Labour has argued that the CAP is nonsense. It accounts for almost 60 per cent. of the EC's budget, which means that the poor old taxpayer pays money to support farmers, which in turn results in his paying more for food than if he had not paid the subsidy in the first place. It is a ridiculous system. Nothing in the reform, or so-called reform, proposals goes to the heart of the matter.
The Government blithely urge the House to support the reform package, which will increase taxes and keep food prices high. The Minister did not mention that when he talked about the reform plans. The reform was not voluntary but was forced on the EC. It came about because of two pressures—one internal and one external. The internal pressure was simply that the cost of the CAP was unsustainable. Since 1975, it has risen in real terms by 250 per cent. Since the Minister has presided over agriculture and food issues, it has increased by more than 55 per cent. Ironically, farmers claim that their incomes have not increased. There is something rather strange here. Nothing in the agreement will alter that balance. Farmers have a genuine case; their incomes genuinely appear to be falling. They are becoming increasingly dependent on state handouts.
Let me tell the hon. Gentleman that 49 per cent. of the income of European farmers comes from subsidies. The amounts are very high indeed. Even poorer farmers who have hard lives in upland areas often receive vast subsidies. I was looking at the accounts of an upland sheep farmer in Scotland who received £43,000 in subsidies in 1990–91. Large amounts of money are going from the public purse to support farmers.
Does the hon. Gentleman agree with the new proposals for set-aside? Previously money would have gone into over-production, which would have to be stored, rather than directly to farmers. Under the new set-aside proposals, the money will go to farmers and, we hope, in an environmentally sensitive way.
I shall try to encompass the hon. Gentleman's important and valid point, which is the key to the reform package, when I deal with set-aside.
If farmers' incomes are low, they can be increased only by the housewife paying more for her food or by the Government paying them more directly from the taxpayer. As the hon. Gentleman says that taxes should not increase, does he think that food prices should increase? If he does not want food prices to increase, should we take more from the taxpayer? He must tell farmers what he believes. He is trying to promise lower prices and lower taxes to get the votes of the housewives and farmers.
We have made it plain where we stand. We believe that proper environmental management agreements should be made with farmers, which obviously will be funded by taxes, but no extra money will be spent on agriculture because, under the present ludicrous system, for every £3 that is spent on agricultural support only £1 goes to the farmer. The Minister agreed with that earlier today. [Interruption.] If I may continue, I shall show that the Government have not corrected that in this package.
The cost of the CAP is incredible. The Organisation for Economic Co-operation and Development, the independent international expert, estimates that the average household of four in the United Kingdom pays £18.80p a week towards the cost of agricultural support, which is indefensible. Under the new agreement—the new deal that the Minister so heralds—the cost to the taxpayer will increase by roughly £1 a week. That, again, is quite indefensible. We want a better mechanism for supporting agriculture instead of trying to patch up and play around with the present regime under which the CAP operates. That is our main grumble about the Minister's claims for the reform.
The Minister's second point was the pressure to change from GATT. We believe that GATT is vital because most European countries depend very heavily on world trade. In industrial matters, Europe could not withstand a world trade war. Germany exports roughly 31 per cent. of its GNP. The figure for Britain is 24 per cent. and for France 23 per cent. If we consider our main competitors, Japan exports only 11 per cent. of its GNP and the United States a mere 9 per cent. Those countries could withstand a world trade war; we could not. That is why we must have liberalisation of world trade. I hope that the changes that have been made will at least satisfy the GATT negotiators and that we will reach a settlement. That is quite important.
I understand Conservative Members being euphoric about the agreement, because they have seen what appeared in the papers and the headlines. They saw the Prime Minister's endorsement of it as a personal triumph for the Minister, but the details do not bear that out. They saw the response of bodies which should have known better, such as the National Consumer Council, which at one time spoke independently for the consumer but now seems to be dependent on MAFF press handouts. They have not been able to read much of the detail because, as the Minister conceded, it is not available. At the time, I did not share their euphoria. I acknowledged that an improvement had been made to the CAP, but nothing which merited such blazing headlines. Labour is justified by history for being cautious in our welcome. We have been through all this before.
In 1984, the Conservative Minister at the time announced the introduction of milk quotas. We were told that that was the way forward and the ultimate solution.
Of course, it was nothing of the sort. Instead of solving the problems of overproduction, they continued with intervention stores bulging with dairy produce—more than 300,000 tonnes of skimmed milk powder and 200,000 of butter rotting. Quotas did not work, although Conservative Ministers assured us that they would.
In retrospect, it is clear what a daft deal it was for Britain because it discriminated directly against Britain. What Minister in his right mind would negotiate the right for the country in Europe which is among the most suited for dairy production to be limited to a little over 80 per cent. self-sufficiency? What Minister would agree that a country such as Britain which can produce all its own dairy produce—we concede that we cannot produce citrus fruits—must import almost 20 per cent. of its dairy requirements? Quotas did not work.
The Minister referred to the Italians, against whom there is rightful anger. It is all very well for the Minister to huff and puff at the Dispatch Box, but what is he going to do? It is disgraceful that the Italians have not introduced milk quotas and outrageous that they are asking for even more. I understand that they are to ask for still more. British farmers have the right to ask the Minister when he will fight for them. Why should British dairy farmers be penalised for playing by the rules if others do not even try to adopt them? I agree that the Italians do not play the game, but why does the Minister not do something about it?
During his remarks about the level of dairy production, the hon. Gentleman railed against the inability of our dairy producers to produce up to national sufficiency—or at least that was the implication. We are net sheepmeat exporters, so is he prepared to set aside the surplus sheepmeat production to rectify the balance or is he prepared to argue for a continuation of our ability to export sheepmeat?
We have long argued that it is in the long-term interests of farmers in Britain, who we believe are among the most efficient in Europe, for them to get much more—indeed, eventually almost all their income—from the market and that there should be no restriction of quotas. That is the way forward. The way to support the needy farmers in difficult parts of the country is through management agreements based on environmental controls. That strikes us as the best way to avoid the difficulties and it will end up with countries such as Britain, which are well equipped for dairying and some sheep farming, being able to concentrate on the activities that they do best.
Will the hon. Gentleman answer the question? In advocating self-sufficiency in dairy products, is he supporting the French farmers who say that they should not have to import British lamb? Self-sufficiency in those terms is not a sensible concept in a Community with a single market. It cannot be so, and his party specifically says that it is not.
The Minister misunderstands the question. We are talking not about self-sufficiency but about the fact that if one can effectively and efficiently produce the goods that the consumer wants, one should win the markets. If one cannot, one has no right to those markets. It is not a question of self-sufficiency within individual nations—we are talking about freer trade. We happen to believe that British farmers would do very well because they are able to compete in free trade. The fact that the Minister keeps rigging the market against them makes it very difficult for them to do so. However, I must move on.
In 1988, we had the next episode. I well remember the Prime Minister returning from Brussels, saying that we had solved the CAP problem. We were told that we had stabilisers and set-aside, that cereals were to be the targeted regime, and that the problems would go away. That was against a background of cereal interventions of 6.7 million tonnes. We were told that that problem was to be solved, but it has been made worse. There is now not 6 million tonnes but 20 million tonnes in intervention and, as the Minister acknowledged, there will be 30 million tonnes by the end of this harvest. Conservative Ministers twice said that they had the answers, but they were wrong. We told them so at the time and we have been proved right, so we can stand by the old maxim, "Twice bitten, twice shy." That is not a bad line to take.
I concede that there have been changes. I accept that there will be a 29 per cent. reduction in cereal prices, 'which will have some effect, and the 15 per cent. reduction in beef prices should be beneficial, but is the new initiative a true reform? We have our doubts. We doubt that it will stand the test of time. We regard it purely as a short-term, transitional measure, and we still await a proper reform of the CAP. If the initiative could be seen as only the first step in such a reform, it would be welcome. However, to judge from the manner in which it has been presented today by the Minister and in which it has been hyped, it seems that it is regarded as the end of the reform process, not the beginning.
Is not it strange that, although British politics is being dominated by consideration of the Maastricht agreement and its consequences and that there will be huge alterations to the treaty of Rome because of Maastricht, not one word of the section on agriculture is to be altered? Does not that show that the changes we are now discussing are very marginal?
My hon. Friend makes a valid point which endorses the theme that I am trying to develop.
Let me take it a stage further. The Minister has not spelt out to the taxpayer how much the deal will cost. My charge is that it will not stand the test of time. In spite of what the Minister says, it is basically the MacSharry blueprint. It is open-ended to get more compensation for British farmers, which means that the cost of the scheme will go up even more. However, MacSharry said that the cost of the CAP will continue to increase for about five to eight years.
Initially, the cost appears to be about £3 billion extra a year, which means an extra £1 a week in taxes for the average household of four. MacSharry and the Commission justify the increase by saying that it is for a short time only and that it should then decline. Our concern is that what goes up very rarely comes down. We do not believe that the reforms will last five years, so it will be money down the drain. What confirms us in our view of ever-escalating support prices is that the compensation payments are open-ended. The amount we pay for the set-aside is on-going. Therefore, the poor consumer and taxpayer will continue to foot the bill.
The Minister made great play of benefits to the consumer, but when we asked in parliamentary questions whether there would be reductions in prices, the Minister was rightly and openly coy. Ministers are hedging their bets because they know that, although in theory there should be reductions in prices, there will not be and, indeed, under these proposals the cost of food to the consumer is likely to rise.
The proposals are a bureaucratic nightmare. They will increase the cost of the CAP bureaucracy, of monitoring by the Minister of Agriculture, Fisheries and Food and the bureaucratic cost for the producer. There will be many more forms to fill in, with the result that the cost will have to be passed on to the consumer. The end result is that the ordinary man and woman in this country will receive no benefit from the deal. There will be increased taxes and increased food prices. The Minister should have no pride in his renegotiations.
I promised that I would return to the issue of set-aside because it is the key to the whole so-called reform package. We have consistently opposed the concept of set-aside for many reasons. The British scheme has failed to make any significant dent in cereal production. The Minister's document shows that since 1985, although the area devoted to set-aside in the United Kingdom has declined by 385,000 hectares, cereal production has increased by 1.7 million tonnes. Set-aside simply has not worked in the United Kingdom.
In "Rural Socialism", which is not a magazine that I normally read, you are quoted as saying—[HON. MEMBERS: "No—the hon. Gentleman."]— Dr. Clark says
the present system of set-aside … is difficult to oppose because it is actually cost-effective
That is what you said in the December—January edition—
Order. I hesitate to intervene as the hon. Gentleman is new to the House, but the word "you" refers to the Chair. He must refer to the hon. Gentleman.
I am sorry. The hon. Gentleman stated in 1989–90 that he believed that the set-aside scheme then in operation was cost effective. Are we witnessing another famous U-turn from the hon. Gentleman?
I am surprised to hear that quote, and I am sure that hon. Members will be surprised to hear it, because I never said it.
Yes, but quotes are not always correct. Hon. Members know that I have consistently opposed the scheme.
Set-aside has two difficulties: first, it does not work and, secondly, it is open to abuse. In this country we have a good monitoring system and good agricultural administration, but there have been abuses here and we managed to catch some of the abusers. The Minister has had to recover set-aside payments worth £0.25 million in recent years. If there is abuse in this country, we suggest that abuses will be even greater in countries which do not have such an efficient agricultural administrative structure.
The main charge against set-aside is that it will not work. The Minister has conceded that farmers set aside marginal, less accessible land if there is no rotation set-aside scheme. As a result, they increase their income and increase production on the rest of their land. He has tried a hybrid system—partly the old scheme topped up with a rotational system, and partly a straightforward rotational system. The weakness of both systems is that they offer no environmental benefits. In this country farmers receive set-aside payments for building golf courses and riding stables, so the scheme has not helped the environment.
Our main charge is that rotational set-aside will result in increased cereal production. Increased productivity will ensure that. The decision to allow set-aside land to be rotational will ensure that that happens because the 85 per cent. of land not set aside will become more productive—that is long-established good husbandry. Experience in the United States supports that theory. As farmers concentrate management and physical resources on a smaller area, productivity increases. In addition, predicted increases in productivity of 4 per cent. a year for wheat would eliminate the theoretical 15 per cent. reduction in production through set-aside in three years.
Does the hon. Gentleman concede that logically, if agricultural productivity increases by 4 per cent., it will do so anyway, irrespective of whether there is an element of compulsory set-aside? It therefore follows that we are reducing production which would otherwise have increased by a greater amount. We are still reducing potential production by enforcing a 15 per cent. set-aside.
The hon. Gentleman's logic is impeccable, but we argue that that is not the way to tackle surplus cereal production and that it should be more dependent on the market. Perhaps I can spell out my argument more graphically by quoting an honest straightforward arable farmer, Oliver Walston—[HON. MEMBERS: "Oh no!"] Hon. Members may not like it because he is a successful farmer. Writing in Farmers Weekly on 5 April, he explained the strategy that he will adopt on his Cambridgeshire farm. He was honest enough to put his intentions on paper, and other farmers will do the same. He said:
this autumn I shall obey the letter of the law and do what Brussels wants. I shall leave 120 ha untouched. That means I shall plant 120 ha less than I had planned of peas and spring rape, but my wheat acreage will remain just the same as usual. For the 1994 harvest, however, my wheat will have the benefit of this fallow land and I expect the yields to rise accordingly … My output of peas and rapeseed will certainly fall. But my output of wheat will remain static next year and will actually increase in 1994.
He graphically illustrates the point that the Labour party is arguing and makes it understandable. I do not need to say any more.
The key pillar of the Minister's strategy to reduce cereal production by set-aside will not work. Farmers will be able to participate in the new scheme without taking wheat or barley out of production.
I have not had time to deal with the details of the package, but they are as flawed as its strategic aspects. A highly complex set of bureaucratic controls will result and will make life difficult for hard-pressed sheep and beef farmers. There will be more forms to fill in, more paperwork and less farming. I am worried about the notion of quotas for hill sheep farms. We wait to find out what the Minister regards as sensitive areas. From now on it will be even more difficult for young people to enter farming because they will have to buy quotas as well as having to buy land. Young people have been able to buy hill farms because the land is cheaper and they have not had to buy as much expensive capital equipment. The scheme will make life more difficult for upland farmers.
The scheme will not help the environment, but will lead to increased production. The Minister and his colleagues have ducked the fundamental issues. Why did he not take on the European Community in its own jargon? Why did he not argue the position of subsidiarity? Even the Foreign Secretary said earlier this week
that Britain wanted a Europe wider in membership and more decentralising in operation than at the moment."—[Official Report, 8 June 1992; Vol. 209, c. 34.]
Is the Ministry of Agriculture, Fisheries and Food immune from such an approach?
More decisions on agriculture should be taken at national and regional level. Countries should be freer to decide how best to use their resources, especially natural resources, such as agriculture, which are dependent on climate and topography. We concede that agriculture should operate within a European framework, but on a looser basis of goods freely traded within the Community. That would make more sense to the consumer, to the taxpayer and to the future of Europe, if the Community is to be made up of a wider Europe, including Scandinavian and eastern European countries. The deal goes against that trend. Reform of the CAP will lead to a more interventionist, bureaucratic and complicated system of agricultural support.
It is, therefore, hard to see the agreement as a significant step towards the reform of the CAP. I can do no better than to conclude my case by quoting the Country Landowners Association, which has been held up as the epitome of what is correct. At the end of its press release, the association says:
All in all there is little in this so called 'reform package' that can truly be called reform in any rational sense. Quotas and other market management measures are a step backwards towards an artificially rigged market. And the cost of compensation seems unlikely to be sustainable in the longer term.
That case is, in essence, Labour's case.
I am most grateful for this opportunity to contribute early in the debate. In so doing, I proffer my apologies to you, Mr. Deputy Speaker, and to the House. As I have a pressing engagement in my constituency, I may not be present for the winding-up speeches. Unlike Opposition Members—there are now only three Back-Bench Opposition Members and two Front-Bench Opposition Members present—some of us are keen to contribute to debates on agriculture. When such debates are flagged, we make arrangements to cancel meetings in our constituencies, important as they may be, because we believe that contributing to these debates in our constituents' interests takes precedence over everything else.
I will address my remarks to the impact of the CAP reforms on the arable farming sector in my constituency, so I will concentrate on the cereal side rather than on the other sectors. I ask the House to consider my remarks in the context of farming in the fens of north-east Cambridgeshire. Given a free market in agriculture, there is no doubt that my farmers would be the most competitive, the most efficient and the most productive in the United Kingdom, if not in Europe as a whole, because of their singular advantages of soil, climate, terrain and opportunities for irrigation.
Let us consider my right hon. Friend's achievements from his very successful negotiations in the latest round. This has been a major triumph for my right hon. Friend because, for the first time, the emphasis has been shifted away from financing a surplus of agricultural products to ensuring that any subsidy payment is directed to the farmers themselves as income to their bank accounts. The new arrangements remove the discrimination against the British farmer, especially the larger arable farmers of East Anglia, which was inherent in the original MacSharry proposals. They will also remove soon the unfair and iniquitous co-responsibility allowance and my farmers especially welcome that negotiating success.
We are told that the cost of the reformed CAP will be kept within the agricultural guidelines. All my constituents welcome that change which my right hon. Friend has negotiated. However, I point out to my right hon. Friend that it may be the biggest test he will have in future years.
The price reductions which have been negotiated will benefit consumers and should enable the negotiations on the general agreement on tariffs and trade to progress to a successful conclusion. The place of environmental protection within the CAP has been strengthened. That has been a primary plank of my right hon. Friend's negotiating position, and the House and the country congratulate him on that.
Those achievements have been recognised by many involved in agriculture, and reference has already been made to the comments of the National Farmers Union. To reinforce the point, I quote the NFU, which said:
The NFU has welcomed the achievement of British Ministers in obtaining the removal of the main discriminatory elements in the EC's original proposals".
The Country Landowners Association
congratulates the Government and Mr. Gummer in particular for removing these discriminatory proposals.
The CLA president, the Hon. John Fellowes, a well-known and much respected Cambridgeshire farmer, said the other day:
The discrimination against efficient UK farming in the original proposals for arable set aside has been removed, and John Gummer is to be applauded for being so resolute on this major point. We are also pleased to see the replacement of the discriminatory dairy cow premium with price based measures in the milk sector.
To my ears and those of my constituents, that sounds like a ringing endorsement. What more praise can a politician expect—even one as skilful and successful as my right hon. Friend?
The achievements are endorsed not only by bodies representing landowners and farmers, but by farmers themselves. I was interested to hear the hon. Member for South Shields (Dr. Clark) quote the words of Oliver Walston, who is a famous Cambridgeshire—but socialist —farmer. In an article in The Sunday Telegraph on 24 May, he said:
The uprooting of the Common Agricultural Policy as we know it has, not surprisingly, made taxpayers, consumers and the Government happy. British farmers should also join the celebrations. For the first time in 30 years the link between subsidies and production has been cut, so no longer will it mean that the more wheat I grow the more subsidy I receive. Since our farms are larger and more efficient than Continental farms, British farmers are uniquely equipped to flourish in this brave new world. But to do so we must forget the past.
Those are wise words from another eminent Cambridgeshire farmer.
Despite the positive achievements, there is a down side for many of my farmers, the most critical part of which is the impact on their farm incomes. The NFU's view is that agriculture's total revenue will be down by £400 million in 1995–96. The price of inputs will continue to rise. That will be offest by lower cereal prices in feed costs, but the net effect will be a 16 per cent. fall in farming incomes. After taking inflation into account, there will be an estimated fall of 28 per cent. in real terms by 1996.
It is estimated—the figures are not yet definite—that arable farmers could face a cut of £12 per acre after compensation is paid for set-aside. That view is reinforced by Mr. John Nix, who is a respected agricultural economist. In a recent publication, he said:
farm incomes per hectare in the UK are now well below half the mid 1960s figure in real terms, while national average earnings of the rest of the population have risen by about a third.
The changes will affect not only farm incomes directly, but the rural economy as a whole. A response is required at two levels; first by individual farmers, and secondly by the Government. How will individual farmers respond? Their first idea will be to cut labour. Fewer people will be required with 15 per cent. set-aside. If the EC directives on working hours go through, the problem will be exacerbated, because there will be less flexibility in farm working hours. Farmers will also cut their purchases of farm machinery, fertilisers and sprayers. The knock-on effects on the rural economy will be fairly serious.
In the future, there will be fewer jobs in agricultural ancillary trades. Less grain and oilseed will be transported from the farm gate to the processing plant and market. Many small road haulage firms in my constituency will feel the effects of those changes. Fewer tractors and farm implements will be purchased, and that will have a knock-on effect on the farm machinery trade, which will decline further and exacerbate the effects of the current recession.
I have some questions for the Minister, which he may be able to answer later today, but, if not, I am sure that the answers will be forthcoming. My farmers have spoken of taking land into set-aside from their oilseed rape and pulse acreages, but not from their wheat acreages. I share the concern of the hon. Member for South Shields that the grain mountain will not be reduced if such a set-aside facility is still available. In addition, compensation payments will be based on average yields for the country, but perhaps we could negotiate something on a regional basis.
There is no question but that the farmers of East Anglia, and Cambridgeshire in particular produce the highest wheat yields in the country. Ten years ago, the yield was 5 tonnes a hectare; now, it is nearer 9 tonnes. We expect that yields will increase with technological developments. Therefore, any loss of wheat yield through set-aside may be offset by the development of better strains, yielding higher output.
A constituent recently pointed out—again, this is not the direct responsibility of the Minister—that if we put 15 per cent. of our land to grass or just mowed it, that would tempt travellers and gipsies to occupy it. The county already has a severe problem with such people. If land is set aside in that way—if it is not ploughed or is left bastard fallow which I understand is the technical term for land that is partially ploughed and kept in good order ready for seeding next year—and the land is left as grass, encampments of gipsies will be attracted to it.
No decision has yet been made on the quality standard for intervention prices for feed wheat in particular. That forms a considerable proportion of the wheat output in my constituency. This year, the harvest is likely to be early because the season is well advanced and my farmers are asking for early decisions so that they can make the correct decisions on set-aside land and on which portions of their farms to nominate for that.
There is an option under the CAP agreement to provide a pre-pension scheme to encourage farmers to retire early. The United Kingdom has decided to opt out of that scheme because the Government believe that it is aimed at those countries with many small farms and that it is an attempt to encourage restructuring.
In Cambridgeshire, the average size of farm is 200 acres. The owner of such a farm is likely to receive £1,500 less income next year as a result of the CAP changes. Those farmers are already under pressure; they are under-capitalised and unable to reinvest out of their profits and their bank charges are accumulating. It is well known that a farm of 200 acres will not be viable in the near future—if it is now. There is a need for restructuring to increase the size of such farms to 250 or even 300 acres. If that is the case and we want profitable arable agriculture, the Government should consider ways in which they can influence people to retire from smaller farms so they can combine to form larger, restructured farms.
I also ask the Minister to use every means at his disposal to negotiate an enhanced sugar beet quota for this country's arable farmers. Sugar beet is an important cash crop, not only in my constituency, but in the rest of East Anglia. If the Government can negotiate a larger quota, that will offset some of the cuts faced by other sectors.
I also ask the Minister to protect the position of the Potato Marketing Board. Potatoes are another important cash crop and although they are not covered by the CAP, the Commission is considering altering the board's structure. However, it is doing an excellent job and my farmers want it to continue to do so.
I have referred to the problems that the reforms will pose for farmers' incomes. I believe that the changes will have a widespread impact not only in my constituency, but throughout the farming economy. It is important that a high priority is given to co-ordination between different Departments so that as labour is lost from agriculture and other problems surface, the rural economy is given all the help and assistance that it needs.
In that respect, greater powers should be given to the Rural Development Commission, which has an important role in providing alternative employment. Road building in rural areas should also be given a higher priority. In my constituency, the dualling of the A47 and the A 10 will have an important effect as it will open up the region and help to prevent increased unemployment. The enterprise agencies, which have an important role in rural areas, should also be given greater consideration and, perhaps, receive better funding.
The wide-ranging CAP reforms will be welcomed by taxpayers and, to an extent, by my efficient farmers, but problems will arise. I hope that my right hon. Friend will address those problems in the detailed negotiations that are to follow.
I add my protest to that of my hon. Friend the Member for South Shields (Dr. Clark) at the fact that we are holding such an important debate on a Friday morning. I understand why the Minister chose to make a statement on the completion of those negotiations on a Friday, because it was an admirable opportunity to accentuate the positive before hon. Members had time to analyse properly the implications of the reforms. That same defence does not apply today. The CAP reforms will have a greater long-term effect on our constituencies than anything that was discussed in prime parliamentary time this week.
This morning I should have been at a governors' meeting of Llysfasi agricultural college. It would have been nice if I had been able to attend and report on the clarification of the CAP reforms. Tonight, I am to attend an important and long-advertised public meeting in Glyn Ceirog—a lovely village a long way from London. That means that I, too, will be unable to remain for the entire debate, for which I apologise to the House. I shall study in detail the Minister's reply in the Official Report, not least because many of the measures in the reform ageement require United Kingdom action.
When the Minister made his recent statement to the House, I asked about the possible knock-on effect of the proposed cuts in cereal prices on grass-reared red meat production. I trust that the Minister will give a more considered reply to that problem today than he has previously. Already poultry and pigmeat production is growing at the expense of beef and lamb.
It would be churlish not to acknowledge that some farmers have apparently been helped by measures different from those in the original MacSharry package. However, many questions remain. Will the quota and set-aside measures be adequately policed in other EC countries, or here, without increasing bureaucracy for farmers or by increasing numbers of Ministry officials? That will be difficult in my area, because the Agriculture Department of the Welsh Office has closed its office in Ruthin. Farmers will be uncertain about their future until details of the administrative arrangements, especially details of the environmental part of the package, are known. I understand that the Minister will have powers to introduce a long-term habitat management scheme. When will such a scheme be introduced, and will he consider ways to ensure that it will be beneficial?
We must hope that the agreed measures will lead to a reduction in overall budget costs. I also hope that food prices will go down and that the reductions will be passed to the consumer and will not add to the inflated profits that our supermarkets already make compared with their European counterparts.
I should like to deal with some issues specific to the predominant type of farming in my constituency. The headage limit retention is welcome. The transferability of sheep premium rights may be good, but my farmers are worried about the movement of saleable quota out of areas such as mine or less-favoured areas. I do not know which criterion the Minister will use, although it would be interesting to know. I am delighted to note that he is taking an anti-free market interventionist approach to the issue.
In the context of the sheep annual scheme, why is an eligible ewe restricted to the application period, which means that it must have lambed by 7 January 1992? That will be very restricting. Could that be changed to a retention period to allow claims for ewes lambing up to 17 April 1993? As we have heard, in its press release the Country Landowners Association welcomed the reforms with one and a half cheers. When we see all the detail, and if the welcome inclusion of environmental considerations works, I sincerely hope that farmers and consumers will be able to raise three cheers.
I am delighted to speak for the first time in the House. I add my congratulations to those that have already been extended to the Minister on bringing back this package of reforms from Brussels. The Minister is popular with farmers in my Northumbrian constituency. I understand that the National Farmers Union has given the package one and a half cheers. Those of us who know the NFU know that that is equal to a standing ovation of the sort given to Pavarotti.
Popularity is unusual for a Minister of Agriculture, Fisheries and Food in Britain, and I urge my right hon. Friend to make the most of it: to make hay while the sun shines. He deserves to be popular for what he has gained. I do not make light of the problems facing farmers, especially those in my constituency, because, despite the package, they will suffer a considerable reduction in future income. However, they can face those difficult times in the knowledge that the enormous discriminatory handicap contained in MacSharry stage 1 has been dropped. They are grateful for that.
Farming and forestry are the cornerstone of industry in my constituency, which covers more than 1,000 sq miles—I understand that it is the second largest in England. It extends from the Scottish borders to the Durham border in the south, to Cumberland in the west and to the city of Newcastle in the east. It has some enormous natural prominences, including Britain's largest man-made forest and the Kielder reservoir, which is the largest man-made reservoir in Britain.
My constituency is spectacular and remote, and the countryside is wonderful. That brings disadvantages, because it is hard to make a living, especially in the hills. Sheep and hill cattle dominate in the north, and cereals and dairying dominate in the valleys and river valleys and in the beautiful remote valley of Allendale in the south. Apparently there are three sheep to every person in my constituency. The town of Hexham has a large livestock mart and dealers and buyers from all over the country come to it. They also come there from South Shields.
Recent comments by the hon. Member for South Shields (Dr. Clark) about BSE and the Government's secrecy, as he called it, about that disease was not well recieved in Hexham mart. Some letters from butchers are winging their way to him. I hope that the hon. Gentleman can explain his allegations, because they are seriously damaging the meat trade in my constituency.
Of course, farming is not the only industry in my constituency. Since the war, improved communications have made the Tyne valley villages and Ponteland and Darras Hall centres for commuters to Newcastle and other parts of Tyneside. I am lucky to count among my constituents many people who make a significant contribution to life in the region. The industry is mostly rural and many small businesses have been set up in the past 13 years. I am glad to say that the Government attitude towards such business has encouraged many of them, even in these difficult times, to become vital middle-sized businesses which the constituency needs.
The constituency is full of history. Hadrian's wall is still among the great monuments of the world, even though enterprising and efficient locals removed a great deal of stone. It no longer serves to keep people out: on the contrary, we welcome visitors and tourists.
Hexham is a lively and ancient market town, with a spectacular abbey. There are plenty of castles, notably the one at Prudhoe, and there are many smaller fortifications dating from the turbulent border wars. George Stephenson's workshop is at Wylam, and Thomas Bewick was born at Cherryburn. Those names are a testament to the engineering and cultural history of the constituency. History lives on in the people, many of whom bear the surnames of the great riding or reiving families of the border wars.
For many years, Northumberland was one of Britain's best-kept secrets, but, thanks to the efforts of the Northumbrian tourist board, tourism in now one of the constituency's major industries. Tourists come for the magnificent scenery, the history and the unrivalled sporting facilities. Bloodstock and racing are important in the constituency; Hexham has a marvellous racecourse, with one of the best national grandstands of any racecourse in the country. However, racegoers need a fairly heavy pair of shoes on windy days.
I pay tribute to my predecessor, Alan Amos, who represented the constituency from 1987. He set a fearsome example as a hard-working constituency Member and I shall have to work hard to do as well. Many of my constituents are grateful to him and I suspect that many Ministers remember his terrier-like pursuit of problems. Another of my predecessors is Lord Rippon and some senior Members may recall Sir Rupert Speir, who is alive and well and hale and hearty in the constituency. He offered me much good advice during and after the election campaign. He told me, "For God's sake don't make a long maiden speech."
The hon. Member for South Shields spoke about the impact of the reforms on wildlife. There is no doubt that intensive arable cropping has not been friendly to wildlife. These reforms have the ability to change that—once again, I disagree with the hon. Member for South Shields. They switch support from yields to production—one of the demands made many years ago by the Game Conservancy Trust, which understands much about these matters, as a way to make modern farming much more friendly to wildlife. Those who produce more than the average for their region will reduce yields, which we hope will lead to less use of the non-essential pesticides that attack the insects on which many ground-nesting birds, including game birds, and other wildlife depend.
Most important is the rotational set-aside, which will bring back to the English landscape one of its lost features—the winter stubble fields that some of us remember from our youth. As we now know, winter stubble is a reservoir for many beneficial insects; that is why the new scheme of rotational set-aside will be of immeasurable benefit to wildlife and game birds.
I know that the Minister has a keen interest in this, but I hope that he seeks advice from organisations such as the Game Conservancy Trust on the best way to manage rotational set-aside, because in the detail and the fine print of management lies the benefit of wildlife.
It is a great pleasure to congratulate the hon. Member for Hexham (Mr. Atkinson) on an eloquent and charming speech. He said that Northumbria had been one of the best-kept secrets of the country, but I feel certain that he will make sure that the House is not allowed to forget his constituency.
As we are permitted only a short time, I shall concentrate on some of the main elements of the package that the Minister has outlined. I intend to give credit where credit is due. It is not to the benefit of the House if we look always at the disadvantages and never at the achievements of the Government. Therefore, I give credit to the Minister and his team of officials for the way in which they have managed to exclude some of the discriminatory features of the previous packages.
I and some of my parliamentary colleagues went to Brussels to meet Commissioner MacSharry early this year and we were able to cover some of the issues on which the Minister touched. We had a long meeting and I know that Commissioner MacSharry welcomed our evidence that it is not simply the party in government that was concerned about the way in which the United Kingdom's farmers would be affected and that others shared its view.
The debate is about not just agriculture but the rural economy and the rural environment. The Minister may agree that it is unfortunate that his remit is concerned precisely with production and not with those wider issues. In a smaller party, I am lucky enough to have a remit that covers all rural issues, so I can look rather more widely at the implications of the package. I am tempted to suggest that the common agricultural policy should no longer be so described. Instead, it should be described as a policy for the common agricultural and rural environment, or CARE, because a number of the features that the Minister described are as much concerned with the environment, the economy and the employment patterns of rural areas as they are simply with agriculture.
Another beneficial side to the package, which we should be ready to acknowledge, is that if prices drop and we stop dumping subsidised products on the world market, we can do much more to help the developing world than aid will ever achieve. We should give credit to the Council of Ministers for that. If—it is a very big "if" and, as a number of hon. Members have implied, the jury is still out on this—the disastrous slide in farm incomes in recent years is reversed, the Council of Ministers should have credit for that, too.
An even greater doubt is whether this package will fulfil the requirements of the GATT round. We all know that the GATT round is in doubt because of the American attitude in the run-up to their election in November. President Bush is unlikely to agree to any major advances.
There is real doubt whether, even if this package is allowed to fall into the green box, a large amount of American support will similarly be allowed. Clearly, there has to be a quid pro quo.
The criteria that GATT has prepared do not seem, in my view and that of many other commentators, to permit the present package to fall into that box. Earlier this year, Agra Europe said:
Compensatory payments under the EC's MacSharry plan and US deficiency payments quite clearly cannot be classified as 'green box' decoupled payments.
I accept that there have been changes—the Minister may describe them as nuances—but this is still in doubt, and it is of critical importance that we maintain momentum on the GATT round. I can only agree with the NFU when it says:
The progress towards reform that the package represents should be used by EC negotiators to reach a satisfactory settlement of the GATT trade talks.
It recognises that this is but a first step, not a conclusion.
A number of hon. Members on both sides of the House have rightly paid a great deal of attention to set-aside, in which there has been a massive increase. The Minister has made it clear that it is not yet possible to know for how long this will be necessary. We know, because he has been quite frank about this, that he has misgivings.
We need to know whether this is intended to be a transitional or a long-term solution. If it is the latter, the package is not adequate to meet the task, because it does not fulfil the essential requirement of positive environmental features. We know that the Minister will have a lot of room for manoeuvre on that, but it will be important very early on for farmers to know what will be involved in terms of countryside management and stewardship schemes.
We all understand that there are major problems. The hon. Members for Cambridgeshire, North-East (Mr. Moss) and for Hexham referred to the differences between rotational and non-rotational set-aside. We have major problems with rotational set-aside, which does not offer the environmental opportunities offered by non-rotational set-aside. We understand the difficulties and we hope that the Minister will be able to say, quite clearly and quite soon, how this hybrid arrangement will work.
The release of extra nitrogen automatically and naturally into the soil may be counter-productive with rotational set-aside. We want to link set-aside to explicit extensification. That is the most important advantage that we can gain here, particularly as it will increase the permanent natural habitat.
In my area, the great Duchy of Cornwall, in the past 10 years alone 70 miles of hedgerow and an area of wildlife habitat twice the size of Penzance have been lost. Those who know the area will know that Penzance is quite a sizeable town. Rather than just using financial considerations, set-aside should be considered against that background.
The obsession with set-aside will not please anybody. It does not please the farmers—their training, their experience and all their instincts are against it. It does not please the conservationsts unless it has built into it real environmental benefits. It does not please the consumer, who will not see any great advantage. Most important of all—the Minister has been frank about this—taxpayers will find it difficult to accept that they will have to subsidise the farmer for doing nothing. It is difficult enough to persuade them to subsidise greater productivity in years of surplus, but to subsidise dereliction will look like featherbedding—the accusation of yesteryear.
We feel strongly that the room for manoeuvre that the Minister has in the present package, which we hope he will retain, should be used as fully as possible to encourage greater habitat conservation and creation and also to enable public recreation and access to be extended. That has to be the right answer.
You will see, Mr. Deputy Speaker, that I am industriously turning over pages of my notes in an effort to keep within your time limit.
The Minister referred to the need to try to improve the level playing field within the Community. It is familiar to us all, in terms of animal welfare, food hygiene and a number of discretionary schemes, that our farmers, for various reasons, have either not had the same benefits as their competitors or have been disadvantaged in other ways. We welcome the opportunity, which the Minister has said he intends to take during the United Kingdom presidency, to tackle the problem. It is to be hoped that, at the end of the year, the present situation will be much improved.
As I said at the outset, the package involves the entire rural economy. As the details come forward, the Minister's room for manoeuvre must be considered on an interdepartmental basis. It is—
I congratulate my hon. Friend the Member for Hexham (Mr. Atkinson) on his witty and interesting maiden speech. He and I have already established that we have several things in common. Our constituencies are similar, and the sheep-to-people ratio to which he referred is similar in both constituencies. We both share the experience of having the chance to come to the House because of the misfortune of others. It is clear from what my hon. Friend has said that Hexham will be as well represented while he is its Member as it has been in the past.
I had the lucky privilege of being one of the two parliamentary private secretaries at the Ministry of Agriculture, Fisheries and Food for about the final year of the previous Parliament. That experience taught me a great deal, quite apart from the obvious advantage that it gave me an inside view of the work of the Ministry, which I am happy to confirm to the hon. Member for South Shields (Dr. Clark) is not run like a secret society.
I also had a chance to learn a great deal about two remarkable people. First, there was my right hon. and noble Friend Lady Trumpington, who served for five years at the Ministry and who was a great credit to it, to the Conservative party and to the Government. She did a great deal for British agriculture. In saying that my right hon. and noble Friend had a personality that was larger than life, I must refer also to her charming and commanding presence. During the election campaign she kindly came to Ryedale. We went to visit a farm and as we arrived in the yard we say that about 20 farmers were present. The car door swung open and my right hon. and noble Friend's left leg emerged. "Hi, boys," was the greeting. It was an object lesson on how to disarm a potentially difficult audience. The farmers would not have been difficult, however, as they recognised how much my right hon. and noble Friend had done for them.
I had a fascinating insight into how my right hon. Friend runs his Ministry and I learnt of his determination to ensure that reform of the common agricultural policy would not mean discrimination for United Kingdom farmers. During the general election I was able to say to all the farmers in my constituency that there would be no sell-out, no discrimination, no back-door acceptance and no disadvantageous reform package. I could say all that with conviction and sincerity because it was true.
I was wrong on one count, however, because I predicted that CAP reform would probably have to wait until United Kingdom presidency. The reform package came rather sooner than I anticipated. My right hon. Friend told the House, extremely graphically, that that was because Mr. MacSharry and some of our colleagues in the other member states were hoping for a different outcome of the general election on 9 April.
In a different sense, perhaps I was right after all. We have an outline package and we have in place the principles for reform, but we can see increasingly that the agreement reached last month is by no means the conclusion of the reform agenda. Indeed, it is only the beginning. Considerable detail still has to be agreed. There is much for my right hon. Friend to do during his presidency of the Agriculture Council, which will begin on 1 July. I am sure that the House and United Kingdom agriculture as a whole wish him well.
The National Farmers Union, the Country Landowners Association and the Tenant Farmers Association have provided excellent briefs in advance of the debate. Given the shortage of time, there is no need for any of us to restate their conclusions except to underline the congratulations that they offer my right hon. Friend. They have itemised their concerns and I wish to draw attention to only two matters of detail before mentioning five points of principle.
First, on detail, when we are considering the arrangements that we need to ensure that quota is not transferred from sensitive areas, we should not do so on the basis that sensitive areas and less-favoured areas come within the same definition. There are areas such as the wolds in north-east Yorkshire—I am sure that there are other such areas in other parts of the country—that are not less-favoured areas but in which sheep farming is crucial to the livelihoods of farmers.
Secondly, I ask my right hon. Friend to do everything that he can to ensure that the quality threshold for intervention for cereals applies to feed wheat and feed barley. If it does not, there will be disastrous consequences for United Kingdom cereal producers.
I move on to my five points of principle. First, it would be a downright scandal if the extremely significant advance and progress of EC farm policy reform that was agreed last month does not lead to an early settlement of GATT. The Americans must move. Their reaction—that of a threatened trade war—reinforces our suspicion that there may have been a lack of commitment or of political will in the first instance.
Secondly, when it comes to progress with CAP reform and our assessment of it, we must set in context other recent developments within the EC, with particular reference to the Maastricht treaty. The principles upon which the reforms are based are essentially nondiscriminatory. Farmers want and deserve fair and equal terms, and that demands that other countries play by the rules. Unfortunately, we know all too well of many examples of other member states not doing so. Strengthening the rule of law within the EC, as agreed at Maastricht, is an essential item which we must not lose in any renegotiation or modification of the Maastricht treaty. It seems to many of us that it is scandalous that strengthening the rule of law in the Community is the only way of ensuring that other member states keep their promises.
Thirdly, there is the effect of the package on the consumers. It would be a gross misunderstanding of the effect of farm prices on retail food prices if we were to expect from the package any material reduction in food prices in the shops, perhaps with the exception of pigmeat and poultry. All the evidence seems to point in the opposite direction. In cash terms, farmers' prices are what they were 10 or more years ago. That is why food prices have risen less than the rate of inflation. If farm-gate prices had kept pace with inflation, food prices would probably have done much the same, or would have become even more expensive in real terms. The non-discriminatory aspect of the reform package is to be welcomed, but it seems certain that farm incomes will fall. That is extremely serious. Undoubtedly some farmers will leave the industry. In time market prices must provide a more realistic return to farmers if they are to make a satisfactory profit out of farming the land.
Fourthly, this significant debate coincides with the Rio summit. We still have much to do to secure the long-term future of our own environment. My right hon. Friend always rightly insisted that environmental features should be central to farm policy. There are important advantages in the CAP reform package, especially the arrangements for stocking limits. That is an important and significant advance, and the way that the limits are implemented will have far-reaching consequences both on the way that large rural areas are farmed and on the viability of farms.
I have never been in any doubt that the best way to keep our landscape as it is is to keep farmers farming the land. That means much more than environmental sweeteners. It means a viable, competitive and profitable agriculture industry—an industry confident in its future. The CAP reform package is a first step towards ensuring that that confidence can be restored.
I add my congratulations to those already offered to the hon. Member for Hexham (Mr. Atkinson) on his maiden speech. I appreciate the position that he was in when he made it, as I was in the same position only a couple of weeks ago.
This so-called reform package has been trailed as a great victory for the Minister. It is interesting that Conservative Members were selective in their quotations from press releases from the Country Landowners Association and the National Farmers Union. The hon. Member for Cambridgeshire, North-East (Mr. Moss) quoted John Fellowes in his congratulations to the Minister. However, he did not complete the quote, which continued:
However, an immensely complicated array of bureaucratic quota controls now faces our beef producers. Even in the arable sector, the arrangements will be excessively complex. This bureaucracy will add to the costs of the industry and to the costs of the consumer.
A reform package that will add to the costs of industry and the consumer is no reform; it simply compounds the problem. Currently, the CAP costs £14 per week per family, and even Conservative Members have said that in real terms farmers' incomes have been falling radically. Indeed, every day 26 people—farmers, farm workers and ancillary industry employees—leave the industry. Conservative Members laughed when my hon. Friend the Member for South Shields (Dr. Clark) mentioned state aid for family farmers, yet I know many farmers who are having to apply for family credit because their basic incomes have fallen below the means-tested levels. Some £5,000 or £6,000 a year for a seven-day, 52-week-a-year job is no real income.
In 1984, west Wales was dealt a terrible blow with the imposition of milk quotas. They were quite literally imposed overnight. Not only were the farmers hit, but so was the ancillary industry, especially milk processing. Two creameries in Dyfed closed within 12 months, with a loss to the rural economy of hundreds of jobs. We have not recovered from that.
I am worried about the detail of the reform package. There are relatively few details in the statement that the Minister deposited in the Vote Office. Although there is no planned increase in milk quotas, in 1993 it is possible that there will be another I per cent. cut, with yet another 1 per cent. cut in 1994.
I made it clear in my speech that I do not expect any such cuts, which would happen only if market conditions demanded it. As there is to be a significant cut in milk production in Spain, there will be a greater importation into Spain from the remainder of the Community. Therefore, it is unlikely that there will be any cuts in the quotas.
I would welcome the right hon. Gentleman's statement if it contained a categorical guarantee. The farmers of west Wales have not recovered from the 1984 imposition of milk quotas. I hope that they will not be put in the same position in 1993 and 1994. It is all very well to say that it is hoped that they will not be put in that position, but what happens if the market is not as expected and the farmers are told that there will be a cut? Farmers have to plan, so it is not fair just to say that there is a possibility of further cuts but that the Minister will do his best to ensure that they do not happen.
The rural economy of west Wales is suffering from deprivation, yet rural areas have not traditionally suffered the hardships of inner-city areas. The highest levels of unemployment in Wales are now generally in rural rather than urban areas. The possibility of a cut of 15 per cent. in the price of beef will have a knock-on effect, and it will not be compensated for by cheaper feed prices. That will hit beef-raising areas. The possibility—and I put it no more strongly than that, in view of what the Minister has said—of another 1 per cent. cut in milk quotas is simply going too far.
Wales expected far more from the so-called CAP reform package. It has not dealt with the fundamental problem of only £1 of every £3 spent on the CAP going back to the farmers. The Country Landowners Association implies that there will be more, rather than less, bureaucracy, so the possibility of a switch from bureaucratic expenditure to the farmers' pocket—which is what is needed—seems remote. Indeed, it will be the reverse.
We need an increase in Government or European expenditure in west Wales, directly into the pockets of farmers. That would have a significant spin-off in the rural economy. Unfortunately, there is nothing in the reform package that would achieve that. There would be a continuing closure of family farms with more and more people leaving the industry. Because MacSharry's proposals appeared to be so draconian, and because they have been mitigated and some of the discriminatory elements have been altered to the benefit of Britain, people view the reform package with a great sense of relief. Unfortunately, there is still a great deal of pain because it does not solve the problems mentioned by hon. Members on both sides of the House. It is a pity that the Minister could not come back with a far better deal.
I congratulate my hon. Friend the Member for Hexham (Mr. Atkinson) on his maiden speech. He described his constituency in a most sensitive and colourful way and rightly paid tribute to his hard-working predecessor. We look forward to many more speeches from him in our debates.
Farming is in crisis in the United Kingdom, in Europe and in north America. In a quarter of a century in public life, I have never known a period when agriculture was so concerned about its future. I represent an area—Macclesfield, in Cheshire—which has some of the finest grasslands and grazing in the country. My family firm—not that I have worked for it—of auctioneers, valuers and surveyors has been associated with farming for 150 years. Therefore, I hope that my hon. Friends on the Treasury Bench will not doubt my pedigree for making the remarks that I do.
Farming is not just a quaint, old-fashioned pastime adopted by those living in rural communities, to make them more attractive to the residents of our towns and cities who visit them for day trips and holidays. Farming is an important industry and a vital way of life. It is at the heart of our rural economy and a major contributor to our nation's wealth. It directly and indirectly employs millions of people, provides food for us all, and improves the natural environment—which is increasingly important.
Farming shapes the countryside and the character of our nation, but it is at a crossroads at home and in the rest of the Community. Worldwide pressure to reduce protectionist measures will continue unabated, and the need to contain the cost of the common agricultural policy will remain high on the political agenda.
In general, I warmly welcome the common agricultural policy package won by my right hon. Friend the Minister, but some of the finer details remain to be worked out. I await their revelation with some interest. I warmly welcomed my right hon. Friend's assurance that United Kingdom milk quotas will not be reduced—I hope he meant for the foreseeable future. British farmers, particularly in my constituency, have been badly treated in respect of milk quotas. It would be ridiculous to accept further cutbacks, given that we are nowhere near self-sufficient in liquid milk, let alone in that required by creameries and cheesemaking plants.
It would also be crazy further to increase our balance of trade deficit in a product that we can probably produce better than any other country in the Community. United Kingdom farmers can meet the challenges that my right hon. Friend described today. Pressures mean that they must continue to adapt to the new conditions and demands that will be placed on them. Such changes are not easily assimilated, but it is the role of the Government of the day and of the local Member of Parliament on all occasions to defend the interests of British farmers.
No mention has been made of the future of the milk marketing boards, although changes are being forced through because of pressures from the Community. I accept that change is necessary, but there is deep concern, not because farmers do not acknowledge the need for it, but because of fears that under a voluntary co-operative system some dairies will undoubtedly seek to buy farmers away from the boards. That is already happening in Cheshire, with Bodfari.
Farmers who enter into a direct relationship with a dairy will have no protection if it seeks to drag down the price of milk. The downward pressure on prices could cause real difficulties. My hon. Friend the Minister of State shakes his head, but perhaps he does not understand the situation. Unlike many other commodities, milk must be sold immediately. Farmers do not have the luxury of being able to bide time while they find a better price. If they do not sell at the day's going rate, the milk is wasted. Those problems will affect many areas where dairying is so important.
One cannot abandon a regulated market. The unfettered free market ideology has its disadvantages. It is naive and dangerous, for farmers and consumers alike, to believe that it is possible to sustain a free market ideology. My message holds equally true in respect of the wider trade in food and agricultural products. Protectionism is not necessarily bad if its intention is to ensure stability, continuity of supply, and fair and free trade.
Nowhere is that more clearly true than in the poultry sector. Our own producers are subject to the most stringent health regulations—but imported eggs are not. The inevitable result is that imported eggs are cheaper. That is not free trade, and it is certainly not fair trade. Similarly, New Zealand lamb is undermining British prices substantially, yet New Zealand farmers are going out of business because of lack of profitability. I am sure that my hon. Friend the Minister of State is aware that a collapse in the spring lamb trade in this country would have a knock-on effect on the autumn store lamb sales and would create even more trouble the following year. That is an example of where, in the medium to long term, superficially free but unfair trade will not benefit farmers as producers, or consumers.
Dairy farms are cleaning up at great expense to rid themselves of effluent. Even after grant assistance, the investment required is massive. One farm in my constituency had to borrow £60,000 for that purpose. I tell my hon. Friend the Minister of State that that takes some paying back—and all the time our farmers are undercut by countries having few if any controls. Is that free, fair trade?
The hon. Member for South Shields (Dr. Clark) mentioned that the big supermarkets and superstores have established a dominant position in the distribution and sale of food, so much so that they may shortly have food producers, in the form of the farming industry, by the very jugular. Their ability to use their suppliers to improve cash flow by taking extended credit is a dangerous development for agriculture. Is that fair trade, and do buyers need to operate in that way when, in the main, they make substantial profits?
America appears to be winning the argument that European farmers are unfairly subsidised. That argument should be exposed for the fallacy that it is. When I pressed that point on my right hon. Friend the Minister towards the end of the last Parliament, he stated that
United States and EC levels of support are not very different; both are high and the need for reform on both sides of the Atlantic remains pressing.
I congratulate my right hon. Friend on that response. I only wish that that point had been more robustly made in the GATT talks.
My theme, which I am sure will strike a chord with many right hon. and hon. Members, is that free trade in perishable food is a dangerous concept.
I extend my warm congratulations to the hon. Member for Hexham (Mr. Atkinson) on his excellent maiden speech. I do not intend to become involved in a partisan squabble, but the Minsiter made a head count of those right hon. and hon. Members present for the debate. It is noteworthy that my hon. Friend the Member for Moray (Mrs. Ewing) is the only Scottish Member who has been present for the whole debate. Also, although I have heavy commitments in my constituency this afternoon, I shall remain for the wind-up speeches because I consider this debate to be of utmost importance.
I wish to add a guarded welcome to the long-awaited agreement on the reform of the CAP. The delay in achieving agreement has undoubtedly had an adverse effect on the morale of an industry already under siege. For a long time during the period leading up to the agreement, farmers were left in no man's land. They were hampered because they could not reasonably plan for the future and, in every industry, forward planning is the key to success. We must strive to give agriculture the stability that it requires to prosper and it is reasonable that farmers should expect to know what the next five or 10 years hold in store for them. Only then will we witness the increase in confidence that is so urgently and sorely needed. I welcome the fact that that protracted period of uncertainty has now ended.
In my constituency of Meirionnydd Nant Conwy, one in five families depends either directly or indirectly on agriculture and the CAP reforms were therefore of paramount importance. The very fabric of rural communities was threatened and diversification is not a word which has much meaning for farmers in less-favoured areas such as my constituency—and, indeed, 80 per cent. of the land mass of Wales. Climatic and geographical features make it impossible for upland farmers to diversify, but, curiously, it is the very factors that mitigate against diversification which ensure that Welsh lamb is undoubtedly the best in the world.
In February, I went with my hon. Friends the Members for Caernarfon (Mr. Wigley), for Ynys Môn (Mr. Jones) and for Ceredigion and Pembroke, North (Mr. Dafis) to visit Mr. MacSharry in Brussels. We put the Welsh farmers' case to him, and I am pleased that many of the points argued for by Plaid Cymru were incorporated in the final agreement.
There is no doubt that the Commission's original proposals were discriminatory to upland producers. The adoption of the original draft proposals would have created a crisis of enormous proportions throughout Wales. Sheep producers would have been very hard hit. Plaid Cymru argued that upland producers should be more directly supported and that that principle was paramount. It appears that the Commission has recognised that, thus acknowledging the special difficulties of farmers in the less-favoured areas. For the reasons that I have given, I am thankful for that.
Plaid Cymru's delegation argued strongly that the sheep annual premium headages should be increased to 1,000 per partner in less-favoured areas and that there should be an increase elsewhere. We also argued that 50 per cent. premium should be paid on stock above the headage limits. It was acknowledged that, if our proposals were adopted, 98 per cent. of Welsh farmers in the less-favoured areas would be secure against financial ruin. I welcome that part of the agreement.
I welcome, too, the increase in the suckler cow premium, which is to be without headage limit, but let me pause on the phrase "optional national top-up". I urge the Government to take those words to heart and put their money where their mouth is. Paying lip service to the concept and offering no additional top-up simply will not do. I call on the Government to state their position clearly and urgently as failure to do so will inevitably lead to confusion and will again damage morale in a period of indecision or uncertainty.
We must strive to address the lack of confidence in the industry and this is an opportune time to do so. Market prices for lamb are disastrously low. In agriculture, as in every industry, marketing is a key to success. I welcome the initiation by the Secretary of State for Wales of Welsh Food Promotions Ltd. 18 months ago, but call on the Government to sink further funds into that aspect of marketing—to put their money where their mouth is. That rather crude phrase best expresses the feelings of those in the industry who see Wales lagging miles behind our European competitors in marketing. Almost every other European country can show us the way. As with everything nowadays, it boils down to expertise and specialist knowledge, which in turn boil down to finance.
A product cannot be properly marketed without advertisement and initiative and I call on the Government urgently to allocate extra funding to Welsh Food Promotions Ltd. so that it can extend and promote the marketing of Welsh lamb the world over. I have contacted the chairman of the Welsh tourist board, Mr. Prys Edwards, to enlist his help in marketing. All our European partners have a place in their advertising material for regional foods and I consider that Welsh lamb—the world beater—would be a great attraction in the advertisement of Welsh holidays. I am pleased that the board has accepted that in principle and will provide for it.
It is incredible that we are not marketing what is the best sheepmeat in the world. The wine growers of France market their product properly and worldwide. It is high time that the Government adopted a market-led recovery ideal in the sheep and beef sector, and there is no excuse for the inadequate funding of marketing. After all, in every other industry as much importance is attached to marketing as to manufacturing, and rightly so.
I draw attention to the accompanying measures in the CAP reform document. Under the heading "Environmental protection" is a reference to aid arrangements being used exclusively to compensate those concerned for measures that have a positive effect on the environment. Naturally, I consider that to be a positive step forward. My constituency is one of three pilot areas in which a scheme called Tir Cymen is to operate. It is roughly equivalent to the stewardship schemes operated by the Countryside Commission. The Government should ensure maximum funding for that scheme, which is to be operated by the Countryside Council for Wales, as it offers a great deal to rural areas; it gives positive incentives to forms of husbandry that are environmentally sound and may well create substantial further job opportunities in areas where it is operative.
I know that the Countryside Council for Wales is enthusiastic about the scheme and I trust that its enthusiasm—and, indeed, the current interest among farmers in my constituency—will be met with abundant funding. That is of the utmost importance because if it is to succeed it must be financially attractive to the farming community.
A further point that Plaid Cymru urged on the Commission concerned a scheme for early retirement of farmers. I am sincere in my belief that it is vital to ensure that producers can retire with dignity and with some financial security. It is equally vital to ensure that agricultural units are available for the next generation—or those of its members who are brave enough to enter this arduous and difficult trade. I know that there is considerable concern and I am wary of the fact that the pre-pension scheme is to be optional at member state level. We are all aware that member states had the option of paying further sums under the hill compensatory allowance scheme, but the Government were reticent, to say the least, about paying.
I call on the Government without delay to bring forth plans for state-funded early retirement because without such plans we shall slip back into the quagmire of uncertainty and suffer a further blow to morale and confidence. I agree with the hon. Member for Cambridgeshire, North-East (Mr. Moss) that an urgent rethink on the pre-pension scheme is required.
In conclusion, I welcome the proposals, with the caveats I have mentioned, and urge the Government to address these points without delay in the interests of sustaining a healthy agriculture industry which will benefit us all.
In the absence of the Register of Members' Interests, I should begin by declaring an interest in the debate. I am a partner in a tenant farm growing grain and beef. It is not for that reason, however, that I have sought to speak today. It is because I represent an area in Wiltshire where farmers have the same sort of problems as those already described by hon. Members and it is important that their concerns should be aired in the House.
Having been away from the House for five years, I had only heard of the reputation of the hon. Member for South Shields (Dr. Clark) as Labour party spokesman on agriculture. I had heard him described as being to agriculture and agricultural prices what Cassandra was to the people of Troy during the Trojan war. Having listened to him this morning, I fear that that was something of an understatement, and I am as baffled about Labour party policy on agriculture as I was before.
I welcome the agreement that my right hon. Friend the Minister secured in Brussels. Six months ago very few of us expected him to be able to achieve such an agreement. We knew that he was against tremendous odds. It was largely due to his negotiating skills that we secured the agreement that we are debating now.
Farmers will not be cheering from the rooftops. Farmers are realists. They would have much preferred the support mechanisms to remain as they were, as they helped farmers. Equally, farmers realise that the common agricultural policy had to be reformed. They are therefore delighted at the results achieved by my right hon. Friend. He managed to secure answers to the questions which had concerned them most during the previous six months. I intend to refer to two of them.
My right hon. Friend achieved an even playing field. The MacSharry proposals had threatened efficient British agriculture in a way that would have discriminated totally against our farmers and put them at a severe disadvantage compared with their European competitors. In securing the deal, my right hon. Friend has created that even playing field, but within the deal there are certain issues that cause concern. I hope that my right hon. Friend will be able to reassure us about them. I wrote to the Minister of State about one of the issues and I intend to refer to it again, because it is of significance. It has been suggested that the intervention standard that will be required for wheat might relate to common wheat. If that were to be the case, our wheat growers would be put at a severe disadvantage. I understand that about 80 per cent. of the wheat that we produce would be outside the terms of that standard. The result would be to create once again—by the back door—an uneven playing field, to the disadvantage of our farmers. That could have significant results. Farmers might move out of wheat production into barley production—the last thing that we want. It could also have an effect on our balance of payments, since we are net exporters of wheat. I hope that when the Minister replies to the debate he will be able to reassure us that an uneven playing field will not be recreated when technical matters such as the intervention standard are at issue.
As for the longer term, reference has been made in the debate to set-aside. I believe that the set-aside programme that my right hon. Friend secured in Brussels is essential at the moment, but I am not certain that in the longer term it can necessarily be sustained. The danger is that the programme might lead to set-aside on the one hand and to intensive farming on what is left, at a time when we should be encouraging extensive farming. I hope that in the further negotiations that my right hon. Friend will undoubtedly have he will look at ways of encouraging extensive farming. In particular, he might consider looking at the point that organic farmers ought to be exempted from the requirement to set aside 15 per cent. In effect, by the farming methods that they already employ, organic farmers have already moved towards extensive, less highly productive farming.
I hope that Ministers will also consider diversification in the use of agricultural products. For example, research into biofuels might provide another market for agricultural products in the future. I hope that that research will be intensified and supported by the Government. It may hold the key to what we all want to see—a healthy and viable agriculture industry.
I sincerely congratulate my right hon. Friend on the deal that he achieved, but I hope that he recognises that it is not the end but the beginning of the process of securing the future of British agriculture. In seeking to ensure that we have a viable agriculture industry and that our farmers are properly rewarded, we are also seeking to ensure that the whole of our rural economy, which depends on a healthy agriculture industry, is secured for the future. I congratulate my right hon. Friend the Minister and I thank the House for its attention.
I do not think that the hon. Member for Devizes (Mr. Ancram) would deny that reform of the common agricultural policy was necessary. We all agree that any reform must benefit consumers, taxpayers, the environment, our obligations to free international trade, farmers, workers in the industry, rural areas and, perhaps most important, must bring some stability, which has been long overdue in the farming industry.
The package must be tested against those criteria. The Minister already seems to have made the judgment. He has hailed the package as a great success. Some positive steps have been made, but serious concerns remain and many right hon. and hon. Members have expressed those concerns today. We remember the claims of the mid-1980s, stated in the House, that the CAP had been reformed. That reform never materialised, which is why agriculture is in its present crisis. We must be careful, therefore, about making extravagant claims.
The fact remains that the only real reform in the package is in the cereal sector. It is true that the reduction in cereal prices of 29 per cent. over the next few years must be compared with the Commission's original suggestion of a reduction of 35 per cent. The Minister can claim a victory for that, and we must recognise that some of the discriminatory elements in the compensation for United Kingdom producers have been removed.
Both so-called victories are an important exercise in damage limitation, because discrimination remains. First, there are many more smaller producers in the rest of the Community than in the United Kingdom. Because of the way in which the regulations have been framed, many more smaller producers in the rest of the Community will be exempt from the set-aside conditions to qualify for compensation, so discrimination still remains. Secondly, the United Kingdom has many larger holdings, which will benefit because they have more flexibility to adapt to the 15 per cent. set-aside condition. They will qualify for more compensation because of the larger areas that they farm.
We should not forget that the size of the average holding in this country is between 60 and 65 hectares. Under the new deal, the qualification cut-off point for smaller units is 20 hectares or 92 tonnes of production, above which 15 per cent. of land must be set aside to qualify. How many smaller farmers in this country will fall into that category? The net result is that smaller producers will face increasing serious problems and the likelihood is that they will be forced to amalgamate and be taken over, so there will be greater concentration of production than in the past.
Similar discrimination exists in other sectors as a result of the deal. It is important to recognise that—important in terms of the European Community and particularly so in terms of the United Kingdom.
It is ludicrous that, as a result of its quota regime, the European Community is still producing about 12 per cent. more milk than we need. That is sustained by an over-generous quota system. Yet the United Kingdom is closing down processing factories because we do not have enough milk. The problem is that we were sold short in 1984, when the panic measure of quotas was introduced. The Government should recognise that, but there is no sign that the Minister intends to take the matter up with a vengeance when negotiations continue. United Kingdom milk interests have been sold down the river. The Commission and producers recognise that a 1 per cent. cut in quota, a 5 per cent. price cut over two years and a 2.5 per cent. cut per annum in the butter price might sound draconian, but I promise hon. Members that those cuts are marginal. There will be little meaningful impact on overproduction. We shall face the prospect of increasing stocks and we shall still be left with a shortfall in self-sufficiency. The damaging consequences for the United Kingdom and its milk sector are likely to continue.
The quotas are to be subject to annual review, but we must take serious measures and insist that in those reviews the Government tackle the problems facing the United Kingdom milk sector. I suggest that in his ongoing discussions the Minister should press for a redistribution of the total European Community quota so that the United Kingdom's position is recognised and so that structural overproduction in the European Community, which still remains, is also tackled. The problem in the United Kingdom is not so much overproduction as inadequate quotas and lack of self-sufficiency.
I am especially concerned about the beef sector. The stated objectives run the risk of not being realised and the previous damage caused to the United Kingdom by the loss of the variable beef premium is likely to be repeated. Input costs are likely to be reduced as a result of cereal price cuts, but the beef sector will face a 50 per cent. cut in the next few years. The amalgamation of lower input costs and a higher premium will stimulate production.
The only real weapon at the Minister's disposal is to control production by limiting intervention. It is true that the present package means a severe reduction from 750,000 tonnes into intervention this year to 350,000 tonnes by 1997, but we have heard that before. A few years ago the Minister told the House that the limit on intervention for beef would be 220,000 tonnes. That did not work and we must insist that the limits on intervention are strictly adhered to or we shall again face a crisis. We must have a guarantee from the Minister.
I do not want to be accused of being too critical so I join in the general welcome expressed for the sheepmeat regime. Previous reductions in the headage limit have damaged sheep producers in the United Kingdom. We welcome a hold being put on the present limit, and the 50 per cent. premium being paid over the headage limit will provide some relief to producers. However, we must not blind ourselves to the fact that this country's limit of 18 million ewes is too low, which is why we are unable to increase our production and to export to other markets. It has nothing to do with the fact that other people are trying to stop us. The stabilising mechanism means a 3 per cent. cut in sheep prices this year because we are over the stabilised level, but the Minister does not seem to have tackled that problem in the negotiations.
It is amazing that the so-called reform proposals do not refer to the sugar regime. We must press for immediate action. The expensive regime, which means that the European Community is 150 per cent. over-supplied, not only damages world markets but hits the consumer. A 29 per cent. cut in cereal prices must be compared with the lack of proposed change to sugar prices. Five per cent. of European Community farmers are engaged in sugar beet production but they receive unparalleled protection.
The agreement states that the Council must instruct the Commission to suggest proposals to reform the sugar regime by the end of the year. We hope that that will happen, but we are entitled to know what principles the Government will use to tackle the long overdue reform of the sugar regime. The claimed benefits for the consumer must be studied carefully. The consumer has been promised benefits before, which never developed. I believe—
I apologise to the House for being absent for a few minutes. I had to see a medical adviser. In this company it would not be unreasonable to ask whether any hon. Member has had his foot trodden on by a horse. The only pleasant part is when the horse takes its foot off.
Pleased as I am with the reform, the fact remains that during the past few weeks decisions have been taken which will have a more marked effect on British agriculture and the farmers of Europe than anything since the introduction of the common agricultural policy.
I do not envy my right hon. Friend the Minister his task, which has been one of imposing pain on farmers—a task born of common sense and necessity. It was no longer tolerable to find an endless quantity of money to force up the price of food artificially within the Community or to ruin world markets with taxpayers' money.
My right hon. Friend has almost achieved the impossible of persuading farmers that they have a good deal, while starting down a road which will end at the objectives that he and his fellow EC Agriculture Ministers have set themselves. It has finally been decided that we shall no longer subsidise the price of food. It has been acknowledged that the CAP was a social policy to maintain a standard of life—for the olive grower in Sicily and the sheep farmer in the Orkneys—which would sustain rural population and benefit the regions concerned.
Implementing the proposal will be difficult, and may be costly. I was interested to hear my right hon. Friend claim that there would be economies. That is unlikely in the immediate future. We are entering an era similar to the days of deficiency payments, when the arguments will centre not on the prices of products but on the social subsidy, whether it be paid to farmers direct, paid for set-aside, or in whatever form the central exchequers devise to maintain regional and rural policies. That is what has changed and I see no objection to it, but there will be a battle between the taxpayer and the beneficiary, and it seems set to continue for many years.
My right hon. Friend will have read the report on cereal prices by the Select Committee on Agriculture, of which I had the honour to be Chairman. The Committee concluded that a substantial cut in the guaranteed price for cereals was the way to proceed. Cereals are the leading commodity in agriculture and the cut would have a roll-on effect throughout the industry. The Community's efforts in that direction were therefore economically correct and, as everyone in the world would agree, they were the right way to deal with the difficulty.
I deliberately said "in the world" because my right hon. Friend did not say much about the GATT talks. It is fair that Community farmers should tell the Americans, Canadians and the other countries in the Cairns group that we are making a big sacrifice. We are going to impose severe price cuts on our farmers, which we hope will have the desired result of preventing surplus production from being put on to the world market at subsidised prices, and of restoring world price levels at which everyone should be able to make a living.
I hope that in the margins of the GATT agreement the diplomats will remind the Americans and the Canadians of the subsidies that they now pay to their farmers. We can reasonably say, "Come quietly, agree to GATT and accept our concessions, or be seen to be cutting your own farmers' subsidies, or stop pretending that agriculture is a barrier to an agreement on GATT." The topic has been selected by the Americans; we have responded and we deserve a friendly and resonable response.
I share my right hon. Friend's view that it is undesirable to fossilise the allocation of quotas and resources within the Community. The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) argued perfectly reasonably that milk and sugar are under-produced in this country in relation to our domestic requirements. I find it surprising that it is possible to renegotiate, albeit relatively modestly within the terms of the agreement, milk quotas for Spain and for Greece, both of which entered the Community only recently. Although the sums concerned are small, the principle has been established. I hope that, having opened the door, although only by a fraction, my right hon. Friend will seek to use the argument that the Spanish and Greeks used when we try to promote our interests in dairy produce and sugar. I must declare my own interest as an adviser to British Sugar; I think that most of my right hon. and hon. Friends know about that.
The hon. Member for Newham, South (Mr. Spearing) has unfortunately left the Chamber. Although it is correct to say that we shall deal with the matter of sugar during our presidency, the time is coming when the artificial agreements on matters such as Africa, Caribbean and Pacific sugar and bananas could be rattled around within our Government by my right hon. Friend. The agreements are foreign aid and no pretence is made that they are anything else. They are beneficial both to the supplying countries, and to our work force and British companies. However, as long as we import half the sugar that we consume, there are British farmers who will not grow it and British refineries which will not refine it.
I was glad to hear my hon. Friend the Member for Cambridgeshire, North-East (Mr. Moss) mention sugar, and it was also mentioned by the hon. Member for Stoke-on-Trent, South. A number of matters are likely to be dealt with by the Government, of which the subject of prices is the first. The sugar regime is unique in that it costs the taxpayer nothing. I hope that Ministers will bear it in mind that if they follow the argument that, if cereal prices are cut, sugar prices must be cut, they can and should reasonably expect a drop in the price of the ultimate product. I find that highly unlikely. What will happen is that there will be a move to cut prices for the sake of it which will not prove to be an advantage to the public because the sugar regime does not cost them any money anyway. The quota matter is a simple point which applies to my right hon. Friend's constituents, as it does to all the beet growers in the country.
The processing margin is crucial to enable the processors to have the necessary amount for investment. I am proud to say that the British sugar beet grower and his processor are at least as efficient as any in Europe. I realise, of course, that my right hon. and hon. Friends will have many other sugar matters to consider.
There are environmental and forestry aspects to the agreement. I was delighted to hear my right hon. Friend the Prime Minister mention forestry at the summit in Brazil. If, wearing his hat as forestry Minister, my right hon. Friend examines the Government's record on forestry, he will not feel proud. The tragic and disastrous change in the tax regime for forestry has led to a serious cut in the amount of private land being planted with trees. Trees absorb carbon dioxide, trees look good and trees are good for the environment. Trees are a long-term natural resource into which public money has traditionally been put, not only in this country, but in many others. I hope that, in dealing with the matter of removing land from agricultural production, my right hon. Friend will give even more serious thought to a more viable, long-term and stable forestry policy.
Thank you, Madam Deputy Speaker, for calling me to make my first speech in this historic House, which has been the springboard of democracy for the world. It is a privilege to represent the people of Cirencester and Tewkesbury. The constituency has had only four Conservative Members of Parliament since it was founded in 1918. If the current Boundary Commission's proposals are accepted, I shall be the last and the most short-lived.
I believe that, on these occasions, it is customary to pay tribute to one's predecessors. I have two very eminent ones. The first was Speaker Morrison, who had a long and distinguished career in the House. In one of his earlier speeches he said, "all taxation is bad". I shall return to that issue later.
My immediate predecessor was the right hon. Nicholas Ridley. He was not only a Treasury Minister, but commanded three great Ministries of State. He was Secretary of State for Transport, Secretary of State for the Environment and Secretary of State for Trade and Industry. I am sure that all hon. Members will join me in congratulating him on his elevation to the other place.
When the history of the post-war period comes to be written, I am sure that Nicholas Ridley will be regarded as one of the great original thinkers. Conservative party policies to reduce taxation, to control public expenditure, on privatisation and on the impact of the environment have been indelibly shaped by Nicholas Ridley's thoughts.
My constituency is a large rural one, and 80 per cent. of it is designated as an area of outstanding natural beauty. The Cotswolds, which comprise a large part of my constituency, are internationally renowned. In the interests of tourism, I encourage every hon. Member to pay them a visit. Although agriculture and its combined trades undoubtedly form the largest, single industry in my constituency, tourism is rapidly playing a more significant part in the local economy.
The third major industry in my constituency is defence. Two major defence firms are located on the outer edges of Cheltenham, one of which was taken over yesterday by another company. I welcome the success of that other company, but I hope that it will recognise the loyalty and hard work of the work force in my constituency and that production will be maintained in those factories. Three large RAF bases, also located in my constituency, are to be subject to closure or a significant reduction in their capacity. Therefore, I have one or two problems with the relocation of the work force in my constituency.
I pay tribute to my right hon. Friend the Minister of Agriculture, Fisheries and Food on his significant achievement in negotiating the agreement. I know that that was in no small measure due to his shrewd alliances with his colleagues in the Council of Ministers. Who would have thought, just a few months ago, that we would emerge with an agreement which does not discriminate against our farmers, offers a level playing field and gives reasonable value for the taxpayer and the consumer.
There are one or two aspects of the agreement that I wish to draw to the Minister's attention, and here I should declare an interest in agriculture. We are now perilously close to the next planting season, but we still do not have the full details that are necessary for our arable farmers to make decisions about that planting season. Until farmers have the details on the common wheat and barley regime and know whether the compensation scheme will be calculated on a national or regional basis, they cannot decide whether to take the set-aside option in the coming year.
Soon after set-aside was announced, I said that it was not the best way forward in the longer term. I still maintain that. However, it is valuable for reducing production in the short term. The Minister may be interested to know that the 15 per cent. set-aside requirement will affect 1.5 million acres in Britain. The public have not yet come to grips with the large amount of land that will be lying idle.
I welcome the enshrining in the agreement of environmental aspects. The Minister will need to consult widely with many bodies about how set-aside is to be handled. If everything grows wild that will mean a nasty mixture of weeds on land that has been cultivated for many years. The birds and bees people might welcome that. Will the land be sown with proper varieties of grass that will require cutting once or twice a year to keep the area tidy? This is an important issue and the public backlash from getting it wrong could be serious for agriculture.
As I have said, my predecessor but one said that all taxation is bad. We must keep a careful eye on public expenditure. The public expenditure goal must be a set proportion of GDP of less than 40 per cent. Our major rivals, the United States, Japan and especially Switzerland, can maintain a much lower rate than ours and still have a satisfactory social security system. If the Madrid condition of maintaining a PSBR requirement of 3 per cent. of GDP is to be met, there must be a stringent public expenditure round in the autumn. The Minister has skilfully negotiated a package which fits that public expenditure round. Although farmers may not welcome it with open arms, they accept that cuts are necessary.
The Government are imposing cuts on farmers and it would be intolerable if the consumer did not fully benefit from those cuts. One part of the food chain should not benefit at the farmers' expense.
It is a pleasure to follow the outstanding maiden speech of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown). I live in my hon. Friend's constituency, and it is easy to see why he has already made such a good impact on the constituency and in the House. I offer him my warmest congratulations. He fits well into the shoes of his distinguished predecessors and we look forward to hearing him again.
I congratulate the Minister on achieving what many of us thought impossible. He has succeeded because of his patience, steady negotiations and endless attention to detail in his discussions with fellow European Agriculture Ministers. It is a marvellous achievement and I am disappointed by the mealy-mouthed and mean speeches of Opposition Members. if they had their way, we would have signed up months ago to Mr. MacSharry and what he calls modulation. Modulation is Eurospeak for discrimination, favouring the small producers at the expense of our much larger producers and disadvantaging the big producers of flour mill cereals. It also means hacking a permanent Luddite attitude towards large-scale production and favouring the small farmers in Mr. MacSharry's own country.
The farmers to whom I have spoken are pleased with the package, especially as it heralds the death knell of the co-responsibility levy. Housewives will also be pleased with the package, especially if it leads to the drop in farm produce prices being passed along the food chain. I hope that that will happen. The settlement heralds brand new thinking by the Commission which will now give money to the producers. the farmers, rather than endlessly subsidising overproduction. We got sick and tired of seeing that the people who made money and profits out of intervention were the store owners and, in too many cases, the fraudsters because fraud was widespread. This will go some way to stamping that out.
Many pressure groups have written to me and, contrary to the "cheer and a half" spoken about by Opposition Members, I have never seen so much correspondence saying that the Minister has done an outstandingly good job. Even the Royal Society for the Protection of Birds has said that.
For ages, arable farmers have been saying to the Government, "Tell us what to do and we shall do it." We have made known for some time what our general drift was, but now we are spelling it out to them in much more detail. We shall not go on subsidising overproduction. We shall end the co-responsibility levy and introduce area payments. The details must still be worked out, but farmers are getting clear signs about the way in which we are moving forward.
I emphasise what my hon. Friend the Member for Devizes (Mr. Ancram) said about quickly establishing which type of wheat is meant, and what the quality standards will be for the intervention buying, because that will still form a large part of agricultural marketing for the time being. It would also be helpful to have details about set-aside so that we know exactly what is the base year, and what are the details of the environmental protection provisions that may be written into this.
I warmly congratulate my right hon. Friend on resisting rotational set-aside. Permanent set-aside in one place is better for wildlife and the environment in the long term. If, as has been said by Opposition Members, this does not offer enough of a reduction in cereals output, it is simple enough to increase the percentage that has to be set aside. We are definitely moving in the right direction.
It is not all gloom and despondency in agriculture. A small agricultural machinery firm of which my hon. Friend the Member for Cirencester and Tewkesbury may know, called Ross Farm Machinery, has risen from the ashes of collapsed enterprises. This year, its first year of operation, it sold seven new combines, 100 new tractors and 160 used tractors, so arable farmers are investing and looking to the future with some confidence now that they know what is happening. They are not, as was suggested by Opposition Members, all looking to greater and greater state handouts. There is vertical integration. Cereal farmers are getting involved in pig, chicken and poultry projects, very often as joint ventures with large end users. This is a way in which farmers are doing a great deal to look after themselves and to improve their lot.
The Gloucester farmers dining club recently visited France to see what alternatives were there. They were horrified by the lack of machinery guards on farms and of inspectors to inspect the machines. They went to a flour mill where chains at head height were whirring with great speed and no effort was being made to guard them. This is by no means the level playing field—that expression that we have learnt to hate. It does not exist in factory laws and implementation of safety laws in Europe.
Another example is slurry. The club also visited a dairy farm—actually, it was a pig farm, but it is the same thing. Well, it is not quite the same thing but they both produce large amounts of slurry and have the same number of legs. The slurry was pouring under the door and into the fields and little effort was being made to control it. The club members also visited a duck paté processing establishment. The duck liver paté producer was cutting up the carcases of the ducks in the back kitchen of the farmhouse. The wellington boots had been thrown in the corner and the dog was waiting under the table for some tasty morsels to drop from the table. Things are not done in that way in this country. Other member states do not implement regulations in the strict way that we do.
I wonder whether my hon. Friend agrees with me that one of the important sections of the Maastricht treaty is designed precisely to deal with this problem. It will enable the European Court to fine countries that do not enforce the regulations for which they have voted. This is another example of the Maastricht treaty containing some important provisions that will serve to level the playing field.
I was about to ask my right hon. Friend whether he would make that one of the priorities of the United Kingdom's presidency. We must ensure that regulations are enforced elsewhere. The problem spreads much more widely than the rather light-hearted examples that I have given. It extends to slaughterhouses and to veterinary inspection, and it is causing considerable difficulty in the United Kingdom. It leads to unfair competition.
The farmers to whom I have spoken are delighted that we have managed to resist modulation and that the co-responsibility levy on milk is to be dropped. The levy never did any good and it would never have done any good. Again, my right hon. Friend has done a first-class job. I am delighted that he resisted the demands that were made by Italy. It was outrageous that the Italians, who had never implemented the quota, sought more quota. A first-class move was made to prevent that from happening.
As for the future of the milk marketing boards, I am glad that my right hon. Friend is to go to Europe with representatives of the boards, to seek to promote their proposals for new approaches and that he has helped the board to get them accepted.
Large retailers, which are supplied with great quantities of milk, are anxious that during the transitional period—the introduction of new ways—a continuity of supply should be available to them. They would obviously like to have 100 per cent., but they would be happy to settle for 75 per cent. of existing usage. It does not seem to be that unreasonable that there should be some continuity to see them through the early stages. Milk quotas for farmers were based on existing production and it would be helpful for milk users if the same consideration were given to them.
Many small producers who are processing their own milk have responded to our exhortations to add value to what they are producing. Will my right hon. Friend ensure that those who do add value to their own milk by producing local yoghurt and locally made cheeses, for example, can continue to develop their stake in the milk-processing business?
With others, I warmly welcome the environmental aspects of the package. I like my right hon. Friend's plans for extensification, for non-rotational set-aside and for setting out a legal basis for long-term set-aside. The support for organic farming is widely welcomed, as is the power to include access provision in environmental schemes, which I think will be extremely popular with the public and will go down well. It will stand the farmers in good stead as well.
It is right that my right hon. Friend should describe himself as the greenest Minister in Europe, for that he surely is. As other Ministers bluster he gets on and does something positive. Many of the environment schemes are very much to his credit. As he is a green and environment-conscious Minister, I ask him not to be swayed by the argument that corbies should be controlled on a seasonal basis. The tremendous increase in the number of magpies and rooks is doing our wildlife a great deal of damage.
Another problem—I do not think that it is yet a European issue that involves considerable damage to the environment—is the activity of the hippies or, as they call themselves, new-age travellers. We in the agriculture community call them new-age pests. Events at Castlemorton common highlighted the problem for all to see. There are many small groups of hippies moving around throughout the country, and once they get on to land they are the very devil to move. They are well aware of the regulations that deal with squatting illegally on other people's land. As long as they have fewer than 13 vehicles, they can stay. As I have said, it is extremely difficult to move them. They do a great deal of damage; they have maurauding dogs that kill sheep they cut down trees and they interfere with water supplies. When they go, they leave a terrible mess, to say nothing of the costs to the police in controlling them.
We have had a great deal of trouble with hippies in Gloucestershire. I pay tribute to the Gloucestershire police, whose vigilance has done much to rid Gloucestershire of the hippies, at least for the time being. We need much closer cross-county border co-operation to keep such people on the move. I hope that my right hon. Friend will bear that in mind.
Another aspect to consider is the easy way in which hippies get social security payments—because they are certainly surviving on them. They are able to get them wherever they stop. The hippies in our woods said that they could not leave until Thursday because that was when they were paid. Stupidly, I thought that they were actually working somewhere, perhaps picking fruit. I thought that they were getting paid for the work that they were doing.
I did not know that they were paid for their fictitious dogs, but single mothers certainly get paid for their children. That is a growth industry in welfare payments.
One difficulty is that when we do get rid of those people, landowners then block all the entrances to their land. All of the woods on the top of the Cotswolds have hundreds of tonnes of quarry waste dumped in their access routes to keep out the hippies. That denies access to ordinary, God-fearing picnickers and others who want to walk in the woods. They have to scramble over what looks like the Himalayas in some areas if they want access to the woods. I hope that my hon. Friend will take note of that problem and, together with the Secretary of State for Social Security, try to do something about it. That would be a great help.
This is one of the best packages that we have had from Brussels for many years. My right hon. Friend has achieved almost the impossible. However, a Minister's work is never done and the playing field is still not level. I do not want to sound ungrateful, but we should remember the lack of guards on machines where duck paté is produced in France. I hope that it will be a priority of our presidency to ensure that other member states fall into line with the scrupulous way that we obey the law.
I am grateful to be called to speak, Madam Speaker, especially as I missed a little of the middle part of the debate. I had no alternative but to disappear for a while. I am glad to follow my hon. Friend the Member for Gloucestershire, West (Mr. Marland), who always speaks with such authority on these occasions. He is a farmer, so he knows exactly what he is talking about. I sympathise with his point about a level playing field, although I am not sure that French paté would taste quite the same without the flavour of Wellington boots and farm dogs. I am not one of those who want to sterilise everything in sight.
It would be churlish of me not to congratulate my right hon. Friend and his team on their great efforts in securing the CAP reform package. I genuinely congratulate them because I know the sort of battle that they have had. However, it is important to put the recent decisions in context. My right hon. Friend related what he had succeeded in doing—he had fought this, stopped that; it has been very much a war of attrition. He also mentioned tobacco, although one wonders what that has to do directly with our country. He referred to the problem of milk production in Italy and Spain and said that we do not know precisely how much milk they produce. That is a sample of just some of the problems, and I pay tribute to my right hon. Friend for his efforts in dealing with them.
European agriculture is now in a nonsensical straitjacket. It becomes progressively tighter and every so often the Ministers meet to tighten the straps or to loosen them—but the patient, agriculture, is no better off and a solution is no closer. The fundamental difficulties that face the CAP are no different from those that face the European Community as a whole. Many different nations with different cultures, climate and working practices are working within a rigid framework, and in my view that will never work satisfactorily.
Just as the whole future of the European Community is now being questioned, it is time to query not just the structure of the CAP but its very existence. The Minister has little power over his industry on behalf of the farmers. I am sad about that because it is a very serious position. If we are not careful, other Ministers will find themselves in the same position. My constituents want us to pursue a simple common market—a free trade area. That is a big enough task in itself. Agriculture Ministers ought to consider ways of giving themselves back the power to administer agriculture in their own countries, and devise sensible rules for trade between countries and for environmental protection.
The co-responsibility levy on cereals is to go. We all shout hooray and say that that is very welcome—but it was a crazy idea from the beginning. I understand that stabilisers are also to be abolished; yet only a year or two ago, it was said that they would solve all our problems. What a colossal waste of time, effort and money. Cereal farmers in my constituency will receive lower prices but incur higher costs. What a long-term prospect that is for them. They have little room for diversification into other agricultural enterprises because of the ever-tightening system of quotas and restrictions. The whole picture is restrictive, arbitrary, anti-enterprise and depressing for the farmers.
My hon. Friend the Member for Gloucestershire, West mentioned poultry inspection. My hon. Friend the Minister of State is well aware of the difficulties that confront the poultry-processing industry because of the ridiculous levels of inspection that it has to tolerate. The cost to the industry since 1990 is estimated at £85 million.
A minor example of European interference in British farming is the decision to abolish dipping for sheep scab. One can make a case for that, but I am convinced that if we were not in Europe, we would continue that practice.
As one who takes an interest in environmental issues, I find it difficult to be very enthusiastic about the environmental measures in the package. That may sound churlish, but the best way to protect our countryside is to encourage a healthy and thriving agricultural industry, and to let it get on with it. I do not believe that artificial incentives will prove to be the right way.
The soundest advice that one can give to anyone who digs themselves into a hole is to stop digging. The Ministers of the Twelve should stop digging for a while and, in good old agricultural fashion, lean on their spades and think the whole thing through again. I am certain that they would conclude that the CAP is madness and must be abandoned.
Any European expert will say two things about the CAP. With the first breath he will say that it is a total nonsense, and with the second that it is the linchpin on the entire Community. There we have it. The whole edifice is built on a system that is generally acknowledged to be a farce.
For the sake of our farmers, we must seriously consider repatriating ministerial power and responsibility, establish clear rules for trade in agricultural products within the Community and take steps to protect the environment. We must seriously consider also abandoning the straitjacket of the CAP, which gives the Community a bad name. Historians may view it as the silliest experiment ever undertaken by politicians. If we are not careful, they may take the same view of the entire European Community.
I am grateful for this opportunity to make my maiden speech in a debate on agriculture. I am well aware that my predecessor, Sir Robin Maxwell-Hyslop, robustly defended all those who worked in agriculture in Tiverton. I hope to follow in that tradition as enthusiastically as he did.
Sir Robin represented Tiverton for more than 32 years. I know that he was well regarded and respected by right hon. and hon. Members in all parts of the House for his knowledge of its procedure. I do not intend to emulate his expertise, although I am aware of the importance of making oneself aware of parliamentary procedures. When Sir Robin raised a point of order in the House he commanded the respect both of the occupant of the Chair and of hon. Members on both sides of the House—not least in 1976, when he challenged the then Labour Government's Aircraft and Shipbuilding Industries Bill, a measure to nationalise many private companies, and proved it to be a hybrid Bill.
The Tiverton constituency covers some 650 sq miles. It contains five small towns and more than 90 small parishes. People live in small villages and hamlets in sparsely populated areas. Many hon. Members represent constituencies in which the needs of the urban voter are very much to the fore. I understand the needs of inner cities and urban areas, and their requirements must be voiced in a whole range of debates, but it is those who live and seek their income in rural areas about whom I am naturally most concerned.
I join in welcoming the reforms of the CAP that my right hon. Friend the Minister has succeeded in securing; he has rightly gained respect for the part that he has played. It has been said that the agreement is just a framework, but it is surely with a framework that we must start. My right hon. Friend has acknowledged that much detail remains to be worked out. I am sure that many of the arguments will be listened to when we come down to the detail.
I shall refer to some points of detail that particularly affect the farming community in Tiverton. We warmly welcome the announcement of headage limits, which are of great benefit to sheep farmers, particularly in my constituency, although sheep are reared not only in the uplands but in the lowlands. I hope that my right hon. Friend will take into account, particularly in considering the system of quotas for ewes, all the lessons to be learnt from the introduction of milk quotas in 1984. I hope that he will take them into account, particularly in terms of the leasing and transfer of quota and the problems encountered where quotas are attached to land, of which he is well aware.
Much has been made of the fact that agriculture is an industry. One of the main difficulties that farmers in my constituency have experienced in the past few years is that they have not been able to plan for the future. Farms are businesses and they need to be able to plan and to make long-term projections. They must invest money, diversify or change their business on a structured rather than an ad hoc basis, not least because of the lead time needed to change or diversify.
Family farms in Devon have experienced problems. I welcome the Budget announcement of the abolition of inheritance tax. My farmers have experienced great difficulties. Where a son or daughter is looking to take over from his or her parents, both families may not be able to derive sufficient income from the one farm. If the son or daughter wants to pursue that career, he or she has no option but to look for alternative premises or land pending the succession. For some time, there have been exceptions to inheritance tax law which have been helpful to farmers, but the abolition of the tax will help us to maintain the continuity of what has been a real family business in the county of Devon for generations.
I am delighted that my right hon. Friend the Minister has returned to the Chamber. He has visited the county of Devon, not least last year when I was delighted to accompany him at a somewhat robust meeting of the National Farmers Union. Having read the comments of the NFU, the Country Landowners Association and the Tenant Farmers Association, I invite my right hon. Friend to return soon to the county of Devon. I wish that he had been with me a few weeks ago at the Devon county show when the farming community spoke favourably of my right hon. Friend's proposals and paid a personal tribute to him. That is not an experience which my right hon. Friend has often enjoyed in the county of Devon, so I ask him please to return as soon as possible and avail himself at first hand of those accolades.
I have already referred to the difference in the position of those who dwell in truly rural areas and those who live in urban areas. The difference applies not just to those involved in agriculture, food processing or the industries associated with farming. It affects everyone living in a rural area. The needs of rural communities may not be so large as those of urban communities, but the need for adequate health and social services support must be satisfied.
As this is a maiden speech, I ask for the indulgence of the House in widening the debate and putting on record my interest in and my concern for a group of extremely vulnerable people, both urban and rural. I refer to people suffering from permanent disabilities—physical difficulties, learning difficulties and mental handicap. I hope that while I am Member of Parliament for the Tiverton constituency there will be an improvement in the quality of life enjoyed by that group of people and a clearer understanding of their needs and the difficulties that they face. I hope that those needs will be addressed in future legislation.
Thank you, Madam Deputy Speaker, for calling me at this particular time. It is a great joy to follow my hon. Friend the Member for Tiverton (Mrs. Browning) after her able and delightful maiden speech. All of us who had the pleasure of serving with her predecessor, Sir Robin Maxwell-Hyslop, will recognise the generosity of her tribute to him and will also note that he has handed over to her a constituency which has a fond regard for any Member of Parliament who takes under his or her wing the welfare of agriculture. I am certain that Tiverton will be well served for a long time as a consequence of its sensible decision first to adopt and then to select such a Member of Parliament. We look forward to hearing her speak again. Agriculture obviously has a very good friend in the House.
The tributes paid to my right hon. Friend the Minister are well deserved. He has clearly achieved for the first time support for efficient agriculture rather than just support for the production of agricultural products. May I also draw the attention of the House to the part played by my right hon. Friend's sidekick, the Minister of State. I am glad that the Minister of State is not here so that I can spare him his blushes. I know that he will return. Every Minister in charge of a Department or Ministry needs an able Minister of State at his right hand during negotiations. It is the technique of playing box and cox in the negotiations that leads to so much success. I am glad that my right hon. Friend and his team have been so palpably successful in using the opportunities and techniques available to them in the recent successful negotiations. It is rare for universal acclaim to be accorded to the outcome of Council of Ministers negotiations on CAP price fixing and reform. Congratulations are, therefore, in order.
I should like to extend those thanks and congratulations to the wider Commonwealth. At gatherings of Commonwealth parliamentarians, it is rare for reference not to be made by parliamentarians from the third world and the developing countries to the way in which the CAP and worldwide agriculture subsidies have undermined their produce. My right hon. Friend the Minister referred to the sale of Belgian oil in Cameroon, but the Malaysians are worried about what has happened to their palm oil. That is just one example of many that are given. It will be a pleasure to be able to point to this agreement as the watershed in Community and worldwide agriculture which began to erode the destruction of the economies of third world and developing countries.
A number of points have been brushed over in the debate. One that has come to light in Herefordshire is the structure of agriculture, of the countryside and of the people in it. The average age of our farming community is close to the Community average of about 55. Over the years, the size of agricultural holdings has increased to produce the income necessary for the family. Fewer people are directly employed on the land, fewer people are involved and there is less room for two families to be involved in one holding. As my hon. Friend the Member for Tiverton said, with an aging population there is no room for the next generation to join the enterprise until they are too old. There is nothing for that generation to do. It is important, therefore, to address the ability of the 55-plus group to be able to retire, not only to clear the way for the new generation to come into agriculture but to enable flexibility of thought in the agriculture process. With these changes and the new stresses that are being put on agriculture, we are asking old dogs to learn new tricks when we need new dogs to learn new tricks so as to adapt to conditions in the industry. I urge my right hon. Friend the Minister to reconsider his position on early retirement opportunities, as I believe that early retirement can be of great benefit to certain aspects of agriculture, not least in my part of the world where we have many owner-drivers operating comparatively small holdings.
My right hon. Friend the Minister referred to the beef and sheepmeat industries. I wish to draw his attention to the question of stocking densities. Young farmers who seek to establish comparatively small holdings on the high ground in the west of my constituency bring in grazing. The question is to whom the acreage accrues in assessing the stocking density. It is important that we clarify this, because I do not want the practice of buying in grazing, and thereby being able to generate a holding, to be nailed by a rigid definition of who owns the stocking density ability in the assessment for the special premium.
In respect of the special beef premium, can it be borne in mind that grass-fed animals do not benefit from reductions in the price of cereals? My right hon. Friend the Minister said that the level of the suckler cow premium and the special beef premium is set accordingly.
I should like him to undertake to review carefully the level at which the national top-up is set so that it does not discriminate against grass-fed animals. That is important to the livestock sector in my constituency. I am proud to be wearing today the tie of the Hereford herd book—the only tie which wholly defines a constituency. The beef of the Hereford suckler herd is very important.
What will my right hon. Friend have on his agenda for the next six months during his presidency of the Council of Ministers? He made no specific reference to that so I shall make some suggestions. The first was touched on by my hon. Friend the Member for Gloucestershire, West (Mr. Marland), who spoke about a level playing field. The playing field may well be more level, but there are still some big bumps in it.
The differential enforcement of legislation is very important. The Maastricht treaty has dimensions that allow for the enforcement of legislation. We must recognise that that is a question for another day, but in the meantime we must put in place what my people call pan-European policing of the regulations so that we can be confident that they are being implemented.
I have seen chicken processing plants in Holland—that paragon of hygienic virtue—where operators were smoking and putting their cigarettes on the counter. I have seen unguarded machinery and things that would not be tolerated in the Sun Valley Poultry plant in Hereford. Some of my constituents mentioned a visit to a dairy unit by an Irish farmer. The farmer was shown around and, obviously, the finer points escaped his attention because at the end of his visit—I must paraphrase slightly—he turned to his hosts and asked, "Where is the slurry stream?" How many farmers in Ireland are constrained by the pollution controls that we have rightly introduced and which are reinforced by the National Rivers Authority?
Another problem that must be tackled is the use of technical methods for discrimination. We have an aphid specific to our hops, on which we have to use an organophosphate drench as a systemic killer. My hop producers complain that the use of that particular pesticide is used as a means of barring Herefordshire hops from Germany even though the United States uses the same technique. It is an example of technical methods being used to create a barrier although the product is safe.
My penultimate point is to reinforce what has already been said about getting across the message about hours of work. In the agricultural industry, it is a nonsense to place an arbitrary limit on the number of hours one can work. Young people in the industry are angry: they do not want to be told when they have had enough—they want to be able to use the weather, their ability and their physique to get on with the job and to earn money when they can. The implications of that must be understood and we must stop any nonsense.
Finally, we must put in place now the system that will look to the future. During debates on reforms of the CAP, one always gets the feeling that once we arrive at a deal, everyone heaves a deep sigh of relief and forgets about it and the political will to resolve difficulties falls away until political pressure builds and something must be done.
Our present deal takes us only as far as 1996. If Oliver Walston is considering the rotation of his crops, so are other people. In terms of the planned rotation of crops, 1996 is already here. We must know what will happen beyond 1996. How are we to plan for the future? It would be nice to know what mechanism will be put in place to look beyond that date. How can we have confidence that those issues are being tackled and monitored all the time? If my right hon. Friend can achieve that during his presidency he will have served it well.
On 10 April I received a message from my farming constituents which said, tersely,
Ensure Gummer continues as Minister of Agriculture. We need him for CAP and GATT review.
It is with some delight and relief that my unspoken wish and their written wish has been complied with.
The hon. Member for South Shields (Dr. Clark) lived up to his reputation in the agricultural community, in his entertaining performance at the beginning of the debate, when he regretted that the debate was taking place today. I note from the Official Report that on 22 May he pressed the Minister for an early debate. The hon. Gentleman's consistency is relevant in that he also said on that day that the Minister had sold out the upland farmer. I do not know how many upland farmers there are in South Shields, but there are an awful lot in Brecon and Radnor. In this limited time I can tell my right hon. Friend that the National Farmers Union county branches in Brecon and Radnor have held a meeting since 22 May, at which they considered the details of his announcement. They asked me to congratulate my right hon. Friend, in the most public way that I can, on the measure of his achievement in the negotiations.
The hon. Member for South Shields may well pray in aid the observations of the Country Landowners Association—an interesting juxtaposition for the Labour party, if the House will allow me to say so. Within my constituency the NFU and tenant farmers are delighted about the quota arrangements, which ensure that quota goes to the producer rather than being tied to the land, although the arrangement has been given less of a welcome by the CLA.
The special achievement in my right hon. Friend's pocket for my farmers is what he managed to do about headage payments for sheep producers. That is a major achievement and has been recognised as such by hon. Members on both sides of the Chamber during the debate. Perhaps the hon. Member for South Shields should therefore withdraw the remarks that he made on 22 May.
One thing that my right hon. Friend has definitely not done is to sell out the upland farmers of Britain. On the contrary, he has managed to develop support methods which will be even more beneficial to them. The extensification arrangements contained in the reform package are widely welcomed by my constituency, as are the arrangements that enable environmentally sensitive areas—this is difficult to pronounce—which the Minister has been in the forefront of developing, to be developed on a Community-wide basis.
It is a measure of my right hon. Friend's success that, coincidentally, two or three days before the campaign started my predecessor, Mr. Richard Livsey, wrote to his constituents telling them that he had visited Mr. MacSharry to put the local farmers' case. I do not know whether the hon. Member for Cornwall, North (Mr. Tyler) was with him. The Government have been criticised about that and in Wales it is said that the Secretary of State for Wales ought to be there to fight regularly for local farmers. The spokesmen took it upon themselves to speak to Mr. MacSharry and to put the case.
All my constituents were told by Mr. Livsey:
John Gummer has criticised me for raising this, but the farmers' union had rightly asked me to raise the subject with the Commissioner. But Mr. MacSharry will still not be moved on the ewe premium thresholds.
Two other people present on that occasion were two former agricultural spokesmen for the Liberal Democrats. I was unaware that the current spokesman, the hon. Member for Cornwall, North was present as well. They were unable to persuade Mr. MacSharry to move his position, but my right hon. Friend the Minister has been able to do so. He has the congratulations of all my farming constituents and all my hon. Friends on the scale of his achievement.
I congratulate you, Madam Deputy Speaker, on your appointment. This is my first opportunity to speak in the House while you are in the Chair. I welcome you to the Chair.
This is an extremely important debate. I pay tribute to the three maiden speakers this morning—the hon. Members for Hexham (Mr. Atkinson), for Cirencester and Tewkesbury (Mr. Clifton-Brown) and for Tiverton (Mrs. Browning). Their speeches were extremely good and I am sure that we shall hear those hon. Members make many more speeches here. They have chosen to make their maiden speeches in this important debate on the reform of the common agricultural policy.
I had many dealings with the predecessor of the hon. Member for Cirencester and Tewkesbury, who was, to say the least, a character. I served with him on many Committees. He was virtually a chain smoker and he used to have to go out to smoke. I was a smoker at the time and I used to talk to him. The hon. Member for Cirencester and Tewkesbury said that his predecessor had changed direction on many policies. I said to Nicholas Ridley that it was a pity that he made certain changes and that I wished that he had concentrated on his painting instead because he was a very good artist. I should have preferred some of the changes that took place as a result of his changes in direction not to have taken place. I do not say that unkindly, although I am sure that many of my hon. Friends agree with me. I am glad that those three hon. Members have had the opportunity to make their speeches. We all know how important it is to get one's maiden speech out of the way.
I pay tribute to my hon. Friends the Members for Clwyd, South-West (Mr. Jones), for Pembroke (Mr. Ainger) and for Stoke-on-Trent, South (Mr. Stevenson), who also spoke in the debate. The hon. Member for Gloucestershire, West (Mr. Marland) derided Opposition speeches in the debate, saying that we were the only people who criticised what the Government had negotiated. I hope that he will study Hansard. If he reads his hon. Friend's speeches, he will find that few gave unqualified support to what has been negotiated and that several were critical of the Government.
When the result of the election in the constituency of the hon. Member for Macclesfield (Mr. Winterton) was given on election night, it was said that he was not a typical Tory and that he was something of a maverick. We know that he is. He raised issues of great importance. Although milk quotas have not been negotiated, they raise questions about what will happen. The hon. Gentleman said that he hoped that the Minister meant that the milk quotas would not be renegotiated and reduced later this year. I believe that it is possible that, in the not-too-distant future, the Minister will tell us about a wholly unacceptable reduction—albeit small in percentage terms. The hon. Member for Macclesfield said that we have insufficient capacity at present and that we are importing too much high value-added dairy produce. That is nonsensical. Any further reduction of this country's milk quota would only worsen the position.
The hon. Gentleman then referred to the Milk Marketing Board. Although I do not want to be side-tracked by that, I believe that he rightly delivered the Minister a shot across the bows by warning that the proposed changes to the board's structure should be debated and need to be considered in the interests not only of those involved in the milk and dairy industry, but of consumers. The hon. Gentleman was right to warn the Minister. He showed that Conservative as well as Labour Members wish to examine the issue, which is a good thing.
The hon. Member for Devizes (Mr. Ancram) is a former Minister and we are glad to see him back in the House. However, I prefer to see him on the Back Benches than in the position that he previously occupied. He highlighted some of the problems caused by the bureaucracy and monitoring of set-aside and the fact that the scheme can be abused and result in fraud. The hon. Member for Cirencester and Tewkesbury also referred to the problems of ploughing and to what is done with set-aside land. He was right to draw attention to the question marks that hang over the use of such land.
The speech of the hon. Member for Suffolk, Central (Mr. Lord) went to what I consider to be the kernel of the debate. I share many of his concerns. We have been trying to renegotiate the CAP, which has been held together with sticky tape and plaster for years. We must consider whether the CAP has worked in relation to article 39(1) of the treaty of Rome and whether the latest attempt at reform will meet the challenges of the years ahead. The hon. Gentleman was right to say that it has not met either the short-term or long-term challenges. The enlargement of the European Community and the unification of Germany have created problems that we had not previously imagined. The agreements on German trade could open the floodgates, and the entry of Poland and other countries into the EC will pose challenges that the renegotiated package will be unable to overcome. The hon. Gentleman was right to express his worries.
The hon. Member for Brecon and Radnor (Mr. Evans) referred to the fact that Labour Members did not want this debate on a Friday. The hon. Member for Cambridgeshire, North-East (Mr. Moss) underlined why my hon. Friend the Member for South Shields (Dr. Clark) was unhappy with the timing of the debate, because he said that he would have to return immediately to his constituency after making his speech. The evidence will show that more Labour Members represent constituencies that are further away from London than those held by Conservative Members. Therefore, if a debate is held on a Friday, many of my hon. Friends have to leave before its conclusion. For that reason, we were unhappy with the decision to hold this important debate on a Friday.
The debate is taking place while the Earth summit is being held in Rio. The former Prime Minister described it as a "funny old world". We are debating a system that will take out of production 15 per cent. of cereal land in Europe at a time when people are starving. It is a funny old world when Europe is prepared, because of cereal surplus, to pay farmers not to produce rather than to see that food sent to those parts of the world where people are starving. The coincidence of those debates focuses attention on that problem. I know that it is not as simple as it appears, but it is important that this country and Europe pay much more attention to that problem.
In his statement on 22 May the Minister gave little information, was self-congratulatory, and was contratulated by his hon. Friends. Today he said that he had not prepared a shopping list for the negotiations because it was not good policy to reveal the bottom line. As a former shop steward who had to engage in negotiations, I understand that [Laughter.] Conservative Members laugh. We do not know what the Minister set out to achieve and therefore have no benchmark upon which to decide how he has done. He could say that he has achieved everything that he set out to achieve and no hon. Member could challenge him. We know only what the Minister chooses to tell us. Do we judge the list in the way suggested by the hon. Member for Suffolk, Central (Mr. Lord), against the original concepts and objectives of the CAP, or do we judge it on price?
The Minister of State, Ministry of Agriculture, Fisheries and Food, who is to reply to the debate, replied to a question this week from my hon. Friend the Member for Carlisle (Mr. Martlew), who asked what effect the agreement would have on prices. The Minister said:
It is not possible to give precise estimates. The reform processes will be spread over a number of years, and during this period retail food prices will be affected by a number of factors. However, at the end of the reform period the retail food price index could be"—
he did not say that it will be—
some 2 per cent. lower on average than it would otherwise have been."—[Official Report, 8 June 1992; Vol. 209, c. 13.]
That could mean anything: the Minister need not have bothered to answer. Therefore, we cannot judge the package by what the Minister said about prices.
The CAP will still consume 60 per cent. of the EC budget and there will still be massive bureaucracy and intervention. Is that realistic or sensible? If set-aside is to be regulated and operated sensibly, reasonably and feasibly, and be seen to be fair and to be doing what it sets out to do, bureaucracy will need to be increased. If it is not, the system will be wide open to abuse.
The Minister said that consumers would be £8 billion better off, but he did not say whether those savings would accrue to consumers in this country or to the Community as a whole. I think that they will apply to the Community as a whole, but the Minister deliberately did not say that, because he wants people to believe that only the United Kingdom will benefit. I agree with the hon. Member for Macclesfield that the savings are for the EC as a whole.
The Minister admits that the savings will accrue to the EC as a whole. He deliberately left the matter open to misinterpretation, hoping that the press might think that the savings benefited only this country.
The Minister was helpful on interventions about sheep quotas and sensitive areas. It is crucial to determine the areas that are to be regarded as sensitive. Sugar is not mentioned in the package and we need to hear more about that. Some Conservative Members have said that the NFU welcomed the package. On 21 May the NFU said that CAP reform was,
an improvement but still severe.
That is not unqualified approval. On 10 June it said:
Government must sort out reform details quickly. The Government is being urged to sort out the detailed conditions of the EC's new set-aside requirements as quickly as possible. This is essential if producers are to be able to adapt their farming arrangements in time to meet the requirements of the new rules …
Again, it raises doubts and questions. In a letter on 29 May, the NFU said:
the prospects for already depressed United Kingdom farm incomes are negative. The implications for individual farmers vary according to the relevant farm commodities, and the structure and character of their farm businesses. The actual impact on United Kingdom farming in general will take some time to assess as vital details … have yet to be settled.
The NFU is not giving unqualified support. It is asking many questions that need to be answered. I know that the Minister said that this will be looked at, but these are legitimate queries.
On 24 May The Sunday Times—not a Labour supporter—
I am glad that we agree about that. The paper said:
The price reductions agreed last week, will, according to officials, result in an overall reduction in food prices of a paltry 2 per cent. at the end of the three years … The £26 billion a year currently spent of the CAP will be swelled by at least £3 billion by the new income support for farmers. Only in four or five years is the overall budget expected to fall. Maybe, maybe not. We all know what happens to five year plans.
The Sunday Times also said:
Farm spending reforms agreed by the European Community last week have been condemned by the EC's own spending watchdogs as a recipe for fraud"—
that underlines the problem—
and a bureaucratic nightmare. In an unpublished report obtained by the Sunday Times, the EC court of auditors attacks the plan to switch from farm price subsidies to higher direct payments to 9 million farmers.
These issues must still be resolved.
There remain problems that have not been satisfactorily considered. Small farmers are still discriminated against by these reforms, whatever the Minister has said. Farmers are not satisfied with the reforms, which increase the bureaucracy of the CAP and create new difficulties. The Country Landowners Association believes that, although the reforms assist farmers in the arable sector, those in the livestock sector are discriminated against. Development of efficient livestock farmers is inhibited and the reforms will result in a decrease in normal incomes, especially for beef farmers. They are given the lowest level of support and, although it is claimed that they will benefit from reduced cereal feed prices, many farmers graze their herds of pasture land and so receive no benefit. Many hon. Members have made that important point today because if the reforms do not benefit these farmers, there will be no effect on the price of their product.
The Country Landowners Association also says that it believes that the new production controls restrict the flexibility and development of the farmer and that
they are a substitute for fundamental economic reform.
The Food and Drink Federation is concerned that too much emphasis has been placed on production control rather than on reducing prices, which creates a lack of security in farming. It does not think that the reforms are sufficiently balanced and comprehensive. The Milk Marketing Board has expressed its opposition and concern.
The Minister said that if Spain agreed to cut milk production by 800,000 tonnes, it would get an increase of 500,000 tonnes. What exactly did he mean by that? Greece will have an increase.
The Country Landowners Association also believes that the reforms could affect the relationship between landowners and tenants. There is great concern about tenants in the negotiation of rents. There are also fears about jobs in the industry. One of the factors that we must take into account is the total package. Unemployment has implications for the net effect of the reforms on the economy of the nation as a whole.
The Tenant Farmers Association states:
paid labour is likely to be shed from all farms and machinery replacement deferred or cancelled with the use of contractors or machinery rings.
That is another example of how unemployment will increase as a result of this package, with resulting effects on the economy.
A number of environmental issues need to be addressed. Although the RSPB welcomes certain aspects of the deal, it wants to know what steps the Minister will take to ensure that farmers who take advantage of the agri-environment package will be able to do so at the same eligibility for compensation payments as those who set aside land short term for periods of five years. I hope that the Minister can clarify that point.
We are anxious to see moves that will improve the environment, but the Council for the Protection of Rural England believes that the CAP budget for this is insufficient to produce any real benefits. The Minister has stated in the past that the Commission officially confirmed that the cost of reform of the CAP could be met within the agriculture guidelines as presently constituted. There is still, however, an increase in costs. The NFU believes that changes must be made to ensure that the reforms are financially and administratively sustainable. I do not believe that that can be said of the package that we are discussing.
Some Conservative Members have said that they would like to hear about the Labour party's policies on these issues. I should love to be replying from the Government Front Bench and setting out a Labour Government's policies. Once again, the Government have negotiated a package that will not last, even in the short term. It will clearly fail in the long term and it will not be good for consumers. Similarly, it is not good for Britain or for the farmers.
We have had the pleasure today of hearing three outstanding maiden speeches from my hon. Friends the Members for Tiverton (Mrs. Browning), for Hexham (Mr. Atkinson) and for Cirencester and Tewkesbury (Mr. Clifton-Brown). They paid genuine and moving tributes to their predecessors and gave eloquent descriptions of their constituencies. It is clear that already they have established the sort of umbilical cord that Members develop with their constituencies. All three of my hon. Friends showed a clear perception of the problems that agriculture faces, and the farmers in their constituencies now know that they are represented by extremely worthy advocates.
I have detected a common thread between Hexham and Cirencester and Tewkesbury. Both constituencies have magnificent abbey churches. Hexham's first church was built by St. Wilfred, the patron saint of Ripon cathedral, in the 9th century. It was St. Wilfred, of course, who ensured that the United Kingdom would pursue the continental forms of christianity. The church was sacked in 876 by the Danes. I hope that that does not jar with any sentiments recently expressed in the House.
Both Hexham and Cirencester and Tewkesbury saw battles in the wars of the roses, in 1464 and 1471 respectively. I am happy to inform the House that the Yorkists won in both cases.
My hon. Friend will recall that in the end there was a marriage between the House of York and the House of Lancaster, which produced the Tudors. I do not wish to draw any extrapolations to current circumstances, but it would indicate that jaw, jaw is better than war, war, even in dynastic politics.
The hon. Member for South Shields (Dr. Clark) made a paralysingly unconvincing start to his speech. To say that he shuddered to a halt would be to give a misleading impression of the dynanism of his remarks. The hon. Gentleman appeared to suffer from three problems: he did not understand the question, he did not understand the answer, and he did not understand the distinction between the two. Relatively recently he said:
the Minister, almost certainly … will lose the battle for our interests.
Interestingly, he added:
I hope I am wrong."—[Official Report, 4 December 1991; Vol. 200, c. 295-303.]
That is one of the few aspirations that the hon. Gentleman has a reasonable chance of achieving.
The hon. Member for South Shields talked about Mr. Oliver Walston's intentions. Mr. Walston is a neighbour of mine and an extremely efficient farmer. He has said that he will set aside the protein and the oilseed side of his farm and continue to grow cereals. It is probable that he will do so in the first year, for that would be the sensible course. Cereals will be affected only by a 3 per cent. stabiliser cut. Mr. Walston will find that over three years the price of cereals will reduce. Therefore, the relative advantage of cereals compared to other crops will diminish. At the same time it is true that the Council retains the option of increasing the percentages required under set-aside. If what the hon. Member for South Shields presented to the House were to become a general phenomenon—I do not think that it will, because of the economics—there is a mechanism that will be able to correct it. I would not wish to suggest that Mr. Walston could be described as a typical farmer. I do not think that he would be accepted as that, even in Cambridgeshire, however efficient he may be.
I shall make a couple of general points and then refer to the specific points raised in the debate. The MacSharry proposals were enormously complicated, and at times the negotiations became so impenetrable that my right hon. Friend and I felt that we might even have strayed into a shadow Cabinet election campaign. Those proposals were not the way we would necessarily have gone, had we been producing them. We would not have started from the premise from which Mr. MacSharry started. His fundamental thrust is towards production control and a large number of European Ministers like that thrust because it would limit the quantity while guaranteeing incomes. Controls apply to cereals, oil seeds, sugar, milk, sheep and beef in one form or another.
Sensible farmers in the United Kingdom, who wish to operate in as free a market as is compatible with a sensible return, the maintenance of the countryside and other environmental considerations, would prefer not to find themselves subjected to such controls. However, it is also true that there is a fundamental shift in the package towards the marketplace. That takes the form of a cut in the cereal price. That is the keystone in the reform package because in a sense all the other elements hinge on that cut in the cereal price. Of course, there are also significant cuts in intervention.
I attribute to Opposition Members the same concern for British interests that Conservative Members feel, so I am sure that they agree that the package is a more rational and sensible way to proceed. It is a political and complex outline agreement. Like everybody else, I should have liked to have at my fingertips every jot, comma and dash of the details, and we undertake to put those before the House as soon as possible. We have no interest in prolonging uncertainty. The working groups are working hard on producing the detailed regulations. They must transit through the Council, but we undertake that they will be made avilable in a comprehensible form as rapidly as possible. We accept that farmers have to take decisions.
It is also a fundamental fact that the reforms are not discriminatory against the United Kingdom in the way that the original proposals were. We must not underestimate the pressure for the original proposals, including within the Council of Ministers. The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) has been in the European Parliament with me, so he knows the pressures for discriminating in favour of the small farmer. There is a sense that somehow the small farmer has a higher moral virtue than the large farmer. We cannot bat away such pressures without a great deal of effort. Underpinning the reforms is a new awareness of the importance of environmental policies. The hon. Member for Cornwall, North (Mr. Tyler) addressed most of his remarks to the need for an environmental policy. There is, for example, the move towards more restrictive stocking densities and towards a permanent set-aside, which is so important to the United Kingdom, and, as my right hon. Friend said, towards the unhappily named agri-environment package on which the United Kingdom is working. We have to produce the plan for that within a year. My hon. Friend the Member for Hexham and others said that that was especially important.
During the negotiations, at the back of our minds was the importance of GATT. It is unfortunate that, over the past couple of years, there has not been a sufficiently wide awareness of the costs of not having GATT. There has been a feeling of, "It would be nice if we could get it", but no realisation of the fact that it would be a real pain if we did not get it. The moves on CAP reform, notably the price cuts in the cereal sector, bring the Community to a stage where it can meet the reasonable requirements and hopes of the United States in the volume of exports.
As my right hon. Friend said, the Community has moved significantly and the United States should respond to those proposals. We have a strong vested interest in achieving a GATT agreement that goes way beyond agriculture. We all accept that a GATT agreement without agriculture would not be acceptable.
The hon. Member for Clwyd, South-West (Mr. Jones), who has probably left for his constituency, drew attention to the transferability of the sheep quotas in the less-favoured areas. We will clearly define those areas. I accept that we shall have to do some ring fencing. The purpose of the negotiation was to prevent a migration of sheep production from less-favoured areas. My own constituency is a significantly less-favoured area. We will define the areas as soon as possible, so that people know where they stand.
I was about to give precisely that assurance. There are restrictions on the eligible ewe—as the animal is elegantly referred to in the regulations—and we are considering the possibility of adjusting the sheep annual premium application and retention periods to address them.
My hon. Friend the Member for Macclesfield (Mr. Winterton) raised three central issues—the future of milk quotas and the milk marketing boards, and farmers and supermarkets. There will be no cut in milk quotas this year, but there will be one in the butter price. We resisted the cut, for the reason argued by a number of right hon. and hon. Members—that the United Kingdom needs all the production that it can get because we want to develop value added products in our own marketplace.
The settlement will be warmly welcomed throughout Somerset—particularly because of the problems which confronted cheese producers this year as a result of a shortage of milk. Anything that my hon. Friend the Minister of State can do to help Somerset cheese producers will be much appreciated. I hope that he will consider that question.
I take my hon. Friend's point, which relates to the second issue raised by my hon. Friend the Member for Macclesfield, about the future of milk marketing boards. My hon. Friend said that the changes were forced by the European Community, but I must categorically tell him that was not the case. The milk marketing boards themselves brought forward the proposals. We agree that that change is necessary because cheese makers and others who want to process value added products are finding themselves short of the raw material. Liberalisation of the marketplace is important to the producer and the consumer.
The debate has moved on and it is accepted that change will come. We are close to the point of giving clear shape to the proposals, which we will of course have to present to the House. At some stage, the milk marketing boards will have to be transformed into their successor organisations, when there will be a change in their statutory responsibilities. Those matters will need to receive the examination of the House—and the sooner that can be done, the better.
Farmers are in a sellers' market in the United Kingdom. Everyone says that we do not have enough milk. I represent a milk-producing constituency with a difficult terrain, so I am aware of the fear felt by some farmers that they will be left to drift. I believe that we shall be able to devise arrangements which will give them a better return for their product and better value from the marketplace. Once farmers overcome their legitimate concerns about the change, they will find the new arrangements well suited to their real needs.
I am grateful to my hon. Friend the Minister of State for his assurances, which farmers will welcome. Can he give an assurance also that the remote dairy farm will still be able to rely on a milk marketing board to collect its product? That is essential in remote dairy farming areas.
The whole point about the change was that the milk marketing board should cease to exist as such. The board intends that its successor organisation should be a voluntary co-operative which all producers should be able to join, receiving from it the kind of support that they receive from the present board. We must be careful not to pretend that that voluntary co-operative is simply a milk marketing board in disguise. For one thing, it will not embrace Dairy Crest, which will be floated off as a separate entity. It is a significant change, but I think that the dairy industry will benefit from it.
It is a fairly familiar theme of farmers that they are exploited by supermarkets. The point of the marketing scheme that we have introduced is to try to bring farmers into the marketplace more, but if that is to be achieved, farmers must do two things. First, when they bring managers in to manage, they must let them get on with the job. Farmers are often reluctant to become vice-chairmen instead of chairmen and to allow managers to run enterprises of sufficient size to weigh in the marketplace. Secondly, farmers must produce what the market wants. The market will not go away. In some areas, there is still a tendency to say, "What people want is what I produce." That is not necessarily the case. Moreover, quite a lot of the lamb that comes off the English hills still does not meet the highest quality standards in the Community, so even in our most efficient sectors there is room for improvement.
The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) was on a similar theme, although he focused on the Welsh side of things. The Meat and Livestock Commission is active in promoting lamb, beef and other meat products abroad. I have assisted with some of its promotions and I know that it regards the Welsh quality mark and Welsh lamb as among the best. He will not be surprised to hear that I cannot allow him to get away with the assertion that Welsh lamb is better than Pennine lamb, but I agree that both are excellent.
I do not want to start a fight. I am sure that it is all of equivalent quality. I am anxious that consumers abroad should have the advantage of access to all our lamb, all of which is a lot better than what they produce over there.
My hon. Friend the Member for Devizes (Mr. Ancram) mentioned intervention funds. I heard what he said, and we shall clarify that point as soon as we can. As regards extensive farming, the move towards criteria governing acreage and grazing is a move in that direction. I also heard what my hon. Friend said about biofuels. We must ensure, however, that we do not replace one system dependent on subsidies with another system dependent on subsidies and that built into the arrangements is the sort of relation to the marketplace that we are seeking to achieve in the CAP as a whole.
I last encountered the hon. Member for Stoke-on-Trent, South in the European Parliament, and he has clearly brought with him some of the rigour that he showed in the budgetary committee of that Parliament. We should all like the United Kingdom to be able to produce more milk, but we cannot use the self-sufficiency argument for milk or for lamb, in which we are way over the self-sufficiency level.
The EC as a whole is not self-sufficient in lamb, but we have significant obligations to third countries, such as that to New Zealand under the voluntary restraints agreements which will eventually be consolidated into a GATT agreement. I am sure that we will all welcome that. We must also bear in mind that—in the coming years—we shall have to negotiate with eastern Europe. The whole House is anxious that we should provide the basis for political stability in eastern Europe. I would therefore hesitate to advocate that the Community should set as a goal self-sufficiency in all products, which would give many politicians the pretext to seek a greater degree of protectionism.
My hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) mentioned sugar and bananas. I do not know whether he was arguing that aid should replace access. If so, he will know that we have a difference on the matter. The British Government believe that access is important and that we should not replace access with aid to the developing countries. The hon. Gentleman will know that although bananas are perhaps not one of the hottest problems in agriculture at the moment, they are generating a great deal of debate.
I heard what my hon. Friend the Member for Gloucestershire, West (Mr. Marland) had to say.
My hon. Friend the Member for Suffolk, Central (Mr. Lord) and I have different perceptions of where the Community came from and where we wish it to go, but ours is an honourable and friendly disagreement which we can no doubt continue to debate.
My hon. Friend the Member for Brecon and Radnor (Mr. Evans) referred to the importance of the uplands, and I echo what he said. I, too, represent constituents who live in upland areas. My right hon. Friend has noted the point made by my hon. Friend the Member for Hereford (Mr. Shepherd). The hon. Member for Burnley (Mr. Pike) made a splendid closing speech. I think that his side is clearly indicating that it wishes that he had made the opening speech for the Opposition.
We have achieved a good deal, but there will be further reforms. We shall have to change because all things have to change. Nevertheless, this is a significant step in the direction of a sane policy. We have taken this step with the help of—and to support—British agriculture, and the United Kingdom can be proud of what we have achieved. British farmers have obtained one element in the stability that they have long sought. They asked us to achieve that, and I believe that we have delivered. Although my right hon. Friend the Minister and I are modest about it, we do not wish to push modesty to extremes.