From swords to ploughshares.
During oral questions on 12 November, I told the House that I would wish to make a statement early this week about the Government's intentions on additional aid to United Kingdom agriculture. I stand here to honour that undertaking.
Since I took office as Minister of Agriculture, Fisheries and Food in July, my colleagues and I have had wide-ranging discussions with farmers' leaders and with working farmers around the country about the problems being faced this year, and how we might reasonably address them. It has become clear that all sectors, but particularly the livestock sector, have been adversely affected by a marked deterioration in market conditions.
The weather has made it difficult to grow adequate supplies of feed for the coming winter and to finish stock. In consequence, animals have had to be kept for longer than usual, and are now coming on to an over-supplied market. The collapse of export markets in Asia and in Russia has exacerbated that situation, leading to further pressures on the United Kingdom market from supplies from countries which would otherwise export to those markets.
Within the constraints imposed by the common agricultural policy, the Government have already taken many steps to offer extra support to farmers. We paid £85 million in agrimonetary compensation to suckler cow and sheep producers at the beginning of this year. We supported the introduction of a European Union private storage aid scheme for pigmeat in the face of a fall of about 50 per cent. in the producer price of pigs. Additional action was taken in Northern Ireland.
We have relaxed the rules on the moisture content of cereals eligible for purchase into intervention, in recognition of the difficulties caused to cereals producers by the wet summer. We successfully lobbied the European Commission to grant two blocks of private storage aid for sheepmeat to help to move lamb on the market. With effect from 8 October, we removed the obstacles to the export of whole sheep carcases to France, and on beef we have successfully negotiated the introduction of the export certified herds scheme in Northern Ireland, and soon expect a partial lifting of the ban for Great Britain.
In addition, we have persuaded the European Commission and other member states to increase beef premium advances from 60 per cent. to 80 per cent. for this year, thereby considerably easing farmers' cash flow problems. We have met the costs for one year of Meat Hygiene Service enforcement of controls on specified risk material from cattle and sheep, and we have met the start-up and first-year running costs of the new cattle tracing system.
I have had useful talks with the retailing sector, resulting in positive undertakings on origin labelling of meat, and on the welfare and feeding standards to apply to purchases of meat, which will be particularly helpful to pig producers. I have also made representations to public sector purchasers of meat.
Not all those initiatives cost money, but those that do have been worth, in total, more than £150 million to the industry, in addition to the continuing support that it receives from the common agricultural policy. Discussions with industry representatives, at both ministerial and official level, have persuaded the Government that more should be done to support United Kingdom agriculture in what are proving to be exceptionally difficult times. In recognition of these extremely difficult circumstances, the Chancellor and Chief Secretary have, exceptionally, allowed me access to the reserve for this financial year, and I am grateful to them for that.
In spring of this year, the Government drew down £85 million of agrimonetary compensation for the beef and sheep sectors. There remains the possibility of drawing on a further £48.3 million for the beef sector in the current year. I have asked officials to notify the European Commission today of the Government's intention to draw this sum, and to make it available to producers on the same basis as the beef element of the spring package—that is, to suckler cow producers in proportion to their 1996 premium claims. I do not anticipate any difficulty in persuading the Commission to approve that arrangement. We expect the eventual rate of payment to be about £29.50 per head.
Although those additional payments to the suckler cow sector will be of some help to hill farmers, the Government recognise that more needs to be done to help that fragile sector. We have decided that, subject to approval from the European Commission, we should increase hill livestock compensatory allowances for the 1999 scheme year by £60 million. Although precise headage rates have still to be worked out, we estimate that, broadly speaking, that will allow us to put up rates across the board by about 55 per cent. As is normally the case, the vast majority of producers will receive the increased rates of allowances during February and March 1999.
In the longer term, the European Commission has proposed replacement of the hill livestock compensatory allowance scheme as part of a range of measures in the Agenda 2000 package to assist the rural economy. I intend to undertake full consultation with farmers' leaders and environmental groups on the shape of the successor arrangements.
On 29 July, I announced the Government's intention to close the calf processing aid scheme when the obligation to run it lapses on 30 November. We considered that the scheme was drawing too many calves from the market and squeezing beef producers' margins. However, the Government were asked to reconsider this matter by farmers, who argued that, in the absence of an export market for British beef, closing the scheme now could have adverse consequences for the market.
We therefore encouraged the Commission to review the rate of aid payable under the scheme, and to fix it at a level that would attract the poorer-quality calves from the dairy herd, while leaving the better-quality calves from that herd and those calves from the beef herd to find their own price level on the market. I am pleased to tell the House that the Commission broadly accepted our arguments in this regard, and will shortly publish a regulation fixing a special rate of aid for the United Kingdom under this scheme of 80 ecu, which is around 70 per cent. of the current rate.
The new rate will come into force on the first Monday following publication of the regulation, which will be either 30 November or 7 December. In view of that, we have decided to continue to operate the scheme for the remainder of the present financial year at the new rate. We shall keep the scheme under review with the industry. I know that maintenance of the scheme will be welcomed by dairy farmers.
This aid package for the livestock sector is worth some £120 million in 1999. In assembling it, the Government have concentrated on those areas to which farmers and their leaders attached the greatest priority.
We also need to think of the longer-term future. Government and all associated with food production in the United Kingdom need to work co-operatively to develop a blueprint for a successful, viable agriculture sector. That means, in particular, securing reform of the common agriculture policy—reform that must create conditions to allow sustainable and competitive European Union agriculture to operate effectively on world markets, reduce the burden currently imposed by the CAP on consumers and taxpayers, and free up resources to offer scope for better-targeted measures to support the rural economy and enhance the environment. That will mean significant changes in the way in which we support agriculture, and will require imagination, flexibility and enterprise on the part of all concerned.
My colleagues and I intend to undertake—in close consultation with all interested parties—a thorough review of the Government's long-term strategy for the rural economy. It will develop policies offering the rural areas a secure future. Over coming months, we shall consult widely on a range of issues. Trading conditions will remain tough in the months ahead, but I hope that this package, and the commitment to generating a vision for agriculture, will give the sector the boost that it needs to face the future with confidence.
The whole House, and the whole farming community, will warmly welcome the Government's recognition that a grave crisis faces agriculture in general and livestock farmers in particular—a crisis that threatens the survival of many farm businesses. I welcome the Minister's statement, and congratulate him on listening to farming organisations, to many individual farmers, and, indeed, to the Opposition. In a motion that we tabled two weeks ago, we specifically highlighted three measures that he has announced in regard to the calf processing scheme, HLCAs and agrimonetary compensation. I am delighted that he was able to use the intervening period to secure the Treasury's support for those proposals.
We would, however, be failing farmers, and the country as a whole, if we did not point out that, although the measures are necessary palliatives, they will treat the symptoms rather than the causes.
Does the Minister agree that this second farm rescue package in a year is needed because the downturn in farm incomes, like the downturn in the whole economy, was made in Downing street? Does he agree that the level of the pound during the last 18 months has been a far more important cause of falling farm incomes than the weather? Will he confirm that the total value of the package barely matches the underspend on the agriculture budget during the past two years? In other words, the money that he won from the Treasury this weekend is really just what had been saved from the total farm budget since Labour came to office. It is welcome, but it must be seen in the context of a drop of more than £2 billion in farm incomes.
Will the Minister confirm that the package will actually be worth less than £2,000 to each of the 60,000 United Kingdom farms that are in less-favoured areas? Will he confirm that, in England, the National Farmers Union estimates that the income of the average farm in a less-favoured area has fallen by £4,700 in this year alone? Will he confirm that many who work on farms in less-favoured areas are earning less than the minimum wage? According to figures relating to the west country, those earnings can be under £1 an hour. Does the Minister realise that farmers need not just cash help, but the level playing field that the Conservative fair deal for farmers would create?
The Minister will be aware of the concern among pig farmers about the contradictions caused by recent conflicting statements from his Ministry and the British Retail Consortium. I fear that his announcement today has added to the confusion rather than ended it. Will he tell us precisely what the positive undertakings he mentioned amount to? For how much longer will British consumers be sold imported meat products that have been produced by methods that are illegal in this country? Why cannot that be stopped now?
Is the Minister saying that, in future, any product that is labelled as British will be grown in Britain, not merely processed here? Does he agree that the poultry industry is also suffering? What does he propose to do to stem the flow of imported poultry from the far east, some of it containing growth promoters that have been banned for years by the European Union? Does he realise that little in his statement clears up the anxieties felt by dairy farmers? Why has he still not announced a lifting of the absurd and unjustified ban on beef on the bone? We wish him well at next week's Council meeting—[Laughter.] Yes, we do. It may be a matter of mirth to Labour Members, but we believe that the country's interests will be served if the Minister can persuade his EU colleagues to lift the export ban.
In that context, will the Minister confirm that, at best, the lifting of the ban will be only partial, and that the export of beef on the bone will continue to be banned? Will he confirm that, in the light of the experience of Northern Ireland, the recovery of our export markets will take some time? As Northern Ireland was helped with export promotion, will he make similar help available to the rest of the United Kingdom?
Does the Minister agree that the heavy burden of regulation on slaughterhouses, for which the industry itself is increasingly having to pay, will lower livestock prices in the future? Is he satisfied that British farms and slaughterhouses are not operating at a disadvantage relative to their European counterparts? Does his statement mean that, from September next year, farmers will be charged for the new cattle tracing scheme? If so, how much will they have to pay?
The package is a helpful aid to the survival of farmers in the short term; but farmers still face huge uncertainties, with Agenda 2000 discussions looming. When will the Minister make the Government's position clear on Agenda 2000, and explain to farmers just what role the Government envisage for them in the future?
I thank the hon. Member for South Suffolk (Mr. Yeo) for wishing me well. I hate to think what he would sound like if I had fallen out with him.
I said that I wanted to involve farmers' leaders in continuing discussions with the Government as the Agenda 2000 package develops. Indeed, we shall have detailed negotiations on that at next week's meeting of the Council of Ministers.
The Government paid for the setting-up costs of the cattle tracing scheme, and relieved the industry of the first year of charges. I shall want to discuss the matter further with the industry, but there will come a time when the charges will have to be transferred to it.
As someone who eats and enjoys eating meat, I am keen for slaughterhouses to be regulated. Regulation is essential to ensuring the safety of the food that is sold.
The hon. Gentleman asked about the beef ban. I have high hopes that we shall be able to secure the implementation of the Commission's proposal for a date-based exports scheme at the meeting of the Council of Ministers on Monday and Tuesday next week. The hon. Gentleman and I share an objective in this regard. As the House will recall, it was the policy of the Conservative party to bring about the lifting of the ban by November; I hope that I shall get it lifted by November—although, admittedly, it will not be the same November. The House will notice another essential difference, in that I am likely to achieve the objective.
My statement contained a good deal for the dairy industry. The hon. Gentleman also referred to the poultry industry. I met representatives of the industry this morning, and they put to me a number of points that I considered entirely reasonable. I shall think very hard about what I can do. The hon. Gentleman was right to put the issue in the context of my initial meeting with the British Retail Consortium, but I intend to meet its representatives again. I am trying to establish a continuing dialogue with retailers, producers and others who work in the food industry, so that we can work co-operatively, rather than the whole industry being characterised by a series of adversarial stances.
I thought that the hon. Gentleman's welcome for my statement was heartfelt, and I am sorry that the rest of his contribution fell away a bit. I noted, however, that he was asking for more money, and I hope that he has cleared that with the shadow Chancellor.
Can I make just one point?
The hon. Member for South Suffolk constantly refers to annually managed expenditure, and confuses it with an underspend or a drawdown from the reserve. If an estimate of demand-led expenditure is not reached, that does not allow the Department to take the rest of the money and spend it on something else. A fair-minded House will realise that I did rather better in my relationships with the real Chancellor of the Exchequer than the hon. Gentleman has done in his with the shadow Chancellor of the Exchequer.
As the owner of a farming business that is determined to do everything possible to keep five men employed—perhaps I should declare an interest—may I express my personal thanks, and, I think, the thanks of farmers throughout the United Kingdom, for a package that demonstrates the Labour Government's powerful commitment to rural Britain?
On a separate point, will my right hon. Friend comment on the huge discrepancies between farmgate prices and the prices that are charged by many supermarkets for many commodities? Can anything further be done about the problem?
I am always happy to hear of a pleased farmer. In fact, after today's announcement, I think that I will even be able to find one or two outside the ranks of the parliamentary Labour party. Nevertheless, I am grateful to my hon. Friend for his support for and welcome to today's announcement.
The Office of Fair Trading is taking a hard look at the discrepancy between farmgate prices and prices in the supermarkets. While I want to keep the different bits of the food sector in continuing dialogue, I am also taking an intelligent interest, as I know many others are, in the OFT investigation, and I look forward to receiving its eventual report.
I welcome the statement and the package of measures contained therein, which will find a broad echo among all rural constituents in all parts of the UK. Does the Minister agree that there is a salutary nature to it, in that it is the second package of relief measures that the Government have been obliged to introduce within the space of 12 calendar months? That in itself vindicates the campaigning that farmers have been undertaking, as well as the parliamentary support, to be fair, in all quarters of the House that has been expressed consistently over that period.
Without being churlish, I think that many hon. Members will reflect on the fact that, not under the current Minister's tenure, but under his predecessor's, if there had been more willingness to try to access a greater extent of the EU compensatory funds earlier, many of those we represent would not be in the depth of difficulty to which they have sunk throughout this calendar year.
As the Minister says, it is inevitably a series of short-term measures. May I therefore direct him beyond the statement—there is no great disagreement about those short-term measures; that is self-evident—to three specific things that he may wish to consider for the future? The first is calling in the chairmen of major high street banks to underscore to them the Government's continuing commitment to agriculture and the need for them to show continuing commitment to farmers who are their customers. That would do a lot to offer stability at community level.
Secondly, on marketing, not least given the Northern Ireland experience since the beef ban was lifted—[HON. MEMBERS: "Where are they?"' Well, perhaps they are out marketing their products. Will the Minister acknowledge that the Northern Ireland experience underscores the need for an aggressive and high-profile marketing drive, both in this country and, more important, in the export markets to which we hope to regain access? Will he do more about that?
Thirdly, will the Minister give even greater emphasis to labelling? There is no doubt that, if there is one silver lining to the overlying cloud that agriculture has been under, it is the fact that at least the British consumer is now more alert to, conscious of, and indeed patriotic about, content, but that that content has to be clearly indicated, particularly with European import products? Will he give further emphasis to that as well?
I thank the hon. Gentleman for his welcome to the package. I am in discussions with the British Retail Consortium over labelling schemes, with the Meat and Livestock Commission over marketing schemes and I am due to see representatives of the high street banks shortly to discuss the finance of agricultural businesses.
The package was shaped by farmers themselves. When I went to their big rally at Blackpool, I said that I was going to listen, to learn and to help if I could. I listened very carefully to what they said, and I hope that the package meets, at least in part, the commitments that I gave them then.
Is my right hon. Friend aware that his announcement deserves a warm welcome because of the benefit that it will bring to the industry at a time of massive crisis? Does he agree that the hon. Member for South Suffolk (Mr. Yeo), who speaks for the Opposition, might show a little more humility, not only because of the extent to which his Government compounded the effect of the BSE crisis on the industry, but because, last Wednesday, an article by the Leader of the Opposition in the Daily Telegraph made it clear that there is no way that a Conservative Government would have found the money for this package? Will my right hon. Friend confirm that all the money in the package is new money for the benefit of the industry?
The bulk of the money is new money that has been given by the Chancellor from the reserve. Some of it is recoverable through the CAP and from the European Union, but even the share that is recoverable in respect of hill livestock compensatory allowances requires a further 71 per cent. contribution from the UK Exchequer, because of the Fontainebleau agreement that was negotiated in 1996. I welcome what my right hon. Friend said about the shape of the package, and thank him for his support.
The Minister will obviously understand that there is great pleasure that today the Lord has given, but there is also concern that in future he may take away. I think particularly of the possible imposition of new charges for a meat hygiene service—specified risk material charges, cattle passports and the threat of a pesticides tax. I urge the Minister to keep all those matters under careful review at a time of great difficulty in the farming industry—difficulty that is likely to endure well beyond today's statement.
On a separate issue, who will lead the review of rural economy policy, an interesting footnote to the Minister's statement? Will it be him or his colleagues at the Department of the Environment, Transport and the Regions?
On the last point, I am working with my right hon. Friend the Deputy Prime Minister on the broader rural agenda, which properly is a matter for both our Departments. Of course, we will consult the territorial Departments as well.
As Chair of the Agriculture Select Committee, the hon. Gentleman is right to remind the House about charges. I intend to discuss those matters further with the industry, but I did say some time ago that there would come a time when charges were transferred from the public purse, which is carrying them at the moment, to the industry. It is clearly right that it should meet those costs in the longer term. Traceability, which underpins the larger of the charges, is here to stay. We would be complete fools to try to push that regime backwards, because it is a requirement of consumer confidence.
I congratulate my right hon. Friend on his sensitivity to the special needs of hill farmers. It has never been easy to eke a living out of upland farming in my constituency, and today's package of measures will be especially welcome there; but will my right hon. Friend give me an assurance that, in looking to the long-term future of British agriculture, he will look for a sustainable and profitable framework for agriculture, especially for hill farmers in constituencies such as mine?
The whole purpose of today's announcement is to help hill farmers and others through times that I freely acknowledge are difficult for them. The purpose of helping them through is, of course, to ensure a long-term sustainable and profitable industry that they can take part in. I thank my hon. Friend for referring to my sensitivity. In my previous job, people did not make such references.
The Minister is aware of the serious crisis that faces pig producers—the worst I can remember—particularly smaller producers, some of whom, if not quite a number, face bankruptcy. Will he therefore clear up the confusion in relation to his meeting with the British Retail Consortium? In relation to imported products from pigs, does that relate only to fresh products, or does it relate to processed products as well? If it is the former, what further action does he intend to take? Will he also say what success he is having in Government procurement schemes, particularly in the armed forces? Is there any prospect of food aid schemes—for example, to Russia—playing a part in the matter?
I am grateful to the right hon. Gentleman for raising the plight of pig farmers. I am extremely sympathetic to the pig industry. As hon. Members who follow the matter know, it has a largely liberal regime, with no great state aids. There are some export refunds and some aids for private storage, but that is about the size of direct state assistance.
There are discussions on opening credit lines to Russia. There may be a possibility of humanitarian aid, including food, being taken up in those discussions, which are on-going. I should welcome anything that would help to clear the surplus from the market.
My discussions with the British Retail Consortium were a genuine attempt by me to help the industry. The agreement applied to fresh meats that would be sold stall and tether-free, and from animals that are not being fed bonemeal—in other words, animals that are produced to the highest United Kingdom standards. The industry's intention was that that covers not only fresh meats but processed meats, including bacon and products such as pork pies. Supermarkets were willing to take responsibility only for those processed products over which they had direct control—in other words, their own brands. However, I am assured that those account for the majority of supermarkets' volume. We shall continue with the discussions.
On the other large procurers of meat products, I am happy to tell the House that the armed forces are 100 per cent. British in their purchase of pork, and just over 50 per cent. British in their purchase of bacon. They are considering ways of improving that.
May I suggest to my right hon. Friend that proof—if any were needed—that he has announced a very good package indeed was provided in the churlish welcome for it given by the hon. Member for South Suffolk (Mr. Yeo)? May I congratulate my right hon. Friend on his negotiating prowess with both the Treasury and the European Commission? May I also praise him for the very speedy way in which he has listened, learnt and now acted to deal with perhaps the worst crisis that I have known in my 20 years as the Member of Parliament for my Teesdale constituency? As hon. Members have already said, is not today's announcement proof of our Labour Government's commitment to the rural economy?
The Government are committed to the rural economy and to farmers. As proof of that, I am now willing to accept the invitation that my right hon. Friend extended to me on Thursday to go and meet his sheep farmers.
Although I welcome the Minister's remarks on the livestock sector, will he tell the House what he is hoping to do for the arable sector? He will be aware that many arable farmers are suffering severe problems, and that prices have collapsed for various crops and products. What will he do specifically for smaller arable farmers? When may we expect an announcement on their sector? When will he tell the House of his discussions with them?
I am not in a position to announce any new or further aids, certainly not to the arable sector. If the hon. Gentleman is asking me to draw down agrimonetary compensation that is available for the arable sector, and to charge 71 per cent. of that to the British taxpayer, he should say so clearly. I have taken action—admittedly it has been modest—to help the arable sector, but it has been proportionate. The crisis in the industry is in the livestock sector.
As my right hon. Friend said, today's package will not financially help every farmer. However, in Norfolk, it will be broadly welcomed as a boost to the morale of almost every Norfolk farmer. My right hon. Friend has in a short time shown farmers that he has the leadership and other skills to tackle the tasks ahead. Will he be as determined as I believe he should be, and as determined as the farmers' union leadership is becoming, to ensure that the package will allow some time to get ahead with Agenda 2000, and not merely delay evil days?
I am grateful to my hon. Friend for his remarks. I plan to embark on a continuing dialogue with those who have an interest in those matters, so that we can work together on the Agenda 2000 package and on the increasing liberalisation of world markets that will inevitably come. The United Kingdom must get ahead of the game, not run along behind it.
The Minister has mentioned help for the upland farmers, and the farmers on Dartmoor in my constituency will be delighted to hear that. However, is he aware that, in the past few years, lowland farmers—who raise those famous Devon cattle—have borne the brunt of the problems? I am just wondering whether the Minister is planning to share with lowland farmers any of the money that he has announced for upland farmers. Will they get any help in their wonderful rearing of Devon beef?
I announced a range of measures—I did not concentrate only on less-favoured areas—and there is something in the package for the entire livestock industry. Moreover, it is a mistake to assume that one bit of the industry does not have a relationship with the other. Even the arable sector, for example, is growing food for the livestock sector. The relationships are far more complex than the hon. Gentleman's question implies. However, I am grateful for his welcome for today's announcement.
I congratulate my right hon. Friend on coming up with a wholesome, desperately needed package. I specifically welcome the fact that he has managed to spread help across the board—to lowland farmers and to upland farmers, especially in the calf processing aid scheme. However, may I urge him to do everything he can to help smaller farmers—particularly tenant farmers, who are going through a very difficult time—by making it clear that it is wrong to increase rents now, and that rents should be decreased if at all possible?
I am very sympathetic to my hon. Friend's comments. Although it is often rash for Ministers to make forecasts from the Dispatch Box, I suspect that, over time, agricultural rents levels will decline as a feature of broader market liberalisation. I welcome his comments on small farmers, and can announce today that I plan to visit Cornwall in January, specifically to meet representatives of small farmers. I shall make that a priority of the visit. I am grateful to my hon. Friend.
The Ministry has been honest enough to recognise that, when a farm suffers from the effects of bovine tuberculosis, compensation offered from the public purse covers only one pound in six of the farmer's true loss. Will the Minister clarify whether the package he has announced today will provide additional compensation to farmers in that very specific situation?
The package provides some extra support to the dairy sector. However, the way of dealing with bovine TB is to press ahead with current Government experiments to establish the science once and for all. We can then take action, based on the science, to prevent the spread of such disease.
May I thank my right hon. Friend for his statement, and tell him that it will be warmly welcomed by the farming community in my rural constituency? May I tell him also that small abattoirs in rural constituencies are suffering great hardship? Will he consider ways in which small abattoirs in rural constituencies might be helped to survive?
I am grateful for my hon. Friend's welcome for today's announcement. Since becoming Agriculture Minister, I have had to focus on some key problems—such as the immediate difficulties in the producer sector, and the need to work very hard on the politics of lifting the ban on our beef exports. Consequently, until now, I have not been able to give sufficient attention to some of the problems in the middle of the producer cycle—the bit between the producer and the retailer. I intend now to focus on those matters.
I am sure that the beef and sheep sectors will be pleased with the Minister's announcement, but I just hope that it does not become an annual event—a sort of farmers' Christmas bonus.
Like other hon. Members, I should like to emphasise the fact that the pig and poultry sectors receive no aid from this package. I am pleased to hear that he met poultry producers today, but I note the confusion between fresh and processed pigmeat. Will the Minister give the House a categorical assurance that, in principle, he is against the import into this country of pig and poultrymeat that is produced to inferior welfare and hygiene standards? Failing that, will he encourage the retail sector to label those products to show that they come from countries with inferior welfare and hygiene standards?
We want a welfare premium for the British industry. As I said, I am very sympathetic to those sectors which work in a relatively liberalised market, especially the pig and poultry sectors. I have engaged retailers in discussions about labelling schemes. I think that, instead of urging me to do something on which I have already embarked, the hon. Gentleman should welcome the fact that I have made a start.
Like many hon. Members, I thank my right hon. Friend for, and congratulate him on, his significant announcement. I am quite sure that the present Secretary of State for Wales, my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), in the short time that he has been in office, and the previous Secretary of State, my right hon. Friend the Member for Caerphilly (Mr. Davies), will both have made significant contributions in putting the Welsh case.
Will the Minister tell us how much farmers in Wales are likely to get? Will he concentrate especially on market issues, as prices in Welsh markets are at absolute rock bottom, and there is a need to push the retail industry along so that farmers get a better deal?
My estimate is that the HLCA package alone might be worth just over £2,000 each to hill farmers in Wales. Clearly, the extent to which they will benefit from the other announcements that I have made today will depend on the mix of the herds. As my hon. Friend will know, I visited Cardiff recently with the previous Secretary of State for Wales to meet representatives of the industry. Those discussions, and the discussions with the present Secretary of State, informed the shape of the package that I have been able to announce today.
I welcome the Minister's proposals, but, given that agriculture is 50 per cent. more important to the Scottish economy and to Scottish employment than it is to the United Kingdom as a whole, how has that been taken into account in those proposals? How does the total match the depth of the problems? if the problems continue, will the Minister be prepared to act again?
I think that the hon. Gentleman could afford to be a little more generous, because Scotland benefits disproportionately from the announcements, as those who follow these matters closely will realise.
I thank my right hon. Friend for this timely and excellent package. May I tell him bluntly what farmers in my constituency are saying about him—that he listens well, and that he is accessible and most courteous? However, will he state the total round sum that is coming to Wales? Does he acknowledge that there are special difficulties for sheepmeat and beef producers on the hilltops and hillsides of Wales? How does this timely package help the family farm which demands so much hard work but often makes so little profit?
I estimate that the announcement is worth just over £21 million to Wales alone. That is a significant package of extra moneys for Wales. I thank my hon. Friend for his kind remarks about how that will be warmly welcomed by the farmers to whom he has spoken.
As the Minister has been listening to farmers, he knows that they will be grateful for the package. What does he say to those farmers who believe that, had the Department—perhaps not the Minister himself—acted earlier, they could have obtained £818 million in agrimonetary compensation? What does he say to those farmers who point out that the £120 million package is worth while, but that the rise in interest rates on their bank loans since the previous election is exactly £126 million?
The idea that there is a huge pile of agrimonetary compensation available for collection in Brussels if only there was the political will to go over and get it and dole it out to farmers is a complete myth. That is not how it works, as the right hon. Gentleman should know, because he was a member of the Government who introduced the Fontainebleau agreement which conditions how such payments are made.
Will my right hon. Friend confirm that the extra £120 million is essentially designed to meet the short-term crisis? In the mid to long term, is it not our aim to bring about reforms of the CAP which would lift the landscape and enhance the environment, and, more particularly, bring new investment, new jobs and a new future to the wider rural economy?
My hon. Friend is absolutely right. That is why there are two elements to today's announcement. First, I am responding to what farmers told me at the large Blackpool rally. They said, "We need help, Mr. Brown, and we need it now." This package is that help. It is specifically targeted to deal with immediate difficulties. Secondly, in the longer term, I want to engage the whole of the producer side of the industry in a sensible discussion about how we get from where we are to where we all realise we need to be. That means working together co-operatively and finding a way forward to deal with the challenges that are marching towards us at a very fast pace.
I welcome the right hon. Gentleman's statement, and appreciate that it offers a great deal of assistance. Essentially, these measures will assist in the short term, but what steps is his Department taking to tackle the important matter of bringing confidence back into the industry and restoring public confidence in it? I should be much obliged if the Minister could respond to that question.
The hon. Gentleman is absolutely right. These measures are targeted on the immediate problems. Farmers asked for help now; this is that help. In the longer term, we have to work co-operatively to move away from a CAP structure based on production support payments. We need to move towards a structure in which payments are area-based, transparent and specific, and which sets the framework within which private sector businesses can work out how they are going to operate and generate a sufficient return on capital and sufficient earnings for those working in the industry to make it worth while. The Government stand ready to help with that.
Does my right hon. Friend accept that, when dealing with difficult farmland such as that in the Pennines, we have to consider the environment and the landscape balance as well as agriculture, as in many cases agriculture will not be viable there? We do not want the Pennines to be full of wind farms, which seem to be the only commercially viable option for many farmers at the moment.
I strongly agree with my hon. Friend. That is why I am working very hard to try to reshape the CAP so that payments are specific and transparent, and are linked to environmental measures such as protecting the very beautiful area to which my hon. Friend referred.
The Minister said, quite fairly, that this welcome package targets the immediate problems. He also said that, in the longer term, he wished to reform the CAP. However, in between, there is still the problem of the very strong pound. What signal is the Minister sending to the industry on how the Government will tackle that problem in the foreseeable future, as it will not go away? How are bank managers and others to envisage a future for the industry if there are no clear signals from the Government as to how, in the medium term, they will deal with the strong pound and its impact on agriculture?
Some people have very short memories. I remember when, under the Conservative Government, interest rates were twice their current level and the value of the pound was falling, which reflects market confidence. The Government's macro-economic strategy is right. To underpin that, I should point out that long-term interest rates are at their lowest level for 30 years.
I, too, congratulate my right hon. Friend on his statement. There will be a genuine welcome for him in the hillsides of Wales, today and in the coming months.
In relation to the dairy sector, my right hon. Friend will know that there has been a substantial collapse in the price of milk, and that that has exacerbated other problems in the livestock sector. He has told the House that he wants to see further co-operation. May I suggest that he brings together the processors and producers of milk, so that he can bang some heads together? I have never known two parts of the same industry to be so greatly at loggerheads that they are depressing the price.
My hon. Friend's suggestion is incredibly tempting, but it would be premature to take it up while the Monopolies and Mergers Commission's inquiry continues.
Welcome though the Minister's statement will be, is not the underlying problem of the industry structural, and will not that problem be resolved only if he proves to be successful in CAP reform? Specifically, what does his statement do for the few surviving hop growers in East Sussex? More generally, does he accept that there is concern on the Conservative Benches for hard-pressed farmers and growers, and for consumers, as food in British supermarkets continues to be among the most expensive in the world?
We all look forward to the report of the OFT's investigation into supermarket pricing. As a student, I used to pick hops, so I know something about it from the labourer's point of view. Changes in the way in which beer is produced probably have more influence on the growing of hops than anything done by my Ministry. I stand ready to help where I properly can, but I will not distort markets so that people engage in economic activity that they would not otherwise undertake.
I welcome the package that my right hon. Friend has announced, which will bring £2,000 for each farmer in less-favoured areas. That is not as much as they have lost, but it is none the less a significant help. Does my right hon. Friend agree that a key issue over the next two or three years will be the rebuilding of the economies of south-east Asia and Russia so that they can take our food exports? There are food shortages in Russia, so will my right hon. Friend enthusiastically press the European Commission to help with packages of food aid in the coming months, both to help poverty in Russia, and to deal with surpluses from our own markets?
The reopening of credit lines so that some supply can enter Russia would be a sensible way forward on humanitarian aid for Russia. An enormous amount of food was being sold to Russia, and the Russians will be in for a very difficult time if we do not find some way in which to restore their markets. I welcome my hon. Friend's other points.
Any positive move by the Minister will be welcomed by farmers in my constituency as a step in the right direction and as an improvement on past rhetoric. Farmers have financial burdens and they are struggling to reduce their losses, but the frustrations of the bureaucracy that has built up around farming—once an activity that involved working out and about in the environment—are becoming worse.
The farming community is subject to almost draconian penalties for the slightest slip of a pen, but ministerial errors—not by current Ministers—that delay payments or cause disruptions seem not to carry any compensation. Will the Minister consider ways in which to reduce the paperwork burden for farmers, and the farmers' sense that penalties are out of proportion to any error?
I have asked my Ministry to conduct a review of the information we require from farmers, and of the way in which we require it. That has been done before, but I wanted to take another look in order to satisfy myself that the Ministry is going about information collection in the most rational way possible. That work will continue into December.
I have tried to be specific in what I have said to the farming community, rather than making generalised statements that everything will be all right in three years. I want to say clearly what the Government can provide, and what the public purse will pay for. My vision of the future is a framework within which people may make their own judgments in a free marketplace.
I join the general welcome for my right hon. Friend's statement, but will he focus on the second part of it, which announced a thorough-going review of our preparation for Agenda 2000 negotiations? Those preparations should go far beyond the producer side of the industry, as they must also encompass processing, transport, the regulatory environment and—critically—the retail environment, in order to give a total picture of the preparedness of our agricultural sectors for a competitive market.
My hon. Friend follows these matters closely, and I am grateful for his informed interest. He understands the significance of the second part of my announcement. It is vital to the United Kingdom industry that we engage in the discussions early, and not just around the Commission's Agenda 2000 proposals. I broadly support those proposals, but broader challenges are marching quickly towards the industry.
Does the Minister accept that the reason why he cannot pay more money to the farmers—to which they are entitled, given their extremely difficult situation over the past few years—is that the rules are dictated by the Maastricht criteria? The question of state aids must be carefully considered, as it seems hardly fair that German miners should receive £6 billion a year in subsidies while UK farmers are entitled only to the fairly minimal, if welcome, amount that he has announced?
The framework within which decisions must be made was entirely shaped for the UK by the previous Conservative Government. I am sorry that the hon. Gentleman seems to find it so bewildering, but I have to operate within the rules. Fortunately for British farmers, I am able to conduct a sensible and rational discussion with the Commission, and to persuade it to help us. The previous Government could not do that.
I thank my right hon. Friend for listening and for helping. I also pay tribute to my hon. Friends the Minister of State, the Member for Birmingham, Perry Barr (Mr. Rooker), and the Parliamentary Secretary, the Member for Scunthorpe (Mr. Morley), who have both done a cracking job, particularly in receiving the message from Lancaster and Wyre. Can my right hon. Friend assure me that issues such as the development of producer co-operatives and the revitalisation of small market towns will play a large part in his discussions, so that we can market high-quality local British produce?
My hon. Friend is absolutely right on all three points. Local marketing, the ability of local farmers to work co-operatively and the work of my hon. Friends in my ministerial team have all shaped today's announcement. I have not been alone in going out to listen to farmers as other members of the Government have done that too. I thank my hon. Friend for his welcome for that work.
On behalf of farmers in Congleton, I welcome the package of measures that the right hon. Gentleman has announced, and his acceptance that the measures are short-term aids, intended to bring a little stability to the industry. May I return, however, to the vexed question of the level playing field, and particularly highlight the import of meat and meat products from countries in which animals are not raised, transported or slaughtered under the same welfare and hygiene standards that apply in the United Kingdom?
Will the Minister undertake to try to win a complete ban on such products? Until then, will he ensure that the public purse bears the high costs of regulation in the UK, such as the meat hygiene regulations and the cattle tracing scheme? Will he ensure that those costs are not transferred to the private sector until a ban is in place?
I am invited to be a protectionist rather than a believer in free trade, and to spend public money rather than to save it, as the Opposition usually want me to do.
I agree with the hon. Lady on two things. First, I am grateful for her welcome for the announcement, even if that welcome was qualified. Secondly, she argued that the rules that British producers must obey should be obeyed by others, and I think that she is right. I intend to take a hard look at the matters she raised. However, in my experience, the allegation that the others are cheating while we are not is often made in general, while specific examples are harder to come by. If the hon. Lady knows of any examples of grotesque unfairness in trading, I invite her to pass them on to me, so that I may have them investigated at once.