Dairy Industry

Part of the debate – in Westminster Hall at 9:30 am on 17 April 2002.

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Photo of David Heath David Heath Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry) 9:30, 17 April 2002

It is important, but the fact that it represents 50 per cent. of the profits is testament to the poor profitability of the dairy industry. The amount of money involved is modest. Perhaps the Minister can tell me—although if he does it will break a pattern set by all the previous Ministers I have questioned on this subject—whether the Government have at any time tried to set up a replacement scheme within the UK for agrimonetary compensation. The reasons why we have an agrimonetary compensation scheme persist. Britain still has a currency that floats free of the euro. Although a green currency is no longer necessary for those countries within the eurozone and it is arguably not necessary for Sweden and Denmark, given that their currencies are effectively pinned to the euro, it is necessary for British agriculture which has to contend with more extreme currency fluctuations.

At this point it is perhaps appropriate to talk about the exchange rate because the exchange rate between the pound and the euro is a problem for the whole of British agriculture. That problem besets the entire manufacturing industry. There are things that the Government could and should do. As many hon. Members know, I am not a great advocate of joining the euro, but I believe that there is a need to do something about the valuation between the pound and the euro to make our manufacturing industries, including agriculture, more competitive. The Government have neglected that issue over the last year or so and it needs to be addressed now if we are to have any hope of retaining a competitive aspect to our major industries.

While we are talking about overseas markets, we still have a great way to go to redevelop our overseas markets, including our European markets, which are important traditionally. There is a strong connection between our meat exports and the dairy industry. They are not divorced from one another. While we see the blatant protectionism that goes on in France, against any scientific or legal advice that the French Government could or should have been given, it is legitimate to ask whether the rules of the European Union do anything to ensure the free passage of trade and goods that the entire structure of the European Union was designed to promote. We need to address that as a matter of urgency.

Other hon. Members wish to contribute to the debate and so I will try to make the remainder of my remarks brief. I mention in passing the difficulties that the industry in my part of the country is still experiencing from bovine tuberculosis. It is becoming a problem for many farms in the west country because of the threat of tuberculosis as a disease and because of its knock-on effect on the mobility of stock, its effect on markets and the difficulties of regulation. Those are the inevitable results of a recurrence of the disease in Somerset and the west country.

I am anxious that there is still no experimental evidence to connect bovine tuberculosis and badgers. The Krebs experiments were put on hold; they are no nearer to completion now than they were a year or so ago. As a result, we do not know whether the connection is substantiated. It is desperately important to have that evidence so that appropriate measures can be taken. Many farmers in my constituency urgently need to do something to eliminate tuberculosis, or they will continue to have great difficulties.

I have to strike a pessimistic, if not apocalyptic, note. I have never been more concerned about the future of farming in my county. There is little cause for optimism in most sectors, including the dairy sector, in the immediate future. Small and medium farms throughout the country, especially in my constituency, will continue to be lost. What have traditionally been called small farms are moving up. Figures for disposal sales show that it is not herds of up to 100 cattle that are being disposed of; herds of 200 or 300 are under the auctioneer's hammer. Profitability and investment are lacking, so people say, "Why are we sitting on this realisable asset when we are in a difficult job requiring great dedication, which does not provide any reward for us?" More and more people are fleeing the industry.

I am most anxious about the tenant farmers who have no capital, and no way out. The Government are remiss in not tackling the issue with retirement schemes that will allow people to leave the industry with dignity, to find a new role. People will continue to leave the industry simply because they do not have the opportunities that they would wish for. That begs the question about the structure of the rural economy and of land use. There is a limit to how many rich people from London can come down, buy farmhouses and keep a few ponies in the paddock. Something must happen to the land between those farmhouses, which is the most productive in the country, but I do not know how that will come about unless the Government and the industry deal with the matter urgently.

Huge changes are on the way; the common agricultural policy must be reformed and we are only at the beginning of the process. I was hoping for more progress, particularly in the dairy sector. However, what the agriculture Ministers could agree, the Heads of Government were able to shelve at an early opportunity. They need to return to the negotiating table to achieve much faster progress on the issue.

There must be a greater focus on farming, the dairy industry, the needs of farmers as primary producers, the processors and even the retailers—I am prepared to bring them in from the cold. Unless there is a structured approach to the entire industry to make it profitable again, primary producers will be lost, processors will have supply difficulties and retailers will have to rely on overseas imports. That will not be in the interests of our constituents, the national economy, or the retailers themselves.