I welcome you to the Chair, Mr. Cummings, and thank you for finding the time to be here for our debate on the important subject of agriculture in the south-west. We must use this rare opportunity to discuss agriculture in Westminster Hall because debate on agriculture in the main Chamber has been almost extinguished. It is hard to remember the occasions on which we have talked about one of our major industries in the Chamber proper. I believe that there was a debate in July 2007, but that was on an estimates day on a Select Committee report. Before that, it was December 2002. Therefore, we are talking about seven years without a debate on agriculture in Government time in the Parliament of the United Kingdom. I find that quite extraordinary, not least because in the dim and distant past, when I was a spokesman on agriculture for my party, we seemed to talk about nothing else, but that was at a time of major political crisis due to the existence of various cattle diseases.
I want to cover a range of topics, none of which I will go into in any great depth. I hope that other colleagues will have the opportunity to do so. It is often the case that when I talk to farmers in my constituency, most of whom are dairy farmers—dairy is the predominant sector there—the main thing that they want to talk about, with good reason, is the weather. Last year, the weather was a significant factor in farming. It was the wettest harvest in living memory. Over the past few weeks, Somerset has had flash floods, one of which sadly took away my car in the process, about which I feel rather sore.
When farmers are not talking about the weather, they are talking about prices. Last year saw a small improvement in the general state of farm incomes in the south-west, which is very good news. None the less, it masks a deeper problem, which I will come on to in a moment. One of the difficulties is price volatility. Over the past year, wheat and cereal prices have yo-yoed. There has been a vast range of prices. They went up massively in the early part of the year and then plummeted towards the end of it. Was that because of weather conditions, the state of the harvest, or the agriculture industry? No, it was because speculators were playing the commodity market and distorting the realities of what is the genuine position of the state of production.
I do not believe that so-called speculators on the commodity farming markets—I used to be a managing director of a company that was involved in such work—can affect prices in such a way. If they did, the realities would come back and bite them very quickly. Such people provide the liquidity for farmers and producers to avoid unpredictable moves in prices. We should not blame the speculators.
That is the hon. Gentleman's view, but it will not necessarily be shared by many in the agriculture industry.
At the time, people said that biofuels were the reason why wheat prices suddenly escalated at such a fast rate. If that was the case, why on earth did we have a crash towards the end of the year when the price of wheat fell precipitately? It does not make sense unless we look at the actions of the market.
At the same time, we have had an increase in the price of milk—until very recently—and livestock. On the face of it, that is very good news for the producer. However, if we look at the other side of the equation—the input side—we can see that the costs have been very much inflated. Costs of feed, fertiliser and fuel are still higher than they were a year ago.
Farming generally has still been able to attract credit. That has been of great value to people running farm businesses. Up until now, they have been able to maintain their cash flow. At the same time—perhaps inevitably—we have had an increase in debt in the farming sector. Although that suggests that the farming industry is fairly healthy and that people are making investments, it also raises concerns about vulnerability in the future. The average dairy farm has a borrowing of about £210,000. That is sustainable only if the income is maintained, but it is not if credit lines cease and income is not maintained. I have a particular concern about tenant farmers. They do not always find the banks quite as sympathetic as those who are owners of their land.
I am concerned that we do not have sustainability in all senses of the word and stability, and that we still have degrees of volatility in the markets, which is evidenced by the fact that milk prices were cut by up to 2p a litre at the beginning of the year. That is not as a consequence of the market conditions, because there is still under-production of milk in this country, and the exchange rate for sterling against the euro is favourable. Therefore, under a free-market system, milk prices should be at a sustainably higher level. That begs the question about the fundamental relationship between the producer, the supermarkets and retailers, and the processors, which are squeezed in between.
I will pre-empt Andrew George and say that we need an ombudsman. An arbiter should examine the inadequacies of the milk market, and the pig market, and I was pleased to be involved with the report published by the Select Committee on Environment, Food and Rural Affairs last week.
Will my hon. Friend touch on my concern that the middle organisations—those that buy the milk from the farmers and sell it on to the supermarkets and other retailers—have huge contractual advantages over the farmers that amount to restrictive practices? Such advantages include the ability to change the price mid-contract. Does that not need to be examined because all the power in that relationship is held by the middle men—the marketing organisations—and very little by the farmers themselves?
I agree with my hon. Friend up to a point. We need to look at the whole chain of supply—I am trying not to pre-empt myself by saying something that I intend to say later—because the processors are often caught in exactly the same difficulty as the primary producers in their relationship with the retailers. The real strength in the commercial relationship lies with the retailers and the oligopoly that the major supermarkets constitute in this country. I shall come back to that.
My hon. Friend will say something about his position on this later, but because of the decoupled world in which farmers exist, they are much more market sensitive. He correctly identified a serious problem in the relationship between farmers and supermarkets, and nearly a year ago the Competition Commission recommended the establishment of an ombudsman. However, the fear is that that proposal would involve examining only the relationship between the supermarkets and the final supplier, not the relationship between the supermarkets and the primary producer. Does he agree that officials in the Department for Environment, Food and Rural Affairs and the Minister need to talk about that with their colleagues in the Department for Business, Enterprise and Regulatory Reform?
I entirely agree with my hon. Friend, who has done a lot of work on this matter and who has very much led the way—and I will give up waiting till later in my speech to say what I think about it. We had a Competition Commission inquiry before the one he mentioned, the 2001 voluntary code of conduct for supermarkets, and the new, tougher code of practice in 2008, which the Competition Commission supposed would have some statutory bite. However, the commission cannot create the post of ombudsman. We need to take the responsibility for setting up a regulator who will be able to regulate the whole supply chain effectively, and ensure that the relationships are fair and transparent, which they patently are not at the moment. Contracts are often very unfair to primary producers. I am not talking only about the producers whom I represent in the west country, but about those overseas—this is a domestic and international issue. The sooner the Government are prepared to accept and act on that recommendation and establish an ombudsman with teeth, who can deal with the iniquities of the food supply chain, the better.
There are some positive things. There is a great deal of innovation in farming and there has been a great deal of improvement in farming practice, which includes things that were not even thought of a few years ago, including direct supply and using the internet to create niche markets for fresh, quality produce. The question is whether some of those innovations will survive the general economic downturn. For example, evidence is already in of a downturn in the veggie box market—many of us happily receive those each week—partly because people have been encouraged to grow their own produce, which is a good thing, but predominantly because the downturn in disposable income means that people feel that they cannot afford to make such commitments, which is unfortunate.
I want to deal with a series of serious issues that are on the minds of farmers in the south-west, which relate mainly to a fundamental question. The south-west is one of the key agricultural areas in this country and, actually, in Europe. Do we want a sustainable, profitable and self-maintaining agricultural industry that is capable of feeding the people of this country in future, or are we prepared to see it chipped away, constantly under threat and, eventually—this is my great concern—exported overseas to those who will not have the same commitment and values, and who will not be able to produce to the same standards?
If my dairy farmers were here, the first thing that they would want to talk about is bovine tuberculosis—I say that at the risk of provoking an intervention from Mr. Drew, who I know has strong views on this matter. The position in the south-west is completely unacceptable. In the first nine months of 2008—these are the latest figures that I have—12,383 dairy cattle were culled, so perhaps 16,000 cattle were culled in 2008 because they tested positive for bovine TB. That is absolutely scandalous. In 10 years, 200,000 cattle, at a cost of £600 million, have been culled. Whether we are talking about animal welfare, the health of the industry, the awful effect that the problem has on farms where reactors appear, the consequences for farming families or the cost to the taxpayer, a quite extraordinary thing is being allowed to happen. We in the south-west feel the effects of the problem, because half of all the cattle culled are in our area. It is very serious. We are seeing the front of bovine TB advance 10 miles a year, which is significant.
I cannot believe that it is right simply to wait and hope that something will happen. I have heard all the arguments and looked at the scientific data, and I maintain that it is important to act, not only for the welfare of the cattle population, but for the welfare of the badger, if we consider wildlife vectors. I find it inexplicable that we allow this situation to continue, especially when I go to closed farms where there has been no movement of cattle on or off the premises, and reactors appear in a previously healthy herd. Some say, "It's all down to the farmers and how they move their cattle", but that is not so. We must get past that barrier and start to deal effectively with the problem.
The hon. Gentleman will not be surprised that I am intervening on this subject. A badger vaccine will almost certainly be available next year. Does he agree—hopefully the Minister is listening—that, at the very least, we should roll that out as a major programme to dampen down the disease for other forms of vaccination? The debate, "To cull or not to cull?" is sterile, and it will not find the answer, as the Bourne report demonstrates. We need to get on and do something, but the answer has to lie with vaccination and probably, in the long run, with vaccinating cattle.
Waiting for a vaccine for so many years is like waiting for Godot. The hon. Gentleman is right that we might be nearly there with vaccines. If we are, vaccination needs to take place quickly. We cannot take half measures because the matter is too important and has too big an impact on the agricultural lives of our constituents to be delayed.
Even if a vaccine becomes available next year, which I think is extremely optimistic, it will be injectable. Will the hon. Gentleman stand with me behind Mr. Drew when he catches his badger to inject it?
Badger wrestling is a minority sport in Somerset, but I do not doubt that it goes on in some places. The reality is that a lot of badgers are being killed, whether we like it or not.
Whether that is legal or illegal, it is happening, and the sooner we find an effective, operable and practicable way to deal with the disease, the better.
This is a point of great interest to me. I was listening carefully, but I may have missed it. Would the hon. Gentleman have allowed the licensing of culling? He talks about finding effective measures to deal with disease. Can he bring any other measures to the table for us to consider?
The Minister has not been long in her post, so she will not have heard me say on a number of occasions that a targeted cull was the right thing to do and that it should have been done a long time ago, before bovine tuberculosis reached its present, almost endemic proportions. That has long been my view. It was in the interests of the badger population as well as the cattle population, and it would certainly have saved an awful lot of misery in a lot of places.
On nitrate vulnerable zones, I simply observe that after the massive expansion—although, of course, I have nothing against proper environmental controls—I wonder whether the scale of the enterprise is not having a deleterious effect on agriculture. Some 22,000 agricultural holdings are affected. The cost for a dairy farmer—an average of £50,000 a farm in cattle costs—is not insignificant. It may be a factor causing some dairy farmers to feel that enough is enough. I do not believe that we can afford to lose many more dairy farms. The herd has contracted and the number of holdings and of people working farms has decreased to the point where we are moving towards an unsustainable industry. That worries me, which is why we need to consider the matter carefully.
The sheep sector is not a big factor in my constituency, but there are concerns about electronic identification. I know how much electronic identification will cost, but the Department must answer the question of what it is supposed to achieve. Is it a reasonable and practical solution to the problems of traceability? I certainly understand the implications for responding to epidemics, but I, like a lot of people in the industry, am not convinced that it is a sensible way of dealing with the problem. Many people feel not only that the costs exceed the effectiveness but that the effectiveness is likely to be limited in any case because of the practical difficulties. Given his constituency, I am sure that my hon. Friend Mr. Williams knows an awful lot more about sheep farming than me, so I shall not pretend to be an expert.
Nor shall I pretend to be an expert on the pig sector, although I have the distinction of having once been a pig breeder, albeit on a very small scale; I do not think four breeding Tamworth sows amount to a major agricultural undertaking. I have a great affection for pigs, which are wonderful creatures. I support the appropriately named hon. Member for South Norfolk (Mr. Bacon) and his Bill, which he introduced earlier this Session and which I was happy to co-sponsor, on food origin labelling. I am convinced that that is a big factor in the profitability of the pig sector and British pig products' ability to compete effectively with imports.
We have extremely high welfare standards for our pigs. Thank goodness for that; it is something of which we should be proud and on which we, as a country, have taken the lead. If any domestic creature deserves proper welfare standards, it is the pig, which is almost the most intelligent of all four-legged animals—and of some two-legged ones—and a great delight. Given that we have such high welfare standards for pigs, we ought to let the consumer know that and not allow our excellent pig products, which are produced on welfare-friendly farms, to be undercut by those that do not conform to the same standards. It is long overdue, and it is time that we did something about it.
I endorse what my hon. Friend is saying. A few months ago, I visited a pig farm in Thornfalcon in my constituency, and I was extremely impressed by the welfare standards maintained there. The farm also used two slaughterhouses in my constituency, so the pigs were taken only a short distance to slaughter. I urge the Minister to take on board that it is absolutely right that consumers buying pork products should know the difference between that sort of production technique and the mass production techniques that often take place, with lower welfare standards, in other countries.
My hon. Friend is absolutely right. Thornfalcon is only two or three miles from my constituency, and I am pleased that he has had the opportunity to visit a pig farm there. We should be trumpeting from the rooftops what excellent standards of pig production we have in this country. If we can get good standards on farms, local abattoirs and local sale—supermarkets should be persuaded to feature local produce, and the growth of farm shops is a significant factor in our part of the world, as in many others—we would have a much healthier industry to look forward to.
I want to deal with a couple more matters before I give others the opportunity to participate. The first is set-aside, which is a difficult issue. It was a way to reduce production, and then it became a good in itself, because of its environmental benefits. Set-aside has now ended, and a sort of son of set-aside is being developed. However, instead of being developed for the right reasons, it is being developed haphazardly and supplanting environmental stewardship schemes, which are surely the right way—identifying good environmental practice on farms and paying premiums for good stewardship—rather than adventitious growth or retention of set-aside land that may be valuable for cereal production.
I am concerned that the south-west as a region still imports a significant amount of cereal foodstuffs and straw, which does not seem environmentally sensible. Wildlife and habitat concerns aside, it does not make sense to bring in heavy goods from outside the region to maintain livestock, when we can produce them ourselves on land within the region. There is an equation that the Department has not yet figured out and that it would do well to consider.
I thank the hon. Gentleman for giving way once more; he is being generous. Does he agree that one of the uses for such land is community agriculture? Some people wish to keep their own animals or grow their own food. If that land could be leased to them, we would be more self-sufficient and could increase production sustainably. That seems a sensible way to go forward.
There is a lot in what the hon. Gentleman has said about community land, but I am not sure that I understand why it should be on set-aside land. When I was a county councillor many years ago, one of the great issues in Somerset was the county farms estate. Our predecessors tried to dispose of it en bloc, and we saved it. Since then, it has become much more difficult to maintain a viable county farms estate, but the principle behind it was a good one, because it allowed entrance into farming.
As the hon. Gentleman has said, even on a smaller scale, giving people access to produce on land is an excellent idea. However, I am not sure that I buy the thought that set-aside land should be used for that, as by definition it is not set aside after it has been brought into productive use. I will consider that suggestion further.
As the Minister knows, organics have suffered a terrible downturn in the past year or so, perhaps inevitably. I think that we are getting ourselves into a muddle on organics. A lot of people were encouraged to go into organics to obtain a premium on their products, a premium that has evaporated or is beginning to evaporate. I cannot see that the answer to that problem is to change the definition of "organics", as some would argue. That is a self-defeating objective. Furthermore, I cannot believe that the answer is to import organically produced feedstuffs from the other side of the world to ensure that the whole scheme is productive. In environmental terms and in terms of the principles that underpin the organic movement, that also seems to be absolute nonsense. I do not have any answers to that problem. I simply point out that we have got ourselves into a terrible muddle on organics, at least in the short term.
I now want to address the issue of water. I mentioned flooding earlier, which is an issue that the Department ought to be looking at very seriously and putting its two halves together, as it were—those officials that are concerned with flooding and those that are concerned with agriculture. I am convinced that one of the major undertakings that we should address in the next few years, particularly in the west country and particularly in the Somerset levels, which is an area that I represent, is whole-river catchment management schemes. They involve setting aside water retention areas on agricultural land, where that is the most effective use of that land, and paying the price for that land, thereby allowing farmers to farm water, if that is the sensible thing to do in order to preserve our communities and prevent flooding further downstream. We need to address that issue in a much more urgent and holistic way. Such schemes are a real opportunity to do something for urban and village communities that suffer from flooding and at the same time to provide a basic income for farmers on land that otherwise may not be desperately productive.
I have raised my final point, which concerns bees, on a number of occasions without receiving satisfactory answers from the Department. I am very worried about bees, pollinators, the potential decline in the bee population in this country and the various diseases that are afflicting the bee population at the moment. I say absolutely bluntly that unless we do something about that problem before it gets any worse, there will be catastrophic economic consequences in the world of horticulture and agriculture, because we will lose a significant part of the pollinator population. It does not need a genius to work out that a small amount of investment in research now may reap enormous economic benefits, if it can prevent the sort of colony loss that we have seen elsewhere in the world. I implore the Minister to take that issue seriously and to do something about it as a matter of urgency.
I have taken half an hour on a canter across a wide range of aspects of farming in the south-west, but I return to the point that I started with. I just want to see a healthy farming industry in the west country. We have all the natural attributes that make that aim a possibility—indeed, it should be a necessity. We have the land, the climate and the people, and we should be feeding the nation. However, to do that we must have the right structures in government and in economics to make farming in the south-west work. As I have said, despite a very small improvement in the fortunes of some farms in the past year, I am not yet convinced that we have the sustainability and protection for good practice in this country that are needed to maintain farm incomes. I believe that some of the suggestions that I have made today will help that process, and I am interested to hear the Minister's comments.
First, I congratulate Mr. Heath on securing this extremely important debate. I also want to say something that does not come very easily to me; I agree with virtually everything that he has said, both in general terms and with regard to the number of constituency issues and particular matters that he has taken the opportunity to raise.
I will not repeat the issues that the hon. Gentleman has raised, but it is perhaps worth recognising that I agree with so much of what he said on a number of very detailed areas, not least bees and bumble bees. There is a very interesting point, which the Minister might like to contemplate, about the linkage between bees, bumble bees, hedgehogs and badgers. There is a distinct ecological linkage there, which needs some further exploration.
This debate offers us the opportunity to do more than just take a moment to contemplate constituency issues and other detailed matters. It could form quite an important part of a much broader philosophical discussion, which we in this country, this Parliament and indeed this world ought to be having right now. I am very glad that the Environment, Food and Rural Affairs Committee, on which I have the honour to serve, has recently launched a heavyweight and important investigation into food and the way in which we, and indeed the world, are going to feed ourselves over the next 20, 30 or 40 years. In a moment, I will say precisely why I think that that debate is so important.
The south-west plays an incredibly important role within the UK in agricultural terms, as the hon. Member for Somerton and Frome has mentioned. We have something like 1.77 million hectares of enclosed agricultural land in the south-west, which is an extraordinarily large quantity. In the south-west, 3 per cent. of our population is involved in agriculture, as opposed to only 1.4 per cent. elsewhere in England. We are one of the biggest areas in terms of dairy and beef production—a third of all of England's dairy farmers are in the south-west. Of course, towards the east of the region, in my part of the world in Wiltshire, we also have significant arable production, so we have a significant contribution to make to the agricultural production of England. Therefore, we in the south-west have a locus to speak about a much wider issue—we have a locus to speak for farmers and agriculture across England—and I do not feel embarrassed about doing so.
It seems to me that the EFRA Committee and this morning's debate must focus on what the world will look like in the next 30 or 40 years. We all know that the present global population of 6.5 billion will rise to some 9 billion by 2040. The World Bank says that global demand for food will double by 2030. Some 852 million people in the world today are chronically hungry; 2 billion people in the world today do not have enough to eat; and 2,500 farmers in India alone committed suicide this year because they cannot grow anything.
The world is running out of water and collapsing through poverty. Diet is changing across the world, particularly in China, where people are giving up eating rice as they move into the middle classes and prosperity and increasingly they are moving towards eating beef and western-type foods. Of course, that will mean that we must produce a vastly greater amount of those foods than we do at the moment. Furthermore, our strategic food reserves in the world are at a historic low. The figure eludes me, but I think that the strategic food reserve available to the world today is 30 days, which is the lowest that it has been for very many years indeed. In other words, it seems to me that, looking forward over the next 20 or 30 years, we are facing a massive food crisis that will affect all of us.
Of course, there is a read-across from food into other areas, such as climate change, which is another hugely important issue, the difference between east and west and the clash, if there is one, between ourselves and Islam. Those issues all interrelate and we should address them all holistically. I hope that the EFRA Committee will do so and that we will do so in this debate.
I notice, Mr. Cummings, that you are nodding. You are quite right in suggesting that we must focus entirely on the south-west and not range too widely. However, I merely made those few remarks as background information to what I am about to say with regard to farming in the south-west.
The counterbalancing aspect to those concerns about global food production must be our concerns about the environment. Of course, the change in the common agricultural policy in the past few years has increasingly been a move from subsidy for production, which came in after the war so that we could maximise the amount of food that we produced, to concern about the environment. Most of us much welcome that development. In the south-west, we desperately need to preserve the landscape and the environment, which all of us who live there love—it is why we live there. We are a small island, and we cannot afford to waste any of it, so we must be acutely aware of our environment. For example, I think of the south-west regional spatial strategy, which is imposing vast quantities of houses across our agricultural land in the south-west and doing a variety of other untoward things. We must be aware of that strategy and fight against it.
If our farmers in the south-west have historically been doing environmentally degrading things, we should stop them, but I am not aware of farmers who do things that are agriculturally degrading to the environment. Farmers are the guardians of our landscape. They are the people who truly understand and care about our landscape, and their interests depend on our preserving the landscape and countryside as it has always been. I do not believe that what they do is environmentally degrading, but if it has been, they must change their practices.
The pendulum seems to have swung excessively far in one direction. After the last war, we were told that the CAP had been introduced to maximise production—we needed food and wanted to become self-sufficient, so we needed to grow as much as we could. Over the years, that has gradually changed until, a few years ago, the CAP changed and the pendulum swung in entirely the opposite direction. Now, all that we are talking about is the environment and preserving the greenery. Many of the issues that the hon. Member for Somerton and Frome mentioned in his excellent speech come into this. One thinks of the pesticides directive that was passed so ignominiously last week by the European Union. If it became law in this country, it would desolate our arable land and reduce our arable production by a significant quantity.
On arable land, I think of the 10 m grass verges around all the fields in my area. I enjoy them very much, because I can ride around them, but is it sensible to reduce arable production by that much? Incidentally, simply allowing grass to grow around the edges of our fields does not seem to be all that environmentally sensible. We might as well just grow weeds. Are butterflies more important than starving people in India? That is the balance that we have to think about.
The hon. Member for Somerton and Frome mentioned the debate that we have been having in the past few years about badgers and TB. In my area, we have been decimated by bovine TB. Most sensible observers recognise the link between bovine TB in wildlife and that in cows. The Secretary of State recently decided, for his own reasons, to ignore the recommendations of the retiring chief scientific adviser to the Government, who recommended a cull of badgers. I strongly welcome the Environment, Food and Rural Affairs Committee report into bovine TB, which came to the conclusion that a large-scale cull of badgers, under certain conditions, had a role to play.
That was the recommendation of the cross-party Select Committee, which included the hon. Gentleman, who is shaking his head like mad. The Secretary of State ignored its recommendation that a large-scale cull of badgers had a role to play in the south-west, and I regret that. It is as plain as the nose on one's face that there is a clear link between badgers and bovine TB. To pretend that there is not, for the love of the cuddly badger, is simply ignorant.
The same applies to the worrying fact that bovine TB seems to be spreading to the deer population. The over-population of deer in my area is extraordinarily worrying—they are absolutely everywhere. That appalling over-population is not good for the deer or for cattle. That is another area in which environmental concerns seem to outweigh concerns for agriculture.
I came across another example in my constituency this week, in which a farmer had, for personal reasons, lost his cattle breeding records from four or five years ago. DEFRA stepped in and confiscated 78 cattle passports, thereby telling the farmer that he needed to keep those cattle on his farm until they died and then bury them on the farm and that he was not allowed to sell them in any circumstances. He could not bring other cows in or do anything, and it effectively put him out of business. Only under pressure from me did DEFRA, or the Rural Payments Agency at least, agree that it had the cows' details and could therefore recreate the records from scratch, thereby allowing the farmer to go back into business. But, my goodness, what a situation to have—because a farmer did not have some bits of paper, he would have been put out of business had it not been for his MP's intervention. That is another example in which political correctness, or environmental sensibilities have overweighed what we ought to be doing, which is growing food.
The whole issue of nitrate-vulnerable zones, which the hon. Member for Somerton and Frome has correctly mentioned, could have a devastating effect on dairy farms, if it is allowed to run its course. Another issue is the electronic identification for sheep, which could be devastating for sheep farmers. We have been told by DEFRA that 5 per cent. of our arable land is to be managed environmentally. That is another 5 per cent. of arable land that might well disappear from useful production. In all these areas, and in so many others, we as a nation, and we as a world, have to think about what we seek to do with our countryside in the south-west.
Of course, there is no question but that we must preserve the environment. I am not one of those who says, "Scrub the environment, let's get on with making food." However, as we look forward strategically, over the next 40 or 50 years, surely it is right to acknowledge that half the world is starving, that half the world is short of water and that those issues are going to get worse rather than better. With the current economic and world situation in which we find ourselves, including the issues in Pakistan, India and elsewhere across the middle east, those are catastrophes waiting to happen. Here in the UK, including in the south-west, we can make a contribution to avoiding the worst downsides of some of those catastrophes by maximising the amount of food that we produce. We have to find ways not to put farmers out of business or to put things right so that the environmentalists are happy, but to balance the two sides. The south-west is a beautiful environment, and of course we must preserve it, but at the same time, for goodness' sake, let us find a way of maximising our agricultural production.
It is a great pleasure to take part in this debate. Let me start by putting on the record my interest in agriculture, as set out in the Register of Members' Interests.
I congratulate my hon. Friend Mr. Heath on securing the debate. He is a champion of agriculture, particularly in the south-west, and is very knowledgeable about it. He also has great sympathy with it, and that came over in his contribution.
South-west England is a large and productive agricultural area, which is important to Britain, Europe and the rest of the world. It has about 1.8 million hectares, which is roughly 20 per cent. of the agricultural land in England, but because of its productivity, its importance to agriculture is disproportionate. If one looks through the statistics, one sees that the number of agricultural holdings in the south-west has increased. One would think that that did not make sense, but the detail shows that while many farms are coming together to form bigger holdings, others are being broken down into smallholdings and lifestyle businesses. That is the way that agriculture is going.
The hon. Gentleman is statistically correct to say that there are more agricultural smallholdings, but there is a direct relationship to the fact that after the mid-term review, the Government started allowing pony paddocks and other enterprises to be registered as agricultural holdings in order to claim very small sums of money. I do not think that the number represents any more serious farmers.
The hon. Gentleman makes an important point, and perhaps we will have the opportunity to talk about such issues, and the Rural Payments Agency, later. However, in our area and in others in the UK, I have witnessed the practice of holdings selling small pieces of land, perhaps to recapitalise the main business, after which there are separate holdings on that land. That is a minor point, though, which I do not want to pursue.
My hon. Friend raised a number of important issues. The one that catches most directly the emotion of farmers across Britain, but particularly in the south-west, is bovine TB. There was disappointment that the Secretary of State, having taken account of the Select Committee report, decided not to pursue any further investigation into the possibility of using culling to contribute to the control of bovine TB. I have never believed that the slaughter of badgers would be the key issue that would eradicate bovine TB in this country. However, along with vaccination and better biosecurity on farms, it has a role to play. I have certainly not said that any such avenues of progress should be ignored. I think that Mr. Drew said that a badger vaccine might be available in the near future. I was interested to hear that, because it has been on the horizon a number of times but has never actually appeared. Will the Minister report on any advances in finding a vaccination and say whether she has found any way in which we can increase the speed of development, because such a vaccine has a part to play?
The available information increasingly indicates that the proactive culling of badgers leads to a reduction in breakouts on farms and, indeed, reduces the number of cattle that have to be slaughtered because they are reactors. Such studies are ongoing and follow the work of Professors Krebs and Bourne in looking at areas in which proactive culling has taken place. There have been real improvements in relation to that, and the Minister must take into account the information that is building up, because it shows that the slaughter of badgers could have a part to play.
The report that has been referred to advocated a further, larger-scale slaughter of badgers to test Professor King's hypothesis that that would make a difference. It is still within the Minister's compass to revisit that decision and see whether something can be done. I do not believe that any hon. Member would say that we should have a large-scale licensed cull of badgers throughout the UK, but we need to continue the work that has been done and build on that knowledge to see whether progress can be made. The geographical make-up of the south-west means that such a pilot scheme could take place there.
My hon. Friend paid due regard to dairying as an important part of agriculture in the south-west. There has been an increase in milk prices, but more recently there has also been a slight decrease. However, farmers are continuing to exit the dairy industry, and young people do not see the purpose of investing their finances, time and effort into dairying as a career, because there has been such a long and protracted downturn in the industry. There has not only been a reduction in the number of dairy farmers, but in milk production. That is particularly worrying for the future of agriculture and the future of young people in agriculture.
My hon. Friend also mentioned nitrate vulnerable zones, which is an issue that weighs heavily on dairy farmers. One can argue about whether the more recent proposals were proportionate in terms of how much they improve the quality of water, but the Minister could go to her Treasury friends now and see whether the tax allowance on agricultural buildings could be reintroduced. The great investment that people have to make in their holding could be mitigated to a certain extent, if they had tax allowances on the big capital investments that they are required to make. Indeed, in some European countries, capital grants are made available for farmers to invest in the infrastructure needed to deal with the effects of nitrate vulnerable zones.
A number of hon. Members have mentioned the proposals by the Competition Commission to have an ombudsman for the grocery trade not only for farmers, but for other small producers who supply large retailers. That issue is much broader than agriculture but it is important none the less. The recommendation has been made and the Minister has a role to play in talking to her Government and Cabinet colleagues to see how it can be progressed. Recent research by an academic from Cardiff university indicated that the net cost of the proposal could be as little as £6 million. That is minute in terms of the total financial turnover of the supermarkets. It is interesting that some supermarkets seem to oppose the idea of having an ombudsman, but others, who we perceive as being more benign in their relationship to primary producers, welcome it, because they believe there would be fewer adverse referrals of their behaviour compared with some of the more aggressive supermarkets.
I shall quickly discuss one or two other topics. A number of hon. Members have raised the issue of pesticides and the European Union decision. Following the vote in the European Parliament, it appears that Ministers in this country have said that they will not pursue the matter as vigorously as some of us would wish. There is undoubtedly evidence that if the matter were pursued in detail, the end consequences would be a large-scale reduction in arable production in this country—particularly of crops such as carrots and parsnips, which depend upon specific chemicals. I urge the Minister to be active in ensuring that if the regulations have to be introduced, the needs of horticultural production in this country are taken into account. If the regulations have to be introduced, it should be done over a long period, so that alternative products can be brought in.
Agriculture is often almost inexplicably contra-cyclical to the economy at large. At a time when the economy is on the downturn, agriculture is relatively buoyant because commodity prices are higher, the exchange rate is advantageous to agricultural exports and interest rates are lower. We have already heard that the average dairy farmer probably has borrowings of about £200,000, so a reduction in interest rates—particularly if it is passed on by the banks—is of advantage to that and other agricultural sectors. I urge the Minister and other agriculture Ministers regularly to meet the major banks in this country to ensure that the interest rate cuts are passed on. Although agriculture is going through a relatively benign period, it does not mean that the Minister can sit back and relax. Indeed, there is a real opportunity to work with those in the agricultural industry to ensure that they can use the skills and resources available—particularly in the west country, where we know the industry is so productive—to produce food.
Mr. Gray mentioned the inquiry of the Environment, Food and Rural Affairs Committee, on which we both sit. The terms of that inquiry relate to securing food supplies, not food security—there is a difference between those two approaches. World pressures—I will not stray too far down that line—mean that Britain has a duty and a role to play in not only supplying Britain but the greater world with food. We do not want some great five or 10-year plan from DEFRA, but we want encouragement and to ensure that regulation is kept to a minimum. That will allow farmers who have both the energy and the enterprise to produce food of a high standard and in an economical way to go forward and carry out that purpose. When sustainability became an in-topic, we were told to think globally and act locally, and that is what agriculture has the opportunity to do in the south-west, if it has the support of DEFRA Ministers.
I, like Mr. Williams, remind the Chamber of my declaration in the Register of Members' Interests, and I congratulate Mr. Heath on achieving the debate. I, too, was going to refer to the fact that it is a very long time since we had had any debate in Government time about agriculture. A few Opposition day debates have taken place more recently than the debates to which the hon. Gentleman referred, but, of course, they were not in Government time, and that is a great shame. I draw a contrast with the subject of fisheries, which is dealt with by the same Department, the Department for Environment, Food and Rural Affairs, and on which we have an annual debate, around the time of the annual Fisheries Council just before Christmas. We should at least achieve something similar for agriculture. We had the health check decisions only six weeks ago and there was no debate about them, yet they have a much more profound impact on agriculture than any Fisheries Council meeting has on the fishing industry, important as it is.
The hon. Gentleman made a number of points about farming in the south-west, most of which I identify with. I shall not try to go through all of them, because there are one or two other points to make, but I shall start with the most important issue, bovine TB. I am sorry that Mr. Drew has left the Chamber, not because I agree with him, as, generally, I do not on this issue, but because I know that he takes a close interest in it. There is no logic in continuing, year after year, to slaughter increasing numbers of cattle without addressing some fundamental problems. We cannot go on the way we are; the cost to the taxpayer is increasing year on year, and every time it goes up, the Government look at ways of paring the costs, and they do. We have seen it happen with compensation payments, because the Government have had to cut back to save money owing to the increase in the total cost of compensation. The Government are appealing against the Partridge case, in which the court held that the Government were wrong not to pay more money for the high-value, pedigree animals that were the subject of the case. We await the outcome of the appeal, but it could have further cost implications for the Government.
Hon. Members described how the incidence of bovine TB is getting worse year on year. The animal health section of what DEFRA calls its west region—incorporating more than the south-west, because it includes Hereford, Worcester and Shropshire—states that in the first nine months of 2008, 17,300 cattle were slaughtered as reactors, compared with 15,500 during the whole preceding year. Projected to a full year, that shows an increase of about 30 per cent. in the west region, and we cannot go on like that. I, like hon. Members who have spoken, have never pretended or suggested that culling badgers is the only answer, because it is certainly not; however, I think that to pretend that it is not part of the necessary package of measures is akin to hiding one's head in the sand.
The Government should have accepted the Environment, Food and Rural Affairs Committee's recommendation, and they should also have used the opportunity to try to find a selective cull process. It is interesting that Professor King's thesis was not to eradicate all the badgers in a particular area; simply reducing their population density would reduce the disease's ability to survive in the long term, and that is very important. Those who accept, as I do, the need to cull badgers must make it clear that they are talking about not eliminating every badger area, but simply reducing the population to a level at which the disease cannot survive.
My hon. Friend is absolutely right. Professor King's thesis about the over-population of badgers is backed up by a direct correlation between a sharp increase in outbreaks of bovine TB in areas such as my constituency and a vast over-population of badgers—and of ill badgers. Every night, when I drive through my constituency, I see dead, dying and ill badgers on the road; they are incredibly common. I see more badgers than blackbirds. Badgers are everywhere. There is vast over-population and there are huge quantities of TB, and Professor King is absolutely right.
I am grateful to my hon. Friend. I must move on to other issues, but before I do, I shall make one other point about bovine TB.
I fully recognise that the right hon. Lady took up her post only recently and has not yet had a chance to make an impact on what I know she accepts is a serious issue; however, I am astonished by the way in which DEFRA and the Treasury work out their funding and, in particular, their public service agreements. It is astonishing that DEFRA's public service agreement with the Treasury, PSA 9, involves an incremental trend of 17.5 confirmed new incidents per annum. When I looked into what that meant, because, like a lot of these things, it is not easy to understand, I found that it meant that the rate of increase could rise annually by 17.5 confirmed new incidents. If, for example, there had been 250 confirmed new incidents in new parishes last year, and that is not far from the reality, this year there could be another 250—plus 17.5. In other words, the rate of increase could rise. Fortunately, the rate in reality is going the other way and the number of confirmed new incidents has declined over the past few years, for which we should all be pleased. However, it does not negate the fact that the PSA is absurd, and it is almost impossible to conceive of the Department failing to meet it. At the same time, there is the point that my hon. Friend Mr. Gray made about the disease spreading at 10 or more miles a year, which brings me to a part of what I believe is an essential package: dramatically stepping up the testing process in what I have always called the frontier areas of the country—the areas into which the disease is moving—to try to identify and halt its progress, while addressing it in particular areas.
The hon. Member for Somerton and Frome spent some time discussing the dairy sector, because it is so important in the south-west, and he rightly said that that sector and, indeed, most of British agriculture is currently sheltered by the collapse in the value of sterling, primarily against the euro, but against other currencies, too. World commodity prices in the dairy industry have dropped by anything up to 50 per cent., and there has been a huge collapse in the price of skimmed milk and whole milk powders, and in the mild cheddar market. We are protected from that, but, as a result, I fear further price cuts, because, for other reasons, we hope that sterling's collapse will not last forever. It may well reverse and, indeed, there are indications that it is beginning to.
That brings me to the issue of the power of the supermarkets, with which I always associate the power of the producer because I think that they are opposite sides of the same equation. I shall not go into any more detail about the issue of an ombudsman, because other Members have made the point and I support the approach; however, we must look at the share of the retail price that the producer receives. I draw a comparison with Germany, where, over the past 10 years, the retail price of milk has risen gradually but the supermarkets' share has remained the same. Reports in this country indicate that while the retail price of milk has risen, the supermarkets' share has gone up far faster than the retail price, to the detriment of the producer. When I look at the reasons, I cannot help feeling that we arrive at the issue of the power of the producers, through co-operatives, farmer-owned businesses or wherever we want to call them, which are much more powerful in Germany than they are in this country.
The hon. Gentleman is absolutely right; the issue is about the power of the producer. However, that power is amplified not only by horizontal integration through co-operatives, but by vertical integration through links. Is that not also a failure of this country's structure—that we have such weak vertical integration?
The hon. Gentleman is absolutely right. Not every dairy producer likes the comment that I am about to make, but I have made it before: the industry is still paying the price for the immense security that it achieved under the milk marketing boards, which stultified both innovation and any need for the industry to become competitive. We are also paying the price for falling behind Europe in innovation and the development of new products. So many of the high-value dairy products on supermarket shelves are imported because we are years behind in innovation and highly efficient modern production techniques, although the situation is improving.
On the power of producers, it seems odd that although the EU is constantly striving to put its fingers into all sorts of areas of national life, we have completely uncommon approaches to competition law. This is not a debate about the future of Europe, but the Minister and I will be debating another issue this afternoon where it is ridiculous that the EU is getting involved. Not everybody is aware that Arla, the big Danish milk co-operative, commands in excess of 80 per cent. of production in Denmark. Nothing of the sort would be allowed in this country. Even New Zealand, which is held up as the epitome of the free market, has co-operatives with huge market shares that would be prevented by the Office of Fair Trading in this country. Much more work must be done in that area.
I will mention quickly a couple of issues before giving the Minister plenty of time to respond. The hon. Member for Somerton and Frome mentioned the important issue of food labelling. I am relieved and pleased that the Minister and the Secretary of State have come round to recognising the strength of the argument. I was astonished at the Secretary of State's speech on the subject at the Oxford farming conference because for years DEFRA has resisted any effort by the Opposition and individual hon. Members to address the issue. I hope that the conversion of DEFRA Ministers will lead to action.
As has been said, my hon. Friend Mr. Bacon is reintroducing the Food Labelling Bill that has already been blocked four times by this Government. I hope that they will give it a fair wind and that we can have the legislation on honest labelling about the country of origin that we need. If the Government block the Bill again, it will demonstrate the vacuousness of the Secretary of State's remarks last week in Oxford.
The issue of set-aside has been raised. I strongly support environmental measures in agriculture, but we have become too committed to the regulatory approach. I fear that that is down to the attitude of Natural England. Set-aside produced environmental gains by accident. It was not the intention. It is important that those gains are retained. However, it would be far better to do so through encouragement and stimulus such as the entry-level stewardship, than through the threat of a stick if a certain percentage of land is not set aside, as the Government are suggesting.
Nitrate vulnerable zones make a nonsense of the concept of regulation. Four national muck-spreading days are laid down in statute. Regardless of the weather, the land, the slope and so no, muck-spreading must be done on the allotted day and not on the day before, even if the weather is more propitious. That is absurd. The Government should have done a far better job of getting derogations in Europe. I accept that the measure is based on the nitrates directive, but in my view that is obsolete and should be updated as soon as possible and the changes backed up with modern science.
Finally, I endorse what has been said on pesticides legislation. I credit the Secretary of State, who has been robust in his comments on the subject in this country. We are not privy to his comments in Europe. However, I exhort the Minister to ensure that DEFRA seeks every opportunity to mitigate the impact of that legislation on British agriculture. The impact would be devastating for all specialist crops, such as field-scale vegetables and salads, and for mainstream arable crops. That would be bad for the south-west, for British farming and for the British consumer. The biggest absurdity is that it would still be legal to import products produced using those chemicals from outside the EU. That drives a coach and horses through the whole enterprise. I urge the Secretary of State and the Minister to maintain their robust approach.
This has been a useful debate and I share the view that we should have more debates on the subject. It would be beneficial to debate regional or national agriculture in the Chamber for a whole day.
I grew up not in the south-west, but in God's own country in the north-east. I lived in a small village outside Darlington that has sadly become a suburb. I shall explain why this is important to the south-west in a moment. It was surrounded by market gardens and by arable and dairy farms. My next-door neighbour raised Labradors as a hobby so we would occasionally visit the large Winyard estate on Teesside. My happiest childhood days were in the summer months, when the sun always seemed to shine. We would cross neighbouring farmland dressed in T-shirts, shorts and wellies with at least four Labradors who, for a bit of extra excitement, would occasionally set up a rabbit. I must add that they never caught them. That is one reason why it was such a great joy to be invited by the Prime Minister to serve as the Minister with responsibility for agriculture in this House. The post allows me to get involved in issues of intense personal interest.
Having listened to this debate, I understand that these issues are of immense interest to hon. Members who represent rural constituencies. I compliment Mr. Heath on securing the debate. He and Mr. Paice among others have drawn attention to the lack of debate on such matters in Government time. We now have time that can be allocated to such debates. There will be a debate in Government time on food on
My able predecessor, Lord Rooker, brought to the job not only a tremendous level of experience, having served in the post for a number of years, but a depth of understanding for and empathy with farmers, which was much appreciated. Having a Minister responsible for this policy area in this House means that we will have more opportunity to debate these issues. I will make such representations to my good friends in the Whips Office.
At the outset, I acknowledge the essential job that farmers in the south-west do for us all. They have a strong tradition of producing quality food that we all enjoy. I accept that they often work under difficult conditions. The hon. Member for Somerton and Frome began by commenting on the weather. I know that last year's harvest was particularly difficult with about twice the normal level of rainfall in the region. He alluded to the serious flooding in October and December. He may know that a small Environment Agency project is underway to gauge the extent of the problem and to discover how changing the management of agricultural land could control run-off when there is heavy rainfall. If he does not know about that, I can provide him with details after the debate.
But it is not all bad news. Despite the poor weather, we estimate that wheat and barley production in the region have increased by almost one quarter, to 1.4 million and 611,000 tonnes respectively. As the south-west has approximately 1.8 million cattle, half a million pigs and 3.2 million sheep, livestock diseases are a serious issue for the region.
Hon. Members have not touched on bluetongue, but the threat is still present. The Government and the core group of industry stakeholders still believe that mass vaccination is best and will be rapidly achieved through a voluntary approach. Farmers must continue to vaccinate. Significant quantities of vaccine are still available, but, as I said at oral questions last week, farmers also need carefully to consider the risks and check the health and vaccination status of animals they buy from within the UK and from abroad.
I accept that bovine tuberculosis is a serious problem for farmers in the south-west. I take the matter seriously and am committed to tackling the disease. Soon after coming into the Department, I asked that among the visits to farmers and the farming community that were being discussed for me, at the very earliest opportunity I be given a chance to meet farmers who have been affected by the disease. Consequently, my second visit was to the constituency of my hon. Friend Mr. Drew, who has left the Chamber, at which time I had the opportunity to listen to a group of farmers from mixed backgrounds, both tenant farmers and farm owners, who described the impact of the disease on them and their businesses.
I am glad that the right hon. Lady is speaking directly to farmers who are affected. May I suggest that it might be a good idea to reinstate what was a matter of practice every year a few years ago, which was that agriculture Ministers attended the Royal Bath and West show? The Minister would have direct contact with a large number of dairy farmers who have been directly affected, and her presence would be appreciated. The practice seems to have gone out of fashion in recent years, but it could be usefully reinstated.
I am interested in that invitation and shall ask my officials to get details about the show. I hope to visit the south-west soon. Given the distance, it would seem sensible to spend more than one day there, if parliamentary responsibilities allow it. We have discussed several issues this morning that affect the south-west in particular, so the visit would focus not only on the impact of bovine TB although that would be one of the focuses.
I realise that the decision taken by my right hon. Friend the Secretary of State not to allow the licensed culling of badgers is unpopular with many farmers. Hon. Members may disagree with it, but they will know that it was based on a wide range of factors, including scientific evidence, the practicalities of delivering a successful cull, discussions with farming, veterinary, wildlife and conservation groups, the conclusions of the independent scientific group on cattle TB, and the Environment, Food and Rural Affairs Committee report.
The Government do not deny the link between cattle and badgers. There is no denying that the badger species is susceptible to the disease and reacts to bovine TB. Measures in place that aim to reduce the spread and incidence of the disease include regular testing, zero tolerance of overdue tests and pre-movement testing.
I listened carefully to what the hon. Member for South-East Cambridgeshire said. I shall look again at the public service agreement targets to which he alluded. I understand the stark reality of the thousands, if not tens of thousands, of cattle that are being slaughtered, and the fact which farmers have pointed out to me on numerous occasions that some cattle do not actually have the disease but react to the tests. There is added grief for owners if perfectly healthy cattle have to be destroyed.
I would like to reassure the House that we continue to invest in ways to eradicate the disease: £20 million will be spent over the next three years on vaccine development, and the bovine TB eradication group was established in November. I want the Government and the industry to work together on eradicating the disease, and I am pleased with the positive engagement there has been with that group. It has agreed that it needs to consider different approaches for different areas. It wants to look at the spread of the disease at the edges of high-incidence areas, and the various drivers and risks, and seek to define the overall aims for each of those areas in order to focus its work programme.
Although a licensed cull of badgers has been ruled out, I seek to reassure colleagues that I very much want to encourage the eradication group, and that my mind is open to all the suggestions that might be made for finding solutions to this appalling disease.
Changing the arrangements for sharing the responsibilities and costs of animal health have been under consideration for some time and would be of enormous benefit to the south-west of England. We hope to consult in the near future on specific proposals.
The economic downturn is of concern to all of us, and farmers are no exception. However, we can assume that the demand for food will not be as volatile as for some other products, but the impact of recent financial shocks on personal pension plans may be a problem for some farmers. The National Farmers Union conducted a useful survey of some 400 of its members to assess the impact of the credit crunch and the availability of credit to farmers. It produced some encouraging results that bear out the comments of Mr. Williams that, counter-cyclically, farming and farmers are not as badly hit by the availability of credit. They appear to receive better treatment than other UK businesses when they seek credit.
Some other factors will help farmers. The reduction in the base rate will help all businesses by reducing the cost of borrowing, and farming stands well placed to benefit from that. The current exchange rate is good for exporters and increases all farmers' income from EU payments. The Rural Payments Agency is making good progress on completing its single payment scheme targets. I gave information about that last week at oral questions so will not reiterate it today.
I shall not go into detail on electronic identification, as we had a separate debate not that long ago on the subject. As the time remaining allows me to deal with only one other matter, I shall reserve it to touch quickly on food labelling.
However, the hon. Member for Somerton and Frome expressed his interest in and concern for bees. All that I will say now is that I hope that the Department will soon be in a position to make an announcement that will be of great encouragement to all those Members who have written to me expressing their concern about the decline in bee numbers. We need to be concerned about all pollinators, not just bees. Therefore, I hope that the imminent announcement will be welcomed by both sides of the House.
Labelling is one of the hottest topics to do with food at present. I am working hard with officials to see what we can do, given the constraints under which we have to work—constraints in respect of the free flow of imports across Europe with which we would all agree. However, there are things that we can do to improve labelling of country of origin. In particular, I hope that the pork industry will be encouraged by some announcements that I expect to be able to make very soon. They will bring forward benefits, perhaps not going quite as far as the hon. Member for South-East Cambridgeshire—