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BUSINESS OF THE HOUSE

Ordered,


25 Feb 2002 : Column 534

Agriculture (West Dorset)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]

9.42 pm

Mr. Oliver Letwin (West Dorset): I am grateful to the Minister for Rural Affairs for spending time late in the evening listening, yet again—as has been the custom once a year—to the condition of agriculture in West Dorset. I wish that I could say that there would be a shorter list of problems than in previous years and that I could signal an end to this series of debates, but that is not so.

I am sure that these facts will be entirely familiar to the Minister. Farm profitability in West Dorset remains—without hyperbole—abysmal. Smaller farmers continue to leave in droves. As the older farmers leave their family farms their children do not take over. More worryingly, even in our mid-sized farms—of between 200 and 500 acres—where considerable value-added is going on, trading is at close to break even.

Production looks set to reduce further. As the Minister knows well, beef self-sufficiency in the United Kingdom has fallen generally by about 25 percentage points. That is reflected in what is going on in West Dorset beef farming. My pig farmers remain hugely concerned that they are at the tail end of an international price war and that Danish and Dutch pigs will see them out.

Underneath all that lies a severe set of price pressures—again, the Minister is well aware of them. The price of milk heading downwards—from about 19.5p a litre to about 18p—puts most of my dairy producers at severe risk of unprofitability next year. Pigs are now at 89p a kilo and the price may be headed down. Cereal prices are tumbling out of bed.

Some of that is entirely beyond the Minister's control: the temporary high level of the pound versus the euro—a frequent lament during recent years. Some of it is also certainly due to the demoralisation that attended foot and mouth disease. My farmers join the rest of the farmers in the UK in hoping that there will be—as there certainly should have been—a public inquiry.

A great part of the problem remains structural. It is structurally impossible for my livestock producers to manage to be profitable in circumstances in which there is a huge differential in animal welfare standards and in the costs imposed by those standards between them and their competitors on the mainland. There is also a huge and similar difference in environmental regulations that affect cereal production.

That is the lament. Although I suppose that I would have sought this debate to make that lament alone, I could have spared the Minister a few more minutes and ended there, were there only that bad news. So far, the picture has been similar to last year, and the year before that and the year before that. However, there is a further reason for requesting this debate tonight.

As any Member representing a rural area will have done in the past months, I have met a range of farmers, including, most recently, the National Farmers Union representatives in my area.

Mr. Eric Martlew (Carlisle): That is no surprise.

Mr. Letwin: Indeed, it is no surprise.

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The good news is that the prominent farmers in my area see a ray of hope and believe that the Curry commission report points the way to a future for them. I want to draw out the critical elements of a way forward in the light of Curry, which might prevent me, many other Members and the Minister from having to have such debates on many occasions in the coming years. More importantly, the recipe, if adopted, might prevent the destruction of farming as we know it in West Dorset and similar areas.

The first point that I want to draw out from Curry is an observation that almost merits the term "profound". He has given us a different picture of the way in which we ought to regard agriculture in the UK. Until now, romantics have seen UK agriculture as a nostalgic and delightful business, and have argued the case for subsidising it without regard to profitability, whereas those who have thought of themselves as realists have seen agriculture as much the same as any other competitive industry. By and large, as an economic realist about a wide range of industries, I would say, as the agricultural realists have been prone to say, that it does not matter too much whether Britain produces one kind of widget or not, or whether some widgets are imported and others produced locally.

What we want, by and large, across industries, is an efficient, well-functioning economy that is open and competitive—one in which competitive advantage dictates whether we produce a given good or service or somebody else does. The realists have argued that the same applies to British agriculture. If British pig farmers, dairy farmers or other kinds of British farmer cannot compete with an outsider on the same rules of open markets obtaining in the UK, so be it—let our agriculture disappear. That struggle between the romantics and realists has pervaded the scene over many years.

Curry offers us a way out of the morass of unproductive debate between an unsustainable nostalgia and a crypto- economic realism that is also unsustainable because there is no prospect of continued farming in the UK on the basis of sheer open markets with no subsidies and no national defence mechanisms. Curry offers us the possibility that we might regard farming in the UK, particularly in a place such as West Dorset, as a national environmental asset that can be sustained only if we treat it in a certain way and make it profitable on a long-term basis. Curry makes us consider the sustainability of farming in a place such as West Dorset as part of a UK-wide approach to a regulated industry, parallel in many respects to the utility industries.

The best way to conceptualise that is to imagine the dreadful moment when the whole nation is turned into a park that is cared for by paid park keepers who are the minions of the Minister. In that scenario, Sir Humphrey presents the Minister with the wonderful prospect of diminishing the costs of keeping the park by allowing the keepers to keep animals and grow things. If we see farming on a regulated basis, as a United Kingdom- protected industry that is sustained as a single national enterprise over and against competitors on the continent and elsewhere, there is a hope of putting the fragmented pieces together into a coherent strategy that makes sense only because farming is the cheapest and most sensible way to preserve the rural character and the environmental advantages of our countryside.

What elements does Curry identify that need to be put in place and that my farmers have alighted on to construct such a coherent national strategy? First, there needs to be

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a serious approach to research and development and to model farms—the New Zealand approach. New Zealand understands that it is a small country battling against the odds of the deficiencies of being far removed from most of its markets. The economy is in every other respect open.

In the case of agriculture, New Zealand has expended huge efforts on enabling its farmers to learn from models and research and development, and to benefit from national direction and strategy, so that ordinary farmers can see how to go about their business in a way that is coherent with what is going on elsewhere in the country.

The second element, which is allied to the first, is the need to develop the home market for home produce by producing high-value-added local niche products—to put it parochially, Dorset cheeses and Dorset hams in Dorset. Other counties would have their own products.

The third element, which is perhaps more important than the other two, is a changed attitude to regulation. The comparison and contrast with the utility industries is constructive in this regard. Almost every utility regulation Bill has imposed a duty on the regulator to consider the interests of consumers and producers. He has to balance one against the other and to consider the return on assets that is achieved by the regulated entity. If a new regulation—be it environmental, health and safety or whatever—is imposed on the regulated utility, it becomes the duty of the economic regulator to assess the cost of that extraneous regulation on the industry that he is regulating and to allow it to recoup the cost as a return in its charging structure.

No such system is in effect for British farming. I am not making a partisan attack; that has been true under Labour and Conservative Administrations alike for many years. If well intentioned Members introduce Bills and persuade Governments to impose a new regulation on my farmers in West Dorset, there is no corresponding allowance for that in any feature of the subsidy regime, the crypto-price control regimes or the tax regime. The farmers bear the double cost—the direct cost and the competitive cost.

Economic impact assessments are febrile documents, as the Minister and I know. My farmers estimate that the figures in the impact assessment for the recent imposition of nitrate vulnerable zones are wrong by a factor of broadly four. That is typical. It has been the case over the years in many domains outside agriculture that the economic impact assessments presented to the House are the ludicrous fictions of optimistic officials who are guided by intense Ministers. Again, that is not a partisan remark. I regret to say that it has been true under regime after regime.

If our regulatory arrangements for farming were so designed that the Treasury had to buy increases in exogenous regulation of our farmers by paying specific subsidies to the value of that regulation, the battle royal between the Treasury and DEFRA or other Ministers taking up an environmentalist or animal welfare standard on behalf of members of the ruling party's parliamentary party would be huge. The Treasury would then demand to understand whether the regulation in question was worth buying and the farmer would be recompensed. The likelihood is that, on both competitive and direct-subsidy grounds, a plethora of animal welfare and environmental

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regulation that is not matched by parallel regulation in our competing markets and unmatched by subsidy would no longer be imposed on our farmers.

Fourthly, there must be a serious attitude on the part of the nation as a whole to animal health. At the moment, we have no serious, single national body responsible for policing animal health standards at our ports. The evidence from everyone who has ever visited a UK port or airport in pursuit of the agency or agencies that are controlling the import of dangerous substances is that there is no such single agency and that there are indeed no such agencies effectively policing those frontiers. I have wandered fruitlessly around both ports and airports attempting to find the agencies seriously involved.

I do not say that efforts are not being made—they are—but by comparison with the scale of the problem, as recent reports have made clear, they are pathetically inadequate. The problem will not be solved until there is a single agency of government, rather than one of the seven or eight currently partially responsible, that becomes alone responsible for policing the frontiers.

While we are at it, we need an agency specifically charged with the remit of producing contingency plans for disasters that occur as a result, as there always will be, of imperfections in border controls, even where those have been improved. The fact of the matter, as the Minister will very well be aware, is that whereas the Ministry of Defence has typically had contingency plans for hundreds of kinds of events that are unlikely ever to occur, MAFF and its successor DEFRA have traditionally—I fear that it is still so—had no contingency plans for many events that are almost certain to occur. We saw that most recently with foot and mouth, and we shall see it again in other spheres. Indeed, we shall see it until we have a single agency, whether the Food Standards Agency or another, charged with the business of contingency planning.

Finally, if we are to see a changed attitude and to offer a prospect of sustainability, we must, as the Curry report clearly indicates, have a serious attitude to replacement of old farmers by young. There must be a serious effort to replace manpower. At the moment, there is no strategy for that, but until there is, we cannot expect a sustainable industry.

Those five themes are small but crucial. My farmers see this as a decisive moment—not in the sense that it is noticeably worse than in years past. They have been so bad that this year is no worse. Rather, my farmers see this as a decisive moment in the sense that there is now a ray of hope in the shape of the Curry report. There is a way forward for the industry which has not previously been part of the political currency. It is up to the Government whether they will grasp that challenge or evade it.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]


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