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Agriculture (West Country)

Volume 487: debated on Tuesday 10 February 2009

In a way, I apologise to the Minister, because she and her predecessors have been assailed annually by debates on agriculture in West Dorset. However, I make no apology for the fact that I intend to continue the practice in future years; it is a useful way of enabling the Minister to get a snapshot of admittedly only one location where farming is a crucial part of the local economy and society.

As the Minister will be well aware, dairy farming is the preponderant form of farming in West Dorset. Last year, until about November, was the first time that I can remember when my dairy farmers began to think that there might be some light at the end of the tunnel for farm-gate prices, because for most of the past 13 years, milk has sold at below 20p a litre at the farm gate and for a brief moment, it did not look like that, somewhat offset by what were then sharply increased input costs of various kinds—both for fuel and raw materials, such as feedstock, fertilizer and so on. Unfortunately, however, since November, most of the prices experienced by most of my farmers have fallen by about 2p or 3p a litre, and dairy farmers have now returned to the very difficult position of being unable to cover costs, including capital costs, or to bring in a reasonable income or wage for themselves and those they employ, given the price levels they are able to obtain. It took some years for that to happen but it is now feeding through to a significant and, all the indications are, pretty sustained, reduction in output and capacity in West Dorset’s dairy farms.

For some years the innate, long-term optimism of the farming community—that things would get better at some uncertain date—combined with deep love of a way of life, led people to remain in the industry beyond the point when rational calculation of rates of return would have kept them there. Over the past 10 years, for every farmer—there were many—who sold all or some of their livestock, there were others willing to absorb them. That led to an increase in the average scale of dairy farms and, probably, in average efficiency, which is to be welcomed, although it came with significant social effects, because the driving out of smaller farmers has been another nail in what I hope will never be the coffin of the local village—often the local farmer is the main, or an important, component of the local society.

For a while, from a sheer economic point of view, it looked as though concentrations were rising and productivity increasing, which one could celebrate. However, unfortunately the economics eventually came home to roost and people have been moving out of the industry without finding people willing to buy the livestock and maintain capacity.

Nationally, we reached a 30-year production low in 2007-08, which is paralleled in West Dorset, and as far as I can see the figures are still falling. Eventually, one might expect supply and demand in the liquid milk market to push prices back up, but clearly there is a great deal of resistance to that among hard-pressed consumers in times of economic difficulties. All in all, on the fundamental economics, the position of my dairy farmers is not good.

In addition, dairy farmers now face the very severe crisis of bovine TB, of which the Minister will be acutely conscious. Briefly, it once looked as though pre-movement testing might have had an effect, and the hot-spot concentrations were stabilising or perhaps even diminishing. Unfortunately, however, that is no longer the case. The number of bovine TB reactors is increasing again, and there are some very severe hot spots in West Dorset. Pretty much every week, a farmer tells me another terrible tale of the discovery, or now in most cases the rediscovery, of reactors and probables. That is another pressure pushing farmers out of dairying and out of farming.

The animal welfare consequences for the badger and cattle populations are also unfortunate. Nationally, that is causing considerable strain on resources, because of the fiscal cost of purchasing animals that have to be slaughtered. I fear that West Dorset is a large, and likely to be an increasing, contributor to that fiscal pressure. I know that the Minister, her colleagues and previous colleagues whom I and colleagues from other parts of the country have belaboured about this over the years, have expressed a desire to develop the gold standard—a proper vaccine for the badger population. We would all welcome such a vaccine. However, for the past 10 years, I have been hearing that it was about five years off, so I have no more confidence than my farmers that it will arrive five years from now. Even on the optimistic assumption that in five or six years there is some method of vaccination, there is no substitute for an interim cull, although that is not the Government’s current position, which I maintain is not responsible in terms of animal welfare, fiscal costs or the costs to my farmers, emotionally and economically.

Alas, this is not just a question of milk prices and bovine TB: there is also the unnecessary fact of continuing bureaucratic problems. To exaggerate is no part of my purpose, and I pay tribute to the work of Lord Rooker, who in my experience was the first person in a long time to enter the Ministry of Agriculture, Fisheries and Food or the Department for Environment, Food and Rural Affairs who really tried to get to grips with the single farm payment system. I have exchanged so much correspondence with him that I feel that I know him extraordinarily well. He had an effect, and to some degree payments caught up—I pass over in silence the whole saga of the ghastly mapping exercises and the computers that still do not speak to one another properly.

A new problem, which I hope that the Minister will address, is coming over the horizon and beginning to affect my farming constituents quite significantly. As the Department or the Rural Payments Agency have caught up with the past, they have begun to discover that the past was not as accurate as they once thought that it was. They have started to ask farmers for repayments of overpayments, of which neither they nor farmers had previously been conscious. Farmers of mine are being asked for money from 2005, 2006 and 2007. Some of the cases are not meritorious; at a certain point, when the farmer has done everything in his power to provide accurate information and the RPA has made a series of errors, it becomes unreasonable, as with tax credits, to try to claim back the money. I warn the Minister that there is likely to be much pressure from me and, I suspect, other similarly disposed Members of Parliament, about that issue, although I accept that in some cases the RPA was misled or that farmers made mistakes. However, where farmers have tried to do everything in apple-pie order, and there has been an error on the other side, it is a bit tough on the farmers to try to claim back the money.

However, the bureaucratic problems are not restricted to the single farm payment. Another such problem relates to field records, with some 23 now having to be kept for each field. None the less, that issue pales into insignificance compared with the nitrate-vulnerable zones saga. I have said publicly on various occasions—I recently made a speech about it in the context of wider issues on regulation—that the whole NVZ apparatus is manifestly barmy. It constrains farmers from distributing slurry in the so-called wet months, including on the dry days of wet months, and allows them to distribute it during the so-called dry months, including wet days in dry months. That is not a rational process. When evaluation is carried out some years from now, I am sure that we shall discover that the NVZ direction has been translated in England in a way that has increased rather than reduced the nitrates in our rivers. Therefore, the system is crazy.

Let me park that issue because I know that the Minister only inherited the system and did not invent it herself. I pity her because she will go down in history as a Minister who presided over a barmy system. None the less, as the system is in place, there is at least one set of people who should not suffer from it, and that is the farmers who did not want it, who hired people such as myself—not that they paid me extra but they pushed me into action—to campaign against it. They also organised the National Farmers Union to campaign against it, and they themselves made powerful arguments against it. They are the last people who should suffer.

Putting up a serious slurry store on a significant-sized farm costs about £50,000. The whole apparatus of pillar 2—as I have just heard from the Secretary of State—is not contributing a single penny to that cost. Therefore, we have a totally non-productive investment in a wildly underinvested industry, on which the Government have repeatedly commented, as has the Chatham House report. The unproductive investment is compelled in regulation and exists because of a barmy system that did not need to be there in the first place and that costs the farmer £50,000 to comply with. Moreover, neither the Minister nor I can give the farmer the slightest advice on how to raise the money because there is not a bank in Britain that will give £50,000 for unproductive investment in a farm that is strapped for cash. That is a really serious problem that will come home to roost for the Minister in a very straightforward way—more of my constituents will leave the industry.

Recently, a constituent who has farmed for years told me that he is now on the way out. The straw that broke the camel’s back was slurry. The same thing will happen all over West Dorset, and in many other places. The south-west of England is very wet, and there are real problems with NVZs. I have campaigned for years about the need to deal with nitrates, but forcing farmers to keep slurry stores so that they can dump the stuff on wet days in dry months at great cost is not the way to do it. That is barmy. Something must change. The very least that needs to be done is to find money from pillar 2 to pay for the slurry stores. It is not the right answer because that is to change the framework, but given that the framework is already there, the slurry stores must be subsidised.

In conclusion, I want to raise two issues to which I hope the Minister and her colleagues will attend. The first is bluetongue. The Government did well on bluetongue last time round, although neither they nor Conservative Administrations have had such a happy history with other diseases. The bluetongue vaccinations were ordered on time and were well distributed and the disease was controlled, but I fear that there is not sufficient protection against the new strains. I have corresponded with the Secretary of State about that. I am conscious that unless we have multi-strain protection pretty early on, we will hardly be able to surround the Channel ports and the patches of our coastline between the ports with large nets to catch the vectors. We will be under attack from minute objects and we must deal with them in any way we can, which means proper vaccination. I hope that the Minister is pressing forward with ordering to ensure that there is not a lag when we discover that the vectors carrying new strains are heading our way.

Finally, I turn to research and development. I have mentioned that the agriculture industry is probably the most severely underinvested industrial sector in Britain—not that there are no problems of underinvestment in many other sectors, but agriculture is peculiarly ill affected by it. Farmers do not have the capacity to carry out fundamental research. Research must be undertaken at the level of DEFRA and the other agencies.

One area of concern is beekeeping, which is of immense horticultural and ecological significance in West Dorset and many other parts of the country. Over the years, I have corresponded with Ministers about it. I do not think that there is any doubt in Ministers’ minds that colony collapse is an increasing problem. Leave aside the economic and biodiversity effects, the sheer fiscal cost of widespread colony collapse, and the serious effect on horticulture and agriculture as a result, will beggar the tiny amounts of money that are currently invested. I know that an extra £400,000 has been invested, but that is not enough. I understand the causes. When DEFRA found itself fined by the Commission because of the RPA’s delays on the single farm payment, it had to cut down somewhere, and research looked like an easy target. However, it is not a cost-effective place to be reducing investment. For tiny numbers of millions of pounds, huge additions to our knowledge could be gained, and there would be a real chance of preventing colony collapse. Now is the time to address the problem. I know that times are tough; we are in recession and I understand the pressures, but I believe that we are storing up for ourselves a considerable liability if we do not act.

It is a pleasure to be here this afternoon and to respond to the second of what I anticipate will be a series of debates. It is obviously an annual occurrence, and one that I welcome. I congratulate the right hon. Member for West Dorset (Mr. Letwin) on winning this opportunity to discuss agriculture in his constituency. I participated in a very interesting debate on agriculture in the south-west on 20 January, but I welcome the opportunity today to put on the record my appreciation of all the hard work that our farmers do to put food on our tables.

The right hon. Gentleman opened his debate by talking about the trials and tribulations of dairy farmers, and I recognise the description he gave. The debate gives me an opportunity to express my disappointment with the tone of the recommendations of the Food Standards Agency, released in the past 24 hours, on our diet and how to deal with obesity. The FSA recommended that we should produce far less full-fat food, that dairy products should be consumed less and that we should remove all the fat, and that we should stop drinking full-fat milk and drink only skimmed milk. I do not know whether your experience is like mine, Mr. Illsley, but surely eating less is a better way to deal with obesity.

The more we remove fat from meat and milk, the less tasty food is. Am I the only one who thinks that? We should take a sensible approach and promote a balanced diet. I say that not only because I am regularly involved in debating such issues with farmers, but because I am a sensible representative of the public. The idea that we should eat as much as ever but consume fewer fatty foods is not such a good way forward. We should consider the amounts that we eat, as well. If we cook fatty meat properly, we remove a lot of the fat; it is also sensible to eat less of it. As a bit of a salad dodger myself, I am aware that I am on thin ice, but I was a little disappointed by the tone of the agency’s campaign. I know, however, that the FSA is independent from the Government and an important commentator.

The right hon. Gentleman is right to draw attention to the difficulties faced by farmers in his constituency. I know that last week’s snowfalls will have made their job even more difficult. I hope that their experience of working with the weather meant that they were reasonably well prepared. The present conditions follow the high rainfall in the autumn that made gathering the harvest particularly difficult.

I will come to prices in a moment, but I will first talk about disease. I agree with the right hon. Gentleman’s description of bovine TB as a severe crisis. I take the disease seriously and I am committed to tackling it. A package of measures is in place to reduce the spread and incidence of the disease, including regular testing, zero tolerance of overdue tests and pre-movement testing. However, I accept, as he rightly mentioned, that there is a great deal of concern that the incidence of the disease is increasing and that the measures that we have in place do not appear to be sufficient to hold it back. We need to understand why that is happening.

We are making significant investments in TB vaccines. The right hon. Gentleman will know that we plan to spend £20 million on vaccines in the next three years. When I joined the Department for Environment, Food and Rural Affairs in October, I was told that it would take five years to create a vaccine for badgers, but I am encouraged by the progress that is being made by DEFRA scientists on advancing that. I hope that the eradication group will also bring forward some good ideas.

I accept that many farmers are unhappy with the decision not to cull badgers. As the right hon. Gentleman knows, the decision 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 bovine TB; and, not least, the contribution of the Environment, Food and Rural Affairs Committee.

The eradication group was set up in November. Through it, the Government and the industry are working together to draw up a base strategy to bring about the eradication of the disease. I have met the group. The views of its representatives carry a great deal of weight, based on their experience and knowledge of farming and of the disease. I am hopeful that it will bring forward a strategy that will carry the confidence and support of the farming community. That is my objective for the group.

We rolled out a successful vaccination campaign against bluetongue. I am grateful for the right hon. Gentleman’s kind comments on that campaign, which was a great example of farmers and Government working together. The seriousness with which farmers took the threat was indicated by the high take-up of the vaccination, which remains the only effective tool against the disease. Even now, I encourage farmers to continue to vaccinate to ensure that we remain bluetongue free. I listened to what he said about the developing strains of bluetongue and the need to ensure that our vaccines are kept up to date. Work on that is ongoing.

In that context, and bearing in mind our memory of foot and mouth disease, the Government have been discussing with representatives of the livestock industry how to change the arrangements for sharing the responsibilities and costs of animal health. Those discussions have been under way for some time. We plan to consult in the near future, and my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs hopes to bring forward some specific proposals soon. We anticipate that they may include a proposal to establish a new independent, arms-length body for England to deal with animal disease policy, and a livestock registration scheme to raise revenue for it. Those are difficult issues, especially given the potential costs for the industry, but there is a willingness to discuss how best to reduce the threat of disease. The scheme would differentiate the financial contribution according to the risks involved, which would provide an incentive to livestock keepers to improve their risk management. The consultation that we are considering would also seek views on the potential for private insurance to play a role.

The right hon. Gentleman mentioned the economic climate, which provides a serious challenge to all industries. However, farming as a whole is well placed to weather the difficulties, because demand for food will remain reasonably stable, even if different sectors face different difficulties, as he rightly said. For many farmers, 2008 was a relatively prosperous year. Total income from farming has increased by 9 per cent. in real terms and the outlook for livestock farms in 2008-09 is more favourable than it was in 2007-08. Average prices for fat cattle and finished and store lambs increased in 2008 by around 30 per cent., and store cattle prices increased by between 10 and 15 per cent, although I appreciate that his primary concern is the dairy sector and the price of milk.

The right hon. Gentleman will know that the current exchange rate has increased the value of all farmers’ income from European Union payments, and the exchange rate is good for exports. The reduction in the base rate of interest will also help all businesses to invest by reducing the cost of borrowing. It is an ill wind that blows no one any good.

The Rural Payments Agency is making good progress towards its 2008 single payment scheme targets. I pay tribute to the work of my predecessor, the noble Lord Rooker, on the subject. He rightly takes a lot of credit for improving the RPA’s performance. Nationally, £1.3 billion—80 per cent. of the total funds—has been paid out to almost 93,000 farmers. However, I hope that the right hon. Gentleman will be reassured to hear that I am not complacent. Once the main bulk of the RPA’s work on the single payments is concluded, I intend to undertake a review of the system, how we could introduce improvements without too much disturbance to the system, and the appeal process for the kinds of cases that he described. I anticipate a significant correspondence with him on that in the weeks to come.

West Dorset, like other parts of England, will benefit from social and economic investment under the rural development programme for England. The budget for the south-west region as a whole is more than £150 million. Officials meet regularly with the regional development agencies to discuss the development programme and to identify how we can improve its delivery. The South West of England Regional Development Agency is taking steps to speed up delivery of the programme and to ensure that it has sufficient capacity to appraise projects and administer funding.

Successful farmers are entrepreneurs who respond effectively to market demands. The EU protected food name scheme provides farmers and producers with a way to add value to their food products and to develop the market for regional and local food. The right hon. Gentleman may not be aware that an application is being made to include south-west beef and lamb in the scheme. I encourage local producers to use European standards, kitemarks and protection of names to their best effect.

Farmers look after much of our countryside and how they farm has a huge impact on the environment and biodiversity. The right hon. Gentleman rightly expressed concern about the impact of regulation, but it has an important role in safeguarding our environment and public health, as the latest food scare—about dioxins in Irish pig meat—demonstrated. That British pork could be demonstrated to be safe resulted from the farm assurance scheme. Regulation of that type brings huge benefits, but I want to ensure that we do not hold back farming with the burdens of excessive regulation. I am working to strike the right balance. Part of the problem is understanding the likely impacts of proposed new regulation. We are working hard in Europe to ensure that decisions are based on solid analysis of what needs to be done and the impact that decisions will have. A good example of when that did not happen is the electronic identification of sheep, on which he and I agree.

The Nitrate Pollution Prevention Regulations 2008 came into force at the beginning of this year. The right hon. Gentleman described them as barmy—I am sure that he would have been sent out of the Chamber had he used stronger language. Some 60 per cent. of nitrates enter water from agricultural land. The new measures will help to tackle the problem, but I understand the concerns of farmers in nitrate-vulnerable zones. An extensive programme of advice and support is being rolled out to help farmers to control nitrate pollution, with guidance documents, practical workshops and a helpline. I saw the potential impact for myself when I visited a pig farm. The farmer met the higher welfare standards by raising pigs in barns where they had proper bedding and straw—there was a mountain of bedding. The consequences for that farm were significant, considering the potential impact on the environment and the regulations. I am studying the situation carefully.

I heard what the right hon. Gentleman said about bees. A number of his colleagues on both sides of the House have raised the issue, and we are responding to it.

Question put and agreed to.

Sitting adjourned.