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Livestock Industry

by Cristopher Gill MP (from Hansard)

I8 FEBRUARY I998

Mr. Christopher Gill (Ludlow): It will not have escaped your attention, Mr. Deputy Speaker, that this week is British beef week in the House of Commons. I preface my remarks by congratulating the Chairman of the Catering Committee on the initiative that he has taken, and I thank the Leader of the House and the House authorities for making it possible to stage British beef week in the House of Commons. I urge all my right hon. and hon. Friends and Opposition Members to go along to the Dining Room and sign the pledge book that they will find there. Doubtless, there are so few of us in the Chamber at this time because hon. Members are in the Dining Room, enjoying good old English roast beef.

I must declare an interest. I am a butcher and a farmer, and I represent one of Britain's prime producing areas of livestock. Shropshire is one of the most agriculturally dependent counties in England, and the Ludlow constituency is undoubtedly the most heavily dependent on livestock. In the west of my constituency, in the Shropshire hills, there is no alternative enterprise for farmers to engage in, other than the rearing and production of beef and lamb.

It is worth putting on record that nationally more than 700,000 people are employed in the meat and farming industries. Given the nature of the business, a substantial proportion of that number are employed in the meat and livestock sector. The total value of sales of meat in the United Kingdom annually is £15 billion-a substantial sum.

This time last week, the headline in The Daily Telegraph read:
"Farm incomes at eight-year low, says bank".
Last month, the Shropshire Star', always first with the news, carried the headline:
"Farm incomes dropped by almost half in year'.

That referred to the report issued by the Ministry of Agriculture, Fisheries and Food on 30 January.

By common consent the farming industry, particularly the livestock sector, is in dire straits. Tomorrow I shall be inviting the Minister to tell the House how many farmers have committed suicide in each of the past five years, worried literally to death by financial difficulties and despair occasioned by an avalanche of bureaucracy.

Look at the evidence. Over-30-month cattle have been drastically reduced in value because of cuts in the rate of compensation and the reduction in the maximum weight limit to 560,kg live weight. Cull cows are worth 33% less than two years ago. A constituent writing from Bishop's Castle tells me that last month he sold lambs for less than they fetched 20 years ago, in 1978. What other industry could put up with having to sell its product at the prices that appertained 20 years ago?

Finished cattle prices are 22% less than two years ago owing to higher imports, which rose 20% last year, and the continued ban on beef exports. I remind the House that, before the ban was imposed, 28% of all beef produced in the UK, valued at £550 million to £600 million a year, went to overseas markets.

What does the farmer do when he has no profit or, more to the point, when he has no income? He does the only thing that he can do: he stops spending. The Minister must understand that when farmers stop spending, it is not only the rural economy that suffers. The whole economy suffers, as evidenced by another headline, this time from The Daily Telegraph last Saturday.
"Farming slump hits Britain's tractor makers".

It was reported that:
"More than a thousand workers at the Massey-Ferguson tractor factor in Coventry will be put on a four-day week next month because of a huge slump in machinery sales."

I know well the Minister's views on subsidies to agriculture. He makes no bones about it. He says, if I may paraphrase his words, that he does not see why the people whom he represents in Birmingham should put their hands in their pockets to pay for subsidies for farmers.

I take this opportunity to say to the hon. Gentleman that some of his constituents will almost certainly be affected by that news. Many others in the west-midlands conurbation who work in the components industry that supplies the tractor works will also be affected by the slump in the sale of agricultural machinery. There is a knock-on effect. Ministers would do well to consider the urban consequences of the rural crisis to which I am drawing attention.

In his speech to the Oxford farming conference on 6 January this year, the Minister of Agriculture, Fisheries and Food said:
"I want to see an industry that is successful, competitive and sustainable."

Let us examine that proposition. Clearly, the industry is not successful at present. By any measurement, after only nine months of this Labour Government, the livestock industry is less successful than at any time since the 1930s.

I have no doubt that, given a fair chance, the British agriculture industry, and particularly the livestock industry, would be competitive, but it will not be successful if it is burdened with the additional costs imposed on it by the Government. How can it be competitive, especially when it is apparent that the same cost burdens are not imposed on our continental competitors? In its written evidence to the Agriculture Committee last month, the Meat and Livestock Commission cited an independent report that identified extra costs in UK abattoirs over those in other EU states at £26.65 per animal.

In the same submission, the MLC went on to instance the considerable increase in extra costs that will apply in 1998 totalling no less than £95.4 million, equivalent to £43 per animal slaughtered. That does not include the cost of setting up the cattle tracing service. It will cost the industry £13 million to set up the cattle tracing service, and according to the same parliamentary answer given by the Department, the annual running costs will be no less than £15 million. Another £3 million is the estimated cost to the industry of providing the second tag in cattle born or imported after 1 January this year.

In November 1997, the Minister stated:
"The Meat Hygiene Service's enforcement of the existing SRM controls in licensed' slaughterhouses: costs the taxpayer about £18 million a year. When: the extra controls off sheep and goats are introduced, the cost will rise by about £26 million a year. The Government has concluded that the cost can no longer be borne by the taxpayer. We therefore propose that from the start of the next financial year, the cost should be recouped from the industry, as is currently done in respect of Meat Hygiene Service
inspections."-[0fficial Report, European Standing Committee A, 19 November 1997: c. 2.

Incidentally, the cost. to the industry of the MHS, according to the Minister's reply to me on 26 January, will be £28.7 million in the current year. Interestingly, in that same reply he stated that the £44 million referred to in his speech to the Standing' Committee in November to meet the cost of specified risk material controls has escalated to £48 million.

I have mentioned several costs that are all over and above the continuing costs of the Meat and Livestock Commission, which amount to £37 million a year. To that sum must be added another £37 million for all the other longstanding statutory charges and levies that are made against the agriculture industry. Coming soon will be the as yet unknown cost of the Food Standards Agency.

Has the Minister no idea of the effect of all these cost burdens on the competitiveness of the industry? He talks about having a sustainable industry:' How will it be sustainable if one cost is piled on another? I have not mentioned recurring costs of £77 million and non-recurring costs of £20 million that are referred to in the 18th paragraph of his Department's regulatory appraisal of the ban on the sale of beef on the bone.

To make matters worse, neither the regulatory measures nor the same cost burdens are being imposed on our continental competitors. No other country has banned the sale of beef on the bone. In a parliamentary answer, the Minister told me that the Belgians were considering a ban on the sale of beef on the bone. He added that the Irish had decided what many of us feel should have been done in this country, which is to warn the public that there is a small risk in eating beef that has been prepared or cooked with the bone in place. It has been left to the Irish public to decide for themselves, which I think is absolutely right.

The removal of the specified risk material - compulsory in this country for the best part of 10 years - will not be mandatory throughout the European Community until 1 April. I am not aware of the costs, even then, being borne by the industry, as they are in the United Kingdom.

There has, been much talk about agrimonetary compensatory amounts over the past several months. As the Minister knows, the industry has expressed the view that the Government should compensate the British industry to the tune of £980 million. The Government has set their face against that. That sort of money is being paid. to other farmers in the European Union but not to British farmers.

We are no longer eligible for export restitutions. They do not apply in the United Kingdom because we are no longer allowed to export our beef. However, restitutions to other countries that are allowed to export their beef are being paid out of money that has come from British taxpayers' pockets.

Mr. John Hayes (South Holland and The Deepings): Perhaps my hon. Friend will comment on the progress that has been. made on lifting the export ban. In answer to an oral question on 21 May, the Prime Minister said:
"I believe that we can make progress and 1 am hopeful that progress is being made."-[Official Report,' 21 May 1997. Vol. 294, c. 710.1
To what extent has progress been made? What is holding up the progress of which the Prime Minister was so confident in May last year?

Mr. GILL: My hon. Friend makes a valid point, and in this instance I am sure that the Minister will agree with me. When he and his colleagues took office, they were optimistic that merely by conducting a charm offensive in Brussels the would get the other member countries to agree to lift the beef ban. None of the other 14 countries in the EU has the least incentive to lift the ban-let alone an interest in doing so. We can conclude - my right hon. and hon. Friends reached this conclusion a long time ago-that the ban was imposed for purely political reasons and had nothing to do with considerations relating either to animal health or, more to the point, human health. It was a purely political decision.

The Government did not take that view when they were elected in May 1997. They thought that, if they were more reasonable and more accommodating towards the Commission, rapid progress would be made. It was instructive to hear the Minister of Agriculture, Fisheries and Food say on the farming programme on 12 February, barely a week ago, that he believed that the beef ban was political. The only progress that we have made with the Government on the beef ban over the past nine months has been to persuade them of what many people have known all along, that the ban was entirely political. Nevertheless, we have made progress because it is now on the record that the Minister of Agriculture, Fisheries and Food accepts that.

It is ironic that, at a time when the European Community is saying that our beef is still unsafe, it is providing £2 million to conduct an advertising campaign in this country. Some supermarkets have had access to that money to advertise British beef. Clearly, something is wrong. I am interested to know what the Minister has to say about that. If the Community really believes that our beef is unsafe, why is it spending £2 million of Community money to advertise British beef? If, as is suggested by that action, the Community believes that British beef is safe, does that not call into question the decision that the Government made shortly before Christmas that led to a ban on the sale of beef on the bone?

What is the effect of the charges to which I have referred on the competitive edge of British agriculture? None of the additional charges, costs and burdens on the industry does anything to help us to sell more meat or to compete within our own market, let alone world markets or markets within the continent of Europe. As Ministers continue to load more regulations and cost burdens on the industry, one is tempted to ask whether they take that approach out of prejudice or ignorance.

The Government campaigned on the slogan, "Not a handout but a hand up". There are few in the industry who expect the present Minister of Agriculture, Fisheries and Food to advocate additional handouts. After all, the right hon. Gentleman is an ambitious man. We recognise that he will not prejudice his political career by going off message, by appearing to be the friend of the farmer and going against the strictures of his friends in the Treasury. Who can doubt that, at the next ministerial reshuffle, he hopes to become a Secretary of State and to be relieved of the smoke and mirrors of the common agricultural policy and the common fisheries, policy? As we are talking about smoke and mirrors, the right hon. Gentleman's love of the Smoking Room when the House is debating important agriculture matters has not gone unnoticed. While he remains at the Ministry of Agriculture, Fisheries and Food, will he recognise that adding to the meat and livestock sector's costs is not the way to make a successful, competitive and sustainable industry?

Mr. David Drew (Stroud): In his long speech, the hon. Gentleman has given only a cursory mention to the role of supermarkets and their ability to absorb costs. He will agree that it is a two-ended process. The difference can be made not just at the farm gate but at the place where the consumer buys the product. Perhaps he might like to have a word with the hon. Member for Tunbridge Wells (Mr. Norman), who I gather is still chairman of Asda, about what role Asda is taking with regard to keeping prices down and absorbing costs.

Mr. Gill: I do not quite understand the point that the hon. Member for Stroud (Mr. Drew) was trying to make, as he made the point badly, but I shall respond. because many people-my constituents included-are concerned about the role of supermarkets. Many of my constituents, who are operating on slim or non-existent margins, look at the apparently healthy margins of supermarkets and, quite rightly, question whether the available profit between the production of meat and its sale to the housewife is being distributed equitably.

We must accept that, nowadays, supermarkets sell an enormous amount of meat. A high proportion of the meat sold on the British market is sold in supermarkets, and they are the customer. Many of us are old-fashioned enough to believe that the customer is right. We may not like what the customer-in this case the supermarket-is doing, but we recognise that supermarkets are the outlets for the product of the British agriculture industry.

Mr. Owen Paterson (North Shropshire): I am grateful to my neighbouring Shropshire Member of Parliament for giving way. I congratulate him on bringing this most important issue to the attention of the House.

On the point about supermarkets, will my hon. Friend congratulate the farmers, who demonstrated spontaneously and brought pressure on supermarkets and large consumers, such as McDonalds? Up to 80% of that company's beef is British, and Sainsbury's is running a British promotion this month. That is totally in line with what the Government want. Farmers do not want subsidies. They want to be able to compete on a level basis.

Does my hon. Friend think that it is disgraceful that the Government are not helping-I shall be grateful if the Ministers will just listen to this point, because beef was imported into this country last year-

Mr. Deputy Speaker (Mr. Michael J. Martin). Order We should not have speeches during interventions.

Mr. Gill: I am grateful to my hon. Friend the Member for North Shropshire (Mr. Paterson) for his intervention. He is quite right. The supermarkets are doing what they can to sell British beef. I have a letter from the customer services director of Sainsbury's, in which he says to a correspondent:
"90% of our Beef is from Britain ... and 10% is from Southern Ireland."
In other words, Sainsbury's is sourcing all its beef in the British isles.

I have another letter, addressed to Mr. Sedgley, in my constituency, from the company secretary of Somerfield, saying:
"Over 75 per cent. of meat sold in our stores is British."
It is all very well having a pop at the supermarkets, but we have to bear in mind that they are our customers. They have tremendous power-too much, perhaps-in the marketplace.

It was interesting to hear the Minister for Public Health say at a meeting last night that the Government propose to put their healthy living clinics inside supermarkets. She was quite rightly asked what that will do for the local shops on housing estates that are trying to provide a local service to people who live away from the areas in which supermarkets provide essential services. It is very well the hon. Member for Stroud shedding crocodile tears, but he should look at how he and his party are encouraging supermarkets to create a monopoly.

Mr. Lembit Opik (Montgomeryshire): Does the hon. Gentleman also agree that the focus on supermarkets-

Mr. Deputy Speaker: Order. I am wondering when the Minister will get an opportunity to reply. The Minister is here to reply to the debate. When people put themselves out, particularly Ministers, they should at least get a hearing.

Mr. GILL: In that case, I shall finish.

I want the Minister to focus on the £79 million of additional cost burdens that he will impose on the meat and livestock industry this year, which almost entirely cancel out the £85 million of additional help to the industry that he announced on 22 December. I want him to look at those costs against the huge financial loss that is already being absorbed by the industry as a result of there being almost no value in meat and bonemeal and tallow, which is costing an estimated £43 million a year, the extra specified risk material disposal charges, which are costing £6 million a year, the loss in value of ox cheeks, £8.7 million a year, and, not least, the £97 million cost this year of the ban on the sale of beef on the bone.

When the Minister replies, he might be tempted to rake over the coals of the previous Administration's handling of the BSE crisis, but I respectfully suggest that he leaves that to the Phillips inquiry and concentrates instead on that for which he and his Government have been responsible since 1 May.

Mr. Paul Marsden (Shrewsbury and Atcham): On a point of order, Mr. Deputy Speaker. Is not it a convention of the House that the Minister has 15 minutes to reply to an Adjournment debate?

Mr. Deputy Speaker: There is no, such rule, but I would expect that a Minister would be given a reasonable time in which to answer. I do not think that the time now available to the Minister is reasonable.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I have exactly four minutes. When the debate started, everybody knew that it had to finish at 1.30 p.m.

I shall address two key points raised by the hon. Member for Ludlow (Mr. Gill). On the cattle movement service, we lost six weeks because the previous Government did not complete the arrangements to appoint the consultants, which they could have done before the general election. No final decision has yet been taken on charging for the cattle movement service. The location at Workington was the cheapest for running costs. I am conscious of that, as the farmers will have to pay the running costs in the end. It was also the only option where I could guarantee that staff could be recruited.

The previous Government said that the set-up costs would be met by central Government. I must emphasise that we have not announced the decision on that. It is quite wrong for people to assume that we have. People are going up and down the country, on one radio station after another, telling us what the Government have announced and decided. Nowhere have we announced any decision regarding start-up costs. We have still to make that announcement and will do so in due course.

On specified risk materials, I announced on 19 November that charges could be up to £48 million. I announced that in front of a Standing Committee. I was not questioned about it by a single Conservative Member. Since l January-when the conditions came into effect, but not the charges-experience has shown that the real costs will be nothing like as high. We are still consulting, as the hon. Gentleman knows. A letter was issued on 6 February. The consultation ends on 2 March. The decision on charges will not be made until the consultation has finished.

I regret that some parts of the industry refuse to pay the existing Meat Hygiene Service charges, which is causing problems of undercutting costs and unfair competition. I was at a medium-sized abattoir yesterday in Staffordshire, which had a high hygiene assessment score and has invested in new equipment. Why should a good firm be undermined by crooked companies-bucket shop companies-refusing to pay? We are looking urgently at bad debt to the Meat Hygiene Service to see what action can be taken. I am not prepared to see the good side of the industry unfairly disadvantaged.

There are problems with sanctions. The key sanction would be for us to ask the Meat Hygiene Service to refuse to health mark the goods. There may be problems with the European Union about that, but the situation cannot be allowed to continue with one part of the industry placing unfair burdens on the other. I repeat that consultation on those charges is still under way and it would be, wrong for anyone to draw a conclusion.

As for the hooligans outside the television studio on Sunday, such people do the farming industry no good whatever. Had they been outside a football ground they would have been charged.