Stephen Byers

Labour Party | North Tyneside

'The Costs of CAP - Our Money and African Lives'

Westminster Hall Debate

Copenhagen Summit and CAP Reform

Mr. Stephen Byers (Tyneside, North): I am delighted to have secured a debate to discuss the common agricultural policy in relation to the Copenhagen summit. I follow a debate secured by the right hon. and learned Member for Rushcliffe (Mr. Clarke); Westminster Hall is clearly becoming the venue for former Cabinet Ministers to continue to tread the boards. I hope that this debate proves as interesting as the one on policing in Nottingham.

I welcome to the Front Bench my hon. Friend the Minister for Europe. Many of us were delighted by his appointment. He has shown a deep interest in Europe, not only during his time in the House, but for many years before that. I know that he will be a strong and forcible advocate for Europe both within and outside the House. I look forward with interest to his response to the debate. I think that he is covering the main debate in the Chamber later today, so it will be a busy day for him. I apologise for that.

Mr. Richard Spring (West Suffolk): What about the shadow Minister?

Mr. Byers : I never apologise to shadow Ministers. That is one of the few things that I have learned during my time in the House.Most importantly, the Minister will be able to deal with the CAP and the extent to which it may be debated at the Copenhagen summit. I say "extent because, as many of us are aware, there was a fair degree of discussion about the CAP at the European Council meeting towards the end of October. Some decisions were taken there and they have set the framework within which any changes or reform will take place.The Copenhagen summit will primarily be discussing enlargement—something that is very important for the future of Europe. It just so happens that many of the candidate countries for entry into an enlarged European Union have extensive farming interests. However, farming in those countries is outdated and inefficient. Enlargement and the nature of the agricultural sector in the candidate countries mean that there will need to be changes in the CAP. We should use enlargement as an opportunity to drive through major changes. Perhaps we should even reconsider the idea of giving subsidies for production, which has led to many of the present difficulties.

Andrew George (St. Ives): I am grateful to the right hon. Gentleman for securing this important debate. I checked the EU website this morning and found that the CAP is not on the agenda to be raised formally at the meetings of the European Council in the next couple of days. Does he share my concern that the only debate will be in stand-up rows in the withdrawing rooms? Which language does he recommend that those stand-up rows be conducted in?

Mr. Byers : From my former experience, I know that even though there is a formal agenda at such gatherings, the Heads of State discuss a range of relevant issues. I do not doubt that there will be friendly discussions—I cannot say "comradely now, given the nature of the political complexion in France. I have to say that the Prime Minister speaks very good French. He would have no problems speaking in French if he wanted to, but I am sure that he will speak in English. Enlargement will be raised both formally and informally in the context of the agreements made in the European Council in Brussels and I make that point because we now have the parameters for any changes that need to be made to the common agricultural policy.

I want to raise three issues in this debate. First, I want to consider the high price that taxpayers and consumers in the United Kingdom are paying for the CAP. Secondly, the way in which the CAP works at the moment threatens the livelihoods of some of the poorest farmers in the world. Thirdly, if the argument for the CAP is that it safeguards the future of small farmers in the United Kingdom, the latest figures from the European Commission show that that is not the case because they are not benefiting from the way in which it operates.

The Brussels conclusions at the end of October resulted in one decision being taken and one being deferred. The first decision was that there would be an agreement on the overall level of spending on the CAP in line with the Commission's recommendations for 2006–13. The decision assumes that there will be an inflation rate of 1 per cent.—the single European currency is working well and I doubt whether inflation will be down to 1 per cent. for all those years—and therefore there will be a real-terms reduction, which was agreed in Brussels, in the amount that will be spent on the CAP.

The clear area of disagreement was reform because, as part of the deal on the capping of spending on agriculture, it was argued that there should be no reform of the CAP before 2006, which means that the status quo should apply until 2006. That was not agreed, but it was accepted that any reform should be part of the mid-term review, which will be conducted in line with the conclusions of the Berlin summit in 1999. The mid-term review will go ahead, and reform must form part of it.

It is very important that the European Union gets its act together and makes urgent progress. We all know of the failure of the World Trade Organisation talks in Seattle, and many lessons were learned as a result. As part of the European Union, the United Kingdom Government were in the forefront of arguing that there should be a new ministerial meeting, which should consist of a development round of trade talks. At the Doha meeting 12 months ago, we managed to re-establish and restart the trade talks. The round of talks will concern development, but as part of the deal it was recognised that agriculture had to change within those trade discussions.

The European Union is the only one of the main trading blocs that has not put its proposals forward. As part of the Doha process, it has quickly to put its proposals forward for change on agriculture. If it fails to do so—it probably has to do so by the end of this year or in early January at the very latest—it will derail the Doha talks, so it must make urgent progress. Even if it happens informally, I hope that the urgency of making progress on submitting our proposals within the European Union for change to the WTO will be realised and that will take place at Copenhagen. If we fail to do so, we will carry a very heavy burden indeed.

I mentioned that I wanted to tackle three issues. I am pleased to see that the shadow spokesman is taking notes of what I am saying; he might learn a good deal. The hon. Member for Banbury (Tony Baldry) has just passed him a pen. The fact that the shadow spokesman did not bring a pen shows his remarkable state of readiness. Even the Minister is lending a pen—a better quality one, of course. I shall speak slightly more slowly, so that the shadow Minister can take full note of my contribution.

On the cost to consumers and taxpayers, it was interesting that when I secured the debate and it appeared on the Order Paper, someone contacted me to ask, "What is the relevance of this to your constituency? Tyneside, North is an urban area with very little farming and few farmers, so the conclusion was that the subject was not terribly relevant to my constituents. However, it is relevant. Many of my constituents are concerned about the effect of the common agricultural policy on the developing world.

A few months ago, I attended a very good meeting organised at St. Bartholomew's church in Benton in my constituency. Many people who attended were concerned about the way in which the CAP operates and its effect on the developing world. Another concern—perhaps, a more self-interested one—is the fact that people in my constituency pay to fund the CAP. About ÿ3.30 a week for every man, woman and child in the country is paid to the CAP, either by consumers through higher prices or by taxpayers through their taxes. From my constituency, ÿ270,000 a week goes to the CAP—a total each year of ÿ14.9 million.

Mr. Roger Williams (Brecon and Radnorshire): Is not it also in the interests of the right hon. Gentleman's constituents that the CAP has produced food security for several years? That is as important as the other issues that he has mentioned.

Mr. Byers : The hon. Gentleman's comments show the time warp in which some of the debate takes place. Food security may have been an issue 20 years ago when the CAP was in its infancy, but it is not the issue that it was. There is now overproduction in many parts of the world, particularly because of the way in which the CAP operates. If there is a need for a common agricultural policy, surely we could get away from a system that supports overproduction in the United Kingdom, which is dumped on small farmers in the developing world. I shall deal with overproduction shortly, particularly in the sugar and dairy sectors. If there is an argument about food security, it is one on which I have yet to be persuaded. The CAP as presently constructed does not address food security—perhaps there should be a debate about how it could be reformed to reassure the hon. Gentleman.

The pensioner and the young mother doing her shopping pay higher prices to support the CAP. That goes down badly with shipyard workers and miners who have lost their jobs, because there was no Government subsidy for their industries. They have gone through the painful process of redundancy, and have retrained, learned new skills and found work, only to pay higher taxes to support the CAP, which provides subsidies to very rich farmers in the UK. They resent paying higher taxes to subsidise the farming sector.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): The right hon. Gentleman referred to very rich farmers, but I represent a constituency in which hill farm incomes have sunk to about ÿ4,000 per annum. That is not rich by any definition. I hope that he is not intent on giving a false impression about farmers. I agree that there is a need for drastic reform, but it is not the case that all farmers are fat cats.

Mr. Byers : I accept absolutely the hon. Gentleman's point. For family reasons, I know his constituency very well. I shall later disclose figures that show how payments under the CAP are made to farmers in Great Britain, which will confirm the hon. Gentleman's point. Many farmers—small farmers and particularly hill farmers—are struggling in very difficult circumstances. If they receive Euro5,000 a year from the CAP they are doing well. Others are paid more than Euro500,000 a year. A few farmers and big businesses are doing very well out of the CAP, but many small farmers are struggling and are not receiving any benefit from it. That is the self-interest issue and why consumers, shoppers and taxpayers are paying heavily.

The second issue is the effect on farmers in the developing world. For understandable reasons, much of the debate about helping farmers and countries in the developing world has focused on increasing the amount of aid that we give to those countries and on writing off debt. Those are important initiatives and I do not decry them, but a greater prize is available, to us and to those countries, from liberalisation and greater trade. It has been calculated that if Africa increased its share of world exports by just 1 per cent., it would generate billion going into Africa. That is five times the amount received in aid.

The issue is not just one of breaking down barriers and tariffs. I admit that it was a mistake on my part, but when I considered the matter in the past, I saw it as the European Union breaking down tariffs to open up the EU market. That is important and we are taking steps to do that. I applaud the fact that some of those tariffs are coming down, albeit a bit too slowly, but at least they are moving in the right direction. However, the real problem for many small farmers in the developing world is the way in which subsidies are used to support certain sectors of farming in the United Kingdom. The result is overproduction, which is then dumped in those countries at a low price. The two worst sectors for that are dairy and sugar. The Organisation for Economic Co-operation and Development estimates that in 2001 the European Union dairy sector was subsidised to the extent of Euro16 billion. That is equivalent to more than a day for each of the 21 million cows in the European Union when 100 million people in Africa live on less than a day. That must be the ultimate obscenity of the common agricultural policy, yet some European leaders argue for no change and want the status quo. They do so for a simple reason: their view is that change to the CAP will cost them votes. However, the message is clear: the way in which the CAP works is costing lives in Africa.

Andrew George : Further to the point raised by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), does the right hon. Gentleman agree that more than half the amount either supports export subsidies or goes to processors and trading companies, not farmers? Does he also agree that many of the subsidies do not help farmers in this country; they help large companies and exporters to dump on the third world and undermine the livelihoods of small farmers in countries about which we are all concerned?

Mr. Byers : Free from the constraints of ministerial office, I now have the opportunity of attacking big business, which my hon. Friend the Member for Luton, North (Mr. Hopkins) will applaud. I do not intend to do that because, rather than attacking big business, which sees a system that it can use to its own advantage, we, as politicians who are accountable to people in our countries, must ensure that we change the way in which the CAP operates. The hon. Member for St. Ives (Andrew George) is right; it rewards a few at the expense of many. I shall carry on with my speech, as many hon. Members want to take part in the debate.

Dairy products are being dumped on developing countries and Jamaica is a good example. In the past 10 years, its imports of milk powder from the European Union have increased fivefold; the European Union is spending about Euro4 million a year to subsidise production in Jamaica. As a result, Jamaica's own milk production has fallen by 35 per cent. in the past two years. Local producers now supply only 12 per cent. of the domestic milk market. That is a good example of how subsidies to dairy producers in the European Union act against the interests of developing countries.

There is a similar tale to be told about sugar, which was brought home to me recently when I visited Peter Makokha, who farms 10 acres of land in western Kenya, just outside a town called Mumias on the border with Uganda. He farms mainly for his own use for produce for cattle and sheep, on which his family live. He has one cash crop: sugar cane. He uses the money he gets from selling the sugar to send his children to school, for health care and to buy fuel—the simple, basic necessities. With the other farmers in Kenya, Peter produces white sugar at Euro280 a tonne; the cost of production in Europe is Euro670 a tonne. Peter's worry is that he is being denied access to his own local market. He will not be trading his sugar in the European Union or the United States. For Peter and the other farmers in Kenya, what really matters is the local market 10 miles down the road or the bigger market in a regional centre. These are the poorest farmers in the developing world.

The Minister for Europe (Mr. Denis MacShane) : In the light of his experience at the Department of Trade and Industry, will my right hon. Friend reflect that, if no more European or American subsidised products were dumped in Africa, as I would wish, and Peter, to whom my hon. Friend referred, could sell his products locally, how would we handle the problem of Australia and New Zealand, which can produce unsubsidised sugar and other commodities at even cheaper prices? The last time I checked, those two countries were not among the poorest nations in the world.

Mr. Byers : They are not, but as the figures show, when the cost of transport and so on is added, Kenya, Nigeria and other developing countries would be competitive when one compares the amount and cost of sugar coming from those other countries.

Peter is affected because the European Union is subsidising sugar. In the last year for which information is available, Kenya imported million-worth of sugar from the European Union; it exported only ,000-worth of sugar to the European Union. The effect of dumping goods subsidised by the CAP on the developing world is clear. Some people say that that is the consequence of liberalisation and open markets. What I find offensive is that the European Union is a great advocate of opening up markets and its members do so behind the comfort of pretty hefty tariffs. We tell the developing world that they must open up their markets, then we hide behind big tariffs. The reality is that immediate liberalisation—leaving it to market forces—has not worked for many of those developing countries. There must be an incremental approach—in the long term, that will be best—in which markets are opened up, but in a way that is compatible with development goals. That needs to be phased in and it needs active assistance from Government.

The third issue is that of the benefits to UK farmers from the common agricultural policy, which has already been raised by a number of hon. Members. There would rightly be concern about changing a common agricultural policy system where large amounts of money go into the farming sector. Small farmers, who have been through difficult times in recent years, are worried that they might be adversely affected by any changes to the CAP. We are all sympathetic to those concerns. We must examine where the money from the CAP goes. There is an assumption that it is spread around pretty evenly, but hill farmers in north Wales, for example, have to leap through bureaucratic hoops to receive very little.

When we dig down and get the details of where the money goes, it makes fascinating reading. This information is not easy to get hold of. Some 166,000 farmers in Great Britain receive some money from the CAP. Let us see who gets what: 41,000 get less than Euro1,250 a year in CAP payments. Those will be the hill farmers the hon. Member for Meirionnydd Nant Conwy mentioned. Another 11,000 get between Euro1,250 and Euro2,000. Another 25,000 farmers get between Euro2,000 and Euro5,000. Another 22,000 farmers get between Euro5,000 and Euro10,000. The big winners, although they are probably more agribusinesses than farmers, are the 376 who get between Euro200,000 and Euro500,000 a year. The real winners in this expensive lottery are the 80 farmers who get more than Euro500,000 a year.

Mr. Mark Lazarowicz (Edinburgh, North and Leith): I am grateful to my right hon. Friend for giving way. I, too, congratulate him on raising this important issue. He will no doubt be aware that one of the proposals in the mid-term review of the CAP was that there should be a limit of Euro300,000 per farmer. Does he agree that that limit is far too high and that if there is to be real reform, the limit should be set at a much lower level that reflects the needs of farmers and sustainable rural development rather than the needs of a big agribusiness?

Mr. Byers : I accept that absolutely. That proposal is a sign of tinkering around at the edges, rather than the fundamental and radical reform that many Labour Members want.

Mr. Llwyd : To reinforce the right hon. Gentleman's argument, 380 farmers receive up to Euro500,000 per annum. The comparable figure in Italy is 70 and only 10 in Portugal. There is an urgent need in the UK for reform.

Mr. Byers : The hon. Gentleman makes an important point about the way in which the system operates here and in other countries in Europe. A small number of big businesses—sometimes multinationals—are scooping the pool while the farmers in the hon. Gentleman's constituency, who would win public sympathy, are not benefiting by anything like as much. Most people would assume that the money would go to the small hill farmer in north Wales who is struggling to make a living in difficult conditions.

Mr. Roger Williams : The right hon. Gentleman quotes some interesting figures. Perhaps he will reflect on the fact that some of the farmers who receive small amounts are not commercial farmers but people who run smallholding operations and probably have other employment too. The support for farmers should perhaps be directed to the commercial farmers rather than those who receive only small amounts.

Mr. Byers : The hon. Gentleman introduces an interesting debate about the role that farmers—even those with other interests—play in maintaining the countryside. We could begin to tackle some of those issues if the CAP were more flexible and not based solely on production and subsidies for production.

Finally, the figures show that 78,000 farmers earn less than Euro5,000 a year, but fewer than 500 earn more than Euro200,000. Under the CAP, taxpayers, consumers and shoppers are now paying billions of pounds for a failed system that benefits only a small number of farmers, who receive a significant amount of money from it. It also leads to higher prices in our shops and to greater taxes for those people who pay them.

The livelihood of small farmers in developing countries is being put at risk. About 100 million people in Africa live on less than a day and any regime that spends more than a day on every cow in the European Union—there are 20 million of them—is simply unacceptable and has to change. Change will not be easy; it will require political leadership. Many hon. Members and people in this country expect that political leadership to come from the Government.