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The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)
May I begin by congratulating my hon. Friend the Member for St Ives (Derek Thomas) on securing the debate? His constituency neighbours mine and I know that he champions the interests of farmers in his constituency. Indeed, we often jointly attend west Cornwall branch meetings of the National Farmers Union, and in the autumn I had the pleasure of speaking at a village called Madron in his constituency, which ran a series of events on the future of farming.
I worked in the farming industry for 10 years. I care deeply about the industry, and the Government value the role of agriculture and our food industry because it is the biggest industry in the country. Food manufacturing is our biggest manufacturing industry—bigger than the aerospace and automotive industries put together. It is worth about £100 billion a year throughout the supply chain and employs about one in eight people. That is why we made a manifesto commitment to put in place a 25-year food and farming plan, which is currently under development and will be published in the spring. It will look at how we attract new skills to the industry, how we use technology to improve productivity and use of resources, how we open new export markets, and how we develop risk management tools for the agricultural industry.
As my hon. Friend the Member for St Austell and Newquay (Steve Double) pointed out, there is growing consumer interest in food provenance. People want to know where their food comes from. There is a growing interest in local sourcing and local brands, particularly in Cornwall where we have some strong local food brands. We are keen to develop that, so 2016 will be the year of great British food. Our Great British Food unit will champion those artisan food producers throughout the course of the year.
We are also doing a huge amount on exports. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) asked about that. At the end of last year, the Secretary of State went to China and was successful in opening new markets for British barley and for pigs’ trotters. In fact, we have been opening about 100 new markets a year over the past two or three years. Our food exports are now rising to £19 billion a year.
We have made some very good progress on exports, but I do not deny for a moment that farming is going through an incredibly tough and difficult time, due to a number of factors. The exchange rate of the pound against the euro is not favourable to farmers; the weakness of the euro has put pressure on all commodity prices for British farmers. Set against that, there has been a global oversupply in many areas and some key markets have been disrupted. In Europe, milk production has risen by about 10% due to very good weather and favourable conditions for production. That has had a downward pressure on prices and, as many hon. Members have said, many farmers are experiencing prices that are well below the cost of production.
There has been difficulty in other sectors such as pig production, where the market in Russia has been disrupted, exacerbating the problems. There has also been difficulty with lamb. New Zealand lamb has been finding it more difficult to get access to the Chinese market, so there has been a surplus of New Zealand lamb on the world market. Despite those short-term pressures, my message is that the long-term prospects for our farming industry remain good. As my hon. Friend the Member for South East Cornwall (Mrs Murray) said, there is a growing world population. It is set to reach about 9 billion by 2050 and many projections suggest a rise in demand for food of about 60%. That brings me to the issue of food security.
As the shadow Minister said, we are clear that there are two key elements to delivering food security in the world. One is that we must have open markets and the second is that we must have a vibrant, profitable and successful food production and supply system. The reason that self-sufficiency and food production alone is not enough to guarantee food security is that farming is always at the mercy of the weather. If there is a severe weather event in one part of the country, we need to be able to move food around the world, so open markets are crucial to ensuring food security.
Although our self-sufficiency is lower now, at about 64%, than it was at its peak in the late 1980s, we should recognise that then there was an incredibly distorting common agricultural policy. It was an era of grain mountains, butter mountains, wine lakes and so on. That had a distorting effect. Against historical standards, we are still producing far more of our food than we have done in the past. Indeed, in the 1930s just before the second world war, our food self-sufficiency was only about 30% to 35%, so things are not as bad as some would suggest. However, if the Government do what we want to do—produce more, sell more, export more and import less—over time I hope that our current self-sufficiency will improve.
My hon. Friend the Member for St Ives posed a number of questions. He raised the plight of cauliflower growers in Cornwall, many of whom are in my constituency. That situation is wholly driven by weather. The autumn has been warm and many of the varieties have come in simultaneously, which has caused particular problems. I agree with him about country of origin. The UK has been at the fore of arguing in the EU for mandatory country of origin labelling—successfully when it comes to beef, pork, poultry and other fresh meats. We have been arguing tenaciously for country of origin labelling to be mandatory on some dairy products. I have to say that the Commission is pushing back on that at the moment, but we will redouble our efforts to improve the voluntary code in that regard.
My hon. Friend also asked what supermarkets are doing. It is important to recognise that and to give credit where credit is due. For instance, Morrisons has its “Milk for Farmers” brand. Many people scoffed at that when it came out, but it has actually been very successful. It pays an extra 10p a litre to farmers and its sales have well exceeded expectations, which shows a consumer interest in helping British agriculture. The other thing is that many of the main supermarkets, including Sainsbury’s, Tesco, M&S and the Co-op all have aligned contracts with virtually all of their liquid milk suppliers. The farmers supplying some of those supermarkets with liquid milk in particular are still quite often getting somewhere in the region of 29p to 32p a litre. There is a wide spread of fortunes in the dairy industry currently and we should recognise that some supermarkets are supporting farming through aligned contracts. Tesco is experimenting with the idea of an aligned contract on cheese, although that is more difficult because it is more exposed to commodity markets. M&S has also experimented with aligned contracts in other sectors, such as lamb.
On the other questions asked by my hon. Friend the Member for St Ives, public sector procurement is an important issue. We set up the Bonfield report to set out a balanced scorecard so that more locally sourced food is bought by the public sector. He asked what we are doing to back British farming. We have our Great British Food campaign and we will be working with organisations such as the NFU. He is right to highlight the benefits of animal welfare that we have. In fact, World Animal Protection rates the UK as top in the whole world for farm animal welfare. When it comes to getting a fair price, we are doing things to try to improve risk management so that farmers can mitigate the price volatility that they experience.
The hon. Member for Strangford (Jim Shannon) mentioned the issues in Northern Ireland. There has been a particularly difficult situation with dairy in Northern Ireland and we have recognised that by arguing for an increased share of the support fund from the EU in November. My hon. Friend the Member for Shrewsbury and Atcham asked about the Groceries Code Adjudicator. That will be reviewed later this year by the Department for Business, Innovation and Skills. We have now put in place the ability for it to levy fines of up to 1% of turnover. In fact, looking at the survey data, the number of complaints about supermarkets has gone down slightly and Christine Tacon reports that more buyers and more suppliers to supermarkets are using the code in the way that they should.
The hon. Members from the Scottish National party mentioned convergence uplift. I am meeting NFU Scotland later this week. I have committed to reviewing that once everybody is on an area-based payment system, and we will continue to do that. Finally, a number of hon. Members, including the hon. Members for Berwickshire, Roxburgh and Selkirk (Calum Kerr) and for Great Grimsby (Melanie Onn) and my hon. Friend the Member for South East Cornwall, made a very important point about fisheries. I completely agree with that, although I do not share the analysis of my hon. Friend the Member for South East Cornwall that it is all bad news. We have seen big uplifts for plaice, haddock and cod this year, which shows the benefit of sustainable fishing.
In conclusion, we have had a very good debate in which lots of interesting points were raised. I again congratulate my hon. Friend the Member for St Ives on securing the debate.