Question: British meat and dairy exports have been hit by a worldwide ban following the first outbreak of foot and mouth disease in Britain for 20 years - what damage will this do to the UK farming industry ?

Ben Gill: This will be devastating for farmers but it is a necessary evil to control the spread of foot and mouth disease.

On top of all the problems we have had to surmount in the last few years, the impact is unthinkable. But it is in the interests of the whole of the British livestock industry that the spread of this disease is halted and there is simply no alternative. The sooner the outbreak is controlled, the sooner any restrictions can be lifted and that has to be the main priority now.

Question: Putting aside the impending crisis that will be caused by the outbreak of foot and mouth disease - we consistently hear that farming is in crisis. What exactly is the crisis at present?

Ben Gill: Well the crisis is simply one of lack of income. We've seen farm incomes collapse in the last five years by the order of £3 billion. We've seen farming incomes down on individual levels to, on average, as little as a few thousand pounds. We see the figures for Wales that came out earlier this week where the average income for Welsh farmers is a loss. In other words, in Wales, farmers' gross revenue was less than their total costs. Why has that happened? Several reasons. One - in the early 90s we had an agreement on world trade rules which gave easier access for products from around the world and made it harder to export. At the same time and as a consequence, the EU reduced our support prices, not all with full compensation. That's part of the picture.

The second reason is the value of sterling. We're part of the manufacturing sector of the economy severely affected by the value sterling. But actually we suffer even more acutely than most other parts of the manufacturing sector. Why do I say that? Because many manufacturers can at least offset some of the pressure by an ability to buy their inputs at a lower price from abroad, and their internal prices are not so rapidly forced down by imported products. We're in a different position because for the major commodities our prices are determined in euros. So we're in the euro economy without being in there. My beef prices are determined in euros. My milk price support levels are determined in euros, my cereal prices are determined in euros. My direct payments are determined in euros and then translated back to sterling. If I was receiving a thousand euros five years ago I would have been receiving £850. At one stage last year that had fallen from £850 to £570. And in that period inflation has gone up, so it hits us very hard. But even in the non-supported sector, such as horticulture, pigs and poultry, because of the rapid turnover of our goods - flowers from Holland, the need for fresh food to keep coming in- we're exposed to regular daily price changes. So if you go to New Covent Garden they will price British produce against the Dutch market prices. Daily. Hourly. It's a direct competitive interface that drives down domestic prices on a daily basis.

And the third dimension is the level of the regulatory base that we find in this country - regulation that can often be excessive and that has been gold- plated time and time again. Britain's Treasury insists on full cost recovery for all implementation charges. But what it classes as full costs tend to be very different to other countries with whom we have to compete. The Treasury in this country defines full cost as everything attached to an exercise, an activity, including all the over-heads, however remote they are. Other member states may only actually attach the variable cost as the full cost recovery and not put on the overheads. Add to that actual double standards, the additional safe guards put in, and we've seen our regulatory cost mount and mount enormously. All too often that additional cost has actually come out of the farm gate price. It's shoved prices down at the farm gate.

Question: So what effect have supermarkets had on the farming industry?

Ben Gill: It's perhaps not properly understood that the balance of power with the supermarkets in Britain is no different to anywhere else in Europe. We think we're the only country with big supermarkets. Yes, we have the big three who control about 60% but if you look elsewhere in Europe it can be 80% in two hands. You've got the Aldis and the Nettos in this country that are not British supermarkets - they're continental ones. You've got the big Carrefours that are just as big as Tesco, and there are many others- you've got GB, many other major supermarket groups. Now that doesn't detract from the fact that our supermarkets are probably the most efficient in the world: efficient in the distribution networks, efficient in the way they organise themselves. And what they have done is use that to their power, coupled with the fact at the same time we, as farmers in Britain, have a history of being very badly organised post and pre farm gate. So we do not have a matching size to counterbalance this and that's what others in Europe have. That's the major change that we believe we have to introduce.Imagine the confusion when farmers think they've got that as they did in the milk sector with the co-operative Milk Marque. And then the Monopolies and Mergers commission, as it was then, comes along and says we're going to break you up, break you up into three smaller ones. Where's the balance in power? We've been driven down. That's why we've taken that decision to judicial review because we believe the Competition Act exempts agricultural co-operatives from this sort of interference, as elsewhere in Europe, and because they are looking at the wrong parameters. So that's the key question - not what is the proportion of the industry in Britain, for the reasons I've illustrated, the products are traded throughout Europe - but what is the proportion within Europe? And if you compare milk in Denmark, 94% of Danish milk goes from one farmer owned co-operative. But they don't look at it that way. That's 6% EU milk, and that's why they let it go on, to the benefit of everybody.

Question: So what we need is major structural change so that the various sectors within farming can unite to increase their bargaining power?

Ben Gill: Yes.

You see the three lines on that. The top line is RPI, the second line is food price inflation, the third line is farm gate inflation. And that goes back to 1987. Now you can see here that the myth that food is dear is exploded immediately. Food over that period has consistently underscored price inflation. And you see that deflation has actually got more intense in recent years. If you look at the farm gate price you see that it consistently, significantly underscores food inflation. The point here where the farm price becomes closer to general inflation in the mid '90s coincided with the period when sterling was very weak. The pound fell as low as 2.18DM, whereas it's currently about 3.10DM- 3.05DM and has been as high as 3.40DM. This graph shows several interesting points: one, if farming had been properly structured post farmgate when sterling was weak then we should have had even better returns from the market place. Equally when sterling has been strong we shouldn't have had that big fall down in prices. But another factor causing this gap is that the regulatory burden has been shoved down to the farmer and not up to the consumer, as the politicians all too often say.

Question: Has that regulatory cost burden been caused by successive governments?

Ben Gill: Oh yes. Take one example, the Nitrates Directive. This goes back to 1980. The Nitrates Directive was introduced at a time when science suggested that 100 parts per million was right but there was no certainty. So they said right: precautionary 50 ppm. And what were the reasons for doing this? Two: they said nitrates in water can cause blue baby syndrome, and nitrates in water maybe carcinogenic. So what's the situation now? At every meeting I've had with scientists in the last year I've challenged someone to come forward with evidence that supports those two assertions today. Nobody's done so. Because the WHO has said blue baby syndrome is not an issue anymore. And the current research thinking is that nitrates, if anything, are beneficial in preventive actions against cancer. It confused nitrates with nitrites. And so we're hoodwinked into this legislation that is literally costing Europe billions of euros from water plants, to farmers and that cost has to come out of here.Question: What are these countries where there is a successful farming industry with less regulatory burden?

Ben Gill: Sweden, Finland, Denmark, Holland, Belgium, Luxembourg, Austria, Germany, France, Portugal, Spain, Italy, Greece and Ireland.

Question: So why hasn't MAFF tried to emulate the success stories of these countries ?

Ben Gill: You should actually be asking the DETR. The DETR is the key problem in this area due to environmental regulations. To give a specific example, the European Union agreed that there need to be pollution checks on big industry. It was called integrated pollution control. It was a system designed to monitor and protect against pollution incidents from major chemical factories like ICI and DOW. Then it was decided that it was appropriate that these controls should be extended to agriculture. They changed the name from IPC to IPPC. Enlightened. But it's just not appropriate to take a section of regulation that's designed for big industry, and try and apply it not just to an SME but to a micro SME. So what was the answer as the Government proposed to implement it 15 months ago? Visiting a farm near my own in North Yorkshire I saw what the proposed charges would mean to a pig unit that was relatively new. The inspection would take 10 days and the charge was going to be circa £1,400 a day - a £14,000 charge. As the farmer said to me, "I wouldn't mind if I had a bad record of polluting, but I have not had one pollution incident here. When they come and check from time to time they are perfectly happy". And what were other member states doing? Not that in any way or form. Not full cost recovery. We attacked this last year. The government recognised part of the problem and deferred introducing it early - they were not going to introduce it in 2007, when the regulation said, but this year. And the Environment Agency, faced with the need to answer why they were going to have to charge twice as much as SEPA, the Scottish Environment Protection Agency, have significantly reduced the charge. But we're still wrong because we're still going to be charged more than others in Europe with whom we have to compete.

Take another one - the climate change levy. Well, we all know about climate change. We are worried about it, we're at the pit face. My farm's been more underwater in the last 6 months than in the last 16 years. Crops destroyed, damage, problems all the way around. But can anybody honestly think that we will solve climate change just by our little selves here in the UK? Ask yourselves what my competitors are doing. Take horticulture. Who are the major competitors? Spain and Portugal. What are you doing in Spain? Que? Climate change levy? Never heard of it. Portugal? The same response. Holland? Ah yes, we're going to have one but it's tax neutral so there's a nil charge to horticulturists. Then you begin to see the nub of the problem. Even with the 50% rebate that we've managed to negotiate for horticulturists, which is now in a mess because government, the DETR and the Treasury went about it in the wrong way and it's been deemed as a state aid, we will be uncompetitive. And just think a little bit further. The response of the Government and the Treasury was "ah, but you shouldn't worry because, for the country as a whole, the charge is tax neutral. This is why it's a good tax because we're giving a rebate off national insurance, to equally match what we're taking in climate change levy". Ah yes. So that means big employers will benefit and those with low employment don't. "Yes". So who's the big employer in the country that benefits? Do you know who that is? Do you know who the only major beneficiary in this country is? The government. The Treasury benefits because it's paying less on national insurance. And what they have created is a monster that requires us as a Trade Association to go through complex form filling, to check on all our members, to act as tax collectors. It is immoral. And we're the only country to have it.

Question: Has this Government introduced more red tape than previous Governments?

Ben Gill: In certain departments, yes.

Question: Which departments?

Ben Gill: The Treasury and the DETR, for example, although we have seen some limited change. The regulatory reviews that were initiated 18 months ago have delivered a number of improvements in the areas of work that they covered. But as fast as we resolve one issue, it seems that another two surface. Current examples are Climate Change Levy; Integrated Protection & Pollution Controls; pesticide tax; rating issues; and the roll of local planning officers and highways authorities. In MAFF, some things have moved on. For example until last year, if a UK merchant wanted to enter a lot of grain (say 5,000 tonnes) into intervention, he would have to pay around £5,000 in a non returnable deposit to cover testing charges, whereas in France the comparable charge was only £120. That has now been equalised.

Question: How do you view the government's handling of the countryside?

Ben Gill: I believe the DETR does not understand the countryside in a properly comprehensive way.

Question: Why not? Is it too urban-orientated?

Ben Gill: They react to the general public feeling that perceives the countryside as - "a frozen Constable landscape." They perceive it as something that just happens by chance; that everyone and everything is in beautiful harmony with one another. And they don't realise that the environment, the countryside, is a very cruel, dynamic system of biodiversity, with destructive food chains. If you've never lived in the countryside and been woken in the middle of the night to hear the screams of one animal killing another animal, you don't know what I'm talking about. And I don't believe people in the DETR understand that concept. They don't understand that agriculture makes the countryside. They don't understand that farmers are the people who have created the beauty there. They are too easily hood-winked by single issue pressure groups who consistently highlight mistakes and half truths while ignoring the positive aspects. I've admitted many times and many times publicly that we have made mistakes. But we are not alone in that. And you compare the balance of wrong and right in the countryside with the balance of wrong and right in what we've done in inner cities, in urban problems, and I think we've got a good track record. Yes we must always seek to improve, but I think we have achieved a lot. But to improve that more you need to understand the dynamics rather than be prescriptive about what goes on from a totally detached viewpoint.

Question: So what exactly could the government do, or should be doing, to first of all understand farming and then trying to get farming out of the crisis that it's in?

Ben Gill: They need to do two things. Firstly, they should adopt a more adult approach to regulation by encouraging best practice by inducement and penalising those who consistently abuse severely. We need to move away from the current approach of assuming that everyone is guilty until they can prove their innocence to a more mature carrot and stick control procedure. They need to work with industry to solve the problems, not against them.

Secondly, they need to develop that approach to the whole way that Government looks after agriculture and food production. The attitude of Government must change to that found to work effectively elsewhere where the aim of the sponsoring Government department is to promote the industry for which it is responsible, not to regulate it. With the separation away from MAFF of the Food Standards Agency this should be possible.

Question: Do you have a good working relationship with Nick Brown? Do you have confidence in him?

Ben Gill: Yes.

Question: Will you be attending the countryside march?

Ben Gill: Yes. The Liberty and Livelihood March.

Question: The government want to have more specialist schools. Would you see one idea as a specialist farming school?

Ben Gill: We have around the country a shrinking network of agricultural colleges and horticultural colleges. We need to maintain that technical training because farming is changing just as much as any other industry. The use of laptop technology, the use of IT, the concept of a farmer having a mobile phones would have seemed alien as recently as five years ago. In no time, he'll not only have a mobile phone strapped to his belt, he'll have data capture equipment as well recording information as he walks around his farm. He will be able to detail weed and pest problems in his arable crops and list any notes on his livestock, all of which can then be automatically entered into his computer records on return to his office. Using the latest software he will be able to decide optimal pesticide application rates.

Question: So is there sufficient IT investment in farming at present?

Question: You didn't allow Tim Yeo to speak at your recent conference. Some people say you are trying to position yourself closer to the Government. What do you say to that?

Ben Gill: Well, I would say that's rather peculiar because he addressed the conference and answered questions.

Question: So why did you change your mind?

Ben Gill: I didn't change my mind. He had a letter in June of last year which he replied to at the time, accepting.

Question: Why was he so upset then?

Ben Gill: You must ask him that. Let's put the whole thing in context. He focused on the second day rather that the first day. On the second day, traditionally, for the last 15 years or so we have always invited the Minister of Agriculture, of whichever party has been in power. Second point. Last year I asked the Prime Minister to address the conference. Shortly before the conference the leader of the Opposition approached us saying he would like to come. I said it's not very easy, we have a timetable, would you like to come next year, and give a balance then? He preferred to speak last year. Now I was then left then with the Liberals for whom it was impossible to find a space last year. So to maintain the balance, and after discussion with his office, I invited Charles Kennedy to speak this year.

Question: Which of the political parties has come up with the best plan so far to help farming?

Ben Gill: In actual fact the difference in the real fundamental policies on the Common Agricultural Policy between the Conservative and Labour parties is absolutely minimal. Where there is a difference that affects agriculture, is outside direct agriculture policy - the attitude to Europe. At the moment, the Conservatives tend to be more dominated by Euro-scepticism, whereas the Labour Party and the Liberals are much more pro-European in their approach. I think there is a lot of mischief being put about on both sides of the argument. There are undoubtedly problems emanating from Brussels bureaucracy; but there are problems from Whitehall bureaucracy as well. I see no more sense in wanting to leave Europe and pass control back to the UK than I do in wanting to leave England and pass control back to my region of Yorkshire. It is without dispute that agriculture is heavily focused on Europe because our support systems are common ones throughout Europe. We're heavily dependent on them and on a common approach in that marketplace. We export a lot of our products into Europe. In the sheep sector, for example, a third of our production goes into Europe, principally France. We export several million tonnes of wheat a year into Europe. We could do much more and we need to do much more in ensuring that our voice is fully heard in the European context. We need to have confidence in the strength of our arguments and have that vital interface in that marketplace.

Question: So we're not really having really inadequate debate about Europe so far?

Ben Gill: I think that some sections of the media have led the debate by a single-handed approach and its bias has been quite incredible. Let me give you the quote of a discussion panel on the BBC a couple of years ago when one of the Sunday papers did a review of who they thought were the most powerful people in the country. At number two was Mr Rupert Murdoch. Listening to a discussion on the radio the following day, the panel was asked a question: "If Rupert Murdoch had been for Europe and for the Euro, in the panel's opinion, what would be our position in Britain towards those two issues?" The unanimous decision of the panel, which was not heavily biased one way or the other, was that rather than being outside the Euro at the start we would have been in the Euro from day one. I do worry if that really is the situation - that public opinion is controlled by one individual to such an extent. Even more recently I heard a political editor of one of our major papers state on Sunday television that arguing for Europe was not going to be easy for the Government as all the major nationals were against it!

Question: Would you have liked us to be in the Euro from day one?

Ben Gill: I think we need to have had the full debate which has not taken place yet. Our position is very clear, that the agricultural arguments for joining the Euro are overpowering. The broader economic arguments are different. There are risks in going into the Euro, undoubtedly. There are also risks in staying out. Many have identified the risks from staying out but have been keen to point out the risks of going in. It's not enough to say that the City's doing well now outside the Euro. The question is: would the City have done better or worse if we'd been in the Euro? And that's the answer that needs to be given.

Question: Would farming have done better if we'd been in the Euro right from the start?

Ben Gill: It depends on the rate. We wouldn't have done better at the rate of 57p to the Euro. So you might ask what rate would we accept as fair? Look at where the punt is, they have a thriving economy there with the punt at 78.75p to the Euro. We would logically be in somewhere around that, or marginally stronger than that, say 75p. From the agricultural perspective the case for joining the Euro is very clear. Agriculture is, more than any other industry, a long term business. It has difficulty in withstanding the pressures of volatility in the currency markets. Such volatility is likely to become greater as we become exposed more and more to world market forces. But the more broad-based economic and fiscal arguments have still to be made, and the debate on those had.