HC Deb 17 July 1974 vol 877 cc455-65
The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

I should like to inform the House of the main decisions reached by the Council of Ministers (Agriculture) at its meeting of 15th–16th July in Brussels.

The main business before the Council was the difficult situation on the beef market throughout the Community. The Council agreed on a number of measures designed to strengthen the beef market and to assure reasonable returns to producers. Much the most important of these measures was the authorisation of the system I myself proposed for direct premia to be paid to beef producers on finished cattle. The purpose of these premia is to sustain producers' returns and to offer an incentive to them to market beef cattle in an orderly manner through the autumn and winter.

The maximum rates rise from £9.24 per head in August to £32.34 in February. Arrangements for March and April will be decided following a review in December. The cost will be borne by the member State from August to October, but thereafter Community funds will bear a proportion rising from 50 per cent. in November to 70 per cent. in February.

The premia will be subject to reduction or suspension only if market prices rise far enough to make this desirable. There is no automatic cut-off price. The Government intend to introduce this scheme with effect from 5th August and I shall announce full details as soon as possible.

The effect of these premia will be to assure beef producers of a reasonable return, and to offer a real incentive to phase marketings in such a way as to maintain stable market conditions. They amply fulfil the intention I announced to the House on 26th June of giving our beef producers an assurance that, over a period, their returns would not fall below about £18 per live hundredweight for clean cattle. If the industry responds to the assurance which these premia will provide, average returns over the period till March should substantially exceed this figure. Permanent intervention still remains on option, but these premia represent an alternative way—in my view, a far better one—of supporting the farmer whilst marketing the beef. In this sense they can fairly be said to represent a major change in the Community's beef régime and a new approach to this sector of common agricultural policy. They will sustain producers' returns by direct assistance while enabling consumers to buy beef at prices they can afford.

The Council also decided on special measures to encourage beef consumption in the Community. First, it noted the Commission's intention of authorising member countries to arrange for the purchase of frozen intervention beef, at reduced prices, by non-profit-making organisations. Secondly, it agreed to authorise member countries, at their discretion, to operate schemes under which those in receipt of social benefits could receive financial assistance towards the cost of buying fresh beef in the shops. The authorised rate of assistance is likely to be about £1 per head per month. Fifty per cent. of the cost would be borne by Community funds. The Government are considering whether to operate this scheme in the United Kingdom. Thirdly, the Council decided to make aid available from Community funds for campaigns to promote consumption of beef and other meat.

Finally, it was decided to suspend temporarily the issue of licences for imports from third countries, except for the quantities covered by the GATT levy-free quota, and to suspend temporary importation for processing and re-export. Licences which have already been issued will enable some beef imports to continue. The Council also noted the Commission's intention to put intervention beef into cans so as to provide a stockpile for use in future shortage and as food aid to the developing peoples of the world. We think that there are opportunities for much of this beef to be canned in the United Kingdom, and I shall be pursuing this with the industry.

I regard the outcome of the Council meeting as very satisfactory for both producers and consumers in this country. It is a good omen for the further negotiations we intend to carry out in this field.

Mr. Jopling

We are grateful to the right hon. Gentleman for coming to the House, so soon after his return from Brussels, to make this statement. We welcome what he said. It is a short-term measure, which is certainly a step in the right direction, to deal with a current crisis. I think that it is fair to point out that his announcement is a consequence of the Government's agreement on 26th June to the motion that was put down by the Opposition. Remembering the promise that the Minister made on 26th June, that returns will not drop below about £18 per live hundredweight for clean cattle, does he agree that the season is now approaching when the marketings of cattle are heavy and prices tend to be low? If prices were to drop in the next few months, does he agree that it would be possible for farmers, even after they have been paid these premia, to receive less than £18 per live hundredweight? If this happens, how will the right hon. Gentleman honour his promise of 26th June? Could the Minister tell us how much the premia will cost the Government? Will he give an assurance that the premia will apply to cattle sold both live and dead weight?

We note what the Minister said with regard to the consumer subsidy. Will he tell us when we can expect an announcement on that with regard to what our Government intend to do? Can he say how soon people will be able to buy cheap beef in the shops?

The right hon. Gentleman has been telling the media that this has been something of a triumph. Does he realise that the action he has taken today on this scale in the United Kingdom has become necessary only because of his total irresponsibility in removing all beef guarantees from the industry in March and leaving the industry with its confidence at an all-time low?

Mr. Peart

I am surprised that the hon. Member for Westmorland (Mr. Jopling) should blame me for all the ills of a policy which failed when the hon. Gentleman's right hon. Friends were in power. I have always believed that a policy of permanent intervention is good neither for the producer nor for the consumer. When I first went to Brussels I sought to change that. I believe that I was right. If the hon. Member examines what is happening in those countries in the Community who have permanent intervention, he will find out that the policy is not working there. That is why we seek to change it.

I believe that these premia will afford security. I hope that the hon. Member will not talk the industry down with scaremongering. I believe he should accept that most farmers will welcome this as a major step forward.

The hon. Member asked me about Exchequer costs. The total value of the new premia to producers could be up to £40 million direct to the individual farmers. An increasing proportion, rising to 70 per cent. in February, will be paid from Community funds. The direct cost to the Exchequer could be up to £23 million, or lower if market prices rise sufficiently to allow a reduction in the level of the premia.

I shall be having immediate consultations with my colleagues with regard to cheap beef. I am not now in a position to say that we have accepted the scheme. When we come to a decision I shall report to the House.

Mr. Hooson

The Minister said that this represented a major change in beef policy by the EEC and a new approach. Is that the Government's true view? Do they now find the agricultural policy of the Market to be much more acceptable? How can the Minister represent this arrangement as achieving a price of about £18 per cwt. when the price of fat heifers for example. in Lewes and Maidstone on Monday and Tuesday of this week was £12 per cwt.? A premium of £9 at auction represents for a 9-cwt. beast a premium of £1 per cwt., which will come nowhere near £18 per cwt. for cattle at this kind of price.

Mr. Peart

I believe that when the premia come into operation this will give confidence to the industry. I am sure that farmers, who have praised what I have decided, will accept this, as did the Scottish NFU. I am certain that other British farmers will all accept this. This measure has the approval of the farming community. It will give long-term security.

The hon. Member asked me about the common agricultural policy. This is only part of an improvement of a system in relation to livestock and beef production. The common agricultural policy is a policy which I believe should be changed. I do not like it. I still have my own views on that. I have not altered them in any way. I believe that my task in the renegotiations is to seek a change. I cannot say whether I shall be successful. I suspect that there are some people who do not even want me to be successful.

Mr. Jay

While we must all be thankful that the right hon. Gentleman has saved us from the worst horrors of the intervention system in beef, is it not extraordinary that he can do this only at the cost of a complete ban on imports from all third countries, which must exclude the cheaper beef which Australia is now both able and willing to send us? Is not the very existence of this ban a proof that there is cheaper food in the world outside the EEC which we could purchase if we were not members of this grotesque organisation?

Mr. Peart

There is no complete ban. Our obligations, and licences issued under the GATT arrangements will continue.

This suspension will last for only a short period. I did not support it. Nevertheless, it was part of an agreement. I accept that when one is negotiating sometimes one has to give and take. I did not support the measure, which is only a temporary one. Indeed it affects only a small amount of beef in relation to exports. I have the figures. Only 30,000 tons were imported in the first six months of this year, and only 16,000 tons were expected in the second half of the year. There are 10,000 GATT quota tons which will be available. Some people still have licences to import meat. Those licences will be fulfilled. I hope that this period will soon be over and that we shall recognise that many of our traditional suppliers should have access to our markets. I have said that with regard to other commodities. I have said it to the Community in relation to Australian sugar. I have also said it, above all, in relation to New Zealand dairy products. I have stated that in the House previously.

Mr. Charles Morrison

Everyone will support the statement of the right hon. Gentleman if it renews confidence in beef production. He must accept that it is he who undermined that confidence. Will he now answer the question? What will he do to live up to his undertaking to ensure a minimum price of £18 per cwt., if the market price is so low that the return to the farmer is less than £18 per cwt., even given the premium now announced?

Mr. Peart

I am surprised that the hon. Member should repeat the statement that I was responsible for the state of the industry. Of course I am not. The industry has faced high inflation. A series of crises in the dairy sector was not dealt with by the right hon. Gentleman, the former Minister, when in power. Immediately I came to office I went to Brussels. I demanded national aids, which the previous Government should have provided but did not. The permanent intervention system in Europe has not worked. They know it.

Mr. Arthur Lewis

Will the Minister confirm that he had no power to "sell out" in the original instance? It was all due to the action of the right hon. and learned Member for Hexham (Mr. Rippon).

With regard to the social benefits that may accrue, is my right hon. Friend aware that originally it was suggested that the old-age pensioners and those in social need should benefit? We would all accept that. Mention was also made of probably selling the meat to prisons. Can the Minister give us an assurance that prisoners will not come top of the list in the social priority classes?

Mr. Peart

I am not aware that that was said. There are many categories which could be helped. The scheme is optional. The Government have not made a decision. It is optional for any country to operate this scheme.

I have only just arrived from Brussels and on my return I made a speech to the Dairy Federation. I shall now consult my colleagues. When we have reached a conclusion a decision will have to be made. It may well be that we shall accept a scheme, maybe not. I cannot acept it at this stage. I take careful note of what my hon. Friend has said.

Mr. Monro

Would the Minister answer the earlier question whether this applies to auction marts as well as to deadweight sales?

Mr. Peart

The answer is, "Yes."

Mr. Monro

Would the Minister answer the question put by my hon. Friend the Member for Devizes (Mr. Morrison) concerning the total return? If the return is less than £18 per cwt., including the premium, what action will be taken? How will this affect the store sales for the hill and upland farmers in the autumn? This is a critical moment and is the only time when they can sell their beef. Will the Minister take action?

Mr. Peart

I will always look at any section of the industry in difficulties. The premia scheme which I have announced goes from August, September, October through to February, when we shall re-examine the proposals. The headage payment varies. For example, for a time it will be £9.24 per head, going right up, in February, to £32.34. That is a considerable amount of aid going direct to the livestock producer and I think that it is welcomed. After all, it will not only provide realistic aid by injecting capital into the right sections but above all it will give a measure of confidence, which is what affects the market.

Mr. Watt

Is the Minister aware that his statement will remove all confidence from the beef producers of this country?

Mr. Biffen

Which country?

Mr. Watt

My country, anyway. There is now absolutely no floor in the beef market. Will the Minister also answer my question which he did not answer last week—does the proposed premium apply to all finished cattle or only to clean cattle?

Mr. Peart

We are still discussing the actual definition with the management committee. Originally, we proposed all clean cattle, but it may be extended. We shall, of course, know this before we operate the scheme on 5th August. I am amazed that the hon. Gentleman should say that this scheme, which I know has been welcomed by the farming community, will undermine confidence. He must be living in cloud cuckoo land.

Mr. Watt

No—on a farm.

Mr. Roper

Will my right hon. Friend accept that many hon. Members throughout the House will welcome this important step towards a successful renegotiation of the common agricultural policy? Did the Council of Ministers adopt any regulations about the beef industry yesterday? If so, why was my right hon. Friend's Department unable to provide the European Secondary Legislation Committee with draft instruments of those regulations?

Mr. Peart

I was unaware of that. I was the first Minister to appear before the Scrutiny Committee with my staff. If there have been any difficulties, I shall be delighted to appear again and explain them.

Mr. Body

If we cut out the waffle about this direct premium scheme, does it not simply mean that the taxpayers of this country will be called upon to pay £40 million to subsidise the farmers to prevent that same beef from being eaten by taxpayers? As to the beef from Australia, how does the Minister square this new announcement with the very firm promise in the Labour Party's manifesto that low-cost producers outside Europe would continue to have access to our food market?

Mr. Peart

The total value could be up to £40 million, as I said, but part of this, rising to 70 per cent. in February, will be paid from Community funds. The direct cost to our Exchequer could be about £23 million, but these are rough figures. The main purpose of our renegotiations is a liberalisation of the CAP and the access of which the hon. Gentleman speaks. I spelt out in my last statement what we propose to do and what we did on certain commodities. In principle, we still hold to that.

Mr. Swain

Is my right hon. Friend aware that that part of his statement dealing with the disposal of the beef mountain created by intervention is based on a means test policy with which I hope no one on this side of the House would agree? Is he also aware that the earlier part of his statement referred to a temporary rather than a permanent system? How can the farmers plan for the long term on temporary negotiations which may or may not appear successful in the Council of Ministers?

Mr. Peart

My hon. Friend has a distinctive view about giving cheaper beef to sections of the Community and lower income groups. He may be right. In fact, we in this country operate a scheme for butter, with butter tokens—

Mr. Swain

We should give them the money so that they do not need tokens.

Mr. Peart

My hon. Friend may he right. There are different views on that. On the other hand, it is not easy for anyone to refuse to give meat at reduced prices to those groups who need it—

Mr. Swain

It only helps French farmers.

Mr. Peart

It is not just French farmers who are concerned but beef producers in other countries as well. We have only taken an option. We have not made a decision about this. It will be re-examined in February and March and will be linked with our major renegotiations. I want a longer-term plan for the industry.

Mr. Peter Mills

It would be churlish not to welcome this statement, but would the Minister not agree that the last five or six months have been times of tremendous uncertainty for beef farmers—for some of them, times of disaster—and that his responsibility is that he added to the problem by taking away the intervention system, so he is only paying back something he took away? In the interests of British agriculture, would he consider looking at agriculture in a special review to give the long-term assurances that are so desperately needed?

Mr. Peart

It was the previous Government who destroyed the beef guarantees—

Mr. Mills

The right hon. Gentleman added to the problem.

Mr. Peart

They adopted a system which did not work and is not working in the Community. I believe that what I have done is a far better approach and will offer greater security to the livestock producers.

Mr. Harry Ewing

My right hon. Friend said earlier that he did not support the ban on imports but accepted it nevertheless. Why did he accept it? Was it part of a package? Did he consider using the veto?

Mr. Peart

I believe that it would have been wrong to use the veto at that stage, when I was trying to negotiate a new beef structure. I did not support the ban, which is only temporary and will affect only small quantities. Licences have already been issued, including licences under our GATT obligations.

Mr. Rippon

I join in the congratulations to the right hon. Gentleman on his progress in the negotiations. But would he accept that the criticism of him has been directed to his having abandoned one policy—intervention—before having settled the long-term future? Will he confirm that what he has been negotiating is a continuing process, fully in accordance with the provisions of the Treaty of Accession? Third, does he agree with what the Prime Minister has always said, that we can only change the CAP from within? Does he agree that we can prevent the Community from dumping surpluses outside the Community at artificially low prices and thus disrupting world trade only because we are a member? Finally, would he answer the question put by so many hon. Members and which he has evaded—what will he do if it is necessary to ensure the minimum guarantee price, that he promised the House to provide, of £18 per live hundredweight?

Mr. Peart

I believe that what I have done will give that security and that the right hon. and learned Gentleman knows it. As for intervention, hon. Members must know that permanent intervention failed. Why did the previous Government not seek to end it and bring in a support system? They, including the right hon. and learned Gentleman, acquiesced in the CAP. I am surprised that he should raise the issue today. I want to change the CAP. My task, as representing a Labour Government, is to do that in the renegotiation. Also—

Mr. Rippon

The right hon. Gentleman represents the British Government.

Mr. Peart

Yes, the British Labour Government. I believe that what the right hon. and learned Gentleman negotiated, especially for New Zealand, was disastrous. Therefore, I have said that I want continued access for New Zealand products to our market. In the Treaty of Accession the right hon. and learned Gentleman curtailed their commodities, and he knows it.