§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
§ 11.4 a.m.
§ Mr. Nigel Spearing (Newham, South)
On a point of order, Mr. Speaker. It may be within your recollection that four of the documents that are down for discussion this morning were put on the Order Paper on 25th July. On that occasion the motion was that the House should take note of the documents, and two amendments were tabled. Will you please now rule that because of the fact we are now discussing the documents on a motion for the Adjournment rather than on a specified motion which would be amendable, the powers and opportunities of this House have thereby been diminished? I think this is generally known to hon. Members and would be generally accepted, but on the matter of the powers of the House on these important motions, would you confirm that fact?
§ Mr. Speaker
The hon. Member did not give me notice of his point of order, so I will answer as best I can straight away. It would appear to me that the opportunity for discussion on the Adjournment is very wide indeed—in fact it is limitless—but it is quite true that amendments cannot be moved.
§ Mr. Douglas Jay (Battersea, North)
Further to that point of order, Mr. Speaker. Although the scope of debate can, of course, be wider under these circumstances, it is very unsatisfactory that the House does not have the opportunity to express an opinion on the important matter of European secondary legislation by taking a vote if necessary.
§ 11.6 a.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)
I should like to begin by saying how much I welcome this chance to have a longer than usual debate today on a number of Community proposals relating to agriculture and fisheries which the Scrutiny Committee has recommended should be considered by the House. I congratulate the right hon. Member for Knutsford (Mr. Davies) and his colleagues on the hard work they put into scrutinising Community measures. I hope he will not mind my saying that, and I hope I have not embarrassed him.
It is true, of course, that we have a larger than usual number of proposals before us. In part, this reflects the extent to which agricultural questions arise within the Community, but it also demonstrates very effectively the considerable task undertaken on behalf of the House by the Scrutiny Committee, to which I am happy to pay tribute. The Committee's substantial report on the stocktaking of the common agricultural policy is a particularly good example of this, and, by drawing attention to most of the major points in the Commission's report, the Committee has provided a most valuable basis for our debate today.
This debate is an important one in two respects. First, it provides us with our main chance so far to discuss the stocktaking report which is clearly the key document before us. Equally, most of the other items we are concerned with today are directly affected in one way or another by the stocktaking exercise, and it seems to me entirely right that we should consider them all together. Indeed, the Scrutiny Committee specifically recommended that we should do this in the case of the green pound and the documents on the milk products sector.
Secondly, although the debate is now being held rather later than we originally had in mind, it comes, in my view, at just the right moment. As the House will know, the Council of Agriculture Ministers is to have a special meeting on 29th and 30th October devoted solely to the stocktaking. It will therefore be an enormous advantage to me 1721 to have heard today the views of hon. Members, and I shall be greatly interested in what is said on this subject during the debate.
Having said that, I think we can all agree that the Commission's report is a document of considerable significance, both in its analysis of the operation of the CAP so far and in the possibilities it holds for improvements. The Government's general approach to it has been set out on a number of occasions, but perhaps I can highlight what seem to me to be the most important considerations, some of which I would also like to come back to when I deal with the Scrutiny Committee's report.
First, there is the fundamental need to ensure that, while providing efficient producers with a reasonable assurance, the CAP avoids imposing excessive burdens on either consumers or national or Community budgets. In particular, I welcome the Commission's recognition that the costly accumulation of wasteful surpluses must be discouraged. I also welcome its acknowledgement that support prices must be set at levels which take account of the needs of modern and efficient farms and of the market situation for particular commodities. These are points that I have already stressed during preliminary discussion in the Council in the spring, and which I shall continue to press.
A second consideration to which I attach importance is that there should not be undue reliance on end price support alone. This can cause problems and conflicts. I have repeatedly made clear that we see a rôle for direct aids, including, where appropriate, those granted nationally. The CAP needs to be made increasingly flexible, so that it can deal more effectively with differing national and regional problems—[Hon. Members: "Hear, hear."] I hope that the hon. Members who are cheering now will realise that the battle on the Market is over, that we are in, and that we must therefore make our influence felt in this direction—
§ Mr. Norman Buchan (Renfrewshire, West) rose—
§ Mr. Buchan
My right hon. Friend did indeed ask me to be here. Will he explain what he meant when he said that the battle was over? Does he mean that we have taken a decision to enter, or does he mean that we shall surrender some of our traditional agricultural policy to the CAP, or does he mean that we shall continue to fight for changes in that policy?
§ Mr. Peart
I hope that my hon. Friend will not be too pedantic. He knows the result of the referendum. That was the will of the British people. As good democrats, my hon. Friends must recognise that this is the British position. We are now in the Community and we must play our part.
I was referring to the need for increased flexibility in the CAP. At the same time, we must clearly avoid significant distortions of competition.
Thirdly, the Commission's report contains welcome recognition that, while producer interests are bound to be a central consideration, the interests of consumers must also be taken fully into account. In particular, it says that, when surpluses arise—and occasional surpluses are almost inevitable under any agricultural support policy—consumers within the EEC should be given priority in their disposal. This is an aspect of the report which I believe to be right and for which I believe we, as a Government, can claim a good deal of the credit. I also think that we can claim credit for another welcome feature; namely, that the policies adopted by the Community must be seen in their international context. This is something to which we attach particular importance.
So much for the broad outlines of the Commission's report. I should now like to turn in rather more detail to some of the specific conclusions which the Scrutiny Committee has drawn in its report—though I shall reserve my main comments on the milk sector and the green pound for later, when I discuss the specific documents relating to them.
First, there is the question of Community self-sufficiency. I would agree with the Committee that too extreme a policy would lead to unnecessary costs. The Government have already made their views clear on expansion of United Kingdom agricultural production. This policy is based on an assessment of how 1723 our national resources can be most efficiently and economically deployed. Such considerations are equally important for the Community as a whole. We must also be aware of the needs and interests of countries outside the EEC, especially in the developing world. I have already mentioned the importance that we attach to this, and I shall ensure that these considerations are kept fully in mind in Brussels.
Secondly, there is the responsibility of producers. Generally, we support the principle of producer co-responsibility for structural surpluses. How this principle should be applied is likely to vary from commodity to commodity, but, basically, it must be the marginal, relatively inefficient production which is mainly discouraged in this way. That surely is right. At the same time, I am quite clear that action to curb overproduction in the Community, must not bear inequitably on producers here. For example, we have structural and climatic advantages in dairying, so an increase in our producers' share of Community production would be entirely consistent with the basic principles of the CAP.
The Committee has drawn attention to this point in general terms in its reference to possible conflict between British and Community interests, and I shall naturally have it very much in mind in the forthcoming discussions.
The Committee also refers to intervention buying. Our attitude to this is well known. Intervention buying can have a rôle to play in assuring security of supply—I accept that—but accumulating mountains or lakes of unwanted produce is just not sensible. The new beef arrangements, which we secured earlier this year, allow intervention buying to play its proper role, as a fall-back mechanism putting a floor in the market. I do not need to go into details about the fixed and variable premium system which I negotiated. When the Community beef régime is reviewed prior to the next marketing year, we shall certainly not accept any arrangements which are not at least as good as the current régime.
I have already touched briefly on consumer interests, in respect of which I have said that we should like to see, wherever possible, Community consumers 1724 being given priority in receiving the benefit of surpluses when these arise and have to be disposed of.
Of course, it is important, as the Committee points out, that the disposal of intervention stocks on the Community market should not undermine that market. On the other hand, in some cases the disposal of stocks might help to even out what might otherwise be an excessive increase in prices, due to shortage of supply. At the same time, we do not wish to see consumer subsidies used as an alternative to a proper and efficient support price policy. While ensuring that producer interests are properly respected, my concern will be to see that the progress made towards greater recognition of consumer needs is not eroded.
The Committee's final reference is to the need to relate prices to modern and efficient farms. As I have already said, we have been pressing this for some time and progress along these lines has already been made. To that extent, I think the Committee has been a little hard on the Commission. The stocktaking report recognises the point. However, I accept that it is only by the effective linking of support prices to the needs of modern and efficient farms and to the needs of the market that a reasonable market equilibrium will come about. I cannot pretend that this is an easy task; nor does the Commission.
The Committee points to the socioeconomic factors in the equation. Clearly one cannot operate simply through market forces. There are regional and social considerations to be taken into account. It is important, however, not to distort support policies so that, by providing for all producers the level of support required by the less efficient, one calls forth a level of production far exceeding what can be marketed efficiently. I am sure that all hon. Members connected with the industry will agree with this principle.
It is here that it is important to note the Commission's own recognition of the need for structural, regional and social policies. I can give an example. The recently agreed less-favoured-areas directive is a major development, and we also support the Commission in wanting to see all member States actively implementing the structural directives originally agreed 1725 in 1972. At the same time, I shall be concerned to ensure that any new EEC initiatives in the structural field are truly cost effective.
Finally, although I shall say more about the green pound when I come to the unnumbered document dealing with the July change in the representative rate, I think it might be convenient to mention briefly the Commission's suggestion that there should be rules and procedures for changing the size of monetary compensatory amounts. This idea raises many difficulties. Changing the representative rate of any member State inevitably touches on difficult and sensitive areas of policy, and I do not at this stage see how these can be adequately catered for by automatic rules. We, as a Government, naturally keep the sterling representative rate under review, but I am doubtful about the feasibility of going further than this.
These, then, are the main points arising on the Commission's stocktaking document, and on the Scrutiny Committee's report. Our aim now will be to translate these as far as possible into specific improvements. This is bound to be a gradual process, though, clearly, we shall have a major opportunity to press our views in the 1976–77 price fixing discussions. Both in that context and more generally, I shall of course continue to keep the House closely informed of developments.
I made a reference earlier to the milk sector. One point which stands out in the stocktaking report is the importance of this sector. I would, therefore, like now to turn to the two documents which deal specifically with it, notably in relation to the surpluses which have arisen, particularly of skimmed milk powder. The first is R/1944/75, which contains an analysis by the Commission of the current situation in the Community's milk products market, together with a list of possible measures for dealing with surpluses. Associated with it is R/1991/75, which puts forward substantive proposals for action by the Council.
The market for milk products is the one in the Community which has been most continuously in surplus, although even here there have been periods of shortage. The best way of dealing with this situation is through a sensible policy 1726 on prices, which will discourage production by the less efficient producers while allowing the more efficient to make their full contribution to Community supplies. This must be the main theme of our approach to the milk problem.
§ Mr. Hamish Watt (Banff)
Does the right hon. Gentleman agree that the best way to get rid of the surplus milk in Europe is to encourage people to drink the stuff?
§ Mr. Peart
I agree. There is no reason why Frenchmen should not take their brandy in milk. It is a very good drink. I had two last night, in another place. I note that the hon. Gentleman has a photograph of me drinking milk. I drink a lot of milk—believe it or not.
There is good reason for taking a careful look at the intervention mechanisms to see whether they can be improved. From this point of view I have some sympathy with the Commission's proposal on milk in the stocktaking document. There might well be some advantages in the introduction of seasonal pricing in the Community. The milk marketing boards already operate a seasonal scale here in the United Kingdom. There might also be something to be said for relaxing the rigidity of the intervention system. I shall be interested to hear the views of the House on this point.
At the same time, I am sure that we would all agree that the Commission's proposal is not suitable in its present form, because price abatements in times of surplus would be concentrated in the winter months. Winter production is more important in the United Kingdom than in other member States, largely because of the need to meet a large liquid demand in full. We clearly could not accept a system which was biased against United Kingdom interests.
In its documents dealing specifically with the milk situation, the Commission has made a number of tentative suggestions and five specific proposals. The Commission does not claim that its proposals would allow the rundown of existing stocks of skimmed milk powder within the foreseeable future from the present figure of over 1 million tonnes to a more reasonable level. We shall have to look more closely at this issue 1727 and, in all probability, come to some hard decisions about it.
Of the proposals in document R/1991/75, the Council of Ministers adopted in July the amendments to the arrangements for selling skimmed milk powder on favourable terms for developing countries. I am glad to report that there has, as a result, been a revival of interest in the scheme, although the quantities sold under it still remain small. This was a useful step. The Council also agreed to introduce a temporary private storage aid for skimmed milk powder, which, in the event, is financing the storage of about 53,000 tonnes.
These are useful measures. I do not know why my right hon. Friend the Member for Battersea, North (Mr. Jay) is laughing. I can hear him chortling. This is a serious matter within the developing world, and my right hon. Friend should not dismiss this.
Neither this aid nor the suspension of the inward processing arrangements for skimmed milk powder—the third measure adopted by the Council in July—will alone be sufficient to solve the problem.
§ Mr. Frank Hooley (Sheffield, Heeley)
My right hon. Friend seems to take exception to the fact that we regard this as a matter for comment. Does he not agree that it is a serious matter that 1 million tonnes of valuable food should be stacked away unused when there are millions of starving people in the world?
§ Mr. Peart
That is precisely what I am saying. That is why I say that this is not a laughing matter but a serious problem, with which we have to deal. We have recommended a step forward in this direction. That has not solved the main problem, and we have to solve it. I hope that I have the support of my hon. Friends in working out a better solution for Europe.
The remaining proposals are still under active consideration. The Commission has revised its proposal on the sale of part of the intervention stocks of powder for use in animal feed, in order to allow sale on the domestic market as well as for export. I welcome this change, in principle. Subject to agreement on the detailed arrangements, I shall be prepared 1728 to accept this measure, and I hope that the House will agree.
On the other hand, I am very doubtful about the suggested suspension of the inward processing arrangements for butter, where other measures are open which would cause less disruption to trade. The other proposal—for the exclusive use of milk fat and protein in milk products—would cause considerable difficulties. It is doubtful whether such a measure would, in fact, promote the consumption of milk products; it might, indeed, have a perverse effect, by encouraging the use of substitutes. Questions of principle are also involved, since proposals on these lines could restrict consumer choice. This is, therefore, a measure which I shall be subjecting to close scrutiny when discussions on it resume in Brussels.
The Commission is continuing its examination of the other possibilities which it put forward tentatively, but I understand that a number of practical problems have been encountered. We shall, of course, take part in the study of these and other solutions, and I hope that in due course I shall be able to report an improved situation to the House.
I now come to the document R/1831/75 on feed wheat, where I should perhaps begin by saying something about the discussion which has already taken place in the Council at its meeting on 21st/22nd July. As the Committee points out in its report, the document in question comprises a memorandum from the Commission highlighting what it sees as the consequences arising from the increased production of high yielding wheats in the Community. This had attached to it a draft Council resolution which, in particular, sought the Council's agreement that from the 1976–77 marketing year onwards wheats unsuitable for bread making should be supported at price levels applicable to feed grains.
In the event, it was generally agreed in the Council that no policy decision could be taken then on future price arrangements for wheat. Equally, there was the feeling that some warning should be given to growers that they should not expect to continue to receive milling prices for feed wheat. For our part, we made it clear that we would 1729 not wish to enter into any substantive commitment in advance of an opportunity for the matter to be debated in the House.
In the light of the discussion, the Commission withdrew the resolution that is annexed to the Communication before us. Instead, the Council adopted a resolution whichinvited the Commission to submit to it no later than its price proposals for the 1976–77 marketing year, appropriate measures to deal with all the problems raised by the development of these varieties unsuitable for making bread, with due regard to practical management and control".The Council alsoinvited those interested to take into account the fact that from the next price-fixing operation the prices will be fixed within the Community organisation in such a way that producers of wheat not suitable for making bread may not expect a return higher than the equivalent feed grain valueThis was in a recommendation which has no binding force. We agreed the resolution because the issue was left entirely open pending the submission of detailed proposals by the Commission, which would, of course, come before the Scrutiny Committee in the normal way.
In the circumstances I would not want to take time out of this important debate by speculating upon the possibilities which may be open to the Commission—though, equally, I should be happy to hear any views which hon. Members may wish to put forward now on the issues at stake. What I will say is, first, that whilst we do not share the Commission's fears that Community production of the bread-making varieties of wheat is at risk, we believe the Commission was right to be concerned at the high cost of supporting feed wheat at a price much above other prices for feed grains.
Secondly, in forming our own view on whatever proposals are eventually put forward, we shall wish to apply the same criteria as those which we shall be applying to the stocktaking exercise. In other words, we shall want to consider how any proposals affect our own consumers; the costs of our essential imports; the expansion of our own industry; the Community's budget, and the significant surpluses of wheat that normally arise in the Community. Also, if there were to be a system under which the intervention price for consignments 1730 of wheat which display good bread-making characteristics was higher than that for other wheats—I stress the word "if"—there would clearly need to be some simple and absolutely certain method of distinguishing between the two kinds of wheat. At the moment, I believe that such a test still has to be found.
§ Mr. John Davies (Knutsford)
I fully follow the point that the right hon. Gentleman is making, but I hope he will take note of the fact that the principle of accepting a broad statement of intent by the Council to the Commission instead of the more detailed proposals that the Commission puts forward could, if expanded into many other spheres, constitute an awkward precedent from the point of view of this House. I hope that the right hon. Gentleman will take account of what I say.
§ Mr. Peart
I think that the right hon. Gentleman has made a valid point. I have said that there are some technical matters which still have to be worked out. I accept that a bad precedent could be created.
I come now to the unnumbered document dealing with the change in the representative rate for the pound, announced last July. To some extent this has been overtaken by the further change in the green pound which I announced on Wednesday. The House will recall that I made clear in July that I was ready to consider further adjustment, should this be necessary. The two changes together have reduced the green pound by almost 11 per cent. In consequence, support prices for United Kingdom producers in sterling terms will be about 12 per cent. above the level of three months ago. In particular, the guaranteed price for milk for the whole of 1975–76 will now be over 40 per cent. above the level set at the 1974 annual review. The effective guarantee over the winter months will be over 40p a gallon.
Whatever arguments may be put forward, I believe that these changes make a substantial improvement in producers' support prices and returns. They will also have the effect of causing increases in some retail prices. The overall effect of these increases is, however, quite small, and it is worth stressing that the application of the latest change to wheat has been deferred until July 1976, which 1731 will mean that bread will not be affected at all until later next year.
We have to recognise that unless our farmers have adequate returns they will not produce the food which we need. I believe that what we have done in these two green pound changes is right, in the interests both of producers and of consumers.
Lastly, on the agricultural items before us today, I should mention R/1947/75, in which the Commission has updated its assessment of the short- and medium-term outlook for agriculture in the Community. I do not intend to dwell on this, save to say that it is useful to have this mid-term assessment. The Commission's 1975 Annual Report should, of course, be available in the next two months.
I now turn to the two remaining documents which both concern the operation of the common fisheries policy. I propose to deal quite briefly with R/2193/74. This is an essentially factual report on the operation of the market support system for the fisheries sector within the Community, which the House will know has relied, in practice, upon voluntary action by producers themselves through producers' organisations.
The report, which is the first of its kind for this sector, in fact covers only the initial period in the operation of the system until the beginning of 1974. It thus seeks merely to draw some tentative conclusions from the experience gained so far, but otherwise gives rise to no immediate action.
Its main point is that the formation of producers' organisations can be instrumental in achieving the objectives of the treaty but that their prime objective of rationalising production, and particularly marketing, will be achieved only if they co-ordinate their landings better, pay more attention to market needs, and cooperate more fully with merchants and processors. We now have six producer organisations in the United Kingdom, with the possibility of another one being set up later in Northern Ireland.
Speaking personally, I regard this as an encouraging development and an important step towards more organised and orderly marketing, which can only 1732 be an advantage to fishermen and those who buy their fish.
The other fisheries document before us is R/2713/73, on the harmonisation of State aids. This is naturally of much more immediate interest, in that it would, if enacted as a regulation, clearly have a direct bearing on the various grants which we make available to our own industry. In particular, I have in mind such things as grants and loans for the construction of fishing vessels, grants for harbour works, and loans for processing plants.
The basic aim behind the Commission's proposal is to ensure that all the varying national aids given by member States comply with certain broad rules aimed at preventing the distortion of competition within the Community. As a broad objective, I have no quarrel with that. Indeed, one distinct advantage would be that aids which conformed with the rules in question would automatically be regarded as consistent with Community objectives and thus secure from the possibility of challenge. The crucial thing, of course, is to make sure that the rules themselves are reasonable and sensible, and here I do have some reservations about the proposals before us.
First, although the Commission would not require us to give aids at any particular level for any particular purpose, it would impose certain maximum rates. Perhaps the most important item for us is the one which would limit the basic aid for vessel construction to 15 per cent. or 18 per cent. in the case of multipurpose vessels, with an option to increase this by five percentage points if the applicant is a member of a producer organisation. I need only say that in so far as our present practice is a single rate of 25 per cent., the difficulties to which the Commission proposal could give rise are evident.
My aim will be to ensure that our interest here is safeguarded and that we can continue to give the appropriate level of assistance to our fleet. Another significant point is that the Commission takes the view that the ceiling should apply to all aids benefiting fisheries. Our approach has been that it should apply to all aids specifically directed to the fishing industry, but that it will also be necessary to accommodate more general or regional measures from which the fishing 1733 industry, like other sectors, could benefit. We shall continue to press this approach.
I am afraid that this has been a long speech, but with so many complex matters to discuss this was inevitable. I hope that what I have said has been useful in setting out the background to this important debate, and I look forward to hearing the views of hon. Members. These will be of great value to me when the matters we are discussing come before the Council in Brussels.
§ 11.38 a.m.
§ Mr. Michael Jopling (Westmorland)
I thank the Minister for his speech. I entirely forgive him for the perhaps unusually long period that he has taken to deliver it. I believe that it was a useful speech in helping us to understand how the Government's attitude is emerging as regards agricultural policy and fishing policy. I join the right hon. Gentleman in paying tribute to my right hon. Friend the Member for Knutsford (Mr. Davies) and the members of his Committee for all the work that they have done and do on this and other matters in scrutinising the secondary legislation that comes from the Community.
I very much welcome the opportunity to have this debate. It is a pity that we could not have had it before the Summer Recess. It gives us the opportunity to consider the wider implications of the common agricultural policy and our own domestic agricultural policy. I hope that we shall be able to concentrate a good deal on the broader aspects in future without concerning ourselves only with the factors which we all know about and are so important in the crisis in which the agricultural industry finds itself.
Over the years the common agricultural policy has been much maligned in this country. It was much maligned before we joined the Community. Many people tend to forget that it was originally designed for the six original member nations and that it was never tailor-made in the first place to include the interests of this country. There were basic unfairnesses within it at the beginning for this country. But we were able to iron very many, if not most, of them out before we joined the Community.
The Minister succeeded in the renegotiations, in which he took part, in ironing out a number of the other unfairnesses 1734 which existed. My right hon. Friend the Member for Grantham (Mr. Godber), as Minister, was in the process of ironing them out without a renegotiation. I am sure that we now hear far fewer phrases such "as the grotesque unfairness of the CAP" than we used to hear.
Fair-minded people both inside and outside the House now agree that this scheme takes the interests of this country much more to heart than most of us thought possible some years ago. It has been a remarkable experiment in international co-operation. It is true that it was too inflexible in the early years, but certainly the changes that occurred some years ago in the parity of the German and French currencies, which created the beginning of the monetary compensation amounts, led to flexibility creeping in. The agricultural policy has, therefore, been both the pioneer and the Aunt Sally of European economic regimes. It will be the pioneer of such future regimes as may be set up. I am sure that we shall build on and value the experiences which we have gained from the common agricultural policy.
Returning to agriculture, we agree with what the Minister said to the Select Committee—namely, that the aims of the CAP are similar to those of our legislation since the war. But, at the same lime, it is wise to have a stocktaking at this time. This exercise has been widely applauded.
I was lucky enough to go to Strasbourg on 17th June to listen to the debate on the stocktaking document, which was led by my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins), who I hope will catch your eye, Mr. Deputy Speaker, later in the debate. The stocktaking has been a most useful exercise.
It is worth while looking at the support systems which are used within the Community to support the agricultural industries of the member nations. I should think that it is correct to say from the start that the policy which bases a support system on the economic modern farm is correct. I was glad to hear the Minister say that in his speech. I endorse that. To endorse that attitude is very much in our interests as we are much the best placed country to take advantage of a policy which is based on the economic modern farm. We have a 1735 far better farm size. In this country the average farm size is about 124 acres, compared with 30 acres in the rest of the Community. We have an average dairy herd in the United Kingdom of about 45 cows, compared with about 10 cows per head in the Community. That shows that our system over the years has led us to have a far better structured agriculture than the other countries. It is right that the Community as a whole should follow our lead and move towards more efficient farming structures.
I must point out to the Minister how essential it is to maintain the advantageous position which we have. There is danger now, which so many of us can see, that as the most efficient dairy producer in the Community, as I believe we still are, we risk losing a share of our own market to the far less efficient milk producers throughout the Continent. We see across the board that we are losing our share of our own market to produce produced in Europe on a less efficient basis. We already see—the Minister must take note of this—the decline in production in this country. I shall return to that point later.
This morning I looked at some recently arrived figures referring to Wales. They show that the number of milk producers in Wales declined by 7.5 per cent. compared with the previous year. We, the most efficient producers, are losing our share of our market to less efficient continental competitors. [Interruption.] It is no good Government back benchers chortling whenever some difficulty is pointed out about the common agricultural policy. There are some Government back benchers who titter like excited schoolgirls when any common agricultural policy problems are pointed out. That becomes a bit of a bore.
§ Mr. Spearing
Although I am grateful for the hon. Gentleman's comments, I do not believe that his adjectives are correct. Does he agree that when the Conservative Government negotiated the entry of the United Kingdom into the Common Market, instead of looking at some of the problems, about which he accuses us of levity, all they did was to negotiate the interim period. They did not negotiate on a matter of principle which affects the 1736 problems to which the hon. Gentleman refers. Is that not correct?
I do not agree that that is correct. We went further than the interim period in the negotiations prior to our joining the Community. The hon. Gentleman has not done his homework.
When we look at the methods of supporting the market, as the stocktaking does, it is as well to begin by asking ourselves why we support the agricultural market. There are some who wrongly feel that the only purpose of doing so is to support the interests of farmers. That is untrue. The purpose of supporting an agricultural policy and agriculture is to provide the best possible assurance for the housewives of this country of continued supplies of food in adequate quantities at reasonable prices. The way in which the European common agricultural policy supports agriculture is basically good. It is a system which is based on import control.
§ Mr. Peart indicated assent.
§ Mr. Jopling
I notice that the Minister accepts that. However, I can remember how he huffed and puffed in the 1960s when the Conservative Party decided that the best interests of our housewives and farmers would be served by moving to a system of support based on import controls. But, backed by that, we have always said—I still believe it is true—that it is right to have in reserve residual powers to use the deficiency payment system, and also to have at the back of our minds and our armoury the power to have a support buying or intervention buying system.
§ Mr. Peart
I am sorry to interrupt, as the hon. Gentleman is making a constructive speech. However, he should be aware that during the negotiations the former Conservative Minister promised the French that the entry of Britain into Europe would mean that the French would have access to the largest food market in the world.
§ Mr. Jopling
There was always a certain degree of access. We know that that is part of the whole theory. We 1737 have always known that one of the main implications of the common agricultural policy was that the countries in the Community would have access to each other's markets. I see nothing especially clever in the Minister making that point.
Difficulty arises over the problem of what to do with surpluses. I accept—as do the Minister and the Commission—that, where possible, surpluses should be discouraged. We must always remember that surpluses from time to time often constitute an insurance policy for housewives. It is now becoming much less politically and popularly acceptable that surpluses should be dealt with by selling them off at cheap prices to third countries. I believe that the Minister's conclusion is right—namely, on the one hand, that we should concentrate on dealing with surpluses in sales to developing countries, but on the other hand, and principally, that we should benefit selected groups within the community. The Select Committee's view on this matter is correct.
I am a little concerned about emphasis in the stocktaking document on consumer subsidy. I welcome the Minister's caution on that point. I hope that consumer subsidies, when they are considered, will be used on a selective basis.
§ Mr. Buchan
The problem is that in building up surpluses the process in the end is repeated. In other words, it depresses prices by not selling through the normal process but through subsidies, and, therefore, the process of intervention buying operates once more.
§ Mr. Jopling
I was glad that the Select Committee also made the point that it was important that the sale of surpluses should not undermine the market or cause other difficulties.
I turn to documents R/1991 and R/1944 dealing with a surplus with which the Community is experiencing difficulties; namely, that of dried skimmed milk powder. Events have overtaken some of the estimates. In one of the documents to which the Minister of State has put his name it is suggested that by the end of the year the surplus will be about 900,000 tons. That surplus is now over 1 million tons, and that is a worrying feature.
1738 I wish to ask the Minister of State one or two questions on the figures in the explanatory document, and I hope that he will be able to give some explanation in his reply.
There is a proposal to sell off 80,000 tons of dried milk powder for use in feeding stuffs. There is an estimate in the Minister's document that the cost would be about 18 million units of account. I do not understand how that figure is arrived at. I understand from bodies outside the House which are concerned with these matters that it will be necessary to apply a subsidy of about £400 per ton to make that dried milk powder competitive with soya meal. That looks like costing about 54 million units of account—three times the figure used in the Minister of State's document. Much the same problem arises over the proposal to sell off to developing countries dried milk powder at a quarter of the intervention price. The Commission intends to get rid of 50 million tons to developing countries. That would appear to involve 33 million units of account, whereas the Minister's document suggests only 11 million units of account. There is confusion on that point and it would be helpful if it could be explained.
I am also concerned at the effect of prohibiting the use of milk products containing non-milk fats or non-milk proteins. I understand that the United Kingdom dairy food manufacturing industry is alarmed about these proposals. I hope that the Minister will be able to say what negotiations he has had with food manufacturing interests which are alarmed about the proposals.
I wish to deal with the proposal to set up a two-tier system in support of milk prices. The Select Committee was right to express its alarm about this proposal. I have spoken to Mr. Lardinois privately about this matter. I hope that he is aware that the proposal will present grave difficulties to the British dairy industry. I welcome the Minister's words today about this matter, and I recall his remarks in similar terms in a debate on 14th July, set out at col. 1077 of the Official Report, in much the same terms. There is no question that it would be disastrous to introduce the two-tier price arrangements into the British dairy industry, which relies to a 1739 large extent on winter milk production. I hope that the Minister will be as good as his word—and I am sure he will be—in resisting at all costs this proposal.
I share the views expressed at the beginning of the debate in points of order put by Labour Members. One of the amendments involved was in my name and in the name of some of my hon. Friends. I hope that it will not go amiss if I read that amendment so that it appears on the record. The amendment, which for technical reasons could not be called, recognises:the principle that producers should share the responsibility for surpluses, but urges the Government to oppose the proposal to apply the target and intervention prices for milk in two stages, put forward in paragraph 106 of EEC document R/635/75, such that efficient United Kingdom producers would be financially penalised by the production of surpluses on the Continent".
§ Mr. Neil Marten (Banbury)
Before my hon. Friend moves on, will he suggest that the Minister accepts that very amendment?
§ Mr. Jopling
I hope that note has been taken of the point, and I, too, would be grateful if the Government were to accept it. We tabled the amendment originally in an effort to help the Government. We know the Minister's attitude as reflected in his statements, and we felt that the amendment would stiffen his bargaining position if he knew the view of the House.
I turn to the other document, R/1831/75, on wheat. I was glad that the Minister explained the Government's attitude. I cannot possibly argue against a scheme to create a greater degree of parity in feed grain prices, but there is a good deal more to be worked out. I was glad that the Minister mentioned the problem of defining what "bread wheat" is.
Perhaps I may be allowed to quote my own experience. I neglected to declare my interest in this debate, which I think is well known to the House. I had a bin of bread wheat last winter on my own farm. It was tested by three millers, who pronounced it suitable for the making of bread, yet when a single load out of that bin went to a miller he said that it was not suitable for making bread. However, the next loaf that came out was considered to be suitable, even though it 1740 was made from exactly the same grain. That illustrates the problem of definition.
It is vital that we should continue to encourage the use of more of our home-grown wheat in the grist of our flour which goes for bread manufacture. It must be in the interests of our country to move as far away as possible from reliance on hard imported wheats. I hope that the Minister will not lose sight of that.
I come now to discuss some of the distortions which affect the smooth working of the common agricultural policy. There is no question, as the stocktaking document suggests, but that some of these distortions badly affect the unit of the market. The manifestations of the green pound provide the greatest distortions of all. These distortions started before we ever joined—when the Germans revalued their currency and the French devalued theirs some years ago. There is no doubt that the monetary compensatory amounts bedevil the whole of the common agricultural policy. They lead to abuses which alarm us all, the sort of abuses that cause some right hon. and hon. Members on the Labour benches to go through their ritual titterings. There has recently been the problem of grain coming from one country and then being taken back. We have heard stories of what the meat trade calls "roundabout meat" because it goes from one country to another and collects subsidies here, there and everywhere.
The green pound arrangements bedevil the Community. Short of having a common currency in Europe, how are we to avoid this? If there are no monetary compensatory amounts there can be no units of account and no common agricultural policy. The only solution, ultimately, is to have a common currency. I hope that the Government will be moving towards this end. I know that there are immense difficulties. It would certainly make the common agricultural policy much easier to administer and much more effective.
One thing we might do is to introduce automatic triggering arrangements which would reduce distortions in green pound parities. Whether this could be done by having a system which would automatically halve the green pound when the difference gets to 10 per cent., or 1741 whether it could be done by having a regular review every three or four months, I do not know. I hope the Government are thinking about this. If we could be told something about the Government's attitude towards such arrangements aimed at reducing differentials it would be helpful.
Let me say a word now about the distortions caused through State aids. There is a suggestion, and the Minister welcomed this, that there should be a freer approach to State aids. In many ways this is a good thing. But I invite the right hon. Gentleman to beware of the implications of moving to freer policies in this respect. So often we have seen that our colleagues in the Community are not averse to cheating.
§ Mr. Jopling
We know that this happens. The Minister will know perfectly well. Some countries in the Community use State aids which, strictly, are not within the rules of the Community. In the immortal words of my hon. Friend the Member for Devon, West (Mr. Mills), so often Britain seems to get the dirty end of the stick when aids of this sort are being put into application. There is also the distortion caused by the transitional policy. This was embarked on at a time when everyone thought it would be a good thing. The problems which the transition has caused were unforeseen at the time we joined. There were few who argued about the transitional period then.
There have been suggestions aimed at reducing this transitional period. I do not think that the right hon. Gentleman said very much about this. Mr. Lardinois has said that there is, from his point of view, no objection to reducing the period. As he reasonably says, it will be necessary to do it as a package because it could not be done for pigs, poultry or milk without being done at the same time for cereals.
§ Mr. Jopling
Perhaps I put that a bit too strongly. I gladly withdraw the word. I think that the right hon. Gentleman knows what I mean—that other countries within the Community have a habit of bending the rules; something which the British Government are not prepared to do. That is what I mean and it is well known that it goes on.
I turn now to the way in which the Government have been handling their agricultural policy within the CAP. I cannot argue about the renegotiation, and I have told the Minister earlier that I believe he did a good deal to assist us, as a country, and our agriculture industry in particular, in that renegotiation. Above all, it is clear that the Government have not taken full advantage of the situation with which they have been presented as members of the Community.
There have been cases, as a result of the consequences of the rise in oil prices, when the Government have let down our food producers. The Minister failed to make use of the Community rules to help out our glasshouse producers. There have been occasions in the fishing industry when he did not make as full and as prompt use of the Community rules as he might have done. I shall not say much about fishing today because we are to have an important debate on that subject next Wednesday.
The glasshouse industry is facing subsidised competition from other Community countries, operating under Community rules. That has been unfair on our industry. We feel that the Government have not made full use of their powers. A classic example concerns the green pound. The Minister could have done far more to help our producers, if he had made use of powers at his hand to reduce discrepancies caused by the green pound. As a consequence of his inability, or unwillingness, to use those powers, there has been in the past two months a serious decline in virtually all the breeding herds and flocks in our livestock producing industry. More and more we have seen a reduction in the United Kingdom food production and an increase in the number of markets created in this country for our European competitors. 1743 I know that the Minister hates it when his achievements in coming back from Brussels with various remedies and solutions are not referred to and are not taken into account. I acknowledge that he has come back from time to time with various remedies to deal with the decline, particularly in livestock production. To our constant question over the months about whether such measures would be enough to stop the decline there has been no answer. We had an example of this on Wednesday which culminated in my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) tabling an Early-Day Motion criticising the right hon. Gentleman for his refusal to answer the question and to give an assurance that his remedies would be enough to stem the decline in production.
So far, the right hon. Gentleman's remedies have not been sufficient to stem this decline in the milk industry. The reduced production of milk is a serious criticism of the right hon. Gentleman's inability to produce adequate remedies. Experience has proved that his remedies have not been adequate. The decline has continued. It is no use blaming the common agricultural policy, as some of his hon. Friends have done. He could have prevented this decline in livestock production by using the powers available to him under the rules of the Community.
We have to ask the right hon. Gentleman where his White Paper stands now. It was produced a few months ago, with a great blare of publicity. I am not trying to be funny. We have to ask, in all seriousness: is it still the Government's policy? We ask these questions because there has been such a serious decline in livestock production.
The Minister made the most extraordinary admission on Wednesday in reply to a question from my hon. Friend the Member for Banbury (Mr. Marten), when he said:I had discussions with my colleagues before I went to Europe and I was able to go to 5 per cent."—[Official Report, 15th October, 1975; Vol. 897, c. 1369.]This shows perfectly clearly what we have always suspected before and many of us have said in public—that the Minister cannot carry his will in the Cabinet. This shows that his right hon. Friends the Secretary of State for Prices and Con- 1744 summer Protection and the Chancellor of the Exchequer are in charge of these matters. The implication of the Minister's answer to my hon. Friend on Wednesday, which I have just quoted—I do not enjoy saying this—is that he is no more than their messenger boy so far as Brussels is concerned.
It seems clear to me that the determination of those Government Ministers to hold down food prices in the short term is a dangerous policy. Apart from making the Minister of Agriculture look stupid over his White Paper, it also runs grave risks in regard to shortages of food and high prices to the housewife next year and afterwards.
It is not long since the Minister of Agriculture was telling us, during the referendum debate, that there is no more cheap food in the world. Over the months ahead, when he goes to Brussels on common agricultural policy matters, we want to see more long-term policies, so that assurances can be given to farmers which will enable them to maintain and even increase supplies of food over the years ahead. This was, to me, the major omission from his speech. I was surprised that he did not talk of the need for long-term assurances and policies rather similar to the ones embodied in the 1957 Agriculture Act. The Minister has had—[Hon. Members: "1947."] The 1957 Agriculture Act gave long-term assurances. Hon. Members should do their homework.
I accept that the Minister has had serious difficulties to contend with in recent months in regard to inflation and I accept that his task has been difficult, but he must accept that his remedies have been on a week-to-week and month-to-month basis. Let him, in the months ahead, concentrate in Brussels on bringing within the common agricultural policy automatic mechanisms to reduce the green pound distortions. Let him, perhaps, think in terms of introducing formulae so that increases in feeding stuff prices can be written into the prices received by producers. Let him also consider the possibility of supply control.
There is much for the Minister to do in Brussels in the months ahead. As he knows, the Opposition have told him in the past that we are prepared to sink some of our party differences and some of our party sovereignty in order to try 1745 to evolve a bipartisan approach to the problems of the food producing industry. He may laugh about this, but he has refused to do this before, and all I want to say to him is that, as far as we are concerned, the door is still open. If he is willing to try to introduce a bipartisan approach to the problems of the food producing industry, we are prepared to help him.
The Minister has much to do. There is a serious crisis today in our food producing industry, and we look to him, within the rules of the common agricultural policy, to do his best and get British food production away from decline and back to the expansionist path.
§ Mr. Deputy Speaker (Mr. George Thomas)
Before calling the next speaker, I wish to appeal to both right hon. and hon. Members. There are under three hours remaining for all those who wish to participate from the back benches. Nearly 30 right hon. and hon. Members wish to speak. I beg those who are fortunate enough to be called to bear that fact in mind.
§ 12.15 p.m.
§ Mr. Douglas Jay (Battersea, North)
If the hon. Member for Westmorland (Mr. Jopling) wants a bipartisan policy, he will not get it by making rather petty party political attacks on my right hon. Friend—as he did near the end of his speech—which really have little to do with the common agricultural policy.
It is certainly high time that this House seriously debated the main stocktaking document on the common agricultural policy, which was dated as long ago as 26th February.
We had some excellent sentiments from the Minister of Agriculture today, and we probably all welcome some of the minor proposals. At times my right hon. Friend's method of oratory is to expound a platitude and then invite us all to agree with it, which no doubt we sometimes do, but we have also in recent months been promised, notably during the period of the so-called renegotiation, a thorough reform of the common agricultural policy. I should like to quote from the Labour Party manifesto of January 1974, which has such loyal support from the Manifesto Group and, I am sure, from my 1746 right hon. Friend. It states that the main objectives wereMajor changes in the common agricultural policy…so that low-cost producers outside Europe can continue to have access to the British food market.Instead of anything like that, in this stocktaking document we get a further plethora of platitudes and a considerable measure of diplomatic double-talk. I have gone through them all and it is evident to me that there is really no firm guarantee of any drastic change in the high price system, which is doing so much harm to this country and is now one of the major causes of our difficulties over the cost of living and the balance of payments. Our own farmers have learned, notably in regard to the price of feeding stuffs, that the CAP is as damaging to agriculture as it is to the consumer in this country.
What I find even more disappointing is that in the months since this document was published the Government seem to have done very little to press actively for real reforms in the British interest, or even to ally themselves with the German Government, who in recent months have been more energetic than our own in calling for just those reforms that British interests require. Why, in this controversy, are we not able to ally ourselves more actively and successfully with the German Government?
I should like to quote from the Economist, which I warmly compliment on having started to tell the truth since the referendum. It says:British hopes, encouraged by pro-Marketeers during the referendum campaign, that the CAP would be shaped to serve the interests of consumers as well as farmers, are now beginning to look empty.In the Commission documents the platitudes are almost as plentiful as the surplus skimmed milk powder and surplus beef. I refer to only one of them, which says thatan opening up of frontiers between member States would have the most substantial effect in bringing about a better division of labour and consequently an improvement in the structure of both producers and consumers and their standard of living.What the document does not say is that the opening up of frontiers between the EEC and the rest of the world would produce a far better division of labour and a far greater rise in living standards in the EEC and many other countries.
1747 The German Chancellor, Herr Schmidt—certainly not a rabid anti-Marketeer—has also had some things to say about the CAP. I quote from The Times of 15th September 1975We must all finally realise that the mammoth misguidance of economic resources is just as irrational in the long term as the continual use of public funds to get rid of the surpluses.That is the opinion of Herr Schmidt.
In a rational world, Western Europe—particularly at a time when the United States is producing a record wheat and maize crop—would import cereals freely from the other continents and would itself produce meat and dairy products at lower prices, as well as buying tropical and other foods freely from Third World producers. The CAP, however, in its present form, is a restrictive high price system which, as Herr Schmidt rightly says, prevents this happening freely.
The document before us suggests no more than minor changes. Therefore, perhaps we could look at the facts, as opposed to the platitudes. The fact is that uneconomically high prices for food arbitrarily enforced, naturally cause lower consumption and unsaleable surpluses. As recently as 13th October, the Minister told me—these are his figures—that there were still 250,000 tonnes of surplus beef being stored at the expense of EEC taxpayers.
The Economist adds:The present EEC beef stores are enough to keep every citizen in the Nine member States chewing hard for 18 days".Those are the words of the Economist. They are not mine.
We have not been told accurately how much beef, this year, has been sold cheap to the Russians and other countries outside the EEC to keep the figure down to 250,000 tonnes. Even at the moment, according to the Financial Times, 2,000 tons of Irish beef a week are being sold into intervention. At the same time, the main world beef exporters—notably Australia and Argentina—are protesting against the EEC's almost total import ban which, contrary to the GATT, is preventing people in this country and in the other EEC countries from consuming beef at reasonable prices. Are the Government doing anything to bring this quite indefensible ban to an end?
1748 The Minister has always claimed—he did so again today with reason—that his one real success is that he is paying a slaughter premium for beef and not building up a British beef mountain. Is this true any longer? The Financial Times on 7th July told us that the British Intervention Board was just starting to take beef into storage. Is this true? If so, why is the Minister doing this? Will he tell us how large this specific British beef mountain is at this moment?
Will my right hon. Friend explain more adequately than he did today the scheme for aid to private storage for beef? According to statements coming from the British Intervention Board—I refer to one of 9th September—the scheme for private storage aid for beef was re-introduced on 21st July and contracts for, I think, about 10,000 tons of beef have already been issued under that scheme.
Does that mean that, under cover of so-called aid to private storage, home-grown beef is being hoarded away from the consumer by means of the expenditure of public money and that these amounts are not included in the official EEC beef mountain? Perhaps they are. Could we at least be told how much British beef has been hoarded away in this fashion under cover of aid to private storage and whether that comes into the 250,000 tonnes which the Minister has admitted now exists?
I cannot believe that, on the issue of the even greater scandal of the skimmed milk mountain, the Minister thinks that the proposals in the EEC document or what he said today are adequate to meet it. Again, I quote that fine anti-Market paper, the Economist, which describes the situation rather more bluntly than in the Minister's language today. On 9th August it stated that EECaid for skimmed milk intended for animal feeding stuffsis to cost the taxpayer £339 million this year. That is not the total cost of the dairy products CAP scheme. According to the Economist, that is the cost of feeding skimmed milk back to animals. The Economist describes it in this way:This means that EEC money is used to subsidise buying milk from farmers, converting it into skimmed milk powder, and adding water to it so that it can be fed back to the calves of the cows that supplied it in the first 1749 place. This in turn will enable the calves to grow up so that they can produce more subsidised milk.Those are not my words. They are the words of a very responsible paper.
The Minister complained that some of us were inclined to smile. I even caught a smile on your face, Mr. Deputy Speaker, at some points during the debate. I hope that it is not out of order to draw attention to that.
§ Mr. Jay
All this would indeed be funny if it were not a tragic folly in a hungry world, when, as a result, the British public may be threatened with a milk shortage and serious harm is being done to our dairy industry. I can find no firm proposals in this document or in the Minister's speech today which would bring this skimmed milk scandal to an end at an early date.
On 13th October, in a Written Answer to me, the Minister gave the exact figure. He said that there were now 1,038,000 tonnes of skimmed milk powder. I understand that means the milk skimmed off 19 billion pints of perfectly good milk which is unsaleable because the price is too high to the consumer.
§ Mr. Jay
The hon. Gentleman says "Rubbish", but those are the figures given in the Economist. The EEC's dairy product policy, according to the Economist of 27th September—the Minister can tell us whether the figure is wrong—will cost £1 billion in 1976. That is £1 billion, in effect, to keep food away from the consumer. I find it extraordinary that anybody should be prepared to defend an economic policy of that kind.
Meanwhile, according to another Intervention Board statement—I do not imagine the hon. Gentleman will question it—our own taxpayer is paying aid to private storage of butter. Apparentiy 36,000 tons of butter are now held in United Kingdom stores—that was at 31st August—while millions of gallons of liquid skimmed milk have been used for animals this year in this country.
In comparison with these damaging policies, the latest farce of the wine lake 1750 is almost trivial, because it is not a major article in the standard of living of this country. However, it is due to the same fundamental blunder—an attempt to support agriculture by high prices instead of the deficiency system which served us so well in the past.
France and Italy together now hold wine stocks of 2.3 billion litre bottles which, I am advised, at the rate of consumption of one bottle a day for every man, woman and child in the EEC, would take a week to swallow. I am sure that if my right hon. Friend could manage that in addition to the milk he would be helping to solve these problems.
Seriously, the British taxpayer comes into this matter of the wine lake. We are now to pay up to turn this wine into industrial alcohol and to sell it cheap to the Russians through the medium of a French Communist millionaire who no doubt gets a rake-off on the way. On the issue of the wine lake, I wonder whether the Minister will tell us whether it is true that when the German Government opposed paying subsidies for this preposterous purpose the British representative did not support them. If that is true, may we know why, in this case, we did not ally ourselves with the Germans?
These policies are not merely indefensible as economic policies; they are particularly damaging to Britain. They raise our living costs. They raise our import prices and damage our balance of payments. For instance, the consumption of bacon per head in Britain has fallen by 20 per cent. or 25 per cent. in the last two years since these policies were introduced.
But there is worse to come and that is what the House should realise. The food prices we are forced by the EEC to impose are bound to rise much further between now and 1978. John Cherington, also a very truthful journalistic writer on these matters—he is the Financial Times agricultural correspondent—rightly said this on 19th September:Further food price rises are inescapable, particularly if we remain members of the EEC and accept the common agricultural policy.Indeed, only on Tuesday of this week the leading aricle in the Financial Times said this—I draw hon. Members' atten- 1751 tion to this in case they do not believe me:Another step in the transition from U.K. to EEC prices is due to be taken in the Spring. Food prices seem bound therefore to go on rising fairly fast".Further, in a free market we could now buy butter from New Zealand at £400 or £500 a ton. We are already paying £800 to the EEC. By January 1978, even on the present arrangements, that figure will rise to £1,260 a ton and the retail price of butter will probably by then be about double what it is now. In those circumstances, how can anyone say that there is not cheaper food to buy outside the EEC?
Lasting economic recovery in Britain will hardly be possible unless we change these policies drastically. They are damaging to our balance of payments and our living standards, while, incidentally, they strengthen the balance of payments of France which cheerfully, as in the case of wine, seems to break the rules whenever it suits its needs.
The Commission's stocktaking document makes a number of detailed proposals, and even at one time mentions the possibility of deficiency payments, but it nowhere proposes the sort of drastic changes that everyone who understands the matter, including Herr Schmidt, knows are necessary.
It is now the Government's duty to tell the House and the country whether they propose to do something to achieve fundamental reforms and the real defence of British interests which we have so often been promised.
Today, the right hon. Gentleman said that the referendum had decided this matter. In that case I am sure that he will stick to the terms of the referendum prospectus which the Government themselves laid before the country. In that popular leaflet distributed to every household the Government said:There will be further reviews. Britain as a member will be able to seek further changes in the common agricultural policy to our advantage".The Chief Secretary to the Treasury said only this week in Brussels thatThe Government was greatly concerned at the rising cost of the CAP and believed there was an urgent need to make changes in the agricultural support arrangements".1752 I am delighted that the Chief Secretary said that. What is needed now is not more promises but some real action to relieve the British economy of a burden it cannot bear any longer.
§ 12.35 p.m.
§ Mr. John Davies (Knutsford)
I am grateful to you, Mr. Deputy Speaker, for giving me the opportunity of intervening briefly in the debate.
It has been my fortune—I will not say whether good or bad—to have often been called in fairly close juxtaposition to the right hon. Member for Battersea, North (Mr. Jay). I have heard his views expressed on these matters fairly frequently. I note that he still attaches himself to the antediluvian concept that this is a world flowing with surplus food, that we have only to open the gates of the Community and it will all flow in, to our immense benefit and advantage. I believe that to be an absolute delusion. I will not directly follow what the right hon. Gentleman said. He knows my views on it. Goodness knows, I know his.
§ Mr. Davies
The right hon. Gentleman puts words into my mouth and then refutes them. I said no such thing.
§ Mr. Davies
There is obviously food outside the Community. What I say, and what the right hon. Gentleman would be wise to recognise, is that his remark about a food-hungry world means that, with production world-wide undoubtedly running short and the population of that food-hungry world rising, we in this country and in the Community are well advised so to devise our system that we are not ourselves caught short within this terrible procedure.
I was glad to hear my hon. Friend the Member for Westmorland (Mr. Jopling) draw the contrast that clearly exists between the situation of the United Kingdom and that of the remaining member States of the Community. The common agricultural policy was, naturally, devised to meet the needs of the first six countries to be members. It is true that when three new countries, including ourselves, 1753 acceded to the Community the two others were also, broadly speaking, advantaged by the common agricultural policy as it stood and without great amendment.
It is a pity that we missed the prime opportunity over the years when we were not a member of the Community so to shape this policy that it was more in conformity with our specific needs.
Despite that, the truth is that the CAP has not operated to the disadvantage of Britain during our membership. It is possible to draw a number of detailed cases to the attention of the House where quite the reverse has been the case. The Chief Secretary recently pointed out that in relation to the 1976 budget, as a result largely of the operations of the CAP, it was likely that Britain would be a net beneficiary from the budget rather than a net payer. I am not sure whether the change in the green pound to which the right hon. Gentleman has recently agreed in Brussels will have the effect of reversing that position. That is a matter on which perhaps the Minister will give us further information later.
It is right to remember that we have had our advantages. We had our advantages in that period of the extraordinary, almost revolutionary, change in the whole pricing system of world food during the extremely troublesome shortage of cereals over the course of 1973–74. The Community undoubtedly was a great resource to us then. It is not untrue that during the great sugar shortage which struck Britain the Community proved to be a great resource to us and helped us greatly.
Not the least is in relation to the much-abused monetary compensatory amounts. From a national economic point of view it has proved possible to accommodate, all the same, a great rise in food prices through the use of the MCAs and the support they give to imports of goods, which relieved the Government of what otherwise would have been, presumably, a cause for still greater subsidies.
We must not forget these issues upon which the CAP has been specifically of help to us. It is perhaps a paradox that the very MCAs upon which we have relied so greatly, and which have had such an effect on our balance of payments, have been in some sense at the very root of the great troubles and problems that our farming industry has faced over the same period. It is too easy to accept the 1754 rather facile expressions which go the rounds, with people referring to the green pound and compensatory amounts without making reference to the reality of them. The truth is that we are using in the green pound what is called a representative rate of exchange which is unrepresentative of anything that I recognise. It is because it is unrepresentative of anything that I recognise that the foreign producers meeting our requirements for imports into this country have had to be subsidised to give them the advantage of maintaining their price levels while our farmers have suffered from the totally unrepresentative nature of this form of exchange rate.
These are the realities of the green pound story which have caused our farming industry most acute trouble. It is a continuing process. It is not one to which we can see a precise stop. As the pound deteriorates, so our farmers are running a kind of relay race in which the stagger is constantly exaggerated against them. Therefore, the green pound situation is not stable and stationary; it is accelerating against the very interests of our farmers so long as sterling deteriorates.
This calls for real consideration of the fact that we are not dealing with a static and once-for-all differential. Nowhere is that more true than with milk. I should like to quote from the exchanges, following the right hon. Gentleman's statement on Wednesday, between the right hon. Gentleman and my hon. Friend the Member for Devon, West (Mr. Mills), who is so often deeply involved in these matters and who was so helpful in our scrutiny activities. He asked a question to which the right hon. Gentleman replied very clearly. My hon. Friend asked:Will the right hon. Gentleman bear in mind that there can be no increased production, no stopping of the slide out of milk, unless there is price parity between British farmers and European farmers?The Minister's reply was:I accept that and I agree with the hon. Member's comments about prices."—[Official Report, 15th October 1975; Vol. 897, c. 1368.]Therefore, the truth is that the Minister is accepting that there can be no reduction in the deterioration of our milk industry while there is a disparity between the prices secured by the industry and those of the industry's continental 1755 counterparts. This is the reality, and the Minister recognised it. The truth is that the extent to which that disparity has been narrowed is still only relatively small. The disparity still exists. Indeed, it is very great, and, as I hope I have demonstrated, it is increasing.
Whilst not wishing to go into the doubts which may be expressed about the Minister's own commitment in this matter, the truth is that he demonstrates a marvellous degree of sweet reasonableness across the Floor of the House. But the fact, equally, is that that sweet reasonableness accompanies a situation of great anxiety to all those who have the future of our farming industry at heart. These expressions of sweet reasonableness, and, indeed, of points of view and a line of policy which I could hardly fault in any respect, coincide with a deterioration of our farming industry which is frightening to us all. While accepting what the right hon. Gentleman says, I am concerned with what the results are. The results are entirely troublesome.
The Minister, equally, was less than his usual reasonable self in indicating to my hon. Friend the Member for Banbury (Mr. Marten) on Wednesday that it was in some sense the Community which was slowing him down in restoring the disparity.
§ Mr. Davies
The wording—I do not wish to go into it—left me with the impression that the Minister, having recognised the verity of what my hon. Friend the Member for Devon, West said, went into action to get all he could, and got 5.8 per cent. The implication was that getting 5.8 per cent. was due to some reluctance on the part of some other people to attain it.
§ Mr. Davies
I am sure the Minister will recognise that this matter lies largely in his own hands. The ball is at his feet. 1756 I am sure that there would be very little reluctance in the Community if he wished to go in for something more positive. Our farmers generally and our milk producers particularly have other problems of such a considerable kind that this is a problem of which they should be relieved as far as possible. When we think of the great difficulties they face in trying to deal with the problems which they sec coming in the matter of capital transfer tax, the uncertainties about tied cottage issues, and the gloom of the wealth tax looming on the horizon, one must recognise that our farmers have many problems which are of a degree and nature which their continental equivalents do not face. To add to these problems is, to my mind, the straw which breaks the camel's back.
I fully agree with what my hon. Friend the Member for Westmorland said. I believe we all recognise the difficulties of the Minister and of the Cabinet in trying to close this gap in a short period of time. I understand that from the consumers' point of view, and I am sure my hon. Friends do, too. But what would be possible would be to give a clear indication first of a settled programme in order to close that gap, and a formula which would not allow it to re-open. I strongly urge the Minister to give attention to that proposition.
I promised to be quick, and I will be. There are, however, some issues which none the less I feel I should mention from the point of view of Community interest, not as contrasted with the national interest but combined with the national interest. One factor which seems to me to be wholly unacceptable in the present Community situation is the dislocation of timing between the budgeting activity of the Community and the farm pricing system.
We have been through a budgetary exercise on which the German Chancellor had a great deal to say, but anybody who is concerned with these matters knows that the 66⅔ per cent.—two-thirds of that budget, comprising the agricultural aspect of the budget—is at the moment totally uncertain. We are basing ourselves on last year's price assessments, transported into this year and calculated on the likely decrease of production and consumption. But we 1757 all know that there has got to be another review of pricing. We see a budget two-thirds of which is represented by these figures and which can be changed, and changed in a massive way, one way or the other, with a subsequent and formidable supplementary budget presumably coming along.
I plead with the Minister to use his influence with his colleagues and in Brussels to try to get the budgetary system organised in a way to enable us to take a real look at the Community budget. At the moment we are not able to do that. We are looking at something which we know to be a travesty. It is important that we should button up these two very unsatisfactory aims of Community activity.
Secondly, what worries me about the co-responsibility activity which is referred to in the stocktaking document and the Scrutiny Committee's report is this. Surely what should not happen in the Community is that the pricing and intervention system, which I have always supported, and will continue to support, basically, should be so devised as to make marginal production a matter worth while considering solely for interventionary purposes. This is what I believe substantially happens in continental farms. Many continental farms, in France particularly but also in Germany and Italy, and perhaps in Belgium and Holland, too, actually do calculations which are related to the marginal cost of production, notably of dairy products, with a view to seeing whether the intervention system pays them to enable them to go into intervention.
In this area of co-responsibility, I believe, a much better system could be worked out so that there was some penalty on the purely marginal approach to the cost of products related directly to intervention purposes. I commend action on that matter to the Minister.
Next, in the same context—I am sure that the Minister is entirely with me here—it should prove practicable to find a method of pricing arrangements within the Community which allowed for obvious differences in the nature of the agricultural industries of the individual countries. Ours, of course, is the most significant, and it is ridiculous for the Commission, in my view, to put before 1758 the Community as a proposition a two-tier milk régime or a two-tier grain régime which it must recognise as entirely unacceptable to such an important member as ourselves. There should be flexibility within the Community system to allow for, so to speak, the majority who may be so affected to take account of a Commission proposal but for a country such as ourselves—I instance both those products, but I am thinking particularly of milk—to be allowed special consideration and be provided for as such. I see no difficulty there.
Finally, I put a strong recommendation to the Minister that the guidance section of the fund should be deployed more strongly in favour of the more efficient marketing of Community products. To date, the guidance section has been directed purely towards the structural aspects of farms and like matters. I am sure that money would be far better spent and rewards more readily obtained if we had a deliberate effort to try to secure both better marketing and better distributive procedures, with, I believe, an increase of the market itself.
It is my firm view that the tendency to reinforce structural change through the guidance fund is a dead loss, and I should like to see—I hope that the right hon. Gentleman will agree—the Minister using his influence to secure a shift in the use of that part of the fund for the purposes I suggest.
I am grateful for the opportunity to speak at this point in the debate, and I hope that what I have said will be regarded as constructive and not merely critical.
§ Mr. Deputy Speaker (Sir Myer Galpern)
This is a long-awaited and important debate, and there are some 27 hon. Members still anxious to take part. I am not quarrelling with the right hon. Member for Knutsford (Mr. Davies), but I must say that if all hon. Members who succeed him take about the same time as he did, we shall be able to accommodate only 12 out of those 27.
In view of the importance of the debate, and the fact that hon. Members are remaining in their seats throughout, I feel that is would be much better if, in order to accommodate as many as possible during the 185 minutes which remain to us, hon. Members were to restrict 1759 themselves to six-minutes speeches. My wife always tells me that it is possible to say as much in six minutes as one could say in 16. We ought to be able to accommodate all who wish to speak, and I appeal to hon. Members in that light.
§ 12.53 p.m.
§ Mr. John Roper (Farnworth)
I shall try to observe your injunction, Mr. Deputy Speaker, though I confess that I had hoped to take a little more than six minutes. In speaking immediately after the right hon. Member for Knutsford (Mr. Davies), even though I cannot agree with all he said, I must say at the outset how much all those of us who served under him on the Scrutiny Committee appreciate what he did and recognise that this debate would not have been possible were it not for the work which he and others did on that Committee.
I revert, first, to the exchange which took place between my right hon. Friend the Minister and my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) during my right hon. Friend's introductory speech. In one sense, the debate about entry into the European Community is over. Clearly, however, the debate about building a sensible Europe can now begin. We shall not be constrained by some of the passions which tore us apart before the referendum, and it may well be that alignments in this second debate will not necessarily be the same as those in the first. Certainly, I agree with a lot of what my right hon. Friend the Member for Battersea, North (Mr. Jay) said in his opening remarks, although I found less acceptable some of his later comments. However, perhaps we may find that we agree on a very great deal.
In view of the restraints of time, I shall concentrate on one of the documents—the stocktaking assessment. I must express concern about the inadequacy of that stocktaking. Perhaps even the term "stocktaking" should never have been accepted, because what we wanted was not merely a stocktaking. I have no idea what the phrase is in German or in French, but what we really wanted was a reassessment and proposals for change in the common agricultural policy.
1760 The desire for major changes in the common agricultural policy is not exclusive to these benches. If one reads the speech of the German Chancellor, in Cologne, on 13th September, as my right hon. Friend said, one sees that he was outspoken, saying thatThe Government of the Federal Republic will not agree next year to any decisions on agricultural prices if they do not blend in with the collective economic landscape.We must look at these matters in the wider context. The Danish and Italian Governments also have made clear that they are very dissatisfied with the present common agricultural policy.
It is interesting also—we do not know the whole story here—that the German Government, aggravated in part by their inability to secure reductions in spending on the common agricultural fund, chose instead to fight for cuts in programmes which could bring major benefits to the United Kingdom, through the social fund and the regional fund, and beyond the United Kingdom, through the fund for non-associated countries. It may well be that by not pushing fast enough and hard enough in reform of the common agricultural policy, we could end by suffering other adverse effects.
I was interested to read what the Scrutiny Committee of the House of Lords, in its 25th Report, had to say about this document. That Committee is freer than we are, in this House, to comment upon the substance of documents coming before it, as distinct from explaining why they are important. I note this comment by the House of Lords Scrutiny Committee:amongst nine Member States, where progress is achieved by means of inter-governmental compromise, these generalities appear academic; especially amongst nine countries whose rates of inflation diverge so markedly.The House of Lords goes on to point out that this is not altogether an adequate document.
I was interested also to read the report in the document published by the European Parliament—not the part of the report which was the responsibility of the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) but the opinion of the Budget Committee, which appears in the same document, No. 115/75. Interestingly enough, it is not a report drafted by a member from this House; it was drafted 1761 by a former Gaullist French Minister of Agriculture, M. Cointat, on behalf of the Budget Committee. Giving the view of the European Parliament, that report said:The Committee also deplores the fact that the Commission's communication"—that is, the stocktaking document—does not constitute a genuine stocktaking of the CAP, especially as its financial aspects are concerned.Next, I turn to the view of the Consumers Association. Unfortunately, in this debate so far we have not heard a great deal about the interests of consumers. In the memorandum which the Consumers Association submitted to the Select Committee, it made perfectly clear that its view was that it was a vague and seemingly contradictory document. In paragraph 4 of Appendix 10 to the Report of the Scrutiny Committee, we read the Consumers Association's view thatit is a difficult document to commend or criticise because it appears to have been written by a number of different sections of the Commission expressing, at times, contradictory views".It gives examples of such inconsistencies and unsatisfactory contradictions.
Another way to appreciate how shallow are the analysis and the proposed remedies in the document is to ask this question: If all the new methods for organising the CAP suggested in the document were adopted, would the cost of the guarantee section, at present approximately five-sevenths of the total, drop either in absolute terms or relative to other parts of the Community budget? My assessment is that there would be a very small change in expenditure in the Community as a whole. I hope the Minister will tell us whether there is not a strong case for sending this document back to the Commission for redrafting to provide a satisfactory reappraisal with some proposals.
The argument which has always been put in the Community is that one must have unity of the market. As the House of Lords report pointed out, a system of uniform prices and policies is not the only interpretation that can be put on the phrase "common agricultural policy". In view of the uncertainty of the Germans and others, we should explore other possible interpretations. The stocktaking document accepts the idea of a unified 1762 price support system, arguing against what it sees as obstacles such as ACAs and MCAs, though allowing for special social and regional policies. But there are other alternatives, suggesting the need for a more variegated set of instruments. In many ways the CAP is moving in different directions, for example with the introduction of deficiency payments for beef which is not only a policy we like, but is also being supported by the Italians.
Another problem which needs to be examined very carefully is that of stocks and surpluses. There is a general distrust of stocks and surpluses in the United Kingdom and many other Community countries, and criticisms of the CAP, such as we had from my right hon. Friend the Member for Battersea, North today, are heavily weighted in terms of the problems arising out of surpluses. But what is one man's mountain is another man's stock. What one man may see as an excessive surplus, someone else may regard as a reasonable stock, which is a necessary safeguard for the consumer. Even 18 days' hard munching of beef may not be an excessive stock for the consumer in the Community.
§ Mr. Roper
I accept that the problem of the skimmed milk powder surplus is, as the Minister admitted, a difficult one. I was trying to deal with the general problem rather than a particular one. Food reserves are not intrinsically bad, but the stocktaking document is ambiguous and unsatisfactory and does not express a clear attitude on the storage of reserves. We need a clear statement saying which products should be taken into surplus, how much of each will be stored, and what will be done if the surplus drops below certain levels. We do not have clear proposals on this subject in the document. That is one of the inadequacies about which I am concerned.
There are problems about the decision-making level in the Community. There is an assumption that Brussels knows best. The Budget Committee of the European Parliament said in its report that there is too often a tendency to regard the 1763 management of markets as the exclusive preserve of the Community. The report says:It would be desirable to make better use of existing facilities in member States without creating new services whose cumbersome nature inhibits efficient management.This is not discussed in the stocktaking document, and it represents a serious gap.
There has been a good deal of comment about MCAs already, and I shall be very brief. There is a serious problem here. Some people advocate the total abolition of MCAs, but until we reach economic and monetary union, which is regarded here as being some way off, unless there is something like MCAs there will be problems about the CAP while some Community currencies are floating against others. Their abolition would be a foolish mistake.
I would like to have spoken about the problems of the concentration of production in most favourable areas, but I am sure that that subject will be raised by other hon. Members later in the debate.
There are a number of major issues which are not adequately dealt with in the stocktaking document. For once, there is near unanimity throughout the Community that a major reanalysis is necessary. In addition, there are threats, implicit and explicit, that, without such a reanalysis, many developments in the Community, such as the regional and social funds and the fund for non-associated countries, will be at risk. I hope that the Minister will take back to Brussels the comments and views of this House and persuade his colleagues in the Council of Ministers to send the document back to the Commission so that it can do a better job on it and provide a better analysis and proposals for action.
§ 1.6 p.m.
§ Mr. Neil Marten (Banbury)
If I do not take up the points made by the hon. Member for Farnworth (Mr. Roper), it is because I want to keep my speech as short as possible. If my remarks do not flow quite as freely as they should, it will be because I am trying to pack in quite a few points. One method of giving more time to back benchers is for the Front Benchers to keep their concluding speeches very short, or even for the Opposition Front Bench not to wind up at all. We have made this point 1764 before. It is something which the House wants the Front Benches to take to heart.
Many of us object to a debate on agriculture being held on a Friday. Many hon. Members representing country constituencies have masses of constituency appointments on Fridays and I hope that future debates can be held in mid-week. I am taking the opportunity of slipping away to catch a train at about 4 o'clock to attend a dinner in my constituency, but if there had been a vote after this debate I would have arrived in time for the pudding rather than for the soup.
I also hope that we do not continue the system of having these debates on the Adjournment, because we cannot then move amendments. Debating such documents on a take-note motion is the only way we can effectively control the executive. The less Parliament is able to say effectively, such as by amendments, the more power goes to the executive to push off to Brussels and do deals. We had evidence of this from the Parliamentary Secretary to the Ministry of Agriculture—the hon. Member for Edinburgh, East (Mr. Strang)—when he told our Select Committee:I think it is fair to say that it has never been the case in the Council of Ministers that the Government has felt that it could not agree to something and reach an understanding with our Community partners without having endorsement for that precise agreement from Parliament. I think that this is inherent particularly in the agricultural situation where there is a whole host of measures on the agenda. Inevitably we go in with the best solution for us, and we make compromises and trade-offs in relation to other items where we want to get the best solution for us as well.That is a clear admission by a Minister that once he gets to Brussels he makes compromises and trade-offs. I want Parliament to have a lot more control than it is being allowed to have at the moment. This is an illustration of our loss of sovereignty, which has gone much further than the undertakings we were given in debates in 1972. I hope that the Government will in future play fair, arrange the debates properly and on the right days, and allow the House of Commons to make amendments if it so wishes.
As for the Minister's remark about the referendum, as an anti-Marketeer I accept the result of the referendum—I could not do otherwise—but it does not 1765 mean that I am converted to a passionate pro-Marketeer. It does not mean, even, that I have come round to thinking that the CAP is a sensible system, because it is not. The country should be glad that there is quite a big handful of anti-Marketeers in the House of Commons to watch what is going on on its behalf.
I was alarmed to hear my hon. Friend the Member for Westmorland (Mr. Jopling) talking about a common currency being the only way to get this sorted out. I do not know whether he was expressing official Conservative policy, but a move to a common currency is a move towards a federal State. As my hon. Friend the Member for Saffron Walden (Mr. Kirk) said in the European Assembly, the one thing the referendum did not approve of was a federal State. I hope, therefore, that my hon. Friend the Member for Westmorland will have second thoughts on that score.
The Minister has been engaged in an argument with other hon. Members about devaluation of the green pound. My right hon. Friend the Member for Knutsford (Mr. Davies) got involved in some discussion about what was meant. Someone referred to my question on Wednesday when the statement was made. It is clear there that the Minister said:It is true that people hoped that I would get a 10 per cent. change in the green pound last July. I was able to get 5 per cent."—[Official Report, 15th October 1975; Vol. 897, c. 1363.]The clear implication was that the right hon. Gentleman would have liked, no doubt with the support of the Cabinet, to get 10 per cent., but it was disallowed when he got to Brussels.
I put down a Question on 28th July, asking the Minister whether he had asked the EEC for a greater devaluation of the green pound than the 5 per cent. or whether he asked only for the 5 per cent. That was a clear question, but the answer was:The Commission's proposal for a 5 per cent. adjustment in the representative rate was made with the agreement of Her Majesty's Government."—[Official Report, 28th July 1975; Vol. 896, c. 401.]It is clear that the change stemmed from a proposal by the Commission, but I cannot help feeling that behind it all the Minister went off not allowed by his 1766 Cabinet colleagues to ask for more. The Government must therefore accept the responsibility for the decline in our dairy industry from that period until the devaluation this week, and for the continuing decline due to lack of confidence in the dairy industry.
I finally come to the stocktaking document. The only point I wish to deal with has been mentioned already. It concerns the dairying proposals in what I think can be called the two-tier pricing system for summer and winter. We all know the snags involved, especially those of us who have agricultural constituencies, and therefore I shall not go through them. I shall quote what the NFU said which was that paragraph 106 dealing with milkcould have the most damaging consequences for British farmers, to which therefore we must register the strongest protest.That is what I would have liked to have seen had we been able to put an amendment down to the motion today.
One thing which worries me has not been mentioned. It concerns the proposal by the Commission which will be so damaging if it comes about. I want to know whether the British dairy industry was consulted by the Commission before the Commission made these rather curious proposals, and if not, why not. It must have been sheer arrogance on its part to have made this proposal without consultation with the dairy industry. It seems imbecilic behaviour for the Commission to make this lower sixth form proposal, but we are getting used to these documents coming from the Commission.
If the House can refer to the Committee's report from the other place, that is, its 22nd Report, we can see the stupidity of the document on energy which the Commission has put forward. This worries me very much, because one of the Brussels Commissioners, who was of British nationality, is a former Minister of Agriculture and a farmer, yet he approved this proposal which will be so damaging to the industry in this country. I find that most disturbing. He must have known the effect that the proposal would have, and the House is entitled to be deeply suspicious about what lies behind the Commission's proposals. 1767 The Community has this great surplus of dairy products and it wants to get rid of it. Of course, one has no evidence except that which I mentioned; but what it wants to do is to damage the British dairying and dairy manufacturing industries. That is what lies behind the proposal. It is putting our farmers out of business, and it is certainly putting dairy manufacturers out of business—and that is very serious. When they go out of business it is the continental countries which fill the vacuum created by this policy. It is time that the dairy industry and the NFU, in spite of its leadership, woke up to this fact.
This is not the only area in which this is happening. Take the glasshouse proposal. If people are encouraged to "smash" their glasshouses, who, other than the continental horticultural farmers, will fill the vacuum? There is a a danger and a sinister element behind the Commission's document. The Commission seems to be trying to get rid of its surpluses by damaging the industries in this country and filling up the vacuum with Community produce.
I hope that I have made the point which I set out to make. The right hon. Member for Battersea, North (Mr. Jay) has quoted the article in the Economist of 27th September. I urge hon. Members to take this matter seriously and to get hold of that article and study it. It is an incredible indictment, especially coming, as it does, from a pro-Market magazine. It was very courageous of that magazine to publish it. The only quotation which slips nicely in after the article in the Economist is that from the National Union of Agricultural and Allied Workers, in its view on the stocktaking document. It says thatit would be difficult to find a policy more inappropriate to a basically urban country like ours which has an efficient agriculture but with a large import bill for food.I have always opposed the CAP. It is a stupid policy. Each country needs its own national agricultural policy where, if there have to be taxes on food, as there virtually are already, they should be used to keep down the prices of food, not force them up. I am in favour of a national policy to correct the CAP with which we have to work at present.
§ 1.20 p.m.
§ Mr. Norman Buchan (Renfrewshire, West)
Not for the first time, I have great pleasure in following the hon. Member for Banbury (Mr. Matren). I felt at one time that mine might be a valedictory appearance, but, as I was asked to speak by my right hon. Friend the Minister of Agriculture, perhaps it will not be the last occasion. Under the strictures, if not of Mr. Deputy Speaker, at any rate his wife, I shall have to cut down considerably on what I meant to say—
§ Mr. Buchan
Your wife and I have known each other for many years, Mr. Deputy Speaker.
I agree with the hon. Member for Banbury that the policy for a basically urban country is not necessarily the same as that for an agricultural country. It is shameful that, although hon. Members with farming interests and involvement have taken part in our last few debates, the National Union of Agricultural Workers should have to remind us of that.
The danger underlined by the hon. Member for Banbury is that if we participate in a market in which there are surpluses and surpluses are dealt with by cutting down production, at the end of the day there will be little to protect us from having to proceed to cut down production. The example he gave was the smashing of greenhouses. A person going into the glasshouse industry gets 30s per square yard to encourage him to smash. That means that vegetables will be produced in hot countries rather than in countries which have to rely on glasshouses. The same follows with dairy produce. This is the whole point of a single market.
The background is threefold. There is, first, the background of the hungry world, and I wish that people would remember that in our discussions. The anger we feel about intervention policies is not because stocks may be built up—there is nothing wrong in that—but because the purpose of intervention does not contain any element of planning for 1769 stocks. On the contrary, it is the result of the failure to plan. Secondly, there is the background of the common agricultural policy and what we are to do with it. Thirdly, there is the need for expansion within this country. Those three aspects are inter-related. The Common Market policy must not be allowed to interfere with our need to expand, but there is a danger that it will.
All three aspects fit together, the necessity for the expansion of agriculture in this country and the necessity to develop new thinking towards the achievement of that because of the background of the common agricultural policy. I deplore the lack of fresh thinking which has been demonstrated in speeches from the Front Bench over the past year. We are in a new ball game, and agriculturists have to realise that.
Dr. Pereira, the Chief Scientist in the Ministry of Agriculture, points out that we can roughly estimate in advance the future population. In India, of the population of 550 million half are under 18 and 20 per cent. are under six years old. We can, therefore, predict the population explosion. The conclusion is that world population will double within the next 25 years. That is an appalling thought if we cannot get our agriculture knocked into shape, and Britain cannot do that in isolation.
If the common agricultural policy were designed to maximise our production in Europe to allow more of the under-developed countries to fend for themselves or to allow Europe to supply the under-developed world, that would be fine, but it is not. My main criticism of the common agricultural policy is that it has forgotten the main purpose of agriculture. This debate should be not about farming but about food. With the world population doubling in the next 25 years, that is the only question that matters. Our agricultural policy in this country should be determined by a food procurement policy—where to get the food and how to grow it.
It is in that context that we must look at the Government's White Paper. It does not contain a policy for expansion; it is merely a pious hope and belief that we could have expansion. It does not even argue that we should have expan-
1770 sion It merely says that we can have it. It suggests that we can justify a policy of expansion by a higher output of milk—with beef as the by-product—and sugar beet. But the products in which we are encouraged to expand are those which are coming under the gaze of the common agricultural policy from the point of view of producing surpluses more easily; for example, sugar beet and milk. That is a bizarre situation.
On the production of milk, the only argument with which we are left is that we are a more efficient producer, our industry is better structured and, therefore, we should be allowed to continue to produce milk. But that argument runs against the argument of all being members of one market. We cannot expect to win that argument without changing the CAP. If I were a producer in Europe, I would not tolerate that argument. I would say "If my milk production is to be cut down, so must his milk production. I can supply him with milk, and if I have to cut down, why should he be permitted to expand?" That is the obvious logic, but no thought has been given to that. It is not enough to make one or two comments on the stocktaking policy. We need dramatic and powerful fresh thinking about it.
It follows from that that we cannot dissociate the needs of the consumers of this country from the needs of fanning. Another indictment of the CAP is that it has set the requirements of consumers into conflict with the requirements of farming. It has laid the basis for expansion, but it is a tricky business to plan it properly. We have 350,000 outlets, and to equate micro-planning with macro-economic requirements is a tricky business. We have never totally succeeded in doing that. The farmer requires an adequate return for expansion but I do not believe that high prices are essential to give a sufficient return to the farmer. We have distorted farming by the CAP, in which high price returns are the only incentive and the only planning mechanism. That has distorted the future of agriculture; for instance, in East Anglia. The only aim is an end price policy—a cash return—whereas agriculture's function should be to provide food for the Community, and it is the Community's responsibility to make sure that the return is sufficient to 1771 get that food. Therefore, we have to convince Europe—having first convinced our own Front Bench—to stop this stampede towards high end prices and, instead, look at direct investment in agriculture.
That fits in both with the problem which faces British agriculture and with the needs of the under-developed world. It is shocking that we should still seek to expand our beef production by importing grain and by using up nine or 10 tons of vegetable protein to produce one ton of animal protein, when we remember that the world population will double in 25 years. That is why my hon. and right hon. Friends are horrified that 1 million tons of dried milk should be used in that way. It is unproductive.
We have to concentrate not just on the importation of cereals or even on the growing of cereals, but on grass. Dr. Pereira says the same, but the Ministry does not ever listen to its own scientific officers.
We must concentrate on grass in three ways. We have to improve its quality. A good deal has been done on that but individual farmers cannot be expected to do that kind of research. Money from the nation is needed for it. Secondly, there needs to be improvement in the handling of grass and silage, for example, development in the use of grass juices. That, too, needs national research and national money. Thirdly, expansion is needed in the area of grass and the bringing into production of marginal land. Again, that is a national rather than an individual farmer's duty. It may not be worth the while of an individual farmer in his foreseeable lifetime to bring marginal land into good grass production, but it may be worth the while of the nation to do so.
It follows from that that we shall require some plan in our agriculture. If intervention were necessary because our planning had gone wrong and it was necessary to use it to buttress our planning, it would be permissible and correct, but I question whether that is the position. This year we shall produce, let us say, a million tons of potatoes. If the potato situation goes wrong and we produce too many we shall buy in part of the crop. Indeed, such action is correct. But merely to say that we should farm for 1772 cash and that if we should produce too much it can be put into intervention, allowed to rot or turned into animal protein is not only wicked, not only a crime, but a blunder—namely, bad agriculture. Therefore, we must achieve proper planning. I believe that that can be done, among other things, by the establishment of structured commodity commissions.
It is not true to say, as has been claimed by members of both Front Benches and as was claimed throughout the referendum campaign, that the CAP has helped our consumers. On the contrary, it adds enormous cost to consumer prices. This is where the dilemma exists. Three weeks before the referendum vote a report entitled "The CAP and the British Consumer" appeared as a result of a study group's work chaired by Professor Tim Josling. Amongst other matters, the newspaper reports claimed that the CAP had saved Britain £138 million. That seemed such an extraordinary proposition to come from a scientific body—I accept that both Front Benches might have believed that claim to be accurate—that I studied the figures.
The study showed that, since accession, accession compensatory amounts and monetary compensation amounts have saved us that much money, but the figures quoted in the Press did not tell us that if we had been paying the full Common Market prices in the calendar years 1973 and 1974 we would have been paying another £1,206 million. That is the minimum extra that we shall pay in two years' time.
There are three engines driving up food costs in this country. One such engine is the movement towards parity in food prices with Europe. Secondly, there is the abolition of the various compensatory amounts. Thirdly, there is the additional cost that has arisen from food price increases which come every year as a means of developing agricultural production. There will be an immense movement towards higher food costs starting from this baseline of £1,206 million.
I do not believe that the kind of money which is necessary to expand British agriculture will be tolerated by British consumers. Therefore, we must fight to get a planned agricultural economy with public investment. We have to fight against the troglodytes in the Conservative Party who want to lead us towards 1773 a high-price economy. I want to see my right hon. and hon. Friends lead us away from the destruction of planning in agriculture. For example, what has happened to the Central Planning Unit in the Ministry of Agriculture? I gave it the remit a year ago to consider the structures necessary to enable us to operate the coming necessity of a food procurement policy. The unit had an important rôle to play in a difficult world food situation. I should like to know what has happened to the unit since I left office. It is essential that we achieve some of the Socialist measures that we included in our programme on which we fought the two elections of last year.
§ Mr. Deputy Speaker (Mr. George Thomas)
This is the last appeal that I propose to make to the House. Unless hon. Members can confine themselves to 10 minutes or under it will be impossible to call all the other hon. Members who want to speak.
§ 1.35 p.m.
§ Mr. Robert Hicks (Bodmin)
I support the view expressed by my hon. Friend the Member for Banbury (Mr. Marten) that it is somewhat unfortunate that a debate of this significance is being held on a Friday. In making that point I apologise to the House and to the Minister who is to reply because, like many Members who represent peripheral seats a long way away from London, I must leave the House in mid-afternoon to be in my constituency this evening.
I agree that the documents which we are considering are inadequate in many ways. On the other hand, the debate affords us the opportunity to put forward our own views on what should be the evolution of our own rôle in agriculture within the European context. I hope that the views expressed will be taken note of by the Minister when he goes to Brussels in late October.
This is a rare opportunity for us to examine in an objective manner the future development of British agriculture within a European context. We hold this debate today in the knowledge that, as a nation, we are now a fully committed member of the European Community. The shadows of renegotiation are over. I agree that we must start the process of making the European agricultural policy far more 1774 acceptable and sensible. However, in defence of the CAP as we now have it, I make the point that it was largely drawn up in the context of the needs of a Community of Six. The requirements of that policy in the new situation of a Community of Nine are totally different.
All of us, whether we are pro- or anti-Marketeers, have made criticisms of the CAP. It has been accused of being needlessly expensive and monolithic. That is true in respect of certain commodities. Such criticisms have been justified on various occasions, but it is equally true that in many respects the CAP has made a significant contribution to both the economic advantage of the countryside and the political evolution of the European ideal. We must not forget that in the early days of the Community the CAP was a central feature of its structure. One aspect, which has not been mentioned but which we should seek to encourage, is that the CAP can provide a kind of rural regional development scheme. Clearly the CAP has much wider implications than merely the paying of a price to the farmer.
I have always felt that within our national context the Minister of Agriculture should have wider responsibilities for rural communities. After all, farming is one of the basic economic activities in rural areas. It is often the most fundamental activity, in terms of employment. It seems ludicrous to set out for the Departments of Environment and Industry, for example, certain functions which concern the land. Most European countries—this is apparent in the reports which we are now considering—advocate the idea of a Minister of Agriculture and Rural Development, or some such Minister. The FEOGA funds apply not merely to the producer but to a wider sphere. I would have thought that the possibility of the Minister operating in a wider area should be given real consideration.
I now turn to the practical application of the CAP as it will affect individual commodities in the future. I am pleased that the Minister accepts the contention that prices fixed in the future should be based on the modern efficient farm and that due consideration must be given to geographical and climatic conditions where they are to our advantage. I should like to relate those considerations to our dairy industry. 1775 The United Kingdom, and especially the West Country, as a natural dairy farming area, should be given the responsibility of remaining one of the prime producers. That concept must be encouraged in a regional context. It saddens me that within the national context the domestic dairy producer achieves an ever-declining proportion of our national market for milk products. It is ludicrous, as is now happening in the West Country, to have spare capacity in milk processing and in the manufacture of dairy products. I recognise that this symbolises the dilemma in reconciling our national interest with the surpluses which have accumulated in other parts of the EEC. That is why I said that there are inadequacies in these reports. The documents should give a positive indication of who does what, as that is what we are seeking.
I am opposed to the suggestion that the future target for intervention prices for milk should occur in two stages. We are virtually alone in the EEC in seeking a regular level of milk production throughout the year. Winter feeding is an important element in our milk production régime.
§ Mr. Peter Mills (Devon, West)
Does my hon. Friend agree that a two-tier system in the West Country would be serious in that area and even more serious for the consumer? The producers in the South-West act as a buffer to supply milk to other areas when there is a shortage. If there were two standards it would be difficult to switch milk supplies.
§ Mr. Hicks
There is not only a regional aspect; the system has national implications.
Turning to the question of beef, I do not believe that a modification of the present CAP would be a political disaster for the Community. That is not why I voted in favour of joining the Community in 1971 and, more recently, of remaining a member. I am troubled that we are attempting to reach these objectives in a haphazard manner. We require from this debate, from the Council of Ministers later this month, and from the Commission, a strategy for a period of 5–10 years. If that gives greater emphasis to the national producer and enables us to look after ourselves better, as is the case with the present arrangements for beef, it 1776 would not be a defeat for the Community or for the CAP. It is a natural evolution, taking account of the different requirements of the Community of nine.
The West German Chancellor has given the United Kingdom a splendid opportunity to influence the future direction of the European Community agricultural policy. He has put his foot down and has set a limit on the amount of money that will be made available. Although the percentage of the European budget devoted to agriculture is declining—I think it is now about 66 per cent.—it is still a major one. The remarks of the Chancellor of West Germany to the effect that there must be limits and closer examination gives us the opportunity to make certain that we express our own ideas and put forward our proposals. There will be fundamental changes. We must make certain, as a result of the views expressed today both by hon. Members and by the Minister, that Britain does not lose on this occasion.
Our farmers face enough uncertainty as it is, with a possible wealth tax, the capital transfer tax, tied cottages and the green pound adjustments. As least let us ensure that the Minister knows the strategy which we wish to follow for British agriculture. Members of Parliament must back the Minister, so that he can take full advantage of the changes which are bound to occur.
§ 1.47 p.m.
§ Mr. Douglas Henderson (Aberdeenshire, East)
I shall try to perform two unique actions in this debate. First, I shall say something about fishing, which has hardly been mentioned. Secondly, I shall respond to your courteous appeal, Mr. Deputy Speaker, to Members to limit their remarks.
Fishing is regarded as a bit of a Cinderella. During the renegotiations it was only at a late stage in the renegotiations, in response to pressure from Members of Parliament, including myself, that the Government recognised that the common fisheries policy presented a problem.
The cursory reference to the fisheries document made this morning by the Minister of Agriculture and, indeed, the lack of comment from the Opposition Front Bench were distressing and disturbing. I ask these questions. How does the document assist fishing with its 1777 present problems? Will the provisions in the document help the industry, and should different aspects of fishing be tackled?
Today we are not arguing the question of Common Market membership but are looking critically, I hope, at the way in which our membership affects us and especially at the extent to which our national interests in Scotland and England are compatible with the documents now emerging from the Community.
I am disturbed about the document on the fisheries policy, as it tends to be restrictive and to mention cutting down the support which fishing needs at a time when it is desperate for further help. It is not only the Common Market countries which are important in the world of fisheries. We must take into account what our fishing competitors such as Norway and Iceland are doing. For instance, this year the Government of Norway are offering 270 million kroner in assistance to the industry over and above the 189 million kroner already budgeted. Norway is smaller than Scotland but it takes its fishing industry seriously.
I am concerned about the attitude of this document towards capital grants for the fishing fleet. The explanatory memorandum refers to rates of interest. It would be of great help to the inshore fleet if it could obtain a rate of interest such as that given on loans to owners of large trawlers. Under the terms of the Industry Bill the large ships, the trawlers, which are now becoming virtually redundant, are lent money at 7½ to 8 per cent., whereas the vast bulk of our fleet, and, indeed, the most efficient part, the inshore fleet, is charged interest at the public lending rate of up to 14⅝ per cent. When we bear in mind that inshore fleets are virtually family boats, financed by family money and not money raised on the Stock Exchange, I suggest that the Labour Government have their priorities badly askew.
In considering the question of grant we must look at the cost inflation in the price of boats. I have records showing the situation of 10 boats ordered by skippers in my constituency in 1973. The original cost was £175,000, but the final 1778 cost is now £330,000. That fully reflects the effect of inflation on building costs in the fishing industry. It is against this background that we have an incredible proposal from the Common Market countries that the rate of grant should be reduced.
There is a reference in the documents to the de-commissioning of vessels. Has the Minister in mind the idea that we should have some kind of scrapping subsidy for our fleet? I received a letter this morning from the wife of a skipper in my constituency explaining the latest effect of the new survey proposals on her husband's boat. The survey will cost £600. She has no idea how much it will cost to carry out the work which the surveyors recommend and is asking whether the Government realise that they may be forcing many boats out of business. She suggests that the Government should consider some form of compensation similar to that given to an employee who is declared redundant. The Government must look carefully at this problem since it is likely to arise more frequently in future.
I should like to make one final point on the subject of capital grants. I refer to onshore facilities. Will the Minister look at ways of overcoming the problem posed by the fact that our own Common Market partners, the Danes, have acted as bandits and pirates in industrial fishing and have destroyed stocks in the North Sea and elsewhere. We appreciate that the Danes have a problem as a result of the fishmeal proposals. However, will these proposals assist us in the transition period, and will other fishermen act as responsibly as our own fishermen have acted over many years? We must keep clearly in mind—and I hope that this will be part of any renegotiation—that we should increase limits and handle Conservation of stocks in such a way as to guarantee a future livelihood for us all—not just the men who risk their lives by going out to sea to catch the fish, but the men and women in the factories onshore whose livelihood depends on fishing.
§ Mr. Deputy Speaker
I am deeply grateful to the hon. Member for Aberdeenshire, East (Mr. Henderson) for taking full note of what I said a little earlier.
§ 1.56 p.m.
§ Mr. James Johnson (Kingston upon Hull, West)
The hon. Member for Aberdeenshire, East (Mr. Henderson) appears to see himself as a kind of Cinderella—though, of course, a masculine version. I confess that I feel a little like an intruder in this debate among so many bucolic agricultural contributors. I hope that they will not mind while we have a break in the agricultural television commercial which we have heard so far.
I could not agree more with what has been said about the needs of the fishing industry. I enjoyed the speech of my right hon. Friend the Minister of Agriculture, particularly when he said that liquid milk was to be converted to powder to be sent to Third World countries. I believe that many other items could be transformed in this way to be sent to the starving millions in the Third World, as it is termed.
The fishing industry is now going through its worst period since the war. The hon. Member for Aberdeenshire, East spoke of the "scrap and build" policy. I must remind him that that policy was adopted following the report of the Fleck Committee in the 1960s. I hope that the hon. Gentleman's remarks will be considered by others, including the Minister of State.
The memorandum contains much material on the subject of grants and loans for the construction of fishing vessels and also deals with market facilities, harbour works and help for the White Fish Authority and the Herring Industry Board. I am interested to see all these frills, but what we in the fishing industry want to know is how we can obtain facilities which will enable the fishing industry to modernise and expand, as envisaged in the various texts. If we look at document R/2713/73 we see much information about modernising fleets, but I must emphasise that one quarter of our deep-sea fleet is at present in port immobilised, catching not even a sardine, never mind a cod or a haddock. The inshore fishing fleet is experiencing difficulties, and that certainly applies to the fleet at Milford Haven.
The documents give the impression of a positive movement towards equality of competition between the sea-fishing industries of all member States. I repeat 1780 that one quarter of our deep-sea fleet is laid up. The owners and men in the deep-water, middle-distance and inshore fleets all face low prices for smaller catches and high inflation levels in respect of their gear and fuel. The situation is a difficult one for them. It is an exaggeration to say that the industry is in a state of total collapse, but it is certainly correct to say that fishing is not an expendable industry any more than is the textile industry or any other basic industry, whether agricultural or forestry. That is the message we must get across to the Minister.
We must remember that when a vessel is scrapped it is not only skippers and crew who lose their jobs but all the ancillary jobs connected with cold stores and gear of all kinds. We are dealing with floating factories. We all know what happens when a pit closes and men are forced to go on the dole. The same happens when a floating factory is closed. This affects many ancillary activities undertaken by our constituents, and this problem must be strongly borne in mind.
We are the leading fishing State in Europe. I spent five years as a member of the Council of Europe and I visited Poland, Germany—both Germanies—and elsewhere. There is no doubt that they accept our expertise. They also know that we have a large number of fish around our shores. This is where the nonsense about competition comes in. We are in the Common Market, which has a common fisheries policy. What are we getting out of it? Our partners can fish in the waters about our shores and, in theory, we can fish off their shores. But there is no fish there—they are fished out. The fish in the North Sea and the North-East Atlantic lie about the islands and archipelagoes off the West Coast. Our Market partners have access, and will have more access if we are not careful, to our inshore waters, whereas we get nothing, even if we go to the Zuider Zee or Jutland or anywhere else.
I was in favour of being a member of the Community, and I still am. But those of us with fishing constituencies are hobbled by this common fisheries policy. It must be changed. The Minister said that he was attending a meeting of Ministers at the end of this month. I hope that at that meeting he will not only talk about milk and bulls and the 1781 like but will also talk about fishing and the feelings of those interested in the subject. This is not a party issue. We are all together in this, Scottish Nationals and everyone else. That is the message the Minister should take with him.
A comment was made earlier about the behaviour of our partners in the EEC. They do not behave well There was mention earlier by the hon. Member for Banbury (Mr. Marten) of a certain desire on the part of our Common Market partners to see that our agriculture does not do so well, so that they may step into the gap. The same thing as happened in agriculture is happening with fishing. The Danes, who have signed papers agreeing to do this and that, have behaved atrociously. It is all right talking about the Communists fishing off Devon and elsewhere. They do. But our Common Market partners are equally culpable. They are fishing herring on an industrial scale, paying no attention to quotas. This applies to other member States. The Dutch have cleaned up plaice in the North Sea to the detriment, and almost ruin, of the men in Lowestoft. This vacuum cleaner technique scoops up our fish in the North Sea and elsewhere.
Earlier this year the EEC produced "a fishery package" which had no significant effect upon our market. We are now in a serious plight which requires speedy remedial action. The Minister was authorised by the EEC to give us a subsidy in the second half of this year. We received assistance, but without more financial help the industry will not survive as we know it.
What is to be the structure of our deep-sea fleet? Is the Department thinking about that? Do we no longer intend to build 90-metre or 270-feet boats for distant waters? Do we have to come back to middle waters in the North Sea, or are we to do something about limits? Is it 50 miles or 200 miles? These are the 64,000-dollar questions which my right hon. Friend, the Department and the Government must answer. Otherwise the industry may become expendable. If there is no vital change in Community thinking and no action taken the industry will become expendable in due course.
Do we share our fishpond with the Belgians, the Danes, the Dutch and 1782 others? I wonder. To be blunt, I do not want to do so. We must keep in touch with the Norwegians and the Icelanders. We have to allow them, as old neighbours with historic fishing rights, to fish parts of our waters so that we may fish in theirs. The best example of this is Iceland. The Minister of State at the Foreign Office has been to Reykjavik. Mr. Augustsson, their Foreign Minister, whom I know, as do many other hon. Friends, is an intelligent and civilised man. I believe it is possible to get a settlement with the Icelanders. But we may have to accept the 200-mile limit in principle. The Icelanders would then come to an agreement with us. We shall have to accept that fewer British vessels can fish there and that our catch will be less than the 143,000 tons of the past year. We have made concessions, but so must also the Icelanders.
Unless we settle the common fisheries policy to our benefit, unless we bring into the open the whole question of limits, and unless we can settle with Iceland next Wednesday and Thursday, we shall be in an even worse state than we are now. I believe that my colleagues can negotiate an Iceland settlement, and also that our fishermen will get some help as a result of the efforts made by the Minister of Agriculture in Brussels.
§ 2.6 p.m.
§ Mr. Geraint Howells (Cardigan)
For the first time since Britain became a member of the EEC we have the opportunity to discuss and express views upon the Community's stocktaking documents. When talking about the future of British agriculture in a European context we must bear in mind certain basic facts. The first is that the whole purpose of agriculture is to produce sufficient food to satisfy the needs of the British people. Producers must be adequately rewarded for their efforts. If this is done the industry can make a tremendous contribution to our balance of payments situation. Hon. Members will be aware that we paid £3,952 million in 1974 for imported food for ourselves and for our stock.
The second thing to remember is that if we wish to increase production, as we have to, it must necessarily be a long-term process. The full results may not be obvious for at least 10 years. There must be an injection of capital into the 1783 industry now. There will be little immediate return, but in 10 years it will be seen to have been a worthwhile investment. We have neglected this kind of long-term planning over the past 20 years. We are now suffering for our short-sighted view.
We are now within the EEC and we have a common agricultural policy—one of the most important factors within the framework of the Community. We should make every effort to unhold that policy and to adapt it gradually from within. It will take a long time, perhaps many years, before policies can be tailored to suit all our European partners, but it is essential that we have the patience and far-sightedness to apply ourselves to this task. The influence of leaders of industry and politicians must be brought to bear on the agricultural Ministers of the EEC so that we may adapt policies to benefit Britain and the Community as a whole.
One of the first things that must be examined is the value of the green pound, because its operation has resulted in great injustice to British farmers. Every effort should be made to find a suitable formula to keep the green pound at more or less the same value as the £ sterling.
In the short term we must concentrate on stabilising our industry. I believe that we learned a very important lesson last year, when the beef sector was for eight months without a guaranteed price or a floor to the market. It was a very bitter lesson indeed, and I am glad to welcome the new beef régime that has come into being and helped to restore much-needed confidence in that sector. But I should like the Minister, when concluding the debate, to gave an assurance that the beef régime is here to stay and will continue over the transitional period.
Many farmers in Wales and other parts of Britain have been told that the beef régime will operate only for 12 months or so. I hope that he will be able to give an assurance today to all the livestock farmers that there will be a guaranteed price for what they produce, especially in the livestock sector. I believe very much in the guarantee system and the deficiency payment system, and that we must hold on to these for the good of the industry.
I should like to ask the Minister whether he accepts the sheep meat regulations 1784 or draft regulations, and whether he will make sure that we do not do away with the system of deficiency payments operating in this country.
I should like to ask him also to do his best to persuade the French Government to do away with the very damaging stop-go policy they have for the import of carcases to France. I know from experience—here I declare my interest, being a practical farmer myself—that many farmers have lost between £1 and £2 per head owing to the uncertainty of this market. When the market closes the effect on our producers is disastrous.
Another improvement that I should like to see is the extension of the boundaries of the less-favoured areas. Will the Minister tell us whether he envisages any change in the policy towards these areas, and will he assure the sheep farmers and hill farmers in the livestock sector that the present subsidies they receive will not be taken away from them? In my view, farmers want to plan ahead, and we need that stability and confidence in the industry if we are to be one of the leading agricultural nations in the world.
There are nearly 1 million hill cows in the United Kingdom, representing about one-fifth of all the cows used for beef production, with an estimated value of £125 million in finished cattle. This means that we must take very seriously the claims of the hill farmer in these difficult times, and I suggest that, because of the tremendous increase in the cost of hay and barley straw, the winter keep subsidy should be greatly increased. It will interest the Minister to know that, in common with other farmers in my area in Wales, I have paid £68 per ton for hay and £40 per ton for barley straw delivered. I fear that if the hill subsidy is not increased we shall see even more farmers giving up this type of farming, which in my view is of importance to the economy. This should not be allowed to happen.
The industry as a whole, like any other, must be able to recoup its costs. I can recall only a few occasions during the last 20 years when this has happened and the farmer has been adequately recompensed for the labour and costs he has put into the production of the food.
Living in a rural area, I have been disappointed also by the serious erosion 1785 of the labour force in this country—a drop of roughly 50 per cent. over the past 20 years. This decline must be stopped. On this point, I think that the Minister must consider very carefully what effect the abolition of the tied cottage will have on the work force and, consequently, production in the industry.
It is heartening to see that the general public is now beginning to realise that the farmer cannot produce if he does not receive an adequate return, and I believe that the consumers would be willing to pay a little more for their food if they could be certain of a regular supply.
Farmers are fully aware that it is important not to increase prices too much at this inflationary time, but this means that the Government must take certain steps in order to be fair to both farmer and consumer. Among these measures I should like to see the Minister reintroducing the fertiliser subsidy and bigger grants for the improvement of hill land. If given, these would increase production by 100 per cent.
I should like now to say a few words on behalf of the dairy industry. I believe that the impact of the recession in the milk industry, not only on the farmers of this country but on the thousands of workers in the ancillary industries, is demoralising. Britain this year will produce only about 6 per cent. of the butter consumed in this country. In 1973 home production was nearly 25 per cent. of consumers' requirements. This shortfall in home production has been replaced by a massive increase in imports from the EEC countries. Domestic butter production in Britain in 1972 was 90,000 tons. In 1973 it dropped to 52,000 tons. In 1974 it dropped to less than 30,000 tons. I wonder what the figure will be for 1975. As the Dairy Trade Federation pointed out recently, in Britain the import bill for milk products is now over £1 million per day, and it could easily be £2 million by 1980.
Surely something must be done to reverse the trend. I hope the Minister will raise the matter as soon as possible in Brussels. In my view, dairy farmers need another 5p to 6p per gallon in order to cover costs of production. I am sure that the Minister will give favourable consideration to the plight of the dairy farmers in this country.
1786 Finally, I should like to mention world famine in relation to the common agricultural policy. In my view, every effort should be made within the next 10 years to double our output from the land, so that we may be self-sufficient in this country and play a major rôle in combating the widespread famine that is inevitable unless world food production is increased by at least 25 per cent. during the next decade. If we are united in our efforts and deliberations to do everything in our power to avoid hunger in the world on an unprecedented scale, the farmer or the producer must be adequately rewarded for his work and guaranteed a standard of living equal to that of his counterparts in industry and commerce.
Now that we have a common agricultural policy, it is up to us, as a team of politicians and leaders in the agricultural industry, to work together to make sure that farmers and consumers are well treated, and treated alike, within the framework of Europe.
§ 2.20 p.m.
§ Mr. Russell Fairgrieve (Aberdeenshire, West)
One matter which in this debate and in other recent debates saddens me somewhat is that, whether the subject be agriculture, industry, social services, or anything else, any current troubles in this country are blamed by some hon. Members on the EEC. I find this boring, irrelevant, backward looking—not forward looking—destructive and not constructive.
In this context I should like to remind the hon. Member for Aberdeenshire, East (Mr. Henderson) of the hundreds of thousands of pounds in grants which have gone from the EEC to build fishing boats, particularly in the North-East of Scotland.
§ Mr. Andrew Welsh (South Angus)
What about the Danish trawlers which are now scooping up immature fish? That kind of activity is destroying the fishing industry. What is the use of building boats if there are no fish for them to catch?
§ Mr. Fairgrieve
I am sorry to have been delayed by that intervention. It is interesting that when we talk of these troubles the Scottish National Party always talks of Denmark, never of Norway. I was talking about the hundreds 1787 of thousands of pounds in grants which have come from a generous Europe to the Scottish fishing industry.
The documents that we are debating are concerned with the green pound and transition. We have heard reasons why the green pound should be altered at certain levels of 10 per cent. and 5 per cent. I should like to see the abolition of the green pound.
We have talked about transition and whether it should be done by this, that or the other sector. I should like to see the abolition of transition.
We in Britain have the most efficient agricultural industry in Western Europe. We do not want the green pound and we do not need transition.
My constituency is famous throughout Britain for the quality of its beef production. It is also a large pig and milk producer. Certainly prices are a bit better now in the beef sector, but we still need long-term guarantees.
We know of the great slaughtering which has taken place throughout our milk herds. I think that I am correct in saying that at present the Grampian area is about the only area in Britain where milk can be used for anything but liquid use.
I conclude with what I have said many times before. We can never produce too much food in Britain or in Europe when over two-thirds of the world population suffer from under-nourishment.
§ 2.23 p.m.
§ Mr. Nigel Spearing (Newham, South)
I will follow the last point made by the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) in the context of the few remarks that I wish to make.
Through the intransigence of the Government the House of Commons is denied the oppportunity of coming to a firm conclusion on this debate, although on 25th July it would have been possible to have accepted an amendment from either the Opposition or hon. Members on this side of the House and to have done so.
Since the referendum the Government have deliberately taken the step of going back on the implications concerning the powers of this House since we joined the European Economic Community. Those 1788 rights, as is clear for all to see, have been reduced.
On 25th July, when this debate was first mounted, we had four documents to discuss. Now we have seven. Clearly, the difficulties of time in which hon. Members have found themselves today are partly due to adding three more documents to the original debate. All should be debated properly. We should have had a debate on the stocktaking document alone without the additional documents. I think that the Government are playing less than fair with the House and the country, bearing in mind the fundamental importance of the common agricultural policy to the whole structure of the EEC.
I criticise, and will continue to criticise, the CAP in principle. We all want support for agriculture. The question is: how is to be done? The CAP pattern of a mixture of competition, protection and intervention buying does not take account of the agricultural realities of Western Europe, the difference between the sociological inheritance of agriculture and natural conditions. The needs of agriculture are, therefore, incompatible with the superimposed policy which we have now taken upon ourselves with the support of the Liberal Party, which has now departed.
The stocktaking document, on page 40, admits that the CAP has not worked. It states:the internal income discrepancies have remained very high and in certain regions even threaten to increase".If it has failed from that point of view on the admission in that document, what has happened to all the money which has gone into the surpluses? For what purpose has that money been spent? I suggest that a lot of it has gone in big profits to farmers who have good conditions. It has gone to the big boys and to those involved in storage, along with all the other money paid out by the European Commission.
Sooner or later we shall need a new policy, not a titivation of the existing policy. We shall want a policy which takes fundamental account of the needs of farmers, of husbandry, of food production and of the consumer. The CAP does not take account of the needs of the consumer very well at all. 1789 I come now to the world outlook, to which the hon. Member for Aberdeenshire, West referred. The common agricultural policy does not fit the world food pattern. Why are we encouraging the feeding of dried milk to animals? The conversion ratio of this double process is hideous. It is bad enough when we feed wheat or maize to animals to produce meat and protein, but when we feed those animals dried milk, which has already come from them, the ratio becomes about 100 to 1. Therefore, such a policy is irresponsible in a world of food shortage.
The whole structure of the CAP is not susceptible to what I think is coming—a world food policy. The second world food conference will be taking place soon. I cannot see the CAP in its present situation merging with the sort of policy which we must have in the world to deal with the problems which have been mentioned.
I should like my hon. Friend the Parliamentary Secretary, when he winds up, to assure us that there will be no change in the grades of milk in January. The derogation which we had regarding grades of milk under the Treaty of Accession runs out at the end of December. I understand that there is a possibility that we shall be selling three or four different grades of skimmed milk. It will, therefore, be possible to drive a coach and horses through the excellent pattern that we have had since the Milk Marketing Board was set up in the early 1930s. I understand that that is a legal possibility. Will my hon. Friend tell us whether that will happen, and, if so, whether he has any powers to prevent it happening in future?
I switch from milk to the unlikely topic of tobacco. On 10th March I had a Written Answer from the Minister in which he said that the EEC bill for tobacco support in 1975 is £69.3 million. That is to support tobacco-growing in Europe, which is mostly carried out in Italy and France. The United Kingdom's share is £9 million. If we are searching for a cut in public expenditure, we should ask the Minister, when he next goes to Brussels and discusses this stocktaking paper, to cut tobacco support altogether. The implications of the £9 million public subsidy from this country to European tobacco-growing are hideous. I understand that the amount grown is about 1790 140,000 tonnes, which will be increased by 2 per cent. That appears in Document R/1947. We might as well get rid of that straight away. I do not know anyone who would be against it. The tobacco farmers in Italy and France might like to grow more food, in accordance with the request made by the hon. Member for Aberdeenshire, West.
Turning to sugar, the beet acreage is 15 per cent. up, but the United Kingdom's quota is unrealistic. At least the Minister of Agriculture has not stopped the British Sugar Corporation applying for a vast capital sum—I believe it is about £30 million—to increase the sugar-refining capacity of our existing beet sugar refineries. I declare an interest, having the largest sugar refinery in the world in my constituency. We have a good deal of cane sugar refining capacity. Why should we spend scarce national capital resources amounting to £15 million or £30 million on building new machinery to put into beet refineries when we already have the capacity in the port cane sugar refineries?
Alas, we have the capacity, but the target of 1.4 million tonnes of sugar has not been reached. I therefore hope that the Minister will give us an indication of his policy in this direction, because there will have to be, so we are told, some rationalisation of port cane sugar refiners, anyway. If we are to have some rationalisation of port cane sugar refiners, why should the nation have to pay millions of pounds to the sugar refineries? They are not entirely interchangeable, but I believe that they can be complementary.
The annual report of the United Kingdom Intervention Board shows that it paid £15 million in assistance to firms in the United Kingdom to convert wheat into starch. I asked a Question about which these firms were. The Minister said that he could not say. I understand that with any expenditure by the Exchequer in this country of British domestic taxpayers' money it is a practice that every subsidy is known and open—"transparent", to use an EEC phrase—to those to whom it is paid. Apparently that does not apply to moneys paid by the EEC United Kingdom Intervention Board, even to firms in this country and even though some of the wheat may have been grown here. I therefore ask the Minister to have a look at this, because 1791 it is intolerable that we cannot discover to whom the money is paid, as we are full members of the EEC as well. I should have thought that the Public Accounts Committee would do well to follow this up.
I conclude by supporting my hon. Friend the Member for Farnworth (Mr. Roper) in asking the Minister to take the document on stocktaking back and ask the Council to have another look at it. There are few statistics concerning the actual expenditure. If we are spending, and if the European countries are spending, apparently quite willingly, huge amounts in respect of food, we want to know to whom the money goes. How has it benefited us to be in Europe? What sort of coalescing of units has there been? We want some comparison of the cost and benefits of the policy. As I read it, this document does not contain it.
First, let us have another and a better document which makes some attempt to make the comparison, and, at the same time, let all the agriculture Ministers begin to get together to produce another and separate policy that meets the legitimate needs of farmers and consumers, which is good husbandry, and which fits into the world pattern of food need. The present policy does not. It has within it the seeds of its own destruction. Let us now constructively begin to create a new common agricultural policy which meets all these demands.
§ 2.33 p.m.
§ Sir Anthony Meyer (Flint, West)
The hon. Member for Newham, South (Mr. Spearing), like the hon. Member for Battersea, North (Mr. Jay) and my hon. Friend the Member for Banbury (Mr. Marten), reminds me of clocks that have stopped: twice every 24 hours they are exactly right. That is no reason for taking much notice of the clocks the rest of the time.
As the hon. Member for Cardigan (Mr. Howells) has pointed out, the debate takes place against the sombre background of a crisis of confidence in the livestock industry and, in particular, in the dairy industry. The crisis is even more severe in Wales than in other parts of the country. Forty-five per cent. of Welsh farmers are concerned in dairying in one way or another. They produce 12.5 per cent. of the nation's milk. Last 1792 year production was down by 4 per cent. on the year before. Grimmer still, one milk producer in 12 left the industry. That trend is continuing and probably accelerating. If I had the time, I could give many more equally alarming statistics.
During the recess I spend a good deal of time seeing for myself what these grim figures mean in terms of people, of reasonable hopes dashed, of hard work, of public spirit and of enterprise penalised.
There are two groups of dairy farmers who have been especially hard hit. The first group contains those who by the very nature or size of their land are unable to produce anything other than milk. In Wales there is a disproportionately large number subject to this limitation. The other group which has been badly hit is those who responded to Government appeals to step up production, who even invested heavily in new equipment, and who now find themselves paying huge bank charges on their overdrafts while their income remains uncomfortably compressed. These unlucky ones reflect ruefully on the constant parrot cries from the Trades Union Congress and others that Britain's poor economic performance is due solely to the failure of industry to invest in new equipment.
I very much hope that the further small devaluation in the green pound which the Minister of Agriculture, Fisheries and Food has managed to get the Cabinet to agree to—as he himself has now candidly admitted, it was not the Common Market that the Minister had to persuade in order to get better prices for British farmers; it was his own colleagues in the Cabinet, notably the Chancellor of the Exchequer and the Secretary of State for Prices and Consumer Protection, who still hope to check inflation by cooking the Index of Retail Prices; it was they, not the bureaucrats of Brussels who compelled the Minister to take two inadequate bites at the cherry—as I say, I very much hope that the further devaluation, plus the tiny increase in the price of milk already agreed, will go some way to make dairy farming a viable occupation.
What these measures cannot now do is the one thing they are intended to do—that is, to restore long-term confidence to the industry. 1793 The nasty fact is that farmers have lost confidence, not just in this Government but in any Government. I think that they are wrong to pin the blame on the present Minister of Agriculture, Fisheries and Food or on any of his predecessors, who have been, without exception, men of ability with a determination to uphold as best they could the legitimate interests of the farming industry.
The real trouble lies in the fact that farmers, who are so essential to the community, represent such a small proportion of the population and are unable to operate the kind of stranglehold that other key groups, such as the miners, operate. Their ability to do so is still further limited by the provisions of the Restrictive Trade Practices Act.
This is why the overwhelming majority of farmers came to see that it must be in their interest to be in the Common Market, where the farmers represent a much higher proportion of the population, and exert more political weight than they do here. In order to get this long-term basic advantage they were prepared to put up with certain defects in the common agricultural policy.
The defect which has been most commonly deplored—namely, the occasional emergency of gigantic stockpiles or "mountains"—is one about which far too much fuss has been made. It cannot be altogether bad to have stockpiles in a world where food is apt to run suddenly and unpredictably short.
A much more serious defect arises from the basic difference in milk consumption patterns in Britain and on the Continent. It is here that Welsh farmers have some very real misgivings about the possibility of being able to look to the common agricultural policy for long-term assurances such as would enable them to plan ahead with confidence.
I hope that the Minister will be successful in his efforts to get the agriculture Ministers of the Community to recognise the special problems of United Kingdom dairy farmers, which are a direct result of the special drinking habits of United Kingdom consumers, and get them to understand that in Britain, unlike on the Continent, there is no persistent problem of overproduction of liquid milk.
1794 There is one other matter on which I hope that the Minister will be able to give us reassurance. This is a matter which is causing much anxiety in Wales. The directive on farming in less favoured areas sets out in some detail, supported by some hideously small-scale maps, the areas which are to qualify for special aid. Can the Minister tell us whether the areas which are already getting help under existing United Kingdom schemes covering hill farming will in all cases continue to be assisted? I fear that there will be considerable alarm and despondency in many areas of rural Wales, including my own village, unless this is cleared up pretty soon.
But, despite defects and uncertainties, the common agricultural policy holds out a surer hope to farmers than ever the best-intentioned of British Government can now do. This is quite simply because the Community, by its structure, and also by the traditions which it has evolved in its 18 years of existence, is better able to take a long view than democratically elected national Governments who have to face electors, consisting mainly of consumers, every four or five years at best.
Of course, the present Government, with their doleful record of buying electoral support by massive handouts of seed corn, with their consistent bias towards the consumer and against the producer at every level and in every industry, will never be able to restore confidence. It must be to Europe that the long-sighted farmer looks for hope, and every farmer has to be long sighted. That is why farmers should be even more appalled than the rest of us at the way in which the present Government, by their policies within the EEC, in blocking effective action in such matters as pollution control or sabotaging the forthcoming energy conference, are not only totally destroying Britain's good name in Europe but are gravely damaging the effectiveness of the EEC itself.
If there is any country in the world which needs all the friends it can get, it is Britain. Yet when, despite the efforts of most of the party opposite, we find ourselves at last firmly cradled in an organisation whose members are morally and legally obliged to give one another every kind of help, we set about doing all we can to wreck the structure of the organisation and sour its spirit. 1795 The Minister of Agriculture, Fisheries and Food, to give him credit, has done his best to play a constructive part within the Community, but there are some among his ministerial colleagues, notably the present Secretary of State for Energy and the Secretary of State for Trade, who are carrying on their vendetta against the EEC even if in the process they destroy this country's best chances of recovery.
I warn the Minister. He by himself cannot give confidence back to the dairy industry, but he can stop his colleagues smashing the one remaining hope left—effective European co-operation and, with it, the common agricultural policy.
§ 2.42 p.m.
§ Mr. John Watkinson (Gloucestershire, West)
I do not want to follow the ostrich-like attitude of some hon. Members opposite who regard any criticism of the Common Market as totally out of order, given the fact that we have now joined that organisation. It seems to me that they should take note of the criticisms which have been made about the organisation in West Germany and Italy.
Looking at the CAP and considering whether there is a common market for food, it seems to me that there is not. There is no communality in trade. The economic position of this country and of other countries, and the forced devaluations of currencies, have meant the creation within our economies of a superstructure dealing with agriculture, apart from the rest of the economy. In addition, we have the complexities and difficulties of the green pound and the MCAs, so difficult and complex as to be almost beyond comprehension.
I believe it is important to ask whether the common agricultural policy can operate outside a full monetary union within the Common Market. It is too big a question to go into at the moment, but my belief is that the only way in which this policy can operate is by having full monetary union, and I am opposed to that.
The second question I want to ask is whether there is a viable market system operating within the Common Market. It seems to me that there is not. The essence of the intervention system precludes 1796 the operation of supply and demand within our markets. As we have heard at length today, this produces large-scale surpluses within the Market. The question is: is this a structural weakness in the Common Market or is it something on the margin, as Professor Weingarten suggested recently, in an NFU publication? Our experience is such that we can now see that year after year we get this surplus of product after product. It is a structural weakness produced by the intervention system.
It seems to me that it is accepted on all sides that there must be support for agriculture. It is a question whether it is support at the price end, as the Common Market has it, or at the income end, as we had it. Historically, the guarantee system has served this country well, and I should like to see a return to this system.
I am pleased that the Minister is holding out against introducing a régime on mutton, and I am also pleased with his efforts on the beef premium. Within the Market I think there is a realisation of the benefits which can be obtained from a guaranteed price system. I believe the Italians are beginning to appreciate this, and this is a helpful development in terms of the Common Market.
I turn to two areas of agriculture which are rarely mentioned in debates of this sort. I should like to mention the plight of the glasshouse industry. In my constituency I have such an industry. The prices stood up well in the early part of this year and through the summer. My hon. Friend the Parliamentary Secretary and I visited the land settlement at Newent in my constituency. I am told that our visit was like the kiss of death, because as soon as we left the price collapsed.
The glasshouse industry has gone through a bad month. Now we hear of a 10 per cent. increase in the price of fuel. At Newent it costs £12,000 a year to heat an acre; 10 per cent. of that is £1,200. This means that the growers, the small operators, are faced suddenly with a vast increase in their heating bills. I urge the Minister to implement those powers which are given to him under the EEC regulations to assist the glasshouse industry with a substantial subsidy.
1797 The other matter I wish to raise is that of forestry. I represent a forestry industry, having within the bounds of my constituency the Forest of Dean. An hon. Member opposite referred to the fishing industry as being the Cinderella of agriculture. The same could be said of forestry.
The value of the forestry industry to this country rests not only in the timber which is produced, and not only in rural employment; it rests also in the proper use of land and in recreational facilities. This country is ideally suited to the growing of timber and supply of timber products, but we have only 8 per cent. of our land surface under forest, whereas in France over 20 per cent. is under forest and the figure in the rest of Europe is 29 per cent.
Considering that an acre of land in this country can produce twice as much as an acre of land in Germany, and four times as much as in Finland, it is a scandal that much more timber is not grown in this country. In addition, timber imports cost this country £2,000 million a year. We produce only one-tenth of our requirements. I urge upon the Minister the necessity for a full-scale expansion in this area. The indications are that there will be a timber shortage at the end of the century. Let us invest now and increase our acreage in forestry, because that will be to the long-term benefit of this country.
§ 2.49 p.m.
§ Mr. John Farr (Harborough)
I know that the hon. Member for Gloucestershire West (Mr. Watkinson) will understand if I do not follow his speech too closely, in view of the shortage of time.
I wish to refer to the CAP stocktaking documents. In particular, I select two points on which to comment, namely, the milk situation and beef. To British milk producers it is not good enough to plan a two-stage price system. It does not suit our environment; it does not suit our climate; it does not suit Britain. If we are really to assist milk producers at home we must encourage our colleagues in the EEC to engage in a massive sales promotion campaign. Only by boosting production can we help overcome many of the problems which our milk producers face.
1798 We must never forget that our problems at home are very different from those of many of the other EEC countries, inasmuch as we produce only a little over half of the dairy produce which we consume.
I turn next to the question of beef—and I am glad that the Minister has returned to the Chamber to hear what I have to say. He referred to the arrangements made for beef and he gave the House an undertaking which I should not like to let pass without full recognition on both sides. He said that it is his intention to see that no worse arrangements are made for beef in the future than exist today. I unreservedly welcome that. In the big beef finishing areas of the East Midlands, we are a little apprehensive about the future. We have this arrangement until the end of 1976, and I know that my producers will be delighted to hear what the Minister said today.
The stocktaking document deals with two other matters on which I should have liked to comment at greater length than there is time to do now. I shall mention them only in passing. Section G of Chapter I refers to harmonious development of world trade. Although I agree with some of the contents of this document, which summarises the position to date, it seems to me that in one respect—a respect to which much criticism was directed before we joined the Common Market, and has been directed since—it is a rather inward-looking document.
I acknowledge that it is right for us to be concerned with the state of the agricultural economies of our own and the remaining nations of the Nine, but we must not fail to recognise that there is a world famine—that in 1973, for example, the world ate more food than it produced as a whole.
I hope that the right hon. Gentleman will use his not inconsiderable influence in the discussions which proceed in Europe to try to persuade the European Ministers to adopt a more outward-looking policy—to persuade them, for instance, to sign the International Sugar Agreement, and to bring them to recognise that in many cases nations in the underdeveloped world are entirely dependent on the advanced countries of the EEC for the sale of some of their agricultural output and raw materials. European Ministers must recognise that, as the hon. Member for Kingston upon Hull, 1799 West (Mr. Johnson) said, it is not good enough just to send them dried milk. They often both want and need the opportunity to engage in trade with the richer parts of the world, and they want and would accept the exchange of technicians, know-how and agricultural education.
Finally, I turn to the vegetable seed directives. The Minister may or may not know—I shall send him the details today—that it is becoming apparent to many of our firms which are engaged in the vegetable seed trade that some countries in the EEC are adopting a far more lax interpretation of the regulations than we are in Britain. I refer in particular to Holland, but it seems clear that Italy also does not take any notice of the regulations. The same may apply to Denmark.
I am sure that the Minister knows that in the trade Press, the vegetable growers' Press and the technical journals a good deal of correspondence and space has been taken up in discussion of the present situation. Many British producers of high-class seed are worried at the appalling delays in Brussels in the processing of information received from member States regarding varieties newly cleared for marketing and disseminating to other member States. For example, the amendments to the EEC catalogue of vegetable varieties published in December 1974 have not yet been circulated to the firms concerned in Britain. It seems clear that the variation in interpretation of the vegetable seed directives shows an extremely lax attitude, and it is without doubt operating to the disadvantage of many British firms.
In view of the time, I shall leave my comments there, while giving a guarded welcome to what the Minister said today.
§ 2.53 p.m.
§ Mr. Robert Hughes (Aberdeen, North)
I wish to take up one comment made by the hon. Member for Banbury (Mr. Marten) in complaining about this debate being held on a Friday. All of us like to be in our constituencies on a Friday. No matter what the subject or the particular Friday when we have to be here, the common complaint is that the debate should have taken place midweek because we wish to be in our constituencies rather than in the Chamber. 1800 The only complaint now, I think, about having the debate on a Friday is that there is an hour less available to us, and if the two Front Benches take up so much time the inevitable consequence is that back benchers do not have a chance to speak or have to cut their speeches very short.
Another thread to be seen running through the debate at certain points has been the suggestion that in still wishing to discuss the future of the common agricultural policy, the common fisheries policy or other Common Market policies we are trying to continue debates long past and revive battles now over. It is said that in this exercise we are trying to fight the referendum campaign again.
Nothing could be further from the truth. Both sides of the House, including both Front Benches, know that the whole purpose, even after our joining the Common Market, is that negotiations should continue day after day and week after week. Therefore, I greatly resent the suggestion coming from certain hon. Members, sometimes not very politely, that because we wish to discuss these matters properly we are doing something wrong. I think that the hon. Member for Flint, West (Sir A. Meyer) went so far as to say that we were like stopped clocks which were right only twice in every 24 hours. That was an extraordinary remark, especially since he is among those who at the same time make special pleading for their own constituency interests.
Hon. Members cannot have it both ways. We are in the Common Market, and if we all recognise that there are swings and roundabouts, that there are concessions to be made, the onus is upon them to show a little more humility in their own special pleading for their constituencies.
Having said that, however, I shall at once put some special pleading for my constituency, and, since I represent a fishing constituency, the House will not be surprised at that. It is acknowledged by all that the common agricultural policy was designed initially for the Six—we have been fighting against that for a number of years—but it seems to me that the common fisheries policy was cobbled together, one might almost say at 24 hours' notice to get us into the Market 1801 and to provide access for the other European nations of the Community to British fishing waters.
In that context, it should not be forgotten that we are seeing a general decline in our fishing stocks, and not only in numbers. There is research going on now, and what is worrying many fishery scientists is the age groupings of fish being caught in the North Sea. The fear is that our stocks will suffer a dramatic fall, because there seems to be one age group of fish which is missing this year in the sort of numbers which the scientists would expect.
We are very concerned about the question of access to fishing limits. It has always been our policy, when extending our limits, to preserve the fishing rights of other nations which have traditionally fished in our waters. If we extend our limits further, and there are strong demands in the industry for a 50-mile or even a 200-mile limit, and then allow the same vessels to come in, it will make little difference. Our policy is at variance with that of the Icelanders, who seem to be saying, although I hope they will negotiate on this point, that by extending their limit they will cut down the number of vessels fishing in their waters and the amount of fish caught by other nations. I hope that when discussions on fishing limits take place with Iceland the Ministers concerned will recognise that it is not just the deep-sea trawlers going to Iceland that will be affected. Other vessels might be diverted from Iceland into our fishing areas, making it even more difficult for us to have a proper policy.
Fishing has suffered greatly from increases in oil prices and building costs, and these, coupled with the reduction in the catch and curious difficulties in the fish selling side of the industry, have put it under tremendous strain. Fishing faces serious difficulties and many boats are being laid up. I was pleased to see in the document on fisheries policy that there is a serious attempt to match up to what is involved. I am very interested in the part of the document which suggests there should be financial aid available to help in the search for new fishing grounds, like those deeper areas which have not yet been fully exploited, and for new species like the blue whiting. But if we are to do this we must also put a 1802 lot more money into selling species like the blue whiting. We in this country are very conservative in our eating habits and do not take kindly to new varieties and species of food.
I am concerned at the possibility that we may be forced into reducing the building subsidy from 25 per cent. to 18 or even 15 per cent. With the current escalating costs of oil and building, no reduction in the subsidy can be tolerated. Perhaps the Minister could also explain what is meant by the paragraph in the document which says there may be a subsidy for the de-commissioning of fishing vessels which have been operating for not less than 15 years. That is not a scrap and build policy. It seems to be just a scrap policy. If we do this, we must be sure how many vessels we shall have going to sea. There should be no question of de-commissioning vessels, with people in dire straits scrapping their vessels, and then finding in a few years' time that we have a shortage of fishing boats. There must be a planned target in terms of both the volume of fish and the number of vessels going to sea.
Can the Minister say whether we are any closer to a decision on what is to happen to the temporary fisheries subsidy? This is under review at present, and I hope it will not be too long before we have some idea of what is to happen to it.
The CAP was fundamentally designed for producers, and the dilemma we have always had in this country in facing up to the European market is how to produce food in marketable quantities while seeing that the cost does not fall unfairly on the consumer. In our concern for farm incomes, I am as much concerned for agricultural workers as for farmers. It is unreasonable to expect increased wages for them if there is not enough money to pay for rises. In an industry so dependent on subsidies, this is a serious problem.
It has been suggested in the debate that my right hon. Friend was frustrated in his desire to get a bigger devaluation of the green pound because of the performance of the Secretary of State for Prices and Consumer Protection. I do not know if that is true, but I do not imagine for one moment that my right hon. Friend gave way on that. I am 1803 sure it was a common policy that was agreed. I am coming round very strongly to the point of view that the difficulty in farming is that individual farmers decide what commodity to grow or what animals to go in for on the basis of the maximisation of profit. Their concern with the end result is not about food but about how much money is involved. We need a policy for food but we need a policy for the consumer.
The immediate short-term or even the longer-term importance of the CAP and the common fisheries policy is for a common policy not just for this country, which should mean the merging of the Ministry of Agriculture, Fisheries and Food with the Department of Consumer Affairs—they should be doing the same job together and not in competition, as inevitably sometimes happens—but for the whole of the EEC. Instead of dealing with individual small units of food policy—agriculture, fisheries, wine or whatever—we should be taking into account the global interests of all the people of the EEC, producers and consumers alike, and at the same time remember that in the past we wanted the EEC to look outwards. It seems to me that we are tending to become even more inward-looking, and I hope that by taking a more global approach we shall begin to produce the EEC we all want, a body with a common policy enabling everyone to work together and not in competition.
§ Mr. Deputy Speaker (Sir Myer Galpern)
I shall issue my final appeal to hon. Members to be brief. I remind the House that the closing speeches must begin by 3.30, and that six hon. Members on the Opposition benches still wish to speak in the debate.
§ 3.7 p.m.
§ Mr. David Crouch (Canterbury)
The hon. Member for Aberdeen, North (Mr. Hughes) spoke with great sincerity and concern about the future of the Common Market and this country's future contribution to agriculture and fisheries in the EEC. He added the right dimension to this debate, because, as I have listened to it for some hours, I have begun to wonder whether we are discussing an EEC matter or are simply discussing agriculture. We should have in the forefront of our minds this afternoon all 1804 those engaged in agriculture and fisheries. Those are the constituents of this debate. We are talking of agriculture and fisheries in a new and wider context, now that Britain is in the EEC and is operating under the CAP.
This has been a valuable debate. The Minister may wonder whether he has come under attack from both in front and behind, or whether he is getting support. When he was answering questions on Wednesday about the decisions he had reached in Luxembourg I said that I hoped he would dispel any impression that he was becoming complacent. If we allow the Minister to leave this debate today feeling that he has got away with a 5.8 per cent. devaluation, when he really wanted 10 per cent. if he is that sort of person—I do not think that he is—this debate will have been of no value. There is no vote at the end, and no determination by which hon. Members can speak against the Minister on any particular policy.
I would not mind if the Minister went away from this debate sustained in the thought that the House of Commons was seriously concerned about the future of food production in Britain and that the proposals in his White Paper on food resources should be achieved, but also seriously concerned that he should go back to the Cabinet and tell it that not enough had been done. We want him to tell the Cabinet that he must try again, that the annual review is coming up in November, and that the House of Commons feels seriously on this issue as it affects the fishermen and the farmers. He can tell the Cabinet that he sensed that the House was not trying to hit the Government but wanted to help them achieve what they had set out in their White Paper.
I appeared in a television programme about this subject yesterday, when some one hinted that I would not have minded a bipartisan approach if I thought that it would help the farmers and achieve greater food production.
I wish to ask the Minister about the green pound. The EEC has taken the view that farmers need to be insulated against purely currency changes rather than genuine price changes due to movements in costs and demand. That view should be challenged. It is a wrong 1805 premise. In practice, the farmers have not been insulated. Instead, they have been injured by the failure to let them experience the reality of the value of the pound across their whole business, across their output results as well as their input costs. They are greatly at a disadvantage with their competitors on the other side of the Channel. I know that the Minister recognises that fact.
One major effect of the green pound and the MCA system is to keep down consumer prices as long as the representative rate of the green pound is higher than the actual rate—the situation that obtains in Britain today. Therefore, it is clear that the Minister is in some difficulty as he talks to his ministerial colleagues. That is a position which militates against the farmer and assists the consumer. He and all other Ministers of Agriculture have always had the difficulty of reconciling the respective interests of the consumer and the producer. All Ministers have to work towards the farmer and the fisherman getting a fair and not an excessive return. Today, unfortunately, farmers are producing at a loss. It is not out of any whim that they decide to go out of business—particularly dairy farmers. It is because of their bank managers, who say "Not another penny".
The Minister is under great pressure. He must also have been influenced by the benefits we receive from the EEC in the payment of subsidies on imported foodstuffs. By his devaluation of the green pound he has considerably reduced the subsidies on bacon, processed pig meat, poultry, eggs, cheese and butter. There is a price to pay for what he has done to support the farmer.
In my opinion, the Minister has not done enough. I hope that he will take the seriousness of what we are saying this afternoon very much to his heart and to his head, and realise that bank managers will still say to farmers "I am sorry, you have been running at a loss of several thousand pounds a year with your prize Guernsey herd". I was thinking of writing to the Minister about one farmer in my district, but I hesitated to tell him that one of my constituents was in the process of going bankrupt, because I felt that that would prejudice my constituent's position with his bank manager.
1806 I hope that the Minister will not neglect to recognise that farmers are being caught by the effects of inflation over which they have no insulation and no protection. Their costs have risen enormously and, in addition, they have to sell at a fixed price, which is still unaffected by the devaluation of the green pound.
The green pound has become too artificial. It was all right when the difference between the moving rate of the real pound, across the exchanges, and the rate of the green pound was only marginal, but when the difference became 20 per cent. it was a gulf, not a gap. Then the difference was reduced to 13 per cent., and the Minister has further reduced it.
My right hon. Friend the Member for Knutsford (Mr. Davies) made a remarkably constructive and helpful speech. I agree with his suggestion that the Minister should consider introducing a formula. We do not say that that should be "spot on" and done quickly, to save the day. What we need is a formula which will enable us to live within the CAP, to improve it and to improve the lot of our farmers and other food producers.
§ 3.15 p.m.
§ Mr. Colin Shepherd (Hereford)
The common agricultural policy has come in for a tremendous amount of criticism from both sides of the House. Along with other hon. Members, I am disappointed that it should have come in for that sort of partisan criticism pre- and post-referendum. I have not yet heard anything constructive to put in the place of the CAP. There have been very many destructive remarks but nothing constructive. I shall continue giving my support to the CAP whenever I can. I feel that it constitutes a constructive means of taking forward the agricultural requirements of our national grouping in Europe.
The stocktaking document is an honest attempt to say "Stop, what is the situation? What does it look like now? Where are we going?" To that extent it has been successful. However, in the comprehensive coverage that it gives to the present siutation, rather excessive emphasis is placed on the glamour items such as milk, beef, sugar and cereals. Not enough emphasis is placed on the various Cinderella items. Others have already spoken 1807 about the Cinderellas of fishing, forestry and horticulture. The assumption it made in the stocktaking document and document R/1944/75, which covers the short-and medium-term outlook, that the CAP is working well as regards apple growing. However, the sudden large influx of low-cost French Golden Delicious apples that arrived in this country soon after 7th September has had the effect of demonstrating the shortfall of the CAP as regards sudden surges of surpluses.
It seems that Document R/1944/75 does not look to the future in the context of apples. It merely reports that the apple and pear harvests in 1974–75 were down on previous years. The document was published in July 1975, before the results of this year's apple harvest, and makes no prognostication as to the forward outlook. This year the production of apples in France is expected to be nearly 3 million tons. That is a record, a harvest 24 per cent. above last year's total. That constitutes a surplus. Already the damage has been done for this year.
I read an extract from a letter from an apple-growing constituent of mine who is very much concerned about the present situation. He writes:you will see…that the influx of large quantities of French Golden Delicious at a low price is nullifying the effect of the levy and depressing the overall market price level. It is further not being subjected to standards of inspection at the docks that English fruit is by Ministry inspectors at packhouses like ours. There is also considerable doubt whether it is fetching as much as the EEC intervention prices".I draw specific attention to this matter because it is one of very great concern. I hope that the Minister will take up the matter in his consultations both with his colleagues and with ministerial colleagues in Europe.
A sudden influx of such a character knocks the bottom out of the United Kingdom growers' market. My constituency is at the forefront of British applegrowing. Herefordshire growers are highly effective and efficient in producing high quality apples, and they must be allowed to continue. I subscribe to the right hon. Gentleman's statement that producers must bear part responsibility for surplus conditions, but when quality fruit is having to content with low quality dumping it is imperative to take action 1808 to stop the dumping. I hope that pressure can be brought to bear on the right hon. Gentleman's French counterparts to get their farmers to apply for the apple-tree grubbing-up grants that are available rather than forcing such action upon our own effective industry.
I now mention one point which involves the interests of our agricultural producers. Paragraph 18 of the stocktaking document says that this common measure is designed to ensure that enough people remain on the land to keep it in good heart. The policy of the Government and our European partners must not do only that. It must ensure that enough people keep in good heart to remain on the land.
§ 3.21 p.m.
§ Mr. Robert Boscawen (Wells)
I regret the shortness of this debate as many important factors in the stocktaking document and the CAP have not been dealt with today. I regret that on this occasion hon. Members have been able to make only two or three brief points each. However, there is time for me to stress a few points, which are of great concern to the area I represent, to the producers, about employment, and to the consumers.
I refer first to the position of the green pound. The next time the Secretary of State goes to Brussels he should take this message with him. We want to see a continuing, if not automatic, reduction in the differential of the green pound. We want to ensure that the unfairness resulting from the fact that the European producers receive a great deal more for their products than their counterparts in this country is brought to an end steadily—if not all at once, at least in a way whereby the producers can see that it is going to happen stage by stage over a defined period.
The trouble over the past two years has been the sudden jerks and lurches in policy. It is all very well for the Minister to boast that he brought in a substantial amount of resources for the United Kingdom dairy industry. He has done so, but the way in which it was done was most harmful. I refer to his method of throwing financial lifelines to the industry every few months when it is just about to surface for the last time. We hope that as a result of this debate we shall see a 1809 long-term policy developed for our dairy industry. I was glad when the Secretary of State said that he held the same point of view.
We must not allow the introduction of a two-tier price system for the dairy industry in this country. It could not work. The United Kingdom industry is an all-the-year-round producer of dairy products. That is our strength, and that must continue. I shall back the Secretary of State if in Brussels he adopts a firm line to the effect that we cannot accept the flexible intermediate price system which has been proposed in the stocktaking document.
This has been a welcome debate, if only because mention was made of the methods by which we must dispose of the European surpluses. There has been far too much emotive comment in the United Kingdom about the shortcomings of the system in building up surpluses. Thank heaven it is a system that builds up surpluses. It is far better than a system which creates shortages and famines. During the period in office of the first Labour Government after the war there was grave famine in Europe. At that time I worked in a European country where children scraped dustbins to obtain the last scrap of food. That situation now exists in other parts of the world. Let us talk more about disposing of the surpluses we create and indulge less in emotive attacks on butter, beef and other "mountains". I still believe that the CAP holds out the best hope for the producers and, in the long term, for the consumer. I hope that the Secretary of State will take that message to Brussels and that it will help to strengthen his arm in negotiations.
§ 3.25 p.m.
§ Mr. Hamish Watt (Banff)
I regret that of necessity we must shorten our speeches. I am grateful to the Minister for his attempts in recent months to devalue the green pound. Unfortunately, his action has amounted to too little too late. Dairy farmers' costs have risen by a greater percentage than has the devaluation of the green pound. As they can no longer recoup their costs, let alone make the necessary profits, dairy farmers in their thousands are giving up the unequal struggle.
1810 I must take to task the Minister for his words in the House last Wednesday when he claimed that he was giving the dairy farmers more than £90 million. Why "give"? If the cost of the production of a motor car rises by £90 and the company increases the price of the car to recoup its costs, that amounts to a figure of £90 in the hands of the motor company. Why make it sound in this case as though the dairy farmer is being given a handout? The Minister must stop deliberately distorting the truth.
§ Mr. Peart
I hope that the hon. Gentleman does not indulge in emotive language. I know that he likes the dairy industry as much as I do. I think that the award to the industry was a reasonable one arising out of an adjustment. I believe the industry deserves it because it has earned it. Therefore, I hope that he will not continue to use language of that sort.
§ Mr. Watt
I pay tribute to the Minister. He did his best, but, unfortunately, his best is not good enough in these desperate times. Ever since the war milk producers have not been able to recoup their costs. The industry has not been able to build up a financial buffer against such lean times. I say to the Minister and to the ghosts of other Ministers who have sat at the Dispatch Box before him that they have had their pound of flesh from the dairy industry. I hope that they are well satisfied. It looks as though the pages of the pamphlet "Food from our own Resources" will rattle round among the bare bones of our once-prosperous dairy industry for a long time.
In a previous speech to this House I urged the Government to realise that there are external forces at work that do not want to see a prosperous British agriculture. Our EEC partners want our market, and we must recognise the situation. We must see that they do not get it. But inaction now will cost the taxpayer dear. Once a farmer has given up milk production he will be reluctant to submit himself, his workers and his family to the rigid discipline of the dairy cow. Would any hon. Gentleman on the Government benches care to be tied to milking a cow 730 times a year as many small dairy farmers are? The 1811 nation must pay for that type of dedication.
But there is more to dairy farming than money, important though that commodity is. There is the job satisfaction that goes with the challenge of building up a dairy herd and bringing it to full potential. The building of a dairy herd is more than the work of a lifetime, yet it is work that can be destroyed by ill-considered Government policies. Few farmers once having sold their herd will seek to establish another. I believe that the most damaging piece of legislation which has come out of the EEC has been our adoption of the capital transfer tax. That measure, more than any other ever taken in this House, has destroyed the incentive for our dairy farmers to soldier on.
I said that the establishment of a dairy herd is more than a lifetime's work. If that work is destroyed by taxation, so that it cannot be handed on to a man's family, where lies the incentive to start a herd, let alone continue with one? What right have Governments of any colour to interfere with the work of generations of dedicated cattle breeders? Some of the Left-wing theorists on the Labour Benches would do well to spend a year tied to working with a dairy herd. Then they would see what would be the effect of such plans as the abolition of the tied house.
One interesting piece of information I have as a result of being a director of the Aberdeen Milk Board is the result of a survey carried out among the Board's producers to discover what would happen if the tied cottage was abolished. No fewer than 37 per cent. of the producers swore that they would go out of business within a year of such legislation being enacted. That 37 per cent. included most of the big producers, producing much more than 37 per cent. of the milk.
I return to the matter of real concern to manufacturing companies, and here I declare a further interest. As a director of the Aberdeen Board I have long worked in the best interests of my fellow producers. Our Aberdeen factory produces butter and skimmed milk powder to the highest possible specification. In the present glutted world market for skimmed milk powder, my Board experiences great difficulty in selling the stuff. Unfortunately, 1812 we have to sell much of it into intervention. What happens to it there? Normally it deteriorates. In an endeavour to make this product more saleable, my Board has spent £300,000 on capital equipment to enable the plant to add various types of vegetable and animal fats to the powder. Now we have the EEC Commission coming forward with Regulation 804/08 seeking to limit the manufacture of milk products to the production of substances that do not contain any non-milk products. Far from reducing surpluses, this will aggravate the position.
If the Council of Ministers wants to reduce milk surpluses it ought to do something tangible, such as trying to increase milk consumption in Europe. I amused the House earlier today with an intervention on that subject. The present high level of milk consumption in Britain did not happen by chance. It was the result of hard selling and advertising.
§ Mr. Deputy Speaker
I hope the hon. Gentleman will recall that I said earlier, that it was hoped that the Front Bench speeches would begin at 3.30 p.m.
§ Mr. Watt
I trust that the Minister, his colleagues and members of the dairy industry of the EEC will make the great effort that the dairy industry of Britain has made to get rid of milk surpluses.
This Chamber is no place to discuss the intricate details contained in these documents. Once again I commend to the House the setting up of a Select Committee on Agriculture in which we could discuss such details. This is necessary if we are to protect the long-term interests of our agricultural producers and our consumers.
§ 3.33 p.m.
§ Mr. James Scott-Hopkins (Derbyshire, West)
There is never enough time, in any of these debates, to cover all of the matters we would wish to. Hon. Members find it difficult, as I do, to sum up in a few minutes and to make all the points that they wish to make. Without doubt, all hon. Members would agree that this has been a worthwhile debate, in which many constructive points have been made. A remark by my hon. Friend the Member for Canterbury (Mr. Crouch) was particularly important. The Minister must not go away thinking that this has been an easy debate and that there has been 1813 no criticism of him. Worries have been expressed about the common agricultural policy
My right hon. Friend the Member for Knutsford (Mr. Davies) made an excellent speech, in which he said that on the surface it seemed that things were going smoothly for the Minister. It seemed that the CAP was developing along the lines he hoped, giving latitude and flexibility. The Minister must know that the harsh fact is that at home various sectors of agriculture are in dire trouble. The dairy industry is in the gravest difficulty. The adjustment of the green pound is not sufficient.
In hill farming, mentioned by the hon. Member for Cardigan (Mr. Howells), there are grave difficulties, in Wales and elsewhere in the United Kingdom. These farmers are having very difficult times.
The right hon. Gentleman talked of his wish for the implementation of certain directives, including the hill and marginal area farming directives, but they have not been put into practice, and will not be, in existing circumstances. The people in those areas need great help.
The key question, which has come up time and time again, is how the United Kingdom is to get a greater share of the market, not only in the United Kingdom but throughout Europe, for its farm produces. The hon. Member for Farnworth (Mr. Roper) said that the stocktaking report was vague. There were quite a lot of proposals in it of a definitive nature, and I should have thought that the one criticism that could not be made was that it is vague. It may not go far enough, but there are many suggestions in it worth considering.
The Minister will need to look into the question much more extensively in order to decide whether the specialisation of areas of production should be carried much further.
The right hon. Member for Battersea, North (Mr. Jay) mentioned milk surpluses, and made his views very plain, as he always does. I seem to have heard that speech about surpluses from him many times in the past few months and years. There is nothing new about that matter. He mentioned the very large surplus—over 1 million tons—of dried milk. I agree with the Minister that it would not be acceptable to start putting 1814 this into pigs as animal teed, except in minute quantities.
The hon. Member for Newham, South (Mr. Spearing) mentioned the world food shortage, as did my right hon. Friend. We have to institute a method whereby food can be put into circulation. At the European Parliament this week there was reference to a proposal from the Commission that a great deal more of the surplus—between 250,000 and 300,000 tons—should be made available to the developing countries as food aid, not, as the Minister said just now, at a rather cheaper price, but as food aid to the developing countries needing it. I hope that when this proposal comes forward it will be acceptable. What is one man's surplus is another man's normal reserve, and we heard during the debate about the 17 or 18 days' chewing of beef. The Common Market has very rarely considered what it would be prudent to have as a reserve for a household, for a country, or for the Community in general. We must always try to remember the interests of the consumer. The Minister talks about this but forgets about it immediately afterwards.
On the question of the green pound, once again, there is no doubt that when, in July, the Minister went to get the first devaluation he could have applied to the Commission to recommend a greater devaluation than he did. The reason he did not do so was made clear by my hon. Friend the Member for Flint, West (Sir A. Meyer).
§ Mr. Scott-Hopkins
Indeed, it was not the first. The right hon. Gentleman has been devaluing the green pound ever since he became the Minister, because of the decline of the ordinary pound and the disparity between the two. There is no doubt that he has not been able to do it to the full extent that the farming industry needed and could have been accepted by the consumer at that time, because he was not allowed to do so by a Cabinet decision here. The Commission assured me in Strasbourg this week that it would have been prepared to accept a greater devaluation had the Minister asked for it. I regret that he did not. He should have done. What the right hon. Gentleman has done is still not sufficient. 1815 Another point made by my right hon. Friend the Member for Knutsford concerning the green pound was that there should be a general review. I do not believe that there is any possibility of having a running devaluation, linking the green pound with the ordinary pound. That is not possible, for many technical reasons, but it is possible to have a statutory review of green currencies compared with other currencies every three or four months. I suggest that it should be done every quarter. This should be a statutory obligation on Ministers of Agriculture. They may have their hands held by finance Ministers, if necessary, but I suggest that an adjustment should be made on a quarterly basis if it is required. That would take out some of the uncertainty amongst farmers. There is still a gap, which is detrimental to our farmers, between the green pound and the money that they are getting. It is vital that this gap should be closed and kept closed.
The stocktaking document suggests that there should be a method whereby long-term forecasts can be turned into the reality of a forward-looking programme, over, say, a five years' level of production. That would make farmers' planning simpler. It would give more confidence to them and make forward estimating for budgeting easier. There is no doubt that at the moment there is no confidence for the future in the agriculture industry. Hill and dairy farmers have very little confidence in what will happen in the coming years.
When the Minister goes to Brussels at the end of this month he must impress on his fellow Ministers the necessity to come forward with—perhaps three years is too far ahead—a two-year forward-looking programme on levels of production which can be sustained and are sustainable within the resources available.
Reference has been made to the German Minister of Agriculture's thrashing around and refusing to accept the draft budget for 1976. I hope that the Minister of State will confirm what was said yesterday, namely, that the draft FEOGA budget for 1976 has been accepted by the Council of Ministers, including the German Minister. Although there will be a further review on the next stage of the budget procedure, the German 1816 Minister has accepted it as it is, and it gives a 17.6 per cent. increase for 1976. I hope that the Minister of State will confirm that.
I have not had time to mention all the important points which have been made by hon. Members in this debate. However, I hope that the Minister will realise that although there are many imperfections in the CAP—the stocktaking document highlights several, such as trying to deal with surplus milk by the two-stage method, which would be disastrous for British farmers because we have winter or autumn calving, whereas on the Continent they calve down on to the grass—given the right developments in future, it does and can assure farmers, as Articles 38 and 39 of the Treaty of Rome state, of an income comparable with that enjoyed by other sections of the community. That must be the Minister's aim, and it must also be our aim in supporting him when he goes to Brussels. The CAP, properly developed, can give stability not only to the farmer but to the consumer.
§ 3.45 p.m.
§ The Minister of State for Agriculture, Fisheries and Food (Mr. E. S. Bishop)
We have had a long and interesting debate. We have listened with great interest to the points which have been made. In the short time I have available for my reply I cannot deal with all the questions. I hope that I shall be spared interventions so that I can deal with some points. The points which I do not deal with will be noted for the next stage of our negotiations.
My right hon. Friend paid tribute early in his speech to the Scrutiny Committee for the tremendous amount of work it has put into the Community proposals which are before us. The right hon. Member for Knutsford (Mr. Davies) put the House even more into his debt today by the considerable contribution he made on this subject.
Not surprisingly, many hon. Members dwelt on the problem of the green pound. The hon. Member for Derbyshire, West (Mr. Scott-Hopkins) returned to the question. It is a problem which has particular reference to the decline in the dairy herd. I have over 80 villages in my constituency, so I am aware of the concern of farmers. I am conscious that 1817 many farmers have felt a sense of grievance about the green pound arrangements. I recognise that there was a good deal of misunderstanding about this device. Some sort of representative rate system was almost inevitable, given the nature of the agricultural policy and the existence of the floating currencies among the member States of the Community which make the MCA system necessary.
It was right of the previous Government to accept this system of representative rates and MCAs. What I find difficult to accept is the continuing criticism of hon. Members opposite that we have allowed the green pound system unfairly to penalise United Kingdom producers. Not once did the previous administration alter the green pound. My right hon. Friend has altered the green pound rate on four occasions. In October last we agreed to the green pound being devalued by nearly 7½ per cent. In March of this year there was a devaluation of 2 per cent. In August there was a 5 per cent. devaluation. This week we have announced another devaluation, one of nearly 6 per cent.
On each occasion we have needed to balance the interests of the producers and those of the consumers. Reducing the green pound value tends to raise food prices. I hope that hon. Members are aware of the importance of curbing inflation, as most of the country now is.
We have, however, recognised that our farmers are our surest source of food. They need to have adequate returns. The reduction in the green pound which was agreed last July, and which is the reduction formally before us today, was estimated, with the associated increase in the guaranteed price for milk, to increase the producers' return by £100 million in a full year. This is a substantial amount. However, we recognise that this must be seen against the costs the industry has had to bear.
§ Mr. Bishop
No, I must get on because there are many points to cover.
I was saying that the reduction in the value of the green pound last July, together with the increase in guaranteed milk prices, was estimated to mean an increased return for United Kingdom producers 1818 of £100 million in a full year. The further change my right hon. Friend announced this week has been estimated to have a similar effect. These large improvements are in addition to the substantial increase in guaranteed prices which my right hon. Friend made in this year's annual review. They come on top of the improvement in the 1975–76 CAP support prices and the new EEC beef régime which were negotiated at the beginning of this year.
The reductions in the green pound have enabled us to increase the guaranteed price for milky over 2p as from the beginning of September and by a further 2.3p from 1st November. The effective guaranteed winter price is now over 40p a gallon. The average guaranteed price for milk this whole year is 40 per cent. higher than the price set by the previous administration in the 1974 price review, This point should be emphasised on far more occasions when we are accused of not doing enough for the industry.
In the face of that record I find it very difficult to accept some of the criticisms of hon. Members opposite. At the same time, we have sought to minimise the effect on consumers. This is most important at a time when we want all the co-operation we can get in dealing with our anti-inflation policies. We have arranged for the latest green pound change to apply to beef from only 5th January and to wheat from 1st July next year. When fully effective, the increase in food prices as a result of the latest change should be less than 1 per cent. Moreover, in the long run it must be in the consumers' interests to maintain our farmers' returns at reasonable levels.
The hon. Members for Westmorland (Mr. Jopling) and the right hon. Member for Knutsford spoke of the need for considering automatic arrangements for reducing MCAs. Any change in the national representative rates involves difficult and very sensitive issues. Automatic rules could not take these properly into account. The Government, however, keep the green pound under regular review, and we have changed the rate four times already in just over 18 months.
I turn to the major document before us today, the Commission's stocktaking report. It was produced at the request of 1819 the EEC Council of Ministers following the Council's discussions last autumn, and today's debate is particularly timely because at the end of the month the Council will have its first substantive discussion of the Commission's report.
The stocktaking exercise is a valuable opportunity to review the operation of the CAP and to assist its development in the future. Clearly, this must be part of a continuing process. That is my reply to several hon. Members, including my right hon. Friend the Member for Battersea, North (Mr. Jay), my hon. Friend the Member for Farnworth (Mr. Roper) and the hon. Member for Westmorland. Major improvements can, and must, be made. I have particularly in mind the new beef régime which my right hon. Friend negotiated earlier this year. The Community recognises, I think, that further improvements still have to be made.
The Commission's stocktaking report contains much which accords with the United Kingdom's view of the CAP. That this should be so is a tribute to my right hon. Friend's efforts in the last 18 months, during which time he has had responsibility for agriculture and food. In particular, the Commission's report reiterates the importance of fixing support prices in relation to the needs of modern farms and the market situation for each commodity. This point was made by the hon. Member for Bodmin (Mr. Hicks) and others.
The report emphasises the need to avoid accumulating surpluses, and I think reference was made to the budget by the right hon. Member for Knutsford. The importance of containing the costs of agricultural support is recognised by all hon. Members, I believe. The Commission accepts that when surpluses do arise and have to be disposed of, Community consumers should be given maximum priority. There is recognition also of the need to take account of the countries outside the Community, including the developing world, though there are problems here in distribution.
As my right hon. Friend made clear, we intend to build on those points in the Commission's report. We want a flexible and efficient common agricultural policy which provides a sensible and reliable 1820 framework in which efficient producers in the Community can maintain and, where appropriate, expand their production. This is most important in framing our future policy considerations. This point has been emphasised this afternoon by various speakers.
The interests of consumers must be brought fully into the discussion of agricultural issues. I am afraid that those who say that we are not doing enough here often refuse to recognise that the whole purpose of agriculture and of food production is to provide for the needs of the consumer. Agriculture is not an end in itself, although, of course, it is a very important link in achieving that objective.
The philosophy which seems to underlie the Commission's document, therefore, is fully in line with the approach outlined in our White Paper published earlier this year. I emphasise that the basic principle underlying the stocktaking is that agricultural production should be located within the community where it may be most efficiently carried on. This is something which we must, and will, bear in mind. While our milk industry has certain climatic and structural advantages, it would be entirely in accord with the Commission's approach that our producers' share of Community production should increase to reflect their relative efficiency.
I must say a word or two more now about milk and surpluses. My right hon. Friend has made clear that he understands the industry's concern. His announcement a few days ago shows that that is so. We recognise that the Commission's proposal in its present form could cause difficulties for our pattern of winter and summer production, but here again the House may be assured that we shall have very much in mind in any discussions in Brussels the need to avoid unfair discrimination against our producers.
There have been references to the build-up of stocks of skimmed milk powder within the Community since the Commission's stocktaking document was prepared. This build-up indicates the need for short-term measures to reduce these stocks, and we shall certainly keep in mind the points made in the debate about that.
1821 The hon. Member for Westmorland spoke of accelerating the transition. I remind him that this was a part of the Act of Accession and is controlled there. Moreover, apart from the legal consideration, there are the other aspects, to which I referred earlier, in reference to the cost of living.
Comments have been made about the glasshouse industry. In this connection, I draw attention to the policy which we adopted to give aid to the industry early last year before it was ended in December. In fact, we were pioneers in this in Europe. I am pleased to note now that the better prices of produce have helped the industry through the difficulties which it experienced earlier this year.
There has been reference also to the storage of beef in the United Kingdom. Contracts for assisted private storage of beef have been placed since July for about 11,000 tons. I say that in reply to my right hon. Friend the Member for Battersea, North. The beef has not been out of the hands of traders or the trade. This is merely a matter of private storage arrangements.
We shall continue our policy of not agreeing to undue intervention for beef, and we hope that the present arrangements, which my right hon. Friend negotiated earlier this year, will enable us to ensure that, whatever changes are made in the beef regime, we are not at a disadvantage in relation to the present situation.
Now, a few words about the fishing industry. I noted the comments of my hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson), who reminded us that we have the biggest fishing industry in the Community. My right hon. Friend has said that we want to renegotiate the common fisheries policy as soon as possible and not wait until 1982, as the Act of Accession dictates. We have this matter very much in mind at present, and on my visits to many fishing ports throughout the country I have emphasised our interest and concern. We shall certainly bear those matters in mind in the near future.
I have not been able to answer all the points raised, but I assure the House that we shall keep in mind all that hon. Members have said. I end with a tribute to my right hon. Friend and his influence and interest from the days of Tom Williams 1822 and the 1947 Act, which was the basis of agricultural prosperity in this country. My right hon. Friend never forgets to remind us that he was PPS to Tom Williams. We shall keep in mind the policies of the Labour Government in 1947 for the security and stability of the industry in the development of the CAP, just as we did in what we said in the White Paper.
§ It being Four o'clock, the motion for the Adjournment of the House lapsed, without Question put.