HC Deb 23 December 1976 vol 923 cc920-7
The Minister of Agriculture, Fisheries and Food (Mr. John Silkin)

With permission, Mr. Speaker, I wish to report to the House on the results of the meeting of the Council of Ministers (Agriculture) on 20th-21st December.

The main questions discussed were the milk action programme, beef import arrangements, the green pound, aid to processing and marketing and the directive on meat products and fisheries. My right hon. Friend the Minister of State, Foreign and Commonwealth Office, has already told the House of the decisions taken in the Foreign Affairs Council on fisheries.

No further progress was made on the milk action programme. Some member States could agree to the proposals only if the tax on vegetable and marine fats and oils were included. I made clear that this tax was not a necessary part of the package and was totally unacceptable to us. Other member States supported my view.

I also restated our opposition to the proposed ban on investment aids and the Commission's proposal on "exclusive use". All the proposals on milk will now be reconsidered next year under the United Kingdom presidency.

I told the House after the last Council that I had withheld agreement to the Commission's proposal on beef imports until more liberal arrangements were accepted both for 1977 and for the longer term. The Council has now agreed to much improved arrangements. From 1st April 1977 the safeguard clause—a ban on beef imports from outside the Community except under special arrangements—will be removed. It will be replaced by a new permanent import regime. Levies on both fresh and frozen beef will be progressively dismantled when prices rise and imported beef is needed. Even when prices are low, the levy will not go above a level about 10 per cent. below the Commission's proposal.

There will also be provision for Community imports in 1977, effective from 1st April, of 75,000 tonnes of beef for manufacture at a reduced or nil levy, of which 25,000 tonnes will be for corned beef manufacture. For the first three months of 1977, before these arrangements come into effect, we have negotiated substantial improvements, on both canned and boneless beef, in the "jumelage" scheme, which allows for imports linked with purchases of intervention beef.

The United Kingdom's share of the 1977 GATT import quota, on which no levy is paid, is also being increased to 12,750 tonnes, the United Kingdom being the only country to receive an increase. These arrangements will greatly improve the opportunity to obtain beef from abroad next year. This will help the trader and the housewife.

The Commission and other member States again pressed me to make an immediate devaluation of the green pound. I resisted this. At the request of the Irish Government, the representative rate for the Irish pound is being devalued by 8 per cent. I asked for and obtained the Council's endorsement of the meat industry employment subsidy which we have found it necessary to pay in Northern Ireland.

The Council agreed on the proposed regulation on Community aid for processing and marketing. This will make available about £165 million over five years within the Community for improvements in the processing and marketing of agricultural products and fish. I believe that this will be helpful to investment in our food industry and that the housewife will gain from lower costs and improved quality in an already efficient sector of industry.

Finally, the Council agreed to an amended directive on health control of meat products in intra-Community trade. At our request, all references to veterinary supervision have been deleted. I am sure that the House will welcome this. We shall continue with our present arrangements for the allocation of responsibilities between veterinarians and environmental health officers and the whole question will be reviewed within the Community by July 1977. I am glad that this review is being undertaken quickly and I have stressed the importance of a thorough examination of the qualifications of EHOs.

Mr. Peyton

While some of what the Minister's statement contained will be welcome, I do not think that he will be surprised when I say that his statement was more remarkable for what was not in it than for what it contained. It was a thin and meagre diet to offer to the many people who are concerned about the present situation.

On the subject of beef, does the Minister accept that it is his duty to find a middle course between high prices, which will simply cause the consumer to turn away, and measures that will have the effect of undermining the market with the result that the home producer cannot even recover his production costs? Many people have not yet forgotten the 1974 slump into which his Government blundered.

Does the Minister agree that the action of the Irish Government in devaluing their pound by 8 per cent. will be a major stimulus to the smuggling industry on the border? What is he going to do about it?

The fishing industry is beginning to wonder whether it has any future at all. There are serious fears that we appear to be handing over a valuable asset. It is wondered whether at the end of the day we shall find ourselves as customers when we ought to be suppliers.

I find it astonishing that the Minister has made no substantial reference to the plight of the pig industry. Does he not now feel a sharp regret that he missed his earlier opportunity for a modest devaluation of the green pound, since that would have made possible a correction of the anomalous basis upon which pig meat MCAs are calculated. We now face a calamity, and the producers are facing it with the handicap of about £100 per ton on pig meat compared with what European exporters and producers receive.

It is clear that consumers will face the problem later and that there will be serious consequences for the industry in the long run. What action does the Minister intend to take? It would be absolutely wrong if he washed his hands of the problems so tragically affecting the industry.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

I draw the attention of the House to the fact that we are now encroaching upon the time provided for the Adjournment debates.

Mr. Silkin

I note what you have said, Mr. Deputy Speaker, and I shall therefore be briefer in my replies than otherwise.

My right hon. Friend the Minister of State, Foreign and Commonwealth Affairs, made a statement to the House on fisheries, and I do not want to add much to that. It is a delicate situation. I must remind the House that that which was so unfortunately given away in relation to fisheries when we joined the EEC—that to which so many hon. Members, including myself, objected at the time—means that my hands are now rather tied. A renegotiation starting from the beaches is a difficult process.

Beef has a long cycle of production. We now have a safety valve and we shall be able to import beef from outside the Community when it is required in this country and other parts of the EEC. Many hon. Members have been pressing for that for some time. We have put an end to the closed door situation that existed for a number of years.

The right hon. Member for Yeovil (Mr. Peyton) was right in saying that there is a danger of smuggling resulting from the Irish devaluation of the green pound. I hope that he was given sufficiently long notice of today's debate: he did not have enough notice last time. I draw his attention to what I said in my statement today. I asked for and obtained the Council's endorsement of the meat industry employment subsidy, which we thought necessary to pay in Northern Ireland in order to avoid smuggling.

I know that the right hon. Member for Yeovil shares my anxiety about the pig meat problem. I hope that the House will understand this matter and that hon. Members will not make arguments that they would not expound if they fully understood. The Commission had the power to change the basis of the calculation of MCAs by up to 8 per cent. That is all that is in its power without the matter going to the Council.

What I managed to obtain from the Council was something that we had achieved for the first time in EEC history, and it was achieved without the devaluation of the green pound. If we had devalued the green pound by the suggested amount of 4.5 per cent. as a method of dealing with pig meat, that would have meant that while MCAs went down by £40, the cost of feeding stuffs would have gone up by £40. No one would have been better off.

We have to change the basis by recalculating MCAs by a different method, or by some other means. A change in the method of calculation would require the unanimous consent of the Council. A number of members of the Council, including Germany, Denmark and Holland, for reasons that I will not go into now, would not wish the recalculation to be made without a great deal of discussion. There have been bilateral discussions and they are continuing, but the Council's decision could be against us. I am as concerned as any other hon. Member about the situation, and I am looking into alternatives.

Mr. Watkinson

Can the Minister be more specific about beef measures and say whether beef prices will fall next year? I appreciate what the Minister has said about the pig meat industry, but there is grave concern in my constituency. I appreciate the difficulties about pig meat MCAs that the Minister has explained to the House, but does he have in mind the possibility of direct measures being taken by us at home if they are necessary to save the industry? Has the Minister noticed the statement made by M. Lardinois about the huge current food surplus between the EEC and the United States? What are the Minister's views?

Mr. Silkin

I hope that I made it clear to the House that I am looking into every possible means of dealing with the problems of the pig meat industry. I hope, Mr. Deputy Speaker, that you will forgive me for my lengthy reply, but I want hon. Members to understand this. I hope that the problems will be overcome. We shall do our best.

If more beef comes into this country, that must have an effect on prices.

Mr. Grimond

The House cannot too often reiterate the demand of the fishing industry for a 50-mile limit, if only for the purpose of strengthening the Minister's hand in negotiations. Is the right hon. Gentleman aware that if the £165 million allocated for processing and marketing is spread throughout the whole community over five years, it might not amount to much, but it could be very useful? How is it proposed to operate the system? Would it be open to small producers in my part of the world, who have been hard hit, to apply for grants?

Mr. Silkin

I am grateful for the right hon. Gentleman's remarks about fishery limits. The opinion of the House is listened to with great interest in Brussels. The basis of the new scheme is that if the individual marketeer or processor pays 50 per cent. and there is a minimum contribution of 5 per cent. from the national State, the Community will pay about 25 per cent. It could be very useful and I hope that it will help in exactly the circumstances described by the right hon. Gentleman.

Mr. Bidwell

Is it true that the Council has decided to write £60 million off the value of more than 1 million tonnes of dried milk?

Mr. Silkin

I have no final information on that point. This scheme caused many of us considerable worry and I think that my hon. Friend is well aware of our attitude to it.

Mr. Jim Spicer

The Minister has stated how concerned he is about the catastrophe facing the pig producers, but is he aware that if the pig processors went out of business, the producers could never come back and would be lost for all time? Does he not agree that it is time that he took urgent action?

Is it not a sad commentary that if 1,200 workers in the Marathon shipyard were facing dismissal, action would be taken almost overnight, but when we face the same situation in the pig processing industry, nothing is done because the workers are in little packets all over the country?

The write-down in the value of milk powder was inevitable, but does not the right hon. Gentleman accept that a great responsibility rests on him to reach agreement on milk early in the New Year? Is he aware that if agreement is not reached quickly, we shall face chaos and an ever-mounting stockpile of milk powder in the summer? I know that the hon. Gentleman is aware of these points, but can he give an assurance that they will receive priority over any other action that he may take in the new year?

Mr. Silkin

The hon. Gentleman will do me the credit of believing that I am not doing nothing about pig meat. I have moved the position slightly, though not nearly as far as I should like. It is a most urgent question and I understand it from the points of view of both the processors and the producers.

There are many reasons for the milk surplus—or the butter mountain as it is sometimes called—not the least of which is connected with the price and the fact that the consumers throughout the Community have resisted paying prices which they found unacceptable. We have to get the price level right, too.

Some of the measures in the milk action programme were very useful, but I do not see how, for example, the tax on margarine and frying oils will make the slightest difference to the consumption of milk anywhere in the Community.

Mr. Jay

Did we not have an excellent middle way in our deficiency payments system, which was destroyed by the Conservative Party? Can my right hon. Friend make clear whether after April 1977 beef imports for human consumption from efficient producers such as Australia, New Zealand and Argentina will be entirely free, apart from the levies and import duties we shall have to pay anyway?

Mr. Silkin

I am well aware of the point made by my right hon. Friend about our original deficiency payments system. I can give him the assurance which he sought in the second part of his question.

Several Hon. Members

rose—

Mr. Deputy Speaker

Order. In fairness to those hon. Members who have Adjournment debates, we must move on.