HC Deb 22 June 1976 vol 913 cc1366-73

3.43 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

With permission, Mr. Speaker, I should like to make a statement about the agreement reached in the Council of Ministers (Agriculture) in Luxembourg yesterday about imports of butter from New Zealand. The Council agreed on arrangements which carry out fully and satisfactorily the understanding secured at the European Council in Dublin last year.

Under these arrangements, the quantities which may be imported from New Zealand in 1978, 1979 and 1980 are 125,000, 120,000 and 115,000 tonnes respectively. These are firm and fixed quantities.

Within these fixed quantities, there are arrangements under which some butter may be diverted, if necessary, from the fresh market into food manufacture. This will apply only to imports in excess of 25 per cent. of our butter market in the preceding year. It will not affect New Zealand's total entitlement or her financial return.

Finally, the Council made a statement confirming that Protocol 18 remains the basis for continuing imports of New Zealand butter after 1980. The Commission will make a report in 1978, and this will serve as a basis for further decisions on these continuing arrangements.

I kept in close touch with the New Zealand authorities during these negotiations. New Zealand fully agrees that the settlement reached takes account of their essential interests both up to 1980 and afterwards.

Mr. Pym

The House will be glad that this important matter has been resolved. Does the last sentence of the statement, which refers to the settlement taking account of New Zealand's essential interests, mean that New Zealand regards this as a fair and satisfactory arrangement?

I should like to ask the right hon. Gentleman three other questions. First, if the whole of this quantity comes to the United Kingdom and it exceeds 25 per cent. of consumption in the previous year, who will pay for the decrease in the price of butter diverted into manufacturing? The right hon. Gentleman said that it would not affect New Zealand's financial return. Somebody will have to pay the bill. Who will that person or body be?

Secondly, will the Minister be more explicit about what he believes will be the impact and effect on the United Kingdom butter market, which is now in a state of revival?

Lastly, does not this agreement mean that it is even more vital now than it was before to get on top of the ever-increasing surplus of dairy products in the Community? Will he assure the House that he will not again agree to a hare-brained scheme that demonstrably fails to achieve the required objectives?

Mr. Peart

I am surprised that the right hon. Gentleman should be contentious about this matter. The Community has always recognised a continuing commitment to find room for New Zealand's imports into its market. The Community is pledged to agree this autumn on measures designed to bring the milk products market into better balance and to rectify the surplus situation. I cannot go beyond that. I think that this is a very good deal for New Zealand. Indeed, the Deputy Prime Minister of New Zealand made a magnificent statement on this matter. He said that the agreement protects New Zealand's interests, and added: I am particularly grateful for the understanding and support received from the British Government and the EEC Commission. Now that the outcome is known the dairy industry will be able to plan ahead with greater confidence. On manufacturing, the Deputy Prime Minister of New Zealand said that in the lengthy negotiations New Zealand had been at paints to stress the need to preserve cif returns and the need to be able to market the diverted butter. This will not cost us what I think the right hon. Gentleman implied. Naturally New Zealand will have access to our markets in the way that it always has had. This is a very good deal for New Zealand.

Sir G. de Freitas

Does my right hon. Friend believe that this settlement bears out the belief of those of us who thought that New Zealand would get a perfectly fair deal from the Community as a result o the British Government's representations?

Mr. Peart

Yes, I accept that. Indeed, the Deputy Prime Minister of New Zealand publicly stated: The package was the result of very tough negotiations and what had finally been agreed took account of New Zealand's essential interests. He then went on to talk about access after 1980: None the less, a statement read into the Council Minutes"— [Interruption.] I do not know why hon. Members laugh; this is a major statement affecting New Zealand— makes it clear that the Commission will submit a further report to the Council before 31st December 1978, and this, taken with the decision made by the Heads of Government at Dublin, assures the ongoing nature of the arrangement beyond 1980. New Zealand has praised this deal, and I am very proud of it.

Mr. John Davies

Does the right hon. Gentleman recognise that the satisfactory settlement which he reached is fully in conformity with the terms negotiated at the time of accession—and that anything that has been said since then to imply that the terms of accession did not provide for just such an arrangement totally falsifies the reality of the situation?

Mr. Peart

I accept that the agreement was based on Protocol 18. The Government and I played a major part in achieving that. I am grateful for the right hon. Gentleman's support.

Mr. Jay

I understood the Minister to say that imports of New Zealand butter would occur on a declining scale from 1978 to 1980, from a figure which was already much below that of five years ago. Will the Minister assure us that the Government do not accept the presumption that the decline will continue after 1980?

Mr. Peart

My right hon. Friend is wrong, as he sometimes is, on this matter. The quantity that I negotiated was fully consistent with the Dublin declaration and is more than New Zealand has recently sent. It means that the average entitlement for 1978 to 1980–120,000 tonnes—is higher than the average sendings in 1974 and 1975, which was less than 119,000 tonnes. Indeed the degressivity is less than that originally proposed by the Commission. I hope that my right hon. Friend will not nit-pick and that he will welcome this deal.

Mr. Geraint Howells

I am sure that the New Zealand Government were pleased to accept the present arrangements. But I wonder what were the views of the British producers. If home milk production continues to rise at the present rate for the next five years, does the Minister think that we shall take up the quota of New Zealand butter that was agreed yesterday? If so, what effect will that have on our dairy industries? We are all aware that the New Zealand butter imported into Britain has been subsidised during the past few years from EEC funds. Will that policy be continued until 1980?

Mr. Peart

The hon. Gentleman represents an important dairying area in Cardiganshire. He will know that we had a moral obligation to help New Zealand. That was stated by both Governments. After all, New Zealand came to our aid voluntarily in a crisis. New Zealanders regard themselves as British in the best sense. That is not sentiment. I believe that we fulfilled that moral obligation under the terms of the Dublin Summit agreement. I do not worry. I think that we can accommodate this market and at the same time have a flourishing dairy industry in our own country.

Mr. Mark Hughes

I congratulate the Minister on this agreement. However, does it not make a reform of the Community dairy industry more essential than ever? The accession of this quantity of butter from New Zealand puts enormous pressure on the Dutch, the Danes and the other producers in the Community and must force the Community to mend its ways of dealing with dairy products.

Mr. Peart

I am not sure what my hon. Friend is trying to argue. The dairy industries of the countries he mentioned are efficient in many ways. The Com- munity agrees with us that there should be a link with New Zealand—we have achieved that—despite the fact that it has problems with its own dairy industry. Therefore it was not easy for the Commission to make that decision. The Commission felt that it must honour the Dublin agreement. I am proud to say that it did so. Commissioner Lardinois played an important part in that.

Mr. Marten

The Minister said that some imports of butter may be diverted into food manufacture. Does that mean that if the British people want to eat more than 25 per cent. of New Zealand fresh butter they will not be allowed to do so? The Minister did not answer the question asked by my right hon. Friend the Member for Cambridgeshire (Mr. Pym) about cost. The Minister said that ongoing arrangements would be assured. To which assurances did he refer?

Mr. Peart

I referred to the assurances contained in my statement, which have been approved by the New Zealand Government.

There will be no diversion into manufacture unless imports of New Zealand butter under the special arrangements are more than 25 per cent. of the United Kingdom market for butter for direct consumption in the preceeding year. If imports of New Zealand butter amount to more than 25 per cent. of the United Kingdom market for direct consumption in the preceeding year, butter may if necessary be diverted into food manufacture—for example, cakes and biscuits. This is a sensible arrangement which was approved by New Zealand.

Several Hon. Members

rose—

Mr. Speaker

If the House will cooperate with me and ask brief questions, I hope to call everyone who has stood so far. However, I hope that hon. Members will ask single questions, as there is a great deal of other business.

Mr. Spearing

Does my right hon. Friend remember saying that the Dublin agreement on special arrangements would not deprive New Zealand of the outlets which were essential to it after 1977? Have the New Zealand authorities confirmed that the quotas which my right hon. Friend announced will not deprive them of those outlets? How do we know that the amounts sent out will be up to those figures?

Mr. Peart

I cannot say exactly. The Deputy Prime Minister of New Zealand has confirmed that we agreed.

Mr. Moate

Will the Minister be more helpful about the post-1980 situation? Does he expect the principle of degressivity to continue to apply thereafter? Is there a longer-term assurance?

Mr. Peart

I mentioned the proposal for a review in 1978 to determine access after 1980. The New Zealand Deputy Prime Minister said: It is clear that the arrangements will continue after 1980. The Council of Ministers were not prepared to admit the inclusion in the Council regulation of an article making explicit provision for a review in 1978.… None the less a statement read into the Council minutes makes it clear that the Commission will submit a further report to the Council before 31st December 1978, and this, taken with the decision made by Heads of Government at Dublin, assures the ongoing nature of the arrangement beyond 1980. We have confirmed that. It was approved by New Zealand. [Interruption.] Hon. Members may mutter. I cannot be more New Zealand than New Zealand. I have defended New Zealand's interests. That was agreed.

Mr. Hooley

Will my right hon. Friend say what will be the effect of this agreement on the consumer? Will he confirm that the intervention stocks of butter by the end of this year will be 400,000 tonnes?

Mr. Peart

I cannot confirm that. Nor can I give precise figures.

Mr. Raphael Tuck

Do the Government assume that New Zealand will produce 500,000 tonnes of butter less every year until finally it produces nothing at all?

Mr. Peart

Mr hon. Friend is being facetious. I have the impression that some hon. Members wish that I had not succeeded.

Mr. Corbett

I accept that my right hon. Friend has done his best within the straightjacket within which he must live. Will he not take on board the point made by my hon. Friend the Member for Durham (Mr. Hughes) that the agreement underlines the urgent necessity for the Community to put its own dairy industry in order?

Mr. Peart

I do not wear a straitjacket. I was freely able to negotiate with New Zealand and with my colleagues in the Community. Hon Members are showing that they do not wish to have a successful deal with New Zealand. We achieved a successful deal, which was approved by the Government of New Zealand.

Mr. Gould

Does the Minister accept that it is difficult to base any argument on the amounts of butter supplied by New Zealand to this market over the past year or two, as the New Zealanders have been subject to considerable pressures by the Commission—in terms of prices and the future arrangements on which they depend—not to supply the quotas to which they are entitled?

Mr. Peart

I agree with my hon. Friend the Member for Southampton, Test (Mr. Gould). He is a New Zealander and, in view of his background, he knows the difficulties. The tonnage agreement which I obtained is a good one. The continuing access provision was approved by New Zealand and the New Zealanders responsible for this matter. I am proud of the agreement. It shows that we have been able to accomplish what we set out to achieve.

Mr. Ioan Evans

Although the Minister has maintained the interests of New Zealand, has he considered the essential interests of the housewives of this country? Surely we should seek to scrap the EEC common agricultural agreement, which works against the interests of the housewife. In view of the build-up of the surpluses and the price rises, something must be done to change the scheme.

Mr. Peart

I am rather surprised at that question. My hon. Friend the Member for Aberdare (Mr. Evans) must have supported me on previous occasions when I was critical of negotiations. Certainly the present arrangement is not incompatible with the needs of our consumers. If my hon. Friend is saying that I should not have obtained this access, I understand his argument, but I still believe that it was right to obtain access for New Zealand butter to this market. We gave a pledge on that matter as a party, and I am sure that my hon. Friend was party to that pledge. I gave a pledge to the Dublin Summit, and I shall not go back on it.

Mr. W. E. Garrett

I am sure that it has not escaped your attention, Mr. Speaker, that when we are discussing agricultural matters, I am always among the last to be called.

Mr. Speaker

I always keep the best until last.

Mr. Garrett

I know my right hon. Friend's loyalty to and love of New Zealand, and I accept his assurance. I know that he seeks to obtain the best possible deal he can for New Zealand. Therefore, I hope that the agreement is more successful than some of the rotten agreements we have made in the last few months. Is my right hon. Friend aware that the farming correspondent of the Observer, Mr. Murray, correctly anticipated the situation by stating the precise terms of the agreement that was read out this afternoon? Was that intelligent anticipation, or was it a leak?

Mr. Peart

My hon. Friend, who has read the Dublin agreement, will know the aims of the British Government. Therefore, there is nothing new in the situation, and indeed the matter was endorsed by the House of Commons. I know Mr. Murray as a distinguished journalist and a sensible man. There are no leaks involved in this matter. I have just returned from Luxembourg, where we had long discussions late into the night. I was glad to achieve what I did achieve. I was grateful for my hon. Friend's earlier remarks.

Mr. Pym

The figures of tonnages were mentioned in the course of the debates on the European Community on Thursday of last week. I think that that is the answer to the hon. Member for Wallsend (Mr. Garrett).

Mr. Peart

I am grateful for that reinforcement of what I said. That is what we want to endorse in relation to the Dublin Summit.