§ 10.0 p.m.
§ The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang)
Once hon. Members have gathered their thoughts, perhaps we can move on to another area of the common agricultural policy—the documents on the Mediterranean sector that are before us.
I beg to move,That this House takes note of Commission documents R/3197/77, R/3197/77 Addendum 1, R/3270/77 and R/402/78 on Mediterranean agriculture and the wine sector.The principal documents, R/3197/77 and its addendum, contain a set of Commission proposals for developing the Mediterranean regions of the Community. Such regions are of importance in the existing Community and will take on an increasing significance with the progress of enlargement. I therefore welcome the decision of the Scrutiny Committee to recommend the documents for debate. Related to the main documents are R/ 3270/77, which deals with the financial consequences, and R/402/78, which contains the Commission's short-term proposals on wine referred to in the principal text.
The first volume of R/3197/77 defines the problems to be solved and outlines the general principles which the Commission believes should be followed in tackling them. The basic problem in the Mediterranean regions is how to encourage economic growth and raise standards of living in areas which are heavily dependent on agriculture, have large agricultural work forces and possess weak industrial sectors. The Commission recognises that solutions cannot be found in agriculture alone and that an overall economic plan for these regions will be required. But, because of the importance of agriculture, it has made a start by putting forward the firm proposals for action in the agriculture sector which we are to debate tonight.
I should sketch in briefly some history to these proposals. Farmers in the south of the Community have complained for several years about the relative weakness in the price support arrangements for some Mediterranean products, notably 1458 wine and fresh fruit, and about an alleged lack of effective Community preference for such commodities. Moreover, the Community has concluded preferential trade agreements with most Mediterranean third countries which contain tariff concessions for Mediterranean agricultural products. Southern farmers have claimed that these agreements have further eroded their degree of Community preference.
In these circumstances, it is perhaps natural that there should be a school of thought which believes that the problems of Mediterranean agriculture could be solved by granting Mediterranean products "equality of treatment" with temperate ones. This would mean more price support, including more extensive intervention facilities, for these products and increased restrictions on imports from third countries. The result would be higher prices for Mediterranean products throughout the Community; production would increase, consumption would fall and structural surpluses would be created or worsened. Such an approach would be completely unacceptable to the United Kingdom Government.
I am glad, therefore, that the Commission has rejected this simple policy of more support and protection for Mediterranean products. Instead, it has emphasised that the measures adopted must not conflict with the Community's existing policy of reducing structural surpluses and avoiding the creation of new ones. Nor must they lead to increases in protection which would damage relations with third countries and lead to higher prices to consumers.
The Commission's analysis shows conclusively that the weaknesses of Mediterranean agriculture principally arise from structural deficiencies in production and marketing. Farms are small and often fragmented, communications are inadequate, marketing organisation is poor, investment is low and much of the soil is poor and arid. The large agricultural work force is under-employed. High prices would not help to solve these fundamental problems.
Instead, the Community has two broad options. The first would be to take drastic action to increase farm sizes and cut the agricultural work force. This would be extremely expensive and would have 1459 unacceptable social consequences, as it would force out of agriculture large numbers of workers who could not be absorbed into the industrial and service sectors. Instead, the Commission has decided to preserve employment and to seek gradually to improve farm efficiency, marketing and incomes. Such a policy will not provide a magic solution to the problems of Mediterranean agriculture. It will be expensive, but it will give the Community a long-term plan on which to work and one that will not involve either greatly inflated prices or greatly increased levels of unemployment.
I shall deal briefly with the implications of enlargement. In our view, the Commission's proposals should be judged on the basis of whether they provide a realistic attempt to tackle the problems of the Mediterranean regions of the existing Community.
But there are two points which need to be borne in mind. The first is that the prospect of enlargement strengthens the need to avoid raising the levels of support and protection for Mediterranean products. Support prices in the Community for these products are in general higher than those in the applicant States, and the extension to any new member State of these higher prices could well encourage increased production and lower consumption. In turn, this could mean new or worse surpluses of some products. Any additional increases in common price levels would make matters worse.
The second point is that the agricultural sectors of the applicant States share many of the structural characteristics of the Mediterranean regions of the existing Community. Many of the proposals which we have from the Commission at the moment are limited to certain strictly defined areas of the existing Community. They would not be extended automatically to the new member States. If, however, the Community accepts the new members, we shall also accept a degree of responsibility for their agricultural industries, and it would be difficult to refuse to extend to them measures which had been adopted in the existing Community to deal with problems which were similar to theirs. This, I believe, argues for great caution in selecting structural measures at the present time, since any programme of reform for Mediterranean agriculture would, in an enlarged Com- 1460 munity, become that much more expensive.
The addendum to R/3197/77 and document R/402/78 give the legal texts of the Commission's proposals.
On the marketing side, the proposals for olive oil are designed to increase consumption of olive oil by reducing the price to consumers. Initially the new arrangements would cost about 15 per cent. more but in the long term the risks of expensive surpluses should be reduced. At present, we see no justification for altering the present system of calculating reference and entry prices for fresh fruit and vegetables so as to strengthen Community preference, but other proposals in this sector may with some adjustments provide an acceptable basis for tackling current problems.
The proposed aids for processed fruit and vegetables are designed to make Community products competitive with third country products by lowering Community prices. This approach is an expensive one and will need to be looked at carefully to ensure that it is cost-effective. But it could well be more acceptable than alternative measures which would raise prices or interfere with supplies. We see no major problem with the modest scheme for aid for field beans and peas.
The marketing measures for wine are designed to provide interim marketing improvements in the period before the measures for longer-term structural reform can begin to take effect. We share the Commission's belief that the main need in the wine sector is to attack the current surplus by taking structural measures to reduce wine production. We note the Commission's undertaking to submit proposals shortly over and above those already submitted for Languedoc-Roussillon. It is clear that any interim marketing measures should be compatible with the longer-term structural aims. Therefore, the link which the Commission sees between the two sets of measures is very important.
The structural proposals that the Commission has tabled include proposals for 50 per cent. FEOGA aid towards the cost of improving infrastructure, speeding up irrigation, restructuring and reconverting vineyards and improving marketing and processing. It is a sobering 1461 thought that these relatively modest proposals are expected to cost some billion units of account over a five-year period. This illustrates how expensive structural reform can be and how necessary it is to scrutinise these proposals in depth to ensure that they are necessary and cost-effective.
It is fair to say that the principal implication for the United Kingdom of the marketing and structural proposals is the cost of implementing them. The Commission's estimate of the financial implications of all of the proposals, save for those on wine market management, are set out in R/3270/77. They are expensive, and if these proposals were accepted as they stand, the burden on the United Kingdom Exchequer would be about £30 million per annum.
The cost of the interim market measures for wine would vary from year to year with the size of the harvest. Our share of the cost might be £2 million in a normal year. Clearly it is necessary to take a very tough approach to expenditure of this magnitude. Of course, we cannot simply refuse to assist the Mediterranean regions of the Community.
It would be illogical to welcome the prospect of the accession of three more Mediterranean States and at the same time to deny aid to the Mediterranean regions when it is clear that they have severe problems to overcome. But I should like to emphasise that we must maintain close control over Community expenditure in this sector and ensure that it is relevant to the real needs of the Mediterranean regions.
The Government's reaction to the Commission's package has therefore been to accept it as a working basis for tackling the problems of the Mediterranean regions, to support the Commission's conclusion that the problems of these regions arise from poor structures and marketing and should be tackled by measures designed specifically to alleviate these weaknesses, but to stress that the individual proposals must be carefully examined to ensure that they are necessary and cost-effective. This examination needs to be thorough. Decisions must not be rushed.
§ 10.12 p.m.
§ Mr. Michael Jopling (Westmorland)
After the relative heat of the end of the last debate we are now slipping into more somnolent thoughts of the Mediterranean climate, which is reasonably acceptable after a long day.
I do not know whether I should declare an interest but perhaps I should do to be on the safe side. I think that my interest as a farmer is extremely vague. We are grateful to the Minister for explaining the implications of the document at greater length than we might have expected. He was right to point out that they have very little application to this country and deal mainly with the South Mediterranean and are particular to these parts of the Community.
However, there are one or two points in which we have an interest. The Minister explained that the structural improvements which are proposed are likely to be very expensive. They are likely to cost 1,026 million units of account over a five-year period, and the cost to the United Kingdom will be about £30 million.
This is the first time we have debated major improvements of this kind affecting other parts of the Community. Perhaps the Minister would tell us how he acquaints himself with the details of the needs of areas such as those we are discussing in Italy and France. Does he rely utterly on reports from the individual national Governments or from the Commission? Or do the British Government send staff to these areas to see what is happening? It is important for the Minister to explain the background to his acquisition of knowledge in deciding whether he should support or oppose schemes of this kind in the Council of Ministers. This is relevant and helpful information which we hope that the Minister will give the House.
We must approve of worthy schemes to improve the structure of marketing and the provision of other facilities in areas such as these in which conditions are extremely difficult and the standard of living low. Farmers in southern areas of the Community have complained that price guarantees do not work through to them. The Minister will be aware that farmers in certain parts of the United Kingdom say that that is true of this country. I remember that when I was 1463 on the NFU Council these comments were made about potatoes, lambs and other matters. It is a familiar problem and it is a complaint regularly voiced by farmers in these parts of the Community.
It is right in principle that we should support schemes of this type to improve facilities in these areas. We obtain considerable help from the Community in a wide sphere of activity, agricultural and industrial. It is right that this should be a two-way movement. It is also right that if money is available from the Community to support schemes in this country it should be provided if the British Government are prepared to prime the pump with money in the first instance. We are now seeing that process working the other way round.
It is important in these schemes that the national Government should be prepared to prime the pump with some cash. We cannot be sure whether it is necessary for Community money to be put into vast irrigation schemes in Southern Italy, but if the Italian Government are prepared to put in cash, it makes it easier to reach a decision.
It is vital that we as a nation ensure that if production is to be stimulated in these Mediterranean areas, or even if production is to be shifted from one enterprise to another, it will not add to existing structural surpluses.
A good deal of the material in these documents refers to the problem of the provision of olive oil. It is a product in which there is a surplus. I draw attention to this point in an earlier debate, but I was surprised to see that one of the proposals in the Commission's price package is that there should be an increase of 8.7 per cent. in the intervention price for olive oil. That seems to fly in the face of everything we were discussing earlier. It is strange that for a commodity that is in surplus there should be such a tremendous increase in intervention price at that level. It would be helpful to be told why that is so.
When we hear about the conversion from olives to other crops it would be helpful to know what other crops the Minister has in mind. I hope that the Minister will not say that vines are included, because they would simply add to an existing surplus.
1464 Finally, I wish to ask the Minister a question on structure. What will be the next step? Are we likely to see a flow of schemes of this sort each year to provide structural aid to various parts of the Community? I imagine that after the accession of Spain, Portugal and Greece we shall be likely to find many more regions similar to those we are discussing in this debate.
If we are to see a stream of documents and proposals of this sort, some of the northern States in the Community may become a little restive and may try to put in schemes of their own. I can think of some parts of the United Kingdom—some parts of Northern Ireland might come into this category—that might take the view that schemes of this sort should be enlarged to cover them. We believe that there is a large job to be done on these lines in many areas, including the United Kingdom uplands.
In these proposals we find many familiar features. For example, there is the need for rural improvement policies that embrace matters other than agriculture. We need schemes to bring forestry, tourism and light industry into some of the deprived areas, especially in the United Kingdom uplands. We find both the problems and the solutions reasonably familiar.
We have been told about the formation of the European joint trade table wine organisation. When we consider the objectives and possible jobs that it is proposed that the orderisation might under-take, it seems that we are setting up another Home Grown Cereals Authority or a Meat and Livestock Commission. It has always seemed familiar ground. I can remember covering the same ground many years ago in the House.
We would accept the organisation on the lines of the Meat and Livestock Commission or the Home, Grown Cereals Authority. If that is a fair analogy, which I think it is, it is something that we would accept. We would consider it a wise provision to make for the wine sector. However, we realise that we are dealing with an interim document. We agree that the Government should press for the early appearance of a long-term structural measure to deal with these problems. We shall look forward to seeing that document when it is eventually published.
1465 These are not contentious matters. However, I hope that the hon. Gentleman will be able to answer the few points that I have raised.
§ 10.27 p.m.
§ Mr. John Evans (Newton)
The hon. Member for Westmorland (Mr Jopling) has said that these are not contentious matters. That may be true. But they are extremely important. It is not my intention to detain the House for long. I merely wish to make one or two comments in respect of the regional policy implications of the documents before us.
From time to time we discuss the ramifications that flow from European policy as regards regional policy. All too often we lose sight of the fact that compared with the regions that we are discussing tonight the majority of regions in the United Kingdom are prosperous. That is the position of most of our regions as opposed to the serious poverty and hardship that exists, for example, in Southern Italy. There is no doubt that the European Assembly and the European institutions are far more aware of the problem than the House.
When we refer to the fact that the prosperous regions of the Community have grown more prosperous than the least prosperous regions to the order of six to one as opposed to five to one in 1970, we lose sight of the fact that we are referring to Southern Italy as opposed to regions of the United Kingdom. This means that the benefit that flows from Community membership will be concentrated in those regions rather than regions in the United Kingdom. All too often that is forgotten.
When we refer to the serious and even dreadful problems that arise in Southern Italy in the many agricultural areas, we are talking about problems that are endemic and problems that will ensue from enlargement of the Community. Undoubtedly there is great fear in the southern regions of Italy and France about what will happen to them when the Community is enlarged to include Greece, Portugal and Spain, countries that have many similar problems and much similar produce.
The House must recognise that the arguments concerning enlargement of the Community, which I presume are sup- 1466 ported on both sides of the House, are not supported in other parts of the Community. Obviously they will affect the economic problems from which some countries are suffering.
The Community's proposals concentrate entirely on improving the agricultural structure and productivity in those regions and I feel that we are losing sight of the human problems that will ensue. Most hon. Members agree that we need to improve productivity and the structure, but we must realise that we shall be adding to an existing high level of unemployment in the Community and it is open to doubt whether the rest of the EEC will be able to absorb the people who will be released from the land in Southern Italy and France—especially when we consider the various problems associated with immigrant labour.
This subject cannot be passed over lightly. The prosperity and future of the EEC will depend not only on improving the wealth of prosperous regions but, more important, on improving the wealth, environment and lifestyle in the less prosperous areas.
The southern regions of the Community suffer serious excesses of labour in agriculture, with low rates of productivity and significant underemployment of labour. The proposals to improve productivity will reduce the amount of labour and the size of holdings. That will mean a reduction in the amount of surplus labour and, while I accept that it is right for us to seek an efficient agricultural industry throughout the Community, we cannot look at Southern Italy and France in these terms without considering the need for a new Community economic programme to deal with industrialisation as well as agriculture.
If we deal with the problem only in agricultural terms, we shall take a tremendous number of peasants away from the land and all the talk about increased productivity in monocultures will do us no good. I hope that the Under-Secretary will draw to the attention of the Minister the need for a Marshall plan for the Mediterranean.
I believe fervently in the expansion of the Community to include the new applicants, but I know that there will be great difficulty in persuading countries such as Italy and France to accept enlargement if 1467 we are just to bring in other countries with problems similar to those confronting Italy and France.
We shall probably conclude negotiations with Greece in the next few months, but there is great danger of some countries, particularly Italy and France, blocking the applications of Portugal and Spain. I recognise their right to veto the applications if the Community is not prepared to look at the totality of Spain and Portugal's applications.
We desperately need the Community to look into all aspects of enlargement and we certainly need to look at the regional aspects of these policies. I ask the Minister not to believe that this is a simple matter that can be hurried through the House. We shall have to return to it time and again.
§ 10.30 p.m.
§ Mr. Strang
I shall reply briefly to the debate. The hon. Member for Westmorland (Mr. Jopling) asked how we acquired information on these issues. I regret to have to tell him that British Ministers are unable to spend a great deal of time visiting the vineyards of Southern France and Italy. We have to rely on the Commission and the other member Governments for information.
Every six months Ministers visit a different member State in the Community which provides the opportunity for them to learn something at first hand about agriculture there and to see how it operates in practice. In addition, British officials visit various parts of the Community. Ultimately, however, responsibility for providing information rests with the Commission.
I was asked about olive oil. There is to be an increase, but this involves a new regime and that represents a potential step forward. We shall have to look closely at the 15 per cent. cost increase. It involves new arrangements which will more effectively recompense producers and reduce the price to consumers.
My hon. Friend the Member for Newton (Mr. Evans) raised some important points. Let me comment briefly on the relationship of this proposal to the Regional Fund. The Regional Fund can contribute to investments in rural infrastructure, provided the area in question is covered both by the fund and by 1468 the less favoured areas directive. It provides for Community aid towards the supply of drinking water, electricity, and rural public roads, together with water purification. In practice, aid under the Regional Fund has normally been restricted to facilities not primarily serving agriculture.
The proposed regulation would provide Community aid for infrastructure throughout the Mezzogiorno and areas of Southern France, so there would be a wider geographic coverage than under the Regional Fund. Aid would be concentrated on small-scale projects serving agriculture which are not normally aided by the Regional Fund. There arc, therefore, differences of emphasis between the Regional Fund and the proposed regulation. Nevertheless, we are examining closely the relationship between the proposed new regulation and the Regional Fund.
My hon. Friend touched on the important issue of enlargement and the relationship of these proposed regulations to the enlargement issue. The prospect of enlargement has focused attention on the problems of the Mediterranean areas in the existing Community, and this has led to the Commission bringing forward this series of proposals. Of course, there is more to come. We cannot adopt a reactionary approach to these issues. If we are in favour of helping people in less developed parts of the world, we should equally be in favour of helping people in less developed parts of the Community. But we cannot ignore the net cost to the United Kingdom. Given a substantial net deficit for the United Kingdom in its contribution to the agriculture budget, we cannot ignore the cost of the proposals. My hon. Friend will recognise that we are right to look very closely to ensure that they are cost effective. He mentioned the need to ensure that they achieve a proper development and improvement in the quality of life in those areas of the Community.
We are not prepared to accept that we have, so to speak, to bribe the French and Italian Governments in order to secure their agreement on enlargement. We recognise that there is a problem to be tackled, and, as my hon. Friend wishes, we shall adopt a constructive attitude.
§ 10.35 p.m.
§ Mr. John Cockcroft (Nantwich)
I have been most struck by these discussions about the enlargement of the Community which I believe is possibly the greatest issue before the institutions in Brussels, Luxembourg and Strasbourg.
At the time of the original signing of the treaties of Messina and Rome it was envisaged that the Community would embrace the whole of Europe, including possibly Eastern Europe. Now we have got bogged down to some extent in discussions of the wider issues such as Cyprus and the Eastern Mediterranean countries. There has also been an agreement that Greece would become a member within 20 years.
But there is a dilemma which is not sufficiently discussed in this country. The original Community of the Six was tightly drawn because we were not at the negotiations at Messina. Perhaps there were several advantages from that, because, as Churchill said, it may have been seen as a stepping stone to the formation of a United States of Europe.
Now we are faced with a situation whereby several Mediterranean countries, and the countries of the Iberian Peninsula, are applying to join, which I welcome in principle. But I remind the House that there could be a problem, particularly if we lost momentum and became bogged down.
There are technical difficulties about enlarging the size of the Commission, the Council of Ministers, the Civil Service, and so on. It is only five years since the Community of the Six became the Community of the Nine. These are not just procedural difficulties. They concern the whole question of the concept of what is Europe and what the whole organisation is about. We have been talking tonight about vegetables and fruit and about the Southern Mediterranean. But there is this problem of what the original founders of the Community considered it to be about.
I believe that we should proceed fairly cautiously on this issue, even though I have always been a European. There is a great hankering in this country for the original idea of a European free trade area or even a North American free trade area with America. But one is now seeing that the idea of the Community is a 1470 political idea as well as an economic one. It will therefore take time to absorb new countries. There are considerable problems in absorbing countries which are much poorer than most of the areas of Western Europe including ourselves. There are also obligations to the nations of the Third world. This is a complex equation.
We in the Community have considerable obligations to the poor and wealthy regions. But at the same time we must not lose the momentum of this great idea of Europe which, in my opinion, was from the beginning designed to supersede the old idea of the nation State and to produce something new in this part of the world.
§ Question put and agreed to.
That this House takes note of Commission documents R/3197/77, R/3197/77 Addendum 1, R/3270/77 and R/402/78 on Mediterranean agriculture and the wine sector.