HC Deb 31 March 1980 vol 982 cc28-34
The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker)

With permission, Mr. Speaker, I wish to make a statement about the Council of Agriculture Ministers' meeting in Brussels on 26 and 27 March, at which I represented the United Kingdom with my hon. Friend the Minister of State.

After a brief discussion on some of the Commission's proposals on prices and economies the presidency engaged in a series of bilateral meetings with each Minister. I gave our view that there should be no price increases for the commodities in structural surplus—milk, sugar and wine. I recorded our demand for the continuance of the Consumer butter subsidy, the need to retain the beef premium scheme until a better system could be agreed and the need in the price fixing to provide the whisky industry with the export refunds to which it is entitled.

When the Council reassembled, the President reported that there was no prospect of progress being made at this week's meeting. He expressed the hope that it would be possible to move towards a solution at the next Agriculture Council, which is due to take place on 21 and 22 April.

Because of the delay in reaching a settlement on agricultural prices for 198081, the Council had to consider extensions to a number of regulations that would otherwise have expired.

The Commission also proposed the extension of one of the agrimonetary regulations, which deals, among other things, with the calculation of monetary compensatory amounts.

The regulations agreed to a year ago now gives an unreasonable advantage of up to at least 5 per cent. to foreign food exporters to Britain and puts Britain's food exporters at an unfair disadvantage. As some other member States were unwilling to amend the regulation so as to decrease our disadvantage, I refused to extend the regulation beyond 31 March.

At a previous meeting of the Council agreement had been reached to devalue the green franc on 31 March for those items whose marketing year ended on that date. When the Council was asked to confirm that this applied to the theoretical end of the marketing year rather than the extended marketing year I demanded and obtained from the Council a statement approved by all Ministers that any Member State may ask for a reduction in negative MCAs and that agreement to such a decision should be independent of agreements on matters of another nature". This clear statement should therefore prevent the reduction of negative MCAs from becoming a matter for negotiating positions in the future.

Mr. Mason

Is the right hon. Gentleman aware that we welcome his stand on a price freeze for products in structural surplus and his request to maintain the butter subsidy? Has he noticed that butter in storage is expected to rise from 69,000 to 88,000 tonnes in the coming year, at an extra cost to the British taxpayer of £24 million? Has he therefore made any proposals during this latest negotiation round to cut the butter surpluses and hence the cost to the United Kingdom budget?

Secondly, why did the right hon. Gentleman propose to tax British imports of food from the Community? Although agricultural exports would have been helped, the British consumer would have been punished again. With four devaluations of the green pound in the last 12 months, farmers have benefited to the tune of £340 million, while there has been a 4 per cent. increase in the food price index solely due to those four devaluations.

Recognising that we import twice as much food from the Common Market as we export to it, would not our food bill rise again with the changes that the right hon. Gentleman requested? Finally, what will be the position on the regulation that he has blocked beyond today, 31 March?

Mr. Walker

On the point about the butter subsidy, obviously the proposals to freeze the price of milk products and to continue with a consumer subsidy on butter were two positive proposals to that end. On the regulation, I find the right hon. Gentleman's statement extraordinary and in total contradiction to the Opposition's position on economic matters. The right hon. Gentleman is suggesting that we should favour a system that positively operates against the advantage of British producers and that we should continue with the system as it operates at present, under which, for example, Irish producers have a 4.4 per cent. advantage and the Belgians a 3.9 per cent. advantage over British producers. The right hon. Gentleman is saying that he would welcome that, no matter what damage it did to British producers—

Mr. Mason

No, I am not.

Mr. Walker

Yes, he is—because it might be to the immediate advantage of consumers.

For a long time under the previous Government, British agriculture and horticulture were at a disadvantage because of the MCA system. I now intend to see that it works to their advantage.

Mr. Grimond

Is the Minister aware that while the industry will welcome the firm stand that he is taking on various matters, the proposals, or lack of them, that have emanated from the meetings are cold comfort to an industry suffering from high interest rates and high costs? Can the right hon. Gentleman tell the House what the next steps may be in an attempt to open up the French market to mutton and lamb? Will the Government take action on matters within their power to reassure the industry that it will receive the help that it so badly needs for production and investment?

Mr. Walker

Last week I announced the biggest increase for the fat sheep subsidy that has taken place. Prior to that, the right hon. Gentleman will know, we introduced the biggest increase in hill farm subsidies for sheep and cattle. The three devaluations of the green pound that were mentioned will help. In spite of these measures, I agree with the right hon. Gentleman that farm incomes in Britain are under considerable pressure from other factors. It is the duty of Governments to sustain those incomes. That is why I tried at this meeting to remove the unfair advantage to foreign importers.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call those hon. Members who have been rising and then move on to an application under Standing Order No. 9.

Mr. Peter Mills

Will my right hon. Friend bear in mind that Conservative Members congratulate him on the stand that he took in Brussels? Will he confirm that the agreement on MCAs will help our food exporters? Will he also confirm that the previous Administration did absolutely nothing to help our food exports? Will he remember that I shall not be satisfied until British lamb is as freely available in France and the rest of Europe as French wines and cheeses are here?

Mr. Walker

The potential of British exports to Europe, without the disadvantage of a penalty, is considerable. One of the reasons why we import far more from the Community than we export to it is four years of massive MCAs against British exporters and in favour of European exporters to Britain. I intend to try to reverse that trend, to the advantage of the British economy. I totally agree with my hon. Friend about the export of sheepmeat.

Mr. Spearing

Will the Minister confirm that his request for an overvaluation of the green pound will have the effect of putting up levies on food from third countries to levels higher than the Com- munity would otherwise demand? Would that not increase food taxes on consumers in this country? Has the Minister received any communication from the Corn-mission about the import of liquid milk?

Mr. Walker

I made no proposals to overvalue the green pound. My proposals in no way affected negative MCAs. That proposal affected purely the now substantial band of nearly 5 per cent. that affects potential positive MCAs. Therefore, the question does not arise. I was not asking for an overvaluation of the green pound. I was asking for the green pound to be treated as a currency at its present levels in the way that it should be treated, so that there should not be a positive disadvantage against it. The subject of liquid milk did not come up and was not discussed at the meeting.

Mr. Sims

May I thank my right lion. Friend for pressing the need for price fixing to provide export refunds due to the Scotch whisky industry? In view of the failure to establish an alcohol regime, may I assume that consideration is being given to making restitution payment under the cereal regime? If that is the case, can I have my right hon. Friend's assurance that he will press this matter vigorously, in view of the substantial sums involved and the long period during which this matter has been outstanding?

Mr. Walker

My hon. Friend is right. Substantial benefits will accrue to the United Kingdom. There are, in my judgment, back payments of about £40 million due to us and payment could accrue to our advantage at the rate of more than £20 million a year. I therefore told the Commission that it was totally unsatisfactory that this should be dealt with under the alcohol regime and that I wanted this issue to be dealt with at this year's price fixing of cereals.

Mr. Hooley

Is it correct that the Minister's proposals on the MCAs will increase Britain's contribution to the EEC budget?

Mr. Walker

It is impossible to say without knowing the effect on the pattern of trade.

Mr. Geoffrey Johnson Smith

In view of today's statement, what prospects are held out by my right hon. Friend for the dairy industry, and what advice can he give it?

Mr. Walker

One of the important features of the dairy industry is that we have a substantial potential for export. Part of what I was attempting to achieve at this Council meeting was an improvement of that potential. The best scope for our dairy industry is in manufactured and processed goods, particularly cheeses. It is in that context that we seek the best possible competitive position that we can obtain. As we are a country which is only 65 per cent. self-sufficient in dairy products, the future of our dairy industry must be good.

Mr. Douglas

Will the Minister comment further on the structural oversupply of milk and how his resistance to price increases is likely to affect us in the short term? Will he say more about the reaction of the French Government to the resistance to the devaluation of the green franc?

Mr. Walker

There has been a temptation on the part of the French Government on previous occasions to use devaluation as a negotiating base. Although they wanted a technical change—it had been agreed that they would devalue on 31 March, though the change in the marketing year altered that—I thought that it was a good opportunity to obtain from the French Government, amongst others, a declaration that in future this would be given as of right. The declaration that I read out in my statement had to be approved by all members of the Council, including the French Minister. I think, therefore, that the situation will improve.

There is considerable disagreement in the Council about the future price of milk products. Every other member State wants an increase way above that proposed by the Commission. We continue to adhere to our view that while milk is in surplus we should maintain a freeze on milk prices.

Mr. Straw

In his reply to my right hon. Friend the Member for Barnsley (Mr. Mason) the Minister claimed that he was more concerned with the interests of producers than with those of consumers. Will the Minister have a word with his right hon. Friend the Secretary of State for Trade, because whenever Labour Members raise similar questions about industries with which we are involved—including the need for protection —we are told that the interests of the consumers and the need for jobs must come way before the interests of producers?

Mr. Walker

For many years there has been a mechanism that adjusts the finances of exports and imports of food products to take account of the movement of currencies. For a long time that has been to the immense trading advantage of Germany, Holland, Denmark and other European countries. At a time when it might now be moving towards our advantage it would be absurd to try to change the rules.

Mr. Leighton

While expressing pleasure at the Minister's stand in refusing price increases for products that are in surplus, may I ask him for an assurance that at the forthcoming summit the Prime Minister will not agree to increases in food prices as part of a package on the budget in line with suggestions made recently by Chancellor Schmidt?

Mr. Walker

The Prime Minister totally agrees with the view that I took in Brussels.

Mr. Strang

If it is the central objective of the Government in price fixing to secure a freeze on the price of all products in structural surplus in order to reduce the cost of the EEC budget what sense can there be, at this time of all times, in seeking a change in the rule in order to apply levies on food imports in order to force our food prices above the common price levels on the Continent?

Mr. Walker

I would have thought that the hon. Gentleman, in the light of his experiences in Brussels,, would 'understand that that was not what I was trying to do. When the hon. Gentleman was in charge he agreed to a system of levies that applied to the United Kingdom differently from all those countries in the EMS. That was greatly to the disadvantage of British agriculture and horticulture. I am trying to remove that disadvantage.

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