HC Deb 12 November 1980 vol 992 cc476-88
The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker)

With permission, I shall report to the House on the outcome of the Agriculture Council on 10 and 11 November at which my hon. Friend the Minister of State and I represented the United Kingdom.

On New Zealand butter, I emphasised the Communitiy's obligation to remove the uncertainties and settle this matter urgently on the basis of the Commission's proposals. The Council accepted the political and economic importance to the Community and New Zealand of reaching agreement. The main point of discussion was over the duration of a new agreement. With one exception, all other member States expressed a preference for an arrangement covering three to four years. France said that it could accept only a short extension. I expect this matter to be discussed further during the Foreign Ministers' Council later this month.

The Council discussed the Commission's proposals for a revised sugar regime. The Government support the need for action to limit excess production in the Community to keep down the cost of surplus disposal and as a necessary step towards membership of the international sugar agreement. I told the Council, however, that the Government could not accept in their present form the Commission's proposals on quotas and on levies for the financing of the surplus disposal because they discriminate against beet producers in the United Kingdom. This subject will be on the agenda for December.

The Council also had before it a package of animal health measures. After considerable discussions yesterday, I am glad to be able to tell the House that an agreement was reached which fully protects the high health standards in our pig herd We drew attention to the serious problems over the implementation of the Council directive on poultrymeat hygiene. The Commission's report has confirmed that there is distortion of competition because of differences between member States in the way that the provisions of the directive are being applied. The Commissioner agreed that there is a need for detailed rules to achieve uniformity and to harmonise the arrangements for meeting the costs involved. He confirmed that he would wish to move quickly to deal with these problems, and I hope that proposals will be made at the December meeting of the Council.

Mr. Mason

I thank the right hon. Gentleman for his report. Is he aware that the last Council meeting caused us anxiety? Is he aware that Parliament would not have agreed to enter the Common Market if we did not have proper safeguards for New Zealand lamb and for the 1.3 million tonnes of cane sugar from the African, Caribbean and Pacific countries? As a result of the discussions at the last Council meeting, it appears that much of that is under threat. Is the right hon. Gentleman aware that New Zealand is not happy with the sheepmeat deal, that the French are vetoing agreement on New Zealand butter imports, and that, if national sugar quotas are not reduced this time, the ACP countries' sugar imports will be threatened?

Everyone recognises that the French are involved in blackmail in an attempt to undermine the budget deal and to squeeze concessions from the Minister on a future fisheries policy. Will the right hon. Gentleman stand firm? He creates the impression that he is not standing up firmly enough for Britain. Is he aware that our major concern is his personal refusel to revalue the green pound? Although the right hon. Gentleman is known to criticise the Government's strict monetarist policy, he is the cruellist monetarist of them all. Does he accept that he is personally responsible for a growing tax on our food imports and an increased budgetary contribution to the Common Market?

Is not it a fact that if the right hon. Gentleman revalued the green pound in full food prices in Britain would fall by an average of 2¼ per cent. and that our financial contribution by way of food taxes would fall drastically? Why, therefore, because of the right hon. Gentleman's policy, should British taxpayers foot the increased Common Market poultrymeat bill so that housewives and consumers continue to suffer? Will he explain why he does not revalue the green pound?

Mr. Walker

The Lome amounts for cane sugar are agreed. By saying that the agreement is in danger the right hon. Gentleman is pursuing a totally unfounded scare campaign. He says that the New Zealanders are dissatisfied with the lamb deal. He will be pleased to know that the New Zealand Prime Minister, deputy Prime Minister and Government have expressed their personal gratitude for the excellence of the deal that we have obtained on their behalf.

I turn to the question of New Zealand butter. I hope that the right hon. Gentleman feels appropriately ashamed that, as a result of his Government's renegotiation of the Common Market, after 1 January this year New Zealand would have had no butter quota of any description. It is total humbug for the Opposition to express disappointment in this way.

I await with interest the Opposition's explanation of the reason why, in a period when negative MCAs were going up to 45 per cent., food prices, instead of going down, went up much faster than under this Government.

Mr. Mason

The right hon. Gentleman owes the House an explanation on MCAs. If he cares and is not as cruel a monetarist as I suggested, he will have studied the figures which affect the families of Great Britain. Will he tell us what the food levy is costing the average family in its weekly food bill? Is it 50p or 75p a week? How much have food taxes cost us since positive MCAs began operating?

Mr. Walker

As a result of what has happened to the £ sterling in the last few days, I understand that in the next week or two there will be a reduction in MCAs. I shall be interested to see what effect that has on food prices. We know that under the last Government, when we had negative MCAs, food prices rose much faster. The right hon. Gentleman forgets that the Labour Party argues that a monetarist policy results in the pound sterling going up to the detriment of British exports and to the advantage of foreign imports. In agriculture we have a mechanism which stops that, and I should have thought that the Opposition would be celebrating rather than complaining.

Mr. Peter Mills

Did my right hon. Friend discuss with the other Ministers the problem of surpluses in the Community? It would be most helpful if we knew the exact position. It would be of interest to the producer, who wants to plan forward and to the consumer, who pays for the surpluses.

Mr. Walker

Considerable changes in surpluses have taken place in the past year. Sugar was one of the main surpluses. Since the European sugar price is way below the world price, Europe is making a profit of about £6 million a week on sugar stocks. I am glad to say that the surplus of milk powder has come down from the peak of 1½ million tonnes to 230,000 tonnes. Butter surpluses have come down from 390,000 tonnes to 170,000 tonnes.

Mr. Geraint Howells

In view of the exchanges between the right hon. Member for Barnsley (Mr. Mason) and the Minister, can the Minister say whether production costs have risen in the last 12 months and by what percentage? What percentage of butter consumed in Britain is produced in New Zealand? May we have an assurance for British meat producers that he will not accept a quota system?

Mr. Walker

The rise in oil prices has had a dramatic effect on the cost of fertilisers. Last year agricultural workers received a wage increase of about 20 per cent., which caused a further substantial increase in input costs. The final figure is not known, but there has been a massive increase in input costs. In the battle against inflation no sector of the economy has played a bigger role in the last 18 months in keeping prices down than the food sector.

I do not know the exact figures for New Zealand butter. The figures proposed by the Commission have been negotiated with the New Zealand Government, with whom we are in close contact. They are acceptable to them. I am glad to say that there has been a substantial increase in sales of English butter and we are now selling a larger proportion of English butter in British shops than for many years. I assure the hon. Gentleman that we shall stick to sugar quotas that make sense for British agriculture.

Mr. J. Enoch Powell

Has any progress been made in reshaping the processing and marketing scheme into a form in which it could be of some use to Britain, especially to Northern Ireland?

Mr. Walker

As the right hon. Gentleman knows, the proposals on Northern Ireland are part of the structures package. There was a three-hour or four-hour discussion on the package, during which some progress was made. We made the point that the Northern Ireland matter was urgent because of the current problems in Irish agriculture. I pressed the Commission and the Council of Ministers to ensure that conclusions are reached at the next meeting.

Mr. John MacKay

Did my right hon. Friend discuss some of the problems that have arisen in the implementation of the sheepmeat agreement, especially how the clawback is affecting wholesalers exporting both to Third world countries and to other EEC countries? That is causing considerable difficulty.

Mr. Walker

We did not discuss that matter at the Council of Ministers' meeting. We have held discussions with various members of the Commission because, as my hon. Friend knows, the Commission stated that when the pattern of trade created by the clawback provisions could be identified it would ensure that measures were taken to ensure that it did not interfere with British trade prospects. We have given the Commission the updated information and suggested a number of technical changes, which it has undertaken to study quickly.

Mr. Donald Stewart

Was fisheries policy discussed at the Council of Ministers' meeting? Will the Minister reaffirm his previous assurances that fisheries policy will still be regarded as a unilateral issue?

Mr. Walker

I give the assurance that fisheries policy has always been discussed on its merits. The Agriculture Council meeting was held this week, and the Fisheries Council meeting will be held next week.

Mr. Jay

Does the Minister recall that the Conservative Party approved the renegotiation terms for New Zealand in 1975? As it now appears that only the French are still trying to block our butter supplies from New Zealand, will he assure us that under no circumstances will the Government give way to the French obstruction?

Mr. Walker

In fairness, the French are not trying to block the butter supplies from New Zealand. In the interests of the New Zealand agriculture plan, we are seeking at least a three-or four-year agreement period. The French are happy to agree butter supplies for next year. We are negotiating for a longer period. Eight member countries and the Commission are in agreement. If it has foreign policy implications, it is important that Foreign Ministers discuss it.

Mr. Beaumont-Dark

Is my right hon. Friend aware of the great feeling of outrage throughout Britain because the Russians buy surplus foods, sell them at high profits and use the money to buy arms for use in Afghanistan? Is he aware also of the strong feelings about the economics of Bedlam whereby vessels catch fish by the ton but if it does not reach a certain price it is then dumped? Are we to continue with a system in which food is said to be too cheap when every housewife knows that it is too dear?

Mr. Walker

The Government have always been opposed to any sales of butter to the Soviet Union. I was glad that the Commission yesterday announced that it was abandoning the pre-fixing procedures that could have enabled further butter contracts with the Soviet Union to take effect in January. I am glad that we have the support of Western Germany on that matter.

Mr. Mark Hughes

Will the Minister confirm that the present levels of MCAs cost the family 50p per week and would cost the British taxpayer £200 million a year?

Mr. Walker

Of course I cannot confirm that. The hon. Gentleman quotes his figure of 50p on the remarkable conclusion that any changes in the MCA would be passed on by the foreign exporter to the British housewife as opposed to the foreign exporter taking a larger profit margin. That is a dubious assumption.

Mr. Teddy Taylor

If the Government's main battle is to fight inflation and reduce spending, will my right hon. Friend explain why he agreed, however temporarily, to the additional 11.8 per cent. tax on food that will result in Britain having to pay more across the exchanges?

Mr. Walker

My hon. Friend's question shows a remarkable ignorance of the mechanisms involved. He uses a good headline-catching phrase. When the previous Labour Government were in power, I am sure that my hon. Friend joined his Shadow Cabinet colleagues in condemning a system whereby British agriculture was suffering a positive disadvantage compared with foreign agriculture. I am glad to say that for the first time since we joined the Common Market we have an advantage. That is why our exports are increasing and our imports decreasing. The Government also have a considerable interest in full employment.

Mr. Dalyell

Is there likely to be an ethyl alcohol regime that will damage investment in such places as Grange mouth?

Mr. Walker

No, Sir. Although the alcohol regime was discussed at the meeting. I do not believe that in the foreseeable future there will be any regime that could be damaging to the investment to which the hon. Gentleman referred.

Mr. Gummer

Will my right hon. Friend expand a little on his remarks about the poultry industry? Is he aware that most of those who produce chickens and eggs in my constituency want to see the EEC work? They are concerned because it appears that they pay the cost of poultry inspection—of which they are in favour—but that in other countries the cost is paid by the State.

Mr. Walker

It was at the behest of the British Government that the Commission carried out an inquiry into the practices of all member States. It has published a report which shows that our complaint was fully justified. The Commissioner has promised to take measures to bring about harmonisation both in the method and in the cost of application.

Mr. Maclennan

Has the Minister had the opportunity to put before the Council of Ministers the proposals of the Scottish National Farmers Union for an integrated agricultural programme for the Highlands and Islands of Scotland? If not, in view of the time that the proposals have been before his Department, why not?

Mr. Walker

The proposals for the Western Isles come under the structures package. Discussion will continue to take place when the package is brought up at the December meeting.

Mr. Peter Fraser

I welcome my right hon Friend's initiatives on the discrepancy in the poultrymeat hygiene regulations. Will he make it clear before the December meeting that we cannot afford any delay on that issue? Will he confirm that the cost of inspection being borne by the EEC is one of the mattters which the Commission will consider?

Mr. Walker

Yes. Sir. On the question of the method of payment, as a matter of principle it is not thought necessary for either the Commission or national Governments to pay. It may be that industry should pay, and I should not object to that providing that industry in all member countries pay. It is important to achieve equality rather than differences in the method of payment.

Mr. English

Does the Minister agree that per thousand pounds of turnover or per employee the subsidies to British manufacturing industry should be raised to the same level as those to the British agriculture industry?

Mr. Walker

I should welcome that if the productivity of British manufacturing industry and investment in the manufacturing industry were as good as that in the agriculture industry.

Mr. Lawrence

Is my right hon. Friend aware that a serious position faces the beef producers in Staffordshire and elsewhere in Britain? Is he further aware that the intervention system does not appear to give a fair return to the producer? Was that subject discussed at the meeting, and, if not, why not? Will he take steps to ensure that the variable premium is more flexible, as is happening in Ireland?

Mr. Walker

Recent changes in the beef intervention system were discussed at the meeting. As a result, the Commission promised to lay before the Council an analysis of the present intervention system for beef, its operation, and ways in which its efficiency could be improved to have a better effect on the beef industry.

Mr. Spearing

Is the Minister aware that a recent common Community levy on common wheat into the EEC was £42 a tonne, but that on wheat imported into the United Kingdom it was £47 a tonne? Does he agree that the basic difference is due to the high value of the £ sterling? Will he also confirm that he could reduce that difference by devaluing the green pound? If he could, why does he not do so?

Mr. Walker

There is a great deal of talk about revaluing the green pound. If the pound sterling continues to go down at the rate of the last two days, in a fortnight we shall be in negative MCAs again. It shows how quickly the position can change. Any analysis will show that the prolonged period when we had negative MCAs was not good for food prices and was appallingly bad for British agriculture.

Several Hon. Members

rose—

Mr. Speaker

Order. I shall call those hon. Members who have been rising to speak before I call the Front Bench.

Mr. Marlow

Did my right hon. Friend have the opportunity to discuss with the Council of Ministers the substance of an answer that he gave to me earlier in the year, namely that the British housewife is faced with a massive bill, over and above our net budget contribution, in excess of £600 million a year, by being forced to buy expensive European foodstuffs rather than being able to buy cheap foodstuffs available on the world market? Does he agree with me that he would enjoy the confidence of my hon. Friend the Member for Southend, East (Mr. Taylor), myself and the rest of the House rather more if he could get some compensation on this issue?

Mr. Walker

While I am desperate to obtain the confidence of my two hon. Friends, I must say to my hon. Friend the Member for Northampton, North (Mr. Marlow) that, as he well knows, I would not be willing to see British agriculture subjected to the adverse effects, at any one moment, of taking the lowest world price and perhaps destroying whole sections of British agriculture. No Government of any complexion in the post-war period has been willing to pursue that policy. It is that type of policy on which the sorts of figures that are bandied about are based.

Mr. Christopher Price

Did the right hon. Gentleman discuss at the meeting the possibility—which is prevented at the moment by what seems to be a French veto—of moving to a full customs union with the Republic of Cyprus? Does he realise that, although he has had quite a lot of questions about the price of fish, the problem about Cyprus agriculture determines to a considerable extent the price of chips in this country, quite apart from the other imports of fruit and alcoholic beverages? Is this country standing behind Cyprus in regard to the pledge which was thought to have been given that there was an agreement to move towards a full customs union?

Mr. Walker

I cannot answer the hon. Gentleman because this was not in any way a matter connected with the Council meeting; but we are in close contact with the Cypriot Government on a number of matters affecting my own Department and Cyprus.

Mr. Foulkes

Does the Minister agree that the hill farmers, particularly in Scotland, are now in real trouble? Is he aware, for example, that I was given a figure of £39,000 as being the average overdraft of hill farmers in Scotland? Is he further aware that they are now having to borrow money in order to pay the interest on the money already borrowed?

In view of the fact that the increase in variable premiums came too late to help the hill farmers, will the Minister now consider some increase in the compensatory allowance, or some other help with feed or fuel cost, to help these people, otherwise the hill farmers will all go bankrupt?

Mr. Walker

I hope that the hon. Gentleman will have prolonged talks with his Front Bench on these topics and try to dispel the general myth that they are trying to create that British agriculture is having a marvellous time at the expense of everybody else when, as the hon. Gentleman says, farm incomes in real terms have been going down? I am glad, therefore, in view of what the hon. Gentleman says, that last year I gave the biggest ever increase in hill farm subsidies and succeeded in negotiating the sheepmeat regime.

Mr. Parry

The Minster in his statement expressed concern for sugar beet. Will he now express his concern for the workers in the port cane refineries? Will he also give a clear assurance that the present 1.3 million tonnes of ACP sugar will continue to come into the United Kingdom for home consumption? A firm commitment from the Government is essential for the employment prospects of workers in the port refineries, particularly in areas such as Merseyside?

Mr. Walker

Yes. It is because we totally respect the agreements on ACP sugar that we are in agreement to reduce the quotas as far as Europe is concerned. We are not asking for increased quotas for the United Kindom and we want, obviously, to use the ability for our own beet producers to provide that part of the market that is not provided by ACP sugar. But we have totally adhered to the agreement of 1.3 million tonnes of ACP sugar.

Mr. Hardy

The Minister said earlier that the level of our agricultural exports to Europe was increasing, and the House is aware that he has given a very firm commitment to this for quite a time now. Is he not disappointed with the level of those exports? Was he not expecting to achieve more? Does he attribute the disappointment to the abuse and disdain of regulations in some member States, as in the case about which I informed the House the other day? One of my constituents, who is well aware of the French disregard of poultry regulations, witnessed last week's eggs being marked with next week's dates, at a time when the French were supposed to be sensitive to the change about which the Minister informed the House a moment ago.

Mr. Walker

I am glad to say that in recent months there has been a very steep increase in our exports to the Community. Another very important factor is the degree, in a whole range of commodities, to which we are getting a much bigger share of our home market. That, too, is an encouraging trend. There are differences of practice, and when we hear of any case violating these principles we draw it to the attention of the Commission, which then normally prosecutes.

Mr. Strang

Returning to the important issue raised by my hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry). is the Minister aware of the continuing speculation concerning the future of the Liverpool cane refinery, including an item on today's BBC early morning farming programme? In view of the fact that there are 1,200 people directly employed at the refinery, in an area where male unemployment is a staggering 18 per cent., will the Minister tell the House whether he has received any communication from Tate and Lyle about the future of the refinery? Will he give an undertaking that the Government will attach the same priority to protecting this employment on Merseyside as the previous Labour Government did?

Mr. Walker

With regard to the area for which I am responsible, which is securing the access of the 1.3 million tonnes of cane sugar to this country—and keeping the British sugar quotas to levels which the Government of which the hon. Gentleman was a member considered to be reasonable for the United Kingdom—I point out to the hon. Gentleman that his own Government's White Paper, "Food from Our Own Resources", set targets for British beet quotas, and I have no intention whatever of exceeding those.

Later—

Mr. Marlow

On a point of order, Mr. Speaker. In my question to my right hon. Friend the Minister of Agriculture, I was discussing the cost to British housewives of food bought from Europe. In his answer, my right hon. Friend started confusing that with agricultural support in the United Kingdom, which is a completely different matter. If that goes in the Official Report in the way in which he put his answer, that would be most misleading to the public. I should like my right hon. Friend to have the opportunity of correcting what he said.

Mr. Speaker

I am afraid that the hon. Member's right hon. Friend has departed.