HC Deb 25 February 1981 vol 999 cc881-9 3.32 pm
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 in Brussels on 23 and 24 February, which I attended, accompanied by my hon. Friend the Minister of State in my Department. With the exception of the Italian Minister, who will report the position of his Government by 10 March, the Council agreed to a package consisting of arrangements for New Zealand butter and for imports of beef from third countries, a new sugar regime, and a major development of structural policy.

I am pleased to say that we obtained a three-year agreement for New Zealand butter which will allow imports of 94,000 tonnes in 1981 and 92,000 tonnes for 1982. The Council will decide the amount for 1983 before 1 October 1982. I consulted the New Zealand Government, who approved of the agreement and have expressed their appreciation of our successful endeavours on their behalf.

The arrangements for the import of beef were agreed in accordance with the Commission's proposal, including the figure of 60,000 tonnes for manufacturing beef, which is the figure sought by Australia.

The sugar regime, which is subject to the views of the European Parliament, will include a total A and B quota for the United Kingdom of just under 1.15 million tonnes—a reduction of 182,000 tonnes. The cost of the regime, apart from the costs arising from the import of ACP sugar, will be financed by levies on sugar production.

The structure package as finally agreed is generally satisfactory and includes an agricultural development programme for Northern Ireland enjoying a contribution of 40 per cent. from Community funds, a scheme for marketing and processing of animal feed in Northern Ireland, 50 per cent. and an integrated development programme for the Western Isles of Scotland, to which Community funds will contribute 40 per cent. of the cost. The scheme for Northern Ireland will amount to £40 million and for the Western Isles £20 million.

The Council agreed, after pressure from the United Kingdom, to increase the sluice-gate prices for certain types of poultry, which will be a particular help in the United Kingdom turkey sector.

The Commissioner announced that France had formally notified a package of State aids to the Commission on 14 February. The Commission had opened proceedings against France under the relevant article of the Treaty of Rome. The Commissioner also announced that proposals for a directive to remove the distortions of competition caused by different poultrymeat hygiene inspection practices would be ready in the near future.

The Commission presented its price proposals and they were commented on briefly by Ministers. A more detailed discussion will held on 16 March.

Mr. Roy Mason (Barnsley)

Is the right hon. Gentleman aware that some useful progress seems to have been made at this last Council meeting, although that progress may be dependent upon Italian agreement? We welcome the New Zealand butter deal, but we are still concerned about the annual reductions. There seems to be a steady and constant pressure to squeeze out New Zealand imports from the Common Market. We hope that the Minister will continue to stand by our Commonwealth friends.

We welcome the package of the EEC and United Kingdom financial assistance to farmers in Northern Ireland and the Western Isles of Scotland. It appears that of the £60 million Her Majesty's Government will probably pay about £36 million. That represents a useful boost for areas where it is badly needed.

As the right hon. Gentleman secured the quota for the United Kingdom beet producers, and noting that there has been a reduction of 182,000 tonnes, can he say whether there will be a reduction in the quotas of the other Common Market surplus beet producers? If not, is it not likely that there will be another sugar mountain in the future, with all the problems that that will create for the ACP cane producers.

On the question of State aid in France, even if France is found guilty, what can the Commission do about it? What sanctions can it apply to France, in view of the way in which that country has helped its own farming industry?

On the Commission's proposed package, which includes some useful reforms, what is the Minister's attitude on controlling surpluses by further coresponsibility levies? How does he think that the super levy on milk will be applied, and how will it affect the British dairy industry?

On the matter of MCAs—monetary compensatory amounts—there is a need to recognise the growing difficulties in the British farming industry, but is the Minister aware that with a positive MCA of over 18 per cent. the British consumer is continuing to suffer? Indeed, he is now the Community's notorious biggest food taxpayer, and British housewives and consumers are now actually boosting the CAP budget. In these negotiations the Minister must be prepared to accept some revaluation of the green pound.

Finally, is the right hon. Gentleman aware that the proposed increases for the total package are still too generous? Above all, he must oppose the increases of those products that are in structural surplus.

Mr. Walker

First, I thank the right hon. Member for Barnsley (Mr. Mason) for his generous remarks about New Zealand butter. He knows that the New Zealand Government have welcomed the proposals. Indeed, this Government can be proud of what has been achieved. We achieved the figures and the three-year agreement in the face of opposition from France and Ireland, who were in favour of figures of 40,000 to 50,000 tonnes on a one-year basis only.

On the matter of sugar beet quotas, I did not give the fugure for Europe as a whole, because of the disagreement of the Italian Government, who are urging an increase in their A quota sugar that the Community was unwilling to give. Until that matter is settled, I am unable to give the figure. But, for the first time over Europe as a whole, sugar beet quotas will be reduced.

On the question of State aids, I believe that we are moving towards co-responsibility levies, and they can be imposed in a sensible and sane manner only if there is no distortion of State aid. I therefore welcome the Commission's decision to take proceedings against France in order to expose the extent and degree of the problem, and I hope that the Community will see that such problems do not recur.

Then there is the attitude of Ministers to the various problems of price fixing. The Presidency suggested—I think correctly—that as the proposals were published only last Friday, proper consideration could not be given until 16 March. At yesterday's meeting, France, Germany and other countries expressed their bitter hostility to a super-levy, but I believe that there must be some form of penalty on those who increase the production of goods that are in surplus. The principle is one that the British Government will support, as they did last year.

I find the Opposition's view to MCAs rather remarkable. I look forward to a clear announcement from them on the question of the degree to which they wish further to reduce British farmers' incomes. It is interesting that, at yesterday's meeting, the other countries with positive MCAs, namely, Germany and the Benelux countries, were all staunch defenders of their positive MCAs. It may be that they recognise that the eradication of the MCAs is more to the benefit of the foreign exporter than the domestic consumer. The disastrous policy of the Labour Government of negative MCAs well illustrate that.

I am sure that the right hon. Gentleman will take pleasure in the fact that the proposals for price increases in this coming review are exactly the same as the overall price increase agreed to by the Labour Government.

Mr. Peter Mills (Devon, West)

I congratulate my right hon. Friend on what he has achieved, which shows what can be done when a Minister gets the balance right between the producer and the consumer, but can he tell us whether progress has been made with the United Kingdom butter subsidy? Can he also clear up a small problem that has been worrying some of us? Was the average price increase to British agriculture under the Socialists 7½ per cent.?

Mr. Walker

In the Commission proposals there is a continuation of the British butter subsidy. It is important to retain it. The average Community price increase agreed to by the previous Government was 7.56 per cent.

Mr. James Molyneaux (Antrim, South)

In view of what the Minister has achieved for Northern Ireland, will he ensure that he keeps in close touch with the Secretary of State for Northern Ireland and Northern Ireland farming interests to ensure that the £40 million will be concentrated on the most vulnerable sectors of agriculture?

Mr. Walker

Yes, Sir. I am delighted that we have at last reached agreement on the matter. It is an important injection of money for Northern Ireland. I regret that, compared with the moment that I obtained agreement in principle, there has been this delay. The Secretary of State for Northern Ireland is anxious to see that the money helps in every way possible the areas of Northern Ireland agriculture that are having great difficulty.

Mr. Colin Shepherd (Hereford)

Is my right hon. Friend aware that the achievement on sluice-gate prices for turkeymeat will be much appreciated in many parts of the country, not least Hereford? Will he take great care not to lose the initiative over the poultrymeat inspection directive and to keep right behind it, as it is of vital interest to the poultry sector?

Mr. Walker

We considered it important to try to improve the sluice-gate prices. The British poultry industry requires every possible assistance at present. I had hoped that proposals on hygiene inspection would be available in January. The death of Mr. Gundelach, who had promised to do that, made it impossible. The new Commissioner has undertaken to attend to the matter speedily. All Ministers present at the Council of Ministers were impressed by the manner in which the new Commissioner, Mr. Dalsager, performed his duties.

Mr. Donald Stewart (Western Isles)

May I welcome the approval of the integrated development programme as it applies to the Western Isles and thank the right hon. Gentleman and his hon. Friend for their part in securing the agreement? May I ask for an assurance that the commitment of the Government to their part of the programme will be fully and enthusiastically accepted?

Mr. Walker

Yes, Sir.

Mr. Stephen Hastings (Mid-Bedfordshire)

I welcome much of what my right hon. Friend said, but can he tell us when he expects to be able to discuss with his colleagues in Brussels the reduction of fuel subsidies in the glasshouse industry? Is he aware that growers in this country are facing a crisis this winter and many are being forced out of business by grossly uncompetitive fuel prices? Since the Belgian, French and German Governments have found a way to help their growers to withstand the unfair competition, will he consider a subsidy on the same scale for our growers this winter until the matter is sorted out in the European Court?

Mr. Walker

Legal proceedings are taking place on the Dutch situation. The speedier they are the better I shall be pleased. Energy prices in the horticulture industry are of immense importance. As a result of a recent NEDC meeting, an inquiry was set up with the CBI, the NEDC and the Government to consider the general implications of energy prices on particular industries. I have seen to it that the impact of energy prices on the horticulture industry is strongly fed into the inquiry.

Mr. Douglas Jay (Battersea, North)

Will the Minister make rather more clear whether there is to be a quota for imports of cheese from Australia and New Zealand? If so, how large will it be?

Mr. Walker

We did not discuss cheese at this Council. We were discussing the importation of beef. I am glad to say that the figures which the Australians required and demanded and which a number of countries opposed were granted.

Sir Albert Costain (Folkestone and Hythe)

Will my right hon. Friend put the anxiety of the fishing industry at rest by stating that the satisfactory agreements were obtained without selling our fishing industry up the Seine?

Mr. Walker

I am glad to say that on this occasion there was no discussion of fish of any description.

Mr. Bob Cryer (Keighley)

As the Minister said that the poultrymeat inspection directive will be produced speedily, as he is aware that poultrymeat processors are in grave difficulties, largely because of imports from France, which have increased significantly over the past 12 months. As many people are losing their jobs and the matter is urgent, can he assure the House that if a directive is not forthcoming he will be prepared to stop the imports by taking unilateral action?

Mr. Walker

Decisions on imports will be taken at the time on the evidence available to me. The hon. Gentleman takes an interest in such topics and will know that recently I announced that until the hygiene arrangements were made there would be a further grant of £2 million for the poultry industry. The difficulties may be caused partly by imports from France and differences in hygiene arrangements. That is why it was important at the meeting to raise the question of national aids and important that the Commission took the decision.

Mr. Robin Maxwell-Hyslop (Tiverton)

Does my right hon. Friend agree that the case for a super-levy depends on a national base rather than a Community-wide base for over-production? Will he remind the Labour Party and the Commission that one reason why we cannot have a revaluation of the green pound now is that farm incomes suffered so desperately when the boot was on the other foot under the Labour Government that any revaluation now must inevitably mean greater unemployment for farm workers?

Mr. Walker

One tragedy is that in the processing and manufacturing industries connected with dairy and pig products the negative MCAs pursued by the Labour Government proved disastrous in those years. It will take many years before we can make amends for the damage and import penetration that took place. It is, therefore, to the benefit of the economy as a whole that the position has been somewhat reversed. The proposals on super-levies are on the basis of individual dairies and, therefore, in reality mean that they are applied on a national basis.

Mr. John Home Robertson (Berwick and East Lothian)

Is the Minister aware that steps to protect the poultry industry are particularly welcome, but that enormous damage has already been done to the industry as a result of the impossible trading conditions over the past couple of years? Is he aware that there have been almost 100 redundancies in the industry in my constituency? Can he specify the assistance that will be given to the industry?

Mr. Walker

The hon. Gentleman is always well informed on such subjects and will know of the recent assistance that we gave of £2 million, the action that we took last year against imports of American turkeys and the improvement in sluice-gate prices that we achieved in this negotiation.

Mr. John MacKay (Argyll)

Does my right hon. Friend realise that there will be widespread welcome in Scotland for the integrated development programme for the Western Isles? Does that not show, especially in an area where the EEC and the Government are often knocked, that they are both pledged to do something positive to help the economy of the Western Isles? Having got that negotiation under his belt, will my right hon. Friend now start negotiating an agricultural development scheme for the remainder of the Highlands and Islands?

Mr. Walker

I appreciate my hon. Friend's remarks. The last meeting showed how a substantial amount of positive aid can go to two areas of the United Kingdom that very much need it. I am sure that my hon. Friend will understand that matters concerning price fixing will probably take up the agenda of the next few Council meetings, which will preclude immediate discussion of the matter that he mentioned.

Mr. Dennis Skinner (Bolsover)

As the Minister refers to the need for ratification of the sugar agreement, does he envisage a time limit being necessary? If he does, he should send telegrams now to all the Members of the Assembly who are in scattered corners of the world.

Mr. Walker

I am delighted that the hon. Gentleman is so enthusiastic about the agreement.

Mr. Nicholas Winterton (Macclesfield)

Is my right hon. Friend aware that his statement will be welcomed not only by British food producers, but by British food processors? Fanning incomes have dropped in recent times—the agreement will remedy that—and the food processors' margins have been far too narrow. How will the package improve the incomes of farmers? Will my right hon. Friend give a little more information about the package as it relates to the poultrymeat industry in Britain, which, as he said, has suffered severely in recent months?

Mr. Walker

I shall publish the detail of the improvement in sluice-gate prices. A major factor is to obtain the directive on poultrymeat hygiene so that the whole of the Community will have the same standard of hygiene inspection and the same method of paying for it. That will eradicate the unfair competition that has taken place to date.

The other proposals give a permanent position for sugar beet production in Britain, as it presently exists, without allowing it to increase to a scale that would be damaging to cane refining. Another factor is the specific structural packages. I have mentioned the one for Northern Ireland and the Western Isles because they are the main features of it, but there are other features that I shall publish in detail in the Official Report—for example, a package of assistance to young farmers.

Mr. Nigel Spearing (Newham, South)

The Minister mentioned the slight reduction in the A quota for beet sugar. Will he confirm that there is no reduction in the American, Caribbean and Pacific cane sugar quota? Will he tell the House the amounts that are in dispute in force majeure and when he expects the disputes to be concluded?

Mr. Walker

On the hon. Gentleman's last point, I forget the exact amounts but, compared with the totality, they are small. It is possibly a switch from the Italian B quota to the Italian A quota. The ACP commitment of 1.3 million tonnes is not in dispute, and never will be. It is safeguarded.

Several Hon. Members rose

Mr. Speaker

Order. I shall let the questions run until 4 o'clock. If hon. Members ask brief questions and receive brief replies I shall be able to call everyone who wishes to speak. I shall call the Opposition Front Bench spokesman at the end.

Mr. Michael Shersby (Uxbridge)

I congratulate my right hon. Friend on his achievements at the Council meeting. Will he be a little more specific about the A and B quotas for beet sugar? What tonnages have been agreed for them? Have there been reductions in other European countries, and, if so, how much?

Mr. Walker

I forget the exact figures, but as the total is 1.144 million tonnes, of which 90 per cent. is A quota and 10 per cent. B quota, I am sure that my hon. Friend can quickly work out the figures.

Mr. David Myles (Banff)

Will my right hon. Friend ensure that we retain our beef premium scheme, and also improve the intervention system for beef to support the beef producers' market?

Mr. Walker

It is essential to retain that scheme. I assure my hon. Friend that we shall objectively examine the various details of intervention policy.

Sir Anthony Meyer (Flint, West)

May I provide some perspective for the British contribution to the CAP, even after my right hon. Friend's highly successful negotiations? Will he confirm that if there were European policies to safeguard industrial production, which were as successful as the agricultural policy to safeguard European food production, the cost of the CAP would be put in its proper context by the greater expenditure that would be necessary on those other policies?

Mr. Walker

My hon. Friend's point is correct. This is the one regime in Europe where the marketing and investment arrangements are done on a Community basis. If other areas, such as energy and transport, were operated on a similar basis, there would be higher comparative costs.

Mrs. Elaine Kellett-Bowman (Lancaster)

I thank my right hon. Friend for clarifying the position on MCAs and for pointing out that their abolition would benefit foreign exporters much more than the British housewife. In the unlikely event of their being passed on in total to the British housewife, will he confirm that that will amount to only ¼ per cent. on the retail price index, but that their abolition would be disastrous for many farmers?

Mr. Walker

The Commission proposes that we should reduce our MCAs by 5 per cent. As our MCAs will have been reduced by 4 per cent. during the course of this week, that leaves only 1 per cent.

Mr. Teddy Taylor (Southend, East)

As the New Zealand butter quota is to be only half of the imports of New Zealand butter into this country of 186,000 tonnes in 1969, did the Minister obtain an assurance from his Common Market colleagues that they would not stand in the way of New Zealand's attempts to find new markets by dumping 300,000 tonnes of butter at knock-down prices on the world market?

Mr. Walker

I know that my hon. Friend has a certain enthusiasm for these topics. He will be pleased to know about the degree to which the New Zealand Government welcome the arrangements made yesterday, and the degree to which they welcome the manner in which, during the past year, they have worked in happy and close collaboration with the Commission.

Mr. Geoffrey Johnson Smith (East Grinstead)

We all appreciate my right hon. Friend's attitude towards the problems of the poultry industry. Will he confirm that the Commission fully understands that the future of the industry is in absolute jeopardy? Will he confirm that he made it perfectly clear to the Commission that we are concerned not about special aids or special favours, but that we are playing by Marquess of Queensberry rules while other EEC countries break every rule in the book?

Mr. Walker

There is an important difference in poultry hygiene arrangements which can affect the competitive position. As I said earlier, I am much more concerned about the potential damage that could be done by national aids to the poultry industry. That industry could expand swiftly, and a large injection of Government money would create a position in which one country could compete unfairly with another Community country. I issue a warning to other countries contemplating pouring in unfair national aids to that industry. The adverse effect of that on the Community would be such that urgent and immediate action would have to be taken.

Mr. Richard Shepherd (Aldridge-Brownhills)

What will be the implications for retail food prices of my right hon. Friend's recent negotiations, especially as food prices paid by the British consumer are already among the highest in the world?

Mr. Walker

My hon. Friend will be pleased to know that as a result of the static position in CAP prices during the past two years, for which this Government have responsibility, food prices have increased far less than prices in general, and should continue to do so.

Mr. Tony Marlow (Northampton, North)

Does my right hon. Friend agree that MCAs have two effects? One is to keep up the income of farmers within the United Kingdom, and the other is to inflate still further the inflated prices that housewives in Britain have to pay for expensive European food. Cannot he keep one and deal with the other? Secondly, will he confirm that he will not allow an increase above 7.8 per cent. in European food prices this year?

Mr. Walker

I must make it clear to my hon. Friend that positive MCAs do not increase the incomes of British farmers. They retain the incomes but do not increase them. He appears to be suggesting that I should positively reduce incomes of British fanners. That would be wrong—

Mr. Marlow

I did not suggest that.

Mr. Walker

I am glad that my hon. Friend is not suggesting a revaluation. The countries which have been adversely affected by positive MCAs have been exporters to Britain. For example, there is the classic case of Danish bacon, which has never undercut the British bacon price. If the MCAs were reduced to nothing, there would be not a reduction in the price of Danish bacon but simply bigger rewards for Danish producers.

Mr. Bill Walker (Perth and East Perthshire)

Is my right hon. Friend aware that everyone in Scotland will welcome the news about the Western Isles? Will he take on board the fact that many other farmers in Scotland are in a parlous condition, and that there is much work still to be done to ensure that that viable part of the Scottish economy is not allowed to rot?

Mr. Walker

Yes, Sir. That is why we substantially increased the hill farm subsidies and introduced the sheepmeat regime, which is of such benefit to Scotland.

Mr. Gavin Strang (Edinburgh, East)

Is the Minister aware that what he has agreed on sugar beet quotas and levies is a setback rather than an encouragement for the future of the Tate and Lyle refinery in Liverpool? In the unavoidable absence of my hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry), I should make it clear that that closure is not acceptable to the people of Liverpool, that it is being resisted by the unions, and that they are supported by the Opposition.

Mr. Walker

It is incredible effrontery on the part of the Opposition to suggest that the announcement that I have reduced the sugar beet quota by 182,000 tonnes below the quota that they agreed is against the interests of Tate and Lyle.