HC Deb 27 March 1981 vol 1 cc1249-56

Motion made and Question proposed, That this House do now adjourn.—[Mr. Berry.]

2.35 pm
Mr. Colin Shepherd (Hereford)

I am grateful to the Parliamentary Secretary for coming to the House to answer this important debate.

I raise the poultry industry issue because of its importance and scale in our country, its sometimes less than fully sung efficiency and present fears that its future could be knocked by factors outside its control. It is not generally appreciated that it is a £500 million industry, with physical ramifications stretching over the constituencies of 136 colleagues in England and Wales and 18 in Scotland.

Hereford contains the main works of the nationally important Sun Valley Ltd. as well as smaller companies involved in chicken and turkeymeat production. Locally in Herefordshire about 1,200 people are employed directly in breeding, growing, processing and adding value to poultrymeat. That is only the tip of the iceberg. A multitude of other people are partially dependent upon the continuation of the industry in Hereford. Our story is repeated throughout the country.

That the industry is doing a good job is illustrated by the answer to a question that I tabled two weeks ago, which shows that the United Kingdom is 99 per cent. self-sufficient in poultrymeat. As consumers we know that chicken and turkey are good buys in the shops. The industry has always had to compete with red meats for a place on the Sunday lunch table. It has been successful in spite of some difficult circumstances.

As the Minister knows, the industry has an attack of the jitters—and well it might. It has to compete with one hand tied behind its back. The fair basis of its competition has been undermined by the consequences of the various actions taken, or not taken, by our European partners or the Commission. The United Kingdom poultrymeat industry is looking to the United Kingdom Government to restore the balance of fair competition. Its expectations of redress are fair. The two main spanners in the works are the poultrymeat hygiene regulations and the employment of grant-aid by the French and other European countries. That is, to say the least, suspect in relation to the compliance of the spirit of grant-aid.

The poultrymeat hygiene problem involves differential implementation. I protest strongly at the damage that the differential has done to the industry. The industry, correctly, brought that to the Government's attention as soon as the regulations came into effect. Our Government were diligent in prosecuting the matter with the Commission. Eventually an investigation was started, but it took ages to report. Even then the rack was nearly needed to extract the report from the Commission. Excuses, delays, postponements and translations were involved. It was a disgrace. The result was what we already knew. Britain, implementing the directive in the proper spirit, in the best interests of public health, is now at a price disadvantage compared with every other EEC producer.

I am told that an efficient producer's ex-works price for chickenmeat is 44p per lb. It is not surprising, therefore, that the managing director of Midland Poultry in Shropshire blew his stack to his Member of Parliament, my hon. Friend the Member for Ludlow (Mr. Cockeram), when he was quoted a price of 41p per lb for chicken delivered in the United Kingdom and held firm for the rest of the year. The Minister will know that my hon. Friend swiftly referred the matter to the Minister of Agriculture, Fisheries and Food, since the implications are so alarming.

The Minister's grant of £2 million towards poultrymeat inspection costs is welcome, but it cannot be regarded as anything but a holding operation. Action to achieve parity of inspection must be taken urgently. Will my hon. Friend take the initiative in bringing forward proposals that will enable our health requirements properly to be met, but which will not put our industry at a cost disadvantage? Does he yet know when we shall receive the Commission's proposals for achieving harmony, in the light of the survey on the implementation of the poultrymeat hygiene directive?

What will happen should the date of harmonisation be after August, when the present poultry industry's scheme of equalisation of costs expires? The nearness of the date underlines the urgency of the issue.

I revert to the question of French "competition". My hon. Friend will probably be aware that only 30 per cent., or thereabouts, of French production of poultrymeat is licensed in respect of the poultrymeat hygiene directive. That allows French producers to sell into their home market on a far more profitable basis, thus enabling them better to support export efforts. It means that such grant-aid as is available—and there seems to be plenty—may be directed towards developing their export expansion.

Furthermore, we note that Brittany is apparently a development area. It lies across two important trade routes with Britain, and grants allegedly to the value of £125 million are being poured into the establishment of a poultrymeat factory with capacity to supply the whole of the known United Kingdom market's requirements. It is no wonder that the United Kingdom industry is frightened out of its wits.

I ask my hon. Friend to tell the industry of the broad approach of Her Majesty's Government to this problem. Is he aware of any aspect of this development which, like the evasion of poultrymeat hygiene costs in other plants, is outside fair and proper competition? Is he aware of allegations or soft loans being involved?

Yet another threat to the poultrymeat industry comes from third countries. I have the United States especially in mind. The swift action taken by my right hon. Friend the Minister of Agriculture, Fisheries and Food last year in dealing with the improper imports of turkeymeat from the United States was much appreciated, but there is more to be done.

My hon. Friend will be aware that, in respect of imports into the European Community under the general agreement on tariffs and trade, there is a tendency, due to the tight French and German home markets, for turkeymeat imports to be deflected unreasonably towards Britain. It is disturbing that there seems to be inadequate information held by the Commission that such imports are upsetting Community markets in general. Are there any proposals for an improved monitoring of imports into the Community and their distribution thereafter within the Community?

It must be borne in mind that in 1980 exports from the United States of America to the European Community exceeded the 1977–78 volume by several thousand tonnes. What steps are Her Majesty's Government taking to ensure the defence of United Kingdom turkeymeat producers? What provision is there to enable urgent action to be taken when imports exceed the stipulated quota, as indeed they have?

I understand that the designed mechanism for dealing with imports from third countries is the sluicegate price mechanism. However, that has given the industry cause for concern. The cereal element has been regularly reviewed. The updating of the standard amount element of the sluicegate price for turkeymeat, which was announced by my right hon. Friend a few days ago, is much to be welcomed. However, it was no less than six years overdue. Will my right hon. Friend give an undertaking to the industry that this will be reviewed and adjusted on a regular and annual basis, as called for in Community regulation 277/75 in article 7?

Will my hon. Friend press for a closer definition of turkeymeat, bearing in mind the moves that have been made by United States exporters to exploit loopholes? In that context I refer to the business of sending turkey without giblets as turkey with giblets, or uncooked and cooked boned turkeymeat as preserved turkeymeat, and so on. Those are comparatively minor spanners in the works, but they are important to the industry.

Will my hon. Friend give the Government's view on the possible establishment of a similar monetary compensatory amount mechanism to that in the pig meat sector? At the moment the arrangements are different, and effects can be unexpectedly adverse when they should not be so.

I have been as brief as I can so that my hon. Friend may have the maximum time in which to answer the points that I have raised. The debate has been an attempt to get at the basis of the fears that are reasonably held by the poultrymeat industry. It faces problems enough without unfair competition. Its history so far has been one of success. We are talking about the employment of about 40,000 people. Even now its margins are under intense pressure. Its confidence needs to be sustained.

2.47 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin)

I congratulate my hon. Friend the Member for Hereford (Mr. Shepherd) on choosing this subject for debate on the Adjournment of the House. I agree that the poultry industry is an important part of our agricultural industry.

The poultry industry in the United Kingdom has shown remarkable progress over the years. Sun Valley Poultry has a substantial interest in his constituency. In my capacity, regrettably only as a trustee, I was for a time a shareholder in Sun Valley Poultry. I knew some of those involved in setting up the company, which has been successful. I understand the importance which my hon. Friend attaches to its operation in his constituency.

The poultry industry is highly technically efficient. It makes a major contribution to our total food supplies, and has for many years provided consumers with good value for money. We need to ensure its continued viability. I fully appreciate the difficulties currently facing this sector. We are working closely with all the United Kingdom interests concerned to find effective solutions to them.

As my hon. Friend hinted, the Community's common policy does not provide for price support in the form of a managed market with intervention arrangements. It provides for an essentially free market, with sluicegate prices and levies on imports from third countries and restitutions on Community exports.

Successive Governments have broadly accepted that approach as appropriate for this sector. My right hon. Friend the Minister of Agriculture, Fisheries and Food has, however, made it clear that if these general arrangements are to operate fairly and effectively, our industry must be in a position to compete on reasonable terms with the industries of other member States and those of third countries. We have therefore taken a number of initiatives open to us under the Treaty of Rome and consistent with this objective—in particular, the harmonisation of hygiene inspection arrangements and the method of charging for them; State aids available to the industries elsewhere in the Community; the possibility of improving market information; and the need to ensure that sluicegate prices and export restitutions are set at realistic levels.

I understand entirely my hon. Friend's statement that he considers poultrymeat hygiene one of the more important issues. He is right, of course. A Commission, report on the implementation of the poultrymeat hygiene directive has confirmed our view that there are wide variations in poultrymeat inspection levels between member States and, perhaps more importantly—or at least as importantly—in the charges which are made for these inspection services. This results in unwarranted distortions and is an example of harmonisation measures creating disharmony and unfair competition.

We have now heard that the Commission has submitted to the Council its formal proposals designed to rectify this state of affairs. I tried to get firm confirmation for this debate but unfortunately we have not yet received the formal documents. When copies are available they will be deposited in the House in the usual way. I think that the delay is simply a bureaucratic one, but the Commission has submitted its proposals to the Council.

We regard this matter as one of the utmost priority. We shall continue to work for agreement on levels of inspection and methods of charging which all member States will undertake to apply, and our understanding is that the Commission's proposals cover both points.

Mr. Colin Shepherd

I am grateful for that assurance. Will my hon. Friend seek to ensure that the Commission's proposals also have the means contained in them of verifying the conformity with these regulations by the various producers in the member States?

Mr. Wiggin

Of course, the responsibility for that lies with the Commission, as my hon. Friend will understand. However, it was our dissatisfaction with the existing arrangements and our initiative in highlighting what turned out to be irrefutable evidence that there was disharmony. I imagine that the Commission will be minded in its future monitoring of any new arrangements to remember that we shall be diligent in seeing that it does its job. We are determined that whatever is agreed will be applied in practice. We have in the past undertaken that standards here will be adjusted to whatever are the agreed standards, and I repeat that assurance.

We shall do all that we can to ensure that the Commission's proposals are considered quickly in a Council working group so that conclusions can be reached and implemented with the minimum of delay.

My hon. Friend pointed out that the present cost equalisation scheme run by the British Poultry Federation was due to end at the end of August and that there was uncertainty about what was to happen thereafter. Obviously it is not really feasible for any decisions to be implemented across the Community by then, but we expect to know much more clearly by then the likely attitudes of the other member States. We shall discuss future arrangements with the industry, local authority associations and other interested organisations in the light of the stage reached in the Brussels discussions. We shall not be entering the negotiations with a commitment to any set levels of inspection, but we seek an agreement which all member States will implement. We hope, as do the industry and the local authorities, that the quality of the product will be maintained.

I shall not labour the point, but I hope that my hon. Friend will give this Government the credit for providing £2 million towards inspection costs. I appreciate that it is only about half the level required, but under the scheme it has been possible to alleviate the worst commercial injustices. I do not suggest that my hon. Friend neglected to make the point because of any casualness on his part. However, it is right to say that we responded once we had learnt the nature of the problem.

Mr. Shepherd

I fear that I did not lay sufficient emphasis on this. Of course, I congratulate the Government unreservedly on what they have done. It has been much welcomed in the industry. However, I made the point that it could be regarded only as a holding operation.

Mr. Wiggin

I accept that entirely. We hope that we shall be able to get this matter sorted out on a much more businesslike, sensible and permanent basis, as I have described.

My hon. Friend hinted that we might consider taking the initiative to revise standards to remove cost disadvantages from which our industry is suffering at present. I am not sure that this is a road down which we wish to go. It is, of course, rather premature until such time as we learn the full attitude of the Commission to what is proposed.

My hon. Friend rightly went on to another extremely important matter, namely, the State aids being received by the poultry sector in France. It is true that poultry producers there are due to benefit from the income aids announced in December as part of a general package of aid worth nearly £400 million. We have protested most vigorously about this aid. The Commission has now written to the French Government saying that it, too, finds the aid incompatible with the Common Market and that the aid cannot be implemented before the procedures it has opened under the State aid provisions have led to a final decision. We feel most strongly that aid of this kind which seriously distorts competition should not exist within a common agricultural policy and are doing all that we can to bring pressure to bear on the Commission to act decisively. The position on aid to poultry processors in France is less clear. We have a good deal of information about the aids and have passed it to the Commission for consideration but have not yet received its views on it.

My hon. Friend has repeatedly made it clear that he will refer to the Commission any cases of illegal State aids which operate to the detriment of the United Kingdom provided that we have a sound basis for our representations.

The third point that my hon. Friend raised concerned imports of turkeymeat from the United States of America. Following the conclusion of the GATT multilateral trade negotiations there was an exchange of letters between the Community and the United States. The Community granted some tariff concessions to the United States on turkey parts, and the United States undertook that if exports of turkeymeat to the Community exceeded the average level realised in the course of the years 1977 and 1978 discussions would be held in order to examine the situation and, if needed, to find a solution to the problems thus created on the Community market. The letters do not specify what is to be regarded under the agreement as each country's reasonable proportion of the particular types of turkeymeat traded.

Based on Commission statistics, the average of United States exports to the Community in 1977 and 1978 was 11,372 tonnes. The latest Commission figures for 1980 show imports at 14,832 tonnes, which is clearly in excess of the 1977–78 average. The Commission has already held meetings with the United States and we are pressing it to hold further urgent discussions, as envisaged in the exchange of letters, in order to examine the situation and to find a solution. We have made clear to the Commission our concern over the level of United States exports, to the United Kingdom especially, and the effect that this is having on our industry.

I agree with my hon. Friend that there is need for effective monitoring of United States exports to the EEC. Largely as a result of pressure from the United Kingdom, the Commission introduced a regulation which from 1 January this year required member States to submit to it 10-day statistical returns of imports in addition to the existing monthly returns.

As I have already explained to my hon. Friend, the exchange of letters between the Community and the United States referred only to the average level of turkeymeat exported to the Community as a whole. It did not specify the levels or the proportions of particular types of turkeymeat traded. The Commission has based its estimate of the average level of imports from the United States in 1977 and 1978 on the total tonnage imported into the Community of whole turkeys and fresh and prepared or preserved cuts.

My hon. Friend also asked about the description of turkeys. I think that it would be better if I wrote to him on the details of that point, which clearly are technical. I shall seek to do so as soon as I can.

Imports from third countries are subject to sluicegate prices and import levies. The Community regulations envisage regular review of the arrangements. It is clearly important that they operate effectively. We have, therefore, taken the initiative in pressing for action. It was in response to this that the Commission recently proposed and the Council of Ministers agreed to some increases in the sluicegate prices for turkeys, ducks and geese. These will come into operation on 1 May. They are welcome as a step in the right direction and we are considering in consultation with United Kingdom interests how best further progress can be made, in relation not only to turkeys, ducks and geese but also to other products, including broilers, day-old chicks and hatching eggs, all of which are of particular interest to our industry. My hon. Friend will appreciate that increases need to be agreed by all member States. We shall continue to press for regular annual reviews, with the aim of ensuring that sluicegate prices are adjusted to take proper account of increases in costs of production. Indeed, I entirely sympathise with my hon. Friend's views. It is strange that Community regulations are waived for some things and not for others. It is a weakness in the system's operation.

In the time available I have not been able to cover every point of interest to the poultry industry—nor did my hon. Friend—but I am glad to have had the opportunity to state the Government's view on the issues of the moment. I hope that I have left my hon. Friend in no doubt about the importance that we attach to working closly with the industry in pursuit of our joint objective—ensuring that our industry can and will compete on fair terms with all other countries.

Question put and agreed to.

Adjourned accordingly at one minute past Three o' clock.