Cereals (Hansard, 19 December 1985)

§ 8. Mr. Deakins
asked the Minister of Agriculture, Fisheries and Food when the European Economic Community Council will next consider the level of cereal prices for the current year; and if he will make a statement.

§ Mr. Gummer
The Council took no decisions earlier this year on cereals prices for the current marketing year, although discussions continue, and the Commission has now laid before the Council further proposals.

§ Mr. Deakins
When the Council comes to consider cereal prices for next year, will it take as its base figure the level of cereal prices for the current year as determined by the Council following the German veto, or the level of cereal prices as determined by the Commission?

§ Mr. Gummer
The hon. Gentleman knows that the proposals before the Council will have to be considered by all the members of the Council. The Government have made it clear that we welcome the fall of 3.5 per cent. in real terms in the price given to cereals and that we intend to have that and to pull the price down still further.

§ Mr. Harris
Is my right hon. Friend aware of two pieces of evidence given to the Select Committee on Agriculture? The first piece is that the amount of grain in intervention stores is virtually bound to increase still further. The second piece is that farms have now reached the ridiculous point of growing purely for intervention rather than for the market. Although my right hon. Friend is right to put his faith in price restraint, if it can be achieved, the fact is that that will not be achieved because of the view of our partners in Europe. Will he be prepared for what I reckon will be the inevitable consequence of the introduction of quotas so that we do not get them introduced overnight?

§ Mr. Gummer
I am sure my hon. Friend is right in saying that we should be prepared for a package that will include a range of measures. That is always true and it would be wrong to think otherwise, but unless the Government stand firmly by the fact that we need to have a major part of the package based upon price discipline, price discipline will not be achieved, and it is essential for success.

§ Mr. Geraint Howells
Will the Minister agree with me and others that if we lower the price of grain by 5 per cent., production will increase by 10 per cent. within the next two years?

§ Mr. Gummer
I do not agree with that.

§ Mr. Bill Walker
My right hon. Friend will be aware that we had a drought last year and that this year has been particularly wet. Does he recommend to farmers in Scotland that in future they should go into warehousing? It is obvious that there is more money in that than in growing cereals or keeping livestock.

§ Mr. Gummer
No, Sir, I do not so recommend.

§ Mr. Strang
Will the Government oppose root and branch the proposal for a co-responsibility levy for cereals?

§ Mr. Gummer
For the many reasons that we have put forward previously we do not like the concept of the co-responsibility levy. We do not enter these discussions on the basis that we oppose root and branch any of the proposals put forward. We shall consider, discuss and argue them and try to come to a solution that fits the whole of Europe, for the Conservative party is an internationalist party.

§ Mr. Budgen
May I remind my right hon. Friend that when there were proposals to reduce the production of milk, our Government said that the quotas would be bureaucratic and impracticable? Is there any guarantee that when there are proposals in Europe to reduce the production of cereals the Government will not once again go along with a solution which they know to be wrong and against the interests of the British people?

§ Mr. Gummer
We do not believe that quotas are the way to solve the problem. We have said that clearly. We believe that the way to solve the problem is by price restraint. We shall continue to press that. That seems to be a solution that will be good for Britain and for the rest of the European Community, to which we belong.

§ Mr. Home Robertson
As the Minister keeps saying that price restraint is the right way to control surpluses, will he give an estimate of the percentage price cut that would be necessary to bring supply into line with demand? What would be the effect of such a cut on smaller producers? Will the right hon. Gentleman accept that such a solution would be intolerable? We need a comprehensive package, which must include quotas.

§ Mr. Gummer
The hon. Gentleman always asks for a comprehensive package without indicating what would be in it. Whatever the results we come to, and whatever the period during which cuts are obtained, it is necessary for cereal prices to come down.