Agriculture Council

HC Deb 28 February 1985 vol 74 cc478-88 4.13 pm

The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling)

With permission, Mr. Speaker, I wish to make a statement on the Council of Agriculture Ministers meeting in Brussels on 25 to 27 February. My hon. Friend the Minister of State and I represented the United Kingdom.

The Council agreed to certain modifications to the milk supplementary levy regulations in order to ensure the implementation of quotas throughout the Community in 1984–85. Two of these are particularly important to our industry.

The first is a provision enabling producers who have two quotas, one wholesale and one for direct sale, to switch between the types of quota according to the marketing needs of their businesses.

In order to avoid abuse, there will be strict administrative controls. This is a change for which I have been pressing at successive meetings and I am delighted that we have now obtained an agreement.

The second important element for milk is a provision, for one year only, to permit unused quota to be switched between producers and between regions. Provided there is no abrupt change in levels of milk production, I would expect this to relieve all liability for levy on wholesale milk sales in the United Kingdom in 1984–85. This is of particular benefit to Northern Ireland. We would also expect liability for levy on direct sales to be substantially reduced, though it is not possible at this stage to say whether it would be eliminated.

The package did not deal with a number of points which are of particular importance to some other member states, including the Irish request for an additional 58,000 tonnes of quota. This issue will be further discussed in the price fixing. It was made clear that subsequent decisions on this or other matters were in no way prejudiced by the decisions taken at this Council. I emphasised that we remain opposed to the Irish request.

I am also pleased to announce that the Council agreed on a series of important measures to bring wine production under control. These implement the outline agreement reached by the European Council in Dublin last December.

The new measures contain three main elements. The first element is an effective guarantee threshold so that surplus production will be removed by compulsory distillation at low prices, so as to dissuade producers from increasing output.

The second element is a system of aids for producers who grub up their vineyards and go out of production, thus leading to a permanent reduction of the Community's vineyard area.

The third element is a commitment to a restrictive price policy for as long as a significant structural surplus remains. This is a crucial part of the agreement and was one of the Government's major objectives.

During negotiations I was successful in reducing substantially the cost of the package to the Community without undermining its effectiveness. The Commission's original proposals would have cost over the next five years 740 million ecu—about £460 million. But this has now been reduced to 435 million ecu—about £270 million.

Our calculations show that these decisions will lead to significant savings for the Community budget by way of reduced distillation costs.

The agreement of the Council will be put into legal form as soon as the European Parliament has given its opinion on a small element of the package, which has only been recently proposed by the Commission, to restructure some Greek vineyards. We made it clear that this element is still subject to scrutiny in this House.

The Council also carried forward discussion on the more general agricultural structures regulations. The Commission formally proposed a new article authorising member states to introduce aids in environmentally sensitive areas. As the House knows, I have been pressing for such a provision. I am glad to say that it had a wide measure of support in the Council. I would expect discussion on the structures package to be resumed at the next Agriculture and Finance Councils, when I hope it will be possible to reach final decisions.

The Council adopted a regulation which allows the Commission to acknowledge applications submitted to it for aids for improvement in processing and marketing facilities. Without a prior acknowledgement from the Commission, work in hand is rendered ineligible for aid. This technical change was, therefore, needed in order to allow people to press ahead with investments. It is an important change for many British firms which wish to make improvements urgently.

Finally, I raised the question of the preferential tariff for supplies of gas to the Dutch horticulture industry. The Commissioner told the Council that the Dutch Government have now been informed that this tariff is incompatible with the Community's state aid rules. The Dutch have one month to respond to the Commission's communication. I emphasised that the Dutch growers had already benefited from reduced heating costs for most of the current season. I said that this was a thoroughly unsatisfactory situation and that the growers should be required to repay the aid. The Commissioner said that he would be giving further thought to this in the light of the Dutch response.

This was a highly satisfactory Council for the United Kingdom. The wine decisions are the second major step, after milk, to bringing reality into the common agricultural policy. The modifications of the milk regime are of great importance, as is the proposal on conservation. The Council has cleared the way to press ahead with the price-fixing negotiations.

Mr. Brynmor John (Pontypridd)

I repeat the welcome that we gave to the changes to the milk quota scheme when they were debated in draft in the House last week. They are welcome because they will make the scheme a little less rigid than it was. Particularly welcome is the reprieve given to direct sellers through greater flexibility. Several of them were faced with possible heavy penalties, and that reprieve must rid them of considerable anxieties. However, the direct seller sector is only one of the major sectors that are seriously affected by the milk quota scheme. As the Minister will know, what we call the development cases face greater hardship. Therefore, is there any hope that a future Agriculture Council can be induced to do something to help them?

Secondly, I should like to ask the Minister about the proposal for redistributing unused quota to other parts of the United Kingdom. As he said, the present agreement extends only for this year. However, the Financial Times, reporting the Council's proceedings this morning, said: pressure is growing from several member states to make it permanent. How realistic is that report? Is the United Kingdom one of the countries which are pressing for a permanent scheme? Again, I rely on the newspaper accounts for this matter. Will the Minister give us an account of the general review of the milk quota scheme, bearing in mind the tale of insuperable difficulties in Italy in implementing the scheme? When will we see the scheme actually working everywhere rather than just in the United Kingdom, as it is at the moment?

We also welcome the measures on wine, but the retails are a little less certain than they were. They are somewhat complicated by the fact that Italy is one of the countries that is most affected. From the reports that we read in the newspapers, we see that there is a slight difference between what is reported and what the Minister said today. I should be grateful if he would clarify whether the grant is given for people who grub up their vineyards or for those who forgo replacing their vines with new vines. There is a world of difference. It is a dangerous concept to pay farmers for not doing something. At the back of our minds all of us are thinking of the number of phantom vineyards that will be spawned if the grant is to be paid for not doing something. I understand that the exact amount of money involved in the grubbing-up, or non-planting, scheme has not yet been decided, and will not be decided until the end of the year. I hope that the Minister will resist any substantial expenditure upon such an activity.

Most importantly on that aspect, I must ask the right hon. Gentleman what will be done with the surplus wine. I understand that most of it, after distillation, is going into storage. The Minister will know that the United Kingdom is the major manufacturer of industrial ethyl alcohol in the EEC, with about 50 per cent. of the production, and major chemical plants at Baglan bay and Grangemouth are dependent upon it. As I understand the situation — perhaps the right hon. Gentleman will clarify it — the use of such surplus distilled wine as industrial alcohol would be uneconomic without the introduction of a heavy subsidy to assist sales. I hope that the Minister will undertake clearly to the House that he will not consent to a scheme for such subsidies, which would undermine production and employment in this country.

The right hon. Gentleman also mentioned some progress on the environmental input to the structures agreement. Will he refresh the House's memory, because it is such a long-running serial? For how long has the structures agreement been on the agenda for the ministerial meeting? Is the right hon. Gentleman's confidence that it might be dealt with finally next time realistic, or are we to have a continuation of the serial?

I should like to ask when our hard-pressed growers are to be relieved of the unfair competition of the Dutch gas subsidy. What the right hon. Gentleman said, welcome though it is, promises that the subsidy will creep on from month to month, and month by month it is severely afflicting the horticulturists in our industry who have to put up with that. It is not good enough for the Commissioner to say that he will give further thought to it in the light of the Dutch response, because that will mean it being at least three months from today before any penalties are imposed. Will the right hon. Gentleman assure us that it will happen much earlier?

Mr. Jopling

The hon. Gentleman asked many questions, and I shall do my best to answer them. I am grateful for what he said about the changes that we have been able to make in the milk arrangements. His comments were particularly helpful.

Milk producers who have applied for an expansion of their quota have virtually all been dealt with by the panels and the tribunal. I hope that the decisions of the tribunal will be transmitted within the next few weeks. As soon as we know where we are with the total amount that has been awarded by the tribunal, we can move much more quickly towards the finalisation of secondary quotas. We want to get on with that.

The hon. Gentleman asked about the permanence of the regional exchanges that I mentioned. That is clearly for this year alone. The Commission has made that absolutely clear, and we were prepared to accept it for this year, but no further at this stage.

The hon. Gentleman said that the milk quotas were working only in the United Kingdom. With respect, that is not true. With the principal exception of Italy, where the Commission has taken legal proceedings, milk production is moving towards the quota levels. That is happening in virtually all the other member states. Therefore, it is not fair to say that the quotas are working only in this country.

With regard to wine, the hon. Gentleman referred to ensuring that those who grub up their vineyards stay out of production. I remind him of the words that I used. I referred to a system for producers who grub up their vineyards and go out of production, thus leading to a permanent reduction of the Community's vineyard area. I think that that answers that question. That point is taken on board. We must make sure that the acreage does not just come back through the back door.

The hon. Gentleman asked about the use of surplus wine and its compulsory distillation into alcohol. I assure him that on many occasions in the Council we have raised the problems that can arise because of the impact on firms such as British Petroleum of that sort of industrial alcohol. We keep a close eye on that matter and on several occasions we have drawn the difficulties to the attention of the Commission, and we shall continue to do so.

The hon. Gentleman asked me for how long the environmental point had been discussed. I think I am right in saying that I first raised it in the summer. I began by having no friends whatsoever on the conservation arrangements. To the best of my memory, the structures regulations have been discussed for about 18 months, but our environmental initiative has been much more recent. I am glad that we have gone from having no friends to having the support of the Commission, which proposed those regulations.

The hon. Gentleman asked the question about Dutch gas that I have been asking at every meeting of the Council since that anomaly arose, the question being, "When will relief come?" I have been pressing the Commission, and will continue to do so, so that what I regard as an illegal subsidy is ended as soon as possible.

Sir Peter Mills (Torridge and Devon, West)

I congratulate my right hon. Friend on his persistence and first-class effort in these matters. Will he bear in mind that what he has done will be particularly welcomed in the south-west of England by the producer-retailers of Cornish and Devonshire cream, which is so important for our tourist industry? Surely my right hon. Friend will agree that it is far better to get rid of dairy products by consumption rather than by storage. Having achieved that great result, will he now move on to the next problem, which, of course, is the sale or leasing of quotas and a further extension of the outgoers scheme?

Mr. Jopling

I am grateful to my hon. Friend for his generous remarks. I have had very much in mind the special problems of the south-west and the cream trade, about which over the last 20 years he has told us so much, and its importance, which I support.

On the question of leasing and sale, as my hon. Friend will know, we have been consulting the industry about how we should proceed to achieve greater flexibility in milk production—whether we should go for leasing or for the sale and purchase of quotas. We have considered it our first priority to deal with the question of mixed businesses, and we shall now be able to give more attention to the question of flexibility. I have had recent discussions with the National Farmers Union on this subject. I have explained to the House in the past that I have a good deal of sympathy for the prospect of leasing to create the greater flexibility that we need, and I hope to be able to make an announcement soon.

Mr. James Nicholson (Newry and Armagh)

May I take this opportunity to add my congratulations to the Minister on the outcome of the negotiations, which, without doubt, will be of great assistance to the dairy farmers in Northern Ireland.

May I also take the opportunity to remind him that, while we welcome the improvements, in many ways they have come too late for those producers who kept within the law as it was and did not produce extra milk during the year. Such producers will now be seriously disadvantaged.

I ask the Minister to make it clear that this is not the end of the quota system, as many farmers may assume that Brussels will never collect the money. I ask him to do this so that we will not be in the position next year that we were in this year. I ask him to emphasise that point.

I also remind the Minister of the great difficulty that arises in Northern Ireland because of the lack of uptake of the outgoers scheme, and I ask him to bear that in mind. That problem has still to be overcome and solved in Northern Ireland.

Mr. Jopling

I am grateful to the hon. Gentleman for his earlier remarks.

I understand that it would have been more helpful if we could have negotiated this change many months ago. The hon. Gentleman will know that I began pressing for the change last June, since when I have pressed for it at every meeting of the Council. Although I would have preferred it earlier, I am glad that it has come before the end of the year.

As to the outgoers scheme, I know that this has been going slowly in Northern Ireland. It has been re-opened. I hope that any farmers who are contemplating leaving the industry will take advantage of the scheme, which is very generous.

Sir Hector Monro (Dumfries)

I add my warm congratulations to my right hon. Friend on his outstanding success over milk quotas. May he have equal success with the sheepmeat regime and the beef premium.

Is my right hon. Friend aware that his remarkable progress on conservation is much appreciated by those with conservationist interests in the countryside and by farmers who are equally keen that the countryside should remain as pleasant and as beautiful a place as it is already?

Mr. Jopling

I am grateful to my hon. Friend on two counts; first for his earlier remark and, secondly, for his reference to what he called our remarkable progress on conservation. I find that my colleagues in the Council of Ministers are becoming more and more conscious of their responsibilities in the matter of conservation, and we shall keep up the pressure.

Mr. John Morris (Aberavon)

Will the Minister answer a simple question? Is he saying that he has agreed on a system of extra wine distillation without agreeing on a system for its disposal? How will it be disposed of, will there be a subsidy, and will there be an affect on the British chemical industry? Will he give an assurance that he will not agree to a step-by-step extension of the common agricultural policy into this part of industry?

Mr. Jopling

As to the alcohol which is produced by compulsory distillation, the current cost of the wine surplus has been running at about 1 million ecus a year, or approximately £600 million. This is the absurd situation from which I believe we must now move away. We are spending a great deal of money to reduce the acreage of vineyards and to ensure simultaneously that the surplus is taken off the market at the low price at which it is uneconomic to produce.

A great deal of the alcohol which comes from this distillation goes into store. As I said to the hon. Member for Pontypridd (Mr. John), we have been vigilant in ensuring that this does not distort the market, and we have been defending the interests of such firms as British Petroleum for a long time.

Sir John Farr (Harborough)

May I add my congratulations to those of my other hon. Friends, and, indeed, other hon. Gentlemen, to my right hon. Friend on the successful conclusion of his visit.

Does my right hon. Friend recall the performance of the Dutch who, in recent years, have repeatedly been about to give up unfair subsidies and practices, as we have been told by successive predecessors of my right hon. Friend? The fact is that they continue to act outside the law. I ask my right hon. Friend to follow up the Dutch question with his usual energy. I congratulate him again on what he has secured abroad.

Mr. Jopling

My hon. Friend is generous. I can give him the assurance that I shall not miss any opportunity to press the Commission to deal with the illegal actions of the Dutch Government until they are finally stopped.

Mr. David Penhaligon (Truro)

I wish to raise two points. Can the Minister say whether the agreement on the wine lake has any effect on the fledgling wine-producing industry in this country and, indeed, in my constituency? Can he confirm that it is still the Government's intention to deny milk farmers in my part of the country and, indeed, iii the rest of the country, the full quota allocated to them under the development system of inquiry?

Mr. Jopling

The agreements that we made have no effect on English wine. An exemption from obligatory distillation was secured for English wine.

With regard to the milk situation, my difficulty is that I cannot produce milk quotas which I do not have. I suppose that it might have been possible for me to fulfil all the awards of the panels and tribunal if, for instance, I had taken from all milk producers more than the extra 2.5 per cent. — say 3 per cent. I have to balance one against the other. If I had had the milk available to give to the developers, as the hon. Gentleman mentioned, it would have meant everybody else having that much lower quota.

Mr. Colin Shepherd (Hereford)

May I add my congratulations to those of my right hon. and hon. Friends, which will have made my right hon. Friend aware that the persistence with which he has pursued these problems will earn him the warm recognition of the industry, which, in my view, he is serving well.

Is my right hon. Friend aware that overall fairness is still considered to be of great importance in the industry? Is he happy that the rules that he has negotiated in the change between wholesale quota and retail quota are capable of being properly enforced, especially in France? Secondly, will he remain aware that the Irish question continues to be regarded with great suspicion by producers in the United Kingdom, and will he make certain that Irish farmers do not pull a quickie?

Mr. Jopling

My hon. Friend in his generous remarks asks about the enforcement of the arrangements that I described concerning mixed businesses. As I explained in my statement, there are some administrative provisions to ensure that abuses do not occur.

There was a good deal of disquiet about the possibility of a large amount of milk being transferred from direct to wholesale quota — the opposite of what we want. In Italy there was a suggestion of approximately 1 million tonnes. That suggestion was specifically excluded from the arrangement. I hope that we shall not see abuses on that account.

With regard to the Irish claim for a greater milk quota, in my explanation to the House I made my position very clear.

Mr. Donald Coleman (Neath)

May I refer the right hon. Gentleman back to the measures designed to deal with the wine lake and reinforce what my right hon. and learned Friend the Member for Aberavon (Mr. Morris) said? The production of industrial alcohol in south Wales represents a considerable means of employment. Will the Minister give the House an absolute guarantee that there will be no subsidy that will cause difficulties for the producers of industrial alcohol in Britain, and particularly those in south Wales?

Mr. Jopling

I am very conscious of the danger, and we have been very much aware of it for a long time. The whole purpose of these provisions is to reduce the amount of surplus wine and thus to reduce the amount of alcohol that is compulsorily distilled from it, which is in danger of distorting the market. We have been trying to bring wine production closer to the level of consumption, so that such distortion is much less of a danger.

Mr. Nicholas Baker (Dorset, North)

My right hon. Friend's announcement will be warmly welcomed by the dairy farmers of Dorset, and he is to be congratulated upon it, but is he aware that producer-retailers represent the one sector of dairy farmers who have increased the amount of product sold? Will my right hon. Friend now turn his attention to the problems of those dairy farmers who have provisionally been allocated secondary quotas, and who find on appeal that those allocations have been reduced?

Mr. Jopling

In the discussions that we had not long ago on the Bill to arrange the outgoers scheme, I told the House that it would be necessary to have cuts in the awards of the panels and of the tribunal. I said that I thought the figure might be about 35 per cent.

Mr. Dafydd Wigley (Caernarfon)

With regard to the Irish bid for additional quota, did the right hon. Gentleman make it absolutely clear that if any additional quota was going, there was a very strong case for it going to help those farmers who are suffering in Britain, and particularly in Wales? In that context, given the mechanisms that exist in the EEC and which could be used to help producers, did the Minister make any application for additional assistance for milk producers in the less-favoured areas?

Mr. Jopling

With regard to the Irish proposal, I have continually made it clear to other Ministers and to the Commission that we would be opposed to that suggestion, and that if there is to be extra milk for anyone, we are just as anxious to suggest candidates as, I imagine, are all the other Ministers.

Mr. Teddy Taylor (Southend, East)

Is not this very costly scheme to give additional subsidies to farmers to grub up vineyards in order to get rid of wine lakes very similar in character to the Common Market scheme of some years ago, which paid people millions of pounds for killing cows in order to get rid of the milk lake, which has, of course, grown enormously since then? Is the Minister at all confident that the scheme will be fairly applied by the Italian and French Governments, given that the Italian Government already pay substantial sums of Common Market money to the Mafia for non-existent vineyards and for the destruction of non-existent tomatoes?

Mr. Jopling

There is provision to set up a register of vineyards throughout the Community, and that will go a long way towards solving the problem. Steps have been taken to deal with any dangers of imaginary vineyards. The assistance given to people to grub up their vineyards includes a provision to ensure that they do not come back into wine production.

Mr. Robert Maclennan (Caithness and Sutherland)

With regard to the proposed new article allowing the payment of aid in environmentally sensitive areas, will the Minister confirm that it is to increase and not to reduce farmers' incomes in those areas? I welcome his gradual conversion to the policy of the Social Democrats in allowing greater flexibility on quotas by trading them.

Mr. Jopling

One of the first things that I said when I came out from the final negotiations on the milk quotas was that they were much too inflexible and that sooner or later we would have to work in a system of flexibility. The hon. Gentleman asked about the environmental arrangements. I hope that we shall be able to get final agreement on that matter within the course of the next Council, and that we shall then be able to continue our progress so that extra assistance can be given to farmers in certain sensitive areas to encourage them to continue with traditional systems of farming.

Mr. David Crouch (Canterbury)

Although I recognise the great achievement in reducing the amount of surplus wine, I am concerned, as one involved in the chemical industry—as I think my right hon. Friend knows—that the vast wine lake may one day be unloaded on the market in the form of distilled alcohol, thus greatly disturbing one of our most successful industries. As one who is also concerned with health, may I say that if I had to give any advice to my right hon. Friend, I would say that it was better to advise people to drink more wine and less cream.

Mr. Jopling

From what I hear about some of the table wine that goes for compulsory distillation, I would rather my hon. Friend had to drink it, and not me. I hope he will understand that the prime purpose of the negotiations is to reduce the surplus wine so that less distillation then has to take place, and so that there is less of this alcohol around, which is extremely expensive to dispose of.

Dr. Roger Thomas (Carmarthen)

Although I do not wish to tarnish the Minister's halo today, will he recognise that there are at least 10 other areas affecting the dairy industry that badly need his attention before that industry can even get on the first rung of the ladder to recovery?

Mr. Jopling

When it comes to helping the dairy industry back to recovery after the imposition of milk quotas, I hope that the hon. Gentleman will recall — particularly as he comes from an area that has many small producers — that one of the principal purposes of the outgoers scheme is to return the small milk producer to a level of quota that is the same as his level of production in 1983, before quotas ever came into being.

Mr. William Cash (Stafford)

Will my right hon. Friend accept the congratulations of my constituents in Stafford who had certain difficulties about the milk quotas during the by-election? He has achieved considerable success in the recent negotiations. In practical terms, how will policing measures be pursued in the European Commission to ensure that the level of production—for example, in France—has fallen as far as it should have done? I believe that at present the French have managed to reduce production by only about 1.3 per cent., whereas the figure for Britain is about 8.9 per cent. What practical administrative measures are being taken to ensure that the French fall into line with the rest of the Community?

Mr. Jopling

I refer my hon. Friend to the distinguished weekly news sheet, Agra Europe, which shows in its current edition that there has been a very large reduction in milk production in France during the past month. I think that it is true to say that the Commission is becoming more and more expert in policing regulations, and that the weapon of disallowance is being used much more frequently. Although there is still a long way to go, we are moving in the right direction.

Mr. Andy Stewart (Sherwood)

I am sure that not only the farmers but the taxpayers will welcome my right hon. Friend's statement. He has informed us that the scheme to administer the dairy surpluses will lead to a reduction of £200 million. Is it not interesting that his statement coincides with the report published in one of our daily newspapers that dairy farmers' margins for concentrates have increased by 18 per cent. since the introduction of quotas?

Mr. Jopling

I am grateful to my hon. Friend for what he has said. I am glad that the dip in the sales of dairy concentrates which took place in the months following the introduction of milk quotas is now reduced and that the level of production is moving back towards previous levels.

Mr. Roy Beggs (Antrim, South)

I, too, offer my congratulations to the Minister and his colleagues on the successful way in which the negotiations have been concluded. However, I ask him to move forward and consider how the provision of quotas can be made available to young entrants to dairying who wish to make dairy farming their career.

Mr. Jopling

I am grateful to the hon. Gentleman. I was conscious from the start of the milk quota regime that the inflexibility would cause difficulties and problems for young men trying to enter dairy farming. That was the main reason for my urging that we should introduce greater flexibility. I intend to press the Commission and the Council to give more attention to this problem now that the problem of inflexibility between direct and wholesale quotas is out of the way.

Mr. David Maclean (Penrith and The Border)

I add my personal congratulations to my right hon. Friend and his ministerial colleagues on the splendid deal that they have pulled off in Brussels on wholesale and retail quotas. I assure my right hon. Friend that many of his right hon. and hon. Friends will, in their own inimitable way, help him all that they can to reduce the European wine lake. I ask him to redouble the strenuous efforts that he is making to bring some relief to tenant farmers. Will he consider making tenant quotas a tenant right?

Mr. Jopling

My hon. Friend has been extremely kind in his remarks. The problem of landlord and tenant goes with the desire to make the transfer of quotas more flexible. Tenant rights and compensation are very much involved. Many legislative problems accompany any move that might be contemplated into the deeper grounds of tenant rights and arbitration. However, these are options that we have very much in mind for the future and we are discussing them with the farmers' unions.

Mr. Keith Best (Ynys Môn)

Anglesey and Wales will welcome my right hon. Friend's statement, because it proves that my right hon. Friend and his ministerial colleagues are doughty fighters who are capable of winning on behalf of our farmers. If there is insufficient quota to meet the requirements of farmers who engaged in considerable industrial expansion to produce more milk in the past, will he consider whether there are any other ways in which he can help those who have made considerable capital investment? When we debated this issue last year, my right hon. Friend was good enough to say in response to my intervention that he would reconsider the matter if there was insufficient quota to meet these requirements.

Mr. Jopling

My hon. Friend has said kind words about the arrangements which we were able to negotiate. I am prepared always to consider what can be done to help those who are in particular difficulties over milk quotas, and the work of the panels and the tribunal is one way of doing this. My hon. Friend will know that the injection of further Government funds behind his worthy aim is a much more difficult problem.

Mr. John

I return to the issue of industrial ethyl alcohol. The right hon. Gentleman's answers will cause real anxiety to those who are employed in the industry. I ask him to confirm two points which I put to him originally and which he overlooked, no doubt because of the number of questions I asked. Will he confirm that, without a subsidy, the industrial alcohol that is distilled from the wine surplus will not be competitive with industrial ethyl alcohol manufactured in Britain? Secondly, will he confirm that he will not give his consent to money being made available from EEC funds to subsidise the use of wine alcohol in this way?

Mr. Jopling

The hon. Gentleman has heard what I have said about this. Distillation is an extremely expensive way of dealing with surplus wine production. It means that, at heavy cost, we obtain alcohol that is distilled from wine. In the past, huge sums of public money have gone into this process. As I told the House a short time ago, the cost of the surplus is running at about £600 million. The product of that sum is industrial alcohol that has been distilled from wine.

We are seeking to reduce the amount of wine that is produced. Therefore, there will be fewer hectolitres of wine which need to go to compulsory distillation. Less alcohol will be produced and there will be less danger of the market being distorted. I can produce chapter and verse to support my claim that we have been raising this matter almost endlessly since I became the Minister of Agriculture, Fisheries and Food, and I believe that it was being raised before my appointment. Every effort has been made to try to ensure that anomolies do not occur and that British firms, such as British Petroleum, are not put at a special disadvantage.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

rose—

Mr. Speaker

Order. I do not know whether the hon. Gentleman was in the Chamber at the beginning of the Minister's statement. However, I am prepared to trade off a question now for a shorter speech from him in the Welsh debate.

Mr. Howells

I am grateful to you, Mr. Speaker, for allowing me to ask a question of the Minister. I shall be brief in the Welsh debate as well. What plans does the Minister have to help dairy farmers who bought their farms in 1983 and who find life difficult as they do not have a quota that will keep them in business? They are in financial trouble. What specific plans does he have to help them?

Mr. Jopling

It is extremely difficult to do anything for those with no quota who were not producing milk when the scheme began on 1 April 1984, other than to have their cases considered sympathetically and carefully by the panels and the tribunal. The hearings of those bodies have now finished and I hope that their decisions will be transmitted within the next few weeks to all farmers who believe that they have a grievance under the rules of the arrangements. I am not able to go beyond that.