Surplus Grain (Hansard, 17 January 1985)

§ 1. Mr. Barron
asked the Minister of Agriculture, Fisheries and Food how much of the EEC surplus grain is held in the United Kingdom.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor)
Some 11.9 million tonnes of cereals were held in intervention in the European Community on 4 January 1985, the latest date for which figures are available. Of this, 2.9 million tonnes were in the United Kingdom.

§ Mr. Barron
Does the Minister agree that it costs more to keep grain in Britain and the EEC than to give it to the northern region of Africa, to countries such as Ethiopia and to many others in that region, many of which are in dire need of that grain at present, and that to give that grain away is not only economic but humanitarian? What do the Government intend to do about the present need in that area?

§ Mr. MacGregor
Unfortunately, I cannot agree that the economic cost works out quite as the hon. Gentleman suggests. It is more expensive. Nevertheless, I share his humanitarian objective. The United Kingdom Government are playing a major and leading part within the EC in the export of grain as emergency food aid. Substantial quantities of grain are supplied by the EC and the United Kingdom as food aid. The hon. Gentleman will know that the European Council meeting in Dublin agreed to provide 1.2 million tonnes of grain to the African countries before the next harvest, on top of substantial amounts that have already gone out this year.

§ Mr. Leigh
Does my hon. Friend agree that cereal farmers need more certainty and that either we should get the grain out of intervention by more restitution and export credits, particularly to the eastern bloc, or, failing that, that farmers should be told that we now have a low input and output economy for cereals and that over the next five years there will have to be a cut in real prices?

§ Mr. MacGregor
As my hon. Friend will know, we are exporting considerable quantities of grain. Indeed, exports of grain on the open market are cheaper than exports of grain in intervention. Therefore, there are limits to the extent to which one can increase export restitutions. 494 But my hon. Friend is right to be concerned about the surplus and its cost. Everything that has happened this year supports the Government's objective in the forthcoming price review of severe restraint on prices, coupled with the full application of the guarantee threshold, which will have something of the effect that he suggests.

§ Mr. Geraint Howells
Has the Minister any plans to persuade his counterparts in Europe of the need to change the intervention system within the Community in the next few years?

§ Mr. MacGregor
The most important thing that we can do, in order to get down the potential cost of the surpluses that we now have that could go into intervention, is to have restraint on cereal prices. Most of the other suggestions, which are not on the table for negotiation in the Community, such as quotas, are impracticable and would be wrong. The right objective is to tackle the problem through restraint on support prices.

§ Mr. Ralph Howell
Does my hon. Friend agree that that is precisely what we were doing and what was being advocated before the milk crisis burst and quotas had to be imposed? Are we not going down exactly the same road as before?

§ Mr. MacGregor
If the policy on milk prices that I have been advocating had been adopted, we might have avoided quotas. We made a significant difference in the price review last year in a variety of ways, which effectively brought cereal prices down in real terms, and we must build on that.

§ Mr. John
Does the Minister agree that the figures that he has given represent a rise of a third in the grain in intervention in the past year? Does he further agree that if we are to consider a cut in the price of grain—what he calls price restraint—3.1 per cent. is unlikely to take any grain farmer out of the production of grain? Should he not press for a higher figure as a real cut to signal to farmers—in the words of his hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh)—that there is a different situation and they will have to cut the production of grain in Britain?

§ Mr. MacGregor
We should certainly recognise that the amounts in intervention have gone up. To a considerable extent that is a feature of a remarkable harvest last year, for which we should pay great tribute to our farmers in the Community. Nevertheless, the price in real terms has come down quite a bit in the past year. We are arguing for price restraint, which will continue that policy. We should like it to continue for more than one year. I think that that will have its effect.