HC Deb 18 July 1985 vol 83 cc463-4
4. Mr. Latham

asked the Minister of Agriculture, Fisheries and Food what is the latest position regarding the negotiations over cereal prices in the Common Market.

5. Mr. Heathcoat-Amory

asked the Minister of Agriculture. Fisheries and Food if he is satisfied with efforts to reduce the European Economic Community grain surplus.

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

The Agriculture Council earlier this week was again unable to reach agreement on cereal prices. The Commission, however, stated that for the coming marketing year it would apply prices for cereals based on an abatement of 1.8 per cent. It also stated that it would be authorising member states to make an end of season payment for common wheat and rye of breadmaking quality and putting proposals to the management committee to reduce the delay in the payment period for cereals bought into intervention and to operate a special intervention measure for breadmaking wheat towards the end of the 1985–86 marketing year.

The Council will return to the question of cereal prices at future meetings and, in addition, the Commission has said that it intends to bring forward proposals in the autumn for modifying the cereals regime so that decisions on the future of the regime may be taken by the end of 1985.

Mr. Latham

What sort of Fred Karno outfit is it when the non-elected bureaucrats arbitrarily fix cereal prices because the elected Ministers cannot agree? Surely our farmers and consumers deserve a better arrangement.

Mr. Jopling

I agree that this is an uncertain area. The Commission claims that the Council's failure to take decisions is contrary to its obligations under the treaty and that the Commission has a duty to fill the gap as far as possible. The Government do not think that it would be profitable to add to the uncertainty. The price reduction of 1.8 per cent. will therefore be applied in the United Kingdom, pending a final decision by the Council.

Mr. Heathcoat-Amory

As technology and improved techniques will continue to boost cereal production throughout Europe, is it not vital to have an enforceable and realistic policy of controlling surpluses? As the 1.8 per cent. price cut will not do the trick, and as my right hon. Friend must have a realistic policy, can he tell us what it is?

Mr. Jopling

My hon. Friend has heard me say time and again that discipline by price is the best way in which to control surpluses. The combined result of the Commission's decisions is that the support price for 1 tonne of wheat will fall by an estimated 7 per cent. in real terms in 1985–86. That follows a reduction of more than 9 per cent. in real terms during the previous three seasons.

Mr. J. Enoch Powell

Is the Minister satisfied about the legality and propriety of the method by which the 1.8 per cent. abatement is being made?

Mr. Jopling

As the right hon. Gentleman knows, there is a precedent for the Commission moving in, in circumstances such as these, when there is a legal vacuum. The Government do not think that it would be profitable to add to the uncertainty.

Mr. Torney

Is the Minister aware that this country has a surplus of 4 million tonnes of grain and 3 million tonnes of wheat used mainly for animal feed, which is not required? Is he further aware that putting goods into intervention costs the British taxpayer £40 million a year? What is he going to do about that appalling situation?

Mr. Jopling

I would have hoped that the hon. Gentleman would applaud the efforts that I have been making to apply even stronger cereal price cuts. I should have thought that he would agree with me that it was a significant step forward over the past three years to have had a reduction of 9 per cent. in real terms. The Commission's decision for this year implies a reduction of a further 7 per cent. in real terms.

Mr. Deakins

As an important principle is at stake here—whether the Commission has the power to overrule and override the veto of a member Government—will the Minister confer with his colleagues about the possibility of having the matter referred to the European Court of Justice for a ruling?

Mr. Jopling

It is not the Government's intention at the moment to refer this matter to the court. Under the guarantee threshold arrangement. this year there should have been a reduction of 5 per cent. There is, therefore, a strong argument for saying that there should be a reduction in cereal prices this year, although I wish that the reduction was more than 1.8 per cent.

Mr. Parris

Does my right hon. Friend agree that the failure to reach a decision, however looked at, is disastrous for the Community? Can he explain what will happen about storage, given that there is already a record amount of grain in intervention store in this country and that a record amount of cereals has been planted and is about to be harvested? What will happen to the new crop?

Mr. Jopling

My hon. Friend is a brave man to assert that there will be a record harvest. That is not a certainty. I hope that he will reflect on the fact that over the years there has been a major change in the attitude of the Council of Ministers and the Commission, and that although three years ago we were talking about a double digit increase in cereal prices, this year there will be a fall of 7 per cent. in the price of this season's wheat in real terms.

Mr. John

Does not the fact that Ministers were talking about a two-figure price increase so recently mean that the position is desperate? Will he confirm that the Commission's report reckons that the profit margin on cereals throughout the Community is between 20 and 30 per cent. and that this year's end of season stocks will be 10 million tonnes higher than last year? What hope do we have that in the autumn, or at any other time, the Commission will be less feeble and Ministers less faint-hearted than they have shown themselves to be this summer?

Mr. Jopling

I hope that the hon. Gentleman will give me credit for having been the most robust Minister in arguing in the Council of Ministers for reduced prices. I was the only member of the Council of Ministers who argued consistently that cereal prices should be reduced by the full 5 per cent. that was implicit in the guarantee threshold. I shall continue to argue in that way.