Price Review (Hansard, 16 May 1985)

§ 3. Mr. Maclennan
asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the progress of the price fixing negotiations in Brussels.

§ 8. Mr. Latham
asked the Minister of Agriculture, Fisheries and Food what is the latest position regarding the Common Market price negotiations.

§ Mr. MacGregor
My right hon. Friend the Minister of Agriculture, Fisheries and Food and I are currently attending the Council of Ministers in Brussels, from which I have just returned, and where negotiations continue. That is why my right hon. Friend is unable to be here this afternoon, and he apologises to the House for his absence. They are proving to be exceptionally difficult and protracted negotiations. A main stumbling block continues to be Germany's attitude to the proposed cuts in CAP support prices for cereals.

§ Mr. Maclennan
Is not the damaging delay in reaching agreement on prices due to the fumbling ineptitude of the Government in failing to prepare the ground adequately and sufficiently in advance, and especially in failing to recognise that across-the-board institutional cuts at a level which the Government have been pursuing are unlikely to be achieved and will only alienate our Community partners? Does the Minister agree that the only hope of reducing expenditure while maintaining farm incomes equitably is through quantitative restrictions on price support for cereals, as on milk?

Mr. McGregor
Obviously we would have preferred and earlier settlement, and we have urged all the way through for a settlement as quickly as possible. I hope the hon. Gentleman will agree that it is more important to have a delayed settlement that is right than a hasty settlement that is wrong.
The hon. Gentleman is wrong to say that the United Kingdom Government have not been preparing the ground for the cereals negotiations. We have been taking the lead on many of the major issues in these negotiations, and in particular we have argued for price cuts.
I do not understand the hon. Gentleman's point about alienating our Community partners. We are getting increasing support for our approach to price reductions on cereals, but we have to face the fact that many member states have a different view.
Finally, it has become clear in the debates that a considerable number of important member states are totally opposed to quotas for cereals.

§ Mr. Latham
Is my hon. Friend aware of the disturbing rumours from the Milk Marketing Board that the 1 per cent. cut in the co-responsibility levy might not be achieved after all? Will he assure our totally frustrated milk farmers that in these negotiations he will insist on that cut?

Mr. McGregor
I assure my hon. Friend that we are battling extremely hard-for United Kingdom interests, of which this is one. One or two member states have been urging a delay in the reduction of 1 per cent. in the co-responsibility levy, but we have been resisting that strongly.

§ Mr. Weetch
The Minister said that one of the points of contention was the price of cereals. Does he realise that artificially high prices for cereals have caused enormous environmental damage to the country? Will our negotiators do all that they can to persuade the EEC that it would be far better to devote some of the money to an integrated countryside policy than to propping up grain prices and creating surpluses that nobody can buy?

Mr. McGregor
The hon. Gentleman should recall that the United Kingdom Government, initially on their own, took the lead in getting a conservation and 477 environmental element into the Community proposals on the structure programme. We have gradually got more support.

§ Mr. Watson
Does my hon. Friend agree, at least in principle, that any attempt to reduce the present cereal surplus by means of price restraint alone would inevitably involve substantial reductions in price, the main burdens of which would fall upon the more marginal grain producers, such as those in Yorkshire and the south-west?

§ Mr. MacGregor
It is difficult to give the House any final sign of what is happening in the negotiations, because they shift from time to time and the package changes as the negotiations proceed. Although price reductions are the main element in what both the Commission and a considerable number of member states are urging this year, there are other ways in which cereal problems can be dealt with, including the proposal to drop the breadmaking wheat premium, which is currently being negotiated, and one or two other matters, such as changes in the carry-over payments, which would also have an effect.

§ Mr. Deakins
What is the size of the gap between the cost of the Commission's original proposals for 1985 and the upper limit under the financial guidelines for agricultural expenditure?

§ Mr. MacGregor
For 1985, the limit, I think from memory, is 29,955 billion ecu. The current proposals are within that. There has been general agreement, very much at our insistence, that any other proposals now being considered will be financially neutral. In other words, at the end of the day we should stay within that limit.

§ Sir Hector Monro
Contrary to the views of the hon. Member for Caithness and Sutherland (Mr. Maclennan), will my hon. Friend accept that most of us agree that my right hon. Friend the Minister of Agriculture, Fisheries and Food and his team are doing a first-class job in Brussels? Secondly, does he agree that if there is any one issue over which my right hon. Friend should succeed, it is maintaining the beef premium to livestock farmers in the west and the north?

§ Mr. MacGregor
I am grateful to my hon. Friend. He will know that there are many other issues, besides surpluses, of great importance to us in these negotiations, and one of them is the beef variable premium scheme. The House knows that every year we have a problem even getting that subject on to the table. We are making considerable progress, largely because of tremendous efforts by my right hon. Friend, but it is too early to predict the outcome.

§ Mr. Nicholson
Have the Minister and his right hon. Friend accepted the compromise proposal put forward in the negotiations to allow the Republic of Ireland an additional 58,000 tonnes of milk this year as a retrospective adjustment for last year? Does the hon. Gentleman recognise that many of us would not find that compromise acceptable? Will he bear in mind the serious position of Northern Ireland dairy farmers vis-àa-vis their counterparts in Great Britain?

§ Mr. MacGregor
It is difficult to comment with any finality on what is happening in Brussels. For all I know, the compromise proposals may be changing at this very minute. The Irish Government have argued that there was 478 a statistical mistake in quotas last year and have pressed for an additional 58,000 tonnes. They appear to have the support of nearly every other member state. We have made it clear that we are very much opposed to that, but I cannot predict the outcome.

§ Mr. Marlow
Will my hon. Friend take this opportunity to make it absolutely clear that there is not a significant cut in cereal prices this year? Is it not patently obvious to everyone that there will not be any proper reform of the CAP, and that in those circumstances the Government would not dream of coming to the House and asking for an increase in own resources for the European Community?

§ Mr. MacGregor
It is important to bear in mind that the figure of 19,955 million ecu—not 29,955 billion ecu as I said earlier; I expect that tiredness caused me to get it wrong—is the one to which we are working in the negotiations. We are determined to ensure that the financial agreements in the package are honoured.

§ Mr. John
What are the latest proposals for the sheep variable premiums? Is the ceiling originally proposed by the Commission still being maintained, and does the Minister accept that the success or failure of the talks will be measured by what happens on cereals?
Can the hon. Gentleman confirm certain figures? On production last year, would not an 8 per cent. reduction in the guarantee threshold be justified? The Government cut the figure to 5 per cent. because of the legal limitations in the CAP. The Commission originally proposed a figure of 3.6 per cent., but its current proposal is for a cut of less than 2 per cent.—which is less than one quarter of that which would be justified by the amount of grain grown in the CAP during the past year. Would it not be a total dereliction of duty if the Council of Ministers agreed to that?

§ Mr. MacGregor
On sheepmeat, I hope that the hon. Gentleman will forgive me if I say that a number of issues are still being discussed, and that is a rather important element of the final stages of the negotiations.
The limit on the guarantee threshold for cereals was negotiated three years ago, when it was agreed to have a ceiling in any one year of 5 per cent. That is why we had to argue for 5 per cent., although 8 per cent. would have been the figure had there not been a ceiling.
We have been taking a strong position on cereals during the negotiations. However, it is necessary to have the support of a sufficient number of other member states and the Commission to achieve any given figure. I believe that our firm stance has led to the whole question of where the cereals figure ends up being still very much in debate. As the hon. Gentleman knows, there are member states that would like to have no reduction at all.