HC Deb 08 May 1986 vol 97 cc244-5
12. Mr. Knox

asked the Minister of Agriculture, Fisheries and Food if he is satisfied with the level of profitability in the livestock sector; and if he will make a statement.

Mr. Jopling

The whole of the livestock sector will benefit from the recent agreement on CAP prices, in particular as a result of the devaluation of the green pound, which favours livestock as compared with the arable sector. Further, the reduction in cereal prices should be of benefit to the livestock sector as well.

Mr. Knox

Does my right hon. Friend agree that many milk producers have benefited from the reduction in feed costs and have enjoyed a consequent increase in profitability? Does he accept that this is a one-off exercise and that something must be done about milk prices if dairy farmers are to enjoy continued profitability in the future?

Mr. Jopling

I should point out to my hon. Friend that the devaluation of the green pound will raise the price level for milk by around 2.75 per cent. At the same time, he will remember that the cereal price package will reduce feed costs. In fact, for the cereal sector, the package should cut the price of feed grains by about 4 per cent. Those two factors should help dairy farmers quite considerably.

Mr. Kennedy

Will the Minister draw the attention of his colleagues at the Scottish Office to the problem facing the livestock sector in the north of Scotland and in the Highlands and Islands, especially as we are still seeing the feed-through effects of last year's very bad weather conditions, which have resulted in higher feed prices to the livestock sector, and which are now being accelerated through the agricultural economy to other aspects? If the Minister were to look constructively at other ways of providing additional support to that welcome help which the Government provided last year, we would be extremely grateful.

Mr. Jopling

My answer to the first part of the hon. Gentleman's question is yes. He has acknowledged the way in which the Government moved to help last autumn because of the very had weather, in addition to the adjustment that we made to the grants for the less-favoured areas.

Mr. Teddy Taylor

Is there not a certain lack of Conservative ideology in continuing a regime that the Government do not apply to other industries—that of maintaining profitability by having enormous unsaleable mountains and by selling some of the surplus to the Soviet Union at 15p a pound? Will my right hon. Friend explain to my constituents the logic of paying massive sums to dairy farmers to get them out of milk so that they can switch the land to livestock production?

Mr. Jopling

I agree with my hon. Friend—and he has heard me say so on many occasions—that the CAP has suffered over the years, because while in general its principles are right, it has been extremely badly managed by the application of too generous price increases. That has caused the surpluses to build up. However, the principles of the CAP are right. It was right to switch from a policy of maintaining agricultural incomes by deficiency payments and guaranteed prices to a system of support through import levies. Only the other day I looked at some of my hon. Friend's election addresses and noticed that there was nothing in them that argued against that switch in basic policy.