Cereals

HC Deb 30 October 1986 vol 103 cc438-42

5. Mr. Nicholas Baker

asked the Minister of Agriculture, Fisheries and Food what effect the co-responsibility levy on cereals will have on the amount of cereals produced within the European Economic Community.

6. Mr. Rogers

asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the operation of the cereals co-responsibility levy.

Mr. Jopling

The levy was not in force when plantings for the 1986 harvest were under way, and its effect on future harvests will be difficult to isolate because of numerous other factors at work. I have already made clear my attitude to this measure, for example in my statement to the Select Committee on Agriculture on 16 July.

Mr. Baker

Does my right hon. Friend agree that the co-responsibility levy will not reduce the amount of cereal grown, and that any set-aside programme will not achieve it on its own, because the worst land will be set aside and on the best land productivity will be increased? Will he do something to alleviate the present uncertainty by announcing, or getting his Common Market partners to announce, that any future restriction on production of cereals will be based on the yields of earlier years, or a combination of years, so as to reduce the distortion and the present increase in production of cereals?

Mr. Jopling

I do not think that that would be the best way to deal with the problem, given that yields have increased in this country probably faster than in any other Community country. We would be in danger of shooting ourselves through the foot if we were to do it that way. I have always agreed with my hon. Friend that we need a packet of measures to deal with the cereals problem. I do not like, and the House does not like, the co-responsibility levy, and the House would, I think, like me, prefer a reduction in price. With the package of measures, we must have a stringent price policy and tough rules for grain that is suitable for intervention. At the same time, we have made proposals for a land diversion policy so that those farmers who find it most difficult to continue to produce grain at a profit may be given alternative enterprises to grain production, which is in a huge surplus.

Mr. Rogers

Is this levy not inherently discriminatory, and does not the discrimination create an incentive to take avoiding action and to look for loopholes? is not the creation of these loopholes bad government at both national and European level? Why does the Minister not become tough with the Europeans and lay down what we want rather than what they want?

Mr. Jopling

The hon. Gentleman cannot have been here when I made a statement at the end of the price fixing negotiations this year. We were able to remove all the items that discriminated against the United Kingdom in lamb, beef and cereals. Unlike the original Commission proposal for the cereals co-responsibility levy, the present system does not discriminate against the United Kingdom. It is satisfactory from that point of view, but, like the hon. Gentleman, I would much rather not have had the co-responsibility levy.

Mr. Jackson

Will my right hon. Friend accept my congratulations on his set-aside proposals? They are part of a much more satisfactory alternative for the future of cereals than co-responsibility. Will he say something about the progress that he is making with these proposals?

Mr. Jopling

I am grateful to my hon. Friend for his remarks about the land diversion proposals. This matter was discussed informally by the Council of Ministers and I was pleased by the constructive response of the other Ministers to the proposals. The matter is to be further examined by the Commission in Brussels. I hope that before too long it will emerge as a concrete proposal.

Mr. Deakins

As, in a Community of 12, Britain's Presidency will always come round in the second half of the year, what steps does the Minister propose to take now to ensure that cereal prices are reduced in the first half of next year?

Mr. Jopling

The early part of next year will be discussed on the basis of the proposals that the Commission will produce at the turn of the year. Obviously I cannot anticipate at this time what they will be. However, the hon. Gentleman knows very well that the price that the farmer receives for grain is based not entirely upon the support price that is agreed by the Council of Ministers. If he wants an example, he will see that this year farmers have obtained unexpectedly high prices for grain because of a buoyant export market, from which British agriculture has benefited.

Mr. Budgen

Does my right hon. Friend agree that the best evidence of over-production of feedwheat comes from today's edition of The Times, which says that the EEC is so desperate to get rid of its surplus feedwheat that it is continuing to sell substantial quantities of it, with an export subsidy of £82.76, to Syria?

Mr. Jopling

My hon. Friend will realise that there is no embargo on United Kingdom exports to Syria, but no special export refunds exist for the sale of cereals to Syria. The United Kingdom will oppose any proposal to introduce such a refund.

Mr. Home Robertson

That was rather a pathetic answer.

To return to the co-responsibility levy, will the Minister accept that it is hitting consumers every bit as much as it is hitting producers, that it is an administrative nightmare fraught with unfair anomalies, that it cannot cover the cost of export subsidies and that it will have no impact on the production of surpluses? Does the Minister believe in this levy? If he does not, will he join many of his hon. Friends in supporting our prayer against the levy next week?

Mr. Jopling

I cannot anticipate next week's business. As for the co-responsibility levy being a tax on consumers, the hon. Gentleman should know that as the levy is charged on sales into intervention it will affect market prices across the board, especially those for feed grains. It should reduce the cost of grain to livestock farmers who mill their food, and it should not increase the cost of grain to compounders. The hon. Gentleman must check on the facts before making such statements.

Mr. Kirkwood

Does the Minister accept that the inclusion of oats in the co-responsibility levy scheme is wholly and grossly unfair, because it is not a commodity that is in surplus? Will he use his good offices to try to get oats out of the scheme for next year?

Mr. Jopling

I am sure that the hon. Gentleman is aware that in certain circumstances oats, barley and certain feedwheat are interchangeable. If, therefore, we are to have a co-responsibility levy, the exemption of oats would create the danger of distorting the market.

Mr. John Townend

Will my right hon. Friend deal with a problem in operating the levy that is worrying farmers? If a merchant buys grain from a farmer he collects the levy, but if he sells that grain to a farmer who mills on his own farm he receives the rebate. However, there is no way of ensuring that that rebate is paid to the farmer. Is it possible to institute a method of auditing the books of merchants?

Mr. Jopling

I have talked to my hon. Friend's constituents about this matter. I do not think that it will be possible to change the rules this year to enable such an audit to be introduced. However, we are prepared to look at the possibility and to discuss it with the Commission to see whether it might be possible in future to have a different system for operating the levy.

7. Mr. Jim Callaghan

asked the Minister of Agriculture, Fisheries and Food what proportion of agricultural land in England has been used for growing cereals in the current year: and what was the proportion 10 years previously.

Mr. Gummer

The provisional results of the June agricultural census shows that cereals were grown on 34 per cent. of the total agricultural area in England in 1986, compared with 30.7 per cent. in 1976.

Mr. Callaghan

What is the Minister's estimate of the land that needs to be taken out of cereal production in order to align supply and demand?

Mr. Gummer

No, because, as the hon. Gentleman will know, such an estimate depends upon where the land is, what sort of land it is and the circumstances. If we could have a package of measures, including restraint on price, to ensure that there are alternative crops, thereby providing some kind of land diversion, probably with rotation by fallowing, that would meet the need.

Sir Peter Horden

Do these figures not clearly demonstrate that cereal farmers have done far too well for far too long? What proposals does my right hon. Friend intend to produce to the European Commission to reduce substantially the subsidies on cereals?

Mr. Gummer

As my hon. Friend knows, the measures taken this year will substantially reduce the price below what it would have been. That will be done by a mixture of changes in quality control and the intervention rules, coupled with the effect of the co-responsibility levy. We would have much preferred not to have this co-responsibility levy, because it is an odd and unacceptable way of doing it. We would have preferred a reduction in price, and that must by the basis of any future policy.

Mr Campbell-Savours

Why did the Minister not hold an inquiry into the the allegations by Mr. Pedley that witnesses in the BBC trial were interfered with when he was chairman—

Mr. Speaker

Order. What has this to do with cereal levies?

Sir John Farr

I should like to return to the original question. Has my right hon. Friend reached any conclusion about the acreage that he would like to see in cereals in 10 years?

Mr. Gummer

No. We can deal with cereals by providing the farmer with alternative uses for land by reducing the price of cereals in order to bring about a much better balance between supply and demand. It was a pleasure to have a question from a sane Member.

Mr. John

I am not clear whether the last remark by the Minister is in order, Mr. Speaker, but no doubt if you heard it you will rule on it.

Does the Minister accept that the new strains of wheat talked about in the Sunday Telegraph promise vastly increased production from diminishing cereal land? Is that not an argument for overall production control and not for taking land out of production, because technically we could easily produce as much or more cereals on less land.

Mr. Gummer

The hon. Gentleman would need carefully to qualify what he means by overall production control. If he means some sort of quota system, I should like him to explain how one could reasonably quota, for example, over I million grain farmers in Italy. That is not a sensible way to operate. The real difficulty about overproduction is that it is not a problem today nor will it be a problem in two to three years. The difficulty is that the problem increases almost exponentially as technology improves the situation. As my right hon. Friend said, we must have a system which meets the problem not in one way, but through a whole package of measures.

8. Mr. Yeo

asked the Minister of Agriculture, Fisheries and Food what is his forecast for cereal production for 1986.

Mr. Gummer

United Kingdom production of cereals in 1986 is estimated at 24.6 million tonnes.

Mr. Yeo

Is my right hon. Friend aware that the uncertainty about the nature of the measures to reduce surpluses has been the principal source of anxiety among cereal producers? While proposals to encourage the use of marginal land for other purposes such as forestry are very welcome, above all a clear and firm sign is needed on how the problem of surpluses is to be tackled.

Mr. Gummer

I agree with my hon. Friend, and that is why the United Kingdom is taking the lead in seeking a package of measures which will relieve that uncertainty. The uncertainty arises primarily from the fact that we have moved from the position in which a farmer was certain about a market because there was a shortage in the world, into a situation today where there is uncertainty in the market because we are in a world of surpluses.

Mr. Mark Hughes

Does the Minister accept that to dispose of the expected surplus to Syria under the arrangements—which we cannot now change — in the Community, is offensive? Does he also agree that to dispose of those surpluses to Russia and allow Russian pig farmers to buy British grain at £36 a tonne, when we have to pay for them to receive it at that price, is disgraceful?

Mr. Gummer

The hon. Gentleman is only underlining the reason why we have made a major effort and are taking the lead to ensure that we bring supply and demand into balance.

Mr. Latham

Will my right hon. Friend explain precisely what are the Government's objections to a compulsory set-aside system? Do the objections stem from the fact that more than only marginal land would be taken out of production?

Mr. Gummer

My hon. Friend has to accept that Britain is one of the most efficient producers of cereals in the Community and the world. We do not want a system which so restricts cereal production that it causes unfair discrimination against the good producer. That is one of the dangers of having a compulsory system. It is much better to have a voluntary system where those who wish to go out can do so and so enable those who can produce cereals competitively and efficiently — as many of the United Kingdom farmers do—to continue to do that.