Agriculture Council

HC Deb 01 July 1987 vol 118 cc511-22 4.35 pm

The Minister of Agriculture, Fisheries and Food (Mr. John MacGregor)

With permission, I shall make a statement about the meeting of the Council of Agriculture Ministers of the European Community, which took place during last night.

After four months of negotiations, the Council finally took decisions on support prices and other measures for 1987–88. The compromise agreement marks a further significant step towards achieving a reformed common agricultural policy that is more market orientated, with reduced price support and with intervention systems operating to provide a safety net and not an alternative market outlet. The changes in the cereals and oilseeds regimes complement the substantial reforms which were achieved last December in the milk and beef sectors. The agreement will produce savings for the Community budget in 1987 and 1988; and it is a relatively favourable settlement for the United Kingdom, improving the position of our farmers and traders relative to their main competitors in the Community.

The decisions include substantial changes in the support arrangements for a number of commodities. There will be cuts in the prices at which cereals, oilseeds, rice and olive oil are bought into intervention. The periods of the year during which intervention is available for these products will be shortened. Guarantee threshold arrangements are introduced for olive oil, soya beans and tomatoes, and the existing threshold arrangements for oilseeds will operate more effectively. The Council also cut support for wine, protein crops and those fruit crops which place the biggest burden on the budget.

Following the discussion in the European Council earlier in the day, there was no question of the oils and fats tax being adopted. The Commission has not withdrawn its proposal and intends to hold discussions with overseas suppliers. I re-emphasised our position of strong resistance to that tax and made it clear that our attitude is unchanged.

The package includes a number of decisions in the agrimonetary area. Those include a devaluation of the green pound so as to reduce United Kingdom monetary compensatory amounts by 7 points for beef and 5½ points for other commodities, with the exception of sheep. Green rate changes for sheep will be considered as part of the review of the sheep regime later this year. Besides the devaluations, our farmers and traders will benefit from changes in the method of calculating monetary compensatory amounts for beef, cereals and dairy products, for which we pressed during the negotiations.

Following discussion by Heads of Government, the Council adopted new arrangements for phasing out existing positive MCAs and continued the present system that prevents new positive MCAs from arising, but with some adaptations which should be of some assistance in reducing the inflationary effects and which provide for the more automatic removal of new negative MCAs. This new system will be reviewed after one year.

I estimate that, taking the prices and the green rate changes together, this package will itself leave United Kingdom farm incomes unchanged. The effect on consumers will be very small.

In the negotiations I secured a number of welcome changes to the Commission's original proposals. I fought off any decision on the proposal to limit the number of ewes per farm which can receive annual premium. The Commission promised to make a proposal for a system of milk quota leasing; this is now being discussed in Brussels. I negotiated an additional year, up to April 1989, for the acceptance of salted butter into intervention. The Commission has agreed to present an overall study of alternative land use for consideration by the Council in the autumn, and the Council has accepted the need to take rapid measures to ensure an adequate margin for the refining of raw cane sugar in the United Kingdom.

This agreement is a further important step in the direction of reform. But the problems of surplus production remain, and, with them, the heavy budgetary burdens that result. There is no doubt that further decisions will be needed later in the year to correct the unacceptable budgetary situation.

Mr. Brynmor John (Pontypridd)

Because of the complexity of statements such as the one that we have just heard, more questions appear to be begotten by them than usual. I hope that we shall be given a guarantee of an early debate so that we may reduce the number of questions.

I wish to make two references to the statement which I think will be uncontentious. First, let me say to the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), who was formerly Minister of Agriculture but has now been replaced, that we thank him for the courtesy and patience with which he has always explained and kept us informed of developments. Whatever our judgment of his tenure of office, we wish him well on the Back Benches.

Mr. Dennis Skinner (Bolsover)

He was a dumpling.

Mr. John

Yes, but he was the best dumpling we had.

Secondly, I welcome the new Minister of Agriculture, who makes his first appearance in his position today. He brings many attributes on his return to the Ministry, but he certainly does not bring as many inches with him. While I cannot promise that I shall see eye to eye with him on many issues in the metaphorical sense, at least I shall have more chance of doing so in the physical sense than I had with his predecessor.

Any efforts that the right hon. Gentleman makes to bring sanity to the common agricultural policy will have the backing of the whole House. I welcome the news that there will be no oil and fats tax, and that the Commission is not pursuing the new premium flock size limitations. The effect of the former would be penal for both United Kingdom consumers and the Third world, and the effect on the latter would be discriminatory. The Commission intends to return to both measures later, but it must be told in no uncertain terms that our opposition will not waver in the interim.

I should like to ask some detailed questions. The first concerns milk quota leasing. The effect of that will depend on how quickly it is brought into force. We are already into the financial year. How quickly will it come about, and will it be of any help in the current financial year?

Secondly, will the Minister confirm that, even with the lowering of the MCAs—I congratulate him on the masterly clarity of the statement on MCAs and negative MCAs—our beef producers will still be at an 8 per cent. disadvantage as opposed to their Irish counterparts, consequent on the October package for the Irish Republic alone? Can the Minister tell us whether — and, if so, when — the common agricultural policy will run out of money this year? Making payment in arrears rather than in advance, and other savings, would not appear to be anything like enough. Many people fear that what the Minister says about corrections to the policy later in the year simply means the raising of further revenue. That will be resisted by both sides of the House until the EEC undertakes reform that will eliminate surplus production of food within the Community.

Thirdly, what is the expected effect of the price proposals on the volume of reduction? The Minister talked about the cut in cereals, oilseed rape and other products, and that must be placed alongside December's livestock package. But what is the estimated effect of the changes in reducing the food mountains in the various regimes? Will it bring reductions in those, or will it merely lead to more production as farmers try to grow more to compensate for lost income?

Will the Minister also clarify his statement that the agreement will produce savings in 1987–88? Will it produce savings against the budget, or against the overspend which is now £3 billion to £3.5 billion above what was budgeted for the CAP? Is the report in the Financial Times accurate? It says that all the savings will be offset by the so-called reform of the agrimonetary system agreed largely by the Germans and the French at the conference.

This package amounts to yet another evasion of responsibility — another hasty and short-term package, and another failure of will on the part of the Ministers. Once again, the need to reform the CAP has been accepted and then forgotten. But this is not an endless process. It has gone on for far too long, and the Ministers must tame the CAP before it destroys them.

Mr. MacGregor

I understand the point that the hon. Gentleman has made about the complexity of the issues, and I am sure that my right hon. Friend the Leader of the House will have heard his remarks about the need for a debate—although the number of questions that the hon. Gentleman has asked me almost provokes a debate in itself.

I am grateful to the hon. Gentleman for his tribute to my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling). It gives me the opportunity to say that my right hon. Friend played a very notable part in advancing the reforms of the CAP. He was in the forefront, because he understood that they were necessary in the long term for our farmers' interests. He fought hard and successfully for British interests in achieving those reforms, and I believe that he will be seen to have played a significant part in the development of agriculture. I am also grateful for the hon. Gentleman's remarks to me.

Two of the main objections to the oils and fats tax were those raised by the hon. Gentleman—first, that it would be heavy on consumers, and heaviest on the poorest consumers in the United Kingdom, and, secondly, the Third world impact. There has been considerable concentration on American resistance to the tax but the hon. Gentleman is right to draw attention to the Third world. As for the limit on headage payments for ewes, I stressed strongly in the Council, when it was pushed from that discussion into discussing the sheepmeat regime, that I regarded it as very discriminatory towards the United Kingdom. My right hon. Friend the Prime Minister said the same in her statement, and I will maintain that position.

We had considerable discussion about milk quota leasing both before I arrived at the Council and during my time there. I will be following up that discussion urgently, and I hope that arrangements will be made as soon as possible.

As for beef producers vis-á-vis the Irish, there is still a gap, but I am sure that the hon. Gentleman will recognise that we have achieved a considerable improvement in the position as a result of the changes that have been made. It is important to note that the Irish Minister voted against the final MCA package—the green rate package. On the question of the cost of the CAP and the change from advance payment to reimbursement, that is now going to the ECOFIN Council so that Finance Ministers can decide exactly how it should be implemented. It is not possible at this stage to say how much budgetary savings will be achieved from it during the year, but clearly it could be significant.

I entirely agree with the hon. Gentleman about dealing with the budgetary gap in the CAP through further revenue proposals. That is why we originally fought the cereals co-responsibility levy, and it has been a major argument in our opposition to the oils and fats tax. I am glad to know that my resistance to those measures will be supported by the Opposition.

As for the expectation of production, the purpose and thrust of our progress on stabilisers in the Community system is to reduce production where we have surpluses. However, we cannot always be sure exactly how much will be achieved. We all know the effect of technological advance and progress in increasing production from the same amount of land. It will also depend on our harvest. But the thrust of the proposals is to reduce surpluses, and hence to reduce production where there are surpluses.

Finally, the hon. Gentleman spoke of evasion of responsibility and a hasty decision. As it has taken us four months — almost into the marketing year for several commodities—to reach agreement, it was hardly a hasty set of decisions. The fact that it took so long to reach those decisions surely demonstrates the difficulty of reaching agreements among 12 people on what are now clearly enormous challenges for all Agriculture Ministers. Very painful decisions had to be taken which would have very painful effects on many farmers. Therefore, it is understandable that it took so long. That we are facing up to the issues shows that there is no evasion of responsibility. There has been a significant change of attitude, compared with a few years ago, among the Council of Ministers, and it is realised that these issues have to be tackled. However, we are only one of 12 member states. I agree with the hon. Gentleman that we need to make further significant progress.

Several Hon. Members

rose——

Mr. Speaker

Order. I ask for brief questions on this statement. We have a very heavy programme in front of us today, and there will be questions on agriculture tomorrow.

Sir Hector Monro (Dumfries)

I congratulate my right hon. Friend on his appointment. Will he accept that many of us on this side of the House appreciate the long hours of work that he has put into the EEC during the last few weeks in order to reach a long overdue conclusion? Will he also bear in mind that in the livestock and less-favoured areas there is still grave concern about confidence and future stability? Can my right hon. Friend reassure us about beef production, and can he say whether a further devaluation of the green pound is possible? Finally, is he convinced that there is no way in which the Irish could get round the agreement and obtain preferential treatment in our markets?

Mr. MacGregor

I am grateful to my hon. Friend. I agree with him that conclusions were long overdue. I was anxious to reach a settlement because I recognised the uncertainty that was being created for farmers and traders because of movement into the marketing year, with no decisions having been taken. I understand only too well my hon. Friend's point about future confidence and the stability of the regimes. However, I strongly believe that it is in the long-term interests of farmers that we should get on top of the surpluses and the enormous budgetary overruns in order to create confidence. Without doing so, we run the risk of a descent into chaos. Therefore, it will be to the long-term advantage of our farmers that reform should be achieved.

I cannot say whether or not there will be a further devaluation of the green pound. The results that we achieved—a better position on the green pound than the Commission originally proposed — were fair to our producers in the current circumstances, bearing in mind also the need to avoid heavy budgetary increases.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

May I first congratulate the right hon. Gentleman on taking over this very high office of looking after British agriculture and consumers? I wish him well in his deliberations, and may he be blessed with good health. I pay tribute also to the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), who has retired from that office, for services rendered to British agriculture.

By devaluing the green pound by 5 per cent., are British farmers now competing on equal terms with their European counterparts? Will the right hon. Gentleman also assure sheep producers that he will not give in on the number of sheep that qualify for the ewe premium? Furthermore, how long does the right hon. Gentleman think it will take to do away with our surpluses? Does he think that they will diminish in four or five years?

Finally, there seems to be a little disagreement between the right hon. Gentleman and the Prime Minister. I understand that he is quite pleased with this week's deliberations in Brussels. However, having listened to the Prime Minister, I do not believe that she is satisfied with the present state of the common agricultural policy. What, therefore, does the future hold for British agriculture?

Mr. MacGregor

Again, that is almost a speech in a debate. However, to be as brief as possible, I am grateful to the hon. Gentleman for his welcome. I am very conscious of my heavy responsibilities. I am even more grateful for the tribute that he paid to my right hon. Friend the Member for Westmorland and Lonsdale. It was extremely well deserved.

On the hon. Gentleman's point about devaluation and whether it has helped British producers, it is important to look at the estimated changes in average support prices. If one looks at the early calculations, which are fairly accurate, one sees that, overall, the change in average support prices in the United Kingdom is about plus 2.4 per cent., compared with the Community average for the Ten of about plus 0.5 per cent. Therefore, we have achieved a very helpful and relatively improved position for British farmers. The hon. Gentleman knows that there has been a 7 per cent. devaluation for British beef, whereas it is 5.5 per cent. for other commodities. We shall have very difficult discussions on sheepmeat when we see the Commission's proposals for the review of the sheepmeat regime. I gave a clear indication in the Council that I was strongly opposed to the proposal for a ceiling on headage payments.

As to when the surpluses might disappear, I have been in the job for only a short time, but even after having been in it for quite a long time, I suspect that it would not be possible to answer that question.

Finally, I assure the hon. Gentleman that there is no disagreement between my right hon. Friend the Prime Minister and me. I should have liked there to be more progress this week on agriculture.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Since my right hon. Friend the Prime Minister now concedes that reform of the common agricultural policy and the system of budgetary control agreed at Fontainebleau has failed, why cannot the Government, first, be very polite to our 11 partners in the EEC and, secondly, make it absolutely plain that in no circumstances whatsoever will the Government recommend to this House that there should be an increase in resources payable to the EEC?

Mr. MacGregor

That question should be addressed to my right hon. Friend the Prime Minister. In fact, she responded to it in the earlier exchanges.

Mr. Ron Davies (Caerphilly)

Why is the Minister content to rely entirely on price cuts rather than on quotas to curb production?

Mr. MacGregor

I hope that I have made it clear that I am not doing so. For example, if he looks at what has been achieved in the dairy sector, the hon. Gentleman knows perfectly well that quotas have been introduced and that they are producing considerable stability. However, there are very serious administrative and policing difficulties over transferring that stability to other sectors, such as cereals. We have to face the fact that land must come out of cereals production. That is why we are looking at alternatives. They include set-aside and alternative land use. I hope to explore further these alternatives at Community level as well as at national level.

Sir David Price (Eastleigh)

On alternative land use, will my right hon. Friend tell the House whether the present agreement will help or hinder the further production of wool in the United Kingdom, which many of us feel could be expanded? He will recall that once it was the great, staple trade of large parts of the kingdom.

Mr. MacGregor

I do not think that the agreement that has been reached this week has any impact on that issue. However, I know that many people in the farming community are looking at possibilities for wool. However, one should not exaggerate the impact that they will have on land use, having regard to the problems that we face over surpluses.

Mr. Harry Ewing (Falkirk, East)

May I press the Minister a little further on his understandably brief reference to the wine industry? During the discussions on the wine industry, were any proposals put forward to increase the amount of fermentation alcohol that is to be refined and unloaded on to the industrial alcohol market? If such proposals are put forward, I urge the Minister strongly to resist any increase in the amount of fermentation alcohol to be distilled because of the disastrous effect that it would have on the production of industrial alcohol in chemical industries, such as those in Grangemouth, which is in my constituency.

Mr. MacGregor

During the time that I was in the Council there was little discussion of the wine regime, and that particular matter was certainly not discussed. I cannot recall offhand what happened earlier in the Council discussions. However, I shall write to the hon. Gentleman.

On the hon. Gentleman's wider point, I have taken note of what he said. I am aware of the various discussions that are taking place about industrial use, and I shall wish to consider the matter further.

Mrs. Elaine Kellett-Bowman (Lancaster)

I thank the Minister for following in his predecessor's footsteps and resisting the limitation on ewe headage payments. I thank him, too, for getting a better devaluation of the green pound than at one time looked possible. However, may I ask him to follow in the footsteps of his right hon. and learned Friend the Foreign Secretary? Now that New Zealand is no longer pulling its weight in defending the free world, will he consider distributing the 75,000 tonnes among British farmers?

Mr. MacGregor

I know how strongly my right hon. Friend felt about the ceiling on ewe premiums, and I agree with him entirely. I am happy to follow in his footsteps, as in other ways. As for my hon. Friend's point about New Zealand, that issue does not face us at present.

Mr. William Ross (Londonderry, East)

Given that in two statements today we have been told about less intensive farming and changes in land use, will this not in practice translate into lower production per acre? Since no further money is to be made available, will the Minister confirm that eventually that will be translated into a loss of farms and into a loss of jobs in farming? Given that we have a land frontier with the Irish Republic, have the matters been discussed within the ambit of the Anglo-Irish Intergovernmental Conference in an effort to make the Irish Republic accept the sensible stance that has been taken by Her Majesty's Government?

Mr. MacGregor

I have not been a party to the discussions in the Anglo-Irish Conference, so I do not know the answer to the question. On the wider question that the hon. Gentleman asked, obviously less intensive use of land will play some part in dealing with the problem of the surplus that we face. The fact is that, with the enormous improvements in yields and in farming technology, together with the ability, not only until now but increasingly in the future, to produce much more food from the same amount of land, it is clear that agricultural land will have to come out of food production. We have to face up to that as one way in which the problem of the surpluses will have to be tackled.

Mr. Nicholas Bennett (Pembroke)

My right hon. Friend will be aware of the tragic number of family farm bankruptcies that have recently occurred in Wales. Therefore, I welcome the fact that farm incomes will not be worsened and that my right hon. Friend is to take urgent action on milk quotas and the leasing of them. What does my right hon. Friend now believe to be the green pound gap for the beef sector?

Mr. MacGregor

I should like to make it clear that when I was referring to a neutral impact on farm incomes I was talking in relation to the package. Of course, many other factors affect farm incomes during the year—it is too early in the year to say what the effect of those will be—including the effect of the harvest and the way in which dairy producers react to reduced quotas and so on. I have stated that I believe that the beef devaluation was the fairest and best deal that we could get for our beef producers in the current price fixing review.

Mr. Gerald Bermingham (St. Helens, South)

Does the Minister agree that the value of the green pound and its periodic devaluation or revaluation have often meant that British farming has lost out over the years because of the gap between the fixing of one value and the fixing of another? Would it not be better to tie the value of the green pound to the European basket of currencies a propos sterling, and thus protect our farming industry?

Mr. MacGregor

I do not think that that would necessarily make any difference. It is important to recognise what has happened with the devaluation of the green pound over recent months. We must consider the combination of the strengthening of sterling and the result of the negotiations that we have just completed in the price fixing review. Since February, cereals MCAs have fallen by about 14.5 points, and beef MCAs have fallen by almost 16 points. That is the kind of devaluation that farmers and many others were calling for in February, and it has now been achieved.

Mr. Charles Morrison (Devizes)

When does my right hon. Friend hope that the consideration of milk quota leasing will be complete? The matter is causing grave concern. In the context of the grain surplus, has any consideration been given to the possibility of encouraging spring cereals, as opposed to winter cereals, as a means of reducing overall production?

Mr. MacGregor

On the first question, I understand entirely my hon. Friend's concern on behalf of farmers. I stressed the urgency of getting some resolution of the matter during the Council discussions. We shall follow it up urgently. I hope that we shall be able to get decisions fairly soon. The second question was not discussed during the negotiations.

Mr. Robert Maclennan (Caithness and Sutherland)

Will the Minister be kind enough either to publish in the Official Report or perhaps to set out in detail in a letter his detailed calculations about the impact of the package on farm incomes, sector by sector, to explain the interrelationships of the MCA changes with the various cuts in price support?

Mr. MacGregor

I shall consider how that could be done. Of course, the estimate I have given that the effect on incomes would be neutral is tentative at this stage. It is difficult to single out the impact purely of the price fixing decisions on incomes, given that so many other variables affect incomes.

Mr. Nicholas Winterton (Macclesfield)

Will my right hon. Friend direct his attention to the problems of the dairy industry, particularly those of the small dairy farmer, in light of the remarks made by our right hon. Friend the Prime Minister? She said that measures should not be introduced because they would have to be phased in, and they should not have a retrospective impact. Will he recall the problems of smaller dairy farmers, who were retrospectively faced with quotas? Will he give an assurance, if the matter was not discussed at the recent Council meeting, that he will consider not imposing any further quota cuts on farms that have quotas of under 300,000 litres? Further, if there are quota sales, will the Minister consider imposing levies on farmers when farms have quotas in excess of 300,000 litres? That would preserve and ensure the position of the smaller dairy farmer, which is important in many parts of the country.

Mr. MacGregor

As my hon. Friend knows, I well recall the introduction of dairy quotas. I know of his extreme interest in the matter. He referred to retrospective impact. I strongly believe that, if the Council had faced up to the need to deal with dairy surpluses earlier than it did, we would not have had such difficulty and pain in the first year. Nevertheless, now that the situation has stabilised quite a good deal, it is helpful to the longer term certainty of dairy producers. There are no propositions before us that would enable consideration of the type of issue that my hon. Friend raised, but I have heard what he said.

Mr. Tam Dalyell (Linlithgow)

What can we usefully say about the change in the guaranteed credit restrictions on tomatoes and the guaranteed threshold agreements for growers in places such as central Scotland? Will the Secretary of State put on the agenda for the autumn session, on the matter of alternative land use, the future of the low country of Caithness and Sutherland? It is becoming an urgent matter throughout Britian.

Mr. MacGregor

The hon. Member for Pontypridd (Mr. John) helpfully suggested that it was a complex price package. I am grateful for that. I knew that I would be caught out on some detail of the price package. I shall write to the hon. Member for Linlithgow (Mr. Dalyell) about the tomato matter. My right hon. and learned Friend the Secretary of State for Scotland has been dealing with the matter of the low country. I have not yet had time to look at it.

Mr. Robert Key (Salisbury)

What a welcome relief it is to hear my right hon. Friend say that he anticipates no fall in agricultural incomes as a result of the package. I ask him to address the consequential problem of the crisis facing the agricultural engineering industry. It has two consequences for agriculture: first, increased import penetration with manufactured goods and, secondly, the growing problem that farmers face of getting spare parts for machinery.

Mr. MacGregor

I am sure that my hon. Friend will agree that it is inevitable that, when we are facing up to worldwide surpluses, the agricultural engineering industry, with which I keep in close contact, is bound to face considerable market problems. There is no way of avoiding that problem; it is worldwide. Before I went to Brussels yesterday, I was at an exhibition at which there were a number of representatives of the agricultural engineering industry. I thought that they were innovative and doing well in carving out markets for themselves.

Mr. Brian Wilson (Cunninghame, North)

I am surprised that a man from Lanarkshire has been caught out on the tomato matter. Does the Minister agree that quotas in any shape or form would have a disproportionate and disastrous effect on fragile rural communities in Scotland? Will he resist at all costs the imposition of such quotas? Does the negation of the oils and fats tax extend to fish oil and fishmeal?

Mr. MacGregor

On the first point about sheep quotas, we do not actually know what proposals the Commission will make in its review of the sheep regime. We shall have to wait to see what they are. On the second question about the oils and fats tax, some dispensations have been given for fish oils. I repeat that, for a variety of reasons, we are opposed in principle to the oils and fats tax. I am glad to say that a number of other member states, sufficient to produce a qualified minority blocking vote, hold the same view. We do not now have to consider the proposition.

Mr. David Heathcoat-Amory (Wells)

Does my right hon. Friend agree that we are only part way through an agricultural revolution based on new technologies and techniques that will go on increasing European production? What is the overall effect on cost of the package of rather modest price adjustments? Does my right hon. Friend agree that, eventually, we shall have to repatriate the cost of agricultural support so that member countries can decide how much taxpayers' money to commit to agricultural support?

Mr. MacGregor

I agree with my hon. Friend. One of the big difficulties, and why this matter is such a challenge, is that we shall increasingly see the impact of all the things to which he has referred raising production. On actual costs—or the effect on the budget of this package—if one takes into account the extra revenue that has resulted from a sugar levy, the saving to the budget this year and next year is about 1 billion ecu, or £700 million. Of course, that is a saving to the budget, and to that extent there will be an impact on the overspend. The actual saving, not including the increased revenue from the sugar levy, is about 800 million ecu.

Mr. Bob Cryer (Bradford, South)

Will the Minister translate the savings that he claims for 1988–89 in the agriculture budget into a percentage? It is currently 73 per cent. of total Common Market spending, but what does he expect it to be in 1988–89? He said that the oil and fats tax proposal has not been withdrawn by the Commission. However, will he assure the House that, if the veto still exists, it will be applied by the Government to stop any increase?

He said also that the problems of surplus production will continue. Is he not concerned that, as those surpluses grow, giving dramatic evidence of the failure of the CAP, the Government could make a better job of that by renationalising agriculture in the United Kingdom? Es he not disturbed by the fact that the pro-Market fanatics, such as the right hon. Member for Old Bexley and Sidcup (Mr. Heath), never attempt to defend the Common Market now?

Mr. MacGregor

Currently, the proportion is not 73 per cent. but, from memory, I think that it is about 67 per cent. It is too early to make any estimates for future years because we finished only a few hours ago. I have already made it clear that the oils and fats tax is not now before the Council. In fact, it was pushed right off the debate. The Commission is maintaining its proposal, but the qualified blocking minority stood firm during the discussions and the question is now academic.

On surpluses, I would not put all the emphasis on the failure of the CAP because this matter is a difficult challenge for the CAP. I should put much more emphasis on the great success of our farmers, and the trades that assist them, in producing enormously increased yields in recent years. It is that that produces the challenge for us. However, I do not believe that tackling this matter at a national level alone is sufficient. What strikes me, compared with when I was last in the Ministry, is that this issue cannot now be resolved, even within the CAP. It needs to be resolved at an international level because of the high levels of agricultural support in so many countries, including the United States, as a result of the surpluses. The importance of the GATT negotiations, on which we are now embarking, is to deal with agricultural surpluses worldwide. The problem will not be solved purely on a national level.

Several Hon. Members

rose——

Mr. Speaker

Order. I shall endeavour to call the four hon. Gentlemen who are standing, but I ask them to be brief.

Mr. Derek Conway (Shrewbury and Atcham)

My right hon. Friend's news on the green pound is welcome as is the fact that he is continuing to resist the discredited alliance two-tier cereals pricing policy. Can my right hon. Friend assure the House of the time scale that we might see for milk quota leasing? Will he tell the House a little more about the impact on our surpluses of New Zealand imports? Finally, can my right hon. Friend assure those of us who are not competing for Shadow Cabinet election, but who have farming constituents, that the proposals contained in his statement this afternoon will, on reflection, defend a central British national interest?

Mr. MacGregor

If I may, Mr. Speaker, I shall answer those questions — or some of them — briefly. My hon. Friend is entirely right about the two-tier cereals pricing policy. I can think of no policy that is more designed to hit British cereal farming interests, as compared with European, than the two-tier cereal pricing policy that the alliance put forward at the election. As I have already suggested, we are urgently pursuing the timescale for the milk quota system. On my hon. Friend's final point, I can assure him that I am determined to see that British farming interests are not unfairly jeopardised. I shall stand up for legitimate British farming interests as we continue with the problems of dealing with the CAP reform.

Mr. Neil Hamilton (Tatton)

Does my right hon. Friend get depressed at continually having to meet European politicians who exhibit so many of the fixations of the Labour party, such as little concern for the interests of consumers and taxpayers, but obsessive concern for producer interests, repressive regimes, and spend, spend, spend policies, regardless of where the money is coming from? Does he appreciate that many Conservative Members agree with the view expressed by my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) that these countries in the Community that produce the surpluses should pay for them?

Mr. MacGregor

A change of direction appears to be taking place in the Council of Ministers. However, the problems are so difficult that it will take time to make the significant changes that I should like to see. I stress that there is clear concern for consumers and that the effect of this year's price package on them will be small. In fact, it will amount to less than one tenth of 1 per cent. on the retail price index.

Mr. Anthony Steen (South Hams)

On alternative land use, is my right hon. Friend aware that we now have more than 200 commercial vineyards in this country? He mentioned wine in his statement, but can he say something about the way in which wine will affect alternative land use in the future?

Mr. MacGregor

I hope that it will expand in this country. About a quarter of a mile from my cottage in Norfolk is an excellent English wine grower who is doing extremely well. I am keen to encourage the wine-growing sector in this country. However, it is still so small that it does not make any impact on or play any part in the wine regime.

Mr. John Carlisle (Luton, North)

Has any consideration been given to the reduction of Third-world cereal substitutes? My right hon. Friend must accept that it is a little galling for our cereal producers to be encouraged to cut their production while there are massive imports from the Third world in substitutes?

Mr. MacGregor

That was not much discussed during my time at the Council. However, my hon. Friend should take some other points into account, such as the interests of the livestock producers who have benefited quite a lot recently from the change in cereal prices. Of course, we have responsibilities to Third-world countries. I had that very much in mind and it was one of the reasons that we opposed the oils and fats tax.