Dairy Industry (Quotas)

HC Deb 19 March 1987 vol 112 cc1032-3

9. Mr. Charles Wardle

asked the Minister of Agriculture, Fisheries and Food what impact the temporary suspension of quota with compensation scheme will have on the income of the average United Kingdom dairy producer with (a) 40 cows and (b) 80 cows.

Mr. Gummer

The impact of the temporary suspension of milk quota on the income of the individual dairy producer is difficult to assess since much will depend on how each reacts to this suspension. The level of compensation to be paid, 6.5p per litre, compares favourably with the average profitability of dairy production of between 3p and 4p per litre.

Mr. Wardle

Is my right hon. Friend aware that small producers in the Sussex Weald, many of whom have borrowed from the banks to improve their farms, have an abiding problem over the financial uncertainty created by the quota reductions and, it has to be said, by the additional dairy inspection charges that they now face? Will he consider topping up the temporary suspension payment for smaller herds from 6.5p to 8.2p per litre as, I believe, the European regulations permit?

Mr. Gummer

My hon. Friend might remember that when we did the original allocation of quotas we made sure that they were skewed towards the small producer. Of course, the reduction is on the larger amount, and it was consciously done in that way, even though we could not have a smaller reduction of temporary quota for smaller farms because that would be contrary to the regulations agreed by the European Community. I am conscious of the effect of this on the smaller producer, but I think my hon. Friend will agree that the generous compensation is a great help, although there are still difficulties.

Mr. Home Robertson

Is the Minister satisfied that this system is being applied fairly in all parts of the United Kingdom. and that it is not being distorted by national aids of one kind or another to small dairy farmers in, for instance, Germany? If the Minister receives any evidence that such practices are going on, will he take any steps to protect small dairy producers in Britain?

Mr. Gummer

One of our major aims is to make sure that this is fair throughout the Community. I remind the hon. Gentleman that Germany has to bring back 4 per cent. more than anybody else because of the over-issuing of quota which Germany did at the time. Its producers will have a particularly difficult two years.