Dairy Industry (Hansard, 19 November 1987)

§ 3. Mr. Harris
To ask the Minister of Agriculture, Fisheries and Food what impact on the dairy industry he expects as a result of capital gains tax from the sale of milk quotas being given roll-over relief.

§ The Minister of Agriculture, Fisheries and Food (Mr. John MacGregor)
I am delighted that roll-over relief on capital gains tax on the sale of milk quota has been accepted as from 29 October. It will now be more attractive for farmers to develop their businesses, since the tax on the proceeds of the sale of milk quota will be deferred when these are used to acquire a new asset. I know that this has been warmly welcomed by the farming community.

§ Mr. Harris
Will my right hon. Friend take it from me that the decision has, indeed, been warmly welcomed in dairying areas, such as the south-west of England? However, is he aware that many farmers who sold their farms with milk quota prior to that date have suffered hardship? Is there any chance that they might benefit retrospectively from the announcement?

§ Mr. MacGregor
I am grateful to my hon. Friend, and I should like to express my gratitude to my right hon. and hon. Friends at the Treasury for making the announcement and agreeing the decision. As my hon. Friend knows, there is a general principle, which I believe is supported on both sides of the House, that one cannot have retrospective legislation in tax matters and that there is always a cut-off point. Nevertheless, I hope that my hon. Friend will agree that it is helpful that the announcement has been made by means of a written answer in the House well in advance of next year's Budget so that all those concerned will benefit from 29 October through to next year's Finance Bill.

§ Mr. Wigley
Is the Minister aware of the great concern in many dairy areas about the effect of the sale of milk quotas outside those areas? It is feared that that will lead to less milk being available in creameries and to a shut-down of creameries, as is being proposed in Gwynedd and Dyfed. What does the Minister intend to do about that?

§ Mr. MacGregor
There is not a great deal of evidence to suggest that the introduction and transferability of quotas has led to big regional variations in the supply of milk. I do not think that that is so, but it is certainly something that I watch. The hon. Gentleman will know that there is quite a gulf between examining the evidence and agreeing proposals for policy changes which might in themselves be disadvantageous.

§ 4. Mr. Knox
To ask the Minister of Agriculture, Fisheries and Food when he next intends to have discussions about the dairy sector with the president of the National Farmers Union.

§ Mr. Donald Thompson
My right hon. Friend meets the president of the National Farmers Union regularly, but has no immediate plans to have specific discussions about the dairy sector.

§ Mr. Knox
Does my hon. Friend intend to seek an extension of the quota period beyond 1991 so that dairy farmers can plan ahead properly?

§ Mr. Thompson
As my hon. Friend says, uncertainty is the greatest concern in the farming community at present. I know that my right hon. Friend is pressing the Commission—and will be pressed by the president of the National Farmers Union — on this very point. However, conclusions have not yet been drawn.

§ Mr. Grocott
We all know and understand that the Minister and his officials meet representatives of the National Farmers Union regularly. However, will the Minister ensure in future that he follows the precedent set by his distinguished predecessor, John Silkin, and takes a little more notice of what consumers of dairy products require and a little less notice of what producers require?

§ Mr. Thompson
Consumers want an ample and ready supply of clean, wholesome food at a reasonable price. We see the consumers from time to time on various matters. The hon. Gentleman may also like to know that yesterday I saw representatives of farm workers on various points related to agriculture.

§ Sir Hector Monro
Does my hon. Friend agree that something has gone wrong with the distribution of milk in the United Kingdom? In some areas butter is being manufactured for intervention while elsewhere creameries are short of milk to manufacture into cheese for early sale.

§ Mr. Thompson
My hon. Friend is being delicate when he refers to Scotland as "some areas". There is a trade in liquid milk between England and Scotland. My right hon. Friend and I have met Scottish Ministers to discuss this matter, and ways of resolving the difficulties are being pursued urgently.

§ Mr. Latham
Is my hon. Friend aware that he does not have to go to Scotland to find difficulties of distribution, as they are found in England, too? Will he discuss with the European Community whether the quotas are right, as we now seem to be passing from ridiculous surpluses to possible shortage?

§ Mr. Thompson
As my hon. Friend knows, I am fully aware of the difficulties that some cheese producers in the United Kingdom have had this year. I have already discussed this complex question with the Milk Marketing Board, and my right hon. Friend is doing the same. We hope that the situation in England will be resolved to everyone's satisfaction by next year.