Agriculture Council

HC Deb 30 April 1990 vol 171 cc725-36 3.32 pm

The Minister for Agriculture, Fisheries and Food (Mr. John Gummer)

I represented the United Kingdom at the meeting of the Agriculture Council from 25 to 27 April with my hon. Friend the Member for Skipton and Ripon (Mr. Curry), Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food.

Agreement was reached on 1990 farm prices on the basis of a further compromise put forward by the Presidency and the Commission. In general, it maintains a price freeze, with reductions in a few areas. The common agricultural policy reforms agreed in 1988, including stabilisers, have been protected in full, despite the attempts of several countries to modify them.

The package also includes a significant devaluation of the green pound. In debates, hon. Members were at pains to inform me that that was the most important aim of the United Kingdom because it is the means whereby we can eliminate, or at least reduce, the disadvantages that accrue to British farmers in competition with other members of the European Community.

Monetary compensatory amounts will be reduced substantially at the beginning of the next marketing year. On the basis of the position on 27 April the changes would be, for cereals and other crops, a reduction from 19.7 per cent. to 8 per cent.; for milk from 18.8 per cent. to 11.1 per cent.; for beef from 15 per cent. to 5.8 per cent.; and for pigmeat from 11.4 per cent. to 0 per cent. The Commission originally proposed a one third reduction. Looking at it in that way, the reduction for cereals and other crops is not 33⅓ but 55 per cent., for milk 38 per cent., beef 55 per cent., pigs 86 per cent. and sheep 56 per cent. The associated increases in support prices paid to British farmers—these are not increases in general but are, if one likes, reductions in the disadvantage that they have experienced until now—will be as follows: on crops, 10.7 per cent.; milk, 6.8 per cent.; beef, 8.5 per cent.; and sheepmeat, 11 per cent. This will allow our producers to compete on a more equal basis and provide a vital stimulus for the United Kingdom farming sector.

The package also inludes five measures known as the rural world, measures which aid small producers. I did not support these, as they are relatively expensive and do not look forward to the viable and efficient European agriculture which, in my view, it is the Council's task to promote and is in the interests of the United Kingdom to achieve. However, the final agreement contains three important qualifications compared with the original proposals, all of which the United Kingdom has pressed and gained. First, the Commission has said that these measures have "limited scope", and there is therefore every hope that it will not propose any similar ones. Secondly, one of the measures is time limited and another is subject to review after two years. Thirdly, it has been explicitly accepted, contrary to all earlier assertions, that the aids will be taken fully into account in the calculation of the Community's global support for agriculture in the context of the current round of negotiations on the general agreement on tariffs and trade.

I opposed reductions in coresponsibility levies, although I am opposed to coresponsibility levies in principle, because I could not accept them unless there were offsetting price cuts, and those were strongly opposed by some delegations. As a result, there are no reductions in coresponsibility levies, and the French Minister explained that their absence meant that he was not able to support the final package.

The Commission stated that the net cost of this settlement to the European Community budget will be 334 mecu in 1990 and 1,090 mecu in 1991. It confirmed that this would be met within the budget for 1990 and the agricultural guideline for 1991. I estimate that the net boost to United Kingdom farmers' returns in a full year will be perhaps £500 million. The effect on the retail prices index will be about 0.1 per cent. when fully worked through.

This outcome fully sustains the CAP reforms for which the Government have fought so hard, while giving a major boost to our agriculture in precisely the way that both sides of the House encouraged me to adopt in these negotiations. It shows how effectively the European Community can deal with the wide range of agricultural concerns of member states on a common basis. I commend it to the House.

Dr. David Clark (South Shields)

I am grateful to the Minister for making a full statement about the results of his discussions last week. He has announced a fairly good settlement which has been widely welcomed by farmers, and especially by the National Farmers Union. After so much depressing news over the past decade, I can understand their enthusiasm. It would be right, however, to remind the House of the other side of the equation—the taxpayer and the consumer. Obviously this price increase must be paid for from somewhere.

Will the Minister confirm that the cost of the settlement to the European taxpayer will be about £700 million in a full year? I understood him to say that the benefit to the farmers would be to the tune of £500 million per year. Is that a cost-effective way of running agriculture, given that the settlement will cost taxpayers and consumers £700 million while the farmers will get only £500 million? Perhaps the Minister will deal with that point.

Does the Minister realise that there is concern in farming circles about the long-term effect of the proposal on the stabiliser mechanism which, as the House will remember, was introduced with the support of hon. Members on both sides of the House to try to reduce wasteful surpluses? The logic was that European farmers would be paid less if they produced too much. How can the Minister justify paying cereal farmers an extra 11 per cent. when they are supposed to be penalised to the tune of 3 per cent. for producing too much? That point requires explanation.

The third main group to be affected will be the hard-pressed consumers, who are already suffering the effects of food inflation much higher than general inflation. The Minister has said that the present settlement on a 50 per cent. devaluation of the green pound will add only 0.1 per cent. to the retail prices index, but he and the House know that the effect on food prices will be much greater, and that will penalise poorer households in particular. Does the Minister accept that the settlement that he has brought back from Europe will put up food prices by approximately I per cent., which will add more than 60p per week to the average household's food bill?

Can the Minister explain why he felt it right to oppose the rural world measures in addition to opposing the direct income aids which would do so much to help farmers in hard-pressed areas?

As a result of the settlement, farmers will receive an average increase in their income of more than 11 per cent., whereas, as the House will recall, farm workers were recently awarded a mere 9 per cent. That cannot be just. Many farm workers have been heavily penalised by the poll tax which, in some farming areas, such as the Minister's constituency of Suffolk, Coastal, with Tory-controlled county and district councils, is set at £109 more than the Government estimated. Will the Minister join me in advising farmers to play fair and pick up their farm workers' poll tax bills and so share the increase that he fought for and won for them in Brussels?

Mr. Gummer

I thank the hon. Gentleman for his support for the decisions in general. As the outcome was rather better than that for which he was pressing me a few weeks ago, it seems a little curmudgeonly for him to say, "Having agreed with the decisions generally, let me come back with the aspects with which I disagree." I wonder whether, if I had returned from Brussels with no change in the green pound, he would have told me, "The taxpayers and consumers are very pleased with what you have brought back."

The hon. Gentleman asked about the long-term effect on stabilisers. There is a 3 per cent. cut in the price of grain. I can easily justify the so-called 11 per cent. increase for the grain producer in Britain, on the ground that his prices are significantly lower than those in the rest of Europe. Grain producers will not enjoy an increase; they will face a cut of 3 per cent., like everyone else. Their prices will still not be as high as those elsewhere in Europe. If the hon. Gentleman does not understand that that is what the green pound is about, I understand why his invitations to meetings of farmers are limited in number.

The hon. Gentleman asked about the hard-pressed consumer. I am concerned about the consumer. That is why I was quick to say on the radio that the settlement would add less than 0.15 per cent. I found that I had rather over estimated; it will actually add less than 0.1 per cent. I said that because I do not think that we can expect farmers to bear on their shoulders an unfair burden in keeping retail prices down, which we do not expect motor car manufacturers, small business men or anybody else to do. Why should they be asked to bear that burden, in contrast with not only the rest of Europe but the rest of the Community?

I oppose the rural world proposals because they would do no good for Britain. As a collection, they do not help this nation. I am a British Minister of Agriculture and I am in the business of supporting Britain. What is more important, the proposals would do no good for Europe either. I am a convinced and fervent European and I believe that they would do no good for Europe. They would support uneconomic units which would never be economic and which would demand greater and greater support in circumstances which can do no good for Britain, Europe or the rest of the world.

The hon. Gentleman referred to the 11 per cent. average increases in the incomes of farmers. It is not an 11 per cent. increase in the income of farmers but an 11 per cent. increase in the support prices for farmers. On reconsideration, I am sure that the hon. Gentleman will recognise that that is not the same thing because it is offset by the increase in costs which farmers will have from increases in prices. Two years ago, when farmers' incomes fell dramatically, I did not notice that the hon. Gentleman asked me to limit the increase in farm workers' incomes. He knows perfectly well that the two are not connected in that direct way.

The hon. Gentleman referred to the community charge. In Suffolk, Coastal, as elsewhere, the major reason why the community charge is as high as it is is that Suffolk Coastal district council has increased its spending by 24 per cent. and Suffolk county council has increased its spending by 16 per cent. The fact that they are Conservative councils only shows that they have done better than the 50 Labour councils that have done enormously worse.

Mr. Jerry Wiggin (Weston-super-Mare)

Does my right hon. Friend accept that the disparity between the amounts paid to continental farmers for the same products—that is to say, the differential in the green pound—has been one of the hardest aspects of the common agricultural policy to defend? Will he accept the congratulations of Conservative Members on the substantial reduction that he has secured in that unfairness? Will he give an assurance that he will continue to battle until there is no disparity?

Mr. Gummer

The green pound system is wholly unacceptable. It must be abolished by the end of 1992. I shall do my best to ensure that there are substantial reductions between now and then.

Mr. William Ross (Londonderry, East)

Is the Minister aware of recent studies which show that, contrary to popular belief, most farmers in this nation live on low incomes and that, therefore, what he has achieved will be widely welcomed by the farming community in general? Will he reflect that his achievement applies not to the income for the past year but to the next marketing year? Does he recall that last year Ministers also set out to achieve a large devaluation and in some cases achieved it but that it was undermined by currency movements? Is he aware that the beef sector, particularly last year, started with a nil disparity but has ended up out of line by 8 per cent? Does that outcome reflect a judgment in Government circles that over the next 18 months the pound sterling will not recover in the markets? Will he also reflect on the fact that the only long-term hope of success for the farming community is to have a green pound which at least floats and stays in line with currency values? If that were the case, he would not get into this dogfight every year because our farmers would compete on level ground. Has he made progress on that matter or should we look forward to the replacement of the green pound system?

Mr. Gummer

In response to the hon. Gentleman's final comments, let me say that the problem with the green pound, the green drachma, the green lira or anything else is that they fix for a long period an unreasonable exchange rate either above or below the currency value. That is not acceptable. That is why we are committed, as all countries in Europe are committed, to its abolition by the end of 1992. We cannot have a single market while such a system is working. I am pressing the Commission to come forward with its proposals as early as possible in order that we may work on them and ensure that the replacement for the system is wholly acceptable to everyone.

As for beef, I emphasise the important fact that we were offered 33⅓ per cent.; in the last compromise we got that up to 41 per cent.; in these debates and discussions, after considerable pressure in which hon. Members on both sides of the House played a part, we have got it up to 55 per cent. That is an important decision for Northern Ireland as well as elsewhere.

Several Hon. Members

rose—

Mr. Speaker

Order. Hon. Members will be well aware, having seen today's Notice Paper and the number of amendments that we must get through, of the pressure on the House's time today. I ask for single questions.

Mr. Paul Marland (Gloucestershire, West)

Unlike the mealy-mouthed words from the Opposition Front Bench spokesman, I extend warm appreciation for what my right hon. Friend has achieved. It is a major achievement, widely welcomed throughout the industry. My right hon. Friend's breakthrough in the devaluation of the green pound will be welcomed by every farmer in the land—especially pig farmers, who have seen the monetary compensatory amounts completely wiped out.

A point that my right hon. Friend did not touch on but which will be widely welcomed is the speeding up of payments for goods taken into intervention.

I ask my right hon. Friend finally not to lose his commitment to dismantling the coresponsibility levies, because they are a mean tax which do not get anyone anywhere.

Mr. Gummer

I shall certainly not lose my commitment to that, because the coresponsibility levies are a tax on the income of farmers without reducing the price to the consumer. They are therefore unacceptable both as a marketing aid and in equity. I am particularly pleased by the dismantling of the monetary compensatory amounts for pig producers, because they are among those least supported by the Community system, so they have the greatest sense of grievance when they are discriminated against.

Mr. Nigel Spearing (Newham, South)

Will the Minister confirm that in any one year our pro rata contribution to the common agricultural policy, paid through tax, is between £3 billion and £4 billion, of which we receive only about half back in support? What proportion of the increased moneys that will now go to farmers will come from EEC funds and what proportion from United Kingdom consumers?

Mr. Gummer

I am sure the hon. Gentleman will know that under these changes the proportion remains very much the same, but I remind him that the European Community is much more important than the simple balance that he has put forward. As a country we benefit enormously from our membership of this growingly important group in Europe. We are proud to be members of it, and our membership is vital to our future prosperity.

Sir Charles Morrison (Devizes)

This settlement will be as welcome to the British people as it is to farmers, because everyone wants a prosperous and attractive-looking countryside. But to complete the picture, on which I congratulate my right hon. Friend, will he tell us how he thinks the settlement will benefit the conservation of the countryside?

Mr. Gummer

My hon. Friend is right to point to the need to ensure that the countryside of England is farmed. If the United Kingdom has an unfarmed countryside, that will be to the detriment of conservationists everywhere. We need a prosperous farming sector if those who have created the landscape are to be able to continue to look after it. That is why I welcome this settlement from a conservationist's, as much as from a farm income, viewpoint.

Mr. Richard Livsey (Brecon and Radnor)

It would be churlish not to welcome this devaluation of the green pound. It is clearly welcome in the agriculture industry, but the past five years have been disastrous for farming and this change has been a long time coming.

Will the green pound be abolished before 1922, and will the Minister be working towards that end? Does he agree that, in rejecting the rural world proposals, he is discriminating against British small farmers as well as their continental counterparts?

Mr. Gummer

The hon. Gentleman must read the rural world arrangements. If we supported those arrangements, we would find that what Britain calls small farmers would be discriminated against because most of the arrangements apply to what we would refer to as micro-farmers. The farmers that the hon. Gentleman represents in Brecon and Radnor would be the people most disadvantaged by the continuance of such a policy. It is because I have a real concern for small farmers that I am not willing to support a proposal that reaches out only to the very smallest of farmers, most of whom are not found in the United Kingdom except to a very small degree. The hon. Gentleman knows perfectly well that any decision about the future of the green pound depends on 12 Ministers agreeing. This decision is a good one for the United Kingdom because it was reached with the agreement of the other 11 Ministers, all of whom are to some degree disadvantaged by the removal of this disadvantage to the British farmer.

Mr. Robin Maxwell-Hyslop (Tiverton)

I pay tribute to my right hon. Friend's personal success as a well-informed, logical and pertinacious negotiator for this country. Can he clarify that the £500 million increase in income for the farming industry is gross and not net and that it will help that industry to meet the increases in costs for electricity and water, for instance, which are far higher than the retail prices index?

Mr. Gummer

My hon. Friend is right to say that this is an increase in gross income. I thank him for his tribute, which comes particularly well from him, given his great experience in agriculture. For reasons that we would prefer not to be true but which are true, British agriculture benefits to a greater extent than others from the shortening of the payments period because, when there is a high interest rate, payments that are made more promptly save money for those who would otherwise pay a high interest rate on the money.

Mr. Tam Dalyell (Linlithgow)

Will the Minister get advice from the vertebrate zoologists who are available to the Ministry of Agriculture, Fisheries and Food and ask for their figures showing the decline in amphibian populations? Will he put those bio-indicators on the agenda for the next meeting of the Council? [HON. MEMBERS: "Frogs' legs."] Hon. Members should not mock. The decline in frogs all over the Community is absolutely alarming. Tadpoles perform an excellent function in the destruction of algae, and frogs destroy insects rather better than insecticides. This matter is ecologically serious and should be tackled.

Mr. Gummer

I hope that the hon. Gentleman will agree that I have taken an active part in promoting the causes that he has in mind, and I shall certainly look at the point that he raises. I am sure that no hon. Member would fail to seek to make a change in a situation which means that what was once referred to as the common frog ought now to be referred to as the uncommon frog.

Mr. Robert Boscawen (Somerton and Frome)

Will my right hon. Friend take encouragement from what will be seen as an excellent settlement for the livestock industry? Will he go further next year and eliminate the MCAs altogether? Does he further agree that it is time that the super-levy was eliminated from the dairy sector?

Mr. Gummer

I agree that we need to look at all the systems of levy that are in place at the moment. An important part of this settlement was that the Community showed itself wholly supportive in the end of the tough measures to restrain production which were pioneered by the United Kingdom. It also wholly supports the Community's proposals in the GATT round. Previously they had not been unanimously supported, but they now have the additional support of the two minority countries, Germany and Ireland. Together we have shown that we are determined to keep up the pressure. Of course we must look at the mechanisms that we use if they turn out to be less than satisfactory.

Mr. Dennis Skinner (Bolsover)

Is the Minister aware that thousands of people who work on the land in Britain will not clap their hands as a result of his statement? The people who create the real wealth in the countryside, the farm workers, have a job to keep their head above water financially, especially now that they have to pay the poll tax. If he had any guts, he would go back to the Common Market and negotiate a supplement to pay the poll tax for farm workers. Why does not this micro-Minister do that instead?

Mr. Gummer

I thought that almost every country had ceased to make this artificial distinction between farmers and farm workers as the creators of wealth in the countryside. It is only in the fastnesses of the hon. Gentleman's constituency and in the recesses of his mind that that Marxist myth continues to exist. Farm workers in Britain are much more likely to be well off in a prosperous farming industry than in an industry that is strapped for cash and unable to make next year's budget balance.

Rev. Ian Paisley (Antrim, North)

The best thanks of the farming community in Northern Ireland go to the Minister, and I congratulate him on having accomplished a good job. We also thank him for listening to the strong representations that came from Northern Ireland, through both Members of Parliament and Members of the European Parliament. The beef farmers in Northern Ireland have had a rough ride because of smuggling and the differential in the green currencies of Northern Ireland and the Irish Republic. Will the Minister press on with eliminating altogether the green pound differential?

Mr. Gummer

I am sure that the green pound must go. I thank the hon. Gentleman for his comments and I note that the whole community—Unionist and Nationalist and the different parties in the House and in the European Parliament—combined to pressurise me and the Commission in the battle to deal with beef in the north of Ireland. It has been a great achievement, a significant part of which is owed to that lobby.

Mr. Robert Maclennan (Caithness and Sutherland)

Does the Minister recognise that, while the farming community is grateful for his success in respect of the devaluation of the green pound, it remains extremely concerned that that work will be eroded by the further failures of the economy, particularly inflation, which will again widen the gap? Is he ready to throw his weight behind immediate entry into the European exchange rate mechanism to ensure that inflation does not hit the farmers?

Mr. Gummer

One way to ensure that we reduce inflation is by keeping up the pressure on inflation, particularly through interest rates. Therefore, I have riot only thrown my weight behind but am wholeheartedly in support of the Government's tough measures on that front. If the hon. Gentleman explained to the public why it is important to have high interest rates to keep inflation down, he would be doing much more than peddling a panacea, as he so often does.

Several Hon. Members

rose—

Mr. Speaker

Order. I remind the House that there are 26 groups of amendments to be dealt with in the next debate. I shall do my utmost to call all hon. Members who have been rising, up to 4.15 when we must move on. I ask for brief questions.

Dame Elaine Kellett-Bowman (Lancaster)

I give my right hon. Friend the warm thanks of my farmers for achieving the biggest green pound devaluation ever, which will greatly help sheep and beef farmers and milk producers. Does not this fully justify the opinion of Lancashire farmers, who said at the National Farmers Union annual general meeting this year that my right hon. Friend would make a jolly good president of the NFU?

Mr. Gummer

I count a number of jobs more difficult than that of being Minister of Agriculture, Fisheries and Food, and that is one of them. I am grateful for my hon. Friend's thanks, and the support of the Lancashire farmers in these negotiations has been particularly helpful. In these matters, the Ministry and farmers as a whole, whether members of the union or not, are on the same side.

Mr. Colin Shepherd (Hereford)

Is my right hon. Friend aware that his package will be enormously welcomed by everybody involved in agriculture in my part of the country—the Marches—and that it will confirm their opinion that he is a heavyweight Minister of Agriculture, Fisheries and Food? First, can he confirm that this is within the budget of the common agricultural policy and does not constitute a straying outside it? Secondly, in looking towards that important date when all MCAs must go in 1992, is he satisfied that there is sufficient commitment among his fellow Ministers to achieve that?

Mr. Gummer

My hon. Friend is right in saying that much depends upon the commitment of one's fellow Ministers. Almost without exception, they recognise that it is not possible to have a single market without the abolition of the green currency system. The problem is to determine how to achieve that end. We shall have to enter into some tough negotiations to get that right.

Sir Jim Spicer (Dorset, West)

Will my right hon. Friend accept that every farmer in Dorset is delighted with the settlement? I thank him especially on two counts: first, for the settlement which he and his team worked so hard to achieve; secondly, for his clear recognition that our farming community has had a tough time over the past three years. That is a clear sign that he will be fighting just as hard over next year's budget to achieve total parity.

Mr. Gummer

It is right to say that British farmers have had a particularly difficult time over the past few years because of the disadvantages that they have faced in respect of their income compared with that of other farmers within the European Community. I remind my hon. Friend that, at a time when there is a production surplus, it cannot be as easy for farmers to produce high incomes as it was when there was a shortage of production. I should not like anyone to believe that the next few years will be easy in Europe, or in the rest of the world, for farmers. We must seek fairness and equality of opportunity for farmers to compete in world markets. I seek a situation in which the British farmer is not disadvantaged by the green pound or any other part of the CAP.

Miss Emma Nicholson (Torridge and Devon, West)

I warmly congratulate my right hon. Friend on achieving a devaluation of the green pound which could not have been anticipated. I ask him for some elucidation on sheep price increases. I refer to the ewe premium and guide prices. Will these have to wait until January 1991, which is the start of the sheep year, or is there any hope of earlier implementation?

Mr. Gummer

I fear that the facts of the market are that such changes take place at the beginning of each agricultural marketing year. That makes things especially difficult for the sheep producer because he has to wait the longest. If I could have found a way of changing that, I would have done so. That was not possible for a range of reasons, some of which are rather complicated and technical. We have in the past resisted changes because they have been disadvantageous overall to the United Kingdom. I agree with my hon. Friend that it is particularly galling for sheep farmers that they have to wait so long for the very significant increase which they deserve and which they will get.

Mr. William Hague (Richmond, Yorks)

Now that my right hon. Friend's excellent negotiating achievement has given British farmers a fairer chance to compete, does he agree that improved attention needs to be given to the effective marketing of their products throughout the Community? May we look forward to any new proposals about the future operations of Food From Britain?

Mr. Gummer

I hope to make an announcement in the next couple of days about the chairmanship of Food From Britain. I have already made arrangements to extend its remit and funding for three years so that it is able to fight the battle for British food within the European single market. I agree that, whatever prices are on a Community basis, in the end it is the selling of British food aggressively and effectively that matters. We produce some of the best food in the world. We have a reputation in the world for having the best food surveillance systems and the highest standards of food safety that are to be found anywhere.

Mr. David Harris (St. Ives)

Does my right hon. Friend agree that the substantial devaluation of the green pound confounds the gloomy predictions which have been made with such relish by the Opposition? Does he also agree and acknowledge that his announcement today will be welcomed by the NFU nationally and by its county leaders, not least in Devon and Cornwall? In the difficulties that agriculture is facing, it will go some way to keep Britain farming.

Mr. Gummer

I am sure that most farmers recognise that much of what they hear from the Opposition is grounded not in fact but in party-political ambition.

Mr. Quentin Davies (Stamford and Spalding)

As the representative of a constituency with a substantial commitment to arable farming, may I tell my right hon. Friend that his announcement today will bring forth much admiration and gratitude in farming for his negotiating skills? Is not it the first serious breakthrough in the process to bring to an end the pernicious system of green currencies that we have suffered for much too long? It will have at least two effects: first, a sorely needed boost to the economics of the farming industry, and therefore to investment confidence; and, secondly, a boost to the credibility of my right hon. Friend's efforts to bring the green currency system to an end. He is turning into a remarkable Minister for Agriculture.

Mr. Gummer

I thank my hon. Friend.

Mr. Tim Boswell (Daventry)

Will my right hon. Friend confirm that at the beginning of the negotiations the other 11 member states were opposed to our devaluation and that the Commission was proposing a one third devaluation? Can he explain how he managed to achieve an agreed settlement half as good again as the Commission's original proposal without the other member states apparently obtaining commensurate increases in producer prices?

Mr. Gummer

The EEC is, in fact, a good organisation and if member states work together it is to the benefit of all. This is one example of how the EEC works at its best and why it is to the benefit of British farmers and the British nation.

Mr. Bill Walker (Tayside, North)

Does my right hon. Friend realise that the farmers and the farm workers of Scotland will be delighted with his achievements in Brussels? Will he send them the message that it in no way changes his commitment to FEOGA grants that he gave in an earlier statement?

Mr. Gummer

It does not change any of my commitments. I am pleased that we are getting a little closer to parity. I hope that we will achieve parity and the removal of discrimination as soon as possible.

Mr. Barry Field (Isle of Wight)

Is my right hon. Friend aware that there is only one National Farmers Union county branch that has a Member of Parliament all to itself? Is he further aware that the county chairman has warmly welcomed this package of measures? We have many small farmers on the Isle of Wight, which gives the lie to the point made by the hon. Member for Brecon and Radnor (Mr. Livsey) that the package will disaffect small farmers. Can my right hon. Friend confirm that the reduction in the payment period will do much to narrow the perception of farming that it is not an industry where profits are required or where wealth creation is necessary?

Mr. Gummer

Although it may have been a necessary part of the pressure on farm incomes, it sits ill in the Community to insist upon 120-day payment when we are trying to pay small businesses and to set an example to people who owe money.

Mr. Andy Stewart (Sherwood)

I congratulate my right hon. Friend on behalf of the Sherwood farmers, whom I was with on Saturday night. Is he aware that they were ecstatic about the settlement? Indeed, I thought that each and every one of them would receive £590 million. Some commented that my right hon. Friend had performed a miracle. In view of that, could he reiterate how he achieved a settlement that doubled what was on the table?

Mr. Gummer

I say again that it was because the European Community works. It provides the means within which 12 countries can agree proper arrangements for agriculture. If we did not do it that way, we would be battling among ourselves to the detriment of all. The common agricultural policy is a thoroughly good way to deal with common problems.

Mr. Derek Conway (Shrewsbury and Atcham)

Does my right hon. Friend accept that his statement in firm defence of British farming interests will be widely welcomed by Shropshire farmers? Will he confirm that his announcement will, however, have little impact on food prices in shops, because farmers receive such a small percentage of the final cost of that food?

Mr. Gummer

I am sorry that some of the popular newspapers have sought to suggest that the increases in food prices are wildly greater than they will be. Farmers in Britain deserve a reasonable return for their important job of producing food for Britain and looking after the landscape. If they are not provided with that money, they cannot do that job.

Mr. Nicholas Bennett (Pembroke)

On Saturday, I attended the annual dinner of Llanddewi Velfrey community council whose members asked me to convey the thanks of the Pembrokeshire beef and dairy farming communities for the increases that my right hon. Friend secured. I gladly do so. What success is my right hon. Friend having in ensuring that all farmers receive equitable treatment within the EEC, and that those continental farmers who seem to be fiddling the CAP and fail to produce properly audited accounts are brought to book?

Mr. Gummer

We are completely against fraud within the European Community wherever it is perpetrated. I would be against fraud by farmers in Britain as in anywhere else in the Community.

I am only sad that we are talking today not about an increase in the margins available to British farmers but a decrease in the disadvantage that they hitherto suffered. I wish that people would talk about such settlements in those terms, because that is the only way that we will get rid of the green pound.

Mr. Richard Shepherd (Aldridge-Brownhills)

Does not the answer that my right hon. Friend has just given highlight the Alice-in-Wonderland world that this is? We are cheering increased subsidies, either through taxes or higher consumer prices, which is an extraordinary stance for hon. Members on this side of the House, and no one is giving a cheer for the consumer. Should not consumer interests take priority?

Mr. Gummer

My hon. Friend is wrong, because the consumer is protected by having a lively farming industry able to produce the food that the consumer wants. The consumer is protected because 80 per cent. of Britain's land area is looked after by farmers. The consumer is protected because the rural areas have enough income to maintain their economies and their populations. The consumer gets a very good deal out of the settlement. It is quite wrong to drive a wedge between consumer and farmer.