Agriculture Council

HC Deb 03 June 1991 vol 192 cc25-34 3.40 pm

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

With permission, Mr. Speaker, I wish to make a statement about the 1991 settlement of farm prices reached at the meeting of the Agriculture Council, which finished on 24 May. I was supported at that meeting by my hon. Friend the Member for Skipton and Ripon (Mr. Curry), the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food.

I am happy to state that this year's agreement met a number of important United Kingdom objectives. In particular, despite pressure from 10 member states in that council and in the Finance Council, no increase was made in the agricultural guideline for 1991 or 1992. The Commissioner formally confirmed that the package agreed contained sufficient economies for expenditure to be contained within the guidelines already set. That success is an important one, in that the integrity of the 1988 budget decisions has been successfully defended from a sustained attack by those who wish to weaken them. You may remember, Mr. Speaker, that in debates in the House, it was widely felt that that was not an obtainable objective, although the whole House hoped that we could reach it.

That outcome has been achieved by economies in a number of areas. There will be reductions in effective support prices for milk, beef, sheepmeat, oil seeds, proteins, and tobacco. In addition, there will be an increase in the cereals co-responsibility levy to 5 per cent. —although for those participating in set-aside schemes, that will be refunded in whole or in part. Also, there will be a decrease in milk quotas by 2 per cent. There are different options for achieving that. Producers will be compensated in some measure, either financially or by the allocation of quota obtained from a buy-up scheme.

In general, those changes are necessary and welcome, although I have continued to press for the cereals co-responsibility levy to be replaced by price cuts, as such cuts enable other farmers to buy their products at a reduced price, and therefore increase the market for the produce. There will be a new, one year set-aside scheme financed by the Community. The details are such that there ought to be a real incentive for take-up in all member states. One of my criticisms of the existing scheme is that take-up has been uneven in the different member states. I am not prepared to see large areas of Britian set aside so that other countries can increase their production.

I secured the addition of an environmental component to that new scheme. If the relevant environmental requirements are not met, payments will be reduced. That is a major change of policy, and one about which I am particularly pleased. That major step provides us with a basis for the discussions that will take place on the wider reform of the common agricultural policy.

It was agreed that African, Caribbean, and Pacific sugar supplliers will be compensated for the price reduction agreed in 1989. That will be welcome to the countries concerned, although I continue to believe that there are better ways of serving their interests.

The European Court has decided that quota must be found for certain producers who previously gave up milk production for a period. This is known as the Slom problem. Whatever its reservations, the United Kingdom naturally accepts the court's ruling. I do not believe that they are the most deserving producers, but we are a law-abiding country and must accept what the court has said.

We have insisted, however, that the extra quota must be found, to the fullest extent practicable, from the Community reserve. As a result, all the remaining Community reserve will be put out in proportion to previous allocations for Slom purposes, which will ensure that the United Kingdom receives the largest share.

For our farmers, the most important decision was to align the green pound with the market rate applicable from 27 May. This brings the green rate very close to our central rate in the ERM and means that, for the first time for many years, our farmers will be able to compete on equal terms with those elsewhere in the Community. I am sure that the House will welcome that achievement, and I am pleased to be the Minister able to announce it.

The position of producers in less favoured areas is further protected by an increase in the supplement to the ewe premium, which will compensate them for the reduction in the sheepmeat basic prices.

The impact of this outcome on United Kingdom producers depends in part on decisions yet to be taken, but it seems probable that the change in the green pound will largely outweigh the effect of the various economies in the different sectors. Producers in most other member states will not be able to benefit from green currency changes. The settlement will add about one tenth of 1 per cent. to food prices. I commend this outcome to the House.

Dr. David Clark (South Shields)

May I say how pleased Labour Members are that the Minister was able to come back with his decision on the agrimonetary measures? We think that the abolition of the differential with the green pound is a step in the right direction, and at least it allows British farmers to compete on equal terms with their overseas competitors.

Apart from that, this price report is, in essence, a holding report. It is a non-event, bearing in mind the fact that the Commission has a record beef surplus, a surplus of milk and too many cereals. We found little in the price support that will help those long-term problems.

The Minister rightly said that he was pleased that the settlement had been made within the price guidelines, and so are we, but I do not think that the budget guidelines are as clear as they first appear. Will the right hon. Gentleman concede that the result of the statement is that, this year alone, total budgetary expenditure on the CAP has increased by more than 13 per cent.? Will he also concede that there has been much manipulation of the budgetary guideline and a transfer of farm spending across the financial years 1991 and 1992? Does he agree that, by recalculating the dollar effect, the EC has managed to find an extra 300 mecu this year, and an estimated 1 becu to 2 becu next year? What contingency plans are there if the American dollar weakens, because if that happens the budget guidelines have been breached?

The Minister made great play of his new one-year set-aside scheme. Will it be a 12-month only set-aside scheme or the first of a series of schemes whereby farmers enter into a 12-month agreement to set aside their land? If that is so, does not it rather unfairly treat farmers who have already agreed to a five-year set-aside scheme? Has he any plans to deal with that?

Will the Minister confirm that the environmental component of the new scheme, which he lauds, is simply a vegetation growth on the land? Will he further confirm that, if this relevant environmental requirement, as he called it, is not met, farmers will lose a mere 10 per cent. of the grant? It seems to us that this is merely tautology, and not a genuine environmental scheme.

Why does the Minister think that the new scheme will work when it is plain that the old five-year set-aside scheme has not worked? There was a marginal decrease in cereal production, but farmers set aside their more marginal land and, with increased productivity, maintained their cereal output.

Are there provisions in the agreement for individual national Governments to top up any of these schemes? Has the Minister any proposals to top up his set-aside scheme, or does he intend to leave it at £50 an acre plus a rebate and co-responsibility levy?

Mr. Gummer

I thank the hon. Gentleman for his kind words about the agrimonetary activity. I am surprised that he did not point out that we were offered a third of what we got. We got the whole of it, which is more than most people thought possible.

I am surprised that the hon. Gentleman called this a non-event and went on to talk about beef, where we have recast the system in a remarkable way, and about milk, where we have cut quotas by 2 per cent. I wonder what kind of price cuts or quota cuts the hon. Gentleman would have proposed. I hope that, the next time he is invited to meet a farming audience—I had hoped to hear answers to some of his questions—he can explain what cuts in the milk price and in the quota he would propose for a country that is only 88 per cent. self-sufficient in butter fat, as Britain is at present.

It is true that the budget has increased, just as it decreased in previous years. That is understandable in the circumstances.

Mr. D. N. Campbell-Savours (Workington)

What about the 13 per cent.?

Mr. Gummer

The hon. Gentleman talks from a seated position about 13 per cent. I hope that he will explain to his farmers whether he would have liked the budget to be cut by 13 per cent. His farmers will be interested in that, because they are among the farmers whom I have spent a lot of time protecting, the cost of which is included in that 13 per cent. No doubt the hon. Gentleman will speak for himself later.

Of course, the European Community has taken into account the changes in the parity value of the dollar. I should have been in considerable difficulty at the Dispatch Box if the dollar had moved in the opposite direction and the hon. Member for South Shields (Dr. Clark) had said that we had not taken that into account and that we did so only when it seemed to suit our case. We take into account the latest possible movement, what has happened and what is likely to happen.

If the dollar were to move in the opposite direction, the Commission would have to take management action to keep the settlement within the guidelines, because the guidelines have that effect. For that reason, we were determined to keep the guidelines as they were. I hope that the hon. Gentleman recognises that two countries won and 10 countries had to back down on that issue. That shows that, if one is determined to fight within the Community as an enthusiastic member of it, one can achieve what one wants to achieve.

The set-aside scheme is a 12-month scheme. I should like it to be clearly stated, rather than opaquely mentioned, that this was a precursor not to an annual scheme but to an extension of set-aside in the direction for which the United Kingdom has fought for many years. After all, the set-aside scheme was an invention of my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), who has made this case for a long time. I am pleased that what we have found to be successful in Britain will now be seen to be successful in the Community as a whole.

The hon. Member for South Shields talked about the lack of success. What did he want me to do? Did he want me to provide for more set-aside in this country than in other countries—so that, for example, the French could expand their production while we lost our markets? If that is the Opposition's official policy, it is all of a piece with advocating eating New Zealand apples and opposing eating British sausages. We now know exactly what the Opposition's view is—it is to cut prices to the British and to give more opportunities to our competitors.

As far as the environmental compensation is right, it is true that at the moment there is a need merely to have vegetative cover, to look after the land, to grow the crop and to plough the crop afterwards. That sets a standard that is the lowest level, but it is very different from not having an environmental requirement at all. Previously, set-aside could easily be characterised—I fear that the hon. Gentleman has sometimes been guilty of appearing to characterise it as such—as paying the farmer to do nothing, which is wholly unacceptable. We need to pay the farmer to look after the land—that is part of his traditional role, and something on which I intend to insist as part of Common Market agricultural reform.

The five-year scheme is important, and those who are involved in it will be able to be excused the 2 per cent. extra co-responsibility levy which has been added this time. This was a United Kingdom precondition. Part of the reason why the debates have continued for so long was that I was not prepared to agree to a set-aside scheme which set at a disadvantage those who had already accepted the restrictions.

The fact that many people have set aside their least good land does not seem to be a disadvantage. Set-aside has meant that the expansion of production has been less than it would otherwise have been. The Opposition must come to terms with the fact that, if one wants to reduce over-production, the only sensible way to do so rapidly without so distorting the market as to have long-term disadvantages is to have a major set-aside scheme that covers the whole of the European Community and which is not merely a means of attracting people into it in this country and in Germany.

Several Hon. Members

rose—

Mr. Speaker

Order. I appreciate the importance of this statement to hon. Members with agricultural constituencies, but I remind them that there are two other statements. Therefore, I ask them to put brief questions to the Minister on this statement.

Mr. Robert Boscawen (Somerton and Frome)

Does my right hon. Friend accept that, despite the very difficult budgetary constraints, he has preserved the position of British farmers to a large extent and has ensured that their disadvantages are outweighed by the advantages over the green pound? Will he give some guideline on how the 2 per cent. reduction in the quota will be phased? Will he take it from me that he has met his commitment by reducing the size of the quota by an amount that the British farmer can withstand?

Mr. Gummer

I thank my hon. Friend. The quota will be subject to a compensatory payment, and we shall have to buy out that 2 per cent. on a compulsory basis, but there will be compensation. The Slom quota is more difficult, because we still have to calculate how many will require the money. There are problems with the European Court judgment which we shall have to sort out, but I am pleased to say that we shall not only have the money from the European Community reserve; we shall also be able to retain the money that we had for the first Slom pay-out in order to apply that to this one. That means that the buy-out programme will be less extensive than it would otherwise have been.

Mr. Robert Maclennan (Caithness and Sutherland)

Does the Minister realise that the settlement will be judged in rural communities by its impact on farm incomes, on the rural economy and also on the countryside? Does he accept that farmers who are under great pressure will not take complete satisfaction from the continuing downward pressure on prices which the settlement will bring and which may be—this would be welcome—at least partially offset by this alignment of the currency with the central rate?

The Minister deserves congratulations on that. However, does he acknowledge that the emphasis on set-aside may lead to as many as 250,000 hectares being taken out of farm production, if the Minister's figures on take-up are true? Does that constitute long-term assistance to the maintenance of the countryside, which the people of this country like?

Mr. Gummer

Those of us who care about the countryside should not only ask questions but give some idea of the answers to the problem. The hon. Gentleman has counted out price pressure and set-aside. It is difficult to see what the hon. Gentleman proposes, except perhaps that we should continue to increase our spending while finding that the farmer does not get a sufficient proportion of that spending.

I very much hope that the hon. Gentleman will support me in my battles to get the common agricultural policy reformed, so that more of the expenditure gets to the farmer, so that the farmer can be compensated for his work to look after the countryside, so that we can get more money into the most difficult areas, so that we can help the farmer to market his products more effectively and so that the farmer can get a higher proportion of the added value. That is a policy to deal with the problems. The hon. Gentleman is proposing the usual thing from the Liberal Democrats, which is never to give a proper answer to anything, but merely to complain about everything that everybody else does.

Mr. David Harris (St. Ives)

Will my right hon. Friend accept congratulations, especially on the elimination of the unfair disadvantage that our farmers have faced over the green pound? Now that this difficult round of price fixing is over, does my right hon. Friend think that the time is right to give agriculture a sense of direction? Would he consider publishing a White Paper or some other document in which to set out how the Government see the future of our agriculture?

Mr. Gummer

My hon. Friend is kind in his congratulations. I made clear the directions in which I should like the common agricultural policy to be reformed. I am sure that my hon. Friend agrees that when more than 80 per cent. of spending on agriculture comes from decisions made in Brussels by the Community as a whole, the future of agriculture depends centrally on the decisions that we shall make over the next six months, as well as on agreement under the general agreement on tariffs and trade.

I will consider my hon. Friend's proposal. There may be ways in which we can make even clearer the Government's commitment not only to farming, but to the five points of major change for which we look. The fact is that the decisions are yet to be made. I understand that farmers in those circumstances, are looking anxiously to see what decisions will be made under the Dutch presidency.

Mr. Ron Leighton (Newham, North-East)

Is it not true that the whole of the common agricultural policy is a complete and utter monstrosity? Despite all the chatter about reforming it, which we have been hearing for as long as anyone can remember, it is getting worse.

The Minister will have heard of the principle of subsidiarity—that things should not be done at Community level which could be done better at national level. Will he please press for the whole of British agriculture to be dealt with under the principle of subsidiarity, so that we can repatriate agricultural poky back to the House? Surely we can make a better fist of it than the shambles in Brussels?

Mr. Gummer

I do not believe that the hon. Gentleman has ever asked me a question complaining about his constituents' shortage of food. He has never asked me such a question because of the success of the common agricultural policy. The hon. Gentleman should be ashamed of himself, because he is speaking with a full stomach and complaining about the system that has made that stomach full. He must accept that we are trying to change a system that was extremely successful at a time of shortage to one that can deal with a time of surplus, part of which it has created in seeking to solve the problems of post-war Europe.

Mr. Kenneth Hind (Lancashire, West)

My right hon. Friend is to be congratulated, particularly on his achievement on the green pound. He will know from visiting my constituency on several occasions that I represent the largest piece of grade 1 farmland in the north-west of England. His set-aside policy will be welcomed by my farmer constituents, but will my hon. Friend give me an undertaking that he will consider setting aside the poorer land first, before he sets aside the grade 1 farmland where the most productive farms are placed?

Mr. Gummer

My hon. Friend asks a proper question. I want set-aside to be voluntary, so that farmers make their own decisions about which land to set aside. The level will be fixed to draw out of the system sufficient land to deal with surpluses. However, although I want set-aside to be voluntary for farms, I believe that there should be some compulsion for nations. Again, I wish to see a system with a target for each member of the European Community, so that we all share the burden, instead of some being prepared to pick it up more readily than others.

Mr. Andrew Welsh (Angus, East)

Does the Minister accept that farmers are anxious to know how the details of the proposals will affect them? When and how will he announce the details, particularly as they affect the milk and cereals sectors? Will he, for example, state what the basic set-aside payment will be? What effect does he expect the proposals to have on farm incomes in Scotland?

Mr. Gummer

Several of the details are being worked out at this moment in the management committees. As soon as I have them, I shall make them as widely available as possible. If the hon. Gentleman has any worries about their availability, I hope that he will tell me. I shall seek to make up for any problems that arise. I shall certainly give the hon. Gentleman as much information as I possibly can.

On set-aside, the level at which the Community gives its support per acre, plus the advantage of not paying the co-responsibility levy on the rest of the farm's production, seems adequately to meet the needs of set-aside for this country. Indeed, I was worried about and refused to support one proposal that was on the table during part of the negotiations, which would have made set-aside less attractive in some countries than others. Once again, the United Kingdom would have found itself bearing the burden. I was not prepared to accept that.

Part of the reason why we fought on for many more hours was to obtain equal treatment. Therefore, I am not prepared of my own volition to change the equality of that treatment. We want to have a balance throughout the Community. Anyone who proposes the repatriation of agricultural policy does not understand how international the trade is, how impossible such a repatriation would be and the fact that it would lead to one country bidding against another. Therefore, the suggestion should be dismissed out of hand.

Miss Emma Nicholson (Torridge and Devon, West)

I congratulate my right hon. Friend the Minister on creating a level food production field for the British farmer, but can he explain why, although British sheep may safely graze, the British sheep farmer must wait until 1993 for parity with the European sheep farmer?

Mr. Gummer

Of course it is difficult for the sheep farmer, but these matters are dealt with by marketing years. The United Kingdom Government have supported that, and in the past the system has often been to the advantage of the United Kingdom producer. I fear that, having enjoyed the advantages of stability within the system and the way in which the system had become a manipulable arrangement, it would be hard for us to demand—although we asked—that the marketing year should be changed.

My hon. Friend referred to sheep safely grazing. I hope that the changes that we have announced, which include speeding up alterations in the way in which the premiums work, will mean that we shall obtain even more of the European market for the best sheepmeat in the world.

Mr. Andrew F. Bennett (Denton and Reddish)

Is there anything in the package to help sheep farmers in the mountain areas who are stuck with keeping mountain breeds of sheep? In the past two years, the price that they have obtained for the wool clip has been extremely low. Many such farmers are in doubt this year about whether it will be economic to shear their sheep. Can the Minister give any encouragement to farmers to carry out that practice? It would be cruel to the sheep not to shear them, and it would leave the countryside in a horrible state. I am sure that the Minister is aware that the price that farmers are likely to obtain for the wool will be low this year.

Mr. Gummer

I understand the hon. Gentleman's point. The problem for the livestock industry has been especially severe. Not only sheep prices but beef prices have been low. Therefore, farms which usually relied on the success of one product when the price of the other fell have found that the prices of both products have fallen at the same time. That is why I was pleased to see a 4 ecu supplement per ewe for farmers in the less favoured areas, which will give them added support. As the hon. Gentleman knows, the Government's policy on those matters over which we have control, such as HLCA payments and suckler cow payments, has been to try to aim extra help at the most difficult areas. I shall continue to do that.

Mr. Andy Stewart (Sherwood)

My right hon. Friend will be pleased to hear that getting rid of the iniquitous green pound will cause rejoicing in the countryside and that there is great interest in the one-year set-aside. Will he confirm beyond doubt that the refund on the cereal levy will cover the remaining crops and not be equivalent to the 15 per cent. set-aside? Will he confirm that the environmental cover crop on the set-aside does not cover the one-year rotational fallow, which is environmentally friendly in as much as the following crop requires a reduced input of fertilisers and pesticides?

Mr. Gummer

My hon. Friend will be pleased to know that the Government included the environmental set-aside not because we felt we needed it ourselves—we would have continued our own policy on that front—but because we wanted a common attitude throughout the Community so that farmers who set aside in the rest of the Community face the same costs as farmers in this country.

I shall consider the problems of continuing fallow where it is suitable, and I shall give my hon. Friend an answer as soon as I have one. I think that he will find that it is to his satisfaction. On the 15 per cent. set-aside, the cut in the co-responsibility levy is for all the rest of the cereal crop.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

The Minister has acknowledged that the European Court decision will cause real difficulties to producers who took up quota when other producers went out of production. Will he guarantee that those producers will not suffer further cuts because of subsequent arrangements? If one takes account of the inclusion of yoghurt and milk products in the existing quota, it is clear that working farmers are already at risk from extra cuts across the board.

Mr. Gummer

I am pleased that the hon. Lady agrees that there are complications with Slom which none of us wanted or wished to face. However, we must face up to them and the major problems are now clear. We have dealt with the primary part of those problems, even though we still have to deal with the secondary part. Little else can emerge, although one hardly likes to say that of such a contentious issue. We will be able to pay an important proportion of the increase to producers from the extra quota we receive from the Community, which either way increases the British quota, if not by as much as I should like, at least significantly and importantly.

In addition, we will need a buy-out scheme for that part of the quota which it is necessary to redistribute. Nobody will have a special disadvantage, but the fact that the scheme will be in operation will mean movement of quota from some people to others. I hope to make that as voluntary as humanly possible.

Mr. David Nicholson (Taunton)

As a result of the Government's commitment to the European Community and my right hon. Friend's typically robust defence of British farmers' interests, he has returned from Brussels with a fine settlement on the green pound. He will be aware that many farmers are concerned about the uncompetitive pressures on their livelihoods from European farmers. Will my right hon. Friend therefore continue his efforts to eradicate any points of unfair competition that damage our national interest? Will he persevere in defending our countryside, especially the less favoured areas such as Exmoor and the Brendon hills, in my constituency?

Mr. Gummer

My hon. Friend never leaves me the opportunity to forget the Brendon hills or Exmoor; other hon. Members remind me of other places. I hope that those who represent urban constituencies recognise the degree to which a healthy farming industry is essential if the countryside is to be protected and cared for. I am sad that some colleagues seem to think that we can do without farmers because, somehow or other, the countryside will look after itself.

I am pleased to say that the advantages that we have gained from that price settlement set the scene for the arguments, which will be very tough and difficult, about the reform of the common agricultural policy. The environment must increasingly be one of the triggers of a common agricultural policy rather than an add-on extra, largely financed by Governments, as is presently the case.

Mr. Jonathan Aitken (Thanet, South)

I congratulate my right hon. Friend on bringing back from Brussels a better than expected deal for British farmers. However, may I counsel him against gilding the lily of the common agricultural policy, as he seemed to be doing a moment ago? Will he confirm that the CAP still costs the average British family approximately £18 a week and that that figure is rising because agriculture expenditure is increasing by some 13 per cent. a year, even after all the creative accountancy conjuring tricks so beloved by the commissioners in Brussels? What is being done about the longer-term solutions—in particular the admirable MacSharry proposals, which may have put an end to those proposals?

Mr. Gummer

I hesitate to disagree with my hon. Friend, but, having asked such a question, he cannot expect unanimity. When speaking of creative accountancy, from whatever source, we must not pretend that world prices are real. They are simply the dumped prices of countries that support their agriculture, many of which do so to a greater degree than that achieved by the common agricultural policy. Therefore, any figures based on comparisons of what we pay for our food and what could be paid by a small number of people buying dumped food at the lowest possible price, have no meaning whatsoever.

Although I, as much as anyone else in the House, want a thorough reform of the common agricultural policy, that reform will not be achieved by suggesting to the British people that we can guarantee our future supply of food, ensure that the majority of our farmland can continue to be farmed, and care for the countryside, especially the most vulnerable areas, without paying some money for it. Even after common agricultural reform, major costs will be incurred in ensuring that we have the environment that we deserve.

I would not describe MacSharry's original proposals as "admirable". They are so unadmirable that they received the unfettered praise only of Greece, and the opposition of almost every other country. I believe that he has gone back to produce a second version.

Mr. Bowen Wells (Hertford and Stortford)

In what way can Commonwealth sugar producers be better served than by the settlement—on which I congratulate my right hon. Friend—of 30 million ecu in respect of the 1989 sugar prices?

Mr. Gummer

The developing countries, especially the ACP ones, would be better served if we could reorganise our trading practices to enable us to buy their products and increase trade, rather than take direct action and grant aid.

Ms. Diane Abbott (Hackney, North and Stoke Newington)

rose—

Mr. Speaker

In consideration of the hon. Lady's happy marriage during the recess, I shall call her.

Ms. Abbott

How can the Minister justify the Governor of the Bank of England, Mr. Robin Leigh-Pemberton, making £60,000 last year out of set-aside? Does that not show how the system is open to abuse?

Mr. Gummer

I congratulate the hon. Lady on her change of status, but commiserate with her on asking a question about the Governor of the Bank of England on this, of all days. She should add to her comments the cost to the Governor of the Bank of England, or anyone else who sets aside, of looking after that land—[Interruption.] Those hon. Members who laugh have not been near a farm for a long time.

Mr. Maclennan

On a point of order, Mr. Speaker.

Mr. Speaker

Does it concern the reply given to the hon. Gentleman?

Mr. Maclennan

Yes.

Mr. Speaker

I think that a point of order is justified.

Mr. Maclennan

In view of the fact that the Minister invited me to state the policy of the Liberal Democrats—

Mr. Speaker

Order. If the hon. Gentleman is asking for my protection, I must give it. I asked hon. Members to ask questions and not to make statements. The hon. Gentleman asked a question, which was why he was unable to state the Liberal policy.