HC Deb 27 July 2000 vol 354 cc1229-31
8. Mr. Kelvin Hopkins (Luton, North)

What his priorities are for the next reform of the common agricultural policy dairy regime. [131270]

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown)

The Government's priorities for reform of the dairy regime are clear and well known. We want an orderly removal of milk quotas in combination with a reduction in the European Union support prices to world levels. We will press the European Commission and our EU partners for that in the run-up to the review of the regime in 2003.

Mr. Hopkins

I thank my right hon. Friend for that answer. Does he agree that the provision of free school milk is a valuable service? May I take this opportunity to congratulate him on seeing off a European Commission proposal to abolish the subsidy of free school milk? May I also ask him whether he will take the action necessary to ensure the continued provision of free school milk?

Mr. Brown

I was very pleased that, working with partners on the Council of Ministers, I was able to persuade the Commission to change its mind on the school milk proposal. Rather than abolishing the measure entirely, which was the Commission's original proposal, or moving to co-financing on a 50:50 basis, which was the Commission's next proposal, we were able to negotiate that upwards to the proposal that was agreed on Monday at the Council of Ministers.

I am very pleased that that was a successful outcome for the United Kingdom. It just goes to show the value of working with our partners in the European Union and putting a measured case before the Commission, rather than adopting the alternative approach, which is to fall out with everyone else and try to thwart everything that happens, even if it is to our national advantage.

Mr. John Bercow (Buckingham)

Given that the reform deal was described by the Select Committee on Agriculture as a bad deal, that the right hon. Gentleman himself declared that it was disappointing, and that fraud is pervasive throughout the system, why does not the right hon. Gentleman now acknowledge that the CAP no longer stands for common agricultural policy, but for charter for amoral pilfering?

Mr. Brown

There is actually a good point beneath all that eurosceptic nonsense. The fact is that there is a sound case for a common agricultural policy across the EU. The important thing to do is to secure reform of the current structures so that they are not so oriented towards the supply side. The point to which I would draw the hon. Gentleman's attention is that, despite our many differences in this place, there is near unanimity around the Government's proposals for reform of the dairy sector.

Mr. Dale Campbell-Savours (Workington)

If milk quotas went, would there be over-production of milk?

Mr. Brown

I think that the market would quickly deal with that question, although we are in a relatively strong position compared with our European Union partners.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

Does the Minister agree that the only ones who seem to make money out of the current quota system are the quota brokers?

Mr. Brown

One of the unattractive features of the current quota regime is that the quota itself—the permit to produce—has an economic value. That is an inevitable outcome of the current structure and a part of the underpinning of the case for reform.

Mr. Peter L. Pike (Burnley)

Will my right hon. Friend confirm that it is absolutely essential that we reform the current milk quota system before admitting other countries to the European Union? Will he also confirm that, at times, the current milk quota system has led to our importing too many added-value milk products which we could have produced in this country had there not been a milk quota system?

Mr. Brown

Those are very important points. There are enormous advantages for the industry domestically in reform of the dairy regime. Although I do understand why some diary producers are nervous about it, it is the right way forward. I also think that it is the most intellectually appropriate way of dealing with the problems that are posed by the agricultural component of enlargement of the European Union. The two big questions seem to me to be the digressivity of direct payments and reform of the dairy regime.

Mr. Nicholas Winterton (Macclesfield)

I come from one of the prime dairy counties of the United Kingdom—Cheshire, which is in the north-west. Nevertheless, does the right hon. Gentleman accept that the whole of the United Kingdom has the perfect climate to produce good grass, and that good grass is the basis of good milk? Does he agree that any reform should take account of the fact that the United Kingdom as a whole is the right area for milk to be produced? Will he assure me, the House and my constituents that any reform will take that into account—so that the countries which can produce good milk because of their climate and grassland are able to do so, and no system is put in place that will discriminate against us?

Mr. Brown

I agree with absolutely everything that the hon. Gentleman has said.

Mr. Richard Livsey (Brecon and Radnorshire)

Does the Minister agree that one of the biggest effects on the profitability of dairy farming has been the disastrous drop of the price of milk by a third in the past two years? Does not the fact that there is a 20 per cent, advantage to supermarkets in importing milk, because of the euro, mean that the quickest way to get dairy farming back into profitability would be for Britain to join the euro?

Mr. Brown

The hon. Gentleman is right to say that the price per litre that the food chain pays the producer is at the heart of the present difficulties in the dairy sector. I have done everything that I properly can to alleviate the burdens on the industry, such as the hygiene charges. We have used agrimonetary compensation to its fullest extent as a countervailing measure. I know that the industry has welcomed cattle passports as well. Further, I have made representations to the retailers and processors—important players in the chain—to try to get them to understand that every component of the supply chain has a vested interest in the well-being and commercial returns of other elements in the chain. Further than that, as a Minister, I cannot go. I have certainly gone as far as I can.