HL Deb 07 November 1974 vol 354 cc645-67

6.10 p.m

LORD CHAMPION rose to move, That this House takes note of the Tenth Report of the Select Committee (Session 1974) on the future sugar policy of the Communities (R/1900/73 and R/1957/ 74). The noble Lord said: My Lords, I think I should explain at the outset that it falls to my lot to move the Motion on the future sugar policy of the Communities, because I was the chairman of the sub-committee that presented the report which was adopted by the main Committee and which is before the House to-day. In accordance with the traditions of the House, I declared to the sub-committee the fact that I have a pecuniary interest in the British Sugar Corporation, and I now declare it to the House. It is a small one, but nevertheless I must declare it. Although I realise that such a Motion as I am now moving is a peg upon which to hang a very wide debate on the sugar problem, I conceive it as my task to stick fairly closely to the report itself, leaving it to other noble Lords to discuss the wider aspects and to my noble friend Lord Beswick to tell us of the present position and to answer for the Minister of Agriculture.

My Lords, the report attempted to achieve the virtually impossible: that is, to set out the general effect of the proposals in some six paragraphs, and this meant boiling down some twenty pages of closely-typed material into that small compass. Clearly, much detail had to be omitted, but anyone particularly interested can of course get the full documents from the Printed Paper Office; they are, in fact, available there. All I can hope is that what we have included in that report makes sense, that it is in no way a distortion of the policy, and that there is enough information to enable the House to decide whether or not to note the report. Perhaps I ought to add that, by our debating the report to-day, the Minister will be made aware of the views expressed in this House when he participates in the discussions at the EEC Council meeting on the 18th and 19th of this month.

The sub-committee had before them two memoranda dealing with the future sugar policy of the EEC, the first dated July 13, 1973, and the second dated July, 1974, the latter embodying some necessary amendments which were caused by the course of events during the year between the two memoranda. That policy can be set out under three heads: first, the EEC position in relation to any negotiations that might take place for a revival in some form of the International Sugar Agreement; secondly, the obligation of the Community towards the developing countries; and, thirdly, the Community's own internal arrangements for the five years from the marketing year 1975–76. The International Sugar Agreement expired on December 31, 1973, and the Community clearly has to decide whether it will participate in the United Nations Conference which is intended to try to bring into being a new international agreement on sugar; and, if it does so decide, what will be its stance at any negotiations that have to take place.

Perhaps I ought, very briefly, to remind the House of what the International Sugar Agreement was intended to achieve. That Agreement, signed by the United Kingdom in 1968, came into force in 1969 and it sought to bring about a measure of stability in the international market for sugar. The Agreement was slanted towards raising the level of international trade, mainly, I stress, to increase the export earnings of developing countries. To achieve that end sugar prices were to be maintained at a level which, while reasonably remunerative to producers everywhere, would not encourage further expansion in the developed countries, such as ours. At the time of the Agreement, most of the world's sugar was sold under agreements such as the Commonwealth Sugar Agreement, and only a comparatively small proportion of the sugar produced anywhere entered into the world market. This led to such a degree of instability that, on that market, prices fluctuated wildly between £12 and £100 a ton, but the mainly prevailing low prices during this period caused a worldwide neglect of the sugar cane industry. Production fell, and world shortages brought about an increase in the price on the free market to, eventually, the present level of what I believe to be £400 a ton, with futures quoted at £500 a ton. Under the stresses brought about by the world demand exceeding supply, the International Sugar Agreement inevitably broke down, and up to now has not been renewed.

The proposals in the memoranda are that the Community should join a new international sugar agreement as a net importer of sugar, and in the context of such an agreement it would undertake to limit its exports of white sugar to the world market to the level of 800,000 tons, with a proviso that in times of world shortage the Community could export without quantitative limitation. Perhaps I should explain that the Community-would be a net importer of sugar because of its intention to import 1.4 million tons from the developing countries; so your Lordships see where the net importation will take place. That import would come under the accepted obligation of the Community towards the developing countries. Those countries are mainly those which were parties to the Commonwealth Sugar Agreement, under which Britain guaranteed to buy sugar at an agreed price from specified countries of the Commonwealth; and also included in the term "developing countries" are the associate countries of the other members of the Community.

My Lords, the arrangements for these imports would fall to be negotiated within the framework of Protocol 22 of the Act of Accession. Under the arrangements the Community would undertake to purchase the 1.4 million tons at a price no higher than the lowest Community price, so that Community producers would be no worse off than producers in the developing countries; and in return for such a guarantee the developing countries would be expected to guarantee to deliver the agreed tonnages to the Community. Of imports into the EEC of the raw cane sugar, 85 to 90 per cent. would be allocated on a quota basis among the specialised refineries; that is, those port refineries which have traditionally refined raw cane rather than beet sugar.

Under the third head—the Community's own internal arrangements for the production of sugar beet—the existing production régime would be continued for five years from the marketing year 1975–76. That régime can be summarised as a continuation of the allocation of quotas for each enterprise producing sugar from Community-grown beet; this with a price system designed to ensure some production in areas unsuited to the best beet sugar cultivation—this for social reasons—and to encourage some production above the basic quota in the areas best suited to beet growing, but at a lower price. On the Community's proposals the sub-committee had to give its opinion and make such recommendations as it thought fit. We had to take our decisions on August 20, which is now a long time ago in terms of sugar movement, in the light of the evidence we had taken and in the light of the prevailing circumstances.

The terms of reference of the EEC Committee say that it must make representations on the matters it has considered which … raise important questions of policy or principle and on other questions to which the Committee consider that the special attention of the House should be drawn. Clearly, my Lords, within those terms, the Committee must decide whether the Community's proposals are to be viewed from the wide, European point of view or from a more parochial, national standpoint. We tried to achieve a balance between the two and I hope that we succeeded, because I agree with those noble Lords who participated in the previous debate this afternoon that we have to consider both points of view when thinking in terms of what is being said to us from the EEC.

We were of the opinion, from the Community angle, as we said in our report, that the proposals in the memorandum provide a satisfactory framework within which negotiations between agricultural Ministers may take place; and, in particular, provide a reasonable basis for negotiations on a possible reincarnation of an International Sugar Agreement. They would provide, too, we say, for the future production of adequate supplies of sugar, which I hope is an assurance that will meet with the good wishes and acceptance of this House. We were also of the opinion that the price structure ought to continue to maintain the sugar beet industry in the Community, as well as supporting cane sugar production in some of the developing countries.

From our national angle, we were very critical of the proposal to fix quotas on the basis of a producers' total average production between 1968 and 1973, for the reason, which we gave, that our own sugar producers' share was restricted during that period by the Commonwealth Sugar Agreement. That Agreement made the provision that we would restrict our production to ensure that we could take the agreed production of our Commonwealth. We also had doubts about the proposed allocation of imported raw sugar to the specialised refineries. In this matter, our comment might have been very much stronger, except that we were by no means clear what exactly was meant by the phrase which appeared in the memorandum. I will not repeat it, but it was not clear enough for us to take a firm decision on it. Having regard to the very vulnerable position of our refiners—and we are hearing a great deal about this at present—we believe that the Minister himself must carefully explore the words that appear in the memorandum when he considers this policy, and perhaps take a very firm stand to ensure that our refiners do not suffer from neglect as a result of decisions by the EEC.

My Lords, we made other criticisms, but the unfairness of the quota basis to the United Kingdom producer was certainly the one to which we wish to bring the special attention of the House and the Minister of Agriculture. After rereading our report, I do not think that any of our comments or recommendations have been invalidated by subsequent events, except that our main critcism that the quota basis was unfair to the United Kingdom was met by the EEC Council of Agricultural Ministers when it met on October 21. I am glad to say that the United Kingdom now has a very generous allocation.

I hope it can be claimed for the subcommittee that our criticisms helped the Minister to put right an obvious injustice. As has been said this afternoon, it is not only what this House thinks as a House when it discusses matters that is important. I believe that it is also important that the decisions taken by the main Committee on the recommendation of the subcommittee help the Minister to make up his mind and to fight, if necessary, in the Council of Ministers. This is the first of the reports of the Committee, which has emanated from a sub-committee, to be considered by the House and I hope that it is in substance, form and manner, such as meets with your Lordships' approval.

My Lords, may I end by thanking the members of my sub-committee for their co-operation and assistance, as also the clerks who served the Committee. I must, too, add my meed of praise for the work of the noble Lord, Lord Diamond, as Chairman of the main Committee. As everyone has done this afternoon, I wish the noble Baroness—his successor—all that she can possibly wish herself. I would only on my own behalf apologise for the fact that my personal circumstances mean that I shall not be there to help her, but I shall certainly be watching everything she does and hoping that everything goes right. My Lords, I beg to move.

Moved, That this House takes note of the Tenth Report of the Select Committee (Session 1974) on the future sugar policy of the Communities (R/1900/73 and R/1957/74).—[Lord Champion.]

6.27 p.m.

LORD SAINT OSWALD

My Lords, this Report appeared on August 29, which is not far away, but a good deal has happened since then to affect the situation. There is what could be called a sugar crisis created by those events, though the noble Lord, Lord Champion, referred to it as a sugar problem in his deliberate, thoughtful exposé of the Report. His was a speech which gave an admirable background to far more general speeches than I shall be making. This is an occasion which entails a need for urgency and also a need to tread delicately. It is not, therefore, an easy, straightforward debate in which to take part, yet as a member not only of the European Parliament but of the Agricultural Committee of that Parliament, it would hardly be proper for me to sit by silently this evening.

Yesterday, it had been my firm intention to join in the general agricultural debate, but I was struck down by some wandering virus and forced to spend the day, reluctantly and fumingly, in bed. Had I spoken, my words would have been in total agreement with those which my noble friend and European colleague, Lord Mansfield, spoke in that passage of his speech in the debate on the gracious Speech when he referred to the Common Market and, in particular, to agriculture. The urgency of this situation is partly created by the fact that beet farmers in this and other countries of the Community are about to sign their contracts for next season's sowing, and they need to know what prices to expect before deciding on what acreage they can afford to devote to this crop.

With the profit and loss margins—all too often loss—as they are to-day, farmers are required to make fine judgments and to make them in time. I speak as a farmer and as a beet farmer on a moderate scale. The urgency is evident to many; the delicacy is not so evident. This debate is about consumption and supply and, with regard to supply, there are a number of options. Negotiations within the Community are in progress and our country is part of them, and those negotiations could be upset or inhibited by an unwise word inside or outside Parliament.

Mr. Peart has a difficult task. Neither as Minister nor as friend (as he has more than once shown himself to be) would I wish his task to be harder. For this reason I have eliminated from my remarks to-day anything which could, even mistakenly, be taken as controversial. It is also more proper, in my view, to inform the House that if I am to show even the semblance of good manners towards the next place in which I am expected, I shall unfortunately have to leave before the noble Lord, Lord Beswick, winds up the debate. I must therefore beg his forgiveness in this respect.

This self-denial on my part does not make for a truly robust speech, but I hope I can carry into this House some of the measured and fundamental confidence which I feel myself. During Monday and Tuesday of this week I spoke in the Agricultural Committee in Brussels, and the spirit which governed those discussions (which I find is normally the case) was one of co-operation—which did not prevent special interests being deployed where they could be shown and accepted as genuine and reasonable. As an instance, I felt free, when the question of national quotas of beet was being debated—quotas based on the 1968–69 and 1972–73 crops—to point out, as did the noble Lord, Lord Champion, a minute or two ago, that this did not constitute for Britain an entirely satisfactory or even fair base.

The reason, as we said, was perfectly honourable in that our domestic crop had been restricted for a considerable period to enable us to fulfil our obligations under the Common Market Sugar Agreement. This was accepted in spirit clearly and explicitly by the Committee, and I think it may be reflected in future quotas. If it is, I have no doubt that more thanks will be owed to the influence of the noble Lord, Lord Champion, than to my own. On the other hand, I also stressed the essential need of the sugar-producing countries of the Commonwealth. I did this more for the sake of the Record than in argument, because there is a full recognition of this requirement within the Community.

The two Commissioners most closely concerned are Mr. Pierre Lardinois and Mr. Claude Cheysson. Having listened to and conversed with Mr. Lardinois over the past 19 months, I am aware, as we all are in the work of the Community, how deeply pledged he is to the honouring of Protocol 22 of the Treaty of Accession—that part which gave reassurance to those Commonwealth countries. Mr. Cheysson, who deals with matters concerning developing countries as a whole, is totally dedicated to their interests and to ensuring that the Community's duties are fulfilled to the maximum extent. Neither of these, as my noble friend, Lord Chelwood said in an earlier debate, could possibly be accounted "faceless", still less "soulless".

Knowing this as I do, I have been taken aback, especially during the last 36 hours, by so many constant declarations of mistrust in the intentions of the Community towards those countries and the constant reiterance that "nothing is signed". It is true enough that nothing is signed, but the Commission are negotiating on the basis of a continuance of the 1.4 million tons to be imported in the course of next year from the Commonwealth countries. This was made clear in July, 1973, and it has not been changed as an intention. The doubt lies not in the willingness of the Community to maintain the quota, but in the ability of the developing countries to fulfil it. It will be remembered that they failed by over 300,000 tons to fulfil it in the year just ended. However, it seems to me that it would be fatal at this juncture to juggle with possible figures, proportions and statistics, because these make a great deal of difference to the life of every individual in this country.

I have heard it stated, formidably enough, that the Community is unlikely to obtain more than a million tons of raw sugar from the Commonwealth countries, at the most. I have heard an estimate which brings the figure down to 600.000 tons. The fact is that we do not know: quantities and prices are still being negotiated. The aim of the Commission, in the face of what is recognised as an almost certainly serious sugar deficit, is that this deficit should be shared.

THE MINISTER OF STATE, DEPARTMENT OF INDUSTRY (LORD BESWICK)

My Lords, as the noble Lord will not be here, as he said, when I wind up, I wonder whether I might ask him this. He told us that he has put forward a case and is satisfied about the argument on price and quantity. But what about the duration of contract?

LORD SAINT OSWALD

My Lords, this is all being negotiated, as the noble Lord well knows. But what I am saying is that the will is there on the part of the Community. I must not claim too much for myself. This was pushing at an open door in the Agricultural Committee. I am not claiming that my eloquence has affected anybody's views.

LORD BESWICK

My Lords, am I to understand that the noble Lord's judgment is that the will is there on the part of the Community to enter into a long-term contract?

LORD SAINT OSWALD

My Lords, that is certainly the wish of the Community and it is backed up by the will of the Community. But the negotiations are still in progress and nobody—not even the noble Lord and, still less, I myself—can say what will emerge from these negotiations, because the negotiations are rendered more difficult by the present uncertainty which hangs over the duration of our membership of the Community. However, that is a matter that I do not wish to press this evening.

I have said that the aim is that this Community deficit should be shared; that is, that the "have-somes" should share with the "have-lesses". As Britain in the coming year will be the member of the Community with the most serious deficit—more than Italy and far more than the slight shortfall expected by Ireland—this represents a positive and immediate advantage for our coutry. What is most fortifying, if it can be maintained, is the good will which exists within the Community and which has practical expression, as I see it, in cases such as this. Long may that good will embrace our country, and long may it find a response.

6.39 p.m.

LORD SAINSBURY

My Lords, I should first declare an interest in that I am an adviser to a firm of retail distributors selling sugar. But I can assure your Lordships that this gives me no privileged or special position in regard to the purchase of a very scarce commodity. I should like to congratulate my noble friend Lord Champion and his colleagues on the thoroughness and deep thought that they gave to the problems which they had to consider. I am sure they will not mind my saying that the Report has been largely overtaken by events.

I should also like to say at this point that I shall be controversial and therefore will not be able to follow the example of the noble Lord, Lord Saint Oswald. I think that the position is so serious that it would be very hard to avoid being controversial. To talk of quotas, to talk of surpluses, in a situation of acute world shortages seems to me unreal. The fear of these shortages is indicated by the sugar futures market. December sugar was well above the figure mentioned by my noble friend Lord Champion. The top price of December sugar was £650 a ton yesterday. I do not for one moment claim to be an expert but I foresee a serious shortage of sugar during at least the first half of next year, and that fear is reflected in the market.

As I said in the speech that I made in the debate on the gracious Speech, Commonwealth sugar producers are no longer so dependent on sales to Great Britain. They have concluded sales with China, Venezuala, North Africa and North America. Not only has the situation of supply been serious through 1974, but the 1975 supplies are threatened by the current difficulties in the harvesting of European beet because of weather conditions. This bad weather for harvesting is also being experienced in the Eastern European bloc. They are already putting out feelers for sugar supplies in addition to the existing arrangements with Cuba. So in my opinion this all underlines the seriousness of the world supply of sugar for next year.

I very reluctantly criticise the Ministry of Agriculture, Fisheries and Food. I had a happy relationship with that Ministry over many years during the last war and immediately afterwards, as one of their retail advisers. But I say this definitely: the Ministry have been over-optimistic during 1974 that the sugar shortage in the retail shops in this country was going to be overcome within a matter of weeks. The sugar shortage, which practically every housewife in England can confirm, is still with us. The sugar shortage was created, according to Ministry statements, by panic buying and hoarding. Every housewife would say that they got it the wrong way round. The panic buying and hoarding—if there was any in any great way—was created by the shortage. They are optimistic about the prospects in 1975. In the opinion of experts, as I have already said, there is a danger of a real shortage of sugar in this country next year.

What is the Ministry going to do? It is not sufficient to say that during the course of one season you have as much sugar as in the previous season because anybody engaged in food distribution, with the movement of population during holiday times, et cetera, knows that unless you are going to have local shortages which start the run on sugar, you must have 100 per cent. plus and not 100 per cent. of the supplies that you had during the previous period. I cannot help feeling, as one who has repeatedly indicated in your Lordships' House his support for British membership of the European Economic Community, that it would have been very much more fortunate had the Minister of Agriculture been able to deal direct with the Commonwealth producers independent of the quotas and complex price arrangements by which we are bound.

However, other methods of coping with the shortage have to be found. Nobody wants rationing, especially in peacetime; but, going back to the lessons that some of us learned in the early days of the last war, it is essential to start rationing before the shortages arrive and not afterwards. I hope that in this very difficult situation that faces the Government, and particularly the Ministry of Agriculture, at the present time they will bear this in mind.

6.38 p.m.

EARL FERRERS

My Lords, the noble Lord, Lord Sainsbury, said that he was going to be controversial. I did not think he was controversial. I thought he spoke in exactly the way he thought, which was certainly of very great interest. We are most grateful to the noble Lord, Lord Champion, for having introduced the Report and for referring to the draft European Instruments to which it refers. They are indeed extremely important. It is our relationship with the European Community, both present and future, which has become so important of late, particularly for the supplies of sugar, and I want to use this opportunity mostly to ask the noble Lord, Lord Beswick, to clarify certain points.

I had a certain amount to say yesterday about sugar. As I explained then, the Minister is on a tight rope; he has to keep the refineries going, he has his obligations to the European Community, and he has to keep adequate supplies in the shops. All this is made worse by the fact that our Commonwealth Sugar Agreement comes to an end and the new Community agreements have to be started up at a time of a world sugar shortage. Therefore, it is very easy to try to blame either the European Community or the ending of the Commonwealth Sugar Agreement, when in fact a great deal of the trouble does not relate to either of those but to the world trade situation.

I do not want to embarrass the noble Lord, Lord Beswick, either. On the other hand, sugar is important and many words have been spoken about it, some doubtless accurate and some doubtless less accurate. I want to take this opportunity of asking him to be kind enough to clarify some of the points which are in doubt. The concern is really threefold. First, there is the shortage of sugar in the shops. That is of major public concern. Secondly, the refiners are concerned that they will not have enough sugar to keep refineries going after the end of the Commonwealth Sugar Agreement. The Agreement ends on December 31 and the supplies end in February. The third concern is where we are going to get our supplies from to fill our needs next year.

To take the first point, there is immediate concern about supplies of sugar in the shops. We hear of children being sent out and told not to come home until they have bought some sugar. We hear of sugar being sold in some shops only to people who have been prepared to purchase a pound's worth of goods—and that bears hardly on the old-age pensioners. We have the Christmas demand coming up, and of course when there is a shortage of sugar there comes a shortage of golden syrup. I would ask the noble Lord this question: Do the Government believe that stocks are adequate in this country at the moment, and if they are, why is is that they cannot be purchased? Can the Government give any assurance that there are adequate stocks and supplies to fill the needs of both housewives and manufacturing industries, especially at this time of the year when everyone is buying for the Christmas trade?

With regard to the second point, refiners have traditionally refined from the 1.7 million tons which have been supplied under the Commonwealth Sugar Agreement—1.4 million tons came from the Caribbean, and the other 300,000 tons came from Australia. We know that the 300,000 tons from Australia will not be forthcoming in future. But I think that what concerns the refiners is whether they will be able to obtain the 1.4 million tons from the Commonwealth Caribbean countries. Originally the doubt was whether the European Community would accept the 1.4 million tons, and great concern was expressed at the time because of our relationship with the Caribbean countries and about how we should press for this amount still to go through the Community. We got the famous aura à coeur in the Treaty arrangements. But, of course, the difference is considerable because at that time the price to the Caribbean countries was something around £64 a ton when the world price was £40 a ton. Now the doubt is whether the Caribbean countries will, in fact, sell to the Community the 1.4 million tons, even if they are prepared to take it at anything like the price at which the Community is at the moment purchasing, which as I understand it from the document is about £140 a ton. My understanding is that of the 1.4 million tons originally sent to us, and which it is hoped we would still be able to get by their selling to the European Community, only about 600,000 tons can actually be relied upon to be sold to the Community at anything like the price which the Community is offering at the moment.

My questions are therefore these. Where are the refineries to get the sugar from after February of next year when the shipments cease? Have any contractual arrangements been entered into for the supply of sugar to our refineries next year? If no contractual arrangements have been made by now, how do the Government expect the refineries to be in business in February, as it leaves only two months to buy sugar, load it, ship it and get it into the pipeline? In the present state of the world market this could prove to be an inadequate period, and it is certainly running things very fine indeed.

The third point relates to future supplies. The general impression when the Minister of Agriculture came back from Brussels was that the European Community had guaranteed to provide 200,000 tons of subsidised sugar to the United Kingdom. I should be grateful if the noble Lord, Lord Beswick, would clarify this very clearly, because my understanding is that the European Community have only guaranteed to earmark funds with which to subsidise 200,000 tons, but that companies in any member State of the European Community can bid for the subsidy. If that is so, then it is by no means assured that the United Kingdom will receive all of the subsidy or indeed any of it, or all of the sugar if there is any, or any of it. I should be grateful if the noble Lord would clarify that point, because it is an area of considerable misunderstanding. I would also ask him whether the 200,000 tons of sugar is physically there in the Community, or whether it is to be purchased on the world market, and also how the balance of the shortfall of our requirements is to be found—the balance of the shortfall is considerably more than 200,000 tons.

Am I also right in understanding that the subsidy is not to be paid for out of EEC funds direct, but is being paid for by selling forward on to the world market the anticipated surplus of next year's crop in the Community, which is not yet sown, and using the cash from that anticipated surplus to fund the subsidy? Is it a fact that the company, and indeed not the country, which purchases the sugar which is liable for subsidy has to fund the deal at world prices until the subsidy comes in from the Community? I am not criticising these arrangements; I am asking for clarification, because I think they are important. If during the current sugar year beginning in October of this year our requirements, both for what we consume and to replace our strategic stocks which have now been used up, are 2'9 million tons, am I right in believing that the only assured supplies are 600,000 tons from our current sugar beet crop and 600,000 tons from our Caribbean countries which used to supply under the Commonwealth Sugar Agreement? If that is so, that leaves a deficit of 1.7 million tons of sugar to be filled. If the Caribbean countries supplied all the 1.4 million tons to the Community, that would leave a deficit of 0.9 million tons. Where is this to be purchased from? Will it be from the Community or the world market?

My Lords, this is largely a question of price. The Commonwealth Sugar Agreement comes to an end in December and it is all too easy to say, "If we weren't in the Community all we would do is to carry on with the Commonwealth Sugar Agreement." I do not think it would have been nearly as easy as that, because circumstances are wholly different from what they were when the original Commonwealth Sugar Agreement was made, when there was a world surplus of sugar, and when there is now a world shortage. But I hope that the Minister will do his best not only to persuade the Community to take all the 1.4 million tons, but also to persuade the Caribbean countries to sell to the Community the 1.4 million tons. The shortage points to what I was trying to say yesterday: that there really is a substantial argument for the increase of our own British agriculture, and in particular British sugar. However, I am glad that the Minister achieved this improved quota, because I think that it will make a great deal of difference. But if we are going to produce not 900,000 tons, which is our normal amount, but the 1,500,000 tons which we could produce under the joint A and B quotas arranged by the Minister, this will mean a considerable increase in acreage and we shall have to increase both slicing capacity and factory capacity.

My Lords, at the end of all this may I say that the most important point is the need to complete negotiations urgently, whether they are with the European Community, with the Caribbean countries, or with the refining companies. The Government have a direct responsibility here. They must ensure that in one way or another sufficient sugar stocks come to this country. It is inadequate for companies and countries not to know where their stocks will come from, and it is inadequate also for the British public to be unsure of whether they will get the sugar that they require. In the profession of the noble Lord, Lord Sainsbury, I think there is a saying that if you have stocks amounting to 995 per cent. of demand you have a shortage; and if you have a shortage you need 150 per cent. of your requirements for six weeks in order to overcome it. I very much hope that the noble Lord, Lord Beswick, will be able to clarify some of those points, about which I am certainly concerned.

7.2 p.m.

LORD BESWICK

My Lords, may I join with those who have expressed their gratitude to my noble friend Lord Champion for the way in which he examined the sugar situation up to last August? I only wish that the clarity of that examination had been extended up to, say, half-past twelve to-day. Then, maybe, we could have saved the noble Earl from asking so many questions, because the Committee could possibly have explained it much more clearly than I can.

My Lords, may I comment first of all upon the three heads of policy implications on page 3 of the Report? The first is on imports of 1.4 million tons, and they should be metric tons of white sugar. The Government have re-affirmed this commitment to the developing Commonwealth, and have assured them that we shall seek a price of not less than £140 per ton f.o.b., the present price paid under the Commonwealth Sugar Agreement. This means a producer price of not less than this amount, to which has to be added the cost of freight and that of refining the raw sugar, which is about £50 per ton. We have emphasised the importance of an early decision on this question, and the urgency of it has been accepted by the Council. T hope that the necessary decisions will be taken at the November meetings, but this must mean that the Community is ready to be reasonably flexible about prices and other matters including, crucially, duration.

It is all very well giving a guarantee to developing countries that we shall accept 1.4 million tons, but of course they can sell those 1.4 million tons this year, and possibly next year, anywhere in the world market. What they are interested in, and what they were interested in before, is a guaranteed market over a period of years, and it is that stable market situation that we wrecked when we went into the Community. Therefore duration is crucial to the decisions that will have to be taken.

EARL FERRERS

My Lords, will the noble Lord explain what he means when he says that that stable market situation was wrecked when we went into the Community, because the stability would have come to an end, anyhow, on December 31?

LORD BESWICK

No, my Lords. The noble Lord, Lord Drumalbyn, will remember that this was a revolving agreement. The whole point of it was that it was renegotiated every five or seven years. It was stable in the sense that we were sure of supplies. Of course there were times of shortages and times of surpluses, but they always knew how much they were going to get, and they always accepted the fact that, although they sold under the market price one year, they might be selling at over the market price the following year. This gave a stability which was very valuable and, which we have lost.

I do not want to become involved in an argument over this, although I should like to go into the situation; but that was a fact. The noble Lord said that there is no point in talking about the CSA; the CSA is a thing of the past. However, I am saying (hat if you want your 1.4 million tons from the Commonwealth countries now, it is not only a question of price; it is not only a question of amounts; it is a question of the assurances given over a period of years, and unless that is accepted nothing else will follow. This is a matter which will be very much to the forefront of the discussions which we shall have in Brussels.

Secondly, on the question of limiting Community exports, the internal needs of the Community must be the first priority. World prices and shortages mean that the present is hardly a propititious time for meaningful negotiations on regulating the world market. But when that time comes there is no reason why the Community should not be willing to accept the same obligations as other developed communities, should the need arise, since the Community system of quotas means that production can readily be controlled from, one year to another.

Thirdly, on the internal régime we have secured agreement to a substantial increase in our own beet quotas for internal consumption within the Community from a maximum of 990,000 tons to one of just over 1.5 million tons, all of which attracts the full guaranteed price. Thus, the element of discrimination against the new member States that was inherent in the Commission's original proposals has now been removed. We have also expressed our intention to move to full Community prices from January 1, 1975, as a further step to encourage farmers to sow this valuable crop. In these respects, therefore, substantial progress has been achieved since the Committee reported.

However, as I have indicated, much remains to be settled—not only the arrangements to be made with the developing producers, but also the detailed arrangements to ensure that the sugar can be bought and processed in the most efficient and economical way. This means that the cane refineries, particularly those in this country, can be certain that they will get cane sugar. Therefore we are determined to press at Brussels for a substantial proportion of these imports to be reserved for these refineries, as in the Commission's original proposals. This, we believe, is essential to protect employment and investment in this important industry which, unlike the beet industry, is geared to a continuous process of production.

My Lords, the question of the Community's scheme for subsidising 200,000 tons of imports from the world market was raised by the noble Earl, and he asked me what was the position. What we have secured is a commitment from the Council to take whatever steps are necessary to make good the Community's deficit in the coming year. The subsidy will have exactly the same claim on the Community's funds—that is on FEOCA—as any other item and there will be no fixed ceiling on expenditure.

The noble Earl asked about setting the loss of one year against the profits of the next. No doubt that will be a balancing factor, but the point is that the Community have agreed that the sugar can be bought in the world market at world market prices and made available to Community countries at Community prices. This is an enormous guarantee and I can only assume that they understand what they have committed themselves to; but this is the way in which the Community are proposing to work. I have tried to understand the technical details with the aid of charts on a piece of paper; I think I possibly understand it, but I cannot hope to talk about it in this House, and in any case, as I have said, the details still have to be worked out. It is a novel and an experimental scheme and there will need to be considerable adjustments.

LORD GEORGE-BROWN

My Lords, I am not quite clear what my noble friend means by "a noble and experimental scheme". When he was the Co-operative and Labour Member of Parliament for Uxbridge and I was the Under-Secretary of State at the Ministry of Agriculture I well remember the vigorous opposition he put up to our growing beet sugar in England, and I well remember on one particular occasion he said to me, "You can grow pineapples anywhere if you want to pay the money". Do I really understand that he is saying that the argument for the EEC is that even he, the ex-Co-operative and Labour Member of Parliament for Uxbridge, now accepts that there is a way by which our farmers can make a living?

LORD BESWICK

My Lords, I did not say it was a "noble" scheme; I said it was a novel and experimental scheme. I said that the details still had to be worked out and that I was not capable of explaining the possible details over the Floor of the House. But I should be very happy to have further discussions with the noble Earl about this.

EARL FERRERS

My Lords, may I ask the noble Lord about just one point which is important. Am I right in believing that it is the subsidy which can be bid for by other members of the Community?—in other words, if they bid for it they will get the subsidy which will not come to Britain. Or is it a guarantee that we will have 200,000 tons, all of which will be subsidised to this country?

LORD BESWICK

My Lords, it is not quite like that. Bidding does come into it but it is a bid by an importer. He may be of one nationality or of another; he may be a French importer who may distribute the sugar in this country. It is a bid by an importer who then has to secure this amount of sugar in the world markets. If he can secure this amount of sugar in the world markets it does not matter what the price is; the Community is prepared to pay to him the difference between the world market price and the Community price. That is the way in which it is hoped the scheme will work out; but, as I have said, the details of this very complicated scheme still have to be decided.

LORD GEORGE-BROWN

My Lords, will my noble friend forgive me once more. He said he was willing to discuss this with the noble Earl opposite. But with great respect, is he willing to discuss it with some noble Lords on this side of the House as well? Some of us understand and know about it, and there is no very special reason why he should do it in a cosy way with the noble Earl opposite.

LORD BESWICK

My Lords, I am quite prepared to discuss anything with my noble friend. All I am saying about the "nuts and bolts" of this subject is that they are very complicated, and if we are to have a proper and useful discussion on this, quite honestly I would prefer to have advisers with me. If my noble friend Lord George-Brown wants to come in on this I am quite happy to have him with us, but these are the "nuts and bolts" of the details of the machinery. So far as the principle is concerned, that is quite clear. The Community has said it is prepared to guarantee that the price that has to be paid in the world markets will be met by them as between the Community price and the world market price. The fact that these deals are done over a period of years and that next year there may be a lower price which would be offset against this year's higher price is a matter for very detailed arrangement, the details of which I find it difficult to put over on the Floor of the House. Does that satisfy the noble Lord?

LORD DRUMALBYN

My Lords, I am sorry to interrupt the noble Lord, but may I ask him one question. Is he now speaking about the period between the present and the time when the document we are now discussing will come into force? Is this an interim willingness to guarantee the difference in price during that period? Is that right?

LORD BESWICK

My Lords, this arrangement is in force and contracts are now being urgently sought. The machinery is now in operation. My noble friend Lord Sainsbury suggested that we were in error for not setting up the apparatus of rationing. Of course he is absolutely right when he says that the countries of the Commonwealth Sugar Agreement are now no longer able to supply us with sugar because they have made contracts with the American continent. I accept that, but I must remind him that they have made these contracts with the American markets because the old traditional market here was not guaranteed and they were able to get these very high prices at the present time.

But that being so, and there being this abnormally high demand at the present time, does not necessarily mean that we should be justified in setting up the apparatus of rationing. The noble Lord says that if we are to stop panic buying we should have 110 per cent. of supplies. I am advised that since October in the United Kingdom there have indeed been 100 per cent. plus of available supplies. That is the situation, and one can say that rather than an absolute shortage there is an abnormally high demand, and if one of our most important refiners and if the adviser to one of our most important retailers paints a picture of shortage then of course little children will rush out to get supplies wherever they can and this abnormally high demand will be created.

But I must emphasise that the Community has committed itself to making good shortfalls in supplies by buying on the world market regardless of quantity and regardless of cost. This may not be the most sensible way of doing business, but that is the undertaking that they have given. Moreover, we have still to conclude negotiations with the Protocol 22 countries, supplies from which play such an important role in making up the total. Therefore the Government would not regard rationing as being appropriate in the present circumstances.

I understand that my right honourable friend the Foreign Secretary as well as my right honourable friend the Minister of Agriculture will be going to Brussels to discuss these matters. The urgency emphasised quite rightly by the noble Earl is accepted by them. That sense of urgency in getting agreement in Brussels will be emphasised by the British representatives there. One would hope that they would be able to come back with a sense of security in supplies which would damp down the present abnormal demand. More than that I am afraid I am unable to say this afternoon.

EARL FERRERS

My Lords, may I put one point to the noble Lord about which I am still concerned? I asked today, and I asked yesterday, whether in fact subsidised sugar will come to this country, or whether it is a subsidy for which any member country can bid. I asked this question yesterday, and I gave the noble Lord notice that I would ask it. I do not think he has yet replied to it. Would he be kind enough either to let me know the answer by letter, or should I put down a Question?

LORD BESWICK

My Lords, I am sorry if I appeared not to answer the question. This subsidy is committted to the total supply for the total Community demand, of which we are a part. I cannot follow the fears of the noble Earl in this regard. As a member of the Community, the United Kingdom is guaranteed her share of sugar at this guaranteed price.

LORD CHAMPION

My Lords, no shafts have been aimed at the sub-committee, and I have therefore nothing to reply to. All I have to do is to thank those who have spoken warmly of the Report of the Committee. I hope that the Motion will now be carried.

On Question, Motion agreed to.