§ 6.30 p.m.
§ Lord RAGLAN rose to move, That this House takes note of the Fifteenth Report of the European Communities Committee on the EEC Farm Prices Review 1976–77 and on High Yielding Wheats (R/2020/75 and R/2021/75), and on Marketing of Agricultural Products (R/2157/75), and the Eighth Report on Milk Fats (R/1944/75 and R/1991/75). The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. In introducing these Reports I want first to pay tribute to members of your Lordships' Sub-Committee D. We are, I am sure, getting better at coping with a steady stream of proposed regulations from Brussels, but they are often so fast-moving, and touch upon so many different specific problems about which the Committee has to obtain quick and detailed knowledge, that at times we have been boggled (I should say that I am speaking for myself) with the volume of evidence, and occasionally puzzled by the complexity of the issues. That this is not in the end shown in our Reports is due to the fact that the members of the Committee have given generously of their time, even at short notice, arid, undismayed, have continually risen to the challenge.1483
§ I should also like to thank your Lordships' small and hard-worked secretariat for all their help and guidance, and offer my own special thanks to our specialist adviser, Professor Josling, whose vast knowledge of agricultural economics and of the working of the Common Agricultural Policy has been invaluable to us. I am also most grateful for the co-operation which we have had from the Ministry of Agriculture, Fisheries and Food, who, often under difficulties, bring out their translations and explanatory memoranda very quickly and in good, comprehensible English. I think that in our turn, both in our Reports and in our taking of evidence from diverse organisations and specialists, we have been of help to them. In all our activities we feel the presence of the chairman of the Select Committee, the noble Baroness, Lady Tweedsmuir. We who work with her marvel at what she gets through, and are continually filled with admiration for her sure and sympathetic touch.
§ My Lords, the first part of the Fifteenth Report, which is before your Lordships, contains our comments on this year's EEC farm price proposals. There are two main points to which I wish to advert here. The first is the 1 million or so tons of surplus skimmed milk powder, which is also referred to in our Eighth Report. I am certain that we should always plan for a surplus of agricultural production, and many times in past debates I have declared as much. This is our insurance against lean years. If it were all left to the law of supply and demand, we would be very erratically provided for, with prices sky-high one year and absurdly low the next. Agricultural produce is particularly sensitive to market supply, mainly because it is so bulky and perishable. A small surplus, and nobody wants it: a small shortage, or threat of a shortage, and prices rise beyond all reason. The market must be managed for a surplus to prevent producers going broke one year and consumers going without the next and in an organisation which is as large as the Community, what appears to be a huge surplus can in fact represent only a tiny proportion of total production. So it is important that we always keep this surplus in perspective.1484
§ In the case of skimmed milk powder, however, the 1 million tons or so surplus represents a large proportion of production. This is quite unofficial, but using my own mathematics applied to available figures, I reckon that the 1 million tons surplus of skimmed milk powder, which is a cumulative total over several years, represents 4 per cent., perhaps 5 per cent., of total Community production of liquid milk over these years, which is too large. Dried milk skim is often, of course, termed a by-product of butter and cheese production. I think it would be better called a co-product; but the fact is that there is a surplus of butter, and for that reason the Commission has been pressing us to abrogate our contractual treaty with New Zealand for the importation of butter—and we refer to that in paragraph 5. My guess that the Community is now producing 4 per cent. or 5 per cent. too much milk appears to be confirmed by the figures of Community liquid milk consumption, which has dropped by about 4 per cent. this year. That is a verified figure. The Commission is trying to tackle this surplus by all sorts of means, like school milk subsidies and exporting dried milk, and under its new principle of consumer co-responsibility which was propounded in May last year it is insisting that animal feed should contain a proportion of dried milk.
§ Now, though, as an extraordinary measure, and lumped in at the last minute with these price proposals, is a proposition which the Committee believe to be quite unworkable and which we refer to in paragraph 7. It is to deter smaller farms—and "smaller farms" we calculate to be those which have 29 cows or less—from delivering milk which they produce. The Committee believe that the best answer to the reduction in milk consumption is to promote the sales of liquid milk, which has been done very successfully in this country by the Milk Marketing Board and which it seems to us could be done in other EEC countries if the producers were better organised.
§ My Lords, the only other matter in this first part of the Report which I think I have time to speak to at the moment is that of the beef premia, which is referred to in paragraph 9. It is, of course, in the interests both of producers and of consumers that beef producers are assured 1485 against market collapse. Much pressure has been put on our Minister to abandon the system of premia which we obtained in 1973 after prices dropped disastrously owing to the relatively insensitive working of the intervention system. The Commission thinks that because the market is now firm the use of intervention is unlikely; but, if intervention is unlikely, why, we ask, abolish the premia, which at present are costing nothing and yet remain as an assurance against another possible and unpredictable collapse of confidence? I hope your Lordships will give your support to our Minister in Brussels in his efforts to retain the beef premia system.
§ One more point which I think will be of particular interest is that we are, as your Lordships know, taking another transitional step this year to align our prices with the rest of the EEC. I am told that its implications have been swallowed up in greater rises and other inflations, and the estimated effect of both this and last year's transitional steps will be adding only 1 per cent. to consumer prices. For those of your Lordships who may be confused by the Community jargon such as "guide price", "reference price", "support price", "intervention price" and so on, may I commend the minutes of evidence taken from Mr. Williamson, of the Ministry of Agriculture, Fisheries and Food, and published as an appendix? At the beginning of his evidence your Lordships will find what amounts to a glossary of these terms given, as I may say was the whole of Mr. Williamson's evidence, very clearly and concisely.
§ With regard to the next Report on marketing proposals, the Committee have taken a lot of evidence and have questioned at length the head of the Central Council for Agricultural Co-operation, Mr. John Morley. This is a very big subject. It is fundamental to the whole structure of a Common Agricultural Policy and we feel at the moment that the Committee can only comment generally on the proposals. Some of them relate to the financial control of the budget, about which the Committee will be taking more evidence at a later date. I should like to endorse the Committee's commendation of the admirable document on Community marketing by Mr. Ralph Howell, MP, which shows what 1486 a long way the Community has to go in this respect.
§ Our Report on wheat suitable for breadmaking reduces the complicated problem to the simplest terms possible, but those of your Lordships who are interested in the subject will be greatly helped by reading the evidence beginning at page 29. At first, one could not imagine that such a prosaic subject could be so fascinating; but it reads like a detective story—and our solution is to be found at the foot of page 11and at the top of page 12 of our Report. Our commendation has been conveyed to the Agricultural Commissioner Mr. Lardinois by my noble friend Lord Walston who is a member of our Committee. Our conclusion is nearly the same as that which was reached by the Commission itself except that the Sub-Committee are recommending that wheat used for breadmaking should be allowed to command its own premium in the market, without a reference price or other kinds of support prices, rather in the way that malting barley does at the present time.
§ We learned that countries had very different ideas on what types of wheat were suitable for making bread. British-type bread is not made from the same kind of wheat as French-type bread. Moreover, one variety—for example, the famous Mans Huntsman—sometimes produces samples suitable for making British-type bread and sometimes, when grown in other areas under different conditions, it does not produce the right kind of grain. We found that there was no quick test which would detect the difference. In other words, for breadmaking wheat there are differences of criteria throughout the Community and difficulties of testing against these criteria. It is the opinion of the Committee that if the intervention price of wheat were lowered to reduce the risk of a surplus expensively bought, various agencies would, or should, combine to initiate a scheme to promote more orderly marketing of wheat suitable for breadmaking, including the setting of adequate premia.
§ In this country the Home Grown Cereal Authority are on their way to designing such a scheme. If they can get going, it would be helpful to the balance of payments of this country with North America. Working against the inclusion of more homegrown grain in home-made 1487 bread in the United Kingdom, is not only this lack of homogeneity in homegrown lots, of which we heard evidence, but the fact that since the milling trade has grown up on the use of imported grain, the mills are themselves concentrated at the ports and it is simply much more convenient for the millers to import shiploads of suitable grain than to fiddle about with a multiplicity of homegrown lots, relatively small ones, on offer at home. If the Home Grown Cereal Authority can encourage an orderly home market, producing what the millers require, it seems to me that they would be performing a very valuable function. One last point impressed on us from the evidence submitted is that if in future any new grain régime is instituted by the EEC, we must be mindful of the people who grow and market the seed required as they cannot switch from growing one variety to growing another in under about two years.
§ My Lords, not least of the benefits which have accrued from the establishment of the Sub-Committee is that there are now a number of Peers who are kept exceptionally well informed about the Common Agricultural Policy and about what goes on in Brussels. Certainly, I, myself, am very conscious of continuously being educated in all sorts of agricultural matters. In turn, there are two short but important observations which I wish to make on the working of the system, of which we have been made particularly aware as a Committee. We have the opportunity of scrutinising the price proposals before they are decided, which Parliament never had the chance to do in years gone by under the old British system; under the EEC we have a more open type of government. But it would greatly help effective scrutiny if fewer proposals were rushed through and if they were not bunched together as they sometimes are. We, as a Committee, had very little time to consider price proposals and have done as well as we have only because our specialist adviser managed to get hold of half a copy of the French version. The English language translation, in spite of supreme efforts by our own Ministry, came out a whole month after the French. It seems to us, in conclusion, that, granted that the CAP is a very complicated thing to run, it could do with some oil applied 1488 to the machinery in certain places. My Lords, I beg to move.
§ Moved, That this House takes note of the Fifteenth Report of the European Communities Committee on the EEC Farm Prices Review 1976–77 and on High Yielding Wheats (R/2020/75 and R/2021/75), and on Marketing of Agricultural Products (R/2157/75), and the Eighth Report on Milk Fats (R /1944/ 75 and R/1991/75).—(Lord Raglan.)
§ 6.48 p.m.
§ Lord SANDYS
My Lords, I think that the House owes the noble Lord, Lord Raglan, a great debt of gratitude for introducing this debate this afternoon with such enormous skill. It reflects not only the skill of his Committee but the great expertise developed over the last two years by the noble Baroness, Lady Tweedsmuir, and her colleagues in digesting the volume and complexity of European Community regulations and proposals. To follow what the noble Lord, Lord Raglan, has said in regard to the production of documents, I should like first to reinforce what he said in going over the timetable, because your Lordships may not be aware that the proposals on price levels for CAP products—the English document R/166/75—were published only on 13th January. The document came to Westminster on 16th January. It is before us today, will be debated in another place next week, I believe, and it will be debated in the European Parliament on 10th February. It will be discussed in the Council of Ministers between the 16th and 18th February, and their resolution will be published around the 19th or 20th of this month. This is a helter-skelter programme and it is, we are told, necessary; nevertheless, I think it is most commendable that the scrutiny has been carried out with such skill and expertise by the Committee of your Lordships' House under such very great pressures of time and lack of documentation.
My Lords, this is inevitably a two-stage review. So far as the products not subject to CAP are concerned—that is, potatoes, wool, et cetera—there will be a British Price Review around 14th and 15th February. For the products with which we are concerned in the discussion today publication will be around 19th or 20th February.
1489 The noble Lord, Lord Raglan, referred to the beef premia, and suggested your Lordships should support the Minister. I am sure your Lordships are of one mind about this, and perhaps I could quote Sir Henry Plumb of the National Farmers' Union in what he said in answer to the question:Why do you support the Minister in his efforts to keep variable premiums?Sir Henry Plumb replied:I think their workability and flexibility have been demonstrated in the United Kingdom in the past year, and that they have played a central part in restoring confidence in the meat sector".Could you have a more direct statement of confidence in what the Minister is doing at the present moment regarding the beef premia?
So far as prices are concerned, we are under some difficulty here. COPA (the co-operative organisation of European farmers) recommended rises of 10 per cent. at least; but we have the following target prices (and I regret I have to quote some percentages): wheat, a rise of 9.5 per cent.; barley, a rise of 9 per cent.; sugar, a rise of 8 per cent.; milk, a two-stage rise of 2 per cent. and 4.5 per cent.; beef, a rise of 8 per cent.; and pig meat, a rise of 8.5 per cent. It does not measure up in the present prices to anything like what the COPA hoped it would.
Perhaps the most useful role of this debate is that it provides the opportunity to stocktake the Government's own White Paper Food from our own Resources (Cmnd. 6020) as published last April. Paragraph 50 gives the "projection of higher output by 1980"giving a pattern of continuous growth of the agriculture industry of about 2½ per cent. per year, and Table 2 on page 15 of the White Paper refers to this paragraph. But what is the harsh reality? Total agricultural production— as your Lordships may be only too well aware—has fallen by about 6 per cent. or 7 per cent. It is difficult to determine to what extent the wet spring of 1975—which prevented timely drilling—and the hot summer—which created fodder problems and reduced yields—contributed towards this. However, one is at the same time well aware that the exceptionally mild autumn helped to ease the fodder situation and greatly helped in the problem regarding stock.
1490 In paragraph 23 of the White Paper we read:If farmers are to invest in expansion, they need a degree of assurance about their future returns.What do we find, my Lords? In the year 30thSeptember 1974 to 30th September 1975, there was a 41 per cent. decline in the number of applications for capital grants, representing a substantial drop in investment in fixed equipment. We may attribute this to various causes: one would clearly be the lack of confidence; another, almost certainly the delay factor in the handling of applications, and the rate of inflation running at a higher rate than the grant. As your Lordships will remember, the rate of the grant on fixed equipment was reduced to about 20 per cent., and this was no doubt reflected in the lack of interest which farmers have shown.
But to come to the nub of the matter, the lack of expansion in agriculture may be set towards a cleavage in the Government's mind between their desire—which we heartily endorse—to improve farm production, and their equal and opposite desire, through their fiscal policies, to extract cash. These are two so diametrically opposite desires, although at least to some extent outside the precise wording of these documents we have before us, that we must lay some stress upon them. This really lies at the heart of the dilemma of the industry. The NFU policy on this is quite simple. They have said:The taxes we pay must be related fairly to what we earn. They must not destroy our productive assets or our earning potential".Could there be a fairer point of view?
There is no doubt that this is going to continue until such time as the Government issue their proposals regarding wealth tax. There will not be the degree of investment which the industry needs until we know what is to be proposed. At the same time, the Government's proposals on capital transfer tax have made a real difference to farmers in what they consider to be the likely future for the next 10 to 15 years. The centre of so many difficulties of individual farmers is how they see the world in 1985–86, rather than simply in terms of this year's production.
My Lords, I am not going to make a long speech because my noble friend Lord 1491 Vernon is a much better versed member of the Agricultural Committee than I. It is an important factor that no less than three members of the Scrutiny Committee are contributing in this debate. I note that the noble Lord, Lord Mackie of Benshie, has beside him a prodigious pile of documents. While I hope this does not suggest he is going to make an excessively long speech, it indicates the amount of paper that we are attempting to consider. My Lords, I commend the fact that the noble Lord, Lord Raglan, brought this issue before us; it is timely that he should have done so.
§ 6.58 p.m.
§ Lord MACKIE of BENSHIE
My Lords, although I agree with what the noble Lord, Lord Sandys, has said about the taxation factor, I am going to confine myself to the job I greatly enjoyed, the scrutiny of the papers and proposals coming out of the Commission under the chairmanship of the noble Lord, Lord Raglan, and the close supervision of the noble Baroness, Lady Tweedsmuir of Belhelvie. It has been extremely interesting and rather complicated. I see signs of sense appearing in some of the documents which we received, and the Committee have striven to introduce some simplicity into our thinking which has been transmitted to Brussels. This may be because we are simple people; but these matters needed simplifying.
Regarding the proposals for wheat, we thought a great many complications were entirely unnecessary; we thought a lot of political angles had entered into the proposals from the Commission for a separate set of premia regarding wheat for bread-making. We thought the traditional French regard for the "noble grain", which they held above everything else, had come into the matter. Therefore we had a good, hard look and we listened to a great deal of evidence, as the noble Lord, Lord Raglan, said. Eventually we came out with the sensible suggestion that we could not do anything to stop farmers from growing the new wheat which could produce some very large quantities of grain required in this country for feeding animals, if it was not suitable for feeding to humans in the form of bread. And we noted that our millers who used to bring in the grain straight from the prairies, the 1492 No. 1 Manitobas and so on. were willing to pay a very large premium for this.
It was quite obvious that since the war, as techniques improved, they have been using more and more home-grown wheat and this was saving them a great deal of money—because on one particular day the chairman of the Committee and I looked at the price of No. 1 Manitobas, and it was £96 a tonne, whereas the price of home-grown wheat was £67, or some such figure. We thought that if they could do that for wheat off the plains of Canada they could do that for more suitable home-grown wheat and still save themselves a great deal of money. The simplicity of putting in a bottom price and leaving it to the market to pay the premium, we regarded as right and proper, and there is every sign that the Commission are thinking the same way. As a pointer to the common sense of this view, I can say that Maris Huntsman—your Lordships may not know the name —is one of the new wheats of which many farmers are growing four tonnes an acre in this country today—and a very good crop in the past has been considered to be three tonnes. So this proposal is excellent and can save a great deal of money in imports to this country.
Referring to the Price Review, I should like to talk about the price of milk. It appears that as a result of their stocktaking the Common Market have started a review of the whole of the Common Agricultural Policy and to look at prices in relation not only to supply and demand in the Market but also to the competence of a number of farms to which they refer. This appears to us to be sensible, but we do not think that the process has gone very far. It is very curious that although the rate of increase in the price of milk has been lowered in the CAP proposals, it is going up a bit in spite of the fact that it is the commodity most in surplus in the Community at the present time.
We think that the Commission must now begin to think in terms of using the price mechanism where a commodity is in too great a surplus. But in saying this, we also appreciate that there must be a surplus if we are to avoid the situation we have today in this country regarding the potato. If you want to have level prices you must pay for a surplus; and, as I have said many times, that surplus 1493 is not too expensive. The whole of the Commission's budget for the support of agriculture is £2,500 million, and we ourselves in this country at the end of the war, when the pound was worth a great deal more, were spending nearly £500 million in subsidies for food in these Islands alone. So I do not think we should get this out of perspective.
The rate of increase in the countries of the Six is disguised in this country because of the "green pound", or by the deliberate reduction of our prices because of the rate of exchange as against the unit of account. I think that as regards milk we must be very careful over Community legislation. The noble Lord, Lord Raglan, has already referred to the regulation and the offer of help to farmers who might well have up to 29 cows and may go out of business—an offer that could go up to £6,000 as a bribe to go out of business. At the present moment we are getting a distortion between the main countries of Europe and this country. In fact, we are a much more suitable dairying country and our farmers are getting something like 10 per cent. less for their milk, and the Continent is going to rise again. Therefore we must be very careful to reject this proposal applying to this country. My noble friend Lord Lloyd of Kilgerran is particularly perturbed at the effect of this on the small farmers in Wales who are producing milk very efficiently from 30 cows. If they were to go out of business he thinks it would be very upsetting for the whole economy. Our recommendation there is, I think, very sound; and the sooner we are on all-square terms with the rest of Europe on pricing the sooner' we shall achieve one of the objectives of the Community—that is, the production of food where it is most suitably achieved, in the case of milk.
I do not wish to prolong my speech unduly, but there is one important point which goes far beyond the specific proposals which are before us for the improvement of marketing and processing. There is a long document, and a very large number of comments upon it. These proposals are made by the Commission for the improvement of marketing and processing, and in the main they set out a number of criteria which simply express a very wide range of methods for obtaining grants and they set out a number of other conditions, one of 1494 which is that approval and a grant must be obtained from the member country. It goes on at great length and contains a number of very interesting things. I should like to refer at this point to the grave danger of appalling and increasing bureaucracy. I may say to the noble Lord, Lord Sandys, that the reason why I have brought such a great pile of documents with me is not that I wish to speak about all of them, but I should like your Lordships to observe that this is the amount of literature I have accumulated in three months on one Sub-Committee of your Lordships' House, examining EEC regulations. I have spent my life on various committees, and never before has such a glorious accumulation of "bumf" come my way. I think a great deal of money is being wasted because of this.
I have friends who have received FEOGA grants for improvements in Scotland, and they have been very glad to get them; but they have regarded them as a bonus. They have made their plans for an improvement or project, applied for grants and got permission here, and then applied to the EEC. All their financing plans were done in the hope of getting the EEC grant, although they did not care whether or not they got the grant. But, of course, they liked it if they got it.
There are many things wrong with the present set-up, and one of them is the amount of time involved. I should like to read from Article 13 of the Proposals, which says:Applications for aid from the farm shall be submitted to the Commission each year before the 1st October. The Commission shall decide on the merits of such applications before the 31st December the following year.This is not planning. How can you plan for this amount of time before you decide on a project? It can only be a bonus with that sort of nonsense going on. I think that, as a major item of policy, this country should try to put the view that the Commission in Brussels should be a sort of "Monty's caravan headquarters" and not the source of money and grants or a place where we are creating an enormous bureaucracy.
Our own Ministry of Agriculture is rather efficient, and I see no reason why the administration of policy decisions taken in Brussels should not be supervised by our own competent civil servants in 1495 this country, because at the present moment the FEOGA grants are a bonus and they are not helping production one little bit. That is the major point which I am contributing to this discussion, as a member of this Committee. It is a point far beyond our remit, but it deserves the attention of this House.
§ 7.10 p.m.
§ Lord DAVIES of LEEK
My Lords, the House is indebted to the noble Lord, Lord Raglan, for introducing this Motion. Certainly, I am indebted to all the speakers who are practising farming and know what they are talking about. But at last, thank Heaven!, people are beginning to realise that some of us who pointed to the bureaucracy before we went into the Common Market, and some of us who had been to Brussels 10 or 11 times to try to understand, had foreseen the difficulties. The noble Lord, Lord Mackie of Benshie, paid tribute to our Ministry of Agriculture. I think the work of that Ministry stands out as some of the best in the world, and I truly believe that, whatever the criticism of small farmers and others.
I had the privilege for 26 or 27 years of representing a constituency with 3,000 small farms. They were marginal, up on the contour line and, on average, were at about 600 ft. It is a little ambiguous talking about the "small farmer", because many of them have the stature of the noble Lord, Lord Mackie. They were not small by any means, but their acreage was small. They really worked and earned what money they got, as I knew because I saw many of their bank accounts when I went to their aid.
I am sorry that this debate is so late, but because of that I will try to spoke-shave my speech and make it not too long. I also want to pay tribute to the noble Baroness, Lady Tweedsmuir of Belhelvie, who is helping us more and more to understand the operations—I was going to use the ugly word "machinations", but that would not be fair—at Brussels. I thank her for the Reports from these Committees, which I try to read among all the other stuff. I have given up the ghost, as regards going to the Printed Paper Office and getting the papers sent to me, because my wife threatened to leave me if the place got in a bigger mess and made more work for the poor girl who 1496 comes in to clean up. I reached the point where I had more of these papers during the Christmas period than I had letters and cards.
I said that jocularly, but the documentation is beyond human endurance to follow. It is the apotheosis of bureaucracy and, with that and the divine right of computers in the world in which we live today, the ordinary flesh and blood human being is unable to swim through the flood of material that is put before us. I think that the British Price Review was evolved, after years and years of give and take, on a non-political basis and we understood it. We have now ruined that edifice. We have the example of a farmer putting in an application in October and getting a reply 12 months or more later. There can be no planning on that basis.
I should now like to talk about something which has been my bête noire all my life. The English in this Report is pedantic and terrible. I can imagine a poor little British farmer reading this:The major policy change suggested for the butter market is to increase the maximum FEOGA".When I first looked at that—and I speak Welsh among other things—I asked myself: what is FEOGA? I know what it is now, because I take the trouble to find out. It is another of these damned acronyms. I am putting this on the record. I found these words:FEOGA represents the French acronym for European Agriculural Guidance and Guarantee Fund.There should be a dictionary of acronyms used in EEC Reports. They become loaded with acronyms and lose their substance.
Paragraph 7 states:The Commission has outlined 'a conversion plan',I remember conversion plans when I was a small boy; we used to have evangelists, because we Welsh were always being converted—for 'small' dairy farms.This does not mean conversion at all. If we are not careful, the man with a small acreage will disappear and a farmer of the magnitude of the noble Lord, Lord Mackie of Benshie, who knows what he is talking about and has six strapping sons whom he is looking to start off in farming, will not be able 1497 to find any little farms. In other words, we shall have the disappearance of one of the most hardworking contributors to British agriculture. I am not weeping for him. He does not want us to weep; he is fit and strong and willing to work.
It is all very well for people to say things like that in Brussels, when they are sitting in their swivel chairs; and that is swivel chair agriculture, as opposed to speeding the plough with the flesh, blood and muscle of young men who are willing in farming to pit their understanding and strength against nature. Just as we are losing miners, we shall lose people who will develop not in universities or colleges of agriculture, but through struggling with nature, trying to bend nature to the service of man. We shall lose young men who are willing to do that in summer, in winter and in all seasons, if we follow such things as these conversion plans. I have taken six minutes so far, and I propose to take 10. But I believe that the whole machine is cumbersome.
I come now to milk expansion. Today, I cannot get an honest-to-God ice-cream cone. Sometimes I get a few kids around when I am cutting my hedges, and they offer to do it for me. I know that it will cost me ten times more in ice-cream than if I pay a man to do a proper job, but they ask whether they can help. I tried one of the ice-creams but it was nothing like they used to be. Even the food we eat, with its percentages of first class contents, is worked out by bureaucrats sitting in swivel chairs. You do not create gladiators by giving them ice-cream cones based on skimmed milk, and without the real fats and other goods that should go in. Consequently —the nation has voted, so it is my duty to try to make a "go" of it—I hope that those who know what they are talking about in agriculture will stick to their last, mixing my metaphors, and see that some common sense is put into the Common Agriculture Policy which, at the moment, is a failure.
I shall not go into the absurd story of mountains of butter, Himalayas of beef and Lake Superiors of wine, but in 1931 —and I had to struggle through that year —I saw the misery, poverty and disease. They used to pray in the churches for God to help them not to be so wicked as to waste food. We now have the econo- 1498 mists justifying the destruction of surpluses, and what do we do? I hear everybody talking about the menace of the Soviet Union, especially in supplementary questions, yet we sell the Soviet Union fresh butter, good milk and best beef cheaper than we ourselves can buy it, so as to get rid of our surpluses. How daft can mankind become? This is a fact.
I may say, "Ah, this is the Common Market struggling to find the answers". Well, this is not the way to struggle to find the answers. As somebody who always reads with interest the reports of the International Wheat Council, I was going to ask (although my noble friend on the Front Bench has been kind enough to tell me that we are not now importing any wheat from Australia) whether the reopening of the Suez Canal will do anything to cheapen agricultural prices inside the EEC, and whether it will have any effect upon them. But nothing seems to come to us through the Suez Canal these days. Finally, in the Maritime Agreement which was made despite our talks, the United States and the USSR have agreed that for six years from January 1976 one-third of the grain is to be carried in American ships to the Soviet Union at 16 dollars a tonne.
I have one small question and then I will sit down, because the 10 minutes are showing on the geiger counter! Have we in the EEC any policy about freightage for agricultural products, about shipping from overseas or about importing and exporting? Has this problem of world freightage and its cost been discussed? Apart from that, it would be remiss of me to be pontifical or didactic since I do not possess the expertise of the noble Lord, Lord Vernon, who is to follow me. All I want to do is to say that I think this debate has been worthwhile and to pay tribute to the Committee for bringing this Report to the House.
§ 7.22 p.m.
§ Lord VERNON
My Lords, I am not sure that I am going to be didactic, but all of us who are interested, as I am, in the concept of European unity, with ultimately monetary union and a unified defence and foreign policy, are desperately anxious that the CAP should work, and I believe that we should play our part in 1499 trying to help that policy to work. In saying that, I go along entirely with what has been said by the noble Lord, Lord Davies of Leek, and the noble Lord, Lord Mackie of Benshie, about the bureaucracy and the amount of paper which pours out of Brussels and which it is really almost impossible to digest. We are having this debate tonight—one debate—when in fact, if we were to do this properly, the amount of material could easily spill over into another two debates.
As a relative newcomer to the Community and in order to achieve the harmonisation which is the objective of the policy, I believe that sometimes we may have to make sacrifices and adapt our procedures rather more towards Community procedures than vice versa. Of course we must protect our own national interests, but we cannot expect all the regulations which come out of Brussels, which have to cater for different climates, systems and products, necessarily to be beneficial to us. We have to ensure that, in total, we get out of the CAP as fair a deal as the other eight countries, and I believe that we do.
That is one part of my thinking. The other is a belief that we as a nation should become more self-sufficient in agricultural produce. Indeed, our economic position and vulnerability to change in market prices demands this. In this respect, the United Kingdom compares very unfavourably with all the other members of the Community. An interesting table has recently been published by the Commission—it is, no doubt, in the pile of papers which was produced by the noble Lord, Lord Mackie of Benshie—and it appears at page 5 of the 1975 Report on the Agricultural Situation in the Community, R/3271/75. The table compares population levels with usable agricultural area and with percentage value of agricultural produce.
I do not wish to weary the House with figures, but may I quote the example of Germany which has a higher population density that the United Kingdom. The United Kingdom has 20 per cent. of usable land and it produces 12.4 per cent., by value, of the Community's final product. Germany, on the other hand, with 14.3 per cent. of usable land, produces 21.7 per cent. of the final production. In the case of the Benelux countries, the dis- 1500 crepancies are even more startling. Even allowing for extraneous factors such as the importation of feedingstuffs which can obviously affect the final result, the figures are, I would suggest, extremely disquieting. They demonstrate what tremendous scope there is for us to improve our agricultural performance.
Of course, the Government agree that we should become more self-sufficient, and they have said so in their White Paper to which my noble friend Lord Sandys has referred. Unfortunately, they have not, as yet, shown that they mean what they say, nor have they implemented the policy objectives which they themselves have set out. British agriculture has not been given the incentives either as regards capital—and it is a highly capital-intensive industry—or as regards end price, which is necessary to re-establish confidence. At the same time, the Government watch with equanimity while 75,000 acres a year are taken out of agriculture.
I have made this point before and I make no apology for doing so again. How many times at the Dispatch Box have not Ministers said, "Oh, well, we do not take the best quality land". What is not generally recognised is that there is very little grade 1 and grade 2 land in this country. The vast majority is grade 3, and it is grade 3 land which is taken. Yet 75,000 acres of grade 3 land could, if properly farmed, produce every year at least 150,000 tonnes of wheat—rather more on the figures given by the noble Lord, Lord Mackie of Benshie—or 50 million gallons of milk. That is the measure of what we are losing, and we are losing it out of irreplaceable capital.
To return to the question of performance, as I have said, the farmer is not going to increase his output, with all the risks involved, unless he is guaranteed a higher end price. This price is fixed partly in Brussels and partly by our own Government. Here, I should like to refer to paragraph 14 of the Fifteenth Report on the price proposals. I believe that one way in which the Government could help immediately and give a much-needed boost to British farming would be to follow the Italian example last year and revalue the so-called green pound so that it approximated closer to its real value. It is grossly inequitable that the British farmer, because of this arbitrary 1501 and artificial value of the green pound, should receive so much less for his produce than his European counterpart. I recognise that the devaluation of the green pound would involve higher prices for the consumer, but we cannot go on living indefinitely in the make-believe world of cheap food.
So far I have spoken in generalities and I shall not continue for too long, but I want to say something on the specific subject of milk. Our habits as regards milk are different from those of the other countries in the Community. Our milk is sold straight from the cow with fat content unaltered, and the vast majority of it is consumed in liquid form, the average fat content being 3.7. On the Continent, on the other hand, milk is sold with a minimum fat content of 3.5 and fat is added or taken away in order to achieve this result. The two systems, of course, have quite different objectives. Our system of distribution through the Milk Marketing Board ensures the maximum consumption of liquid milk, and in this it is extremely effective because we consume more than twice as much liquid milk as any other country in the Community, with the exception of Ireland. Perhaps it is too effective, because it means that we pour down our throats large quantities of milk and butterfat which might otherwise be used for manufacture. At the same time, we import huge quantities of butter and cheese and other dairy products.
Just consider for one moment the difference between this country and the Netherlands—a country which, incidentally, is even more densely populated than we are. In 1974 the United Kingdom imported 327 million pounds of dairy produce and exported 37 million pounds; in the same year the Netherlands imported 117 million pounds and exported 396 million pounds. The question which I suggest we should consider is not whether our system is efficient. As I have already indicated, it is very efficient for the purpose for which it was designed. The question is, can we really afford it? Do we need to drink so much liquid milk? Is the health of our children so superior to the children of other countries in the Community who drink half the milk that we do? I doubt it. Would we really notice the difference if the fat content 1502 were reduced from 3.7 to 3.5? I think that, too, would be unlikely.
I will not discuss the Commission's proposals under which each country can choose which of the two systems it adopts. The point I would ask the House and the Government to consider is whether our system is necessarily the best. The dairy trade in England seem to think so. But I understand that in Scotland opinion is divided and I tend to agree with those Scots—I hope the noble Lord, Lord Mackie of Benshie, will be among them—who think that it would be more logical and in our longer-term interests to move over gradually to the continental system.
I had intended to say something about bread and wheats, but that has already been covered, so I will omit my reference to it. Finally, I should like to thank the noble Lord, Lord Raglan, who, if I may say so, chairs our sub-Committee with so much charm and skill, for having introduced this debate and given us an opportunity to discuss these interesting matters.
§ Lord DAVIES of LEEK
Before the echo of that neat little speech disappears in this Chamber, may I ask the noble Lord a question: would he not agree that for the British farmer the school milk and meals—particularly the school milk after the war—gave a massive increase in average height to the child, and also weight, and from the dietician's point of view it proved excellent, and was also of great benefit to the fanner? I take it, therefore, the noble Lord is not advocating that we should abandon school milk because the British schoolboy is drinking too much of it?
§ Lord VERNON
My Lords, I am not suggesting that at all and the Commission in Brussels are suggesting that they should adopt our system as regards school milk. I was saying that I should like to see evidence that our people as a whole are healthier as a result of the amount of liquid milk that we consume.
§ 7.37 p.m.
§ Lord COLLISON
My Lords, I hope your Lordships will forgive me for getting on my feet. I did not put my name on the list because it was quite impossible for me to know when this debate would 1503 take place and whether I should be able to get here. However, now I have managed to get here I should like to make a few comments. At the outset, I should like to say that I follow the noble Lord, Lord Vernon, in his attitude towards the Commission. I have not changed my opinion about the advantages which will accrue to this country by our becoming members of the Common Market. Having said that, I recognise, as so many people do, that there are problems so far as we are concerned in relation to agriculture and our previous system of giving support to agriculture, and the system operating in the Common Market, which is largely based upon intervention.
Certainly, we have to find a solution during this interim period. I should like to place on record my personal appreciation of the very great success that my right honourable friend the Minister of Agriculture, Fisheries and Food has already achieved in this respect on the Continent. I appreciate that the conditions on the Continent are the concern of the other members of the erstwhile Six and are rather different from our own commitments and our own requirements. However, I feel sure that we shall eventually arrive at a common solution which will satisfy everyone. It may take a little time.
I should like to make a few staccato comments on the Reports before your Lordships, starting with the Fifteenth Report. On the question of milk powder, it is part of the consequence of pursuing an intervention policy that the so-called mountains of milk powder and beef and lakes of wine occur. It is the natural consequence of the policy and the Commission are seeking to find ways and means of reducing these mountains and lakes. It does not necessarily follow that what they are proposing to us will satisfy us in our own circumstances.
With regard to the milk powder, on a broader front I should like to see it made much easier for the surpluses to be exported to those countries where one finds recurrent famine. One knows what has happened in the past few years in Bangladesh, for example, and in other places. It is heart-rending, and here is this food which is virtually being stored and not being used. But the Commission are proposing certain methods of reducing this surplus of milk powder. One of them 1504 has been mentioned; that is, that we are going to be asked to put into our animal feedingstuffs 2 per cent. of milk powder.
I asked the witnesses who appeared before our Committee what this would mean in terms of feedingstuffs prices. I was told it would mean an increase of £4.l0 per ton—quite a considerable increase. The consequences will be quite wide. It is like throwing a stone into a pool; the ripples spreading out will affect the cost of all kinds of animal products, which in turn will have an effect on prices to the consumer. I thought that this point should be made. This ties up with the proposal made in the Eighth Report on the situation in the milk products market.
We considered this, and the proposal contained in this Report is that certain restrictions should be put upon the manufacture of non-milk products. The Committee were with me, I think, in the sense that I did not like this proposal. If products can be produced by the manufacturing and processing industries which are of good nutritional value, their content of milk products, or otherwise, should not be objected to. What is objectionable is that when these non-milk products are advertised people are given the impression that they are in fact milk products. I entirely agree with those who say there should be a review of the advertising and the statements placed upon the labels which are affixed to these products, so that people know what they are buying and consuming. In questioning witnesses to the Committee, this was agreed by the Milk Marketing Board, who have an interest in another direction; but this is so.
On the subject of milk, I must say that I found the proposal that there should be a conversion plan for small producers completely out of court. I must agree with my noble friend Lord Davies of Leek when he says that this would have the effect of putting out of business a large number of small producers. In this country, the small producer has had to rely upon his herd of dairy cows. This is what has kept him going. If there was a movement into this Scheme whereby payments were made based on past production, they could not go on for ever, and because of the smallness of their units they could not change over to some other form of production; so 1505 the small producer would be seriously damaged. I hope that point is properly understood, and will be properly understood by those who have to deal with this matter.
My Lords, I would now comment on the problem of beef. I regret the proposal to end the beef premiums. The farming industry has become used to the beef premiums it likes them. The premiums are equitable and work well. If they go what is the safeguard for the farmer if the market collapses? I know these proposals are based on the assumption that the beef market will firm up. One cannot be so sure, because variables in agriculture are so great and the import situation is so changeable. But if prices declined the farmer can rely only on the intervention price to help him maintain a proper income on his beef products. The danger is that, instead of reducing the beef mountain, the beef mountain would grow larger if that situation occurred. One must look closely at a proposal of this kind.
I should also like to make a comment on the proposals for improvement of marketing the reallocation of FEOGA grants to assist those Government-sponsored and Government-supported enterprises to improve the marketing of agricultural products. I entirely agree with this proposal. We do not know its precise form, and are waiting further information. But I imagine there is in this country quite a large number of co-operatives, for example, who can, and perhaps ought, to develop their own marketing machinery, who could be helped by the allocation of funds of this kind. I am also concerned with the possibility of developing agricultural experts. I am a member of the Advisory Council on Agriculture and Horticulture. On that Council, we have been intensively studying the possibilities. We have been to a number of countries in Europe. We have also been to the Commission, and discussed these possibilities. As I understand it, such a grant would be available to help the development of marketing arrangements, marketing procedures and marketing projects of this kind. I do not think this project can do any harm at all it can only do good. It is not yet finalised, and I am hoping that the further information which we need will be forthcoming fairly soon.
1506 My Lords, I turn lastly to the bread problem. I must confess that a large number of farmer producers in this country will become confused. In this country we talk about hard wheat and soft wheat, the hard wheat being the type that we use to produce the type of bread we consume, bread that will keep. EEC nomenclature talks about durum wheat on the one hand, which is used for making semolina and pasta only, and the other wheats which are soft wheats. Within the category of soft wheats we have those which, in this country, are termed hard wheats. I think the farmer will find himself confused. With regard to the procedure for maintaining a proper price, certainly this has to be done. The proposal that the bread range should be based on the barley intervention price may work. On the other hand, it is fairly clear that in order to determine what are in fact the bread wheats one will have to devise a proper method of testing. So far we have not been able to find one. The only method which is possible, so far as we know to this day, is the actual baking of bread, which is a long and tedious process and clearly not available for use at the farm gate.
We also have to take into account the difference between the types of wheat used in this country for our own types of bread, and those used on the Continent. I am sure a solution could be found, but I am equally sure that all those concerned with developing this programme should really understand it, and that in particular farmers and the industry should not be led into further confusion by the two types of definition before us. I understand that the milling trade understand this, but I must confess that, as my noble friend the Chairman of Committees knows, I was myself confused and I venture to think that if with my knowledge of agriculture I was confused, other farmers will be too.
My Lords, I am sorry I have spoken for 12 minutes—I did not mean to. However, I would end by offering my congratulations, and expressing my very great appreciation of the way in which the noble Lord, Lord Raglan, deals with the work of this Committee. The pile of papers is there we are all suffering for it, and the noble Lord has to suffer most, because he has to read every word of every one in order to be able to direct 1507 people like myself when we go astray. I am very grateful to him, and wish to congratulate him.
§ 7.49 p.m.
§ Lord MELCHETT
My Lords, as a farmer, I am particularly grateful to the Select Committee for their hard work. I have certainly learnt a great deal from reading their Reports. I do not think the noble Lord, Lord Collison, was right in saying that it is only noble Lords serving on the Committee who learn a great deal as a result of their work. I include myself among those who have done. My noble friend Lord Davies of Leek complained about acronyms in the Select Committee's Report, but I hope he will agree that we should be extremely grateful to the Select Committee for reducing the huge pile of papers which the noble Lord, Lord Mackie of Benshie, has shown us to the short, clear and very readable Reports that we are discussing tonight.
I should like to start with the 1976–77 Farm Prices Review. The Commission's proposals are wide-ranging and complex, as I think everyone who has spoken has acknowledged. It is a tribute to the Select Committee that they have been able to produce so quickly a Report that is both comprehensive in its coverage but selective in its comments. I take the point that the Select Committee makes about the delay in the supply of the English text of the price proposals. This year the situation was aggravated by the intervention of the Christmas and New Year holidays, but, fortunately, I understand that the Ministry of Agriculture were able to prepare and submit their explanatory memorandum from the French text and to make available advance copies of English versions in time for the meeting of the Select Committee immediately after the Christmas Recess. I can assure noble Lords that we are again pressing this matter with the Commission with a view to their providing English versions of the proposals more rapidly in future.
The annual negotiations on CAP support are always a major event. This year's negotiations are possibly even more important than usual. They are the first opportunity for improvements to be made to the Common Agricultural Policy following the Council's stocktaking dis- 1508 cussions last year. They are also the first such negotiations since the Government set out their strategy for agriculture in Food from our own Resources. I hope the noble Lord, Lord Vernon, will judge our intentions from the success of my right honourable friend in the negotiations; as I say, they are the first since the publication of the White Paper.
The United Kingdom agricultural industry had a difficult year in 1975. Inflation and unfavourable weather created major problems. However, with two green pound changes in August and October and substantial increases in the guaranteed price for milk, the Government provided very large increases in support during the year. This, combined with a fine autumn and the mild early winter has led to a welcome improvement in the state of the industry. I was glad to see the Select Committee's conclusion that the EEC Commission's price proposals for 1976–77, with our next transitional step, should be enough to give confidence to the industry to plan ahead.
At the same time, I am sure that the House would agree that success in the Government's efforts to curb inflation and improve our economic performance are as important to the agricultural industry as they are to the rest of the community. Much as I am tempted, I will not follow the noble Lord, Lord Sandys, into the field of taxation. I think it would be discourteous to the Select Committee not to concentrate on their Reports in the short time we have available.
§ Lord MELCHETT
My Lords, I leave that to the Select Committee.
The points made in this afternoon's debate will be fully taken into account in the further negotiations in Brussels. I can tell the noble Lord, Lord Sandys, that two meetings of the Council of Ministers are now scheduled for this month. The Council will, I am sure, aim to reach decisions at the second of these meetings on 23rd-24th February, because some of the 1976–77 support prices are due to take effect from 1st March. I noticed that the noble Lord, Lord Sandys, referred to our National Annual Review 1509 decisions being announced on 14th-15th February, if I understood him aright. To avoid confusion, I should perhaps say that it has not yet been decided when these determinations will be announced, though they will be announced as soon as possible.
I appreciate that so far as the EEC price proposals are concerned we are working on a very tight timetable. Nevertheless, there has been time for quite substantial discussions since the Commission tabled their proposals in mid-December. By the end of this month the Council of Ministers will have had four meetings at which the Commission proposals have been discussed. At the same time we have managed to have our debate today in goodtime before the Council begins the really substantive negotiations which will no doubt occupy much of both their February meetings.
As regards the Commission's actual price proposals, I read with interest the comments of the Select Committee on what is known as the "objective method". Like the Committee, I welcome the Commission's efforts to improve this method. It is an important contribution to our wish to see support prices related to the needs of modern farms. At the same time other factors must obviously also be taken into account, especially the state of the market for particular commodities. The Commission have proposed increases in support prices averaging 7.5 per cent. in EEC units of account. These increases are smaller in the Six in terms of their national currencies because of the Commission's monetary proposals. Even so, given the current economic climate and the problems of overproduction facing the Community, the Commission's proposals seem to us to be on the high side. We shall be looking for support prices generally no higher than the Commission have proposed and, in some cases, lower.
The Select Committee comment specifically on the Commission's monetary proposals, and the noble Lord, Lord Vernon, mentioned in particular the problems of the green pound. The proposed changes in the representative rates for Germany, France, the Benelux and Italy are primarily for the countries concerned to consider. As regards the green pound, I do not think it is surprising that the Commission have not proposed a change. 1510 We have made four changes since October 1974. The present sterling monetary compensatory amount is only 6.4 per cent. The net effect of the support price and monetary proposals together is to give a bigger increase in common prices in sterling terms than in most other Member-States in their national currencies. A number of factors have to be taken into account in considering changes in the green pound, including, as the Select Committee say, the need not to endanger the living standards of consumers. However, I can assure noble Lords that the Government continue to keep sterling's representative rate under review; and our record shows that we are ready to act when the need is there.
§ Lord MACKIE of BENSHIE
My Lords, may I ask the noble Lord whether it is the fact that any proposal to change the value of the green pound lies largely with our Government and not with the Commission?
§ Lord MELCHETT
Yes, my Lords, certainly that is my understanding.
The House will recall that last year the Community adopted a series of measures designed to reduce surpluses of milk products. I hope my figures on this section agree with those of Lord Raglan; I am not entirely sure that they do. As I understand it, Community liquid milk production for 1975 was 91.2million tonnes while that of skimmed milk was 1.877 million tonnes. There are at the moment 1.135 million tonnes of skimmed milk in public storage in the Community, of which 0.025 million tonnes is stored in the United Kingdom. The proposals that the Community adopted last year covered temporary private storage aid, arrangements to permit increased sales to developing countries and incorporation in animal feed, and suspension of inward processing arrangements for butter oil and skimmed milk powder.
A further element in the package, namely, the proposed prohibition of the use of non-milk fats and non-milk proteins in manufactured milk products, encountered serious criticism, not least from the United Kingdom, and is still under discussion. In this connection I can assure noble Lords that the Government have taken careful note of the reservations 1511 expressed in the Select Committee's Report about the effectiveness of this element of last year's proposals. My noble friend Lord Collison referred to the Committee's interest in the forthcoming labelling legislation affecting milk products. We will ensure that details are made available when the Community proposals begin to crystallize.
Turning to the Commission's proposals for milk in the current Farm Prices Review, the Commission have proposed a below-average support price increase. They have also suggested that it should be implemented in two stages—2 per cent. in March and 4.5 per cent. in September. In principle, like the Select Committee, I welcome the two-stage increase. The actual size of the support price increases must be looked at against the current serious over-supply within the Community.
The Commission also propose that the fixed price intervention arrangements for skimmed milk powder be abolished in September, and replaced by a tendering system. This could be an important change towards a flexible intervention. As such it would be in line with our stocktaking objectives. While I know there is some concern among producers about the possible implications, I think we must recognise the need for some such action to discourage production for intervention. It would not however be realistic, in my view, to go as far as the Select Committee suggest and halt all further intervention purchases. Producers are entitled to some support. The new scheme of premiums for the non-delivery of milk has also attracted comment, particularly in the debate tonight. Clearly there are serious administrative problems which would have to be sorted out. I also fully share the doubts expressed by the Select Committee and by noble Lords tonight about applying the scheme to farmers producing as much as 120,000 litres of milk a year.
I also recognise the problems of principle and practicality in the proposal to make compulsory the incorporation of about 600,000 tonnes of skimmed milk powder in animal feed. The problem is that the alternative outlets for this powder are limited. There are doubts whether even the Commission's proposal to raise the Community's skimmed milk powder food aid programme from 55,000 to 1512 200,000 tonnes is practicable. Sale of powder for animal feed is inevitably expensive and the question is how the cost should best be borne—whether by users of animal feedingstuffs or by Community funds. I can, however, assure the House that the points which have been made in our debate and by the Committee will be borne in mind in the course of the further consideration of the proposed scheme.
I also accept many of the points which have been made today by my noble friend Lord Raglan, about stimulating consumption. The Commission's idea of helping national school milk schemes, mentioned by my noble friend Lord Davies, and the noble Lord, Lord Vernon, is certainly worth further examination. I share the disappointment which has been expressed concerning the Commission's proposals on the butter subsidy. We have pointed out in Brussels that our butter subsidy helps to maintain consumption here to the benefit of the Community as a whole.
I should now like to leave milk, and turn to beef. The Government have already made absolutely clear their rejection of the phasing out of beef premia. I welcome the Select Committee's support. My right honourable friend the Minister of Agriculture has pointed out how wasteful and ineffective large-scale support buying of beef can be. The Commission have put forward proposals which do not meet our requirements, although they have recognised that premium arrangements might be needed again in different market circumstances. Our system of support which relies mainly on premia, with intervention as a fall-back, has worked well, to the benefit of consumers and of producers. It has been good value for the Community as well as for this country. My right honourable friend has made clear that we need provision for premia. He has also argued, like the Select Committee, that the Commission's price proposals for beef seem to be on the high side.
I have left the cereals sector to the end of my comments on the price proposals, not because they are unimportant but because of course the Commission's proposals for this sector reflect the Council recommendation and resolution in R/2020/75 and R/2021/75 on which the Select Committee has reported separately. 1513 I agree with the Select Committee's conclusions, but 1 think we must remember that the proportions of breadmaking and feed wheat produced in the various Member-States differ. In this country we have traditionally fed about half our wheat to livestock. In the last year or two there has been a tendency, more marked in other member countries than here, to increase production of high-yielding wheats as compared with those used for breadmaking. It seems right that these high-yielding wheats, which in the main go for feed, should be supported at feedgrain level. This avoids imposing unnecessary costs on Community livestock producers and should be a step towards a better balance in Community cereals production. We must, however, ensure that any support arrangements for breadmaking wheat are fair and practicable and set at a sensible level, avoiding unnecessary increases in the cost of our strong wheat imports. Moreover, we shall continue to press the Commission for clear indications of the need for a special reference price for breadmaking wheats and on the method by which they are to be tested in order to distinguish them from feed wheats. We would certainly share the views expressed by my noble friend Lord Collison that at the moment the only reliable method of identifying breadmaking wheats is to test bake, a lengthy and expensive process.
Finally, I would like to say a word about proposal R/2157/75 on aids for marketing and processing of agricultural products. As the Select Committee has pointed out in its Report, much can be done to improve the standard of marketing in the Community. This is therefore a subject of considerable importance which I am glad it has been possible to include in today's debate. We fully accept the Committee's view that the Commission proposal is far from clear on a number of points. We hope that they will be preparing a revised text, but unfortunately we cannot be sure that this will be done. On the basis of the present version my understanding is that the proposals to improve the marketing and processing of agricultural products is intended to take over from the Individual Project Scheme although, as the Select Committee points out, the limit of 80 million units of account per year may mean that less rather than more 1514 money is spent in this area. While we are taking a full part in the detailed examination of the proposals in Brussels, we still need to be convinced that this proposal represents the most effective way of achieving the objective of ensuring that producers obtain a fair return through efficient marketing. I was interested to see that similar doubts are expressed in the penetrating report prepared by Mr. Ralph Howell for the European Assembly's Committee on Agriculture, a report which the Select Committee rightly commends. In particular I recognise the danger that any increase in the size and economic strength of marketing or processing concerns might actually weaken the negotiating position of producers. I also share the Select Committee's concern that the problem areas and priorities have not been adequately identified, and we are by no means satisfied that the proposals as they stand make the best use of the limited resources of the Community's Agricultural Guidance Fund.
The Committee also pointed in its Report to difficulties caused by the imprecise drafting of the proposal. We share this view, especially as regards doubts concerning the criteria by which projects would be evaluated which makes it difficult to see precisely how the scheme would operate. I understand that the Commission are now considering ways in which they can speed up the decisions on those projects which would be eligible for grant aid. We hope that they will be able to suggest ways to overcome another problem to which the Select Committee has drawn attention; namely, the effect of the delay in taking decisions, which weakens the effectiveness of the grant scheme proposals, as was so ably pointed out by the noble Lord, Lord Mackie.
In the continuing discussions on the proposals at Brussels, we shall have in mind all the problems outlined in the Committee's Report, and we shall be seeking to ensure that all necessary modifications are made to overcome difficulties and to avoid the distortion of proper patterns of investment as well as securing real benefits for producers.
I apologise for going on at some length at this late hour. I think that the noble Lord, Lord Vernon, said that the proposals and the Reports we had before 1515 us would be enough for certainly two if not three debates, and I thought it only right to do justice to the considerable amount of work which the Select Committee must have done by seeking to comment on the main points which they made in the various Reports. In conclusion, I should like to reiterate my thanks on behalf of the Government for the extremely useful and constructive work that the Select Committee has done in producing these Reports.
§ 8.9 p.m.
§ Lord RAGLAN
My Lords, I am grateful to my noble friend Lord Melchett, and pleased that so much accord has been found between the opinions of the Committee and the opinions of the Government. There is one point on which he touched; my estimate of what proportion of the Community milk output was represented in a million tonnes of surplus milk powder. I have the figures. I believe we got them from the Ministry. They are certainly printed in our Report, and I said that it was a guess. If you get down to it and guess how much milk is represented by a million tonnes accumulated over three or four years, you come to something like 4 per cent. or 5 per cent. of the total output of liquid milk in the Community. That, as I said, agrees with the known percentage by which liquid milk consumption has been reduced in the Community as a whole.
I am most grateful to my noble friend Lord Collison for the nice things he said about me, but he missed the nice things I said about the Committee, since, unfortunately, through no fault of his own, he was a little late. Some of these proposals—like the one that one might call "the 29 cow proposal"—are just "try-ons". I have the feeling that they try them on and put them forward just to make people think, and then they correlate the sum of people's thoughts and have another think. Of course this is one way of forming a policy—perhaps not a bad one. My noble friend Lord Collison mentioned the matter of hard and soft wheat. I thought we made it clear in our Report that Community wheat is not referred to as hard and 1516 soft wheat; it is durowheat and common wheat, so we have avoided that trap. I see no reason why British millers should not go on calling it hard and soft wheat if they like, so long as they do not confuse it with duro.
§ Lord COLLISON
My Lords, will the noble Lord allow me? I am grateful to my noble friend, because I raised this matter in Committee and it has certainly been dealt with in our Report. When I indicated that I thought people in the industry would be confused, I meant those farmers who probably will not read the Report and have a background of talking in terms of hard and soft wheat.
§ Lord RAGLAN
My Lords, it was owing to the intervention of my noble friend in Committee that we revised the draft and I think it is now clearer. As my noble friend Lord Davies of Leek criticised the Common Agricultural Policy, I found myself warming to it. It is not really such an unfriendly set-up It employs far fewer bureaucrats than the Scottish Office. I would welcome my noble friend to the Committee. He has every right to attend. He would thereby get a better understanding of what the Common Agricultural Policy is about. The great heap of paper which the noble Lord, Lord Mackie of Benshie, quite rightly showed us, indicated how hard he has been working and how hard we have all worked. A great deal of it was something we wished upon ourselves in pursuit of the truth and of clarification. I should think at least half of that is evidence which we have asked for and which has been given to us by various organisations.
We are undertaking a task which we have no need to undertake and which under the old British national system we had no opportunity of doing, but which under the Community we can do. May I give members of my Sub-Committee advance warning that we are going to take some evidence on a new potato regime in the near future; we shall be looking at marketing and asking questions regarding the financial control of CAP.
§ On Question, Motion agreed to.