HL Deb 27 April 1977 vol 382 cc578-87

3.50 p.m.

The LORD PRIVY SEAL (Lord Peart)

My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Minister of Agriculture. I should like to apologise to noble Lords opposite for the fact that they have had copies of the Statement for only a short time, and indeed I have just read the Statement myself now; but we are having an agricultural debate today. Certain matters have been reported in the Press, and I know that there has been general comment about the Review itself. The Statement is as follows:

"With permission, Mr. Speaker, I should like to report on the outcome of the Council of Ministers (Agriculture) on 25th/26th April. My honourable friend the Parliamentary Secretary represented the United Kingdom for the discussions on agriculture, and my right honourable friend the Secretary of State for Scotland for the discussions on fisheries.

"Agreement was reached on Community farm prices for 1977/78. The common support prices will rise by 3.5 per cent. for most commodities, representing a substantial decrease in real terms.

"There will be a Community financed butter subsidy for the United Kingdom which was not included in the commission's original proposals of 8½p per pound, which should lead to an immediate fall in shop prices of about 5p per pound. Prices thereafter will begin to rise again, but increases and decreases throughout the year are expected roughly to cancel out. The subsidy will continue thereafter until 1st January 1979, though the rate has yet to be decided.

"For beef our premium system, with intervention only as a fallback, will be continued not merely until July, as the Commission originally proposed, but for the whole of 1977/78. I am confident that agreement will be reached in the course of the year that the premium system be retained permanently. I shall announce this week the scale of United Kingdom target prices for 1977/78, but the average will be £30.28 per live cwt. and the level will rise to over £32 next March.

"The Commission's proposed levy on isoglucose will be fixed at the maximum at half the level proposed by the Commission.

"The action programme for milk has been improved. There will be no tax on vegetable oils and fats—that is, no margarine tax. There will be no regulation on the 'exclusive use' of milk products or their labelling, although this will be further examined. There will be no ban on national aids for investment on farms. The action programme now comprises incentives to farmers, financed wholly by the Community, to cease to market milk or to convert to beef or sheep production; a 'co-responsibility levy' of 1.5 per cent. from 16th September; Community aid for school milk programmes; and Community aid for accelerated programmes for eradicating brucellosis, tuberculosis and bovine leukosis.

"I now think it right to make a small move in the green pound. It will be devalued by 2.9 per cent. rather than the 6 per cent. proposed by the Commission, to take effect from the beginning of each marketing year, with two exceptions. It will apply to pigmeat from the beginning of May thus reducing the monetary compensatory amount immediately by about 8. per cent. and without at the same time reducing MCAs on cereals. This will provide some relief to our pigmeat industry. We shall continue to press for a more fundamental change in the calculation of these amounts. The change will also be deferred for milk products, and will apply in two equal steps on 16th September 1977 and on 1st April 1978.

"The change in the green pound will he reflected in higher common support prices for United Kingdom farmers in sterling terms. After allowing for the deferment of the change for milk products, however, the effect on retail prices will be very small. Its effect on all food prices between now and April 1978 will be more than offset by the butter subsidy which we have negotiated.

"I consider that this package achieves a fair balance between producers and consumers. The effect on food prices in the shops has been cut to the minimum, and the green pound devaluation more than offset by the butter subsidy. The effect on average food prices of this settlement during the period to next April is estimated at one-third of 1 per cent., so that with the transitional steps the overall effect will be 1.25 per cent. When all the effects excluding the transitional steps are fully passed through, the increase in the RPI would be less than one-third of 1 per cent. Agricultural support prices in the Community as a whole will fall in real terms, but United Kingdom farmers will get a big boost to their support prices from the combination of the transitional steps, the common price increases, and the small devaluation of the green pound.

"I believe that the outcome of these negotiations represents a very good deal for both British housewives and farmers. The final package is a considerable improvement on what was originally proposed by the Commission. For us the key objective was to keep consumer price increases to an absolute minimum, while at the same time obtaining a fair deal for the farmer. I recommend the package to the House.

"The Council also agreed to certain changes in the basic regulation on hops which will strengthen producer marketing. I believe these will be welcomed by the Hops Marketing Board and the farmers' unions.

"The Council agreed on a mandate for the negotiations with the ACP countries on sugar prices for 1977/78. These will start on 28th April.

"The Council decided to extend the present ban on fishing for herring in the North Sea for a further month, and to consider the herring situation as a whole—including waters to the West of Britain as well as the North Sea—at the next Council.

"I should take this opportunity to tell the House that Commissioner Gundelach has notified me that he is studying how the functions of the Milk Marketing Boards can be maintained, with particular regard to the means by which the Boards help to maintain the level of liquid milk consumption, thereby reducing intervention on dairy products, with a view to making appropriate proposals."

My Lords, that concludes the Statement.

3.57 p.m.


My Lords, the House will be very grateful to the noble Lord for having repeated that Statement, and I am grateful to him for his apologies that the Statement was not distributed a little earlier. I received my copy at a quarter to four, and having received it I found that half of it was illegible because something had gone wrong with the photo-copying machine. But there was probably one advantage because my copy was marked "Final Version", and possibly there were fairly late alterations to the transcript. One is bound to say that one wonders why.

The Minister said in the Statement that this would be a package which was acceptable to the consumer and to the farmer. I am bound to say at the outset that quite clearly this is a consumer-orientated package, and in saying that I would not want to infer that the consumer's interests should not be taken into account; of course they should be, and of course the Minister has done so. What I would point out is that the interests of the consumer and the interests of the farmer are very similar, and where the Minister has made the mistake is that he has delayed the whole of the Common Market negotiations over the Farm Price Review by one month; and what has he got out of it?—a subsidy of three-quarters of a penny per pound on butter! Almost everything else has been the same as he would have negotiated one month ago, and this has caused great consternation to those of us who have watched the negotiations going on.

The Minister says in the Statement that the effect on food prices between now and April 1978 will be more than offset by the butter subsidy. I will not take too long because I intend to refer to this matter in what I have to say later, but I would only hope that in the future the considerations of the Farm Price Review will go much higher than the considerations of a price for butter.

My Lords, in view of the fact that farmers' costs have gone up 20 per cent., I should be grateful if the noble Lord could tell me whether or not I am correct in thinking that the increase in prices which this Statement allows increases their institutional prices by only 10 per cent. I should also be grateful if he would explain how this package affects pig producers. They are facing disaster and huge losses. How will this package help them? I should also like to ask the Minister what effect this is going to have on the price of milk, both to the housewife and to the farmer.

Baroness SEEAR

My Lords, we on these Benches also thank the noble Lord the Leader of the House for repeating this Statement. We, too, have some difficulty, in that we received it even later than a quarter to four and have been able to have only the most cursory examination of what it contains; and as it contains a very considerable amount of detail it is, of course, quite impossible, as well as being inappropriate, no doubt, to comment in any detail on what the Statement in fact says. The fact of the matter of course is that it is a compromise—a compromise attempting to satisfy both the farming interests and the consuming interests. While accepting that there is an overlap of the interests of these two groups, on many points, particularly in these negotiations, those interests are in conflict, especially in regard to what is to happen to the green pound. Whereas, obviously, it is in the interests of the farmers that the devaluation of the green pound should take place as quickly as possible, the consumers in this country are very anxious to see that that devaluation does not proceed swiftly.

So the Government were faced with the need for a compromise, and the Statement reflects that this is in fact a compromise, with an attempt to do something for the farmers (which no doubt, to a considerable extent, cannot satisfy them) and something, albeit very little, for the consumers. We are told that the rise in prices will be compensated for by the fall in the butter price, but we are also told that that fall in the butter price will be only temporary and that butter will proceed to rise again after a very few months. The fact of the matter is, of course, that this unsatisfactory Statement reflects a very unsatisfactory state of affairs, both in this country and in the Common Market.

Until we are able to get real reforms in the CAP we cannot get a satisfactory settlement, and until we are able to put our own house in order in terms of inflation we cannot deal with these matters in this country; nor are we in a position, of course, to take any effective action in relation to Europe because of the situation of being the people who, on the one hand, are asking for assistance from Europe and, on the other, are at the same time trying to get them to reform and to change proceedings in the interests of Europe as a whole. This is an impossible position for the Government to take up. So this is a compromise situation, probably the best that we can reach as long as there are these two fundamental problems which need to be dealt with, both in this country and elsewhere; and we are in no position at the present time to deal with either of these problems.


My Lords, perhaps I could reply quickly to the noble Baroness on the question of reforms in the CAP. I cannot accept this. I myself actually negotiated the beef premium, which was something very much like our own deficiency payments system, and this was welcomed by the industry. This was a major reform in the ongoing business of the Community. Added to that, there was the CAP sugar arrangement which I mentioned, which affected countries outside which had traditional links with us and supplied our market with sugar. The guarantee of access which was achieved in negotiations was a major step forward. The use of the commercial firm to assess what should be correct prices was, again, another step forward. There was the liberalisation of trade within the Community. This is what we did, and this has been carried on into this Price Review; and I am glad that my right honourable friend was able to get the assurance on the beef premium system. I am tempted to develop the arguments which I shall be developing later, when I wind up—and this, of course, was mentioned earlier by the noble Lord, Lord Middleton. It is rather unfortunate that we should have this intervention at this stage. All I would say is that we have done that, and whatever arguments there may be about a compromise there has been progress because of what has been done over a period of time.

The noble Earl put to me one or two specific points. I think his most important one was: What is the situation now for pig producers? All I can say is that in recent weeks the indications have been slightly more encouraging, with sow slaughterings down somewhat. The Council, I understand, could not agree on a solution to the MCA problem in the price discussions, but I understand that the Minister of Agriculture will continue to go on pressing for one. In the meantime, the Department's view is that the temporary subsidy is giving positive financial support, and the green pound devaluation will be of some help. Moreover, the introduction last week of a Community scheme of aids to encourage private storage will also have a beneficial effect on the pig market. I think I can also mention when the green pound change will take effect for pig producers. I understand that the devaluation will have an immediate effect in lowering the MCA. For example, the bacon MCA will come down by about £22 per ton, which is about 8½ per cent., but producers' costs will not be affected yet because the devaluation for cereals does not take effect until the beginning of the cereals year in August. I will leave my other points to specific parts of my speech when I wind up.


My Lords, may I ask my noble friend the Leader of the House whether, in order to convince the British housewife that the Minister has achieved a fair deal, he could hold a Press conference and translate this very important Statement into understandable and plain English, and not bamboozle her with percentages, as Governments have always done until now? Also, would it not be pertinent to ask, when others criticise the Minister about a compromise: Since when have negotiations always led to victory?


My Lords, I do not disagree with my noble friend, but the Minister will certainly have already given a Press conference; I am certain of that. That is the practice. I would hope that he would give a Press conference, not merely for agricultural journalists, but also to put in good and simple English what it means. But it is not easy. There is a lot of gobbledegook about all this; I know that. I speak from experience. I am like the noble Baroness now: I tried to grasp it very quickly, in a few minutes, in order to deal with this very technical question and answer period. I will do my best when I wind up.


My Lords, may I ask the Minister one or two questions? Before doing so, on the technical nature of this subject, perhaps I may say that it is not the public not understanding the language that I worry about; it is whether the Minister understands it. Perhaps I may say first that the one good thing that appears to have come out of these negotiations is that there is hope that our excellent system of marketing, the Milk Marketing Board, will be understood and allowed to continue, which is what I took out of the Statement. That is a real step forward. Could the Minister tell us what the money available per pig will be because of the change? I have been going round my most competent friends in the pig world, and the best of them tell me that they need at least £5 per pig to bring the thing into profit at all. I very much doubt whether the 3 per cent. will go anywhere towards that; and I am very disappointed to hear that little progress has been made in the calculation of the MCA on pigmeat, which is grossly unfair. I should have thought that a very strong case could have been made for recalculating it, to the great benefit of the consumer, if so much time had not been spent on the price of butter.

I doubt whether this is a fair balance. I think it may well affect the consumer very badly if the feeling among pig producers and beef producers continues as it is. I do not think that £30 to £32 will produce much beef in this country. The fall in the breeding herd at the moment is considerable, and certainly all the college costings I have seen do not show any profit at a figure of £30 to £32. I should like the Minister to comment on this and to say whether he envisages any more changes in the 3 per cent., in the green pound, in the future, or whether he thinks that this minute change will be enough to bring our agriculture into line with Europe.


My Lords, when I have dealt with the green pound I have always said that every Minister who has had to deal with this—and my successor will have to do the same—has had to consider it in the light of the circumstances appertaining at each Price Review. I, in fact, made four changes in the green pound, and it may well be that there will be other changes. I do not think that we should insist on a hard and rigid position on that. I will check on the question of whether or not it is enough, and, in my final speech, will confirm what the noble Lord has said. He mentioned a figure of £5 and he asked what it was. I have not got the answer immediately. I am glad that he stressed the importance of protecting our marketing boards. That, again, is something the Government have done and something which is of benefit to farmers and consumers. I believe that one should not get into this terminology of the consumer versus the producer. I have always argued this. I believe that if you produce food reasonably well, then it is good for the consumer. I have always taken this view.

The Minister has put forward our position very strongly to the Community about the need to protect our marketing boards. The question of marketing boards in general remains unaffected; but by yesterday's agreement on the revision of the EEC's hops régime we have a move forward. The Government aim remains to ensure that we maintain the functions of the boards. I think they are essential to the orderly marketing of the products concerned. Milk is a classic example; and I wish that the Community would adopt our structure there.


My Lords, may I ask one question? Could the noble Lord say when the guarantees such as those for potatoes which depend solely on our own Government will be announced?


My Lords, I think that if I start following up all this now I shall be in conflict with Standing Orders. I have been reminded of this; and I read from the Companion to the Standing Orders: Ministerial statements are made for the information of the House, and, although brief comments and questions for clarification are allowed, such statements should not be made the occasion for immediate debate, unless the House so order". We have an immediate debate and I will pursue these matters there.

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