HL Deb 29 November 1979 vol 403 cc483-6

3.12 p.m.


My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government how, in view of the fact that the rate of cost inflation experienced by United Kingdom farmers will be far higher than in other parts of the EEC, they will ensure that CAP price fixing in 1980 will permit agricultural production to be maintained in this country.


My Lords, Her Majesty's Government have already introduced a number of measures designed to strengthen agriculture, and we will continue to take whatever action is necessary to enable the industry to make its full contribution to the national economy.


My Lords, while thanking my noble friend for that reply, will he not agree that the Government have done very well regarding the livestock farmers in the uplands of Scotland on the new rates of subsidy; but will he not further agree that the Common Agricultural Policy is really becoming rather an absurdity? Will he not agree that when some of our EEC partners can get a subsidy of 40 per cent., to a certain extent provided by the British taxpayer, and can flood this country with agricultural products, this Common Market policy is really not common at all? I do not like common things particularly! Nevertheless, I should like to have a Common Market policy.


My Lords, I am grateful for the first part of my noble friend's question in which he said he was grateful for what has been done for livestock in Scotland. With regard to the second part of his question, we all recognise that the CAP has faults which we wish to see improved, and it is our intention to try and improve those faults.


My Lords, does my noble friend agree that our present inflation problem has not been caused by and is not being accompanied at the moment by a rise in farmers' returns? I should like to ask him whether he will help us out in this matter, because we are in a very serious cash flow position with a continuing devaluation of the green pound, and this applies not only now but to the future should the pound fall, bearing in mind that we had a particularly rough deal from the last Government on devaluation of the pound.


My Lords, I fully recognise the very real point to which my noble friend has referred in regard to farmers' cash flows. I can assure him that the Government have done quite a bit over devaluation of the green pound; it was down 5 per cent. in June and another 1.1 per cent. in October. Allowances have been made for the wholesale and retail prices of milk, which have been increased. Certainly it is my right honourable friend's intention to keep agriculture as competitive as possible. I can only repeat to my noble friend that it is the commitment of this Government to devalue the green pound, over the lifetime of a Parliament, so that farmers in this country compete on equal terms with farmers in the Community.


My Lords, does the noble Earl not agree that it would be in the interests of British agriculture to make it possible to pay our farmers guaranteed prices that are reasonable in the light of their own costs without at the same time having to pay higher prices for Europe as a whole? In view of the proposed increases in prices under the Common Agricultural Policy, should not higher subsidies be paid to our own farmers when it is necessary?


My Lords, I think it is in the interests of both British consumers and British agriculture to have an efficient, productive and competitive British farming system. That has to be done in the context of the European Community, and it is our desire to ensure that certain aspects of the Community which we believe are unfair to Britain are put right.

The Earl of ONSLOW

My Lords, has the noble Earl in his first Answer reflected upon the illogicalities of some parts of the Common Agricultural Policy and the overweighting of the budget? Would he like to comment on the fact that the Government disagreed with the European Parliament when it decided to cut the Common Agricultural Policy budget?


My Lords, we are in agreement with any form of cutting of the budget—and indeed the Commission have proposed certain cuts in the budget already—provided that the cuts desired and requested are fair all round. The proposals made so far have not been fair for all Members of the Community.


My Lords, would my noble friend agree that farmers' overdrafts in the last 16 to 18 months have increased by about 30 per cent? In view of the very high bank rate now prevailing, would it not be possible for the Treasury to allow bona fide farmers slightly lower rates of interest? After all, they are producing wealth, and this very high rate is a great burden on them.


My Lords, I agree with my noble friend that it is very worrying that farmers' overdrafts have gone up very considerably over the last few years, and that has not been matched by an increase in investment; in other words, their overdrafts have gone up because of the cash flow problem. With regard to my noble friend's second question, he will know that the Government support agriculture in many ways, but the way that he is suggesting—subsidised credit—is a form of support which at the moment it is not the Government's intention to introduce.


My Lords, referring to the noble Earl's reply to the question put by the noble Lord, Lord Kaldor, does he not agree that sheep farmers today selling lambs would undoubtedly he losing money were it not for the subsidy being paid under the United Kingdom guarantee system? Notwithstanding what happens to the French market, does he not agree that it is essential that this form of guarantee, or at least some similar form, is retained in any common sheepmeat policy in order to safeguard the interests of the British producer and indeed to ensure a regular continuity of supply of fresh meat into the shops?


My Lords, I agree that the impact of the sheep farmer in the hills is extremely important and it affects the whole of the livestock sector of agriculture. That is the reason why my right honourable friend recently announced an increase of 37 per cent., in other words £20.6 million, in the livestock subsidies.