§ 5.57 p.m.
§ Lord Cledwyn of Penrhos rose to move, That this House takes note of the report of the European Communities Committee on cereal substitutes (42nd Report, H.L. 270).
§ The noble Lord said: My Lords, in presenting this report to the House, I should like to thank all those who have helped the committee to produce it, as well as the witnesses who gave evidence, both oral and in writing, who were very helpful to us. The subject under review might on the face of it seem to be one of secondary importance and of little interest to the lay observer. In this debate we must seek to correct such an impression, because the proposals that we have examined deal with an issue of important principle which affects both the Community and the developing countries. In fairness, I must say at the outset that the committee were not quite unanimous in their conclusions. My noble friend Lord Mackie of Benshie, whose experience and contributions are of great value to our committee, took a contrary view, and I hope that in due course he will present his arguments with characteristic energy.
The subject of the report is described clearly in the introduction, and I shall quote the second sentence
because it points to the issue of principle to which I have just referred. I quote:
… the subject provides a significant illustration of the problems of conflicting objectives, both internal and external, which arise from the operation of the Common Agricultural Policy, and of how the institutions of the Community may seek to resolve such conflicts".
The problem, or the issue, that the committee had to consider is whether the Commission's attitude and intentions towards the import of products, that is, cereal substitutes, and their competition with cereals produced in the Community in the composition of compound feedingstuffs are fair and proper. That was the cornerstone problem which we had to consider. In fact, the committee concluded that they could not agree with the Commission's approach, and they recommend other ways to resolve the dilemma.
§ It may be helpful if I refer your Lordships to the second paragraph, which clarifies the term "cereal substitutes". As it says, the term can be misleading because the products in question are in no way inferior to cereals. Many of them can be used as alternatives to cereals, and others as complements to cereals in compound animal feedingstuffs. Manioc, also known as cassava or tapioca, with a 95 per cent. starch content, is such a product, and there are others mentioned in this report. As we go on to say, the Community is heavily dependent on these imported proteins; the major part consists of soya beans, which come largely from the United States of America, and they enter the Community free of duties or levies. The nil rate is bound under the GATT.
§ Another factor is that the EEC produces more common wheat and barley than it eats. These are the cereals which provide the carbohydrates in animal feedingstuffs. The Community's production of these cereals has been growing rapidly and is estimated to have increased by over 40 per cent. for common wheat and 24 per cent. for barley during the last five years or so. Tariffs and levies are paid on the imported cereal substitutes, and they vary as between the different products. For example, cereal residues—bran, wheat offals and so on—are subject to a variable levy which now stands at a level equal to about a quarter of that on feed grains.
§ Molasses, which is also subject to a variable levy, in fact attracts no levy because the threshold price is set at a level which draws none. Other substitutes enter free, the rate being bound in the GATT at nil. Major exporters are the United States, Brazil, South Africa and Argentina. As to manioc, which is the main subject of the report, it is wholly imported. It comes mainly from a developing country—namely. Thailand—and is subject to an import duty not exceeding 6 per cent. ad valorem, which is also bound in the GATT. The tariff position is explained more fully in paragraph 6 of our report, and I will not go into it in any further detail at this time.
My Lords, I have tried to summarise the basic facts which were before us, but our committee's chief concern is of course the Commission's attitude to the imports of these substitutes into the Community. As the report reminds us in paragraph 7, they fired a warning shot in their paper of 11th December last, Reflections on the Common Agricultural Policy. They spoke of exercising,
more vigilance over the imports of certain feeding-stuffs or similar products".
This was followed by a more detailed examination in the Commission's report in 1980, which we refer to in paragraph 8 of our report. Here, the growth of imports of manioc is described dramatically as a
destabilising factor in the cereals market".
They refer to the need to control manioc, bran and maize gluten feed—these are the three products specifically mentioned by the Commission—but it now seems that manioc alone is picked out for special attention. So far we have heard nothing of restricting maize gluten feed, and no action has resulted on bran or other milling residues. I think that is a point which your Lordships will wish to bear in mind as we proceed.
The provisions of the submission on manioc are detailed in paragraph 10 of our report, and the subsequent history in the following paragraphs. They describe the reaction of the Thai Government to the proposal and the action taken by them. Paragraph 19 enlarges on this as follows:
It is to be particularly noted that imports of manioc into the Community increased between 1975 and 1979 by 3.2 million tonnes, or more than double; but they fell between 1978 and 1979; and they may subsequently have remained at around the 1979 level, latterly because of the actions of the government of Thailand".
It should also be noted that the imports of maize gluten feed more than doubled, and may increase further. There has been no suggestion whatsoever that this should be restricted, although, of course, the Commission could decide to control this as well in due course. It is perhaps interesting to note that this comes very largely from the United States of America.
My Lords, we seek to analyse the policy issues in Part VI of the report, and the House will note the reference again to "conflicting considerations". Our committee always listen with great care to the evidence of the National Farmers' Union, and we particularly appreciate their readiness to testify at our meetings on a range of the subjects which are drawn to our notice. On this occasion the committee are unable to accept the arguments of the National Farmers' Union, and we explain why in paragraph 30 and also in our concluson in paragraph 47. We say in the report:
… the National Farmers' Union suggest that the conflicting considerations in the case of manioc should be resolved by bringing that product within the Common Agricultural Policy cereals régime and subjecting imports of it to variable levies. … One reason for this attitude appears to be the NFU's view that the very uneven usage of manioc … represents a distortion of competition for livestock producers".
The committee point out that "green" currency differentials have created an artificial situation, and I have no doubt that that was the case, as anyone who studies the situation at the time would agree. We argue, I believe with force, that the interests of producers and consumers of livestock, in which the Minister of State is I know concerned, should be given precedence at this time. Livestock producers have gone, and are going, through a difficult time. Livestock producers in Wales, certainly, as they said to me when I addressed the annual meeting of the Farmers' Union of Wales recently, are deeply concerned about their prospects and by the fact that the real income of livestock farmers has in no way compared with the real
income of cereals farmers.
§ It seems to be self-evident, as the committee point out, that the lower the cost of animal feedingstuffs the lower the prices necessary to support livestock production; and, of course, meat prices should be lower, with a resultant improvement in demand. From this viewpoint the imports of cereals substitutes, including manioc, must in principle be beneficial to the Community, and certainly to the United Kingdom. We believe that those who want to restrict imports must prove that this would be beneficial, and we say that that proof was not provided at any time or in any of the reports which the Commission produced last year. We must also (and they must, as well) take account of the importance to a poor developing country of manioc exports.
My Lords, if it was the case that cereals producers were in financial difficulty at this time and had been in financial difficulty in the last few years, and if it was the case that cereals substitutes, including manioc, were pouring into the Community without any sort of control, then we might have to take a modified view. But as things are now we cannot accept that the proposed action is justified. I am glad to note that the National Farmers' Union, in their latest circular, which noble Lords will have received in preparation for this debate, agree that our conclusions are correct "in the short term", but they go on to say that our analysis is static rather than dynamic and:
takes no account of the possible effects on the budget of large increases in manioc supplies in the future".
But the committee's function is to look at these proposals as they would affect a range of interest now, as things are now; and my experience of the National Farmers' Union (over a long period of appreciative observation, if I may say so to your Lordships) is that they are not slow to adopt a similar stance. They are static or dynamic as the situation demands.
We took the most careful account of all the evidence both oral and written; and I will do no more than call attention to the views of the feedingstuffs industry (GAFTA and UKASTA) and the Overseas Development Institute. The Brandt Report is very much in our minds at this time and we all hope that the talks which are starting today in Mexico will result in some hopeful initiatives for the developing countries. But we must also make sure that our Community policies do not run counter to the sympathetic expressions that we utter from time to time about the developing countries. As the committee have said in paragraph 35:
… whilst recognising that the Thai authorities have voluntarily accepted the proposed agreement and that no Thai criticism has been seen, [the Committee] regret that the first recourse proposed to deal with an internal problem of the Community should be by restricting imports from developing countries".
The allegation that the internal cereals market might be disrupted is effectively dealt with in paragraph 38 and the effect on the budget in paragraphs 39 and 40. We say that the restriction of imports of manioc could simply have the effect of artificially promoting expansion of imports of other products or of compelling resort to an ever-widening series of restrictive measures. The Ministry of Agriculture made plain in the evidence to us that they certainly disliked this.
§ Our conclusions therefore in Part VII are short and 803 clear. The committee are not in favour of the Commission's proposals, for reasons I have tried to explain. They believe that any benefit which might accrue would be at the expense of damage to the third world countries, to the Community's reputation as a trading partner and to its political relations. This short report therefore has far-reaching implications for the Community and for the United Kingdom and I hope that the Commission, the Council and Her Majesty's Government will give further careful consideration to the consequences of the proposals as they now stand. I beg to move.
§ Moved, That this House takes note of the report of the European Communities Committee on cereal substitutes (42nd Report, H.L. 270).—(Lord Cledwyn of Penrhos.)
§ 6.12 p.m.
§ Lord Mackie of Benshie
My Lords, it is not often that I disagree with the noble Lord, Lord Cledwyn, and, indeed, I do not disagree too much with the other members of the committee. I think we are a very nicely balanced committee. We have every form of prejudice and self-interest within our ranks and up to now we have produced a fair balance and our reports have been acceptable to and always studied with great interest by the Government and, certainly, by the Commission. I can happily commend the report to your Lordships. It is beautifully printed, it is closely argued, well written and has a beautiful blue cover. The only thing is that I feel that the conclusions are wholly and absolutely wrong. I feel so not because I am a farmer and wholly prejudiced but for a number of reasons which I shall try to make clear to your Lordships.
The first is that we are now members of the European Economic Community. There were when we joined and are at present another eight members. The other eight members are quite happy with the system of supporting agriculture by intervention, by buying and keeping up the price to a level which would give the farmers a reasonable living and the consumers a good service; and the consumers in Europe (especially in the original Six) and the farmers have had an excellent deal. Production has risen to an enormous extent and the proportion of money spent by the public on food has fallen because of the rising incomes. There is no doubt at all that the other eight members of the Community regard the EEC, and the CAP in particular, with favour.
They look on it as needing, adjustment and tuning but not this sort of hankering that still exists in this country—and, I regret to say, in our committee—for an impossible reorganisation of the CAP which will make us once again have the enormous advantages which we think we enjoyed in the days when the members of the grain trade associations could roam the world buying their food for this country and for manufacture and resale at prices that impoverished the peon on the pampas and the "okies" in Kansas. Those days are gone and I hope that Members of this House realise it. Like it or not, we are in a Community that is wedded to the production of the major proportion of their food inside the Community and to the rewarding of the farmers by intervention buying. 804 The whole point about this report of ours is that we hanker back to the days when we could buy this cheap food as and when we would and spread it around the country while we supported farming by direct payment to farmers. When we are inside the Community that system is largely gone, although remnants of it can remain and have remained.
The first thing about our report is that we totally ignore the general position that we are in and the position as felt by the other members of the Community. The second thing is that it is a wholly illogical situation that we take up. Cereal substitutes is not a good name for all the substances discussed—for example, soya bean, which is mainly protein and some of the others. But maize gluten and the manioc, tapioca, or cassava, whatever you like to call it, is a cereal substitute. It is totally illogical to have a policy for cereals whereby you exert a big levy on cereals to keep them up to the recommended price in the Community and a cereal substitute which can replace the cereals comes in at 6 per cent. of the tariff—or no tariff at all in the case of gluten—under the GATT. It may be right for other reasons, but it is wholly illogical in the face of the generally accepted policy on agriculture in the EEC; and such, indeed, appeared to be the opinion of MAFF, in parts of their evidence at least.
The position at the moment is that in 1975 96 million tonnes of cereals were grown inside the Community. That had risen to 119 million tonnes in 1980. That is a considerable achievement in the raising of production. In 1975 we imported 2.3 million tonnes of manioc. In 1978 it had gone up to 6 million tonnes and dropped to 5.5 million tonnes in 1979. There is no doubt that these imports are directly replacing the cereals which we are exporting with a big subsidy on to the world market. This export on to the world market is affecting cereal growers in the world because it is depressing the world price and cereal growers on the River Plate or on the fields of Iraq, or wherever they grow barley, are affected by the dumping of cereals on the world market with a subsidy by the EEC. So we are not really doing all that much good to the third world countries simply by taking in the manioc, which is the commodity I wish to talk about although maize gluten may be a distinct danger in the future.
Before I go on, I should like to say something about livestock producers. I have every sympathy, not so much with the farmers of Wales—for they come with the farmers of Scotland in the same bracket and deserve sympathy for other reasons—but certainly with the small farmers and the efficient stockfarmers of Northern Ireland. They were very badly hit by the EEC when we joined it. Previously they had imported their grain from the Americas into Belfast very efficiently and competently and at a reasonable price, and they converted it with great efficiency. Now instead they have an awkward and expensive route across England, more or less, through the ports and into Belfast. Therefore the cereals cost them far more than they did. The result is that an extremely efficient industry has been hard hit.
However, I do not think that the way to help is to import a cereals substitute such as manioc against the whole of the rest of the policy. In cases like that, there 805 should be special help. In the case of cereals it may well be that prices are too high. If so, let us work the solution out and reduce them. If that is not the case, then let us put up the price of meat or meat products for the livestock farmer. It is wholly illogical to say, "They are having a bad time; let us break the system and import this substitute". Either you work the system, or you do not. But to say: "Somebody is suffering, let us go and bust it by buying in something from outside", in my view must be entirely wrong.
Now we come to the Third World and Thailand. I have taken a little trouble to find out about this. I asked for a report and received some figures from the FAO about Thailand. There are a number of curious things happening there. Other members of the committee may know more, and the noble Lord, Lord Walston, went to Thailand to see the situation. First, it appears to me that it is a highly dangerous road for Thailand to depend for such a large amount of its income from exports on a product which is busting the system in the EEC. It is highly dangerous and they themselves appear to think so.
Furthermore, I am told—and this is backed up by a number of people—that it is not a good product for the land in Thailand. In the North-East province, where it has been grown, there are already signs of a grave deterioration in the land. It is a very extractive crop and the Thai Government themselves are not entirely happy about it. Certainly the evidence from the overseas development body was against it and they spoke of the appallingly restrictive attitude of the EEC, and so on. But they also portrayed a remarkable ignorance of the problem and in their evidence said that they were unable to discover much about it.
I would very much doubt the long-term good to Thailand in depending on the export of manioc to the EEC. Certainly if we are to continue to be efficient and grow in this country, I would think that Thailand would be quite right to be looking voluntarily at a different attitude and to be looking at alternative measures in line with the EEC Commission's proposals. I do not think that the Commission's proposals are ungenerous or unwise; I think that they are extremely sensible. To offer to give money for development along proper lines of agriculture for the long-term good of Thailand, is certainly doing much more good to Thailand than continuing to supply a market to the detriment of the country's soil, to the detriment of the forests and very much to the detriment of the growing of rice, which is the staple food and has been a staple export. I may say that in Thailand the Government deliberately keep the price of rice 30 per cent. below the export price, I presume in order to get some money. There are a whole lot of things that could be put right.
I yield to no one in my concern for the Third World and developing countries, but I do not think that this is the way to help them. If I may come back to the conclusions of the committee—I much enjoy attending and disagreeing on occasions—I would say that the first conclusion that it is wrong is incorrect. The second conclusion that the increase,in imports of cereals substitutes in recent years, and of manioc in particular, has been stimulated by situations in which undervaluation of "green" conversion rates in certain Member States have made these imports relatively cheap",806 is of course right. But I very much doubt whether the Dutch or East Germans who led the way in taking in the cheaper product, have done very much good to the Commission or, long-term, to themselves by so doing.
Far from it being unimportant in Britain, I quote a headline from the Farmers' Weekly of 18th September: "Manioc pours in to feed UK mills". We are now in a position where barley is much more expensive in this country and manioc can come in. It is a distortion which will do no good in the long run.
The third conclusion is:Restriction of imports of cereal substitutes would be disadvantageous for Community producers and consumers of meat".I submit that in the long term that is not so. There are other ways of putting it right. If the price of cereals is too high, then let us be courageous and say so. Do not say instead that we will nip in something which is destroying the ground in Thailand.
The fourth conclusion, that it does not benefit the budget, must be wrong. To export the amount we did—we spent £360 million or some such enormous figure—and, obviously, if we are going to dump wheat and barley on the world market as a result of importing some other cereal which we could have used here, must cost the budget very large sums of money.
That is not the major reason that I oppose this. I oppose it on the grounds of inconsistency. I think that the Commission have taken a sensible and a humane attitude, and I think that we should support them.
§ 6.27 p.m.
§ Viscount Brookeborough
My Lords, I should like to start by paying a tribute—and a very genuine tribute—to our staff and to the drafters of this report. I have sent it round to a number of people in Northern Ireland to get their opinions on it. One and all have said that it is the best written report that they have ever read and explains a rather complicated subject well, especially when the phrase "cereal substitutes", which means something rather different from what we are discussing is used. My first point concerns the clarity with which this report is written.
When I came into the House I saw the television cameras filming for the "Nationwide" programme. Your Lordships have agreed that this should be done, and it was a great pleasure that I saw the noble Lord, Lord Mackie, exposing a huge expanse of his tartan waistcoat in front of the camera. I feel sure that, when the programme eventually appears on "Nationwide", everybody will feel that out committee has done credit to this House in the exposure of its various members.
I should like to pay tribute to the noble Lord, Lord Cledwyn of Penrhos, not only for his introduction but for his control uf the very many different aspects of concern of the members of his Committee. When one hears the noble Lord, Lord Mackie, explaining his particular position one knows the ability of the other members in the drawing up of the report and in taking part in the actions of this committee.
I can say that, because as regards this particular report, owing to various circumstances including nefarious problems in Northern Ireland, I do not feel that I have contributed personally as much as I should have liked to have done. Its interest to me, coming 807 from Northern Ireland, is of the greatest importance.
There are three rather conflicting main arguments which are going on. The first is: Is Europe to have a "fortress" type of trade or is it to have a dynamic and expanding trade? The second is the question discussed by the noble Lord, Lord Mackie: the selfsufficiency of the EEC. Thirdly, there is the question of the imbalance between the prosperity being allowed under EEC pricing to the livestock producers and the cereal producers respectively.
While it would be unfair to talk about "barley barons" in this House, there is absolutely no doubt that the barley growers of this country have been doing extremely well compared with the livestock producers, and the CAP is for the prosperity of all producers and farmers at a proper price for the consumer. In paragraph 36 of our report there is what I believe to be a very important sentence. It says:The Committee are in no doubt that in present circumstances the latters"—that is, the livestock producers—should be given greater weight: and … consumers' resistance to increased prices is adversely affecting consumption of meat".Therefore it follows, to my mind, that if we are to restrict the import of anything which makes the input into livestock more expensive, unless something is done about the price of beef in the end we are going to reduce consumption in a very big way.
It is that aspect I should like to emphasise, not as regards the general high principles to which the noble Lord, Lord Mackie, referred, but coming down to the rather smaller area of Northern Ireland, for which the noble Lord, Lord Mackie, was kind enough to express sympathy. During the period of guaranteed prices, various Governments have maintained the balance between prosperity for livestock producers and cereal producers in a very careful way, and the balance was not really too wrong. But now under the CAP the balance is worse than it has ever been in my memory.
As an illustration of how it affects us in Northern Ireland, I should say that 89 per cent., or nearly 90 per cent., of the output of the Northern Ireland farmers, which is £500 million, comes from livestock. The noble Lord, Lord Mackie, has said that perhaps the price of cereals is too high, but the fact is that if the price of cereals had not been too high then cereals would have been used. Somehow the balance has become completely wrong and at the present moment the only way any prosperity can be maintained for the livestock producers of Northern Ireland is by not restricting manioc.
I am referring to manioc because it appears to be what we would call the most important cereal substitute, certainly as far as Northern Ireland is concerned. The Commission's proposal appears to be mild enough—that the import from Thailand will be 5.25 million tonnes this year, decreasing in 1983 to 4.75 million tonnes—but even that apparently minor restriction is unsatisfactory in the part of the world I come from. In paragraph 37 it says this:It is not possible to measure the benefit, in terms of the prices of meat, of the existing largely free access for cereal substitutes …The noble Lord, Lord Mackie, has explained that the livestock industry of Northern Ireland was based on an 808 efficient industry importing from the Americas; but we can, with the use of manioc, say exactly how this is cheapening the price of our end products, because it is on our end products that we really have to make a decision.
In September this year, the price of grain was £14 per tonne more expensive in Belfast than in East Anglia. When that is converted into the compound feed, it works out at £5 per tonne for pigs and poultry and £8 per tonne for dairy cake. When you then translate that in terms of your end product, you find it is £1.30 per pig, ½p per pound for broilers and 1½p per gallon of milk. That is a total profit: remove that and you have a disaster. It is on that basis that I oppose even the minimum restriction of the importation of manioc.
We have other problems which I have already mentioned. Our markets, in spite of all the other problems involved in more expensive inputs, is more distant; but in spite of that the efficiency of the industry has always enabled us to overcome that particular disadvantage. Our industry is on a knife-edge, and if the pig industry alone, if I only take one part of it—and I must not get on to the ills of the pig industry, because we are talking about cereal substitutes—should collapse, we are talking in terms of 2,000 to 5,000 people becoming unemployed, which, translated into terms of unemployment benefit, would cost the country something like £20 million a year. As it is, the income of the farmers in Northern Ireland is down by 77 per cent., and out of a turnover of £500 million there is only £9 million termed as being surplus.
The proposal of the Commission may look harmless, but the problem is that if manioc is restricted at all we will not get it in Northern Ireland, because the Dutch and the Germans have invested a large amount of money in port facilities and a large amount of money in Thailand. The good manioc comes to Rotterdam in ships of 40,000 tonnes and it is then trans-shipped. The Dutch and the Germans are using vast quantities of it. If it is restricted, it will be more profitable to use all that manioc in Germany and Holland, and none will then come to Northern Ireland.
Therefore, if it is not available to Northern Ireland and if there is to be any restriction at all, I come back really to what the noble Lord, Lord Mackie, was saying: other actions must be taken in anticipation. The Government must accept that to have any restriction at all, either by quota or by raising the price of manioc, will have a disastrous effect on this industry in Northern Ireland. If restriction occurs, the Northern Ireland miller will not transfer to cereals because the cost of the compound will be too great. In fact, the amount of cereals used in Northern Ireland will decrease, because there will be no livestock industry to consume it. So I hope that the Government will read this report and agree with me that there should be no more restriction on manioc, either by quota or by price.
§ 6.38 p.m.
§ Lord Sainsbury
My Lords, as is his custom, the noble Lord, Lord Cledwyn of Penrhos, has given a clear and thorough summary of the report. It is a most wide-reaching subject, but I must confine my brief remarks to two aspects of it. First, I should like to stress the importance of the cassava root, which, 809 as has already been said, is also called manioc and tapioca, to the Thai economy. Secondly, I should like to ask how the Community, having encouraged the excess production of cereals through the price support system, can justify restricting competition from imports, particularly imports from a developing country. The Community cannot espouse protectionism at home while claiming to champion the interests of the third world. I cannot pretent to speak with the intimate knowledge of Thailand of my noble friend Lord Walston, but, as I understand it, cassava is an ideal crop for Thailand. My information is very different from that of the noble Lord, Lord Mackie, and perhaps my noble friend Lord Walston will adjudicate as to which view is nearer to the true facts.
As I said, cassava is an ideal crop for Thailand, and is well suited to a poor country and a poor soil. It requires little money to grow, yet can survive under soil and climatic conditions where other crops would fail. The sandy barns make harvesting this tuber particularly easy, while the pronounced wet and dry seasons make the drying and processing economic. Of more importance is the financial dependence of the country on tapioca. As a result of the demand from certain countries in the EEC, and direct encouragement in the processing, tapioca has become one of the country's main foreign currency earners. A large part of the population owes its livelihood to its production, transport, processing and export.
The Community is offering financial assistance to help Thailand diversify its agricultural production, but it will take time for new crops to become established. Even when new export crops have been produced, what guarantee will Thailand have that the markets of the European Community will stay open or, for that matter, whether satisfactory markets will be available in the rest of the world? The magazine Agribusiness Worldwide referred to a Thai merchant commenting on the aid, saying:If Thailand starts producing cashew nuts for export, is it not likely that the Community walnut growers will eventually seek to limit even these imports?From the evidence that the committee received, it has not been possible to judge the concern that Thais feel on this attempt to limit their exports. At present, the agreement is indeed informal and voluntary for Thailand. However, there is the threat of what is known under the GATT as "de-consolidation". In other words, the import levy on manioc fixed at 6 per cent. could be replaced with a much higher tax.
This brings me to another point of the increasingly protectionist stance of the Community. In my opinion, it is time that the policy makers acknowledged that the problem facing cereal farmers is that production is greater than Community demand, the reason for this being that support prices have been too high in relation to world prices for too long, although the gap between Community prices and world prices naturally fluctuates. It is this that has caused surpluses and not, as we are being led to believe, the importing of feed grain sub-substitutes. Of course, imported feedingstuffs will be attractive, if the price of feed grain grown in the Community is maintained at too high a price.
Part of the general problem of the CAP, in my view, arises from the policy of self-sufficiency which appears to be the primary aim of certain member states of the 810 Community. If this is EEC policy, it seems inevitable that it will give rise to surpluses because of variations in supply and demand. There are many who argue—and I am one of them—that it would be better to aim at 80 or 90 per cent. sufficiency, buying the other 10 or 20 per cent. at a lower price from third world countries.
This proposal to restrain the imports of manioc stems from the hope of Community farmers that demand for their grain will increase. It is, therefore, valid to ask what will be the real effects of this move. The committee heard repeatedly in evidence that compound feedingstuffs are not direct substitutes for cereals. From the Grain and Feed Trades Association we learned that some ingredients in compound feedcake perform specific roles. Manioc itself is almost entirely carbohydrate, but mixed with proteins and fibre the nutritional balance and quality of feed compounds can be controlled.
The first possible result of this restriction of imports of manioc could, as we state at paragraph 44 of the report:…simply have the effect of artificially promoting expansion of imports of other products, or of compelling resort to an ever-widening series of restrictive measures".The other products would include cereal residues, known as brans and sharps, wheat offals and grain screenings, fruit pulp, molasses and sugar beet pulp, and maize gluten. There is certainly no guarantee that there will be a corresponding increase in the demand for Community cereals. Manioc is the exception, but all other cereal substitutes are by-products of processing methods. They have no particular value and their price can be reduced to that which secures disposal.
Secondly, if feed prices increase as a result of the restriction on the imports of manioc, and other restrictive measures which might follow, it is bound to affect livestock producers and consumers of meat and poultry, although it is, of course, difficult to estimate the the exact increase. The Community, in their anxiety to deal with what can be an embarrassing and costly grain surplus, ignore the interests of the livestock industry which, as has already been said, has done relatively badly compared to cereal producers.
Finally, it is more than probable that there will be an increase in budgetary spending. Again there are no definite figures, but the Overseas Development Institute have estimated that the proposed financial assistance could amount to 50 million dollars. I am opposed to this attempt to restrain Thailand's exports. As the Overseas Development Institute state in their evidence:The story combines all those elements which so often bring the CAP into disrepute: misdirected public expenditure; insensitive protectionism and uncritical acceptance of the views of European farming interests at the expense of consumers and overseas suppliers".On a more general level, it must make developing countries doubt the Community's commitment to aid the third world. Therefore, I believe that these proposals should be resisted.
§ 6.51 p.m.
§ Lord Bishopston
My Lords, as previous speakers have indicated, I am sure your Lordships are indebted to my noble friend Lord Cledwyn of Penrhos, to the members of the European Communities Select Committee and to those who gave evidence for the report 811 which we are discussing. May I add the tribute of the Opposition for the effort involved and, referring to the comments made by the noble Viscount, Lord Brooke-borough, the clarity shown in the presentation of the report by my noble friend Lord Cledwyn of Penrhos.
As the committee claims, the Commission's proposals raise important questions. It is right that we should be discussing these matters now in your Lordships' House. Some may think that it seems rather odd—the noble Lord, Lord Sainsbury, referred to it—that we are discussing manioc which is associated with cassava, a plant with tuberous roots. On the face of it, there appear to be much more important issues confronting the Community. These matters might be thought to be of less consequence. Yet, as the committee claims, matters of policy and principle are involved, affecting not only animal feedingstuffs but other aspects, too.
We are concerned not only with the composition and prices of compound animal feedingstuff but also with the constituents of the feedingstuffs, the sources and the conditions of procurement. However, the undertone of my comments this evening will be that there are much wider aspects which concern not only the effect of policies on EEC members but the wider canvas of human affairs farther afield. Reference has been made to the less developed countries. But this is not a simple matter, for as members of the Community we know that there are other considerations which we must take into account.
We were reminded by my noble friend Lord Cledwyn of Penrhos that cereal substitutes are not necessarily inferior to cereals. This is one factor, among many others, which we must take into account. There are some cereal substitutes which are alternatives, but there are also some which are complementary to cereals themselves. The EEC and its member states wish to ensure that their own producers are not undercut, that they are safeguarded, and that there is a fair trade between member states and non-member countries.
The objective of the EEC is to ensure maximum productivity with reasonable competition from inside, helped by policies to prevent internal production from being undermined or threatened by undue imports from non-EEC countries—hence the levy or the low duty system. If outside imports are not regulated, it is said, then unfair competition results. So the EEC wishes to restrict the importation of cereal substitutes. But what matters is the way in which it is done. This is one of the factors which we have to bear in mind. Yet, as the report claims, the Community is heavily dependent on imported proteins, the major part of which is derived from soya beans, the main source of these imports being the United States. But protection in the form of variable levies also keeps EEC prices high above those on world markets. As the report indicates, most of the cereal substitutes are both produced in the EEC and imported, produced as a by-product of the processing of either EEC-produced or imported raw materials, manioc, as we have been told several times, being wholly imported. Thailand is the main source of supply. Smaller amounts are obtained from Indonesia and China.
With regard to the Community's views and proposals, these are most important for they indicate the 812 approach and the aims of the Community. The Community rightly points to the disadvantages of the use and input of cereal substitutes, including the disadvantageous effects on the Community budget and loss of revenue. My noble friend Lord Cledwyn of Penrhos referred to the growth of manioc imports, which has been called "spectacular". It is regarded as adestabilising factor in the cereals market".Manioc gets special mention. The Community stresses that the policy objective in respect of manioc and other potential cereal substitutes must be to ensure that there is no disorderly development or growth of imports likely to cause imbalance in the cereals market or any addition to budgetary costs. It seems that it is on this basis that the Community seeks speedy action on manioc. An outline agreement text between the Community and Thailand was, as we have been told, negotiated about two years ago by Mr. Gundelach and has not yet been formally concluded. Despite non-conclusion, the Thai Government have acted, I understand voluntarily, to restrict their exports of manioc to the EEC. This restriction has caused some difficulty for the Thai Government through low farmgate prices and it has asked, quite naturally, that the Community should co-operate in overcoming some of the resulting problems. We note that the Council of Ministers' outline agreement includes provisions for the restriction of exports of manioc from Thailand to the Community—this point has been made by several speakers—the imposition of a maximum levy of 6 per cent. and the imposition, in effect, of import quotas. The aspect of help to Thailand was a proposal that Thailand's position as an exporter of manioc was not undermined by a substantial increase in manioc imports from other countries and the possibility of the Community doing its "utmost", whatever that may mean, to provide financial assistance for projects aimed at rural development and crop diversification in Thailand itself.
There is need for more orderly arrangements. We are told by MAFF that manioc production in Thailand during 1980–81 has risen substantially, with their producers suffering a significant fall in their income. This is a factor of very great importance to people in that country. In this way, Thai producers' incomes from their exports have fallen substantially below what they might have been.
With regard to the comments of the European Parliament, it seems apparent that the Parliament is also concerned and has called upon the Commission to review its trade policy to open up the Common Market to a much greater extent, not only for raw materials but for finished products as well. In addition, there is emphasis upon the need of the Community to consider trade policies which are compatible with Community development policy, particularly through long-term agreements with developing countries. This aspect is of very great importance, and reference has already been made to it.
With regard to other views which have been expressed, I am pleased to note that other agencies and bodies with not only a commercial and trading interest but with concern for the wider human aspects have commented. GAFTA/UKASTA, concerned as they are 813 with the grain trade, argue that the issues in general amount to a choice between the concepts of a dynamic market economy and, as the noble Viscount, Lord Brookeborough, mentioned, the alternative of "Fortress Europe", urging the former. They go on to say that the main cause of the trouble is the high level of Community support prices for cereals. They want policies which are not piecemeal, unsound and impracticable attempts to restrict access of imported feedingstuffs but the discouraging of surplus production, and this of course is another indication of the diverse ways in which we can achieve the aims which will buttress and ensure good sound agriculture, both here and in other parts of the world.
As the report points out, there are conflicting considerations affecting policies towards cereal substitutes. They include agreements with exporting countries designed to restrict imports of manioc accompanied by financial and technical aid. This of course includes development matters, diversification and so on in Thailand. There are, of course, measures to limit budgetary costs and to discourage surplus production of EEC produced cereals. The latter aspect would be accompanied by reductions in cereal support prices if a standard quantity of production is exceeded. As I understand it, MAFF have supported the Commission's proposal for the restriction of manioc imports and would welcome further the restrictions which the Commission appear to have in mind while not contemplating very severe restrictions, and I think the House will await the comments from the noble Earl the Minister of State on this matter and to know what future policy proposals the Ministry and the Government have in mind.
The National Farmers' Union is naturally interested in some form of comprehensive protection for producers generally under the CAP while, as they say, seeking to avoid distortion and other undue factors. It is also commendably concerned with the interests of the developing countries. As one might expect, the Overseas Development Institute has commented that there are undesirable aspects in this matter including "elements which bring the CAP into disrepute". Also they speak about misdirected public expenditure, insensitive protectionism and uncritical acceptance of the views of the European farming interests at the expense of the others.
I think the point about looking at the interests of the Community overall and the CAP in particular, to see that it does not fall into disrepute or merit unwise criticism is one of great importance; but I think there is a danger in looking at one or two items in particular while ignoring the aspects of the economy of Thailand itself and indeed the economy and the conditions in non-EEC countries.
The ODI have pointed out also that other restrictions by the Community, for instance in textiles, which have adversely affected Thailand, should be borne in mind when these matters are considered in the agricultural aspect. Other countries in the South-East Asia area are also involved here. There is the danger of aggravated trade relations with that region if restrictions are clumsily applied.
The noble Lord, Lord Sainsbury, has mentioned his concern, which is a concern we all share, for the developing countries, and in your Lordships' House on 814 3rd June last a debate took place on the report of the European Communities Committee on development aid policy, the 21st Report, and it was on that aspect that I made my maiden speech the day after entering your Lordships' Chamber. It is often thought that development aid, and indeed other forms of assistance, to the LDCs (or the less developed countries) in the third world have to be considered mainly in terms of what the rich North can do to help the poor and needy South. It is not a matter of what we can do for them and what we can give them; it is a matter of how we can work with them in partnership, not only in aid but in trade as well, and this surely is one of the basic points in our debate this evening.
The report to which I have just made reference considered the policies of the EEC in respect of the LDCs as a programme of assistance. But real aid must be seen not in terms of what the rich can give or do for the third world so much as what the North and South can do together for the mutual benefit of both. We do not see the interests of the South as being in conflict with our interests at all; indeed they are very much bound up together.
On that basis trade is as vital as, if not of more value than, aid. It is in negotiations with the CAP comprehensively including trade policies of the EEC with the non-EEC countries that some of the more noble aspirations can become reality. I think the danger is that we tend to look at the Brandt Report and the problems of aid in isolation and when Ministers—and I had five years as Minister of State for Agriculture in another place—enter into negotiations on occasion we tend to look at our interests and their interests, without realising sometimes that our interests may be in conflict with their interests in other respects, where we normally show much greater concern.
As the committee indicates, they have not examined the wider implications for policies in this report. It is so easy for Governments, Ministers and indeed the public to look at single issues—such as the one before us now—in a narrow way without regard to the wider perspectives. So it is no wonder that the Select Committee points out in paragraph 35 that it regrets that the first recourse proposed to deal with an internal problem of the Community should be by restricting imports from the developing countries, which is a case in point. I think also we should bear in mind, as the noble Viscount, Lord Brookeborough, from Northern Ireland has made known his concern about conditions in that country, that in many ways we are all developing countries to some extent and are deserving of the consideration of others. We know as members of the Community how often we plead our case and ask for the tolerance and understanding of our fellow Community workers.
The Committee goes on to say that lower cost of animal feedingstuffs and lower costs to support livestock production result in lower prices to the consumer, meaning of course more demand, and that means not only happier producers, workers, and processors but consumers as well, both inside and outside the Community. So fewer restrictions on international trade are therefore beneficial and preferable, especially as it represents freer trade and a valuable source of export earnings for certain developing countries, as well as for ourselves.
815 Finally, to come to the conclusions of the committee, the Commission has not proposed that imports should be eliminated. The proposed draft agreement with Thailand envisages a progressive reduction in the volume of exports from that country. But I was interested to note that MAFF's evidence suggested that the Commission do not envisage doing much more than placing a lid on the present position. Perhaps the Minister may be able to give us a little more clarification of what they have in mind there. The report goes on to assert that no factual evidence has been advanced to show that imports of manioc have become "excessive" or that they involve any imbalance in the cereals market. These are points that we have to bear in mind. I was interested that the noble Viscount, Lord Brooke-borough, answered some of the points and the misgivings uttered by the noble Lord, Lord Mackie of Benshie, when he spoke as he did from his experience and as a member of the committee.
So the fact is that in these situations facing agriculture and food production in our various countries, as the noble Viscount, Lord Brooke-borough, has said, we live very much on a knife-edge and never quite know when we may need the consideration of others. Agriculture and food producing industries have many ways—we might call them weapons—by which the balance of interests can be protected. Some farmers want more money and, as I told them when I was Minister of State, and indeed since—because at that time I had both import and export responsibilities with many countries—if policies lead to higher prices, then of course consumption goes down and profits go down as well. If prices are not adequate to ensure fair returns, then farmers restrict production and shortages result, with higher prices, and so we have the swing of the pendulum there. On the other hand, if import levies protect home production unwisely or excessively then the EEC producers do not benefit from the soft breezes of competition. We want only soft breezes of competition and not the gale forces which unfair competition from outside the Community can sometimes bring. But again there are, of course, regional variations even within the Community. So a balance must be kept in all this.
I think in looking at the considerations of the report as they affect us within the Community we also must have concern for the third world. It is important that we help the third world in the ways in which they think we can help them best. On the EEC 21st Report, debated on 3rd June, in the comments made by our late noble friend Lord Goronwy-Roberts, who spoke for the Opposition, he said:I think it will be agreed that the paramount criterion to aid is that it must be determined by the development needs of the third world and not by the exigencies of the Community's internal agricultural policies. We must not be afraid of constructive criticism over the way in which the Community's economy is operated".—(Official Report; col. 1235.)Having regard to the ways in which we can help other countries is one matter of great importance when we are so much involved, naturally and rightly so, with our own interests.
I go along with the committee's general conclusions, especially those in paragraph 49, which anticipates damage to the developing countries, to the Community's reputation as a trading partner and to its 816 political relations, if the proposed measures were enacted. We are all grateful to the Select Committee for their work and I hope that those with responsibilities will heed their conclusions, because, as my noble friend Lord Cledwyn of Penrhos has said, their conclusions have far-reaching implications.
§ 7.13 p.m.
§ Lord Stanley of Alderley
My Lords, I would like to start off by thanking the Select Committee and indeed agreeing with them that this report should be debated on the Floor of the House. After that, like the noble Lord, Lord Mackie, I fear I can find nothing else to agree with. I would like to put the points that worry and concern me. Paragraphs 45 and 50 suggest that cereal prices are relatively too high and support prices should be fixed at a lower level. If your Lordships are saying—and I think my noble friend Lord Brooke-borough was certainly saying—that livestock producers have fared worse than their cereal brothers, I would reply briefly in two ways. First, they will not achieve prosperity by improverishing their cereal brothers, and they will not achieve prosperity by throwing out lock, stock and barrel the whole of the CAP. What are they wanting? Are they wanting to go back to deficiency payments, or do they want a complete revision of the CAP, including Article 39, which I will be happy to give to any noble Lord who wants to read it afterwards? Perhaps in a lighter vein I might misquote the old beer advertisement by saying that all farming is bad but some is worse than others!
I would ask your Lordships to consider the case of a young man paying £50 an acre and 20 per cent. interest on his money, a section of our society that is so very vital to our country that the committee seem to have forgotten. I can assure your Lordships—and I am a cereal producer—that such a young man needs to average over 50 cwt. an acre merely to break even, while the national average is well below that figure. I challenge any noble Lord here regularly to exceed that figure of 50 cwt. by March.
The committee states that world cereal prices are lower than ours, to which I ask your Lordships what would be the result of dropping the support price, as was suggested, I think, by the noble Lord, Lord Sainsbury. I suggest the following would happen. First, labour would be further reduced to the detriment of our rural community. Secondly, there would be a switch to other forms of production, as indeed happened when there was an EEC subsidy to encourage dairy farmers to get rid of their cows, many of whom were forced into cereal production, so causing part of the problem we are discussing. That scheme, incidentally, was studied by this very Select Committee in 1980 in their 32nd Report. Thirdly, there would be even greater pressure on the farmer to increase his yield, which would involve a greater use of fertilisers and pesticides, rationalisation—by that I mean of field size; nothing less than 100 acres for me—causing further removal of hedges, ditches and other obstructions to the production of cereals at the lowest possible cost, because that is what we would be forced into.
That, I believe, is what your Lordships' committee is saying. I am sure I see in the eyes of my noble friend Lord Mottistone that that is what he wants us 817 to do. That is what we would do. I am sure the noble Lord, Lord Cledwyn, would admit that we farmers are very easy to lead; we do exactly what we are told and we do get on with it. But, my Lords, at the back of my mind, way back in the distant past, did not your Lordships debate, maybe too briefly, a Bill called Wildlife and Countryside Bill? If my memory is not all that short and does not completely desert me, I had a feeling that somebody somewhere in this House had a different sentiment altogether over that particular point. So watch out, my Lords, if I may say so, before you force us into this very unpleasant and nasty road. If you do, I hope you will support me when those who do not want us to do these things attack me.
I ask your Lordships to accept that the prices set for cereals only conform to Article 39 of the Treaty of Rome, which among other things requires conditions for an efficient producer to earn a reasonable living. And even at today's prices he would, I believe, require an element of historic costs to achieve such a living. If substitutes are allowed in cheaply this support price will be undermined, with the consequences I have described. But they will also cause, as I believe the noble Lord, Lord Mackie, mentioned, great problems to the economics of the CAP, which would find itself paying more in restitutions. I would point out, in passing, that at the moment the EEC is only 92½ per cent. self-sufficient in feed grains without those cereal substitutes coming in.
The report suggests a greater degree of freedom for imports of cereal substitutes. Without considering the consequences I have mentioned. But my greatest criticism of the report is that such a policy is totally contrary to the CAP. While I accept that the CAP is far from perfect, this suggestion, or the suggestions in this report, completely and utterly destroy the basic concept, and worse still—and I am sorry to say it—put nothing in its place.
Your Lordships may gather that I am somewhat critical of this report, but it does not diminish my respect for the work and thought put into it by your Lordships' committee. Its controversial nature at least takes my mind off the wet weather. As the noble Lord, Lord Cledwyn, has known me all my life, though I have not known him quite all his, I am sure your committee will understand that I am not being particularly spiteful when I say that I hope its conclusions are not accepted.
§ 7.20 p.m.
My Lords, the noble Lord, Lord Stanley of Alderley, said that farmers—whose spokesman he eloquently is—are very good and do as they are told. It has been my experience in another place and here that they are very expert in making sure that they are told to do just what it is they want to do. I take a very different view from the noble Lord, Lord Stanley, about the report that we are debating. In particular, I think that it is a very good illustration—especially when we include the lucid speech of my noble friend Lord Cledwyn of Penrhos—of the great value of the work of the European committee and its subcommittees, not least because the committee procedure gives a full opportunity both for those with expert 818 knowledge, such as we have heard on all sides in this debate, and laymen, such as I certainly confess myself to be on this particular question, to make contributions to the unravelling of these difficult problems.
On the question of manioc, let me admit that my only direct personal knowledge derives from the tapioca pudding that my mother used to make. As to the more abstruse statistics and analysis of the manioc situation in the report, I approach the matter without expert knowledge. However, it is clear to me, and I believe that it must now be clear to your Lordships from what we have read and from what we have heard in the debate, that there is here a very serious issue at stake, particularly—and this is the point that interests me—for the country of Thailand, and I believe it behoves us as a House to say so clearly, both to our own Government and to the powers that be in Brussels.
I do not propose to attempt more than to set this technical report against a non-technical background and to examine briefly just a few of the general principles which seem to me to be raised. The first part of the background against which I think that this proposal should be seen is the contrast between, on the one hand, the general propositions of the Treaty of Rome and its basic premises in favour of competition and freedom of trade, and, on the other hand, the restrictive practices which have emerged, particularly in relation to agricultural production. We have in the case of manioc a proposal to restrict its entry simply because it is an unwelcome competitor to some of Europe's farming interests.
§ Lord Mackie of Benshie
My Lords, will the noble Lord give way? I think that the freedom of trade talked about in the Treaty of Rome is a freedom of trade within the Community. The basic concept of the CAP—and we must not forget it, even if we dislike it—is that the Community has protection from outside.
My Lords, I accept a good deal of what the noble Lord has said, but I am pointing to the fact that there is a contradiction of philosophy within the Treaty of Rome itself and the practices which have emerged in relation to the CAP. Of course, the whole of the common agricultural policy is subject to the criticism that I have made, but this is not the time for us to go into the general question. We have examined that through an earlier report produced under the chairmanship of my noble friend Lord Cledwyn.
Whatever may be our views about the CAP, I believe that we are entitled to insist that, so far as practicable, there should not be any unnecessary extensions of the restrictions, particularly when the well-being of third world countries is at stake. What is proposed in the principles of the agreement that we are asked to endorse would, as has been made clear by my noble friend Lord Cledwyn and others, have a detrimental effect on the basic economy of Thailand. Indeed, as the noble Lord, Lord Sainsbury, pointed out in his speech—with which I thoroughly agreed and which I admired—in paragraph 44 of the committee's report it is asserted that the restriction of imports of manioc (if we start along that road) will compel at later stages resort to an ever-widening series of restrictive measures.
819 My second point is that, despite the criticisms that have hinted at about the CAP and the EEC in that respect, I am a firm admirer of much of the EEC's policies towards the third world. They do not go far enough by any means in my judgment, but what they do is soundly based. I particularly have in mind the STABEX scheme, which ensures that primary products from a wide range of third world countries are subject to the Lomé Convention's indexing arrangements, with compensatory payments to cushion those countries' economies from the vagaries of world commodity markets.
It seems to me regrettable, since the EEC has a good record in respect of its STABEX scheme, that it should now propose a quite contrary policy in respect of the import of manioc from Thailand. As my noble friend Lord Bishopston has pointed out, the evidence from the Overseas Development Institute expressed the view that this episode reflects badly on the EEC, and I think they had in mind that hitherto, as I have said, the EEC's policy in relation to developing countries has been a good one. I recognise that the proposed agreement includes some attempt to compensate Thailand, but, frankly, I doubt the wisdom of first creating a problem for a country and then trying to overcome it. In any case, in my judgment, more harm will be done to the Thai economy by the exclusion of their product than could be offset by the proposed compensation.
The proposed restriction is specific and the promise of compensation is, I would suggest, distinctly vague. The expression is that, "the EEC will do its utmost to provide financial assistance". That is a term of art that I have recognised on many earlier occasions in relation to the proposed 1 per cent. of GNP contribution that the United Nations set as a target for overseas aid programmes. In our own country the Government in which I had the privilege to serve as well as the present Government very often approach that 1 per cent. with terms of art such as, "do its utmost" and "make best endeavours". While the restriction is so specific I should like to see the compensation arrangements equally specific.
The noble Lord, Lord Mackie, made the point in his speech that it is dangerous for the Thai Government to rely as regards their agriculture so very much on one particular product. I would agree. It is a problem that is also to be found in other agricultural economies in other developing countries, be it cocoa in West Africa sugar in Mauritius, coffee in Kenya or copra in the Pacific islands. There is a widespread problem of economies relying on one commodity. I agree that long-term there is a need for their agricultural economies to be diversified. But surely we do not deliver a short-term blow at their economies and then promise them some long-term rectification of the damage that we have done.
§ Lord Mackie of Benshie
My Lords, the noble Lord has extraordinary courtesy in giving way. He has slightly taken my argument the wrong way. The single culture idea is, of course, very dangerous, but in this case much more dangerous than cocoa and copra, which we do not grow in this country. The point that I was making was that this is a substitute 820 that we are taking in against the general policy, which is to be self-sufficient in barley, which is what it replaces. That makes it more dangerous.
My Lords, I was looking at it from the point of view of the economies of the developing countries, and I think that there is a justified parallel in the instances that I have given.
It seems to me that the proposed directive which we are now considering really runs directly counter to all progressive thinking about the relationship between developing and developed countries. A theme that runs through the latest world development report, issued by the World Bank, is that industrialised countries need to keep protectionist measures under control and that they need to keep their markets open in order to help poorer countries. This theme is, of course, also a main part of the analysis of the Brandt Report, which is to be examined by Heads of Government at Cancun in Mexico tomorrow and the day following. It is also the considered view of almost all specialist bodies in this field of the welfare of developing countries, and notably, in connection with this particular report, the wise opinion of the Overseas Development Institute, which gave evidence to the committee and expressed itself in that forceful paragraph which both my noble friend Lord Bishopston and the noble Lord, Lord Sainsbury, quoted with such effect. As I say, what the EEC proposes to do in this connection runs counter to a great deal of really expert and honest opinion.
In the light of all this authoritative opinion, I suggest that we cannot let this proposed agreement pass without firmly endorsing—as I certainly do—the conclusions which the committee of the noble Lord, Lord Cledwyn, has reached, in examining this question and particularly the manioc situation.
§ 7.33 p.m.
§ Lord Walston
My Lords, at the outset I should like to thank the noble Lord, Lord Cledwyn of Penrhos, not only for initiating this debate in such a clear manner, but for presiding over the work of the subcommittee, keeping us all in order—even the most difficult members of the sub-committee—and at the same time keeping his temper and enabling us to keep ours.
I support the conclusions of the committee. I believe them to be right; I believe them to be correct. However, that does not mean to say that I do not have a great deal of sympathy for the attitude of the noble Lord, Lord Stanley of Alderley, concerning the plight of the arable farmer. Some of your Lordships may know that I am one myself. So some may think that I speak with a certain amount of knowledge; others may think that I speak with a certain amount of prejudice. However, although without any doubt in the past years cereal farmers have, by and large, had a good time of it, that has been due in very large measure to the exceptionally high yields which have been obtained, which, in turn, are due both to the skill of the seed breeders and the experts, but largely to the climate. That profit has been gradually, but not very slowly, eroded by an inflation rate running at about 18½ per cent., with an increase in prices averaging about 4½ per cent. Therefore, even the 821 very substantial margins which some of us enjoyed two or three years ago are now very close to disappearing, and in certain cases have already disappeared.
Therefore, I do not think that we can solve this problem simply by pushing the matter back and saying,"Let us have lower cereal prices and then everybody will be happy". That is no solution at all. I would just say to the noble Lord, Lord Stanley of Alderley, that so far as I know, nowhere in this report do we recommend that cereal prices should be lowered. In the last sentence in paragraph 45 it is stated:One method of dealing with such difficulties as may exist could be to fix support prices at lower levels …".That is very different from saying that the best method, the only method, would be to fix prices. We had a certain amount of argument over that in the committee, as the noble Lord, Lord Cledwyn, will remember. So there is certainly nothing in this report which suggests or states that lower cereal prices are the answer to this problem.
I should like to deal briefly with the attitude taken by the noble Lord, Lord Mackie of Benshie. He praised the writing of the report; he praised its formation; he even praised the colour of its cover, which he said was blue. Mine happens to be red; I find that a more attractive colour. I hope that this is not a presage of any split that may jeopardise the result in Croydon tomorrow. The contents—whether they be in a blue or red cover—of our two reports are the same.
The noble Lord, Lord Mackie, took what I can only call a Luddite attitude towards this: we must not allow any new techniques, any new methods, any new materials to alter the existing balance, even though it may bring about increased efficiency, even though the price of feedingstuffs may be lower as a result of using, in this case, manioc; we must resist that because we have to protect our existing producers of cereals. It is exactly the same argument which was used in the days when the butter mountain was at its height: we must prevent people from buying cheaper margarine because, if we allow margarine to come in at lower prices or to be manufactured here at lower prices, the butter mountain will rise still higher. It has been used to keep out isoglucose—a new method of producing sweeteners—which will enable the consumer to have his or her fizzy drinks sweetened at a cheaper price than if sugar were used.
We cannot allow that sort of attitude to influence the overall workings of the common agricultural policy. Of course we need long-term, steady protection, but not the sort of protection which rigidly excludes the new techniques and the new materials which will make the overall industry of agriculture more efficient and which will benefit the consumer by lower prices. After all, if this attitude had been taken some time ago, I rather doubt whether the noble Lord, Lord Mackie of Benshie, would have gone along with it. It could well have been said that French wine is a competitor of English beer, which is made of English barley, and in order to protect the barley growers of England we must keep out claret; or, that French cognac is a competitor of Scottish whisky, also using barley, so in order to protect the barley growers we must not allow any cognac to come into this country. I do not think that the noble Lord would have taken 822 exactly the same view had that arisen for the Select Committee to investigate.
§ Lord Mackie of Benshie
My Lords, I am sorry to keep interrupting, but I am being attacked. If the noble Lord takes that view it is slightly illogical then that we simply do not take the levy off imported barley and bring a little competition into it that way. What I object to is the total inconsistency of levying highly on imported barley, but a substitute you let in at nought or 6 per cent.
§ Lord Walston
My Lords, I know that is what the noble Lord expounded at considerable length with great fluency and persuasiveness earlier on in his speech. I was suggesting that the analogies I have given were not all that far-fetched. We must ensure that the Community is not restrictive in its world trading, and the proposals for those who wish to keep out manioc are undoubtedly restrictive; they are undoubtedly a blow against the third world and a blow against the general trading with the third world and improvement of conditions within the third world.
Perhaps the position of manioc in the Thai economy has got a little out of proportion. I had the opportunity of visiting Thailand in another capacity last month, during the Recess. While I was there I took the opportunity of talking with many people—the Minister of Agriculture, the Minister of Finance, the Minister of Industry, the head of the EEC delegation—and of visiting the North-East, which is the centre of the area in which manioc is grown, and has increased by the largest amount.
My noble friend Lord Sainsbury is absolutely right in recounting the merits of manioc as a crop. Is it growth suitable for that climate, and so on. The noble Lord, Lord Mackie of Benshie, is absolutely right in pointing out its drawbacks. It is bad for the soil. It puts very little back into it; far less than it takes out. It leaves it uncovered. It encourages erosion. But the important thing about manioc in this particular area is that its cultivation has increased enormously from about 1970.
Ten years ago the total exports of manioc from Thailand were 50,000 tonnes. Today, as we have heard, they are something over 500,000 tonnes. The great part of that increase has come in this particular area—not all of it, but the great part of it—of the North-East of Thailand. It has come partly from abandoning rice cultivation and growing manioc instead. About half the increase has come from that. The other half has come from cutting down trees, particularly the very valuable teak trees, and clearing the land and growing the crop on that cleared land.
This is giving great worry to the Thai Government and the Thai authorities because it is encouraging erosion, it is depleting fertility, and it is in fact already appearing to begin to change the actual climate of the area in reducing the rainfall, with devastating effects, if this continues, on the rice cultivation. So the Thai authorities themselves are just as anxious as anybody to move the farmers back into rice cultivation, which is already beginning to happen not through any action of the Community but simply by the force of market circumstances. The price has dropped significantly; the costs of transport and of handling have increased, 823 and so the returns to the Thai farmer have diminished very substantially and he is now moving back towards rice cultivation.
That makes the situation easier. It does not alter the principle of the matter one iota. Therefore, I would suggest that while we are perfectly right in turning our faces against any move to prohibit the importation of manioc, or even to diminish it, any help that can be given, as is indeed being given by Brussels, to the Thai Government to diversify its crops, to find alternatives to manioc, and help it to move back into what its own experts consider to be a more balanced form of agriculture, will be very much to the advantage of Thailand, and incidentally will reduce the amount of manioc which is incorporated into the feedingstuffs in the Community as a whole.
What effect that will have on the price of feedingstuffs is another matter. My own guess is that it will have only a minimal effect. After all, the total amount consumed even at its peak was 5½ million tonnes. If that comes down to 4½ million tonnes the price differential will not be all that great, and, as we have heard, it is largely the German and Dutch compounders who make use of it, and the United Kingdom compounders to a very much smaller extent. Therefore, I do not think we need be too worried about that situation.
I shall repeat only once more my approval and support of this report and its conclusions, and to repeat again, because it is worth repeating, the overall need for us in the Community not to build a wall round "Fortress Europe" and keep out the products of foreign countries when they are likely to be permanent and cheaper, and to the advantage not only of the third world but of ourselves and of our own industry.
§ 7.47 p.m.
§ Lord Mottistone
My Lords, I shall be brief. Like the noble Lord, Lord Walston, I should like first to congratulate the noble Lord, Lord Cledwyn, for his splendid chairmanship of Sub-Committee D, which is a pleasure to enjoy and indeed to be disciplined by, and also for the most clear way in which he introduced what is really quite a complicated subject. In fact, if I might say so, no other noble Lord has put it so clearly since. I should also like to extend my warm congratulations to the noble Lord, Lord Mackie, for the statesmanlike way in which he presented his case. It is so very different from how he presents his case in Sub-Committee D.
I shall not delay your Lordships because the main substance of what I have to say was, as is so often the case, said so skilfully by the noble Lord, Lord Sainsbury. If in due course you come to read the Official Report and you see what the noble Lord, Lord Sainsbury, has said you can imagine that I would have said it if he had not done so first. I am left therefore with two main ques ions which perhaps my noble friend the Minister might consider answering. They have stuck out strongly in the whole debate, and have not been really answered by subsequent speeches.
First, what is being done about the problems of Northern Ireland, so eloquently expressed by my noble friend Lord Brookeborough? It does not seem to me that we have got an answer. What this report which we 824 are debating attempts to do is to push things in the direction of solving the problems of Northern Ireland, but of itself it does not. We took evidence on this at one stage during the past year. I am concerned that the whole balance of the Common Agricultural Policy and the effectiveness of this policy seem in various ways to be biased away from Northern Ireland. I feel that this is a real problem which the British Government should take up very forcefully, and I hope that my noble friend the Minister will be able to tell us they are doing so. Article 39 of the Treaty of Rome applies just as much to livestock farmers as to cereal producers, though from listening to my noble friend Lord Stanley of Alderley one would have thought that, somehow, livestock farmers were a lesser breed and excluded from Article 39.
§ Lord Mottistone
My Lords, my noble friend says, "no", but when he comes to read what he said, he will see that that is the sense one got from his remarks. I should therefore like reassurance that livestock farmers are ordinary people and just as worthy of receiving all the benefits from Article 39 of the Treaty of Rome as any other sort of farmer. If they ate, then the report which we are debating will be seen to have more sense to it than was implied by my noble friend.
§ Lord Stanley of Alderley
My Lords, if I made such a remark, it was certainly not my intention to do so. I think I said that both should be treated equally and that you do not make one rich by making the other poor. Certainly Article 39 applies to both.
§ Lord Mottistone
I am grateful to my noble friend, my Lords, and I am glad he has had an opportunity to correct what he said earlier. Perhaps the Minister will now give us the great wisdom he has to contribute to the debate.
§ 7.51 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)
My Lords, I should hate to disappoint my noble friend Lord Mottistone after his offer that I should contribute wisdom to the debate; I do not know that I have ever contributed wisdom to anything, but I shall do my best to answer the points that have been made and put the Government's point of view on the subject. One would not think that a debate on cereals substitutes was necessarily the most stimulating of subjects on which to have a discussion, but it is extremely interesting, and we have had a fascinating debate in which a number of noble Lords have, fortunately, not always taken the same point of view.
We congratulate the noble Lord, Lord Cledwyn, and his committee for what they have done in producing this report, because they have painted a very clear picture of the issues which are raised by the European Commission's proposal for restricting imports of manioc and for identifying what issues would arise if the Community at some stage proposed to take action to control imports of the other so-called cereals substitutes. This is not the easiest of problems to 825 analyse, but as usual Sub-Committee D has come out with a trenchant document and has put the matter most clearly, and for that not only the Government and your Lordships but many others throughout the agricultural world will be very grateful.
Being one who, basically, likes to find himself in a fairly harmonious existence with other people, I always like it when the department which I have the privilege to serve at the moment is in agreement with your Lordships' committee, and I do not like to find any cause for dissent. But, of course, the members of the committee were at odds with each other because of the presence of the noble Lord, Lord Mackie—I am sure the noble Lord will not take offence when I say there was nothing new in that—and he did his best this evening to make sure that your Lordships were at odds with each other as well. But, when the noble Lords, Lord Walston and Lord Mackie, had a discussion as to the relative benefits of claret and beer, I thought that that was going slightly wide of the mark, although I saw a scintilla of a thread of a connection. Nevertheless, I enjoyed the almost empirical judgment of Lord Mackie on the conclusion of the report, when he said, rather, I thought, as a teacher might have said to a schoolboy, "Wrong is wrong and right is right."
Before I explain to your Lordships what views the Government hold on the main issues, perhaps I may first recall the reasons why there is mounting concern in the Community about cereals substitutes and about manioc in particular, and I agree with the noble Lords, Lord Cledwyn and Lord Bishopston, that cereals substitutes are not inferior. There is nothing synthetic about them, rather like plastic sausage skins; they are entirely wholesome. Manioc is, as your Lordships know, the root of the tapioca plant, which in tropical countries is used for human food, but it can also be used as animal feed. It is also known as cassava.
Manioc was of little importance as an animal feedingstuff 10 years ago. Imports into the Community have increased from about 1¼ million tonnes in 1969 to between five and six million tonnes in the last year or so. The attraction of manioc is not that it has special nutrient value; it is almost pure starch or energy and it actually contains much less protein—2 to 3 per cent.—even than feedgrains like barley, which contain 9 to 11 per cent. It contributes nothing, therefore, to remedy the Community's shortage of protein. In fact it makes it worse because you have to import proteins to balance up against the manioc which has none, or virtually none. Its attraction is simply that it is not subject to the Community's cereal levy system which applies to imports and which is variable. Manioc pays a much lower and fixed import charge. It can, therefore, be imported into the Community much more cheaply than grain.
Imports of manioc at the present level have a significant effect on the Community's budget because if manioc is used in place of maize, the Community loses revenue, which is the difference between the rate of levy on maize and the much smaller import charge on manioc. If, alternatively, manioc is used in place of home-produced grain such as wheat or barley—and here I agreed with the noble Lord, Lord Mackie—the wheat or barley which is not used then has to go for export, and the Community budget incurs higher expenditure on export refunds. On the assumption 826 that the main effect was on exports, my department's officials estimated in their evidence to the committee that the net cost to the Community budget might be about £150 million. The Commission have recently come up with a much higher estimate of about £280 million. This may be rather exaggerated, but it is clear that the cost is very substantial.
In addition, there is something in the argument—quoted, but somewhat dismissed, in paragraph 38 of the report—that, in so far as manioc replaces barley it makes it more difficult to maintain a stable cereals market in the Community. It is not always easy to find outlets for barley on the world market; but unless exports can be kept flowing, the market price in the Community may fall below the support level, and there will then be excessive sales into intervention, with a resulting cost to the budget and to national exchequers. We have seen this in recent seasons and it is a problem which affects the United Kingdom particularly, as a quarter of the Community's production of barley is in this country.
Then there are fears that the use of manioc, which has up till now been concentrated much more in some parts of the Community than others, may be giving an advantage to livestock producers in those areas over their competitors for whom manioc is not readily available. At different times livestock producers in this country and France have voiced this complaint.
Those, then, are the main concerns and I have related them to manioc, for it is there that the case is much stronger. My noble friend Lord Brookeborough referred to this, as did my noble friend Lord Mottistone, and Lord Brookeborough correctly drew attention to the differing prices of barley in Northern Ireland and East Anglia. He drew attention to the fact that conditions in Northern Ireland are very hard. I accept that entirely. I know that because of the special position of the livestock industry in Northern Ireland the incentive to take up cheaper feedingstuffs, such as manioc, may be even stronger there than in other parts of the United Kingdom. But the proposed agreement on manioc should not deny Northern Irish buyers the supplies that they want—
§ Lord Davies of Leek
My Lords, may I interrupt the noble Earl? I do so after exercising great control, since I did not put my name down to speak in this fascinating debate, in which no one has mentioned the consumer. I read all the report carefully. Can the Minister say what effect on the consumer the manioc position is creating?
My Lords, if I may, I shall come to that point when I have finished dealing with the Northern Ireland problem. I thought that the noble Lord, Lord Davies of Leek, had temporarily transposed himself from Wales to Northern Ireland.
If I may continue to speak about the Northern Ireland position, I would say that the proposed agreement on manioc should not deny Northern Irish buyers the supplies which they want. The evidence is that even this year less than 100,000 tonnes of manioc will have been imported into Northern Ireland. Under the proposed terms the Community could still import from Thailand and elsewhere more than 5 million 827 tonnes a year. That should leave ample room for imports into Northern Ireland to be maintained at recent levels, though we should remember that of course when sterling is weaker than it was earlier this year manioc might not be so attractive for our compounders in relation to other feedingstuffs.
The noble Lord, Lord Davies of Leek, asked what would be the position with regard to the consumer, and I think that the noble Lord, Lord Cledwyn of Penrhos, referred to this, too. In my judgment the position is one that would not affect the consumers greatly. The greatest effect which the introduction of a lower priced—if it is lower priced—cereal would have would be that the resultant carcase would be cheaper to produce. In that respect it would be likely to benefit the farmer more than it would benefit the consumer because of course the consumer pays the price at which the animal is purchased on the open market, which does not reflect the cost incurred in producing the animal.
The report rightly brings out the fact that similar arguments have been advanced in relation to quite a wide range of other so-called cereal substitutes. I very much agree with the Committee that the term "cereal substitutes" should be treated with great caution, for it has come to be used for a variety of different products with different properties—products of very different importance to the Community market, and with differing significance for the Community's international trading relations. Both the Commission and the French regularly use the term "cereal substitutes" to cover not only manioc but other non-cereal feedingstuffs, such as the residues from maize starch manufacture, which is known as "maize gluten feed", the by-products of the milling of wheat and other grains, citrus pulp, and molasses. All of these are referred to as "cereal substitutes", and yet the term is sometimes extended even to the residues of oilseed crushing, such as soya bean meal, which are certainly an important ingredient in feed rations but which in no normal sense could be considered as substitutes for cereals.
The noble Lord, Lord Mackie, referred to maize gluten feed as well as manioc as substitutes for cereals. I agree that manioc may be a substitute, but maize gluten is not, because that has 20 to 25 per cent. of protein, and the Community needs that. That is very different from manioc, which has under 2 per cent. of protein, and therefore I think that the noble Lord was making an error when he combined the two—
§ Lord Mackie of Benshie
My Lords, what I meant to say was that maize gluten, with the increased manufacture in certain countries of what I understand is called gasahol, might become an element which would be a danger to the Community policy in the future.
My Lords, we should have the distinction that maize gluten and manioc cannot be associated together as similar properties. If these different cereal substitutes have anything in common, it is that with the exception of manioc (and molasses), they mostly contain a significantly higher percentage of protein than any cereals. The Community cannot meet the protein 828 requirements of its livestock from home-produced feed, and it is therefore bound to import protein in some form. Therefore, it is not surprising if the livestock industry seeks to meet some part of its requirement for protein with the by-products of other industries, when these can be obtained at relatively low prices. Manioc is, therefore, alone among the so-called substitutes in contributing nothing towards meeting this shortage of protein. Thus it can be considered apart on that score.
Then again some, but not all, of the products concerned are imported into the Community at low import charges which are bound under the GATT. If the Community wished to vary these arrangements, it would have to enter into formal negotiations, and it would need to offer compensation to the supplying countries, or else risk retaliation by them. Those are the rules of the game, and they are important points to bear in mind.
Having drawn the picture of the problems as best I can, I should like to turn to the proposals that have been made. The noble Lord, Lord Bishopston, asked me to explain what "putting a lid on the top" means, and perhaps he will find that by the time I sit down I shall have explained it to him. The Commission has been instructed by the Council of Ministers to pursue negotiations with the countries from whom the Community imports manioc, with a view to setting some limits to that trade—the lid on the top. By last November the Commission had negotiated a draft agreement with Thailand, the country which in recent years had accounted for 85 to 95 per cent. of Community imports. The terms of the agreement were approved by the Council in the following month. It has not yet been formally signed, because it commits the Community to reaching parallel agreements with other supplying countries in order, quite understandably, to prevent them from moving in and taking advantage of the reduction in supplies from Thailand, and agreements with these other countries, such as Indonesia and Brazil, have not yet been negotiated. The Thai Government have said, however, that they will observe the terms of the draft agreement during 1981. So, evidently, they are content with their side of the bargain, provided that other suppliers accept equivalent restraints.
The effect of the agreement with Thailand, if it is concluded, will be to reduce the Community's imports of manioc over a period by perhaps 1 million tonnes. Even so, they should continue at a level which will be very much higher than had ever been reached until about three or four years ago.
The noble Lord, Lord Oram, was concerned that the agreement runs counter to attitudes which ought to be held and which are held towards developing countries. I take the noble Lord's speech as being very serious and very important, because without question we in the developed countries, and indeed the Community, have a responsibility towards developing countries, which we recognise and which we must accept. The noble Lord, Lord Oram, said that the Community is only obliged to do its utmost to provide assistance, and he did not feel that that was a very cast-iron assurance. I understand that that form of words is not unusual in international agreements and that the 829 only doubt is that the specific amount of aid has not yet been agreed. The fact of the aid is not, I understand, in doubt.
My Lords, concern was expressed by the noble Lord and, indeed, by others that these proposals would deprive a developing country of a lucrative line of trade, but your Lordships will have noticed from the report that Thailand would be compensated by this aid for any loss of trade, and this does appear to be welcomed by Thailand. There are sound agricultural reasons for their attitude; and I am bound to say that I agree with the noble Lord, Lord Mackie, in his view and disagree with the noble Lord, Lord Sainsbury, if I may say so, because manioc production imposes severe stress on the land and it is not desirable for the long-term health of Thailand's agriculture that manioc should be grown too extensively or too continuously. The aid which is being offered by the Community for projects to diversify Thailand's agriculture is therefore in the best interests of Thailand's long-term agriculture.
Concern has been expressed that the cost of compensation might outweigh any possible gain to the Community's cereals budget. I think that that is probably also misplaced. It is true that the exact amount of aid to Thailand has not yet been settled, but provision for it would be found from the budget provision for aid to non-associated countries, which is large. It is about £85 million for 1981 and there is £120 million in the draft budget for 1982. It is to be expected that any new aid for Thailand under the manioc proposals would be found from this provision, which is already allocated under this budget heading, and that it would not mean higher total spending than would otherwise have occurred.
On the other side of the account, there could be distinct advantage for the Community budget if a limit were set to the imports of manioc. I respectfully think that possibly the Committee might have given too little weight to the prospect of this. I have already referred to the estimates that at current levels these imports cost the budget something in the region of £200 million a year. The proposals might reduce that, but, even if they did not, it would clearly be sensible to set a limit upon what is a fast-growing cost to the budget; and, in conjunction with the other efforts which are being made in order to contain expenditure on the common agricultural policy, any steps to limit an item of expenditure of this size must be regarded as worthwhile.
I know that the noble Lord, Lord Sainsbury, could not help taking his usual swipe at the CAP. He said that this brings the common agricultural policy into disrepute. My Lords, I do not think it is really quite as bad as that. He said, as indeed he always does, that the price of cereals is too high and that therefore we ate now producing surpluses, insisting that that was bad. The robust exposition by my noble friend Lord Stanley of the problem of cereal farmers was not totally inappropriate because, in a world which is short of food, if the European Community can contribute to alleviate that, that must be good. But, of course, the harm comes if such a disposal makes massive inroads into the common agricultural policy budget. That is the difficulty, and that is the balance which one has to try to get right. I agree with the 830 noble Lord, Lord Bishopston, that our relations with developing countries should, where possible, be in the form of trade and not aid, and, if I may say so, he is quite right to refer to the Brandt Report and to underline the points which his noble friend Lord Oram made about this sensitive and highly important matter of aid and help to developing countries.
In paragraph 43 of their report the committee suggests that one reason why a limit on manioc imports might not bring budgetary savings is that it could lead to increased imports of some other substitute product rather than increased usage of Community-produced cereals. I rather doubt whether this would happen. As I have already said, the other so-called substitutes are not direct replacements for cereals in the same way as manioc. Moreover, all those which are currently imported by the Community are by-products of other processes—of flour milling, starch production, sugar manufacture and so forth. Output of the byproduct is determined by demand for the main product, and it would not therefore be increased in response to the modest reduction in manioc supplies for which the draft agreement with Thailand provides.
It will be clear to your Lordships from these remarks that Her Majesty's Government see much more of advantage than of disadvantage in what has been proposed on manioc. Clearly it is necessary—and I recognise it—to tread carefully where the interests of developing countries are concerned, and I fully understand and appreciate the concern which has been correctly expressed tonight on that issue. But I hope that I have explained why we do not think the proposals on manioc would be damaging to Thailand in the long run, or to the other suppliers; they would merely represent an attempt by the Community to set some moderate limits to a trade which has started to grow and produce problems.
If I might refer to the other so-called cereals substitutes, I would say only this. I explained that it is misleading to regard most of these as mere substitutes for cereals. They have other properties, notably a protein content, which cereals cannot match and which the Community badly needs. For that reason the Government do not see the same case for action on these other products. We share the view of the committee that the interests of the livestock sector come first here; that any proposals for constraining trade in maize gluten feed, in wheat brans or in other so-called substitutes should be looked at very cautiously indeed; and that tariff barriers should not be erected unless there is a real need for them. This is a view which many, though not all, of our Community partners share. I can assure your Lordships that the Government will continue to bear the interests of the livestock industry at heart—very much so—where this trade is concerned.
I should like, if I might, to end on a note of agreement with your Lordships' committee. It has quite rightly been said that underlying all the controversy about trade in cereals substitutes is the level of prices which the Community maintains for cereals themselves. The combination of a wide gap between the price of grain and other feedingstuffs on the world market and inside the Community, and the current recession through which the livestock industry is going, has spurred livestock feeders to look for any 831 alternative to high-cost grain. If Community grain prices were closer to those on world markets—and here I know I carry the noble Lord, Lord Sainsbury, with me, even if I get stick from my noble friend Lord Stanley behind me—many of the problems we have been discussing tonight would disappear. The Government are conscious of this, and we sought in the last CAP price review to obtain a better balance between support prices for grain and livestock. We had some success in the settlement of prices for the current year, and we shall continue to give full attention to this in the next review.
§ 8.18 p.m.
§ Lord Cledwyn of Penrhos
My Lords, we have had a constructive debate on the report, and I am grateful to all noble Lords in all parts of the House for the speeches they have made and for the kind things they have said about the report which Sub-Committee D has produced. I am also grateful to the noble Earl the Minister for the speech he has just made in which he explained the attitude and policies of his department towards this subject.
I was disappointed in his attitude towards the report when lie says that he and his right honourable friend and the Government are proposing to support this negotiation which will result in a reduction of manioc exports from Thailand by 1 million tonnes. I say to him that 1 million tonnes is not particularly significant as far as the Community is concerned but for the people of Thailand the reduction of 1 million tonnes may be very serious indeed. In these negotiations which he says the Government of Thailand are likely to agree to I hope that consideration will be given to the arguments advanced by the Government of Thailand; because the one thing that the committee did not receive and the one piece of evidence which the Minister of State was unable to give to the House was the attitude of the Government of Thailand towards these negotiations. While I and the House will appreciate the contribution of the noble Earl, there are certain matters in it which, if the time were available, I should like to analyse; but no doubt at some stage the opportunity will arise again in Sub-Committee D.
I am grateful to my noble friend Lord Bishopston for his contribution, and also I should like to refer in particular to the speech of my noble friend Lord Walston following his visit to Thailand. I thought that that was an interesting and valuable speech. I trust that the Government will take note of what he said and possibly make sure that a full report of his visit to that country will be made available to officials in the Department of Agriculture.
My Lords, I turn now to the two dissidents and, first, to the noble Lord, Lord Mackie of Benshie, who made the forceful speech that I expected but showed his unwillingness to be converted on the road to Bangkok, as it were. I hope that he will think again about this. I think that he and the noble Lord, Lord Stanley of Alderley, are unduly sensitive about the recommendations of the sub-committee. The noble Lord, Lord Stanley, said that I had known him for longer than he had known me. My Lords, the margin was very small. He is, as I know, a most efficient, practical farmer 832 himself and when he speaks on agriculture in this House he is always worth listening to. On this occasion he must remember that if we temper the wind to the shorn lambs of Thailand, this will not affect the fat lambs of Anglesey. What we are proposing for Thailand in this instance is something very small against the background of the resources of the Community, but something very important to them.
Therefore, my Lords, I believe that this has been a valuable debate, but I think also that we shall come back to it from time to time because there are implications in this report in relation not only to manioc but to all the other so-called cereal substitutes which are of importance to British and Community agriculture.
§ On Question, Motion agreed to.