§ 4.12 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)
My Lords, perhaps it might be for the convenience of your Lordships if I intervened to repeat a Statement which has been made by my right honourable friend the Minister of Agriculture, Fisheries and Food in another place. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a statement on the Council of Agriculture Ministers held in Luxembourg on 18th-20th April. I represented the United Kingdom, accompanied by my right honourable friend the Minister of State.
"The meeting continued the negotiations for the 1983–84 price fixing. It started with a statement by the Commission on current trends in the 1983–84 expenditure.
"The Commission informed the Council that an increase on the budgeted figure would be required in 1983. This contrasted with the position in 1982 when the out-turn was less than budgeted, and resulted from a combination of factors including the monetary changes of 21st March, substantial increases in the production of major products, and trends in world prices.
"They also informed the Council that their previous estimate of the budget provision likely to be required for 1984 had to be revised upwards by 6 per cent. The Commission stated that their price proposals for 1983–84, which had been criticised by the majority of member states as being inadequate and substantially below current rates of inflation in Europe, would need to be adhered to. In discussion, seven of the 10 member states argued strongly that there was a need to improve upon the price proposals of the Commission. Only one other member state argued, with us, that there should be no increases in the Commission's price proposals. The majority of member states strongly opposed the Commission proposal to reduce their original price increase for milk to an increase of only 2.3 per cent.
"The meeting was adjourned to enable the Commission to consider their position. Following a meeting of the Commission held on Wednesday 654 they came forward with a revised package of measures upon which they hoped to complete the price fixing. The Commission reported that they had decided that they would not put forward any proposals for any further price increases on any of the major commodities. They further declared that they had unanimously decided that, irrespective of what the Council of Ministers themselves should suggest, the Commission would not be making any proposals for further increases on the major commodities during this price fixing. I welcomed this statement.
"In discussion of the package proposed by the Commission, while many member states still expressed a desire for further price increases, it was clear that the majority would, albeit reluctantly, come to a conclusion on the basis of the Commission's paper.
"A major difficulty remained for Germany. The proposals made by the Commission for the revaluation of the German green currency would mean an increase in prices for Germany of the order of only 1 per cent. overall and no increase on the major commodities, milk and cereals. The German Minister could not accept this.
"Primarily to allow further consideration to be given to this issue, the meeting of the Council was adjourned until next Wednesday, when an attempt will be made to conclude the price fixing on the basis of the Commission's current proposals.
"The proposals, if accepted, would result in an increase of prices for the agricultural marketing year 1983–84 for the United Kingdom of 2.3 per cent. on milk, 3 per cent. on cereals and 3.8 per cent. over all products. For the Community, the overall increase would be 4 per cent., substantially below the anticipated inflation rate for the Community of 9 per cent.
"In the United Kingdom, the effect on food prices would, over a full year, add one half of 1 per cent. to the food price index and one tenth of 1 per cent. to the retail price index.
"We would retain the beef premium scheme and the sheep premium scheme. There would be a small improvement in the butter subsidy. These consumer subsidies would be worth between £200–£300 million.
"The school milk subsidy would be improved from 10.9 pence per pint to 12.4 pence per pint. The scheme would last for five years and the total benefit next year is likely to be of the order of £16 million.
"For Northern Ireland, the various schemes assisting the beef producers would be extended and are anticipated to be of £11–12 million benefit to the Northern Ireland producers. The Commission have also proposed to move around 75,000 tonnes of cereals from intervention into Northern Ireland.
"The proposals include a number of measures of benefit to our pig and poultry producers. Firstly, these sectors would benefit from low cereals price increases. Second, the Commission would undertake to take account of regional difficulties in its management of the pigmeat market; this would for example mean that, if market conditions warranted it, the advantages of private storage facilities 655 financed by the Community could be continued in the United Kingdom even if there were no need for such facilities in other parts of the Community. And thirdly, following the strong representations we have made, the Commission propose to press ahead with a scheme to make available from intervention stocks cereals for use in animal feed. This could involve 2 to 3 million tonnes.
"I hope that negotiations can be brought to a satisfactory conclusion as quickly as possible".
My Lords, that concludes the Statement.
§ Lord John-Mackie
My Lords, we are grateful to the Minister for repeating the Statement made in another place. I, personally, am grateful for the absence of my noble kinsman because the last time a Statement was made on the Common Market he accused me of an ungracious reception of what the Minister had said. I am afraid that I am going to be a little ungracious again in one sense, in that I think that, if the press reports are right—and I see no reason why The Times and the Telegraph should not be—Mr. Walker claims a farm price triumph. The Telegraph said:A triumphant Mr. Walker said Britain had virtually been given control over her Common Market partners by a Commission ruling that any change in the recommended prices required a unanimous vote by EEC Ministers".The Times stated:This has given Mr. Walker total control over the outcome".That seems an extraordinary thing. There were another two Ministers by his side in the negotiations and if any one Minister can have a veto then they all can have it. I cannot see why Mr. Walker, for whom I have great respect because he is a good Minister of Agriculture, should say that, but we all know that there is an election in the offing and anything that helps a little the Government are glad to pick up. But it cannot help unity in the Community if a Minister claims a triumph of this description.
In any case, if he has all this power that is claimed for him, why did he not go further? In the debate on 3rd March in the other place he demanded no increases at all. Why did he not use the power to get what he wanted, which he had stated firmly in the debate in March?
As regards the Statement itself, the last sentence seems to be an interim one. The Minister says that he hopes that,negotiations can be brought to a satisfactory conclusion as quickly as possible".No doubt after the week's grace that has been given we shall be having another final Statement. I wonder whether that will be the case.
Naturally we welcome the Statement. I, and I am sure the consumers, hope that the figures quoted, showing how little will be the increase in the price of food, are correct. If that is so, the consumers will certainly welcome it, too. I wonder whether the noble Earl would care to make a guess as to whether the reduction in the corn prices will redress the balance between corn and horn. That is the one thing that would help the agricultural situation—if we could have a better balance in that way. I have mentioned this before, and I wonder what the Minister thinks.
656 Referring to page 2 of the Statement regarding the difficulty with Germany over the green currency situation, if a settlement is made, is it likely to affect this country or will it purely be between France and Germany? I see that the German Minister refuses to accept the proposals. I wonder whether, if a change is made, it will make any difference to this country. The school milk subsidy is to be improved by nearly 2p. I wonder whether this will encourage the Government to get local authorities to extend the present milk schemes, and also to take up more of the present ones. I am sure that that would help and encourage a lot of people in this country.
The Commission has proposed to move 75,000 tonnes of cereals from intervention into Northern Ireland. What exactly does that mean? Is that to be at a cheaper rate? Are there no cereals available from British stocks to go into Northern Ireland? What is the reason for that? I wonder whether the Minister can answer that question. The low cereal increases are mentioned in the last paragraph as helping the stock sectors. Does the Minister think that that is really an opportunity? It is a very small increase, even taking inflation into account. I doubt whether it will help the pigmeat and poultry people as much as they would like, or even whether it will make any difference at all.
What exactly does the last part of the Statement mean, about moving 2 million to 3 million tonnes from intervention to animal feed? Is this what I read about in Agra-Europe about a week or 10 days ago, which was a scheme to subsidise this amount? It does not say so in the Statement. I should be interested to know whether that will be subsidised. That would certainly help stockmen to a great extent. I hope that the Minister can answer these questions. As I say, we welcome the Statement in general.
§ Lord Tanlaw
My Lords, we on these Benches want to welcome the Statement of the noble Earl the Minister, and briefly ask perhaps two questions. First, is this a Statement at all? It would appear from the way that it is written that it is a statement of intent, subject to satisfactory negotiations confirming the figures in it. I should say that my noble friend who would normally be putting the questions on this Statement is not in the House today. I feel that the figures included in the Statement will have to be clarified and confirmed when the negotiations have been completed. I would ask the noble Earl to confirm that.
I also detect a slight change in the Commission's thinking towards the "fat cats" of the European farming community, who have been for far too long the beneficiaries of the CAP. I think that the Minister of Agriculture should be congratulated on supporting and assisting in the change of heart in this area. Finally, like the noble Lord, Lord John-Mackie, I, too, should like clarification of the last paragraph of the Statement—whether the intervention in stock cereals means assistance for the use of cereals in animal feeding, especially in the hill farming areas of this country.
My Lords, if I may, I would answer the noble Lord, Lord Tanlaw, first. He asked whether this was a Statement. It is a Statement. He asked whether it was a statement of intent. He is of course quite 657 correct that it is a statement of intent. The Statement really showed what has happened so far. It indicated that if the proposals which were put on the table are in fact agreed to—which at the moment they are not—then this is to be the likely outcome. But the noble Lord was perfectly correct when he said that there would in fact be a further Statement when the outcome is final. It is not final yet, of course, although it is hoped that it will be next week. The noble Lord is quite correct when he says that that will have to be clarified, as indeed will a number of the points to which I have referred. I have been asked some detailed questions which I would prefer not to answer in total yet because the position itself is not clear. I appreciate the noble Lord's congratulations to my right honourable friend the Minister of Agriculture for having tried to encourage a reduction in the claims for higher increases of prices.
The noble Lord, Lord John-Mackie, said that he was grateful for the Statement and then proceeded to castigate the Government, not for what was said in the Statement but for what a newspaper had said or what two newspapers had said. If a newspaper says that somebody thinks that this is a triumph, that is what the newspaper says; it is not what the Statement says. I hate to say the most elementary of things to the noble Lord, but he really should not believe all that he reads in the newspapers. One newspaper will say one thing and another will say another. I do not think that it was very helpful to castigate my right honourable friend by saying that it does not help unity when a paper has said that this was a triumph.
If the noble Lord, Lord John-Mackie, were to read the Statement a little more thoroughly he would see in the fullness of time that it was not my right honourable friend but the Commission who reported that they had decided that they would not put forward proposals for further price increases of any major commodities. The Commission further declared that they had unanimously decided that, irrespective of what the Council of Ministers themselves should suggest, the Commission would not be making any proposals for further increases in major commodities during this price-fixing. That was the Commission's move and that was the Commission's proposal. My right honourable friend warmly welcomed that, and that is the position as it is.
The noble Lord asked me to speculate on whether the reduction in the price of cereals would repair the balance between corn and horn. I would for clarity and for correctness remind the noble Lord that it is not a reduction in price; it is a reduction in the increase in the price. In so far as this increase is lower than it might have been and lower than the rate of inflation, one hopes that that will make its effect felt on the balance between corn and horn, as he puts it.
The noble Lord also asked what effect the alteration of the German currency rates would have upon the United Kingdom. I am bound to tell him that I would not speculate on that because I do not know what changes will be made. When the noble Lord referred to school milk he said that he was glad that this would result in an increased subsidy of school milk. I quite agree that this is encouraging. It ought to encourage the use of more milk in schools. We would hope that 658 it would do so. It is quite encouraging to know that this is going on for the next five years.
With regard to the point about cereals to which the noble Lord referred, he will be aware that when stocks are taken into intervention they are taken in at a price which is inevitably lower than that which is used when they are on the open market. Very often the criticism has been that there have been these stocks of cereals in intervention which cannot be used for feeding purposes. The purpose of this—and it is a very difficult situation to police properly, which has been one of the problems; it is difficult to operate the provision effectively—is to be able to use that which was in intervention for pig or other animal feeding by some method which will have to be approved and which will enable this to be done either by taking cereals out of intervention or by preventing them from going into intervention, possibly with a subsidy—but that has not yet been determined.
§ Lord John-Mackie
My Lords, before the noble Earl sits down, I should like to point out to him that it is Mr. Walker who is claiming the triumph. He is quoted in The Times—and I look forward to seeing a denial in The Times tomorrow. It was Mr. Walker whom I quoted as saying—and I shall read it now—Although that increase is below the average and through the B quota …"—I am sorry, my Lords—I … believe that a freeze on cereal prices this year would be far more sensible."—[Official Report, Commons, 3/3/83; col. 388].I was quoting Mr. Walker.
I am so sorry, my Lords. I thought that the noble Lord was quoting a newspaper report. It may be a newspaper report of what the Minister said—but it is not what the Statement says. In so far as it is said that my right honourable friend was pleased, of course he was pleased, because he has been encouraging the Commission and the Council of Ministers not to increase their proposed prices at the price fixing. In so far as the Council has decided not to do that, of course my right honourable friend was perfectly pleased, as would have been the noble Lord had he been in my right honourable friend's position.
§ Lord Peart
My Lords, I should like to ask a very brief question. Is it correct to assume that the beef premium scheme has been saved?
§ Lord Mottistone
My Lords, would my noble friend not agree that it is a most heartening move on the part of the Commission to have taken a firm line so differently from earlier years, whatever are the other implications, and that this is something that we should welcome with open arms?
My Lords, I am very grateful to my noble friend for those remarks. However, I must be careful not to be too much in agreement with him for fear that the noble Lord, Lord John-Mackie, may say that I am being triumphant. I would say to my noble friend that my right honourable friend has over a great many years been trying to persuade the Commission 659 and the whole Council of Ministers to make such a move. The fact that it is beginning to take effect is I believe grounds for modest pleasure.
My Lords, can the noble Earl make clear what was the position taken by the Minister of Agriculture in respect of milk? Do I understand the position to be that he supported the proposal of the Commission; namely, I believe an increase of 2.3 per cent., or did he advocate no increase—a freeze? When a few weeks ago we debated the matter, I understood that the Government were favouring a nil increase in those cases where surpluses were continuing to be produced, and I am wondering whether the Government have changed their attitude in that respect.
My Lords, as the noble Lord, Lord Oram, will know, the object of any negotiation is to be able to secure an agreement. It has always been our view that there should not be any increases in those commodities which are in structural surplus. That is our view. But when one knows that that is not likely to have the agreement of the other members of the Community, it is essential to try to find what is the position on which one can get agreement. When the Commission put forward the proposals which included an increase of 2.3 per cent. in the price of milk, my right honourable friend supported them because he knew they would be the kind of proposals which were most likely to attract agreement. Even though he supported those proposals, as was explained in the Statement, agreement has not yet been secured.
§ Lord Cledwyn of Penrhos
My Lords, further to my noble friend's supplementary question, is the noble Earl aware that we welcome the fact that the effect of the proposals on food prices will be small? Will he be good enough to "translate" that particular point in rather more detail? From what has been stated would we be right in inferring that there will be no increase in the price of milk or bread, but that there could be an increase in the price of beef? Is that how we should read that part of the Statement?
Secondly, while wishing to bear in mind the noble Earl's injunction that we should not believe everything we read in the newspapers, may I ask him to confirm what the Financial Times stated this morning: that a supplementary EEC budget of more than £1.2 billion is needed this year to finance farm support spending? That is 35 per cent. more than last year. I think that the point is made, or at least can be read between the lines, in the Statement, but are those the facts? Is the estimated cost of the current proposals £261 million this year, and a further £486 million next year? If those figures are true, are they not proof of the need for radical reform of the CAP?
My Lords, we are all conscious of the expenditure of the common agricultural policy. As the noble Lord, as an ex-Minister of Agriculture, and a greatly respected one, will know, all countries are trying to secure within the common agricultural policy a system which works properly and effectively. When the noble Lord says that the CAP needs drastic reform, I would point out that reform must be carried out in a 660 way that is acceptable to the parties involved. I agree with him that the percentage increases are unattractive, if I may so put it.
With regard to the 35 per cent., I want to make the position quite clear. One refers to the first five months of this year, even though only four months have passed. It is expected that for the first five months of this year the increase will be 35 per cent. over what it was for the first five months of last year. That does not mean to say that the cost of the common agricultural policy for this year is expected to be 35 per cent. more than it was last year. However, it is expected that there will be an increase, and the Commission has said that it will be putting forward a supplementary budget after the price fixing has been agreed. What that amount will be, I cannot yet tell the noble Lord.