§ 5.10 p.m.
§ Lord Mottistone rose to move, That this House takes note of the Report of the European Communities Committee on the EEC Farm Price Proposals 1983–84 (7th Report, 1982–83, H.L. 82).
§ The noble Lord said: My Lords, once again I have the privilege of presenting to your Lordships the report of the European Communities Committee on the annual price proposals at the request of our present Chairman of Sub-Committee D, the noble Lord, Lord Plowden, who is sadly unable to be with us for today's debate. I must again declare an interest, in that, being employed by the Cake and Biscuit Alliance and the Cocoa, Chocolate and Confectionery Alliance, I have a natural concern for the interests of food processors.
§ Also by way of introduction, I offer my thanks to my noble friend Lord Ferrers for kindly agreeing to speak both at the beginning and at the end of this debate so that your Lordships may have the advantage of knowing the views of the Government on this interesting subject before making your speeches.
§ Finally, I should like to express gratitude to my noble friend the Government Chief Whip for arranging almost uniquely for a debate of this sort to take place at a reasonable hour. As noble Lords who are also members of the Select Committee will, I am sure, be aware, it is more often than not the case that important debates—I am serious here—on EEC matters of this nature tend to take place at some ridiculous time like eight o'clock, when those few noble Lords who are still here are eating and the House does not have the benefit of hearing what has to be said.
§ I do hope that my noble friend the Deputy Chief Whip, whom I see to be with us, may convey to our noble friend the Chief Whip the great gratitude that we have and the thought that perhaps in future—I am very serious—these kinds of debates may be given a similar timing and given a chance. My Lords, what happens in Europe is terribly important. Indeed, in some ways it is more important than many of the things that we discuss of our own more domestic nature in this country. The sooner that we come to realise that the better.
§ I have had a look at my speech of 30th March last year in introducing the 1982–83 price proposals. At first sight I was almost tempted to limit my speech to inviting you to read that earlier one of last year, adding one year to the appropriate dates, and then to sit down. However, I am afraid, my Lords, you have to hear a bit more. There really is much that is similar and the whole debate is worth reading again, but there are sufficient new matters or aspects of matters established in earlier years, some of which are of fundamental importance to the future of the common agricultural policy, to justify my giving a more normal introduction to my Motion.
§ Before considering the report itself, it is perhaps reasonable to remind your Lordships briefly why the common agricultural policy is important and how it is currently most under threat. It is important because over the years it has provided the background to feeding, mostly from "own resources", the peoples of 39 the Community at prices which at any rate initially were broadly tolerable—at least to the Continental consumer. At the same time it worked towards that aim of Article 39 of the Treaty of Rome to ensure that the standard of living of those engaged in agriculture is broadly comparable with that of persons employed in industry. As such—I think that this is important—it has had an important stabilising influence in the Community over all the years of its development. It may not be entirely pleasing to everybody, but up to now the common agricultural policy has done a jolly good job.
§ However, it is under threat, because the very policy has led to food costs which all consumers are increasingly protesting about. It has also led to the production of ever-increasing surpluses, which add to the costs of storage in intervention and, when sold outside the Community, add to world production totals and decrease world price. That decrease in world prices adds further to costs in increased export refunds and generates as well antagonism on the part of other major suppliers of agricultural commodities like, in particular, the United States of America. Those underlying difficulties are among those highlighted under the heading of "The Problems" in paragraphs 11 to 15 of the report—I would draw your Lordships' attention particularly to paragraph 12—and in paragraphs 34 to 37 of the report.
Turning to prices, I would invite your Lordships' attention to paragraph 17 of the report and in particular to its penultimate sentence, in which your Lordships will see that, although considering seriously that there should be a total restraint in prices,
The Committee do not consider it politically realistic or necessarily wise to look for no price increases at all".
Your Lordships will, however, have seen in press announcements made since the report was written that the Commission has decided to recommend that dairy prices should be frozen because the milk surplus is growing frighteningly large. That goes further than the committee felt was likely to be politically acceptable but is none the less welcome for being a firm move in the right direction when the whole basis of funding the common agricultural policy is in jeopardy. This is the conundrum. If the common agricultural policy is in jeopardy, firm action must be taken to put things right so that it is not swept away altogether or seriously distorted so that it ceases to achieve any of the aims for which it is established.
§ This new approach will also go some way towards meeting the demand of consumers, which is that there really must be a halt to the rise in prices for food as sold in the shops. Whether one has a particularly strong bent to try to realise that or a particularly strong bent to realise the aim of the farmers to get a reasonable return for their efforts is one of the conundrums, but it is a fact that this will no doubt be something that the consumers will be interested in. I shall be most interested to hear what my farmer colleagues on Sub-Committee D have to say about prices generally and dairy prices in particular.
§ The key problem, however, as I see it, is surpluses, which short-term price reductions seem to exacerbate rather than to contain. In the guidelines which were issued in 1981 there was a basis of a solution to that 40 important problem, but in the 1982–83 price fixing the Council of Ministers took the easy way out and, to be blunt, let the rest of us in the Community down very badly indeed. That failure to act responsibly is described in paragraph 9 of the report, to which I would direct your Lordships' attention. I would call your Lordships' attention also to paragraph 10. I ask my noble friend Lord Ferrers when he comes to speak to give the House the assurance that he will invite his right honourable friend the Minister to take the robust attitude referred to in paragraph 10 and expected by the committee and exercise all the pressure that he can on his fellow farm Ministers to follow a similar line this year.
§ As will be seen from the last sentence of paragraph 17 and from paragraphs 24 to 32, to which it refers, the committee believes that the most realistic method of controlling production currently being proposed by the Commission lies in the rigorous application of the production threshold mechanism. It is perhaps reasonable to mention that the idea of a five-year rolling programme—which is encompassed within the paragraphs to which I have drawn your Lordships' attention—around which the production threshold mechanism is built, was first proposed by your Lordships' committee in its report on the common agricultural policy issued in February 1980. So naturally those of us who have been Members of Sub-Committee D for some years like that proposal very much.
§ But to be thoroughly serious, the forward projection of limitations in production not only provides the basis of a method for controlling surpluses, but also can be used to give advance warning to farmers of what they should do to respond to the restraints. As has been said many times before, the announcement of farm prices in the spring or summer—and it sometimes is in the summer, or at least it has been in the past—of a given year is bound to be after much of the farmers' planning for the season concerned, and indeed the relevant planting, has already taken place. I therefore invite your Lordships' attention specifically to paragraph 32, which is well worth looking at. In that paragraph we suggest very much that the farmers should have the facts of the guidelines and the policy thoroughly presented to them in advance.
§ I should add that the National Farmers' Union have indicated that they support this approach. They do not support much else either in our report or in the Commission's proposals, but they do support this and, therefore, in supporting it they are perhaps supporting the principles, to which I am referring, of the production objectives, and indeed the whole principle of the five-year rolling programme. If so, then that is an added reason why the Government should give every type of support to it.
§ There are other important matters of greater detail in the report to which I hope my noble colleagues on Sub-Committee D who are also taking part in the debate, as well as other noble Lords—and I am delighted to see several of them—who are not on Sub-Committee D, will draw your Lordships' attention. I should like to conclude by making three points. First, I should like to express how grateful the subcommittee were to all those who contributed both written and oral evidence, and how grateful they were 41 to those who gave written evidence and accepted our view that there was not a need for very much oral evidence in order to give us a chance to get the report written and to have this debate before the farm Ministers meet to discuss the proposals. We have managed to achieve that and it is, I trust, a great help to the Government to have a clear guide from us when our Minister goes and has these discussions within the next few weeks.
§ Secondly, I should like to draw your Lordships' attention to paragraph 6 of the report. For some reason of protocol, although copies of the Farm Price Proposals are available clandestinely in Brussels on the day after publication, your Lordships' Committee and, I believe, the Ministry of Agriculture, Fisheries and Food have to wait nearly a month before they can see the proposals. As stated, this year the position is much better than it was previously, and indeed this debate is taking place more than three weeks earlier than the debate last year. But it could be better still and it might have been possible, if we could have had a little earlier warning of what was going to be in the proposals, for us to take more in the way of external oral evidence. It probably was not necessary this year because of the similarity between this year's proposals and last year's proposals, but it might well be in the future. So an earlier issue is very important. By all means let us wait a month for the official English translation, if that really has to be so, but please can we have an unofficial copy as a pre-Christmas present—it was published before Christmas last year—and if necessary let us have it in the vernacular French and we will struggle through it trying to translate it for ourselves. But whatever it is, can we have a sufficiently authoritative copy of the price proposals before the end of the calendar year in which they are being published?
§ Finally, I should like, on behalf of the subcommittee, to thank the clerk and the specialist adviser for their hard work and enthusiasm in helping us to put together a report which, if not perfect, I hope is sufficiently succinct and to the point to be easy reading for your Lordships. I hope that it makes its points as clear as possible. My Lords, I beg to move.
§ Moved, That this House takes note of the Report of the European Communities Committee on the EEC Farm Price Proposals 1983–84.—(Lord Mottistone.)
§ 5.27 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)
My Lords, the House will be grateful to my noble friend Lord Mottistone for introducing this debate this afternoon and I would like to thank him as well as the noble Lord, Lord Plowden, and the sub-committee for their report which has provided the framework for our debate. It has provided us with a clear analysis—which is not always readily discernible from Commission documents of the Commission's price proposals for 1983–84. I agree with my noble friend that it is very useful that the debate should be taking place earlier this year than usual, and that is mainly because, as my noble friend said, the Commission's proposals themselves have appeared earlier. Now that the German elections are over, negotiations will begin in earnest and it is therefore very helpful to have the 42 views of your Lordships at this formative stage in the price fixing procedure.
My noble friend referred with some feeling to the wish of having these papers earlier than has proved possible this year. There are, of course, agreed procedures for making documents available to the House which involve other departments as well as the Ministry of Agriculture, Fisheries and Food. I can assure my noble friend that we are looking into the problem which the sub-committee has identified and to which he has referred, and we hope to be able to offer arrangements which will overcome the problem in future years. I can give my noble friend the assurance that we will be in touch with the subcommittee about the matter.
I thought that it might be helpful to your Lordships if I were to give the Government's views on the Commission's proposals at the beginning of the debate and then, if there are any points to which your Lordships would particularly wish me to reply, if I had the leave of the House at the end, I could do so.
I am grateful to my noble friend Lord Mottistone for stating the advantages of the common agricultural policy, because too often that is not done and the common agricultural policy is too frequently subject to vilification. As in all things in life, the advantages are always taken for granted; it is the disadvantages which irk and upon which the spotlight tends to be turned, and thereafter the arrows. I am grateful to my noble friend and I think it is useful to have had the advantages of the common agricultural policy extrapolated this evening.
The proposals will next be considered at the Agricultural Councils on 14th and 15th March and on 28th to 30th March. I think it is reasonable to hope that it will be possible for agreement to be reached by the deadline of 1st April, which is not only what the sub-committee wants but is also, as it rightly states, what the industry would wish. Of course, I cannot guarantee that that will happen, but it seems a reasonable possibility. But like all Community matters, it depends upon the other nine members too.
The Commission proposed in December price increases based on a "norm" of 5.5 per cent., with less for some products and more for others. The average for the Community as a whole is 4.4 per cent., which is well below the forecast rate of inflation of nearly 9 per cent. For the United Kingdom the figure is 4.1 per cent. This does not take into account the revaluation of the green pound which the Commission proposed in December, because the drop in sterling since the proposals were published has in fact done what the Commission's proposals sought to achieve, and more.
§ Lord Harmar-Nicholls
My Lords, if my noble friend will give way, I want to raise a point on the record concerning the average. Surely, if you take into account the green pound, the average is 7 per cent. and not the 5 per cent. to which my noble friend refers?
My Lords, this may be a question of mathematics. When one comes to the question of green pounds and devaluations of other currencies, it becomes fairly complicated. All I would tell my noble friend is that the average—or the "norm"—was 5.5 43 per cent. But the averages which I have quoted take account of the latest news received in the last few days of the Commission's decision to revise downwards its proposals on milk, and perhaps I can return to that later.
Throughout the Community, agriculture had a good year in 1982, despite the general recession. This was partly because of exceptionally favourable weather conditions and partly owing to the price increases in the last two price fixings. Agricultural incomes in the Community—and this statistic is achieved by taking into account all those involved in agriculture and does not just relate to the incomes of farmers—are now estimated to have risen by about 9 per cent. in real terms in 1982. But it is important to remember that the 1982 figure—in real terms—is only fractionally above the average of the three years 1973–75, and it is still below the level of 1978. In the United Kingdom the Annual Review of Agriculture shows that farming income—and I reiterate the distinction that this is the income of farmers as opposed to the income of all agriculture—rose in 1982 by about 45 per cent. in money terms. Much has been made about the increase in incomes in the last week or so, but we must remember that in real terms farming income has still not returned to the levels which were achieved in the mid-1970s.
This substantial improvement in agricultural incomes can only be good, and I am bound to say that I am amazed that at a time when we have been going through the most appalling recession—when industries of all kinds have been showing losses, when some businesses have been going bankrupt and when some have been shedding labour—when one industry, agriculture, shows better results, higher profits and actually takes on labour, this should have been met with almost howls of protest. Anyone might think that it was a bad thing that an industry should make a profit; that it was bad to see an industry beginning to emerge from recession. If farmers have had a better year, maybe they will be in a better position, for instance, to buy more tractors and machinery and so help the agricultural engineering industry, which itself has been going through the most desperate ravages of recession. Other industries whose prosperity and employment are intimately dependent upon the fortunes of agriculture ought also to benefit from better agricultural results.
More profit may actually stimulate demand and this is, of course, what the whole country needs. It has been slow enough coming, but if it has appeared in one industry—just a little—then we ought to rejoice and hope that it will happen in others. After all, it is not as though the profits of agriculture have been profligate. When I use the word "profits", perhaps I should be more correct to use the words "farm incomes". But the profits have not been profligate. By its nature, agriculture is influenced by factors over which we have no control—such as the weather—which make good years and bad years a hazard of the industry. There has been one good year which, with the previous year, has helped to reverse the downward trend, but agricultural incomes are even now not what they were in real terms about seven years ago.
44 My noble friend Lord Mottistone says that we must draw a halt to the increase in food prices in the shops. Perhaps I could remind him what I told the noble Baroness, Lady Seear, in our last debate. Since 1979 inflation has risen by 50 per cent; retail food prices have risen by 34 per cent; farm gate prices have risen by only 23 per cent. So agriculture has made a substantial contribution to the attack on inflation. If there has now been an increase in incomes, that should in turn have a beneficial effect on other industries.
The Commission has set out, as it did last year, its medium-term forecasts for production and consumption over the next five years. Like the subcommittee, the Government welcome the continued attempt by the Commission to encourage the Council to take annual decisions which are, nevertheless, set against a medium-term prospect. The Commission have proposed increases which are below the norm for the main surplus commodities—and these are, milk, sugar and cereals—where stocks are high and problems of disposal are increasing. The increases are 2.33 per cent. for milk, taking into account a further reduction of 0.8 per cent. decided upon by the Commission last week; 3 per cent. for cereals; and 4 per cent. for sugar. But for wine, where there are also disposal problems, the Commission has proposed a 5.5 per cent. increase, with a change in the marketing year, which could be worth an additional 1 per cent.
In our view, all the Commission's proposed increases are too high. This is also the view of the sub-committee. We should wish the final figures for these surplus commodities to be lower than those which are proposed. Indeed, we consider that by far the most sensible thing would be not to increase the prices for cereals and milk at all. But I am bound to make it clear that, although we shall continue to press for this—and my noble friend asked my right honourable friend to be robust—we shall not necessarily carry all our Community partners with us. Indeed, we may not carry any, but a lone voice in the wilderness is not necessarily a wrong one or a disreputable one. However, there are some member states who consider the proposed increases are not high enough.
One could argue that last year's settlement was not as effective as it might have been in implementing the Commission's guidelines. One of the good features about it was the introduction of guarantee thresholds for milk, cereals and oilseed rape. This is the first year in which these thresholds will have an effect on prices, provided that the Council takes the necessary decisions, and we attach particular importance, as does the sub-committee, to this because it will set the pattern for future years.
Perhaps I could refer to the main commodities in greater detail. I will take cereals first. The cereals sector is the most expensive common agricultural policy sector after milk. It accounts for no less than 16 per cent. of the guarantee expenditure, and accounted for £1.2 thousand million in 1982. Production in the Community is increasing, and the reality is that it will continue to do so as new, higher-yielding varieties are introduced. At the same time, consumption within the Community is static and world prices are depressed. It is therefore difficult to dispose of the surplus at a reasonable cost. This is exacerbated by the fact that 45 increased exports by the Community themselves increase tensions in trading relations and I think particularly of the United States.
There is a strong case for a shift in the balance of support in favour of livestock producers, in particular for pig and poultry producers who have been facing difficulties, by holding down cereal prices. At last year's price fixing my right honourable friend the Minister of Agriculture strongly supported the introduction of the guarantee threshold scheme as a method of restraining prices as production increases. But we should like to see improvements to make the scheme even more effective.
We should particularly like to see the price reductions, which the scheme sets out to achieve, apply not just to intervention prices but to target prices as well. For it is these which determine the price of imported grains. We do not think that it is justified for the imports of those types of cereal which we cannot produce in the Community—such as hard wheats from North America, and maize for starch and breakfast foods—to be subjected to additional, and in our view unnecessary, increases in the levy in the way that takes place.
Milk accounts for 31 per cent. of the guarantee section spending, or about £2.4 thousand million in 1982. The increasing surplus of milk in the Community is a matter of great concern, about which your Lordships have expressed concern on a number of occasions. Effective measures to tackle the surplus are essential. The co-responsibility levy is certainly not the answer since it applies to all producers, regardless of whether or not they are adding to the surplus. It increases the price, and so thereby reduces consumption. In our view, it would be better to have a lower price rather than a higher price and a co-responsibility levy. However, the Commission have proposed that the levy should continue at the level of 2 per cent. This continues the reduction of ½per cent. which was made last year. Although we would like to see the levy abolished, I must tell your Lordships that it is likely to be difficult to achieve.
The Commission have proposed the continuation of last year's arrangements for the distribution of 120 million European currency units (£66 million) for small producers, and I have no doubt that there will be pressure during the negotiations for this to be increased. We regard measures of this sort to be of a social character and we consider it quite inappropriate for them to feature as part of the support arrangements to be financed by the guarantee section of FEOGA. It goes without saying that we also consider that the co-responsibility levy should not be adjusted in any way so as to favour small producers or to penalise larger ones.
The Government welcome the Commission's proposal for the application of the guarantee threshold through intervention prices as a means of tackling the problem of the milk surplus. The cut of 2.2 per cent. which they originally proposed was not in our view adequate to cover the extra costs of disposal which will be brought about by increased deliveries to dairies in 1982, and we welcome the Commission's decision to propose a further cut of 0.8 per cent., bringing the total cut to 3 per cent. However, as I said, we still think that 46 the best course would be to have no increase in milk prices and to abolish the co-responsibility levy.
The Commission have proposed that the special United Kingdom butter subsidy, which is currently worth about 13p per pound on all retail butter, should be continued. We [...] But we consider that there is a good case for an increase, in view of the fact that butter stocks are mounting and the prospects of increased consumption are poor. On school milk we welcome the Commission's proposal to guarantee the Community's financial contribution for a full five years, but we would like to see an increase in this as well as some administrative improvements to the scheme. While the Community beef market is showing some signs of being oversupplied, the Government's view is that the case for a guarantee threshold is weaker than for some other commodities. There would also be practical difficulties in applying such a scheme.
We attach great importance to the variable premium scheme, which can be worth up to almost £50 per animal, and we welcome the proposal to extend it for another year. It encourages consumption and it safeguards producers' returns. We would like to see improvements in the scheme, but we have to face the fact that the scheme is not liked by other member states. We are also seeking an increase in the suckler cow subsidy which would be helpful for specialist beef producers. There are proposals that this year there should be a carcase classification scheme for intervention buying purposes on a uniform basis throughout the Community. We are concerned about this and would not agree to it unless and until we are satisfied that it can be applied both fairly and effectively.
The Government are concerned about the financial implications of the Commission's proposals and we will wish to ensure that the Commission's figures are properly studied. Our aim remains that the rate of increase of guarantee spending should be markedly lower than the rate of increase of the Community's own resources. The Commission apparently has a similar aim but we have doubts, as does the sub-committee, as to whether the proposals will in fact achieve the aim. Despite the problems and anxieties which are frequently expressed about the cost of the common agricultural policy, it is encouraging that agriculture's share of the Community budget has in fact fallen from 80 per cent. in 1978 to around 65 per cent. in 1982. This is substantial progress, and we do not want this progress to be jeopardised.
The Government's approach to the negotiations is very much in line with that of the sub-committee, in particular on the need for restraint on prices for those commodities which are in surplus, and on the effective application of the guarantee thresholds. My noble friend asks my right honourable friend to be robust. I hope that what I have said indicates my right honourable friend's intention to be robust. But we have to face the fact that measures of this sort are likely to be resisted by some other member states.
We shall hope for a satisfactory and, with luck, early settlement which will be in the best interests of our producers, our processors, and our consumers. I look forward to hearing your Lordships' contributions today, which I know will be of great value, as will be 47 the report of the sub-committee, and I hope that they will encourage us in confirming the approach which we take.
§ 5.47 p.m.
§ Lord Mackie of Benshie
My Lords, I am much encouraged by the way in which the noble Lord, Lord Mottistone, introduced the report. It might sometimes be thought on the committee that we are in slight opposition to each other. He was good enough to declare his interest in various alliances, and of course I must declare that I have an interest in another sort of alliance as well as having an interest in farming, being a farmer. On the committee the interests of the farmers and indeed of the other members are in the long term. The noble Lord and the Minister both brought out the fact that the common agricultural policy has worked really extraordinarily well if you take the three main planks of the Treaty. These were, first, to provide a stable supply of food, which of course is the first duty of any Government or any alliance; secondly, to provide a reasonable price to the consumer; thirdly, to see that the competent members of the farming community were rewarded in approximately the same way as the people in industry.
When we consider that in Europe we are looking at a problem of surpluses, while in Eastern Europe they are looking at problems of shortages, we must say that the CAP has done a good job in this essential of providing food in quantity and in choice for the consumer. It should also be pointed out, as in fact the Minister pointed out, that food prices have risen by less than the retail price index. In fact, in the report it is pointed out by the Minister of Agriculture that the rise in food prices evolves rather more from the processing and retailing section than from the prices received by farmers. If you look at the note by the Ministry of Agriculture you will see that they say that rather more than half of consumers' expenditure on food is represented by the costs of processing, packaging, distribution, et cetera. They go on to say, in the case of cereals, that the cereals themselves represent only about one-quarter of the retail price of bread.
It is also a fact that the proportion of weekly income that consumers have to spend on food has fallen in 10 years from 32 per cent. to between 21 and 22 per cent. By that I do not mean that we can go on putting up the price of food. In reality, however—although no one likes to pay more for food—when one looks at the figures and facts (and of course it does not apply to all sections of the Community, but to the majority of people in the Community) it is clear that people are having a reasonable deal on that side of the regional aspect of the Treaty.
As for farmers' incomes—the Minister mentioned this—I must refer to the hoo-ha, the press comment, about the 45 per cent. rise because it has been ludicrous, and I must quote a few figures to the House. Taking the base year as 1975, in 1979, in real terms, their income was 68 per cent. compared with 1975; in 1980 it was 52 per cent. compared with 1975; in 1981 it was 58 per cent. of what it was in 1975; and we find the colossal rise to 77 per cent. of the 1975 base year figure in 1982.
48 I must also refer to the even more ludicrous comments that have been made about beef farmers in Ulster. Ulster is one area of the agricultural community which has had a very raw deal out of the CAP because its agriculture was based on importing cheap grain from the other side of the world and the production of foodstuffs. It is said that some incomes of beef farmers in Ulster rose by 400 per cent. In fact, when you look at the figures, you see that the net income per farm rose from £703 to £3,876. I should be interested to know the income per family in this country which is considered to be below the poverty level. I cannot believe that a rise from about £14 a week to about £70 really represents farmers in Ulster rolling in wealth and purchasing large numbers of expensive motor-cars. There is a curious willingness on the part of many people in the urban community to look upon the farming community as people who are always complaining but who really never have anything to complain about.
We must consider the real problem of surpluses and, taking a general view, the committee has been consistently right in its attitude. Long before the guidelines, it said we should have a five-year forecast on which farmers would be able to plan. The committee, consisting as it does of all shades of opinion, has consistently said that the problem of surpluses can be tackled only long-term, by the law of supply and demand, and not by savage, large drops.
One snag has always been that the Council of Ministers has overridden the expert advice of the Commission, and they have done so for purely political reasons. There is no doubt also that the payment into the budget is very unjust in that the industrialised nations with a low proportion of agricultural land pay most, West Germany and the United Kingdom being the main contributors. As a result, the nations of the Community with large agricultural sections do not mind pushing the budget to the limit because they benefit from that. France, Denmark and the Netherlands do that consistently, so we get purely political results coming out of the Council of Ministers, which in the long run must do great harm to the CAP and the farming community in the whole of Europe.
After all, we cannot go on with these enormous surpluses without making people think there is something very far wrong; that too much money is being paid or—as people are saying in some quarters—that the whole system is completely wrong. What the farming community needs in order to produce food are not high prices so much as stable prices. Farmers' unions throughout Europe need to realise that they cannot go on getting increases when we are in surplus, and the surpluses are growing. That is what has happened, so we must accept that something must be done to bring the surpluses down.
In that context, I wish to comment on the notion that we can give the surpluses away to the hungry third world. That may be so, but it is now accepted by the major agencies, in looking at hunger in the world, that food aid—by which I do not mean famine aid—is doing a great deal of harm. It is undermining local agriculture and social structures, is driving people into the towns, and is altogether the wrong way to go about it. If we are to help the third world we should be seeing 49 that they have the structure—the dams and so on—and we should give them the money for that, and leave them to produce the food under a high system of protection. It is seen now quite easily that giving them the food destroys not only their agriculture but their social systems.
We must not make that an excuse for subsidising our exports, particularly in cereals. The significance of EEC exports is now very large—we have gone from practically nothing to 14 per cent.—and that contributes enormously to the drop in world prices. I must remark that world prices are not real; they are a reflection of very large systems of support in agriculture in North America and Europe, pumping their surpluses on to the market. It is not a genuine cost price. Indeed, many agricultural communities throughout the world are suffering in a 'thirties-like manner from ridiculously artificial world prices.
Thus, in the EEC we really must tackle these problems. For example, we must do something about sugar. It is scandalous that while we in this country take 1½ million tonnes of sugar from the third world, at the same time we pump on to the world market, to ruin a great many other sugar producers, two, three, and sometimes more, millions of tonnes of sugar at a subsidised price. The problem of tackling the surpluses is urgent and I believe the committee is absolutely right when it says it should be done over a long period; it cannot be done quickly, but it must be done definitely and the farmers must know that it will happen. Therefore, we say the cuts must be real. We accept that price increases, given inflation, are cuts, but in the long run the committee feels—and I believe the farmers on the committee concur—that cuts which will really have an effect on controlling the surpluses will be good not only for the budget and the consumer in Europe but, in the long run, for the farming community as well.
§ 5.59 p.m.
§ Lord Brimelow
My Lords, I was grateful to the noble Lord, Lord Mottistone, for the thoroughness of his introduction, and to the noble Earl, Lord Ferrers, for the fulness and frankness with which he told the House of the Government's views. I also thought that, of the many points which Sub-Committee D covered in its discussions, those which were not mentioned by Lord Mottistone were admirably covered by the noble Lord, Lord Mackie. So I think that I can concentrate on a single point: the importance, which emerges from all the previous speeches, of what happens later this month in the Council of Ministers, and what happens in subsequent years in the Council of Ministers; because, as the report mentioned and as the noble Lord, Lord Mackie of Benshie, emphasised, continuity over a number of years is very important.
Last year, when the Ministers of Agriculture met as the Council, I thought that the British delegation fared rather like the biblical lamb in the thicket. They wished to see moderation of prices, and they pushed and pushed, but they were not able to push their way through. The penalty for failure was not as heavy as it was in the case of the biblical lamb—that was executed. The members of the British delegation survived to press another day. Nonetheless, the price was high, and it took many forms. It took the form of 50 excess stocks. It took the form of prices higher than were needed to balance production and consumption. It created tensions in trade relations, not only with the United States but also with regard to some of the developing countries mentioned by the noble Lord, Lord Mackie of Benshie.
Of the various burdens, including a burden on the budget which was greater than foreseen, this country will be expected to bear more than a fair and proportionate share. It is essential that this year and in subsequent years in the Council of Ministers we do better. It will not be easy. In pargraph 10 of the Select Committee's report, it is pointed out that those members of Sub-Committee D who visited Brussels gained the impression that this year, too, we shall stand alone. The noble Earl, Lord Ferrers, tended to confirm that impression on behalf of the Government. But are the omens altogether bad? We may stand alone, but the starting point is not as bad as it was last year. In October 1981 the Commission published guidelines which were designed both to work against the production of surplus stocks and to bring about a rate of growth of agricultural expenditure lower than the growth of the Community's own resources—a point to which the noble Earl, Lord Ferrers, drew attention. I am not certain that in publishing those guidelines the Commission was convinced by its own figures. The Select Committee—and from what the noble Earl, Lord Ferrers, said, it seems the Government—think that the guidelines themselves may be inadequate. But last year, in formulating its proposals, the Commission did not have the courage of even its guidelines, let alone of its convictions. This year it almost had the courage of its guidelines. That is good as far as it goes. But last year the Council of Ministers went beyond the guidelines, and it is very important from the point of view of the interests of this country that that should not be repeated.
Will our contentions in the Council of Ministers fall on deaf ears? They may, but they will be less deaf than they were last year, because some Governments are worried by the cost of stocks; they are worried by the tensions which we are creating in international trade. They would like to see greater control made effective. I therefore think that when the right honourable gentleman the Minister of Agriculture goes to the Council of Ministers he will be batting on a very difficult wicket, though slightly less difficult than it was last year. I am sure that in his delegation there will be some people old enough to remember Carmen Miranda, a Latin American chanteuse, who sang the praises of a polyglot, but monosyllabic, lady, who in 24 languages could say only, "Yes". The Council of Ministers, thank goodness! does not yet speak in 24 languages. But in this year and in subsequent years it will be very important that in its reply to the Commission's proposals it should not go beyond the word "Yes". If it goes rather less far—and obviously the Government hope that it will—all I can say is that I am sure that the majority of noble Lords present this evening will be in favour of restraint and virtue.
§ 6.6 p.m.
§ Lord Kearton
My Lords, I am not a member of Sub-Committee D, nor have I any interests to declare, other than those of a consumer and taxpayer. I must 51 say that the House owes a great debt of gratitude to Sub-Committee D, for the very speedy way in which it has prepared its report, and for its comprehensive nature, and I should like to join in the congratulations to the noble Lord, Lord Mottistone, who introduced it so succinctly. The committee's report fundamentally agrees with the Commission's recommendations, including the norm of an increase of 5.5 per cent. In paragraphs 11 and 12 the committee sets out the very serious problems—those of over-production, the market not growing sufficiently fast in the Community to take the increased production, the disruption of world markets, the irritation of major allies, as well as all the numerous problems which the CAP, as at present operated, has brought about.
But rather surprisingly, the committee is somewhat political in its conclusions, in the sense that though it deplores all those developments, it has relatively little hope that there exists the political will or political possibilities to make much impression. Therefore, in common with many other Members of your Lordships' House, I was most encouraged by the robust attitude of the noble Earl, Lord Ferrers, who really went much farther than did the sub-committee and made it plain that the Government want to see zero increases in most areas.
It is interesting that on dairy products the Commission itself has retreated from a 3.2 per cent. increase to one of 2.4 per cent., and that the Commissioner has made loud cries of woe about what might happen to his CAP if the reduction is not accepted. But as the noble Lord, Lord Brimelow, has pointed out, for years the Council of Ministers has exceeded—in fact, virtually neglected—the Commissioner's recommendations. Last year it virtually doubled them. It is also true that farmers throughout the Community put pressure on Ministers of Agriculture to increase the prices yet again. Most of the farmers' lobbies are in fact asking for increases larger than the Commission itself has proposed. It was extremely far-sighted of the noble Lord, Lord Mackie of Benshie, to take the view that the farmers could perhaps be over-reaching themselves slightly, and that a certain degree of realism on their part would be beneficial to them in the long run.
I agree with the noble Earl, Lord Ferrers, that the common agricultural policy has on the whole been a very good thing. It has been the cement which has held the European Community together. It has greatly benefited both the farmers and the agricultural industry of this country; and therefore, rather than condemn the CAP out of hand, we need to curb its excesses; and it is most encouraging that that is precisely what Her Majesty's Government propose to do.
As an ex-industrialist perhaps I may make one or two more, as it were, sideline remarks. All industrialists find the prominence given to agriculture quite striking. In the United Kingdom, agriculture represents 2½ per cent. of the gross national product. That is the 1982 figure, and it is up from an average of 2.2 per cent. in the few years preceding 1982. It is a smaller proportion of the GDP than it was 10 years ago, when it was 2.8 per cent. It makes about one-third of the contribution to the gross national 52 product of petroleum and natural gas; it makes about one-tenth of the contribution of manufacturing industry—although food, drink and tobacco are important components of manufacturing industry. The total turnover of the agricultural industry is not quite twice that of ICI. In fact, it is appreciably less than the turnover of Unilever. The industry employs 633,000, about 2½ per cent. of the country's labour force; but the 633,000 includes regular part-timers and nearly 100,000 seasonal workers.
I think it is a matter of great satisfaction that the country now produces about 62 per cent. of the food it needs and 76 per cent. of the food which we can grow within these shores. That is a very good development. I well remember the desolation of farming in the pre-war years. In those pre-war years, I was working for a firm which made chemical fertilisers and we courted the farmers a great deal to try to persuade them to take the fertilisers. The then chairman of the firm issued a well-known booklet, Britain Can Feed Herself. At the time I think that Britain (which was a smaller country in population than it is now, but had more farming land) produced about 30 per cent. of the food it needed. I think that the development whereby we produce now 60 per cent.—nearly two-thirds—of all the food we need and over three-quarters of the food which is well suited to our climate, is a most welcome development.
I also feel that the fact that the farmers' income went up in 1982 was a good thing. It has spin-off effects on all kinds of other industries. The mention of a 45 per cent. increase is misleading, as the noble Lord, Lord Mackie of Benshie, has pointed out, for one must take the whole thing over a 10-year period. Perhaps one might remark that the hired labour in farming does not do quite so well. Their income in 1982 went up by 7 per cent., approximately, from £1,100 million to £1,176 million. They do have another 7 per cent. this February; but it still leaves their gain from the industry very modest and we do have the position that vital workers in agriculture are getting appreciably less than the average in manufacturing industry—so that particular objective of the common agricultural policy has not been realised in this country. I should be very happy to see moves made in the direction of making it more of a reality.
In considering the farm income, we must also recall that Government support for agriculture in 1982 was £1,333 millions; in other words, practically the whole of farming income was made up in one way or another of Government support grants. Some of these support grants are reimbursed from the Common Market fund but, equally, large sums of money go out of this country to support the working of the CAP in other countries, especially France. The support grant is a good deal greater than the total grant in the way of subventions and aids to capital expenditure which the mining industry gets. That industry is very much in the news today and there is great alarm about the fact that it is not yet self-supporting, that it requires quite a lot of money from the Government to keep going. I would suggest that mining in its own way is as important as farming and that the farmers and others should remember that farming is helped by Government grants in one way or another to a very considerable amount.
53 I think that it is quite sensible and proper that farming should get these grants but I do not think that it is very sensible that in every other branch of the economy we persist in saying that it must be absolutely economic, it must have no subventions, it must not be regarded in the light of any world circumstances but must stand on its own feet and be absolutely independent of any Government support. Farming has been very lucky since the war to have had a succession of Ministers who have really served it very well. It is interesting to industrialists that farming does have this powerful voice in Cabinet the whole time. Farming has marvellous scientific services, marvellous research services, all provided from public funds. As an ex-industrialist, I feel somewhat wistfully that the country would be in a better state if we took to our manufacturing industry, which has had so many blows in these last few years, an attitude similar to that which we take to farming.
With regard to the consumer, I agree that it has been of great advantage to the consumer to have stable and regular supplies. I also note from the statistics that the proportion of income spent on food is going down steadily. Ten years ago about 20.7 per cent. of income was spent on food; in 1982, it was down to 18.4 per cent., a considerable drop, a 10 per cent. drop, in 10 years. It is relevant to point out that the rise in the retail price index for food has been lower than the rise in the overall retail price index.
I can only hope that the advice given to the noble Earl, Lord Ferrers, by the noble Lords, Lord Brimelow, Lord Mottistone, Lord Mackie of Benshie and others will be taken and that the Government will be robust in the discussions in Brussels, will endeavour to get some reshaping of the common agricultural policy, will endeavour to get more support for livestock and pigmeat and less for cereals, will endeavour to do something about the butter mountain and will try to get some reciprocal bargain for this country in other matters—perhaps in the energy industry—if they do not succeed completely in getting all they want in farming.
§ 6.18 p.m.
§ Baroness Elliot of Harwood
My Lords, I have listened with tremendous interest to the speech of the noble Lord, Lord Kearton. In this debate, he is the first member of your Lordships' House who has spoken as a non-member of Sub-Committee D. I am a member of that sub-committee and have been ever since it started. It is very encouraging to hear Lord Kearton say that he supports the common agricultural policy—with, not unnaturally, some reservations, which, indeed, we all have—and that, as an industrialist, he is prepared to say that agriculture is an industry which should be and has been supported by the Government. It is true to say that we get tremendous support from the Government and that also, as a nation and individually, we get a tremendous amount of help from the EEC. Those people who run down the CAP and the EEC often do not realise how much help we get from the EEC not only for agriculture but for developments in rural areas and in less favoured areas and for the social policy and other developments which we hope for and are prepared to carry through.
54 Agriculture is an industry where the costs are rising. I do not think that people who are not engaged in the industry realise how expensive are a great many of the important items of machinery and other things that we use in our farming enterprises, though of course the noble Earl, Lord Ferrers, does. Our costs rise just as much as those in any other industry. Therefore, one has to keep that in mind when one thinks that more money is going into agriculture than should be. Unless help of this kind is available, we cannot continue to have what we have today, which is a highly modernised, extremely efficient, industry. That is very important indeed. I am not against subsidising important industrial activities. Last week we were talking about railways. The important aspect about the subsidies that have gone into agriculture is that today they have made the most efficient agriculture in Europe—I do not know about the rest of the world. That shows that it is worthwhile and it is something that we should certainly not be afraid to continue.
I was tremendously impressed by the speech of my noble friend Lord Mottistone in introducing the subject and also that of my noble friend Lord Ferrers. Those Members of the House of Lords who have read our report will feel that we have published proposals after a great deal of thought and a great deal of interviewing and learning from many people who take part in agriculture. In paragraph 3 of our report will be seen the list of people whom we interviewed and who sent us papers on different subjects. It is an impressive list.
We are in a slightly different position from that of other EEC committees of your Lordships' House in that we are largely farmers or interested in farming and know about farming. But we must also take some interest in the consumer and the point of view of the consumer. Occasionally that interest clashes; but if the report is studied it will be seen that we have been fair to both sides. When we have put forward proposals of one kind and another we have also considered the effect of rising prices or different prices.
Many Members of the House in this debate have mentioned certain matters and I shall speak very shortly on them because much has been said already. I support what has been said. We supported the principle of guidelines in order to try and hold down the prices. In paragraphs 8 and 9 we say straightforwardly that the Commission in 1982 ignored the price guidelines. As a result, our production of certain products continued to rise and prices went up. This of course affected more particularly the crucial products such as cereals, milk, sugar and wine. Wine does not affect us so much but I am referring to wine in the European context.
I agree with so much of what the noble Lord, Lord Brimelow, said: our United Kingdom delegation have always urged a reduction or a limit of the amount of production and encouraged small price increases rather than a permanent increase in prices—certainly regarding cereals. This, as we have said in our report perfectly honestly, has been ignored and the enormous surplus of grain continues. This will have to be dealt with. As the noble Lord, Lord Mackie of Benshie, said, there must be some reform in the CAP on the subject of cereals.
55 The other great problem is milk. There is an enormous increase in milk production. That is something which is very difficult to deal with. I was delighted to hear that the milk in schools scheme, which was one of the schemes which we started many years ago, is now being carried on by the CAP and is likely to continue for at least another four or five years. That is a very good way of absorbing some of the surplus in milk.
Whenever I went to Brussels or met any members of the Commission I was always asked the same question: "We are all great experts at production but who is thinking about the consumer and the selling of the goods that we produce?" I have always been disappointed because I have found people shrugging their shoulders and saying, "That is somebody else's job". But it is not somebody else's job. The most urgent need at the moment is how to sell the production of certainly European agriculture and of course our own as well. That is why I am extremely keen that the Food from Britain campaign which has just been launched, and which I support wholeheartedly, shall be a great success.
The launching of the scheme—which my noble friend Lord Ferrers, many other noble Lords and I attended—was a very impressive affair. There were nearly 5,000 people there and it was a tremendous plan for the selling of our produce. I hope very much that the Food from Britain campaign will be a great success. To be a success it must be first-class. That is what we are trying to say. It is not just a sentimental appeal about trying to restore the slogans, "Buy British" and, "British is Best" without being absolutely certain that it is best. I was extremely impressed by those people who made the speeches at the opening ceremony about producing food which people on the Continent as well as here will want to buy. If we could get that across it would be a tremendous help in regard to this question of overproduction in the CAP.
What we produce must be very good. It must be well organised. It must be sold as the best and not just because we want to sell something British. I think your Lordships know that I have been associated from the very beginning with the consumer movement, the Consumer Council and Consumers' Association. I received—as possibly other Members of the House may have done—a memorandum from this movement concerning this debate. I have been asked whether I would put forward some of their points of view, a good many of which I agree with. They say that in a situation of surplus there should be a price freeze. I believe that would be very good and I think that we are agreed that that should be so. They say that where cereals and other products have risen greatly in price there should be some price restraint, so that this will possibly discourage people from producing more and more cereals when they are not wanted.
Then the question of an increase in the prices of agriculture is raised. There is reference to this in this country and elsewhere and the movement believes that the increase should be monitored so that there could be some check on the cost rises, and that we should be guided by markets as to how much can be 56 sold rather than just produce an enormous amount and encourage its going into intervention.
In our report and in the memorandum from the consumer movement it is said that unsaleable goods should be avoided if possible. We have been quite honest in that. We have definitely said that we cannot go on for ever producing more than can be sold. From the point of view of the committee, which is largely made up of farmers, this is a perfectly honest way of dealing with this aspect. So far the proposals suggested to limit unnecessary production have been adopted and some of them have been agreed. In paragraph 32 of our report we put the point that this is a fact, and with this I agree.
This problem of surplus goods has so far not been tackled successfully. The noble Lord, Lord Mackie, spoke about hopes, and others have done so. If we can get across the great selling programme which the Government are now embarked upon and at the same time get the Commission to be firm about the guidelines and the limitation that they are agreed upon, then the CAP would go ahead and would be understood better by the ordinary population—certainly it would have a better press than it has at the present time. I support it very strongly, and I support the Government very strongly in what they are trying to do.
§ 6.30 p.m.
§ Lord Roberthall
My Lords, the noble Lord, Lord Mottistone, in his admirable opening speech, began by saying that this was a very important debate, and I should like to begin by stressing that we are debating something that is much more important than the position of agriculture and things such as prices. The position of the CAP has very wide repercussions indeed, and those repercussions will continue to be felt, so it is important for your Lordships to be able to discuss them. I am not a member of Sub-Committee D and therefore I do not think it is out of place for me to say what admirable reports they produce on this subject. This year's report is perhaps a little more technical than usual and it assumes a general knowledge of the background; but both in its analysis and its recommendations I think it strikes an admirable balance. We are very indebted to the sub-committee for the hard work they do, and especially under "timetable pressure", as they were this year.
I last spoke on this subject about two years ago in a debate which was introduced, as today, by the noble Lord, Lord Mottistone. I think there must be a certain amount of melancholy in his mind, as there is in mine, that the report deals with problems of surpluses, as almost all the previous speakers have said. I remember that we dealt with surpluses in the previous debate, and the present report points out that, so far from reporting any progress in the two years which have elapsed, we have gone back again. I remember at that time there was a suggestion that the surplus problem was mainly a social one which was concerned with the small, marginal farmers, and therefore that it should be treated as a social problem rather than as an agricultural problem. It was also suggested that the countries which suffer most from this problem and who feel that it is politically impossible to touch the small farmers should themselves be responsible for 57 keeping them going and not doing it through general price increases.
Nothing came of that suggestion and it has not even been mentioned this time; but we do have an analysis of the movement of thought in the Commission. It is very clear that although the Commission have had great difficulty in facing the problem, in the last two years they have begun to move in the right direction and that the reason why the underlying problem of surpluses is getting worse—there is no improvement—is, as many speakers have pointed out, that when it comes to the Council of Ministers they take the somewhat weak recommendations of the Commission and water them down even more.
Like other speakers, I welcome what the noble Earl said in his remarks about the attitude of the Government. I hope they will indeed take a strong line. I also hope that the noble Lord, Lord Brimelow, was right in being a bit less pessimistic than the committee as a whole about the prospects for this year. I think myself it would be very optimistic to hope that the Council of Ministers are going to do any better than they have done in the past. The surpluses arise, of course, because the prices are fixed to a large extent with the small, marginal farmers in mind. They are therefore attractive to the big and efficient farmers who, with the benefit of the guaranteed price, are encouraged to put all their energy into being more efficient and increasing output. Nothing is going to stop that but the price.
There was one thing in the noble Earl's speech which caused me to feel a little critical, which was when he pointed with pride to the achievements of agriculture but did not point out that British industry as a whole would not have any difficulty at all if it had a guaranteed price for the whole of its output, as the noble Lord, Lord Kearton, said. I think the noble Lord was the only speaker who did not refer to surpluses, but I believe that if he analysed the costs that flow to British farmers he would find that they arise to a large extent from the costs created by the surpluses. We produce milk, cereals, grain and sugar—all things that are in surplus—and it is the cost of dealing with the surpluses which is creating these fundamental difficulties for the Commission, as is set out so well in paragraph 12 of the report. I will not attempt to amplify what it says.
Perhaps by fortunate chance there was a leading article in The Times last Saturday, as some of your Lordships may have seen. It was called something like "Starting with milk" and it analysed the surpluses problem, particularly in relation to milk and dairy products. It pointed out that there were 300,000 tonnes of butter stored within the EEC and at least as much in the United States, and it said that world stocks of skimmed milk powder had been estimated at no less than 1,400,000 tonnes. It is these great surpluses that lead to wholesale dumping, and it is that dumping in the form of food aid which causes the distortions which were so well analysed by the noble Lord, Lord Mackie of Benshie.The Times leader concluded:It is time to start bringing the CAP down from its lofty plane of unreality".There was also a leading article in the Financial Times this morning, which ended up as follows: 58For too long the beneficiaries of the CAP have lived in a fool's paradise".Both writers, I think, would agree with the committee, and to some extent with the Commission, in saying that what we want now is a plan to be followed consistently over a series of years—a plan which moves in the right direction; that is, one that is beginning to have some effect on the surpluses themselves.
I am not in any way concerned with agriculture, but two years ago I pointed out—and I must point it out even more strongly tonight—that the inability of the CAP, the Commission and the Council to deal with the surpluses is putting supporters of our membership of the EEC in very great difficulties. It is impossible to defend a system which is generating these large surpluses, which are taking up so much of the funds of the Community and generally distorting its policy. It is a real threat to the future of the Community that this goes on.
The ordinary voter does not think of macro-economic problems and does not take much notice of them, but he cannot avoid knowing about the CAP. The disputes between the British Government, the Commission and the other members about our contribution have been tremendously widely publicised, and the housewife, who probably never thinks about most of these problems, cannot avoid hearing about the large surpluses of butter and the sale of these products on preferential terms to Russia. No doubt, if this goes on she will hear more about them.
It is very difficult for supporters of our membership of the Community—and I know that a large number of Members of your Lordships' House belong to that category—to go on defending something where so much of the money is diverted from other desirable uses to producing these surpluses, and, so far, the people in charge seem to take the shortsighted view that we shall run into immense difficulties and be unable to do anything about them. It is very serious for us all, in this connection, that more progress cannot be made.
§ 6.42 p.m.
§ Baroness Seear
My Lords, I was not a member of Sub-Committee D and I approach this subject from the point of view of the consumers, who were not represented on this committee. I think it is a pity that the committee was so heavily dominated by people with agricultural interests, not because that has biased their judgment but because in the discussions taking place on matters of this sort it seems to me desirable that other interests should also be heard, not after the report has been prepared but at the time when the thinking is being done on the report.
§ The Principal Deputy Chairman of Committees (Baroness Llewelyn-Davies of Hastoe)
My Lords, will the noble Baroness let me interrupt for a moment? There were representatives of consumers on the committee.
§ Baroness Seear
My Lords, I stand corrected. But they do not seem to have appeared in the debate this afternoon. Perhaps they are coming on later, or perhaps they were frightened off by the preponderance of the agriculturalists.
My Lords, I wonder whether I can be of help here. I wonder whether the noble Baroness, Lady Llewelyn-Davies, may have meant that all those who take part this afternoon also happen to be consumers.
§ Baroness Seear
My Lords, this is like being told that the workers of Rolls-Royce will hold back their claims for more pay because they are so interested in purchasing the product.
§ Baroness Llewelyn-Davies of Hastoe
My Lords, it is quite trivial, really. There were people who were consumers, and not farmers or anything like farmers, and are still on the committee. A particular noble Lord of whom I am thinking is, unfortunately, unable to be present today. Also, I almost always attend the committees.
§ Baroness Seear
My Lords, I still stick to the point that they do not seem to have appeared in the speakers' list of the debate this afternoon. Perhaps I may get started as the lone voice of the consumer. I fully accept that the CAP has, in the past, done a good job. I am not decrying the work that has been done up till now. We covered these points only a week or two ago. The CAP has, of course, fed the EEC. It has made for a restructuring of agriculture, which was very much needed and which has been highly successful. But that does not mean that it has to go on as it is at the present time. It does not mean that consumers' interests are not now of greater importance than prolonging the emphasis on agricultural requirements, which has been categorised by the work of the CAP in the past.
The noble Earl, Lord Ferrers, pointed out to me a week or two ago, and reminded us again today, that food prices have gone up less fast than have prices of other commodities and, therefore, that the consumers' interest has, as a result, been well cared for by the work that has gone on. I would only say to that that, of course, one has to remember that the consumer is paying twice over. He is paying for the food that he buys in the shops. He is also paying for the subsidisations through the CAP, to which he contributes very considerably indeed, as a taxpayer. It is not really quite correct to take the line that the only cost to the consumer is for the food that he purchases over the counter.
The point has also been made this afternoon that the percentage of individuals' budgets spent on food has fallen, and that is true. But it should have done. The EEC was intended to make us all more prosperous. I am an extremely strong supporter of the CAP, though, at times, a somewhat baffled one, and particularly baffled when I look at the way in which the CAP is operating. But if a community, if a country or if an individual gets more prosperous, it follows always that the percentage spent on food falls. If this had not happened, it would have been an appalling condemnation of the working of the EEC that it had not had the normal outcome of any increase in prosperity, which is that expenditure on items other than food goes up and expenditure on food goes down. So I cannot say that I am enormously convinced by those two arguments, which are intended to show us that the consumer is really doing quite well under this system.
60 What I am urging is that, with all the good work that has been done, the time has now come when we should take a much more fundamental look at what the CAP is doing, and at the way in which agriculture should be supported. In these discussions, consumers' interests should be far more central than they have been in the past and the voice of the consumer should be heard when the discussions are going on. Whether or not it is true that they were adequately heard in Sub-Committee D, I do not think anybody would deny that they are not adequately heard when it comes to the agricultural council in Europe, and that is the place where it really matters.
Of course, I realise that we are not going to make very swift progress, but, if we were to decide that there really has to be a shift of emphasis towards consideration of the consumer and away from the dominance of agricultural interests, then we could at least begin to make some progress and get our sights on what we are really trying to do. Surely, this is a good moment to start.
As regards the recent increase in farm incomes, I absolutely accept that this has been a recovery from a low over a number of years, and that the 45 per cent. has been grossly exaggerated and misinterpreted in the popular press. None the less, a year after a period when there has been an increase in prosperity is, surely, a good time to start redressing the balance, and my plea is that we should make a very strong effort to redress this balance. Then there is the futher point that interest rates have fallen, and this must be a very considerable advantage to the farming community everywhere, as to other producers in other industries.
So it is a good time to start making a shift, remembering that there are a very great many people who are far worse off than the agricultural community and who are grievously affected by the present level of prices. It is true that the industrial worker in employment has done better than the agricultural worker, but people not in employment and people on the lowest levels of industrial employment have to pay food prices, and they are very badly affected when food prices go up. Also, if we want to control pay increases, if and when there is an industrial recovery, then surely it is of the greatest importance to keep food prices down as much as we possibly can in order to reduce the cost of living of those people who will be bargaining for pay increases.
Now is the time, surely, to see whether we can get rid of some of the more obvious absurdities of the outcome of the CAP. As every noble Lord who has spoken has admitted, the surpluses are plainly absurd. If we had not become accustomed to the CAP over 20 years, anybody coming in from outside and looking at the way in which it is operating would think they had come to Cloud Cuckooland. The more surpluses there are, the more people are paying in order to produce more food which people do not want to eat. It is said that the important thing to do is to improve marketing, but the simplest way to improved marketing is to get prices down. If we want to sell more it is no good putting the price up; the price should be brought down. Yet prices are going up and up.
Surely the time has come for the Government to admit—at a reasonable pace, because such things cannot be done overnight now that we have become 61 accustomed to this system—that it is an absurd system in the way that it is working out, and to make a determined attempt to put much of it into reverse, starting with the surpluses. I was delighted to hear the noble Earl, Lord Ferrers, say that the Government supported no price increases on dairy products and a small price increase on cereals. I wish that the noble Earl could go further and go for no price increases right across the board, although no doubt that is asking too much. But can we not say that this is the direction in which we should be going? Food, after all, is produced in order that people shall eat it, and not in order to create surpluses and then to have to sell the food at ridiculously low prices.
§ 6.52 p.m.
My Lords, as I read the committee's report I came across a sentence in paragraph 14 which I found most welcome. Referring to the Commission's price proposals the report states that,it is right that they should be simple and discussion of them kept simple".That sentiment warmed my heart and encouraged me to speak in this debate, I assure your Lordships, simply and briefly. I thought that I might start with a few simple statistics. I ascertained that in the 10 member countries of the EEC there are 8¾ million farmers and farm workers, and that includes those in forestry and fishing. I also noted that in the 10 member countries there are 270 million consumers. Since the noble Baroness, Lady Seear, felt that she was a lonely consumer in this matter, I can assure her that I counted her in the 270 million and I counted myself as well.
We have a contrast there in terms of the producer interest and the consumer interest. We are thinking of the consumer interests of 30 people as to one person with a direct producer interest in agricultural policy. That made me think I should make sure that at least one consumer voice was heard in this debate. I am gratified that indeed quite a number of consumer voices have been heard. The noble Lord, Lord Mottistone, in his introductory speech; the noble Baroness, Lady Elliot of Harwood; the noble Lord, Lord Kearton; and the noble Baroness, Lady Seear, all placed some emphasis on the consumer case in these considerations.
§ Lord Mackie of Benshie
My Lords, in counting up to that figure of 270 million, did the noble Lord, Lord Oram, count in the families of the 8¾ million as well?
Yes, my Lords, as a simple way of arriving at a figure I took the population, because all people are consumers—so even babies and people who are about to die are included in my figure.
§ Lord Mackie of Benshie
Well, my Lords, farmers and agricultural workers have babies as well. Did the noble Lord count them?
Yes, my Lords, I can assure the noble Lord, Lord Mackie of Benshie, that they were counted too—and they have a consumer interest as well as a producer interest.
The noble Baroness, Lady Seear, was quite right when she urged—and I fully support her in this—that 62 the consumer interest should have more regard paid to it than is the case at present when decisions about food prices are being reached—whether it is by the Commission, by the Council of Ministers, or by our own British Minister of Agriculture. It is too often forgotten, although the noble Lord, Lord Mackie of Benshie, reminded us of this in his speech, that the objectives of the common agricultural policy as laid down in the Treaty of Rome include reasonable prices for consumers as well as a fair return for farmers, security of supply, and other objectives. Reasonable prices for consumers are laid down as one of the purposes to be served by the common agricultural policy.
Therefore, I welcome this report's plea for simplicity in such matters because, as I have tried to follow the workings of the CAP over the years, I found its mechanism and its jargon—its technical terms—getting more and more complicated at the same time as its results in practice became more and more defective. The chief defect has been referred to by a number of speakers in today's debate; it is that, while the EEC has now achieved self-sufficiency in practically every major food commodity, it nevertheless continues to encourage still further production by means of its protective mechanism and its support for farmers' incomes through guaranteed prices, irrespective of the needs of consumers.
I am glad that the consequences of that major defect are spelt out in the report, in paragraph 12. They are spelt out there with devastating simplicity. I will summarise those consequences; increased cost, budgetry rigidity, trouble with America and others, harm to third world countries, and misuse of resources. That is a summary of paragraph 12. But what an indictment that is of the EEC with its surplus-producing mechanism. Moreover, each one of the points in that indictment is of direct and special importance to Britain—with our depressed economy the cost hits us particularly badly; our unfair contribution to the EEC budget; our special relationship (which we treasure) with America put in jeopardy, possibly, by trading rivalries; our widespread responsibilities in the third world. All those points, to which the committee made such forceful reference, affect us in Britain more, probably, than any other member country.
In short, in my view the common agricultural policy is becoming more and more questionable for the EEC as a whole—but it is becoming especially so for our own country. There are signs that both the Commission, in this year's price proposals, and the EEC Committee of the your Lordships' House, as it reviews the Commission's proposals, are beginning to face up to the basic problem. That problem is that year by year farmers are being paid too much, and it is the housewife who is paying. This year the Commission proposes increases which are smaller than it recommended last year, and our committee, quite rightly, in paragraph 9, warns of the danger that once again the Council of Ministers, when it reaches its decisions, will override the Commission and raise prices too high. I think the committee did well to give us that warning.
Those proposals of the Commission, being more moderate than last year's, and those warnings which 63 the committee gives to us are all to the good, so far as they go. But in my view they fall short of what is really needed and what is urgently needed in this matter. It is unfortunate, I think, that neither the Commission nor your Lordships' committee has plucked up enough courage to advocate what is really needed, and that is a price freeze for all those products that are in surplus, not just in the case of dairy products. I was glad—I thought I heard the noble Earl aright—that he was describing something in that direction as being the Government's attitude. But it is not at this moment the committee's attitude. They recognise that things are wrong and are going rapidly worse. If you like, they recognise that the European Gadarene swine are rushing to their doom, but instead of telling them to stop they are merely telling them to run to their doom more slowly.
I was fascinated by the reason which the committee gave in its report for putting forward a rather lukewarm recommendation about prices. In paragraph 17 it says:The Committee do not consider it politically realistic, or necessarily wise, to look for no price increases at all.I think the noble Lord, Lord Mottistone, quoted that same sentence. What does that mean, supposing we put it in the simple language that the committee urges us to use? When it says it is not politically realistic, what it means is simply that the farmers will not put up with it, and, moreover, that the farmers are a very powerful political lobby. And we in this House know that very well; indeed farmers are strongly represented on our Front Benches, I notice. The noble Lord, Lord Roberthall, quoted from The Time's leading article on Saturday of last week, and that leading article described, I thought rather effectively, the power of the farmers' lobby. Referring to the Council of Agricultural Ministers, the leading article said this:None of [them]"—that is, none of the Ministers—including Mr. Peter Walker, has ever shown the inclination to do anything that might be seen as inimical to the interests of the powerful EEC farming lobby. Shrewd politicians as they are,"—we know at least of one among them who is a shrewd politician—they are all too well aware of the bellows of rage that would arise across Europe from Bavaria to Tyrone at the very prospect of what, in real terms, would amount to a reduction in farming incomes.That, I think, is a description of the political reality in the EEC. That being so, I believe the time will come, and perhaps soon, when the consumers, the housewives of Europe, must show themselves unafraid of those bellows of rage that The Times said would come. They must, in my view, demand a more equitable arrangement of prices as between producers and consumers. In other words, the time is coming for the consumers of Europe to stand up and be counted, not only statistically, as I did in my amateurish way, because, though, statistically, the consumers are of course overwhelming, they should seek to be counted in terms of bargaining power as well.
This report that we are considering has this year put what I would call a tentative toe into the water of consumer price protection. It has started a criticism of the price arrangements from the consumers' point of view. I hope it is not too much to think that next year 64 they will perhaps have the courage to go further than they have gone this year and to take the plunge into the consumers' interest and speak up more fully for the consumer.
§ Lord Mackie of Benshie
My Lords, I hesitate to prolong the noble Lord's speech, but before he sits down would he not perhaps admit, as several noble Lords have said, that there is a real decrease in farmers' incomes, and that the consumer is suffering more the depredations of the manufacturer and retailer than from the farmers he is attacking so effectively?
My Lords, the question of farmers' incomes is an involved one, as the noble Lord knows only too well. In thinking of it, one needs to think of the support that the farming industry gets. As the noble Lord, Lord Kearton, was pointing out, other industries could be profitable if they were as well treated as the farming industry is by the EEC. But I think it is well recognised that the farmers have not done too badly just recently, and it is also the case—and this was the burden of my central point—that the farming industry of Europe is producing surpluses, and we are paying them to carry on on that erroneous road.
§ 7.8 p.m.
§ Lord Harmar-Nicholls
My Lords, this is the first time I have taken part in a debate in connection with the EEC since I became a member of the European Parliament three and a half years ago, but I have always tried to follow the results of the deliberations which the various Select Committees have carried out. I have to tell your Lordships that one of the reasons why I wanted to make a contribution to the debate today was to say just this: that I hope the Select Committees will carry on doing their work, because I can assure them that there is no report which comes to the European Parliament which is held in higher esteem than the one which comes from your Lordships' deliberations in the Select Committees. That is not a matter of patting ourselves on the back; that literally is a fact. The number of times that the results of the Select Committees' reports are quoted in support of arguments or to further a particular point of view is legion. Whatever the nationality, on this matter your Lordships' Committees really stand supreme so far as the reports are concerned. I wanted that on the record in order to encourage the Select Committees to carry on in the same line in future as they have done in the past.
This debate is a very timely one. The subject of this report will dominate the European Parliament debates which are taking place throughout this week. I suppose I should have been there today but I shall see how they are getting on tomorrow, reinforced with the points of view that I have had the opportunity of hearing this afternoon.
I believe that the reports are accepted because they are concise, authoritative and, more important, they are objective. I cannot say that the noble Lord, Lord Mackie, has always been completely objective. He has a point of view about the poor farmer which it is right should be on the record, but it sometimes lacks that 65 little bit of objectivity which the reports, by and large, do convey. Having said that, I share the disquiet and the feeling that much more must be done if we are to find the right formula for operating the common agricultural policy. That is clear.
The report we are now debating is the seventh report. My point of view is expressed completely in the appraisal set out in the fourth report printed on 8th December. Because I think it is so concise and so absolutely accurate in its description of the situation, I wish to quote from it. It is the appraisal given by the committee in paragraph 13, on 8th December 1982:In the Committee's opinion … Instead of leading to a narrowing of the gap between Community prices and those of competitors it will, at best, leave the gap unchanged. It exacerbates relations with the USA and other exporting countries. It imposes little effective restraint on excess production and does nothing to reduce the cost of disposing of the surpluses. It will lead to further increases in consumer prices and add to the cost of the Common Agricultural Policy. Far from reducing the budget inequity … it makes it worse. Finally, instead of reducing the proportion of Community spending that goes on agriculture, it will increase it from a figure of some 65 per cent. in 1981 to an estimated one of just under 70 per cent. in 1983".That is a report from the committee, having done its work objectively and with the sort of detail to which we have become accustomed. I believe that it is in the light of that message that we ought always to be considering any of these questions to do with the common agricultural policy and how we hope to improve it.
I had a little exchange with my noble friend at the beginning of his very excellent introduction. How excellent it is to have a Minister who is prepared to give the official point of view at the beginning of a debate so that everyone can take the official view into account, rather than putting our own often not so well documented points of view and having the Minister reply afterwards.
On that particular issue, as I see it, the price increase proposed, while it can be presented in a way which makes it appear relatively modest, is not quite what it seems. My noble friend quoted 5.5 per cent. as the norm, but that is 5.5 per cent. in the Community currency of ECU's. If one translates that into national currencies and multiplies by the proposed Green Paper devaluations it becomes 7 per cent. I believe that we ought to know that. It is no good thinking that the figure is 5.5 per cent. The advantage of my noble friend speaking first and replying at the end of the debate is that if my figures and calculations are not right he will have the opportunity of putting the record straight. However, as I understand it, the position is as I have explained it. The figure is 7 per cent., not 5.5 per cent.
The position for the future must take into account this alteration from ECUs to the national currencies and the effect of devaluation, such as is mentioned in the Green Paper. So far as the farming increased prices for the United Kingdom last year are concerned, we did not have 7 per cent. Our increase amounted to only 4.1 per cent. Again, that is the sort of thing that we have to take into account, How do we as a member of the Community fare as compared with our partners? I have found in the United Kingdom more concern flowing from the co-responsibility measures that have been proposed for cereals and milk than from the low price increase.
66 As regards the large stocks that we read so much about and which were very properly mentioned, since my reaction has been slightly critical of the Community in this field I think we ought to have on the record just this. Taking everything into account the stocks are perhaps not so much out of level as it would at first appear. The February stocks amount to 13 days' consumption of beef. It will take 13 days to remove the stocks that we have. There is a 30-day stock of butter, a 70-day stock of wheat and a 23-day stock of barley. If one compares those with the 90-day stock of oil that we think it is right to keep and the four-month stock of coal that we think it is right to keep, it will be seen that the stocks, presented separately, can seem to be excessive and out of gear; but if one looks at the need for strategic and other reasons over the whole field of consumption they are not so much out of gear as all that.
The one problem which I believe must be borne in mind, even in doing the right thing, such as keeping prices in bounds, is the effect on other countries when they, for political and economic reasons of their own, are forced to give extra aid. If we get the price that we are given under the CAP, below a level which our partners in the Community find can be operated, and they have to give separate aid, that is one way of disrupting the whole machine of the CAP and it may later bring about a disintegration of the whole EEC which we would all find very unpleasant and unnecessary. Therefore, while we are making our criticisms of surpluses and the unnecessary stocks, and while we are making our criticisms looking at it from the consumers' point of view and the price we have to pay in order to keep an efficient farming community, those are the problems that must also be weighed. That is what makes it so difficult for the Council of Ministers or for anyone else. At the end of the day we must not just criticise but must find an answer which will work and which will get rid of these particular problems.
The second reason, apart from congratulating the Members of the Select Committee, why I wanted to make a contribution today is this. I do not think what I say now will be approved by the farming lobby, but while it is right that we should attempt to solve the problems by a freeze such as was mentioned by the noble Lord, Lord Oram, and indeed by many others, I do not think that such a freeze of prices is the final answer. In the medium and the long term we must think in terms of introducing quotas.
Over the past 20 years we have found out the sort of contribution that can be made from the various members of the Community and we can now work out what the excesses are. I do not believe that by the price mechanism alone we can rectify them. In business, if one is getting any price at all for unnecessary surpluses, one can always find ways and means to go on producing them. I believe that we ought to be beginning to try to give a lead for the introduction of quotas, where the various nations that make up the Community will be told the level of their actual contribution in amounts.
My noble friend Lord Ferrers and I served at the same time as junior Ministers at the Ministry of Agriculture back in 1955. He will remember, as those who understand farming problems will know, that we overcame the very real problem of sugar and sugar beet by the application of quotas. We had Common- 67 wealth sugar agreements which had to be honoured in order to give the market to the third world countries whose main commodity sugar was. My constituency, which was Peterborough, was the ideal part of the country for the growing of sugar beet. We were in a position to provide a great deal of our sugar needs from our sugar beet and our sugar factories, but we had to keep the amount down in order to honour our Commonwealth agreements without overloading the whole market. We did that by giving a quota as to what sugar beet could be produced.
Although some of our farmer constituents were very eager to increase their acreage in that commodity, they well understood the commonsense need to work to a quota in order to keep down the levels. I believe that in the long term that is the only effective answer, although we cannot jump into that tomorrow; it may well be that we shall have first of all to go via the price freeze before we get to the point where we can have quotas such as I have suggested.
The other points that I think ought to be on the record when we are being critical of the overall situation is that it is a fact that food prices have increased at only approximately half the general inflation rate in this country; production has gone up in the United Kingdom from 60 per cent. to 75 per cent. of self-sufficiency; on the common agricultural finance, the right honourable gentlemen the Minister for Agriculture has in two years doubled the amount that comes from Brussels to this country. If one adds all the pluses and minuses together, although there is a great deal to be concerned about and many problems to be overcome, it is not all black.
I do not think that we need do anything other than approach the problem in a calm, sensible and objective way, as the Select Committees of this House always have done. If in the future they can find time to start an examination of the problems and difficulties of switching from price freezes to quotas, they will be anticipating the future in a way which will overcome many of the problems that we have to tolerate today.
§ 7.24 p.m.
§ Lord John-Mackie
My Lords, first and foremost could I apologise for raising the height of the Dispatch Box, but the top of it is just outside the range of the focus of my spectacles and I miss things occasionally. I am very envious of the noble Earl, Lord Ferrers, who can read his notes from his tremendous height, although I see for the first time today that he is sporting a pair of spectacles. No doubt we shall get together and get the Box raised by a mechanical device from below to help us. The other thing that I must do, like everyone else, is to declare an interest. I am a farmer; I scrape a living from London clay a few miles up the road from this House.
It was only natural, my Lords, that the whole question of farmers' incomes, which were given such great prominence by the issue of the White Paper, should creep into the debate in no uncertain way. I am speaking now on behalf of my noble colleague in the Committee, Lord Brookeborough, who apologises for not being here today, although that apology will not satisfy the noble Baroness, Lady Seear, or my noble 68 friend Lord Oram, because of course my colleague is a farmer. Nevertheless, he is sorry not to be here today. He is very worried, as one would be, with The Times headline:Ulster lowland incomes up 450% in record year for farmers".I should have thought that The Times would be a bit more responsible. Of course one gets a better picture if one reads on. But how many people read on? That is the whole point. Far too many people look at the headlines in today's press and do not make any comparisons at all.
Let me just take those people who have criticised farmers' incomes, particularly my noble friend Lord Oram, who, I think, if I took him down correctly, made the remark that farmers were paid too much. Let me refer those people to the White Paper. I do not know whether my noble friend has read it. On the page where farmers' incomes are given, down the percentage change side the figures look very high indeed. I have worked out four of the biggest ones there and I should like noble Lords just to take note. In Scotland the hill and upland livestock cattle and sheep farmers had a 218 per cent. increase. Their average for the two years, 1981 and 1982, was £139 a week. That is not a very high wage for working, as I know these farmers do, very long hours indeed. I have a son in the road contracting trade and he pays men who work long hours on a dirty job between £200 and £300 a week. If one goes down to the arable farmers in Scotland, one finds they are earning only a pound less a week, £138. But if one goes to the Northern Ireland farmers, who are quoted in The Times headline, one finds that their average income in the two years is £44 a week. If one goes down still further to cropping and cattle and sheep farms, the wages are a little higher—the highest of the lot—£170 a week.
I ask my noble friend Lord Oram whether he thinks that those are excessive incomes for people with capital employed and everything else. I do not think that the statement he made that farmers are being paid too much can possibly be defended. As I say, my noble colleague on the committee. Lord Brookeborough, was quite worried about the headline and I promised that I would mention it in the debate.
The other thing that I should like to say is that I very much agree with Lord Mottistone. I must compliment him on the way that he introduced the debate and the short time that he took. I shall try to be as short as he was in introducing the debate, in placing emphasis on the timetable. As he knows, and as longstanding members of the committee know, we have been appealing to the Commission to let us have the figure earlier and to let us have the thing settled before the farming year starts—although, quite frankly, the farming year starting now really starts in October and November, when all the winter corn is sown and one cannot change one's mind if the prices do not suit. Things have improved immensely and we are looking forward this year to seeing the figures before the start of the farming year. As I say, we have been pressing for it for a long time and I hope that we shall get it.
The Minister, Lord Ferrers, said that the Government and his Minister would be robust about the situation. I should like to ask him whether that means the use of the veto again. I hope not. We do not want to see that used to delay matters, although of course we 69 agree with him that the Minister must be robust in pressing the Government's point of view. But I hope that that will not cause a delay.
The other point I naturally want to make concerns the question of the CAP itself. I cannot think that anybody who can remember what farming was like between the wars does not realise how much this country and the whole of Europe has benefited by a common agricultural policy. Of course, we know only too well that it has its faults and we are doing our best to put forward those faults in a reasonable way. One thing that the CAP has done for agriculture—and I emphasised this in my maiden speech in this House nearly two years ago—is the achievement of the continuity of prices and production. We cannot switch about farming production in the same way as one switches production in some factories. The stability which we have had has made a tremendous difference to agriculture.
Most noble Lords have given particulars and figures. Mention has been made of the average of 5.5 per cent. and the split in an effort to try to depress the production of milk but perhaps help olive oil and wine. We are all agreed on, and have been pressing for, guidelines for the future, along with production thresholds. But they are only a guide to making price penalties. Frankly, there are only about three options open to the Commission as regards prices—no increases, small increases or very large increases indeed. The noble Earl, Lord Ferrers, mentioned that the Government would like to see the emphasis of prices going away from cereal production and milk and going more to other livestock. That is not easy to do. It would need a tremendous slash in the prices of cereals before one could force a cereal farmer into livestock.
In paragraph 32 we try to make the point that farmers must be made to realise the situation. I do not think that many farmers realise the situation, and it should be put to them very simply. During the discussion on the drafting of the report, I objected to the words:clouded by obfuscatory discussion".I am sure that very few farmers know what that means, but it is essential that farmers are made to notice exactly what is happening about the surpluses, et cetera. As I asked a few minutes ago, how much would it take to make people change, and to what? We have surpluses in practically every commodity except perhaps beef. It would be very difficult for farmers to change. Therefore, as someone said in the debate—I think it was the noble Lord, Lord Harmar-Nicholls—the only hope is to reduce production.
I come next to the point that the noble Lord made about quotas. He is being a little not so much naive as optimistic in thinking that one could apply quotas on the scale of the EEC. It is very easy to do so in this country with 150,000 to 200,000 farmers, but not when one is dealing with, to quote my noble friend, Lord Oram, three-quarters of a million farmers. Quotas could help if they could be worked, but the administration would be appallingly difficult.
The next proposition would be a complete revision of the CAP. There is a strong case for having a look at a revision of the CAP. I was interested in a paper given 70 at the Oxford Farming Conference, where a strong case was made for acreage and/or headage payments which would be simple and could be operated easily. I think that the noble Baroness, Lady Seear, said that we were not doing anything about change. We are: the committee will be looking at each individual commodity in its next task to see what can be done individually as regards change. Having done that, we will look at the whole situation and may recommend a change. That is very difficult to do because the EEC is very much tied to the CAP as it was originally thought out. It would be a big change to move from prices to headage or acreage payments.
The one thing that is adding to the whole situation is the recession today and the fact that consumption is stagnant, if not decreasing. I do not know whether the advertising plan of the noble Baroness, Lady Elliot, as regards Food from Britain and so on would increase the production of food. It might help, but I do not know. The Commission say that they would like prices more in line with those of competing countries. That would involve a very large change as regards a lot of commodities, particularly cereals, where the difference is £44 or £50 a tonne in some cases. It will be very difficult to get those prices down quickly enough to have any effect. The main problem, as we see it in the report, is that there is no way in which one can do it quickly without a tremendous political upset, as quoted by my noble friend, Lord Oram.
I turn to the 5 per cent. increase in incomes and the question that in this country it is 45 per cent. I have dealt with that point. The 45 per cent. concerns a very low figure and in no way goes back to the figures of 1974–75. I do not think the argument can be defended that farmers are getting too much.
We are definitely against the co-responsibility levy on milk. It has not had any effect. It causes a great deal of ill feeling. My noble friend Lord Brookeborough asked me to make it clear that in Ireland they feel that the milk price will be affected to the tune of a 2.3 per cent. increase and the co-responsibility levy will substract from that. He thinks that Ireland will be treated badly. We recommend a threshold for beef simply because we think that ultimately if beef production continues on its present lines, it will be in excess in the Community. There should be a threshold. I cannot think that operating some system of price control as regards milk and cereals will have any affect as regards pushing people into specialist beef.
One point not mentioned by anyone, but which appears in the report, concerns the question of monetary adjustments. These make a tremendous difference, especially with the swinging about monetary values. Although I know that it is not Government policy, I should like to think that we shall soon join the European Monetary System, because in the end that must help.
Another matter which several noble Lords have raised as regards the Commission's proposals, is their alteration by the council. We have a considerable objection to the way in which they have done this. Looking at the figures for 1982, the Commission's price proposal was then plus 522 million ECUs and the council's final decision was plus 780 million ECUs. In 1983, the Commission's proposal was plus 745 million ECUs and the council's final decision was plus 71 1,540 million ECUs. Those figures are too wide and we hope, as someone said, that the council will not get cold feet again this year and alter the Commission's already—as our Government think—too high proposals. The noble Lord, Lord Roberthall, made that point very forcefully.
The noble Lord, Lord Harmar-Nicholls, stressed that the surpluses were not all that big. He was right. I go back to the point made by my noble kinsman that we cannot carry on with food aid. There are 800 million people with a nutritional standard far below what is reasonable and I understand that 400 million of them are actually starving. There are something like 90,000 deaths a year. One cannot help but emphasise these points. What is 20 million tonnes of grain, for instance, in that context? I cannot help thinking that it is not beyond the wit of man to get surplus food to the actual people who are starving—it does not matter where it comes from. I know that the food aid given in various ways has distorted matters, but surely some method could be found of getting it to the people who really need it. The second Brandt Report, which I understand is to be discussed in London this week, also emphasises that point.
I now want to deal with one or two of the points made about consumers. The noble Lord, Lord Kearton, paid the farming community a very nice compliment, but he gave various comparisons. We all know the old story that comparisons are sometimes odious. He said that we have a powerful voice in the Cabinet. I have been the Parliamentary Secretary to two Ministers of Agriculture, and after they have been at a Cabinet meeting they have returned very much with their tails between their legs. I know that my noble friend Lord Cledwyn of Penrhos will bear me out on that. So in the six years that I was on the job I never saw this great Cabinet lobby.
The noble Lord, Lord Kearton, made a point about the huge amount of money that goes into industry, and I have in mind the motor car industry, the steel industry, coal mining, and so on. An enormous amount of money goes into those industries but they are still losing money. I agree that an enormous amount of money has gone into agriculture, but it is profitable and it is producing more. Therefore I do not think that that comparison stands a great deal of examination.
The noble Baroness, Lady Seear, said that we cannot go on forever like this. I could not agree with her more. This committee is looking at the situation with a view to seeing whether we can alter it as the years go by. The noble Baroness mentioned the fact that people are taxed twice. What happens with regard to a motor car?—we are taxed twice. An enormous amount of money goes into steel and into British Leyland, so you pay the price for your car and you also pay your taxes. Therefore, if the noble Baroness makes these points she must make them all.
I should like to give her a list of the consumers on the committee. The chairman is a consumer—he is not a farmer; the noble Lord, Lord Mottistone, is not a farmer; the noble Baroness, Lady Llewelyn-Davies—who is our Deputy Speaker today—is not a farmer; neither is the noble Lord, Lord Jacques; nor the noble Lord, Lord Brimelow, who are both 72 members of the committee. Therefore, I do not think that the accusation that the committee was overloaded with farmers will stand examination.
I thought that I would not have much to say, and if it had not been for the noble Baroness, Lady Seear, and my noble friend Lord Oram, with his eight and three-quarter million farmers' families, I would not have. I do not think that the noble Lord answered the point made by my noble kinsman about the eight and three-quarter million farmers' families, because I am sure that a ratio of 30 to 1 will not carry weight either and I think that we should take another look at it. This comparison of people producing something for an enormous number of consumers can apply to anything. One has only to look at the number of Metro cars coming off the assembly lines, the number of people producing them, the number buying them, and so on.
My noble kinsman suggests that I should throw away my notes, but I am not quite as fluent as he is and the one thing about notes is that you stop when you reach the end of them. My noble friend Lord Oram said that what was really needed was a price freeze. He said that matters are getting rapidly worse. I would refer to the noble Lord, Lord Harmar-Nicholls, who gave the figures as to how many days it would take to consume the various surpluses. I would point out that we only have to have a drought like that which happened in 1976, not only in this country but in other countries, and the surpluses will vanish overnight. Therefore I do not think that we should be too worried about those surpluses when we know what can happen in such a situation.
My noble kinsman will be happy to know that I have now come to the end of my notes. There is much more that one could say. I think that the committee did a good job. I know that people would like things to happen more quickly, but, as the late Lord Butler said, "Politics is the art of the possible", and I think that the quotation in the report is absolutely right: that you cannot move too quickly here. Farming is a long-term business. I would commend the report to your Lordships.
§ 7.45 p.m.
My Lords, we have had a debate which, remarkable though it may seem, has shown a considerable degree of unanimity, if only a unanimity over concern as to the way in which the common agricultural policy is going and in trying to find the right way for it. If I may, I would commend the words of my noble friend Lord Harmar-Nicholls when he says that it is important to try to think of the success of the common agricultural policy and not always to look at the failures or the shortcomings of it, because whatever stage of development a thing reaches, there will always be problems attached to it and those problems are there to be overcome. It is important to see how successful it has been.
I think it was the noble Lord, Lord Kearton, who said that the common agricultural policy cemented the European Community. Of course, in that he is absolutely right. It is a fundamental part of the European Community. We must try to mould it so that it takes on a correct direction. Of course, in- 73 evitably, that is bound to be difficult when you have 10 member states all of which have different interests.
There is one matter that I should like to mention. In my opening remarks I referred to the fact that the average price increase was 4.4 per cent. for the Community and 4.1 per cent. for the United Kingdom. I should have said that this does not take into account the latest Commission proposals. I thought that I did. I believe, however, that I said that it did take into account the latest Commission proposals. If those new proposals were taken into account, the average increase would have been 4.1 per cent. for the Community and 3.9 per cent. for the United Kingdom. I merely state that in order to get the figures totally correct should I have misled any of your Lordships.
I would be tempted to pursue my noble friend Lord Harmar-Nicholls on his argument about 7 per cent. I am bound to say that, although I listened to him again, I did not quite see the basis of his figures; nor can I say that I agree with him. However, I shall be perfectly prepared to listen to him afterwards and try to see what it is about which he is concerned, because at the moment, through my ignorance and stupidity, I do not quite see what it is he is concerned about, and his figures do not accord with mine.
The noble Lord, Lord Mackie, referred to the problems of sugar. Of course, these are very substantial problems. I agree that sugar is a sector which poses very great difficulties. The Community produces 50 per cent. more sugar than it needs and the Community's surplus adds to pressure on the world market, on which of course several developing countries depend for their export earnings. That is why we should like to see a lower price increase than 4 per cent. which is proposed by the Commission. However, it is worth noting that the Community beet acreage was cut by 9 per cent. in 1982, and we can hope for a further reduction in 1983. We should also note that the Community agreed to increase its carry-over stocks so as to limit the exports for 1982, and it is likely to do so again.
When referring to Northern Ireland the noble Lord, Lord Mackie, asked: what is the family income below which the poverty level strikes? Not surprisingly, I do not have that particular figure with me. He was quite right to refer to the problems of Northern Ireland. The noble Lord, Lord John-Mackie, mentioned this too when he said that there had been, so it was reported in the newspapers, a 450 per cent. increase in incomes, and this was translated as being an enormous great income that people had had. I would only re-emphasise what the noble Lord, Lord John-Mackie, said, that on the Northern Ireland cattle farms the income in 1980–81 was £703 for the whole year, and in 1981–82 it went up to £3,896. That meant that in 1980–81 the income was £13 a week, which is surely intolerable, and it went up to £75 per week. For that to be transposed as being an enormous increase from which the farmers were benefiting, and almost one which was an increase which should not have occurred, is really quite wrong, totally erroneous and grossly unfair.
The noble Lord, Lord Roberthall, said that if industry had had protection such as agriculture has 74 had, industry would have found no difficulty at all in making ends meet. All I would tell him is that Northern Ireland did then, and that was not a very happy state for them to be in. The noble Lord, Lord Oram, said that farmers have not done too badly. That may be a generality, but in so far as Northern Ireland was concerned that was not true. This is the danger that one can get into if one deals in generalities by saying that farmers have done well, or industry could have done equally well if it had had assistance of this kind.
If I may say so to the noble Baroness, Lady Seear, it is all very fine to say that the consumers pay once by buying the food, for which they also pay again by paying taxes. Of course, this happens on a variety of different occasions, and I shall come to that. I enjoyed Lord Brimelow's reference to last year's price fixing when he said that he thought my right honourable friend was like the lamb struggling in the thicket to get out. I am bound to say that if one stretched the biblical analogy a little further, and indeed if it stretched my biblical memory a little further, I think it was not the lamb but the ram that was in the thicket, and the poor ram ended up on the altar being sacrificed and was cooked, and it may be that that was also indicated in a not dissimilar set of events last year.
I enjoyed the noble Lord's reference to the fact that Carmen Miranda could only say "Yes" in 24 languages. I am not sure whether that was a reference to my right honourable friend or not, but I am bound to say that it accelerated my imagination considerably beyond the confines of the common agricultural policy. I should like to deal with the real point of concern expressed by a number of Members—the noble Baroness, Lady Seear, the noble Lord, Lord Kearton, the noble Lord, Lord Roberthall—and it also worries a number of us—which is the problem of the consumer. Of course, it is right that the consumer must be looked after and must have his interests adequately and properly reflected. I think that one may see that this happens under the common agricultural policy.
It is one of the tenets of the Treaty of Rome that the common agricultural policy should assure adequate supplies to consumers at reasonable costs, and at the same time try to give a reasonable return to the farmers for their work and their livelihood, but it is not all that easy to get these two to row together. Accepting the fact that that is not all that easy, it has happened to a remarkably successful extent so far with the common agricultural policy. One of the great problems is that you will never get supply and demand in equilibrium, and particularly is that so in agriculture.
People need food, and people must have it. The noble Lord, Lord Roberthall, wanted to see a lowering of the surpluses. I agree. The Government would like to see a lowering of the surpluses, but my noble friend Lord Harmar-Nicholls was right to put that into perspective as to exactly what these surpluses are. If one finds it difficult to keep supply and demand in equilibrium, which it is, one can refer back to only a few years ago, for instance, to the potato shortage of 1976. This was a shortage that happened not only in this country but in the whole of the Community, when prices went up from £60 a tonne to over £300 a tonne. 75 Who was affected then? It was the consumer who was affected.
One ought to remember too that in the European Community the price of sugar has been below the world price on occasions. That was in 1974–75 and again in 1980–81, and there have also been occasions when the Community price of wheat has been below the world price. Noble Lords may say that this does not happen very often. No, that is perfectly true, it may not happen all that often, but it shows that if you are to be dependent on world supplies those world supplies are not constant, and the common agricultural policy has in fact provided a reasonable support for the farmers at the same time as providing a reasonable supply of food at reasonable cost to the consumer.
I pointed out at the beginning, and I shall not weary your Lordships with pointing it out again, that the increase in the price of food has been very much lower than the rates of inflation. Not only that, but I think that it was the right honourable gentleman who was Minister of Agriculture in the previous Administration, Mr. Silkin, who said that between 1974 and 1979—and I use these figures not to make any party political point but merely to repeat what he said—the price of food had gone up by 110 per cent., and that that part of that 110 per cent. attributable to the common agricultural policy was in fact only 10 per cent. It is too easy to blame always the common agricultural policy for increases in the price of food.
The dilemma—and the noble Lord, Lord John-Mackie, correctly referred to it—is that in this world in which we live we have one-third of the world with too much food and two-thirds with not enough. The noble Lord asked cannot we move this across? There are great difficulties in trying to move food from an area of surplus to an area of deficit of food. One is cost, the second is the ability of the country to pay, and the third is to get it to the country concerned, and to get it to the people who actually require it.
If one is worried about surpluses, it is worth looking around the world. One merely has to look at Somalia, Poland, and Ethiopia to see the ravages of famine, and to realise even now that places like Mali, Chad and Niger are all facing the possibility of widespread famine this year. When one realises that, we are in fact immensely lucky in the Community to have a system which at least has prevented that. The difficulty is to prevent the surpluses exacerbating trade and causing conflict. That is a difficulty which we can only get over gradually and by negotiation and by trying to mould the Community and the common agricultural policy rather like moulding a potter's vessel. You cannot do it in one go. It has to be done gradually over a number of years.
My noble friend Lady Elliot referred to Food from Britain. I was glad that she did. We in the United Kingdom have a considerable export of food now, and this is good, but what we do not do is to market our food as well as we should. She was correct to say that Food from Britain is not just a convenient way of encouraging people to buy food. They have to buy food, not because it is British but because it is best. That has to be done not just by providing a slogan and advertising it. You have to find out what the consumer wants; the processors have to find out what the 76 consumer wants; the farmers have to find out what the processor wants, and each one has to ensure that the supply is exactly what the consumer requires. This means a dependence on quality, price, consistency and constancy; only then can we promote British food, which is what we hope to see happen.
In the difficulties we have—and the noble Lord, Lord Kearton, referred to the sums of money spent on British agriculture—we should remember that the export of food, feed and alcoholic beverages amounted to £3,391 million in 1981, and already between January and September 1982 it is £2,539 million. These are very substantial figures, and the net benefit to the balance of payments from our increased self-sufficiency between 1978 and 1982 is £1,250 million, so the country as a whole has very considerable advantages from having successful agriculture. It has served the country well. It has improved our balance of payments, reduced our imports, encouraged our exports and, as I said at the beginning, it has actually provided new jobs this year, a trend which has not happened for a great many years.
It is our intention in the common agricultural price-fixing which is going ahead to take account of the consumers' view. We want to see the surpluses not increased but reduced, and I would remind the noble Lord, Lord Oram, that my right honourable friend is not just the Minister of Agriculture but the Minister of Food as well, and in that respect he is, I think, in a minority of one in the Community. But he does, and will, take into account the views of consumers. And in so far as your Lordships have expressed concern about them, an absolutely justifiable concern, I assure the House that my right honourable friend is equally concerned. We want to see the CAP succeed for the benefit of the farmers, of the consumers and of Europe as a whole. That will not be done overnight. It must be done by gradual and careful negotiation.
§ 8.3 p.m.
§ Lord Mottistone
My Lords, I wish to thank all noble Lords who have taken part in the debate. I was pleased to see the Leader of the Opposition, who until recently was the chairman of Sub-Committee D, with us for most of the evening. The noble Baroness, Lady Llewelyn-Davies, chairman of our Select Committee, has graced us with her presence practically throughout, and I am most grateful to her for that.
I was delighted to hear my noble friend Lord Ferrers confirm that efforts are being made to see that we get our farm price proposals earlier, that a final decision on farm prices may well be made at the first meeting of agriculture Ministers and that our Minister will be robust. My noble friend did not mention in either his opening or closing speeches the point which I and several noble Lords made; namely, whether the Ministry of Agriculture, Fisheries and Food could help to spread the message on thresholds and penalties in the guidelines on a five-year rolling programme, to which we gave special point in paragraph 32 of the Report.
I wish to make a special point of thanking my noble friend Lord Harmar-Nicholls for joining us, the first time he has taken part in a debate on one of our reports, and for the kind remarks he made about all 77 the reports of the Select Committee. It was good to hear that they are so well considered in the European Parliament. His second point, which was touched on by the noble Lord, Lord John-Mackie, was the view that quotas might be the answer. He might like to know that Sub-Committee D is now studying commodity by commodity what we call supply control, and one of the solutions we are examining is quotas. Whether that will be the one we recommend is not at all sure because there are all sorts of difficulties about that, as we are discovering, but the sub-committee will be discussing that subject next, which is what he wanted us to do.
I think that probably the figures he quoted, which were somewhat confusing to the Minister, resulted from the fact that the advice he got took into account the possible introduction of a negaative MCA of 1.5 per cent., which threatened us last week-end but which was deferred by the management committee, at any rate for a week. If that was put into effect it might make some sense of the figures, but I would not be sure of that.
This has been a splendid debate. I did not agree with the Minister on one point, and that was when he congratulated us on our unanimity. I think it was rather the reverse. It was one of the first splendid debates of the sub-committee of the Select Committee at which there was a great deal of argumentation, with splendid people from outside the committee taking part. I hope very much that future debates of this sort, on whatever reports, will take the same form and that we shall have the same type of argumentation in that we shall develop even more our ability to impress people in Europe with the wisdom of the remarks from this noble House.
§ On Question, Motion agreed to.
§ House adjourned at seven minutes past eight o'clock.