HL Deb 01 March 1984 vol 448 cc1396-400

5.26 p.m.

Lord Belstead

My Lords, with the leave of the House I shall repeat a Statement being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food. The Statement is as follows:

"With permission, Mr. Speaker, I would like to make a statement on the Council of Agriculture Ministers which took place in Brussels on 27th and 28th February. I represented the United Kingdom Government with my honourable friend the Minister of State.

"Most of the time of the Council was taken up in detailed discussion of the Commission's price proposals and adaptations to the common agricultural policy. No decisions were taken. But there was further clarification of individual national positions on the various commodity sectors and other issues. These negotiations will be resumed at a further Council meeting next week.

"The Council agreed that the existing structures directives should be extended with effect from the beginning of the year until the end of June. Under this agreement, FEOGA will contribute in the normal way to payments made since 1st January under the Community schemes for capital grants and hill livestock compensatory payments. Aids to dairy investment are not included in the roll-forward. This means that no application for development plans under the Agriculture and Horticulture Development Scheme which include dairy investments will be accepted from today onwards. Nor will claims be accepted under the Agriculture and Horticulture Grant Scheme on dairy expenditure incurred from today onwards.

"I am pleased to tell the House that the Council agreed to the extension of the less-favoured areas in the United Kingdom. This is an important decision for farmers in our marginal areas. As foreshadowed in my Answer to my right honourable friend the Member for West Devon and Torridge on 30th November, it enables the Government to make arrangements for paying enhanced rates of capital grant in the marginal areas and to consider in the autumn review appropriate intermediate rates of hill livestock compensatory allowances to be applied in 1985.

"The Council also agreed that the present import arrangements for New Zealand butter should be extended for a further month so that 20,750 tonnes can be imported during the first three months of 1984 pending a decision on the proposal which the Commission have made for a five-year agreement".

My Lords, that concludes my right honourable friend's Statement.

Lord John-Mackie

My Lords, we must thank the noble Lord for repeating that Statement. I may say that it is like the curate's egg—good in parts. I note, under the first section of it, that the next meeting is next week. We have been promised year after year that a decision will be taken by the end of March, by the beginning of the farming year. Farming is a long-term business, and I should like to ask the Minister whether, this year, there is any chance of this decision being taken in time. We know there will have to be considerable cuts and changes in agricultural production, and we should have adequate warning about what is to be done. The Minister mentioned in the Statement the individual national positions. What are those individual positions? Are some of the countries not agreeing? Does he know that? As we all know, the Council of Ministers put forward the question of phasing out MCAs, which is an important thing for the British farmer. I wonder what the position is there?

Giving, from today, no notice at all to the dairy industry—although I think they had been warned; I have to admit that—about the question of no further aids to improve dairy buildings and to improve anything in the dairy sector, seems a little hard. I wonder whether it would not have been possible to detail this a bit better and to keep the grants for something which improves efficiency but does not improve production; in other words, no extension to a yard to bull more cows but something to help the efficiency, probably transferring cows from a yard to slats or cubicles, or something which does not increase the farmer's herd but increases his efficiency. I should like to ask what the Government's ideas are here: whether they are in favour of a price freeze or a price reduction, for that matter, or a sugar levy or quotas. If the dairy farmer is faced with all that, I think it is a little hard not to allow him something to improve his efficiency.

It is good to see that New Zealand is to be considered. In earlier stages of negotiations, in 1972–73—and I believe agreement was reached in 1975—we gave New Zealand a long period when the reduction of the butter supplies was agreed on. I hope that agreement will not be broken.

As regards the less favoured areas, there are difficulties. I have looked at some of them recently, notably in Ireland, I also saw some in Scotland during the last harvest that I looked at when I was a member of an AEC during the war, when they were given hill cow and hill sheep subsidies. I was amazed to see that land growing wheat today. If that is the case, what is to hinder these less favoured areas improving their pastures to such an extent that they can grow wheat or keep dairy heifers for dairy farmers?

It is a very real problem deciding about these things. I am sorry to ask so much of the Minister but this is a very important Statement, and I would reiterate once again the importance of getting decisions in time for farmers to alter their plans for next year, when they can do it, and not a year later.

Lord Gladwyn

My Lords, in the temporary absence of our own most respected farmer, my noble friend Lord Mackie of Benshie, it falls to me to make a few observations, and I can only hope that they will be considered moderately relevant. First, it must surely be obvious that on what I might call the overshadowing question of the reform of the common agricultural policy very little progress has been made. Final agreement, if it is ever reached, will have to be reached at the next European Council meeting (not at the next agriculture Ministers' meeting) at the end of March—perhaps as a result of some bargain which none of the agriculture Ministers will find acceptable or even agreeable.

For the rest, unless I have misunderstood the Statement it looks as though, for the time being at any rate, our hill farmers and farmers in marginal areas, to say nothing of the New Zealanders, have reason to be moderately happy and our dairy farmers rather less happy—although not so unhappy as they probably will be when there is general agreement, as there will be, substantially to limit the production of dairy goods in the EEC as a whole. I imagine that we must, while being thankful for small mercies, go on hoping that general agreement on the future of the CAP will be forthcoming before the money runs out and members of the committee have to take measures which might not be consonant with the continuance in being of the EEC itself.

Lord Belstead

My Lords, I thank both noble Lords for their response to my right honourable friend's Statement. The noble Lord, Lord John-Mackie, expressed the very strong hope that it would be possible to get agreement on the price fixing, from the point of view of farmers knowing where they stand for the forthcoming year. The Government most certainly agree with the noble Lord in that.

As the noble Lord, Lord Gladwyn, pointed out, the final decision on this by the agriculture Ministers will have to take account of the next full council meeting, which falls later this month. Her Majesty's Government will certainly be working hard to achieve the objective which I know the noble Lord, Lord John-Mackie, wishes us to be able to achieve.

The noble Lord asked me about the different national positions on these matters, and although I have expressed the wish of Her Majesty's Government to see these matters of the price fixing and, indeed, the future of the budget resolved, there are presumably different national positions. I do not think that either noble Lord would feel it appropriate for me to go into details now; but as your Lordships will know, Her Majesty's Government are looking for action to contain the cost of surplus production and to reduce the actual surpluses which exist. We shall certainly continue to stick to that line through these lengthy negotiations.

The noble Lord, Lord John-Mackie, asked me specifically about the MCAs. I should like to make it perfectly clear to your Lordships that my right honourable friend considers that there is no justification whatsoever for the Commission's proposals to revalue the green pound. We believe that these proposals do not take account of the United Kingdom's position in having a freely floating currency, and hence a variable MCA.

The noble Lord also asked why it was that the dairy farmers appeared to have suffered as a result of the meeting of the agriculture Ministers whereas other sectors—for instance, cereals—had not. I would only say that it has been generally recognised—and, indeed, the noble Lord, Lord Gladwyn, recognised it in his remarks—that the key surplus area at the moment is milk. The agreement in the council is an important element in the Community's aim to reduce that particular surplus.

Having said that, I of course recognise, along with the noble Lord, Lord John-Mackie, that cereals are also very much in surplus. Her Majesty's Government have been pressing for several years for price restraint—and not without success, because the price of cereals, having regard to average price increases, has increased by a lower amount. Perhaps I may just add that the noble Lord, Lord John-Mackie, will remember that only last year the Government significantly reduced the grants for cereal drying and storage.

The noble Lord also asked what our policy was so far as the milk surplus is concerned. Our view remains that a substantial cut in support prices in order to bring the milk market into better balance is the way forward. We are prepared to discuss proposals for a supplementary levy, but we have made it quite clear that any measures concerning a levy that are taken would have to be fair as between producers in the member states and without exemptions or exceptions which would allow some producers to keep on increasing milk production while others did not. The noble Lord, Lord John-Mackie, also put to me the apparent contradiction of trying to reduce surpluses while giving help to the marginal areas. I am sure that the noble Lord, who is characteristically generous as well as wise, would he the first to say that there must be a balance in agricultural matters, and we must try to keep a healthy agricultural industry in the hills.

Our application to the European Community for an extension of the less favoured areas and the marginal areas was in recognition of the special difficulties of farming in these areas. I believe that the success of our application will give great confidence to those areas, and I am very glad that the application has succeeded. These are complicated matters, and I should like to end by expressing my thanks to the noble Lord, Lord John-Mackie, for having given me notice of the questions he was going to ask.

Earl De La Warr

My Lords, would my noble friend please do the very best he can to give farmers an assurance that the Government are sensible of the agonising uncertainty through which the industry is going at the moment? Perhaps, as he has mentioned milk, it is all right for me, as a dairy farmer, to talk specifically about milk.

Will he tell us that he realises that there are many farmers—most of them small farmers—who just do not know at this moment whether they will have a livelihood within the next year? Does he fully realise that the suffering at the moment is the suffering of real anxiety for their way of life and for the livelihoods of them and their families? Does he realise that they are not squealing about any burdens with which they may be hit, but they are squealing about the length of the uncertainty? Finally, will he take on board that the publicity which has recently been given to my right honourable friend the Prime Minister's working party, which is to have a look at the benefits that are alleged to be given to the farming industry, has caused a further shiver to go down the spine? It is really much more than a shiver; it has struck terror into the hearts of many who feel, perhaps unjustly, that this is another blow aimed at their livelihood.

Lord Belstead

My Lords, I am very glad that my noble friend Lord De La Warr has underlined the enormous importance of the agricultural industry to this country. In the last decade, it has saved this country literally millions of pounds in foreign exchange and it will be a bad day when this country ceases to recognise the importance of British agriculture. I say that because my right honourable friend the Prime Minister was very ready to recognise the importance of the agricultural industry in this country.

As I think my noble friend is aware, on 23rd February this year, in answer to a Parliamentary Question, my right honourable friend the Prime Minister recorded that we are determined to reduce farm surpluses, which is likely to be painful, and that the Government are very well aware of the difficulties which face certain sectors of the farming industry. But, at the same time, my right honourable friend said that people in Britain realise that there is a need to support our agriculture, and that support is offered by every Western industrialised country to its agricultural services. My right honourable friend ended that passage of her reply by saying that we need a healthy agricultural industry. It is, therefore, in this difficult context of surpluses, which we have in the Community at the moment, that those words which my right honourable friend spoke stand.