EC: Grain and Beef Stocks (Hansard, 6 June 1991)

§ The Earl of Strathmore and Kinghorne
My Lords, the latest available figures for European Community intervention stocks of grain and beef show stocks standing at 18,092,000 and 566,000 tonnes respectively. The corresponding figures two years ago were 6,596,000 and 274,000 tonnes.

§ Lord Jay
My Lords, as the food mountains are again rising to record levels and as the common agricultural policy now costs the fantastic sum of £23 billion sterling annually, can the Minister at least assure the House that our Minister of Agriculture will support the moderate proposals for reform put forward by the agricultural commissioner in Brussels?

§ The Earl of Strathmore and Kinghorne
My Lords, the Government welcome the Commission's acceptance that reform of the CAP is needed, but the Government are not in favour of the Commission's approach. In particular, emphasis on safeguarding small farms would tend to make EC agriculture less able to adapt to market forces. It would severely disadvantage United Kingdom farmers.

§ Lord Hailsham of Saint Marylebone
My Lords, has it occurred to the Government that the vast amount of millions of tonnes of grain might more cheaply and usefully be used in feeding the hungry?

§ The Earl of Strathmore and Kinghorne
My Lords, I very much take my noble and learned friend's point. Some of the grain will go to those who are in disaster areas at the moment. However, the Government also take the view that cash and expertise are equally welcome.

§ Lord Dormand of Easington
My Lords, will the Minister confirm that when the EC responds to the various famine appeals it does not draw from its own stocks but buys on the world market? If that is the case and if the noble Earl can confirm it, is that not the most ridiculous situation and an utter condemnation of the whole farce of the common agricultural policy?

§ The Earl of Strathmore and Kinghorne
My Lords, I hear what the noble Lord says. I do not have the answer to the question but I shall look into the matter and write to him.

§ Baroness Carnegy of Lour
My Lords, does my noble friend agree that it might help in freeing the market within the European Community if stocks of beef and cereals which are in intervention could be freed when the market requires them, rather than when the European civil servants decide to release them?

§ The Earl of Strathmore and Kinghorne
My Lords, the rules on sales from intervention stocks of the 741 various commodities are inevitably complex but in principle intervention is designed to support a given price by removing stocks from the market. It is therefore logical that those stocks should only be released back on to the market at a price at least equal to the support price. Sales out of intervention stocks at the market price, if that were below the support price, would therefore inevitably undermine the system.

Lord Bruce of Donington
My Lords, is the noble Earl aware that the storage costs for these surplus foods amount to an astronomical sum per annum? A figure of £12 billion has been reported, of which the United Kingdom share is significant. Those storage costs contribute directly to the higher cost of food that is borne by households in this country. The costs also have a fiscal effect as they form part of the £2,000 million net contribution of the UK to the European Community.

§ The Earl of Strathmore and Kinghorne
My Lords, the noble Lord is absolutely correct to mention the figure of £12 billion. I shall elaborate on the figures. The cost of the storage and disposal of surplus food in the European Community in 1990 was 16.22 becu. That is £11.3 billion. In 1989 the figure was 18.44 becu, or £12 billion. The noble Lord mentioned the latter figure. The full impact of recent increases in stocks has not appeared in the 1990 budget as yet. The cost of the storage and disposal of surplus food in the United Kingdom in 1990 was 810 mecu, which is £565 million, compared with 941 mecu, or £616 million, in 1989.

§ Lord Stanley of Alderley
My Lords, do the Government still rely on farm gate price reductions to reduce this surplus? Have the Government worked out the long-term consequences to the rural economy of such a policy?

§ The Earl of Strathmore and Kinghorne
My Lords, the outcome of the 1991 price fixing settlement has been a notable success.

§ Lord Stoddart of Swindon
My Lords, is it not a fact that the astronomical and wasteful figures that have been mentioned entail more than mere figures? Is it not a fact that those figures feed through to ordinary people in their weekly bills? Is it not the case that each family in this country spends £16 per week more on food than they would have to spend if they could buy their food at world prices? Will the noble Earl confirm that the Irish have so much grain that they can no longer store it inland but have to hire ships to store it offshore?

§ The Earl of Strathmore and Kinghorne
My Lords, the noble Lord has quite rightly previously referred to this matter. Today the noble Lord mentioned the figure of £16 but I believe in the past he has mentioned £18. One must not forget that at the moment United Kingdom farmers are benefiting from the common agricultural policy. I cannot comment on the Irish grain situation.

§ Lord Elton
My Lords, if the object of buying grain into intervention stocks is to keep prices up while the effect of releasing the grain on to the market is to push prices down, and the cost of keeping the grain in intervention stocks is excessive, does not my noble friend agree that the opportunity of getting rid of large quantities of the stuff outside the market is to be welcomed? The answer to the question asked by the noble Lord, Lord Dormand, should be that the Common Market is trying in every possible way to use this grain to alleviate famine in other countries, as my noble and learned friend Lord Hailsham suggested.

§ The Earl of Strathmore and Kinghorne
My Lords, I agree with many of my noble friend's remarks.

§ Lord Gallacher
My Lords, does the Minister agree that one of the principal reasons for the increase in the grain stocks in the past two years has been the total inadequacy of the measures taken by the Agriculture Council thus far to deal with mounting surpluses? While hope is held out that the recent settlement may do something to alleviate the position, one cannot ignore the fact that the Agriculture Council is itself a major source of the problem of grain surpluses.
As regards beef, does the noble Earl agree that the beef mountain is in part due to the purchase of stocks of beef which are being dumped by East European countries? Although those purchases are supposed to be controlled when they enter the Community, the degree of control is inadequate. British farmers have been beneficiaries in this matter in that the European Community has taken a fairly liberal view of the problems which the beef market is experiencing in Britain at present because of the incidence of BSE. Will the noble Earl ask his right honourable friend the Minister whether he will consider releasing additional supplies of meat free to those categories of people in Britain who are currently entitled to a free distribution of meat?

§ The Earl of Strathmore and Kinghorne
My Lords, the noble Lord made a number of points. In answer to his first point, I can only repeat that in the Government's view the outcome of the 1991 price fixing settlement was quite successful. The noble Lord also asked about beef imports from Eastern Europe. We have pressed the Commission to ensure that in all cases the rules regarding imports are properly applied and are not circumvented by illegal cheap imports from outside the Community. The Commission has adopted measures enabling it to monitor the level of live calf imports. The issuing of licences can be suspended if necessary. In addition, the Commission proposed the introduction of an annual live animal import limit of 425,000. That is significantly lower than recent annual imports.
As regards the noble Lord's final point on the availability of beef from intervention stocks to United Kingdom pensioners, under the EC surplus food scheme some 3,000 tonnes of beef will be distributed in 1991 to the most needy citizens in the United Kingdom. Pensioners as a group are not eligible for 743 this allocation. The food is restricted to homeless people and to those in receipt of income support or family credit.

§ Lord Jay
My Lords —

§ Lord Waddington
My Lords, we should move on to the next Question, otherwise there will be insufficient time for it.

§ Lord Jay
My Lords, if the Government cannot accept the Commission's proposals, are the Government themselves putting forward effective proposals to get something done?

§ The Earl of Strathmore and Kinghorne
My Lords, I firmly believe that my right honourable friend in another place is doing a most excellent job.