HL Deb 03 March 1994 vol 552 cc1130-1

3.16 p.m.

Lord Mottistone asked Her Majesty's Government:

What reductions in the price of sugar they are seeking in the current annual common agricultural policy price settlement.

Earl Howe

My Lords, the Commission has proposed no changes in support prices for sugar this year apart from a reduction in the amount paid for storing sugar. Proposals have to be made later this year to address the reform of the regime and the measures needed to implement the Community's GATT obligations in time for the 1995– 96 marketing year. The Government, however, believe that there is no reason why some reduction in prices should not be made now to help redress the growing imbalance between this sector and that for other arable crops.

Lord Mottistone

My Lords, I thank my noble friend for his Answer. In asking this Question I declare an interest. While my noble friend's Answer is welcome so far as it goes, does he not think there are sufficient technical issues involved to enable us to ask the Commission to reduce the price still further in the light of the out-of-date situation regarding the sugar regime?

Earl Howe

My Lords, I agree with my noble friend that there is ample scope to reduce prices even before the reform of the regime. As regards this year's price fixing, we have made it clear in the Council that a price cut is essential.

Lord Carter

My Lords, if there is a reduction in the price of sugar, what mechanism exists to ensure that the consumer benefits and that the reduction is not used to increase the profits of the sugar industry? Do the Government anticipate that the change in the reimbursement of storage costs— the Minister mentioned that— proposed for 1994– 95 will be reflected in prices generally?

Earl Howe

My Lords, the reduction in the storage refund will lead to a reduction in the level of the storage levy which should in turn reduce the price of sugar. 'That is good news for consumers. However, in processed products such as cakes and biscuits, sugar represents only a relatively small proportion of the total cost and the impact of any cut may therefore be modest. Nonetheless, if it occurs it will be welcome.

Lord Boyd-Carpenter

My Lords, is it not an exercise of extreme optimism to believe that the Commission will reduce the price of any commodity?

Earl Howe

My Lords, I remind my noble friend that the Community has signed up to the GATT agreement and sooner or later those targets will have to be addressed. It is likely that the targets will be met by a combination of quota cuts and price reductions. That combination cannot yet be determined, but we will press hard for price reductions to take the weight.

Lord Mackie of Benshie

My Lords, is the Minister aware that if one reduces the price of sugar, very little of that reduction will reach the consumer? Over 70 per cent. of the price of the product goes to manufacturers and retailers and very little to the farmers who produce the sugar?

Earl Howe

My Lords, there is no doubt that the consumer bears a large proportion of the cost of the sugar regime. In that respect what the noble Lord, Lord Mackie, says, is correct. However, if, as I indicated, prices come down— if not this year, then as the regime is reformed— it would be a great surprise to me if there were not some effect on retail prices in the shops.