Tobacco Growing: EU Subsidies (Hansard, 17 June 2004)

§ The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)
My Lords, the tobacco regime was in place when the UK joined the European Community in 1973. UK governments have never supported the regime and have constantly pressed for its discontinuation. We are now in a situation where agreement was reached at the Agriculture Council in April this year to end direct support for tobacco from 2010.

Lord Renton
My Lords, while thanking the Minister for that reply, why is it that this year our taxpayers must pay £88 million towards subsidising the growing of tobacco in the European Union? Is this not a typical example of applying a policy for the whole of Europe that could and should affect only part of it?

§ Lord Whitty
My Lords, I largely agree with the noble Lord. We disapproved of this when we joined the European Union, but it was part of the common agricultural policy at that point. Successive governments have tried to change it, and we have now succeeded under this Government, although not as quickly as we would have liked. The agreement reached in April in principle decouples payment to tobacco growers, but the compromise is that the tobacco producers can recouple 60 per cent of it until 2010. From 2010, there will be no incentive to grow tobacco in Europe.

§ Lord Hoyle
My Lords, does my noble friend agree that it would be far more sensible to give these people generous settlements and so get rid of this inefficient, unnecessary and unwanted tobacco growing?

§ Lord Whitty
My Lords, in line with the radical changes in the rest of the common agricultural policy, the agreement is to decouple and to move to a single farm payment. After 2010, the ex-tobacco growers will receive 50 per cent of what was previously the tobacco subsidy in terms of a single farm payment unrelated to a particular crop and therefore not an incentive to grow tobacco. That is the way in which we have dealt with it for other crops under the CAP, more or less. A single farm payment that allows farmers right across Europe to decide what to grow, rather than tying it to a particular crop, will also from 2010 apply to tobacco.

§ Lord Palmer
My Lords, can the Minister inform the House whether this tobacco is consumed? If my figures are correct, only about 2 per cent of the world production of tobacco comes from the EC.

§ Lord Whitty
My Lords, the percentage is slightly higher than that. Total tobacco production is getting on for 6 per cent of world production. Of course, that means a vast amount of tobacco that is consumed in this country and the rest of Europe is not grown in Europe under this subsidy regime.

§ Baroness Byford
My Lords, first, can the Minister tell us the total figure for tobacco subsidies? Secondly, why is there the delay between 2004 to 2010? That seems to be a huge period of time. Will the subsidies be tapered—reduced—over that time?

§ Lord Whitty
My Lords, as I was explaining, the subsidies will be decoupled but then recoupled up to 60 per cent. So, in that sense, it will be reduced up to that period. From 2010, there will be no relationship between any subsidy going to tobacco growers and the growing of tobacco.
As regards the total spend, I shall have to write to the noble Baroness because I do not have my glasses on—this is in 10 point type. The sum is about 600 million or 700 million euros, but I shall confirm the exact figure subsequently.

§ Lord Jopling
My Lords, is it still the case, as it was a few years ago, that a good deal of the subsidised tobacco grown in Europe has no known demand anywhere in the world?

§ Lord Whitty
My Lords, I think that is largely true and another absurdity of this situation. It is quite apart from the absurdity of us continuing to subsidise a crop that causes severe health damage across Europe. The fact that much of that tobacco is not particularly popular even among smokers in Europe or elsewhere is another dimension to something that we are now, at last, bringing to an end.

§ Lord Weatherill
My Lords, is it not bonkers to give a subsidy to grow tobacco, then to tax people for smoking it and tell them that they will die if they do?

§ Lord Whitty
Yes, my Lords. As the noble Lord said, it is "bonkers". It has been bonkers for the past 30 years. At last, we have come to an agreement which, eventually, in six years' time, will end that particular madness.

§ Lord Biffen
My Lords, does the existence of a European constitution enable the date of 2010 to be brought forward?

§ Lord Whitty
My Lords, theoretically probably, but it has very little to do with the constitution. This is a longstanding and rather grinding process of decisions under the common agricultural policy.

Lord Berkeley
My Lords, are the Government proposing the same reduction in subsidy for sugar beet? It always seems to me to be unnecessary to subsidise it in this country when it can be produced much more cheaply elsewhere in the world. It also causes health problems.

§ Lord Whitty
My Lords, the sugar regime was not covered by the reforms, but there will be a proposal from the Commission on the reform of the sugar industry shortly. Clearly, there are a wide range of difficulties arising from the sugar industry. It is not subsidised directly, but there is a European price for sugar in order to benefit the sugar beet industry, which is substantially higher than the world price. In that sense, as consumers, we are supporting the sugar beet industry of Europe. If we are moving to a liberalised agricultural system, that, too, should be radically reformed.