HC Deb 15 April 1986 vol 95 cc331-2W
Mr. Teddy Taylor

asked the Minister of Agriculture, Fisheries and Food why the EEC Commission has agreed to sell butter to the Soviet Union at 10p per pound; how much butter was involved in the most recent sale; and why Her Majesty's Government agreed to the regulation which made such sales to the Soviet Union possible.

Mr. Gummer

The Community currently has over 1 million tonnes of butter in store, of which about half is more than 18 months old. These stocks place a considerable financial burden on the Community and depress the world butter market.

The Government have consistently taken the lead in arguing for measures to curb surplus production and bring supply and demand into better balance. But while surpluses continue to exist, the problem of their disposal remains.

Several schemes already provide for butter to be sold at a reduced price within the Community. But there is a limit to the amount which can be sold in this way without disrupting sales of fresh butter and leading to a further growth in intervention stocks.

Against this background, the most economical way of disposing of stocks is often to sell them on the world market. That is why we recently supported the introduction of a regulation enabling butter at least 18 months old to be sold to the USSR, Mongolia, India and Pakistan.

The terms of this regulation provide for the price to be determined by competitive tender. In the first round of applications the Commission considered that the prices offered were too low and proposed the rejection of all bids. But in the second round (which closed on 8 April) the Commission considered that the prices were the best that could be realised given the state of the market. It therefore proposed that bids for 100,000 tonnes for sale to the USSR (including 11,000 tonnes from United Kingdom stocks) should be accepted. A majority of member states supported this decision, but the United Kingdom abstained. When account is taken of transport and other costs, including a margin for the trade, the price to the Soviet authorities will be about 13p per pound.