§ Mr. Teddy Taylorasked the Minister of Agriculture, Fisheries and Food if the provisional European Economic Community agreement on milk production reached on 16 December places any additional financial responsibility directly on member states; and who will be responsible for the payment of subsidies (i) to buy out milk quotas and (ii) to dispose of existing butter surpluses.
§ Mr. Gummer[pursuant to his reply, 18 December 1986, c. 626]: The Council agreed two measures involving compensation to producers for milk quota cuts. First, it agreed to increase the maximum EC-funded rate of compensation under the existing Community outgoers scheme (which aims to buy up 3 per cent. of quota for cancellation) from 4 to 6 ecu per 100 kg per year for seven years. To the extent that this compensation is not fully spent by a member state, it may be used as direct compensation for compulsory across-the-board quota cuts or to buy up quota for redistribution.
Secondly it was agreed that compensation should be paid for the temporary suspension of quota (4 per cent. from April 1987 and a further 1.5 per cent. from April 1988) at the rate of 10 ecu per 100 kg per year for the next two years. Both of these measures will be fully funded by the Community and member states will pay for them to the extent of their normal budgetary contributions. It should however, be noted that the package of measures on milk agreed by the Council will result in an overall net saving to the Community budget over a number of years and therefore a reduction in member states' contributions.
Both the Community outgoers scheme and the new arrangements for temporary suspension of quota allow member states to top up the level of compensation from national funds. The Government have no plans to make use of these provisions.
The Council took note, with approval, of a Commission paper outlining plans for a two-year stock disposal programme covering 1 million tonnes of butter. The Commission proposes to finance this by deferring the reimbursement to member states of any losses on these sales for two years and then making four equal annual payments borne by the Community budget in the normal way. For the period of deferral interest will be paid to member states on the amounts outstanding. No decision has yet been taken on the detailed arrangements which will be discussed at the future Council.
§ Mr. Teddy Taylorasked the Minister for Agriculture, Fisheries and Food what surplus production of milk and milk products has been estimated for the European Economic Community in the current year, 1987 1988 and 1989, respectively, in the event of implementation of provisional agreement on the milk sector reached on 16 December; and if he will make a statement.
§ Mr. Gummer[pursuant to his reply, 18 December 1986, c. 626]: In its interim report on the quota system (document COM (86) 645) the Commission estimated the Community milk surplus for the current year to be about 9.5 million tonnes. The package now agreed by the Council would reduce milk production by that amount 831W over two years. On this basis there would by 1989 be no surplus production of milk. The Commission report does, however, point out that its estimate of the surplus assumes that current levels of subsidised disposals both on the home market and for export—remains unchanged. Nevertheless, the agreement reached by Ministers does represent a very substantial step forward in removing the surplus in the milk sector.