Milk Quotas (Hansard, 31 March 1987)

§ Mr. Jopling

As the House will already be aware, the Community agreed last year to the permanent reduction of milk quotas by 2 per cent. with effect from 1 April 1987. A Community outgoers scheme has been operating in the United Kingdom to obtain as much as possible of this quantity by voluntary means, subject to a 2 per cent. maximum in any purchaser area. This measure has achieved 10.78 per cent. of the target quantity in the United Kingdom as a whole.

For wholesale quotas, the balance of the 2 per cent. reduction required will be obtained by applying cuts in each purchaser area where the 2 per cent. reduction was not achieved through the outgoers scheme, resulting in a reduction in each producer's quota as at 1 April. The reduction factors to be applied are as follows:

448W

	per cent.
England and Wales	1.89
Northern Ireland	1.30
Scottish MMB	1.42
Shetland	2.00
Other Scottish purchaser areas	Nil

For direct sales quota, the reduction factors will be as follows:

	per cent.
England and Wales	1.88
Northern Ireland	2.00
Scottish MMB	0.14
Shetland	2.00
Other Scottish areas	Nil

As a result of new arrangements agreed by the Agriculture Council last February, compensation for these compulsory reductions will be paid from Community funds, at the same rate as is payable under the outgoers scheme, that is 27.49p per litre spread over seven years.

The European Commission has made it clear to us that it disputes the legality of the present allocation of milk quotas to Northern Ireland and would initiate legal action against us if we did not change it. To meet this point a transfer of 30,000 tonnes of wholesale milk quota will be made from Great Britain to Northern Ireland in addition to the 20,600 tonnes transferred last autumn. This will bring the treatment of Northern Ireland producers with special needs more closely into line with that of producers elsewhere in the United Kingdom. We shall aim to obtain this quantity by voluntary means. 1 shall shortly be announcing details of a national outgoers scheme, but in order to ensure that the required quota is made available it will be necessary, pending the outcome of the scheme, to make a provisional reduction in quotas of about 0.3 per cent. from 1 April. I hope that the response to the national outgoers measure will enable this provisional reduction to be withdrawn. The rate of compensation under the national outgoers measure will be 27.49p-litre spread over seven years. To the extent that the provisional quota reduction needs to be made permanent, producers will be compensated on the same basis. To provide for this expenditure the cash limits on relevant Votes (Class IV, Vote 4 and Class XVI, Vote 2) will be increased and Supplementary Estimates will be presented to Parliament. The increases in expenditure will be contained within planned provision for programmes and will not involve a call on the Reserve.

Also arising from agreement within the Community, a 4 per cent. suspension will be imposed on wholesale quotas for 1987–88 and one of 5½ per cent. for 1988–89. For the 4 per cent. suspension in 1987–88 producers will receive compensation at a rate of 6.5p-litre, which represents almost double the average profit per litre for milk production.

A further permanent reduction of I per cent. of all quotas will need to be implemented with effect from I April 1988. As with the 2 per cent. cut, the industry will be offered the opportunity to surrender the necessary quota voluntarily through an outgoers scheme and compensation will be paid over seven years at 6 ecu-100 kg (27.49p-litre at current conversion rates). I shall be announcing further details as soon as possible, following consultations with industry organisations.