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Sugar

Volume 885: debated on Monday 3 February 1975

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With permission, Mr. Speaker, I wish to make a statement. Agreement was reached in Brussels on 1st February on future arrangements for the supply of sugar from the developing countries. This involved two separate negotiations.

The first was between the ACP sugar group and the British Government. This concerned the price the Government should guarantee for sugar shipped to the United Kingdom in 1975. The price agreed was £260 per ton cif. I regard this as a reasonable compromise. It does not involve a rise in retail prices. In itself it is somewhat above our equalised price, but the equalisation scheme takes account of the lower costs of our own beet sugar and of sugar imported under the Community subsidy arrangements.

This agreement on price made possible the conclusion of the second negotiation. This was between the ACP countries and the European Economic Commission acting on behalf of the Community and in accordance with the mandate agreed by the Council of Agriculture Ministers. Agreement was reached on a protocol which embodies the principle of indefinite duration of access arrangements. The ACP countries will be able to send up to 1·4 million tons in a full year if they choose. The first full year will begin on 1st July. But special quotas have been agreed for the six months from January to June 1975. With reasonable assumptions about the figures for St. Kitts, Belize and India, the total for these months is about 380,000 tons. It is clear that in future more of the sugar will be shipped in the second half of the year. The basic price guaranteed in future years by the Community will be negotiated annually, within the price range obtaining in the Community, taking into account all relevant economic factors.

I regard this as a very satisfactory agreement. It greatly eases our own supply situation in this difficult year. More important, it fulfils entirely the assurances given to the Commonwealth developing countries. They can now send, if they choose, a full 1·4 million tons for the indefinite future, and at no time will they get a price below the range of Community prices. This agreement gives them the security they need, and it gives us the promise of a continued supply of cane sugar for our refineries and for the British consumer.

I welcome, as I am sure the House does, that the tripartite negotiations between the EEC, the United Kingdom and the 46 ACP States have been concluded subject to formal ratification. Will the right hon. Gentleman say whether the allocations to manufacturers, which averaged about 66 per cent. last year, and fell to little more than 50 per cent. early in January, will now be restored in full? The supply situation is still critical. The 380,000 tons to which the right hon. Gentleman referred compares with 500,000 tons received last year, and current stocks are at an all-time low.

Secondly, the Minister said that the ACP countries will be able to send the quantity referred to if they choose. If for any reason they fall short in their deliveries, from where will the shortages be made up and at what price? Thirdly, there is no long-term agreement on price. Am I right in believing that there is likely to be a surplus in the European harvest in 1975–76 because of the increased beet quotas which the right hon. Gentleman helped to negotiate? Will this not affect the Minister's scope to give ACP countries a supplement in addition to the basic price next year? In these circumstances what assurances can the right hon. Gentleman give about long-term supplies?

Finally, everyone will be glad that the price will not have to go up to the consumer, but it has already doubled since last autumn. When does the right hon. Gentleman expect that the United King dom will enjoy what is described in the agreement, with his colleagues in the Council of Ministers as common prices throughout the Community? The right hon. Gentleman has acknowledged that the consumer in Britain is paying more for sugar than consumers in any other country in Europe. When does he expect that the price will be the same throughout the Community?

I cannot be precise about a common Community price. It is much too early to answer that question at this stage. I shall be in Brussels next week negotiating prices which affect sugar beet in particular—[Interruption.] I hope that the hon. Member for Westmorland (Mr. Jopling) will ask a question standing up. As for the prices negotiated, we are committed to taking 1·4 million tons at a price which will be related to the price in the Community, but world conditions may mean that that price will be above the Community price. I cannot be specific about the trend of world prices, but that is a matter for discussion every year between the supplying countries, the Community and ourselves. I cannot therefore give a specific guarantee on that score. This matter is laid down in the protocol.

As for the refineries, I am glad that Tate and Lyle has made a statement that it welcomes this deal. I hope the arrangement we negotiated with the Community, in which account was taken of traditional supplies to the countries which refine sugar, will hold firm. I am anxious that we should guarantee adequate supplies to our refineries.

I compliment my right hon. Friend on his usual excellent performance in bargaining about food, particularly on behalf of the smaller Commonwealth territories. For what length of time has this deal been made—for one year, two years or five years? It is vitally important that islands like Mauritius and the Fijis should be able to plan ahead and rely on a period of continuity.

The deal for 1·4 million tons has been negotiated for an indefinite period. However, because of world conditions we provided in the declaration by the Community that we could negotiate, in the light of economic circumstances and world conditions, a supplement to that guaranteed price, and that will enable us to negotiate annually a price that we think might be helpful to the developing countries. This will help them.

The right hon. Member for Cambridgeshire (Mr. Pym) raised one point that I forgot to reply to. We believe that countries like Mauritius will sell us much more sugar than under the Commonwealth Sugar Agreement. Some other countries may sell us less, but the intention is that we should be supplied with a global amount.

Can the right hon. Gentleman say a little more about quantities? I acknowledge that a substantial concession has been agreed in guaranteeing the basic quantity of 1·4 million tons, but this will not be much good if the countries concerned choose to send only half that quantity. Can the right hon. Gentleman also say more about the shortfall for this year, which we acknowledge must occur? Finally, will he start negotiating prices for next year rather sooner so that the same problem may not happen again then?

The figures have still to be worked out with the supplying countries. Some of the countries had no political representatives at Brussels this weekend, but we have had assurances that they will quickly supply the quantities that they will sell us, and Mauritius has categorically stated that it will send more under the CSA. We may have had difficulties at the beginning of this year, but we are certain that we will achieve about 380,000 tons, which compares very well with the figure we had under the old Commonwealth Sugar Agreement.

I welcome the arrangements announced by the right hon. Gentleman. What will be the subsidy for the 1975 season from the EEC through the equalisation grant? Can the right hon. Gentleman say more about the indefinite period of price level that he hopes to negotiate? Would this be over and above £168 a ton, which is the present Community level?

As I have pointed out, that is a matter for negotiation. I cannot give a specific figure, and it would be wrong for me to attempt to do so. We have to take account of the Community figure in relation to the negotiation of the supplement, for which we—the British—are responsible in total. I cannot give a specific figure.

I congratulate my right hon. Friend on a first-class agreement in the circumstances. He has negotiated two successful tranches so far. If it appears that we shall not get the full supply of 1·4 million tons under this agreement, when will the third tranche be negotiated?

As my hon. Friend will recall, we had imports of 200,000 tons which had already been subsidised, and only last month the Council of Ministers agreed to extend the scheme to a further 300,000 tons. I believe that it may well be extended further, but we will have to see what the supply situation is.

Does not the right hon. Gentleman recall his statement when he returned from Brussels on 21st November? He said then that he had reached agreement to ensure an adequate supply of sugar throughout the Community for the 1974–75 marketing year at a common price. Between the beginning of November and now, the price of sugar has risen from £133 to £185 per ton. We do not seem to be getting anywhere nearer to a common price. What is the present position in the light of the right hon. Gentleman's undertaking on 21st November about a common price?

As I have already said, I cannot give a specific figure. I cannot say when there will be a common price situation in the EEC. I hope that there will be, but I cannot be more precise. The hon. Gentleman is being unreasonable in pressing me on this aspect. I want a supply of sugar. I have negotiated a supply at the price I have stated. The agreement has been accepted by the Community and by the ACP countries, and I believe that it is good for Britain and good for those areas as well.

Order. I am determined to preserve, as far as I can, time for the debate on devolution. I suggest that hon. Members who have other questions about the sugar agreement put them down in the usual way.