Skip to main content

Pig Subsidy (European Court Ruling)

Volume 932: debated on Thursday 26 May 1977

The text on this page has been created from Hansard archive content, it may contain typographical errors.

With permission, Mr. Speaker, I should like to make a statement on the United Kingdom pigmeat industry.

On 21st May the European Court of Justice issued a decision on an application from the Commission to the effect that we should suspend the temporary pigmeat subsidy forthwith pending the outcome of the substantive hearing which will decide the legality or otherwise of this subsidy within the Treaty of Rome.

Following the Court's decision the Government are taking action to suspend the subsidy from Saturday 11th June.

Having regard to the serious implication of the Court's decision for the future of our pigmeat production and processing industries, I have pressed on Mr. Gundelach the need for immediate action to assist our pig sector. To this end I have made a formal application to the Commission for urgent action using its powers under Article 135 of the Treaty of Accession. Discussions with the Commission on this application have already started.

A welcome is to be given to what the Minister said this afternoon: first, the fact that the subsidy will not be brought to a sudden end overnight and, secondly, the fact that the Minister made application to the Commission under Article 135 of the Treaty of Accession. Nevertheless, four questions arise.

Why did the Minister not make application before, as clearly a great deal of loss and suffering might have been avoided? Do we not now face a danger that both producers and processors have sustained heavy losses and are not in a condition to take much more? Is there not therefore the danger that producers will see this moment as a signal to join a precipitate flight, get out, and unload breeding stock, which will of course foreshadow high prices and shortages in the autumn? How does the Minister intend to reassure producers so as to fend off such a disastrous situation?

On the first question, Article 135 is temporary. It is contained in the Treaty of Accession. It ceases with the ending of the transition period on 1st January 1978. I have been trying to achieve a permanent solution since 8th September last. Indeed, when I introduced the pig subsidy I said on more than one occasion that it was a temporary subsidy. I have spent all these months trying to persuade the Commission to accept that a permanent solution is needed in the recalculation of pigmeat monetary compensatory amounts. The Commission has at last said that it is prepared to discuss the question.

When the Court decided that the pigmeat subsidy should cease it did not answer the question whether it was legal. That substantive action still remains. Of course, I had to do something else. That something else was the temporary solution of Article 135.

I agree that there is a great danger. However, at the joint Press conference that I held as President, with Mr. Gundelach as Commissioner, after the meeting of European Ministers of Agriculture in Lancaster House earlier this week, every question addressed to us concerned pigmeat. At that time the Commissioner was asked whether he would encourage or discourage British pig producers from slaughtering their herds. He said that he would tell them not to do so.

Does my right hon. Friend agree that he is taking something of a risk? In view of the way in which the common agricultural policy and the Common Market as a whole trundle along, is there not every possibility that the Commission's decision on giving more aid will still not have been made by 11th June? Does he not therefore feel that it would have been better to defy the order and so possibly have hastened the day when the CAP will disintegrate? The danger is that if this matter drags on our pig industry will go out of existence and workers in the bacon-curing industry will be thrown on the dole.

The question of taking as great a step as my hon. Friend has indicated does not seem to arise on a narrow point such as that of assisting British pig producers. It is a much wider issue than that. On his first point, at the same conference Commissioner Gundelach said that he would treat the matter as one of urgency, and that he was well aware that there should be no gap between the decision of the Commission—this is totally within the Commission's powers—and the ending of the pigmeat subsidy. So we know that urgent discussions are going on, we are taking part in them, and we expect Commissioner Gundelach's reply very soon.

I appreciate the efforts of the Minister to help the pig producers, but does he agree that if he could only persuade his counterparts in Europe to accept our guaranteed price system for pig producers and give a realistic price for the end product, the problems would be solved? Has the right hon. Gentleman given any further consideration to my proposals concerning the export of store pigs to the Continent? That would help the situation.

The hon. Gentleman's second point is very important, but it needs a deal of consideration. On his first point, it will not surprise him to know that there is a long list of what I should like my fellow members of the Agriculture Council to accept.

Does my right hon. Friend accept that it is incredible that the official Opposition and those who support the Common Market should be criticising him at all? We realise that he is in a Catch-22 position, but those of us who oppose the Common Market are still distraught. Many of our constituents are going to the wall. Surely the Common Market, despite its ignorance, must recognise that this decision of the Court that we must suspend payment has put us in our present position. Does it realise the extent of this problem, does it intend to replace this payment, and does it realise that an alteration of the green pound is no solution in this instance? Does it intend to do anything urgent about a renegotiation of the MCAs, which is vital in this matter?

My hon. Friend is speaking very much to the point. It seems to me that the crime that I have committed in European eyes is doing not too little but too much for the British pig producer. On the second question, the Court said that if the substantive decision that it hoped to make were to be in the United Kingdom's favour, the United Kingdom would still be able to provide the disputed aid retroactively. Since the purpose of the aid is to stop the slaughter of pigs, and since very few British Ministers of Agriculture are endowed with the power of resurrecting slaughtered pigs, it seems to me that that comment casts more light on the European judges than it does on British pig producers.

Does the Minister accept the need for an immediate cash injection into the industry to protect home supplies and restore confidence? If agreement is not reached by 11th June, will he consider other methods? An example is the Belgian straight cash payment per sow, or the French methods of protecting their suckler cow industry during a similar emergency. Does he realise that his short-term policy will be paid for dearly by both the housewife and the producer in eight or nine months, when high-price imports come from the Common Market to replace lost home production? May I add that, having given up a day of my party's conference to come here today, I am saddened to find that no Scots Tory or Labour Members are here to get this message over to the Minister?

I am not sure what the message is, except that we need a permanent solution; not a temporary one. I have told the House several times that we shall do everything possible to see that there is a permanent solution. However, in the hon. Gentleman's hypothesis—that the Commission, despite the evidence, is unwilling to help us, and that we cannot get a permanent solution—there are various ideas at the back of one's mind, even if one is in the Catch-22 position referred to by my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis).

May I share the concern that has been expressed by hon. Members on both sides? When will the next appropriate meeting take place in Europe? Will my right hon. Friend then maintain his position on the pigmeat MCAs and deplore the inadequate attention to that aspect of the matter that has been displayed by the Opposition Front Bench?

I have enough difficulty sometimes explaining my own position to my colleagues in Europe without explaining the position of the Opposition Front Bench. The next meeting of the Council is on 20th and 21st June; that is the moment when it will be discussed.

Since the right hon. Gentleman has called in question, or mentioned, the position of the Opposition Front Bench, will he now have another shot at answering the two questions that I asked him? First, why did he not make this application before, and what makes it particularly favourable now? Secondly, what will he do to reassure producers who now stand in a very dangerous situation?

I tried to illuminate the right hon. Gentleman's mind. I said that the trouble with Article 135 is that it is a temporary provision and that what I have been after since September is a permanent solution. That is what I have been pressing for on every occasion. The subsidy was an immediate effort, by which I tried to come to the rescue of British pig producers. If the right hon. Gentleman studies Article 135 he will probably come to the same conclusion as I did—that that was not the appropriate moment to do it. It was only when the temporary subsidy was challenged—as the right hon. Gentleman knows, the United Kingdom still reserves its position on the legality of that—and it was ruled that I could not continue paying the subsidy, that I invoked Article 135.

Has not a great deal of the trouble which our pig producers have suffered been caused by the subsidies paid to Danish and Dutch pig producers sending their pigs to this country? What representations has the Minister made to his European colleagues among Agriculture Ministers about that? Is that process to continue indefinitely? Was this matter brought to the notice of the Court? If it was not, will it be brought to the Court's notice when the substantive hearing is held?

The right hon. and learned Gentleman is some months out of date. That is exactly what I have been putting forward, not only to my fellow Ministers In the Council but to the Commissioner and it has appeared in the Court hearings and will no doubt take its part, although I am obviously not conducting that case, in the substantive action before the European Court. The point is very simple: the MCAs are wrongly calculated and because they are wrongly calculated we need to recalculate them. I have said that over and over again to my colleagues.

Will the Minister, with whose efforts I have every sympathy, accept that even the temporary subsidy, legal or illegal, was not adequate? Will he accept that in the long run it is not simply the pig producer and processor but the housewife who will pay. whether through increased prices for pigmeat or through repercussive increased prices for other meat, and that that in the end will endanger the Government's whole economic strategy, through its repercussions on wages policy?

I readily accept everything that my right hon. Friend says. He is perfectly correct. That is exactly why at this stage I have told the Commission that it must consider the matter in the light, as Article 135 says, of an economic disaster—I forget whether that is the word, but it comes to a disaster—within our own economy.

Does the Minister accept that between 70 per cent. and 75 per cent. of the costs of most pig producers are attributable to feeding stuffs? The essential reason why pig producers are now in a state of hardship is that while they were able to buy feeding stuffs for £25 a ton before we entered the Common Market, the price now to be paid is about £125. The reason for the increase of £100 a ton is that the price of cereals has been artificially raised by a system of import levies. Does the right hon. Gentleman accept that feeding stuffs would be £20-£25 a ton cheaper but for the system of import levies?

I absolutely accept that the high costs that the British pig producers, and perhaps other pig producers in Europe, are facing are due to the excessively high cost of cereals. That is one of the reasons why we have been trying to keep down prices as far as we could. However, we are one out of nine. It is that disadvantage that sometimes prevents us from giving the right answer at the right time.

Is my right hon. Friend aware that in Gloucestershire the pig industry is in danger of annihilation? Are his Common Market colleagues, who have recently been in this country, fully aware of the gravity of the situation for British pig farmers? Will he give a categorical undertaking that he stands by the pig industry and will support it at the end of the day, come what may from Europe?

I am aware that, not only in Gloucestershire, the British pig industry is in a very bad position and that, as has been said, this affects the whole economy. After yesterday's demonstration, some of my fellow Agriculture Ministers may be rather more aware of the facts than they were before.

Is the right hon. Gentleman aware that very little in what he said this afternoon will give any reassurance or confidence to pig producers in Herefordshire? There is considerable confusion over the differential treatment of pig producers in Northern Ireland. Will the right hon. Gentleman outline the reasons for the different subsidies that are provided to enable the pig producer there to stay in business while here it is threatened with annihilation, as the hon. Member for Gloucestershire, West (Mr. Watkinson) said?

There are a number of technical reasons. One is that there has been a unanimous Council decision in regard to Northern Ireland. Secondly, there is, or has been said to be, a smuggling trade between Northern Ireland and the Republic, or between the Republic and Northern Ireland—I am never quite certain whether it is either or both. That does not exist in our own country. Finally, I was not trying to be reassuring; I was trying to be realistic and to give the true position.

Has my right hon. Friend noticed that his most vociferous critics and those who appear most unclear about the situation are those Opposition Members who vociferously advocated our entry into the Common Market and our subjugation to the Treaty of Rome and Section 2(1) of the European Communities Act? As they clearly did not understand the implications of what they were doing then, is it not high time, in the light of this incident, that they reconsidered their position in regard to the Act and the Treaty?

I have several times said that I cannot answer for Opposition Members. They must answer for themselves. My immediate problem, regardless of the wider question, is to do the best I can for our own pig industry, and that I intend to do.

I hope that the Minister will not think that I am being unduly suspicious, but may I suggest that perhaps the Danes and the Dutch are trying to capture a large part of our market in this country under the guise of this racket? Secondly, would it not be better for the British people and the British pig producers if we had our own national pig policy?

The hon. Gentleman will be aware that, even on a temporary basis, I tried to get our own national pig policy, and at present I have been stopped from doing so.

Will my right hon. Friend confirm that, by virtue of the European Communities Act, to persist with the national subsidy would have involved him in a breach of domestic law? Is not the escape from that and similar dilemmas in the future to amend the Act?

On questions of law, it is far better if I leave things to my right hon. and learned brother, the Attorney-General.

Will the Minister accept that for the processors, as opposed to the producers, the subsidy is really irrelevant, and that the only proper answer is recalculation of the MCAs? Does he also accept that the time scale is crucial? When is the earliest point that action can be taken under Article 135? Exactly how long can that go on? Is it until January?

It would have to end on 1st January 1978. For me, the whole basis was to have it as an insurance policy while we were finding a permanent solution, which the hon. Gentleman rightly says is necessary.

With regard to the timing, the Commission has very wide powers, as the hon. Gentleman will see if he cares to look at the Article. The Commission could come to a decision this afternoon or at any time, but I do not know when it will do so. I do know that at the Press conference Commissioner Gundelach gave the impression, I think explicitly, that if he could avoid it there would be no gap at all.

Is my right hon. Friend aware that many of us who believe that there is a tremendous need to defend the pig producers believe that we must equally defend the consumers? Is he also aware that we believe that it is not possible to reconcile both aims within the confines laid down by the common agricultural policy? Therefore, may I put a straight question to my right hon. Friend? Would we not be better off in this respect outside the Community?

If one were thinking of pig producers alone—that is what my hon. Friend is asking me about—one could arrive at one of two solutions. One would be to say "Yes. That might very well be right." The second would be that if the pigmeat MCAs—which are distorted export subsidies applying against our pig producers—were correctly calculated, our pig industry would be extremely healthy and, I believe, more competitive than any in Europe.

I should like to ask two questions in support of two important matters raised by my right hon. Friend the Member for Yeovil (Mr. Peyton). First, if Mr. Gundelach advised our pig producers not to slaughter their breeding herds, did he also indicate how they were to feed the pigs that they do not have enough money to feed? Secondly, if the Minister's application under Article 135 is not dealt with speedily, what action will he take after 11th June? He has discussed this in broad terms, but can he give the House accurate information on what plans he has to deal with this crisis?

The answer to the second part of the hon. Gentleman's question is "Not at this stage", because the Commissioner has promised that the matter will be dealt with urgently. Therefore, it would be both inappropriate and perhaps a little discourteous to look at alternatives that may or may not have to be brought into effect then.

Does my right hon. Friend agree that in view of the devastatingly knowledgeable submissions made by the hon. Member for Holland with Boston (Mr. Body) and others, the current farce seems to indicate that by our very joining the EEC we have more or less bought a pig in a poke?

I fully understand my hon. Friend's point. However, the question that I am concerned with now is related solely to the United Kingdom pigmeat industry.

Does the right hon. Gentleman accept that if there are no alternative arrangements on 11th June there will be a substantial agricultural catastrophe in this country? I understand that the right hon. Gentleman has impressed this point upon his colleagues in the Commission. Did his answer to my right hon. Friend the Member for Yeovil (Mr. Peyton) about delay in implementing Article 135 mean that he did not believe that the crisis was bad enough last autumn? If so, there are tens of thousands of pig producers who do not agree with him.

The House has to understand exactly what Article 135 is about. It is a temporary request for help in a particular set of circumstances. It seems that the hon. Gentleman is talking without reading the Article. I suggest that he reads it. He will find that it was quite inappropriate last autumn. It is not very helpful to his case, or to mine, to suggest that it was appropriate at that time.

Does my right hon. Friend accept that he has acquired a well-earned reputation as a worthy champion of our agriculture industry, as well as acting in the best interests of consumers? Is he aware that there are those of us who have reservations about the Common Market who wish him well in his negotiations on behalf of the pig industry? Does he accept that to serve the best interests of the British people, his major responsibility is to convince his counterparts in Europe that there is a vital necessity for a fundamental reappraisal of the whole common agricultural policy.

A reappraisal of the CAP was an issue that was discussed at the Council of Agriculture Ministers at its meeting last Tuesday. Arrangements have been made for further and more detailed discussions.

Will the right hon. Gentleman confirm that use of Article 135 is having recourse to a temporary lever to secure a permanent solution—namely, a fundamental recalculation of the monetary compensatory arrangements? Will he further confirm that if, having had recourse to that somewhat uncertain instrument, we are left after 11th June in a situation in which there is no protection for British pig producers, there will be a novel and highly explosive situation? Does the right hon. Gentleman recognise that for decades and generations, constituents have come to this place in the belief that it had within its authority the right to restore what they believed to be wrong? Will he indicate to his fellow Ministers that there will be a growing belief that the European Court of Justice is an alien form of jurisdiction, and that it will not be worth their while to insist upon such rigorous regard to the present rules, and that they should have far greater regard to political sensitivities in this country.

I have tried to explain very fully to the Commission and to my fellow Ministers—as the hon. Gentleman knows, it is not they who are concerned under Article 135—how explosive the situation will be. I hope that both have taken due note of that point.