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European Community (Agriculture Ministers' Meeting)

Volume 980: debated on Wednesday 5 March 1980

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The Minister of State, Ministry of Agriculture, Fisheries and Food
(Mr. Alick Buchanan-Smith)

With permission, Mr. Speaker, I should like to make a statement about the Council of Agriculture Ministers' meeting in Brussels on 3–4 March, at which my right hon. Friend and I represented the United Kingdom. My right hon. Friend is today attending the OECD meeting in Paris. The main items discussed were sheepmeat and the Commission's economy proposals on sugar, milk and beef.

On sheepmeat, the Council considered a draft resolution tabled by the Commission for interim measures to apply from the opening of the French market until 15 July. My right hon. Friend said that for it to be acceptable to the United Kingdom three conditions would have to be met. First, the French Government would have to undertake that they would not reintroduce restrictions on imports in the future. Secondly, Community finance would not be used for intervention during this period. Thirdly, there must be agreement for a fair allocation of the available Community funds between member States.

The French Government did not give an assurance that import restrictions would not be reintroduced. Nor would they accept interim arrangements that did not allow for Community financing of intervention measures.

Eight member States were ready to accept a proposal made by the presidency of the Council that, following the opening of the French frontier, there should be interim Community aid to support farmers' incomes, but with an intervention measures nationally financed. The Irish delegation stated that it did not rule out the principle of Community financing for intervention measures. The French delegation refused to accept the President's proposal.

The President expressed deep regret at this. He said that the French Government's position was a blatant violation of the Treaty and that member countries should not feel able to break the law with impunity. He also said that the Commission, as guardians of the Treaty, had a clear duty to act. Vice-President Gundelach accepted that the Commission must carry out its role in this respect, and said that it would do so.

The discussion on sugar centred on the Commission's proposals to reduce the maximum quotas to 10·5 million tonnes and on the allocation of this reduced quota. Wide differences of view were put forward on behalf of member States. We maintained our support for the proposed overall cut in quotas, but made clear our opposition to the proposed basis of allocation. There was no progress towards agreement. The Commission will be making a new proposal before the next Council.

The discussion on milk was mainly concerned with the proposed co-responsibility levies. On the basic levy, a number of delegations, including ourselves, are opposed to further exemptions of the kind proposed by the Commission. Others, however, favour progressive rates of levy with higher charges on more intensive producers.

A number of fundamental objections were also registered against the Commission's supplementary levy.

We made it clear that we are ready to consider additional co-responsibility levies, provided these do not discriminate unfairly against the United Kingdom. The milk proposals will be further discussed in a group of senior officials.

There was a brief discussion on the Commission's proposals for beef. This focused particularly on the proposed suckler cow subsidy. We expressed strong reservations about the proposed limitation of the subsidy to the first 15 cows in the herd.

Finally, the Council had a brief discussion on national aids towards fuel costs of intensive horticulture. My right hon. Friend expressed concern about unfair competition and emphasised the urgent need for an agreed policy for the Community as a whole. The Vice-President accepted that this problem needed attention, and undertook that the Commission would investigate this as quickly as possible.

May we assume from the Minister's statement that no progress whatsoever was made on anything at the two-day meeting? Will the Government stand absolutely firm in their opposition to the introduction of an expensive sheepmeat regime as a quid pro quo for the ending of the French ban on imports?

As the hon. Gentleman's statement made no mention of butter, can he assure the House that the Government intend to resist the proposal to end the special United Kingdom butter subsidy, which is worth about 13p a pound to our consumers? In this connection, can he tell the House whether his right hon. Friend took the opportunity to comment on the Commission's proposals to resume sales of heavily subsidised butter to the Soviet Union?

Does the Minister agree that the paramount objective in the present price-fixing must be to secure action to tackle the colossal surpluses, particularly of milk and sugar? As the milk sector alone now accounts for one-third of total Community expenditure, will the hon. Gentleman assure the House that the Government will oppose any increase in the common price of milk and will not agree to a package that does not include effective action to tackle this monstrous misuse of taxpayers' money?

I believe that progress was made at this Council. We were involved mainly in discussion of commodities, particularly those in surplus, and also of sheepmeat. I believe that progress was made on sheepmeat and that a sensible interim measure was accepted by eight members of the Community, the French alone standing out against it. It is significant that arising from this Council the President has instructed the Commissioner for Agriculture, in conjunction with his fellow Commissioners, to undertake further legal proceedings against the French Government.

The hon. Gentleman mentioned particular commodities. I agree with him on butter. At the last price fixing we achieved the biggest butter subsidy from the Community that has ever been acheived. We believe that the subsidy not only benefits consumers in Britain but that it is a sensible and useful way of disposing of surpluses within the Community to members of the Community. We shall continue to work to that end.

On exports to Russia, we have made our position absolutely clear. We are opposed to such exports and will continue to oppose them within the workings of the management committee. On surpluses generally, I can assure the hon. Gentleman and the House that we shall continue to work towards a better control of surpluses, especially milk surpluses. One of the problems is that even the proposed super levy deals only with the existing surpluses and not with any of the underlying forces that lead towards those surpluses. We believe that what is required in the longer term is a much more fundamental approach.

Is it correct to assume from what my hon. Friend said that the interim arrangements for exporting sheep-meat to France that are now in operation, unsatisfactory though they are, will continue up to 15 July? It therefore becomes increasingly urgent to have a sheepmeat regime operating from 15 July that will help restore lamb prices in this country.

It is true that what we discussed in Brussels this week was simply related to interim arrangements up to 15 July to give an opportunity for the French to open the Market—an opportunity that they did not take. It would have given more time to work towards a more satisfactory arrangement. I agree with my hon. Friend that satisfactory permanent arrangements for our sheep producers particularly towards the autumn of this year, matter most of all.

Was there any discussion or agreement on redress for producers for their losses over the period during which sheepmeat was banned from France? Is he aware that the fact that the French would give no assurance that they would not reintroduce a ban means that they intend to continue to break the rules with impunity, and that they will get away with it?

On the last point, further legal proceedings are under consideration. The point was made by the President of the Council yesterday that no country could continue to get away with it in the way that the French have done so far. On compensation, we welcome the interim proposals. These suggest that a sum of £20 million should be available to producers of sheepmeat in the Community. The allocation would be on the basis of production within the Community. As our production amounts to 47 per cent. of the total, this would be of considerable financial benefit to the United Kingdom.

I am the first to admire the Minister's stand in Europe. Does he agree, however, that little progress has been made during the last few months? If a settlement is to be achieved during the next six to eight weeks the Minister will have to make a compromise in Europe. If this happens can he give an assurance that the sheep sector, the dairy sector and the beef sector will not suffer a loss? Can he give an assurance that the guaranteed deficiency payment will be restored in this country and that he will not agree to a sheepmeat regime at any cost?

I think it is understood that there is a certain precedent for this kind of procedure in relation to the annual price fixing in Europe. One goes through a series of meetings over a period in the early spring. It is often later that actual conclusions are reached. I do not think that this is necessarily a bad thing. It gives an opportunity for different countries to express their views on different proposals. It enables solutions to be worked out that could not be achieved simply by one meeting. In that respect, I do not think that progress or procedures this year are different from those in previous years.

I agree with the hon. Gentleman about the important livestock products that he mentioned. Livestock products are probably more important to agriculture in this country than in most other countries of the Community. I can assure the hon. Gentleman that in these negotiations, as last year, we shall certainly stand up for the interests of our producers.

Is my hon. Friend aware that this continual delay by the French in according to the recommendations is very frustrating for fellow members of the European Community? Is there any way in which he can advocate a proposal for a satisfactory solution, possibly by suggesting some form of daily levy to be placed upon the French until they fall into line? Did my hon. Friend have discussions about the future of the beef premium scheme. If so, what was the outcome?

In relation to sheepmeat, I emphasise, as my right hon. Friend and I have done before, that this whole question is not simply a dispute between the United Kingdom Government and the French Government. The French Government are in dispute with the Community as a whole. That is why it is correct for the Commission, with its powers as guardians of the Treaty and as instructed yesterday by the Council of Ministers, to take action against the French Government. That is important in itself.

I agree totally with my hon. Friend. The stage that we have reached is thoroughly frustrating. But it is also significant that during the Council meeting of the last two days, everyone—the Commission and all the other member countries of the EEC—have bent over backwards to put forward proposals of an interim nature that the French, for no good reason, were not prepared to accept. It has been demonstrated beyond peradventure that the French are not prepared to do so. In the attitude that they have taken, they are breaking the law and have lost the sympathy not only of the United Kingdom but of every other country in Europe.

Dees any member State, in principle, object to the Commission's proposal that we should, as a Community, join the international sugar agreement? Will the Minister be more specific about his reference to beet sugar quotas? Are we endorsing the Commission's proposal about beet sugar, which would honour Lome in its proper way?

The international sugar agreement was not discussed. As the right hon. Gentleman knows, it would be our wish that we should join that agreement. We have opposed what has been proposed up to now on beet quotas because of the disproportionate cut that would be imposed on British producers. For example, cuts would be of the order of 24 per cent. in our quotas, whereas for countries such as Denmark, Germany and France the cut would amount to only 4 per cent. or 5 per cent. To the extent that those cuts are utterly discriminatory against the United Kingdom, we reject them totally.

I repeat our support for what was agreed in Lome. The commitments under the Lome convention are not simply entered into by the United Kingdom Government; they are entered into by the Community.

Will my hon. Friend be a little careful in seeking to get the French put into the dock over the import of lamb, vital though it is to secure the required objective? For them, this is an essential national interest in the light of the income of farmers in South-West France who produce lamb. Will my hon. Friend also bear in mind that our defences against the import of ultra-heat-treated milk are not sufficiently solid to risk finding ourselves put in the same position as France.

I must tell my hon. Friend that never at one moment of time have we denied the opportunity of the French Government to help their own producers. Indeed, the original decision of the European Court last September specifically stated that it was open to the French Government, in this situation, to help their producers. What we oppose is the use of Community funds in order to finance intervention in sheepmeat in Europe. To any sensibly-minded individual—we have the support of every other country in the Community except France and Ireland—it does not make sense to introduce a heavy Community-financed intervention regime for a commodity that is not in surplus, where there is a deficiency of demand, and imports from third countries, and in which the direct interest basically belongs to three countries. It is that that we are opposing.

We understand the position of French producers. We have constantly said so. It is wholly open to the French to use their own funds or even to introduce nationally financed intervention if they so choose. It is the total rejection of the French to accept any of these means for which they must stand condemned.

For how many months now have the French been defying the law with complete impunity?

Following on that point, does my hon. Friend think that if the French continue to defy the law with impunity other nations in Europe should not take the hint and do the same?

The point that my hon. Friend makes was precisely the point made by the President of the Agriculture Council yesterday, and it was in the light of that that he instructed the Commission to take further legal action.

Is the Minister aware of the serious consequences for the dairy farmer and the dairy industry of the exemptions in the co-responsibility levy? Since Britain does not contribute anything to the surplus of milk in the EEC, will he or his right hon. Friend ensure that, in the view of the hardships that may result from the agreement of these exemptions, the dairy farmer and the British consumer will be protected both as regards cutting down of herds and as regards prices?

I think it significant that the exemptions to the basic levy that are proposed would exempt only about 5 per cent. of United Kingdom milk deliveries, in contrast to over 30 per cent. of milk deliveries in such countries as Luxembourg and Ireland. We regard that as wholly unacceptable, and we have said so.

I congratulate my hon. Friend and his right hon. Friend on the hard-line yet constructive attitude that they are taking in Brussels, and urge that they continue with it. But is my hon. Friend even slightly optimistic that this time the Commission will be able to take effective action to persuade—I think that that is the right word—the French to behave in a communautaire fashion?

After six months I think that it would be a brave person who expressed overwhelming optimism in relation to the present position. But, again, I think that the real significance here is that every effort has been made by the Commission and by individual countries to persuade the French to comply with the law. It has been demonstrated at this week's Council of Ministers that all those efforts of persuasion have totally failed, and now the law must run its course.

I appreciate that the Council had a heavy agenda, but will the Minister take it that some of us are now becoming increasingly concerned about the Council's obvious reluctance to discuss the French Government's proposals to allow their wine industry to discharge its fermentation alcohol into the industrial alcohol market? I plead with the Minister to have this matter discussed and decided at an early date, because BP is anxious to make a major investment decision at Grangemouth, in my constituency.

That matter was not discussed at this Council, although my right hon. Friend and I are wholly aware of it. As the hon. Gentleman knows, it is what is proposed in the draft regulation that could be damaging to our ethyl alcohol or synthetic alcohol industry. The proposals have been tabled, they were discussed briefly some time ago, and so far they have been pushed back and back, so at least to that extent we are that much further away from actual proposals even coming into effect. But I assure the hon. Gentleman that we are aware of the problems and we shall make sure that the interests of our synthetic alcohol industry are properly looked after in the negotiations when the time comes.

On what basis does my hon. Friend expect fresh proposals to be made for sugar? Is he aware of the uncertainty that delay is creating in our sugar industry, and will he say when he expects the further proposals to be considered in detail?

It undoubtedly creates uncertainty. The longer time goes on, the closer we come to the time at which farmers wish to sow their crops, and by the next Council meeting we shall have reached or almost passed that moment. I am therefore wholly aware of the uncertainty. We had expected proposals to be tabled before the end of the meeting yesterday, but in fact they were not. They were delayed till the next meeting. It would appear from the indications that we have from the Commission that it was talking in terms of maintaining for next year the A quota, any cuts that it was making being applied to the B quota. But I emphasise that that was simply an indication that we had.

The Minister said that the Government are opposed to the export of butter to Russia. Will he confirm that they cannot stop it, and that part of our £2,000 million contribution goes to promote this export traffic? Can the Minister say how much is going between now and the end of the year, and what is the subsidy in pounds per tonne?

On the latter point, what will go between now and the end of the year is obviously totally speculative—

and I could not know what it is. The hon. Gentleman is correct in the first part of what he said, in that the actual arrangements and decisions to be taken —this has been repeated from the Dispatch Box on earlier occasions—rest with the management committee. As the hon. Gentleman knows, already as a result of pressure by the United Kingdom Government those procedures have been tightened up so that it is now much easier clearly to identify precisely what is taking place. I assure the hon. Gentleman that both in the management committee and at Council meetings we shall continue our opposition to these sales.

If we do not manage to get a satisfactory resolution to the problems of our budget deficit with Europe by the end of this month, since the nature and requirements of our United Kingdom agriculture are quite different from those of Continental Europe, since the NFU is now coming out against the common agricultural policy, and since the French do not even obey the law, will my hon. Friend and his right hon. Friend give serious consideration to a unilateral withdrawal from the common agricultural policy as a means of solving both our budget deficit and many of the problems that we have been discussing this afternoon?

With respect, not all that my hon. Friend has said is wholly correct. I am not aware that the NFU is against the common agricultural policy, although some views were expressed by individual members at the meeting. Equally, I assure my hon. Friend that in relation to many other member countries of the Community we find that we are not fighting a lone battle in the least. As for milk and the co-responsibility levy, very much the same views are expressed by, for example, Denmark and the Netherlands. I remind my hon. Friend also that in terms of sheepmeat we are in a majority of eight against one. Therefore, I must tell him that the conclusions that he draws from the situation that confronts us are by no means necessarily correct.

Order. I propose to call those hon. Members who have been rising to ask questions.

Did we detect in the Minister's answer to my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) that he was somewhat chuffed with himself for pushing back a proposal tabled on ethyl alcohol? If so, his chuffment is misplaced, since BP needs an investment decision and pushing the decision back and back is no good to us.

In the first place, we have not pushed back anything, whether by chuffing or by any other means. The Commission itself believes that there is a great deal more work to be done on these proposals before it brings them forward again to the Council of Ministers. I am sure that the hon. Gentleman will agree that the most foolish kind of chuffing would be to try to discuss half-baked proposals.

I add my congratulations to my hon. Friend upon the strenuous efforts that he is making. Did Mr. Gundelach give any indication of the kind of timetable that he would be prepared to accept in requiring the French to abide by their obligations under the Treaty?

I have to tell the House that in the time since I came to the Dispatch Box at 3.30 pm I have learnt that the Commission has decided today to proceed to implement an interim injunction against France—[HON. MEMBERS: "Hear, hear."]—and I am advised that this will take from seven to 10 days.

On that very question, does the Minister realise that the whole country, apart from the Government Front Bench, now acknowledges that the French Government regard themselves as above the law of the Community, injunction or not? That is the main message. Has not the time now come when the French, as the main beneficiaries of the CAP, must be made to suffer? As a gesture, why do not the British Government withdraw their contribution to the CAP until the French stick to the law of the CAP?

The President of the Council himself described the French attitude as a blatant violation and said that no country should be able to flout the law with impunity. I do not believe that there is a difference among hon. Members on either side of the House about that. I am only surprised that the hon. Gentleman, with his background, should believe that it is right to meet one illegality with another. There are legal processes for dealing with this and, as I said, the Commission has decided to take those legal steps. I am surprised that the hon. Gentleman does not support and welcome that.

While I am satisfied that the Commission has at last decided to seek to implement the earlier judgment of the Court, may I ask the Minister whether the Government accept that though it is the responsibility of the Commission to initiate the proceedings to protect the Treaty and the responsibility of the Court to deliver the judgment, in the last analysis the enforcement of that judgment lies with the Council of Ministers? Why have the Government and the other seven Governments that are in agreement with the United Kingdom done nothing in six months to give effect to that judgment of September? Does that inaction not bring into disrepute the machinery for law enforcement in the Community?

The hon. Gentleman is wrong to say that nothing has been done. Attempts have been made to resolve this specifically in relation to what I described at the Council meeting. Persuasion having failed, it is now necessary—as the Commission recognises—to take legal action.

When will the Minister stop pandering to the British Sugar Corporation and the farmers' lobby on beet quotas? The Minister is trying to ride two horses in one race and he must be aware that the BSC have never met quotas in the past. Does the Minister agree that the refinery industry has done its part in shedding 2,000 jobs in recent years, many of them on Merseyside? Will the Minister not ask his right hon. Friend to oppose further expansion by the British Sugar Corporation?

One of the tragedies of the situation is that this should be seen simply as a beet sugar versus cane sugar lobby. It is not that. Both interests are important. Cane sugar is important, and so is beet. Beet production holds an important position in British agriculture. We believe that there is a place for beet sugar and cane sugar within our sugar refining capacity and we intend to keep a proper balance to the benefit of both.