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Cereal Production

Volume 77: debated on Thursday 18 April 1985

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7.

asked the Minister of Agriculture, Fisheries and Food if he will list the alternative means of restricting cereal production which are under consideration in his Department.

Decisions in that area are matters for the Community, but I accept the need to bring the cereals sector into a better balance. Restricting production directly could be one way of doing that. Others include developing new outlets, finding new ways of financing existing policies, or encouraging the greater operation of market forces through a restrictive price policy or by reducing the impact and coverage of support measures. I remain convinced that a sustained policy of price restraint is the best way of improving the balance of the cereals market.

Earlier it was said that there was likely to be a 16 million tonne carry-over of cereal surpluses into next year. Does the Minister accept that a marginal price cut, be it 3ยท6 or 5 per cent., will lead to pressure to increase production? Does he further accept that the draconian price cuts necessary to have the effect of suppressing production would have a devastating effect on smaller producers? Will he now take our advice and consult about contingency plans for cereal quotas, or has he learnt nothing from the shambles of the hastily introduced milk quotas?

The hon. Gentleman underestimates the effect that a sustained policy of price restraint could have. We have obviously been engaged in contingency planning. Our analysis of the alternatives and awareness of the difficulties and disadvantages involved in them leads us to the view that price restraint is by far the best answer, if it can be achieved.

Will my hon. Friend ensure that those contingency plans are ready to be implemented quickly, because our experience over milk quotas tends to suggest that when the Council of Ministers makes a final decision we shall not want to be caught on the hop again?

It is important to recognise that in the current price-fixing negotiations the proposal on the table is for price restraint. That is what we are discussing. The position is rather different from that of milk last year. Therefore, it is important to try to obtain a realistic answer along those lines in the negotiations.