With permission, Mr. Speaker, I wish to make a statement on the Council of Agriculture Ministers meeting in Brussels on 13 to 16 May 1985. My hon. Friend the Minister of State and I represented the United Kingdom.The meeting was devoted entirely to negotiations on the 1985–86 agricultural prices, and an agreement was reached last Thursday covering all commodities other than cereals and rapeseed. Decisions on prices were overdue and, while decisions on all commodities would have been preferable, I was not prepared to give in to German insistence that there should be no meaningful reduction in prices for cereals. They felt so strongly on this issue that their Minister made it clear, using the words of the Luxembourg compromise, that very important interests were involved for his country and that the Germans were not prepared to agree to a vote. This represented a significant change in the attitude of the Federal Government towards the use of the Luxembourg compromise. Turing to the decisions which were taken, the co-responsibility levy for milk was reduced by 1 per cent., backdated to the beginning of April. This is linked to the reduction of 1 per cent. in the national quotas. With the 1·5 per cent. increase in the support price for milk, this means an improvement of 2·5 per cent. in the level of support for milk. Now that these decisions have been made, we can go ahead and notify producers of their individual quotas for 1985–86. Letters to producers will start to be sent out later this week. The Council agreed that supplementary levy will be collected annually at the end of the milk year. This avoids problems over quarterly or half-yearly payments which may bear unfairly on producers if they change their seasonal pattern of production. The Council did not agree to the Irish Government demand for a permanent addition of 58,000 tonnes in their quota allocation on account of a statistical error in the Irish production figures on which the Council based its decisions last year. An adjustment was made only for 1984–85 and 1985–86. As I foreshadowed in my statement on the implementation of the report of the Committee on Medical Aspects of Food Policy, I accepted that the special United Kingdom butter subsidy should be discontinued. Taken together with other adjustments affecting butter, this will mean over time a small increase in butter prices of about 1p per 250g pack. I secured the continuation of the beef variable premium scheme in an unchanged form, against very strong opposition from most other member states. This will be welcome to producers and consumers alike, and will reduce the quantity of United Kingdom beef going into intervention. The guide price for beef will remain unchanged, but United Kingdom producers will benefit —by approximately 1 per cent. —from an increase in the intervention prices under the second stage of the carcase classification grid which was agreed last year. For sheepmeat, there will be no price change this year. But, for the next year, when the marketing year will start on 6 January, the basic price will increase by 1 per cent. I successfully resisted pressure from the Commission and some member states for changes in the regime which would have been damaging to our interests, including a proposal to impose a ceiling on variable premium and a related bar to the recovery through the ewe premium of any money forgone. I resisted also pressure for an immediate end to the special export certification arrangements which facilitate the export of ewes from Great Britain. Instead, there will be further discussions about these arrangements over the coming months. The Commission has undertaken to bring forward proposals to enable annual premium to be paid from next year on certain sheep in especially disadvantaged mountainous areas which cannot be tupped until their third season. I secured agreement on the modification which the farmers' unions and the trade had sought to the sheepmeat seasonal scale which will promote more orderly marketing. I secured also an extension until the end of 1987 of the exemption from clawback for our sheepmeat exports to third countries, which should enable our exporters to develop that trade with more certainty. Agreement was reached on measures that should bring about a better balance for Mediterranean products and establish a greater control over the regimes in these sectors. In particular, significant price reductions were agreed for tomatoes, citrus fruits and some varieties of tobacco. Overall, the changes which were agreed will have a negligible effect on food prices in our shops. Throughout the negotiations, I have attached great importance to the Council continuing with the task, which was started last year, of bringing greater realism into the common agricultural policy within the budgetary constraints laid down. The Commission stated clearly that it would ensure that the measures agreed, with the decisions yet to be reached on cereals and rapeseed, will be financed within the budget provision recently approved for 1985 by the Budget Council. The cost of the compromise package under discussion, of which this settlement forms part, was within the financial guideline for agriculture in 1986. The Council will meet again on 11 June to continue its discussions on cereals and oilseed rape. This package, agreed last Thursday, meets our objectives. In particular, I was determined to resist measures which would discriminate against British interests, and that we have done. I consider it a good agreement for the United Kingdom and for the Community as a whole. I commend it to the House.
I thank the right hon. Gentleman for that statement. Although it contains some good points, overall this year's endless round of meetings is probably one of the most disastrous ever for the Council of Ministers. I hope that we shall have a debate on it in the near future.If the Secretary of State was reflecting the unanimous views of those hon. Members who participated in the recent debate on agriculture and price proposals, he must be disappointed. Because the right hon. Gentleman is the only Minister of the Council who comes before us, it is incumbent upon us to criticise the Council through him. To say that agreement has been reached when, in fact, for the first time the main component in the agreement has been removed, is like "Hamlet" without the prince. Does the right hon. Gentleman appreciate that the success or failure of these talks and the sincerity of professions to reform CAP will always depend upon the cereal settlement ? Does the right hon. Gentleman agree that, judged by this criterion, this meeting has been an abysmal betrayal of the people who live in the EC and who have put their faith in the Council's making this type of reform ? Is it true that over-production of fruit and vegetables was so great that dumping or destruction caused the Community to pay out hundreds of millions of pounds ? Would this not have justified a far larger cut in the threshold of these products ? Is it true that in this and other respects the rest of the Council agreed lower cuts than would have been justified in order to help secure German agreement to cereal cuts ? Is it not true that Germany has pocketed all the benefits of these concessions without agreeing any cereal trade-off ? What will happen on 11 June. now that the German Government have refused to allow any more than a derisory 0·9 per cent. cut in cereal prices ? What will happen now that the Commission, by reaching partial agreement, has capitulated in advance to German demands ? May I welcome very much the retention of the beef variable premium ? The Glasgow Herald —I do not know whether it is right or wrong—reports the right hon. Gentleman as saying that he has received
How bankable is that assurance ? Many of us in the House are getting pretty sick of the annual blackmail on the beef variable premium. Similarly, we also welcome the measures on sheep, including the sheep variable premium. May I ask the right hon. Gentleman what his justification is for a rising butter price when there are still enormous surpluses of unwanted butter ? I return to cereals. Has not the talk of budget discipline, which the right hon. Gentleman and others have carried on over the years, and of reforming the common agricultural policy, been shown, in the light of the fiasco that I have described, to be totally insincere ? Is it not a fact that the EC is producing far too much in the form of cereals and that even the Commission's miserable 3·6 per cent. proposed reduction, which was much lower than the Government's proposal, has been halved again during the negotiations ? What, therefore, will be the future of cereal production ? In my view, there will be no reduction of the amount of cereals. Have the right hon. Gentleman and his colleagues made an assessment, on the 1·8 per cent. proposal, of the amount by which cereal production will fall ? Otherwise, we shall have to take it that we shall continue to add to the millions of tonnes of unwanted and unused cereals in store. What about the cost ? I heard what the right hon. Gentleman said, and I have also studied what he said in the final part of his statement about it being"a verbal assurance that it can be extended".
Frankly, if that is so, it is remarkable. My understanding is that if there is only a 1·8 per cent. cut in the cereal price, we shall be spending tens of millions of pounds extra this year and hundreds of millions of pounds extra next year on account of only the cereal prices themselves. In my view—"within the budgetary constraints laid down."
I am talking about the most serious part of the agricultural year — [Interruption.] To most Conservative Members, it is a matter of pocketing the difference. To millions of consumers, it is a matter of vital importance.The millions who are offended by the spectre of unwanted cereals will regard the Council of Ministers' ducking of the major issue of this Council as arrant political cowardice. I believe that the complacency that the Council has shown now will give way to blind panic and cereal quotas. If that happens, the farming community will once more have to cope with ministerial shortcomings.
I am grateful to the hon. Gentleman for his kind words about the continuation of the beef variable premium arrangements. Perhaps I can help him In his question. A date — 6 April — has been put into the agreement, but the Commissioner has giver me an undertaking that, if the marketing years are extended, the beef variable premium will be extended with that. That means that it will be extended on the same basis that it has been over many years.It is all very well for the hon. Gentleman to talk about annual blackmail. The reason why we have the arrangement annually is that when it was introduced by Lord Peart back in 1975, for the next five years it was renewed only on an annual basis. Therefore, we are left with what his Government arranged during those years. On sheepmeat, again, I am grateful to the hon. Gentleman for his warm welcome. With regard to the other things that he mentioned, he will understand that I heard what he said about the need for a debate. but my right hon. Friend the Leader of the House is in his place, and he, too, will have heard what the hon. Gentleman said. On fruit and vegetables, the hon. Gentleman will have heard what I said earlier. There are reductions for fruit and vegetables of up to minus 3 per cent. That is a good move. On the costs of the package, it is clear from what the Commissioner has told us that he believes that the package will be budgetarily neutral in 1985 and will come within the financial guidelines in 1986. On cereals, I find it strange that the hon. Gentleman speaks about ducking the issue. The German delegation used the Luxembourg compromise, which meant that the debate could not be concluded but had to continue. The response of successive British Governments to that appeal by a member state, which in the past we have used ourselves, is well known. It is not fair, and shows no understanding of the situation, to speak of ducking the issue. I understand that all compromise proposals on cereals have lapsed. We must wait and see whether the Commission comes up with new ideas before the Council meeting on 11 June. I have made my negotiating position clear in recent months. I have always believed—I told the House when we debated the matter — that the guarantee threshold for cereals should be properly implemented. I will be ready to consider the new proposals that the Commission puts before us on 11 June.
Order. I understand the importance of the statement to the House, but I have to have regard also to the fact that no fewer than 42 right hon. and hon. Members are anxious to take part in the subsequent debate. I will therefore, allow questions to continue until 4.5 pm.
Is the right hon. Gentleman aware of the deep reentment, not only in Northern Ireland, about the special treatment once again afforded to the Irish Republic ? Is he aware that the nominally temporary nature of that treatment is regarded with some scepticism ?
The right hon. Gentleman will be glad to know that I opposed the increase in the Irish quota throughout the piece, as I opposed any extra for Ireland a year ago. The difficulty this year was that, while last year I had supporters in my opposition, this year I had none. Therefore, in the end, it was impossible to resist the increase of 58,000 tonnes. However, I sternly resisted any suggestion that it should be placed on a permanent basis. That is why the increase applies only to 1985–85 and 1985–86.
Will my right hon. Friend agree that the Opposition are making heavy weather of a very good agreement worked out after some 60 hours of work and only three hours sleep ? My right hon. Friend is to be congratulated on what he has achieved, especially the supplementary levy that will be collected annually at the end of the year. That must be of tremendous benefit.May I add one note of criticism ? We are getting tired of the Irish Republic getting away with it not only in the last price review but on the subsidies that it receives for exports to this country.
I am grateful for my hon. Friend's generous words. I believe that the payment of the levy annually will help producers who could have found themselves in difficulty if they had altered their seasonal patterns, and so will help a number of our producers. The Irish settlement has been allowed in the belief that a statistical error was made by the Irish Government a year ago. I opposed it all the way through the piece. It is a pity that more states did not take the same view.
Now that both the United Kingdom and West Germany have invoked the Luxembourg arrangement in regard to agricultural prices, is it not clear that the EEC would work a great deal more smoothly if an element of flexibility were introduced into the common agri-cultural policy to allow national Governments to meet the unique agricultural and social needs of their countryside ?
I do not quite know what the hon. Gentleman's attitude is to use of the Luxembourg compromise, but he will know that the British Government have always taken the view that it is right for delegations and member states to have that weapon. We are all interested to observe that the West Germans have now joined the club.
I thank my right hon. Friend very much indeed for the hard work that he and his colleagues have put in on our behalf in Brussels. May I say how much we appreciate the retention of the beef premium and the sheepmeat regime and the change in the co-responsibility levy ? Will my right hon. Friend and his colleagues try in future to get some continuity so that farmers do not have to hang on until May to know what the year holds for them ?
I am grateful to my hon. Friend. I understand the problem of continuity. Matters have been made a good deal more difficult this year because a new Commission came into office on 1 January and it could not produce its proposals as early as usual. There were some delays in discussing the matter, which I opposed at the time. I have continually told my colleagues that we must try to settle earlier. My hon. Friend will be aware that, in the past, the settlements have had to wait until June.
As the Minister has just said, six months is too long to sort out the annual price negotiations. What can the Minister do in future negotiations to ensure that they are finalised within a few weeks ? I welcome the decision for beef producers and sheep producers, but it is only short-term. I wish that the Minister and his counterparts in Europe would discuss the long-term future of agriculture. Confidence would be restored if the industry knew that the variable beef premium and the sheepmeat regime would remain in force for the next 10 years. I should like to ask the Minister two other questions, one on quotas — [HON. MEMBERS: "No."] Were quotas discussed for other products which are produced in Britain ? Finally—[HoN. MEMBERS: "Really!"]—
Order. That would be an abuse when so many other hon. Members want to get in. The hon. Gentleman has done jolly well.
I am grateful for what the hon. Gentleman said about the beef and sheepmeat arrange-ments. They were difficult to achieve, but they are good. I agree that six months is too long, but I do not believe that we could have settled the sheep and beef arrangements satisfactorily at an earlier meeting. I am sure that the hon. Gentleman agrees that it is better to wait to get the right decision than to get the wrong one early.As for the hon. Gentleman's question about quotas on other products, I have been worried for a long time about the possibility of quotas creeping into the cereals sector. I raised the issue with my colleagues at one stage and I can tell the House that I have been considerably heartened to hear that a good many of my ministerial colleagues on the Council strongly oppose cereal quotas. I hope that, when we discuss some of the more long-term studies in Italy next week, we shall be able to fortify that strong feeling in the Council of Ministers that cereal quotas are not the way out.
On that very point, will my right hon. Friend confirm to the cereal farmers whom I represent, who are arguably the most efficient in the world, that he will not tolerate a repetition of what developed in milk last year—when, because of agriculture ministers' failure to act on price, huge surpluses built up and draconian quotas had to be introduced at the last moment ? If necessary, will my right hon. Friend invoke the Luxembourg compromise to veto any suggestion by our Common Market partners that we should have quotas on cereals, as that would be devastating for the fertile eastern counties ?
I am afraid that I cannot anticipate the attitude that one would take to future proposals in the discussions. I can only say that if my hon. Friend had heard what I said in the Council about the possibility of cereal quotas, he might have accused me of reading his speeches.
Has the Minister considered that there would be no surplus if we sent surpluses to the Third world, where millions of people are starving ? Will he press the Commission to dispose of this awkward problem in that way ?
The hon Gentleman, who takes a great interest in these matters, knows that the Community has been extraordinarily generous with food aid. Substantial quantities of grain are supplied by the European Community and the United Kingdom, under the food aid convention. The Community is committed to providing more than 1.65 million tonnes annually. While I agree that we must be as generous as possible, the hon. Gentleman is wrong not to recognise what we have already done.
I congratulate my right hon. Friend and his ministerial colleagues on their success, which has been welcomed in Scotland. Is my right hon. Friend aware that beef producers in the United Kingdom suffered a considerable setback in the target price this year, which according to the National Farmers Union will amount to £45 million up to 20 April ? Can he give the House an undertaking that he will endeavour to improve the support to the beef sector, for example, by intervention, so that there will be a good back-up to the beef premium scheme ?
I am grateful for my hon. Friend's remarks. I noticed that the National Farmers Union of Scotland talked about the settlement on beef and sheepmeat as good news for producers and consumers, and welcomed the British Government's stand. I am aware that, during the past few weeks, the beef market has weakened. However, I hope that as we move away from the period in which a good many cows are being slaughtered as a result of the milk quota arrangements, we shall see more stability in the beef market, and that producers' returns will be improved as we move into the second stage of the carcase classification grid, to which I referred earlier.
Is the Minister aware that the package, which he described somewhat oddly as meeting the Government's objectives, has been rejected by the president of the NFU who said that it
Does the Minister realise that, even if the Government had these extremely limited objectives, he has failed to satisfy those who are worried about the budgetary costs and the trading impact of the cereal surplus, and that if he does not end his somewhat dogmatic opposition to quotas, a system will be forced on him for which he is wholly unprepared ?"does very little to help the industry with its current problems."
I can only say that, if the hon. Gentleman reads carefully the statement by the president of the NFU on 17 May, he will see phrases such as
The president further stated that he was "pleased to know" about the sheepmeat arrangements. That seems to me to be rather a warm response. If the hon. Gentleman is critical of the fact that we were unable to achieve what I regard as a realistic settlement on cereals, he should re-read his speech in the House on 18 March, in which he said:"I greatly welcome the Minister's success in retaining the variable premium for beef … I also welcome the decision to reduce the milk co-responsibility levy."
As usual, in his stumbling way, the hon. Gentleman does not know what he wants."Therefore, I hope that it will not be necessary to attack cereal production too savagely in one year."—.[Official Report, 18 March 1985; Vol. 75, c. 664.]
Is it the present position on the Luxembourg compromise that Germany can exercise a veto and we cannot ? Secondly,. what need is there for a co-responsibility levy now that the quota scheme is in operation ?
I may not understand exactly what my hon. Friend meant by his second point. We continue to have a co-responsibility levy, which is now running at 2 per cent. I have always expressed my opposition to the co-responsibility levy. I am glad that many Ministers now join me in being critical of it, and talk of the need to phase it out. My hon. Friend's first point is wrong, in that it strengthens our hand considerably to know that the German Government also believe in the use of the Luxembourg compromise. That can only strengthen the hand of other countries which believe that that weapon should be available.
Although I welcome the Minister's success in withstanding the threats to sheep and milk, It appears that he was fighting a rearguard action at the meeting. Does he accept that farmers in Wales want him to go out with positive plans to safeguard their long-term future instead of fighting such rearguard actions ? They want positive plans such as those put on behalf of Ireland — the Irish Government succeeded in part — but which we appear not to be putting forward.
The hon. Gentleman is being unreasonable by nitpicking simply because I got what I wanted at a late stage in the negotiations. A prominent farming leader in Wales jumped the gun and criticised the settlement because he imagined that we would not get some of the things that I was determined to get. He should be satisfied, and should rejoice that we got what we wanted.
On the Luxembourg, compromise, the British Government's position at least has the merit of consistency. Is it not a bizarre exhibition of political incoherence that the Federal Republic of Germany should advocate European union and then invoke the Luxembourg compromise in defence of an industry that represents 0·2 per cent. of German GNP ?
I am sure that my hon. Friend welcomes, as I do, the conversion of the German Government to the use of this device. Although it has taken them many years to come round to it, let us welcome them into the fold.
May I first congratulate my right hon. Friend on securing a package far better than many of us had expected ? Secondly, does he believe that the increase in prices to producers of 1 per cent., 1·5 per cent. or eventually 2·5 per cent., is reasonable at a time when inflation is nearly 7 per cent. ?
It is a difficult equation to put to dairy farmers, but all dairy farmers understand that they do not have the right to continue producing milk that is not wanted. I remind my hon. Friend that about 12 per cent. of the milk that we shall produce this year will be surplus to consumption in the European Community. Production will be about 98 million tonnes, whereas consumption will be only 86 million tonnes. Most farmers realise that we must adjust to the reality of the position, and, like it or not, that spells a difficult economic equation.
Does my right hon. Friend accept that the marginal farmers in my constituency will be pleased with his success in the beef and sheepmeat regimes ? Does he accept that they will be hopping mad, as I am, that Ireland has again got away with murder ? I hope that it will not next year. As to quotas, will he beaver away to try to alter the odd formula which penalises farmers who were upgrading their herds at the relevant date ? They were penalised because they had some up-and-coming heifers in their herds at the time.
On my hon. Friend's last comment, I am aware of the problems of dairy farmers who had undertaken expansion programmes. That is one difficulty that emerges from the quota arrangements. I am grateful for her generous remarks at the beginning about our success. With her, I am not pleased with what we eventually had to agree for the Irish.
Has my right hon. Friend estimated the increased cost to be borne by the British Exchequer, the British taxpayer and the British consumer as a result of the agreement ?
My hon. Friend will understand that it is impossible to estimate an overall figure while part of the package will continue to be negotiated on 11 June. I remind him that the Commission believes that the agreement will be budgetarily neutral in 1985.
May I ask the hon. Gentleman whether he was here for the statement ?
Yes—part of it.
Does my right hon. Friend accept that there will be great disappointment in the cereals trade about the inability to reach agreement, and that that will cause enormous uncertainty ? What will be the effect of the guarantee by the American Government of about S2 billion of export credit for cereals next year on his talks on 11 June and on the settlement which I hope will then be reached ?
My hon. Friend puts his finger on an important point. I hope that that announcement in Washington will have a salutary effect on my colleagues, who will realise that they cannot fly in the face of economic reality for long.
Will my right hon. Friend give the Prime Minister a detailed account of the negotiations and the Federal Republic of Germany's use of the veto so that, when she goes to Milan this month and is lectured about European unity, she can draw the attention of the other member states to the realities of political life in Europe ?
I have done that already.