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Agricultural Production

Volume 81: debated on Thursday 20 June 1985

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asked the Minister of Agriculture, Fisheries and Food if he will estimate the effect that the recent price cuts proposed at Brussels on agricultural produce will have on agricultural production.

It is impossible to make precise estimates of what agricultural production will be in any year, as much will depend upon unpredictable factors, such as the weather. But if prices are reduced, the production of a commodity over a period will be lower than it would otherwise have been.

Does my right hon. Friend realise that the figures produced by his Department show that during the past 10 years farm gate prices have fallen by an average of 20 per cent., but that during the same period production in some sectors has risen by as much as 200 per cent.? Bearing that in mind, can he have any confidence that this price-cutting policy will reduce food production?

Those who are against nominal price cuts have always used the argument that if prices are cut production is increased. I reject that argument. There is a great difference between cutting prices in real terms and cutting prices in nominal terms. My hon. Friend should remember that so far in the history of agricultural support, either in this country before we joined the European Community or within the common agricultural policy, there has not been a period when a real attempt has been made to control production by reducing prices. My view is that in this sector the market will work, as it works in other sectors.

If the agreement results in a cut in prices, will the Minister think of my small farmer constituents who have already had their sugar beet and potato quotas cut and to whom CALs make all the difference between a profit and a loss? Will he tell the House what he thinks will happen to them?

During the past few years the larger farmers on the eastern side of the country have had a far better deal than have farmers on the western side of the country. That has caused me to say continually that the imbalance between grain and livestock needs further to be redressed.

Will my right hon. Friend bear in mind that in this changing scene for British agriculture there are some very real problems, particularly for small farmers? Will he also bear in mind that prices now for calves, heifers and store cattle are the highest they have ever been and that grass sales are running at £125 per acre? All is not, therefore, gloom and doom under this Government.

I am glad to hear that the farming industry in Devon has confidence in the Government's policies. That is the only lesson that one can derive from the most interesting figures that my hon. Friend has presented to the House.

:Farmers were delighted by the retention of the beef variable premium scheme, but they now find that the Commission is implementing that scheme in a quite different way from that which was outlined by my right hon. Friend in the House. For example, it is limiting the pay-out on certain weights of carcases.

Last week I had a meeting with the Commissioner and told him that this proposal was totally unacceptable.

Is it not astonishing that the Minister of Agriculture, Fisheries and Food appears to be unaware that he is responsible for the direction of British agriculture? It is not good enough for the right hon. Gentleman to stand at the Dispatch Box and airily appear to diagnose the problem without beginning to perceive that he is responsible for providing some of the answers.

The hon. Gentleman must understand that, because this country is part of the Community and of the common agricultural policy, it is not always possible immediately to get exactly 100 per cent. of one's own way. That was certainly the case when the Labour party was in power. I remember seven or eight years ago the then Minister standing at the Dispatch Box wondering what on earth to do about the pig crisis.

On the proposed cereal price cuts by the Commission two days ago, will my right hon. Friend say what on earth is going on in this chaotic organisation? Do we, or do we not, have a veto? What will be the price?

I remind my hon. Friend that there is a later question on this matter on the Order Paper. I have read the reports of the Commission's intentions, although I have not yet received formal notification. Clearly, the Commission cannot simply overrule the Council of Ministers, but, in the absence of Council decisions, the Commission's desire to maintain an orderly market is understandable. I do not rule out the possibility of the Council reaching a satisfactory agreement on cereal prices before 1 August.

What effect will the proposed cereal price changes have on agricultural produce? Should not the answer be that there will be no diminution of cereal harvesting, production and surpluses in Europe during the coming season? Will the right hon. Gentleman pledge that none of the extra VAT devoted to own resources in the legislation introduced last Friday will be spent on agricultural produce?

The hon. Gentleman knows as well as I do that the position agreed with regard to the increase in own resources was that spending on CAP would increase at a slower rate than the rate at which resources were increasing in total.

Is my right hon. Friend aware that this feeble attempt to cut surpluses is resented by those farmers who receive no price support of any type? Does he realise that early strawberry growers, especially around Cheddar, are suffering because dumped foreign fruit has been brought in at below the cost of production? What will my right hon. Friend do to help them? Will he support the British horticulture industry as vigorously as other countries protect their industries?

If my hon. Friend reads Hansard, he will know that on many occasions my hon. Friend the Minister of State and I have raised this matter in the Council of Ministers. Two years ago we were getting little support from other member states in resisting the importation of soft fruits of this type from eastern European countries. I am glad to say that many other countries which are facing similar difficulties are moving in behind us to get something done about these damaging imports.