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Milk Quotas

Volume 114: debated on Thursday 23 April 1987

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asked the Minister of Agriculture, Fisheries and Food when he next intends to have discussions with the European Community Council of Ministers about the operation of milk quotas.

The next meeting of the Council of Agriculture Ministers will start on 27 April, but the operation of milk quotas is not on the agenda for that day.

Is my right hon. Friend aware of the deep resentment felt by many British dairy farmers over the fact that New Zealand imports are included in the British national quota? Does he think that this is fair, particularly when one third of the butter consumed in this country comes from New Zealand?

My hon. Friend will remember that when we joined the Community, part of the negotiation was that part of our butter market should be available to New Zealand. My hon. Friend will also recall that the importation of New Zealand butter has halved since we joined the Community, and each year imports are on a descending scale. This matter will come up for review again next year, and no doubt the comments of my hon. Friend will be heard and noted by the Commission at that time.

Will my right hon. Friend bear in mind that, since New Zealand has reneged on her defence commitments, she has no further claim to part of our market for agricultural produce?

I hear what my hon. Friend had to say. I think he knows, as I do, that many farmers in Britain have expressed similar views. However, it is not a matter for immediate negotiation. It will come up again next year.

Is the Minister aware that when I recently attended my regular meeting with the Cumnock branch of the National Farmers Union of Scotland, the right hon. Gentleman was about as unpopular there as at the annual meeting of the National Farmers Union of England? One of the questions asked by my constituents in the farming industry related to reductions in milk quotas. Can the Minister say what compensation will be given to farmers who are compulsorily required to reduce their milk quotas? Will it be in any way similar to that given to those taking part in the outgoers scheme?

In answer to the hon. Gentleman's first comment, I can only say that these are not happy times to be a Minister of Agriculture anywhere in Europe. At least I have not been burnt in effigy, as my German colleague has been on a number of occasions—[Interruption.]

Compensation for reductions in milk quotas is to be made at the same rate as in the previous outgoers scheme—27·5p per litre will be paid over seven years. The temporary suspension of quota will be compensated at 6·5p a litre. Bearing in mind that the average profit on a litre of milk is between 3p and 4p, the hon. Gentleman will surely agree that the second of those levels is generous.

My right hon. Friend has presented the House with a great temptation this afternoon, but will he reconsider the very relevant question put by my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox)? Is it fair, when my right hon. Friend and his colleagues on the Front Bench make great play of the contribution to dairy surpluses made by the United Kingdom dairy industry, that we should have to accept about 76,000 tonnes of New Zealand butter, when that is the reason for our contribution to the surplus? Will my right hon. Friend say now that he thinks it wrong that United Kingdom dairy farmers' income and future should be placed in jeopardy because we in the United Kingdom take sole responsibility for New Zealand butter in the EEC?

Yes, but many hon. Members at the time of our accession to the EEC were insistent that adequate steps be taken to preserve the position and to look after New Zealand. If my hon. Friend would be good enough to look at the figures, he would see that the amount of butter that is manufactured in this country and put into intervention is larger than the amount that is imported from New Zealand.

Does the Minister accept that, even after the recent rise in the outgoers scheme price, it is almost certain — as market prices are running ahead of the 27·5p a litre that he mentioned — that that will be the flop that its predecessor was? Will he reconsider the position or does he think it just and fair that those awarded hardship quota by the tribunals are still receiving only 50 per cent. of that quota?

The reason why hardship cases last year were not able to receive their full quota was the lack of milk available to be allocated to them. We could have allocated 100 per cent. to the hardship cases, but that would have meant finding the milk from the others who had set quotas. Unfortunately, we cannot produce spare quota from thin air.

When my right hon. Friend read the recent Court of Auditors report, did he notice that the cost of cold storage for butter stocks alone exceeded the entire revenue that was raised by the milk co-responsibility levy? Does that not show what nonsense has been made of CAP economics, and does it not point to the need for further sensible reform that is fair to the United Kingdom dairy sector?

Yes. My hon. Friend will know that I have been making that point for a very long time. He will agree that the ultimate nonsense is that half the total costs of running the European Community relate to the storage and disposal of surplus foodstuffs.