Our debate on these particular Documents arises from a recommendation by the Scrutiny Committee. I pay tribute, as I have on previous occasions, to the work of this Committee. The Committee shoulders a substantial responsibility in scrutinising the proposals by the Commission and reporting to the House its conclusions on them. A large proportion of the proposals which are under consideration in Brussels relate to the food and agricultural industries.
As the responsible Minister, I am therefore very much aware of the value of the Committee's Reports in drawing the attention of the House to particular issues of importance and in stimulating discussion of them. I therefore welcome this opportunity of debating these two Documents.
The Committee's Report of 25th February—presented on this occasion by my hon. Friend the Member for Birmingham, Erdington (Mr. Silverman)—dealt with these revised proposals from the Commission concerning the use of skimmed milk powder in animal feed and the stocking of imported proteins. The Committee recommended in its Report that these revised proposals should be considered by the House. But it went on to say that it did
not consider that such further consideration"—
of the proposals—
need delay their adoption by the Council should such adoption prove necessary in the course of negotiations to achieve a satisfactory settlement on this package as a whole.
I am grateful to the Committee for the helpful and constructive attitude which it adopted on this particular point.
Of course, the normal purpose of our debates on Commission proposals is to guide the Government in their handling of the discussions on them in the Council in Brussels. On this occasion there is much to be said for the House considering the proposals, even after their adoption by the Council. The incorporation scheme is a novel temporary measure to deal with a surplus situation. It is right for this House to discuss the unfortunate predicament which made its adoption necessary and the principles which underlie it, and this discussion will be of great value to the Government in deciding their attitude to any future situation of this kind which may arise.
As the House knows, agreement on a prices package was reached in the Council on 6th March. This package included an agreement on arrangements for incorporation of skimmed milk powder and a decision in principle, pending an opinion from the European Parliament, to introduce a scheme for the storage of protein. The decisions taken include certain modifications of the proposals set out in the Documents to which the motion refers. It may, therefore, be helpful if I explain briefly the background to the proposals and indicate the developments that took place during the Council discussions.
The Commission's original proposals were included in its proposed farm price package for 1976–77. In putting forward its original proposals, the Commission drew attention to the level of the skimmed milk powder intervention stocks in the Community and to the need for a combination of measures to tackle this problem. It also emphasised the need to achieve a better balance between supply and demand in the milk products sector. Among the immediate measures suggested was the proposal that some 600,000 tonnes of skimmed milk powder should be disposed of from intervention stock for compulsory incorporation in compound feeding stuffs.
The proposal was that compound feeding stuffs should be required to include 2 per cent. by weight of such powder, which would be sold for this purpose at the same price as the cost of powder used in the production of feeding stuffs for calves in the Community. The intention here was, of course, that skimmed milk powder should be absorbed into pig and poultry feeds.
This original proposal was the subject of a detailed discussion with the interests concerned in the Community. The House examined it pretty critically in the course of its debate in February on the price package as a whole. There was also discussion in the European Parliament. A number of serious objections were raised to this original proposal and there were in particuar substantial doubts about whether it would be administratively feasible.
In the light of this reaction, the Commission came forward with the revised proposals in the two Documents which are before the House today. These envisage a system of deposits to encourage the use of skimmed milk powder in animal feed, linked with aids to provide for the storage of imported proteins.
These revised proposals, details of which are set out in the Select Committee's Report, were generally recognised as having a number of substantial advantages over the original proposal for compulsory incorporation. Instead of requiring the trade to include a specified minimum quantity of denatured skimmed milk powder in individual compound feeding stuffs, the deposit system leaves the trade substantially free to decide how and where skimmed milk powder should be absorbed.
There is, therefore, no requirement to check that individual compounds contain a mandatory minimum percentage of powder. This flexibility means that the trade will be able to operate the system in the light of its commercial judgment and of the situation in the various markets for its products.
The parallel arrangement for the storage of imported proteins is designed to help to reduce the immediate impact on the protein market of the skimmed milk powder incorporation scheme. Here again, it is for individual traders to decide how the scheme shall operate from the point of view of their own businesses. There is no compulsion on anyone to store proteins under this arrangement.
Looked at from a United Kingdom point of view, the revised Commission proposal had another substantial advantage over the original proposal. It is based on quantities of vegetable protein and not on compound feeding stuffs as such. Since we account for a smaller proportion of the Community's consumption of vegetable proteins than of compound feeds as a whole, our industry has to absorb a smaller proportion of the total quantity of skimmed milk powder to be disposed of under the arrangement.
During the course of the discussions in the Council from 2nd to 6th March, a number of helpful modifications to the proposals set out in the document before us tonight were accepted. In particular, provision has been made for the use of skimmed milk powder simply by incorporation as an alternative to denaturing. This should be helpful from the point of view of our own trade. But, in addition, the quantity of skimmed milk powder to be disposed of was reduced from 600,000 to 400,000 tonnes and the storage arrangement was also scaled down from 400,000 to 250,000 tonnes.
Before the Council meeting I saw the trade to discuss the Commission's proposals. I explained on that occasion that I personally did not like these particular proposals and that I would have preferred that the need for them should not have arisen.