Cereals (Co-responsibility Levy)

Oral Answers to Questions — Agriculture, Fisheries and Food – in the House of Commons at 12:00 am on 10th July 1986.

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Photo of Mr Derek Fatchett Mr Derek Fatchett , Leeds Central 12:00 am, 10th July 1986

asked the Minister of Agriculture, Fisheries and Food whether the cereals co-responsibility levy will apply to large-scale livestock producers who process their own feed.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

Any producer, whatever his size, who processes cereals on his agricultural holding for use in animal feed on that holding is exempt from paying cereals co-responsibility levy on that grain.

Photo of Mr Derek Fatchett Mr Derek Fatchett , Leeds Central

Does it not appear from the right hon. Gentleman's earlier answers that small and medium-sized producers, which are much more likely to have to buy feed rather than rely upon their own, will have to pay the levy? As a result, in an industry which is very competitive and in which margins are tight, is is not likely that some producers will go out of business?

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

I cannot accept that final comment. The hon. Gentleman should understand that many medium-sized and smaller farms mix a good deal of their feeding-stuffs at home and therefore would not pay the levy. However, grain that goes for processing, including the manufacture of animal feeds, will be subject to the levy.

Photo of Mr Colin Shepherd Mr Colin Shepherd , Hereford

Does my right hon. Friend accept that there is considerable urgency about resolving the problem to which he referred earlier? There is much uncertainty in the intensive livestock industry as to who will pay the levy and costs are, therefore, affected in one way or the other. There is also uncertainty about the future purchasing arrangements for feed. Does he expect to have the problem resolved within days, or weeks?

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

There is no uncertainty about who is exempt from the levy. A producer who produces grain on his own agricultural holding for use in animal feed on that holding is not liable to pay the levy. I am perfectly well aware that there have been delays in finalising the Community regulations and that that has disrupted trade. I regret this. I and my officials have kept in close and continuous contact with interested trade organisations. We have always sought to clear up the uncertainties as quickly as possible, and we shall continue to do that.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

How can the right hon. Gentleman say that when his Department has not defined an agricultural holding for the purpose of the levy? This is important, because if integrated producers are exempted from the co-responsibility levy, it means that one third of the feed grain produced in Britain will be exempt and the statement of my hon. Friend the Member for Leeds, Central (Mr. Fatchett) that small and medium-sized producers will be penalised unfairly is justified.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

I hope that the hon. Gentleman understands what he is saying. He must understand that the more farms there are that are manufacturing feed and which we ask to pay the levy, even though they may be large integrated holdings, the more money may unnecessarily go to the Community's funds from Britain. We must weigh one thing against the other.

Photo of Mr John Townend Mr John Townend , Bridlington

Does my right hon. Friend accept that the application of the levy will cause great unfairness, specially to producers such as Twydale Turkeys in my constituency, which purchases 45,000 tonnes of feed from four mills and will be put at a competitive disadvantage? It could also result in those mills having to reduce employment. What action can he take to make the application of the levy fairer among various sectors of the industry?

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

My hon. Friend will recall that when we debated the matter before the price-fixing resolution we agreed that inherent in the levy system was some discrimination and unfairness, and so it has proved. That is why we did everything we could to avoid a co-responsibility levy in those price-fixing negotiations.