With permission, I will make a statement about the meeting of the Council of Agricultural Ministers of the European Community on 23 and 24 January, which I attended along with my right hon. Friend the Minister.
The main decision was the adoption by the Council, subject to the opinion of the European Parliament, of a package of six measures, most of which had been under discussion for some considerable time. These measures were: first, further changes in the beef support arrangements, building on the temporary measures agreed in December 1986; secondly, a scheme to give effect to the judgment of the European Court that certain farmers who had gone out of milk production under Community incentive schemes before milk quotas were introduced in 1984 were entitled to a quota; thirdly, a scheme permitting member states to grant direct income aids to less prosperous farmers, with partial financing from the Community; fourthly, a degree of financial assistance to producers of nuts, mainly of interest to the southern member states; fifthly, a change in the arrangements for compensating small cereals producers for the effects of the co-responsibility levy; sixthly, changes to green rates for certain member states, mainly in the beef sector.
This package of measures was adopted by majority vote. The United Kingdom was one of three member states voting against, mainly because of reservations about certain aspects of the outcome on beef. There are nevertheless a number of attractive features of the package and a number of improvements were made in the course of negotiation. For example, we had serious doubts as to whether it was appropriate for the Community to finance direct aids to low income farmers; but the scheme finally adopted by the Council was considerably more restricted in its scope than that originally proposed by the Commission.
The most important aim on the milk quota part of the package was that the extra quota now to be made available should not be at the expense of existing producers' quotas. This was fully achieved.
The aim of the new beef arrangements is to restrict intervention buying further, and to harmonise the premium payments to producers. The intention is that the new system should come into force on 3 April.
We have always believed that heavy intervention buying is an expensive and inefficient way of supporting beef producers. Although somewhat less constrained than the Commission originally proposed, intervention will in future be much more restricted than at present.
For the reasons explained by my right hon. Friend in last week's debate, it was not realistic to negotiate any further extension of the United Kingdom's variable premium. It will be replaced by the so-called "special premium" on male animals, already operated by most other Community states since 1987.
The rate of special premium will be 40 ecu per animal compared with 25 ecu at present. It will be limited to 90 animals per producer per year compared with 50 at present and 75 proposed by the Commission. Although we did not secure the complete removal of the limit, the increase to 90 is obviously a considerable improvement.
There will also be an increase from 25 to 40 ecu in the Community-funded element of the suckler cow premium, and part-time farmers will in future be eligible for the premium
I thought it right to vote against the package because of our strong objections to the concessions on beef intervention and to the continued provision of a headage limit on the special premium. Even so, the outcome represents a considerable improvement in existing arrangements. There should be no difficulty in absorbing the costs of the package within the provision for agricultural market support in the 1989 Community budget and within the financial guideline limits set by the European Council for future years. Community consumers will benefit from reduced intervention for beef; United Kingdom producers will compete on level terms with producers in other member states in terms of intervention support and the premium regimes; and the budgetary cost of the regime will be under much better control.
I thank the Minister for his statement, although in a sense it raises as many questions as it answers. We are bitterly disappointed at his news on the beef support system. In last week's debate, the Minister had the unanimous support of the House to resist a new discriminatory beef regime because the exclusion of the special premium of heifers will hit United Kingdom farmers particularly hard. Having carried the House with him, it is regrettable that he was not able to carry the Community with him as well.
Was there any discussion of extensification? If not, why did he not press that issue, as the package is a serious setback for the specialist beef sector in the United Kingdom and is important to the marginal and hill areas?
As the financial support of the new beef regime switches from the national Governments to the EC, presumably there will be some savings to the budget of the Ministry of Agriculture, Fisheries and Food. Has the Minister made an estimate of the sum by which the Ministry will benefit, and has he any intention of diverting that money towards essential research and development work on meat health and safety, which would be a positive move?
On the SLOM milk matter, will the Minister assure the House, which he has not been able to do previously, that he now has the necessary machinery and information to ensure that those British farmers entitled to the new benefit will receive it? That is important.
The Ministry, and especially the Minister, have made no secret in the past of their opposition to income aids. Indeed, I gleaned from his statement today that the Minister was not especially enthusiastic about the new scheme. I understood, too, that the new scheme was likely to be permissive. If that is the case, do the Government intend to adopt the scheme? If they do, when will they adopt it, and will they seriously consider Opposition support for some direct income aid to those farmers in upland areas who are especially hard hit?
Will the Minister give us some idea of the effect that the new beef regime will have on the consumer, because it is difficult to ascertain whether beef prices will go up or down?
I noticed that agri-money was on the agenda for discussion. During that discussion, did the Minister raise the serious issue of fraud in European agriculture? Did he draw to his colleagues' attention the remarks of the
director of the Government's serious fraud squad, John Wood, who revealed yesterday that he was close to completing inquiries into two significant cases of agriculture fraud in Britain, involving EC moneys amounting to millions of pounds? He said on that occasion:
Our own domestic experience is that the money obtained by fraud is being used to finance the traffic in narcotics and is also being used to finance trade in arms and terrorism.
What was the reaction of the other European Ministers to those serious allegations by a senior British Government official?
I thank the hon. Gentleman for his questions. The headage limits system is not more discriminatory. It is less discriminatory across Europe than were the four different schemes which various countries had for paying support to their farmers.
There was no discussion of extensification, but that comes into the income aids question. We believe in extensification, set-aside and measures that will reduce production. We would rely on the social security system throughout the Community rather than on special income aids, however rigged by the Community.
As the SLOM package emerged, it appeared that British farmers, who were entitled under this narrow band, would receive their entitlements along with other European farmers.
The hon. Gentleman asked how the beef regime would help the consumer. Of course, the variable premium did not help the consumer when prices were high. The special premium enables beef farmers and farmers with a 90 head limit on dairy herds who want to raise beef as well to be certain about the amount of money that they will collect. Therefore, there will be a firmer beef regime and a steadier amount of beef available to the housewife, which eventually should knock on into consumer prices.
The agri-monetary debate was short and concerned two small points. Fraud was not mentioned. I know that fraud is always at the forefront of my Minister's mind when he is in Agriculture Councils, as it is in mine when I am in Fisheries Councils. The United Kingdom has a good record on this matter and it enjoys the support of the entire House.
Is my hon. Friend aware that there will be a general welcome for a scheme which allows those milk producers who went out of milk prior to the introduction of milk quotas now to be eligible for a quota over and above the existing national level? There will be certain anxieties about beef, although we shall welcome the increase in the number to 90.
Can my hon. Friend say more about the suckler premium, which we hope will in some way compensate for the new beef arrangements which will apply only to male animals? As more than 75 per cent. of our beef production comes from the dairy herd, the question of heifers will cause concern.
Both those questions are related to the dairy sector. I agree with my hon. Friend that those people who will now receive a quota will find it restricted. They will have to produce 80 per cent. of the quota within two years, and they will be entitled to only 60 per cent. of the quota initially, so it will be restricted. Those who are worried about it need not do anything immediately. The application process will start and will run for three months once the regulations have been laid. The cow suckler premium has increased from 25 to 40 ecu and there is scope for national Governments to increase it. We shall consider the rate to apply in 1989–90 and make a further announcement in due course.
Will the Parliamentary Secretary wish his colleague the Minister well and a rapid recovery? Does he agree that we should regret the passing of variable premiums, although I recognise the circumstances under which they have been lost? What can we do as Members of Parliament to assist the Minister in persuading the Europeans that heifers should be eligible for special premiums? There is a considerable loss to British beef farmers. How many farmers in the United Kingdom will qualify for low income support? If the Under-Secretary of State can give us the figures, does he think that perhaps that method should be considered as a possible way of assisting farmers in the poorer parts of the United Kingdom?
I thank the hon. Gentleman for his kind remarks about my right hon. Friend the Minister; and I thank the hon. Member for South Shields (Dr. Clark), who made similar remarks privately to me before the statement. The Minister is improving. He is in hospital in Brussels, being well looked after, and he hopes to be back in business soon.
The heifer question is difficult for British farmers. As the hon. Member for Ynys Mon (Mr. Jones) expressed it so well the other night, 34 per cent. of our beef comes from heifers. It would be horrendous to monitor the heifer system by on-farm inspections throughout Europe to see that none got into the dairy system, and it would be impossible to receive a derogation just for the United Kingdom.
The low income scheme is tentative, although some guidelines were set down, such as the 300 million ecu total, the period of five years and the maximum of 2,500 ecu. It is not appropriate for the United Kingdom. We have other better ways of preserving our farming community.
May we on this side of the House join in sending good wishes to our right hon. Friend the Minister? We respect the efforts of my hon. Friend the Parliamentary Secretary of State at what must have been a difficult meeting, which he joined late. We are grateful to him for standing up for British interests as he has done.
Will my hon. Friend acknowledge that the beef matter will be discouraging for many farmers where our structure for beef production is different from the rest of Europe, particularly in Scotland? Many farmers have diversified into other areas, such as from milk or cereals into beef, and they will find themselves restricted. Can my hon. Friend say whether consideration has been or could be given to relating the restrictions on headage numbers and steers only to labour units per farm rather than to the farm itself? That would recognise the different structure in Britain, particularly in Scotland, compared with the rest of Europe.
I thank my right hon. Friend for his good wishes to my right hon. Friend, which will be conveyed.
The United Kingdom structure is different, which is why we voted against the package. We tried hard to do away with a headage limit altogether, believing that the package will not restrain Europe's total beef production but only that in units. Ultimately, that will make no difference to the total restriction of beef production throughout Europe. We did not discuss farm labour units. Obviously it is a continuing debate, and we must wait to see how the 90 headage limit affects British farmers. At present, it seems that it will include the majority of specialist breeders and those to whom my right hon. Friend referred who have diversified into beef, and to those who have a milk unit. We shall bear in mind the farm unit labour system of counting.
Recognising the problems that this development will cause for the specialist beef sector, and particularly for small producers in difficult farming lands, and the fact that the Minister does not believe that direct income aid is the course to take, what is the Minister's message to farmers? Is it that Labour will give the farmer a better deal than he gets from the present Government?
When the hon. Gentleman believes that, he will start saying it. We intend that the small farmer of any sort will not fall to the level where income aid is necessary, which is why we believe that the cow suckler premium and its increase will help. Although the headage limit is not high enough at 90 animals, it will also help.
There is no use pretending that this is an ideal package, and my hon. Friend was right to vote against it. What proportion of British beef herds will have all their animals covered by the premium? Does he agree that we must be particularly careful in discussions on sheepmeat about limitations on headage payments? Will he take to heart the message of my hon. Friend the Member for Daventry (Mr. Boswell) in last week's debate—in which, as I recall, no Labour Back Bencher participated—that the United Kingdom must use its discretion to include a suckler premium, because that is most important for the uplands?
My hon. Friend makes several good points. We went to great lengths to emphasise to the Commission, and to the commissioners, that the beef variable premium scheme is coming to an end but that the variable premium for sheep is continuing, and that there is no connection between the two.
I express on behalf of the Official Unionist party and of other right hon. and hon. Members the good wishes of the House to the Minister of Agriculture, Fisheries and Food, in the hope that he will speedily be back on his feet and able to resume his good work—especially as he is evidently much needed.
Can the hon. Gentleman tell the House how much extra milk quota there is, what the proportion of that will be for the United Kingdom, and how much of the United Kingdom's quota will go to Northern Ireland? What is the precise machinery for deciding which farmers will receive the quota? People need to know that information quickly. How will the farmers be selected?
Can the Minister explain to the House, and to the farming community, how one is to define less prosperous farmers? Various definitions could be used. What will be the net effect of the various changes in the beef regime on that sector's profitability?
Will the hon. Gentleman confirm that this is the first time that United Kingdom farming interests have been overruled by a majority vote, that that is a sign of things to come, and that, more and more, United Kingdom interests will be overruled?
As the hon. Gentleman and my hon. Friend the Member for Skipton and Ripon (Mr. Curry) have said, this was not an ideal package or an ideal negotiation. Although I was there for the whole time, in the end we could only vote against the package as a whole.
As for the milk farmers who are coming back into the scheme, we have no idea yet how many will apply. The Community has set a limit of 600,000 tonnes and thinks that that will be adequate. It is new milk, and therefore will not impinge on those who are already producing milk. The instructions, when they arrive, will be clearly set out, and people will have three months in which to apply and our assistance and that of others to do so.
Each national Government will define their less prosperous farmers within guidelines set out by the Community's incomes aid scheme. We hope not to define our less prosperous farmers in that way. Profitability and costs for both the Community and the farming industry have not yet been worked out, which is another reason why we voted against the package. Part of the cost will be due to implementation of the various schemes, and we could get no clear indication of that.
I do not know whether this is the first time that we have voted in accordance with our interests —[Interruption.] I am told that it is the second time. Whether that is a sign of things to come I cannot say, but I know that my right hon. Friend the Minister and I fight hard for British interests in the Community, and that we fought long and hard on this occasion.
Dame Elaine Kellet-Bowman:
May I say how pleased I am that my right hon. Friend the Minister's condition is improving.
I greatly regret the passing of the beef variable premium, and I am very glad that my hon. Friend was tough enough to vote against it. I also do not like the limit on beef headage, and I do not see why it cannot be paid on clean heifers at the time of slaughter. I appreciate that my hon. Friend managed to get the limit up to 90 animals, but will he please press ahead with improvements in the beef suckler premium, which is vital to my marginal farmers, and continue the fight against fraud which brings the Community into disrepute?
Reading the reports of our debate the other night just before coming into the Chamber, I noticed my hon. Friend's telling intervention on both variable premiums and headage limits. The difficulty with paying on clean heifers at slaughter is that not all Community Governments will use that system of payment, which leads us directly to the fraud question that my hon. Friend mentioned.
Is the Parliamentary Secretary in favour of any extension of direct income aid beyond the rather narrow range already agreed? In view of the concern expressed in the House yesterday about agriculture and its effects on the environment, was any consideration give in the EEC towards helping small farmers who practise in an environmentally friendly fashion?
The environment that people see from their cars and love so much is the environment created by farmers. We have other ways of helping farmers and of restraining production. We have the less-favoured areas scheme, which sustains farmers throughout the United Kingdom, especially in Wales, the spine of England and Scotland. We have set-aside, environmentally sensitive areas and various grants for environmental measures. I do not think that the direct income aid proposed by the Europeans is relevant to the United Kingdom.
In considering the level of national top-up on the suckler cow premium, will my hon. Friend bear in mind its importance in encouraging the economies in the upland areas? Will he also bear in mind that that support goes directly to the primary producer, and that any encouragement to suckler beef producers is a direct encouragement of quality beef, which is important to the consumer?
I agree entirely that quality is of direct importance to the consumer. I know that, before he became a Member, my hon. Friend was directly involved with these matters. I have heard what he and the whole House have said about the level of top-up. As I have said, a statement will be made at another time.
Did the Minister say that as yet there has been no estimate of the net effect on farm income of the changes to the beef regime? If so, and if an estimate is prepared that shows a severe effect on specialist beef producers, will the Government consider giving assistance to people who are hard hit by these changes? Is it not ironic that the changes in the beef regime have been pursued to restrict intervention buying which at present is not a major factor in the Scottish beef market?
Intervention buying has not been a significant factor throughout the United Kingdom. We wanted to make sure that intervention buying became a safety net rather than just another too-ready market for the producers or end users of beef. We think that these regulations which have been brought up to date and altered and have an intervention ceiling of 220,000 tonnes and a safety net at 80 per cent. together with other measures, will help.
Is my hon. Friend aware of the appreciation in the farming industry, and especially in the beef sector, that he and his right hon. Friend were playing with a weak hand? Can he confirm that the cessation of the variable premium scheme should eliminate distortion in the market caused by the Irish element of beef production? Does he agree that the industry will be looking for a sum at least equal to the funds that come free from the Treasury input to the beef variable premium scheme to be put to the suckler cow premium as a national top-up so as to sustain their confidence and the vital industry of the upland areas?
Again, my hon. Friend asks about the suckler cow premium and again I say that there will be a further statement in due course. I am sure that my hon. Friends in the Treasury will read Hansard tomorrow as keenly as my hon. Friend and I will read what we have said. The beef sector debate was hard and long and we did not finish it until 5 o'clock in the morning. The variable premium scheme has always had clawback factors and money always had to be paid back when beef went into intervention. Given the surges and recessions in payment, it is difficult to work out its exact cost. We shall lose clawback when we lose the variable premium, and that will help in many ways and will especially help our exports. We also hope to lose many of the Irish difficulties with variable premium across the border. That should simplify the system. Much will depend on how efficiently Ireland., Northern Ireland and ourselves can introduce and maintain the new headage limits.
Is there nothing in this package about intensification? In view of the problems about pollution and food quality associated with intensive farming, why are not the Government pursuing a vigorous policy of extensification that will lead to healthier food and cleaner environment?
The Government are pursuing an environmentally sensitive areas policy. That is being examined throughout Europe as a way of looking after the countryside in the manner that the hon. Gentleman recommends. He shakes his head. Extensification would do much of what he said, but so will set-aside, because less land will be farmed and need not be fertilised.
How does it make sense to adopt a package that will force up prices for the housewife in the United Kingdom but not for the housewife on the continent? That will be the result of abolishing the variable premium. The consumption of beef in Britain is already below the amount consumed on the continent. Is this not a grim warning to the United Kingdom of what happens with the extensification of majority voting? Could the Minister say whether he was successful on behalf of the United Kingdom in eliminating the exceptional circumstances clause which has wrecked previous cost controls and which will wreck this one if it is still in place?
My hon. Friend alludes to fraud. That is always in the forefront of our minds when we introduce any system. Whatever disadvantages the demise of the variable premium will have, I cannot see any disadvantage in having a common system throughout Europe, nor can I see how that advantages or disadvantages consumers in the United Kingdom or in the rest of Europe. I think that., for the first time for many years, the consumption of beef has increased this year. Perhaps we can get the consumption of good British beef back to what it was in the past.
I should like to join in the expressions of good wishes to the Minister of Agriculture, Fisheries and Food. I have two simple questions. Are there savings in the package that has been announced? If the Minister had secured what he set out to secure, would there have been greater savings?
If we had secured what we intended to secure, there would have been greater savings on intervention. If there were no headage limit, it would make little difference to the amount of money going into the beef regime because, as I said, I do not think that this will curtail the total amount of beef being consumed. Generally, it will be possible to absorb the package in the budgetary limits that have been set down for the future.
The hon. Gentleman knows a fair bit about being ill, and I thank him for his good wishes to my right hon. Friend.
What is the position of tenant dairy farmers? Am I right in thinking that the Government are not to take advantage of income support that has been voted by the European Community? What are the other methods of assisting farmers on low incomes? If there is evidence of fraud and malpractice, will my hon. Friend send the papers to the Comptroller and Auditor General so that we may all know about it?
I fully understand the House's concern about fraud. I said specifically in answer to a question that fraud was not discussed at this Council meeting. We are pursuing the question of fraud in every possible way because we do not want to bring the Government or the EC into disrepute by any further extension of fraud. I understand the present difficulties of tenant farmers, especially with regard to milk quotas. I do not think that the income support envisaged in the package would be of assistance to the people that my hon. Friend has in mind.
The Minister must agree that many hours of discussion and debate in the Common Market that cause a Minister to fall ill are hardly the best way to deal with problems about the production and marketing of food. The Minister has been good enough to tell the House that the six parts of the package are unsatisfactory. I assume from that that the components of each part do not add up to much in terms of advantage for the United Kingdom. That will be evident from the impact that this will have on prices. I understand why the Minister was not able to discuss with his colleagues in the Department how best to come back to the House to explain the nature, extent and cost of the dissatisfactions and what the housewife will pay, because once again the Common Market would not listen to the United Kingdom.
The hon. Gentleman knows that this statement hangs together with the debate that we had last week and those people who participated in the debate knew exactly our hopes and expectations for this package when we set off and our disappointment when we returned. That is why we voted against the package.
We all regret the fact that these negotiations go through the night, but I am sure that the hon. Gentleman, as a distinguished Committee Chairman in this House, well understands the complexities and difficulties of pushing through legislation. He has sat for many more hours than he would like to number listening to debates in Committee when he would rather have been elsewhere. It is the same in Europe, where we have 11 other colleagues to deal with individually. We did not like this package as a whole, but, like the curate's egg—if I dare mention that—it is good in parts.
Milk producers in west Wales will be particularly pleased to discover that the outgoers scheme will not mean a reduction in their own quotas but an additional quota. Can my hon. Friend give any estimate of the total number of producers who might be eligible for that scheme and can he say whether the Commission will be prepared to increase the level from 600,000 tonnes if that proves to be inadequate?
Will the Minister give an assurance that he fully understands the retrograde and damaging impact of the loss of the variable beef premium in upland areas? Does he agree that that makes it even more crucial that he fights to the last ditch for the sheepmeat regime to maintain that source of income? Will he also make clear his view of the discretionary increase that is available to him as a national aid in terms of the suckler cow headage premium? Will he give us an assurance that he will fight the Treasury to make that necessary increase? Will he also tell us what proportion of our less-favoured dairy farmers will qualify for income support under the low-income scheme?
I do not think that that aid is suitable for the United Kingdom, and it would be unfair to offer that as a help. I fully understand that the variable premium will be missed, not only in the upland areas, but throughout the United Kingdom. We cannot, and should not, as we emphasised to the Commissioners, connect this package on beef with any future discussions on the changing of the sheepmeat regime, which is not yet due for change. I fully understand the importance of the suckler cow scheme. There will be a further statement in due course.
My hon. Friend's toughness in the negotiations is, thankfully, not reflected in the quality of British beef which, if properly cooked, is extremely tender. As we have now lost the variable beef premium, farmers will feel that the future is very uncertain. May I add my voice to those emphasising the need for the national optional top-up to the suckler cow premium to be incorporated in full because, without that, we will not have the level playing field to which my hon. Friend referred.
With regard to income aid for less-favoured areas, will my hon. Friend take note of the scheme adopted by the North Yorkshire national park committee and discuss with his colleagues in the Department of the Environment how such a scheme could be adopted in other national parks?
As that scheme has been adopted in the North Yorkshire national park, the adoption of this European scheme is unnecessary. Tender beef and the suckler cow herd go together because, to have tender beef on a suckler herd, we need steers and not bulls, which would run wild in the fields. It is important that we have a throughput of steers into the shops and supermarkets. There will be a further statement on the suckler cow premium in due course and I shall add my views to those that have already been expressed.
I am delighted to hear that the Minister of Agriculture, Fisheries and Food is well on his way to recovery because he has many curates' eggs as well as boiled eggs yet to eat on our behalf.
What implications will there be as a result of this announcement for the size of the intervention stores? Will he deal particularly with the ever-deepening wine lake? Are there any proposals to turn that wine into fuel, or will my pensioners in Newham have the opportunity of getting the odd bottle?
I thank the hon. Gentleman for his kind words about my right hon. Friend.
The intervention store to which he referred is now at a limit of 220,000 tonnes and the amount of beef taken into intervention last year was almost twice that amount. Provided there is no collapse in the price of beef, as there was in pigmeat last year, that intervention limit should help.
We did not discuss wine at this meeting, but wine, cereals and the use of agricultural surpluses for other purposes are important matters and are being pursued by the Government and the European Commission at all times. I should not wish to take a drop from the hon. Gentleman's constituents, but, if we can find another use for the wine, it might make that drop cheaper.
Does my hon. Friend agree that the enhanced suckler cow premium will make a significant contribution to the maintenance of quality beef production in the United Kingdom and that that maintenance of high quality is important in boosting the consumption of beef from home resources?
Yes. We now have scope to increase the suckler cow premium and will be considering the rate to apply for the 1989–90 scheme. As I have said, there will be a full and further statement in due course. Of course, the animals from the suckler herds are the most tender and of the best quality. In addition, suckler cow herds help to keep the country as green, pleasant and environmentally sweet as we all like to see. We therefore place great emphasis on suckler cow herds.
How will milk quotas be allocated? I am thinking particularly of a case in my constituency where a farmer, because of disease in the herd, was advised to slaughter the herd, keep cows away from the farm for about five years and then come back. Of course, quotas were introduced during that time, so the farmer has not had a quota since. Will such a farmer be able to apply under this scheme and have a chance of obtaining a quota?
No. We regret that many people who are genuine hardship cases, like my hon. Friend's constituent, will still be left out of the quota scheme while, on the other hand, through the implementation of the European Court ruling, other people will be let back into the scheme. However, it would be wrong of me to give my hon. Friend any encouragement for his constituent.