With permission, Mr. Speaker, I would like to make a statement on the outcome of the Agriculture Council dealing with this year's price review.
Last week's Council, at which I represented the United Kingdom, was devoted almost entirely to the Commission's proposals for agricultural prices and related measures for 1989–90. After a whole week of negotiations, agreement was finally reached on a compromise package in the early hours of the morning of Saturday 22 April.
The package represents a very satisfactory outcome for the United Kingdom. It meets our key objectives of respecting the February 1988 European Council conclusions, in particular not weakening the stabiliser mechanisms; and of ensuring a fair deal for United Kingdom farmers which improves their competitive position. The Commission confirmed, at the completion of the negotiations, that the 1989 budget for CAP guaranteed expenditure would be respected and that expenditure in 1990 would be well within the financial guidelines.
So far as the United Kingdom is concerned, I obtained a substantial devaluation of the green rate at which support prices in ecu are converted into sterling. It will reduce United Kingdom monetary gaps generally by one half, and completely remove the monetary gap, and therefore the monetary compensatory amount, for beef. At my insistence, the discriminatory element of the Commission's original proposal, which envisaged dismantling only one third of the gap, was completely removed. Overall, this has a significantly favourable effect on MCAs from the United Kingdom point of view.
The devaluations will take place at the beginning of 1989–90 marketing years and will improve our farmers' competitive position relative to those in other member states. In themselves, they should increase United Kingdom producer incomes by about £155 million in a full year, when all the effects have worked through.
The changes to green rates for the United Kingdom and other member states represent a further significant step toward the complete dismantling of monetary gaps, and hence MCAs, by 1992—certainly by the end of 1992—for which I have been consistently pressing.
Turning to other elements of the package, a major breakthrough was achieved on the levels of milk co-responsibility levy. From the 1989–90 marketing year, no co-responsibility levy will be charged on milk produced in the less-favoured areas, and the levy on milk produced outside those areas will be reduced by 0·5 per cent., to rates of I per cent. for producers of up to 60,000 kg per year, and 1·5 per cent. for other producers. Most important, it was agreed that this is the first step towards complete elimination of the levy, and the Commission undertook to propose a further step for 1990–91.
I have always opposed co-responsibility levies as a mechanism for CAP reform, and have constantly pressed for their reduction and subsequent elimination, so this development is greatly to be welcomed. The cost of the changes will be met by a 2 per cent. cut in the intervention price for butter and by management measures. Moreover, following my pressure, it has been agreed that the Commission will examine the administration of the co-responsibility levy for cereals and will submit any appropriate proposals.
The Commission will also study the functioning of the milk quota system, and I will be pressing for that to include the question of greater flexibility in the transfer of quotas.
Community prices for sugar will be reduced by 2 per cent. this year. This is considerably less than the Commission's proposal for a 5 per cent. cut, and reflects the concerns expressed by member states, including the United Kingdom, about the effect both on Community producers and on the suppliers of cane sugar from the African, Caribbean and Pacific countries. As a condition of my agreement, I secured a comitment to safeguard the position of Community refiners of cane sugar.
In addition, the support prices for field beans and for a number of Mediterranean products will be reduced, and the stabiliser mechanism extended to cauliflowers and apples. Basic support prices for other products will remain unchanged in ecu terms, but the prices actually applied are liable to be cut automatically, under the stabiliser arrangements, if output exceeds a given level. In addition, there will be a reduction in the period of intervention for cereals and oilseeds, and lower monthly price increases for those commodities and for protein crops.
The existing definition of double-low rapeseed—sometimes called double-zero rapeseed—has been extended to 1990–91. I pressed for this delay, which is of importance to our growers, as commercially viable varieties able reliably to meet a lower definition in United Kingdom conditions are not yet available.
During the Council I took a further opportunity to raise yet again the importance of taking early and effective action to combat fraud in the CAP.
The settlement keeps within the budgetary limits, extends the stabiliser mechanisms, further improves the competitive position of United Kingdom farmers, and has only a very small effect indeed on the retail price index. Overall, therefore, it is a good settlement for United Kingdom interests.
I welcome the Minister's success in obtaining abolition of the co-responsibility levies in certain areas and reductions of those on the MCAs. Equally, I welcome the review of the milk quota. I urge the Minister to try to ensure that this is done as speedily as possible, because we really must avoid too much uncertainty creeping into the dairy sector.
The Minister emphasised that the recent EC price proposals kept within the budget requirements laid down at the February 1988 summit. I cannot understand why the Minister takes credit for that. My understanding of the Prime Minister's statement to the House on 15 February 1988 is that those restrictions were legally binding, so the Minister and his colleagues had no option but to keep within the relevant financial disciplines. Will the Minister confirm that that legally binding requirement stands?
To what extent does the Minister believe that we managed to remain within the financial guidelines because of the greenhouse effect and of the drought in the United States, as opposed to careful management by the Commission? To us, that is a key point. About two thirds of total Community spending has been on agriculture. At last year's Brussels summit, it was agreed that that proportion would be reduced. Will the Minister say by how much the review has reduced the amount of spending on agriculture as a percentage of European funding as a whole?
The Minister stated that, as a result of the review, prices for farmers will increase by more than £115 million. Bearing in mind the fact that Britain already faces high inflation and that food prices are creeping up, will the Minister say by how much he estimates that the agreement will increase prices in the shops? That matter concerns a great many people.
The Minister referred quite rightly to fraud. As he and I both know, between 10 and 20 per cent. of the CAP budget is lost through fraud. The Minister has been strong on rhetoric but weak on support. Those are not my own words but the sentiments expressed by Lord Cockfield when speaking in another place—[Laughter.] Right hon. and hon. Members may laugh, but Lord Cockfield was the Commissioner dealing with the matter, and I suggest that he knows considerably more about it than right hon. and hon. Members opposite.
What action is the Minister taking to put his own house in order? He will recall that it is more than three months since the director of the serious fraud office, John Wood, revealed that he was close to completing inquiries into two significant cases of agricultural fraud in Britain involving EC moneys. Will the Minister confirm that those cases exist in reality and say when definite action may be expected?
Intertwined with the EEC price review have been general discussions on the general agreement on tariffs and trade. I know that the right hon. Gentleman has hurried back from an important conference in the United States where he discussed that matter. Will the Minister explain how the price review will aid our discussions in GATT? If trade protection is cut and the resulting high food prices, consumer taxes and Third world destabilisation are all to be tackled, we must ensure that the latest review is helpful to that process.
I am grateful to the hon. Gentleman for his opening comments and for his welcome to many parts of the package.
The milk quota review really concerns the functioning of the milk quota and does not apply to the future of the milk quota system after 1992. 1, like the hon. Gentleman and all dairy farmers, am anxious that that matter should be discussed in the Council at an early stage, so that our farmers will know the way ahead in the 1990s. I have pressed for that many times, but it was not right to raise that matter in these price negotiations. The review will be about the functioning of the system. I hope, as I made clear, that we shall secure changes in transferability and greater flexibility. There will be an early report, because the Commission has undertaken to report on that aspect by the end of July this year.
The hon. Gentleman is entirely right to say that we have to operate under legally binding limits, which certainly affect the climate in which the discussions take place. However, it is right that we should ask the Commission each year, at the end of our negotiations, to make it clear that we have fully met those legally binding limits. If there is any risk of over-running them, we would need to have a joint meeting with ECOFIN. As I have said, clearly we are well within the limits.
The hon. Gentleman is right to say that the drought in North America has had some impact on Community expenditure this year. It is also important to recognise that the stabilisers are having their effect, too, and that, without any question, the impact is already coming through. Indeed, as a result of those negotiations we are well below the legally binding guidelines for both this coming year and the year after. That is a very good outcome.
The hon. Gentleman asked by what percentage the proportion of total Community spending devoted to agriculture had been reduced. We are actually still working out the precise figures, and pehaps I can let him have that information shortly. He also asked about the impact on consumers, and I am pleased to tell him that the outcome of these negotiations, which is favourable to our farmers, has virtually nil impact on the retail price index—at most, one twentieth of 1 per cent.
I reject entirely the view that I have been weak on support in asking for actions on fraud. I have raised this matter very regularly in the Council since I became Minister, orginally with little support from other Ministers. I am pleased to say that that support is growing almost by the month. On this occasion, four Ministers specifically spoke strongly in favour of the actions I was recommending. There are three sorts. First, I asked the Commission to look into the allegations made in the European Parliament recently about butter expenditure, and to report. Secondly, I asked for an action programme on the Court of Auditors' report and recommendations on intervention and various aspects of the existing system. I was given a very good timetable of proposals due to come in front of our Council soon from the Agriculture Commissioner. I am satisfied that he treats this matter with as much seriousness as I do.
Thirdly, I floated the suggestion that in future, when we are looking at major changes to any proposal or at any new proposal, in addition to having a report on the financial consequences, we should have from the Commission a report on how any new proposal would be controlled, administered and made fraud-proof. I hope that that suggestion will increasingly get support. To me, for the future, that is one of the major contributions the Agriculture Council can make in reducing fraud.
Finally, on GATT, it was timely that I was in the United States in the last two days, both because it came immediately after the outcome of the Geneva discussions on what is effectively the mid-term review of the Uruguay round of GATT, and also because it came immediately after the completion of the price negotiations. I was able to tell my American counterpart that, through the price review, we have fully met the commitments that we have undertaken in the Geneva round of discussions. The stabilisers have been honoured. In fact, we have taken the process of reform further in some directions, and the outcome is totally consistent with our position in GATT. For that reason it was welcomed in the United States. Certainly the atmosphere this year is very different from what it was last year. I hope that we will now be able to work constructively together on the latest stages of the GATT Uruguay round.
I assure my right hon. Friend that what he has achieved, particularly in relation to MCAs and the milk co-responsibility levy, will be enormously welcomed by the agricultural community, some sections of which are extremely hard pressed at present. However, can he give some indication of the timetable he expects—I know it is difficult to predict in Common Market negotiations—in relation to the review of milk quotas and also for the final removal of the co-responsibility levy?
This year we have done well with the timetable, because we have reached decisions rather earlier than usual. We will be getting a review of the functioning of the milk quota system by the end of July. I will certainly be pressing for early action to follow up proposals that I hope will be made. We have a commitment to make further progress next year on the co-responsibility levy on milk, and I assure my right hon. Friend that I share his view. One of my main objectives next year will be to make much further progress on this levy; I should like it removed altogether.
Regarding my right hon. Friend's point on MCAs, I think it is worth giving relevant figures to the House, because they demonstrate the substantial progress made in removing the unfair competition elements that existed in the last two years through the MCA system for our farmers.
Let us compare the figures for February 1987 with today's figures. In crops, the negative MCAs have dropped from minus 32·8 to minus 2·6. In milk they have dropped from minus 31 to minus 1·8. In eggs and poultry they have dropped from minus 28·3 to nil. In pigmeat they have dropped from minus 27·2 to nil. In beef they have dropped from minus 24·5 to nil. We have taken a major step forward in ensuring fair competition for our farmers.
May I thank the Minister for looking after the interests of dairy and beef farmers? Can he give an assurance that, in the next round of negotiations, he will look after the interests of sheep farmers?
Having said that, I am afraid that the majority of those involved in agriculture will not consider this a very good settlement. The Minister mentioned a figure of £155 million. I am sure that he is aware that the industry now pays £800 million in basic interest rates and borrows £6,450 million, the highest amount ever. Will he give an assurance that he will do all that he can to help agriculture in its fight to put an end to the disastrous effects of high interest rates? Finally, will he tell us whether the £155 million that he mentioned is net or gross profit?
As the hon. Gentleman will realise, the price negotiations were about the price negotiations and not about anything else.
I know of the hon. Gentleman's concern about sheepmeat. The review of the sheepmeat regime is still ahead of us: I have often told the House that I expect this to be a long and difficult negotiation, and I now believe that it will be even longer than I thought. Meanwhile, I am sure that the hon. Gentleman will be pleased to learn that, as a result of decisions that we made last week, there will be an improvement in the sheepmeat sector of 4·3 points in the 1989–90 marketing year as a result of the green rate changes. That is a significant improvement, and I hope that the hon. Gentleman will agree that this negotiation has helped in that respect.
Finally, let me answer the hon. Gentleman's question about the figures. The £155 million is net for a full year, after account has been taken of the effect on feed. We calculate, however, that dairy producers' incomes will increase by another £20 million as a result of the changes in the milk co-responsibility levy.
Will my right hon. Friend confirm that a co-responsibility levy is wholly incompatible with a quota system? Will he say whether all producers will pay only 1 per cent. up to the first 60,000 kg of production, or whether some will pay 1·5 per cent? Will he also pay some attention to not allowing the principle of differentiation between the small and the larger farmer to become too widespread?
I shall go further than my hon. Friend and say that I do not consider the co-responsibility levy system appropriate in the context of CAP reform as a whole. I think that we should be tackling it in other ways, and I am therefore eager to find any way of obtaining support for reducing and eliminating the system. We made big progress this year: for the first time, other Ministers are coming in behind the argument that I have been pushing ever since I became a member of the Council.
The first 60,000 kg in the milk co-responsibility levy is for small producers with a quota of less than that amount. Those with a quota above that will pay the full 1·5 per cent. I thought that quite hard last week; it seemed to me wrong to give preferential treatment to the small producers, of whom we tend not to have very many. It also seems wrong—I think that this is what my hon. Friend had in mind —as a general approach to CAP reform. I nearly obtained majority support but not quite, and I thought it better to settle for this now—because it was the first major step in dealing with the co-responsibility levy—knowing that we would come back to it next year.
Hon. Members representing constituencies where dairy farmers are in the less-favoured areas will find it worth noting that the LFA change—a nil co-responsibility levy—will affect some 25 per cent. of our dairy producers.
The Minister referred to the north American drought and its effect on Community prices. Does he accept that perhaps that drought has a good deal to do with the destruction of rain forests in central America and Amazonia—that is a climatologist's opinion and not mine? Will he put on the agenda of the next Council meeting the import from unsustainable sources of woods such as mahogany on which I have received frankly helpful answers from the Parliamentary Secretary? Does the Minister recognise that it is a European matter and not simply a British one?
As it happens, I have come to the House straight from the global climatology seminar in another place. I certainly take a very great interest in these matters and I hope that the Council will be able to discuss them. We have been discussing them informally, but I hope that we will be able to discuss formally in the Council the implications for Community agriculture and forestry, among other matters. The hon. Gentleman may know that we are in the final stages of agreeing a Community forestry programme which will also be helpful. The weight of evidence and scientific opinion about the north American drought this year is that it is not yet linked to the longer-term effects. Nevertheless, I agree with the hon. Gentleman that the global climatology issues will very much affect agriculture, and need to be discussed.
While the Minister has made the farmers very happy, does he agree that it is an abuse of the EEC pricing system to consider proposals for 36 separate green currency changes at a net cost to the Community of less than nothing, which will mean that the entire cost of the extra price will go to the consumer and less than nothing, according to the figures, to the EEC? Is it not simply an accountancy fiddle to help keep the Community's expenditure within the spending limits? Does he have any proposals to bring down the surplus production of food, which is costing taxpayers throughout Europe more than £200 million a week to dump and destroy?
I know that my hon. Friend felt that the February 1988 reforms would not bite and did not have much impact, but he should recognise the progress that has already been made. One cannot change everything overnight, and it is important that we carry through internationally CAP agricultural reforms in dealing with subsidies and surpluses. I hope that my hon. Friend will notice the progress that has already been made. It is not an accountancy fiddle. The figures are quite clear; they show that, as a result of last week's negotiations, on current forecasts we will be £700 million below the ceiling in 1988 and 1·9 billion ecu below it in 1989. Those are real figures and they demonstrate the real progress that has been made. At the same time, I hope that my hon. Friend will accept that the green currency changes were absolutely right, because United Kingdom farmers were being disadvantaged. That is why that was one of my prime objectives in the negotiations.
The Minister says that he cannot deal with the problem overnight, but the Government have been at it for 10 years. The Prime Minister sticks up an Agriculture Minister about once every two years and then she sacks him. We have an annual farce when the Minister tells us he has got a good deal. How much of the money will end up in farm workers' pockets? How much will end up in the pockets of the godfathers? No doubt one of these years the Minister will be telling us that they have given the Mafia a seat at the table.
In the past year, we have made considerable savings, for which I have given the figures. We have, quite rightly, improved farm incomes as a result of the green currency changes for United Kingdom farmers. That will work throughout the farming system and be of benefit to it. It has an absolutely negligible effect on consumers. The hon. Gentleman referred to other elements—
I have already dealt with that in saying that the measures will work through the farming system.
One of the other issues that I raised in the Council is fraud. I believe that we are now getting down to detailed proposals which will enable us to take more and more action on that front. The hon. Gentleman knows that I agree with him on that, and I hope that he will allow that we are making considerable progress.
I congratulate my right hon. Friend on the package and on the great effort he has made on the monetary compensatory amounts. He needs no reminding from me that few, if any, cereal farmers in East Anglia made any profits last year. Does he agree that it is important that probably the best cereal farmers in the world are allowed to make a living, not only for their own sakes, but for the sake of the people they employ, who have just been mentioned by the hon. Member for Bolsover (Mr. Skinner)? The workers' livelihoods depend on sound agriculture, just as much as those of the farmers, and the many rural industries that depend on cereal farmers for their incomes.
Of course I agree with my hon. Friend. We are neighbours and share the same problems. My hon. Friend will acknowledge that, in our part of the world, we have had bad harvests in the past two years, which have had a considerable impact on the incomes of cereal farmers. We must hope that that does not happen a third time. There is not much doubt that I could not have achieved more this year in the price negotiations for cereal farmers. Their relative position has changed considerably.
Sugar is the other major concern that my hon. Friend probably has in mind. It is important to take into account all the factors involved, including, of course, the green pound changes; that means that returns to United Kingdom growers and beet processors will rise by about 2 per cent. after the effect on levies and the devaluation of the green pound are taken into account—even after the price reduction.
While welcoming the green pound devaluation, I regret that it has taken 10 years to reach even this stage, and that the differentials have not yet been eliminated. How will the Minister's package measure up to the needs of an industry facing rising costs, not the least of which is the 5 per cent. interest rise of last year? I estimate that it will cost the industry at least twice as much as any improvements in this package. Are we, yet again, facing the problem of too little, too late for the industry?
It is not 10 years, but two years. I gave the hon. Gentleman the figures for two years ago. He will see that the monetary compensatory amounts are negligible in two sectors and that in three other sectors there is a nil MCA. That is a considerable improvement. I hope that the £155 million improvement in farm incomes negotiated as a result of this deal will be helpful to farmers. It is important to bear in mind also that we are talking about support prices. The returns to farmers could be higher than that, depending on the market. We have been discussing only the support prices themselves.
Will my right hon. Friend accept that this is the news that our dairy and livestock farmers have deserved for a long time, especially the news on the MCAs and the co-responsibility levy? When it comes to the review of quotas and their transfer, will my right hon. Friend carefully consider the difficulties of young farmers and new entrants to the industry?
I am grateful to my hon. Friend. In his second question he raises one of the major difficulties of any quota system. I have made it clear to our farming industry that, if there is a general consensus about one or two of the possibilities that might help to deal with that —the siphoning of milk quotas is one of the most obvious —I should be happy to consider them. There is no consensus at present, and it is difficult to see a way of helping some of the new entrants into dairy farming. That is, unfortunately, one of the consequences of a quota system.
While the Minister says smugly that he gest a fair deal for farmers—although he admits that there will be a price rise for the ordinary consumer—is he doing any work in the Cabinet to try to unfreeze child benefit, which was debated earlier in the week? Many consumers will be aware of the priorities he has exhibited today. Does he accept that more than £1,000 million will be spent on propping up the Common Market this year and next year—and no doubt for many years after?
Can the right hon. Gentleman tell us whether more or less than 70 per cent. of total EC income will go on the CAP, or has he not yet made that calculation? Does he accept that it is lame to come to the House after 10 years of Tory Government and discover that over £6,500 million is being cheated out of CAP funds by fraud? When is he going to do something about it and catch the crooks?
The hon. Gentleman bandies about figures without knowing what he is talking about. By definition, one cannot know the precise figures on fraud, but I am almost certain that the figures that he has quoted are way, way above what the figures are likely to be. Nevertheless, any loss of taxpayers' money through fraud is highly reprehensible; that is why I have taken the fraud issue so seriously. I have already made it clear that the effect of the review on consumers is one twentieth of 1 per cent. and it will have a negligible effect on improving the prospects of our farmers. The proportion of Community expenditure which is spent on CAP is less than 70 per cent.
Can I thank my right hon. Friend for his vigorous and effective negotiating in the interest of the whole of the United Kingdom, not just one section of it? On specifics, is it not the case that the cost of the reduction in the co-responsibility levy has been met by the reduction in cost of storing surplus butter? In view of the dramatic increase in costs, including interest costs, why is it therefore necessary to reduce by 2 per cent. the support price—the intervention price—for butter?
I am grateful to my hon. Friend for what he has just said. The reason for the 2 per cent. reduction in the intervention price is that it was important that that decision was budget-neutral, and the reason for that is that, despite all the reforms that we have carried through, the dairy sector is, at the moment, still the most expensive sector in the Community and as it is still expensive, it is necessary to have a eye to costs. Nevertheless, I expect that now that we have reduced the butter mountains and the skimmed milk powder mountains, our expenditure on that will work its way through the system and the dairy sector will then become less expensive than it is now.
The Minister has already said that he expects that negotiations on the sheepmeat regime will be long and difficult, but will he assure the House that he is aware of the importance of the timing of any such changes and of the disruption and the dislocation that could be caused to the marketing year both from the uncertainty about when such changes will be introduced and about what would happen if they were introduced at the wrong time in the marketing year?
May I join in the congratulations to my right hon. Friend on his outstanding success over the co-responsibility levy and the green pound? Bearing in mind the uncertainty in the livestock industry, especially in hill areas, will he do everything possible this summer to ensure that an increase in the suckler cow subsidy is as high as possible?
I am grateful to my hon. Friend for his remarks on the price negotiations. I am aware of the feelings that he and others like him have about the suckler cow premium and I shall certainly make an announcement about that before 15 June, which is the deadline by which that announcement is required.
This is an excellent package, and I should like to add my congratulations to my right hon. Friend and to reassure his doubters that the money will find its way right through the system, be it to the farm workers or to the bank managers. I welcome my right hon. Friend's remarks about the co-responsibility levy on dairy produce but having negated that, will he turn his attention to the cereals co-responsibility levy which has encouraged cereals farmers to produce more rather than less, and which is the most worthless tax that there has ever been?
I totally share my hon. Friend's views about the cereals co-responsibility levy. I have been repeating such remarks ad nauseam in the Council since we have had the co-responsibility levy. I did it again this year, and we achieved one improvement, in that the Commission is now committed to looking at the administration of the cereals co-responsibility levy. I assure my hon. Friend that I intend to build on that.
It was clear this year that, for the first time, we were getting growing support for our attacks on the milk co-responsibility levy. It seemed right to build on that and to secure results on that this year, not least because it means that the Council has now committed itself to phasing out one of the co-responsibility levies. The Council has now begun to recognise the principal arguments against the principle of the co-responsibility levy.
My right hon. Friend will agree that producers, particularly the hard-pressed cereals producers, will want to know what effect this will have on prices for the coming year. Can he give a forecast of what he expects the price increase will be? While I am glad to hear him restating his opposition to the co-responsibility levy, may I ask him to explain how that squares with his support for stabilising penalties?
My hon. Friend will know that it is not possible at this stage to predict what market prices will be this year because, being market prices, they will depend on a whole range of market factors. But the fact that MCAs now on cereals in this country are minus 2·6 per cent., compared with minus 32 per cent. only two years ago, is a major contribution that this price review has made, in addition to the improvement in crop support prices as a result of the green rate changes.
As for his question about stabilisers, my hon. Friend and I have had battles on that issue in the past. It is essential for the future stability of our cereal farmers that we get on top of the surpluses and ensure that the cereals sector does not absorb ever-rising amounts of taxpayers' expenditure. That is the point of the stabiliser. I believe that the mechanism of the stabiliser on support prices was the right way to tackle it and that it should not have been encumbered by a co-responsibility levy as well. That is why I am endeavouring to get rid of that.
Will my right hon. Friend be not deflected from the excellent work that he is now doing by the unholy alliance in this House represented by my hon. Friend the Member for Southend, East (Mr. Taylor) and the hon. Member for Bolsover (Mr. Skinner)? Will he carry on in the reforming way in which he has approached these matters? Will he accept congratulations, given the squeeze on farm incomes, for the extra £155 million that our farmers will gain from this settlement, and in particular for the pending abolition of the co-responsibility levy on milk, which will mean a tremendous amount to milk producers in the south-west of England?
My hon. Friend is right about the important step that has been taken in the Council for many south-west of England dairy farmers. For many of them in the less-favoured areas there will be no co-responsibility levy on milk from now on. That is an important step forward and I am grateful to my hon. Friend for his comments—[Interruption.] I am sure that the whole of agriculture will have noticed the frivolity with which Opposition Members treat these matters—[HON. MEMBERS: "No."]—the frivolity on the Opposition Back Benches, compared with the serious approach and questions that have been asked by my hon. Friends.
What is the anticipated impact of green pound devaluation on the competitive basis of United Kingdom producers in relation to EC producers, and why has the marketing year been changed?
I am glad to say that, as a result of action even earlier than these price negotiations, we managed to secure a nil MCA in the pigmeat sector, so that it is now in a fair and competitive situation. The change in the marketing year is a sensible move designed to bring it into line with the starting date of the marketing year for the cereals sector, given that cereals play a prominent part in the costs of the pigmeat sector in terms of feed costs and so on.
Will my right hon. Friend accept the thanks of farmers in my area for his sterling work on the green pound in particular and on the co-responsibility levy? Will he continue to bear in mind the problems of young milk producers such as my constituent, Mr. Derek Lomax?
I assure my hon. Friend that I recognise the problems and discuss them often with the farming community. There is a general recognition in the farming community of the problem and an acceptance that this is one of the inevitable penalties of a quota system. On the other hand, there are divided views on how it should be tackled. At every meeting that I have been to, when I have tried to see if there was a majority view, it was difficult to find one. Siphoning offers the best prospect but, as my hon. Friend will know, many in the farming community are not in favour of that.
I too should like to congratulate my right hon. Friend on his considerable achievements in pushing the British argument in Europe. May I now exhort my right hon. Friend to use his considerable powers of persuasion to influence his colleagues in Europe to phase out intervention, which is carried on at horrific cost, which is wide open to abuse and which is of doubtful benefit to producers or the customers they serve? Undoubtedly, the money could be used to much better effect if it was channelled more directly to farmers.
I agree with my hon. Friend that we should try to bring intervention back to its original objective as an ultimate safety net and not as an alternative market outlet. We are making progress, because two modest further steps towards that end were taken this year, in relation to the intervention period and the monthly increments.
My right hon. Friend's achievements will be particularly appreciated by Pembrokeshire beef and dairy farmers, whose income has been depressed in recent years. Will my right hon. Friend do one further thing for them? Will he continue to press for an increase in the 90-steer headage limit, which would be greatly appreciated?
As my hon. Friend knows, we had a major battle on that last year, culminating in the Agriculture Council in January. I managed to negotiate the steer headage limit up from the original proposal, which was well below the limit of 90 that we eventually achieved. I will obviously come back to the charge on this, but it is one area where I am in a minority, not quite of one but nearly, so it will be a major battle to get any improvement.
May I congratulate my right hon. Friend on his tenacity at the negotiating table? When he begins the important review of the milk quota system, will he put the transferability of quotas high on the agenda? Bearing in mind the effects of last year's drought on world prices, has not enough been saved in export subsidies to abolish the irrelevant milk co-responsibility levy altogether in 1991?
I am working to get the milk co-responsibility levy abolished. Ideally, I should like to see that happen next year; certainly I hope that we shall make progress on it next year. On transferability, I have been arguing for some time that we need greater flexibility. I can assure my hon. Friend that I have already told the Commission that I hope that it will come forward with proposals on that in the study to which it is now committed.
I congratulate my right hon. Friend on the package that he has negotiated, which will be welcomed very much by west Lancashire farmers. In the light of the fact that the British farmer will have a greater competitive edge than in the past, will my right hon. Friend be very vigilant in looking for hidden subsidies that are developed by foreign farmers and producers, particularly as we have seen in relation to gas for the Dutch tomato industry? It appears that the Dutch potato processing industry is benefiting in the same way.
We are always vigilant in pursuing any issues where it looks as though there are unfair state aids. I have to put the emphasis on "unfair" because some aids are permitted within the system and we make use of them ourselves. I can assure my hon. Friend that we are vigilant where there is evidence of unfair aid. We take that up with the Commission because the prime responsibility for dealing with it lies with the Commission.
I offer my congratulations and those of dairy farmers in my constituency to my right hon. Friend. In sorting out the insecurity of the future, will my right hon. Friend's Department hurry up in making a decision about green-top milk? Many of the dairy farmers in my constituency who are involved in this area—who wonder why people are allowed to buy cigarettes and possibly catch cancer—will have nothing to do in future if green-top milk is not available.
Without going into the issues today, I can tell my hon. Friend that we have been receiving responses to our consultation document. We shall be assessing those responses carefully and in due course we shall make a statement about our position.
I shall take one question from the hon. Member for Newham, North-West (Mr. Banks) to represent the consumer, in the place of the hon. Member for Pembroke (Mr. Bennett).
You are a toff, Mr. Speaker.
I say to the Secretary of State that what the farmers of Newham want to know is, how many of his right hon. and hon. Friends sitting behind him have personally benefited from what he has been able to negotiate? Does he not think that in future it would be far better if Conservative Members declared an interest before they asked a question?
That indicates how deeply involved the hon. Gentleman is in these matters.
I am certain that the farmers of Newham would applaud the fact that we have done a greal deal this year to put the United Kingdom farmer on a completely competitive basis. I should have thought that the whole House and the whole country would welcome that.