Common Agricultural Policy

Part of the debate – in the House of Commons at 6:28 pm on 21 May 1998.

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Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge 6:28, 21 May 1998

I am very pleased to have the opportunity of speaking in this debate. I congratulate my right hon. Friend the Minister of Agriculture, Fisheries and Food on the progress that he has made in having the Northern Ireland beef ban lifted, and on the database scheme for all animals born after 1996 in the United Kingdom. Those developments represent huge progress, and belie the final remark made by the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) on the Government's performance in the European Union presidency.

Tremendous progress has been made, and I know that my right hon. Friend will continue to make such progress. Common agricultural policy reform is one of the Government's priorities, and I am pleased that it has the Government's backing.

Agenda 2000 is preparing the European Union for enlargement to the east, and to deal with pressure in the World Trade Organisation to liberalise European agriculture. Enlargement is desirable, and it is vital that the states of central and eastern Europe are brought into the European Union. If they are not, the likely result will be economic, political and, potentially, military instability.

Enlargement will bring two problems, the first of which is institutional design. There is growing criticism of using the same institutions to govern 20 or more member states as were used in governance of the original six member states.

Although the institutional issue has never really been comprehensively addressed, I think that the budgetary implications of enlargement are more immediate and urgent. Because of the Maastricht convergence criteria, the European Union budget will not expand significantly after enlargement, thereby putting pressure on the major item of European Union expenditure—the common agricultural policy.

I do not think that anyone would quarrel with the policy goals—which I have re-examined—incorporated into the treaty of Rome: a fair standard of living for farmers, reasonable prices for consumers, and creation and fostering of stable markets for agricultural commodities. However, the mechanism by which those goals were to be achieved is ineffective. It is certainly outdated.

The mechanism is essentially Commission central planning within a market structure. Wholesale price floors and ceilings have been established for a range of commodities. The European Union purchases intervention stock if the market price falls below the floor, and it pays export subsidies to producers when the market price rises above the ceiling. Although I am critical now of the mechanism, initially it was successful, and the sector moved into structural surplus in the 1970s.

The common agricultural policy transformed the European Community from a net importer to a net exporter, which was crucial to achieving the goals of European security and economic recovery. However, by the end of 1990, despite the export subsidy regime, there were 14.4 million tonnes of cereals, 600,000 tonnes of dairy produce and 530,000 tonnes of beef in public intervention storage. Spending on the CAP doubled in real terms between the mid-1970s the mid-1980s. Even the extra expenditure was not sufficient to control the overproduction that was inherent within the system.

Market price support is a highly inefficient way for Governments to give aid to a sector of the economy. Such support requires, among other things, very large and unpredictable levels of Government expenditure, while offering no way of ensuring that the most needy farmers receive the most subsidy. I hope that, in our presidency of the European Union, we will address that issue, which is one of the most important principles of social justice.