§ The Minister of Agriculture, Fisheries and Food (Mr. Joseph Godber)
I should like to make a statement on the meeting of the Council of Ministers in Brussels this week.
The Council of Agriculture Ministers at its meeting on 19th and 20th November held a first exchange of views on the Commission's proposals for the improvement of the common agricultural policy. There were, naturally, differences of emphasis and approach between Ministers, but substantial support for the general aims of the review—to contain expenditure and consumer prices; to improve the balance of supply and demand and reduce surpluses; and to simplify the support system and improve financial control. The Commission's proposals will now be the subject of detailed study in the Special Agricultural Committee followed by fuller consideration by the Council of Ministers.
The Council also agreed on the framework of a directive on aids for farming in mountain and other less favoured areas. The main lines of this directive follow broadly the forms of support covered by our own arrangements for help in the hill farming areas. As the House knows, these mainly take the form of subsidies for beef cattle and sheep production in the hills, and there are also special rates of capital grant for hill land improvement. These will be covered under the criteria of the new draft directive.
The directive also provides that dairy cattle in the true mountain areas shall 1563 receive aid on the same terms as beef cattle. In the lower hill and less favoured regions payments for dairy cows will be restricted to 10 cows in each herd and at a rate of not more than 80 per cent. of that given for beef cattle. All these aids will be applicable at the discretion of each member State. The specific areas in which it is proposed to apply them will be designated by the member States and will be subject to approval by the European Commission and the Council of Ministers.
These payments will be subject to a contribution from Community funds, the actual rate of which will be determined only after a clear indication of the total cost can be established once the areas have been defined. The intention, however, is that these contributions should be not less than 25 per cent. and not more than 50 per cent. for livestock and should be 25 per cent. of the cost of aid for improvements under development plans. The remaining cost will be borne by each individual member State. Final confirmation of the directive will only take place once the areas have been defined.
The general effect of these decisions is that they confirm the ability of the United Kingdom Government to continue paying grants and subsidies on the broad lines at present in force for hill areas, and when the directive has come into force the cost of these will be reimbursed in part from FEOGA funds. This is an important reassurance to our hill farmers and a confirmation of the undertaking which the Government have always given that we would seek freedom to continue within the Community to give a comparable degree of support to our hill farmers to that which has previously been provided.
The Council meeting, which was a lengthy one, also discussed a number of other matters ranging from olive oil to alcohol.
§ Mr. Shore
The Minister will know that we understand that this is only the preliminary or first exchange on the most important matter of the possible reform of the common agricultural policy. However, does he not agree that the opening statements really constitute a thoroughly bad start to this most important matter which has to be reviewed and, we hope, 1564 fundamentally reformed? Is it not the case that the basic features of the CAP—self-sufficiency, Community preference, and the mechanisms of the levy, other intervention buying and so on—are to be continued and that he and other Ministers on the Council have agreed to these fundamental features continuing? Is not the result that the framework of the discussions is pre-set by these continued assumptions and, therefore, that the possibilities of change are very small and very limited?
To bring the matter out more clearly, can the right hon. Gentleman say whether he himself has made any proposals at this stage for withdrawing certain commodities from the coverage of the CAP? Has he taken an initiative, for example, in the case of sugar and that of rice—which are two wholly inappropriate commodities to be covered by the CAP—to withdraw them in the future from the coverage of the CAP? Has he at this vital preliminary stage raised the question of the financing of the CAP which lays such a disproportionately heavy burden on the British taxpayer?
Turning to hill farming, on which there has been more progress, I think that we all share the right hon. Gentleman's sense of disappointment at his inability to get the Community to accept, as I understood was his objective, the Community financing of hill farming for beef cattle and so on, and his failure to limit the new scheme so that it excluded dairy cattle, which apparently it now does.
In relation to the hill farming scheme, can the right hon. Gentleman say whether there is any net benefit to Britain which will come to us arising out of these arrangements?
§ Mr. Godber
Dealing with the right hon. Gentleman's first points, I do not agree that this was a bad start to our discussions. The discussions will cover a very wide range and take a considerable time. It is much too early to say whether the result will be as good as some people hope or as bad as some people fear. I believe that there are reasonable prospects of getting significant changes of emphasis. We have always said that we accepted the principles of the CAP, as the Opposition did when they were in power. For that reason it is not appropriate to take the right hon. Gentleman's analysis as being correct.
1565 The withdrawal of particular commodities from the CAP certainly has not been raised. It would not be appropriate at this stage. But at any time when it would seem appropriate to consider any particular commodities in this way I shall not be opposed to doing so. However, I do not accept the right hon. Gentleman's definition regarding the two commodities that he mentioned.
I must correct the right hon. Gentleman on one point about hill farming. We never expected the full cost of our hill subsidies to be borne by FEOGA funds. It has always been accepted that the FEOGA contribution would be a percentage towards that cost. At the moment no decision has been taken except that the range will be between 25 and 50 per cent. The main anticipation is that it will be about 25 per cent. It will depend on the result of the final schemes put before the Commission and the total estimate of the cost. I am sure that the right hon. Gentleman will welcome the fact that in this way the Council is keeping control over the cost so that it should not get out of hand.
In the fully mountain areas dairy cattle will be included, and there will be the inclusion of small herds in the lower hill areas. But for the mountain areas, in particular, practically all these cattle are not involved in FEOGA contributions because their milk is used for cheese production, which does not figure in the support arrangements.
§ Mr. Charles Morrison
My right hon. Friend's statement will be of great encouragement to hill farmers and should be welcome to consumers as well because they will benefit from the increased production which will result. When does he expect these arrangements to operate? Will he confirm that existing hill subsidies will continue in the meanwhile and that all the areas in the United Kingdom which are currently eligible for hill subsidy will be eligible in the EEC scheme?
§ Mr. Godber
Yes. I certainly confirm that there will be no gap between the continuation of our existing schemes and the provisions under the new draft directive when it comes into force. It is difficult to say precisely when it will come into force, because each country has to submit its own areas, which have to be 1566 approved by the Commission, and the Council then has to consider the total cost. Therefore, it would be unwise to attempt at this point to give a firm date. I assure my hon. Friend that the existing arrangements will continue in full until any Community arrangements are brought in. Our hill farmers may be assured that there will be continuing support for them whether provided from national funds or supported in part by Community funds.
§ Mr. Maclennan
Will the right hon. Gentleman confirm, as has been reported, that the special position of crofting grants was considered and that it has been secured? Secondly, will the existing levels of upland grant be maintained? Is it likely, as a result of the decision that has been taken about milk, that the Government will review their policy of not enabling the winter keep scheme, for example, to apply to milk farmers?
§ Mr. Godber
Existing schemes, such as the winter keep scheme, will continue to apply to the types of farm which already benefit from them. Regarding any of our dairy herds which might conform to the new proposals, we shall have to look at particular aspects, like winter keep, to see the extent to which they could conform. Much will depend on the exact terms of the directive, which has not yet been finalised.
The crofters' position was specifically raised by me with the Council of Ministers. This matter is not directly covered in the terms of the directive, but my statement about it was accepted by the Community, so we can continue with our present arrangements. We shall continue grants for crofters, so there is no risk for them in this regard. No time limit has been set, but the review as a whole is normally done on a five-year basis, and we can continue thereafter. The totality of the areas concerned is subject to revision and consideration by the Commission, but there is no reason to suppose that the whole of our areas will not continue to qualify.
§ Mr. Godber
I have not seen the report to which my hon. Friend refers. I mentioned that olive oil was discussed. The proposal is that out of a total Italian production of about 400,000 tons of olive oil arrangements should be made for stockpiling in the early part of the season. This is to ensure that a correct record is kept so that there can be no question of abuse of FEOGA funds. I hope that my hon. Friend will welcome that proposal.
§ Mr. Mackie
The Minister knows only too well the difficulty that was experienced in defining areas in this country. Are there to be any common criteria between countries on defining areas?
§ Mr. Godber
The criteria in general have been laid down for the types of animal which will qualify. Mountainous areas are specified as being above 600 metres. Other areas are laid down in general terms in the articles, but each country will submit areas which will be examined by the Commission according to the criteria. I understand that all our areas would properly come within those terms.
§ Mr. Marten
Was the proposal to tax farmers on surplus milk raised? If so, was my right hon. Friend's view expressed to the Council of Ministers?
§ Mr. Godber
This matter was mentioned, although only in general terms because we had what approximated to a First Reading debate on these matters. I 1568 made the United Kingdom Government's position quite clear; namely, that we thought that a general tax on all milk production was so similar to a reduction in price that it would be more straightforward to have a reduction in price. Concerning the proposal for a tax on milk products going from dairies into intervention, there is a strong case for some form of tax as a direct discouragement to the production of surpluses.
§ Mr. Godber
I cannot give any particular figure to the right hon. Gentleman of the upward or downward effect on costs, but there will be no immediate effect of any kind as a result of these proposals. What is of importance is the longer-term position and I hope that this will be helpful.