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Mr. Marlow: The hon. Gentleman says that he wants to do away with production subsidies. Does he count area payments for arable farmers as production subsidies? If he does, and he is to do away with them, what agriculture support will he offer in the arable area?
Mr. Morley: Area payments are a negative use of public money. I do not think that they are efficient. Indeed, they do not meet the hon. Gentleman's criteria. He was talking about money going to large farms instead of small farms, but the area aid system works against that.
I know that there are arguments both for and against modulation, as it is called, but the hon. Gentleman says that he wants more support for small farmers, and the present system of arable aid payments will not achieve that. We want a support system that is based on giving farmers the opportunity to opt into various environmental support and management programmes--and, of course, an extension of the existing environmentally sensitive area schemes, which we have long supported. We believe that they have a very useful role to play.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Tony Baldry):
I am genuinely grateful to my hon. Friend the Member for Northampton, North (Mr. Marlow) for giving the House an opportunity to debate the important issues surrounding the common agricultural policy. We have had a thoughtful and informed debate, in which constructive speeches have been made by hon. Members on both sides of the House, and a range of philosophical approaches to both agriculture and Europe have been aired.
The current common agricultural policy has few supporters in this country. It attracts much criticism. It costs taxpayers a great deal of money; it raises food prices for consumers, albeit not by as much as is sometimes claimed; it is vulnerable to fraud; and it imposes a number of bureaucratic restrictions and controls on farmers that increasingly limit their initiative. It disadvantages both our farming industry and the food industry that relies on its products.
For those reasons, we have long pressed for reform of the CAP. There has been some progress. First, owing largely to United Kingdom pressure, a ceiling on CAP spending has been in place since 1988, and only unanimity can alter it. That single change has helped the proportion of the EU's budget that is spent on agriculture to fall from nearly 70 per cent. in the late 1980s to 50 per cent. now.
Secondly, in 1992, CAP reforms dramatically reduced cereal and beef support prices, and reduced the reliance on intervention as a market management mechanism. Those changes have contributed to the almost complete elimination of the food mountains of the past. Intervention stocks of frozen beef in the EU stood at nearly 1 million tonnes early in 1993, and are now down to a minimal
12,000 tonnes. Intervention stocks of cereals in the EU totalled nearly 32 million tonnes two years ago; the total last month was under 5 million tonnes.
Thirdly, and most important for the future, the United Kingdom played a major part in ensuring a successful conclusion to the GATT Uruguay round negotiations, including a far-reaching agreement on agriculture. That agreement set world agricultural trade on a liberalising course, and paved the way for further market-led reforms of the CAP.
Fourthly, the United Kingdom has argued strongly and successfully for better controls on CAP fraud and financial mismanagement. We have secured the adoption of several tough pieces of legislation, including the CAP "blacklist" regulation. There has also been a 50 per cent. increase in the reporting of irregularities, and much tougher action by the Commission--in the form of disallowance of spending--when member states' controls are found to be inadequate. That is extremely welcome.
The United Kingdom is leading the debate in Europe on CAP reform. The report of the CAP review group has been widely read throughout Europe. We have set out our aims clearly in the rural White Paper, published in October. Our overriding objective is to secure an efficient, prosperous, competitive and outward-looking agriculture that can operate and compete in increasingly open world markets, providing high-quality raw materials at competitive prices and paying due regard to the environment.
I do not think that there can be any dispute with our aims. In the discussions that I have held with farmers and their representatives, there is a basic and general recognition that the CAP is bound to change, and that their interests--all our interests--lie in a more open, market-oriented policy in which UK farmers, because of their efficiency and competitiveness, will be in a strong position to do well.
Many farmers are understandably concerned about the number of bureaucratic controls that now seem to be part and parcel of the CAP. Some of those controls are necessary to protect public money and reduce the opportunity for fraud; others are there because of artifical constraints on production, and are more difficult to defend. Creating the conditions in which quotas, set-aside and other supply controls can be removed will lift a major burden of bureaucracy from our farming industry.
In our view, that must be the way forward. It will mean continuing the process of progressively reducing production-related support, bringing EU support much closer to world market levels. That would substantially reduce the economic costs of the policy, and allow the eventual abolition of supply controls.
It does not mean renationalising the CAP; nor can radical changes in policy be introduced overnight. Reform must be introduced steadily, at a pace with which farmers can reasonably be expected to cope, and it must be Europewide. It will be no less important under a reformed CAP than it is now to ensure that member states cannot give their farmers national subsidies to snatch illicit competitive advantage: a level playing field is an imperative.
We do not seek to do away with a common policy for agriculture in the European Union. That would not be in our interests. It is also clear that cuts in production-related support will not be negotiable without some compensation
for the farmers who are affected. Our aim will be to ensure that such compensation is fully uncoupled from production, is time-limited, and does not discriminate against United Kingdom farmers.
Mrs. Gorman:
Does my hon. Friend agree that absent from this feast of information about the CAP is any mention of our urban population, whose taxes are paying for all this? Because of the CAP's inefficiency, they are being forced to pay through the nose for their food, to the tune of around £25 a week. Is that not a disgrace?
Mr. Baldry:
My hon. Friend clearly was not listening to what I said at the beginning of my speech. I said that the CAP had few supporters in this country, that it cost taxpayers a great deal of money, and that it disadvantaged both our farming industry and consumers--and that, for those reasons, we had long pressed for its reform, which we intend to secure.
A reformed CAP will also need to place more emphasis on environmental concerns, although we must always remember that the primary purpose of farming is food production. The 1992 reforms introduced several important environmental elements, most in response to United Kingdom pressure. Future reforms will need to build on those, reflecting the importance that the public attach to the conservation and enhancement of our farmed environment. Such a package of reforms is coherent and logical, and the right way forward.
Alas, our approach is not yet universally shared by other member states, many of which are broadly happy with the way in which the CAP operates at present and would prefer to consider that the 1992 reforms were upheaval enough. It is, however, becoming increasingly clear that, as we move towards the 21st century, pressures for change will intensify.
The EU's existing GATT ceilings on subsidised exports will exert pressure on the policy, and without reform, growing surpluses could again begin to emerge. The next round of negotiations in the World Trade Organisation, which are due to start in 1999 and are designed to take further the process of trade liberalisation and subsidy reduction, will increase those pressures.
The forthcoming enlargement of the EU to include the countries of central and eastern Europe will also be an important factor. Extending the current CAP to those countries would be prohibitively expensive for the EC budget, and would further increase the danger of growing surpluses; it would also be contrary to the interests of the aspirant countries, whose economies could not afford the high prices and economic distortions associated with the CAP.
Against that background, I welcome the European Commission's new report on agriculture and the accession of the central and eastern European countries to the EU. That report is to be presented to the European Council in Madrid later this month.
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