Select Committee on Agriculture Minutes of Evidence


Examination of Witness (Questions 20 - 39)

TUESDAY 23 MAY 2000

RT HON NICHOLAS BROWN, MP

Mr Paterson

  20. You mentioned getting nearer the market. What lessons could British and European agriculture learn from the New Zealand experience?
  (Mr Brown) Certainly in the dairy sector there is a lot to be gleaned from the New Zealand experience. The core question is life without quota. In other words, should the dairy regime be reformed in the European Union and the quota system phased out as has happened in New Zealand or should we continue with the current European model and, as the Committee knows, the present model in the European Union was introduced in the early 1980s as a temporary expedient and it is still with us now. I think the case for the removal of the quota system and the phasing out of it over six years, the famous "Gang of Four" plan put forward at Brussels, is absolutely right. I stand by it. I think in the review of the dairy regime we will want to return to it collectively as Ministers or to something very similar. I do not think the present position is sustainable.

  Chairman: Income tax of course was a temporary expedient as well. Mr Todd?

Mr Todd

  21. Clearly some members have difficulty moving away from the dirigiste planning mode we have had in agriculture over the last 40 or 50 years. Is not the real future the development of enabling policy tools which allow farmers (like other business people) to make their own intelligent responses to the market-place, to assess risk and venture capital to achieve an outcome and that precisely planning what an outcome will be in terms of breakdown of incomes in the agriculture sector in the future as a direct result of policy initiatives is something of a fool's game?
  (Mr Brown) There is no precision in this, as I was trying to explain earlier. Nevertheless, that does not mean that the government is helpless. There are things we can do and I think the package of measures we have adopted is the right package. It is a mixture of immediate aids and changes to the regulatory burden and the initiative on planning is particularly significant. I have to say the full package (including the contributions from the NFU) has been widely welcomed.

  22. Indeed, but the thrust of this package is broadly liberal in market terms. We are enabling farmers to respond more positively by reducing the regulatory burden here and there, by enabling through the planning process change, and by reducing the burdens otherwise placed on them through direct charges and so on, so the thrust of this package is consistent with an increasingly liberal regime in farming in future?
  (Mr Brown) I completely agree with that.

Mr Paterson

  23. They wrote it!
  (Mr Brown) Did they really? Very good!

Mr Drew

  24. If I could move us on to agrimonetary schemes and the help that you pursued. The best thing about it is we can remember it because it is £22 million for each of the different sectors. Have you now applied for the agrimonetary support and when are you likely to hear whether or not you have been successful?
  (Mr Brown) We have applied and I am confident that we will be successful.

  25. Any idea when you will get it?
  (Mr Brown) I do not know. The Department has been working on the methods of making the payments. As you know, we need to put new arrangements in place in the dairy sector because it is the first time we have drawn down agrimonetary for the dairy sector but I have no doubt we will be able to make the payments crisply. In other words, I have no reason to believe there is anything going wrong with it at all.

  26. How would you describe then the Government's approach towards agrimonetary aid now in as much as this is the third time we have been round this loop and in better times we would hope not to be exercising this particular route but it is there for the purposes we know? How would you look at the strategy?
  (Mr Brown) We are looking at it to give some countervailing support to farm businesses because of the current difficulties in the sector. It is as straightforward as that. As you know, the bulk of the money comes from the United Kingdom taxpayer because of the Fontainebleau abatement and given the current circumstances in the industry we believe that it is right to make use of this instrument. I cannot say the Government is committed to doing it in all circumstances. More than that, as the Committee knows, the instrument itself is only of a limited duration.

  27. Can you remind us when you expect the whole idea of agrimonetary compensation to come to an end?
  (Mr Brown) The current regime has two further years to run and the ratios over which the monies are allocated—this is the permissive regime, in other words the European Union regime—are that half the total funds allocated are in the first year, that is this year; a third on I think all of the regimes, for next year; and then the remaining sixth for the year after so the regime itself is permissive and degressive and of course most of our European Union partners do not see a need for such a regime beyond then because of course they are all in the single currency arrangement.

  28. Can I move you on to specific issues related to the agrimonetary schemes. Clearly one important element was the releasing of the cap on the support for the beef management operation. What is SEAC's advice now with regard to the need for this Over Thirty Months scheme?
  (Mr Brown) This is a very important question. What I have done is I have requested the Food Standards Agency, to whom SEAC now acts as professional advisers, to review all of the principal BSE controls and report back to government in the autumn. The debate will also of course be informed by the independent inquiry report into BSE which we are expecting late summer/early autumn. We will be able to consider both what is contained in the report and the advice of the Food Standards Agency. I asked them to look at the future of the Over Thirty Months scheme, to also look at the use of pigmeat and bonemeal and whether a commercial use can be found for that, and to look at some of the issues relating to sheep as well. It is their professional advice the government is relying on. I am not proposing any action ahead of their independent advice and of course they can put their advice into the public domain so everyone else can see it at the same time as Ministers.

  29. Given the battle there has been over the weight limit, would you be kind enough to say that the Government would not have liked to have gone along this route if the EU had been more willing to be fairly liberal in the interpretation of what monies would be paid or was it an inevitable cost-cutting exercise because clearly there is only a limited amount of resources and you have to allocate them in the best possible way?
  (Mr Brown) We have lifted the weight limit. You are right, it is necessary to get the consent of the Commission to do that and the Commission have been very helpful and they have agreed. It is also true we are paying for it. The extra cost amounts to something like £20 million, we estimate, per year. That is a cost that falls on the domestic Exchequer.

  30. If I can move on to the dairy industry then. Clearly in terms of looking at the charging regime you have announced that you are going to remove dairy hygiene charges but that this is subject to legislation. When is this legislation likely to be introduced?
  (Mr Brown) I think it has been introduced for England and the instrument for Wales is expected shortly.

  31. It is through SIs?
  (Mr Brown) That is correct.

  32. There is no problem with this, there is no delay.
  (Mr Brown) It does not require primary legislation.

  33. While we are on the dairy industry, I know I have asked you this before but I will reiterate it because I think it is a key issue. In our investigation on the marketing of milk we all got to grips with the wonderful mechanism of IMPE. All I came to believe as a result of that is here we have an industry that is principally in every country a domestic industry. There is obviously milk flowing backwards and forwards and clearly we have always imported from Australasia but within reason it is crazy we ever linked this industry to currency movements. Is there not a case, whether we are in or out of the single currency, for just negotiating with our colleagues to say, "Let's decouple the dairy industry from all this ludicrous apparatus that is causing so many difficulties in this country"?
  (Mr Brown) I am trying very hard to get the Common Agricultural Policy dairy regime reformed and re-shaped and also to get my colleagues from the European Union to face up to the inevitable consequences of not re-shaping it effectively. There are three schools of thought. There is the reform movement and the rational case for reform, I believe, is gaining ground with other Member States. There is a middle group who see the case for doing something but worry about timing. There is a third group who are strongly committed to what is called the European model of agriculture production controls, intervention, all underpinned by economic protectionism. If it would help, Chairman, I can give you the exact dates for the lifting of the dairy hygiene inspection charges. The charge in England was removed with effect from 10 May and in Wales with effect from 20 May.

  Chairman: Thank you very much. Owen?

Mr Paterson

  34. I have written to you and raised it in questions to your colleagues about the problems of calves. Much as my dairy farmers would welcome the £1 million on hygiene inspection, if Britain's dairy farmers could get the prices current for French calves I would suggest that is worth £90 million.
  (Mr Brown) I have not made a comparative study with the French market.

  35. You can get £120 for a good bull calf in France and in the UK because the export market is closed they go for nothing to the hunt kennels or for £10 or £15.
  (Mr Brown) The key point, you are absolutely right, is because the export market is closed.

  36. But we have a £90 million hole in dairy farmers' pockets. I have put this problem to you on numerous occasions and I have to say your Ministry does not seem to be taking the issue seriously.
  (Mr Brown) We certainly take it seriously but what solution are you advocating?

  37. I would like to see the export industry re-opened.
  (Mr Brown) So would I. That is the economic rational solution to the problem.

  38. What evidence is there you are really trying to get it opened? I have written to you on many occasions in the last year and I do not get a sense of real urgency. This is a £90 million problem and we have got a £1 million state refund.
  (Mr Brown) You are absolutely wrong about that. I am trying very hard to address the issue and there are a number of ways of doing it. The first is to see if we can get the calf industry strengthened here in the United Kingdom. We are working very closely in projects with the NFU to do that. Secondly, we are talking to the Commission about the possibility of amending the rules for the date-based export scheme so at least very young product could leave the country on the bone rather than off the bone. It is a very sensitive issue and we are in the early stages of these discussions but clearly that is the rational way forward. There can be no BSE danger in very young meat born from animals after the contaminated feedstuff issue was firmly dealt with from August 1996. In other words, we have logic on our side but we are not there yet.

  39. When will we be there?
  (Mr Brown) I cannot set a date for the desired outcome but it is an issue on which I am pressing very hard.


 
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