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 allocatedthis
is the permissive regime, in other words the European Union regimeare
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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