Select Committee on Agriculture Minutes of Evidence


Examination of Witness (Questions 80 - 99)

TUESDAY 23 MAY 2000

RT HON NICHOLAS BROWN, MP

  80. The balance between outgoers and supporting those who are staying in but reducing capacity, has any thought been given as to precisely where that balance will lie?
  (Mr Brown) Yes. There has been some thought given to it. I do not want to state a final balance, although certainly for the first year of the scheme the balance in money terms lies with the outgoers rather than the ongoers. That is what we anticipate. However, remember that we are going to take sealed bids for the outgoers scheme, in other words people bid for the capacity which is being taken out. I do not want to go much further. I do not want to say anything which jeopardises what is, after all, a commercial arrangement.

  81. Those who are staying in, will part of that support involve assistance with marketing as well?
  (Mr Brown) Yes, it does.

  82. Obviously some additional marketing assistance has been given previously earlier in packages specifically targeted at the pig sector.
  (Mr Brown) Yes.

  83. Have we reviewed how effective that additional help has been?
  (Mr Brown) The help was given relatively recently.

  84. About a million, was it not?
  (Mr Brown) As you know, there have been changes in the market place. I have to say, and maybe it is claiming too much for cause and effect, the domestic market has strengthened considerably. I do think the measures we have taken have at least in part assisted that.

  85. Some further help on the marketing side to consolidate the position of an increasing UK customer adherence to British pork would be money well spent?
  (Mr Brown) I believe that and, indeed, the Meat and Livestock Commission has just launched a new and very hard hitting campaign to bring home to the consumer the animal welfare benefits of the domestic product, and good for them.

  86. Finally, on this, there is still an element of persuasion to come I think towards pig farmers to show them that there was no other way to define an aid package. I am sure you regularly receive correspondence—
  (Mr Brown) I do.

  87.—I still do from pig farmers who say "Well, there is a BSE tax to compensate for, why not have money for that and a variety of other purposes?"
  (Mr Brown) Yes.

  88. To what extent are we getting across the message that the aid package that has been defined is the only route through the current restrictions that arise from the Commission?
  (Mr Brown) I meet farmers' leaders and leaders particularly of the different pig sectors regularly and I have explained this in terms. As you know, I was quite keen to keep my foot in the door with the Commission for as long as possible to see if it was possible to devise a scheme that would explicitly meet the disposal costs arising from the precautionary measures relating from BSE. More than that, again as the Committee will know, I have twice been to SEAC to check whether there is some way of getting commercial use into material or, on the first occasion, whether the ban was absolutely necessary. The advice is very clear and the Government will stick to it.

  89. One does note that SEAC have been given a further brief in this particular action to once again review the measures.
  (Mr Brown) That is correct.

  90. Would one assume that they will look at this particular aspect once more?
  (Mr Brown) I have asked them to and I expect them to come back. As you know there is a debate in the European Union that is moving in the opposite direction, an increasing view that meat and bone meal should not be recycled anyway.

  91. Yes.
  (Mr Brown) Since we do not we shall make a virtue of it and say so. Of course, as you know, it is a cost the domestic industry bears, competitors do not. It is a fixed cost so as the price comes down the effect of it bears more heavily. I was very keen on looking at every avenue to relieve that but the fact of the matter is if I was to make a proposal to the Commission it would be knocked back under the State Aid Rules. I believe when the Select Committee visited the Commission you explored this matter with Commissioner Fischler and received the same view.

  92. We received a very clear answer.
  (Mr Brown) Yes.

Mr Öpik

  93. Minister, the outcome of this element is a bit like a retirement scheme. Do you agree with that to begin with?
  (Mr Brown) No.

  94. I thought you might say that.
  (Mr Brown) I can see where it is going.

  95. How would you describe that scheme in that case?
  (Mr Brown) It is a restructuring measure in order to permanently remove capacity.

  96. Okay. To rephrase my second question before I even ask it then. If it is good enough for the pig industry surely there is a case to do the same for dairy and the lamb industry? Perhaps by connecting the outgoer scheme to some sort of ingoer scheme as well, we have to make sure there is not an influx coming in at the bottom.
  (Mr Brown) Why would we want to intervene to permanently remove capacity from the sheep or the beef or the dairy sector. The Government does not propose to make such an intervention and in any event these industries are all constrained by Common Agricultural Policy instruments.

  97. Are you saying strategically you would not be willing to consider some kind of an outgoers scheme given that there are some—
  (Mr Brown) Are you really asking me about the early retirement scheme?

  98. Of course I am.
  (Mr Brown) You are. As you know, when I became a Minister I reopened consideration of the scheme in the Department. If we could have made a go of such a scheme I would have liked to have done so. I share that with the Committee. I have said it before on a number of occasions. The reason that we cannot is in summary because of the dead weight cost of the scheme.

Chairman

  99. Minister, you used the phrase "permanently remove capacity", would implementation of this scheme have any implications for our future ability to build capacity in response to the same study market?
  (Mr Brown) No, the only occasion would be those who have gone out of the industry under this scheme could not come back under the capacity itself—


 
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