|
Norman Lamb: I echo the comments of the hon. Member for South-East Cambridgeshire. The purpose of this Committee is to scrutinise proposed European legislation. This place does not do that very well, and that needs to be improved. It is not good enough for the Minister simply to say that because we do not know what the proposals will be, we do not know what our attitude to them will be. Surely the purpose of this Committee is to tease out the principles that the Minister will apply in negotiations with other member states. Like the hon. Gentleman, I urge the Minister to be a bit more forthcoming in his response to this debate and to clarify the Government's attitude to several key issues that will be up for discussion with other EU members.
Column Number: 21
I represent one of the primary sugar beet-growing areas of the country, and it is important that the voices of the sugar beet growers in North Norfolk are heard in this debate. They are efficient growers, putting Britain in the top three of all member states. The crop is environmentally attractive, too. A Government report in 2002 highlighted the massive progress in recent years in reducing chemical inputs, and the fact that the crop provides a habitat for wildlife. Sugar beet is also important for crop rotation and for the rural economy, as it supports some 20,000 rural jobs.
It has been put to farmers and their representatives that they are against reform. It is important to make it absolutely clear that the farmers whom I talk to in North Norfolk are not against reform. They embrace the need for reform, as do the National Farmers Union, their representative body, and other interested parties such as British Sugar. As the Minister indicated in his introduction, there is now a common view that reform is necessary—but we must find a way of achieving it without destroying an efficient industry in this country.
It is right that we respond to the ''Everything but Arms'' initiative of the WTO negotiations, and I believe that all the parties in Parliament recognise the importance of trade liberalisation to give a better deal to the developing world. However, it must be remembered that producers did not create the current sugar regime; it was created by politicians. Producers of any sort operate to the best of their ability to maximise their return in whatever economic framework they are given. Therefore, when proposals are introduced that could pull the rug from under them, it is understandable that there will be real anxiety. We are discussing livelihoods in North Norfolk, which is an area with a low-wage economy, not a wealthy area.
The challenge is to find a way to tackle European protectionism, which is no longer internationally acceptable, but not to destroy efficient European producers or, critically, producers in the poorest countries. Those who argue for an immediate move to free trade must understand the consequences.
The hon. Member for South-East Cambridgeshire referred to Brazil. It is widely accepted that in a free market, Brazil could clear up most of the world markets, not just because they are low-cost producers but because of cost subsidy. The Minister said earlier that the subsidy was very small, but what about the hidden subsidy? Producers in Brazil rely heavily on bioethanol production for their transport needs. Is there not a substantial hidden subsidy that reduces the cost of producing sugar beet for the world market?
We have already mentioned concerns about the environmental degradation that will result if Brazil substantially increases the land mass under production. Loss of savannah land has been highlighted by the Royal Society for the Protection of Birds, which has referred to the land as
''biologically the richest savannah in the world''.
It says that two thirds of it has already gone, and has been
Column Number: 22
''converted or modified through man's activities, primarily agriculture.''
It also says:
''Relatively high world prices and comparatively low production costs in Brazil has seen a major expansion in soy plantations—factors which may be expected to be mirrored under full liberalisation of the sugar regime without sustainability safeguards.''
As for the impact on the least developed countries, those countries have made clear their anxieties about the current state of negotiations in the EU. The LDC London Sugar Group's end of September press release is headed, ''LDCs say that the Commission's Sugar Reform Proposal of 14th July 2004 Spells Disaster for their Sugar Industries and is an Insult to the Offer of 'Free Access' to the EU.''
How are we to proceed? The European Scrutiny Committee report included in the papers before us notes that the Minister
''says that the Government is also aware of the need to ensure that no sector of the UK sugar industry suffers unfairly as a result of reform or interim measures.''
That is a worthy ambition. The report also says that he asserts
''that the relatively efficient UK industry . . . would be expected to survive at lower production levels''.
Bluntly, the industry's concern is that unless there are significant changes to the most recent proposals, we will not be able to achieve the Minister's own clearly stated objectives.
I want to mention, as the hon. Member for South-East Cambridgeshire has done, the important issue of bioethanol production. Some have argued that it is simply a ''get out of jail free'' card for the industry to say that if the sugar regime were dismantled, growing sugar beet for bioethanol production would fill the void. As the hon. Gentleman said, that facility will take up the extra production, but it would mean a much lower price than farmers have hitherto received for their crops. The basic truth is that there needs to be a viable sugar beet sector in the first place so that, building on that, bioethanol production can emerge.
There is some very good news: British Sugar has submitted a planning application to create a bioethanol plant in Norfolk. A press release was issued yesterday. However, as I understand it, that is dependent on the Government delivering on the introduction of a biofuels obligation requiring a mix of biofuels in transport fuel cells. In the pre-Budget report, the Chancellor referred to a further period of consultation on introducing a biofuels obligation. It is essential that such an obligation is introduced. If it is not, that development in Norfolk, which is the news that we have all been waiting for, simply will not proceed. I would be grateful if the Minister responded to that point. Is he, and are the Government, fully committed to finding a way of introducing the biofuels obligation?
I shall address one or two more issues. The first is compensation. The Commission intends compensation to be fully decoupled from production and paid to the sector in accordance with CAP reform.
Column Number: 23
That must be a mandatory element of the legislative proposal. Will the Minister confirm that he agrees with that?
As I said earlier when questioning the Minister, the UK has flexibility in relation to implementation. Please will the Minister respond very specifically to my question? When he goes into the negotiations and considers the Government's position, will he work from the principle that compensation should go to those who have suffered a loss as a result of the reform? That is a fundamental point. It does not matter that we have not yet received the final proposals; the Minister can give us his view, and I would urge him to do just that.
On the quota, I support the Commission's proposals for cross-border quota transferability. That is essential, and I was pleased to note the Minister's support for it. It is crucial to facilitate a process of concentrating production in Europe in the most efficient areas; that will work with the grain of the market. British Sugar has also proposed a restructuring scheme to be introduced at the start of the reform process to give high-cost industries the opportunity to restructure, and for them to close down their industries. The suggested scheme would be operated by the Commission, and relinquished quota should be cancelled to help to reduce the EU surplus. Does the Minister support that idea? Will he at least consider it positively?
The current proposals for the quota cut would disproportionately disadvantage the UK, as an efficient producer. The UK produces only half the sugar that it consumes; the rest comes from African, Caribbean and Pacific and other least developed countries. The cut in quota should, on principle, be focused on countries where there is surplus production. Where is the logic, or the justice, in imposing substantial quota cuts on the one member state that, under existing rules, imports half its sugar requirements from the developing world? In the chart showing where there are surpluses and deficits in Europe, it is remarkable to note that France is massively in surplus and the UK is substantially in deficit. Cuts in quota must reflect such variations throughout Europe.
On price, I would urge the Minister to beware of the law of unintended consequences. Too substantial a price cut would decimate not only domestic production but production in the least developed countries. That is now widely recognised. Even non-governmental organisations that earlier argued a different case have now fully accepted the dangers. The director of Oxfam said in a letter to The Times on 25 November:
''unfettered liberalisation will harm the most vulnerable''.
The Minister nods, and I hope that that principle will be applied as the Government proceed in the negotiations.
Column Number: 24
It is all very well to repeat the economic mantra that artificial support is not good for developing countries, but, in reality, too rapid and dramatic a change could have devastating consequences for them. The least developed countries argue in their own presentations:
''Sugar cane is an acclaimed tool to facilitate rural development''.
Their view is that the proposals will
''stifle investment in one of the few rurally based industries in which least developed countries have a comparative advantage''.
They also state:
''Whilst the LDCs welcome the Commission's plan to retain a managed market structure, they call for the EU to introduce a more reasonable transition period (such as 10 years proposed by LDCs) with a more modest and gradual price change incorporating increased immediate LDC sugar access to the EU.''
Remember that the UK receives 50 per cent. of its sugar from those countries; most of the rest of Europe does not.
Producers will work with the Government to get the best result, and the hon. Member for South-East Cambridgeshire was absolutely right to recognise and acknowledge the challenge that the Government face in reconciling those different interests. It is crucial that the Government get it right. They must acknowledge the results of the Cambridge research to which the hon. Gentleman referred, and carry out their own robust regulatory impact assessment at a stage when it can inform their view during the negotiations, to ensure that we do not destroy an efficient industry and plunge the least developed countries into crisis.
4.19 pm
| 
