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Session 2007 - 08
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European Standing Committee Debates

CAP Health Check and Rising Food Prices

The Committee consisted of the following Members:

Chairman: Mr. Christopher Chope
Ainger, Nick (Carmarthen, West and South Pembrokeshire) (Lab)
Armstrong, Hilary (North-West Durham) (Lab)
Burt, Alistair (North-East Bedfordshire) (Con)
Clappison, Mr. James (Hertsmere) (Con)
Clark, Ms Katy (North Ayrshire and Arran) (Lab)
Farron, Tim (Westmorland and Lonsdale) (LD)
Goodman, Helen (Bishop Auckland) (Lab)
Jack, Mr. Michael (Fylde) (Con)
Kennedy, Jane (Minister of State, Department for Environment, Food and Rural Affairs)
Kumar, Dr. Ashok (Middlesbrough, South and East Cleveland) (Lab)
Paice, Mr. James (South-East Cambridgeshire) (Con)
Plaskitt, Mr. James (Warwick and Leamington) (Lab)
Williams, Mr. Roger (Brecon and Radnorshire) (LD)
Hannah Weston, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 119:
Drew, Mr. David (Stroud) (Lab/Co-op)
Hopkins, Kelvin (Luton, North) (Lab)

European Committee A

Monday 20 October 2008

[Mr. Christopher Chope in the Chair]

CAP Health Check and Rising Food Prices

4.30 pm
The Chairman: I understand that Katy Clark, as a member of the European Scrutiny Committee, wishes to take advantage of the opportunity to explain why this matter has been referred.
Ms Katy Clark (North Ayrshire and Arran) (Lab): I have been asked to take a couple of minutes to explain the background to the documents and why the European Scrutiny Committee has recommended them for debate in Committee.
Since 1992, there have been a number of reforms of the common agricultural policy aimed at replacing market-related support, such as intervention by direct income payments to producers and streamlining support arrangements. However, the Commission says that if the reform process is to continue, it is necessary to identify further improvements that should be made. Therefore, in November 2007, it produced a health check of the CAP, which set out a number of further measures relating to both the market and environmental concerns. That document was debated in a European Committee on 25 February.
Document No. 9656/08 comprises a number of proposals aimed at giving legislative effect to the health check and, inevitably, it covers similar ground. Despite that and the relatively short time since the last debate, the European Scrutiny Committee considered that the document should be debated because of the inherent importance of the subject, and because of the extent to which the proposals reflect developments in the Commission’s thinking since last November. However, we were also influenced by two further considerations: first, the environmental consequences of the proposals; and, secondly, the need to take into account recent increases in world food prices. The latter point is addressed in document No. 9923/08, which is the second of the documents before us.
That document seeks to analyse the reasons for the increase, to assess the impact in the Community and more widely, and to outline a Community response. It notes that although the impact within the Community has been mitigated by several factors, the global effects could be severe, particularly for developing countries that are net importers of food. The document concludes by outlining a number of measures that the Community could take in the short, medium and long terms, as well as action that could be taken internationally. In view of the importance and topicality of that subject, and its relationship to the CAP health check, the European Scrutiny Committee recommended that the document should be debated in European Committee alongside document No. 9656/08.
The Chairman: I call the Minister to make her opening statement.
4.33 pm
The Minister of State, Department for Environment, Food and Rural Affairs (Jane Kennedy): It is pleasure to serve under your chairmanship, Mr. Chope, to discuss what is—I entirely agree—an important set of papers that are worthy of scrutiny. I will get in my excuses in advance: when I was preparing for the debate, an official told me that this was like sitting an A-level with only two weeks’ study time. I will genuinely do my best to answer the detailed questions that will be asked. I am aware of the interest that the subject generates among hon. Members in the room, including you, Mr. Chope. Many members of the Committee know a great deal about the detail of the subject and have a vast experience of it, but I will do my best to give the answers that they seek. The comments that are made and the concerns that are expressed in such Committees often inform and assist the Government when we debate these issues in Europe. I therefore want to listen carefully to what is said and to do my best to answer questions.
We are dealing with two issues today. We are debating the Commission’s proposals for the CAP health check reforms and the issue of rising food prices. Our goals for the health check and for the longer-term reform of the CAP are driven by our vision for farming. We want a profitable and internationally competitive farming sector that earns its rewards from the market for high-quality food that is produced to high standards and is affordable for consumers. Environmental responsibilities must be integral to farming’s long-term success. Farming should be rewarded for providing environmental services, such as landscape management, protection of biodiversity and action to tackle climate change.
Reforming the CAP is a vital part of achieving our vision. At a time of high global food prices, when millions of people around the world are being pushed deeper into poverty and hunger and UK families are spending more of their weekly budgets on food, the CAP still includes mechanisms that withdraw food from the market and undermine production in developing countries. It still weighs farmers down with regulation and inhibits competitiveness.
Our long-term ambition is to achieve the elimination of the expensive, wasteful and distorting pillar one of the CAP. I hope that hon. Members on both sides of the Committee share that aim. Public money should be targeted at producing environmental benefits for society, and the health check is an important step towards that goal.
One of our highest priorities in the current EU discussions on the health check is to reduce the market distortions faced by our farmers. We are thus negotiating to secure the removal of all subsidies in the EU that remain linked to production and to prevent new distortions from creeping in. We are arguing, for example, for the ending of milk quotas and set-aside, to allow farmers to take their own business decisions about production levels and to cut food costs. Other aspects of the old price support system must be cut back and eventually phased out.
I strongly support the Commission’s proposal in the health check to increase the focus of funding on environmental challenges and the contribution that farming can make to our biodiversity and climate change objectives. Simplification and reduced administrative burdens for farmers are key priorities of mine, and we are working to keep those high on the health check agenda.
It would be remiss of me to go any further without paying tribute to my predecessor, Lord Rooker, for the very good work that he did as the Minister responsible for farming. I know from the farmers whom I have already met how very much appreciated he was because of the interest that he took in farming and his willingness to listen to the concerns of farmers and to work hard to ensure that those concerns were responded to.
I come now to the Commission communication entitled “Tackling the challenge of rising food prices—Directions for EU action”. At a time of global economic instability, changes in food and fuel prices make people’s lives more difficult. At home, poorer families spend more of their weekly budget on food as prices rise. For example, the price of bread and butter is up by about 70p on what it was 12 months ago, while eggs and cheese cost about 25 per cent. more, although food prices are quite volatile.
We need to think about where and how we produce our food for the future. Our food supply will need to be reliable, resilient and able to withstand shocks and crises, so our food security policy will need to cover the availability, access and affordability of food. Our food supply in the UK is secure. We have the capacity to produce food in significant quantities and we have trading partners throughout Europe and beyond. Our food security cannot be considered in isolation from that of the rest of the world. If protectionism is the answer, someone is asking the wrong question. We need a trading system that is strong, open, global and sustainable. That depends on getting right the level of intervention from the Government and the EU.
We support the proposed EU response to the rise in food prices set out in the communication, which is in line with what we argued for at the G8 meeting in Japan in July. Only with concerted action such as this can we tackle the problem of rising food prices around the world.
I look forward to discussing these important issues further, not least with the hon. Member for South-East Cambridgeshire, for whom I have the highest regard. Indeed, his knowledge on the subject gives me some cause for concern.
The Chairman: The Committee has until 5.30 pm for questions to the Minister. I encourage hon. Members to be brief, and I hope that the Minister’s responses will be succinct. I am prepared to allow a series of questions so that Members are able to engage in a sustained line of questioning, but only if that is not abused.
Mr. James Paice (South-East Cambridgeshire) (Con): I, too, welcome the opportunity to serve under your chairmanship, Mr. Chope.
We are debating a subject that, as the Minister suggested, I consider to be of some importance. I welcome the right hon. Lady to her new post. She comes to the Department with a considerable reputation as someone who listens and who is interested in the subject. I look forward to working with her.
You will understand, Mr. Chope, that I have many questions, and I am reliant entirely on you as to how I ask them. My first question is about what the Minister referred to in her opening remarks as the Government’s “vision for farming”. Nearly three years ago, in December 2005, the Government published a document entitled, “A Vision for the Common Agricultural Policy”. Is that still a full description of the Government’s attitude to farming and the common agricultural policy?
Jane Kennedy: The overall scope of the health check was set out at the time of that vision statement. I believe that the work that has been invested in the health check very much mirrors the vision that the Government set out in 2005. Anyone who has served in government knows that new Ministers step into policy areas that have been well worked; that is particularly so for me in following my noble Friend Lord Rooker. However, I want to bring a fresh pair of eyes to the vision statement to ensure that it remains appropriate for today’s circumstances, especially given the tremendous changes that are taking place in the world.
Kelvin Hopkins (Luton, North) (Lab): Does my right hon. Friend accept that the CAP still tends to favour large agribusiness and very rich farmers rather than small, less affluent farmers? Are the Government aware of that, and will they try to do something about it?
Jane Kennedy: I am aware from the farmers whom I have met so far that some sectors of farming are supported by the common agricultural policy and others are not supported through payments from the European Union. As a result, there are differences even within the United Kingdom’s agricultural industry. My hon. Friend is right. I want to study the various impacts of the CAP on farmers. I do not yet know in sufficient detail how those impacts take effect, but we are looking to bring about a level playing field not only for farmers in the UK, but for British farmers within Europe.
Tim Farron (Westmorland and Lonsdale) (LD): It is a pleasure, Mr. Chope, to serve under your chairmanship. I welcome the Minister to her new post.
I echo the earlier comments about how easy Lord Rooker was to work with and how much farmers valued his listening ear. He intervened on many occasions and—dare I say with offence to non-Members who are present—showed a willingness to overrule his civil servants, which is something that all Ministers should consider doing, at least occasionally.
When the Minister considers the health check with regard to delivering environmental goods and keeping food prices low, will she recognise that having farmers present in our countryside—particularly in the uplands—is a significant factor in helping us to deliver biodiversity schemes? It also ensures that we have sufficient capacity for food supply to keep prices low. If the movement within CAP reform leads to less money going to the less well-off dairy farmers and farmers in the uplands, we may see many people leaving the industry, which means that the schemes that Natural England wants to see in the uplands will not be delivered, because no one will be there to deliver them. We will also see an upward pressure on food prices, because we will not have sufficient capacity to produce food. For example, we could produce less milk than at any other time in recorded history.
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