AGRICULTURE AND ENVIRONMENT (SUB-COMMITTEE
D)
AGRICULTURAL GUIDANCE AND GUARANTEE FUND
(5433/07)
Letter from the Chairman to Lord Rooker,
Minister of State for Sustainable Farming and Food, Department
for Environment, Food and Rural Affairs
Your Explanatory Memorandum on the above Proposal
was considered by Sub-Committee D at its meeting of 28 February
2007.
We agree with the Government that national interest
rates are a matter for national management and therefore that
such compensatory measures should not be encouraged. The budget
neutrality of the measures is also of concern to us and we are
glad that the Goverment is seeking clarification on this matter.
We are therefore surprised to learn that the
Government does not intend to oppose the proposal but rather to
abstain. For this reason, and ending further explanation of the
Government's position, we are retaining the proposal under scrutiny.
2 March 2007
Letter from Lord Rooker to the Chairman
Thank you for your letter of 2 March, setting
out the position of Sub-Committee D as regards this proposal.
The Government intends to abstain rather than
oppose the proposal, as the EU Commission has linked it to an
earlier proposal which would abolish the system of public intervention
purchases for maize (EM 16922/06 of 18 December 2006 refers).
We are very much in favour of this first proposal, and would not
wish to jeopardise it. Abstaining over the intervention financing
proposal would send a clear signal that we do not support such
compensation for higher than average interest rates, wthout impeding
the progress of the maize proposal—which the Government
views as the higher priority.
Hungary, which stands to lose most from the
abolition of maize intervention, as it holds the majority of EU
maize stocks, would also be the greatest beneficiary of the intervention
financing proposal, as it has a higher than average (around 8%)
interest rate. Hungary is trying to "de-link" the proposals,
wanting to oppose the first, and support the second. Should their
attempts prove successful, we would oppose the intervention financing
proposal.
19 March 2007
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