Ten years on, U.K. lies uneasy with E.E.C.

Press, 31 March 1983, Page 20

Ten years on, U.K. lies uneasy with E.E.C.

‘Locked in a cockpit of warring interests’

By

STEVE KAY,

a New Zealand journalist from

Christchurch, now Deputy News Editor of “Farmers Weekly” in the United Kingdom.

British housewives could be excused for celebrating their country’s 10 years in the E.E.C. with a traditional roast dinner — of New Zealand lamb.

For New Zealand lamb is currently selling cheaper in British butchers’ shops than a year ago, while homeproduced lamb, with prices pushed up by the E.E.C.’s sheepmeat regime, is more expensive than ever before. Hanging in the window of my local Dewhurst butcher’s shop in London this week (March 4) was a whole N.Z. lamb, priced for the freezer at 62 pence a lb, total price £18.60. Expensive perhaps by Kiwi standards, but still a colossal 40p a lb cheaper than the price English producers wjere getting this week. Their average return was 225 p a kg. Also in the shop window were N.Z. legs of lamb priced at £l.lB a lb. Hanging alongside was its fattier English counterpart with a £ 1.79 a lb price tag on it. At those prices, my butcher, whose small High Street shop turns over £2500 a week, is happily selling 30 N.Z. lambs a week, 10 of them as whole carcases. Now he’s looking forward to the new season’s crop which has just started coming on to London’s

Smithfield wholesale market.

Like other butchers, he’s only too aware that the presence of cheaper N.Z. lamb, apart from filling the seasonal gap, helps to keep consumer demand up. His boss knows it too. Mr Colin jCullimore, head of Dewhursts which is the largest specialty butcher chain in the country, maintains there will always be a market for N.Z. lamb in Britain of between 130,000 tonnes and 150,000 tonnes. Consumers of course would heartily agree with him but ask a sheep farmer in the Welsh hills and his reply would be a fierce: “Get New Zealand lamb off our market.”

These contrasting viewpoints reveal some of the absurdities and contradictions of Britain’s E.E.C. membership. While producers of most commodities are better off than ever before because of the Common Agricultural Policy, consumers grumble that they are paying too much for their food.

They attack the C.A.P. for creating “artificially high” food prices, describing the policy as a financial disaster. And even farmers, especially those oriented to the free market, are worried that the C.A.P. is unnecessarily providing the public with expensive food. More significantly, they are worried about the level of surpluses being produced in the E.E.C. and they want something done about them. That’s the conclusion of a special opinion poll carried out recently by Britain’s top farming paper, “Fanners Weekly.” In the poll, of 1500 farmers, 78 per cent said action should be taken and nearly half of these said quotas were the best way. The same poll revealed that farmer support for the E.E.C. has slipped significantly since the E.E.C. referendum in 1975. Then, 92 per cent of farmers said “yes” to Europe and 7 per cent said “no.”

Now, according to the poll, the “yes” vote has dropped to 78 per cent, the “no” vote has increased to" 15 per cent and 7 per cent are unsure. In other words, more than one in six of those who voted yes in 1975 have withdrawn their support. And half of these are positively anti-E.E.C.

Loss of support is greatest among farmers in the northern part of the United Kingdom and among those with smaller units. This means those on less produc-

tive, marginal land or too small to take real advantage of C.A.P. prices. This feeling of being left out is seized upon by the Labour Party. Mr Norman Buchan, its agricultural spokesman, complained recently that most of the proposed increase in E.E.C. farm incomes this year would go only to the top 13 per cent of farmers. “The taxpayer and the poor consumer will be making the rich farmer richer,” he asserted.

The call for quotas and the drop in farmer support for the E.E.C. is not all that surorising. Over-production and its consequences is the issue that currently dominates any discussion of the C.A.P., either of what it has achieved and what it might achieve in the future.

Fanners, agricultural economists and politicians are agreed on one thing — that the C.A.P. needs an urgent overhaul. Farmers are also beginning to learn that 10 yeans of unrestrained production is over, that they can no longer produce what they like and however much they like.

And that sobering realisation has come after 10 good years during which the E.E.C. has changed the face of British agriculture. For farmers in 1973, the E.E.C. was a brave new world. Gone were the days of deficiency payments and the blatant cheap food policy. The British would no longer scour the world for bargain basement food supplies, topped up with the output of their own farms. The sneers of “feather-bedd-ing” and “soft subsidy” would no longer ring in the farmers’ ears. Support and returns were to be geared to the marketplace. Alas, the reality did not match the promise. Transitional years left British farmers frustrated as compensatory payments eased foreign supplies into Britain while returns to producers were held down. Currency manipulation, especially in the mid-19705, short-changed the fanner.

The end of this monetary disadvantage dovetailed with the onset of the world recession in the late 19705. Costs roared ahead and farm prices failed to keep up. By 1980, United Kingdom farm incomes were actually falling behind returns of five years previous. When they rose sharply last year, by a record average of 45 per cent, they still only came back to the level

of the mid-19705. The headache for the farming lobby currently is to try and explain that to a disbelieving British public. The decade has seen growth in virtually all the farming sectors. Average dairy herd size has increased from 30 cows to 55 although over-all numbers have dropped slightly. Ironically, this increased efficiency is now to be penalised. Perhaps the greatest “success” story has been with oilseed rape. In 1972, Britain grew just 7000 hectares and produced 14,000 tonnes. Last year, the area soared to 174,000 hectares and 571,000 tonnes was produced. Within a couple of years, the oilseed rape area will almost certainly exceed that for sugar beet or potatoes.

That is the C.A.P. in action, bringing in new crops which have changed not only the pattern of farming but also the look of the countryside. Cereals have been the other success story, with both acreages and yields rising dramatically. Some argue that the technical advance would have come outside the E.E.C. but there is more cash to spend on modern growing techniques when corn sells at £l2O a tonne instead of £35, the 1972 price. A rather less savoury growth sector has been bank borrowing. It has shot up by more than £3700 million in the decade, with most of the increase coming in the last four years. In 1973, farming owed the banks a mere £7OB million. Since then, the debt has risen 525 per cent to £4425 million.

On balance, Europe has been good for British farmers. But the first 10 years have not been decisive. Now, with production cutbacks and price freezes in the offing, there is a chill wind blowing through the industry. The idea of quotas has already caused some soulsearching among policymakers at the Ministry of Agriculture and in the National Farmers’ Union, Britain’s biggest farming organisation.

The N.F.U.’s chief economist, Mr David Evans, firmly rejects the idea, saying they would stultify technical developments in farming and limit opportunities. The European Commission itself has shied away

from the use of either onfarm or national quotas because it says they would be too difficult to administer. Instead, it has introduced a softer concept, production threshholds. They are based on cutting the support price for a particular commodity once production of that commodity goes over the threshhold level on an E.E.C. basis. But even these won’t be enough, it seems, to stem the growing milk lake which is currently threatening to drown the Community’s budget. Figures circulating within the European Commission point to a massive £ 1200 million deficit by the end of 1983 if the present over-spending on agriculture continues.

With this grim prospect before it, the Commission this month announced a sharp reduction in the proposed price increase for milk to be paid to E.E.C. dairy fanners this year. In short, it wants to put a freeze on the price of milk.

As for the sudden increase in output that has precipitated this crisis, Britain appears to be the chief culprit. Its output increased 5.6 per cent last year, compared with the E.E.C. average of 3.5 per cent.

It is not surprising then that the day after the Commission’s announcement, the Agriculture Minister, Mr Peter Walker, said Britain would advocate a price freeze on both milk and cereals at the coming price talks.

The E.E.C. already has 300,000 tonnes of butter in store and this figure could rise to 600,000 tonnes by the

end of this year if new markets cannot be found.

The obvious way out is for the Commission to make it easy for subsidised butter to be sold to the Soviet Union, but it has been frightened of the political repercussions. New Zealand, to its great and growing concern, has been an unwilling and powerless bystander to this whole crisis. Its butter exports to the United Kingdom hung in the balance for months because France and Ireland wanted the “butter to Russia” deal to go through. The New Zealand quota of 87,000 tonnes, approved last October, has only recently been implemented because of the French and Irish obstruction. More alarmingly, the French have threatened to block imports of New Zealand butter in 1984.

The whole sorry issue typifies the way that the E.E.C. and its affairs can degenerate into messy nationalistic battles over what would seem to be straightforward issues. A so-called lamb war still simmers between Britain and France, part of a retaliation by the French for Britain’s banning of all poultry and egg imports on the pretext of controlling fowlpest disease. The ban illustrated Mr Walker’s immaculate sense of timing, as it headed off the annual influx of French turkeys bound for the Christmas trade. The British turkey producers were not unhappy. The French riposte was to introduce rigorous hygiene regulations on lamb imports

which have been enforced at random. Not unexpectedly, Mr Walker and his French counterpart, Madame Edith Cresson, have had several celebrated verbal clashes since then, notably on the Russian butter deal.

New Zealand officials,’ whatever their public pronouncements, are deeply worried about the stop-go atmosphere which has developed over butter sales.

Certainly, the dairy trade and producers in Britain would shed no tears over any cutbacks in New Zealand exports. But such a move would be politically unacceptable to the present Government and would also arouse the fury of consumers.

One consumer body has described Britain’s first 10 years membership as bringing “mixed blessings” for U.K. consumers. The Consumers in the European Community Group say that the free market has brought a wider choice of goods and the stimulus of competition, leading in some cases to higher standards. And consumer protection measures have been welcome.

On the other hand, it says the C.A.P. has led to the over-production of food, the surplus of which is sold outside the E.E.C., subsidised by E.E.C. tax-payers, or sometimes even destroyed. And it claims that consumers are paying more, which in turn encourages farmers to produce more and more food which people don’t want.

With this kind of feeling growing, it is not surprising that more and more people are listening to the Labour Party’s call for Britain to quit the E.E.C. Agricultural spokesman Norman Buchan says food costs the average British family of four £5 a week more because of the C.A.P. In his view, the C.A.P. has not produced harmonious

Europeanism within the Community. Instead, it has tended fo split Europe, withanti-Europeanism almost endemic in nearly every meeting of the European Council of Ministers. “The truth is that we are locked in a kind of cockpit of warring interests which we seem unable to resolve. Nor, given the differing needs of other E.E.C. countries, can we,” he asserts.

His assessment of a decade of E.E.C. membership is bleak, although he concedes that agriculture has endured rather better than other sectors of the British economy. But; he argues, agriculture could have used its marvellous technological advances in other and better ways. “We have not got the individual freedom to use that advance in ways that will be within our control and in the interests of British farmers and consumers alike.”

Mr Buchan also argues, with some validity, that the C.A.P. mechanism is not designed for British agriculture’s needs. For example, every increase in cereal prices is an added burden to the livestock industry which depends on cheap, homegrown feedstuffs. And by placing the main element of support on end prices, to which the farmer has had to respond, an inevitable distortion of good husbandry has taken place, he says.

Labour’s manifesto for the coming general election will include E.E.C. withdrawal, with the C.A.P. being replaced by a deficiency payments scheme. In theory, withdrawal could free up the British market for more New Zealand products.

In practice however, the opposite is more likely. It is difficult to see how the market could absorb any more New Zealand exports, at the same time soaking up home-produced surpluses that now go into E.E.C. stores.

That is not to say the future looks bad for continued New Zealand access to the U.K. market. Only a political miracle will save the Labour Party from heavy defeat in the coming election, and the Conservatives are deeply committed to staying in the E.E.C., despite disquiet from some Right-wingers about the C.A.P.

With Mrs Thatcher firmly at the helm for another five years, New Zealand lamb, butter, cheese and other products will continue to find their way on to British tables. ■■■■■■■■■■■MH