EU Sugar Regime (EUC Report)

My Lords, I, too, begin by thanking the noble Lord, Lord Renton of Mount Harry, for his extremely helpful speech to commence the debate. I also thank the European Union Committee as a whole for giving us the opportunity to discuss the very important subject of sugar reform and its wider consequences and, as noble Lords have said, to look ahead, which is one of the main purposes of the debate. I also pay tribute to the members of Sub-Committee D for an excellent report. I put on record my thanks to the noble Lord, Lord Grenfell, Chairman of the European Union Committee, for writing to me with the emerging findings ahead of the pivotal meeting of the EU agriculture Ministers in November last year, when agreement on a compromise package was successfully reached under our presidency. It was very valuable for two main reasons to have the benefit of the sub-committee’s initial analysis as we went into the final stages of the negotiations: first, because of the support it gave to the rationale behind the European Commission’s proposals; and secondly, for the way in which it highlighted the key areas where pressure was likely to come. Those themes were, of course, carried forward into the final report, which also had the advantage of being able to assess the final outcome as a whole and to set it in the wider context which is the subject of our debate today. Before embarking on the substance of this, I want to thank all those who have spoken in this debate for their characteristically considered and well informed contributions. They have ranged over wide areas of policy and reinforce the need for government to have a coherent and collective response beyond the remit of individual departments. That message is understood and I hope to be able to demonstrate that we are indeed taking a broad strategic view of these issues, in line with the span and depth of the sub-committee’s own work. I welcome what the noble Lord. Lord MacGregor, had to say about British Sugar’s commitment to the UK sugar industry. It was good to hear that. The Government have, of course, already provided their formal written response to the sub-committee’s report and I do not intend to go over too much of that ground again today but I do not think that there are any other arithmetical mistakes. However, it may be helpful if I recall very briefly some of the major points as well as attempting to update the House on where we now stand in the process of implementing the reform package, ahead of the commencement date of 1 July. Following the November Council agreement, it was necessary for the European Commission to amend its original legislative proposals of June 2005 to reflect the presidency compromise. In addition to this technical work, the Council also needed to take delivery of the opinion of the European Parliament before proceeding to the formal adoption of the legal texts. During this time, it also became apparent to the Commission that the combination of existing sugar stocks in the EU, expected plantings in 2006 and the impact of the WTO export limits following the Panel case, meant that there was a real risk of oversupply to the market in the first year of the new regime, before the restructuring process was fully underway. The Commission therefore asked the Council to give it the power, for one year, to apply temporary measures to reduce EU beet production, over and above the various market management instruments already in the package. After debate in the Special Committee for Agriculture in late January and early February, the Council finally adopted all three regulations giving effect to the new sugar regime on 20 February, including the new temporary measures. Work has now begun at the level of the Commission-chaired Sugar Management Committee on the various detailed implementing rules necessary to bring the new regime into operation, including the temporary withdrawal of 2.5 million tonnes of sugar in the 2006–07 marketing year. Member states are also putting into place their own arrangements in respect of issues such as the incorporation of payments to sugar growers into existing direct payments schemes, on which we ourselves have launched a full public consultation, having listened to and taken advice from the National Farmers’ Union on how we should approach that particular issue.