Renshaw, Derwent.

English

Archive of European Integration

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WESTERN EUROPE' S PROGRMiUE TO KEEP 
AGRICULTURE STRONG 
Address presented 
by 
Derwent Renshaw 
Secretary for Agriculture 
Delegation of the Commission 
of the European Communities 
Washington, D.C. 
at 
the 37th ANNUA.L SOUTHERN AGRIBUSINESS FORm1 
Memphis, Tennessee 
January 26, 1984 
1. 
I am most grateful to you Mr. Chairman and to the 
Southern Agribusiness Forum for giving me this opportunity 
of saying a few words to you on such an important topic -
one with implications not only for European far~ers but 
also for American agriculture and for American agribusiness. 
I propose spending the half hour alloted to me this 
morning saying something about the Common Agricultural 
Policy - where it has got to and the course plotted for 
its future. 
As most of you will know, the European Communi t~' 
has operated its own farm policy - the Common Agricultural 
Policy or CAP - for the last 20 years or so, and I i~agine 
that you will also appreciate its great importance not 
only to our 3 million farmers and their families but also 
to all 270 million Europeans living in our 10 Member States. 
The objectives of the CAP - set out in the Treaty of 
Rome - can be summarised as follm·Js 
- to increase productivity ; 
to give the farmer a fair standard of living 
- to assure the supply of sufficient food at 
reasonable prices, and 
- to stabilise markets. 
. I . .. 
Goals which are not very different - I would have thought 
from US Farm policy , but - I get the impression - that 
here 
there is perhaps less emphasis/on stability of prices 
and security of supply. 
Very broadly, these objectives have been achieved 
by fixing common prices for the major part of our farm 
production. But here, let me emphasise that the CAP 
be 
should not looked at in a purely economic context but 
against a social, political, cultural and environmental 
background as well. We believe that the well-being of 
agriculture is essential to the fabric of rural life. 
Let us now look briefly at what the effects of 
achieving these objectives have been - both inside and 
outside the Community. 
We are frequently accused by our critics of spending 
limitless sums of money to encourage our farmers to 
produce surpluses which are then off-loaded onto world 
markets. But let us examine the facts. 
First. As a result of the support we give our 
farmers, our wheat production, for example, has increased 
by 29% over the last decade - slightly more than the 
world average of 27%. The increase here in the US has 
been 73% and a lot of that in soft wheat grown largely here 
. I . .. 
2. 
3. 
in the Eastern half of the US. This increase is 2 1/2 times 
the world average. I say this in no accusatory sense, but 
in an attempt to set the record straight. But, at the 
same time, I cannot resist commenting that an increase 
of this magnitude and particularly in soft wheat - is 
bound to have had some destabilising effect on the world 
wheat market. 
Furthermore, the increase in Community production has 
been achieved on an acreage that has remained virtually 
unchanged for the last ten to fifteen years. 
Second. Our total farm spending on all agricultural 
products at about 13.5 bio $ in 1983, compared with 
around 20 bio $ here - PIK excluded - represen~ed less 
than 1/2 of one per cent of the Communi tj'' s GDP. 
As to the impact of the CAP on world markets, 
let me start by referring to so@ething which I hear 
with increasing frequency - "the CAP is fine so long 
as it confines itself to do~estic, i~ternal policies 
but not so good when you export your surplus by means 
of unfair export subsidies". 
Just three general points 
I 
. I ••. 
First, we are not the only producers in the world 
that export products which are surplus to internal re-
quirements. Two thirds of US wheat, for example, is 
surplus to requirements and has to find buyers on the 
world market. In addition, 50 per cent of your cotton 
and 40 per cent of your soyabeans are bought by customers 
overseas. The last two - cotton and soyabeans - are, of 
course, of great interest to you here in the South and 
East. But the Community grows very little of either and 
imports about 10 to 11 mio t of the latter. 
Second, International trading rules to which both 
the US and the EC are signatories, specifically permit 
the use of export subsidies, provided they are not used 
to gain more than an equitable share of the market. 
We maintain, and trade statistics support our view, that 
we have kept to these rules. 
And last, but of signal importance, the EC is the 
American farmers' best customer taking about 1/3 of 
4. 
US farm exports and running a massive deficit with vou on our 
transatlantic agricultural trade. 
It seems to me that where the US has lost markets -
the major factors have been the strength of the US dollar 
brought about primarily by a massive budget deficit - a 
point of view now subscribed to by USDA in one of their 
more recent publicatious -~and, of course, a desperate 
. I . .. 
shortage of funds particularly in developing countries. 
This, of course, is not a very original diagnosis 
but is perhaps worth repeating once again. 
This brief review of past events should not be 
taken to imply that everything is fine on the other 
side of the Atlantic and that we have no problems whatso-
ever in the Cormnuni ty. Those of you \vho follow develop-
ments in the Community, even at the most superficial 
level, will be well aware of the serious problems \Je 
currently face. On the agriculture front, \ve are both 
of us - US and EC together - basically faced with the 
same problem : that of producing larger quantities than 
markets can absorb which, of course, is not the same as 
saying that there is too much food in the worl~. 
Whilst I strongly believe that the CAP is one of the 
major achievements of the European Community, it must -
like any other in?titution or policy, if it is to survive, 
and survive it will - adapt itself to changing conditions. 
In the Community, technical advances and productivity 
gains have Meant that output has risen more rapidly 
than consumption. 
Increases in the volume of agricultural production 
5. 
have averaged between l l/2 and 2% a year whilst consumption 
has only risen by about l/2%. 
. I . .. 
At the same time, we are running very low on cash -
whether farm expenditure represents less than one half 
of one per cent or not. 
From 1974 to 1979, expenditure on supporting agricul-
tural markets grew at 23% per year - almost twice the 
rate of growth in our revenue. For the next two or 
three years - 1980 to 1982 - expenditure remained 
fairly stable, largely because prices remained relatively 
high on world markets. But since then expenditure has 
increased sharply (once again, as it has here), and 
an increase of about 30% is estimated for 1983. 
Unlike most national governments - our Community 
constitution forbids us to run a budget deficit. So, 
for the first time we are running very close indeed to 
our financial limits. 
There is very little spare left. This chilling 
fact coupled with that of production outpacing consumption 
is the background against which the Commission has pro-
posed an essential and very tough double barrelwbattery 
of measures for the rationalisation of our agriculture. 
The first was announced in July and concentrated on a broad 
adapt~tion of our farm policy - the second, revealed only 
two weeks ago, makes specific proposals as regards prices 
for individual crops. 
. I . .. 
6. 
The main thrust of the Commission's proposals is : 
to adapt our agricultural policy to meet the changed 
conditions of the mid 80's 
- to discourage surplus farn production 
- to limit Community spending on farm support. 
Time does not allow me to describe in any detail 
the full panoply of measures which will hit 8 million 
European farmers and their families and which will 
demand substantial sacrifices from them. 
The European farmers' organisation - COPA - said re-
cently that the proposed measures "would have extremely 
serious repercussions on all sectors of agricultural 
production and would lead to a further substantial fall 
in farmers incomes". 
But briefly, the measures envisaged are : 
l production quotas with severe penalties for 
farmers who exceed them - a 75% levy in the 
case of dairy farmers, for example ; 
ii extension of guarantee thresholds (guarantee 
thresholds put a strict ceiling on the amount 
of a given crop a farmer may produce without 
him having to contribute to the cost of dis-
posing of the surplus) 
. I . .. 
7. 
iii a tough price policy for farm products which 
will entail_reductions in some cases and an 
intensification of our efforts to narrow the 
gap between our prices and those of our com-
petitors ; - I \'lill return to these two aspects 
in a moment ••• 
iv prices for some surplus commodities to be 
fixed for more than one marketing year 
v reduced intervention or support buying 
vi - and, the discontinuation of a number of production 
aids and premiums. 
o. 
This brings me to the external aspects of the package. 
Since our own farmers are being asked to make considerable 
sacrifices and to limit their production, the Commission 
feels that it is not unreasonable to review the treatment 
of competing impo~ts provided that this is done strictly 
in accordance with international trading rules. 
As I said earlier, we are aiming to narrm1 the gap 
between our grain prices and those of our competitors. 
Such a move will, in the long run, have the effect of 
making grain substitutes much less attractive. But 
until that time and whilst we are inplementing a s·::::-ict 
guarantee threshold and requiring our grain producers 
to limit their own production, it is absolutely essential 
. I . .. 
to have some effective stabilisation of the imports of 
grain substitutes. Such stabilisation should also help 
to reduce surpluses in the ~ivestock sector - particularly 
in milk. 
Our aim of stabilising imports of substitutes is not 
a fiendish European plot aimed specifically at the resi-
dues of the US corn processing industry. Substitutes 
are imported into the EC from a wide range of sources 
and arrangements have already been concluded for manioc 
and for bran coming from South East Asia and elsewhere. 
It is now proposed to stabilise the imports of other 
major substitutes - corn gluten feed, for example -
a residue, to a large extent, from the corn sweetener 
industry which, incidentally, has been able to take 
advantage of US support arrangements for sugar . 
Imports of cgf have soared from under 700.000 tons 
to 3 million tons· since 1974. 
However, and I must stress this, what is being 
proposed is not hasty unilateral action, not a banning 
of corn gluten imports nor even a reduction in imports, 
as one might gather from the howls of protest, but a 
calm and reasoned negotiation aimed at a stabilisation 
of imports and this only after carrying out the proce-
dures laid down in the GATT. 
. I . .. 
9. 
10. 
Two final observations about this particular proposal. 
It does not seem to me unreasonable to ask for cooperation 
from other countries in limiting our imports of subsitutes 
since adaptation of the CAP - with the cutbacks envisaged -
is in their interest since it should lead to a better 
balance on world markets - something the US has been pressing 
us to do for years. 
And, furthermore, it seems to me that if we can 
successfully stabilise our imports of grain subsitutes, 
then the amount of European wheat which would be forced 
onto world markets because it had been displaced by sub-
stitutes in animal feeding, would be reduced. A factor 
which should not be without interest to a number of 
those represented here today. 
The second measure which has caused concern here in 
the United States and nowhere nm:e so than in Hr. Weems 
association, is the proposed consumption tax on oils 
and fats. 
Let me try to calm these fears. 
First, the tax would be non-discriminatory and 
applied to all oils and fats, excluding butter, whether 
produced locally or imported. Imports would be treated 
no differently from domestic products. This squares 
fully with international trading rules. 
. I . .. 
Second, it is extremely doubtful whether the tax 
would have any measurable effect on the quantities of 
oil seeds and beans ir:tported because: 
(a) the low rate of tax proposed is unlikely 
to alter consumption patterns of oil and margarine: 
(b) all other vegetable oils, including olive 
oil, would be taxed at the same flat rate which would 
have a proportionally greater effect on lower priced 
l.argel.y 
oils - such as rapeseed oil produced/from Comounity 
grown seed: 
(c) soya beans and meal are imported primarily 
for animal feed and not for oil production. 
Third, and most important, it is no part of this 
proposal to subject 3 to 4 bio $ \vorth imports of soya 
bean or soya meal or any other oil seed to any restriction, 
tax or levy. 
Let us now turn to the detailed price proposals 
made a fortnight ago but which have to be seen in the 
frame\mrk of the earlier proposal made last July. 
We have explained to the 10 national governments that 
what is required from them is a global decision before 
31 narch on both elements. There can be no picking and 
choosing from the list as one might do from an a la carte 
menu. Ministers can no longer put off taking difficult 
decisions. 
't·lhat has been proposed in reality is a virtual 
price freeze, but with variations - a few prices are 
to be increased, some frozen-and some reduced. 
. I . .. 
11. 
Our price proposals have been adapted to the different 
market situations of different products. 
For cereals, milk, wine and tomatoes, where 
the market situation calls for a particularly restrictive 
pricing policy, it is proposed that prices for next year 
are frozen at their present level ; 
For colzaand rapeseed, where the guarantee 
thresholds I mentioned earlier have been exceeded and 
for certain varieties of tobacco, price reductions are 
proposed ; 
For sugar, durum, wheat, sunflower seed, beef 
and some other products marginal increases have been 
proposed. 
The average effect of these measures overall will 
be to increase prices by 0.8% in Ecu terms. But when 
expressed in national currencies, which after all is 
what our farmers are paid in, the result will be an 
average frop of l/2%. 
It is abundantly clear that some parts of this 
package will be difficult for the agricultural com-
munity to accept, particularly after an average decline 
in EC farm incomes of about 6% last year. But it has 
to be pointed out that the CAP has helped to protect 
our farmers from the worst effects of the economic 
crisis. Farm incomes in some other parts of the world 
declined more steeply last year. 
. I . .. 
12. 
It is also abundantly clear that the market situation 
for many of our farm products is extremely difficult and 
in milk particularly production has gone far beyond what 
the market can handle. Public authorities cannot be 
expected to take charge of all these products for which 
there is no market. The CAP cannot continue on such a 
basis - one which is neither economically sound nor 
financially acceptable. 
However, this is not to say that these proposals 
for European agriculture are merely a list of price 
savings to the benefit of our hard pressed budget and 
at the expense of the farm community. They have to be 
seen as part of a coherent, overall policy for the de-
velopment not the dismantling of the Common Agricultural 
Policy. 
Neither should they be seen as an attempt to shuffle 
off our problems on to our friends and allies. They are 
a serious and honest effort to adapt our farm policy to 
meet the vastly changed conditions of the mid 80's. 
As a result, the CAP will be given the opportunity to 
continue to ensure food supply and price stability, to 
give our farmers a reasonable, but not excessive, return 
and yet permit us to play a positive, cooperative and 
responsible role in the world trade. 
* * * 
DR/sbh 


Western Europe's programme to keep its agriculture strong. Address presented by Derwent Renshaw, Secretary for Agriculture, Delegation of the Commission of the European Communities, Washington DC, at the 37th Annual Southern Agribusiness Forum. Memphis TN, 26 January 1984

------~------... r:  r··:  -~ --.  %;;;;::::: •  ~:;·  ' !:,. !?•  _!  :  •  "' WESTERN  EUROPE' S  PROGRMiUE  TO  KEEP AGRICULTURE  STRONG Address  presented by Derwent  Renshaw Secretary for Agriculture Delegation of  the  Commission of the  European  Communities Washington,  D.C. at the 37th  ANNUA.L  SOUTHERN  AGRIBUSINESS  FORm1 Memphis,  Tennessee January  26,  1984 1. I  am  most  grateful  to  you  Mr.  Chairman  and  to  the Southern Agribusiness  Forum  for  giving me  this opportunity of  saying  a  few  words  to  you  on  such  an  important  topic  -one with implications not only  for  European  far~ers but also for American  agriculture and  for  American  agribusiness. I  propose  spending  the half hour alloted to  me  this morning  saying  something  about  the  Common  Agricultural Policy  - where it has  got  to  and  the  course plotted  for its future. As  most  of you will  know,  the  European  Communi  t~' has  operated its own  farm  policy  - the  Common  Agricultural Policy or  CAP  - for  the last  20  years  or  so,  and  I  i~agine that you will also appreciate its great  importance  not only to our  3  million  farmers  and  their families  but also to all  270  million Europeans  living in our  10  Member  States. The  objectives of  the  CAP  - set out in the  Treaty of Rome  - can  be  summarised  as  follm·Js - to  increase productivity  ; to  give  the  farmer  a  fair standard of  living - to  assure  the  supply of  sufficient  food  at reasonable  prices,  and - to  stabilise markets. . I ... Goals which  are not very different - I  would  have  thought from  US  Farm policy  ,  but  - I  get the  impression  - that here there is perhaps  less  emphasis/on stability of prices and  security of supply. Very  broadly,  these objectives  have  been  achieved by  fixing  common  prices  for  the  major part of our  farm production.  But  here,  let me  emphasise  that the  CAP be should not  looked at in  a  purely economic  context but against  a  social,  political,  cultural and  environmental background  as well.  We  believe that the well-being of agriculture is essential to  the  fabric  of rural life. Let  us  now  look briefly at what  the effects of achieving these objectives  have  been  - both  inside  and outside the  Community. We  are  frequently  accused  by  our critics of  spending limitless  sums  of money  to  encourage  our  farmers  to produce  surpluses which  are  then off-loaded onto  world markets.  But let us  examine  the  facts. First.  As  a  result of  the  support we  give  our farmers,  our wheat  production,  for  example,  has  increased by  29%  over  the  last decade  - slightly more  than  the world  average of  27%.  The  increase here  in  the  US  has been  73%  and  a  lot of that in soft wheat  grown  largely here . I ... 2. 3. in the Eastern half of  the  US.  This  increase is  2  1/2  times the world  average.  I  say this in no  accusatory sense,  but in an  attempt to set the  record straight.  But,  at the same  time,  I  cannot resist commenting  that an  increase of this magnitude  and particularly in soft wheat  - is bound  to  have  had  some  destabilising effect on  the world wheat  market. Furthermore,  the  increase in  Community  production  has been  achieved  on  an  acreage  that has  remained  virtually unchanged  for  the last ten  to  fifteen years. Second.  Our  total  farm  spending on  all agricultural products  at about  13.5  bio  $  in  1983,  compared  with around  20  bio  $  here  - PIK  excluded  - represen~ed less than  1/2 of  one  per cent of  the  Communi tj''  s  GDP. As  to  the  impact  of  the  CAP  on  world  markets, let me  start by  referring to  so@ething  which  I  hear with  increasing  frequency  - "the  CAP  is  fine  so  long as it confines  itself to  do~estic,  i~ternal policies but not  so  good  when  you  export  your  surplus  by  means of unfair export  subsidies". Just three  general  points I . I  ••. First,  we  are not the only producers  in the world that export products which  are surplus  to internal re-quirements.  Two  thirds of  US  wheat,  for example,  is surplus  to requirements  and  has  to  find  buyers  on  the world market.  In  addition,  50  per cent of your  cotton and  40  per cent of your  soyabeans  are bought  by  customers overseas.  The  last two  - cotton and  soyabeans  - are,  of course,  of great interest to you here  in the  South  and East.  But  the  Community  grows  very little of either and imports  about  10  to  11  mio  t  of  the latter. Second,  International trading rules  to which  both the  US  and  the  EC  are signatories,  specifically permit the  use of export subsidies,  provided  they are not  used to  gain  more  than  an  equitable share of  the market. We  maintain,  and  trade statistics support our  view,  that we  have  kept  to these rules. And  last,  but of signal  importance,  the  EC  is  the American  farmers'  best customer  taking  about  1/3 of 4. US  farm  exports  and  running  a  massive deficit with vou  on  our transatlantic agricultural trade. It seems  to  me  that where  the  US  has  lost markets  -the major  factors  have  been  the  strength of the  US  dollar brought  about  primarily  by  a  massive  budget deficit - a point of view  now  subscribed to  by  USDA  in one  of their more  recent publicatious  -~and,  of course,  a  desperate . I ... shortage of  funds  particularly in developing countries. This,  of course,  is not  a  very  original diagnosis but is perhaps  worth  repeating  once  again. This  brief review of past events  should  not  be taken  to  imply that everything is fine  on  the other side of the Atlantic  and  that we  have  no  problems  whatso-ever  in the  Cormnuni ty.  Those  of  you  \vho  follow  develop-ments  in the Community,  even at the most  superficial level,  will  be  well  aware  of  the  serious  problems  \Je currently face.  On  the agriculture  front,  \ve  are  both of  us  - US  and  EC  together  - basically  faced  with  the same  problem  :  that of  producing  larger quantities  than markets  can  absorb  which,  of  course,  is not  the  same  as saying that there is  too  much  food  in  the  worl~. Whilst  I  strongly believe  that the  CAP  is one  of  the major  achievements  of  the  European  Community,  it must  -like any  other in?titution or  policy,  if it is  to  survive, and  survive it will  - adapt  itself to  changing conditions. In  the  Community,  technical  advances  and  productivity gains  have  Meant  that output  has  risen more  rapidly than  consumption. Increases  in  the  volume  of agricultural production 5. have  averaged  between  l  l/2  and  2%  a  year whilst  consumption has  only  risen by  about  l/2%. . I . .. At  the  same  time,  we  are running very  low on  cash  -whether  farm expenditure represents  less  than  one half of one  per cent or not. From  1974  to 1979,  expenditure on  supporting agricul-tural markets  grew at 23%  per year  - almost  twice  the rate of growth  in our revenue.  For  the next  two  or three years  - 1980  to 1982  - expenditure  remained fairly stable,  largely because prices  remained relatively high on world markets.  But  since  then  expenditure has increased sharply  (once  again,  as it has  here),  and an  increase of about  30%  is estimated for  1983. Unlike  most  national  governments  - our  Community constitution forbids  us  to run  a  budget deficit.  So, for  the  first time  we  are  running very close  indeed to our  financial  limits. There  is very little spare left.  This  chilling fact  coupled with that of production outpacing consumption is the  background  against which  the  Commission  has  pro-posed  an  essential and  very  tough  double barrelwbattery of measures  for  the rationalisation of our agriculture. The  first was  announced  in July and  concentrated  on  a  broad adapt~tion of our  farm  policy  - the  second,  revealed only two  weeks  ago,  makes  specific proposals  as  regards  prices for  individual  crops. . I . .. 6. The  main  thrust of the  Commission's  proposals  is  : to adapt our agricultural policy to meet  the  changed conditions of  the mid  80's - to discourage  surplus  farn production - to limit Community  spending  on  farm  support. Time  does  not allow me  to describe  in  any  detail the  full  panoply of measures  which will hit  8  million European  farmers  and their families  and  which will demand  substantial sacrifices  from  them. The  European  farmers'  organisation  - COPA  - said re-cently that the proposed measures  "would  have  extremely serious repercussions  on  all sectors of agricultural production  and  would  lead  to  a  further  substantial fall in  farmers  incomes". But  briefly,  the measures  envisaged  are  : l  production quotas  with  severe penalties  for farmers  who  exceed  them  - a  75%  levy  in  the case of dairy  farmers,  for  example  ; ii  extension of  guarantee  thresholds  (guarantee thresholds  put  a  strict ceiling on  the  amount of  a  given  crop  a  farmer  may  produce without him  having  to contribute  to  the  cost of dis-posing of  the  surplus) . I ... 7. iii  a  tough price policy for  farm  products  which will entail_reductions in  some  cases  and  an intensification of our efforts to narrow the gap  between  our prices and  those of our  com-petitors  ;  - I  \'lill return to these  two  aspects in  a  moment ••• iv  prices  for  some  surplus  commodities  to be fixed  for more  than  one  marketing year v  reduced  intervention or  support buying vi  - and,  the  discontinuation of  a  number  of production aids  and  premiums. o. This  brings  me  to  the  external aspects  of  the  package. Since our  own  farmers  are being  asked  to  make  considerable sacrifices  and  to limit their production,  the  Commission feels  that it is not  unreasonable  to  review  the  treatment of  competing  impo~ts provided that this is done  strictly in accordance with international trading rules. As  I  said earlier,  we  are aiming  to  narrm1  the  gap between our  grain prices  and  those of  our competitors. Such  a  move  will,  in the  long run,  have  the  effect of making  grain substitutes much  less attractive.  But until that time  and whilst we  are inplementing  a  s·::::-ict guarantee  threshold  and  requiring our grain producers to limit their own  production,  it is absolutely essential . I ... to have  some  effective stabilisation of the  imports of grain substitutes.  Such stabilisation should also help to reduce  surpluses  in the  ~ivestock sector  - particularly in milk. Our  aim of stabilising imports  of substitutes is not a  fiendish  European  plot  aimed  specifically at the resi-dues  of the  US  corn processing industry.  Substitutes are  imported  into the  EC  from  a  wide  range  of  sources and  arrangements  have  already been  concluded  for  manioc and  for  bran  coming  from  South East  Asia  and  elsewhere. It is  now  proposed  to stabilise the  imports  of other major  substitutes  - corn gluten  feed,  for  example  -a  residue,  to  a  large extent,  from  the  corn  sweetener industry which,  incidentally,  has  been  able  to  take advantage  of  US  support arrangements  for  sugar . Imports  of  cgf  have  soared  from  under  700.000  tons to  3  million  tons· since  1974. However,  and  I  must  stress this,  what  is being proposed is not hasty unilateral action,  not  a  banning of corn gluten  imports  nor  even  a  reduction  in  imports, as  one  might  gather  from  the  howls  of protest,  but  a calm and  reasoned  negotiation  aimed at a  stabilisation of imports  and  this only after carrying out  the  proce-dures  laid down  in the  GATT. . I ... 9. 10. Two  final observations  about this particular proposal. It does  not  seem  to  me  unreasonable  to  ask  for cooperation from other countries  in limiting our  imports  of subsitutes since adaptation of the  CAP  - with the  cutbacks  envisaged  -is in their interest since it should  lead to  a  better balance  on world markets  - something the  US  has  been  pressing us  to  do  for years. And,  furthermore,  it seems  to  me  that if we  can successfully stabilise our  imports of grain subsitutes, then  the  amount of European wheat which  would  be  forced onto  world markets  because it had  been  displaced  by  sub-stitutes in animal  feeding,  would  be  reduced.  A  factor which  should not be without interest to  a  number  of those  represented here  today. The  second measure  which  has  caused concern here  in the United  States  and  nowhere  nm:e  so  than in Hr.  Weems association,  is the  proposed  consumption  tax on oils and  fats. Let  me  try to  calm these  fears. First,  the tax would  be  non-discriminatory  and applied  to all oils and  fats,  excluding butter,  whether produced  locally or  imported.  Imports  would  be  treated no  differently  from  domestic  products.  This  squares fully with  international trading rules. . I . .. Second,  it is extremely doubtful whether  the tax would  have  any measurable effect on  the quantities of oil  seeds  and  beans  ir:tported  because: (a)  the  low rate of  tax proposed  is unlikely to alter consumption patterns of oil and  margarine: (b)  all other vegetable oils,  including olive oil, would  be  taxed at the  same  flat rate which  would have  a  proportionally greater effect on  lower  priced l.argel.y oils - such  as  rapeseed oil produced/from Comounity grown  seed: (c)  soya  beans  and  meal  are  imported primarily for  animal  feed  and  not  for oil production. Third,  and  most  important,  it is no  part of this proposal  to subject  3  to  4  bio  $  \vorth  imports  of  soya bean or  soya meal  or any other oil seed  to  any  restriction, tax or  levy. Let  us  now  turn to  the detailed price proposals made  a  fortnight  ago  but which  have  to  be  seen  in the frame\mrk  of the earlier proposal made  last July. We  have  explained to the  10  national  governments  that what  is required  from  them is  a  global decision before 31  narch on  both elements.  There  can  be  no  picking and choosing  from  the list as  one  might  do  from  an  a  la carte menu.  Ministers  can  no  longer put off taking difficult decisions. 't·lhat  has  been  proposed  in reality is  a  virtual price  freeze,  but with variations  - a  few  prices are to  be  increased,  some  frozen-and  some  reduced. . I ... 11. Our  price proposals  have  been  adapted  to  the different market situations of different products. For cereals,  milk,  wine  and  tomatoes,  where the market  situation calls for  a  particularly restrictive pricing policy,  it is proposed  that prices  for  next year are  frozen at their present level  ; For  colzaand  rapeseed,  where  the guarantee thresholds  I  mentioned earlier have  been exceeded  and for certain varieties of  tobacco,  price reductions are proposed  ; For  sugar,  durum,  wheat,  sunflower  seed,  beef and  some  other products marginal  increases  have  been proposed. The  average  effect of these measures  overall will be  to  increase prices  by  0.8%  in Ecu  terms.  But  when expressed  in national currencies,  which after all is what our  farmers  are paid in,  the result will  be  an average  frop  of  l/2%. It is abundantly clear that  some  parts of this package will be difficult for  the agricultural  com-munity to accept,  particularly after an  average  decline in  EC  farm  incomes  of about  6%  last year.  But it has to be  pointed out that the  CAP  has  helped to protect our  farmers  from  the worst effects of  the  economic crisis.  Farm  incomes  in  some  other parts of the world declined more  steeply  last year. . I ... 12. It is also abundantly clear that the market situation for  many  of our  farm  products is extremely difficult and in milk particularly production has  gone  far  beyond  what the market  can handle.  Public authorities cannot  be expected to  take  charge of all these  products  for  which there is no  market.  The  CAP  cannot continue  on  such  a basis  - one  which  is neither economically  sound  nor financially acceptable. However,  this is not to  say that these  proposals for  European  agriculture are merely  a  list of  price savings  to  the benefit of our  hard  pressed  budget  and at the  expense  of  the  farm  community.  They  have  to  be seen  as  part of  a  coherent,  overall policy  for  the  de-velopment  not  the  dismantling of  the  Common  Agricultural Policy. Neither  should  they  be  seen  as  an  attempt  to  shuffle off our  problems  on  to  our  friends  and  allies.  They  are a  serious  and  honest effort to  adapt our  farm  policy to meet  the vastly changed  conditions  of  the  mid  80's. As  a  result,  the  CAP  will  be  given  the opportunity to continue to ensure  food  supply  and  price stability,  to give our  farmers  a  reasonable,  but not  excessive,  return and  yet permit  us  to  play  a  positive,  cooperative  and responsible  role  in the  world  trade. *  *  * DR/sbh 

Western Europe's programme to keep its agriculture strong. Address presented by Derwent Renshaw, Secretary for Agriculture, Delegation of the Commission of the European Communities, Washington DC, at the 37th Annual Southern Agribusiness Forum. Memphis TN, 26 January 1984

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