BACON INDUSTRY (AMENDMENT) BILL. (Hansard, 8 March 1939)

THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF FEVERSHAM)
My Lords, the purpose of this Bill is to make certain amendments in the Bacon Industry Act, 1938. These amendments have been found to be necessary since the passing of that Act last July. Your Lordships will know that the Bacon Industry Act established a bacon price insurance scheme for the bacon industry. This price insurance scheme was designed to protect pig producers against fluctuations in the price of feeding stuffs, and to protect bacon curers against fluctuations in the price of bacon, for a limited period of three 69 years. Pig producers receive fixed prices from curers during the three years to which the Act relates, and if the price of a certain ration of feeding stuffs rises above a stated level, pig producers receive an additional sum, which is provided, in effect, by the Exchequer. If the price falls below that stated level the Exchequer receives, in effect, a payment from pig producers. On the other hand, bacon curers are reimbursed by the Exchequer if bacon prices fall below a standard fixed in the Act, and when prices rise above that standard they make a similar payment to the Exchequer.
Of course the operating margin of the curers is derived not only from the sale of bacon but also from the sale or manufacture of those parts of the pig called the offals, which are not turned into bacon. The most important product manufactured from the offals is lard. At the time when the principal Act was framed it was felt that there was no need to make any provision for lard in the insurance scheme, because it was anticipated that lard prices would maintain the stability which they had shown for a considerable period before the Act carne into operation. This, however, has not proved to be the case. The price of lard dropped steadily throughout the year 1938, and within that year there was a total drop of 20 per cent. compared with 1937. This drop was accounted for in part by a marked increase in imports from the United States, which appear to have had a dominant effect on the market for lard in this country. Over and above this consideration the position of the curers is made worse by the removal of the duty (10 per cent. ad valorem) under the Anglo-American Trade Agreement, and having regard to the increasing production of pigs in the United States of America it is expected that lard prices will remain weak for some time to come. The Government, therefore, decided that in order to round off and complete the insurance scheme of the principal Act there should be some means of compensating curers for falls in prices of lard, and the main purpose of the Bill now before the House is to remedy this deficiency.
The Bill gives effect to this decision by fixing basic lard prices in the same way as basic bacon prices were fixed in the principal Act. For the first year the basis has been taken as 65s. per cwt., as indicating the average level of lard prices 70 which prevailed when the main structure of the price insurance plan was settled. It has been estimated that a rise or fall of 1s. per cwt. in the price of lard causes on the average a rise or fall of 1d. per cwt. of bacon in the curer's returns. It is therefore proposed that when the price of lard falls below the basic price by 1s. the standard bacon price shall rise by 1d.; that is to say, the level at which the curer ceases to receive money from the Exchequer and begins to pay into it is raised by 1d. Similarly, when the lard price rises by 1s. above the standard level, 1d. is subtracted from the standard bacon price. That is obviously and must necessarily be a rather technical and complicated matter of figures, but I must state the matter for your information if I am to explain the provisions of the Bill at all.
In the Bacon Industry Act, as your Lordships will be aware, the principle of "tapering" is applied to pig prices and also to the standard bacon prices in the interests of greater efficiency and greater economy, the effect being that these standard prices are lowered in the second and third years in which the principal Act operates. The same principle is now applied in the amending Bill to basic lard prices, which would be reduced to 63s. per cwt. in the second year and 59s. in the third. The alterations I have described are dealt with in subsections (2) and (5) of Clause 1 of the Bill. The remaining amendments effected by the Bill are of a somewhat technical nature, and I do not propose to detain the House by explaining them in detail, unless your Lordships desire me to do so. Subsection (3) of Clause 1 deals with the arrangements for weighing bacon for the purpose of calculating the amounts due to and from the Exchequer, and subsection (4) re-defines the ascertained bacon price, so as to remove certain difficulties that have arisen under the definition contained in the principal Act. Clause 2 effects an alteration in Section 19 of the Act relating to the curing of imported pigs and carcases.
Clause 3, subsection (2), of the Bill makes the provisions of the Bill retrospective, as it is felt that the price insurance on lard should come into effect on the date on which the curers become liable to pay the standard pig prices. Therefore the complete scheme will take effect from the commencement of the contract system, which started on 1st December last. It will be seen that there has 71 been no departure in this Bill from the intentions of the principal Act, and I trust that, with the explanation that I have given to the House, your Lordships will be prepared to give the Bill a Second Reading. I beg to move.

THE EARL OF CRAWFORD
My Lords, I will engage to say not one in a million people who produce bacon or consume bacon will have the remotest idea of what this Bill means. It is one of the most complicated bits of draft-men's prose I have ever seen. But there is one group of words in it which I think authorises me to make a remark or two about my practical experience of matters. It refers to "specified premises and specified pigs"—Clause page 2, lines 14 and 15. For a good many years I have produced pigs and have done so in a manner which is, I understand, eminently satisfactory to the gentleman who buys the pigs from me. In the ordinary way of business my pigs are sent to him on a particular specified day in the week to his specified premises, and my specified article exactly suits his requirements. It is just as long as he likes, just as tail as he likes, just as broad as he wishes, and its interior is precisely suited to his requirements. His credit is good, and his cheques are received by me on the appointed day.
Well, it is a matter of twenty or twenty-five miles to his specified premises, but a few weeks ago I was instructed to send my pigs to Yorkshire, 220 miles away. It takes fifteen hours for them to get there. My factor has made the best arrangements he could that my pigs shall be cosy on the journey, and I am bound to say that I am paid as steadily and as regularly as I used to be paid before. But it seems to me rather a slow and painful and, for the pig, fatiguing process. I hope it may effect in due time, as my noble friend on the Front Bench said, a contribution to improved efficiency and greater economy; but meanwhile it seems to me a very cumbersome and roundabout method of doing business.

THE EARL OF FEVERSHAM
My Lords, I cannot but concur in the opening remark of the noble Earl when he said that this measure was one of the most complicated that it has ever been 72 his experience to come across in your Lordships' House. The noble Earl has had infinitely greater experience of Bills submitted to this House during the course of this century than I have had, but I cannot believe that there have been more than a round dozen Bills submitted of a more technical character than this. It has taken me a considerable time to begin to master the intentions of the clauses. But my noble friend has, in raising a point arising out of the Bill, been generous to me, inasmuch as he has not referred to a small or detailed or technical point, but to the point of the allocation of pigs under the revised contract system which has called forth a lot of criticism during the last six months. Perhaps therefore your Lordships will allow me for a few moments to refer to certain aspects of that system. There is at present much misinformed opinion as to the intention of the Bacon Development Board and the Pigs Marketing Scheme because we have arrived at the position where, in the noble Earl's experience, pigs from the Midlands have been sent to Yorkshire, and in my personal experience a certain number of pigs have gone from Yorkshire, where there are within a radius of fifteen miles of me two factories, down to Birmingham.
I should point out that the first contract period under the new Act runs from December, 1938, to November of the present year, and producers have offered under that first contract about 1,500,000 pigs. Although the number of pigs offered is less than in previous years, this number in the circumstances must be considered satisfactory in view of the reduced supply of pigs. Rather more than three-quarters of the total were offered on what are called "nominated curer" offers. That means that most pig producers have been inclined to do as the noble Earl has done in the past, send their pigs to the nearest factory, of which they have some knowledge and in which they have some interest. The "open offers" and the "group offers" together have accounted for just over one-fifth of the total. As an indication of the extent to which contracts are being fulfilled, I think it worth while to mention that the total number of pigs offered on long contracts for December was 115,000, and during December 104,000 pigs were delivered and accepted against 73 these contracts, which on past experience is quite a good ratio of deliveries to the number contracted for.
This is the point: the old system of contracting under which producers could contract with any curer they chose resulted in a very uneven distribution of contracts among the factories. Some curers were well supplied; many did not have enough pigs to give them an economic through-put; a few even were unable to secure a sufficient number of contracts to carry on their business with success. Curers who were short of supplies had to buy pigs on the open market and eventually open market prices rose above the contract prices to the detriment of contracting producers. The result was that the intentions of the Bacon Marketing Schemes completely failed, and we had a collapse in organised marketing which destroyed that confidence and success which had been given to such an extent in the initial stages to those schemes that within a comparatively short time the pig population of this country increased 98 per cent. Owing to the breakdown due to the causes that I have enumerated, the pig population has fallen in the last eighteen months to such a pitch that there are not sufficient pigs for all the curers, whether supplied in the open market or under contract.
Therefore, under the proposals of the Bacon Industry Act one of the most important features was a rationalisation scheme to be prepared in the course of three years among the curers themselves. Under the new legislation, which was brought into operation last July, it was necessary to protect the new contract system against the dangers of uncontrolled open market buying. Both sides of the industry agreed that there should be some fair apportionment of pigs among the factories, and this was a new principle for the industry. Those who were responsible for carrying it out were obviously breaking new ground and they had to remove or overcome the natural misconceptions and prejudices that existed. The main source of complaint about allocations has been the transfer of pigs to factories other than those which the pig producers have nominated on their contract forms. The reason, it is contended, is that several factories were offered pigs well above their proper shares and it was therefore inevitable that these extra pigs should be diverted 74 to other curers who were short of their allocations. Further, owing to the reduced supply of pigs, as I said, it was inevitable that most curers would have to work with fewer pigs than formerly, and consequently their shares of the contract supply have been much smaller than were expected. In spite of the widespread criticism of the allocation proposals, only one pig out of every six for a nominated contract was transferred away from the nominated curer. These figures go to prove that the evil to which the noble Earl has referred is not quite so widespread as may be commonly imagined.
Just one further word on the important question Lord Crawford raised in respect of transport. Many complaints have been made that there has been unnecessary and costly transport, but I should like to emphasize the fact that there is no evidence at the present time that transport costs this year will show an increase over those of previous years. The Bacon Marketing Board have been given certain powers to regulate the transport of pigs by or on behalf of the curers, and these powers are being used so as to secure all possible economies in the transport of pigs. In conclusion I would like to express to the noble Earl this view, that the organisations concerned cannot necessarily be content with the experience of the allocation of pigs among curers that has occurred during the last few months, but it must be borne in mind that there is to all intents and purposes a revolution being effected in the processes for the marketing of pigs and of the manufactured product, bacon. A committee recently appointed by the Pigs Board has submitted a full report to the Bacon Development Board upon the present defects of the allocation system, and it is anticipated that the Development Board in the next contract period will do all that lies within their power to remove the ills to which my noble friend has this afternoon referred.

THE EARL OF CRAWFORD
By leave of the House, may I thank the noble Earl for his very interesting explanation and add that my pigs have expressed no prejudice on the subject at all?