HL Deb 17 April 1957 vol 203 cc162-84

6.28 p.m.

Debate resumed.

LORD MELCHETT

My Lords, perhaps the noble Earl who was speaking before the adjournment will forgive me if I do not follow him into the technicalities of milk production and the various means of determining the quality of milk; but I am sure fairly precise answers can be given to quite a number of the important questions he raised, and perhaps the noble Earl who is going to reply will touch on them. I have personal knowledge that in some of the research institutes which specialise in milk a great deal is known, and the knowledge, I think, is fairly easily obtainable if asked for.

I should like to follow, very briefly, the noble Lord, Lord Forbes, who raised the important question of the import of feeding-stuffs. If one turns to the most recent White Paper on the Annual Review and Determination of Guarantees, one finds that the three paragraphs which deal with production policy all make reference to the problem of the increasing importation of feeding-stuffs, or, at least, they all make reference to the importance of reducing the amount of imported feeding-stuffs. In paragraph 10, the production policy is restated as continuing to be that of a selective expansion of the net output with the main emphasis on the substitution of home-grown feeding-stuffs, including grass, for imports; and in the very next paragraph we are told that greater and better use should be made of home-grown products, especially grass. The paragraph states: In so far as the greater and better use of home-grown products, especially grass, should reduce unit costs of production, it should help the industry… In the next paragraph, paragraph 12, which is still dealing with the production policy of the Government, we are told that we must rely to a greater extent, for the maintenance of a large livestock population, on home produced resources. That is really all we are told in this White Paper about production policy. The whole emphasis is on reducing imported feeding-stuffs and making better use of our own home-grown resources.

On the other hand, if one looks at Table D in the First Appendix of the White Paper one sees in fact what has been happening. Here I should like to emphasise once again that this is a continuation of the policy which we have been pursuing for some time. What has happened is that there has been a very big increase in the import of feeding-stuffs. The Table shows that in four years the tonnage has nearly doubled. I think that during that time prices have increased quite considerably, so actual expenditure, from a balance of payments point of view, is a very serious issue indeed, which is clearly recognised by the Government. I believe that as matters stand (this is the point I should like to make) there is little hope of reducing the import of feeding-stuffs. On the contrary, I believe that the import of feeding-stuffs will continue to increase, as it has done during the last four or five years, under the present arrangements of the long-term assurances and the price structure which has been now fairly well established. Because there is limitation to the amount of adjustment which can be made in prices, I think it is certain that we are going to get a continuing increase in the import of feeding-stuffs.

There are three main reasons for this. First, since 1951 or 1952 (it was about the turn of the year when we de-rationed animal feeding-stuffs) the import has been completely free, including that requiring the expenditure of dollars. There is no restriction whatsoever, and the importers are in a very special position—a position enjoyed by practically no other importers of commodities into this country. If you want to import machinery, particularly from the dollar area, or raw materials for many sorts of manufacture, either you are subject to restrictions or quotas or you have to prove that it is impossible to make use of home resources or obtain the machinery from manufacturers in this country. The feeding-stuffs importing industry was put in a very special position. Secondly, the marketing of animal feeding-stuffs in this country is a very sophisticated and highly-developed industry. Those engaged in it are very efficient in selling their products. So we have, on the one hand, absolute freedom to import, including complete freedom to spend dollars, and on the other, a highly developed sales organisation which is, I sometimes fear, much more efficient at persuading farmers to buy expensive feeding-stuffs than the Ministry of Agriculture's Advisory Service can be in persuading people to use less imported feeding-stuffs and make more use of grass and home-grown silage or whatever the desirable alternatives may be.

Lastly—I think this is really an important point—under existing arrangements relating to livestock products the farmer is automatically recouped for any increase in the price of imported feeding-stuffs which he buys. Any rise in the price of these feeding-stuffs is automatically taken into account and the increase is made good to the farmers. It is part of the cost taken into account before any reduction is made under the long-term guarantees. So we have a system whereby the Government, in practice, are encouraging people to use imported feeding-stuffs; they are giving every freedom for the materials to be brought into the country. Although I fully support the line of policy advocated in the White Paper, I believe that the Government are beating the air in this respect and I cannot see how we are going to achieve the desirable objective of reducing our imports under this system.

I should like to make just two suggestions as to what might be done to put more direct emphasis from the Government's own price support operations on to the increase of home production and the reduction of imports. First—and here I follow the noble Lord, Lord Forbes—would the noble Earl with his colleagues consider whether we could not introduce a direct silage subsidy? It has been introduced in Northern Ireland, and I have taken some trouble to find out what experience they have had there with it. Whereas, I understand, conditions there are quite different from conditions taken over the whole of this country, nevertheless their experience has been encouraging, and I believe we have enough information now to operate successfully a direct silage subsidy scheme in this country.

I should like to see arrangements made whereby we reduced some of the subsidy going into milk prices and put it on to silage, thereby directly discouraging increases in the importation of concentrated feeding-stuffs and encouraging the use of our own grass and silage making. Secondly, I wonder whether the noble Earl could tell us why the Government are so adamant in their attitude towards restricting the imports of feeding-stuffs. Could we not have a quota system? I cannot see why we should be told that if we restricted imports we should he forced back to rationing. After all, the Government say we can substitute home-grown materials for imports. Therefore, there is no reason why there should be a shortage or why we should be forced to adopt rationing. If we introduced a quota system, which could be on a declining basis each year over a period of, say, five years, I feel certain that that would encourage the production of grain and grass and other feeding-stuffs which could be substituted for this enormous quantity of imports.

Lastly, on this point, I have a suspicion that the noble Earl will tell me that a good deal is being done. In this Price Review the Government have increased the subsidy on nitrogen which is a direct help to grassland production, and we have the scheme of help for silos. But I am convinced that these schemes are too indirect, and that they are, not giving sufficient support for it to have any real effect on the import of feeding-stuffs. This is one of the largest single items in the import bill, as can be seen from an examination of the Economic Survey White Paper. I ask the noble Earl and the Government whether they will not give serious consideration during this year to making some alteration in these arrangements for the next farming year.

6.40 p.m.

THE EARL OF LISTOWEL

My Lords, the main theme of most of the speeches to which we have listened this afternoon is that the farming community as a whole—that is, the landowner, the farmer and the farm worker—has done a very good job for the country. That is a proposition with which no one would disagree. I do not think that the farm workers were explicitly mentioned by any of the speakers whom I have heard, but I am sure that that omission was not deliberate, because we should all agree that they are equal partners in the work of farming. Most of the speeches were based on what one might call a retrospective view of farming, and there is something to be said for looking into the future, which is what the noble Lord, Lord Melchett, was doing and what the noble Lord. Lord Forbes, did in his remarks. The future has this advantage over the past: that the future can be changed for better or for worse, whereas we must accept the past just as it was.

What I should like to do in my few remarks is to discuss various matters relating to the future of agriculture. I think that the Annual Review, which is the main topic of our debate, makes it clear that the future of agriculture, like that of any other industry, will depend upon its efficiency. No one would disagree with the statement in the White Paper (and here I quote from paragraph 10, to which the noble Lord, Lord Melchett, referred) that: The major objective of policy continues to be that production should be more economic. Of course, that is the essential feature of production policy. The trouble is that it is not agriculture which is inefficient—as the noble Earl, Lord Dundee, rightly said, the efficiency of agriculture compares favourably with that of other industries—or that its high degree of efficiency is not improving; the trouble is that the efficiency of agriculture is not improving quickly enough in relation to rising costs. This is shown, among other things, by the further increase in the total subsidy to £245 million in the current year.

This problem of increasing farming efficiency, which means reducing the cost per unit of farm produce, is all the more, important because we are told in the White Paper that there is every likelihood that the present level of support will be even higher next year. It is true that this year's Review, unlike the Reviews that were issued when Mr. Butler was Chancellor of the Exchequer—and I think that this is an interesting difference—contains no veiled threats or even discreet warnings from the Treasury. On this occasion "His Master's Voice" is completely silent. Obviously, it is very desirable that that should be so. Nevertheless, it is perfectly plain that if the cost of agriculture to the Exchequer rises, so does the Chancellor's mental conflict about the allocation of revenue, which may be reflected in agricultural policy. Another tiresome symptom of the impact of this on the public mind is that there will be accusations of "feather-bedding" from certain, probably rather ignorant, sections of the This makes it more than ever desirable to stabilise ultimately, if we can, our annual expenditure on production grants and price guarantees.

This can be done only under two conditions. The first is that the Government succeed in stopping inflation. We all want to stop inflation. The Government have tried very hard, but I think that the noble Earl, Lord St. Aldwyn, will admit that their efforts have not been successful so far. I daresay the position might have been worse, but no one can say that prices will not still rise and that there is not a serious prospect of even higher prices in the near future. The other condition is that the farmers and the Government together should make an even greater effort than they have made hitherto to improve the efficiency of the industry.

Another important aim of national policy, apart from farming efficiency, is the great importance which agriculture still has from the point of view of helping with the balance of payments. We are still importing about half our foodstuffs and a very considerable proportion of expensive animal feeding-stuffs. This latter expense the Government hope to be able to reduce. The noble Lord, Lord Melchett, was very pessimistic about that. I do not think that I altogether share his pessimism, although I thought that his arguments were novel and fair enough. The main way in which agriculture can help us in the near future with our balance of payments is, as the White Paper suggests, by substituting home-grown for imported animal feeding-stuffs. The saving that we could make in foreign exchange if that were done to any considerable degree would be a valuable contribution to our balance of payments. I am sure that nobody would say that we are over our balance of payments difficulties. They still remain a threat to our economic future. If that is so, clearly we must ask farmers to be willing to do whatever they can to help us to save foreign exchange by growing more grass and feeding crops at home and increasing the livestock population, especially sheep and cattle.

I think that the pattern for the future of agriculture that emerges from the White Paper is probably the right one for the country in normal times. During the war we needed milk and corn crops. We now have enough milk. Of course, there have been many complaints, and justifiable complaints, from producers about the effect of reducing the price given for milk; but we have enough milk and do not want to stimulate the increase of milk production, and it is certainly cheaper to import cereals, apart from the coarse grains we need for our livestock. What we need to concentrate on is the growing of grass and the rearing of animals that can be used to take the place of the meat we import now from overseas. We should look for the expansion of farming to the crop that is best suited to our climate—namely, grass—and to the increase in the sheep and cattle population that we can feed by the better use of our own grassland.

But I think there are three main obstacles to the further expansion of agriculture in this direction, and I hope the noble Earl, Lord St. Aldwyn, will give consideration to these matters. I hope that the Government and the farmers will consider seriously the first of these difficulties which must be removed if expansion is to go on in the right way. This obstacle is the continued drift of labour from the land. This has not been mentioned so far in the debate, I think, but it is a very serious matter. Last year, when we were debating the Annual Review, I mentioned that there had been a considerable exodus during 1955. In that year, 34,000 whole-time farm workers left the industry. And I added, I think without contradiction from the noble Earl opposite, that if we go on losing manpower at anything like that rate, or even at, say, half that rate—that is to say, 17,000 whole-time workers a year—we should soon find ourselves faced by an acute labour shortage and there would be a drop in food production.

I have looked at the figures for 1956, which come in the June and December returns, and I am afraid that my interpretation of those figures is that they are far from reassuring. I hope that the noble Earl, Lord St. Aldwyn, is less alarmed by them than I am. In England and Wales there has been a loss in the past year of 13,000 whole-time farm workers; in the United Kingdom—that is, taking in Scotland as well—there has been a loss of 21,000 whole-time farm workers. This shows that, even if the decline in the labour force was not as much in 1955, and that, at any rate, the drop is in itself satisfactory, it is still proceeding at a rate that will not only prevent expansion but will, unless it is slowed down, start to reduce output in the not very distant future.

We all know the reasons why young people who have been brought up in villages often prefer to work in the neighbouring town. The main attraction of the towns is clearly the higher wage paid in industry and transport. The gap between the average earnings of the farm worker and those of the industrial worker is now well over £3 a week, and the success of recent wage claims in shipping and the railways, which no doubt we have all studied in the Press, has certainly widened the gap in relation to these particular industries; and these claims may start a round of claims in other industries.

EARL BATHURST

Perhaps the noble Earl will allow me to interrupt for a moment, as he has missed out what seems to me an important point when talking about the wage of the agricultural worker as compared to that of his comrade in the city. The agricultural worker on a good farm must start off something like £1 a week, and possibly £2 a week, better off (depending on the type of council house the town worker occupies) if he lives in a good modern cottage. He has fuel at hand and easy to obtain—that might be worth something like 10s.

a week; milk and eggs are cheaper for him than for his comrade in the city; and he has no transport to worry about, whereas somebody working twenty miles from a factory can pay up to 15s. a week for transport alone. The living of the agricultural worker must be something in the region of £4 a week cheaper.

THE EARL OF LISTOWEL

I am grateful to the noble Earl for helping me to qualify what I have said, because clearly I should have made that qualification myself. I accept entirely what he says. There are, of course, these incidental benefits of living in the country which supplement the money wage of the agricultural worker. Nevertheless, there is this big money gap, and it is the money gap, coupled with many other things, in-eluding the superior amenities of the towns, which still pull the young people from the villages into the towns. What. I am afraid of is that this process of improved wages in industry—which is very desirable in itself—if it is not coupled with improvement on the land, will result in the continuation of the present drift of workers from the countryside. I think we must recognise that this gap in the money wage between industry and agriculture must be made narrower if young people are to be kept from moving into the towns and working there instead of in the countryside.

But, apart from that, there are many other considerations which have to be borne in mind. Of course, the more distant a farm is from the nearest town, and the fewer its amenities, the more difficult the labour problem becomes. Yet it is from these remote farms in hill and upland areas that we must look for the sheep and store cattle which we need in much larger numbers to-day. I hope the Government will bear in mind the whole range of amenities and attractions which must be provided in the countryside if they are to rival the amenities and attractions of urban life. For this purpose, financial support for agriculture alone is not sufficient; what is needed is a much more rapid expansion in rural social services, such as housing and schools, and in public utilities, such as electricity and water. I hope that the Government are aware of the wide range of measures required to make life in the country, as compared with life in the towns, satisfactory to the young people.

The second of these obstacles to the greater efficiency of agriculture is the size and shape of farm holdings. The trouble here is really an historical one: it is that property rights in land have grown up in an entirely haphazard way and without any basic relationship to economic efficiency. The majority of farms in this country are of less than 100 acres, and many of these are far too small to give their occupants a reasonable livelihood. For instance, there was a recent survey in the Eastern counties, probably the most prosperous farming area in the country, where it was found that two-thirds of the farms of between twenty and fifty acres in size are uneconomic; and, of course, the number of the small uneconomic farms in the hill and upland areas of Wales and Northern England is much greater and a larger proportion of these holdings is uneconomic. Of course, such farms are handicapped by their shape, by boundaries that divide fields or cut off access to water. The Zuckerman Report, to which I shall refer only briefly, in passing, because we shall be debating it later on, goes so far as to say: It is in fact the pattern of occupation rather than the nature of the land itself that makes farming so generally unprosperous in marginal bill areas. Her Majesty's Government have, at any rate, recognised that it is sheer waste to spend public money on uneconomic farm units, and one of the conditions of capital grants in the recent White Paper on long-term agricultural policy is that farm units should be economic, or could be made so with the improvement proposed; and these capital grants will not be made if the unit is not economic in itself, or cannot become economic with the necessary improvements. Of course, a similar condition already applies to grants given under the Hill Farming and Livestock Rearing Acts. I am glad that the White Paper—not this one, but the earlier one—goes a little further and, in fact, provides an incentive for the amalgamation of these tiny pieces of land by providing a grant of one-third toward the cost of amalgamation schemes. So far, so good. But I do not feel that this is nearly enough to bring about the widespread adjustment of farm boundaries needed for productive efficiency.

I hope that the Government will study the methods that have been successfully used for this purpose in other European countries. It is not only a matter for the Government, of course, but a matter for farmers, too. Here one hopes that they will bear in mind that the productivity of farm land is really far more important than any particular freehold or leasehold rights. Of course, greater co-operation would also help to overcome this difficulty of size; and the noble Viscount, Lord Bledisloe, emphasised the value of cooperation. But I do not feel that that is by any means the whole answer.

I should like to pass, finally, to the third of these obstacles to greater efficiency, and that is the extremely wasteful use that is now being made of large areas of agricultural land in different parts of the country. We have very little cultivable land in this country. A large part of the country is heath, mountain, streets and buildings, and if the cultivable land were shared out equally between the whole population, the average Englishman would have about one acre, whereas the average Frenchman would have 3¼ acres, and the average American, needless to say, 12½ acres. With those acreages, how badly placed we are in relation to many of our neighbours! If that is so, it is all the more essential that our limited area of cultivable land should produce all the crops and livestock that modern farming technique can give, or that it can produce economically, without an undue expense on our resources. There is probably not much more room for substantial improvement in the use of our best arable and grassland, but the scope for improvement in the use of marginal land is enormous; and this is just the type of land required, both for providing a substitute for imported feeding-stuffs and to rear a much larger number of sheep and store cattle.

As your Lordships will remember, the Government set up about two years ago a Royal Commission to suggest ways in which we could put to better use our 2 million acres of common land. Some of this land will no doubt be found to be more suitable for forestry or recreation than for agriculture. But the Royal Commission have no doubt been thinking about the improvement of many thousands of acres of rough grazing which are included in this area of common land. I should like to ask the noble Earl whether he can say how far the Royal Commission have got, whether we are likely to have their Report before long, and whether they contemplate publishing an Interim Report. After all, this is a matter of the utmost urgency, and the sooner the Government get the Report, the sooner it will be possible to take what action may be required.

I believe that a much more substantial contribution, possibly, than that from common land could be made by a better use of marginal land in the upland and hill areas of this island. As I said earlier, I do not propose to-day to discuss the Zuckerman Report on marginal land, because my noble friend Lord Jowitt has a Motion on the Paper which we shall be discussing shortly after we reassemble. I would only draw the attention of the House to one of its conclusions relating to the potentialities of hill land. The view expressed in this conclusion is that the stock-carrying capacity of 3¼ million acres of upland, marginal land in England, Scotland and Wales, could be so much improved that we could dispense with one-third of our annual imports of carcase beef.

I am sure that these three obstacles and difficulties which I have mentioned—the drift from the land, the uneconomic size of many farm holdings and the neglect of our resources of marginal land—can be overcome if the Government and the farming community go on working together for the same purpose. But I feel that if this result is to be attained, both partners will have to do even more than has been done hitherto, and that in looking to the future of agriculture, that is the direction in which we should look.

7.5 p.m.

EARL ST. ALDWYN

My Lords, the noble Viscount, Lord Alexander of Hillsborough, has drawn attention to the condition of agriculture, and he does not appear to think that that condition is, frankly, as healthy as it might be. I am afraid that I must disagree profoundly with his diagnosis. I believe that there is abundant evidence that the state of our home agriculture to-day is one of great confidence, of outstanding performance and of fundamental soundness for the future. There is confidence in what the industry has achieved, in the future prospects that lie before it, and in the policies of Her Majesty's Government.

Now what are the facts? Despite rising costs, and despite setbacks caused by the weather, farmers have been sufficiently competent and sufficiently industrious to push their net output from 49 per cent. up to 59 per cent. above pre-war during the last five years. There is every sign that their plans, and the continued improvements in efficiency on which they are based, will push up net output still further in the near future. Output of nearly all livestock and livestock products is still expanding though I shall have something to say a little later on about the dangers which may accompany any indiscriminate expansion of output. Crop production is increasing, too, as the continued improvement in yields offsets the transfer of tillage acreage to grass. There is no doubt whatever that this reffects not only abundant faith in the future but a great investment of human endeavour and material wealth. The contribution that this represents to the national economy is second to none in our industrial life. It has been made possible by the full support given by Her Majesty's Government, by both the great political Parties and by the country at large.

The noble Earl, Lord Listowel, was disturbed about the position of the farm worker and about the numbers. There has been a reduction—I do not attempt to deny that at all—and it has been more or less, as the noble Earl referred to it, a drift from the land. But there is no evidence that the shortage of labour is impeding production, and I think we need to keep this matter in perspective. While the number of workers has been falling, output has gone up, and this indicates that increasing efficiency has counterbalanced the effect of the reduced numbers—in other words, the change reflects genuine progress in reducing costs in terms of manpower per unit. If I may take this opportunity I should like to thank my noble friend Lord Bathurst for his intervention on behalf of the status of the agricultural worker.

The noble Viscount, Lord Alexander of Hillsborough, complained that, in the face of cost increases of some £38 million at this year's Annual Review, the Government increased the total value of the guarantees by only £14 million, leaving the industry to bear, by its own increasing efficiency some £24 million increased costs. These matters can only be taken broadly. Changes in the value of the guarantees are not the same thing as changes in income, because income is affected by many other factors. But, leaving this aside, the impact of the £38 million increase in costs on the net income of 1957–58, as compared with that of 1956–57, will, in practice, be considerably less than was implied by the noble Viscount. For instance, an appreciable part has already affected the net income for 1956–57; only the balance, therefore, is an offset to increasing efficiency in 1957–58. In our view, therefore, taking a broad account of all factors, the industry will still retain substantial benefit from the improvements in its own efficiency.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Do I understand that the argument is that, whatever the increased costs have been—£38 million—the farmer, when he is dealing with the Annual Review, is regarded as having already absorbed a lot of that; that he has had no compensation at all on the guarantee; that he has absorbed it and that therefore it is not really taken fully into account in the Review?

EARL ST. ALDWYN

It is most certainly taken fully into account in the Review: it is already reflected in net income. The noble Viscount also said that the industry had never been expected to bear any comparable burden since 1949. In fact, as I understand it, at the last Annual Review conducted when his Party were in power in 1951, there was a cost increase of no less than £76 million, but an award of only £43 million (and even that included over £11 million for wool arising out of the profits from the Korean situation) leaving £33 million of so-called under-recoupment.

The only real embarrassment in the general picture is that output in certain directions has expanded beyond immediate requirements, notably for milk and eggs. My noble friend Lord Forbes mentioned an experiment of separating milk on his farm up North where the skim can be used for stock-feeding and the cream sold. This is most interesting and we shall certainly watch its development. I understand that something on a similar line is going on in the South-West as well. This embarrassment is due partly to the rapidity of the technical improvement, partly to specially favourable weather conditions, and partly to the critical part that production of these products, especially milk, plays in our farming. Naturally, this presents us with considerable difficulties, and the necessary adjustments are by no means easy. In the nature of agricultural production changes can only be made gradually. Public policy must take full account of that. This we have done and shall continue to do—in our long-term arrangements such as the long-term assurances recently given to the industry, in our production policy, and in our annual determinations of price guarantees.

We have made it quite clear that our home agriculture is going to continue to enjoy full Government support; that the essential needs of the industry will continue to be met, however stringent the requirements of the national economy; and that there is no question of letting the industry down or of making sudden and unexpected changes of policy. This, I think, is now fully accepted in the industry. It has been illustrated most forcibly in the last few weeks. Confident in the long-term assurances that we have given, the farmers' unions have been able to accept a stern Annual Review settlement called for in the broad national interest. That is a tribute both to the responsible leadership of the unions and to the effectiveness of present Government policies. I hope that I did not misinterpret the noble Viscount opposite when I thought he rather scoffed at the idea that we should consider the leaders of the farmers' unions as having acted in a statesmanlike manner.

We have also made quite clear what we expect of the industry. We no longer need output at any cost, but we still want an expansion in net output in those directions that will help the national economy. These are in the production and use of home-grown feeding-stuffs, including good quality grass, to replace imported feed; and in the production of more good quality beef and more mutton and lamb. We still want a large volume of home-produced livestock and livestock products, though not quite as much milk and eggs as are at present in prospect; and we want this large volume of livestock and livestock products to be produced at lower cost and with less use of imported materials. This may well mean some reduction in the present number of dairy cows, for example; but cutting out the least good animals and concentrating on more economic production from the better ones should not hurt any dairy farmer and will be what the nation needs. From our arable farmers we still want the maintenance of a large arable acreage, but with the main emphasis on feed crops and on continued improvement in crop yields.

We are helping and encouraging the industry in many ways to achieve these objectives. In the financial sphere, we have maintained, and where necessary increased, the value of the guarantees. As your Lordships know, we have increased the total value of the guarantees substantially in each of the last three years. This support to the industry, along with its own contribution in improvements in efficiency, has maintained net income despite very substantial cost increases each year, and would have increased net income but for the difficulties caused by the weather—a hazard that the industry must normally be expected to bear.

We have supported this practical assistance by undertaking to maintain the guarantees above clearly defined limits that restrict the freedom of action we should otherwise have, though still leaving sufficient room for us to take due account of national considerations. That is a very real safeguard to the industry and it has been welcomed as such by most farmers—though not, I gather, entirely by "Farmer Alexander." But some critics are suggesting that we intend to use these new assurances not for the protection of the industry but for quite the contrary purpose—to reduce the income of the industry, to discourage home production and to depress the condition of all those who work in agriculture. That is very far indeed from our intention.

We are not, of course, committed to assuring any particular level of income for the industry; nor are we committed to any particular level of production. But we are committed to maintaining a prosperous agriculture, on the understanding that the industry adapts itself as necessary to the national requirements. We have every intention of completely fulfilling our obligation to see that the industry is capable of producing such part of national requirements as we consider, having regard to all the relevant factors, should be produced in this country. As your Lordships well know, that is a high level of output, including, as I have already said, an expansion in net output in the directions that we have indicated will help the national economy. At the same time, any responsible Government must leave itself room to take proper account of those factors which may call in any particular year for a reduction in the guarantees—not only factors such as the Exchequer liability, but also a number of factors favourable to the industry, such as its increasing efficiency, the way in which net income may be increasing, and any decrease in costs there may be in the future.

My Lords, we have heard a certain amount this afternoon about the small farmer. I should like to say that we have taken special care in our determinations to be fair to all classes of farmers, large and small. We realise full well the difficulty created by the reliance of many small producers on livestock products, especially milk, eggs and pigs, which are the commodities of which we do not want to stimulate greater production in present circumstances. At the last Annual Review we considered the possible effects on small farmers of all our determinations taken together. I think that the combination of a substantial reduction in the guarantee on eggs, no change in the guarantee on pigs, and a small increase in that on milk is fair to the small farmers, while at the same time taking account of production needs. But we have gone further than this, for we have also had in mind the possible effect on the small farmer in reaching our other determinations, particularly the increase of 2s. 8d. per cwt. in the standard price for oats and the increase of £3 million on the nitrogen subsidy.

The noble Viscount, Lord Alexander of Hillsborough, asked me what will be the position of the oat grower. The determination as to whether there will be a deficiency payment this year, and what it will be, cannot, of course, be taken until June 30. But I cannot see any real hardship to the producer in that, and of course the increase of 2s. 8d. in the price for the 1957 harvest will materially raise his chances of getting a deficiency payment for that harvest.

The salvation of the industry does not lie in pushing up the level of the guarantees so that everyone's costs can be covered automatically. It lies rather in still better farming, in improved farm management, in the development and use of better techniques, in ensuring the most economical and efficient use of labour and materials, in the control of disease and in improvements of all kinds in the quality and the marketing of what we produce. The Government, for their part, are providing an immense amount of technical advice and practical help—all designed to promote economic production. The expenditure on production grants in general is rising steadily. It is now running at over £70 million a year, compared with about £60 million in 1955–56. It includes high rates of grant on a number of major items, such as, lime and fertilisers, ploughing up grants and the calf subsidy. In sum, it includes all manner of useful things, to which the grants for silos have been added within the last twelve months.

My Lords, several noble Lords have raised the question of a subsidy on silage itself. We considered this suggestion most carefully, as we have done on several occasions. Last year we decided to introduce the subsidy for the construction of silos, but we did not think that we should be justified, at any rate under present conditions, in introducing a grant on silage itself. The noble Lord, Lord Melchett, compared the position here with that in Northern Ireland. I would point out to him, however, that there they have had a grant on silos for a considerable number of years, and all the silos are built virtually to a standard pattern; so that the difficulties which we in this country would have in measuring the content of the pit are largely overcome. That is one of the big problems which I am afraid we have not yet solved. Hardly two silos are alike, and to get anything approaching an accurate measurement of the content would be an extremely difficult job at the moment. I think that the silo subsidy scheme has been extremely well received. In the first three months of its operation over 1,800 projects, to the total value of about £270,000, have been approved.

We are helping the industry to improve the quality of its output so as to meet market requirements. For instance, on meat, we are encouraging production of the right kind of product by the new differential system of guarantees for fat cattle and the two rates of quality premium for pigs. We are supporting marketing schemes in those cases where the circumstances call for such schemes and in two cases where there are special doubts and difficulties—pigs and horticulture—the Government have had investigations made by an independent Commission or Committee.

I should like to add my congratulations to those already voiced on the maiden speech of my noble friend Lord Malmesbury. He was much concerned with the details of the management of the grants under the Agriculture Bill. We shall have that Bill, I hope, in this House before long, and I hope that he will take part in the Second Reading debate on that Bill and enlarge on his ideas. The noble Viscount, Lord Bledisloe made one of his more historical speeches. He gave us a broad picture of agriculture over a considerable period; but he raised one particular point—the question of a subsidy on potash. Again, we have looked at this proposal most carefully. The trouble is that the control of potash is still virtually a monopoly in the hands of two, one large and one very small, cartels outside this country, over which we should have absolutely no control. If we were to put on a subsidy there would be nothing to prevent the price from being raised by an equivalent amount overnight.

The noble Earl, Lord Bathurst, raised the question of standardisation of electricity charges. There he has my complete sympathy, but he must remember that the boards are virtually autonomous bodies; and although I never miss an opportunity of impressing upon them the advantages of having standard rates throughout the country, I am afraid that they have not yet fallen in with that suggestion. The noble Earl, Lord Lonsdale, asked how far we had got with the Arton Wilson Report and its recommendations. The position there is that the main recommendations have been accepted, and there has been a reorganisation of areas, which came into operation on April 1. Most of the other recommendations are being dealt with. The majority of them are likely to be accepted and will be coming into operation shortly.

The noble Lord, Lord Silkin, was very worried about his pigs, and I greatly look forward to seeing his figures and facts. But I am glad that all farmers do not take quite such a pessimistic view about production as the noble Lord does. The general trend is for an increasing number of gilts in-pig, which would indicate that, by and large, people are finding it a not unprofitable business. I hope, however, that the noble Lord will not take his figures for a short period but over the full year, for I think that is important. I hope he has appreciated the advantage which he has had from the new system of guarantees, which instead of working on fifty-two weeks works on on eight weeks' average, and thus reflects very much more quickly any fall in prices. I think the noble Lord will find that he has benefited considerably from that change.

The noble Earl, Lord Ferrers, was very worried about solids-not-fat in milk. It is getting late and this is a subject on which, no doubt, we could have a useful discussion at some considerable length. I will not weary your Lordships tonight, but will merely say that the fact that the housewife cannot herself detect whether the food which she eats is of high nutritional value or low nutritional value is, in my view, no reason for not aiming at the highest nutritional value possible. As I understand it, the standard of solids-not-fat in the last thirty years has gone down quite appreciably, and that seems to me to be a trend in the wrong direction. The noble Lord queried what we could do about it—and in fact there is quite a lot that can be done. It is one of the few qualities in which hereditary characteristics pass equally happily through male and female. It should not be at all difficult, therefore, to raise the standard with a little selective breeding.

Though I cannot claim, I am afraid, to have dealt with all the questions put to me I will try to deal with others—

THE EARL OF LISTOWEL

My Lords, was the noble Earl going to say something about the Royal Commission on Common Land, a matter on which I gave him notice?

EARL ST. ALDWYN

My Lords, I am sorry. I should like to say a word on that. The Royal Commission do not expect to take any further evidence after their next two public hearings, one at Exeter on April 30 and one at Taunton on May 2. Shortly after that they should be in a position to consider the form of the recommendations they are going to make. Now that the Royal Commission has reached that stage it would be a pity to suggest that there should be an Interim Report. It is such a complicated problem that I am sure they should be allowed to complete their full and mature consideration of the matter.

LORD FORBES

My Lords, before the noble Earl sits down, I believe he said that some dairy farmers could do without some of their poorer cows. Does he mean that dairy farmers should replace those with better cows and produce more milk?

EARL ST. ALDWYN

My Lords, I am not suggesting that the noble Lord should produce more milk. But, after all, if, taking the whole of one's herd, one's expenses are so much a gallon with a number of low-producing cows in the herd, then with fewer low-producing cows one's cost of production per gallon would be more favourable.

LORD FORBES

My Lords, does the noble Earl by those words now suggest that if one has a herd of, say, fifty cows and equipment for that number one can quite easily reduce the number to forty cows? That is just not an economic proposition.

7.35 p.m.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I first say how grateful I am to all Members of your Lordships' House for the manner in which they have joined in the debate which I was bold enough to initiate to-day. I did not expect that the noble Earl would agree with my general view about the condition of agriculture, and I hope that he is right and I am wrong and that the Annual Review over the next two or three years will not show any worse results than at present, because we all want to see agriculture really prosperous and improving.

I am not satisfied, however, with the general attitude of Her Majesty's Government on one of the main points—how we are going to use agriculture so that it may become an increasing factor in correcting our balance of payments; and before we part to-night I should like to quote paragraph 90 of the Economic Survey, which says: The outlook will continue to be dominated by the necessities of the balance of payments. We need a current surplus sufficient to finance our long-term investment overseas and to strengthen our position as an international banker. It could not have been put more strongly than it has been put in the Economic Survey, and I should have thought that those ministerially responsible for agriculture had a fairly strong card to play in negotiating with the people at the Treasury, who are always so difficult to negotiate with, in the terms in which they have outlined the situation to Parliament and the nation in their own document. I hope that as a result of doing that there may be better results.

One point on which I thought the noble Earl was wrong was on the question of the contribution made by farmers themselves, by way of increased efficiency, in the past nine years. I have the statistical chart with me and have been looking at it. In 1951 there was a bigger margin than the actual amount this year, but the proportion of grant made was certainly a better percentage of the deficiency than it is in this case; so I will give the noble Earl half a mark for that. The outstanding point is that in this debate it is, in my view, proved beyond the shadow of a doubt that the net income of farmers has been dropping steadily since 1952–53 in comparison with the rest of the community. According to the rates published by Her Majesty's Government, the income of the community in general is going straight up, whereas farm incomes have been dropping since 1952–53. Other incomes have been going up, enabling those people to absorb, in spending Power, the depreciation in the value of the pound; but the net returns to the farmers have left them with no improvement in income, while the devaluation of the pound operates effectively against them. That is the actual fact of the situation.

I am grateful to the noble Earl for his answer, which I will read very carefully, and if I have any points to make I will send them by post instead of prolonging the discussion now. May I repeat my thanks to all noble Lords who have taken part in this debate and ask leave to withdraw my Motion?

Motion for Papers, by leave, withdrawn.