§ 3.43 p.m.
§ THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD WALSTON)My Lords, with your Lordships' permission, I should like to repeat a statement about this year's Annual Agricultural Review which my right honourable friend the Minister of Agriculture has just made in another place. The details of the Review are in a White Paper available in the Printed Paper Office. If I may, I will use my right honourable friend's own words.
"This year in the Review the Government have looked to see what progress has been made in the selective expansion plan. This is more important than ever. Last year's difficulties make it even more necessary to secure all the import savings we can from our farmers.
306 "Broadly, the arable side, particularly cereals, is expanding in line with the programme. The livestock side, particularly meat, is making less satisfactory progress. Overall, net output is tending to decline. While the labour force is falling rather faster than in the programme, the decline in output means that the industry's productivity is rising more slowly than we had hoped.
"The Government have kept fully in mind the requirements of the prices and incomes policy. While the particular criteria to apply from July 1 are still under consideration, it is clear that there will be continuing need for moderation in regard to prices and incomes. On the other hand, more needs to be done to help agriculture fulfil the programme.
"We have always recognised that agriculture must have the physical and financial resources required to increase output and productivity in accordance with the programme. We have recognised also that farm income is a main source of the finance for any further investment the industry may need to make.
"For the industry as a whole net income has remained virtually unchanged during the last three years. The forecast for 1966–67 is £472 million, almost the same as last year and slightly below 1964–65. Costs have increased by £15½ million. This figure does not allow for any increase there may now be in fertiliser prices, but we have allowed for this in our determinations. Against these cost increases must be set the industry's rising productivity, estimated—taking one year with another—at about £30 million. Our conclusion, after weighing these factors, is that the industry needs an increase in income to finance further investment, particularly on the livestock side, and it should get this in the national interest. If not, the expansion programme will fail.
"The programme puts particular emphasis on beef. The beef herd has been expanding, but falling market prices last autumn produced some loss of confidence. The dairy herd, from which two-thirds of home-produced beef comes, is static. Further incentives are needed. We shall increase 307 the guaranteed price for cattle by 5s. a cwt., the calf and the beef cow subsidies by £1 a head, and the hill cow subsidy by £1 5s. a head. These incentives cover all stages of production from rearing to fattening. To encourage expansion of the dairy herd we are increasing the guaranteed price of milk by 1½d. a gallon, inclusive of the increase in the standard quantities on account of the rise in liquid consumption. The retail price has to go up to 10d. a pint on April 2 to pay for increased distributive costs and last years Price Review award. With this years award we should expect to keep it at 10d. until April, 1968.
"The sheep breeding flock has recently fallen. Since an increasing share of the ewes must come from the hills and uplands we are increasing the rate of hill sheep subsidy by 2s. to 21s. This higher rate will apply not only to flocks maintained during the current year, but also for 1967–68. In addition, the subsidy will be extended to bring in about 2 million more ewes in flocks further down the hill. Subsidy on these ewes will be at 10s. 6d. Winter keep subsidy payments will be correspondingly extended. Finally, we shall increase the guaranteed price for fat sheep by 1d. a lb.
"The pig breeding herd has fallen during the last two years. The decline has now been checked, but pigs are well below the level needed. We are increasing the middle band—in effect, the standard quantity—by 400,000, as I announced"—
this is, of course, my right honourable friend the Minister of Agriculture speaking—
"last September, and increasing the guaranteed price by 8d. a score. We are also adjusting the flexible guarantee arrangements to give a stronger incentive to get production up to the required level, and encourage greater stability thereafter. The result of all this is to increase immediately the effective guaranteed price to producers by 1s. 11d. a score. Quality premiums will cease to be paid as announced in last year's White Paper.
"Production of eggs has over the year as a whole outrun demand. The guaranteed price will be reduced by ¾d. a dozen.
308 "Cereal production is expanding satisfactorily. The growth in consumption justifies an increase in the standard quantities by 100,000 tons for wheat and 500,000 tons for barley. Since barley is outrunning wheat, we are increasing the guaranteed price of wheat by 6d. a cwt. and reducing barley by 7d. The net effect is no change in the cereals guarantee. We are increasing sugar beet by 2s. 6d. a ton. There is no change for potatoes.
"The grant under Part I of the Ploughing Grant Scheme will be discontinued. The fertiliser subsidy will be reduced by a little under £2 million a year. We do this after considering all the circumstances, including the recommendations of the National Board for Prices and Incomes; the high cost of the subsidy; and the fact that special grants for fertilisers will be available in the hills and uplands after the Agriculture Bill has become law.
"The net effect of these changes is to increase the value of the guarantees by just over £25 million. This gives full recoupment for the agreed cost increases, together with a further £10 million, and leaves with the industry the whole of the estimated £30 million gain from increasing productivity. The Government could, consistently with the assurance on productivity given at the 1966 Review, have permitted the industry to retain only a part of its productivity gain. We have decided that it is right, in the exceptional circumstances of this year, to go beyond this to provide the means for a further substantial investment in agriculture. I firmly believe that, provided farmers respond to the capital injection given at this Review, output and income will resume their upward trend and, most important of all, the industry will be able to make an even greater contribution to the nation's needs."
§ 3.52 p.m.
§ LORD NUGENT OF GUILDFORDMy Lords, may I thank the noble Lord, Lord Walston, for the Statement that he has given us; and may I also thank him for the implication it carries: that the Government have seen the red light to which noble Lords on this side of the House, including myself, called 309 attention in the recent debate, and agree that the tight Reviews of the last two years must be reversed? Is he aware that these very positive steps to arrest the downward trend in production which we have seen in the last two years are very welcome? Would the noble Lord tell me this? Is it hoped to reverse the falling trend of production, and can he tell us what increases in production are forecast for the coming year, 1967–68?
In particular, with regard to livestock, where the confidence loss has been most serious, is he satisfied that the relatively marginal increases in price and other subsidies that the Award gives will be enough? Would the noble Lord also tell us whether the Government are prepared to study seriously some form of import control to preserve our livestock keepers from the sort of collapse of markets that we had last autumn? Finally, would the noble Lord tell us whether any thought has been given to the technical point of assisting some form of break crop to help out the continuous cereal cropping, especially in the Eastern Counties, in the interests of good husbandry?
LORD HENLEYMy Lords, may I, too, thank the noble Lord, Lord Walston, for repeating this Statement, and congratulate him, after seven lean years, on at last being able to introduce a Review which is, I think, a good one? The noble Lord, Lord Nugent of Guildford, said there have been two tight years, but there have not been just two tight Reviews. As I say, there have been seven tight ones. Nevertheless, I echo the noble Lord, Lord Nugent of Guildford, in congratulating the Government on recognising at long last what a tremendous saving in imports agriculture can make, and also on recognising at last what a very difficult position the agricultural industry has got itself into in the last few years, and that only an injection, such as provided for in this Review, can help it find that capital which it needs to re-finance itself. I congratulate the noble Lord and the Government on this.
It is almost impossible, at short notice, to comment on the different prices. They have taken months to produce, and they are all interrelated, so anything one can say is really something which has not 310 been carefully thought about. However, I have one or two small points. I wonder whether the increase in the cattle prices of 5s. is quite enough to achieve the result which the Government want. I have a feeling that the increase might well have been 10s. So far as the beef cow and hill cow subsidies are concerned, I think they are probably about right. I also think the milk is about right, and I welcome the increase in standard quantities. Again, I welcome very much the putting down the hill of the new subsidy. I am sure that this will be of great advantage.
I have one other small point, which relates to imports, a matter also raised by the noble Lord, Lord Nugent of Guildford. I will not press the point, except to say that it seems to me that we ought to do something about, in particular, the import of eggs. We have reached the point where we are now reducing the subsidy by three-farthings a dozen. It is already extremely difficult to make eggs pay, yet we still import quite a considerable amount. It seems to me that there is room for something to be done there, and perhaps the noble Lord will tell us if he has anything in mind. Otherwise, I congratulate the Government on this Review.
§ LORD BALERNOMy Lords, I also should like to thank the noble Lord, Lord Walston, for his Statement, and to reiterate what my noble friend Lord Nugent of Guildford has said about the desirability of getting some information about import controls. I think that this is going to be essential for the long-term consideration by farmers of the value of this particular Price Review. I should like to take issue with the noble Lord, Lord Henley, when he says—
§ LORD SHEPHERDMy Lords, may I respectfully suggest to the noble Lord that this is not a moment to debate his point of view as against that of the noble Lord, Lord Henley? We are discussing a Statement, and I think that, by custom, we should keep our comments to that.
§ LORD BALERNOI should just like to say that I do not think it is the agricultural industry that has got itself into a mess in the present situation.
§ VISCOUNT STUART OF FINDHORNMy Lords, it is not my desire to turn the discussion into a debate at this stage, but I should like to ask one very brief question of the noble Lord opposite. I have no doubt that it is a great relief to the Government that they have got an agreed Review. Does this indicate that we must expect a General Election within the next twelve months?
LORD INGLEWOODMy Lords, might I ask the noble Lord whether he is satisfied that the price system for milk continues to give full consideration to quality? Because there have been times in the past when quantity has been rewarded too generously and quality not generously enough.
§ 3.58 p.m.
§ LORD WALSTONMy Lords, I am somewhat overwhelmed by the remarks which have been addressed to me and to Her Majesty's Government on this Review. It is rare, I think, to find such polite words, albeit hedged about with a certain amount of reservation. Perhaps I may first answer the penultimate question, with regard to the General Election. Putting it at its lowest, I would say that, in view of the fact that the farming community unfortunately comprises somewhat less than 4 per cent. of the total electorate of this country, I am not sure that the significance of the Review in purely electoral and base terms is such as would warrant any serious consideration of the noble Lord's question.
The noble Lord, Lord Nugent of Guildford, asked me whether the Government had seen the red light. I would say, No, my Lords. There is no red light here at all. The fact that one occasionally puts a very light touch on the brake and then occasionally puts a light touch on the accelerator does not mean to say that one sees a red light ahead. One may see an amber light, or one may feel that road conditions (if I may pursue my metaphors in the terms that noble Lords have been discussing) are correct for speeds up to even 70 miles an hour. But I hope that farmers will now see very clearly the green light for further expansion, and not only will desire to go ahead, as I know they all do, but will actually have the incentive and the possibility to do so. That is what we undoubtedly want, and I believe that this Review will make it possible for them to achieve it.
312 With regard to reversing the falling trend and what increases we foresee in 1968, I think it would be a rash farmer, let alone a rash politician, who could foresee any increase or decrease in the years ahead. Speaking purely as a farmer, even at this late stage, in March. I should be extremely chary of assessing my harvest prospects in August. I believe that the common sense of the agricultural community, which is very considerable, is such that the concrete encouragement which this Price Review gives them will result in greater confidence, greater investment, greater efficiency and greater output over the years ahead.
On the matter of the import control for livestock, which the noble Lord mentioned, I would merely suggest two things to the noble Lord. One is that the whole system of guaranteed prices and efficiency payments is designed very largely to cushion farmers against the undue impact of imports of this kind. The other is that although the psychological effect of last autumn's imports was considerable, the actual economic effect was not half so serious as many farmers expected. But I can assure the noble Lord that my right honourable friend the Minister of Agriculture is in very close—I might almost say constant—consultation with the Ministers of Agriculture of the importing countries, and particularly of Eire, in order to minimise the type of difficulty which arose during last autumn.
I am glad that the noble Lord brought up the matter, because it is of very great importance, I think, to many farmers; and particularly to those in my part of the country, East Anglia. In fact, in this Price Review an incentive is given (I did not mention it, because I was not able to mention all the aspects) to the planting of beans as a break crop which will, I believe, have a considerable effect in helping farmers to find some profitable crop other than cereals in order to improve their rotation. There will be a grant of £5 an acre, starting with the 1968 crop, for field beans. We are happy to consider with the unions concerned the scope for any further incentives of this kind to enourage the appropriate type of break crop.
The noble Lord, Lord Henley, mentioned the import of eggs. Although I have not the figures in front of me I can assure him that the actual import of 313 eggs at the moment is minimal. Speaking from memory, it is something under 2½ per cent. of the total quantity of eggs consumed in this country. We are producing rather more eggs than the consumer is prepared to digest. I think it has something to do with the regrettable habit of many people, including myself, of forgoing breakfast. I hope that that will be overcome by publicity. I do not agree with the noble Lord that the increase of 5s. per cwt. in the guaranteed price for cattle is inadequate. We do not want to concentrate too much on one aspect; there are all the other grants given to beef cattle. I believe that it will be adequate. I should like, in conclusion, to thank noble Lords again for the welcome, which is shared by the representatives of the farmers, they have given this Price Review. I am sure that it will have in the coming year the desired effect.