BACON CURING INDUSTRY STABILISATION SCHEME 1973

HL Deb 22 February 1973 vol 339 cc247-51

3.24 p.m.

EARL FERRERS rose to move, That the Draft Bacon Curing Industry Stabilisation Scheme 1973, laid before the House on February 4, be approved. The noble Earl said: My Lords, I would point out a printing error on the Order Paper, which states that the Scheme was laid on February 4, which in fact was a Sunday. It was laid on February 1.

The purpose of this Order is to provide for the continuation of bacon stabilisation arrangements for bacon produced by curers in the United Kingdom between February 28 and May 31 next. The Scheme which is at present in use continued the form of arrangements which dated from 1967, and which provided for a system of payments and levies. It was made on March 31, 1970, for a period of 3 years, and it provided for bacon produced only up to and including February 27, 1973.

The terms of the draft Scheme which is at present before your Lordships are identical to its predecessor, except in relation to its commencement and termination. With regard to bacon produced, it covers the period immediately following that of the 1970 Scheme. Its terminal date puts into effect the decision, which was taken at the meeting of the European Economic Community's Council of Agricultural Ministers at the end of last month and which I announced to your Lordships on January 29, that the bacon stabilisation arrangements were to be phased out over the period to June 1, 1973.

It may assist your Lordships to be reminded that, under the draft Scheme (as under the current Scheme), there is provision for the Minister of Agriculture to make payments to curers when, jointly with the Secretary of State for Scotland, he considers that curers' returns from the market fail to exceed their raw material costs by a predetermined margin. Equally, when curing is considered to be profitable, then levies may be required back from the curers. The extent of the payments or levies is calculated by a formula which takes into account, in particular, both pig and bacon prices. In fact, payments to curers have vastly exceeded levies mainly due to the price of bacon generally remaining low relative to the cost of pigmeat. Since November 6 of last year, under the terms of phase 1 of the freeze, the first-hand prices of United Kingdom bacon have been fixed at the levels which were prevailing on November 6. To-day, therefore, the price of British Al grade Wiltshire bacon is £445 per ton (the same as it was on November 6). But Danish Al bacon has increased from that time from £450 per ton to £550 per ton. In other words, the differential between Danish bacon and British bacon was £5 per ton on November 6, and it is now £105 per ton. Due mainly to the world increase in the price of meat, British curers have had to pay higher prices for their prime product, as a result of which the rate of stabilising payment payable to British curers has risen from £17.5 per ton on November 6 to some £66 per ton now.

Following receipt of an independent accountants' report on curers' costs and profitability, Ministers have decided to make one change in the Scheme's administration. In future levies will not be collected from curers unless the margin between their market returns and their pigmeat costs exceeds £82 per ton. Payments will however continue to be calculated as at present on the basis of a margin of £54.2 per ton. In all other respects the existing stabilisation arrangements will be continued unchanged.

The widening differential between imported and home produced bacon, which is caused largely by the world shortage of meat, is distorting the bacon market and affecting its balance with the pork market. The Government are therefore prepared to accept, as a first step, limited increases of up to £25 per ton in the first-hand price of United Kingdom Wiltshire bacon sides in the week beginning February 26. Comparable increases in first-hand prices of other types of bacon can be made concurrently. Taken with the increase in the pig prices which are to be used in the stabiliser calculation, a £25 per ton increase in first-hand bacon prices would reduce stabiliser payments from next week from £66 per ton to £58.5 per ton. The effect of the proposed increase in bacon prices at the retail level will depend on a number of factors, including the possible impact on United Kingdom bacon production and the effect of that, in turn, on imported bacon prices. In any event the retail increase will be small. Assuming all other factors to be constant, a £25 per ton increase on British bacon (which accounts for 43 per cent. of total supplies), with distribution cash margins remaining constant—as, under phase 1, they must—should result in an increase on retail bacon prices of less than ½p per 1b, overall. Moreover, higher compensatory amounts are likely to operate next month in the pigmeat sector as a result of world cereals price movements. These, together with monetary compensatory amounts to offset the effect on our overseas supplies of parity changes, should also help to contain retail prices.

My Lords, this Order is part of our implementation of the Community's Common Agricultural Policy to which we subscribe, and is also an earnest of our determination to carry out the obligations of Community membership. At the same time the Order will enable the Government to phase in the effect of removing the stabiliser and to provide our bacon curing industry with a continuing element of support over the next three months. I commend this Order, which I trust will have your Lordships' approval. I beg to move.

Moved, That the Draft Bacon Curing Industry Stabilisation Scheme 1973, laid before the House on February 1, be approved.—(Earl Ferrers.)

3.30 p.m.

LORD HOY

My Lords, I must say that the speech to which we have just listened had very little to do with the Order. The noble Earl talked about an increase of ½p per lb. Can he tell me what that will mean in total to the consumer? If the noble Earl cannot tell me now, I shall be interested to get the answer later. We know from past experience that we never get increases of less than ½p, because we do not even have a coin to deal with them. What is likely to happen as a result of the announcement is that the increase will be not ½p but at least 1p. I am certain that housewives in this country will pay particular attention to price movements over the next 14 or 21 days. What cannot be denied is that there will be a further increase in living costs for thousands, nay millions, of people in this country. No matter how small the increase is, it is no use the Government's saying, "We do not have any control over this. It is due to all these outside influences." This is another case of the Government putting up prices by their own action. The noble Earl must realise that we dislike intensely what is happening.

To come back to the Order, when the stabilisation scheme was introduced its purpose was to bring some stability into the British bacon industry. People may have doubted whether it is now being operated in the way originally intended but, be that as it may, to-day's Order merely takes us over a three months' period and we shall then filter into the Common Market and take the consequences of that. I do not want to go back to what I said a little earlier during Question Time, but this industry can get into difficulties in a very short space of time, and I want to take this opportunity of repeating what I said about health. The industry should be given protection, and I ask the Government to take action in that respect. I do not want to go further than that this afternoon, because one could go on describing what happened long ago. When we were the Government of the day, we were always being asked to increase Britain's share of bacon production. I do not now hear demands from the Benches opposite that Britain's share should be at least 50 per cent. We shall have to see how this Order works, but I should like the noble Earl to convert the ½p into the total sum that housewives will have to pay.

EARL FERRERS

My Lords, I am grateful in part to the noble Lord for his welcome, which was a rather modified one. I did not think he would be too welcoming, because I fully realise that he is concerned about the increase in prices. But so, also, are the Government and, as I explained in my opening remarks, the price of imported bacon has gone up since November 6 by no less than £105 a ton: whereas, because of the freeze, British bacon has been kept at the same price. This is a question of world supply and demand and we are now in the situation which we knew we should be in, where the stabilising subsidy must be moved out. We are doing this gradually in order, on the one hand, to meet our obligations to the Common Market, and, on the other hand, to meet our obligations to the consumer. The total value of weekly bacon supplies at first hand is some £5 million. An increase of £25 per ton would increase that figure by little more than £100,000. The point which I wish to make to the noble Lord, Lord Hoy, is that, although this step is bound in some measure to affect prices, the prices of bacon in the shops are very often equalised out between the price of imported bacon and the price of British bacon. The effect of this Order will be to increase that price by less than ½p per 1b.

On Question, Motion agreed to.