§ Order for Second Reading read.
§ 6.12 p.m.
§ The Minister of Agriculture (Major Sir Reginald Dorman-Smith)
I beg to move, "That the Bill be now read a Second time."
I think it will probably meet the convenience of the House if I recall the main principles of the financial provisions of the Bacon Industry Act, 1938, which received the Royal Assent last July. Under this Act for a period of three years pig producers are to be insulated from the effects of variations in the costs of pig feeding stuffs in respect of pigs sold to curers under the contract system set up by that Act. To achieve this, curers are required to pay certain fixed prices for pigs during those three years. When the price of a prescribed standard ration rises above 8s. 6d. per cwt., curers have to add to the pig price an additional sum, which, subject to one qualification, they are entitled to recover from the Exchequer. Where the price of the ration falls below 8s. 6d., curers have to deduct a sum from the pig price and are required, again with a qualification, to pay that deduction to the Exchequer. The qualification in each case is the quantity of bacon made from the pig.
Parliament realised that one cannot require curers to pay fixed prices for pigs without having regard to the amounts which they in turn receive for their products. For example, the market conditions might operate in such a way as to make it quite impossible for the curers to pay the statutory pig prices, and accordingly, provision was made in the Act for insulating curers in a similar way from rises and falls in bacon prices. Certain notional bacon prices, referred to in the Bill as "standard bacon prices," were assumed for this purpose, and where the average price of bacon, as ascer- 1203 tained in accordance with regulations, falls below the standard price, the difference is made up by the Exchequer. Where the ascertained price rises above the standard price, the curer pays the difference to the Exchequer. Further, as an incentive to efficiency and economy, both in pig production and in bacon curing, the pig prices and the standard bacon prices are to be reduced in the second and third years. So far as the curers are concerned, the effect of tapering the prices is that the curing margin per cwt. of bacon will be reduced by 5d. at the end of the first year and by a further 10d. at the end of the second year, or 1s. 3d. in all.
The curer's source of income from pigs is derived not only from the sale of bacon, but from the sale or manufacture of those parts of the pig called the offals, which are not made into bacon. The return to curers from the offals is an important element in the curing margin, and by far the most important by-product of the offals is lard. It is estimated that lard constitutes about three-quarters of the total value of the offals. When the financial structure of the new bacon plan was under examination it was felt that the returns from offals could be left to look after themselves. Accordingly no provision was made in the Act for the stabilisation of such returns. There was, I believe, a reasonable expectation, which was shared by the leaders of the industry, that lard prices would be maintained. In 1937 the average price of the best quality of imported lard was about 68s. per cwt. The average price over a considerable preceding period was about 65s.
The expectation that lard prices would maintain themselves was not, however, realised. Indeed, before the Bill was introduced prices began to weaken and they dropped steadily throughout 1938, reaching 48s. in December and averaging 52s. for the year. It is true that imports of lard were 2 per cent. less in 1938 than in 1937, but imports from the United States increased by 66 per cent. over the preceding year. There has been an increase in the pig population of the United States, which started in the spring of 1938 and will probably continue at an accelerated rate in 1939. Consequently it is expected that with an increase in the import of lard from the United States, which appears to be the dominating factor 1204 of the lard price situation in this country, lard prices will remain weak for some time to come. The House will realise, therefore, the effect which a decline in lard values will have on the ability of the curers to pay the fixed prices for their pigs required by the Act.
The position of the curers, of course, will be made worse by the removal of the duty on lard under the Anglo-American Trade Agreement. The Government, therefore, have come to the conclusion that if the full intentions of the Bacon Industry Act are to be implemented, lard should be brought under a price insurance scheme. It is recommended that certain notional lard prices should be taken, in the same way as the standard bacon prices, as the bases from which payment to curers by the Exchequer and by curers to the Exchequer should be assessed. For the first year the notional lard price will be 65s. per cwt. as indicative of the average lard prices ruling when the financial structure of the Act was settled. The principle of tapering, which is applied to the pig prices and to the standard bacon prices, will equally be applied to the notional lard prices, and in the second year the notional lard price will be reduced to 63s. and in the third year to 59s. per cwt. This will have the effect of increasing the reduction in the curing margin to yd. in the; second year and is. 4d. in the third year, or 1s. 11d. in all.
Careful estimates indicate that a lair measure of the effect of the fluctuation of lard prices on the return of curers as a whole is 1d. per cwt, of bacon for each shilling variation in the price per cwt. of lard. It is proposed, therefore, in this Bill that for each is. by which the price of lard, to be ascertained in accordance with regulations, falls below the notional lard price, id. shall be added to the standard bacon price. Similarly, for each 1s. by which the ascertained lard price rises above the notional price, the standard bacon price will be decreased by id. The Bill does not represent any departure from the intentions of the Bacon Industry Act. Its purpose is not to provide an addition to the curers' margin but to complete the price insurance plan embodied in the principal Act. namely, that in order to enable curers to pay the fixed pig prices they should have some assurance against reduction in the curing margin which results from the operation 1205 of the Act. It is only right that the lard price insurance should operate from the date on which the curers' liability to pay the pig prices began, and it is proposed, therefore, that the provisions of the Bill should be made retrospective. This means that the lard price insurance scheme will date from the commencement of the contract system, namely, 1st December last.
This Bill deals with two other Amendments of the principal Act. The first one seems to me somewhat technical. It is contained in Sub-section (3) of Clause 1 and deals with the arrangements for weighing bacon for the purpose of assessing the Exchequer payments and receipts. The intention of the Act was to enable the curer to recover the whole of the food cost subsidy paid by him to the producer if he turned the whole of the curable part of the pig into bacon, as is done in the production of Wiltshire bacon. It was necessary, therefore, to assume the proportion of the pig that represents the whole of the curable meat. Tests taken out at a number of factories show that the weight put into cure in the production of Wiltshire bacon is, on the average, 78 per cent. of the dead weight of the pig. This, of course, is the average. Some carcasses will "dress out" at more than 78 per cent., others a little less.
The Act contemplates that the curer shall supply proof of the weight of bacon made from each pig. If curers are compelled to weigh separately each part of a carcass that becomes bacon it will mean that no curer will be able to recover the whole of his food cost payments, even although he turns the whole of the curable part of the pigs into bacon, because some of the carcasses will dress out at less than 78 per cent. It has been found that the detailed work of weighing and recording separately the proportions of bacon made from individual pigs might seriously slow down factory operations and may, in fact, increase curing costs. To get over this difficulty, Sub-section (3) of Clause 1 of the Bill provides that the pieces of bacon made from a number of pigs may be weighed together and that the proportion of bacon made from each pig shall be deemed to be the same as the proportion made from all the pigs. It is desirable that this alteration should apply as from the beginning of the contract system, and accordingly the House will be asked to make the Sub-section retrospective.
1206 The other Amendment relates to the curing of imported pigs and carcasses with which Sub-section (3) of Section 19 of the Act deals. It was the intention of the Act that curers should be free to buy and cure imported pigs and carcasses so long as it could be shown that these had been taken into account for the purpose of any system of import control for the time being in operation. It has been found, however, that the Act was drawn rather too narrowly to enable the Minister to specify in regulations, for the purposes mentioned, certain voluntary arrangements which have been arrived at, particularly with Dominion countries, which are now in force in regard to imported supplies. It is proposed, therefore, to amend Sub-section (3) of Section 19 of the Act so that the regulations can be made in more general terms without interfering with the existing voluntary arrangement or departing in any way from the intention of the principal Act. A variety of arrangements have been made and it has been difficult to get one formula to meet all of them. Here again I am asking that this arrangement should be made retrospective. These are the principal points in the Bill. I hope that they will not be very contentious and that this will be a sufficient explanation of the terms of the Bill.
§ 6.25 p.m.
§ Mr. T. Williams
I am glad to see that the right hon. and gallant Gentleman's Department has been fairly successful in disciplining the Minister even on his second speech. The question of price insurance is not a very new one. It has been debated in its various forms, but I note that the Minister has now finally accepted the price insurance plan as determined by the Ministry of Agriculture and as embodied in the Bacon Act, 1938. If the right hon. and gallant Gentleman has now deserted all his past associations or affiliations with price insurance plans and has adopted the bacon price insurance plan, hon. Members will know exactly what he means when be brings forward any further price insurance plan to deal with agricultural commodities. This Bill is not controversial since, if hon. Members accept a price insurance plan—the only doubt being in the determination of the original figures assumed by the Department—I do not quite see how we can object to the conception of 1207 an insurance plan such as the one embodied in the Bacon Act and maintained by this Bill.
An important point emerges to which I ought to draw the attention of the House and of the Minister in particular, namely, that this Bill is not only designed to amend the Bacon Act, so that the curer can have the same insurance guaranteed for the offal that he previously had for the rest of the carcass, but is introduced because of the Trade Agreement with the United States. The right hon. and gallant Gentleman made a passing reference to the fact that the 10 per cent. duty on imported lard is to be removed, and he said that the position would be made worse when the duty was removed. Those of us who sit on these benches, ever since I have been in the House, well in the teens of years, have been made to believe by hon. Gentlemen sitting opposite that whenever we impose a duty on an imported article it is the foreigner who pays the duty. I have heard the Prime Minister and almost every Member on the other side declare at one time or another that merely to impose a duty on an imported article is not to impose upon the consumer of the commodity here, but to compel the foreigner to pay the duty. We now have it on the authority of the Minister of Agriculture that when a duty is imposed upon foodstuffs such as lard the consumer in this country pays and not the foreigner, and that if we remove the duty the position of the bacon curer will be made worse.
The Bill is partially meant to compensate the bacon curer for any loss he may sustain as a result of the removal of that import duty. We should bear that in mind, and I hope that the Minister will not hesitate to tell his colleagues in the agricultural industry and the spokesmen of that industry that duties do invariably impose burdens upon the consumers of the commodities. The burden which the passing of this Bill will impose is comparatively small. According to the Financial Resolution it is estimated at round about£150,000 in the first year; the obligation in successive periods will be determined, of course, by the price of lard. The removal of any burden from the consumers of a foodstuff and its transfer to the Treasury will be welcomed by every Member on these benches and we 1208 entirely agree with that part of the Measure, but I have one or two questions to ask in connection with the price plan as related to the Bacon Act and to this new Bill.
The price for the first period assumed in the Bacon Bill was 94s. 9d. per cwt., and we now know that the right hon. Gentleman assumes 65s. a cwt. to be the fair price for lard. Will he give us the figures over a period of years, either before 1930 or since 1933, so that Members may determine whether 65s. is a fair and reasonable price? It may be as near to a fair average price as the Department could estimate, and I know that where figures are concerned their assumptions are invariably correct, but we are entitled to know why they fixed upon 65s. If the price of lard remains at the standard figure of 65s. there is no price variation for bacon, but if lard rises to 70s. there would be a reduction of 5d. in the price of bacon, and if lard fell to 60s. obviously the curer would call for an increase of 5d. in bacon prices. But suppose lard goes down to 55s. or 50s., will the curer, that is, the seller of lard, have any further interest in the price of lard, since he knows that the Treasury will compensate him for any further reductions? I am sure the Minister and hon. Members in all parts of the House will appreciate the substance of that question. What I should like to know is this, putting it quite plainly: Has the Minister—or have the Department—anything in mind to safeguard the position of the Treasury should the price of lard fall to an abnormally low figure? If it is an insurance scheme we ought to know that it is fair to the curer of bacon on the one hand and equally fair to the Treasury on the other.
Referring to the second Amendment, that to Sub-section (3) of Section 1, the right hon. Gentleman truly said that it was merely a matter of convenience to curers, and to the extent that the Amendment prevents an increase in the price of bacon we welcome it; but I understand that bacon curers—and I am not here to advocate their cause—already have numerous problems facing them, some of which may be dealt with later in this Debate, and it is not for this House to impose further burdens upon them. The third Amendment, relating to imported carcasses, raises one or two points which I wish to bring out. The new arrange- 1209 ments with regard to imported carcasses may have some definite relation to the known bacon position at the moment. I need not tell the right hon. Gentleman that the Bacon Marketing Board has almost broken down, that the scheme embodied in the Bacon Act, 1938, is almost breaking down and being brought to a close. I do not know the actual figures of output at the moment, but I understand from those who are able to express an opinion that while the Government anticipated an output of 2,100,000 pigs last year that number has not been contracted for, and that there is a reduction of approximately 600,000 pigs. I do not know whether those figures are correct, but I understand that the output of pigs fell enormously below the assumed figure embodied in the Act of 1938.
The output of British bacon is decreasing, and we also find ourselves in a difficulty about maintaining our imports of bacon. So long as our farmers are not producing the appropriate numbers of pigs they are creating definite financial problems for bacon curers, are causing an increase in the price of imported bacon, and also causing an increase in the imports of carcasses, chilled and frozen, and in the price of them, whether those carcasses are sold for pork or turned into bacon. From 1936 onwards there has not only been an increase of about 7s. 6d. per cwt. in the price of imported bacon but also an increase of somewhere over 8s. in the price of imported frozen and chilled carcasses. There is, of course, a relationship between the Bacon Act and this new Bill, and since I gather that even farmers in the right hon. Gentleman's own county are combining for the purpose of destroying the Bacon Marketing Board I am wondering whether the figures embodied in the Bacon Act and the figures embodied in this Bill will really compensate curers for the functions they are now performing.
I do not want to ask the right hon. Gentleman for higher subsidies for bacon curers. If I invited him to do anything at all it would be to insist that the Bacon Development Board should get on with the business of rationalising the curing industry, for there alone lies real hope for this industry; but even with the best rationalised curing system in the world if farmers themselves are not going to be loyal to the curing side of the industry, after the Government have assumed an 1210 output of pigs and what the price of bacon ought to be, and made a further assumption of what the standard ration for the feeding of pigs ought to be, the whole scheme is bound to break down. Already I understand, on account of the shortage, pigs are being diverted from where they have been reared to various other parts of the country, to the annoyance of pig producers and even to the annoyance of curers, and that, in fact, the net result of the Bacon Act, 1938, is chaos in the industry from top to bottom.
I should like the right hon. Gentleman or the Minister of Pensions, or whoever replies, to tell us whether this Bill, being tacked on to the Act of 1938, and completing the price insurance scheme, is really going to stabilise the pig and bacon industry. We on this side doubt it very much. We feel that the Government have never been strong enough to face up to their responsibilities. The right hon. Gentleman has a very difficult row to hoe. We wish him well in his task and we advise him to go back to reorganisation within the industry itself if we are to get stability in this many-sided industry. I repeat that we here have no desire to oppose the Bill and wish it a speedy passage to the Statute Book, and if it can help we shall give it our blessing, but we do not think that it will stabilise the bacon industry.
§ 6.41 p.m.
§ Sir Arnold Wilson
Until I heard the speech of the hon. Member for Don Valley (Mr. T. Williams) I was under the impression that nothing that I should wish to say upon the Bill could be in order, because the Bill is narrowly drawn, but I am led by his concluding remarks to observe that to call for loyalty on the part of the farmers to the curers is to stretch the imagination rather far. The curers have not as yet given the farmers a fair deal, and the organisation of the board as it stands puts such power and authority into the hands of large curers, and so penalises small curers, that farmers can scarcely be expected to fall in readily with the scheme. It compels them, against their will, against their interests and to their financial loss, to send great numbers of pigs distances of 150 to 200 miles to large and wealthy curing firms and thus leading to the virtual destruction of small or medium-sized curing establishments which for the past 20 years or so have been established 1211 within 10 or 15 miles of their farms. In the counties of Hertfordshire, Essex and Cambridgeshire 8 to 10 per cent. more pigs are being produced than in 1935, but the curers in those counties are getting far fewer pigs than ever before. Farmers in my own county of Hertfordshire have been compelled to transfer pigs to Calne and to Ipswich at great cost, and some detriment of the bacon itself, taking them away from old-established firms, one of which was partly a farmers' co-operative concern and had existed for the last 20 years. It is not to be expected that farmers will be loyal to curers who have a scheme which gives such great advantages to a few very large firms.
Rationalisation is not merely a question of size, and I am sure the hon. Member for Don Valley will not regard rationalisation as calling for fewer and larger establishments, because there is a great deal to be said for being able to send a pig to a factory only four or five miles away and to be able to do it in one's own vehicle, in one's own time, and at the very hour, almost, when it happens to suit both curer and farmer. There is great discontent among farmers in Hertfordshire at the present position. There is a great feeling of injury at being asked to send pigs, to the number of many thousands, 100 or 200 miles by rail, by a circuitous route, and at considerable cost, while local curing establishments are starved of pigs. Hertfordshire is one of the Home Counties. It has an assured market for every pound of pork and bacon that can be produced from local pigs, either on the spot or in London and its suburbs, and we want all our pigs to be slaughtered, cured and dealt with on the spot. I agree that this Bill does not in any way deal directly with that point, and I only hope that it will not be regarded as a final instalment of the amendments that are required to the Bacon Act as a whole if that Measure is to be a success. There is no one on this side of the House, and no farmers, who do not wish the right hon. Gentleman well in his task and who do not recognise that the Bacon Industry Act was passed with the best possible intentions. It should not be regarded, as the hon. Member for Don Valley half hinted, as any fault of the farmers if the anticipations of the Government have not been fulfilled. Farmers have done their best, and if the scheme 1212 has not worked it should not be regarded as due to the perversity of the farmers, the wickedn3ss of the curers or the inefficiency of the Government.
§ 6.46 p.m.
§ Mr. J. Morgan
I gathered from the Minister that the Bill was introduced mainly because of variations in the factors and circumstances expected to operate when the principal Bill was brought in. I take it that the amount of money that is expected to be necessary to meet the liabilities incurred under this Bill is based upon the contractual obligations of the farmers in regard to pigs; but when one looks at the Amendment to Section 19, one gets the suggestion that powers are now required by the Minister in part to meet circumstances that arise from obligations entered into in various ways, and in part also because there is a marked development, particularly recently, going on for some reason or other in respect of the importation of whole frozen carcasses for ultimate curing in this country. I would like to know a little more clearly what the Minister has in mind as to the suggestion that there is need to supplement the curers' supply of pigs, and whether or not the Minister's powers will be exercised to enable the curers to use imported carcasses in increasing quantities, as may be required to make up the deficiencies that are occurring, and will occur in the contracted supplies from the farmers.
The essence of the Bill depends upon the standard of the original Act. If for any reason the original Act has broken down, or if at the present time any parties to that arrangement find themselves unable to comply with the contracts which were entered into under that Act, the propositions which are presented to us tonight are also likely to break down. I would like the Minister to satisfy himself that the farmers intend to complete their contracts under the principal Act, enabling the Sections that he intends to amend to be carried out.
My information is that the Pigs Board, which is one of the executors, as it were, to the operation of the principal Act and to the Bill, is itself actually in difficulties, and has been holding inquiries within itself as to whether or not it is capable of ensuring to curers a supply of pigs at all; and that actually it is discussing this very question at this moment. If that is 1213 the case, I feel that the Minister should look a little more closely into the present affairs of the Pigs Board before he commits this House even to this Bill. It may be that one of the main structures supporting the proposals of the Bill will give way in a very short time. That situation ought to be dealt with before we are finally committed to approving the terms of the Bill.
It is, of course, not for me to suggest why the farmers are in this mind, and why they are not willing to be made parties even to completing the undertakings with which we are asked to deal to-day. They have reasonable ground of complaint. Some of them are complaining that they signed their contracts under misapprehension. They had no idea, when they signed for their pigs to be sent to a factory, that the animals were to be sent to any factory that the Pigs Board might decide upon. They thought there was to be a pool from which pigs for this allocation were to be drawn and that, in the main, the contracted pigs would be directed to factories where good will and long association rested between them and the farmers. Consequently, many of the farmers are now seriously contemplating defaulting under their contracts. They are prepared to risk the full penalties under the powers granted to the various boards, rather than proceed with their contracts. That seriously interferes with and involves the proposals before us this afternoon. I submit that the figure in the Bill is dependent upon the complete and anticipated fulfilment of the contracts that farmers are presumed to have made with the curers.
Further than that, I suspect that the curers have come before this House through the Minister again because they now find themselves in such a difficult position with regard to their throughput send overhead costs that they must look in every direction, even to offal, to secure their position; and that they have been forced to do so by the probability that in the coming year they will not be able to secure a throughput of pigs that will enable them to earn a profit, or even to cover their costs. I suspect that there will be pressure very soon upon the Minister, under the Amendment that he proposes to make to Section 19, to exercise those powers in order to let in as many frozen carcasses as possible from almost any country in the world, that 1214 the curers may deal with them. The introduction of the Bill is an indication that they are in such a dreadful plight under the commitments they have made to the farmers, and because of the way in which the administration of the schemes is worked out, that they are running to the Treasury, so to speak, for further subsidies for offal. Hitherto, when the farmer sold a pig, he sank the offal, gave it, more or less, to the curers or to the buyer of the pig, but now we find that the curer is having to protect himself in this way.
I wonder how far the completion of these proposals is affected by the fact that curers are themselves now evading the regulations and the terms laid down in the principal Act, and are going outside the scheme by paying more for the pigs on the open market by some means which it is difficult yet to state. They are paying 2s. per score more for pigs, and more than that for Irish pigs. They recognise that the contract system looks like breaking down. My own purpose is not so much to criticise the Measure but to suggest that the Minister should take an early opportunity of examining the premises on which the Bill is based in order to see whether the structure which supports the Bill is sound enough to carry it to a conclusion. Personally. I have very grave doubts.
§ 6.55 p.m.
§ Sir William Wayland
The unfortunate fact about the pig industry is that there has been no combination between curers and farmers. I will not say that the history of the Pigs Board has been anything but a happy one, and I am not going to say that farmers have always played the game, because in many instances they have not done so. The complaint of the Pigs Board is that when the price of pork was the higher price they paid for pigs on the market and the farmers sold them in the market for pork. I will not say that the majority of farmers did so, but there was a sufficient number, and the consequence was that the scheme fell down. With regard to the curing situation, I do not believe that any small curer suffers. I am confident that if you want to make the curing business a success you will need to have large curing establishments. The overhead costs are much less and the curer has a far greater chance of reducing the price of turning pork into bacon than has the small curer.
1215 Numbers of the small curing establishments have been closed. In my constituency there was one that could not possibly make both ends meet owing to the overhead charges. We want to be able to produce in this country, almost all the bacon that we require, and it is quite possible to do so. At the present time we produce only a very small percentage. If we can get that happy combination in which all parties are pulling together, farmers and curers, with help given by the Treasury, I am confident that the industry will, in a comparatively short time, be able to make a profit all round.
§ 6.58 p.m.
§ Mr. A. V. Alexander
We are indebted to the Minister for what I may call a very good Departmental explanation of the machinery of the Bill, but I feel certain that he will not feel at all aggrieved at the point made by my hon. Friend the Member for Don Valley (Mr. T. Williams) as to the fiscal revolution contained within his machinery Amendment. I do not want to dwell upon that point to-night, but upon some of the difficulties which become revealed in the bacon curing industry to-day by the very terms of the Amendment which is put before us. The Government have gone so far in this Bill as to recognise that the trade agreement with the United States of America will handicap the bacon curers on the fixed margin that was postulated in the Act of 1938, and they propose a relief estimated at about£150,000 a year. I do not believe that that amount of money will relieve one large and substantial bacon curer I know of in this country from incurring a loss on bacon curing this year. That is the first result in the first bacon year of the Act of 1938. I recognise that the right hon. and gallant Gentleman was not in charge of the Measure last year, but the Government Front Bench should remember that on this side we may quite well say, "We told you so."
Directly you begin to think of that position, if you are revising the general margin, as my hon. Friend put it, because there are doubts about the original figure, it seems to me that the Government are lacking in their duty unless they come to the House with a much wider and bolder policy to prevent the industry going altogether. In regard to that, I want to take up the point that my hon. 1216 Friend put. No one can deny that the real producer of pigs for bacon, the man in the industry who has been accustomed to produce pigs on his farm for the bacon industry, was very satisfied when the Ministry of Agriculture announced last year the amount of the subsidy and the manner of its application so far as the producer was concerned. I well remember the statement made at the annual meeting of the Pigs Marketing Board when the report was put to them of what was going to happen by some of the older and more skilled producers. They said, "If you cannot make pigs for bacon pay on this subsidy you had better give it up altogether, because it is very good indeed."
However, the first fact that emerges is that with that splendid offer, from the producers' point of view, the farmers do not contract. It is no good for the hon. Member for Hitchin (Sir A. Wilson) to retort that it is not a question of loyalty. It is true that the farmers have not responded and that, under a price insurance scheme, they have failed to contract for the pigs required for this industry. We are 600,000 pigs short, for the year, of the figure postulated in the Act of 1938. I should like to know, first of all, exactly how the Ministry propose to apply the powers in the varied forms in which they take them now under Clause 2 of the Bill. Are they really intending to use those powers to make it easier for the curers to obtain imported carcasses suitable for bacon curing such, for example, as the very fine type of carcase that is coming from New Zealand? We all want to induce more employment upon the land, more production of pigs and a more stable agricultural population, nevertheless if the Government have first induced the provision of bacon-curing factories and facilities at high capital cost and leave the curers with their overheads, surely even for the protection of the farmers who have contracted and still want their pigs to be cured, you must see that the factories are run at a reasonable throughput in order to keep them in being and to see that the industry does not fall altogether.
There were one or two smaller, but nevertheless important, matters which arise upon this adjustment. I have said that the£150,000 that you now propose will not be sufficient to adjust the price margin to the curing industry but, even without asking the House for more 1217 money, I feel certain that, if the Ministry could devote a little attention to the administration of this scheme, it might do something to improve matters. Take, for example, the extraordinary cost to the industry of administration. I do not know whether the Minister has had time to examine the volume of documents which have to be filled up by bacon curers for every single consignment of pigs. You want a separate staff for the whole business, and this comes out of the price margin. You have to deal with a railway consignment note, and an invoice with it, for live pigs. You have to send an advice note to the Bacon Board. You have to supply three copies of a grade ticket for deliveries under long contracts. You have to send in your claim in respect to pigs conveyed by road in your own vehicles. You have to supply a statement of the conveyance of pigs by hired road haulage. You have to send in a statement of all pigs conveyed by sea. You have to send in a claim in respect of pigs conveyed from the railway station to the place of slaughter. You have to make a return of bacon produced from home pigs, as apart from others. You must have a return of the producers supplying all supplementary pigs—all that to be filled in in triplicate. You must arrange for three copies of a form setting out the marking of carcases and parts of carcases—home supplies. You must arrange for three copies of marking of carcases and parts of carcases—imported supplies. You must arrange for a return of transfer of home-produced pigs, carcases or parts of carcases. You must make another return of producers offer of Class I pigs—board, curers and producers copies. Finally, you must make a return of group contractors offer of Class III pigs.
Really the whole machine is more harness than horse. It makes the whole thing ridiculous. It becomes ridiculous because the Ministry were not sufficiently wise to accept the Opposition Amendments in Committee on some of the main provisions dealing with transport and things of that kind. The hon. Member for Hitchin was right in his remarks about the re-allocation of pigs under the contract as a hardship upon the farmers whom he represents, but there is also a considerable hardship upon the bacon curer in the same respect. Instances have been quoted by some of my hon. Friends in the last few days. It is a common 1218 thing under the re-allocation scheme for pigs, which ought to go normally to a nearby factory at a cost of transport of 6d. a pig, to be sent too, 150, or 175 miles. It costs from 12s. to 15s. a pig and, in consequence, although, of course, the particular curer does not pay the 12s. or 15s.—he has a flat rate—the whole flat rate of the scheme is up until on the transit shrinkage allowance as well as the transport charges you have already a minimum flat rate of 2s. 9d. a pig over the whole country, a rate which it seems to me is likely to have to undergo amendment. The whole basis of the thing is ridiculous unless the Ministry can go behind the scenes and get these two boards together and get a little common sense into the machine. I recognise that it may mean that the Amendments postulated in this Bill might have to be added to and that you would have to amend the Act of 1938 to make it more sensible, but unless something can be done about it one of two things is bound to happen.
I believe all parties welcome the proposal that we should have serious and well-run rationalised factories. I agree with the hon. Member for Canterbury (Sir W. Wayland) that you cannot tackle the problem of bacon supplies with small, scattered factories. If you are to make them successful you have not to postulate your Bacon Marketing Board machinery and arrangements to meet the needs of one or two people in industrial areas. You have to deal with rationalisation on the basis of putting your factory in the pig-producing area. While we recognise and welcome that, what is going to happen is that farmers will continue to be doubtful about the scheme. You will lose the confidence of farmers like those mentioned by the hon. Member for Hitchin who have been co-operating, without State help, for 20 years to run their own factory. I have a letter from one of the farmer shareholders of that factory saying that he will have to let the whole thing go or deliberately break the law. If you lose that confidence, the whole scheme goes. The other alternative is to try to slip out gradually, and not let it go all at once, by trying to collect the real costs of the curer from the consumer and see the trade in British bacon gradually slip right away instead of tackling the situation that you set out to tackle, and that was to obtain a regular annual level supply of tank-cured bacon which 1219 would take the place of the well-known graded quantities that we have been getting from Denmark and similar sources. I am sorry to have to say to the right hon. and gallant Gentleman—he has not been there very long—that something has got to be done, and done quickly, if you are to save the industry from complete disaster.
§ 7.12 p.m.
§ The Minister of Pensions (Mr. Ramsbotham)
The right hon. Gentleman has used this comparatively short Bill as a peg upon which to hang a fairly comprehensive criticism of the general administration of the bacon industry. I think that his criticism is a little harsh, considering that the industry itself, under the Bacon Industry Act, 1938, has been operated only for a comparatively short time. The actual contracts commenced on 1st December, and there has been some two months' experience of it. I am sure that even in the case of the co-operative societies rather more than two months are allowed for a new venture before criticising it so harshly. At the same time I agree that, if the industry is to he successful, the farmers have to co-operate loyally and respond to it. My hon. Friend the Member for Canterbury (Sir W. Wayland) talked about farmers not playing the game. I agree that, if the producers do not play the game, in the nature of things it will not be very long before there is no game to play, and what the right hon. Gentleman says in that respect should be weighed carefully by all sections of the agricultural community. I think he was correct as to the probable effect of Clause 2, though the Clause is more of a drafting nature than otherwise. Section 19 (3) is intended to enable registered curers to convert into bacon imported pigs or pork, included in any scheme of regulation of import. The arrangements are of very widely different types and various degrees of formality, and it has been found that, for the purpose of enabling the Minister to carry out what it was the intention of the -House that he should carry out, that section was too narrowly drawn. It is for that reason that the Amendments in the Bill are now proposed, and they will have the effect which the right hon. Gentleman anticipates.
1220 The hon. Member for Don Valley (Mr. T. Williams) suggests that the reason for this Bill lies in the agreement recently made with the United States. I do not think he is quite correct in that view. The fall in the price of lard is quite irrespective of that agreement. I would not say that the agreement has not affected it, but the real reason for the fall is the increased pig population of the United States. I admit that it was not foreseen at the time by the Ministry or by the leaders of the curing industry, but, now that it has occurred, it is obviously necessary, as my right hon. and gallant Friend pointed out, to complete the price insurance scheme, which hitherto has been based only on the bacon portion of the pig.
The hon. Member for Don Valley wished to have some indication of the eventual liability of the Treasury. The price of lard was 65s. per cwt. for the first year, and this Bill is based on an average of the prices for the 16 years from 1922 to 1938, which I think is a fairly sound basis so far as safeguarding the Treasury is concerned. It is true that none of us can foresee to what extent the price of lard may fall; it has fallen, I believe, on one occasion, as low as 30s. per cwt.; but we have to remember that the actual arrangements are only for three years, and in any event there is a "taper" Clause, so I think that in the circumstances, without abandoning the price insurance scheme altogether, the Treasury are adequately safeguarded.
My hon. Friend the Member for Hitchin (Sir A. Wilson) criticised the transport arrangements, and it is true that there have been difficulties and anomalies in their working. The allocation has caused difficulties. But, at the same time, it must be remembered that, in this practically new service, over 80 per cent. of the pigs have been allocated to curers of the producers' choice. I admit that I would rather it were a larger figure, but, bearing in mind the difficulties with which the board were faced at the outset, and the comparative speed at which it had to be Done—
§ Mr. Alexander
I am sure the Minister would not wish to convey a wrong impression. It may be that 80 per cent. of the producers' contract pigs have gone to the bacon factories to which they were originally consigned, but it is the case 1221 that in some areas the proportion was not much more than 50 per cent., and it is not quite fair to leave out those cases where there was that grievance.
§ Mr. Ramsbotham
I do not say that that average figure was maintained everywhere, but, taking the whole country, and considering the speed and the difficulty of the operation, I do not think the allocation has been so unfair as perhaps in certain quarters it might have been imagined to be, and I very much hope that, with experience, the difficulties to which the right hon. Gentleman referred w ill be removed. The scheme has been going for but a very short time, and a certain amount of patience must be exercised. I would remind my hon. Friend the Member for Hitchin that, on the question of transport charges, he was speaking from the point of view of the producer; but, after all, as the right hon. Gentleman has pointed out, it is the curer who pays the transport charges, and a great deal of my hon. Friend's criticism was really laid at the door of the producer and not of the curer.
§ Mr. Alexander
I am sorry to interrupt the hon. Gentleman again, but I should like this point, which was raised by the hon. Member for Hitchin, to be cleared up. Is anything going to be done to relieve the hardship entailed upon farmers in his constituency who, having for 20 years co-operated voluntarily, having put their money into their own factory and grown pigs for their own factory, now have their pigs taken away from them and sent from Essex and Hertfordshire to Calne?
§ Mr. Ramsbotham
I quite follow the point put by the right hon. Gentleman. That is one of the grievances which have come to light during the working of the contract. All I can say is that it is now very well known to the Pigs Board and to the Ministry, and every step will be taken in the future to see that anomalies of that kind are, if possible, removed.
The hon. Gentleman for Doncaster (Mr. J. Morgan) seemed to think that the reason why we supported the inclusion of the lard price was that the curers, owing to some lack of foresight or some mistake on the part of the Government, were finally forced to look to the offal to recoup them. I do not know whether the hon. Member is familiar with the pig industry or not, but I believe it has always been the fact that the curer 1222 has looked more to the offals than to the bacon to provide the margin of profit on which he exists. I have not the figures, but, speaking from memory, I believe the margin of profit over a considerable period is something like 16s. or 17s. per cwt., to cover the costs of manufacture, transport and so forth, and that, of this sum, from 6s. to 7s. is derived from bacon and from 9s. to 10s. is derived from offals. As the hon. Member knows, in the Bacon Industry Act, 1938, it was anticipated that the price of lard would remain stable at 65s., and no action was taken last summer to insure it; the curers and everyone else were perfectly happy on that basis. The price of lard has now fallen to an extent which makes matters very difficult for the curer, seeing that he used to rely on the offals for two-thirds of his margin of profit. It is not a question of the curer being driven to it; it is merely a question of an unexpected fall in the price of lard, which has put the curer in a very difficult position. The hon. Member for Doncaster also gave the impression that the farmers were dissatisfied with the Pigs Marketing Board. I can only say that all the members of the Pigs Board except, I believe, one, have recently been returned by their electors unopposed.
§ Mr. J. Morgan
Might not the fact that they were unopposed reflect a certain degree of indifference as to who got there?
§ Mr. Ramsbotham
I could not quite accept that. I myself, in the unlikely event of my being returned unopposed, should regard it as an indication of very great satisfaction on the part of my constituents. If there were any very grave dissatisfaction, I should have expected the producers to put up candidates in order to remove the people whose conduct had been unsatisfactory. This is not a very extensive Bill. The three Amendments in question will remove certain anomalies which have been found to exist and which it is worth while to remove, and I hope the House will give the Bill a Second Reading.
§ Question, "That the Bill be now read a Second time," put, and agreed to.
§ Bill read a Second time.
§ Bill committed to a Committee of the Whole House for Monday next.—[Captain Dugdale.]