HC Deb 21 November 1946 vol 430 cc1026-9

The following Question stood upon the, Order Paper:

157. MAJOR WISE,—To ask the Minister of Agriculture if he has yet completed his negotiations with representatives of the National Farmers Union relative to the dispute on the question of prices to balance increased costs arising from the payment by farmers of higher wages; and if he is prepared to make a full statement on the matter.

At the end of Questions

The Minister of Agriculture (Mr. Thomas Williams)

With your permission, Mr. Speaker, I should like to reply to this Question.

Yes, Sir. I am glad to say that as a result of the discussions which have been taking place with the National Farmers' Unions during the past few weeks, agreement has been reached on a number of modifications of the Price Review Procedure designed to lead to a complete settlement of the issues which arose after the Special Review of June last. The proposed modifications are set out in a letter which I have sent to the President of the N.F.U. of England and Wales, which letter, together with the President's reply, I am arranging to be printed in. the OFFICIAL REPORT.

Mr. Snadden

Will the right hon. Gentleman say whether the Scottish Farmers' Union were consulted in this matter?

Mr. Williams

Yes, Sir, and they are in full agreement with this statement.

Following are the letters:

Ministry of Agriculture and Fisheries,

55, Whitehall,

London, S.W.I.

18th November, 1946.


Following on my address to the Conference convened by your Union on 15th August we agreed' in an exchange of letters that an investigation should be conducted jointly by representatives of the Agricultural Departments and the National Farmers' Unions into certain anomalies which had become apparent in the methods and procedure adopted for the purpose of annual and special reviews of agricultural prices.

As you are aware, that investigation has now taken place, and I set out below a proposed basis of agreement designed to lead to a complete settlement of the issues which occasioned the summoning of your Conference in August.

Proposed Modifications of Price Review Procedure.

1. Inequalities between fanner and farmer resulting from use of the price instrument to effect adjustment of incomes.

It is agreed

  1. (i) That the adjustment of commodity prices is the only satisfactory method which can be generally applied to effect changes in the level of farming profitability, in spite of the admitted inequalities between farmer and farmer which it produces.
  2. (ii) That the inequalities can be mitigated to some extent by a careful apportionment between commodities of any given global adjustment of farmers' incomes, in the light of statistical and economic data showing the incidence on farms of various types and sizes of changes in costs and conditions.
  3. (iii) That for this purpose the following additional information will be made available for the next and subsequent February reviews:
    1. (a) Data showing the incidence of cost changes on the profitability of different types and sizes of farm;
    2. (b) Data relating the productivity of different types of farm to the wage bill on those farms;
    3. (c) Data showing the profits of farms grouped according to their wage bill;
    4. (d) Data from which the incidence of cost changes on the net returns from different commodities may be inferred.
  4. (iv) That the apportionment proposed in (ii) above will be without prejudice to the right of the Government to take account in fixing prices of any changes that may be required in the character- of the national output.

2. Farmers' incomes in relation to those of other rural groups.

It is agreed

  1. (i) That evidence of changes over a period of years in the relative incomes of fanners and other classes of the rural community will be recognised as one of the factors to be taken 1028 into account in assessing, at February reviews, any change in the level of farming profitability to be accepted as an objective in fixing prices.
  2. (ii) That to this end the following additional information will be made available for the next and subsequent February reviews:
    1. (a) Index numbers of farming profitability;
    2. (b) Index numbers of the incomes of the rural population gainfully occupied other than farmers;
    3. (c)The components of (6) sub-divided in respect of wages, salaries, and profits and interest.

3. Procedure for Special Reviews, and factors to be taken into account.

It is agreed

  1. (i) That on the occasion of any future Special Review occurring between February Reviews (and on those occasions only) the objective should be to effect by means of price adjustments a change in the aggregate gross income of the industry (related to the price review commodities) corresponding to the sudden and substantial change in costs of producing those commodities which has occasioned the review.
  2. (ii) That the appropriate aggregate figure will be apportioned among the price review commodities with due regard to the considerations mentioned under Item I above and that, save in the most exceptional circumstances, further inter-commodity price adjustments designed to effect changes in the character of the national output will not be introduced at such Special Reviews.

4. The time-lag between changes in costs and changes in incomes.

It is agreed

  1. (i) That a time-lag between changes in costs and changes in incomes is inherent in the system of fixing guaranteed prices in advance, and that while it operates to the disadvantage of the farmer when costs are rising, it operates to his advantage when costs are falling.
  2. (ii) That so far as normal February Reviews are concerned the effect can and should be reduced (a)by ensuring that the information available at those reviews shall be as up-to-date as possible, (6) by fixing prices for all livestock and livestock products, namely milk, fat livestock and eggs, for a yearly period beginning on 1st April of each year.
  3. (iii) That so far as Special Reviews are concerned special consideration will be given to the consequences of the time-lag if the change in costs is so substantial as to prejudice materially the capacity of the industry to finance production.

In accordance with the assurance which I gave in my letter to you of 24th August it would of course be understood that these proposed modifications in the price review procedure would be applied, in so far as they are applicable to a February Review, to the review due to take place in February next, with a bearing not only on the prices that would normally be considered on that occasion but also, if justified, to the prices for 1947 crops and for fat cattle and sheep for the remaining period of the livestock year ending on 30th June, 1947.

I should add in connection with the proposal set out in Item 3 (i), that Ministers attach the utmost importance to a full recognition on the part of the N.F.Us. that an acceptance of the principle of full recoupment of any increased costs which had led to a Special Review did not in any way imply acceptance of the same principle for the annual February Reviews, and that at these latter reviews the Government must continue to be completely free to reach decisions on the level of prices to be fixed in -the light of allthe relevant factors.

Yours sincerely,



National Farmers' Union,

45, Bedford Square, W.C.I.

45, Bedford Square,

London, W.C.I.


21st November,1946.


At a Meeting today my Council duly considered your letter of the 18th November containing the proposed modifications of price review procedure.

I am authorised on behalf of the National Farmers' Unions to state that they accept the proposals as providing a means which can lead to a settlement of the issues outstanding from the Special Review held in June last, and which will ensure the continued cooperation of our members with the agricultural Departments in carrying out the food production campaign.

Yours sincerely,



Ministry of Agriculture & Fisheries,

55, Whitehall, S.W.I.