AGRICULTURE (GUARANTEED PRICES) (Hansard, 21 July 1955)

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. G. R. H. Nugent)
I beg to move: That the Potatoes (Guaranteed Prices) Order. 1955, a copy of which was laid before this House on 11th July, be approved. I think I should say a word of explanation to the House as this Order is, so to speak, breaking new ground which I hope will be beneficial to the growing of potatoes. The Order is made under Section 4 of Part I of the Agriculture Act, and by virtue of the extension Order which the House has just approved. The making of this Order for guaranteed prices for potatoes marks the final stage of the Ministry of Food moving out of the business of guaranteeing prices for, and to some extent trading in, potatoes; makes way for the Potato Marketing Board to come back into the business, and for there to be in future a free market in potatoes, supported by the new guaranteed price system working on a support price basis.
The Order authorises a guaranteed support price for potatoes which will be operated by the Potato Marketing Board which the House brought back in a reconstituted form last May. The Potato Board will deal with the marketing of potatoes in Scotland, England and Wales, and the Northern Ireland Government will deal with marketing in Northern Ireland. The guaranteed price which will be operated is the price which was settled at the Price Review, 1954, revised by the award at the Special Review which took place this year.
I should briefly tell the House the broad idea of this new guaranteed price system. The main crop of potatoes is normally entirely home-produced, and the very high cost of freight for such bulky food normally makes importation of potatoes impossible. Therefore, we thought it suitable to implement the price guarantee by a support price system for this commodity on the basis that in a year of normal yield 697 the supply of potatoes produced would meet the demand and equate with it at an economic price sufficient to give a fair price to producers. But as potato growing is a section of husbandry where yields vary very considerably—by as much as a ton per acre—it is necessary to make provision for the years in which there is an exceptional yield.
This support price system will come into operation on those occasions to ensure that the surplus is taken off the market, that the market price is supported at a reasonable level, and that growers continue to receive a reasonable return. The price level which has been guaranteed under the support price system runs at approximately 15 per cent. below the guaranteed fixed price level which has operated in the past. The guaranteed support price is to be broken down into regional price levels and also into seasonal price levels to operate over the whole twelve months.
The Potato Board stands ready to buy from producers any potatoes for which producers cannot find a market in the ordinary way. When the Potato Board has bought potatoes in this way, it will either dispose of them by selling them in the ware market, if it can find a market for them, but at not less than the support price—if it did that it would break its own price level—or alternatively by disposing of them to potato factories, or, finally, for stock-feeding purposes, when they must be sold at a very low price level.
As an incentive to efficient marketing by the Potato Board, we have made a provision that in its trading operations the Board will not be entirely underwritten for the trading loss in which it might be involved. It must bear a small proportion of the loss, which has been agreed at 5 per cent., to ensure that it will have a full commercial incentive.
To give an incentive to the even marketing of the potato crop throughout the twelve months, the Order gives to Ministers the necessary authority to make advances to the Potato Board, so that the Board can make advance payments to producers who offer their potatoes to the Board under the guaranteed price system. This will enable the Board to keep those potatoes off the market until such time as it thinks that the market is ready to receive them. This system of advances 698 which will, in fact, be in the form of loans to producers—will impose no charge upon the Exchequer. It is to be operated on a self-balancing basis by which the Board covers the interest and administrative charges, taking one year with another, and recovers them from producers.
The financial agreement which will be brought into being between the Government and the Board is now in its final stages of conclusion. If it is the wish of the House, a copy will be placed in the Library for the interest of any hon. Members who might wish to read it.
I think that that describes the broad effect of the Order and how the new arrangements will work. They have been the subject of lengthy and detailed discussions and have been agreed with the representatives of the producers and the trade. I think that the new arrangements will work satisfactorily to ensure that in normal years there is an adequate supply of potatoes and a fair return for producers.

§ Mr. A. J. Champion (Derbyshire, South-East)
Tonight we are discussing potatoes, and on Monday, I gather, we shall be discussing fish—in other words, fish and chips, Britain's greatest contribution to the gastronomy of the world. It is true, of course, that we are getting the chips before the fish instead of after them.
The House has already agreed the Potato Marketing Scheme; and as I understand the Order tonight, it makes provision only for guaranteeing the price for the potato crop through the Marketing Scheme to which we agreed before the end of the last Parliament. The Order will give to the Minister such safeguards in this connection as he thinks necessary.
We had no quarrel with the substitution of the Potato Marketing Scheme which was passed by the House except that we had some doubt at the time about the composition of the Board and about the arrangements for deciding the quota acreage. That Scheme has been accepted by Parliament, and it seems to me that tonight we have to consider only the arrangement which is being made to operate the price guarantee, which, as the Parliamentary Secretary said, was agreed to in the Price Review of last year and 699 was amended to some extent by the exceptional Review this year.
Within the limits which the Government have imposed upon themselves, I find it difficult to find much fault with the provisions of the Order. The satisfying of standards to which potatoes must conform, the arrangements for settling the support price, and the reservations as to selling, seem to me inevitable and right in a scheme of this kind. I am grateful to the Joint Parliamentary Secretary for intimating that he will place in the Library the details of the final settlement which is arrived at between his Department and the Potato Marketing Board. I am sure that all of us who are interested in the matter will study them.
The only point about which I have doubt is whether this Order, like others that we have seen lately, is not saddling firmly upon the Treasury and the taxpayer another unlimited liability. Does it, as is the case with cereals and fatstock, put on the taxpayer a liability to which there is no limit settled previously by the Treasury or anybody else? So far as I can see, in this case the Minister has not reserved to himself any right to participate in the decision whether a year shall be a quota year or not. That seems important. I wonder whether the Minister was right in taking up a position which leaves him outside participation in that decision.
I also find it difficult to discover how much these provisions will cost, or at least what the Minister thinks they will cost, the Treasury by way of subsidy on potatoes. It seems, from the Supplementary Estimate which we approved the other day, that these proposals will cost £3.9 million, according to page 30 of the published document, and £2.9 million according to page 15. I trust that it will be the latter figure, but I hope that the Parliamentary Secretary will be able to tell us which of these figures represents the cost to the nation.
I gather that some of my hon. Friends have points to make in connection with the Order, but we do not propose to divide the House against it, despite the fact that we think that the Minister might have gone a little further in guaranteeing the taxpayer against some of the things which we think might happen as a result of the approval of the Order.

§ Mr. Grant-Ferris (Nantwich)
Does my hon. Friend the Parliamentary Secretary visualise that the Board will take up the farmer's crop of potatoes immediately after harvest, or will it be necessary for the farmer to go to the extent of clamping and consequently the expense of unclamping later on? This represents a considerable expenditure on labour to the farmer. If the potatoes are taken straight away it will be of considerable help. I should be grateful if my hon. Friend would answer that question.

§ Mr. S. N. Evans (Wednesbury)
I was very glad to hear my hon. Friend the Member for Derbyshire, South-East (Mr. Champion) speaking up for the taxpayer, because if there is one thing clear about the Order it is that the taxpayer and the housewife and consumers generally are forgotten men and women. The implications of the Order are very considerable and somewhat startling. Certainly they make nonsense of all that was said from the benches opposite in the course of the debate last week on monopolies. When the President of the Board of Trade opened the debate, he said that the Government viewed with suspicion any restriction on trade and claimed that his was the party of free enterprise and the one which believed in competition. Later on the Attorney-General said that private courts were repugnant and spoke in very strong terms about them.
If there is one thing that this Scheme does it is to sanctify and enshrine every restrictive practice of which complaint has been made by the Monopolies Commission and in the Press in the last few months. It also, of course, sanctifies the private trade court about which so much criticism was offered last Wednesday week.
This Order requires that every farmer who is going to produce more than an acre of potatoes has got to be licensed and cannot any longer sell his potatoes to any institution, hospital, orphanage, canteen, public authority, local authority or Government Department without a licence. Indeed, if he is caught selling a ton of potatoes to the village fish and chip shop without permission he can be hauled before the disciplinary committee which is being set up by this Order and 701 fined anything up to £200. But it is worse even than that. This Scheme which we are asked to approve—

§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
This Scheme has been passed and this Order deals only with the price.

§ Mr. Evans
if you recall, Mr. Deputy-Speaker, I did discuss with you, because I was anxious not to get out of order, what it was we could discuss, and it was your view at that time that it would be in order to discuss the Scheme as set out in the White Paper, because this will be our last opportunity for three years. If that advice has been found on reflection not to be quite in accordance with procedure, then I shall most certainly sit down without further ado. But this Order is important, and I should have thought that this was the opportunity to discuss this Scheme. This Order gives effect to the Scheme which will operate for three years, and it is only right—

§ Mr. Deputy-Speaker
I understand that the House has agreed to the Scheme and that this Order simply deals with whether a guaranteed price for potatoes is desirable and whether the machinery for that process is the best. That, I am afraid, is all that we can deal with.

§ Mr. Evans
If we cannot discuss this private trade court which can fine people up to £200— —

§ Mr. Deputy-Speaker
That arises out of the original Scheme and does not arise out of this Order.

§ Mr. Evans
The advice that I was given was quite different.

§ Mr. Deputy-Speaker
I am sorry, but I think I misled the hon. Gentleman because I did not know as much yesterday as I do today. I am very sorry.

§ Mr. Evans
I was most anxious to discuss the quite startling provisions of this Scheme, but I do not think I should weary the House any further in view of your Ruling.

§ Mr. David Renton (Huntingdonshire)
I should like to set the mind of the hon. Gentleman the Member for Wednesbury (Mr. S. N. Evans) at rest, if it is possible to do such a thing, with regard to private courts. There is, of course—

§ Mr. Deputy-Speaker
It has been decided that that is part of the Scheme and is not what we can discuss on this Order.

§ Mr. Renton
I beg your pardon, Mr. Deputy-Speaker, I thought you were ruling the hon. Gentleman out of order on another point which he made later. I will not pursue that matter further.

§ Mr. Deputy-Speaker
No, the Scheme cannot be discussed. This only deals with the guaranteed price.

§ Mr. Renton
On the question of the price, and the way in which the support price may be attracted, I wonder if my hon. Friend, speaking again with the leave of the House, could clear up one point? Do I understand correctly that it will be possible for potatoes to be sold on the open market or privately, but that if they are so sold they will not attract the support price, and that if the support price is to be attracted then they must be sold to the Board and to the Board only?
My other point is this. In the definition paragraph, paragraph 2, we find these words: Producer' means, in Great Britain, a producer registered under the Potato Marketing Scheme, 1955, and in Northern Ireland any producer of potatoes. That would seem to be placing the Northern Ireland producer in a position of unusual privilege. Although I have no connection with Northern Ireland, I have a great respect for Ulster, for those who represent it in this House and for those who grow potatoes there, but in fairness to our own producers, I would be grateful for enlightenment as to why it is that a producer in Northern Ireland gets the benefit of this Potatoes (Guaranteed Prices) Order without being registered under a potato marketing scheme.

§ Mr. Nugent
If I may briefly reply to the points that were raised, the principal one raised by the hon. Member for Derbyshire, South-East (Mr. Champion) was, what safeguard was there for the taxpayer and to what liability would the taxpayer be exposed? I think the hon. Member for Wednesbury (Mr. S. N. Evans) was concerned as well with that point. We have made a provisional estimate of £3.9 million, which is the best estimate we can make of what may be 703 the cost of the scheme in the current 12 months. That cost would arise mainly by virtue of the loss in taking potatoes off the market that are sold to the Board and then disposed of, probably for stock-feeding.
That machinery has been used for supporting the potato price over the last 15 years, in the hands of the Ministry of Food up till now. In fact it has not in most areas been very costly machinery but it has ensured that, taking one year with another, the supply of potatoes coming forward has been sufficient to meet the consumer demand.

§ Mr. Champion
Does the £3.9 million include the £1 million advanced to the potato growers of Northern Ireland, or is it part of that figure?

§ Mr. Nugent
The £1 million advanced to Northern Ireland is apart from the £3.9 million. I would remind the hon. Member for Wednesbury that potatoes are an expensive crop to grow. I would not like to put a precise figure on what it costs now, but producers variously estimate the cost of growing potatoes at between £70 and £90 per acre. So a good deal of money is laid out by producers, and unless they have reasonable stability in their market they could not afford the very big outlay involved to plant the potatoes that are needed to ensure our supply.
Therefore, T feel confident that the general provision of a price guarantee is essential to ensure that we have an adequate supply of potatoes. I should have thought that the kind of sums which are usually entailed in fulfilling the guarantee are reasonable in view of the large amount of potatoes involved.
I may not answer other queries by the hon. Member for Wednesbury. I am sorry that he feels anxiety about those matters, but perhaps on some future occasion when we have another marketing scheme order before the House we may be able to discuss them.
704 To turn to the point put by my hon. Friend the Member for Nantwich (Mr. Grant-Ferris), the Board may accept an offer from a producer while the potatoes are in the ground but will not sign a contract to buy until the potatoes are out of the ground and clamped. Obviously, it would be impossible for the Board to accept any quantity of potatoes in that way and at the same time bring about orderly marketing. The Board would normally want the potatoes in the clamp so that it could bring them on the market at the most favourable time.
My hon. and learned Friend the Member for Huntingdonshire (Mr. Renton) asked whether potatoes can be sold at the support price other than to the Board. The answer is "no"; the Board itself will be the only body offering the support price and able to pay it. The producer will be left free to sell his potatoes at the best price he can in the market with the guarantee that the Board is ready to offer him the support price if he cannot find a purchaser otherwise.
My hon. and learned Friend also asked why producers in Northern Ireland do not need to be registered. The reason is that the Marketing Scheme does not extend to Northern Ireland, and Northern Ireland producers prefer to operate a scheme through the Northern Ireland Government. The position of a producer of potatoes in Northern Ireland is no different from that of a producer in England, Scotland or Wales. Both will enjoy exactly the same benefits of price guarantee, and there is no disadvantage which will be suffered by the producer here because he is registered.
With those explanations, I ask the House to approve the Order.