MILK MARKETING

HC Deb 22 June 1955 vol 542 cc1401-15

8.5 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Harmar Nicholls)

I beg to move, That the Draft Amendments of the Milk Marketing Scheme, 1933, a copy of which Amendments was laid before this House on 5th April. 1955, in the last Parliament, be approved. My first appearance at this Box was to answer Questions about eggs; my second, in the normal business of the House, is to talk about milk. There is no doubt that so far I have dealt with matters of real nutrition, and I hope that to move from eggs to milk is considered an advance in the Parliamentary sense.

These Amendments to the Milk Marketing Scheme for England and Wales have three main objects. Firstly, they are designed to give the Board the necessary powers to continue the marketing arrangements introduced during the war, and operated since, under the Defence Regulations. Secondly, they will enable the Board to operate the guarantee arrangements for milk which were previously operated by the Ministry of Food. Thirdly, they will bring the Scheme up to date in certain other respects to which I shall refer later.

Hon. Members will know that these Amendments are part of a larger number which were circulated to all registered producers, according to the proper procedure about a year ago. That was done in order to give the registered producers a chance to ask for a poll, if they so decided, as to whether or not the Amendments should be passed on to my right hon. Friend for his further action.

At that stage no request for a poll was received, and the Amendments were therefore formally submitted to my right hon. Friend. They were published, and once published the opportunity was there for formal objections to be made to them. A number of objections were received and a public inquiry was set up with Mr. Edmund Davies, Q.C., acting as Commissioner. The inquiry was completed on 21st December last, and the Commissioner's Report was submitted in January.

In the light both of the objections that had been submitted and the Commissioner's Report, my right hon. Friend decided that certain modifications should be made to the Amendments as first submitted. To those modifications the Board has given its assent. The Agricultural Marketing Act requires that only those Amendments to which objection has been taken need be submitted to Parliament for its approval. It is for that reason that we have not now to consider all 94 Amendments but only the seven which were the subject of objection at the proper time. I think that it would be right to add that in any case the remaining 87 were of a minor character, and I have no doubt that that was one of the reasons why no great objection was put in at the time.

Of the seven Amendments now before the House, a few, whilst important, are not so important in relation to the others. I think that that applies to the first two, and I feel there is no point in wasting the time of the House because the Explanatory Notes will probably satisfy hon. Members who may be interested.

The third Amendment relates to several matters which are of considerable importance and should have some comment. The first deals with the implementation of the guarantee agreements. The Board has, in fact, been implementing the guarantee for milk on behalf of the Government since its marketing powers were restored on 1st April of last year. The Board has been operating the guarantee under the terms of the Defence Regulation, and this Amendment makes permanent provision in the Scheme for it to continue doing what, in fact, it has been doing since April, 1954.

The third Amendment will also require the Board to give the Minister notice of its intention to exercise certain of its main marketing functions. Previously, as hon. Members will remember, the procedure was that the Board could put new ideas into operation, and it was only after they had been so put into operation that my right hon. Friend could deal with them. Now they are required to be submitted to my right hon. Friend so that he can judge whether they are likely to be contrary to public interest or not. A provision of this kind, requiring prior notification to the Minister, and which we know is a common feature of the marketing schemes, enables him to consider the matter before the proposed action by the Board is put into effect, instead of having to wait until afterwards.

Lastly, under the third Amendment, the Board's power will be extended in certain ways, as indicated in the 1949 Act. In the form in which the Amendment was originally submitted before the modification, it sought power for the Board to manufacture anything required in the production and distribution of milk, as well as a general power to provide services for the benefit of registered producers. In the light of the objections which were made, and in the light of the report from the Commissioner, my right hon. Friend could not be satisfied that a general power of manufacture would, in fact, be conducive to the more efficient operation of the scheme, and he decided that this power should be limited to the manufacture of dried grass. That is how the Amendment will now cause Paragraph 59 of the Scheme to read.

On the other hand, my right hon. Friend was satisfied that the other new powers sought in the same paragraph, and particularly the general powers to provide services, were proper powers for the Board to have, and that is why this provision remains part of the Amendment. I have no doubt that hon. Members will recognise the difference between the two. The services that have been provided in the past more than justify those extra powers being given in the future. When we remember milk recording, transport development, the drying of grass and artificial insemination, which are all part of those services, we see that it augurs well for their development in the future.

The fourth Amendment is also considered to be important, in that it will confer on the Board the power to require producers to sell their milk only to or through the agency of the Board. As hon. Members will know, the main control exercised by the Board over marketing before the war was derived from a system of contracts to which the Board was a party. The Board was a party to a contract between two other parties. Since 1942 the Board has acted as the sole buyer of milk produced in England and Wales, except that sold by the producer-retailers operating under licence. The Board ceased to become a party to a contract, but it became the sole buyer of the milk produced in this country. Until last year it did so under the control of the Ministry of Food, under the Defence Regulations, and it was proved that very well worth-while economies could be brought about by that sort of development. I am told that something like 2½ million gallons of petrol have been saved by following this system which is now to be made permanent under this Amendment, because the main purpose of this Amendment is to give the Board permanent power to continue in the same way.

The effect of the fifth Amendment is to revise certain provisions of the scheme relating to the Board's obligation to purchase milk. It introduces some changes in the circumstances in which the Board may refuse or cease to purchase milk. I think that the nature of these changes will be apparent in the text itself. Indeed, on pages 11, 12 and 13 they are set out very clearly and in some detail. and I feel that it would take up unnecessary time if I dealt with the matter again when it is already dealt with in words which could not be clearer.

The sixth Amendment relates to the Second Schedule of the scheme in which is specified a list of commodities which the Board is empowered to produce from milk. The effect of the Amendment is to extend the list to include margarine and any other commodities of which milk is a substantial ingredient, except that there is a proviso limiting this power in relation to margarine and the actual content of it. The seventh and last Amendment is what one might describe as a machinery one, concerned only with the renumbering of the paragraphs.

That very briefly is a sketch of the seven Amendments which are before us this evening, and, in commending them to the House, I am certain that hon. Members in all quarters will wish me to pay a tribute to the excellent work that has been done by the Milk Marketing Board over many years and to congratulate it on the effective way in which it has helped producers in a variety of ways to improve their standards of production and marketing generally. I am reasonably confident that these Amendments will help the Board in its continued efforts to this end, and I am confident that the House will approve them.

8.17 p.m.

Mr. A. J. Champion (Derbyshire, South-East)

I congratulate the Joint Parliamentary Secretary to the Ministry of Agriculture on his first appearance at the Box to move a major Scheme. As he said, we have heard him at Question Time before, but not at that Box doing the sort of thing that he has had to do tonight. The hon. Member was a very lively back bencher. I sincerely hope that the weight of the Department which he has now entered will not cause him to be any less lively as a Front Bencher, and that he will continue to serve this House well in the task to which he has been called by the Prime Minister. As he rightly said, he started by answering Questions on eggs, and he now moves to milk. He will find that eggs and milk are a very sustaining diet, and I hope that he will stick to eggs and milk.

The hon. Gentleman rightly said that the draft Amendments make a number of fairly substantial amendments to the Milk Marketing Scheme. I think that a number of points have still to be explained to the House, and I propose to ask a few questions about the Scheme. I regard these Amendments as being of considerable importance, and I am particularly interested in the Amendment which gives to the Board the very wide powers that are set out in the new paragraph 59. I should like to know whether the Minister has any idea of the extent to which the Board proposes to use those powers. He himself referred to them as extensive powers. He said they would help the Board in the task which it has in the future, and I would like to know to what extent the Board proposes to use the powers which are now being given to it by this Amendment.

I would like to know to what extent the Treasury will pay for any experiments which the Board will make in connection with the manufacture of commodities from milk. These are very wide powers in paragraph 59, and we ought to know whether it is possible for the Treasury to have to meet the cost of the experiments which will be conducted under this Amendment to the scheme.

I was particularly interested in the point that the Minister made about the things which the Board sought to manufacture. He told us that as a result of certain objections, the Minister has refused to give the Board some powers for which it asked. I wish he would tell us what were the things which the Board sought to manufacture and what wider powers it sought. Who were the main objectors to the Scheme proposed by the Board and what reasons decided the Minister not to accede to the Board's point of view but rather to accept the objections to the Amendments which the Board had proposed? I hope the Minister will be able to answer those questions, because in view of the importance of paragraph 59 we should be given answers to them.

In paragraph 67, Amendment No. 5, we have an Amendment which gives the Board very great power—the power to refuse to purchase milk. It follows a right given to the Board of the exclusive purchase of milk from registered producers. It seems to me that this is an extremely powerful weapon in the hands of the Board, and we are entitled to ask what are its purposes and in what circumstances the Board visualises using these powers.

I want to ask a specific question: to what extent is it intended by the Board that the powers given in these Amendments are to be used to secure an improvement in the quality of the milk—an improvement which the 1953 Working Party told us was essential? The Working Party set up to consider the quality of milk reported that the quality badly needed bringing up to a very much higher standard than that which it then found. The Report laid special emphasis on the necessity for raising the level of the solids-not-fat—a difficult term but one which means something in this connection. It emphasised the need to bring up the level of solids-not-fat to a very much higher standard than the Working Party found. The Working Party's Report read: One of the strongest reasons for dissatisfaction with the present level of quality is that the level of solids-not-fat has not been as well maintained as that of fat. Having said that, the Working Party went on to make a recommendation which is set out in paragraphs 85 and 86 of the Report. I will not read the whole of these two paragraphs, which are available for the Minister and for the Milk Marketing Board, but I wonder to what extent it is intended that the powers which will be vested in the Board by the Scheme will be used to ensure a raising of the level of the quality of our milk, particularly in this feature of solids-not-fat. I hope the Minister will be able to tell us that it is the intention of the Board to have regard to the recommendations of this very important Committee and to use the powers given by this Scheme to that end.

I admit that I have no very great quarrel with the Amendments in the Scheme, but I would point out that the provisions of the Agriculture Act, 1947, have very considerably altered the relationship between the Government and boards of this description. That has been altered as a result of the fact that under the 1947 Act there has been a commitment to guarantee prices to the agricultural community. In this instance of the Milk Marketing Board, the Government are committed under the guaranteed price arrangements to the payment of a sufficient subsidy to bring the price to the producer up to 3s. 1.95d. per gallon.

As I see it, that is a subsidy payment which is likely to continue to increase if the present tendency continues of having to send a larger proportion of the milk produced to the manufacturer. That this is likely to continue is recognised by the Minister, by his Department and, I am sure, by everyone else who knows anything about this problem. For example, paragraph 28 of the 1955 Annual Review says: The market for liquid milk has declined somewhat since 1951–52 and, although it is hoped that this declining trend has now been brought to a halt, the market is not yet expanding again. In paragraph 17 of that same Annual Review the Minister points out that there is no evidence at all of a decline in the upward trend of milk production. Put together, those two factors mean that an increasing amount of milk going to the Milk Marketing Board must be sent to the manufacturers, which means, if we are to maintain the price to the producer, an increase in subsidy. This is a factor which, of course, has tremendously altered the relationship of the Board to the Government and of the Government to the Board. It is recognised by these Amendments, particularly by paragraph 58 (2), which makes provision for the Board to enter into an agreement with the appropriate Minister on matters affecting the price guarantee.

I ask the Minister, is this enough? The 1949 Act made specific provision for altering the composition of the Board. It made a provision which would recognise the new and different relationship between Parliament, the Minister and the boards which are set up under the various Marketing Acts. The 1949 Act enabled the Minister to appoint additional members to such boards in order to safeguard the interests of the consumer and various other interests, including those of the Exchequer.

I do not know whether this could have been done in the draft scheme—I think it might have been possible—but I think the Minister should have considered providing an Amendment which would increase the number of members of the Milk Marketing Board. Paragraph 10 of the White Paper on Decontrol of Food and Marketing of Agricultural Produce, Command 8989, said this of the Milk Marketing Board: The exercise of these powers must, of course, be subject to necessary safeguards for the Exchequer, the consumer and other interests. Thus, the continuance of an element of consumer subsidy will involve approval by the Government of the level of prices and distributive margins. The Government have set out to give effect to some part of the promise which they made in the White Paper, but I incline to the point of view that the powers contained in paragraph 58 (1) and (2) are not enough. I think the Minister ought to have taken this opportunity of making an addition to the number of people that he can appoint to such a board so that they might be there safeguarding the interests which I have mentioned—those of the Exchequer, the consumers and certain other interests—in the matter of the sale of milk by this virtual monopoly method, which there is bound to be with a producers' board of this sort.

I would have urged the Minister to appoint the maximum possible number under the Milk Marketing Act, 1949, and even at this late stage I am inclined to ask the Minister to withdraw the present Scheme and to bring in another which will have regard to the altered relationship between the Minister, the Board, and so on, as a result of the 1949 Act, include all the Amendments which are listed, and have, in addition, a provision to increase the number of the Minister's representatives on the Board so that the essential interests' can be properly safeguarded in the interests of the country.

If the Minister will not do that, we shall not oppose the Scheme, but we ask him to consider these points and, if he will not withdraw the present Scheme, whether an Amendment ought not to be brought forward at a later stage. I hope the Minister will consider these matters. I believe they are essential points. Parliament decided, in its wisdom, to pass the 1949 Act, and it did so realising its implications. I would have hoped that the Minister would at this stage have given effect to this important part of the 1949 Act. If he cannot do so in this Scheme, I ask him to consider the matter and bring forward another Scheme to give effect to the provisions which I have mentioned.

8.32 p.m.

Mr. Sidney Dye (Norfolk, South-West)

I entirely agreed with one thing that was said by the Joint Parliamentary Secretary, and that was his tribute to the Milk Marketing Board for the wonderful work it has done, the great organisation it has built up and the way in which it has improved not only the quantity but also the quality of the milk produced and consumed in this country. These things ought to be acknowledged in all quarters of the House.

I fully appreciate the desire of the Board for further powers to enable it to improve still more the quality of the milk it handles. We have not yet attained a suitable standard, and everything that can be done to that end must be done, even to the extent of rejecting milk which does not come up to the standard. Consequently, I can entirely agree with the new provisions.

There is, however, an aspect of these Amendments which I regret, and that concerns the limitations placed upon the Board with regard to the supply to its producers of a wider variety of feeding stuffs. The Joint Parliamentary Secretary and his party believe in competition, including competition in supplying the needs of the dairy farming industry. One thing that I have noticed is that the feeding stuffs suppliers' association is rejoicing very greatly at the limitations which have been placed on the Board.

There is danger in the supply of feeding stuffs for dairy cattle becoming almost exclusively in the hands of large firms which are bound together in an association and can thereby fix not merely the standards of the product but also the price. That is what has been happening over the last 12 months. In the case of some of the main ingredients going into dairy cattle feeding stuffs, import prices and home prices have been low, but the price of the final feeding stuffs has risen or remained constant.

There must be something wrong, and it would have been a good thing if the Milk Marketing Board, instead of being confined to drying grass, could have been able to extend its operations so that it could not only use dried grass but could, by buying other cereals and proteins on the world markets and in this country, have been able to produce a balanced diet for the dairy cattle. It could also have supplied the producers of milk with that balanced diet in competition with the big firms which are now binding themselves together in a formidable organisation and are rejoicing that they will not have this kind of competition.

What is the position of Her Majesty's Government? Do they believe in competition in this sphere? If so, why should not they have given this great democratic organisation of producers of milk in this country the chance to break through the kind of monopoly which is being built up, which is charging high prices for feeding stuffs, which is keeping up the cost of milk production? What we want is to bring down the costs of production. What we want is to add to efficient milk production.

Why is it that the Government came down on the side of the objectors in this respect and have not enabled the thing which they proclaimed, namely competition, to play its part? Or have they some other method of breaking up these associations which are fixing prices for the supply of feeding stuffs? Have they something else up their sleeve? Can they tell us that they are going to allow free market prices to operate?

Just after harvest this year barley and other cereals will be sold at low prices and the corn merchants will be exporting barley to Denmark and to other Continental countries in order to try to get rid of our surplus. Why not enable the Milk Marketing Board to buy at that time the heavily subsidised cereals from our own farms, as well as from the world markets, with a view to bringing in other commodities so that the Board could supply to the dairy farmers a balanced diet for the cattle in the winter months? This is of the utmost importance and, if the Government cannot reconsider this matter now, I hope they will bear it in mind for the future. It would be an advance in co-operation that I, at any rate, would like to see.

My hon. Friend the Member for Derbyshire, South-East (Mr. Champion) showed concern about the falling off in demand for liquid milk against a tendency to increase the supply. It is all to the good if each cow can be persuaded to produce more milk, because we want to encourage increased production per cow, but this problem has been taken care of. I do not remember any other year when the fall in the number of cows kept for milk has been so great as during the last 12 months. Perhaps my hon. Friend was not in the Chamber when earlier I quoted some figures? The number of cows and heifers in milk is down in the last 12 months by 28,000, so there will have to be a very great increase in the production per cow to make up for the loss of those great numbers.

Then the number of heifers, which would be those coming on for calving and milk production in the following year, is down by 13,000. What is of even greater importance is that the number of heifers under a year old is down by 36,000. It looks, therefore, as if there will be far fewer cows to produce milk, and so we are likely to see not a continual increase in milk for liquid consumption in the next few years but a falling off. That may be to the disadvantage of the country from a health point of view.

Mr. Gerald Nabarro (Kidderminster)

Before the hon. Gentleman goes any further, will he tell us the figures before and after the decline in the number of beasts? Can we have the percentage decline in each category? Then we might understand the question in its proper perspective.

Mr. Dye

I am very sorry if the hon. Member has not studied these problems and these figures before, for he, like me, represents an agricultural constituency, and the Government issued these figures over a month ago. The hon. Gentleman has had access to them. They were issued by the Ministry of Agriculture in a Press notice over a month ago. The hon. Gentleman is showing the lack of interest that he has paid to these matters in the past. I cannot make up for his deficiencies. I have said as much as I want to say about the Scheme, and I leave the hon. Gentleman to look up the figures in the Library which he can do at any time.

Mr. Nabarro

The hon. Gentleman confesses that he cannot support his argument by the full range of statistics that we need to make the argument conclusive. His figures are evidently meaningless without supporting statistics of the figures before the decline and the figures after the decline.

Mr. Dye

With great respect to the hon. Gentleman, I would say that if he is unable to work out the percentages himself, I will come and help him at any time.

8.42 p.m.

Mr. H. Nicholls

I should like to thank the hon. Member for Derbyshire, South-East (Mr. Champion) for the kindly comments he made on my first appearance at the Dispatch Box. I will try to benefit from the food which he said was so beneficial. He asked what the Board wished to manufacture and who were the people who objected. The Board had in mind in their first Amendment a general power to manufacture. There is no specific point in mind that one can relate at this stage. It was a general power to manufacture which covers a very wide front indeed.

The list of objectors consisted of the Agricultural Engineers' Association, the Agricultural Machinery and Tractor Dealers' Association Limited, the British Refrigeration Association, the Compound Animal Feedingstuffs Manufacturers' National Association, the Dairy Appliance Manufacturers and Distributors' Association Limited, the Dairy Engineers' Association Limited, the Electrical Contractors' Association, Incorporated, the Joint Committee of Concentrate Manufacturers, the Milk Machine Manufacturers' Association, the National Association of Corn and Agricultural Merchants Limited, the National Association of Provender Millers of Great Britain and Northern Ireland, the National Federation of Ironmongers, the National Union of Manufacturers and the Society of Motor Manufacturers and Traders Limited. That is the list of objectors for which the hon. Member asked.

The Minister decided from the evidence given—and he had of course the benefit of the Commissioners' Report—that those full general powers would not be conducive to extra and better efficiency and he decided to modify the Amendment in order to retain the powers only for the manufacture of dried grass.

Mr. Champion

Would the Joint Parliamentary Secretary, having given me that reply which I sought and having acceded to the objections of these people, take care that they do not, by price fixing and so on, bleed the industry, as they might very well do?

Mr. Nicholls

The hon. Gentleman can be satisfied that the Government are taking energetic steps to see that, not only in connection with this subject but over the whole range of industry, that does not happen. I am certain that hon. Gentlemen opposite are, as I am, exhilarated by the speed and the effective way in which we have started to deal with that matter in this Parliament.

The hon. Gentleman referred to Amendment No. 5. There is in that a chance of the Board using these powers to get a better quality milk. They can be used. The Board can refuse to take the milk if the milk is of poor quality or the arrangements for production and delivery are unsatisfactory, or if, in the preceding two years, the purchaser has committed, on more than three occasions in any period of 90 days, a serious breach of the terms on which milk is sold. The Board can clearly use these powers to get the better quality to which the hon. Gentleman rightly drew the attention of the House.

The Minister is satisfied that there are circumstances in which the use of the powers would be justified and that the Board would not penalise producers guilty of trifling infringements. The powers will not be used in any tyrannical fashion. They will be a sanction which ought to be used either for the provision of good quality milk or for improving the general distribution throughout the country.

The point made by the hon. Member about the cost of increasing the amount of milk going for manufacture and bringing about an increase in the subsidy was, in my opinion, exaggerated. There is, of course, always a risk of too geat a proportion of milk going to manufacture instead of to liquid consumption and that the subsidy may rise. But, under an arrangement, the Board has agreed to share this risk and the fears which the hon. Member seemed to express, appear not to be so great as he would have the House believe.

I would say to the hon. Member for Norfolk, South-West (Mr. Dye) that at present the feeding stuffs market gives the appearance of being really competitive; and the fears which he expressed and the extreme words he used are not in accordance with the facts of the situation. If he will provide my right hon. Friend with any information he has to the contrary, I can assure him on behalf of my right hon. Friend that it will be dealt with. I wish to thank hon. Members for their general acceptance of the Amendments. I agree with them that these draft Amendments can only be for the general good of milk production and distribution.

Mr. Champion

Would the hon. Gentleman reply to the point I made about the desirability of adding to the Minister's representation on the Board? I know the difficulties, but I should like to hear his reply. It may be necessary at some time to introduce an Order to do that.

Mr. Nicholls

I remember that the policy put out by the hon. Gentleman's. party in January suggested having a bigger Ministerial representation on the new Board. That would mean increasing the Board and altering the constitution generally. At this stage there is no evidence that the alterations flowing from that would be justified. There is nothing to support the idea of extra representation to which the hon. Gentleman referred.

Question, put and agreed to.

Resolved, That the Draft Amendments of the Milk Marketing Scheme, 1933, a copy of which Amendments was laid before this House on 5th April, 1955, in the last Parliament, be approved.