HC Deb 15 March 1956 vol 550 cc559-65

The following Question stood upon the Order Paper:

91. Mr. CROUCH

To ask the Minister of Agriculture, Fisheries and Food whether he will make a statement on this year's farm Price Review.

The Minister of Agriculture, Fisheries and Food (Mr. D. Heathcoat Amory)

Yes, Sir. The statutory Annual Review of the economic condition and prospects of the agricultural industry has been concluded. The Government have made their determinations on the guarantees to the industry in the light of the Review. These are set out in a White Paper which is now available. The White Paper also sets out the results of the Special Review which was held concurrently with the Annual Review.

The general production policy of the Government continues to be to foster the highest level of net output that can be achieved economically and efficiently, by encouraging in particular beef, mutton and lamb and the production and use of home-grown feedingstuffs. Until markets can be extended or costs reduced, it is desirable to avoid stimulating further the production of milk, pigs or eggs.

The net output of the industry in 1955–56 is forecast at 55 per cent. above pre-war as against 51 per cent. for last year. Falls in the tillage area and in pig production have been offset by record yields of cereal crops, a better hay harvest and more milk and eggs. I am sure the House will agree that this reflects credit on everyone concerned during the past year—[HON. MEMBERS: "Hear, hear."]—following the adverse conditions of the previous year.

The actual net income of the industry, which is forecast for 1955–56 at £299 million out of a gross income of about £1,400 million, is recovering only slowly from the setback of 1954–55 when it fell to £285 million. There has also been a substantial further increase in costs of about £37 million in a full year for review commodities. I am confident that the industry will help itself to meet these costs by continuing to increase its efficiency, mainly through improvements in husbandry and farm management. This will also help the nation by keeping down the total subsidy bill and the volume of feedingstuffs imports

The Government's conclusion is that a further increase in the value of the price guarantees and production grants is necessary to ensure that the industry has the resources it needs in order to play its full part in meeting the requirements of the national economy. The determinations now made have the effect of increasing the total value of the guarantees in a full year by £25 million.

It has been decided to increase the price guarantees for fat cattle, fat sheep, and milk for 1956–57 and for oats, barley, potatoes and sugar beet for the 1957 harvest to leave unchanged the price guarantee for hen eggs; and to reduce by small amounts the price guarantees for pigs and wool for 1956–57 and by a more substantial amount the price guarantees for wheat and rye of the 1957 harvest.

We have also decided to increase the fertiliser subsidies, the marginal production grants and the subsidy on steer calves; and to make provision for grants for silos for the conservation of silage. The Government have had particularly in mind the position of the smaller farmers in reaching the decision to increase the price guarantees for milk by ½d. a gallon and oats by 1s. 6d. a cwt., and in making additional provision for production grants.

The Government have also given careful thought to the form of the fatstock guarantees. They have decided to discontinue the individual guarantees for all classes of fatstock. These were a feature of the guarantee scheme introduced in 1954 after the end of control. But the risks for individual producers in the restoration of the auction markets which these arrangements were intended to meet no longer justify the complications and the elaborate machinery involved.

This will not only enable the fatstock guarantee system to be simplified considerably, but it will also save about 300 staff. A single guarantee payment will be made in future for each group of fat-stock. But to provide greater stability, this guarantee payment will be adjusted as and when necessary to ensure that the average total return to producers each week remains within a predetermined range on either side of the standard price.

I regret that on this occasion agreement has not been reached with the Farmers' Unions. I understand that, while in the prevailing circumstances, they would not have wished to dissent from the total increase in the guarantees, they feel unable to agree to the price determinations or to the changes to be made in the fatstock guarantee system. The Government are, however, satisfied that their determinations are fair and just and take a full and balanced view of the needs of the agricultural industry and of the national economy.

Mr. T. Williams

Is the removal of the individual guaranteed price for livestock consistent with Part I of the Agriculture Act, 1947, which distinctly states that guarantee prices and assured markets should be provided? Does the Minister think that an imposed settlement, for the first time, will help in our balance of payments problem? Although it is difficult at such short notice to make figures clear, if the profits of the industry for 1955–56 have increased by £14 million, compared with 1954–55 and as there has been a recoupment of £25 million out of the £37 million extra expenditure, leaving the sum of £12 million, does that not mean that profits increased over the low figure of 1954–55 by only £2 million? Did the right hon. Gentleman expect to get agreement with the National Farmers' Union in the light of those figures.

Mr. Amory

I will do my best to answer the three very reasonable questions which the right hon. Member has asked. I am sorry that we have not succeeded in getting agreement, particularly as the discussions this year have been held in a very friendly and temperate atmosphere. However, as the right hon. Gentleman himself knows, there is no obligation under the Agriculture Act, 1947, necessarily to reach an agreed settlement.

The individual guarantee was introduced as a special measure of protection against the uncertainties of reopening the free markets. It was never intended to be a general floor price. It served its purpose in those circumstances, but today it is very doubtful whether, on balance, it is helpful. I have had a good many criticisms that the system, including the individual guarantee, is so complicated that it is difficult for producers exactly to understand where they will be. It is important to have a simple system which is understandable and I believe that the new arrangements which we have made, with the special provision for stabilising adjustments, will prove popular.

The right hon. Gentleman next asked me about the effect on the net income of the industry. This settlement has not, as settlements never have in the past, been made on a cost-plus basis. As against the £37 million which it is estimated the Review commodities will have increased in cost, we are making an increase in the guarantees of £25 million, but, fortunately, the industry shows every sign of continuing its steady improvement in productivity year by year. When that is taken into account, the effect on the net income of the industry of this settlement should be very beneficial indeed. Also, the industry has not yet received in full the benefits from the increases that were made in the Price Review last year. Some of these will be accruing during the next six months.

The right hon. Gentleman asked me a third question—

Mr. Williams

Relating to the removal of the individual minimum guaranteed price and whether that was consistent with the Agriculture Act, 1947.

Mr. Amory

The answer is that I am satisfied, and I am sure that the right hon. Gentleman will be satisfied when he looks at it, that it is completely consistent with the spirit and letter of that Act.

Mr. Vane

Now that the collective guarantee for fatstock has been shown to provide a reliable support, would my right hon. Friend not agree that the value of the individual guarantee has not proved as great as was thought at the end of controls when it had a particular psychological value? Will he not agree that its elimination, without weakening the price structure, will be welcome because of the simplification which will result?

Mr. Amory

I agree that that will be the result. It has served a useful purpose, but I think that the balance of advantage is in favour of its removal and the substitution of a simpler system. Administratively, it is proving top-heavy and it is difficult to justify the use of 300 staff for the purpose.

Mr. Willey

Is the right hon. Gentleman aware that he has made his statement against a disturbing picture of British agriculture in that, despite the good weather last year, we have suffered a further decline in agricultural production? [HON. MEMBERS: "No."] There has been a fall of 4 per cent. compared with the figure given in last year's statement. Is the right hon. Gentleman aware that, whatever he may say about the individual guarantee, the fact that the Farmers' Unions have not agreed this time means that they are further disturbed by the action of Her Majesty's Government?

Is the right hon. Gentleman further aware that his statement must be considered together with the Chancellor's statement and that it means that the price support of the British farmer is being directly paid by the consumer and that the reduction in subsidy is being used directly this time for the increased price support? Can the right hon. Gentleman give the House an assurance that the farmers will obtain the benefit and not the middlemen?

Mr. Amory

The hon. Gentleman is usually so clear and lucid that I have no difficulty in following him, but I honestly cannot follow the arguments which he has just adduced. I would remind him and the House that the forecast for the present year is of a net output at a level reached only once before—in the year before last—and which has never been surpassed. As to the effect on the industry, I am sure that when agriculturists consider it they will decide that in present circumstances an additional contribution to their resources in the form of additional guarantees amounting to £25 million will provide them with a very sure base on which to continue their increase in efficient productivity.

Mr. D. Marshall

Will my right hon. Friend clarify one point? Has there been disagreement about the total award, or only about the pattern of that award?

Mr. Amory

The farmers' leaders, at the conclusion of our discussions, told me that in the prevailing circumstances they would not have wished to have dissented from the aggregate award, but they felt that they could not agree to the pattern of the price determinations or the alteration in the fatstock guarantee arrangements.

Mr. Peart

The right hon. Gentleman's reference to increased production was cheered by hon. Members opposite, but is he aware that he is relating his figure to production last year and that last year's figure was comparable only to what it was in 1951? Is it not alarming that the increase in agricultural production since 1951 has been at the rate of only 1 per cent.?

Mr. Amory

For the year 1950–51, which was the last completed year before the Labour Government went out of office, the net output was 145 per cent. above pre-war. It is now 155 per cent. In the next year, the year ending May, 1952, which was six months after the party opposite went out of office, it had risen 4 points to 149 per cent. Between the last completed year under the Labour Government and this year there has been an increase of 10 points in the output over pre-war.

Mr. Speaker

Mr. Tom Williams—the last question.

Mr. Williams

I am sure that hon. and right hon. Members would like to have correct figures. What my hon. Friend the Member for Workington (Mr. Peart) put to the Minister was whether it was not the case that output between 1951 and 1956 has increased by only 4 per cent. If the right hon. Gentleman takes the year 1951–52, when the party opposite had been in office only for a few months and all the work had been done before we on this side of the House had left office, he will find that the figures are almost the same. In four years, output has gone up by only 1 per cent. per annum during the term of office of the party opposite.

Mr. Amory

I cannot agree with the right hon. Gentleman's figures. If he takes the year 1950–51, which was the last full year for which his party was responsible, the figure was 145 per cent. of pre- war. This year it is forecast as 155 per cent.

Several Hon. Members

rose—

Mr. Speaker

Order. This is becoming a debate, with no Question before the House.

Mr. Crouch

On a point of order, Sir. May I put a supplementary question to my own Question?

Mr. Speaker

I am afraid that the hon. Member missed his opportunity.