Motion made, and Question proposed,
That a Supplementary sum, not exceeding £44,983,490, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, by the Ministry of Agriculture, Fisheries and Food for grants and subsidies to farmers and others for the encouragement of food production and the improvement of agriculture; for payments and services in implementation of agricultural price guarantees; and for certain other subsidies and services including a payment to the Exchequer of Northern Ireland.
§ 3.59 p.m.
§ Mr. John Hare
As the Committee knows, this Vote covers agriculture and food grants and subsidies. There are great difficulties in assessing accurately these types of Estimates. The first point I would make is that the Estimates were drawn up before the 1957 Price Review and do not take account of the £14 million award of last year.
Secondly, the Vote includes subsidies such as those for fertilisers where the expenditure is entirely dependent on how much farmers choose to use of a particular fertiliser. Still more important, the Vote covers all the agricultural price guarantees, and the expenditure in this case depends partly on the volume of home production and partly on the market price of farm products, neither of which can be predicted with great accuracy a year or more ahead.
I should like to make some comments on the main items. The first is that dealing with farming grants and subsidies. The Committee will see that the big increases are £1.6 million on fertilisers and £1.4 million on silo subsidies. These are directly designed to encourage higher production and better use of our grassland and thus to reduce our dependence on imported feedingstuffs. That is a very important part of our policy because our bill for imported feedingstuffs is still very large.
The nitrogen subsidy, of course, was deliberately increased at the last Price Review, and this seems to have encouraged farmers to make more use of nitrogen. The silo subsidy, introduced early in November, 1956, has been more successful than we had originally expected. 528 I hope that the Committee will welcome rather than deprecate the higher expenditure on these items. I should perhaps point out that the excess expenditure of over £4 million on some of the "A" subheads for the Vote are offset by savings on other "A" subheads, shown in page 7 of the Supplementary Estimate, amounting to £2½ million.
I should like to turn to those subheads which provide for the agricultural price guarantees. The Committee, I am sure, appreciates that the 1958 Agricultural Price Review is shortly to begin. While I will try to explain the reasons which have led to increases in the costs of the guarantees this year, it would obviously be wrong for me to say anything at this point on the future level of particular guarantees.
The biggest item is the cereals guarantee, for which we are asking an additional £20,500,000, which is a very large amount. By far the greater part of it is due to the fall in world prices of grain, and I want to say something about this, in particular, a little later.
The next item deals with eggs. It is not too easy from the Supplementary Estimate to see how much extra we are requesting. It is, in fact, £15.7 million, but the actual figure does not appear in the Supplementary Estimate and it may be convenient to the Committee if I try to explain in detail how this is worked out.
First, we must turn to the original Estimate of last year. It will be seen in page 40 of that Estimate that under Subhead B.2 we provided a sum of £28.1 million for a subsidy to egg packers to implement the price guarantee to producers. At that time we did not know whether the Egg Marketing Board would be voted into existence and take over the administration of the price guarantee, and we provided last year only for a token sum of £10 for payment to the board. Last year, we also provided £4.6 million under subhead B.7 in page 41 to cover the cost of trading in eggs by my Department. The total of these three items in the original Estimate was £32.7 million.
In fact, the Egg Marketing Board took over the administration of the guarantee on 30th June, 1957. Up to that time we had paid out to the egg packers about 529 £15.3 million. This is much less than the original estimate of £28.1 million, because the original figure was based on the full year. There is therefore, a notional saving of £12.8 million, which will be seen under Subhead B.2 in page 7 of the Supplementary Estimate.
On the other hand, from 30th June we expect to pay £32.3 million to the Egg Marketing Board, and this is shown under Subhead B.B.2 in page 6 of the Supplementary Estimate. Finally, the losses on trading were just under £800,000 in the three months up to June and the saving on the original Estimate for the year was, therefore, £3.8 million. This is included under Subhead B.7 in page 7 of the Supplementary Estimate. To further complicate matters, that saving is reduced by increased payments in trading in Northern Ireland potatoes.
The total cost of the egg subsidy is expected to be £48.4 million, compared with a total provision of £32.7 million, thus showing an increase of £15.7 million. I am sorry that these provisions are so complicated, but I felt that the Committee deserved an explanation of them.
The reason for this additional expenditure of nearly £16 million is that the wholesale prices for eggs have been lower than we expected when the Estimate was produced and production has increased. It is true that the guaranteed price was reduced in the 1957 Price Review, but this has been only a partial offset.
On the fatstock guarantees there is an increase of £3.6 million on my Vote. The Committee may like to know—as the figures are not broken down in the Estimates—that the total cost of the guarantees for the United Kingdom during 1957–58 is estimated at £36.4 million for cattle, £10.4 million for sheep and £38.9 million for pigs, making a total of £75.6 million.
The increase of £3.3 million for milk on the Vote, bringing the total cost of the milk guarantee in the United Kingdom up to nearly £14 million, may seem modest compared with some of the other figures which I have just given, but this could be misleading. The consumer now pays all the cost arising out of liquid milk, including the cost of the increase awarded to farmers at the last Price Review. The subsidies are required to support to a limited extent the price of 530 milk for manufacture, and the main reason for the supplementary provision is the drastic decline which has taken place in the past year in the market price of cheese and butter.
I think the Committee realise that this increased expenditure on our agricultural guarantees must be looked at against the general background of agricultural conditions both in this country and overseas. At home, the net output from our farms in 1956–57 was a record, about 60 per cent. above the pre-war figure. This level of output, I think, will certainly be maintained in 1957–58. It is true that the harvest was not too good, but this was offset by a continued increase in the output of livestock products. I think the Committee will agree that this record is an achievement for the three partners in the industry—farmers, workers, and land-owners; they deserve great credit.
A high level of net output can certainly be in the nation's interest as well as in the farmer's own interest, although I must stress that it is increasingly important that the output should become more competitive in cost and should meet market needs. As I will show, within the general trend there are points which give cause for anxiety both because of their effects on the cost of agricultural support and because of other reasons.
If we look in a little more detail at the main products, we see that the arable area was maintained last year, and that there was a switch from wheat into barley. Both accord with our objective of putting the main emphasis on feed crops. Yields, however, were below normal, and the total production of cereals was also below 1956.
The production of livestock products continues to increase—
§ Mr. Willey
Touching on livestock, perhaps the right hon. Gentleman could help my arithmetic, and repeat the livestock figures. I have had a word with my right hon. Friend the Member for Don Valley (Mr. T. Williams), and we are not sure that we have them right. I am referring to support prices.
§ Mr. Hare
I worry like mad.
To continue, there are definite danger signals in regard to livestock production. Taking cattle first, over the last two years the dairy herd has gone on expanding, although the increase now seems to be slowing down. There was a big increase in the output of milk in 1956–57, and the output in 1957–58 is likely to show a still further increase. The consumption of liquid milk is not increasing and, in consequence, much more has to be sold for manufacture into butter and cheese, at prices that are below the cost of production.
On the brighter side of cattle production, we have increased beef output this year, and the output in 1957–58 is expected to stay at a high level—
§ Mr. A. Woodburn (Clackmannan and East Stirlingshire)
The right hon. Gentleman has said that milk consumption is not increasing. Has it decreased to any significant extent as a result of the reduction in school children's milk?
§ Mr. Hare
The figures remain fairly stable, comparing last year with the year before.
As I was saying, beef shows encouraging signs, and the same applies to sheep. In 1956–57, we had a good lambing season, and the production of mutton and Iamb has gone on expanding.
Now we come to pigs and eggs, both of which, of course, have given rise to considerable difficulties during the past year. As hon. Members know, there has been a good deal of anxiety expressed in the farming industry recently about the low prices of bacon pigs. Quite frankly, the market for bacon has been heavily loaded at times since last October, and bacon prices have been rather low. On the other hand, pork prices have been comparatively high.
Our guarantee system is intended to see that pigs go where they are most wanted and, as has been announced, I am, next 532 week, seeing the leaders of the bacon and pig industry to discuss the position and hear what they have to say. I am afraid that the continuing trend in pig numbers is not too satisfactory an aspect under present conditions—
§ Sir James Duncan (South Angus)
Does my right hon. Friend mean by that, that there are too many pigs, or too few?
§ Mr. Hare
As I thought I made clear, I meant that the market was, at times, being overloaded. I believe that last year my predecessor said that the market at present did not require further pig meat, but it looks as though we shall reach a level of output even above the previous peak in 1954–55.
The output of eggs is continuing to increase. The laying flock is increasing slightly, and yields are improving.
I must remind the Committee that a large part of this production of milk, eggs and pig meat is dependent on purchased feedingstuffs, much of them imported. Despite welcome signs of economy in the use of concentrated feed supplies, we are still having to spend more than I like on imported feed for our livestock population. There is ample room for better use of home-grown feeds, and we must not forget the better use of grass in that connection.
I am sorry to have taken so long but, to sum up, let me once again give the trends in the past year as they affect agricultural policy, and the guarantees in particular. As I have said, the more satisfactory features of the past year are the continued increase in beef, mutton and lamb; the maintenance of the arable area; the swing from wheat into barley, and signs of economies in the use of concentrated feed. Less satisfactory features are larger supplies of milk and eggs on markets already fairly well satisfied; the resurgence of pig breeding, and the extent to which we are still dependent on imported feed.
We shall be reviewing all these trends, together with our production objectives at the Annual Review and, as I said earlier, it would not be right for me at this stage in any way to anticipate the outcome of that Review. I have, therefore, done no more than set out the general trends of production, and how they appear in relation to the production 533 objectives my predecessor had in mind last year. I do not think that the general picture I have painted can be described as a necessarily gloomy one. Above all, the standard of farming efficiency has never been better.
Our expenditure on these guarantees to our farmers is also affected by all the developments in world markets for food and feedingstuffs. During the past year, prices and freight rates for many commodities have fallen sharply. This is particularly true of cereals. An increased subsidy bill is one side of the medal, but the other paradoxically enough, is good news for the consumer—more food at lower cost.
We are, in general, eating better than ever before. For example, we are drinking about 50 per cent. more liquid milk than we did before the war, and we are also eating more meat, eggs and other foods that provide animal protein. We are consuming about 10 per cent. more sugar, and about 5 per cent. more fats than before the war. Retail prices of a number of important foods have been coming down, following the trend of world prices, and only last week I gave the House an example of this in reference to bacon, butter and cheese.
Whatever happens to market prices, we guarantee fair prices to our farmers, and that is the main reason for this Supplementary Estimates. We believe that the combination of a liberal import policy and fair price guarantees to the farmer through deficiency payments is by far the best for the nation. It is for the benefit of the consumer, and it leaves the way open to free choice and lower retail prices—
§ Mr. Frederick Peart (Workington)
What does the right hon. Gentleman mean by "a liberal import policy"? It is important to be precise about this, in view of the controversy about the Common Market.
§ Mr. Hare
I am sure that the hon. Gentleman knows that with G.A.T.T. and our general trading agreements, we are trying as far as we can to liberalise policy, within reason. That is, we are trying to get away from quotas and import restrictions, and relying purely on tariffs to give our own home markets a fair crack of the whip. I hope that the Committee will agree with me that this 534 method leaves the free choice to the consumer and gives the consumer a chance of lower retail prices. It does not, as happens in very many other countries, throw the cost of farm support on to the consumer. If one uses import restrictions, high tariffs and managed prices that is what inevitably happens.
This policy is also to the benefit of our balance of payments. We are helped at present by the, fall in world prices of food and feeding stuffs, but we must recognise the consequences of this policy. When market prices fall, the bill to the taxpayer for the support of agriculture must go up. I think that this possibility was fully appreciated when the present system of agricultural support was introduced.
The 1947 Act, putting guaranteed prices on a permanent basis, was placed on the Statute Book by the right hon. Gentleman the Member for Don Valley (Mr. T. Williams). That was followed by the 1957 Act, which fortified those guarantees through the long-term assurances and, in large measures, received, I think, the support of the Opposition last year. On these matters, therefore, we are probably not as far apart as sometimes we pretend to be. I was very glad, as I was watching T.V. last week, to see that the Leader of the Opposition has at last seen the light on the question of general food subsidies. We were rather heavily criticised at the time we decided to end them. I am sure that everyone now sees that in the long run it was the right thing to do.
I noted that the Leader of the Opposition also said that price control could not be anything but a shock tactic. What alternative is there to our present policy? Surely we all agree that the farmer must have fair guaranteed prices. We all realise that this means an Exchequer subsidy. The subsidy will be high this year. We are now going through a period of falling world prices, with a consequent rise in subsidies.
We should look at the question of farm support on a long-term basis. In years to come, food prices may well rise and the subsidies will correspondingly fall. Moreover, if, as we believe, the agricultural industry becomes more competitive this will also reduce the need for subsidies at the present rates. None of us would be content to think that they 535 would, in fact, remain for ever at the present level. The farming industry is becoming increasingly efficient. As this process continues, it should, therefore, be possible to ensure that farming will earn a fair standard of living, combined with a reducing Exchequer support. We shall, no doubt, hear more from hon. Members opposite about the lines of their agricultural policy.
§ Mr. Sydney Dye (Norfolk, South-West)
Before the right hon. Gentleman sits down, he said that he would return to Subhead B.1, "Cereals." Could he tell us how the £45 million is divided between wheat, barley, oats and rye? It is of some importance, in view of what the right hon. Gentleman has said.
§ 4.23 p.m.
Mr. T. Williams
I hope that for the first two or three minutes of my speech I shall be strictly in order on the Supplementary Estimate. I am not at all sure that I shall be in order afterwards. This is a warning which I hope you have failed to observe, Sir Charles.
While we are glad to see that farmers are becoming fertiliser-conscious and that yields of all kinds are increasing, including grass yields—which cannot fail to be a help to our balance of payments in that we produce our own feeding stuffs instead of having to import them—it would be extremely interesting if the right hon. Gentleman could give the Committee the comparative figures in fertiliser prices over the past few years. This revised Estimate is for £23,600,000, a large sum, and we are anxious to know that suppliers are not taking advantage of any assistance that the Government may be giving to the farming industry.
536 I know that the fertiliser industry is already before the Monopolies Commission for consideration, but we shall neither make charges nor allegations against the producers. However, we should like to hear from the Minister when he expects to receive the report of the Commission. We should like an assurance from him, since the Government are reasonably generous in their treatment by subsidising fertilisers, that they will make doubly sure that the national interests are well cared for when the Monopolies Commission finally reports.
Similarly, we welcome the greater use of lime, which is reflected in the yields: potatoes, 15 per cent.; sugar beet, 36 per cent.; barley, 42 per cent.; wheat, 36 per cent.; and oats, 21 per cent. The use of fertilisers and lime, combined perhaps with better cultivation, is helping the farming community to increase output to the extent mentioned by the right hon. Gentleman. We should also like an assurance, too, from the right hon. Gentleman that his Department is keeping a strict eye on the price of lime. I do not know whether the suppliers are exploiting the position, but, were they to do so, society as a whole would be infuriated. I hope, therefore, that the Minister will give the Committee, if only as an assurance, some information about prices over the past few years.
I should like to say a word or two about cereals. Subhead B.1 reads:Additional provision required to cover increased payments resulting mainly from a general fall in market prices and variations in the quantities and standard prices of certain cereals determined following the 1957 Annual Review.If import prices fall, and the prices of home production fall in sympathy, consumers at some point should, as the right hon. Gentleman said, be benefiting from these lower prices. The right hon. Gentleman suggested by implication that consumers were benefiting and that retail prices had gone down. Yet we noticed that the price index has just gone up once again. There has not been a downward tendency at all in retail food prices, so far as I can discover; and we read of millers' profits and bakers' profits. Perhaps they are entitled to them; I am not complaining.
537 At all events, if the price of imported food decreases, thereby increasing deficiency payments—and the deficiency payment for wheat for October-November is £8 7s. per ton—unless the retail price of that food is decreased, then the consumer derives no benefit from either cheaper imported food or home-produced subsidised food. The sacrifice of the taxpayer is of no avail, so far as the consumer is concerned, except, as the right hon. Gentleman said, the indirect benefit that we all get from the contribution that increased home food production makes to balancing our payments problem.
Surely that is not enough. We agree with the stabilising contribution of the Treasury, but we insist that the consumer should benefit from the cheaper imports and subsidised home production. Indeed, from 1947 that has been the essence of the exercise in this completely new approach to our agricultural and national financial problems—that is to say, to import what we cannot produce efficiently, to equate the price of home production with the price of imported foods, and, with the help of the Treasury, safeguard the producer and consumer at the same time.
We are not sure that that has been happening. We are satisfied that the industry as such, through the assistance received from the Treasury, has been able to do better than ever before in this century, but we are not satisfied that the consumers' interests are being safeguarded, despite the sacrifices made, quite properly, by the taxpayer.
The right hon. Gentleman might say that that would involve some sort of price control and that that is utterly contrary to Tory principles. But that is not an adequate answer. Although I know that we cannot discuss price controls and that sort of thing during this debate, we should remember that if we are to maintain a healthy and vigorous agriculture for its own sake, and for the sake of our balance of payments, deficiency payments being made accordingly, private interests should not be allowed to exploit the Treasury and the consumer.
Nobody wants controls or rigid, price fixing for their own sake, but we have here a completely new problem which has arisen out of the 1947 approach to agriculture. Some of us saw that the day might come when import prices would 538 begin to fall compared with those in the days of shortage during and immediately following the war, and that that was a situation which would have to be watched very carefully. It is a problem affecting consumers which either this or some other Government will have to face. I am perfectly certain that society will not continue to provide £250 million per annum unless it is able to feel that, at some point, the consumer will reap an advantage.
I thought that the right hon. Gentleman was a little too complacent about retail prices and the consumer's position. He appeared to feel—indeed, he said it—that retail prices had been falling largely because of the help which the Treasury was giving to the industry. I have not noticed it. Just to select one commodity, wheat—[HON. MEMBERS: "Bacon".] I said wheat; hon. Gentleman will forgive me if I make my own choice. We are just putting up an extra £8 million because the price of imported wheat has gone down. The price of home-produced wheat has gone down in sympathy and the Treasury is, quite properly, I agree, stepping in. That is its function, to stabilise prices over the year.
Home-grown and imported wheat is being sold at lower prices. May we be told what has happened to the retail price of flour and bread? If there is no reasonable reduction in the retail price, the consumer is being exploited. I am sure that hon. Gentlemen on both sides of the Committee would not like that to happen.
§ Mr. Archer Baldwin (Leominster)
The right hon. Gentleman must be aware that 1 lb. of bread in the United Kingdom costs 6d.; in the United States the equivalent figure is 1s. 4½d.; and in France it is 7¾d. Ours is the cheapest.
The hon. Gentleman is like the flowers that bloom in the spring. His observation has got "nowt to do wi' it". I am concerned only with the price paid by the British housewife and the price paid by the baker or miller for his wheat. That is the only thing which concerns right hon. and hon. Members of the Committee, not what the situation may be in America or in Timbuctoo.
§ Mr. Cyril Osborne (Louth)
On his own calculations, by how much does the right hon. Gentleman think the price of 539 bread should have come down, if the whole amount of the subsidy were passed on to the consumer?
I shall hand that on to the Minister, who, despite the loss of 500 of his staff, has a far bigger staff than I have. He ought to be able to oblige the hon. Member for Louth (Mr. Osborne) and myself with just what reductions have taken place and to what extent, if any, the consumer is really benefiting from the new situation.
I certainly have not, except that I know from the Minister's figures that the deficiency payment has gone up another £8 million for wheat alone. We shall not vote against this Supplementary Estimate, because, as I see the matter, most of it merely carries out agreements made at the last February Review; but we shall expect the Minister to find ways and means, in course of time, of safeguarding the interests of the consumer.
A word now about eggs. The jigsaw financial puzzle which the right hon. Gentleman submitted to us left us all in a state of mental darkness. It was like being in a London fog; we did not know whether we were coming or going. One thing the right hon. Gentleman omitted to tell us was whether the Egg Marketing Scheme is now working efficiently and effectively. We knew, when the original Estimate was produced, that it was quite impossible for his predecessor to get anywhere near an accurate figure, not knowing whether there would or would not be a marketing scheme.
Although the figures look very formidable in the Supplementary Estimate, they are not nearly so formidable as at first glance they might seem. When the Egg Marketing Scheme was, as it were, on the stocks, and people were discussing whether it should or should not come into existence, there was much clamour for more and more freedom for the egg producer. It was suggested that an egg marketing scheme would fail, that farmers wanted to sell their eggs where-ever they wished and not through a packing station with which they were not at all acquainted.
540 If the events of the last six or seven months have proved anything, they have proved that the producer of eggs is better content with a safe market than with anything else. I hope that whoever is to reply will tell us what percentage of eggs produced in this country is now passing through the packing stations. The percentage before the Egg Marketing Scheme came into existence is known, and the Ministry should know what is happening to the scheme now, and whether, having regard to present-day experience, we are likely in future to avoid Supplementary Estimates of the kind confronting us today.
We have no complaint about the Supplementary Estimate. In the circumstances, it seemed almost inevitable. What we might well feel pleased about is that, for the first time in my lifetime, I think—which is, perhaps, too long—we are producing all the eggs the housewife can afford to buy. I was glad to hear the Minister say that we are consuming about 10 per cent. more eggs than we did before the war. True, we did not consume many before the war, because there was not the spending power about for people to buy eggs with, not even crate eggs or lizards' eggs. The situation has improved, thanks to the 1947 approach to agriculture.
Subhead B.3 tells us that the estimate of £3,600,000 will be partly offset by savings due to a reduction in the feed price formula for pigs. Can the Minister tell us how much will be offset by a change in the formula for feed price, and to what extent the feed price formula has been changed due to an increase to the import of cereals of various kinds?
The Minister told us that the arable area this year has been maintained, but he did not go on to add the words "at a very low level". It is down hundreds of thousands of acres, compared with what it was three or four years ago. There is concern about milk because we are producing too much; we have become too efficient, and we have too many animals. We do not know how to sell our own produce. I still feel that there is a weak spot somewhere in the chain, for we still ought to be able to sell more liquid milk, if the housewife were made fully aware of its true value. I do not think that we have reached the end of potential sales of liquid milk 541 which would enable dairy farmers, particularly the small ones, to continue their productivity.
We have the same warning about pigs and eggs that we had last year; there are too many eggs, or they are not being sold where they ought to be sold. Now, we are learning the lesson of the Government's failure to do something with the National Farmers' Union about pigs or bacon or a joint marketing board for pig meat. We know what happened, in the absence of a marketing scheme, following a variation in the price of pork or bacon. If the average farmer, even sometimes when he was an actual member of a bacon factory, could get 1d. more per lb. for pork than for bacon, he would dodge his own bacon factory and go round the corner to get the extra 1d. for pork.
I should have thought that by 1957 or 1958 the time had arrived when we should think more seriously about the possibility of a pig marketing scheme. Otherwise, the transfer from one outlet to the other is bound to continue. At the moment, I understand, some bacon factories are having to carry on with a 25 per cent. through-put of pigs. It is a hopelessly uneconomic proposition and until pigs, either for bacon or for pork, are sold through a nation-wide marketing scheme, we shall never have contentment and happiness in that part of the industry.
§ Sir J. Duncan
Would the right hon. Gentleman not agree that under the agricultural marketing Acts there is nothing to prevent the producer from putting up a scheme if he so desires? The onus is not upon the Government, but upon producers, and there is nothing to prevent them from putting forward schemes.
The hon. Member is aware that the Commission, which was sitting until about eighteen months ago and which finally reported, recommended against a pig marketing scheme and the Minister of Agriculture approved the Commission's recommendations. Consequently, the National Farmers' Union has apparently done nothing further about it since.
That there is a lack of sympathy within the Government ranks was indicated by the Minister's acceptance of the report which recommended against a pig marketing scheme. I hope that present-day experience will at least help the 542 Minister to think about it again and finally, perhaps, the National Farmers' Union will feel that something had better be done about the problem, so that there may be done for pigs what is being done for eggs and what has been done for milk since 1933.
I repeat that it is not our intention to vote against any one of these Supplementary Estimates. We know that they are merely fulfilling bargains that the Government entered into in March, 1957. We welcome the expenditure, even where it has increased, if it is producing the goods and satisfying the needs of the consumers and safeguarding our balance of payments position. I do not know what we would have done had it not been for the increase of between 50 and 60 per cent. in productivity over the last eight or nine years.
I tremble to think what would have happened to our balance of payments position if we had ever reached the stage where we had to buy largely with dollars the extra £400 million worth of food. It is to me, at least, a consoling thought that, starting as we did, in 1947, we at least helped to save agriculture and the nation.
§ 4.43 p.m.
§ Mr. William Whitelaw: (Penrith and The Border)
I hope to avoid the twin dangers, on both flanks, of becoming involved in discussions about the price of bread or about pig marketing. I am prepared to leave both of those aspects to other hon. Members who know more about them than I do. I want to make one point which I hope to relate to the additional sums required for fertilisers and subsidies. Both my right hon. Friend the Minister and the right hon. Member for Don Valley (Mr. T. Williams) have touched upon it. It concerns the use of our home-grown feeding resources and the cutting down of our bills for imported feeding stuffs.
I think we would all agree that these additional sums which are required for fertilisers, lime and the rest are thoroughly justified if they are helping to contribute to a healthy agriculture. That, in turn, means that if it is to be healthy, agriculture must, in the long run, be competitive. That is something at which we must all aim and to which all our policies must be directed. If that is to be the case, we must turn our attention at all times to the costs of production.
543 I should like to make one point following the right hon. Member for Don Valley about the arable acreage. When considering acreages, I always feel that there is a danger of imagining that so long as the acreage of a particular commodity is increasing, all is well. I do no, agree with that. What matters is that we should increase the acreage of the crops for which our natural climate and resources are best profitable. I do not think there is any doubt that in this country the crop for which our climate and resources are best suited is grass. Grass is our national asset and it is to that end that our policy must be directed.
When we talk about costs of production, the dangerous fallacy is sometimes Put abroad that the increased costs fall outside the farmer's control. Many of the increased costs are, of course, outside the farmer's control, but there is one which, clearly, is not. I refer to the feeding of livestock. Already savings have been made, and are being made, by many farmers in their feeding by using more grass and less imported feeding stuffs. Indeed, the fact that the fertiliser and subsidy bills are in excess of the Estimate shows that farmers are determined to improve their grassland and so feed still more grass. In fact, we have moved a long way from the days when grassland was regarded merely as an exercising ground for animals. It is now a crop, as it should be.
In all this, however, I have the one regret that the policy which is directed to improving our grassland is not leading quickly enough to a reduction in the bill for imported feeding stuffs. My right hon. Friend has said that there are improvements in that direction, but I doubt whether any of us can be satisfied that they are quick or big enough. I hope, therefore, that while we continue the policy of increasing our own home-feeding resources, we will take positive action on the other side of the case and that my right hon. Friend will consider deliberately discouraging the feeding of imported feeding stuffs. They are expensive, they add sometimes unnecessarily to the cost of production and, as we all know, they tend to accentuate the problem of surpluses.
For all these reasons. I hope that my right hon. Friend will give his attention to that aspect of the problem.
§ 4.49 p.m.
§ Mr. M. Philips Price (Gloucestershire, West)
What the hon. Member for Penrith and The Border (Mr. Whitelaw) has said should be considered carefully by the Committee. Before continuing with that aspect, however, I should like to remind the Committee of Command Paper 23, published by the Ministry to explain the long-term assurances for agriculture which were established in the Bill of last year. It was published in November, 1956, and it says, in paragraph 2 (iv), that among questions considered by the Government was:What more could be done to assist the industry in improving its competitive position and to help towards a progressive reduction in the need for Exchequer support?That is something which we in this Committee ought to consider today, most particularly.
How far have these subsidies been able to assist the industry to met foreign competition, with a view ultimately to decreasing the subsidies? I fear that the answer is, "Not as much as was hoped." One cannot expect the taxpayer to agree, without very good reasons, to continue indefinitely subsidies of this nature, Unless there is considerable evidence of increasing agricultural efficiency which will lead to a decline in subsidy.
I am not saying that there is no evidence of greater efficiency, but I am afraid that there are areas where this is still in doubt. The Minister today seemed almost to create the impression that as world prices have gone down subsidies must go up. But it is not only a question of supporting the price to the farmer but of his cost of production, which rests with the farmer himself.
What has the farmer done to lower his costs to meet the lower prices? I think that all sides of the Committee would agree that, at any rate now, agriculture must have support of the nature laid down in the Estimates, though perhaps not so much at present because of danger of war emergencies. If a third world war came, the siege economy of the last two wars would be blasted as soon as it began. It is something quite different, to which my right hon. Friend the Member for Don Valley (Mr. T. Williams) referred, which now abundantly justifies the contribution which we ask the taxpayer to make to the agricultural 545 industry, namely, the vital problem of the balance of payments, because home agriculture contributes substantially towards reducing our import bill.
There can be no question that the farming grants and subsidies covered by Subheads A.1 to A.11, dealing with feedingstuffs and lime, field drainage and silo construction, and the newly instituted improvements in farm layout, are the best kind of subsidies because the, help the farmer to help himself. They help the efficient farmer to go on increasing output and lowering costs, which is absolutely vital and far more important than the price which he ultimately obtains. I am sure that the taxpayer is not likely to complain about the sum of approximately £4 million which goes towards those subsidies.
The same thing, however, does not apply to the £44 million or so which go towards the increased Estimates for cereal production, eggs, fatstock and milk. The sum of £20 million in respect of cereals is due, of course, to the general fall in prices, as the Minister has pointed out. But I doubt whether the world market price of wheat is such as to require a subsidy of this magnitude. I believe that the cost of production of wheat and barley could be reduced considerably by modern methods of cultivation, by use of fertilisers and by combining.
My own experience of wheat-growing a few years ago, when I first started combining, was that the cost of production could be reduced by 3s. to 5s. cwt. and sometimes more, depending upon weather conditions and output. Grain drying on the farm, moreover, can abolish the cost of drying at the port silos in the event of a wet season. I understand that there are farms where the cost of wheat production is equal to and even lower than the cost of wheat production per acre in Canada. Unfortunately, this is the case only in a few places, but I believe that the extension of these methods, and of others which modern agricultural science and engineering can produce, can enable us to meet these costs and face lower prices on the world market and thereby reduce subsidies. I hope that the Minister will be able to tell us how far these better methods are being introduced.
The Supplementary Estimate includes £32 million extra for eggs. We ought to 546 consider that figure most carefully. I doubt whether it should continue at this figure especially when one remembers that last year we were dumping eggs into Europe below the cost of production and creating a serious grievance amongst European producers against us.
§ Mr. D. Marshall
Would the hon. Member have the same complaint about various feeding stuffs bought from Europe which may or may not be subsidised from time to time?
§ Mr. Philips Price
I quite agree. We have our grievances, too. French wheat, subsidised by the French Government, comes here.
One of the good things which I see in a Free Trade Area in Europe is that it may be possible to regulate, by agreement between the countries of Europe, the quantities and prices of agricultural products which pass between this country and the Continent and among the European countries themselves. This whole question of subsidising, and in consequence of dumping below cost, between one country and another, is something which I hope the Free Trade Area, when it conies about—as I hope it does—will help to stop. I hope that that again will help us to reduce the cost to the taxpayer of these subsidies and thereby encourage more efficient farming.
I am glad that an Egg Marketing Board has been set up. One of the ways in which we can reduce costs and thereby lower subsidies is by securing the more efficient working of the poultry industry. Progeny testing and efforts to eliminate disease should be carried out by the Egg Marketing Board, just as the Milk Marketing Board has done so much for the dairy industry by enabling farmers to improve the efficiency of their herds. At present in the poultry industry this matter is left very much in private hands. The day-old chick stations where the best kind of chicks are produced are a private enterprise only. They are very good as far as they go, but they require assistance from a national body like the Egg Marketing Board.
Further research into the elimination of such diseases as fowl pest is required. This is still a serious disease, particularly in Lancashire and other northern counties. Can the Minister tell us whether 547 the Egg Board has been able to make any plans for the work to which I have just referred?
As regards the third big subsidy, £75 million for fatstock, although this is an increase of only £3 million, the total amount is colossal. The Minister gave us the figures for the division of the subsidy between cattle, sheep and pigs. I feel that the subsidy for fat cattle and sheep is the one about which least complaint can be made. Our feeders have to compete with the Argentine, with its vast prairies and lower costs of production. They have also to compete with New Zealand, which produces lamb and mutton in a climate where the grass grows all the year round, thereby decreasing costs with which we cannot compete. Here, I think, the subsidy is more than justified, because it will also be a contribution towards dealing with the surplus milk.
In this respect, we have an extraordinary situation. Thanks to the present efficiency of our dairy industry, and because our dairy farmers have learned so much and have used science to such an extent, we are practically swimming in milk. We really ought to be considering other ways of using our cattle. For instance, it is time that the dairy farmer considered whether he could not cross his lower yield milk cattle with Hereford or Aberdeen Angus bulls, and thereby have his dairy herd side by side with a beef herd.
I am a great deal less happy about that part of the subsidy which bolsters up the price of pigs. I believe that something is being done in the right direction, but is it enough? On previous occasions I have called the attention of the Minister and his predecessor to the relative inefficiency of our pig industry compared with that of Denmark. I have argued that our cost of bacon production is much higher than in that country because of the relatively poor quality of our average commercial pigs compared with those of the Danes.
At last, we have a Pig Development Board, which, I hope, is making progress in progeny testing and in investigating food conversion rates with a view to enabling the commercial farmer, as 548 distinct from the person engaged in showing, to be able to get the best possible stock for the most efficient conversion of food into bacon or pork. If that work were more widely extended, costs of production of bacon and pork would be considerably lower, and the £29 million we are now having to pay could thereby be reduced.
Then there is the question, referred to by the Minister, of the heavy bill we have to pay for imported feeding stuffs for keeping the pig and poultry industry going. Unlike dairy cattle which can consume some of the home production, this side of the industry is largely dependent on imported feedingstuffs. Last week, I put a Question to the Minister asking what percentage of foreign ingredient there is in the average cake and cubes imported into this country or manufactured at the ports. The Answer I received from his Joint Parliamentary Secretary was 25 per cent. home grown, which means 75 per cent. foreign. That must be a serious strain upon our balance of payments, and it emphasises the vital need of growing as much as possible of these feeding stuffs ourselves.
Unfortunately, we are up against another interest here. The port millers are concerned with selling their products, and whether the ingredients are home grown or foreign does not matter, although I know that they are taking a certain amount of home-grown production. They produce these cubes very conveniently, and the modern labour-saving milking parlour, where one presses a button or turns a handle and a certain number of cubes go in equal to the quantity registered for the animal, results in much easier handling than dealing with meals, home-grown on the farm. That is another problem which I have watched in the countryside, so we must try to discover what we can do to popularise the handling of home-grown feeding stuffs.
I am sure that neither side of the Committee grudges money spent on agriculture but, as guardians of the public purse, we must ensure that the money is spent wisely and used to increase the efficiency of the industry. I believe that British agriculture has shown that certain aspects of it can stand up to foreign competition, but I hope that I have given evidence to prove that there are still weak spots and that this bill ought to be lower as time goes on.
§ 5.8 p.m.
§ Mr. Douglas Marshall (Bodmin)
In following the hon. Gentleman the Member for Gloucestershire, West (Mr. Philips Price), whom we all respect and whose depth of knowledge we appreciate, I must admit that I was worried at the trend of his speech. It appeared to me to have much more of a radical-liberal trend than possibly either side of this Committee would follow. Indeed, his argument on the question of the sum we are voting today for wheat appeared strange to me. When all is said and done, the sum we are voting today arises from the Annual February Price Review, and has a direct relation to the world price of wheat which could not have been foreseen at the time. If suddenly we rather begrudgingly meet our obligations. I can see no other result than to cause anxiety to the British farmer.
I am not sure that I go all the way with the hon. Gentleman or, for that matter, with my hon. Friend the Member for Penrith and The Border (Mr. Whitelaw) over the question of imported feeding stuffs. I notice, Sir Gordon, that although both hon. Members took into account the balance of payments, external currencies and, eventually, the ultimate cost, both ignored something which has a degree of importance, namely, that ultimately the laws of nature can never be reversed in this House or anywhere else. What we take out of the land must be put back into it, so ultimately, if from time to time we are putting more than the amount back into the land than we take out, there will be a certain degree of advantage, although I do not want to exaggerate it.
§ Mr. Philips Price
Is not what the hon. Member is arguing liberalism and laissez-faire with a vengeance?
§ Mr. Marshall
Not to the same extent. I hope that none of us will suggest that the obligations of the February Price Review are too heavy to meet.
I am afraid I was also considerably worried by the speech of the right hon. Member for Don Valley (Mr. T. Williams), who always has my respect. I think that his speech caused anxiety to all of us who have the farming industry at heart, as I know he has. When he put through the Agriculture Act, 1947, we all knew that the objective was to 550 give a form of surety and guarantee to farmers. The principle in that time of scarcity was to keep down prices.
Consequently, what might be called the quid pro quo had to operate in a time of a drastic fall in world commodity prices, while giving a reasonable living to farmers. I was worried when the right hon. Gentleman went on to say, and I think that these are his words, that he thought that the country would be not only extremely worried but possibly not willing to go on with a subsidy of the type of figure at which it is at present running.
Mr. T. Williams
The hon. Member has not completed what I said. My approach was not what he has implied. What I said in effect was that on this side of the House we supported the Treasury balancing contribution; in other words, we were content with the deficiency payment; but that if imported food prices fell, home-produced food prices must fall in sympathy. We think that the consumer ought then to get some advantage from the falling prices, the Treasury continuing to be the stabilising influence for the producer.
§ Mr. Marshall
I am glad the right hon. Gentleman has made that a little more clear, although, of course, he would not be in order in developing exactly how he would operate that—something which he might find difficult to explain.
The right hon. Gentleman also referred to the matter of getting more people to drink milk. He suggested that the Milk Marketing Board, which is a producing board, is not doing sufficient to promote the drinking of more milk. That may be so. I do not know, but one would have thought that the Milk Marketing Board should do everything possible in that direction.
When my hon. Friend initiated this part of the debate, which is the heart of the Votes we are discussing, he said that it is very difficult at the beginning to estimate the exact cost to the Treasury. We should appreciate certain things from that. Although the majority of hon. Members are prepared to meet these obligations in order to have and to maintain a healthy farming industry, at the same time the Treasury has to meet a sort of blank cheque.
551 It is wise to reflect on that. It may well be that the Minister and his colleagues are rightly and properly focusing the attention of the Government and hon. Members through a telescope upon inflation. Sometimes, when one looks through a telescope one misses a shadow; and that shadow might be deflation, and we must not blind our eyes to the fact that in a world deflation the amount which will ultimately flow from tile February Price Review will increase.
My right hon. Friend also referred to the fact that during 1956–57 farmers accomplished a magnificent achievement by producing just on 60 per cent. of our food. That achievement is even greater when we consider that when we talk about our farmers we talk about only 3 per cent. of our working population. For 3 per cent. of our working population to produce nearly 60 per cent. of our food supply is indeed good.
At the same time, we should also realise that although the income of the nation between 1948 and 1956 rose by 24 per cent., the income of farmers fell by 8 per cent. I hope my right hon. Friend will bear that in mind, because one of the things to which he referred was the increased efficiency of farmers. Although the Government by the 1957 Act increased the general stability of farming, I hope that my right hon. Friend will not forget one psychological and very important point which is that if one wants increased efficiency at any time in any business, one should not leave the feeling that every time efficiency is increased the total amount of that efficiency is taken into account and taken from one. That is not the way to get efficiency. It is worth remembering that since 1948 the farmer has been one of the few people in the community not to become better off.
I want to refer to two items in page 7 of the Supplementary Estimate. The original estimate for home-produced wool was £1 million and the revised estimate is £1,500,000. I should like my right hon. Friend to consider during the coming months introducing a new method of marking sheep at the time of certification for subsidy to enable ancient earmarks to be used without the risk of disqualification for subsidy. Referring to the £500,000 for the calf subsidy, I should 552 like my right hon. Friend to take into account something deeply felt in my constituency.
This is only a Supplementary Estimate. The hon. Member cannot discuss the subject of expected savings.
§ Mr. Marshall
I was pointing out that if different Measures were introduced there might be further saving, but I will leave that matter.
There are two things in page 9 to which I want to refer. The first—in B.3—concerns pigs. The present position of the pig market and the fact that the amount which we would ultimately have to vote to support that market has been swollen have already been mentioned. I am afraid I cannot completely agree with the hon. Member for Gloucestershire, West (Mr. Philips Price) in his rather wide view that a very large number, or indeed the majority, of our pig breeders are inefficient. In answer to what the hon. Gentle-said, I think the danger here is that we cannot have a review of any form of stabilising factor primarily based on the most efficient in the industry. If we were to accept that principle, it would be a very poor day not only for the small farmer but for the average farmer in the United Kingdom.
Despite what has been said from the other side of the House, I should like to ask the Minister whether, in an attempt to lower this particular estimate in the future, he could give further consideration to the introduction of a pig scheme. I am quite certain that there are a number of people who may not agree with me here, but I am equally certain for my part that the important part of breeding pigs is to get a high quality of pig, as well as to produce more pigs for our own use, instead of buying bacon from Denmark. Such a scheme might give a degree of stability, without so much aid from the Treasury.
In Class VIII. Vote 3, Sub-head B.4, relating to milk, excluding milk welfare schemes, reference is made to the Milk Marketing Board, which the right hon. Member for Don Valley also mentioned. Here, the only point I want to make is this. Although I know that the Milk Marketing Board is a producer board, and I realise that the agricultural industry as a whole wishes it that way, the 553 ultimate power really lies with the Minister. I am sure that the Minister himself, the right hon. Gentleman opposite and most hon. Members are extremely worried about the future of the small farmer, and I should like my right hon. Friend to take into consideration the suggestion, which is not generally agreed in the farming industry, for a differential in price with regard to milk.
§ Mr. Marshall
I will certainly reply to that. There was a debate only a year ago on this point, in which the suggestion was made that this had nothing to do with the Minister at all, since the Milk Marketing Board was a producer board. In certain conditions, however, concerning the Milk Marketing Board, the Minister can decide a question in the national interest and say certain things should be done, and I am only pointing out that the Minister has that power.
The last point I want to make is that I hope the Minister will realise, when considering all these matters both for the present and in the future, that although in passing these Votes tonight we and hon. Members opposite are solidly behind them, we are even more solidly behind the farmers of this country.
§ 5.24 p.m.
§ Mr. Dye
It is both a pleasure and a practical thing to have a farmer as Minister of Agriculture, and I found the speech which the right hon. Gentleman gave us today interesting and enlightening. Perhaps he and others of us who are farmers may find it embarrasing at times when we are engaged in voting money which will come to ourselves, but I will try to deal with these matters objectively and from the national point of view.
In listening to my hon. Friend the Member for Gloucestershire, West (Mr. Philips Price), I thought he was criticising some of these Estimates and blessing certain others of them on the basis of how he and the farmers in his own neighbourhood were faring. I think we have to take a broad view—
§ Mr. Philips Price
May I point out that that was not in the least in my 554 mind? I tried to look at the whole question from the national point of view.
§ Mr. Dye
I am only saying what impression it made on me. I have also read criticisms which I have seen in certain journals that are published nationally.
The Minister has pointed out the need for increased production. Therefore, it is quite clear that the case for increased subsidies is based on the greater quantity produced. It is because there has been a greater quantity produced in this country that there has been a fall in the market price, and it is our home production which has made as big a contribution to the fall in the price of our imported food and feeding stuffs as that which is brought into the country. I think the nation should recognise that because we are now increasing our production, that is one reason why we pay less for imports, because in the open market we need less from abroad and the greater quantity produced here means that we have to pay less for imports. Therefore, the nation is getting the advantage.
What worries me is that that advantage is not passed on to the consumer, as, for instance, in the case of wheat. The increased subsidy on wheat is estimated at roughly £9 million, and we know that the millers have been buying their wheat at £3 or £4 per ton cheaper than they did in the previous year. Why is it that milling offals, for one thing, and flour and bread, for another, have either been higher in price or at the same level? This is the kind of question to which we want an answer.
In the February Review, as I understand it, the Minister goes thoroughly into the costs of production here at home. Why should not he go just as thoroughly into the costs of the milling industry and others which receive this cheap wheat and cheap barley? As I understand it. British brewers now buy their barley, by comparison, £3 or £4 per ton cheaper than any other brewers in the world. Why is it, then, that there is not a lower price for the final product after it has gone through the brewery?
We cannot go on with a system of guaranteed deficiency payments in this country if the result is not to bring a direct benefit to the consumer. I do not agree with my hon. Friend the Member 555 for Gloucestershire, South that we should look for further cuts in the income of farmers as a result of the deficiency payment. That seems to be pretty hopelessly wrong. We have gone thoroughly into the costs of production in every aspect of British agriculture, and have agreed that the guaranteed prices are fair, but if we look over the past years, we see that there has been a decline in the estimated income of the farming community, as well as a fall in the value of the money received.
After all, every £1 which the farmer gets now is worth only 16s. compared with its value when the Conservative Government came into power five or six years ago. He has had to face a decline in the value of money and also in the total amount received. It does not seem to me that this is the time to reduce the guaranteed prices to the farmer, and thus reduce the subsidy. The great question is: Why are not these lower market prices passed on to the consumer to a far greater extent than they have been hitherto?
I have mentioned wheat and barley. Those who purchase barley from our farms are getting it at a cheaper rate. Barley is being exported from our East coast ports to the Continent and is being subsidised. As I understand it, as there is a surplus of barley Continental merchants can buy that barley at the current market prices and use it on the Continent. Hitherto, speakers from the Treasury Bench have said that that was a good thing that it was taking some of our surplus barley away and was consequently holding up the price a little. If that is so, why should we not export more, and keep up the market price at home? If my hon. Friend wishes to reduce the amount of subsidies or deficiency payments, that would seem to be the only way to do it. But he and others complain that a smaller proportion of our home-grown grain is going into feeding stuffs for our dairy herds, pigs and poultry.
On the eastern side of the country, far more than 25 per cent. of our home-grown grain goes to feed the pigs, cows and the rest, because we grow more, and one must also take into account the cost of transporting it across country to the animals in the west. This is a practical economic problem.
556 The right hon. Gentleman and other hon. Members have referred to the problem of pigs. The right hon. Gentleman has always taken a great interest in his local Press, as I do. In the Eastern Daily Press of yesterday, there is a very interesting letter which appears under the heading "Bacon Prices." It reads:In The Farmers' Weekly this week we read that Mr. Hare, the Minister of Agriculture, has 70 sows each producing three litters a year through early weaning. On another page we read that Mr. Hare said that the reason for low bacon prices was over-production.On the assumption that Mr. Hare's sows average seven pigs per litter he is overproducing by 500 pigs each year.Surely this is a very bad example for the Minister of Agriculture, who seems to be saying, we are over-producing, please try and reduce such things as bacon, milk and eggs.Perhaps it's the case of don't do as I do, but do as I say.—Your faithfully, E. W. Bell.We have to ask ourselves whether we are producing too many pigs for the nation's needs. If so, we must decide what steps to take to limit their number. I do not think we are producing too many; I believe that the pig and bacon industry is not properly organised to deal efficiently with production. The advice given to Her Majesty's Government by various committees in the past has been proved wrong. If we are ever to have an efficient bacon industry, supplying the British public with the kind of bacon it likes and is prepared to pay a decent price for, we must follow the example of the Danes and link the producers of pigs directly with the bacon factories which they supply, whether as shareholders upon a co-operative basis or by contract.
It is all wrong to have the Fatstock Marketing Corporation as an agent between the producer of pigs and the bacon factories, switching supplies from one factory to another each week. Until we ensure that the producer is producing the right pig and supplying his factory regularly on a contractual basis, we shall never get either the right quality of pig or the quantity that we need.
Secondly, we cannot go on any longer with a large number of inefficient bacon factories scattered all over the country. We must reduce their numbers. It is most uneconomic to have a bacon factory with a 25 per cent. through-put. The Ministry must seek as quickly as it can to reorganise the production of both 557 the bacon pig and the pork pig, regulating that production by agreement with the producers, so that there is a constant flow to meet the needs of the nation. We must not have—as we always have had in my lifetime, and long before it—periods of over-production and low prices alternating year by year with periods of under-production and high prices.
I believe that we can overcome this problem, but if we are to have a satisfactory bacon and pork industry, without having these high subsidies, we must reorganise the industry as quickly as possible so that we can meet the needs of the consumer in a decent way.
§ Mr. Godber
I am following the hon. Member's argument very closely, because it is a very interesting one, and I know that his opinion is genuinely held. He has explained how he would reorganise the bacon pig market, but will he now explain how he will link up with it the pork pig market?
§ Mr. Dye
That is quite a tall order. The failure of pre-war days arose because, although we attempted to control and organise the bacon pig sector of the industry, we left the pork pig sector free. Certain pig firms are offering long-term contracts to producers of pork pigs and large hogs to meet the kind of trade which they can supply. I see no reason why we could not register all pig breeders and factors and so have a record of their output of pigs and how it is coming on to the market, so that a regular supply could he sent into the butchers' shops, pork factories, and the rest.
§ Mr. Baldwin
The hon. Member has quoted the method adopted by the Danes. He will agree that they market their pigs by means of voluntary co-operatives and not through any compulsory marketing board. It is a completely voluntary system. There is no interference by the Government whatsoever.
§ Mr. Dye
That is so, and I also know from my visits to Denmark that the system has been established for many years. It has been built up that way. If our forefathers had been as far-sighted and had built up our industry in the same way we should have been as wise and as rich as the Danes. Our problem is how to transfer from this silly auctioneering system, about which the hon. Member for 558 Leominster (Mr. Baldwin) knows so much and which has been the main system of marketing here, to a system similar to that which operates in Denmark. We know that it will not be quite so easy for us. They are organised mainly for an export trade, but we must try to organise to supply our home consumers and there is a variation in taste between people in the north, south, east and west of the country and between various counties. If we can for once get away from the silly system of the auctioning of fat-stock as the best method of price settlement, I am sure that we can devise a much better system to deal with pigs, cattle and sheep.
On Tuesday, I had to decide how many fat cattle from the yards were to go to the butcher this week. I decided on five. They did not go to market, they went straight to the slaughterhouse at the purchaser's expense. So I am getting at farm price dead weight for the cattle which I sent. I think that a good system, and I am prepared to give it a fair trial. I want to see the same kind of thing operated throughout the country.
§ Mr. Dye
No, it is not the F.M.C. I could use the F.M.C., but its slaughterhouse is further away and I should have to pay the cost of getting my cattle there. Why should I do that? Surely the hon. Gentleman will not argue that we should have a monopoly for the F.M.C.? Why should I not be free to send my cattle where I think they are most needed?
I ask that, with a new attitude towards this problem, we should be just as serious in scrutinising the costs of distribution after our stock has left the farm as we are in reviewing the costs of the farmers at the Annual February Price Review. If we take that as a general principle, I see no reason why we should not go into the costs of distribution, marketing and manufacture of stock after it leaves the farm. That in my opinion will be the next step that a Labour Government will have to take, unless the right hon. Gentleman pays more attention to this matter. The right hon. Gentleman asked us what we would do if we were not proposing to do the same as the Government are doing, which requires us to give some explanation of the Labour Party's view on these 559 matters. But I do not wish to trespass too far from the point or I shall be called to order. I hope the right hon. Gentleman and hon. Members opposite will begin to think constructively about marketing in view of the public concern about the size of subsidies and the concern of farmers about how long they will continue.
§ 5.45 p.m.
§ Mr. Marcus Kimball (Gainsborough)
I shall not delay the Committee because I understand that I shall be out of order if I talk about the matter I wished principally to discuss, namely, Class A, Vote III, Subhead A.7, and the failure of my right hon. Friend to spend £1 million on encouraging the Tuberculosis (Attested Herds) Scheme. However, I wish to say something about Subheads A.2 and A.1. I welcome the increase in spending on fertilisers, but this increase will be utterly wasted unless there is a marked improvement in field drainage. The Committee will observe that we are spending about £2,500,000 annually on field drainage and this evening we are being asked to vote another £250,000 for this item. That money will be wasted unless my right hon. Friend is prepared to face this problem in all its aspects. If he were to ferret about in his desk he would find a most excellent Report which was produced by a distinguished constitutent of mine who used to represent half my division as a Member of this House. I refer to Sir Arthur Heneage.
If my right hon. Friend examines that Report, he will realise that this money will be wasted unless he faces the problem of getting the water away down the main watercourses. Unless that is done, we shall be burying tiles and money. I know that my hon. Friend has not implemented the proposals in that Report because he has failed to obtain a sufficient measure of agreement between the National Farmers' Union, the County Councils' Association and the C.L.A. I hope that he will try to break this expensive stalemate. If the Report I have mentioned is not acceptable, I hope that my right hon. Friend will investigate other measures to instil some sort of order into our system of land drainage, which is such an important thing in the part of the East Midlands which I represent.
560 I wish also to refer to the marginal production assistance grants. I am certain that my right hon. Friend will find that there is considerable overlapping in the money that we spend on these grants. The whole country is now covered by the provisions of the 1957 Act for capital improvements. We have also the Hill Farming and Livestock Rearing Acts to help in the improvement of land.
I will not weary the House with detailed calculations because the way in which the Treasury grant is paid on various subsidies is extremely complicated: but perhaps my right hon. Friend will consider the case of a man who intends to improve some grazing under the Hill Farming Acts by direct reseeding. Having had a grant on that score, he decides to take a cover crop of oats off the land before he does the direct reseeding. He is entitled to a grant for ploughing up grassland and a marginal production grant. If the Minister looks in detail at the example I have given, he will find that the net cost to the farmer for such an operation is practically nothing. It amounts to about £1 or £2 an acre. I consider that there is a certain amount of overlapping between the hill farming and livestock rearing grants and the marginal production assistance grant and there is room for considerable savings.
§ 5.48 p.m.
§ Mr. R. T. Paget (Northampton)
Unlike most of the hon. Members who have spoken, I am no longer an active farmer and I wish to consider the general atmosphere of this matter from a different angle. What fills me with alarm is the kind of defeatist, deflationary, restrictive atmosphere which is here apparent. We are told that there is too much milk and too much pork produced. I seem to remember the right hon. Member for Woodford (Sir W. Churchill) saying that he knew of no better investment than pouring milk into babies. That hopeful atmosphere seems to have gone. The idea is no longer, "How do we use this additional milk which we are so fortunate to get?" Now the idea is, "How do we stop getting it?" and, "How do we stop getting pork?"
Periodically in our history this sort of thing happens to us. It happens when we have a tired Government which, rather like a jockey who has been riding a horse 561 at full gallop, feels, "I must pull up this brute; it will be so much easier to control it at a jog-trot." Instead of managing an expanding production, it is felt necessary to slop it, because the figures are getting on top of us. Broadly speaking, that is what is happening.
I know of many occasions in English history during which the £ has retained its value; they have been miserable periods of hunger, lethargy and recession. When the £ has lost its value, those have been periods of activity and movement. I remember the speech made the other day by the right hon. Member for Monmouth (Mr. P. Thorneycroft), when he said that we had attempted too much. I thought he should have catalogued what we had achieved: leadership in the industrial field of atomic energy, the Welfare State, and sufficient ground forces to stabilise the future of Europe. He told us that this had involved a drop in the value of the from 20s. to 12s. I venture to say that no nation ever got better value for eight "bob".
This is the attitude with which we should approach agricultural problems. We should ask what we want from our countryside and from our farms, not how we can get them budgetarily a little cheaper by getting less production. The attitude behind the subsidy policy is that we must reduce production because extra production is budgetarily expensive. That policy should be reversed, We should want from our countryside as much as we can get. In point of fact, we get only about half what we need. The other half has to be imported. We should arrange things so as to get from our countryside as much as it will produce, subject only to the limitation that farmers and workers should not be given too large a share, an unfair share, of the total product which has to be distributed among the people.
What has been happening under the policy of which these Supplementary Estimates are the culmination? Has this policy encouraged the maximum production in the countryside? It has not. It has been turning agriculture into a declining industry. Let me give the Committee a few important figures. It is no use talking about so many millions if we do not know what so many millions will buy. The share of the national income 562 that agriculture had up to 1952, the year when the last Price Reviews of my right hon. Friend the Member for Don Valley (Mr. T. Williams) had worked themselves out, was approximately 2.9 per cent. It was that in 1948 and remained stable throughout the period of the Labour Government. Since 1952 it has fallen to 2.8, 2.4 and 2.3, and is now 2.2. That means that the farmer has lost one-quarter of his share of the national income since 1952. That is the result of the present policy.
Is that because the farmer has failed to improve his efficiency? The Minister paid a tribute to farmers and said that the way in which farming efficiency had been improved was magnificent. The figures prove that. I can give the Committee the net productivity figures. Since 1948, the productivity of agriculture has gone up by 40 per cent.
§ Mr. Godber
The hon. and learned Gentleman appears to be quoting. Would he tell me what he is quoting from?
§ Mr. Paget
I am quoting from figures obtained for me—I am most grateful for them—by the Research Department of the House. I asked for the agricultural productivity figures and the share of the national income taken by various industries. Taking 1948 as 100, productivity in 1949 was 104, in 1950 it was 106, in 1952 it was 120 and now it is up to 140. Against that, the general figures for industry have gone up by only one-half. Since 1948 the efficiency of industry as a whole increased only by 20 per cent. Last year it actually went down. There was lower production per man employed and per capital unit.
§ The Chairman
This argument is going rather beyond the Supplementary Estimate. The policy has already been agreed to.
§ Mr. Paget
The share of the national income depends upon the amount of commodities produced, and that calls for the Supplementary Estimate. An argument directed to showing how and why productivity has reached a certain level above the original Estimate or below it should, therefore, be in order. I suggest that my observations upon the general farming situation are relevant to that question of the level of production, which governs the Supplementary Estimate.
§ The Chairman
Yes, but I am trying to point out to the hon. and learned Gentleman that the question at issue upon a Supplementary Estimate is concerned not with policy but with why the Department has spent more than it asked for. The original policy was decided long ago. We should try to keep to the reason for the Supplementary Estimate. The Minister asked the Opposition to state their policy and that was really going a bit wide.
§ Mr. Paget
I merely say that the result of the Government's policy has been reduction in the farmer's share, in spite of the fact that his efficiency has increased. If Government policy takes from agriculture the value of increased efficiency, it must be clear that to continue that process makes agriculture an ever-declining industry. That is what has happened with every Conservative Administration this country has had. Each time the industrial side of the party gets control, and every time the countryside is let down. I have seen it happen a number of times in my lifetime. It has happened every time we have had a Conservative Administration and that is precisely what is happening now.
This subsidy system as distributed in these various ways in time will have to give way to a contract system, a system whereby we purchase from the farmer at a price—a price, after all, is only a symbol for the distribution of goods—which gives him a fair share of the national income, and the goods which we get on that contract, for which the public pay, the public should be responsible for merchanting. As it is, these Supplementary Estimates are not really subsidies to the farmer. Overwhelmingly, they are subsidies to the middleman. The more strongly organised middleman will always get the loose money hanging about and that is the person to whom this is paid.
The National Farmers' Union has stood supinely by watching the industry decline. It will really have to pull up its socks and put up a fight for the farmers. This smooth thing is not working any longer and it is time they agitated. We have a tired Government and can only get it out of its inertia by kicking it.
§ Mr. Paget
Of course, the more we inflate, the more we go on doing so. The right hon. Gentleman surely does not think we are actually going backwards yet with the amount of capital which is invested? It would be a total disaster for this country if we did not move forward at all, but we are going slower; we are coming to a stop. Agriculture is getting less labour because the efficiency which agriculture has achieved is taken away from it and is not made available to it so that it can offer a competitive wage. We are getting less capital for agriculture because it cannot get the return. It is grinding to a standstill. The Minister says with pride that we had a record production last year. We had an extremely good harvest and it is going forward. [Laughter.] Of course we had.
§ Mr. Godber
If the hon. and learned Member will forgive me, he said he was now out of farming. I think that has some bearing on his knowledge.
§ Mr. Paget
Although it was a record harvest, it was a difficult one to get—an extremely difficult one, but very productive—anyway in the part of the country in which I am interested.
I have been diverted, but I was concluding by saying that unless some active measure both by constituency Members from the countryside and from the National Farmers' Union, whose job it really is to exercise some pressure on the Government, stops this process of saying, "You have got to absorb more and more additional cost in your efficiency, instead of using your efficiency, as every other industry does, to recapitalise and improve your wage structure", we shall drive the industry to the depression which we have always seen it go to in similar periods.
§ 6.5 p.m.
§ Mr. R. H. Turton (Thirsk and Malton)
I have sympathy with the hon. and learned Member for Northampton (Mr. Paget) when he says he wants to see a thriving countryside and producers producing as much as possible, but when his remedy for this large Estimate, which I find a matter of some concern, is to nationalise distribution, I think the result would be a very much larger Supplementary Estimate.
In the course of his speech the hon. and learned Member made allusion to a speech made from the very spot on 565 which I am standing by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) last week when he said that we have been trying to do more than our resources could manage. I want to use those words in a different context and in an argument to which I believe my right hon. Friend would not wholly subscribe. I believe it is a matter of great concern that, certainly for cereals and livestock, these Supplementary Estimates show a total which is a record, at least since 1954, which is the basic year to take.
I think that is due to the fact that Her Majesty's Government have been trying to do too much. They have been trying to do three things—give support to the agricultural industry, to maintain the links of trade with the Commonwealth and to encourage importation of agricultural goods from Europe and other foreign countries. All three objects are in themselves practicable and, maybe, desirable. It is possible to pursue two of those objects at the same time with success, but I suggest to the Minister and the Government that if they try to do all three at the same time they will fail both the farmers and the Dominions and cause a certain amount of suspicion among those European countries which are exporting agricultural products to us.
I make my survey of this matter by looking at 1954 as the basic year. I noticed that when The Times made a comment on these agricultural subsidies it headed the articleA higher output and lower prices.It may be that for some commodities The Times was speaking accurately, but, keeping to the narrow context of cereals and fatstock, I want to show that in Supplementary Estimates which are of record size that is not true. The production of wheat in this country declined between 1954 and 1957 by 183,000 tons. In fact the guaranteed price to the farmer has been reduced by 1s. 5d. per cwt.
One of the reasons for this huge Supplementary Estimate for cereals—£9 million representing wheat—is that imports of wheat compared with 1954 have increased from 69 million cwt. in 1954 to 90 million cwt. in 1957. The curious fact is that the average price of imports of wheat has been 1s. per cwt. higher in 1957 than in 1954. The reason for the £9 million is that in 1957 French wheat coming in just 566 at the time when our English wheat was being harvested was coming at a price of 20s. 3d. per cwt., which was 3s. 4d. per cwt. less than the price it was averaging in 1954. That is the factor to which I want the Minister to pay particular attention. If large quantities of foreign wheat or any other foreign cereal are thrown on to the market just at a time when the British farmer wants to harvest his produce, it must mean that these deficiency payments will be unduly exaggerated.
We have very nearly the same story with barley, except that, with the encouragement of my right hon. friend's predecessor, farmers have been asked to grow more of their feeding stuffs. As usual, the British farmer has made a great response and has increased his production of barley by about 350,000 tons. While he was increasing his production, imports of barley into this country increased from 18.6 million cwt. in 1954 to over 20 million cwt. The barley from the Commonwealth came into the country at a similar price, but the cheap foreign barley did harm to the British farmer, brought down the price which he realised and increased the deficiency payments.
That is why we are facing this heavy bill for deficiency payments in cereals. The farmer is not getting more; in many cases he is getting less. The fact is that we have a glut of cereals and as a result we are having to export barley, although this in itself is a good thing because we are exporting at £26 a ton whereas some of the foreign barley being brought to this country is as low as £19 a ton. In the circumstances the export of barley is a saving to the Exchequer for which we ought to be grateful.
§ Mr. Paget
Surely the whole case which the right hon. Member is making is the very case which I made for the Government to be the importer. If the Government merely buy the balance that they require, then if they buy it cheaply the advantage which they get as a buyer will be passed on to the farmer in the subsidy payments.
§ Mr. Turton
There is a great deal in what the hon. and learned Member said, but I have found over the years since the war that the Government are always very expensive buyers. I do not want to get into that controversy for I should 567 be out of order. I am simply asking that when we look at the Supplementary Estimate we should realise what is the evil we must cure.
Certainly in cereals the lesson is that imports from the Commonwealth are brought into the country at times which are convenient to British agriculture and at reasonable prices, but imports from the Continent are brought in at an inconvenient moment and at very low prices. In the year we are considering the British farmer received 28s. 5d. for his wheat. The French farmer received 38s. 9d. but French wheat was being brought into this country at 20s. 3d. Bearing that in mind, I should have thought that it would give anybody who looked at the problem cause for considerable thought to see whether we can take action against the import of that French wheat at such low prices.
§ Mr. Marcus Lipton (Brixton)
Is the right hon. Member saying that he is in favour of import controls? That is the only answer.
§ Mr. Turton
That is not so. The hon. Member forgets that a Bill is down to prevent dumped goods from being brought into this country. If foreign agricultural goods are being imported at prices well below those which the foreign farmers are receiving, it may well be a matter to consider whether the Government should take action.
The figure for livestock, too, is a record estimate. There is only £3,500,000 in this Supplementary Estimate but it brings the figure to £75 million. Why is that? Our production of pigs is some 40,000 tons lower than in 1954. It is true that the feeding stuffs formula has been changed, but the farmer is getting only 8d. a score more than in 1954. The reason we have these large deficiency payments and the reason that bacon factories are finding it very hard to sell the bacon is that there has been a very considerable increase in the quantity of bacon imported. The increase was 700,000 cwts., comparing 1954 with the present day. Are we to allow our industry to collapse because the Dane, having failed to send his bacon to Germany because the Germans have put up their duties, is selling it in this country 568 at 10 per cent. below the cost of production in Denmark? That is a matter to which the Government must give earnest attention.
Turning to fatstock, the extraordinary thing is that as far as I can see the farmers in this country are receiving a lower price for their fatstock than farmers in any other country in Europe. It is true that our home production has increased since 1954 by 58,000 tons but here, too, imports have increased. The amount of imported beef—fresh, chilled and frozen—has risen from 268,000 tons to 457,000 tons. This means that we have more beef in this country, and that has depressed the price of beef on the market, especially with Argentine beef being imported at a time when we have the autumn flush of British beef.
The main reason for this huge Vote in the Estimate for fatstock is that the average price of Argentine imports fell from 8 guineas a cwt. in 1954 to £7 5s. 0d. a cwt. this year. That has meant that the Government have had to pay out this large sum in subsidies.
Mr. T. Williams
Would the right hon. Member be good enough to repeat the statement which he has just made? I think I heard it correctly, but I should like to be assured that he said that the Danes were importing bacon into this country at 10 per cent. below the cost of production in Denmark. Was that the statement? If so, would the right hon. Gentleman be good enough to give us the authority which he has for quoting the figure? It is an extraordinary statement.
§ Mr. Turton
I have stated that and I stand by it. As it comes from private conversation I would rather tell the right hon. Gentleman privately after the debate than state the source of my information in Committee. When I have told him I think he will appreciate my reasons for this.
The country is faced with a very great problem. Everywhere throughout the Commonwealth we are being told, "You are not such a good market to us as you were". The reason is that we are becoming the dumping ground for these agricultural surpluses of Europe and the Argentine, which are being dumped in this country. In the Supplementary Estimate there is a very large bill for the results of foot-and-mouth disease, which 569 was entirely due to these excessive and indiscriminate imports from the Argentine.
Before it is too late, I beg the Government to think over this line of policy. It is a very expensive policy for the taxpayer. It may be that the consumer gains slightly by some of these dumped agricultural goods that come in, but neither the farmer, the taxpayer nor the Commonwealth gain by it, and I believe that the time has come when we should not be trying to do too much in this direction.
§ 6.20 p.m.
§ Mr. Gooch
I am very glad that my right hon. Friend the Member for Don Valley (Mr. T. Williams) gave a welcome to the new Minister. Perhaps I, on behalf of not a small number of people engaged in agriculture, may join in those good wishes. I do not say, of course, that we shall always agree with what he says, but I can assure him that on other grounds, apart from the general line of policy, the main part of the industry will be prepared to go a long way to help him.
Now I want to address a personal word to the Minister. Before he arranges another open day on his farm he should take a course of lessons on how to handle little pigs. I noticed that the R.S.P.C.A. was very annoyed to see a picture of the Minister holding up small pigs by their hind legs. But I expect that he will put that right before again inviting the journalists to his farm.
The right hon. Gentleman said that the Supplementary Estimate was necessary because of the difficulty of predicting future needs. That is true, but I think that it would be extremely helpful, and might obviate a future Supplementary Estimate, if the Minister could give some indication to the Committee of production trends. I do not ask him to say in so many words what will or will not be required of farmers in the year ahead, but I think that, not merely for the information of farmers but of the general public as a whole, it would be well if he would give some indication of the lines on which his mind is working in relation to general production.
It may be that before this debate is over, the Minister will be able to give such an indication. It would be of enormous help to know what he is expecting of farmers next year, and where he wants reduced production. If that were carried 570 out as far as possible it might, as I have said, avoid the necessity of the Government asking for considerable additional sums next year.
The price of compound fertilisers is too high. There is a considerable variation in the prices charged to the farmer, and I suggest that a Ministry investigation into this matter would be fruitful. This is the more necessary as the Estimate includes a considerable sum for fertilisers. Again, the right hon. Gentleman said that the 1957 Act fortified the guarantees. I do not want to be ruled out of order, Sir Charles, but as the Minister said that, I should like to remind him that the new Act does not fortify the guarantees but makes it possible at the next Price Review to reduce them. If the reduction is carried out to its full extent, the farmers will be receiving a good many million £s less next year than they have received in the year we are considering.
In that connection, I think that it is most unfortunate that this Supplementary Estimate should be debated on the eve of the Annual Price Review. I say that because we have heard all sorts of rumours of how the farmers are then to be treated. I suggest that bringing this Supplementary Estimate to the Committee at this time is bound to tell against the farmers when they present their case at the Price Review.
Whilst I rejoice that there is considerable harmony in this Committee on the main points, and whilst I support the Supplementary Estimate, my chief concern is to make sure that what happens from now on, and particularly at the February Price Review, does not affect the wages and working conditions of the men for whom, at times, I am privileged to speak. Much has been made of the tremendous increase in agricultural output, and the industry has every reason to be proud of that, but it is often overlooked that that has been achieved with considerably fewer men. Over 100,000 men have gone off the farms, yet production has stood up well. It is true that the increase is due partly to increased mechanisation, but it is also due in large measure to the very fine type of men that we have on the farms today.
It is sometimes mystifying, not only to the general public but to the farmers just where these subsidies go, and perhaps I 571 may, at this stage, read to the Minister an open letter addressed to him, which appeared in the East Anglian Daily Times. It reads:Dear Mr. Hare, I read in the papers how the subsidy paid to all farms above five acres comes to an average of £1,000 a year. I have a farm above five acres, and last week I got what is called a deficiency payment—which is the same as a subsidy—of £58. I keep some hens, too, and I reckon I get another £50 subsidy on them, and what I want to know is who gets the other £900.Perhaps the Minister could put in a bit of homework, and provide the writer of the letter with the information. He may be one of the right hon. Gentleman's constituents. He signs himself "A Very Small Holder", and adds the postcript:I am not against getting subsidies, Mr. Hare. Please don't think that.I think that it is just as well that little farmers like that, who are, perhaps, having a hard time—and, it may be, facing increasingly hard times in the years ahead—should make known what they are thinking. Although there has been unanimity in this debate, a little explanation to the general public as to where the money goes and what it achieves would go a long way towards helping matters in the future. I accept the Supplementary Estimate, but I hope that the Minister will be able, during the year ahead, to lay down a line of policy that will obviate the necessity of a Supplementary Estimate on such a high scale as this.
§ 6.30 p.m.
§ Lieut.-Commander S. L. C. Maydon (Wells)
I cannot believe that I really heard aright what the hon. Member for Norfolk, North (Mr. Gooch) said. It seemed to me that he said that the 1957 Act made it possible for the Minister to reduce the guarantees. He should know—because he said the same thing that I did when the Bill was being considered in Standing Committee—that that is a complete and utter misrepresentation of the facts.
§ Lieut.-Commander Maydon
If the hon. Gentleman will wait until I have finished what I have to say, I will give him an opportunity to reply.
572 The fact is that the 1957 Act limits the amount by which any commodities guarantee can be reduced. Further, it limits the total amount by which all commodities can be reduced. The position previously was that any commodity and all commodities could be reduced by any amount. [HON. MEMBERS: "No."] That is the difference between the truth and what the hon. Gentleman has said.
§ Mr. Gooch
With regard to these guarantees under the 1947 Act, although there was not a limit either up or down, the hon. Gentleman knows very well that the guarantees were not reduced. The Labour Government stood by their word, and the farmers received the full guarantees to which they were entitled. I served on the Standing Committee dealing with the 1957 Measure, and he knows very well that the Government can reduce the total value of the guarantees by not more than 2½ per cent. in one year or any particular guarantee by not more than 4 per cent., less an allowance for the costs. The hon. Member may put his own construction upon what is contained in the Bill, but farmers' incomes next year can go down to 2½ per cent. below last year.
§ Colonel Richard H. Glyn (Dorset, North)
The hon. Gentleman says that the Labour Government kept their word and did not reduce these subsidies. When did they give their pledge or promise to the agricultural community not to do so? It was not until the 1957 Act was passed that the agricultural community had any guarantees.
Mr. T. Williams
Is it not the case that in the nine preceding years under-recoupment has averaged about £15 million per annum, but under the 1957 Act under-recoupment this year can be £30 million?
§ Lieut.-Commander Maydon
I will not argue with the right hon. Gentleman about these figures, because I have not any figures at my fingertips with which to counter his.
To revert to what I was saying, what the hon. Member for Norfolk, North (Mr. Gooch) has just said confirms that what he previously said about the 1957 Act was not the case at all. I am very glad to hear from his own lips the confirmation that the Committee has now heard.
573 I would like to revert for a moment to what the right hon. Member for Don Valley (Mr. T. Williams) said towards the end of his speech. He remarked on the possibility of a pig marketing board. I think that, in general, I am in agreement with what he implied. He also seemed to imply that the Government by now should have done something about instituting such a board or encouraging farmers to institute it. Surely, if any Government sets up a responsible and knowledgeable committee to look into a branch of an industry like this, they would not be right as soon as they have received the committee's report to do or recommend to be done precisely the opposite. I agree with the right hon. Gentleman that this matter must be reconsidered, but I do not think that the Government in the past would have been justified in setting up, or encouraging to be set up, such machinery.
The Minister mentioned in his opening remarks the liberal import policies which led to consumer choice. I think we are all in favour of consumer choice, where it is possible, without damaging our own industries. I am coming to the stage now of seriously doubting whether this liberal import policy is not already damaging our own agriculture. The support system is excellent in theory, but I think it is evident that it is not very easy to carry it through in practice. One of the greatest pointers that I can see in that direction is the fact that this support system gives an adequately rewarding living to those who can farm on a moderate or large scale, but it gives very little return to the small farmer. As the small farmer is by far the greatest by majority of numbers, and is believed by many experts to produce a greater quantity of produce than all the big farmers put together, I think it is time that we gave greater consideration to him.
There is a great deal of inconsistency of thought in this matter. People say that as a trading nation our object must be to remove barriers to international trade rather than to erect fresh ones. If we restrict imports from other countries, those other countries will restrict our exports into their own territory. That is true, but, on the other hand, I do not think that should make us dogmatic about our own policy, for at the same 574 time as we are saying that to ourselves, we are saying to our friends in Europe, when we discuss the European Free Trade Area, that agriculture will be excluded as far as Great Britain is concerned. What does a statement like that mean except that we hold in reserve powers to protect our agriculture?
§ Lieut.-Commander Maydon
I do not complain about it in the least. I think it is time that a little more thought was given to this question of protection in addition to support.
May we, for instance, consider our own pig industry, which has taken a quite large share of the revised Estimate that we are considering this evening. We have recently imposed a 10 per cent. tariff. What is that other than protection? What is that other than going against the liberal import policy? That is why I say, do not let us be dogmatic about how we protect and support agriculture generally. Let us be prepared to use all the weapons at our disposal to ensure that our farmers get a square deal and that the method of giving our farmers a square deal is not burdensome to the public through taxation, to provide support and at the same time make for a prosperous industry.
People in general, in the industry and outside, are talking of a surplus of milk. The difficulty, of course, is that production has over-reached the quantity which can be consumed as liquid milk, and the price for manufacturing milk is inadequate for the producer. I am convinced that many of the ways of increasing milk consumption have not been adequately explored. To mention just one of them, at the risk of being out of order, the use of milk in ice cream could be increased. I understand that ice cream contains very few milk products, fresh, dried or preserved. This is something which could well be looked into, so that we might not, in future, perhaps, have to spend quite so much on milk price support. It would be a great help in the work of the Milk Marketing Board if the Minister took the powers open to him to see that the use of milk is extended.
§ Lieut.-Commander Maydon
It is the small farmer who faces most difficulty, because his efforts are restricted; he cannot twist this way and that in order to follow the vagaries of the market, because his products are usually restricted to the three separate items, pigs, milk and eggs, two of which at the moment are not showing up very well. I hope that greater consideration, perhaps even to the extent of differential support prices, will be given to the problems of the small farmer, who, after all, is the one who so much needs assistance from the Government.
§ 6.42 p.m.
§ Mr. J. Johnson
Unlike those who have spoken so far, I make no claim to be a "political peasant", so I shall confine myself very strictly to the Estimates and address myself to page 6, Class VIII, A.1, General Fertilisers Subsidy, an additional sum of £1,600,000, and A.2, Lime Subsidy (United Kingdom), an additional sum of £650,000.
Reverting to the speech of the hon. and gallant Member for Wells (Lieut.-Commander Maydon), I should like to tell him that, in spite of not being a political peasant, I listen often to farmer constituents in the marts, and I have understood from what they tell me, and I accept, that each year they will have a diminution of 2½ per cent.—not less than 97½ per cent. of what they were having in the way of annual subsidy and that no one commodity amount will be decreased by more than 4 per cent. That is what I am told and that is what I accept, from the farmers who tell me of what they will be receiving at the hands of the Government, which is alleged, of course, to be a bulwark of the farming community.
I join with the hon. and gallant Gentleman in pleading for the small farmer, and I hope to add a few remarks on the subject when I discuss the lime and fertilisers subsidy. The small farmer is the one who really makes our countryside what it is, and, without saying too much about the essential social fibre of the nation and our need to have good yeomen in the countryside, it is plain to all that the small farmer must be helped to gain a good livelihood and remain in being.
My last comment, before I come to the Estimates as I promised to do, is this. It is interesting to listen to hon. Gentlemen opposite, and, remembering who 576 they are, to hear them, behind their own Minister, being so nervous about his policy. They are asking for controls, for example, controls against cheaper imports of Iraqi barley, and against this and that coming in. It is astonishing to see how nervous they are about what they term the "liberalised" policy of their own Government.
The Minister spoke about our spending too much upon imported feeding stuffs; but I wish to speak of the need for more spending—of additional sums each year upon the fertilisers subsidy. The fanner has done a magnificent job. We have heard that total output is up 60 per cent. since 1938, the norm which is taken. In the two years, however, there has been backsliding in this matter of animal feeding stuffs, and we have been importing something like £50 million worth of animal feeding stuffs, which means, probably, £100 million of foreign currency lost. The industry has lost in what one might term its exchange-sparing function.
In this respect if some of the leaders of the National Farmers' Union spoke less about under recoupment and a little more about their members being more efficient through the use of fertilisers and application of lime they would make a contribution to improving the financial situation better than they have done in the past.
The Minister said also that standards of efficiency have never been higher. There is no doubt about our best farmers being good, but, if we apply the standards over the whole of agriculture, we can see that it would be possible quite economically to double the pre-war level of production.
Is it a fact that we still have about 12 million acres of permanent grass, whereas an area less than half that—we have heard about Danish and other land—would, by Continental standards, be almost an extravagant use of land? Is it not also a fact that our fertiliser usage is miserably low, despite our having to find these additional sums under heads A.1 and A.2, apart from the initial figure of £31,750,000? Even then, we are using very much less than is used on the Continent by Germans, Dutch and Belgians.
Therefore, while I accept and support this expenditure, I ask the Minister to pay 577 attention to what was said by my hon. Friend the Member for Norfolk, North (Mr. Gooch) about how much we are really paying. We are being asked to accept this Vote of an additional £2¼ million. Is it £2¼ million worth of value in fertilisers to farmers, small or large, or are others, middlemen, getting a disproportionate amount? If the latter, how much? How much of that money is represented in the true value and content of fertilisers to agriculture?
The figures of tillage crops are more satisfactory than the picture presented by the figures for grassland. I have already mentioned comparison with the Continent. Among Western European countries, only France has an off-take of nutrient from its grassland lower than ours, despite our more favourable natural conditions. We have heard about climatic and soil conditions here, but I am told that we could increase our output by anything up to 25 per cent.—perhaps even up to 40 per cent.—in nutrient value per acre of grassland.
These things to which I have referred can be done through this Vote, which indicates to us the amount which is used and the amount which ought to be used. My comment is that farmers are asking for less in this Vote than they should be. If they were using more fertiliser, the Vote would be higher, and we should then be perfectly happy to vote the money. An investment of this kind is as valuable as an investment by a motor car company extending its shop floor in Coventry. This would be a real investment. After all, we are here discussing but £21 million; the cost of a battleship is four times as great as this Supplementary Estimate. In the sense that we talk about expanding the shop-floor to make new machines, or about building a battleship, these subsidies are as good an investment as any in improving the material standards of our people.
The subsidies enumerated in Class VIII, such as those under the Subhead A.6 for marginal production assistance grants, A.10 subsidy payments in respect of hill sheep and hill cattle, and A.11, silo subsidies, amount altogether to tens of millions of pounds, but of course they do not amount to a comprehensive agricultural policy. The present Government have no such policy. This is hand-to-mouth year-by-year 578 estimation. It is living from expediency to expediency. We must spend more money on investments in improving farm services, getting to the hard core of the conservatism in farming, and raising the less efficient farmers to the level of the better ones. We must spend money on effective land settlement policy, to bring the best human material into practical farming. We must also spend more money on farm improvement schemes and on time and motion study on the farms—work study to improve efficiency of the fiscal equipment and layout of the buildings.
We ask farmers and their wives to work in conditions in which no one in a city would work. We have the proverbial city slums, but there are worse slums in the countryside. We talk about small farmers needing help. The money is provided in these Estimates, but I should be happy if far more money were voted, certainly in this respect of fertilisers, lime and farm improvement schemes. The Minister said that we had a 10-year plan, costing altogether £50 million, for farm improvement schemes. Let us get on with that plan and bring our agricultural industry up to something like the level that we demand of the factories. The small farmers are particularly handicapped in this respect. They could do much more with more help.
We have no real policy. We have these great subsidies which all too often bring opprobium on the industry. I should like to see an efficient, mechanised, up-to-date industry which would then not need half of these crutches to lean upon. It can be said of the fertiliser subsidies that they are a help towards better farming. In that way they are an investment, and I support the farming grants and subsidies enumerated on page 6 of the Supplementary Estimate.
§ 6.54 p.m.
§ Mr. J. E. B. Hill (Norfolk, South)
The hon. Member for Rugby (Mr. J. Johnson) declares himself, I hope with modesty and not with distaste, as no political peasant. I am quite sure, however, that he has listened very carefully to the farmers in his constituency. I am even surer that he has been listening with great profit to his agricultural advisory officer. I am certain that many of the things he said about improvements 579 and about the techniques that should be carried out will sink home to his constituents.
The hon. Gentleman said that we had no policy. The policy, broadly speaking, is one of deficiency payments, which results in the large Supplementary Estimates that we need today. I accept them because they are implicit in the policy, which is that food in this country, is, generally speaking sold upon the basis of world prices delivered in. Nevertheless, the first notice I had of these Estimates was the usual newspaper headline "Another £54 million for farmers." That gives rise to some unfortunate misunderstandings. Hon. Members today have made it perfectly clear that they are not subject to these misunderstandings, but not everyone reads HANSARD and various misconceptions are likely to follow.
One misconception is that farmers are getting over and above what they expected originally. As we know, that is quite wrong. Farmers are, in fact, getting as much as and no more than was guaranteed to them at the Price Review in which, let us remember, they incurred extra costs, which were not repaid, to the extent of about £24 million. The farmers are carrying those costs.
One should say here and now that the return which the average farmer gets—and I believe that it is true at any level—for the ability, the management, the work and the capital which he puts into his farm, large or small, is less than he would obtain in almost any other activity. We must face that fact. It is one of the difficulties, and one of the things which rightly make farmers anxious about their position.
The second fallacy which tends to arise is the suggestion that the extra payments on guaranteed prices in some way reflect the relative inefficiency of the British producer. In fact we know that these payments are due to the fall in world prices. In a way, it is misleading to talk of Estimates when we are dealing with deficiency payments. The definition of an estimate is "an approximate calculation based upon probabilities." Who are we to talk of probabilities when we do not know what the world prices of these primary commodities will do? They move quickly, depending very often upon the action of other Governments.
580 I should like to look again at the cereal figures. An addition has been made to the original estimate of £25 million, and the total is now £45 million for cereals this year. The average yearly payment for the last three years worked out at just over £31 million. That sudden swelling in the size of the payment demonstrates the difficulty of estimating accurately. It encourages the fallacious criticism that the British producer of cereals is not as efficient as his Continental or overseas competitor.
My first comment on that point is that, on pure grounds of husbandry, the British cereal grower is vary high in the world table. We are always beaten by the Danes, but in barley-growing we are consistently second to them and in wheat-growing we vary from third to fourth according to the year. We grow nearly twice as much in yield per acre as do farmers in the United States or Canada. It is as well to remember that when one is looking critically at home achievements.
A third fallacy is that it is thought that other countries produce at a cheaper cost than our own guaranteed price, because their food is sold in our free market, and that the home producer abroad is getting less. But it is extraordinarily difficult to obtain adequate comparisons.
Some of us have been trying to look into the economics of wheat-growing. It is remarkable in how many countries the foreign producer is receiving a higher support price than in this country. I have averaged the very significant figures given me by the Parliamentary Secretary on 2nd December, 1957, for the three years 1954–5–6, in various countries. For example, against our British price for wheat, which averaged £30 5s. a ton, the Belgian farmer has been averaging as a support price £33 10s., the French farmer £36 8s., the West German farmer £35 18s., the Swedish farmer, slightly less, £30, the United States farmer, with the advantages of scale and so on, £27 2s.
Some of the export losses on the production of those countries are remarkable. As we know, France has been exporting consistently at an average loss per ton of £13. Even Sweden has an average export loss of £2 16s. and the U.S.A. has been exporting at an average loss of £3 14s. That is the reason for this large cereal deficiency total. I would like it to be 581 realised more widely that British cereal-growing is not inefficient but is in the very top rank of the world.
On some commodities there is a gap. Milk has been mentioned. Our average guaranteed price at the last Price Review was 3s. 2½d. a gallon. For a very keen competitor, the Dutch, it is 2s. 4d. There is a margin of difference there which we must progressively narrow if we are to compete in the milk manufacturing market. That 10½d. a gallon happens to be equivalent to the cost of between two and three pounds weight of the bought concentrated feeding stuffs usually fed to cattle.
The increase in the Estimates comes mainly from the fall in world prices, as we know, but it also comes from a greater throughput, because each Price Review puts the British farmer on piecework at a rate for the job—so much for the score, so much for the ton. As he tries to increase his competitive power and maintain his income the one thing he can usually do, which is sound economics, is to increase his throughput to obtain a lower unit cost by spreading the overheads. That is why, when the guaranteed price has been reduced, the actual outturn of milk, pigs and eggs has shown a sharp increase. That is all right as long as the food is taken up, but if consumption, broadly speaking, does not keep up with production, the market price is driven down and again there is the result of the increased deficiency payment.
Unfortunately, in the case of food demand is relatively inelastic. There is a good example of that in the case of eggs. When last year the price of fresh eggs fell to about 2s. 3d. a dozen, consumption showed little increase. We are consuming an average of rather more than four eggs per head per week. If our consumption had gone up to the American level, it might well have been that most of the eggs would have been consumed in the English market and the output flow to the Continent reversed.
We must consider whether the question of living off surpluses in the wholesale market has gone too far. Is it good for the consumer? The consumer is having food at the world price, which includes a downward movement due to the element of surplus. Therefore an unmeasurable sector of these Estimates must be regarded as a consumer subsidy. This is demonstrated by the fact that so low did 582 the price of eggs fall that it was worth the while of traders to buy them in England, take them to the Continent, and sell them there, because the Continental housewife was setting a higher value on the egg than did the English housewife.
That is where I think the consumer has a part to play in the solution of this problem. If we, as a mainly industrial nation, decide that we will have a liberal import policy, for all the broader reasons and to give consumer choice, then we are also rightly committed to support the home producer by means of deficiency payments, and we must say that we want him to have the first, place in our market. Then, to complete the circle, the consumer must pay some attention to British produce and consciously seek to buy it, subject to making all the right demands for quality and so on.
§ Mr. Willey
Will the hon. Gentleman allow me to interrupt? He is speaking in support of his right hon. Friend in advocating a liberal import policy. What does he mean by that?
§ Mr. Hill
Letting the consumer have a free choice of the world's foods as they come in. However, though he is free to choose anything, he can at least show a certain preference. One may be free to choose as between the British egg or a foreign one, but if we get into the habit of asking for a British egg, it will probably be found that this is the best support from the consumer angle that the egg producer can get.
§ Mr. Willey
Is the hon. Gentleman suggesting that British agriculture should find its place on the free market? I am not surprised that he should say so since this was pre-war Tory policy, but it is strange to hear that being enunciated here this afternoon.
§ Mr. Hill
I am only saying that in relation to the liberal import policy which allows food to come into the wholesale market. I shall have something to say about some elements of it in a moment, but, in so far as it comes in, if the consumer responded to a drop in food prices by taking more and also by exercising more consciously pro-British purchasing influence, British food would be taken up and, for instance, we would eliminate some of our bacon trouble.
§ The Temporary Chairman (Sir Norman Hulbert)
If the hon. Gentleman desires to discuss policy, he must relate it to the Estimates.
§ Mr. Hill
Coming back to the Estimates, Sir Norman, we are wondering why they are so big. I was trying to explain that one element in them is that the consumer price falls right down. I would like to quote in that connection from The Times of 24th January:It can hardly be a good thing in present circumstances that the consumer thinks that food can be obtained much more cheaply than in fact it can, and that almost all consumers should be paying for it an additional sum of which they are normally unaware and which they cannot precisely assess.
§ Mr. Willey
Now that the hon. Gentleman is talking about the Estimates, he, will forgive me for interrupting, because this is a matter of particular importance at the moment. Are we to understand that this is the policy which Her Majesty's Government are pursuing at Paris at the moment in the O.E.E.C. discussions?
§ Mr. Hill
The hon. Member knows as well as I that I am not a Member of the Government and that I am speaking from my own knowledge, such as it is, and my own beliefs. All I am trying to say is that I think that the consumer needs to pay some attention to what is produced in British agriculture and should demand the things that she wants from it, and should support it. That is her part of the job.
Like many other hon. Members, I hope that we can do something to stimulate further reliance on home-grown rather than on imported feeding stuffs. It would be out of order to detail possible ways of doing that, but there are many which we may have to consider. We do not know all the facts about this year and we do not know on what total volume of foreign feeding stuffs this Estimate is based, but in the last Price Review, the forecast figure for the year 1956–57 was 6,100,000 tons. We do not know what the final figure was and still less do we know whether this year's figure will be in excess of that of the 1956–57 figure, but it is obviously substantial.
If it is a large one, we must look for possible extra ways for encouraging the use of home-produced feeding stuffs and notably swinging more and more to grass-fed produce. Comparisons with the 584 policies of other countries may suggest ways to us. West Germany has a way and the Dutch have a method within their domestic agriculture policy. At the moment, we are relying solely on the farmer's choice, but it appears that the ability to draw on an easy flow of imports tends in total to lose some of the beneficial effects of import saving which agriculture as a whole achieves. For that reason, I hope that as we look to next year's Estimates we will investigate ways of reducing the total cost of the imported raw materials of agriculture.
§ 7.11 p.m.
§ Mr. Hayman
I hope that the hon. Member for Norfolk, South (Mr. J. E. B. Hill) will forgive me if I do not follow all the ramifications of his speech. It was no doubt very clear to him, but it was not conveyed to us in a way which permitted us to assimilate it. He seemed to be making the old, cheap food argument—let as much as possible come into the country so that the housewives are free to choose. The housewife is not free to choose with the incomes of millions of workers being cut.
These Supplementary Estimates amount to about £54 million, which is a tremendous sum. For instance, it is ten times the amount the Government got from the imposition of the 1s. prescription charge. Agriculture expenditure now amounts to about £750,000 a day.
The comparatively small sum of £250,000 is devoted to field drainage and I join with those hon. Members who have asked what happens to field drainage projects after they have been completed and paid for. Do the Government see that the work is not allowed to fall back into decrepitude?
The sum of £1,600,000 is to be spent on fertilisers. Is an efficient check kept on the claims for fertilisers? I was alarmed to hear that one of the Minister's main objects—and that of his predecessors—has been to cut down staff. Those of us who have worked in offices know that checking claims for this purpose is a difficult and lengthy process involving much overtime. If staff is cut, something goes short and I am afraid that this matter may be one of those things. In Cornwall, we have sand dunes with a high lime content and I think that the sand qualifies for a subsidy. Are claims for subsidies for that kind of fertiliser 585 carefully checked? I have no reason to suppose that there is anything wrong, but from time to time these matters should be thoroughly checked.
I join with my right hon. Friend the Member for Don Valley (Mr. T. Williams) in stressing that there is a big difference between the imported price of cereals and the amount which the farmer gets and has to be made good by subsidy. The amount for wheat this year is £15 million, but the housewife, the consumer, does not appear to be getting the benefit of falling world prices. That is something which the House will expect the Minister to examine carefully.
There is an Estimate for milk of £3,300,000. Much has been said about the falling consumption of liquid milk, but it is obvious that with a rising number of unemployed, quantities of liquid milk—
§ Mr. Hayman
As the national income and the population have been increasing, the consumption of liquid milk ought to have increased. I am alarmed about this matter, because in my constituency unemployment amounts to 8 per cent.
Small farmers have been mentioned and it has been asked whether they have been getting a square deal in the Price Review. Some of us wonder whether the time may not come when we have to consider carefully to whom this money is paid—especially if there are cuts in the social services. I support the suggestion for differential payments. Some of these subsidies ought to be more seriously considered, because the small farmer may not be getting a square deal. In Cornwall, where the chief products are milk, pigs and eggs, we are suffering a decline in prices.
Four years ago, the then Joint Parliamentary Secretary gave me some figures to show that an average of 1,650 small farming units were absorbed each year into larger farms and that farms of more than 300 acres were benefiting. That amounted to a rate of ½ per cent per annum. I do not know whether that rate is increasing. I imagine that it is, because in the last year or two small 586 farmers have been claiming that they have not had a square deal from the Price Review.
We are asked to provide a very large sum in respect of pigs. The pig and bacon situation is chaotic. There are two bacon factories in the town in which I live, which is also in my constituency, and I am reliably informed that they are working to only 30 per cent. of their capacity at this moment, even though they are taking in pigs irrespective of grading. It seems to me that if the industry has come to this state of affairs in the year 1958 the whole of the business needs to be looked at very carefully.
The farmers want orderly marketing. I am quite sure that it is not their desire that hon. Members should be coming to the Committee today to increase the subsidy Estimates by £54 million. It seems to me that on this item of pigs, consideration ought to be given very carefully to the possibility of the establishment of a Pig Marketing Board. The bacon factories will not be there in the summer, to take pigs going for pork in winter unless they can have a decent throughput throughout the year. Therefore, orderly marketing ought to be the chief preoccupation of the Minister in this sphere in the time ahead.
§ 7.22 p.m.
§ Mr. John M. Temple (City of Chester)
I will confine myself as far as I can closely to the Estimates, and in doing so I shall follow the arguments of my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). In his opening remarks, I think he must have frightened the Financial Secretary to the Treasury out of the Chamber, because he said that he was frankly disturbed by the size of these Supplementary Estimates. I must say that by any standard £45 million in this Vote must be a large sum.
My right hon. Friend the Minister, when he opened this debate, said that £13 million of this £45 million was attributable to rises in costs which the farmers were granted in the 1957 Price Review. That still leaves a very large sum to be accounted for, and I am thinking back to the time when we were passing the 1957 Act. Then, I think during the Committee stage of the Bill, the Parliamentary Secretary said that we were putting in a floor for the farmers, 587 so that they would not have an abyss below them. Now, I am afraid, the abyss is below the Treasury, and it could be a very serious one.
In saying this, I do not mean that I do not support a very full support programme for our farmers, but I shall try to analyse what I consider are the causes of these large Supplementary Estimates being asked for today, and I shall then endeavour to lay before my right hon. Friend some suggestions about the course of action which he should be able to take in limiting the Exchequer liability.
As I see it, the causes are, first, that the United Kingdom is traditionally and at the present time the world's main importer of foodstuffs, and at the moment marginal surpluses are emerging in certain countries which traditionally do not export to us. My right hon. Friend the Member for Thirsk and Malton paid particular attention to this point with regard to wheat, and I am going to give a certain number of details as an example concerning butter.
On page 9 of the Vote now before us, Subheads B.1 and B.B.2, relating respectively to cereals and eggs, are both for large amounts, but the cause of these large amounts in both cases is the same. In Subhead B.1, we read that the main cause is—from a general fall in market pricesand in Subhead B.B.2. we read the same thing—takes account of a fall in market prices".I believe that here we have the kernel of the problem which this Committee is discussing today. This general fall in market prices is responsible for the difference between the £13 million which the farmers were awarded in the Review and the £45 million which is being asked for in this Estimate. I have said that I consider that the fall in the price of butter was due mainly to these marginal exports, and I will give one specific case, not because this country was the nigger in the woodpile, for that is not the reason at all. I give this particular example because that country uses exactly the same currency as ourselves, and when we are considering the costs of production in other countries and the costs of exports from those countries, it is essential that we should consider a country where one can compare prices on a reasonably level 588 basis. In countries such as the Argentine, there are, I believe, more than ten different rates of exchange which can be quoted.
Taking the case of butter and the marginal exporter, there is the Irish Republic. The domestic price in the wholesale market last October was 438s. per cwt., but the export price to this country was 275s. per cwt. One can see that the export price on the London Produce Exchange was approximately 30 per cent. below what is estimated as the wholesale price within the exporting country.
Other examples can be taken of the same thing, but my point is that these marginal exporters, who do not traditionally export butter to us, have been depressing the price and therefore weakening our support price programme. That is particularly the case with butter, because it comes out of the context of a surplus of milk, and the reason why I am making this point is to emphasise the reason for the very low prices which have been obtained for many things on the London Produce Exchange.
During the Second Reading of the Agriculture Bill, as it then was, on 25th March last year, I referred to the words "standard quantity," and I said:It is right that the Minister should include in the Bill provision for standard quantity because I do not think that any Government can hold prices indefinitely against the law of supply and demand."—[OFFICIAL REPORT, 25th March, 1957; Vol. 567, c. 836.]On that occasion, I instanced the fact that we have a standard quantity now relating to milk. I believe that my right hon. Friend might do well to look at standard quantity and see whether it might not become applicable to commodities other than milk. These Supplementary Estimates are for a very considerable amount of money, which I believe the farming industry finds embarrassing. I do not mean that I do not fully support the programme of support prices for farmers in the general context, but that they must not become too great a burden upon the general taxpayer.
The other suggestion which I should like my right hon. Friend to consider is in connection with the imported commodities which we are now buying through the London Produce Exchange at prices less than the cost of production.
§ Mr. Ross
The hon. Gentleman has made an important statement about standard quantity. Will he not make perfectly clear to the Committee what he has in mind, and what consequences would flow from the acceptance of the principle of fixing standard quantities? This would mean, in respect of each of the products of the agricultural industry, a fixed quantity up to which a particular price would be paid. Is he prepared to do that? If so, how would he divide it out amongst the various producers in the country?
§ Mr. Temple
With respect, this method is adopted in the milk industry. The Milk Marketing Board operates it. But it was envisaged under the Act that these words "standard quantity" would become applicable to other commodities. I am not telling my right hon. Friend how to bring this about but reminding him of the powers that he has under the Act.
The other point upon which I should like to support my right hon. Friend the Member for Thirsk and Malton is in asking the Minister to look at the anti-clumping duties as set out in the Customs Duties (Dumping and Subsidies) Act, 1957. I believe that the situation of farmers having exportable surpluses throughout the world may be transitory. I hope that this is the case, and that the underdeveloped countries will take up their share of world exports when their purchasing power becomes greater. That is obviously the right course. At the moment, however, the produce from these marginal producers is coming on to our market. I therefore suggest that to deal with a transitory emergency it is worth while looking at the Customs Duties (Dumping and Subsidies) Act with the object of considering the enforcement of certain anti-dumping duties where necessary.
§ 7.31 p.m.
§ Mr. Harold Davies (Leek)
I have listened with interest to this debate, and it is wonderful to me to realise that I have listened to about seven or eight different policies for agriculture since I have been sitting here, waiting to catch the eye of the Chair, since three o'clock. First, one hon. Member says that we should make use of the anti-dumping powers possessed by the Minister in order 590 to stop food coming in; next, another hon. Member says that we should let these world surpluses come in until we can get a balance, and then another hon. Member gives us a lecture upon navigation while the ship is sinking. We do not want a lecture on navigation at such a time; we want to do our best to rescue British agriculture.
It is a strange economic fact, as shown by the Estimates, that while farming production is going up income is going down. We get much erudition about finance from the Chancellor of the Exchequer and other hon. Members opposite who say, "We shall pay miners increased wages only if they increase productivity," but the poor farmer who increases his productivity has his income reduced. What kind of Government is this? The sooner they get out the better. I am not snuggling up to them. If any of my hon. Friends wants to do so—misery can acquaint one with strange bed-fellows—let them snuggle up; but leave me out in the cold.
The purpose of this debate on the Civil Estimates is to ask "Why?" and "How?" The Government object to our asking questions, but they do not tell us the truth. They hide it, and we have to screw it out of them. Let us try to screw a few facts out of them about these Supplementary Estimates. One hon. Member said that we should not let the world think that the farmers are receiving these incomes. We know that the farmers are not getting them. As I have said scores of times, the richest jewel in the Tory crown consists of the farmers and the country people of Britain—but let us see the depths to which the Government are prepared to allow British agriculture to sink for the sake of high finance in the City. Let us see what support the Estimates provide for the small farmer.
I will take one subject which I consider to be of importance in really rural Britain—my part of Wales—the additional sum required in respect of field drainage and water supply grants. Only £250,000 extra is required, as compared with the £32 million for eggs. I agree that the amount in regard to eggs is a notional figure, because when the egg scheme came in it was not possible to obtain a proper figure. But only £250,000 extra is required for a basic essential to 591 British agriculture, namely, land drainage and water supply.
In my division, around Dovetail and Leek, I have been trying to get water to farmers. This summer I had to get the fire brigade to take hundreds of gallons of water to cattle dying of thirst. We try to get some common sense into the Ministries by asking the Ministry of Agriculture, Fisheries and Food to combine to make a grant for this poor little parish and local authority, to take water for 300 yards from a main so that it can be delivered to the farms. We have had a delay of about eighteen months. No wonder the additional sum required amounts to only £250,000.
Why is it that in the case of a project where the grant is ploughed back by means of land drainage projects and the laying of water and electricity lines, the Ministry's geometry and arithmetic are not so greatly out as they are in the case of the fertiliser grant, for example? When the Labour Party gets into power we must look into this matter. The money in that case does not go into the hands of the small farmers.
I shall be here at the end of the debate, and I shall want to know why this additional sum of £1 million extra is required for the fertiliser industry. Considering the efficiency of the industry and the mighty chemical combines behind it, why are prices in the industry not low enough to enable more money to be put into agriculture? If the gentlemen in the fertiliser industry are oozing with the same patriotism as that with which hon. Members opposite ooze when they stamp the country with Union Jacks at General Elections their prices should be lower. Why cannot the benefits of better scientific methods and better sources of supply be passed on to the public without there having to be a subsidy in fertilisers?
In the case of marginal production assistance grants only £150,000 extra is required. The Ministry must have got out its slide rules, calculus and graphs. It has done the sum rather well. Why is it only £150,000 out? It may seem that I am putting forward this argument with an element of jocularity, but what I am saying is absolutely true. These marginal production assistance grants could help the small farmers. We do not expect any help for them from the 592 National Farmers' Union or from the Government, but the backbone of British agriculture consists of the small farmers. The N.F.U. is a pearly palace scattering honours to the people who represent big finance and big farming. The day must come when we organise the small farmers, with their twenty, thirty or fifty acres, who have for centuries been the backbone of the country. In the case of these marginal production grants, which can be of great help to small farmers, the Ministry is only £150,000 out.
I know that the Minister is as serious and as honest-minded a citizen as anybody on this side of the Committee, but I want to know why greater encouragement is not given in respect of these marginal production assistance grants.
Let me take another heading—the subsidy payments in respect of hill sheep and hill cattle.
§ Mr. Davies
Is the hon. Member raising a point on what I have already said, or what I am about to say?
§ Mr. Kimball
The hon. Member is criticising my right hon. Friend for not having made a bigger miscalculation in respect of marginal production assistance grants. He would like to see much more money being made available. I would remind him that when one applies for such a grant one has to do so nearly one year ahead. The applications have to be made in October. Since the Ministry had all this information available I should have thought that it would have been extremely bad if it had made any miscalculation whatsoever. The fact that it is only slightly out does not substantiate the hon. Member's argument.
§ Mr. Davies
They are doing very well, are they not? I thank the hon. Member that is an intelligent explanation. [Laughter.] That has given me information. Right hon. and hon. Gentlemen opposite are such strangers to the truth in debate that when one of their number makes a perfect answer they are not gentlemen enough to admit it. That was a perfect answer, and I am grateful. I 593 do not stand up here asking for information like a mountebank. I want to know. Is that strange to right hon. and hon. Gentlemen opposite?
Let me come now to my next point—it is time that this Committee was wakened up a little. We have been sitting here up to now like a lot of dreamers. I wish to refer to the subsidy payment in respect of hill sheep and hill cattle, and once again I may get a good answer. I have never looked after a sheep in my life. I know the difference between a shepherd and a shepherdess, but that is all. However, I have seen plenty of sheep in the Welsh hills and in Scotland. Here we have an additional requirement of £117,000. I might be wrong, but I am sincerely asking for information. Three years ago, and indeed when my own party was in power, I pushed the idea of extending sheep farming in Britain. I talked with hill farmers and sheep farmers about it. This summer I took the trouble to be at Petersfield and on the Downs, and I found—
§ Mr. Kimball
Is it in order for the hon. Gentleman to continue to make these misleading statements, even though he may be asking for information about agriculture, when in fact there is no element of subsidy for sheep involved in Subhead A.10. There has been no subsidy for the last three years, ever since the big blizzard. This payment relates only to cattle.
§ The Temporary Chairman (Mr. G. Thomas)
The hon. Gentleman will take responsibility for his own statements. I think that the matter can rest there.
§ Mr. Davies
I may be a Welshman, but I am also well trained in English. I am readingSubsidy payments in respect of hill sheep and hill cattle.That is English, and it is in capital letters.
§ Mr. Davies
I am not concerned with what the hon. Member thinks but what is in the Estimates, a copy of which I hold in my hand. It states:Subsidy payments in respect of hill sheep and hill cattle.By the side of that I can see figures—£1,231,000 and a revised estimate of £1,348,000. I am not a magician, and if by magic the hon. Gentleman can say 594 that none of that refers to sheep, that is nothing to do with me. I am looking at what the Government tell me, and, apparently as usual, they have not told the truth.
§ Mr. Ross
The Government are telling the truth and my hon. Friend was in order, if the hon. Member for Gainsborough (Mr. Kimball) will look on page 8, he will see the matter broken up into various amounts with regard to hill sheep and hill cattle, £5,000 for hill sheep and £112,000 for hill cattle, making a total of £117,000. I think that my hon. Friend has been subjected to a "smart-aleck" attack, that is all.
§ Mr. Davies
I am grateful to my hon. Friend, but I have a big cross on the next page of the estimates marking in the amount. I was merely wondering whether the Chair would rule me out of order. I knew that you, Mr. Thomas, will not do so, because I know that you have carefully studied pages 8 and 9 and Subheads A.4 and A.10 and are aware of these figures. But why should I bother to explain that to the hon. Member for Gainsborough, whose first answer was so excellent and whose second answer was so bad?
§ Mr. Davies
I believe that we want value for this money, and I am quite prepared, as I think the nation would be, to revive sheep farming. An extension of sheep farming in Britain could be of inestimable value to the nation. From my experience of parts of Wales, which I knew as a child and a young man, realise that sheep farming there and on the Downs and other areas is being closed down. What are the Government doing about that? Are they encouraging the extension of sheep farming, or will they do the same thing as they have done for the past five years—encourage the production of more eggs and then say that the production must be cut; or encourage the production of more pigs and then say that pig production must be cut down? I believe that facilities for sheep farming in this country are being neglected, and I hope that these Estimates will indicate that there should be some development of these facilities.
Actually, up to now every word I have said has been in order.
§ Mr. Davies
I thank my hon. Friend, I appreciate that remark very much, because having listened to all the debate, I know it is true.
Land-owners in Britain are asking for increased rents for land, and just as the analogy is that the National Assistance Board now has to pay increasing rents in some cases for old-age pensioners and others, because of the Conservative Rent Act—
§ The Temporary Chairman
I hope the hon. Gentleman will not spoil his record. He will be out of order if he develops that argument very far.
§ Mr. Davies
Were I during an agricultural debate to develop the tragedy of the broken promises of the Conservative Party and the insincerity of its approach to the vital problem of housing the people of Britain, it would certainly be out of order. It is a strange thing that in a debate such as this I should be perfectly in order were I to refer to miscalculations in the Estimates in relation to the housing of pigs, but were I to develop an argument about housing people I should be out of order. However, I believe I shall be in order—I leave it to your judgment, Mr. Thomas—in pointing out that there is a possibility that next year this Government—
§ The Temporary Chairman
I am sorry to have to interrupt the hon. Gentleman again, but he will be out of order if he deals with the possibilities next year. We are dealing with subsidies for this year.
§ Mr. Davies
There is a notional figure here of £10, which in itself was out of order when it was put on the Order Paper. But as I do not wish to get myself out of order and upset your Ruling, Mr. Thomas, may I put it this way? In addition to this great increase in Estimates which is necessary to honour the pledges about prices which were made to the farmers—which we all believe to be just—shall we see whichever Government is in power faced with another demand for increases because there is to be an increase in the rent of land? We all know that is coming.
No Government yet has had what I consider to be a fair policy for the small farmers who are the backbone of the 596 farming industry of Britain. It is obvious from what has been said in the debate today that the Conservative Government have no policy for agriculture. I believe that these Estimates must be honoured, but in future we must investigate the activities of monopolies and middlemen and other types of organisations which are obtaining the profit from this money instead of the small farmers and the men who work hard in British agriculture. Despite what he may think about it, I beg the Minister to look carefully at some of these questions. If he has to make increased payments, let him pay for something that really benefits the people such as land drainage grants and grants for water and electricity. It is in that direction that the real policy will lie. It is not for us to give the Government opposite policies. Let them flounder and stagger to the next General Election, which I hope will be soon. It will give new confidence to the farmers when we have defeated the present Government.
§ 7.51 p.m.
§ Colonel Richard H. Glyn (Dorset, North)
I hope the hon. Member for Leek (Mr. Harold Davies) will forgive me if I do not deal with the first two points he made, concerning a policy for smaller farms and a new policy for agriculture. I should certainly be ruled out of order if I did so. I shall be glad to deal with the last point he raised.
It is important to consider how the need for this Supplementary Estimate came into being. I refer to the drop in world prices. This can be more accurately described as a drop in the prices of food imported into this country. We are almost the only country in the world to allow food to come in without quota and almost without tariff. It is for those two reasons that surplus food from all nations is regularly sent to us to be sold at the best price it will fetch. We are almost the only country in Europe to admit wheat without restriction, to give an example.
Hon. Members have expressed concern at what the hon. Member for Falmouth and Camborne (Mr. Hayman) described as the "terrific sum" involved in these Supplementary Estimates. Saving of taxpayers' money is rightly the concern of every hon. Member but I must point out that virtually every country supports its agriculture in one way or another. It is 597 done by quotas, tariffs, a combination of both, or support prices, which is our method. The British farmer was never given an opportunity of choosing what form of support he would prefer. I am confident he would never have chosen support prices. Farmers do not enjoy having to form up to ask for support prices which other countries give automatically through the working of a tariff or quota system. This is the system which successive Governments—
§ Mr. Willey
The hon. and gallant Gentleman is on an important point, but he should know quite well that bacon has tariff protection. Is it his opinion that that is not a right and proper support?
§ Colonel Glyn
I said that there were no quotas and almost no tariffs. I used the word "almost" because I am very familiar with the fact that there is a 10 per cent. tariff on bacon, and there are one or two other tariffs, mainly on horticultural goods. I said that the British farmer was not altogether in favour of this form of support, which successive Governments had thought the best for this country.
It is important to stress that the large sum needed for the Supplementary Estimates was caused by the fall in the price of goods brought into the country. One aspect of this matter has not been stressed. Milk prices are guaranteed up to a limited quantity, beyond which milk goes to manufacturers at a low price. Our manufacturing milk price is very low. We used to import powdered milk from Denmark and Holland, which are well-known producers of milk products, but I see that lately we have been able to export powdered milk to those countries and to beat them at their own game.
That remarkable fact stresses the very low price of manufacturing milk in Britain. It is due to the fact that countries which have been selling their milk products here because they could not sell them anywhere else, have been competing among themselves and reducing prices, one against another. I will quote two or three prices.
One of our biggest suppliers of cheese is New Zealand. The Intelligence Bulletin shows that the prices of New Zealand cheese in the London wholesale market decreased from December, 1956, to December, 1957, by no less than £167 598 per ton. As we consume approximately 200,000 tons of cheese the saving to the nation is about £30 million. The greater part of this saving has been passed on to the consumer. The Cheese Bureau reported last November that the price of some cheese was now below the price of the same cheese before the war.
The same is true of butter, which is also quoted in the Intelligence Bulletin. I understand the second largest import of butter comes from Denmark. The price of Danish butter is down by more than £100 a ton over the last twelve months. If the same reduction applies to all butter, as I believe it does and as we consume each year about 500,000 tons of butter, there is a saving to the nation of not less than £50 million in a full year. There is thus a total saving of £80 million on butter and cheese.
I believe there is evidence that a great part of the saving on butter has also been passed to the consumer. Just before Christmas the daily Press reported that in some parts of London the cheaper kinds of butter were less costly than the more expensive sorts of margarine.
§ The Temporary Chairman
Perhaps the hon. and gallant Gentleman would indicate, in order that I may be at ease, the Supplementary Estimate under which he is able to refer to butter and cheese.
§ Colonel Glyn
I am very glad to be able to help you, Mr. Thomas. You will see that Subhead B.4 contains a revised estimate in respect of milk. I shall now come rather closer to the question of support prices and the Supplementary Estimate. I have given examples of what the nation saved. It is right to point out that three-quarters of the saving is in the terms of trade because about three-quarters of our butter and cheese are imported.
The big reduction in the manufacturing price of milk has had two effects, both important. It has caused the need for that part of the Supplementary Estimate which we are considering, and a reduction in the pool price of milk of about 2¼d. a gallon. As we produce about 2,000 million gallons of milk that represents a loss to the farmer of about £20 million. I mention that figure because I do not think it is right when we are considering this Supplementary Estimate to think only of the large sums which fall upon the 599 taxpayers in respect of agriculture. We should realise also that milk farmers have suffered a loss by this process, which has resulted in so much gain to our import and export balances and to the country as a whole.
§ 8.0 p.m.
§ Mr. Baldwin
It is with some diffidence that I support these Supplementary Estimates. It is about six years since the Conservatives got into office and I attacked the whole system of subsidies. I described them then as "shots in the arm" which could easily be stopped. I am afraid I rather upset my Front Bench and I know I upset many of my farmer friends, but I have never Altered my opinion since that date and have never had it more confirmed that I was right than at the present time.
I wish that each farmer in the country would buy a copy of HANSARD and read the debate which has been taking place today. I think he would have something of a shock because he would be afraid that he was not now on quite such firm ground as he was originally. I want to reassure him on this. I think he is on quite as firm ground as ever he was, for the reason that no Government of whatever complexion, can afford to let farm production go down. We are today the biggest debtor nation in the world, whereas in pre-war times we were the biggest creditor nation, and although food may be cheap to buy from abroad it still has to be paid for. If we let our home production go down the balance of payments would extend gradually wider and wider. For that reason I am optimistic about the future of agriculture, not because of the promise of any politician, but because of the position I think this country is in.
All sorts of reasons and ideas have been put forward in this debate and I am quite sure that anyone who reads it will be very confused by the time he gets to the end of it. My idea was, and still is, that we should not expect a great demand from the taxpayer of something like £250 million to £300 million, which means heavy taxation and gives the taxpayer a false impression that we are feather-bedding and do not know how to manage our affairs and so on. Agriculture should have the 600 same protection as any other industry. I have never been able to understand why the biggest and most important industry in this country, and the only industry producing real wealth, gets no protection. It produces from the same land year after year, whereas exporting industries have to get raw materials from abroad and mine the earth to get raw materials. I ask the Front Bench to consider whether the time has come when we should get the same protection from overseas competition that any other industry gets. The motor-car industry is bringing in great revenue, but I believe it has a tariff of about 33⅓ per cent., or even more. I say let us have the same protection.
§ The Temporary Chairman
The hon. Member appears to be dealing with the general issue rather than with the subsidies before the Committee at present.
§ Mr. Baldwin
I am sorry, Mr. Thomas, but I was trying to show that although I support these subsidies it is not because I look upon them as the best method of producing a solution to our farming troubles; but I will leave that for the moment.
We have been told time and time again that we must absorb increasing costs, which come into the calculation at the February Price Review, and absorb them through increased efficiency. Whenever anyone puts that to me I ask, "What do you mean by increased efficiency?" If it means that we should make two blades of grass grow where one grew before and use more fertilisers, I say that I do not look upon the farmer who does that as being necessarily efficient. The farmer is in business to see that if he makes the second blade of grass grow it will be worth while.
We have to ensure that it is worth while for the farmer to increase efficiency and production, but we must not cut him down every time he increases efficiency. Are we efficient in this country? The Economist in October last said that every person in agriculture in the United Kingdom produces £300 per head of the agricultural population; in Denmark the figure is £250; in the United States, £240; and in Italy, £180. Therefore we need an economic industry which does not want all these shots in the arm, but perhaps I am straying a little from the rules of order.
601 I want to comment on what the right hon. Member for Don Valley (Mr. T. Williams) said about the tendency for food prices to remain high although there were lower prices for corn. A question has been asked about the lower prices of wheat not being passed on the consumer, suggesting that although prices on the farm have decreased the benefit has not been passed on to the consumer. If we look at world prices we find that 11b. of bread costs 6d. in the United Kingdom, 1s. 4½d. in the United States of America, 7¾d. in France, 8¾d. in Italy and 1s. 0¾d. in Sweden. Is not that passing on the benefit to the consumers? We have the cheapest food in the world yet we are accused of not having passed on the benefit to the consumer. I do not think the consumer is aware of the facts.
The main part of the speech of the hon. and learned Member for Northampton (Mr. Paget) was to the effect that the Government should have a quota system and buy direct for the farmer and handle the product afterwards, in other words, nationalise distribution. It is interesting to know that hon. Members opposite are still interested in nationalising distribution.
§ Mr. Baldwin
I am simply replying to a previous speaker. He raised that point and I am replying to it.
§ The Temporary Chairman
I am not trying to be difficult with the hon. Member, but I had not the privilege of being present when the other speech was being made.
§ Mr. Baldwin
I will leave that question and deal with another point which was made by the hon. Member for Norfolk, North (Mr. Gooch) who said that farmers were better off under the 1947 Act than under the 1957 Act.
§ Mr. Baldwin
I want to dispute that entirely. The 1947 Act said that farmers should be guaranteed prices for what it is in the national interest they should produce. We asked the right hon. Member for Don Valley what those words meant; whether they meant that when prices of goods from abroad were cheaper it would be in the national interest to buy from abroad. We have reached that 602 situation, and the taxpayer can say that we provide all this money for Supplementary Estimates in order to keep farm prices up. Is it in the interests of this country to buy food from abroad cheaply and let the farmer go west? Fortunately, the 1957 Act has been passed, which gives us a definite guarantee for a period of years. I am glad that we have it.
We have also been told in the debate that we should not buy so much feeding-stuffs from abroad. What do we do with them? In my case, I turn them into bacon. For every £20 worth of feeding stuffs we buy from abroad and which we turn into the manufactured article, we sell the manufactured article for £30. Is it not in the interests of the country that we should buy our raw material from abroad, as the industrialist does, turn it into the manufactured article and sell it? The more we buy from abroad in that way and the more we manufacture, the better for this country.
The hon. Member for Gloucestershire, West (Mr. Philips Price) challenged us that we were not producing at an economic figure. May I tell him what the farmers on the other side of the water get for their wheat? He will then see that it cannot be said that we are being asked for this big subsidy because we are inefficient producers. The Belgian farmers receive £33 a ton for their wheat.
§ The Temporary Chairman
Order. I am sorry to interrupt the hon. Member, but no one in the House is responsible for the subsidies in Belgium. I must ask him to deal with the subsidies which the Committee is asked to approve.
§ Mr. Baldwin
With due respect, Mr. Thomas, I felt that if points were raised in the debate I was entitled to reply to them. The hon. Member for Gloucestershire, West said that we were not efficient producers. We are the cheapest producers of wheat in the world.
§ The Temporary Chairman
That may well be, but I can rule only on what I hear when I am in the Chair. Others will rule when they are in the Chair. We cannot have one Ruling set against another. It would be just as well for the hon. Member and the Committee if we tried to confine ourselves to the Estimate. I realise the difficulty, but we must confine ourselves to the Estimate.
§ Mr. William Ross (Kilmarnock)
On a point of order. I have been here practically the whole day and I have heard all the speeches. There were times when I was tempted to raise points of order in relation to the relevance of the speeches, beginning with that of the Minister, to the Supplementary Estimate. As the debate has continued longer, the Rulings of the occupants of the Chair have become tougher. My concern is that the Scottish part of the Estimate comes last. I have a feeling that by that time the Chair will allow us to say nothing at all.
§ Mr. Paget
Further to that point of order. I understood the hon. Member for Leominster (Mr. Baldwin) to say that we were the cheapest producers in the world and that other countries were more expensive producers. Is not that an argument—I imagine that this is the hon. Member's intention—that we should abolish the subsidy and not approve the Estimate?
§ Mr. Baldwin
The hon. and learned Member was not here at the beginning of my speech when I said, "Give us protection and do away with all these shots in the arm and all the rubbish which goes with them. It is an expensive job taking money out of one pocket, allowing it to circulate, with everyone having a nibble at it, and putting it back, diminished, in the other pocket. Let us manage our own business and be treated as a business concern."
I feel very strongly that agriculture is at the parting of the ways. If we are not careful, if we do not approve this Supplementary Estimate and if we do not have a Price Review to match the cost of production, we shall immediately reduce production. There is no alternative. We may be blue-eyed boys in war time when the nation is in trouble. That day may come again. If the Government allow us to reduce production, get our land under grass and do away with our machinery and labour, they will have a very hard job to wind us up again when that time comes.
I beg my hon. and right hon. Friends to use their influence to see that in the Price Review we get all that we are entitled to in order to provide a price which will keep us in business. We are just on the margin. More than half of 604 the farmers in this country do not receive a farm labourer's income plus 5 per cent. on their capital. If prices are further reduced, they will simply go back to dog-and-stick farming.
§ 8.15 p.m.
§ Mr. Norman Cole (Bedfordshire, South)
I will speak for only one or two minutes, although I should have liked to speak longer than that. A number of points which I wanted to mention would be ruled out of order, and I will try to keep to the rules which have been laid down. I will seek another opportunity to raise the other points which I cannot deal with now.
I want to emphasise a point which has been mentioned several times during the debate but which cannot be overemphasised—that this Supplementary Estimate is an implementation of the promise given by the Government last February in the Price Review on sums which would be reimbursed to the farmers. It is no more and no less than that. That cannot be too plainly understood in the country; the Estimate does not mean any extra money in the farmers' pockets. Perhaps that is not generally understood. We may understand it in the House, but it is as well that the country at large should understand it.
Hon. Members on both sides of the Committee have said that far from extra money being put in the farmers' pockets, over the last few years farmers have been receiving a decreasing income. The least one can do is to keep the promise of recompense and reimbursement given from year to year in the Price Review. If I am not out of order, may I say that I hope that in the forthcoming Price Review the treatment will be generous in order to maintain at least the present income of the farmers and if possible to increase it?
This Supplementary Estimate, in addition to the original Estimate passed last year, is a small price to pay for the maintenance of a high standard of agriculture in this country. Our production is 60 per cent. higher than before the war, but no one in the debate has emphasised the contribution which British agriculture has made to the solution of our export and import problems. The last figure I saw, some twelve months ago, was about £400 million. It must 605 now be much higher than that. That should be set side by side with the Estimates needed to maintain that state of agriculture.
There is much more that I should like to say, but I am sure, Mr. Thomas, that you would rule me out of order if I tried to say it. In all that has been said tonight, two things have emerged. First, we are doing no more than keeping our promise—a right and proper promise—to maintain a standard of agriculture worthy of the country and worthy of our great agricultural industry; secondly, the Estimate does not mean that this additional money will go into the hands of the farmers, whose income, in fact, is at a much lower level than it was a few years ago. I hope that the Government will continue in their work of seeing that agriculture is maintained at a proper level, and I should like to commend the Estimate to the Committee.
§ 8.19 p.m.
§ Mr. Willey
On this occasion I can rise with the happy knowledge that I shall not be subject to the Closure moved by the Parliamentary Secretary.
We have had a well-informed debate, which has been coloured by two anxieties. Hon. Members have been anxious not to get out of order and everyone has expressed an understandable anxiety about the future of British agriculture. May I say at once that I am sure that we are all greatly obliged to the Minister for the broad sweep of the speech with which he introduced this Vote. I hope that he will bring to agriculture a new and refreshing approach, because I think that if our debate is subject to any criticism it is that there has not been sufficient recognition of the need for some new thinking about the immediate difficulties of British agriculture.
This debate falls naturally into two parts. The first part deals with the farming production grants, and I want first to say a word or two about those. We are dealing with certain of these grants in this Vote. This Estimate in itself shows an increase of over £4 million, but the original Estimates showed an increase of £3¾ million. Therefore, the first point I would make is that we have had a gradual, persistent increase of production grant, and I think that the time has come when we should review this in the light of policy.
606 I would remind the Committee that—to take a date that will be non-controversial—in 1952 these grants amounted to £29 million, but if we are to accept this Supplementary Vote they will be running at £76 million. This is important for two reasons. The miscalculations that we are discussing—and I blame no one for them; I realise the difficulty—are not immaterial, because this is part of the Price Review award. Therefore, miscalculations, however understandable, are very important.
The other thing is that we can discuss this calmly because it does not affect the overall award, but, bearing in mind our discussion today, I should have thought that this impingement upon the price incentive was a matter which, at any rate, should have the right hon. Gentleman's very close attention. I want to take one of these production grants by way of illustration—and, again, I am rather surprised that it has not attracted more attention, though some reference has been made to it.
I turn to the general fertiliser subsidy and the lime subsidy. Here, Mr. Thomas, believe it or not, we are asking for £2¼ million more than appeared in the original Estimates, and that sum brings the total subsidy for fertiliser and lime to the enoromous figure of £34 million. It is not enough to say that this may lead to an increase in the use of fertilisers. If the National Coal Board had had a £34 million subsidy, how important that would have been to the British economy.
We are now dealing with a figure so enormous that it really ought to invite some public examination and attention, first of all, as to priorities. But, again, I would remind the Committee that this subsidy was running down in 1951–52. The figure was then just over £8 million. I know that if we want to carry this examination a little further we are in some difficulties because—oddly enough, in the light of this enormous public subvention—this industry is before the Monopolies Commission.
I am in a difficult position. We were discussing this matter on the Supplementary Estimate two years ago, and this industry was before the Monopolies Commission then. This week I was informed that it is not expected to receive a Report from the Monopolies Commission this year. As I say, this places me in some 607 difficulty, but because of the subvention of £34 million we cannot await the Report of the Monopolies Commission before we inquire into this expenditure of public moneys. It is not enough for the Minister to say that this is leading to an increase in the use of fertilisers. That is a laudable enough objective in itself, but the question is whether this expenditure of £34 million of the taxpayers' money is justified.
The second rather remarkable thing we find is this. The lime industry, of course, is subject to costings, and if we were going wide in this debate I would have something to say about that costings investigation; the keeping in of the very marginal producer of lime, and the cost to the taxpayer. But the fertiliser industry is not subject to costings. It seems rather remarkable that we are putting £34 millions into that industry, and that, as far as the greater proportion of that sum goes, we have not even a costings inquiry.
More remarkable still is the fact that this is an industry that is subject to control. It is not subject to any public control—although it receives this enormous subsidy—but it is subject to control. It is subject to very rigid price control, imposed by the industry itself; and I would remind the Committee that, as a result of the Restrictive Trade Practices Act, the Commission will not now deal with price maintenance.
To go back to the essential point, it is, as I say, a laudable enough objective to increase the consumption of fertiliser, but the main point is whether this £34 million is being spent in such a way. As it happens, we have a considerable amount of information before us, provided by O.E.E.C. I have examined the figures, and say quite definitely that the case is not proved. I will give just one of the two conclusions that are clear, because this is a matter upon which the Committee would not rest on my judgment. It is one that ought to be thoroughly examined.
I will first mention one or two factors that are beyond dispute. The first conclusion is that the British farmer lags far behind most Western European countries in the use of fertiliser, nowithstanding the enormous sums that have been paid in subsidy over the past few years. The second 608 conclusion which is unavoidable is more remarkable still. Not only do we lag behind most of the other Western European countries, but the rate of increased use of fertilisers in Great Britain also lags behind that of most Western European countries. I agree that some countries have different forms of subsidies, but there are countries like Denmark that have cheaper fertilisers than we, without subsidy. I would say generally, therefore—and I am asking only for an inquiry—that certainly, on all the information we have from O.E.E.C., the case is not proven.
Notwithstanding the delay in obtaining a Report from the Monopolies Commission we have another source of information. A very distinguished authority, Mr. Frankel, Director of the Agricultural Economic Research Institute, has just completed a study of the fertiliser industry. No one would challenge this as party propaganda; it is a very authoritative inquiry. What does Mr. Frankel find? He finds that this industry, which receives this enormous subsidy, is for all practical purposes, in the hands of two firms—I.C.I. and Fisons.
If we turn to the profits made by those two firms—because that is not irrelevant when we are discussing a subsidy—we find that Fisons have paid dividend at the rate of 15 per cent. over the past few years. That is not a bad rate of dividend for a firm that is receiving a guaranteed market for its supplies, and at a subsidised price. In the case of I.C.I., we find that it has been paying 10 per cent. over the past few years, but 10 per cent. on a double capital. If we look at this industry, on the face of it, at any rate, there ought to be a further inquiry as to whether or not the taxpayer is getting best value for money. It is a sum that has reached enormous proportions.
Mr. Frankel points out, regarding nitrogen, that, as a result of its arrangement with the by-product manufacturers, I.C.I. alone controls 9 per cent. of all the nitrogen produced in this country. I said that it is relevant to consider what the N.C.B. would do with a subsidy at the annual rate of £34 million. Mr. Frankel shows that, in fact, the prices charged by the producers of fertilisers have increased more than the price 609 of coal. But coal mining is an extractive industry. The fertiliser industry is an expanding industry with a guaranteed market.
We know, too—and this is very relevant to the Vote before—us that in 1954–55 the Ministry of Agriculture estimated that an expansion of the consumption of nitrogen was required to the extent of 100 per cent. increase. What has happened since? The industry has substantially abandoned its schemes for expansion. I think that the Government ought to say something to the industry about it. It has been asked for an expansion of 100 per cent., whereas we know that the outlook of this industry is now deliberately restricting production. I refer to the O.E.E.C. figures. Production of nitrogen has increased in the United Kingdom in the last five years by 11 per cent.
§ The Deputy-Chairman (Sir Gordon Touche)
This Supplementary Estimate is concerned only with the additional amount. The hon. Gentleman is taking it rather wide.
§ Mr. Willey
I am expressing a doubt as to whether or not we should agree to this additional amount. Obviously, if we increase our capacity, the industry ought to be able to produce more efficiently and more cheaply. Where as our own nitrogen industry has increased capacity by 11 per cent., at the same time the average increase for Europe is 58 per cent. Our increase is the lowest in Europe.
If we turn from nitrogen to super-phosphates, what do we find? It is true that with the subsidy British prices are the lowest in Europe. Those are the prices that the Government publicise. Let us consider the price without the subsidy. Without the subsidy, the price of superphosphates in this country is the highest in Europe, with one or two exceptions, such as Greece and Turkey.
What are Mr. Frankel's conclusions? Mr. Frankel concludes—and this brings us directly to the Vote—that the evidence suggests that these subsidies would have been required under competitive conditions at a much lower level or possibly could have been eliminated altogether. This causes an unfair comparison between the fertiliser industry and the farming industry. I call in aid the concluding words of Mr. Frankel's study. He said: 610The advice of the Government to farmers is to reduce costs, prices and subsidies. Such an advice to the fertiliser manufacturers seems equally desirable in view of the policy of disinflation and expansion of agriculture. In contrast to the farmers, however, fertiliser manufacturers have reduced their costs of production compared with the pre-war period, but have not yet reduced their prices accordingly. Farmers, who still work largely in conditions competitive with other farmers, including those from overseas, have to pass on to the consumer any savings in costs resulting from encreased efficiency, while the fertiliser manufacturers can refrain from doing so. Thus, the restoration of effective competitive conditions in the fertiliser trade—by legislative action, reduction of import duties, or encouragement to new producers—would help to achieve, and not to impede, the objective of lower prices and subsidies.Whilst we are in the perhaps unfortunate position that we cannot do anything about this particular Vote, I hope the Government can, at any rate, assure us that they do not propose to wait for the Monopolies Commission, but will say that, in view of the very disturbing authoritative report produced by Mr. Frankel of the Agricultural Economic Research Institution at Oxford, there will be a thorough inquiry into the administration and need for this subsidy.
I do not wish to deal with the other items. I hope that I have given a general illustration of the need for the Committee and the Government to review these production grants in the light of development over the past few years.
As regards the second part of the Vote dealing with the implementation of the price guarantees, I come back to a point made by my right hon. Friend the Member for Don Valley (Mr. T. Williams) with regard to cereals. Quite simply, as my right hon. Friend said, we on this side feel that if this very considerable sum is called for, we should have an explanation about two things: first, an explanation of how the need has come about, and, secondly, an explanation as to why it has not had consequences advantageous to the housewife.
As regards the first, I do not wish to expand the argument; I know that we are discussing Supplementary Estimates. I am not, however, satisfied by a generalisation about a fall in market prices. The right hon. Gentleman is new to his Department, but I invite him to look at what happened in 1953–54, when there was a much sharper fall in world prices. The Ministry did not then come 611 to the House and say that there had been a sharp fall in world prices and it was necessary to ask for very large sums because miscalculations had been made.
The more important point is the second. If the producer price has fallen because import prices have fallen, why is not bread cheaper? The hon. Member for Louth (Mr. Osborne)—he is not in the Chamber at the moment—intervened to ask what effect this should have on the price of bread. I could tell the hon. Gentleman at once; it is known exactly. There is what is known as the conversion formula, whereby bread prices are reduced according to wheat prices. A fall of 12s. per ton in the price of wheat ought to result in a reduction of ½d. on the price of a 1¾ pound loaf. I know that the sum is not so simple as that; as the economists say, it depends upon other things being equal. One must look at wheat feed prices, millers' costs, and so on.
The onus is on the Government. I have asked in the House more than once, and I ask it again now—let us have an inquiry. When coming to the Committee and asking for £20½ million, the Government ought, at least, to admit that this is a little rough on the housewife. We have the Ministry Gazette figures for the year this morning, which show that, over the year, there has been a 2 per cent. increase in the price of bread and confectionery. We know that the price of bread has been stable; though there have been a few reductions of ½d. in some places, generally speaking, the price has held stable throughout the country.
Surely, the Minister ought to come to the Committee and say, "This is very disturbing to me; it might help to lose me the next Election. We propose to inquire into it". It is a considerable public subvention which is involved, and, on the face of it, it ought to lead to some reduction in the price of bread and confectionery to the housewife.
Though I do not wish to traverse them now—they are well enough known—I could call in aid the profits of the millers. I put it quite simply to the Joint Parliamentary Secretary, that he and his hon. Friends talk too much about a free market. Is it a fair market? There are 300,000 farmers engaged in an 612 industry which is largely in the hands of three concerns, which, in fact, control nearly 80 per cent. of the trade. If there is to be a considerable element of public money going into support prices, these are matters which the Government should look at.
§ Mr. Baldwin
The hon. Gentleman says that there are 300,000 farmers in the hands of three combines. The farmers themselves can buy back from their own corn merchant, if he is a registered corn merchant; they can buy back their own wheat, if it has been sold to him, at £1 or £2 a ton more than they sold it to him earlier. They do not have to go through the big combines at all. I quite agree that, when I buy feeding stuffs, I find the price too high, and that has driven me to do without bought compounds and make my own.
§ Mr. Willey
I am obliged to the hon. Member. I do not want to stray further. I was putting the case that we have here something which so far is inexplicable—a fall in world prices and prices to the British farmer and yet the price of bread and confectionery to the housewife goes up by 2 per cent. A further reason why we should inquire into this matter is that there is a suspicion that this might not be a fair market to the producer.
As to fatstock, we have an enormous subsidy of nearly £86 million. Having an inquiring mind, a characteristic which I hope is shared by the Minister, I ask myself what purpose this £86 million is serving. Is it reflected in retail prices? I concede that there has been a fall in the price of bacon. It has fluctuated over the year, but this subsidy has not been reflected in a general fall in retail meat prices. They have been fairly stable. Has it saved the producer from violent price fluctuations? Has it been a worthwhile investment because it has prevented a disturbance of the farming industry by ironing out fluctuations? Not at all. Beef cattle have been subject to big fluctuations in prices, and so have pigs, and the F.M.C. is in very serious difficulties.
If the Minister is asking for £86 million, there is a burden upon him to say why this sum is necessary and how he will help us avoid it in future. My right hon. Friend the Member for Don Valley today and my hon. Friend the 613 Member for Deptford (Sir L. Plummer) in Committee on the Agriculture Act, 1957, pleaded for some marketing scheme for pigs but, as has been revealed in the debate today, we have had nothing at all from the Government.
As for eggs, whoever would have thought four years ago that it would have been possible, never mind conceivable, to have had an egg subsidy of nearly £50 million? Viscount Tenby made a very effective party political broadcast on the B.B.C. and said that he had abolished the egg subsidy. But here is this astronomical figure which could not have been believed three or four years ago. I say, by way of aside, that it is one of those ironic twists of British politics that the Minister responsible for the loss of £50 million is now at the Treasury because his predecessor apparently wanted to save £50 million.
I beg the Committee to look at this matter in the proper light. This sum is for the present financial year. I remind the Committee that it is not in respect of the last financial year when the Ministry was in hopeless difficulties. Let us apply the test. Has this enormous sum of £50 million resulted in a fall in retail prices? Not at all. Retail prices of eggs are going up. Therefore, the Joint Parliamentary Secretary cannot smile and say that the purpose of the subsidy was to achieve a fall in retail prices.
The price now is 4s. 6d. a dozen, compared with 3s. 6d. to 3s. 9d. in January, 1957. If it is the purpose of the subsidy to reduce retail prices, I want the Joint Parliamentary Secretary to say so. We can then see what the Egg Marketing Board does. It is an open secret, and not a matter to quarrel about, that the Egg Marketing Board is trying to lift retail prices. It is trying to keep eggs moving at a high retail price. Therefore, it cannot be said that as a matter of policy and purpose we are spending £50 million of the taxpayers' money to secure cheaper eggs.
§ Sir J. Duncan
It looks like being successful. My right hon. Friend said that for three months of the financial year before the Egg Marketing Board came into being the total subsidy bill was £15 million. In that case, if the Board had not been operating, the total bill for the year would have been £60 million. 614 Now the amount is reduced to £48 million in these Estimates and, therefore, it looks as if the Board is doing something towards reducing the subsidy bill.
§ Mr. Willey
With his usual prescience the hon. Gentleman has anticipated my conclusion about eggs. I certainly said that things would have been far worse; the hon. Gentleman has revealed how things would have been worse, but my point is that it is not a fact that this money was put into the egg industry to induce a lower retail price of eggs. No one blames the Egg Marketing Board for endeavouring to find a realistic price which will also hold the market. If we look at the trend of egg prices, that is what has been happening over the past year.
That will not provide a justification for the expenditure of this sum of money. Was this to increase production? Did the right hon. Gentleman's predecessor spend £50 million of the taxpayers' money to increase egg production? Of course not, because we were exporting subsidised eggs to Denmark. We got into trouble about it. No one would suggest, therefore, that the Chancellor of the Exchequer used this money to increase production. He was anxious that production should reach a rather lower level.
Now I come to the point made by the hon. Member for South Angus (Sir J. Duncan) in anticipation. This was solely the price of an enormous Government blunder. In fact what has happened about eggs is what we raised year in and year out in the House of Commons. What has happened has been that we have got an improved system of marketing, and that has improved the outlook for eggs. I invite the right hon. Gentleman to correct me if I am wrong, but I say that we shall have a much better figure for eggs in next year's Estimates.
All that has been done with the £50 million is to alleviate the harm that would have been caused to the producer by Government folly and blunder. I do not express this view only because I have raised this matter in the House. We know that the Public Accounts Committee, year in and year out, has stigmatised the Government for the administration of their schemes. I say that this proves the case. Here we have an example of the prospect of improved marketing and less burden 615 upon the Exchequer. But the Government are indicted. This has happened over each commodity. It happens over pigs, it happens over everything. The Government create an enormous blunder and then, to alleviate the harm to the industry, we get an enormous subvention from the Exchequer.
About milk, I got into great trouble when we were discussing the Supplementary Estimates a couple of years ago because I said it was the policy of the Government to reduce the consumption of full-price milk. That is what they have done. During the past twelve months there has been a fall in the consumption of full-price milk, corresponding exactly with the fall in 1953. That is a consequence of the same price policy of the Government.
That is bad enough in itself, because we are dealing here with the expenditure of £290 million of the taxpayers' money. I say it is bad. In this case it is no good asking if it is right or wrong for a subsidy to be given here or not. We are concerned with the global figure of £290 million, and I say it would have been of far more benefit to use some of that money to hold the price of milk for the housewife and the mother.
By following an anti-social policy for doctrinaire Tory reasons, the Government have greatly prejudiced the industry. Now the right hon. Gentleman makes an extraordinary statement, going out of his way to call our attention to the fact that there still remains a subsidy on milk of £13 million.
We have had a fall in the consumption of liquid milk due to a price policy followed by the Government, while at the same time the Minister has said that we are providing a subsidy of £13 million for manufactured milk. He did not say that we are one of the largest exporters in the world of canned and dried milk. Here is another case of a subsidised export.
The hon. Member for the City of Chester (Mr. Temple) talked about butter, and suggested anti-dumping legislation being used against imported butter, but we have become well versed in the arts of export subsidies for food commodities and we are exporting milk which has the advantage of two subsidies, because there is a two-price structure for milk.
616 I conclude by appealing to the right hon. Gentleman to bring a fresh mind to this subject. We are considering an Estimate calling for the taxpayer to pay another £50 million. The price support of British agriculture is now about £290 million and yet we have had a thoroughly bad deal for the consumer and a thoroughly bad deal for the producer. A glance at the retail price index will show the consumer that the cost of food has risen over the past year by 3½ per cent.
I sympathise with the producer who has been outrageously treated by the way this Supplementary Estimate has been produced well in advance of the others in an attempt to affect the Price Review. We have heard about £50 million of subsidies for eggs, but we know that egg producers are having a lean time. We have been told that £290 million goes to the farmers, but although farmers are increasing productivity, as my hon. and learned Friend the Member for Northampton (Mr. Paget) pointed out, their incomes are falling and the expenditure of this public money has not brought a sense of stability and security to the industry which it enjoyed under the Labour Government.
The hon. Member for Norfolk, South (Mr. J. E. B. Hill) said that his policy was a policy of deficiency payments. That is not a policy; it is a calculation. His right hon. Friend the Minister said that his policy was a liberal import policy. It cannot be anything of the sort. This is the dilemma which caused the resignation of the Chancellor of the Exchequer; hon. Members opposite have to renounce their Toryism.
What we are trying to do for agriculture is to satisfy ourselves that when the farmer is on the market he is on a fair market. We have to realise that marketing conditions are more important than subsidy—as the illustration of egg marketing has shown. Finally, we have to recognise that the essential problem is to ensure that British agriculture gets a larger share of the market than it would obtain on the free market.
The contradiction here—and this is at the back of the mind of every hon. Member opposite—is to go on talking about the free market and then, as the Chancellor of the Exchequer did, to wake up one morning and recognise oneself as a 617 Tory and get into real difficulties. Hon. Members opposite cannot forget that they are Tories and they continue to talk about a free market. What we are trying to do is not to bring about a free market, but to ensure that British farmers get an assured market for their produce at the least possible public expense and with the greatest amount of security. That is the problem to which I hope the right hon. Gentleman will direct his mind on taking his new office.
§ 8.55 p.m.
§ Mr. Godber
We have had a fairly wide debate on very important matters, and I will try briefly to deal with some of the topics raised. With the exception we always expect in these agriculture debates, that of the hon. and learned Member for Northampton (Mr. Paget), we have had general support for the granting of these additional subsidies to fulfil our obligation to the farming community.
Anxiety has been expressed on both sides of the Committee over the level of these additional amounts, and, indeed, of the total cost of the support to British agriculture. I should like to point out at the start that out of the total of £54 million in these Votes, £14 million relates to the increases granted at the last February Price Review, and it is really the implementation of this that has caused a number of these items.
I think we should try to keep this in balance. We should remember in relation to our thoughts about the total costs of support that many hon. Members who have spoken have urged that there should be restrictions of one sort or another to iron out and control the market and raise prices in one form or another. From both sides of the Committee we have heard this today, but I think there is one fundamental thing that we have to remember in all this. It is that we as a great trading nation, relying very largely on our export trade, must try to get our costs of food to the consumer as low as we can, and down to world prices, if our industries are to compete in the export markets of the world. That is a basic principle which we must not forget, and I thought that in one or two of the speeches today some hon. Members have overlooked it.
§ Mr. Turton
Would my hon. Friend say if he would carry that principle so 618 far as to harm the interests of Commonwealth producers?
§ Mr. Godber
Certainly not; nor would I suggest that in fact our policies are really doing that. I know the particular Commonwealth country which my right hon. Friend is thinking of, but I think it is only fair to say that we have taken and are taking a larger total quantity of agricultural products from them than ever before. We are taking very large quantities, and I do not think it is fair to say that by our policies we are deliberately depressing these particular Commonwealth producers.
§ Mr. Godber
The one to which I was referring at that moment was New Zealand, which has had its difficulties in relation to milk products in particular. However, I must not spend too long on this very wide general point; I am trying to put the matter in perspective in relation to the remarks that have been made. If I were to try to follow a number of the channels mapped out in front of me, I should soon get into trouble with the Chair, so I will try to avoid going too far out of order after one or two hon. Members who have spoken.
I have also to be rather careful in replying to this debate in regard to the fact that we have the Price Review coming on, and I must not say anything that will in any way impinge upon it. I can take up one point made by the hon. Member for Sunderland, North (Mr. Willey) when speaking about this particular Supplementary Estimate being brought forward at this time.
The hon. Gentleman suggested that we have rushed it forward so as to embarrass—as I rather understood him—the Price Review negotiations. I emphatically deny that. There was no question of that whatever, as all the Supplementary Estimates of all sorts, I imagine, will be out well before the time for the Price Review could be over, anyway. Surely it is better—if that point was being considered, and it was not—that we should bring this on now and the others later, when this might have been forgotten? I think we have been kind rather than otherwise, if this point had been raised, but, of course, it did not enter into our calculations at all.
619 The right hon. Member for Don Valley (Mr. T. Williams) raised a number of points, some of which were picked up by his hon. Friend the Member for Sunderland, North. First, he talked about the comparative price of fertilisers, and suggested that the manufacturers were getting the full benefit of the subsidies. The hon. Member for Sunderland, North developed that theme at greater length, and had some rather strong criticisms to make about the firms engaged in the industry. It is not part of my function to protect these firms from criticism, but I would remind the hon. Member that this industry has been put before the Monopolies Commission. There is another important thing to remember. The hon. Member referred to two firms in particular, but a third firm is coming into the nitrogenous fertilisers market. It is coming in in a big way, and I am hoping that it will be in soon. That should have a healthy effect upon the price of these fertilisers.
The net cost of fertilisers to the farmer today is less than it was in 1951. The manufacturers have had an increase in costs since then, so it is clear that a very considerable benefit accrues to the farmers when we remember that over that period of seven years the price is now cheaper than it was at the beginning. I do not think it is fair to castigate these people quite so much as the hon. Member chooses to do.
§ Mr. Willey
This is an important matter. All I was asking for was an inquiry. I would emphasise that I was putting not so much my own views as those which have been put before O.E.E.C. and which have been expressed by Mr. Frankel as a result of this inquiry and study.
§ Mr. Godber
I do not want to put words into the hon. Member's mouth, but I understood that he was critical. I know that he was in fact quoting Mr. Frankel. This industry is before the Monopolies Commission and we shall no doubt have its report in due course.
In relation to this Supplementary Estimate it is important to remember that the figure of £1,600,000 is accounted for largely by something which I mentioned a short time ago, namely, the increase granted in last year's February Price Review. The increase in fact amounted 620 to £3 million, but only half has been paid in the current financial year. The rest will accrue to next year's vote.
The right hon. Member for Don Valley spoke strongly about the effect upon retail prices of the fall in world prices of the commodities for which we are having to account by way of these large sums, especially in relation to cereals and, to a lesser extent, fatstock and eggs. The right hon. Member said that the fall in world prices had not been reflected in retail prices. He preferred to base his argument upon wheat. I can well understand his wishing to do so because, on the face of it, it certainly appears that there is a very large figure which is unaccounted for.
The fair way to view the matter, however, is to take the total cereal figure, because much home-produced wheat goes into feeding stuffs. If we do that we see that the figure amounts to an additional £20 million, or, if we include Scotland, about £24 million. A very considerable amount is accounted for by a saving on what would have been the guaranteed payments on fatstock—pigs and poultry in particular. The operation of the feed formula saved £4 million on eggs and £13 million on pigs—a total of over £17 million out of an increase of £24 million in the cereal figure for the United Kingdom. That materially reduces the additional cereal figure. While it is true that the price of bread is the same as it was twelve months ago—it did go up, but it came down again—
§ Mr. Dye
It was stated earlier by one of the hon. Gentleman's hon. Friends that, of the feeding stuffs used, 75 per cent. was imported and only 25 per cent. was home produced. How can the hon. Gentleman charge this amount in relation to the feeding stuffs formula against what is the home-produced element?
§ Mr. Godber
The hon. Member is trying to lead me along one of the channels to which I referred earlier. May I correct him by saying that it was one of his hon. Friends who said that, the hon. Member for Gloucestershire, West (Mr. Philips Price). I will come to that, but at the moment I am dealing with a particular argument which I should like to develop in my own way.
There is left this element of £7 million. I say frankly that the price of bread is 621 the same. We should be glad were it to go down. But I think it fair to say in this connection that, of course, the bakers and millers, like other people, have had additional costs to bear; particularly when we imposed upon them the provisions of the Night Baking Act on 1st January. I remember the Committee stage of that Act, which was warmly supported by hon. Members opposite. But I am sure hon. Members would agree that it must have imposed some extra costs on the industry because of the additional safeguards provided for workers, and it is fair to take that into account. It is also right to bear in mind that the question of these prices has been brought to the attention of the Restrictive Practices Court.
The right hon. Gentleman and other hon. Members have referred to the operation of the Egg Marketing Board. The right hon. Gentleman asked whether it was working well, and what was the throughput compared with the figure before the board came into operation. It is difficult to give reliable figures, because it has not been going on for long, but so far as I can see there is an increase through the packing stations of roughly 5 per cent. I am glad that tributes have been paid to the board. It has been and, I hope, it will be in a position to be of considerable help to the industry.
The hon. Member for Sunderland, North, in his references to eggs, spoke of a Government blunder. I think that a little harsh. The problem of overproduction has been caused because of the efficiency of our hens rather than the inefficiency of the Government. Poultry production has improved sharply as the result of new techniques, including the use of deep-litter houses. Because of that, poultry production has become a more attractive proposition; so much so that last summer the present Chancellor of the Exchequer gave a special warning about egg production because it would have been wrong to stimulate production now that we are producing all we can consume in this country.
The right hon. Member for Don Valley referred to fatstock and the problems of pig and bacon production. He and a number of other hon. Members have mentioned this matter, and there have been charges that serious difficulties exist in the bacon market. No doubt there are difficulties, but they are not only due 622 to imports, and it would be quite wrong to pretend that they are. Pig production has gone up in this country very sharply in the last 12 or 15 months. That was not on the advice of the Government. In the White Paper at the time of the last Review we said that no more pigmeat was desirable at this stage. That has helped to cause embarrassment in the pig market.
§ Mr. Hayman
Cornwall branch of the National Farmers' Union says that the fact that 17 grades of pig are going into the bacon factory is one of the contributing factors to the difficulties of the industry.
§ Mr. Godber
The hon. Gentleman is referring of course to the F.M.C. grades. That comes within the orbit of that body rather than that of the Government.
It is important that there should be high standards of grading. We have seen a very big improvement in that respect, and I am encouraged by the big improvement in quality. My right hon. Friend is very well aware of the pig position. He is meeting some of those who are concerned with it over the next week to look into the problem. We set up the Pig Industry Development Authority because we wanted a body which could go into all the problems of the pig industry. It could do a great deal of good. We have a long way to go yet; we are not up to the standard of efficiency which the Danes have achieved. It is in trying to achieve that standard that we have the best way out of our problems.
Several hon. Members have referred to the need for a marketing board trading in all pigs. The Bosanquet Committee came down very firmly against it. We went into all the pros and cons at great length. I interrupted an hon. Member opposite on this point. There is great confusion about it and great difficulty where there is bacon on the one hand and pork on the other. They are entirely different commodities, vet it is possible to switch rapidly from one to the other when prices become sufficiently attractive It is difficult to find a way of keeping the balance. The Government took the Committee's advice on the matter, and unless very good evidence can be provided to the contrary we shall stand by that decision.
§ Mr. Willey
Will the Joint Parliamentary Secretary try to face the problem that is before us? He says that production has been at a level which was embarrassing and—mournfully "We told the producers that this would happen, and it has happened". That is the problem which the hon. Gentleman must face. It is no good quoting from committee reports that were issued a year or two ago. Does he say that this problem has nothing to do with marketing, with the price of foodstuffs or with imports? I should have thought that it had something to do with all three of them.
§ Mr. Godber
It has certainly something to do with all of them. I said I had to be careful that I did not impinge upon certain problems; the hon. Gentleman must not tempt me too far. Imports are running at a high level at the present time, although there is a tariff on imports The Danish producers are not importing, so far as I am aware, below their cost of production although I have no evidence of that point. They may at certain times take prices lower than the average but I believe they are not subsidised in any way.
§ Mr. Turton
Will the Joint Parliamentary Secretary find out whether the facts I have given to the Committee are accurate or not? I made a statement and I am responsible for it. Will not the hon. Gentleman check it?
§ Mr. Godber
I did have this point put to me some little time ago and I checked it then. The information I got bore out exactly what I am telling the Committee now. If my right hon. Friend has evidence to the contrary he should place it in my hands so that I may examine it. I did go into this point and I was assured that that was the case.
I should like to come to the points raised by other hon. Members. I apologise for speaking at such length. My hon. Friend the Member for Penrith and The Border (Mr. Whitelaw) stressed the point that agriculture must be competitive. I am sure he is right. He spoke particularly about the need to make more use of grass so as to avoid importing feeding stuffs. That point cannot be over-emphasised, and I am grateful for his having called our attention to it once more.
§ Mr. Godber
I propose to deal with the hon. and learned Member for Northampton in a moment. If he does not mind waiting, I will have a word or two to say on his remarks in a moment.
§ Mr. Godber
Agriculture should be competitive in relation to agricultural production in other countries. That is what I was referring to and I think that is a perfectly fair point to make.
§ Mr. Godber
I will not be drawn on that. My hon. Friend the Member for Bodmin (Mr. D. Marshall) dealt in particular with milk and spoke about the differential under B.4. That of course, is due to the need for the manufacturing price. The manufacturing price has been affected very materially by the fall in the price of cheese. That has caused a lower price for manufacturing milk and, under arrangements with the Milk Marketing Board, we have had to bear our share of that.
My hon. Friend the Member for Gainsborough (Mr. Kimball) reminded us very rightly once more of the Heneage Report. I very much sympathise with his views on this matter. The need to make some progress with drainage is unquestionable. We are still in consultation and discussions are taking place on this very difficult and thorny problem, but I have certainly not given up hope. I believe we shall get a measure of agreement in time and be able to bring something before the House. No one will be more pleased than I if we can satisfy my hon. Friend and his most distinguished constituent.
My hon. Friend also spoke of overlapping in regard to hill farming and livestock improvement grants with marginal production grants. I will look into that question. My hon. Friend farms in the Highlands, I wondered whether he might be taking advantage of that himself. I shall be only too glad to look 625 into it and see that he does not take any such advantage. I am most grateful to him for calling our attention to it.
The hon. and learned Member for Northampton made one of his typical speeches in our agricultural debates. We always enjoy but seldom agree with them. He started by talking about this Government as being like a tired jockey pulling up his horse. I rather gathered that he thought we should be charging on at full speed regardless of the state of the horse. Sometimes it is better to pull up before the horse falls dead beneath one. I thought perhaps hon. Members opposite would follow that metaphor in relation to our economic debate last week when I thought the Leader of the Opposition put rather the same view in his idea of having expansion at a time when that was not so appropriate.
§ Mr. Godber
That is a very fair point, but it is quite clear that the hon. and learned Member has ridden too long and too unwisely or he would not have had that experience. I think perhaps I had better not follow that metaphor any further.
§ Mr. Godber
I must protest when the hon. and learned Member speaks once more of agriculture as a declining industry. That is such arrant nonsense and he knows it is arrant nonsense, but he keeps on saying it. He knows that the figures in the White Paper show that production is reaching higher and higher levels each year. Agriculture is certainly not a declining industry. His point is that it is declining as a percentage of the national income.
He gave some interesting figures. I thought he was quoting because I knew that I had heard some of those figures before. Afterwards I recalled where I had heard them. I had heard them from the mouth of the hon. and learned Member himself. I appreciate his wisdom in quoting himself, and I well recall the occasion when he used the figures, in Committee on the Agriculture Bill last year. At that time I considered that they had little bearing on our problems in 626 agriculture. As a theoretical exercise they were interesting but as a practical contribution to our debates I did not think they added up to anything.
The hon. and learned Member said that whatever happened in other sections of industry agriculture must retain its percentage of the national output. That means that whatever the level of development the country has at the time we start we must maintain the position of agriculture as a sacred part of that development, whatever happens in other industries. One could not do that in respect of any industry.
§ Mr. Paget
That is exactly what I am not saying. I said that when we have a currency which is continually changing in value, the only fair test is what proportion of the national product or national income goes to agriculture. It is perfectly true that if agricultural efficiency increased less or did not increase at all and industrial efficiency did increase, then it would be fair for agriculture to have a smaller slice of the cake; but where we find that agricultural efficiency has increased at twice the rate of the increase in industrial efficiency during a period in which agriculture has lost more than a quarter of its slice of the national income, we have a situation in which agriculture is entitled to complain.
§ Mr. Godber
I do not accept that agricultural income has been reduced by a quarter. I know that certain figures have been circulated suggesting that, but I should not accept them in this context.
The hon. and learned Member's argument is that we should retain the same percentage for agriculture regardless of what happens in other industries. I say to him that that does not add up to a sensible policy at present. It could well mean that if other industry expanded we should have to expand further our output of milk. If we were to stimulate a large increase in the output of milk it would be nonsense. We have to relate these matters to our needs at the present time.
I should like to follow this much further but it would perhaps not be fair to other hon. Members to do so. I would only comment to the hon. and learned Member that I was interested that not only did he stigmatise this Government as a tired Government but he referred to the 627 N.F.U. as supine. I have heard many adjectives used in relation to the N.F.U. and Sir James Turner but I do not think anybody has ever called them supine. I am sure this description will be interesting to Sir James.
My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) made a very important contribution to the debate. I understand his feelings on these matters very well and I have tried to deal with broad aspects of the points which he raised in my opening remarks. We must keep in mind that if we are to succeed in our support of British agriculture, not only must we safeguard British agriculture but we must see that our prices of food in this country are at world levels in order that we may compete in the export markets.
We have to watch whether there is any unfair competition through heavily subsidised imports, and I can assure my right hon. Friend that we shall keep a close watch on these points, but I would not wish to take that further at this stage. The hon. Member for Norfolk, North (Mr. Gooch) asked for more indications of broad policy. He knows, I am sure, that in the Annual Price Review we try to give as clear an indication as we can on this point. In paragraph 12 of last year's White Paper we set out what we thought were broad policy objectives, and we shall seek to do the same again this year after the Price Review. I think that that is the best, and the only helpful way in which we can do it—
§ Mr. Godber
We naturally stand by what we said in the White Paper last year, but we hope that another White Paper will be coming out later to bring things up to date. However, I have no reason to believe that there will be any major change in our policy. We said then that we aimed at…more good quality beef, and lamb…and less pig meat, eggs and milk, and I see no reason to anticipate a great change from that.
My hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon), in a helpful speech, made mention of the use of surplus milk for ice 628 cream. He suggested that we should use more genuine milk in the making of ice cream and that is a point, I know, that the Milk Marketing Board has very much in mind and is trying to do something about. The hon. Member for Rugby (Mr. J. Johnson) referred to the low usage of fertiliser. I have tried to deal with this point already. We certainly want to encourage still further use. We have had a very considerable increase in the consumption of fertiliser, and we shall not be satisfied until it is higher still.
My hon. and gallant Friend the Member for Dorset, North (Colonel R. H. Glyn) referred to various commodities and, in particular, to cheese and butter. He spoke of a drop in the retail price of cheese amounting, so I understood him to say, to about £30 million a year. That is just one instance of where food prices have dropped, and it is only fair to say—and this answers points raised by the hon. Member for Sunderland, North and other hon. Members that the price in the shops of a number of food commodities has fallen substantially this year. The hon. Member for Sunderland, North instanced some that had not, but there are those that have fallen considerably. Bacon is an obvious example; cheese another; butter, slightly tea, a little—
If the hon. Gentleman will forgive me, we are not dealing with tea in this Supplementary Estimate. I was careful to confine myself to those foodstuffs that come under the Estimate, but I did give as the general picture, as shown in the Retail Price Index, that food prices have gone up by 3½ per cent.
§ Mr. Godber
No, they have not gone up by 3½ per cent. during the year. The figure is about two points up. In actual fact, the food section of the Retail Price Index shows food commodities to be a little lower at this moment than they were earlier in the year. I think the figure is about 106, although I am speaking from memory—
§ Mr. Willey
The hon. Gentleman will again forgive me, but this is just a point of accuracy. I was comparing December with December, as the Ministry of Labour does.
§ Mr. Godber
I was thinking of January, but, in any case, the increase is very slight indeed. It is, as I say, about 2 per cent. 629 or a little more—on the food figures; not on the whole range of the Retail Price Index.
My hon. Friend the Member for Leominster (Mr. Baldwin), in his inimitable way, said that we must not let farming down and, of course, we are not proposing to let farming down in any way at all, and that is the purpose of the 1957 Act.
I have tried, Sir Gordon, as far as I can, to deal with all the points that have been raised. I apologise for having taken so long in doing so, but, before I conclude, I should like to say, with regret, that during the whole of our discussion of this important subject we do not seem to have had the presence of any members of the Liberal Party, which is claiming an interest in the agricultural constituencies. I am sorry that they have not been here.
I would conclude by referring to the 1957 Act, about which there is some genuine misunderstanding, I hope, on the other side of the Committee. That is certainly what it seems like to me. Hon. Members opposite say that we have legislated to make a price cut of 2½ per cent. We have done nothing of the sort. Prior to the passing of the Act, there was no restriction on the amount by which any Government could cut prices; and it must be remembered that we put in that restriction at a time when there are large surpluses in the world—very different from the 1947 Act, when there were desperate shortages and it did not cost hon. Members opposite a penny piece to provide as they did in the 1947 Act. That is the real difference, and the hon. Member for Norfolk, North knows it as well as I do. There are now far greater guarantees than ever before.
§ Mr. Gooch
A great deal has been said about the fact that the 1957 Act established the guarantees for the first time. That is nonsense. The 1947 Act did that, and the Labour Government were as good as their word. There was no reduction in guarantees. But let us 630 wait until the February Price Review. I am willing to bet that there will then he a 2½ per cent. reduction.
§ Mr. Godber
I will certainly not be tempted into forecasting the outcome of the February Price Review. Under the conditions of the 1947 Act, it was of benefit to the Government rather than otherwise. They were getting their food at below world prices at that time, and hon. Members opposite know that perfectly well We are honouring the blank cheque that they gave them by giving the other side of the coin. We are giving the guarantees now while world prices are falling.
§ Mr. Harold Davies
The hon. Gentleman may be out of order, but would he assure the House that when we have a full agricultural debate he will apply his mind to expenditure on grants for water to farms? The issue of sheep farming would also have been out of order, but those two matters are vital to British farming, whoever is in power.
§ Mr. D. Marshall
In view of the answers the Joint Parliamentary Secretary gave to my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), would he like to have a signed article which states that at the moment the Danes are losing 30s. a pig in exporting bacon to this country?
§ Question put and agreed to.
That a Supplementary sum, not exceeding £44,983,490, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, by the Ministry of Agriculture, Fisheries and Food for grants and subsidies to farmers and others for the encouragement of food production and the improvement of agriculture; for payments and services in implementation of agricultural price guarantees; and for certain other subsidies and services including a payment to the Exchequer of Northern Ireland.