§ The Minister of Agriculture, Fisheries and Food (Mr. John Hare)
Mr. Speaker, with your permission, and that of the House, I would like to make a statement about the guarantees to agriculture for the coming year.
The Government have now determined these in the light of the annual review of the economic condition and prospects of the industry. The details are set out in a White Paper which will be available in the Vote Office when I sit down.
The weather in 1958 was, of course, appalling. I am sure that all those in the industry have had the sympathy of the House in their difficulties and disappointments. Great efforts have been made by farmers and farm workers to get in the harvest and to keep up milk yields as far as possible under the bad conditions that prevailed.
Net output in 1958–59 is forecast at 61 per cent. above pre-war. This is just below the revised figure of 62 per cent. above pre-war for 1957–58 which was a record. But had it not been for the 633 effects of the weather net output would probably have reached a new record level.
Similarly, actual net income is down from last year's record. It is forecast for 1958–59 at £327 million. This is a fall of £27½ million from the revised figure of £354½ million for 1957–58. But when adjusted to normal weather conditions, in accordance with the usual procedure for judging the trend of net income, it is forecast at £360 million, an increase over the revised figure of £355 million for 1957–58 and that of £339 million for 1956–57. Thus, despite the cut of £19 million in the total value of the guarantees last year, net income shows a satisfactory and rising trend, apart from the unfortunate effects of the weather.
Costs have gone up by about £11 million in a full year on review commodities—practically the same as last year. Efficiency continues to improve, though the effects this year have in part been masked by the weather. Imports of feedingstuffs are forecast to increase from 5.4 million tons in 1957–58 to 6.1 million tons in 1958–59.
We have also taken account of the needs of the national economy, of our international trading position, especially in relation to the Commonwealth, and of the considerations affecting particular commodities. The cost to the Exchequer of support for agriculture has fallen from £284 million in the financial year 1957–58 to £248 million in 1958–59. But it is still high. The situation on individual commodities, which must have a strong influence on the changes to be made in the guarantees from year to year, is rather better than it was a year ago. Less change in the guaranteed prices is, therefore, required this year on that account. This is, of course, partly due to the changes in the guarantees we made a year ago.
Our general conclusion, as a result of considering all these factors, is that we should not reduce the total value of the guarantees this year, but, equally, that there is no need for any substantial increase.
The determinations that we have made provide for a net increase of £3 million in the total value of the guarantees, after taking credit for the £6 million net cost of the Small Farmer Schemes. The guaranteed prices for milk, cattle, pigs, 634 sheep, barley, oats, potatoes and sugar beet will be unchanged. The guaranteed prices for eggs, wheat, rye, and wool are to be reduced—hen eggs by 1d. a dozen, wheat and rye each by 6d. a cwt. and wool by 2d. a lb.
There will, however, be an increase of 15s. a head in the subsidy on steer calves and of £2 a head in the hill cow subsidy, so as to encourage further the rearing of beef store cattle. There will also be an increase of 7 million gallons in the milk standard quantity for England and Wales. The new potato guarantee system will apply to the 1959 crop and the support price is being adjusted to this change. Some alterations are also being made in the fatstock guarantee arrangements without affecting the value of the guarantees.
The determinations now made are, we think, fair to the industry and the nation.
Mr. T. Williams
As we are much more generous than the right hon. Gentleman and hon. Gentlemen opposite were in 1947, I shall not blame the Minister for the bad weather in 1958, but am I correct in assuming from the figures that he has given that the balance sheet winds up with this conclusion: that prices have increased by £3 million per annum, that £6 million are to be contributed to the Small Farmer Schemes and £11 million to increased costs, which leaves the industry to bear, under recoupment or by increased efficiency, £14 million?
Secondly, if the £360 million forecast as net income for this year matures, am I right in assuming that, translated into 1951 values, the £360 million will be £270 million?
§ Mr. Hare
The right hon. Gentleman has his figures a little wrong. The net award is an increase of £3 million. The Small Farmer Schemes of £6 million are part of the guarantees, but the total increase is £3 million. As the right hon. Gentleman knows, increasing efficiency is calculated at the rate of £25 million a year. If we add £3 million to that, we get £28 million. If we subtract £8 million for additional costs, which we reckon the industry will still have to face in this coming year, it looks—weather and everything else being equal—as though the industry will receive an additional recoupment this year of about £20 million.
Does the Minister think that the £25 to £30 million increase in efficiency is a possibility, if we have the same sort of weather as we had in 1958?
§ Sir A. Hurd
May I take it that the Government have found it unnecessary to make any major changes in the prices guaranteed this year because the levels they fixed a year ago worked so well—after allowing for the appalling weather—for crops and dairy cows that it has not been necessary to make any major changes? Am I right in thinking that a saving of £36 million has been effected to the Exchequer over the past year, and that the level of prices now determined has been approved by the leaders of the National Farmers' Unions?
§ Mr. Hare
The National Farmers' Unions of England and Wales, Scotland and Northern Ireland have stated that they agree with the conclusions reached.
On the general point raised by my hon. Friend, it is true that because of the measures we took last year no drastic changes are necessary because, as hon. Members will see from the White Paper, the position as regards milk and pigs is much healthier. Exchequer subsidies have gone down by £36 million, and for those reasons it is possible for us to take the view that we have taken.
I do not wish to be discourteous to the right hon. Gentleman the Member for Don Valley (Mr. T. Williams), who put a second question to me. He asked what was the income worth in real terms to the industry today. In real terms, the income to the industry has been above that of the year 1947–48, when a large sum of money was injected into the industry.
§ Mr. Willey
Would not the right hon. Gentleman agree that we have to set off taxpayers' savings against increased consumer prices? With regard to last year, realising the difficulty about making a calculation in the light of the weather conditions, can the right hon. Gentleman say what effect the disincentive on milk had on production? Can he further say, 636 in considering this year's and last year's review, what effect the disincentives on milk, eggs and pigs have had on the relative position of the small farmer within the general figures of the total guarantees?
§ Mr. Hare
Of course, the weather has played a big part, as the hon. Gentleman will see when he reads the White Paper.
As regards milk, there has been a 4 per cent. decline in the milk cow herd. There is no doubt that our policies are working out and that we are getting the switch from milk to beef. The important thing is to ensure that switches do not go too far.
§ Major Legge-Bourke
When my right hon. Friend states, as I am glad he did, that the potato guarantee will be unchanged, will he make it clear that this will mean that the actual guarantee will be paid on the new calculation and adjusted basis of £12 14s. a ton throughout the year, as agreed with the Potato Marketing Board?
§ Mr. T. Fraser
The Joint Under-Secretary of State for Scotland will recall that when we were discussing the withdrawal of marginal agricultural production grants in Scotland under the Agriculture (Small Farmers) Bill, we were promised that the new difficulties created for farmers on marginal land in Scotland would be discussed thoroughly at the Price Review. Have those discussions been completed? Are we to assume that the increases in the hill cattle subsidies and the calf subsidy are compensation 637 which those farmers are to enjoy for the withdrawal of any M.A.P. grants, and if so, would he not agree that there are many hundreds of farmers who will lose those grants who will not get the benefit of the increases mentioned by the Minister?
§ The Joint Under-Secretary of State for Scotland (Lord John Hope)
The rise in the hill cattle subsidy is awarded on the merits of the case and is in no way compensation for any marginal agricultural production money that is to be lost. On marginal agricultural production, the hon. Gentleman has probably seen the Answer given by the Secretary of State for Scotland to a Question put down yesterday about future talks with the National Farmers' Union. If not, he will see it in HANSARD.
§ Mr. C. Pannell
On a point of order, Mr. Speaker. Would you ask the Front Benchers to raise their voices a little and take us into this whispered conversation?
§ Mr. Speaker
I heard clearly enough, but the backs of right hon. Members are turned to the hon. Gentleman and perhaps they forget that occasionally.
§ Sir J. Duncan
Would my right hon. Friend agree—[HON. MEMBERS: "Speak up."]—that the increase in subsidies on steer calves and hill cows will be welcomed in Scotland, although we would like to have another look at the reduction in the price of wool? Would my right hon. Friend also agree that the statement he has just made will nullify the accusation made by the Opposition in past years that the Government would take the full 2½ per cent., or £30 million a year, every time they had a chance?
§ Mr. Hare
I am glad that my hon. Friend has made that point. The long-term assurances provide a floor, and we have repeatedly told the Opposition that although a floor was provided it was not necessarily the case that we should automatically use to the full the right of reduction to which we are entitled under the Act. The Act has been in operation long enough now for farmers to have confidence.
Mr. T. Williams
Is it not nevertheless true—[Interruption.] Shut up, you—that the 1957 Act gives the Government the right, between the date of the Act and 1962, to reduce the net income by £30 million, as they did last year, although they are not obliged to do so every year?
§ Mr. Hare
We have considerable affection for the right hon. Gentleman, but he gets away with murder in some of his interjections. My only criticism of him is that although we always give him reasonable marks for his work in the 1947 Act, he has not been quite so generous to my predecessor in relation to the 1957 Act.
§ Several Hon. Members rose—