AGRICULTURE (FATSTOCK GUARANTEES) (Hansard, 29 March 1960)

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)
I beg to move, That the Fatstock (Guarantee Payments) Order, 1960 (S.I., 1960, No. 428), dated 15th March, 1960, a copy of which was laid before this House on 18th March, be approved. This Order is designed to provide cover for the fatstock guarantees from the beginning of the fatstock guarantee year 1960–61 on 28th March. It replaces, with certain differences, an Order which has covered these guarantees since March, 1957.
The most important difference concerns the new way of treating the special payments on the quality premium grades of pigs about which my right hon. Friend told the House in his statement on the Annual Review.
The old Order enabled us to pay quality premiums, but they had to be part of the overall guarantee on all pigs. This had the effect of reducing the guarantee payments on all pigs. Also under the old arrangement, the payment of the premiums could not have continued if at any time the level of overall average market prices rose above the guaranteed price. Although in the past it was never necessary to reduce or discontinue the premiums on this account, the possibility was a source of concern to the producers of quality bacon pigs who felt, with some justification, that, if quality merited a premium, it did so no matter what might happen to the level of market prices.
The new Order enables us to assure the producer of quality premium grade pigs an enhanced return under all circumstances and at the same time to divorce the premium from the basic guarantee calculations. The result of this will be that the basic guarantee rates will no longer be reduced to finance the premiums, and the premiums can always be paid on eligible pigs of the appropriate quality.
The remaining changes in the Order are all of a subsidiary nature, and they will have little practical effect on the producer.
1254 We are going to apply the feed formula adjustment for pigs to the guaranteed price instead of to the rates of payment. This makes no difference in general, but it has certain advantages from the point of view of making the calculations. We have altered the definition of the guarantee year so that there will be a better fit with the accounting year, and we have made provision for the rounding of payments to suitable currency units.
The old Order was made under the provisions of the Agriculture Act, 1947, and it continued under the 1957 Act. The latter Act was phrased in rather a different way, and the opportunity has been taken to reword a number of the provisions in the Order to accord with the phraseology of the Act.
This Order is concerned with methods and procedure. I am sure that the steps to which it gives effect will be welcomed by producers generally. It is the necessary outcome to the decisions which my right hon. Friend announced and which were warmly welcomed.

§ Mr. Frederick Willey (Sunderland, North)
There is a lot I should like to say about pigs, but I realise that I am not allowed to do so in a debate on this Order. I recognise that it is a procedural Order and that the debate must be limited. But the Parliamentary Secretary has mentioned the feedingstuffs formula and has said that the change made in the Order will be of little practical effect. I take this opportunity of telling him that the reply he recently gave me on the subject was quite inadequate. There is one point to which he should direct his attention. He should consider whether it is possible to relate the formula to retail prices. That was the point I had in mind. I have now had the opportunity to bring it to his notice. He might also consider the incidence of tariffs on feeding-stuffs.

§ Mr. Gerald Nabarro (Kidderminster)
Oh.

§ Mr. Willey
I do not wish to pursue the matter further.
This Order affects the stabilising band, which we know has been altered from 3s. to 2s. 3d., and everyone welcomes that. But I doubt whether the Government 1255 are going far enough. Between now and the next Price Review I should like the Parliamentary Secretary to consider what steps he can take to underwrite the long-term contracts. I know that the purpose of this Order is to facilitate those contracts, but I hope he will consider going even further.
As he said, the main point of the Order is to improve the position in connection with the quality premiums—to separate them from the standard price— and I am sure that Members on both sides of the House welcome this. But I have some doubts about the estimate made in the White Paper as to the effect of this provision. I say this because I was given some figures before the Price Review, and I should have thought that the White Paper was rather optimistic in this matter.
We accept the Order as a good thing. It will help the industry. Nevertheless, it by no means goes as far as the producers wanted the Minister to go. They were asking for separate guarantees, and whatever may be the views of the Parliamentary Secretary the industry feels that this Order is inadequate.
In those circumstances, I hope that the Parliamentary Secretary and the Government will give serious consideration to the pig industry, both in relation to marketing and to further support.

§ Mr. Douglas Marshall (Bodmin)
I only want to say that what has been done in the Order to improve the position of the quality premium is what I hoped the Government would do. I therefore thank my hon. Friend the Parliamentary Secretary.

§ Sir Anthony Hurd (Newbury)
I hope that my hon. Friend will be more explicit about the purpose of separating the quality premium on bacon pigs from the normal guarantee. Is this part of the encouragement to be given to long-term contracts between bacon pig producers and bacon curers? I hope it is. Will my hon. Friend say a word about how he thinks this will work out in practice?
I endorse what the hon. Member for Sunderland, North (Mr. Willey) said about the confusing nature of Article 7 1256 in ascertaining the price of feedingstuffs, because it says: … such price to be ascertained by reference to the prices of the basic feedingstuffs during such period as may be determined by the Minister. Most of us who meet farmers and discuss pig prices, which are in part related to the cost of feedingstuffs, are told that the prices ascertained by the Ministry do not relate to the prices which they have to pay. We know that these are pork prices and that they are an indication of the trend of prices from month to month on which the guarantees are based. Would it not be possible to bring them into closer relationship with what the farmer pays for his feedingstuffs both for poultry and pigs? I hope the Minister will look at that point before he has to give us another Order.

§ Mr. Gerald Nabarro (Kidderminster)
Many farmers in my constituency, notably those organised in the National Farmers' Union, are pretty irate with Her Majesty's Government about the Annual Price Review settlement. I want to ask my hon. Friend a couple of questions on this Order. First, the cost of guarantees for pigs. The cost for pigs in the year 1959–60 is £21.3 million. Is that an agreed settlement with the National Farmers' Union, notwithstanding that the whole of the Price Review and settlement was not agreed? I have heard it murmured by the National Farmers' Union and others that the pig settlement was agreed. I should like to know whether that is so.
Secondly, is it intended in future to separate guarantees between bacon pigs and pork pigs, and are the contents of this Order an indication of what is to come?

§ Mr. Speaker
I am dreadfully sorry, but I do not understand what Order the hon. Member is talking about. Unless I was out of the Chair and missed something, it seems to be some Order relating to fatstock.

§ Mr. Nabarro
Yes, Mr. Speaker.

§ Mr. Speaker
Have I misunderstood?

§ Mr. Nabarro
The Explanatory Note says in paragraph (b): The feed formula adjustment for guaranteed payments on pigs is applied to the guaranteed price instead of to the rates of guaranteed payment. 1257 I would have thought, therefore, that under the Order we are debating, which I understood to be the Fatstock (Guaranteed Payments) Order, 1960, both the questions I put to the Parliamentary Secretary were strictly in order.

§ Mr. Speaker
Unless I misapprehend the matter, there is nothing in this except machinery. It is a machinery Order, and it is very difficult to attach what the hon. Member is saying to the process of the machinery Order. I am sorry.

§ Mr. Nabarro
I wanted to ask a couple of questions about fat pigs.

§ Mr. Speaker
The hon. Member can ask them if they are in order, but he must assist me by trying to bring this matter into order.

§ Mr. Nabarro
I am sorry, Mr. Speaker, I thought I was being frightfully helpful in the matter. I hope that my hon. Friend will respond to both those points because my farmers are pretty fed up with him. I hope he will not be under any misapprehension about that. They are fed up about fat pigs.

§ Mr. Speaker
The fact that farmers are fed up does not bring within order a matter which is out of order anyway.

§ Mr. Denys Bullard (King's Lynn)
I wish to ask my hon. Friend a question about the fatstock guarantee as it affects fat cattle. It is the practice to grade fat cattle at live weight in two grades, both heifers and steers. I notice that it often happens that at the auction sale the Grade II cattle often make the biggest price. I wonder whether my hon. Friend is satisfied that this classification of cattle is necessary and if so, whether those grades are founded on some commercial distinctions on which butchers and others in the market are prepared to pay.
If in the long run it proves to be the case that Grade II cattle make more than cattle in Grade I, there does not seem to be any point in maintaining the differentiation between the two grades. I wonder whether any check is made from time to time on the market realisation prices of the two grades for the purpose of comparison to ascertain whether there is any commercial difference between them.

§ Mr. Godber
I will reply briefly to one or two points which have been raised, but I will endeavour not to follow my hon. Friend the Member for Kidderminster (Mr. Nabarro) too far.

§ Mr. Nabarro
I do not mind so long as my hon. Friend answers my questions.

§ Mr. Godber
Perhaps my hon. Friend will await my reply.
The hon. Member for Sunderland, North (Mr. Willey) referred to the way in which the feedingstuffs formula is worked and suggested that we should relate this to retail prices. It is a matter which has been suggested from time to time, and we have looked at it on various occasions. But I think it will be found that over any period of time the system which we have works fairly as between the producers and the Government. I do not think that any case has been made out for amending it. These are matters which are subject to discussions with the N.F.U.'s from time to time, and I think that the present system works well. While I am willing to look again at these problems, I do not think any case has been made out to prove that it is unfair to the producers.
The hon. Member suggested that what we are doing, in particular in relation to pigs, was inadequate to secure the purposes which we wished to secure. That was the point which my hon. Friend the Member for Kidderminster was seeking to embellish. In relation to pigs we have done a great deal to meet the requests made to us over the last six months. My right hon. Friend has given immense thought to this problem. He has taken three measures designed to help particularly the bacon pig producer and to encourage those long-term contracts which were referred to by my hon. Friend the Member for Newbury (Sir A. Hurd). He has put up the guaranteed price; he has separated the quality premiums as set out in this Order and taken them out of the guarantee, which means that they will be paid automatically for all pigs qualifying, whatever the state of the market.
It also means, in effect, an increase in the price of the pigs. In the guarantee it was equivalent to a profit of about 6d. a score for all pigs, and that is added to the increase given.
1259 The third point is the narrower stabilising limits. All that is directed to assisting to provide stability and security for pig producers and especially for the specialist bacon pig producer.
My right hon. Friend is convinced—this is in answer to my hon. Friend the Member for Newbury—that this will help to facilitate long-term contracts. It is my right hon. Friend's hope that we shall be seeing some very definite proposals coming forward in the near future. One bacon factory I know of has already offered long-term contracts based on these new arrangements. They will help the specialist pig producer to go ahead in confidence, and I think they will be warmly welcomed.
I am very surprised that farmers in the constituency of my hon. Friend the Member for Kidderminster are unhappy about what we have done in relation to pigs in this Review. Whatever they may say about any other commodity, I think what we have done in relation to pigs has had a warm reception. I hope my hon. Friend will refresh his contact with farmers about pigs.

§ Mr. Nabarro
What about the agreed statement?

§ Mr. Godber
All I can say about the agreed statement is that it is never customary to disclose these discussions, apart from saying whether, in fact, in the Price Review a determination was agreed or not. As it is known, they were not agreed, but it would be breaking confidence to go further than that. I have indicated that I believe what we have done in relation to pigs is fair and is accepted as being fair throughout the country.
My hon. Friend the Member for King's Lynn (Mr. Billiard) asked an interesting question about fat cattle and said that on occasion second-grade cattle sold for a higher price than top-grade cattle. I suppose that as these decisions are taken by human beings and we are all apt to err on occasion, there may be times when judgment is incorrect. I am sure that he is aware there are occasions when in a show the animal which takes first prize does not make the highest price at the sale which follows. Taking the country as a whole, however, on the records 1260 which we keep—and we keep clear records—there is a very definite premium in price in favour of Grade I cattle as opposed to Grade II cattle. While I should be happy to look into any case which my hon. Friend brings to me, I have no reason to belive that this system is not working satisfactorily.
With these answers to the questions which have been asked, I hope the House will be willing now to approve the Order.