§ Order for Second Reading read.
§ 1.22 p.m.
§ Mr. W. T. Aitken (Bury St. Edmunds)
I beg to move, That the Bill be now read a Second time.
The Bill's object is to rectify a situation that has arisen as a result of the workings of the Restrictive Trade Practices Act, 1956. Experience has shown that the wording of that Act, and its interpretation, will greatly inconvenience, if not seriously jeopardise, the functions and future of practically all our organised trading bodies of farmers.
The word "Associations" in the Bill's Title refers to agricultural and forestry associations only; the Bill does not apply to any other kind of organisation. There are in the United Kingdom nearly a thousand of these co-operative associations, with a combined total turnover of just over £300 million a year. About half of that amount comes from sales of requisites to farmers, and just under half is produced by sales of farmers' produce. It was at the request of and with the full support of the National Farmers' Union and the Agricultural Central Cooperative Association that I undertook to introduce this Bill under the private Member procedure.
I think that all hon. Members are agreed that the development of an efficient and widespread agricultural cooperative movement is more essential than ever for the future of horticulture and agriculture in Great Britain. The Government are, of course, well aware of this. In 1960, Parliament passed the 609 Horticulture Act, one of the major objects of which was to encourage the formation of co-operatives, and last year we had the Industrial and Provident Societies Act, which doubled the individual shareholding permissible simply to help co-operatives to develop more efficiently. I therefore have high hopes that my hon. Friend the Parliamentary Secretary will give some degree of approval to this Bill.
Because the 1956 Act contains definitions of "trading associations" and of "restriction"—that is, restrictive terms in a trading agreement—and because those terms had to be very carefully drafted—severely drafted, I would say—in order to make them effective, it is now clear that, by interpretation, they must include co-operatives for agriculture and forestry.
I do not think that when the Act was passed anybody would have expected the Restrictive Practices Court, which it set up, to interpret the Act quite so severely as it has done. I attended the Second Reading debate, and recollect that the then President of the Board of Trade, my right hon. Friend the Member for Monmouth (Mr. Thorneycroft), made three very important exceptions from the application of the Act.
The first exception was services, such as hairdressing, transport and a whole variety of similar occupations. The second exception was restrictive practices by workers, which my right hon. Friend felt could not be suitably dealt with by such a Measure. The third, and very wise exception, was any agreement that had to do exclusively with our exports. I must admit, too, that it never occurred to me and, apparently, did not occur to any other hon. Member with agricultural constituency interests, that agricultural co-operatives should also have been included in that list of exceptions.
I am sure that had anyone realised that the interpretation of the Act could raise such serious difficulties as are now apparent, Amendments would have been moved. The fact is that, judging from the report of the Registrar of Restrictive Trading Agreements, it looks as though, far from trying to beat restrictive trade practices to death with a feather—as some hon. Members seemed to believe on its Second Reading—the 1956 Act 610 has turned out to be a very powerful bludgeon, not only for disciplining the guilty but, in its effects, bruising a lot of innocent bystanders as well.
The first doubt about the effect of the Act on agricultural co-operatives really came about when the Restrictive Practices Court got to work. The permanent officials of the farmers' organisations and the co-operative societies, who are not exactly stupid about these things, very quickly realised that there might be some doubts about the application of the Act to co-operation. They therefore took expert advice, and, in 1960, they had a discussion with a Ministry of Agriculture working party under the chairmanship of probably one of the most efficient junior Ministers we have ever had, but who now, in the course of the nature of politics, has gone to the Foreign Office as Minister of State.
I am not privy to what the working party told the officials of the societies and the N.F.U. but it obviously did not reassure them because, in the same year, the National Farmers' Union felt impelled to tell a number of horticultural associations that they should not make any recommendations about prices to be charged for their crops, as that might be construed as a restrictive agreement. There is a very great justification for excluding from the Act associations of farmers.
Farming is in really quite a different position from the industrial activities which the Act was meant to cover. Farming is still primarily a family industry. Over 60 per cent. of the farmers in Britain work their holdings without paid assistants. Every farm is a small business in fierce competition with every other farm. In any other type of business such a multiplicity of individual holdings would not make sense. In fact, long before the days of Cotton and Clore there would have been amalgamations, deals and mergers galore. But small or moderate size farms do make sense in our agriculture because of the unpredictability of our climate, the nature of our soil and the varying skills required.
In the same way, countries like Australia, Russia, and North America find that big farms make sense. As I live in an agricultural constituency 611 where there are a few very big farms, I know well that the big farms are not necessarily the most efficient ones. Most industries, particularly the manufacturing industries, can and do exercise a great degree of control over the prices at which they sell their products, whether wholesale or retail. They can vary the quantities they produce according to demand.
These industries can switch from manufacturing pots to kettles simply by re-jigging a couple of machines and they can be very flexible about their production. These are things the farmer cannot do. He cannot close down plant or lay off men when prices fall or demand drops. Farmers exercise little influence over their selling prices. A crop is sown or a beast bought for fattening or rearing, and no agricultural genius has discovered how to switch production from cows to pigs or suddenly to change a field of barley into one of potatoes. Farmers cannot quickly alter their output to meet changing demands.
Thus the farmer or grower must always be inherently a weak individual seller or buyer. The producer co-operative system is an effective way by which they can overcome these natural handicaps, and more of them are realising that this is much the best way not only to sell their produce but to buy their requisites, and thereby reduce production costs and increase efficiency. It is becoming more clear that the whale future of farming depends more on marketing than on anything else. There can be no doubt that the producer co-operative marketing organisation is the best answer.
One has merely to go round the countryside to see that the modern market of today is the supermarket, the chain store and other big buyers. This modern market is very different from the stall in the centre of the town. The modern type of market insists on high standards of uniformity of supply, quality, good packaging and the utmost regularity in delivery. Direct sales to these organisations are the outlets on which the farmers and growers must increasingly rely if they are to reduce the present stranglehold of the middle-man.
612 Economic marketing is a highly specialised job and far beyond the resources of the ordinary farmer. That is the function of co-operative associations. Because members can maintain their independence as producers they willingly subordinate to a common organisation their independence as buyers of their requisites and sellers of their produce. Even the most rugged individualist—and there are plenty of them in the farming industry—usually accepts the discipline imposed on him to make a success of his own cooperative.
The power and importance of the commercial units from which the farmers buy, and to which they sell, continues to grow. One has only to look at the take-overs in the various manufacturing industries that sell to the farmers to see that this is so—the seed organisations, corn merchants and so on. It is only by co-operation that the farmer can match this power. That is why it is very much in the public interest to encourage all forms of voluntary co-operation among farmers, for efficiency in marketing nearly always means cheaper, better quality and better packaging of farm produce.
In almost every country where agricultural co-operation thrives the cooperative organisations have invariably been excluded from anti-trust legislation. A good example of this, of course, is the Capper-Volstead Act in the United States which has been sustained by many Supreme Court decisions which have clearly recognised that such exemptions were necessary, not to give the farmer any special privileges but simply to put him in a position similar to that of any ordinary private trading concern. It is important to realise, too, that in practically every European country where anti-trust legislation has been enacted, the same situation prevails.
What agricultural co-operative organisations in this country must now face is that the 1956 Act can be construed only in such a way that any agricultural or forestry co-operative is a trading association. Therefore, almost any term in a trading contract made by such associations, with its members or with third parties, can be interpreted by law as restrictive, and, therefore, in many cases, illegal. Intent is not material in 613 any way under this Act. The contract can be innocent in intent as far as restrictive practices are concerned—as understood in context with other types of business—but that will not necessarily save the association. I am sure that this is not what Parliament intended to happen to agricultural co-operative organisations.
The Bill is comparatively short, though quite complicated, but its intent is simple enough. Clause 1 (1) exempts from Part I of the Act of 1956 co-operatives which satisfy all of three conditions; firstly, that they are registered under an appropriate Act, normally the Industrial and Provident Societies Act, but, in some cases, the Companies Act.
§ Mr. Anthony Kershaw (Stroud)
What is the relevance of the Companies Act here? That is very unusual.
§ Mr. George Darling (Sheffield, Hills brough)
Quite a number of co-operatives are now registered as companies.
§ Mr. Aitken
It is true, but I think that my hon. Friend is concerned about the fact that under the Industrial and Provident Societies Act, 1961, we doubled the amount of money which any individual shareholder could hold. But because of the way in which agricultural co-operatives are developing today, and the way we hope they will continue to develop, it sometimes happens that the amount of capital required is greater than can successfully be raised under the Industrial and Provident Societies Act. If a co-operative is going in for grading and packaging on a large scale—requiring expensive machinery, highly-skilled labour and perhaps expensive management—sometimes the Industrial and Provident Societies Act is not as suitable a way of raising the required money as is the Companies Act. Under the Companies Act nobody can get aay with any abuses under this Bill any more than they could under the Industrial and Provident Societies Acts.
The second condition for exemption is that the overwhelming majority of the members of a society, measured by voting power, must be farmers or forestry 614 owners. The third condition is that the purpose of an association must be to market the members' produce or provide the members with requisites for use in a farming or foresty business. In subsection (2) of Clause I there is a definition of the kinds of agreements that may be exempted from the principal Act. They must be agreements of a kind that arise normally in connection with the types of business described in subsection (1), as in connection with the sale of members' produce or the supply to them of their requisites.
Subsection (3) enables the Ministers to make Orders restricting the scope of these exemptions. This is a provision simply to deal with possible abuses, should it be found in practice that these exemptions are too wide and are being exploited, for example, by associations that are not bona fide co-operatives or for purposes not truly co-operative. This subsection would deal with that sort of thing.
I do not think I need say anything about Clause 2 which simply deals with definitions, the commencement and the application to Scotland and Northern Ireland.
The object of this Bill is to secure what Parliament would have wanted if it had known, in the light of today's experience, the meaning of the legal application of the Act. As I have already said, this Bill does not seek to confer any special advantage on agricultural co-operatives. It seeks only to remove a disability—that is, to put the agricultural societies in the same position, so far as the 1956 Act is concerned, as a private trader engaged in the same class of trade. This disability relates to Part I of the 1956 Act only. The cooperatives will still remain subject to Part III which relates to monopolies and also to the Monopolies Act, 1948.
An agricultural co-operative association, or even an association of associtions, which is provided for in the Bill, is not in fact a monopoly, but if it were, either by itself or in association with interests outside agriculture—if, for instance the Yorkshire Woollen Cooperative Society took over a large Bradford firm—this Bill would in no way exempt them under the terms of the 1956 Act.
615 In conclusion, a turnover of £300 million a year clearly illustrates what an important part the co-operative organisations play in British agriculture. I have given the reasons why we must do everything we can to encourage the greater expansion of this movement. Here is a threat not only to the present activities but to the future development of agricultural marketing—a threat which should be removed today. This co-operative development is more vital than ever before in agriculture. It is our duty and very much in the public interest that we should ensure that British agriculture is given every encouragement to market its produce efficiently and is not subject to a disability to which her principal future competitors are not exposed.
This is the purpose of the Bill, and I hope it will get a Second Reading.
§ 1.44 p.m.
§ Dr. Horace King (Southampton, Itchen)
This is the second opportunity that I have had of commending to the House a Bill introduced by the hon. Member for Bury St. Edmunds (Mr. Aitken). It seems as though it is becoming a habit. I hope that it will not become an embarrassment to either of us. We share, among other things, a pride in and an affection for British agriculture, and I only hope that the farmers will not only be grateful to the hon. Member for introducing this Bill, but will study very carefully the thoughtful case that he made for the necessity of farmers not only to get together as they have done up to the present, but to increase the process of combining together and co-operating to market their produce, because I think that that will be good for British agriculture and for the consumer as well.
The best way of supporting a Bill on a Friday, if one wants to be sure of getting the Bill through, is either not to speak at all or to speak very briefly. I shall speak very briefly today, especially when the members of the "active back benchers association" are here. Of course, we may yet have an intervention from the hon. Member for Exeter (Mr. Dudley Williams). May I say that I am bitterly opposed to his opinions. I wish that he were here. I regard him as the unmuted voice of reaction in most of 616 his opinions, but I think that he renders a public service on Fridays by his detailed and painstaking examination of new Bills which private Members propose. He renders a service to Parliament and it would be a bad thing if Private Members' Bills, no matter how worthy, were allowed simply to slip through.
Some of the farming community in Hampshire have asked me to support this Bill, and I do so to show that it has the backing of hon. Members on both sides of the House who are keen on British agriculture. The proposer of the Bill was right when he called attention to the striking growth of the cooperative movement in agriculture. I am particularly aware of it in Western Europe. I think, for example, of wine growing co-operatives, demonstrating the way in which wine growers in France are getting together and building up co-operatives which are good for the professional interests of the wine growers and for the community, also. Their aim is to combine in the collection, packaging and marketing of their produce.
We have some remarkably similar developments in England. I know of them in my own county. I have a letter from a very successful egg producing co-operative, the essential feature of this co-operative being that every member is an egg producing farmer. There is nobody from outside the industry financing what is called Early Eggs Ltd. Every member is in the industry. Like the hon. Member for Bury St. Edmunds, I welcome any developments in this field which cut out some of the middle men who stand between the primary producer of our food and the consumer. We have had a great example of this last year in the mystery of the extra millions of pounds provided by the Government to keep down the price of meat, which the farmers tell us they did not receive and which my wife and many other wives did not receive.
I believe that if agriculture is to flourish—and whether or not we go into the Common Market, the challenge to British agriculture in the years ahead from the Continent is intense—and if, at the same time, the consumer is to get a square deal, it is important that British agriculture should unite against 617 the middle men. Our agriculture has not grown up on the lines of large collective farms. It consists of hundreds of small men doing a highly-skilled professional full-time job, often working nearly 24 hours a day and not getting very much out of it. It is essential that they combine together in every way for the benefit of themselves, of British agriculture in competing with the rest of the world, and of the housewife.
As the hon. Member for Bury St. Edmunds has shown, the question has arisen whether the covenants entered into by such bona fide co-operative agricultural producers among themselves and with their customers are the kind of restrictive practice with which the Restrictive Trade Practices Act ought to deal. We hold the opinion that they are not, that the kind of restrictive practice in which they engage is one which is an essential feature of cooperation. It is difficult to argue what was in the mind of the Legislature when it passed an Act of Parliament. Indeed, it is futile to try, because what really matters is what is in the Act.
No one can blame the Registrar who carries out his duty under an Act of Parliament for interpreting the law as it is. That is his job, whatever his opinion. However, those of us who attended all the debates, as did most hon. Members here, when we were passing the 1956 Act on to the Statute Book had no idea in our minds that we were passing an Act which might jeopardise the future of agriculture co-operatives. I understand from farming friends that some of the agreements which have come under the umbrella or the axe of the Restrictive Trade Practices Act can be indulged in by firms selling agricultural produce or machinery if they are not co-operatives.
I hope, therefore, that the House will give the Bill a Second Reading with real good will and will send to the farmers a message in the spirit of the speech of the hon. Member for Bury St. Edmunds, that we hope that farmers will continue to co-operate, and that we reaffirm that anything that Parliament can do to foster the process will, at one and the same time, I believe, benefit the farming community and the consumer of food even though it does harm to the middle-man in between.
§ 1.52 p.m.
§ Sir Richard Nugent (Guildford)
I support the Bill which has been so lucidly introduced by my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken), and I am glad to know that it has support from the other side of the House by the voice of the hon. Member for Southampton, Itchen (Dr. King). Evidently, its course is set fair, despite the return to the Chamber of my hon. Friend the Member for Exeter (Mr. Dudley Williams). From the position in which my hon. Friend is now sitting, I judge that the Bill is fairly safe.
This is a very useful Measure to correct what I believe was an anomaly in the Restrictive Trade Practices Act, 1956. That Act as now drawn would bring within its scope all agricultural and horticultural co-operative societies. I imagine that they are at this moment under an obligation to register their agreements. They have not done so and the Registrar of Restrictive Trading Agreements has not asked them to do so, but I suppose that at any time a hostile wholesaler of produce might write a rude letter to the Registrar and ask him to examine these agreements. Then the fat would be in the fire, because every agreement would have to be registered and the Registrar would be under an obligation to examine them in due course. There is a strong case for this Bill.
My few remarks are intended to justify agricultural and horticultural cooperatives being given a favoured position before the law. I am sure that each one of us here is very conscious of his responsibility to give no section of the community a favoured position before the law unless there is a really convincing case for so doing. My hon. Friend the Member for Bury St. Edmunds rightly referred to the situation in other countries. In the United States, where the anti-trust laws are even sterner than they are here, in Canada, in the countries of Western Europe, and probably, I apprehend, in Australia and New Zealand as well, there is a favoured position before the law for agricultural and horticultural co-operatives.
The simple reason for this being so is that, if it were not, the societies could not exist. They need to be in existence 619 in this country, for instance, because of the structure of the industry where we have about 350,000 small producing units scattered throughout the land. Their geographical situation to a very large extent prevents their ever being combined. In my hon. Friend's part of the country, in the Eastern Counties, there have been many useful amalgamations in the big corn growing areas, and these have added to the efficiency of production.
Among the livestock units, which preponderate in our countryside, it is impossible to have large amalgamations. Indeed, if there were large amalgamations they would, in the main, be less efficient than the smaller ones. This is a lesson which, I am quite certain, Mr. Khrushchev is slowly and painfully learning in spite of his enormous stake in collective farms in Russia. One cannot, in the very large unit, have the degree of personal attention and personal sacrifice which the individual farmer gives in looking after his livestock.
This structure, with a very large number of smallholdings and a certain number of large ones, is likely to continue indefinitely. This means that, while we have a large number of small producing units, the demand end requires a steady flow of large quantities of produce regularly coming to the counters of large and small shops in our towns, standardised and graded produce, whether it be vegetables, fruit, meat or eggs, ready for the housewife in the condition she wants it.
The development during the past decade of the chain store and the supermarket means that the buyer of produce is buying in larger quantities for very many stores spread about the country, with the consequence that the need of the distributive trading units, the retail trading units, is for a large supply of graded produce regularly arriving to be put on the counter ready for the consumer. The problem is to assemble the produce from a large number of producing units to meet that demand.
The traditional method of meeting it has been the open market to which the producer sends his produce and hopes for the best price. If supplies are short, the price is not bad even if the condi 620 tion is not very good. The producer goes away fairly well satisfied, and the wholesaler then proceeds to bulk the stuff together and sell it to the large retailing chains.
There are, however, two fundamental disadvantages in the open market system. The first arises when supplies are slightly in surplus. Even if the surplus is only very small, usually reckoned at not more than 2 per cent., this is enough to bring about a very steep drop in price to the producer which may seriously endanger his very existence as a producer. The other defect in the open market system from which we suffer particularly in horticulture and also, I think, in fatstock—the hon. Member for Itchen knows that I have some concern with that in another context—is that home produce comes to the market in all shapes, sizes and conditions, from the best to the worst. This is the picture of home produce—a mixed bag.
Imported produce, on the other hand, whether it be fatstock or horticultural produce, comes into the country in a graded condition, according to uniform standards, in regular quantities which can be guaranteed to be up to the appropriate grade. The big buyers prefer that every time, because they can be certain of getting the quantity and quality that they require. This puts our growers at a serious disadvantage in competing with imported goods. The result is that our producers, on average, get a lower price than is paid for imported produce, although the quality of our best produce is undoubtedly superior to anything which can be imported.
The agricultural or horticultural cooperative is designed to overcome these defects. Its function is to act for the members of the society by collecting their produce in sufficiently large quantities. Then the society is able to go to the big buyer—the chain store or the supermarket—and offer to deliver regular quantities of the kind which the big retailer wants at a guaranteed standard of quality which will be as good or better than anything imported. This puts the society in a position to make a contract on favourable terms for the producers.
621 Unfortunately, due to their rugged individualism, to which reference has already been made by my hon. Friend, few farmers and horticulturists are willing to combine in this way and our co-operative movement has not made the progress which I should like to see, and nothing like the progress made in other countries which have been mentioned. At least we should see that our co-operatives, and the central cooperative organisation which tries to promote co-operative's, should not be further handicapped by the law and have their very existence endangered by the provisions of the Restrictive Practices Act. That is all that my hon. Friend is trying to do by this Bill—to give them a chance to live at all.
The major point I seek to make is that there are substantial grounds for giving agriculturists, farmers and horticulturists a favoured position before the law, to enable them to organise themselves into effective trade units to meet the reasonable demands of the consumer and, indeed, to retain their existence. I suggest that by implication this House recognised that there is such a case by passing the Horticulture Act of 1960. If we do not accept the Bill, the whole purpose of the 1960 Act will be completely frustrated. There will be no co-operatives left to benefit.
That Act was a useful one and some use has been made of it. I hope that further use may be made of it. Its value, however, depends on the existence of the co-operatives. I think that I have said enough to make the case that farmers and horticulturists have a special need, similar to that which has been catered for by Parliaments in other progressive countries by giving the agricultural and horticultural co-operatives a favoured position before the law.
In this small Bill we ask that our co-operatives be given a favoured position to the extent of excluding them from the provisions of the Restrictive Practices Act. I am sure that that is justified. It would 'help this very valuable movement. I hope that farmers and horticulturists generally will realise that something useful is being done to help them, and that they will make even more use of this very valuable organisation than has been the case in the past.
§ 2.5 p.m.
§ Mr. Ede (South Shields)
I am quite sure that the House will join with me in congratulating the right hon. Member for Guildford (Sir R. Nugent) on his recent promotion to the Privy Council. He can rest assured that from now on his rising to speak in the House will be violently objected to by all the hon. Members sitting near to him. But the charm with which the right hon. Gentleman always addresses the House will, I am sure, go a long way to removing some of the more positive exhibitions of such hostility.
I am not quite clear about this Measure. With a great flourish the Government promoted the Restrictive Practices Act. I do not think that anybody is satisfied with the way it has worked when people have tried to operate that legislation. The hon. Member for Bury St. Edmunds (Mr. Aitken) deplored the rugged individualism of the farmers. I thought that rugged individualism was just the frame of mind that the Conservative Party would not deplore in people—
§ Mr. Aitken
I am sorry to have to correct the right hon. Gentleman. I did not deplore rugged individualism. I said that even the rugged individualist was sometimes willing to accept the discipline imposed on him by the cooperative society.
§ Mr. Ede
Human nature is so weak that even the best fall into sin. Let us be quite frank about that.
I am not clear about what is the position. Has there been a decision of any court against which we are asked to legislate today? Or are we really legislating on counsel's opinion? If that be the position, this might prove to be a dangerous precedent for the setting up of a privileged community which is to be protected against the provisions of what generally has been a very ineffective Act. I am in favour of co-operation. I am glad to know that anyone from the family of the hon. Member 'for Bury St. Edmunds can find any occasion on which co-operative societies ought to be encouraged and, in fact, have the law twisted so that they would be able to be established where otherwise they would not exist.
623 I believe in co-operation. I deplore the continual attacks made in the Beaverbrook Press on co-operation, and I rejoice to see that even the hon. Member for Bury St. Edmunds is capable of a rugged individualism for the benefit of his constituents. We all know that our liberties in this House depend finally on the activities of the Eastern Association. I am glad to know that the spirit still survives.
I ought to be in favour of this Bill, but I am very doubtful about legislating on counsel's opinion because I have found that, generally speaking, if one counsel gives an opinion, there is no difficulty in getting another counsel to assure one that the opinion given is wrong. Has this matter been tested in the courts? If it has not, is it wise—
§ Mr. Aitken
May I say to the right hon. Gentleman, without being too indiscreet, regarding the views about which he is concerned and counsel's opinion, that the advice which has been sought and the views taken on this matter go a good deal wider than a single counsel's opinion.
§ Mr. Darling
To their surprise, retail co-operative societies were compelled to register their boundary agreements and at the point when the court acted in that way the whole question of cooperative enterprise in relation to the Restrictive Practices Act was looked into.
§ Mr. Darling
Yes. My right hon. Friend will probably know how this works. The Registrar must register all agreements. It was felt for a long time that the boundary agreements of retail co-operative societies were outside the Act. The Registrar, with the approval of the courts, decided that they were not outside the Act. From that point, the whole question of co-operative enterprise under the Act was looked at.
§ Mr. Ede
I thank my hon. Friend for that information.
On the assumption that all the parties concerned are convinced that these cooperative enterprises should not be hindered, I should certainly support this 624 Bill. I myself suffered under a boundary arrangement made by our old friend, Viscount Alexander of Hillsborough, when, for a short time, I lived at Mitcham. When the boundary between the South Suburban Co-operative Society and the Royal Arsenal Cooperative Society was drawn, my house was in between. For a long time I had difficulty in persuading either of these societies that I was eligible for membership.
Anything that can be done to help the drawing of boundaries between cooperative societies is desirable. I hope that it will be possible, when the Bill reaches its Committee stage, to include some redress for persons who have suffered, as I did.
§ 2.11 p.m.
§ Sir Richard Glyn (Dorset, North)
I want warmly to support the Bill which, I believe, will also be supported by Members on both sides of the House and certainly by all those who have any personal experience of the problems with which the farming industry is faced.
It has properly been pointed out that farming in this country is basically a family industry. The great majority of our farms employ no whole-time labour at all. The whole operation of the enterprise in these farms is carried out by the farmer and his wife, aided perhaps by their children or relatives, and sometimes with the use of some part-time help, though often with none.
In this situation, which is a normal one, the family is not only the board of directors, but also includes the secretary of the organisation—if it can be described as such—the sales manager, the buying expert, the executives, and, of course, the workers and labourers. It all consists, perhaps, of only two or three or four people.
This system has worked very well over the centuries and, compared with any other, British agriculture has nothing to be ashamed of in its record. But in the new situation which has arisen, in which the markets Which have served us for generations are going rather out of fashion, and have been largely replaced by the modern supermarket, which was not dreamed of even thirty years ago, and which buys enormous 625 quantities of foodstuff which must be graded so that it can advertise both grading and price. It must look to suppliers who can guarantee a regular supply of graded articles at a certain agreed price for each grade.
That, of course, is out of the question for and beyond the capacity of any family farm. This applies throughout Europe and not only to Britain but to the other countries which are exporting their goods—agricultural, horticultural and, I would add, timber—to us and which may, if we enter the Common Market, be able to do so much more freely. That remains to be seen. But the reason that these foreign countries are able to supply supermarkets in this country is, I believe, entirely due to their farmers' co-operatives.
Denmark is an obvious example. Danish bacon is famous throughout Britain. It is famous because it is widely advertised and is supplied regularly up to a recognised standard at a price which does not fluctuate very much. In these circumstances, it is acceptable to all the big British retailers, supermarkets and otherwise, and is sold and bought and very much relished by British families. How did the Danish farmers bring this about? Undoubtedly, by the use of cooperatives. Almost every bacon factory in Denmark—I say almost, but I know no exception—is owned by farmers' cooperatives, and this puts them in a particularly favourable position.
These factories know exactly how many pigs they have coming along and can adjust their labour forces accordingly. They can see the pigs a month before they arrive at the factories. They know that their member farmers must send along their pigs, for they are under contract to do so. In this way, those factories have an enormous advantage. Our factories are not in that happy position as a rule. They cannot tell from week to week what supplies will be available, and they often work at a 25 per cent. throughput which is very expensive and wasteful to the process.
That situation could be corrected if it were possible for British farmers to combine, to own bacon factories in the way that is done in Denmark. Since the passing of the Restrictive Trade Practices Act, this has not been possible, but 626 before that Act at least one farmers' cooperative in Yorkshire succeeded in doing it. I visited this factory about eighteen months ago and it was showing a much better throughput—about 50 per cent., which was then about double the national average—and was giving great advantages to its farmer members, advantages which were shared by their customers the housewives.
I would like to see more farmers' cooperatives. I believe that this is the best road for the development of British farming, which is good on the production side but very weak on the sales side. The Bill will enable our farmers to co-operate as their rivals in other countries have done. It will enable them to co-operate in selling. It is a practice which is unusual in this country at the moment, for nearly all the farmers' cooperatives are buying co-operatives. They work well, but what we need is selling co-operatives working amongst groups of small farmers, perhaps with the help of larger farmers, and using proper installations where the produce can be sorted, graded and packed. This applies to horticulture as well as to agriculture.
We could then compete on terms of equality with our foreign competitors by marketing British produce, which is as good as any, as well graded and as attractively packed as the imported foodstuffs which are at present so much preferred by the supermarkets and the big wholesalers for reasons which have been explained. For these reasons, I believe that the Bill will have the support of everyone who has studied this very acute agricultural problem—a problem which will be very much increased if we join the Common Market.
The right hon. Member for South Shields (Mr. Ede) said that he did not see why the law should be twisted in favour of farmers. I am sure that no farmer and no friend of the farmer would ask that the law should be so twisted. All that we ask, and it is not unreasonable, is that we shall be put in the same position as our foreign competitors, whose national laws permit them to combine in the way in which at present we are not permitted to combine. We ask to be allowed to compete with them on their own terms, and it is for these reasons that I warmly support the Bill.
§ 2.20 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
I congratulate the hon. Member for Bury St. Edmunds (Mr. Aitken) on bringing in this very useful and necessary Bill. I am sure that all hon. Members present in the House today will give it enthusiastic support, and I hope that it will have a speedy passage through Committee.
My right hon. Friend the Member for South Shields (Mr. Ede) has now left the Chamber. I was going to tell him that I am afraid that the retail societies will have to work out their own solution about their boundary agreements, because this Bill, quite rightly, applies only to agriculture, forestry and horticultural societies.
As the right hon. Member for Guildford (Sir R. Nugent) has pointed out, one of the many reasons why we need the Bill is because we are now running into danger of making the Horticultural Act, which we passed just over a year ago, a completely dead letter. There is one point on which I quarrel with him. He repeated several times that it was desirable to give the co-operative enterprise side of agriculture a favourable position in the law. I do not think that, either in this Bill or in anything else that we are doing in this regard, we are asking for a favourable position.
What the Bill is attempting to do, and I 'hope that it will succeed, is to adapt the law to the circumstances of cooperative enterprise, which is an entirely different thing. The fact that the Restrictive Trades Practices Act was applied to manufacturing industries and the trading operations associated with the manufacture of goods, does not mean that the law can be applied to extractive industries like agriculture. I shall not develop that point, except to say that I do not see that the proposed legislation is giving agricultural societies any favourable position at all. We are merely adapting the law to the circumstances.
The National Farmers' Union and, think, hon. Members in the House today and everyone in the country who is interested, believe that this form of enterprise is desirable.
I should like to follow up a further point made by the right hon. Member for Guildford when he was talking about 628 the defects of the open market. We shall have an opportunity to do this a little later when we discuss certain Estimates. I am glad that the right hon. Gentleman now agrees that without cooperation in some form of co-operative enterprise we cannot satisfactorily operate the price support system in the open market. I am glad that the warnings we have given since 1954 have at last borne fruit.
§ Sir R. Nugent
The hon. Gentleman, in his enthusiasm for his own beliefs, has gone a little further than I did. I pointed out the defects, but I did not say that I believed that the open market was impossible as a basis for operating a price support system.
§ Mr. Darling
We shall look forward to the right hon. Member's contribution when we come to discuss what is being spent in the open market. We would agree that, even though this is not the only solution, one solution to the problem that we now face is to have large-scale co-operative enterprise on the marketing side. I am sure that all of us want to see more co-operative societies not only in connection with the buying of farmers' requisites but more particularly in the marketing of their products.
Everything that the hon. Member for Dorset, North (Sir Richard Glyn) was asking for in regard to bacon production, bacon marketing and processing and so on would now run into grave danger of becoming an impossible enterprise unless we made absolutely sure that the Restrictive Trade Practices Act does not inhibit this kind of development.
We are in favour of this Bill and we hope that it will go through because, in our view, it is bringing common sense into a situation which looked as if it were potentially dangerous. I played an active part in the discussions on the Restrictive Trade Practices Act and I cannot remember—I have not looked up the debates—that this issue was raised at all in the course of those discussions. I know that some hon. Members on this side of the House, rightly or wrongly, suggested that that Act was much too tightly drawn and did not provide sufficient flexibility for the various kinds of enterprise with which we are so much concerned. I am confident that no one anticipated 629 that the Act would work in this way. Therefore, I quite agree that this form of co-operative enterprise, which all of us think is very desirable, should be encouraged and not held back or handicapped in any way by legal provisions which really do not apply to it.
Finally, I hope that none of us will say that in this Bill, which I hope will soon become an Act, we are giving the co-operative societies a favourable position in the law. I think that we are taking note of the special and valuable characteristics of co-operative enterprise and that the law would be wrong if it did not take account of these things.
§ 2.26 p.m.
§ Mr. Jasper More (Ludlow)
I should like to add my congratulations to my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) for introducing the Bill and for the very happy speech which he made in doing so. Had my right hon. Friend the Member for Guildford (Sir R. Nugent) still been in the Chamber, I should like to have said to him that from one hon. Member at least there was no resentment when he rose to make his charming speech in support of the Bill.
When the history of British farming in the twentieth century comes to be written, I am sure that its salient feature will be the growth of our farmers' co-operative societies. The speeches which we have listened to today have emphasised, quite rightly, the marketing and selling aspects of these societies. I think that we are all conscious of the fact that many of the societies which we now know had their origin primarily in the need and ambition to supply at reasonable prices to farmers the goods that they needed for the purpose of that production. That is specifically recognised in the Bill in Clause 1 (1, c).
I had the honour in my own constituency last year of attending the opening of a very large extension to one of our co-operative societies which has been active in both these directions. It was an impressive and very satisfactory occasion. I knew the early history of the society which, like many, was founded in the early years of the twentieth century. It went through very hard and difficult times and was pulled 630 through really by the loyalty of its farmer supporters and by the hard and efficient management at its headquarters.
We have also, I am glad to say, in our part of the country started what I am sure many of us believe to be an important and very relevant branch of our co-operatives. That is the part which deals in livestock marketing. I am certain that societies of both these kinds deserve the support of the House. They are invaluable for the producer, and I beg leave to think that they may make a significant contribution to the solution of the problem which lies on so many of us now—the question of agricultural support when marketing prices in the present market drop.
It has been suggested from one quarter that this Bill is not necessary. It may be that we are legislating today for only the removal of doubts, but there are very respectable and venerable precedents for legislating for the removal of doubts, and even if that is all we are doing today I am sure it is a desirable Bill and I am very glad to give it my support.
§ 2.30 p.m.
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. W. M. F. Vane)
I wonder if it would help if at this point I intervened to tell the House that the Government are glad to echo the welcome which has been accorded to this Bill introduced by my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken). I should like to offer my congratulations to him on the way he has done it and upon the interesting speech which he made telling us about the background to the Bill and also the importance of agricultural co-operation. I think we can put on record that every hon. and right hon. Member who has spoken in this debate has at least ended his speech by approving the Bill. The right hon. Gentleman the Member for South Shields (Mr. Ede) suffered a sort of mid-speech conversion, because he was doubtful when he started his speech, but I understand that he was in support of the Bill by the time he sat down.
As my hon. Friend has said, the purpose of the Bill is to amend the Restrictive Trade Practices Act, 1956, and at this stage I should say that my 631 right hon. Friend the President of the Board of Trade sees no objection to the Bill. All hon. Members subscribe to the view that the curbing of restrictive practices is important to the competitive well-being of the economy as a whole, and this, of course, was the main principle of the 1956 Act. When that Act was drafted it seemed essential to avoid leaving loopholes, otherwise the effectiveness of the legislation as a whole might have been seriously impaired. I am sure that is the reason why the Act provided severe definitions of trade association and restriction. This was asked about during the debate.
As a result of these severe definitions there is, I am advised, some risk that some of the ordinary activities of agricultural and co-operative societies might not meet the requirements of the Act as these are interpreted by the Restrictive Practices Court. I cannot assert that that is the position; in fact, no one can since the courts have not yet heard and decided on a relevant case. Most of us think that it is important that the work of agricultural co-operatives should go on and be encouraged particularly in marketing and better quality. This Bill would put the matter beyond doubt, and it is on this basis that the Government support it.
The Bill covers, as hon. Members will have noticed, only the genuine agricultural activities of properly constituted agricultural co-operative associations, and not such activities as the factory production of foodstuffs or furniture manufacture or the supply of consumer goods to farmers. I am sure that hon. Members will agree that it is proper that arrangements of the latter kind should be left for consideration by the court.
To my mind the real value of the Bill is that it would make quite clear that agricultural co-operatives can make ordinary trading agreements without fear of having to defend them in a court, thereby enabling them to plan ahead with more confidence and give better service to their members and to the public. As my hon. Friend has said—and I wholeheartily agree with him—the improvement of marketing is one of the most important tasks facing the agricultural and horticultural industries today, and, in achieving that, the co-operatives 632 will have a large part to play. I, therefore, hope that the House will help this Bill on its way to its next stage.
§ 2.34 p.m.
§ Lieut.-Commander S. L. C. Maydon (Wells)
I rise to congratulate my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) on presenting this Bill and to speak very briefly in support of it. I think that the first thing which we must make quite clear is that the Bill does not seek to give farmers a position of special advantage or privilege, but to remove existing disabilities.
Co-operation is increasingly necessary for small farmers and for horticulturists, many of whom are small men, too. It has been said that over 60 per cent. of agriculture and horticulture by acreage are family businesses not employing any permanent outside labour. That is obviously true, and it is very much more so in the south-west of England.
In my own constituency, we have recently had the misfortune of seeing two bacon factories close down. Had those bacon factories been working on a co-operative basis, it could never have happened. It is ironical that the ownership of one of those bacon factories lay in a co-operative wholesale society. Of course, that society is not undertaking co-operative business as envisaged by the Bill.
For some time farmers in various parts of England have been combining together on a syndicate basis in the use of machinery and equipment. Of course, as farming grows more technical and complicated the equipment required is more expensive, and it is much more necessary. There are the economics of installing grain-drying plant, silage-making plant, cheese and butter-making plant, and getting grading and packaging equipment. For the small farmer, this is just "not on". His farm is not in a positon to support large-scale capital investment in such equipment, and that, of course, is where co-operation comes in, and makes this Measure so very much more important both in the selling of produce and buying the use of such equipment.
I welcome the Bill and I hope that it will have a swift and easy passage through the House.
§ 2.37 p.m.
§ Mr. Percy Browne (Torrington)
The Bill has been generally welcomed on both sides of the House. Most hon. Members have stressed the fact that it will enable farming co-operatives to act in the future for the purpose for which they were properly set up. My hon. Friend the Member for Dorset, North (Sir Richard Glyn) specifically called this a Bill to help farmers. He said "we" all the time. I speak as a farmer representing farmers, but I should like to echo what my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) said, that this is a Bill which would not only help farmers, but help consumers as well. It is important to recognise this fact.
The Bill comes at an interesting time, a time when we have seen a near-breakdown in our system of support and when—though I suppose I should not mention it in detail now—we have seen prices lo the farmers low and yet to the consumers too high in comparison. I have always felt, talking from a farmer's point of view, that a Bill of this description is really one to solve a social problem which we have and which at some stage we have to face.
My hon. Friend the Member for Bury St. Edmunds talked about rugged individualism. That has been mentioned since. I would put it this way. We have a social pattern in the countryside, centred on our church or chapel, our village hall, and so on, a pattern which we think is worth while and something we want to keep. If we are to keep it, then our problem is: can we allow this 'evolution towards larger holdings to grow more rapidly? Do we want to cushion the blow or to put the clock back? What we want to do is to cushion the blow, and the Bill is a Measure which will help us to do that.
In other words, the Bill will enable farmers to get together in co-operation. I have been preaching this word in my constituency for the last three years, partly for this reason, partly because, without the discipline of a co-operative society, it is impossible the persuade individualists to support that society—that is why our meat marketing has fallen down in the past few months—and partly because also, as has been mentioned, there is more integration of retail supply, in the form of large co-operatives 634 and supermarkets. We have to supply them with what they want, when they want it, at the right price, and we will do that only through co-operatives.
During the past year we have seen a sudden surge of buying groups and the start of selling groups. It is vital for the National Farmers' Union, as it is doing, to encourage the buying and selling groups to put themselves under the umbrella of the farming co-operative movement, for it is the farming co-operative movement which will stand the farmers in good stead in the future, not only so that they may live on their holdings as individualists and prosper, but also to the benefit of taxpayers and the country as a whole if we go into the Common Market. For that reason, I give my whole-hearted support to the Bill and congratulate my hon. Friend on its introduction.
§ 2.42 p.m.
§ Mr. Ronald Bell (Buckinghamshire, South)
I add my congratulations to the others offered to my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) on introducing this excellent and valuable Bill. Perhaps the Opposition ought to form an agricultural co-operative. I am sorry to see the hon. Member for Workington (Mr. Peart) as the sole representative of a party, some 200 strong, on the benches opposite this afternoon.
§ Mr. Frederick Peart (Workington)
It is rather childish to inject that sort of controversy into the debate. I do not complain, if the hon. Member thinks that one Opposition Member is the equivalent of eight Government supporters. I understand but I assure him that the Opposition wholeheartedly support the Bill. It is not contentious and we wish it to go through smoothly. We do not want to delay it and it would be better if the hon. Member were rather brief.
§ Mr. Bell
I am counting those behind me. I can believe that it is possible for the Opposition to be wholehearted when only one of them is present. I have never known the Opposition to be 635 united about anything when more than one is present. What I thought was a rather fortuitous state of affairs appears to be the result of Socialist planning, and to that extent I congratulate the hon. Member, but it is a pity that so large a party, of which he is a member, should show such little interest in agriculture as to be represented by only one hon. Member. That was all I was saying and I thought it was a harmless observation and that the hon. Member would agree with me. I did not want to be controversial, but we are dealing with-co-operatives.
The importance of this subject, in which I have taken an interest for some time, is that the farming industry and the farming community have the dual problem of an industry and a way of life. There are many people who do not want to obtain the advantages which come from size if in doing so they lose the independence and individuality of being on their own. That is a great problem in farming. It is especially the case in constituencies such as mine, where the farming units tend to be rather small. It is no solution to the economic problems which smallness brings to say that many small units should be merged into one large unit. That is to take away from the farmer something which he greatly prizes. The solution is the creation of the co-operative movement.
I remember that the late Lord Bledisloe, who played a large and honourable part in the promotion of this movement, once went so far as to say that the payment of subsidy should be made in some measure dependent on the progress of the co-operative movement. That went too far, but there is still immense scope for the extension of the movement in British agriculture.
It would be ridiculous if the movement, which for some years has engaged the active attention of the National Farmers' Union, which has taken under its wing almost the whole of the agricultural co-operative movement in the country, were to be wrecked at this early stage by quite accidental legal restrictions against it. My hon. Friend the Member for Bury St. Edmunds has performed a major service to the agricultural community by bringing forward the Bill, and I am delighted to support him.
§ 2.47 p.m.
§ Mr. Frederick Peart (Workington)
I was tempted by the speech of the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) but I will not indulge in controversy which would be unnecessary and rather churlish and probably childish. I compliment the hon. Member for Bury St. Edmunds (Mr. Aitken) on making a major contribution to clearing up a part of the law so that cooperatives which we wish to be encouraged will not be harmed by any action or decision of the courts.
We support the Bill and I am very glad that the hon. Member for Buckinghamshire, South, who taunted the Opposition, is now a great supporter of co-operation. He said that he had always been, but I have never heard him speak about it enthusiastically in a debate on agriculture, and I have heard practically every one of them since 1945. I welcome his conversion today.
I think that other hon. Members opposite who represent agricultural constituencies are genuine in their praise for the Bill. The speech of the hon. Member for Torrington (Mr. P. Browne) was admirable. He posed the problem of the countryside—the growth of large organisations, particularly retail organisations and how individual farmers must co-operate to meet that challenge. We accept that, but surely this is not a party matter. Surely hon. Members opposite want us to approach these issues on a non-party basis. I have welcomed the tone of the speeches I have heard today and I pay tribute to what was said by the hon. Member for Torrington and to the initiative of the hon. Member for Bury St. Edmunds.
There may well be differences of opinion. I know that it is easy to taunt an Opposition, but are hon. Members opposite quite sure that there are not differences of opinion in their own party about what should be Government policy towards agriculture and the Common Market? Can the hon. Member for Buckinghamshire, South say that his party is united on that issue? All hon. Members know of the controversy in agriculture and it must be recognised as inevitable that there will be differences of opinion in the countryside on this issue.
637 I think we can all agree, whatever decision we may make about the Common Market, that it is essential in their own interests that the British producers, particularly the small farmers, should co-operate. I am glad to boast of the existence in my area of Cumberland of a very fine producer co-operative enterprise, the West Cumberland Farmers.
The remarks of the hon. Gentleman have reminded me that I omitted to make the customary declaration. I am a member of the West Cumberland Trading Association and another, the West Cumberland Farmers, which is the largest in the country.
§ Mr. Peart
I represent a Cumberland constituency, and I am glad to find that the hon. Gentleman, who represents a neighbouring county, appreciates that this organisation, which extends up the Solway and into Scotland and all over the North-East, performs a great service to the individual farmer.
I agree with the argument that it is not only the producer but the consumer as well, who benefits. I have always thought that the argument of producer rivalry as against the consumer was wrong. We must get away from it now when we discuss support. If the producer suffers, the consumer suffers. To argue about such a rivalry in agriculture is to give a wrong emphasis. We must always stress that if the producers make their organisation efficient and, by cooperating, increase that efficiency, in the end it is the consumer who benefits. More than that, the British people generally, including the taxpayers, benefit as well.
My hon. Friends and I do not wish to oppose the Bill, and so I shall not go into any detail. There is common agreement about this. We are anxious to have further co-operation. We welcome the Bill, and pay tribute to the hon. Member for Bury St. Edmunds for introducing it.
§ 2.52 p.m.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
I join other hon. Members in welcoming this excellent Bill.
I would stress one aspect of producer-co-operatives which is sometimes overlooked, and that is that they give to 638 the consumers a consistency of quality which is not always to be found when a number of independent producers are selling in a disorganised manner.
There have been many jokes over the years about the little lion which appears on eggs. The Egg Marketing Board had its initial troubles, but it has endeavoured to establish a system of quality control in which the public can have confidence. It would be very unfortunate if at any stage the Bill were represented to the public merely as a means of giving semi-monopoly powers to the producer, as there will always be considerable competition between different producer co-operatives.
I am convinced that the passing of the Bill into law will result not in increased prices to the consumer but in more efficient production and distribution and in quality reliability in which the consumer will be able to place confidence.
§ 2.54 p.m.
§ Sir Douglas Glover (Ormskirk)
I draw to the attention my hon. Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) the fact that when one twits the Opposition in politics the result is that one brings in more support.
I am glad to welcome to the Chamber my old friend the hon. Member for Chorley (Mr. Kenyon), who probably knows as much about agriculture as any other occupant of the benches now in the Chamber, not only as a producer but at different stages of his life as a transporter of temperate foodstuffs from the other side of the world. He knows a great deal about all the ramifications of this problem.
I congratulate my hon. Friend the Member for Bury St. Edmunds (Mr. Aitken) upon bringing in the Bill, which, I think, should receive the very warmest welcome from the whole House. The only reason I intervene is to say that everything that we do in this House to bring about co-operation, whether it be through official co-operative organisations, or even merely by the very fact of talking about co-operation between farmers, is much to be desired. I am very proud that in this nation there is rugged individualism, but in farming there is a little too much of it.
639 I remember speaking to an agricultural society, not in my constitency, but most of its members come from my constituency. It is known as the "Lads Club" in Liverpool; it is the Lancashire and District Agricultural Discussion Society. I was talking about co-operation, and I said that in agriculture perhaps the time had come for more limited liability companies, just as co-operation between commercial enterprises grew up in days gone by. A man rose and said that he had never heard such an outrageous speech in his life. The chairman leant across and told me that that fellow had been borrowing a tractor from the chap next door for the last fortnight. There is this attitude of mind, and I believe that we have some responsibility to try to break it down.
My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) spoke about quality. In this era when we have a higher standard of living, price is important, but quality is just as important. The people concerned with chains and multiples want to feel that they are able to offer the same quality day in and day out. They do not want to buy odd lots from the average farmer with 20 or 50 acres. It is only by cooperation in marketing and in production before the marketing stage that the farmers will be able to offer the chains the quality of product that they want to sell over the counter. I am convinced that it is through this growing cooperation over the years that we can maintain a healthy agricultural community.
My hon. Friend the Member for Bury St. Edmunds deserves the thanks of all of us for selecting the Bill to introduce today. I warmly support it.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).