§ The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames)
With your permission, Mr. Speaker, and that of the House, I should like to report the results of the Annual Agricultural Review.
I am glad to say that the figures show a continuing and substantial rise in the industry's net income. The forecast of actual net income for the year ending 31st May, 1962, is £431½ million compared with the revised estimate for 1960–61 of £389½ million. when adjusted for normal weather, the forecast net income for 1961–62 is £413½ million compared with £387 million for last year and £361 million for 1959–60. The forecast for net output for 1961–62 is also higher than before.
The cost of agricultural support has also risen substantially. The estimate for 1962–63, put in before this Review, is £339 million.
I come now to the individual commodities. A feature of last year's weak market for beef was the number of lower quality animals in the market. Consequently, while we are not changing the guaranteed price, we are making the following alterations in the guarantee arrangements. We are raising the general standard at which cattle are accepted for the guarantee and reducing the maximum weights on which the guarantee is paid. We are also introducing a new standard for lighter, young beasts of good conformation. In order to strengthen the pull of the market we are also widening the stabilising limits which apply to the guaranteed price.
The output of mutton and lamb in 1961–62 is expected to be about 10 per cent. above the record figure of 1960–61. There has been a significant increase in the breeding flock and the prospect is of continuing low market prices and a heavy subsidy. We are, therefore, reducing the guaranteed price by 1d. per lb. and here again we are reducing the maximum weights on which guarantee is paid and widening the stabilising limits. There will be no change in the guaranteed price for wool.
1555 For pigs we have the flexible guarantee arrangement which we introduced last year to promote a steadier rate of production. Under this arrangement, the guaranteed price came down by 6d. per score in February, and if the forecast number of pigs reaches 11 million there will be a further automatic reduction. The basic guaranteed price will be left unchanged.
Egg production in the coming year is expected to be significantly higher than the present record level, which satisfies virtually the whole of the demand for shell eggs in this country. There is a real danger that production will exceed demand, and we are reducing the guaranteed price by l½d. per dozen.
The guaranteed price for milk was increased last year by 0.8d. per gallon in the expectation that the industry would devise a payments system which would bring home to the individual producer the fact that output beyond a certain level fetches only the manufacturing price, which is unremunerative, and reduces the pool price. The industry has not as yet found an answer to the problem, and in view of this and the continuing increase in production there has been no option but to reduce the guaranteed price. The reduction will be 0.4d. per gallon, and the effect of this, together with the continuing increase in output, will mean a reduction of about 1d. per gallon in the pool price which the farmer receives.
The method of fixing retail milk prices is not, of course, an Annual Review matter. But before I leave the subject of milk I would mention that we are arranging for the retail price of liquid milk to cover in future the full cost of the guarantee. In recent years the general milk subsidy falling on the Exchequer has averaged £8 to £9 million a year. Taking one year with another, there should be no cost to the Exchequer in future. The retail price of milk will need to be increased from 8d. to 8½d. a pint for some six or seven months of the year; about half of this increase is attributable to the decision which I have just announced and the rest is due to other factors such as the rise in distributive costs resulting from the wages award of some while ago.
1556 The general prospects for cereals, potatoes and sugar beet do not call for any changes in the guaranteed prices for these products.
As regards production grants, we are extending the upper limit of the Small Farmer Scheme from 450 to 500 standard man-days in order to give special help and encouragement to those small farmers who, because of their rather higher level of cropping and stocking, are at present outside the scope of the Scheme.
We shall be introducing lower rates of subsidy for fertilisers, which will reduce the subsidy bill by an estimated £2½ million.
Finally, I come to the need for improved marketing. We welcome the increasing emphasis which the industry is placing on marketing and are anxious to help in this regard. We have worked out with the Unions a scheme of grants to encourage marketing research and development, and the Government will make available up to £1½ million over three years to this end.
The total value of the guarantees for the year 1961–62 was £1,351½ million. After taking increased costs of £19½ million into consideration, the maximum reduction of this figure within the Agriculture Act, 1957, is about £14 million. The effect of this Review is to reduce the value of the guarantees by just under £11 million.
Full details of the Review will be found in a White Paper which is available in the Vote Office.
§ Mr. Peart
I hope that we can have an assurance that, if there is a conflict with the Treasury, the Home Office will not take over from the Ministry of Agriculture, Fisheries and Food.
The Minister has told us that the value of the guarantees will be reduced by about £11 million, and he gave details. How much will the reduction of 1d. per lb. in the guaranteed price for sheep produce? If the forecast number of pigs reaches 11 million, the guaranteed price will be reduced. If this happens, how much will be cut? How much of the £11 million will be accounted for by the reduction of l½d. per dozen in the guaranteed price of eggs? There is to be a reduction in the guaranteed price 1557 of milk of 0.4d. per gallon. Is this to be passed on to the consumer? How much will the consumer pay over the next three or four months?
On general matters, is this an agreed Review? Do the unions welcome the Review? How far have the negotiations with the Common Market countries affected the Review negotiations? Whatever our attitude to the Common Market may be, can the Minister say that the Review offers a challenge to the industry, particularly a challenge to the farmer to increase his efficiency? Can he say how this Review, from the point of view of policy, will affect the farmer in that way?
I welcome the proposals for improved marketing. Will they have an effect? Does the right hon. Gentleman agree with the right hon. Member for Thirsk and Malton (Mr. Turton), who said recently that the Government must have an import policy in view of the effect of imports on our price structure? Do the Government intend to announce a new arrangement about imports? This is a key question.
§ Mr. Soames
The hon. Gentleman asked me, first, what the effect of the Review will be on the price of different commodities. The 1d. per lb. off the guaranteed price for sheep will amount to about £2 million. The reduction in the guaranteed price of milk will amount to about £3½ million. The reduction in the guaranteed price of eggs will amount to about £5 million.
The hon. Gentleman asked what effect the reduction in the guaranteed price of milk would have on the consumer. This year the price of milk has been 8d. per pint throughout the year. During the coming year it will be 8d. for some months and 8½d. for some months—in other words, there will be an increase of ½d. during roughly six months of the year.
The hon. Gentleman asked me whether the unions agree with the Review. The answer is that I regret that they do not, though the basic figures on which the Review was decided have, as is customary, been agreed with the unions.
The hon. Gentleman then asked me whether I think that agriculture in general will benefit from the decisions within the Review. I think that it will. 1558 I remind the House that there will be an increase in the number of small farmers who will come within the Small Farmer Scheme. Linked with that, some of the £1½ million which the Government are to make available for marketing research and development will be able to be spent so that small farmers can get together more in co-operatives.
If a number of small farmers get together they will be able to reap more of the advantages enjoyed by the large farmer, because they will then be larger sellers of a more standard product. I believe that this will be of the greatest benefit to a large number of small farmers throughout the country.
The fact that we are negotiating with the European Economic Community has had no bearing on the result of the Review. The hon. Gentleman spoke about imports. The hon. Gentleman will appreciate that we shall continue with our system of farm support and with our trading arrangements, as they have been operated this year, until the outcome of the negotiations with the Common Market is known.
§ Mr. Gibson-Watt
Could my right hon. Friend tell us a little more about market research? Whereas, in general, the Review seems fair, we would like further information on this point.
§ Mr. Soames
As I was saying in answer to the hon. Member for Workington (Mr. Peart), the scheme has been agreed with the unions. There are a number of things on which this money will be able to be spent. These grants vary from 25 per cent. to 75 per cent. according to the scheme. An executive committee will be set up by the unions and it will sieve the applications from the industry. No grant will be paid until it is approved by my Department, and I hope that a considerable feature of it will be that to which I referred a moment ago; the setting up of a larger number of co-operatives of small farmers.
§ Mr. Morris
On the question of milk, does the Minister remember that last year he said that we must try to break this vicious circle and make a solid effort to work out a scheme? How long will the Minister go on presiding over the continuing declining profitability of the milk industry and the rising prices to the consumers? The unions and the Milk 1559 Marketing Board run circles around him in this respect. Why are the Government frightened to work out a scheme for the general benefit of all producers and consumers?
§ Mr. Soames
We believe, and we have always stated, that it is the job of the industry to decide whether it wishes to continue as at present—with the price of milk declining owing to the increased production above the standard quantity—or whether it wishes to go forward with a two-tier price system. I hope, as was said by the leaders of the unions when the annoucement was made during the course of last year, that further consideration will be given to this very important matter to the industry.
§ Mr. P. Browne
The increase in the man-days and the extra money available for co-operation between small farmers will be welcome, but does my right hon. Friend not think that this increased help for the small farmer has been vitiated by the fact that he has made cuts in exactly the products on which the small farmer depends for his livelihood? This has happened too often over the past few years.
§ Mr. Soames
There was no alternative, the circumstances of production being what they are, but to impose the cuts in the prices of milk and eggs. There was simply no alternative but so to do. I am hopeful that the extension of the Small Farmer Scheme to the extra number of farmers will mitigate the effect of this to some extent.
§ Mr. Thorpe
If the purpose of the 1957 Act was to produce food at reasonable prices to the consumer, and a proper income for the farmer, has is not so far resulted in high prices to the consumer and agricultural incomes lagging well behind the rest of the community?
If I may refer to the point made by the hon. Gentleman the Member for Torrington (Mr. P. Browne), is the Minister aware that the milk cheque is absolutely vital—
§ Mr. Thorpe
—to the small farmer and that this cut will have a very serious effect indeed?
1560 Concerning fertilisers, on which he is making a £2½ million cut. can he explain why, in May, 1960. the President of the Board of Trade persuaded Belgian and West German exporters to raise the prices of these exports to this country by £2 10s. a ton? Only last week a £3 a ton anti-dumping duty was put on exports from East Germany because I.C.I. said that that commodity was being dumped in this country. Meanwhile, I.C.I. is selling this product at the dumped price to Ireland. Why are the Government in collusion with I.C.I. like this and exploiting the farmer? Why not limit the tariffs on fertilisers so that the farmers are able to buy them as cheaply as possible?
§ Mr. Soames
The hon. Gentleman asked whether I was aware that these policies were resulting in expensive food and a poor income for agriculture. In fact, compared with other countries of the Western world, food in this country is exceptionally good value.
The income of the agricultural industry, in relation to the income of the rest of the economy, bears comparison with any developed country in the world.
§ Mr. Speaker
Order. The business in this House is impossible if hon. Members assume to themselves the right to shout a running commentary. It makes it hard for the hon. Member who is speaking to be heard. Sir Anthony Hurd.
§ Mr. Thorpe
On a point of order. The Minister, very courteously, was about to answer the last part of my question, Mr. Speaker.
§ Mr. Speaker
If that was so it was because of the noise that I did not appreciate that fact. That shows how important it is that hon. Members should not make so many noises.
§ Mr. Soames
I was about to say that, on the question of fertilisers, the imposition of anti-dumping duties under the Anti-Dumping Act is the responsibility of the President of the Board of Trade. But this applies to all industries in this country, the fertiliser as well as the agricultural industry and other manufacturing industries.
§ Sir A. Hurd
My right hon. Friend mentioned that the net farming income was up, I think he said, by £42 million over the last year. Is he aware that this seems contrary to the experience of the general body of farmers? Can he say where all this extra money has been made? He mentioned the extension of the Small Farmer Scheme. Is he satisfied that this scheme is doing a good job? How much more money is he proposing to put in and how many people will benefit from this extra money?
§ Mr. Soames
I could not break down the net income of the agricultural industry as a whole into commodities, or groups of farms, but my hon. Friend knows that this is a figure which was agreed with the unions after discussions on the figures.
I believe that the Small Farmer Scheme has been a successful one hitherto. Its object is to bring more in, and the increase from 450 to 500 standard man-days will bring 13,000 more farmers into the Scheme. We have put in £2½ million for it in this year's Estimates. It will probably take about £10 million over the four years period.
§ Mr. W. Hamilton
Can the Minister say what is the toal amount of subsidy and grant payable to Scottish farmers? Year after year we have the Minister of Agriculture making a statement without there being any attempt on the part of the Secretary of State for Scotland to answer for Scotland. Can the right hon. Gentleman say what effect of the increase in the retail price of milk will have on people with small fixed incomes? He should know that this will cause very great hardship to these people and to old-age pensioners.
§ Mr. Soames
We do not break down this figure for any part of the United Kingdom—Scotland, Northern Ireland, Wales, or England—as to how much subsidy payment will go to any particular part for any commodity. It is not a question of Scotland or England, for the same applies to both. It is a national sum which is taken for agriculture as a whole.
§ Mr. Soames
That may be so, but the hon. Gentleman asked exactly how 1562 much had been paid out. This will depend on market prices and the levels in the different countries and I cannot, therefore, give the figure.
The price of milk will be another ½d. for about three or four months of this year and the remaining three months or so will be for the increased distributive costs, as I said, largely owing to the wage increase which took place in the distributive trades last year. The extent to which this will affect the cost-of-living index I cannot say, but it will not affect the price paid for welfare milk by the people who use it.
§ Mr. Stodart
Is the Minister aware that his announcement will do nothing to adjust the imbalance which now exists between the subsidy given to the grain grower, which is far in excess, in proportion to what he produces, to the subsidy which goes to the livestock farmer? Does my right hon. Friend realise that the reduction in the guarantee for sheep will strike at that sector of the industry which finds profit most hard to make, namely, the upland farmers, and that it will have a particular effect upon the Scottish upland farmer, because sheep play a much greater part in the agricultural economy of Scotland than in the case of England and Wales?
§ Mr. Soames
My hon. Friend will remember that in last year's Review we took a considerable cut off barley of, I think, 1s. 2d. We believe that we have the relationship between the different grain crops about right.
I would point out that there has been an increase in production of lambs this year of no less than 10 per cent., and that already the census figures show an even higher ewe flock than we had last year.
Concerning the proportion of subsidy, my hon. Friend will appreciate that while the market price over the past year has been about 2s. per lb., 1s. 3d. extra per lb. has been paid out in subsidy on lamb.
§ Mr. Hilton
While welcoming the decision to encourage more small farmers to participate in the Small Farmer Scheme, may I ask whether the decision to reduce subsidies, especially on fertilisers and eggs, will not punish 1563 the small farmer in particular? Is it not ridiculous to try to encourage more small farmers to participate in the scheme and then to punish them in this way?
§ Mr. Soames
I really cannot differentiate in price and have different prices for different sizes of farms.
§ Mr. Prior
Is my right hon. Friend aware that the news that the net income of the industry is up by £42 million is good news, although, no doubt, many farmers will be unable to understand it? Is he aware that in many respects it is the matters which are not contained in his statement which are important? Is he aware that the decision not to reduce the price of beef after the unfortunate experiences of last year is very welcome indeed and will result in the farming community taking a good deal of confidence from the Minister? Is my right hon. Friend further aware that the farming community will be glad that the 1957 Act has been honoured and that the Minister has fought so hard with the Treasury to keep farming in a prosperous condition?
§ Mr. Darling
Would the Minister agree that we cannot get a proper picture of the full effect of these changes in guarantees, and so on, unless he puts into the Price Review the effect that they will have on the retail price index and the cost of living index? We might then be able to see more clearly what the general effect would be.
I should like to ask a question on the Minister's reference to the grants which he is giving for marketing research. Will he say that he now accepts the view, which has frequently been expressed from this side of the House, that deficiency payment schemes cannot be run satisfactorily in an unorganised market and that co-operative marketing developments are now necessary? Somebody has to prepare these schemes, however. Is it the function of the research organisation, which, apparently, is to be set up, to prepare marketing schemes, not only for small farmers, but to cover a wide range of products that are now subject to free market conditions?
§ Mr. Soames
The retail price index is affected not by the level of subsidies paid 1564 out in agriculture, but by the level of market prices in the shops. These we cannot judge. I cannot gauge ahead what will be the movement of food prices over the coming year. It would be rash to try to do so.
What I have said about market research and development is in no way confined solely to small farmers. I know that the hon. Member and many of his hon. Friends have frequently drawn attention to the need for improved marketing methods, and so have we on this side. The Government have been constantly telling the industry that increased effort should go into the marketing side as opposed to the production side of the industry and that more and more accent should be placed upon marketing. The schemes will by no means be limited to small farmers specifically, but will cover a very wide field.
§ Mr. Kimball
Can my right hon. Friend say what will be the maximum weight on which the top grade payment will now be made for beef? Is he aware that he will at least get some credit for not having chopped and changed around his policy because of the little local difficulties that arose with beef last summer?
§ Mr. Soames
That is an interesting attitude towards the difficulty. In the coming year, the maximum weight on which the subsidy will be paid, is being reduced from 15 cwt. to 14 cwt.
§ Several Hon. Members rose—
§ The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod)
I cannot give a date. Without commitment, however, we will be ready to discuss the matter.
§ Mr. Speaker rose—
§ Mr. Hoy
On a point of order, Mr. Speaker, may I put this point to you? The Estimates as presented to the House are Estimates for the Ministry of Agriculture, Fisheries and Food and separate Estimates are presented for the Department of Agriculture and Fisheries for Scotland, We have not pressed the matter today, but may we have an assurance that if a debate takes place the Secretary of State for Scotland will participate in it?
§ Mr. Speaker
The hon. Member is not addressing me on a point of order. I mean no disrespect to him, and certainly no disrespect to Scotland or Scottish agriculture, but the whole of this proceeding is utterly irregular and out of order.