SUGAR PRICES (Hansard, 29 May 1963)

§ 43. Mr. AWBERY
To ask the Minister of Agriculture, Fisheries and Food if he is aware that the price of sugar has gone up over 40 per cent. since Christmas and is now at its highest; and if he will seek power to control the price.

§ 46. Mr. FARR
To ask the Minister of Agriculture, Fisheries and Food what new steps he is taking to increase sugar production in the United Kingdom.

§ 48. Mr. MCBRIDE
To ask the Minister of Agriculture, Fisheries and Food if he will institute an inquiry into the price of sugar in this country.

§ The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames)
With your permission, Mr. Speaker, and that of the House, I will now answer Questions Nos. 43, 46 and 48.
During the first four months of this year, the world price of raw sugar rose by 75 per cent., from £40 to £70 per ton. Throughout this period we have been adjusting the surcharge at home. This is a charge levied by the Sugar Board to make up the difference between the fixed price at which we buy sugar from producers here and in the Commonwealth, and the normally much lower world price.
As a result of the action which we have been taking to reduce and finally to eliminate the surcharge, we were able, in spite of the rising world price, to keep the price of sugar in this country very steady up to the end of April.
This month, the world price began a new and increasingly steep rise, and this has begun to be reflected in retail prices. As a result of the high price of sugar, profits have accrued to the Sugar Board. As from midnight tonight, the Sugar Board will start distribution payments at a rate of 6d. a lb. of refined sugar to pay back these profits. This will offset the rise in world prices and will make 1320 it possible for retail prices to be restored to their normal levels, and will make it unnecessary for prices of such things as jam and sweets to go up.
In order to remove the risk of serious abuse of these arrangements, the Board of Trade will be controlling the export of those sugar and sugar-containing goods on which the Sugar Board have no power to recover distribution payments.
These arrangements will mean that our supplies of sugar, which are completely adequate for our needs, will be available at normal prices to consumers and manufacturers.

§ Mr. Farr
In thanking my right hon. Friend for his statement in reply to the Questions, may I ask whether he has considered making this year a non-quota year for British sugar producers? There is an estimated shortfall of about 1 million tons in world sugar production for this year and I should have thought that possibly it was not too late to let British farmers take additional steps to make up some of this shortage.

§ Mr. Soames
First, we have no idea what the world price of sugar will be at the time when any future crop is harvested. Secondly, there is plenty of sugar in this country for our needs. Supplies under the Commonwealth Sugar Agreement, combined with those resulting from the acreage quotas for the growing of sugar here, amount to 90 per cent. or even more of our total sugar requirements.
The difficulty has not been any shortage of sugar in this country. This rise in world prices has been the reflection of a marginal shortage elsewhere in the world. It would not be a good solution to raise our acreage quotas for home sugar producers at a time when the price was high and to drop them when the price was low. I think that the arrangements which keep the flow of sugar into this country steady are the right ones.

§ Mr. McBride
In thanking the Minister for his statement, may I ask whether he is aware of the great anger felt by the housewives of Britain at the rise in price of this commodity? In West Germany an allotment from the Government has pegged the price of 1s. Id. a 1b. Is the Minister further aware that 1321 in Mincing Lane last Thursday as reported in the Guardian, the Daily Telegraph and the Daily Express, all newspapers which favour hon. Members opposite, an anonymous spokesman said: What is all the fuss about? It will be all right in the end. Surely someone made something out of this. Surely the Minister owes it to Britain to inquire into the reasons for the sudden steep rise in price in this commodity.

§ Mr. Soames
I do not think that the hon. Gentleman has got the facts quite right. Thanks to our arrangements on the importation of sugar, when the world price rose from £40 to £70 in three months, that rise was not reflected in the shops at all. That was up to the end of April. Only during the month of May, and principally during the last two or three weeks, when there was a very sudden increase from £70 to £100, which has gone back in the last couple of days, has this rise been reflected in the shops. In other words, the British housewife has been cushioned from the general rise in world prices, except in the last fortnight. Therefore, action had to be taken. We are now taking the action, and I believe that the housewives will be getting a very good deal from our sugar arrangements.

§ Mr. Peter Emery
How will this affect exports? I think specifically of industries which have to use a great deal of sugar in the production of biscuits and sweets. Will they be able to maintain their present prices in their export markets?

§ Mr. Soames
Yes, Sir. This will not interfere at all with our exports of sugar or goods containing sugar. What the arrangement will do is to ensure that people cannot buy sugar in this country at the Commonwealth Sugar Agreement price of around £45 or £46 a ton and then re-export it, without doing anything to it, at the world price of around £90 or £100 a ton. This will not affect our ability to export.

§ Mr. Peart
The right hon. Gentleman mentioned payments by the Sugar Board and the rebate of 6d. a 1b., which will go to the refiners. Can the Minister 1322 assure us that this will be passed on immediately to the consumers in toto? Has he had that assurance from the refiners?

§ Mr. Soames
There is an agreement with the refiners, which, I think, dates back to 1956, that any surcharge or any distribution payment will be reflected in the ex-refiner's price. So this assurance can be given.

§ Mr. Grimond
When the Minister has made these arrangements about which he has told us, will they enable quicker action to be taken should there be another steep rise in the world price? Secondly, do these arrangements involve action by this House? Do we have to give the right hon. Gentleman any power or pass any Orders?

§ Mr. Soames
I will lay an Order today which will enable a distribution payment of 6d. to be made by the Sugar Board. If the world price were to rise further and we wished to increase the distribution payment, or, alternatively, if it were to fall and we wished to lessen it, this could be done by a further Order.
As to the powers which should be given by the House to the Government, the Orders which I have laid will be subject to the negative Resolution procedure.

§ Sir C. Osborne
On the wider issue, does it not smack somewhat of humbug for the House to complain about the rise in the world price of sugar when the people who supply it to us from the West Indies have a standard of living which is only one-half or one-quarter of ours? We wish to improve their standard of living and the only way we can do it is by paying more for what they send us. Is this not sheer humbug, therefore, when they are trying to earn an honest living?

§ Mr. Soames
Many Commonwealth countries will be getting advantage from the higher world price which is ruling today. As to the sugar which they sell to this country under the Commonwealth Sugar Agreement, normally the world price is below the Commonwealth Sugar Agreement price and they benefit. At times when the world price is high, this country gets the benefit.