CEREALS (GUARANTEE PAYMENTS) (Hansard, 29 June 1964)

§ Mr. Frederick Peart (Workington)
I do not intend to make a long speech. We have had a major debate on agriculture today and many of the issues which we have discussed are covered by this Order. However, I should like to have a few words from the Minister.
This Order seeks to provide for standard quantities, and it also confirms what was stated on pages 8 and 9 of the White Paper, the Annual Review and Determination of Guarantees, 1964. It is laid down in paragraph 19 of that White Paper that standard quantities will be imposed as follows: For 1964–65 the standard quantities will be 3.3 million tons for wheat and 6.5 million tons for barley, together totalling 9.8 million tons. We do not oppose these quantities. We have accepted standards of quantities in principle in view of the quid pro quo relating to the control of cereal imports. I am sure that some of my hon. Friends would like to ask—[HON. MEMBERS: "Oh."] If hon. Members opposite wish to be contentious, I will pursue the argument and delay the House; but that would not be in keeping with the spirit of the House this evening.
I merely ask the Minister to answer some questions to be put, in particular, by my hon. Friend the Member for Kilmarnock (Mr. Ross), who speaks on Scottish affairs. In the farming world there are contradictory views on this matter. I can speak only for England and Wales. Our N.F.U. accepted with reservations the principle of standard quantities in relation to cattle. There is general agreement on cereals. However, I will leave this to my Scottish colleagues.

§ Mr. Denys Bullard (King's Lynn)
I have always had misgivings about the 1076 principle of standard quantities. The hon. Member for Workington (Mr. Peart) has just said that they were accepted by the farmers—and I think that that is broadly the case—in return for undertakings about importations. I have studied the Order very carefully to see whether my misgivings have been overcome by the regulations now to be made. I think that they have, to a large extent.
My misgivings about standard quantities apply to those commodities which are produced from acres of land, to put it that way. I have never had any doubt that there had to be some limitation on those commodities produced from farm materials—pigs, for instance—other than cereals which are in the nature of a factory process and which can be carried on irrespective of the acreage of land being managed or farmed. But for cereals—and the same applies, to some extent, to beef—I have never been quite so sure that the principle was valid, because these acres should be used in the best possible way. If it is in the best interests to grow corn on them, it seems to me a pity to impose a top limit.
However, on analysing the process by which this is to be done, I feel that cereal growers have no real ability to claim that under these regulations they will be restricted in their acreages. They will still be absolutely free to grow the acreages which they require, but if the national acreage over-tops the acreage laid down as the standard quantity, or the quantity produced exceeds the standard quantity, they are to take a slightly lower price than they would have done otherwise. That is a reasonable and rational method of dealing with the matter, and, therefore, I approve of the Order.
In view of what the hon. Member for Workington said in the debate which we have just had, I am surprised that he should have given his approval in the way that he has done. This seems to me to be a method by which the importation of cereals is to be regulated—

§ Mr. Bullard
The hon. Gentleman must hear me out. He cannot reply to me, because I have not said yet what I propose to say.

§ Mr. Peart
What does the hon. Member propose to say?

§ Mr. Bullard
If the hon. Gentleman waits a moment, I will put it in the clearest possible language.
This is a method of regulating the importation of cereals, and it is to be done by international agreement, of which the hon. Member for Workington and his colleagues say they approve. It is a method which will fit in those importations with our home-grown acreage. It has the great virtue, in my opinion, that it will operate without board, or commission, or any other elaborate organisation so much beloved by hon. Members opposite.
From that point of view, it is a commendable arrangement. I believe that it will be much better done by what I might call the automatic operation of the processes set out in the Order than by any high-powered commission staffed by retired generals and others who would attempt to regulate affairs and who would, I believe, fall down completely on the job. Therefore, for these reasons, despite my early misgivings about standard quantities, I approve of the Order.

§ Mr. Peart
The hon. Member, who has now given way, should realise—

§ Mr. Bullard
I was not giving way. I had finished.

§ Mr. Peart
I thought that the hon. Member had more courage. When we discussed these details in Standing Committee, we took the view that we accepted co-ordination of imports for cereals—

§ Mr. Deputy-Speaker (Sir Robert Grimston)
Order. I am sorry to interrupt the hon. Member, but as the hon. Member for King's Lynn (Mr. Bullard) has not given way, strictly he is not in order, because the hon. Member cannot make a second speech.

§ Sir James Duncan (South Angus)
The Order deserves a word on this occasion, because this is the first time that we have had this new system of target indicator prices operating in our agricultural policy. The standard quantities are between 3.2 million and 3.3 million tons for wheat and between 6.3 million and 6.5 million tons for barley. The guaranteed price to start with for wheat 1078 is 26s. 6d. and for barley 27s. and the target indicator price is 20s. for wheat and 19s. for barley.

§ Mr. Peart
Per hundredweight.

§ Sir J. Duncan
Yes, or £19 a ton. I was hoping that the target indicator prices would be nearer the guaranteed prices. The European prices are all much higher than the range that the target indicator prices involve.
If we are to have a flood of barley this year, there is a danger that the target figure of tonnage may be exceeded and that the target indicator system may have to be brought into operation, reducing the indicator price. I am watching this with interest, because unless we can put a really solid floor to the British price and the target indicator price, there is danger that we Scottish farmers who grow barley and wheat may be discouraged from supporting the system envisaged in the Order.
I hope, therefore, that Ministers who negotiate the next Price Review will not be too tied to these figures and will take the experience as it comes from year to year and not be in the least afraid of raising the target indicator price as opposed to raising the standard quantity, because that would put more heart into Scottish agriculture than anything else.
I note that there is nothing in the Order about oats, except that there is no change. I am grateful for that. The guaranteed price is 27s. 3d. and we accept that. But I have not been able to find anything in the White Paper about maize. In any agricultural policy for the future, whether by the Order or the Annual Price Review, I am convinced that maize must come in.
The whisky distillers can make whisky from either barley or maize. It is the relative cost of maize or barley that determines whether the distillers make whisky and spirits generally from maize or from barley. If the price of maize is low and that of barley is high, they will not buy the barley. I think I have the sympathy on my right hon. Friend the Secretary of State for Scotland. I hope that in the future determination of arrangements for the cereal market maize will come in, too. I am glad that oats and rye are left out of the Order and are unchanged, but I thought it worth rising 1079 to make these few comments on this new arrangement, which is in operation for the first time this year.

§ Mr. J. M. L. Prior (Lowestoft)
This Order really forms part of the Government's long-term policy for agriculture as such has, I think, the support of the Opposition. It may be construed as strange that the Opposition should have just voted against our agricultural policy and yet, at the same, will now presumably, approve this Order without a Division.

§ Mr. Peart
That is a silly remark.

§ Mr. Prior
The fact is that this is an essential part of the Government's long-term policy, and, as far as I know, this policy has received the support of the Opposition.

§ Mr. Deputy-Speaker
Order. The hon. Member cannot continue the debate which has just been concluded.

§ Mr. Peart
The hon Member is being silly.

§ Mr. Prior
I am sorry, Mr. Deputy-Speaker. It may seem silly to the Opposition, but not to Members on this side of the House.
Last July, my hon. Friend was kind enough to answer a debate about four o'clock in the morning on cereals marketing, and during that debate he made a statement to the effect that fanners were doing everything they could to achieve what at that time were voluntary price arrangements agreed by the working party committee on cereals. I hope that he will stress tonight the importance of all farmers trying to obtain the target prices laid down for wheat and barley, because if farmers can obtain those prices, quite obviously they are helping themselves to better the overall guaranteed price, than they would if they allow those prices to fall. I congratulate my hon. Friend on bringing in the Order. It will do a great deal to stabilise cereal production and cereal prices, and we shall no longer have the ups and downs which have been a constant source of worry to cereal producers over the last few year.
My hon. Friend the Member for South Angus (Sir J. Duncan) mentioned the question of maize. As I understand it, all products which will be used for feedingstuffs 1080 which are imported are covered by the Act which we recently passed, and they will, therefore, not be allowed to compete unfairly with our cereals at home.
In addition, I believe that the Minister has got the target prices just about right for the moment. If we were to go higher we should put an added burden on livestock producers. I declare my interest: I am a cereal producer; but I believe that the burden on the livestock producer would be unfairly great if we pushed the prices too high.
I congratulate my right hon. Friend, and I hope that he will ensure that the farmers know how this very complicated scheme works, and that it will have the support of the industry as a whole. It is very important to the Government's forward policy for agriculture, and one which deserves the support of the whole House.

§ Sir Harry Legge-Bourke (Isle of Ely)
This Order has to be read with very close reference to page 42 of the Annual Review and Determination of Guarantees, 1964, Cmnd. 2315. I should like my hon. Friend to explain why it is that while, in the White Paper in paragraph 4 on page 42, these words occur, If a change should be made in the course of the cereal year in the relevant minimum import prices, an identical change will be made in the target indicator price, and an average target indicator price for the cereal year would be used throughout the calculations in the Order there is no reflection of that proviso. It seems to be very important that it should be made absolutely clear tonight that where paragraph 3 of the Order refers to the target indicator price, there is no going back on that undertaking in the White Paper.
We have to face the fact that whatever figure is taken as the target indicator price, it is possible that it may prove to be unsuitable in the light of events, and it is very important that the Minister should reserve to himself—I should have thought through the Order—the right to vary the target indicator price accordingly. I am sure that hon. Members will agree that if this introduction of the standard price is to work fairly to home producers, it is absolutely essential that the target indicator price should 1081 be closely related to imports and world prices. We would, therefore, welcome an assurance on that issue.
My second question is concerned with paragraph 10, which raises the issue of how the Minister will determine whether unsuitable land is being used for growing a crop and whether, in the previous 12 months of harvesting, a crop has been produced in a manner likely to impair fertility and whether the cereal seed sown was not sufficient to provide a proper crop, or whether the cereals were self-sown. How will this be supervised? Will it be done through the National Agricultural Advisory Service? There is no reference to any statutory stipulation and it would be helpful to know how this is to be supervised. This is the sort of issue which could be contentious and lead to the dragging out of argument for months. In the meantime, if the farmer happened to be in the right, presumably payment would be withheld, which could be to his disadvantage. It is only fair to the producers that they should know where they stand on this matter.
Any legislation which the Government are prepared to introduce, or any Orders which they are prepared to lay, likely to relate to the importation of commodities similar to those being produced in this country will always have my support. I am certain that the Opposition have made for far too long the mistake of assuming that the 1947 Act, or any other Act in which they were interested, made sense so long as the Government had the right to interfere in home production without having the right to interfere with imports.
I sincerely congratulate the Government on having seen the light in this respect. I think that my hon. Friend knows that for many years some of us have stressed the importance of this fact, which makes it all the more easy to welcome this Order and the fact that the Government have shown some recognition of the need for this important consideration to be borne in mind.

§ Mr. William Ross (Kilmarnock)
I am tempted to make a speech more relevant to our earlier debate than to the debate on this Order. Some strange things have been said by hon. Members opposite in the course of this debate, but the 1082 strangest, in view of the truth and the facts, has been that of the hon. Member for the Isle of Ely (Sir H. Legge-Bourke).
For too long the Government have failed to appreciate that if one is to do justice to one section, the home production section, it cannot be done by ignoring the effect of that on other producers. For the first time they have realised that it can be done only in a managed market. Our doubt is about whether the way in which they are doing this will produce the best results.
The Preamble to the Cereals Order says: The Minister of Agriculture, Fisheries and Food and the Secretaries of State respectively concerned with agriculture in Scotland and Northern Ireland, acting jointly, in exercise of the powers conferred upon them … with the consent of the Treasury and after consultation with such bodies of persons as appear to the said Ministers to represent the interests of producers, hereby make the following order. … I understood from what the Minister said during his closing speech in the last debate—and, indeed, it is implicit in some of the speeches from the benches opposite daring this debate—that this Order was made in conformity with agreements reached between the Government and the representatives of the farmers.
The farmers of England, Wales and Scotland are represented by two different unions. It appeared to me that the Scottish National Farmers' Union did not accept the principle of standard quantities. I want to get clear whether the statement in the Preamble to this Order means that the Scottish N.F.U. accepted the principle of standard quantities for cereals. The answer to that must be "Yes" or "No". I do not want hon. Members from the back benches opposite to give me the answer to that question. There are two Ministers on the Government Front Bench, one of whom is a Cabinet Minister. I apologise for not having heard the speech of the Secretary of State for Scotland earlier today. It would not make too great a demand on my time if I was present every time the right hon. Gentleman spoke, but my absence today was due to the fact that I was at an important meeting with the Scottish Trades Union Congress.
1083 I hope that the right hon. Gentleman will tell us whether the Scottish National Farmers' Union agreed to this Order. Some hon. Gentlemen opposite are more conscious of the historic nature of this Order than is the Minister, who was prepared to let it go through on the nod. This Order marks a considerable change from previous Orders of this nature. The hon. Member for Lowestoft (Mr. Prior) asked, "Why not vote against?" He knows that without this Order deficiency payments could not be made to farmers this year. We have had this argument before. We do not cut off our noses to spite even our agricultural faces. I hope that if hon. Gentlemen opposite intend to talk about these Orders, they will bring themselves within the rules of order, and talk about what is in them. I hope that they will show a little parliamentary sense.
This is a complicated Order, and many farmers will want it to be explained. We now have not only guaranteed prices, but target indicator prices, average realised prices, and three, or possibly more, out-turns in the relationship between these prices and the calculations which have to be made. We must appreciate that much of this will depend upon the determinations which are made according to the Order—and that determination is the determination of the Ministers, with the approval of the Treasury having regard to the minimum import price levels prescribed for wheat and barley respectively by order under section 1(2) of the Agriculture and Horticulture Act 1964". The hon. Member for the Isle of Ely knows that the answer to his question about variations within the Order was implicit in the assurances given during the discussion of the 1964 Act. We were then told that it would be possible to change the minimum import price in relation to any situation that might arise. That was the great value of the Act. But we are certainly entitled to an explanation of the way in which this will be taken into account, and how the changes will be made.
It is said that the target indicator price is related to the minimum import price, and if the minimum import price changes there can be a change in the target indicator price. This has all 1084 helped to complicate the matter. It is now almost impossible to assess what will happen.
Then there is the question of the new mention of the standard quantity. We have known about the standard quantity before. The Secretary of State for Scotland will appreciate the amount of argument we have had about milk, and particularly about the feelings of Scottish producers—going back for two or three years—when they were concerned not only about the standard quantity but about the limitations in respect of zoning, and the rest. They felt that they could do better than they were doing.
The incidence of this Order and its effect upon farmers should be determined by the standard quantity as fixed by the Minister. It is not a question of restricting the acreage. The Government could let it run. There has been a certain amount of concern about the formula, and whether it will mean a reduction in price. The Minister says that he is quite happy about the Order. He has to be happy about it, because we are too close to a General Election for him to disagree with his own Government, and, as he knows, it is something that we cannot amend. We cannot put forward any changes. We either accept it or we do not, and if we do not accept it we realise the practical consequences that flow. There was never any great danger of the Government being opposed on the Order.
But the Government should clear up the doubts about the Order. They should explain the formulae, and the possible changes in the minimum import price. There are things here that might offend people who are coming new into the industry. Is the term "registered growers" a new one? Apparently it is not entirely new. The party opposite says that it is concerned about freedom. People are rather inclined to talk loosely about freedom in agriculture. It is clear that there is now less and less freedom.
The whole position in agriculture, both in home production and as it is affected by imports, is more and more in the hands of the Government. This is something completely new. It may be inevitable, but it is something about which there is a considerable difference in the view about how it should be handled.

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Scott-Hopkins)
The hon. Member for Kilmarnock (Mr. Ross) chided me for not introducing this Order, but I was seeking to save the House from hearing two speeches from me on it. I shall answer the points which he and my hon. Friends have made. As the hon. Member for Workington (Mr. Peart) said, this is one of a series of Orders dealing with our cereals policy. I am glad that, as my hon. Friend the Member for Lowestoft (Mr. Prior) said, the Opposition agree with this particular part of our policy, especially on imports.
The present Order is complementary to the previous Orders on this subject. It is concerned with the new standard quantity arrangements on the home front for wheat and barley. These were announced after this year's Annual Review and formed part of the general settlement arrived at in agreement with the farmers' representatives. It is true that Scotland did not agree in principle to the standard quantity concept, but I think it has accepted that this Order should embody the new standard quantity arrangements.
In the White Paper following the Review we set out in some detail the new arrangements to apply to wheat and barley for the 1964 crop. Perhaps I might be allowed to refer here to one of the points made by my hon. Friends. My right hon. Friend decided that for wheat and barley, in addition to the guaranteed price, there should also be a standard quantity and a target indicator price. There seems to be a little confusion about the target indicator price. This is determined by my right hon. Friend and he is empowered to do it at the end of the year in the light of any changes in the minimum import prices during the year. The target indicator price is directly related to the minimum import price.
My hon. Friend the Member for South Angus (Sir J. Duncan) wanted to know if we would keep the minimum import price firmly maintained. This is so. If he looks at paragraph 4 on page 42 of the Annual Review White Paper, he will see the relationship of the target indicator price to the minimum import price. It says: 1086 If a change should be made in the course of the cereal year in the relevant minimum import prices, an identical change will be made in the target indicator price, and an average target indicator price for the cereal year would be used throughout the calculations. There is a close relationship between the target indicator price and the minimum import price.

§ Mr. Ross
What is more confusing is that the hon. Gentleman started by saying that the target indicator price would be determined at the end of the year. How, before the end of the year comes, can changes be made in it?

§ Mr. Scott-Hopkins
The hon. Member is not quite "with it". If he looks at page 42, as I am sure he has done, he will see that the target indicator prices are fixed at 20s. per cwt. for wheat and 19s. for barley. These are fixed in direct relationship to the minimum import prices for these commodities. If there are changes during the year, the target indicator price will move in relation to them. Obviously at the end of the year my right hon. Friend will have to work out an average target indicator price. If one studies the matter, as I am sure the hon. Member has done, it will be seen to be clear.

§ Sir H. Legge-Bourke
This is very much on the point I put to my hon. Friend. He will realise that the annual White Paper does not have the force of law or of an Order. The point which concerns me is that although that is in the White Paper, it is not in the Order. Unless it is embodied in an Order, what authority his my right hon. Friend for doing what my hon. Friend has just said he would do, in the event of it being necessary to vary the target indicator price from the 20s. or 19s. per cwt.?

§ Mr. Scott-Hopkins
My hon. Friend will realise that the authority stems from the 1964 Act, and the Orders which my right hon. Friend can lay under that Act.
A slightly different aspect of the same point arises on the question about maize raised by my hon. Friend the Member for South Angus. The reason that maize is not mentioned in the Order is that it is not a home-grown crop, and this Order relates to home-grown crops. My hon. Friend will remember that, when we were discussing the orders specifying the 1087 commodities on which the minimum import prices would bite, so to speak, maize, compounds of maize and related products were involved then. This is the reason why we felt it necessary to incorporate related products in the Act, although the hon. Member for Workington took such exception to it at the time. This particular phrase was brought in for that reason, and I can assure my hon. Friend that he need have no anxiety on the point. His fears about competition between maize and barley are unfounded.
My hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) asked about paragraph 10 of the Order, which deals with bad husbandry. There is nothing new in the bad husbandry provisions. They have been carried on since 1954 and have been operating quite successfully in the intervening ten years until now. They are operated through check inspections by our field officers, not the advisory service officers, and serious cases can lead to a reduction of the subsidy. I think there has been no difficulty in the operation of this system since 1954.

§ Mr. R. J. Maxwell-Hyslop (Tiverton)
will my hon. Friend explain a point on paragraph 4(b) which is not clear to me? In line 4 appear the words to which amount shall be added a proportion of the amount by which the average realised price exceeds the target indicator price". Does the phrase to which amount shall be added apply to the three preceding words, "average realised price" or to the amount, if any, by which the guaranteed price exceeds the average realised price"? There will be a different answer according to which is taken.

§ Mr. Ross
Wait till the end of the year.

§ Mr. Scott-Hopkins
No, the hon. Gentleman is too gloomy. My hon. Friend need not wait till the end of the year. This is the most difficult part of the Order to understand and see how it will work. Here, we are dealing with the range just below the standard quantity, between 3.2 and 3.3 million tons for wheat and 6.3 and 6.5 million tons for barley. This relates to the second lot of words which my hon. Friend quoted.
1088 Payments to producers of these two cereals will be affected by the extent to which the production is greater or less than the standard quantity, and the extent to which the average price realised by growers is greater or less than the target indicator price.
The main object of the Order is to provide for these new arrangements for wheat and barley from the 1964 harvest. As we are not proposing standard quantities for rye, oats, or mixed cereals, the new Order makes no change in the method of calculating and paying subsidy on these crops. Also, no change is made in the tonnage basis for wheat payments or the acreage basis for barley payments.
I hope that I have covered the various points which have been raised, and I commend the Order to the House as a necessary step in the implementation of the Government's policy for cereals on the domestic front.