HC Deb 18 March 1964 vol 691 cc1378-92
The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames)

I will, with permission, make a statement about this year's Annual Agricultural Review.

Before coming to the actual determinations, I would remind the House of the progress made in adapting our support system on the lines I announced on 22nd May last.

For bacon, agreement has been reached with our overseas suppliers for the regulation of supplies on the United Kingdom market.

For cereals, our principal overseas suppliers are, in principle, willing to cooperate in the introduction of minimum import prices. Subject to their final agreement, we will be introducing new guarantee,arrangements this year for wheat and barley which include standard quantities. The effect of these two steps will be to increase market stability, and to bring under control the present open ends of the cereals subsidy. Details of the new arrangements are given in the White Paper which will now be available in the Vote Office.

For beef and lamb, we were unable to reach agreement with the overseas suppliers for the regulation of supply to the United Kingdom market. In these circumstances, we are not introducing standard quantities at this Review. But we shall be discussing with overseas suppliers the phasing of meat imports, and are making changes this year in the mechanism of the price deficiency system for cattle and sheep which will lead producers to pay greater attention to market forces.

The Government consider that these changes in our support system will contribute to its continuing successful operation in the circumstances of world trade in foodstuffs which exist today. These are very different from those that existed when the system was first devised.

In the Review we found that the forecast for actual farm income for this year just ending was appreciably lower than last, largely on account of the long winter and its after effects in 1963. Adjusted to a normal weather basis, the forecast is for £430 million this year, compared with £438 million last and £420 million the year before. Increased costs for review commodities taken into account at this Review amount to £24 million, of which the recent wage increase forms the major part.

In examining each commodity in turn, we found that, while the situation in some warranted no increase in the guaranteed price, and in one case a reduction, others called for increases.

The most important commodity in this Review has been milk. The House knows that increasing production beyond the needs of the liquid milk market has led to a falling pool price to producers over a number of years. Recently, the production situation has changed. The½d increase given last year did not lead to increased production, and output has actually been lower with the milking herd 3 per cent. down. In these circumstances, the Government can bring about a much needed improvement in the incomes of milk producers and the guaranteed price will be raised by 2¼d. a gallon. In addition, as already announced, a ¼d. will be added to help finance, for the time being, the Milk Board's schemes for the improvement of compositional quality, and the standard quantity will be raised on the basis of liquid consumption during 1964. In consequence of these changes, the retail price of milk will be raised from 8½d. to 9d. with effect from 5th April.

The flexible guarantee arrangements for pigs have also needed adjustment. The demand for pork is strong and we have our share of the bacon market to supply. In today's circumstances, the middle band, which must reflect the quantities of bacon and pork which the market can absorb at reasonable prices, is too low. We are raising it by 750,000. At the same time, the guaranteed price will be reduced by 6d. a score. The net effect will be an increase in the producer price of ls. 3d. a score.

There are signs that the rate of increase in home production of beef is declining. With the continued strong demand we think the price should be improved to maintain supplies from the home producer. We are raising the guaranteed price by 3s. a cwt. and increasing the calf subsidy for steer calves by 10s.

No change is being made in the guaranteed price of lamb, but the guaranteed price of wool will be raised by 2d. a lb. Although the Hill Sheep Subsidy is outside the Review, the House may like to know that the standard rate of subsidy this year will be 25s. an ewe.

Production of eggs is increasing notably faster than demand and the guaranteed price will be reduced by ld. a dozen.

There will be no change in the guaranteed prices for cereals. There will be an increase of 5s. in the price of potatoes and of 3s. 4d. in the price of sugar beet. The fertilizer subsidy will be reduced by £2 million. The winter keep subsidy will be increased by £1 an acre.

Taken as a whole, this Review increases the value of the guarantees by about £31 million. of which by far the major part is for milk.

Mr. Peart

Is not it significant that we have had an agreed Review in every General Election year since the Tories took office, and a Review which was agreed in only two years during the last 10 years when there was no General Election? Is not this Review nothing more than a belated attempt to win back lost ground in the rural areas?

Will the Minister comment on the unusual role placed by the Prime Minister, who met representatives of the Scottish National Farmers' Union on 18th February? Has any pressure been put on him?

What about standard quantities? If I may be specific, can the Minister say what are the standard quantities for wheat and barley for 1964–65? Is there any indication in the Government White Paper of the marketing policy of the Government for cereals and meat and what type of marketing machinery will be introduced?

What does the Review really mean in terms of net farm incomes? How does this affect the average farmer? Will the small farmers really benefit, particularly those who farm approximately 50 acres, or will they still be driven out of production, as many have been over the last five years? What about the small milk producers? Will the guarantee encourage them to stay in business? What will be the course of production in the year ahead?

Mr. Soames

This is the fourth Review which I have introduced. Two have been agreed and two disagreed.

As to whether it is a coincidence that this is taking place in an election year, I would point out to the hon. Gentleman that in respect of all the commodities we have taken these decisions in the light of all the arguments. The hon. Gentleman will find them set out—I hope most clearly—in the White Paper. If, from the inference that he has drawn, the hon. Gentleman thinks that the Government have been over-generous in any particular, let him tell the House.

As I said in my statement, standard quantities are being included in this Review for cereals. The details have been worked out—

Mr. Ross

Are they agreed?

Mr. Soames

—and he will find them in the White Paper. They are agreed by the National Farmers' Unions.

We cannot tell what the effect will be on farm incomes, because this is an increase in the guarantee. It is not an increase in income in the same form as a wage or salary increase would be. We are confident that this should lead to a substantial rise in incomes for the agricultural community. As the hon. Gentleman will be aware, and as I have stated, by far the major part is on milk. The fact that we have been able to do this for milk will, we hope, bring about the much-needed improvement in milk production and a more even balance between supply and demand.

Sir A. Hurd

Will my right hon. Friend accept our congratulations on a good job done for British agriculture and for the public generally?

Regarding milk, where the most necessary improvement has been made in the producer price——

Mr. Ross

Who pays?

Sir A. Hurd

—so as to ensure that the supply to the consumer is fully maintained, will my right hon. Friend say whether the maximum retail price is to be kept at 9d. a pint right through the year?

At the conclusion of this fourth Price Review for which my right hon. Friend has been responsible, will he say whether he sees the way clear for agriculture to carry forward its productivity still further and gain a better level of income for the mailer and medium-sized farmers as well as the big farmers and those whom they employ?

Mr. Soames

I thank my hon. Friend for the kind remarks. As I said, the price of milk will be raised from 8½d. to 9d. on 5th April. It will remain at that level throughout the year.

The considerable alteration which, over the years, and particularly in this year, we have brought about in our system of support for agriculture will, I am quite convinced, enable the Government, in future Reviews, to take greater account of the level of farm incomes than was possible without these alterations, and farmers will be able to look forward to increasing production and to supplying the growing market in this country.

Mr. Mackie

Is the Minister aware that milk carries practically no subsidy, or very little, at present? Is he aware that farm subsidies are supposed to keep down prices to the consumer? Would not it have been better to have taken something from the "barley barons" of the South and East rather than directly raising the price of milk? Does not it seem anomalous to raise the price of something, if the whole idea of farm subsidies is to keep down prices, and especially the price of such a vital commodity as milk?

Mr. Soames

The price of milk has been carried for some years by the consumer and not by the taxpayer, except in relation to welfare and school milk.

Sir T. Moore

I welcome generally the statement which has been made by my right hon. Friend and, on the whole, I think that the proposals are fair and reasonable to all concerned. But may I again refer to the question of milk? As my right hon. Friend will know, Ayrshire is one of the biggest milk-producing counties in Great Britain. Is he aware that hon. Members who represent constituencies in Ayrshire, who have farmers among their constituents, and who farm themselves, are confident that an increase of 6d., instead of 2¼d., was what was required, and would have been fair?

Mr. Soames

I am sorry that my hon. Friend should feel that we have not struck the proper balance. Taking everything into account, and not wishing to start up again the sort of difficulties from which the dairy industry suffered in the past years through the production and demand pattern, I believe that we have struck the right balance.

Mr. Emrys Hughes

Is the Minister aware that the farmers in Scotland have no faith at all in his statistics, and that one of the leading farmers there has recently said that the Minister is out of touch with reality, and that if the right hon. Gentleman comes to Scotland in the near future he will be in danger of assassination?

Sir Richard Glyn

Will my right hon. Friend be assured that he is very much to be congratulated by the whole agricultural community, particularly on his success in agreeing restrictions of imports of cereals, wheat and barley? Will he pay particular regard to the question of imports of maize, which is so often nowadays used as an alternative to barley? Will my right hon. Friend look at this? While welcoming the increase in the price of milk, which is only just, may I ask my right hon. Friend whether he will now, in the interests of the milk consumers and of the people who need a regular supply of milk, look at the question of the reserve element in the standard quantity, which has not been increased for many years and which now represents a very much smaller proportion than it did originally?

Mr. Soames

Maize, like other cereals, we have included in our minimum import price arrangements. As to the standard quantity for milk, we have made arrangements, which my hon. Friend will see the details of in the White Paper, altering somewhat the relationship between the standard quantity and that for liquid consumption.

Mr. Thorpe

Without presuming to speak on behalf of the entire agricultural community, but for a substantial minority of it, may I ask the right hon. Gentleman, in so far as he has concentrated on giving long overdue help to small milk producers, whether he is taking the view of Dr. Johnson, that when a man knows he is to be hanged in a fortnight it concentrates his mind wonderfully——

Mr. Speaker

May I express the wish that the House would have its attention concentrated a little more, because our time is not unlimited?

Mr. Thorpe

May I, therefore, ask the right hon. Gentleman three short questions? First, on the 2½d. a gallon increase, is it not a fact that this is well below the costs which were prevailing in 1956 and that since that date farm costs have increased? Secondly, while the right hon. Gentleman is hoping to increase production by 750,000, is not the present deficiency in pigs nearer to the 1 million mark than ¾ million? Thirdly, can the right hon. Gentleman give us a little more further information as to what he has in mind about the phasing of meat imports? Will he, for example, consider tariffs, in preference to the arrangements made for cereals, which were to keep our competitors from artificially raising their prices to this country?

Mr. Soames

The increase in the price of milk is 2¼d. and not 2½d.——

Mr. Thorpe


Mr. Soames

—and the ¼d. is for compositional quality for those producing higher quality milk. The guaranteed price is substantially above what it was in 1956. I cannot, of course, tell what the pool price will be. This will depend upon the pattern of production.

I gather from what the hon. Gentleman says that he feels that the rise in the number of pigs should be 1 million instead of 750,000. It is our belief, taking all the factors into account, and the strength of the pork market and the bacon agreement we have made, that, on balance—it cannot be argued exactly, because this is not an exact science—that we have the right figure.

What I said about meat imports was that we have not yet reached agreement with our overseas suppliers as we have done over cereals. There will not, therefore, be controlled imports of meat, in the way there are minimum import prices for cereals, which we are discussing with our overseas suppliers.

We are having a further meeting this week to phase the meat which the exporters are intending to send to this country so that we can have as regular as possible a market price throughout the year, avoiding the deeper dips down which we have had in the past.

Mr. Vane

May I ask my right hon. Friend, about the ¼d. for milk of compositional quality, whether it is sufficient and how far he thinks it can go in achieving the original Milk Marketing Board's proposal that it should be something like 2d. for milk of the highest quality?

Mr. Soames

It is not the only money which can be used for this. The Milk Marketing Board itself will be running a bonus Pe[...]alty scheme. This is a contribution from the Government. It will enable a spread over several pennies as between top quality and lower quality milk. It is our hope—of course, I cannot be specific about this—that the quality should be raised to a sufficient extent to enable a higher quality milk to be marketed.

Mr. Ross

Will the right hon. Gentleman, in the absence of the Secretary of State for Scotland, tell me whether there was agreement with the Scottish National Farmers' Union on the standard quantities of cereals and in relation to the increase for milk? Scottish farmers asked much more than that. They were hoping to get 4d. Many take the view that the proposals are a calculated decision related to previous Reviews. Will he make it clear to the nation how much is involved in this and who pay for it? Is not the money, the ½d., what every housewife will pay per pint, and the ¼d. for the farmers?

Lastly, will the right hon. Gentleman tell me whether or not the proposal in relation to the switch from M.A.P. to winter keep, as made by this settlement, came from the Scottish upland farmers? He said that it was to be an increase of £1 per acre. How is this to be done? I do not expect the right hon. Gentleman to be able to answer it, but I did expect that the Secretary of State for Scotland would have been here, because he knows from the administration of this in Scotland that there are three separate classifications, A, B and C, at ranges from 30s. an acre to £4 an acre.

Sir H. Legge-Bourke

Who is giving the information?

Mr. Ross

Does each classification rise by £1 an acre?

Mr. Soames

I have received a message from Agriculture House that all three Farmers' Unions, for England and Wales, Scotland, and Northern Ireland, have agreed this Review, and part of this Review is about standard quantities for cereals. Individual unions may have set their sights to obtain an increase for milk or any other commodity. I cannot say. All I can tell the hon. Member is that they have agreed this Review.

As to milk, the hon. Member said this was a calculated decision come to by what happened at previous Reviews. As I think he understands, we were faced with the fact that production was rising far faster than consumption of liquid milk, and so was eroding the average price. There could then be no case for a substantial increase in the guaranteed price. Now, when we are seeing a reduction in the herd, and, last year, production was lower—marginally lower, but lower—as he will see from the figures and the graph in the White Paper, which sets this out very clearly, it is right and proper at this point of time to give a substantial increase.

Mr. Ross

Winter keep?

Mr. Soames

The winter keep grant is paid on an acreage basis used to grow winter feed, and grade, and this £1 increase is per acre for all grades.

Sir Knox Cunningham

Is my right hon. Friend aware that the increase in the price of milk will be welcomed by farmers in Ulster, but can he estimate how much this increase will mean to the incomes of small farmers?

Mr. Soames

I could not split it down as between small farmers and big farmers, or make any estimate of what a small farmer is, but it will mean an increase of £24 million throughout the industry as a whole.

Mr. J. Morris

While welcoming this long overdue increased recoupment to the milk producer, and remembering the Prime Minister's words, that the election must be first and paramount in the Government's mind, may I ask how this will affect the consumer? Will it really result in decreased consumption? How does that fit into the need for a long-term policy for the industry? There are now shortages. Will this right the position? Or will the right hon. Gentleman be in the embarrassing position of a surplus again within a few years?

Mr. Soames

With regard to the point about consumers, it means, as I said, a rise in the price of milk from 8½d. to 9d. a pint on 5th April. I myself believe—I should not wonder if the hon. Member did not, too—that the consumer realises perfectly well that the dairy farmer has not had an increase for a long time. Indeed, the price that he is receiving is lower today than it was five years or 10 years ago, because of the production pattern. I am sure that the consumer will fully appreciate that now that the production pattern is altered it is right that the dairy farmer should get a better return.

Mr. Maxwell-Hyslop

Would my right hon. Friend say whether he has had any success in negotiations further to restrict egg imports, particularly liquid egg imports, now that the small eggs have been taken off the domestic market? Also, has he had any discussions with the milk distributors to ensure that half-pint bottles as well as pint bottles are available, particularly to people living on their own?

Mr. Soames

We made considerable adaptations in the guarantee arrangements for eggs at the last Review, including an indicator price, and within this system there is compensation for the producer if the market price should fall as a direct result of imports coming in in excessive quantity at a particular time. Beyond that, no alterations have been made in this Review, but the import of eggs is running at a rate of about 2 to 3 per cent., no more, of the total consumption of eggs in this country.

The question of discussions with the distributors about half-pint bottles as well as pint bottles does not come within the Review.

Miss Herbison

Can the right hon. Gentleman tell us how the £1 extra on every acre for winter keep will help many small upland farmers in Scotland who received help under the M.A.P. grant scheme, but receive no help under the winter keep scheme? If the right hon. Gentleman says that some of them will be helped by the increase in the price of milk, does he not realise that it will not be anything like what they would have received, and what they previously received, under the M.A.P. grant scheme? Does not the right hon. Gentleman realise that these farmers work very long hours, for seven days a week, and find their income continually reduced under the present Government?

Finally, who will pay the extra money for milk? Is it the housewife? Is it the Government? Who is it?

Mr. Soames

This is an increase in the winter keep grants to those who are drawing the winter keep grants, not to those who are not drawing them. It is an increase which adds up to about £1.6 million. That is the total value of the increase to those who are drawing the winter keep grants.

In the case of the farmer who was drawing the marginal acreage production grant, but is not drawing the winter keep grant, there is not only the increase in the price of milk, but also this year the rise in the price of beef, from which those producing beef will also benefit.

The answer to the question about who pays for the increase in the price of milk is that it is the consumer. The cost is being paid for by a rise in the retail price from 8½d. to 9d. a pint on 5th April. If there had been no increase in this Review, the price would have risen from 8½d. to 9d. towards the end of the next financial year. It will rise at the beginning and remain at that price throughout the financial year.

Several Hon. Members rose——

Mr. Speaker

We must have regard to other business.

Mr. Harold Davies

On a point of order, Mr. Speaker. Can you help the House in this matter? This kind of thing has happened many times since the present Government have been in power. I was unable to catch your eye, Mr. Speaker, but there are over 600 other Members of Parliament and, naturally, I could not assume that I should catch your eye.

However, are you aware that the Price Review statement appeared almost word for word in the Sunday Telegraph and also in the Daily Telegraph on Monday? Such treatment of the House of Commons is becoming abominable. The House of Commons itself should have been the first to receive the statement. Time and time again we are being treated in this manner. This is the second time in a fortnight. I ask you to look into it, please, and see whether some way can be evolved to protect the House of Commons against leakages of information on such matters of vital importance to the country.

Mr. Speaker

That does not raise any point of order for the Chair. The hon. Gentleman's anxieties are between him and the Minister, not between him and the Chair.

Mr. Harold Davies

Surely it is a matter for the House of Commons?

Mr. Speaker

No. The hon. Gentleman has raised a point of order with me, and he had better let me answer it and not shout at me.

I would assist the House about any impropriety which fell within my responsibility, but this does not. That is the difficulty. That is why it does not raise a point of order for me.

Mr. G. Brown

I well understand that, Mr. Speaker, but it is a difficult situation. The whole of the announcement today was certainly in one of the national newspapers two days ago. [HON. MEMBERS: "Point of order."] It was certainly in the Daily Telegraph, and it might have been in other newspapers—the whole of it, and none of it was inaccurate.

Mr. Speaker

Will the right hon. Gentleman assist me? Is he addressing me on a point of order?

Mr. Brown

I am, Mr. Speaker. I say that the Ruling which you have given does not resolve the difficulty for us, and I was wondering whether you would allow me to ask you about the possibility of having an inquiry, or maybe the Leader of the House would help you and us by arranging to have an inquiry, into the way in which the whole of this statement was published in a newspaper two days before the Minister announced it to the House.

Mr. Speaker

The position is that I cannot help the right hon. Gentleman about that. What he has just said will, I have no doubt, have been heard. With due respect to the right hon. Gentleman and to the House, I do not think that we ought to pursue this matter now, for the reason that we shall have much to do and shall, in fact, be very short of time. The mere fact that what has been said has been said will, I have no doubt, result in something being done about it.

Mr. H. Wilson

Would it not save a great deal of time, Mr. Speaker, if the Leader of the House got up and announced that he was going to have an inquiry into the matter?

Mr. Speaker

But there is no cue within our rules of order for that to happen. That is why I cannot help the House at this point.

Mr. Ellis Smith

With due respect to you, Mr. Speaker, and to the Table Office, and while accepting your Ruling, may I ask the Leader of the House whether he will consult the Prime Minister and the Minister of Agriculture——

Mr. Speaker

Order. The hon. Gentleman, with his usual courtesy, says that he accepts my Ruling. That would mean that he cannot now, within the compass of my Ruling, address a question to the Leader of the House. That is the difficulty.

Mr. Ellis Smith

While accepting that, Mr. Speaker——

Mr. Speaker

I really think that we must aim at making progress. I noticed the Minister rising to his feet. It may save time if I let him answer something, and I will, but I had best see what it is.

Mr. Soames

Further to the point of order, Mr. Speaker. Perhaps it might help if I were to say how deeply I regret the fact that so much of the information about the Review appeared in the newspapers. I must add that I did not see any accurate report of it. There were quite a number of reports which were nearly accurate, but I did not see any accurate report of the outcome of the Review.

The House will realise that a large number of people are involved in this matter. Because of the way in which the Reviews are carried out, in consultation with the industry, information is spread rather wide. We have had this sort of thing for many years previously, under Governments from both sides of the House. Some of what has been published has been intelligent anticipation. Other pieces of information have looked more like some form of leak.

However, I assure the House that I shall take all steps necessary to ensure that nothing comes out from within my own Department. This is my duty. I would remind the House that even before the Review started I remember seeing a newspaper article which stated that, in the view of the writer, the Review would end up at around plus £30 million. There certainly is a great deal of intelligent speculation.