HC Deb 24 June 1965 vol 714 cc2104-12

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]

11.11 p.m.

The Marquess of Hamilton (Fermanagh and South Tyrone)

Apart from the question of economic viability, the small farmer problem in Northern Ireland represents of a considerable amount of social distress and anxiety, with redundancy constantly hanging overhead. The problem is also charged with emotion through the deep-rooted desire for independence and of individualism. Since the average holding in Northern Ireland is 30.5 acres compared with 79.2 acres in England, the term "small farmer" has considerable difference in meaning between the two countries.

Although there are approximately 67,000 holdings in Northern Ireland, there are only 11,600 which have a size of over 50 acres, so we are literally a province of small farmers. In Fermanagh, out of a total of 7,800 holdings, there are only 239 of over 100 acres in size, with 4,900 holdings of under 30 acres.

The problem of farming income is so serious and so acute in Northern Ireland that there are approximately 13,000 farmers whose output of production is too low to provide an income equal to the minimum agricultural wage. Yet they have no alternative source of livelihood outside farming. The net income includes not only the work of the small farmer but also of his wife, his function as manager, and also the interest on his capital investment in the farm.

Because of rising costs and, to a large extent, falling prices, the Northern Ireland small farmer is just not in a position to absorb the greater part of the increased costs through increased earnings. The retail price index has risen by 4 per cent. in the last twelve months, yet the small farmer is battling to keep his end up. Somewhat naturally, he asks "Why should I be the victim of circumstances when the small farmer has played a vital role in an industry which, more than any other, has created the present climate of prosperity in Britain?" The small farmer now feels as though he is living on the edge of the industry, almost discarded, and in an atmosphere of uncertainty.

Paragraph 12 of the Government's White Paper on the Annual Price Review mentions the amalgamation of farms. What are these arrangements for amalgamation? What will they involve? What will be the end result in Northern Ireland, with its consistently high unemployment level? Will the promise of a really viable industry refer only to the "big" farmers? Although I am in favour of co-operation between small farms, more detail is clearly needed, and I doubt if it will achieve more than marginal benefit for the small farmer.

I welcome the announcement in the last Price Review of the setting up of an agricultural trust, because I believe this is a development of significance and importance, for such a trust could encourage the growing of experimental crops and/or new processing ventures. Both of these could be of considerable benefit to the small farmer. For agriculture must share in the technological revolution and, like all other industries, must place stress on experimentation, development and research. We have already in Northern Ireland an intensive system of farming through the large number of small farms which are not only forced to have specialised but also intensified enterprises.

Yet, in spite of this intensive farming, the small farmer is becoming poorer each year, and I doubt whether his income has ever risen by 1 per cent. over the last twelve years, compared with the national average of 56 per cent. This is in no way due to inefficiency, or through lack of agricultural education, and to quote from an article in The Times, May, 1963, by their agricultural correspondent: The Northern Ireland farmer has a quicker appreciation of the opportunities that have come the way of the post-war farmer, both technical and financial, with a distinctly greater interest in agricultural education". This article also stated— … that the optimism and evident skill of the fifty acre Ulsterman provides a wholesome corrective to the belief that farming in Britain is becoming a mere agricultural business dominated by tycoons". I fully appreciate and realise that farm structure, like all our social and economic institutions, must be constantly modified in order to keep abreast of the economic situation. However, through the astonish- ing powers of survival, tenacity and adaptability, I am convinced that the family farm will continue to predominate in Northern Ireland.

I am also convinced that there is no single optimum size of farm in Northern Ireland and that they will continue to be financed by individuals, not by farming corporations. But, through voluntary amalgamation and increased mechanisation, an evolution, as opposed to a revolution, is taking place on the land, resulting in fewer people being employed in agriculture. Farms are becoming larger, both in terms of acres and of capital invested. In fact, ten thousand people have left the land in the last ten years.

I am fully aware that the problem of the small farmer is not unique to Northern Ireland, for it appears in Wales, North West Scotland and England. It exists on the Continent. However, because of the continuously high unemployment rate, the sociological problem is far more severe in Northern Ireland than in England, where there is more availability of alternative employment, thereby providing a better standard of living for redundant small farmers. In Northern Ireland it is extremely difficult to obtain alternative employment in rural areas, because the majority of small farms are situated in the outlying, more remote parts of the province where, in spite of intensive efforts by the Northern Ireland Ministry of Commerce, it is hard to attract light industry. These new industries are semi-automated requiring skilled labour which would require a most difficult readjustment for the middle-aged small farmer.

Mention has already been made in the House of the hardship which might be caused to a son who has to pay Capital Gains Tax on taking over a farm from his father. I understand that the Chancellor will reconsider this aspect, since it would not be in the national interest if a son were forced to sell part of his farm in order to find the necessary money to pay Capital Gains Tax. It would also not be in the national interest if the Capital Gains Tax would deter a small farmer from selling his farm to a neighbour who would thereby enlarge his farm.

Paragraph 7 of the White Paper on the 1965 Price Review states: Geographical location must therefore be taken into account in the formulation of agricultural policy. The minimum import price policy has depressed farm incomes among Northern Ireland small farmers because of our heavy dependence on importing essential feeding stuffs which we are importing at the rate of £20 million a year. As a result of this policy small farmers are being forced out of pig production, because grain which prior to 1963 cost £14 per ton is now costing £21 per ton to import. I ask the Government to examine this disparity with a view to making a special concession to Northern Ireland.

We realise in Northern Ireland that we can produce only as much as we can sell in the market. The three main commodities of the small farmer are eggs, pigs and milk. At present the market for eggs and pigs is in danger of overproduction and the small farmer is already up against the multi-laying and multi-breeding units. Eggs are the great stand-by of the small farmer and to the Northern Ireland agriculture industry worth £15 million a year in income. If the Government decided to give more security to the small farmer through special support adjustments, it would give both encouragement and help to the small farmer.

The small farmer will in no way be helped by the phasing out of premium payments for high price pigs. However, according to Press reports, the Minister of Agriculture recognises the special position in Northern Ireland pig production, in view of its importance and emphasis on bacon pig, and I trust he will take measures to alleviate this further hardship.

Since the Minister appears to pin his faith on the upward trend in larger milking herds and production units, life will be made even harder for the small farmer with his heavy dependence on the monthly milk cheque. There is, therefore, a strong argument for the introduction of a small farmers' milk quota scheme, which would be welcomed by the majority of farmers in Northern Ireland.

Our main assets in Northern Ireland are grassland and cattle, for grass is the principal crop of the individual farmer and during the last ten years output of production has risen by 50 per cent. I would welcome a special grant to be introduced to provide cheaper fertilisers and lime for small farmers.

I am convinced that the small farmer would be considerably benefited if the industry were given the opportunity and encouragement to fill a greater share of the British market. A high agricultural policy which would maximise British food production would undoubtedly aid the small farmer and did not the Prime Minister in a speech in May, 1964, say that we must expand industries which could save imports? Again I would accept that our farm prices must be kept more in line with those of other countries.

Finally, on a number of occasions the Secretary of State for Economic Affairs has expressed the view that the resources of all areas and regions of the United Kingdom must be fully developed and must be harnessed for full economic use. As I have already stressed, Northern Ireland has its unique and specific problems. Here is an ideal opportunity for the Government to demonstrate its sincerity when it refers to regional development by assistance to the Northern Ireland small farmer.

11.27 p.m.

The Joint Under-Secretary of State for the Home Department (Mr. George Thomas)

The hon. Member for Fermanagh and South Tyrone (The Marquess of Hamilton) has made a very moving plea for Ulster, and I welcome the opportunity to reply to the hon. Gentleman on behalf of the Government. As the House knows, the Home Office has a very special interest in the affairs of Ulster, and it falls to us to keep a watchful eye on its interests. I have a very good acquaintance with the officers of the Ulster Farmers' Union, and I look forward to a visit which I hope to make to Ulster during the coming Recess. I have therefore listened with all the greater care and interest to what the hon. Gentleman has said, for the future of the small farmer in Northern Ireland is of major importance to that part of the United Kingdom.

The hon. Gentleman reminded us how many farms there are which are not viable. I understand that there are 46,000 farm businesses with an average size of 40 acres. Just over half of these holdings are large enough to provide full-time employment for one or more persons. The remainder are too small to provide full-time occupation by themselves, but there are part-time farmers who run the farm and also have an income from another source.

But the frightening aspect, the disturbing aspect, in Ulster is that there are 16,000 very small farm businesses which are too small to provide full-time employment and where the occupier has no alternative source of income. The hon. Gentleman was, therefore, quite right to remind us of the special problem which faces the Ulster people.

I say at once that we do not believe that we can solve the problem of the small farmer by raising the general level of price support right across the board for farmers as a whole. We believe there must be a selective approach, giving help where it is most needed. If we can single out the people who are in the greatest need and give them the greatest help, I am sure it would meet the wishes of the hon. Member. It is quite right that in the Review White Paper we announced our intention to help those who occupied holdings which are capable of providing a reasonable full-time livelihood but where difficulties are being experienced due to the character and the situation of the farm. We are also working on proposals to encourage the voluntary amalgamations of holdings which from their size and nature cannot yield a reasonable living.

It has been already announced in our Review White Paper that we are taking measures to help farmers whose businesses are viable, or potentially viable, to achieve more efficiency and a more satisfactory scale of production and marketing. I need not go into detail, but already 14,000 farmers in Northern Ireland have received grants under the old small farmer scheme. I hope that those who are eligible for the extended small farmer scheme will take advantage of the help which this can give them to increase the productivity and profitability of their farms.

Agricultural credit facilities are to be improved by arrangements for the provision of guarantees to banks so that they may make loans more readily available to those small farmers to improve their marketing activities and also to encourage co-operative marketing. All this is a help to the small farmer, to whom the hon. Gentleman referred. At the present time we are studying steps to promote agricultural co-operation and a working party of officials from Ulster and our own Ministry of Agriculture have been examining for some months (a) wider arrangements for encouraging agricultural co-operatives in group activities and (b) voluntary amalgamation. What arrangements should be made to encourage voluntary amalgamation of these small farms is a matter of concern to us all.

The hon. Gentleman made some reference to the structural reform of the industry and asked whether we could not raise the minimum import price arrangements on cereals so far as Northern Ireland was concerned. The difficulty here is that we would then have to introduce some system of control on the passage of goods of an agricultural nature from Northern Ireland to Great Britain. This would lead to very considerable difficulties. I can assure the hon. Gentleman and the farmers of Northern Ireland that it certainly is not our intention to raise the general level of prices. We can only have the same minimum import price arrangements for the whole of the United Kingdom and it is not practicable to have different arrangements for Northern Ireland.

The hon. Gentleman also welcomed the setting up of the Agricultural Trust, which was first proposed by the Minister of Agriculture in Northern Ireland and was welcomed by Her Majesty's Government. Its aim will be to overcome the disadvantage of remoteness and to improve the market prices received by Ulster farmers by securing greater efficiency in marketing, and by expanding the home and export markets for Northern Ireland farm produce. It might do this through the development of new crops, new products, and new uses of existing products, and through better sales promotion.

The hon. Gentleman asked about the interest on capital, and the Capital Gains Tax. I think he made the point that my hon. and learned Friend the Financial Secretary had told the House that the Government were now considering whether special arrangements were necessary in respect of the application of the Capital Gains Tax to agriculture. I assure the hon. Gentleman that the Government are well aware of the dire need of the Ulster farmers, as well as of small farmers in Wales and England, to strengthen their industry. The plain truth is that we must all encourage the voluntary amalgamation of farms to make them viable, and, happily, the outlook for employment in Ulster appears to be improving.

The Wilson Economic Report, of which the hon. Gentleman will be aware, indicated that 65,000 new jobs might ultimately be made available in Northern Ireland, and these will, we hope, offer employment to those who today are on holdings which cannot give them an adequate standard of life. They will also help to absorb the other unemployed who, unfortunately, add to Ulster's problems.

I should like to stress again the Government's intention to deal with this underlying problem of the organisation and structure of the agriculture industry in Northern Ireland. We believe that the greatest help can be given by trying to achieve a satisfactory scale of production and marketing, and by the voluntary amalgamation of farms which never can be viable, and these basic problems have at last begun to be tackled in a comprehensive way.

I hope that I have answered all the points which the hon. Gentleman raised. I assure him that it is our earnest desire, and my right hon. Friend's firm resolve, to do everything within our power to strengthen the agricultural economy of Northern Ireland. Already we are seeking to extend schemes which were introduced by the party opposite whereby financial assistance is being given to the small farmer in Northern Ireland. The hon. Gentleman will know, from speeches made in Ulster by the Minister of Agriculture there, and by his colleagues, that a great many farms have received help, and I hope that the future will be brighter as they realise that unless a farming unit is seen to be viable, unless keen attention is paid to business methods, and unless there is a readiness to co-operate with others, nobody else can help.

The hon. Gentleman has raised an economic problem, and a human one. I hope to study this at first hand when I go over to Ulster in a few weeks. I can assure the hon. Gentleman that we are not only keeping all the points he has raised in mind, but our working party is looking for solutions which will help us and help them.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Twelve o'clock.