HC Deb 03 March 1965 vol 707 cc1482-92

11.30 p.m.

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

Mr. Henry Clark (Antrim, North)

We are working the Joint Parliamentary Secretaries to the Ministry of Agriculture, Fisheries and Food rather hard tonight. It may be some consolation to him to know that I will at least speak in language which both he and I can understand.

I wish tonight to raise a subject which is causing wide concern in my constituency and to farmers throughout the country. I have been trying to raise it for two months on the Adjournment and only this week have I had the luck to find Parliamentary time to do so.

Farmers fear that big business is about to steal a large part of their livelihood. The steady increase in the size of flocks of laying hens—particularly the appearance of many flocks of 30,000, 40,000 and 50,000 birds—has led farmers to believe that egg production will soon cease to be a farming operation and will become a highly capitalised commercial enterprise.

The trend in recent years is clear. In 1957, only 13 per cent, of laying hens were in flocks of over 1,000. Today, the figure is 50 per cent. Even clearer is the fact that in 1957 only 1½ per cent, of laying hens were in flocks of over 5,000. By 1960, the figure was 4 per cent, and by 1964, only four years later, it had gone up to 16 per cent.; and the trend continues in an upward direction.

Added to these figures are the rumours—indeed, the detailed plans—that Mr. Eastwood is going in for factory hen keeping on a gigantic scale. In a recent report produced by the N.F.U. it is stated that Mr. Eastwood plans to build up a factory of 12 million birds over the next seven years. He plans to produce 16 per cent, or more of the total egg consumption of the country. If Mr. Eastwood goes in for 12 million birds we can be fairly certain that, sooner or later, someone else will have 15 million. Certainly a number of flocks of a million birds will follow.

Northern Ireland, and my constituency in particular, is a land of small farmers. They must be efficient and they have found over the years that to make a decent living out of 30 acres they must farm their farmyards just as intensively as their land. Pigs and hens represent a very big part of their income. Now that the prospect is that their egg sales will be taken from them—or at the very least that the production of eggs will become unprofitable—they are extremely worried.

In 1964, farmers in Northern Ireland produced 85 million dozen eggs, worth about £8 million. It would be a major disaster for the countryside of Northern Ireland if those earnings were taken from these farmers. The Minister will probably point out that of the —8 million, possibly only —2 million actually represented earnings for the farmers, but the farmers of Northern Ireland cannot afford to lose even —1 million of income.

It is not my case to defend the farmyard flocks of hens, which, by tradition, have provided farm housewives with pin money. I am not attacking, certainly not tonight, intensive methods of egg production. I wish to defend the small farmer and his right to produce eggs in the most efficient manner possible. In recent years thousands of small farmers have found that a laying unit of 500 or 1,000, or even possibly 5,000, hens fits very well into their pattern of mixed production. If a man spends two hours morning and evening looking after his dairy herd, or a period in the day looking after his beef cattle, he finds that the spare hours can be very well filled in looking after a medium-sized laying unit either in cages or in deep litter.

A hen on a small farm produces an egg from exactly the same number of grains of corn as it does in a factory farm in an industrial town. Food is at least 65 per cent, of the cost of production. A really big unit can produce some economies in collection, packing and delivery of eggs, and I do not think that any of us would doubt that the mega-hen capitalist can strike rather hard bargains with the producers of pullets, the miller and the man who makes the equipment; but these bargains merely pass profits from the milling and manufacturing organisations to the man who is producing the eggs.

What we must remember is that if egg production becomes a factory operation, thousands of small farmers will be under-employed, and under-employment is probably the biggest sickness in small farming. Very often there is no alternative employment for a man in this position. We cannot afford to waste the labour of the men and women who are now doing this job. Equally—and perhaps this is the most important argument of all—if the farmers lose this income, the Government are bound by the 1947 and 1957 Acts and by many other obligations to see that the income is replaced in some other way.

The time has come for the Government to take some real action to back the farmer in maintaining his position in egg production. If no action is taken, or even if the decision is postponed, there can be little doubt that egg production will pass out of the hands of the farmer and become another industrial enterprise.

I understand that in the last few weeks the National Farmers' Unions and the Egg Marketing Board have put forward proposals to the Minister. The unions suggested differential prices for different sizes of laying units. The Marketing Board has suggested transferable production quotas for each producer. I have no doubt about advocating to the Minister transferable quotas. For the last 10 if not 20 years, economists on both sides of the Atlantic have been advocating transferable quotas as the only logical solution to over-production on the land. They appeal to me, because if they are transferable they do not establish any rigid or inflexible system of egg production. If there are real economies in large-scale production of eggs, the capitalist can afford to buy out the small farmer. But at least the farmer will get some recompense for his loss of income.

On the subject of quotas, if we are going on to them, as I think we should, there should also be non-transferable regional quotas so that no one area can have its total egg production stolen away from it. It would be a sad day if the tycoon in Nottingham stole the whole of Ulster's egg production.

There are, however, several other reasons for a quota system. The Egg Marketing Board is struggling now with the question of over-production, and struggling remarkably effectively to keep up the national consumption, but it has found from experience that a 2½ per cent, fluctuation up or down in production produces a 10 per cent. fluctuation up or down in price.

We will not get stable prices and efficient production unless there is central control over the global production of eggs in this country. We, and even hon. Members opposite, have got accustomed to the idea of standard quantities for milk, bacon and sugar beet. I believe that standard quantity in egg production is the next logical step in this chain of control of production of farm produce.

This is not the place to discuss administrative details or exactly how a quota system would work. If I suggested details the Ministry would spend a great deal of time thinking of its own even more complicated details. The one person that a transferable quotas system penalises is the inefficient producer. It makes allowance for a new producer to buy his way in and for the successful man to increase his flock by purchasing the quotas of inefficient men around him.

I am not the enemy of the commercial large-scale unit. Mr. Eastwood and people like him very possibly can produce eggs marginally cheaper than can be done on the farm. Mr. Eastwood has said, I believe, that he can produce and sell eggs to the housewife for 1s. 9d. a dozen. That may be true, but the real question is: will he and people like him sell eggs at 1s. 9d. to the housewife and will he be content with 15 per cent. or 20 per cent. of the market? The same profit motives which put the large capitalist into egg production will make him sell eggs not at the cheapest price, but at the optimum price, to give him the largest possible profit.

I have mentioned already the inelasticity of the demand for eggs. If a really large operator controlled 20 per cent. or 25 per cent. of production he could play the market up and down to give him the largest profit and not necessarily to provide the lowest price for the housewife. I have suggested that the differences in production between the egg factory and the small farm are marginal. That may not be exactly true today, but it certainly would be true if the small farmer took every opportunity—and opportunities are available—to combine together and secure the advantages of bulk purchase which the big operator has.

There are co-operative organisations of a large size already in the country. Yorkshire and Cumberland are famous for them. If the Minister establishes a system of quotas, which I firmly believe he must do quickly, he must also give every encouragement to farmers to form cooperative associations for bulk buying. I admit that there is not a great deal that the Minister can do to encourage small farmers to get together. They are not the best people at doing that, but cooperation would be an essential part of the system which I advocate.

I put one final argument for some sort of control. There is already adequate machinery, labour and skills to produce all the eggs we want. Is it sound policy, particularly when tied up with some of the things which the Secretary of State for Economic Affairs and others have been saying, to allow that huge amount of equipment to become derelict? Is it sound policy to dispense with the existing labour force and to increase the demand for labour close to large industrial centres, when probably the labour on the farms cannot be employed elsewhere? They should not be left twiddling their thumbs, or hanging about the cattle markets un-productively, or mending fences that do not need mending at all.

All this is for a marginal saving in cost of production of eggs and, quite frankly, a rather doubtful reduction in the price to the housewife. All this, too must undoubtedly cause an acceleration in the drift from the land. We accept that the drift must go on but taking eggs out of farming will make it just that much quicker and increase the unhappiness and difficulty it causes.

One might talk economics till the cows come home. The Minister must make his decision on social and humane grounds, or to be honest, on political grounds. He has been offered a sound scheme which could carry out what I want—to maintain the income of people actually on the land. He should accept a system of quotas.

I believe in the old statement, made so often on political platforms and elsewhere—that the farmers are the backbone of the country. What we really mean is that the farming profession produces the more admirable qualities in men—independence, self-reliance, industry and half a dozen others. I doubt whether an egg operative who clocks in at 9.30 a.m. on Monday in an egg factory in the Midlands, clocks out again at 4.30 on Friday and collects his wages, could honestly be described as the backbone of the country.

Perhaps we can sum it up in this way: do the Government really want the country to get all its eggs from one basket or, at the most, a dozen baskets?

11.46 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)

I am grateful to the hon. Member for Antrim, North (Mr. Henry Clark) for raising this matter and I am sure that he is grateful for the opportunity to do so. He has assured us that he had to wait two months for it and he has strayed a little from his own part of the country.

I thought that the hon. Member was quite right to do so, because the questions raised by him are of great interest to all concerned with the United Kingdom egg-producing industry. They have been the subject of a great deal of discussion and speculation for reasons which he enumerated. I can assure the House that the Government have given, and will continue to give, the issues in- volved the very careful attention they deserve.

The hon. Member referred to the very significant reduction which has occurred in the number of small poultry keepers over recent years and the increasing concentration of the industry in the hands of people with very large flocks. The figures we have certainly bear out the fact that there has been such a tendency and that it has been going on fairly steadily ever since the end of rationing. I will illustrate the position with a few figures.

Only a few years ago, in 1957, almost three-quarters of the laying birds were in flocks of less than 500 birds and less than one-seventh in flocks of more than 1,000. By 1964, less than 40 per cent. of the national flock were in the under-500 group while almost half were in the over-1,000 group.

To put it another way, about half of the egg-laying flock is now in the hands of about 5 per cent. of producers while, at the other end of the scale, over 90 per cent. of the 260,000 agricultural holdings with hens have fewer than 500 laying hens. What has brought about this very substantial change in the structure of the industry?

In the first place, it is part of a general tendency amongst farmers, mainly in the interest of greater efficiency, to concentrate on fewer enterprises, a tendency which has affected farms of all sizes and has reduced the number of individual enterprises for most types of livestock and not just eggs. In addition, in egg production, there have been the very great changes which have occurred in technology, genetics and disease control over recent years. These developments have radically affected the economics of the industry, and this, in turn, has accelerated the tendency towards concentration within it.

The evidence on costs of production indicates that both capital and operating costs decrease as the size of the poultry unit increases because, for instance, it becomes possible to mechanise to a larger extent and unit costs for housing the birds tend to fall, as the hon. Gentleman said. A large producer can also, by virtue of the size of his purchases, secure much more favourable terms from suppliers of feeding stuffs and other requisites, and when selling can even get a better price from the packing station because he can offer regular supplies in large quantities. Thus, as developments in the other directions which I mentioned—mechanisation of feeding, for example—have facilitated the establishment of larger units, this has been occurring to an increasing extent.

The major factor determining the profitability or otherwise of egg production is, of course, the number of eggs produced per bird. Developments in genetics have led to a dramatic increase in the overall number of eggs, with figures for England and Wales rising from an average of 157 in 1952–53 to more like 205 in 1964–65. In consequence, there has emerged something of a tendency for production to exceed demand, with the result that egg prices have been forced down relative to costs. This has decided many producers, particularly the smaller ones, to cease egg production. On the other hand, it has led others to increase their flock sizes in order to maintain the level of their income from eggs; and yet others, mainly the larger producers, have continued to increase the size of their flocks because they have still found it profitable to do so.

While it is true that the rapid growth of the large egg-producing units has created problems of adjustment, these larger units have, it must be said, pioneered spectacular technological advances. In this respect, they surely represent the very type of modernisation urgently needed in the economy in general; and I must add that, although the expansion of egg production has recently outpaced the normal growth in demand and led to considerably lower market prices, it has also enabled the housewife—and she is not unimportant in this matter—for a number of months to buy eggs at bargain prices. Consumption has responded to this, showing an increase from 242 eggs per head per year in 1960, when over 96 per cent, were home produced, to 256 per head in 1964, when over 98 per cent, of eggs were home produced. These are rather significant figures.

Having described how the present situation has come about, I turn to the question of how this leaves the many tens of thousands of smaller producers who are still in the industry. I assure the House that the Government are fully aware of the changing economic circum- stances of the small poultry keeper. We continually keep in mind, as our predecessors did, I think, the interests of small farmers. One of the objects of the advisory services, the production grants and, in particular, the Small Farmer Scheme, is to stimulate and assist the improvement of their management and husbandry.

I think that this is admitted on both sides of the House; and at this time of year these grants to farmers are, of course, carefully considered, in consultation with the Farmers' Unions, as part of the Annual Price Review. Hon Members will not expect me to say more on that subject at this stage, though, no doubt, they would like me to do so.

Mr. Henry Clarke

Could the hon. Gentleman just answer this question? Proposals about egg production have been put forward. Will an announcement about it be made with the Price Review, or will it be reserved for a later decision?

Mr. Hoy

I will come to that presently, because I know that it interests the hon. Member.

The second point that I should like to make is that while I should not for one moment deny that some of the small producers are in a difficult position, it is clear that many others are still finding their egg enterprises a worthwhile side of their farming activities. A large number of these—many producing eggs by the traditional free-range method—are selling all or part of their production direct to the consumer, as licensed producer retailers or through sales on market stalls or at the farm gate. These small enterprises, without undue dependence on subsidy, meet what is evidently a strong and continuing demand from the housewife in ways which are an efficient and economical use of their resources.

At present, almost 40 per cent. of all the eggs marketed in this country are sold in this way. While we do not have full information about the prices obtained for these eggs, it is clear that farmers with direct sales outlets of this nature find it a definitely profitable undertaking. I recognise, of course, that not all smaller producers by any means have access to such markets, and this includes most of those in the areas furthest away from the main population—for example, as the hon. Member said, in many parts of Northern Ireland; and in many parts of Scotland, too, and in Wales and in some of the remote parts of England there is also this difficulty.

One solution, to which the hon. Member has referred, for these producers may be to try to improve their efficiency by consulting our advisory services and availing themselves of the other help that may be available to them. As the hon. Member said, it is always open to them, in groups and in co-operatives, to improve their collective position by securing reduced costs for chicks, feed, and so on, and improving their marketing prospects. Successful developments have already taken place in some parts of the country, and it may well be that the best solution for others lies in the same direction. This, I understand, is the main conclusion reached in the recent National Farmers' Union report on vertical integration and its consequences for the medium and small egg producers.

I cannot, however, give our final views on these matters tonight. At the Annual Review last year, the Farmers' Unions gave us notice that they were concerned about the changing situation of the egg industry and the danger of egg supplies coming from a very few producers. Shortly afterwards, the unions and the British Egg Marketing Board informed the Minister that they wished to place before him their views on production trends. Discussions subsequently took place between the unions and the Board and certain proposals were later put to the Ministry on an informal basis.

It was then agreed that there should be talks between the unions, the Board and the Ministry, and meetings have been taking place for this purpose since the end of November. As, however, those discussions are still in progress, hon. Members will appreciate that it would be asking too much for me to go into that matter further tonight. The problem is a difficult one. We appreciate the feelings of producers and the threat, which the hon. Member for Antrim, North mentioned, from the farms to which he referred with 12 to 15 million hens. All I will say is that this is not threatened within the next year or two as far as I know.

I assure the House and the hon. Member that my right hon. Friend the Minister will take full account of the views which have been expressed tonight. We will, obviously, have to consider all the courses that are open to us. We realise that this is a problem for many of the smaller producers and that there are fears about what developments will take place. We have all heard of Mr. Eastwood. I do not know who is responsible for enumerating the number of hens which he is supposed to be collecting. All I can say is that we appreciate the position of the smaller producer and we will see what we can do about it.

Question put and agreed to.

Adjourned accordingly at one minute to Twelve o'clock.