HC Deb 17 March 1965 vol 708 cc1286-97
The Minister of Agriculture, Fisheries and Food (Mr. Frederick Peart)

With your permission, Mr. Speaker, and that of the House, I should like to make a statement on this year's Annual Agricultural Review, the details of which are given in a White Paper available in the Vote Office.

One of the Government's aims in this Review has been to promote developments in agricultural policy which we believe must be made if the industry is to go on increasing productivity, and so improve its income while reducing its need for Exchequer support. One of agriculture's main problems is the wide differences between farms. There are many farm businesses which already provide a satisfactory full-time livelihood. But there are far too many others which, because they need better management or are too small in size, cannot do so at reasonable prices. Our objective is to create conditions in which such farmers can raise their standards.

In this Review, we are making a start on these longer-term developments by introducing a number of new production grants and revising some of the existing ones. We shall help the smaller farmer to improve his farm business by making better farm management the essential object and condition of a small farmer grant. At the same time, we shall extend the upper limits of the schemes so as to make them available to many more farmers, particularly the smaller dairy farmer and livestock rearer.

We are also introducing wider agricultural credit facilities, and providing grants for agricultural co-operative marketing. In addition, we are concentrating more help on the hill and upland areas. The hill-sheep subsidy will be made an annual grant on a flat rate; the hill-cow subsidy rate will be raised, and we are bringing in new winter-keep arrangements. There will also be an urgent review of the more fundamental long-term problems in the hill and upland areas.

These measures will give help to those in special need who are willing and able to help themselves. But many of the smaller farm businesses, if they are to succeed, must also obtain the advantages which come from larger-scale production or marketing. We are, therefore, planning measures to encourage an increase in the size of holdings on a voluntary basis, and to extend further help to agricultural co-operation over a wider field.

Turning, now, to the present position of agriculture generally, actual farm income for this year is expected to be £472 million—a record figure, and £63 million more than last year. Adjusted for normal weather conditions, the forecast for this year is £456½—about £30 million more than last year. Output is up substantially, and the growth in productivity has continued.

Coming to the commodities, let me deal, first, with milk. A number of producers are still giving up dairying, but the fall in the dairy herd now seems to have been checked, and production has risen slightly. Producers' prices have gone up appreciably. In view of the importance of the dairy herd, not only for milk but also for beef, the Government have decided to increase the guaranteed price by 1d. a gallon. This change, together with increased distributive costs, will require the retail price to be raised by ½d. per pint with effect from 1st August.

After a temporary decline, the beef herd is now recovering. But, in view of future world prospects, we are encouraging expansion of home production by an increase in the guaranteed price of 4s. per cwt. At the same time, we are widening the calf subsidy to bring in more calves and increasing the rate by 10s. We are also increasing the hill-cow subsidy by £1. The sheep breeding flock continues to grow, and no change will be made in the guaranteed price for fat sheep or for wool. The new flat rate subsidy for hill sheep will be 18s., compared with an average of 9s. 6d. over the last five years.

Pig numbers have considerably increased, and a further substantial rise is forecast. For much of the last year, however, the market for pigs has been reasonably strong and, in view of this, the Government have decided to raise the middle band—in effect, the standard quantity—by 900,000 pigs. We are also widening the middle band, and the steps on either side of it, so as to make changes in the guaranteed price less frequent. The decision, first announced two years ago, to abolish separate stabilising limits and to reduce the quality premiums will now be implemented.

The combined effect of all these steps would considerably increase profitability and so run the danger of encouraging too high a level of pig production. As some offset, the basic guaranteed price will, therefore, be reduced by 1s. 7d. per score, but the immediate net effect will be that, on average, pig producers will be getting 11d. per score more than at present.

This year, egg production has outrun demand. Although there are signs that production next year may be somewhat less, technical efficiency is still increasing. To try to avoid a return to surplus, the guaranteed price for eggs will be reduced by 1d. per dozen.

Cereals production has risen to a very high level this year. In consequence, we are obliged, under the cereals agreements on minimum import prices made by the previous Conservative Administration, to take remedial action with the purpose of restoring a fair and reasonable balance between home-grown and imported cereals. The standard quantities for wheat and barley will be increased to take account of the growth in consumption, but the guaranteed prices will be cut by 1s. 1d. and 1s. 4d. per cwt. respectively. The guaranteed price of potatoes and sugar beet will be increased by 5s. and 2s. 6d. per ton respectively. The fertiliser subsidy will be reduced by £2 million, and the lime subsidy by £750,000.

The net effect of the Review decisions will increase the total value of the guarantees by over £10 million. This will mean that in the present circumstances of the national economy, the agricultural industry will, like others, be expected to absorb this year, through its increasing productivity, a large part of its increased costs of about £29 million. The present determinations will, however, give the industry the opportunity to improve its income, and a start has been made on policy developments of great importance to the industry in the longer term.

Sir M. Redmayne

Is the Minister aware that we shall study the detail of the preamble of his statement with some interest? But is he also aware that the body of his statement will be received with dismay, not only by farmers but by the millions of people throughout the United Kingdom who depend on a prosperous farming industry?

Does the right hon. Gentleman really maintatin that 1d. a gallon milk will stop the drift from dairy farming? Will he not be said in this matter to be penny wise and pound foolish? Nothing is said of the standard quantities for milk. Are they increased? If so, what will be the product of that increase, and does it provide in any sensible way for the increased costs of the industry?

Where does the right hon. Gentleman stand on the brave statement he made at the last Dairy Show that there would be an assurance of stability? Is this an assurance of stability for the industry? Equally, of what worth are minor improvements for small farmers when so many small men depend on a reasonable price for milk to pay them a living? Is the Minister satisfied that 4s. per cwt. for beef will give the impetus that scarcity demands? What has happened to his own previous conviction, publicly stated, that there should be longer-term guarantees, as has been done before in similar conditions?

What are the increases in the standard quantities for wheat and barley? Is it not true to say that the cuts made are the maximum under the Acts? Is it necessary on this scale, or has there been, as we have good reason to suppose from previous things said on these occasions, some political prejudice against the big grower?

I will not weary the House with further questions. [HON. MEMBERS: "Hear, hear."] We shall undoubtedly want a debate on this Review. In view of its nature, I feel that that debate should be in Government time and should be soon.

Finally, I should like to ask the Minister where he himself now stands, in view of all the grave statements he has made during the last 18 months, of which I give one example, Farmers have nothing to fear but much to gain from a Labour Government". Where does his party stand in respect of its manifesto— Farmers, too, will be given a new certainty."? After this Review, the only certain thing in farming will be uncertainty as to the intentions of the Labour Government. I would ask the Minister what his own intention is and whether he intends to resign.

Hon. Members

Resign.

Mr. Peart

I hope that hon. Members opposite will listen to my reply to the right hon. Gentleman. We are giving an award which means for the milk producer a further increase of £11 million. Nine million pounds will come from the increase in the price per gallon and £2 million will come from the increase in the standard quantity. This is an award of £11 million more than they had last year. It is on top of last year's award. This really is generous. [HON. MEMBERS: "Oh."] Let me explain to hon. Members. They must listen to the facts. Apart from the last Price Review, which was in an election year, this is the most generous award for milk since the scheme was introduced in 1954–55.

I turn to the global award of £10 million. I would remind the House of the figures under the Conservative Administration: 1957, plus £14.27 million; 1958, minus £18.90 million; 1959, plus £3.04 million; 1960, minus £8.96 million; 1961, plus £14.16 million; 1962, minus £10.85 million; 1963, no change; last year, which was an election year, plus £31.22 million. This year, in the interests of the nation, it is plus £10.43 million.

Mr. Turton

Will the Minister say whether this is an agreed Review?

Mr. Peart

It is not agreed. Very few previous Price Reviews were agreed under a Conservative Administration.

Mr. John Hynd

Is my right hon. Friend aware that many hon. Members on this side of the House are not inspired to learn that another £11 million is to be poured down the drain for this industry, which is a free enterprise industry? Despite the howls of protestation from hon. Members opposite, they are only too anxious to milk the national cow. Why do we apply two distinctly different principles in the case of the agricultural industry and, for instance, the transport industry?

Mr. Peart

I believe that this award of plus £10 million is reasonable and right in the national circumstances. Added to that, the Review outlines a long-term policy for the industry to make it more efficient. We believe that this is the right approach.

Mr. Stodart

What are the different types of calves that the Minister proposes to bring into the subsidy? Is he aware that, although his award to the hill sheep industry is welcome, what he has said will do absolutely nothing for the keeper of low-ground sheep, who has been swinging over to grain, which is a more profitable undertaking? Does the Minister think it logical to cut the fertiliser subsidy at a time when his policy is directed at increasing beef, which requires more and better grass, which, in turn, requires the incentive of fertiliser?

Mr. Peart

As will be seen from the White Paper, new arrangements for calf subsidies will enable heifer calves, for example, now to qualify, and this will be a major step forward.

On the question of my approach to hill farms, I think that what I am proposing will be acceptable to the industry. We are increasing subsidy rates. I also emphasise, as I have stressed in my Statement and in the White Paper, that we are embarking upon a new Small Farmer Scheme which will help many sections of the industry. We think that this is right.

On the question of fertilisers, obviously we cannot go on continually seeing the fertiliser subsidy increase. We are making a small adjustment.

Sir G. de Freitas

My right hon. Friend referred to grants for co-operation. Is he aware that many of those engaged in agricultural co-operation would prefer long-term loans repayable at market rates to enable them to enter food processing, rather than grants of money under schemes which restrict the co-operative enterprise which is now in the land under the auspices of co-operative organisations?

Mr. Peart

I am anxious, as I have said, to have grants for aid under the Small Farmer Scheme, which is important. This will bring in approximately 40,000 more farmers. We are extending the principle of co-operation that is now enjoyed by the horticultural industry under the 1964 Act. I am extending this to agriculture generally. I am also having a special investigation of the whole future long-term approach in relation to credit and co-operation.

Mr. Grant-Ferris

Does the right hon. Gentleman realise that in my constituency of Nantwich, where there are probably more dairy farmers than in any other constituency, his statement will be regarded with the utmost gloom and despair? Does he further realise that the trend which started in the last Review, or going towards the 25 per cent. increase which farmers have claimed, has now been absolutely reversed? Does he not think that he will, in all probability, go down as the most hated Minister of Agriculture there has ever been?

Mr. Peart

If the hon. Gentleman uses such extravagant language as that, he must be responsible for it. I hope that I will go down as a reasonable Minister who has also to take the interests of the nation into consideration. After all, we are increasing the amount for the milk producer by £11 million. I also have a responsibility to the consumer.

Mr. Hayman

Will my right hon. Friend say what progress is being made in the talks about the egg guarantee system between producers and the Egg Marketing Board?

Mr. Peart

Those talks are still continuing with the Board and the producers. I am waiting for further discussions with them.

Mr. Kitson

Is the Minister aware that, although many of us on this side of the House recognise the interest he has in agriculture, we are absolutely shattered that he is incapable of carrying his Front Bench with him? The only reasonable thing he could do is to resign. Would he tell us what the cost to the consumer would be of ½d. per pint over 12 months?

Mr. Peart

This increase of £11 million is the most generous given to the industry, apart from in an election year. Specifically, it will mean ½d. a pint for four months; that is true. This will have to be borne by the consumer. One has to balance in the interests of the nation what is right, and I think that this is reasonable.

Lady Megan Lloyd George

Is the Minister aware that, with the exception of the pre-election Price Review, this is an infinitely more satisfactory Price Review than any produced by the Administrations of hon. Members opposite. May I, therefore, congratulate the Minister on a sane, balanced and fair Review? May I also welcome the special assistance that has been given to small farmers and hill farmers? Would he tell the House something of the terms and the form of the agricultural credit which he proposes? Further, when does he hope to set up the meat and livestock commission, which is an immediate and urgent necessity for the future long-term planning and efficiency of the industry.

Mr. Peart

On the specific proposal for the marketing of meat, I believe that the introduction of orderly marketing is important and, therefore, we must act quickly. I have already sent out letters to the organisations in the meat industry who are affected, and to the producers, giving details of my proposals for a meat commission. I shall be discussing the matter with those interested parties I believe that this is urgent.

Again, on the question of the award, it will be seen from the figures that this is one of the most generous awards that we have had in the circumstances. There has been extravagant talk about 6d. on a gallon of milk. This would have meant an increase of £50 million to the producer, but we could not do this. I hope that hon. Members opposite will be reasonable.

Mr. Kimball

Is the right hon. Gentleman aware that this Review will lay firmly to rest once for all the ghost of the noble Lord, Lord Williams of Barnburgh, in the country areas, and that the Review will be greeted with sorrow as much as with anger throughout the countryside?

Mr. Peart

I cannot accept that. If the hon. Gentleman will carefully read the White Paper he will see that there is a policy for long-term development.

Mr. Hazell

On how many occasions over the past 13 years has the Price Review been agreed with the National Farmers' Union?

Mr. Peart

I gave examples for each year—

Hon. Members

Answer the question.

Mr. Peart

Five were disagreed in the last nine.

Mr. Scott-Hopkins

Perhaps the right hon. Gentleman will answer some of the questions that my right hon. Friend the Member for Rushcliffe (Sir M. Redmayne) put to him earlier. He asked whether the rise of ld. a gallon for milk will cover the increased costs that the dairy producer will have to meet.

Further, will the right hon. Gentleman tell the House whether these credit arrangements will mean cheap credit rates that he talked about during and before the election, or whether it will be an ordinary rate of interest from banking and other institutions.

Mr. Peart

The hon. Member has been in the Ministry of Agriculture and he knows there is a convention that the costs of particular commodities are not given. Costs affecting labour, and so forth, are given in the White Paper, but I am following the convention and I think it right to do so. It is hard to estimate an exact figure, and the hon. Member knows why.

On the question of credit, my proposal is to extend what was done under the Horticulture Act, and the hon. Gentleman knows what that was.

Mr. Emrys Hughes

Is my right hon. Friend aware that I represent more dairy farmers than the hon. Member for Nant-wich (Mr. Grant-Ferris) and that they produce better milk? Is he aware that recent rent increases in Scotland amount to as much as 3d. a gallon on milk, and that hon. Members opposite who wish to show sympathy with the farmer should set an example by reducing his rent?

Further, is my right hon. Friend aware that it is estimated by the "Farmer and Stock-breeder" that the farmers now owe £550 million to the banks in overdrafts, of which £56 million are owed by the farmers in Scotland? Will these agricultural facilities help to reduce the immense burden of interest rate that the banks now charge to the farmers?

Mr. Peart

My hon. Friend will appreciate that it was a Labour Government who first introduced, in 1948, legislation to protect the tenant farmer, and that it was a Conservative Administration, in 1958, who weighted instructions to the arbitrator as against the tenant farmer in relation to rents.

Mr. Bryant Godman Irvine

Can the right hon. Gentleman tell us whether the £11 million which he has mentioned in connection with dairy farmers is any real advance in the amount which they will get? Secondly, can the right hon. Gentleman say whether the industry, which, I think he said, has produced £29 million as a result of increased efficiency, is receiving an adequate reward for that effort in being allowed to have £10 million?

Mr. Peart

As I have continually explained, this is more generous than previous awards except for last year—much more generous. As I have said, on milk it is £11 plus, and this will help.

Several hon. Members

rose—

Mr. Speaker

We cannot deal fully with this matter by means of questions.

Mr. George Y. Mackie

On a point of order, Mr. Speaker. Is it in order that the Liberal Party should not be called, representing as we do very large agricultural areas?

Mr. Speaker

I am very sorry, but I cannot manage to ensure that all parties ask questions. This cannot be done. If the hon. Gentleman will look round he will see that it is manifest that we cannot hope to deal with this matter today.

Mr. Hooson

I appreciate your point, Mr. Speaker, that there are Members on both sides of the House who wish to speak, but, nevertheless, there are many members of the Conservative and Liberal Parties who represent agricultural constituencies and who have not been called. Further, we represent 3 million votes.

Mr. Speaker

That is an argument about how many votes various hon. Members represent. The point is that I am entitled to allow a few questions on a statement—just a few, nothing about parties or areas. Generosity in this matter, I am afraid, would be at the expense of other business. That is the trouble. I cannot even get round the map, let alone round the parties.

Captain Orr

Further to that point of order, Mr. Speaker. If at any time you should be giving consideration to the size of parties, would you remember that there are nine Liberals but there are 12 Ulster Unionists?

Mr. Speaker

And a large number of hon. Members representing Wales, and ex-Ministers and many hon. Members who are very interested in this subject. I am very sorry. I must ask for the sympathy of the House and request hon. Members to be sensible about this.