HC Deb 26 May 1966 vol 729 cc876-80
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)

I beg to move, That the Eggs (Guaranteed Prices) (Amendment) Order, 1966 (S.I. 1966, No. 479), a copy of which was laid before this House on 4th May, be approved. This Order gives effect to the decision at this year's Annual Price Review, announced in the White Paper following that Review, to postpone for two years the reduction in the Exchequer's contribution under the loss-sharing arrangements set out in the Eggs (Guaranteed Prices) Order, 1963.

As the House may recall, the 1963 Order put into effect the changes in the guarantee arrangements for eggs sold through the Board announced at that year's Review. Briefly, the arrangements are that the basic rate of subsidy paid to the Board is the difference between the guaranteed price and the indicator price. This indicator price is the price which the Board might reasonably be expected to obtain from a market which is neither over- nor under-supplied. Both the guaranteed price and the indicator price are determined at the Review.

This basic rate of subsidy is, however, subject to certain adjustments. One of these is made when the average market price achieved by the Board falls short of the indicator price. It is this arrangement with which we are concerned tonight.

When the new arrangements were introduced in 1963, it was recognised that it would be desirable to phase in the new system over a period of years. It was, therefore, agreed that the Government would continue to pay a proportion, although a proportion diminishing over the years, of any deficiency between the indicator price and the Board's actual selling price. The 1963 Order specified the Exchequer's proportion of any such deficiency as 60 per cent. for 1963-64, 50 per cent. for 1964-65, 40 per cent. for 1965-66 and so on. After the end of March, 1969, the Exchequer's liability would have ceased. It was agreed, however, in 1963 that the working of the new guarantee arrangements would be reviewed during the third year of their operation. This was done, in consultanon with the farmers' representatives, as part of the discussions preceding this year's Annual Review.

The House will recall that there has been an important development in egg marketing since the new arrangements were introduced in 1963. Discussions took place between the Government, the Farmers' Unions and the Board to consider what could be done to encourage the more orderly marketing of eggs through packing stations and thereby to bring supply and demand into better balance.

My right hon. Friend announced in the House on 19th May, 1965, that the Board would introduce, on 3rd April, 1966, a system of contract marketing for eggs, designed to promote these objectives. It was recognised, during the review of the guarantee arrangements to which I have referred, that it would inevitably take some time for this new contract marketing scheme to get established and start to exert its full influence on the market.

The Government therefore made a decision designed to assist the Board to stabilise producers' returns during the period before the contract arrangements could influence market prices effectively. This was to postpone for two years the reduction from 40 per cent. to 30 per cent. in the Exchequer's share of the deficiency. Under the 1963 Order, this reduction would have been made this year.

This means that during 1966-67 and 1967-68 the Government will continue to meet 40 per cent. of any deficiency, as they did in 1965-66. In 1968-69, by which time the Board's new arrangements should have got fully into their stride, phasing out will be resumed.

The change made by the Order is in the interests of egg producers. It is supported by the Farmers' Unions, and I accordingly commend it to the House.

11.8 p.m.

Mr. Michael Jopling (Westmorland)

I am grateful again to the Joint Parliamentary Secretary for explaining the change made in the Order. It is a relatively simple one in its wording, which covers a highly complicated Order. As the Minister has said, it postpones for two years the reduction in the loss-sharing liability by the Government when the realised price for eggs becomes less than the indicator price.

On the face of it, I suppose, the Minister, as he has done, would make out that this is rather generous. The House must, however, consider the Order against the general background of the last Price Review, when we had a reduction of the indicator price from 3s. 2d. to 3s. 1d. per dozen and for the second year running we had a reduction in the guaranteed price, this year of 1.6d. per dozen. Therefore, the Government should not be allowed to get away tonight by making out that this is a generous and open-ended amendment.

The reason the Ministry gives for making the amendment is that it will help the Board to stabilise returns before the contract arrangements can effectively influence market prices. Certainly, my hon. Friends and I welcome all efforts by the Government and the Board to improve marketing, and it is remarkable how eager farmers are to play their part in improving marketing in terms of contracting. Indeed, the figures which were given yesterday for contracts in cereal marketing show this, for in the first year of the scheme, from the very beginning, 40 per cent. of the wheat crop and 30 per cent. of the barley crop were sold on contract. That is a remarkable testimony to the alacrity with which farmers take up new ideas for the marketing of their produce. I hope that the farmers will take up the egg contracts as eagerly as they have the cereal ones.

The background to the egg industry is one of increased efficiency and visibly increased productivity. However, there is, I believe, still a place for the ordinary farmer in the egg industry and I do not consider that there will be room for only the giants and multi-million bird units. Indeed, the ordinary farmers with small and medium sized flocks will have most to contribute and I hope that the Parliamentary Secretary will give the latest progress report on the Board's activities., particularly in the setting up of contracting arrangements. This information would be of great interest to the House, particularly in view of the figures given yesterday showing the rise of contracting in cereals.

I was somewhat amazed at the Parliamentary Secretary's speech because he did not speak about the future of the industry. When the original Order was introduced two years ago—which this Order amends—his right hon. Friend who is now the Minister of Agriculture, Fisheries and Food said: It is restrictionism … I ask the Parliamentary Secretary and his Minister to accept that this Order is a stop-gap measure and no more". He went on: There will have to be a new approach, and it is necessary that the Minister, in his negotiations now with the producers and the National Farmers' Union, adopt a wider approach rather than the policy of restriction which is typified by the Order".—[OFFICIAL REPORT, 2nd May, 1963; Vol. 676, c. 1457.] I have looked through the OFFICIAL REPORT at all the remarks which have been made by the right hon. Gentleman and other members of the Government about eggs since they came to power in October, 1964. I cannot find anything to show that they have done anything in the past 20 months to implement the sort of pie in the sky which the right hon. Gentleman was extolling when in opposition. The Parliamentary Secretary must tell us where the Government stand on this matter.

Will he say where they stand, or is this another example of the Government's double-talk, which involves grandiose idealism in opposition and then, when they come to power, they merely extend a scheme which they criticised so much earlier and follow Conservative policy as they find it?

Mr. Hoy

That was a terrible peroration. The hon. Gentleman has not even realised that the election is over. I assure him that his comments will have no effect whatever on the voters. It was not worthy of him. I had meant to congratulate the hon. Gentleman, when I spoke first, on his first appearance at the Dispatch Box. After that peroration, I feel bound to temper my congratulations. However, I do congratulate him.

I did not deal with the whole of egg production, because this is merely an amending Order. We are not discussing the future of the industry in that sense. But while the hon. Gentleman refers to postponing this for two years, I wonder whether he has considered what would have happened had we not taken this action. I appreciate that he is anxious to have some figures. I understand from the Board that producers responsible for over 80 per cent. of the Board's throughput have already signed contracts. Applications are still coming in, so on the figures so far everything seems to be going reasonably well.

Question put and agreed to.

Resolved,

That the Eggs (Guaranteed Prices) (Amendment) Order 1966 (S.I., 1966, No. 479), a copy of which was laid before this House on 4th May, be approved.