HC Deb 19 April 1967 vol 745 cc763-74

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

11.40 p.m.

Sir John Gilmour (Fife, East)

The Cupar factory of the British Sugar Corporation serves not only Scotland but also the North of England, particularly the County of Northumberland, and has a capacity to slice beet from about 15,000 to 16,000 acres. During the period from 1956 until 1963, an average of about 15,000 acres was treated in the factory but in 1964 the acreage that was sliced went down to 10,500; in 1965 to 8,750; in 1966 to 7,000 and in the present season, of which the sowing season is just about coming to an end, we shall be fortunate if 7,000 acres of sugar beet are sown in the factory's area. This means that rather less than half the potential capacity of the factory will be occupied.

All the sugar beet growers in Scotland are glad that the Corporation has announced its intention to accept contracts for this year and at least another two years but, of course, my interest, as Member for the constituency in which the factory is situated, is not only in beet growing—and I am a contractor to the factory—but also in the effect on employment in the area.

This factory employs permanently about 200 people, of which the majority are males. During the beet season, from October until about the New Year, approximately an extra 180 are employed and this is of no small interest to the area because, in East Fife, we have a considerable seasonal trade in the summer months, when people are employed in the tourist industry, and they have somewhere else to go to when the holiday season ends.

Nearly every year, a refining campaign is run by the Corporation, as is being done now, and another 90 people are employed in the factory as a result. I am sure that it is well known, therefore, that if this factory were to close down the amount of money which would need to be expended to replace it would be very considerable.

In addition, there is a good deal of indirect employment in connection with the factory. The fact that many hundreds of tons of beet are driven in by lorries from rural areas at a time when the grain harvesting is finished and before the main drive in seed production has come up is of great importance to rural transport interests and, in addition, of course, agricultural engineers are employed in servicing beet harvesters and so on, also at a time when they might otherwise not be so profitably employed. This spread of employment is important to the wellbeing of a rural community.

Whilst I stress that there would be a real problem of employment in the Cupar area were this factory to close, I am certain that, in the long run, it is essential to take steps to see that it is put on a viable basis and to have the acreage filled up every year. The loss of acreage really began in 1963 with the disastrous sugar beet season, when the yield went down to under 9 tons to the acre and, of course, as a result, in 1964, there was a loss of 4,000 acres and the contracted acreage went down to little over 10,000.

The average yield per acre in the three years 1964 to 1966 was about 11½ tons. This is worth probably to the growers at present prices about £74 to the acre. At the same time, the United Kingdom yield was running at about 13½ ions to the acre. In this last session, according to a report in the Sugar Beet Magazine. United Kingdom output was about 15 tons to the acre against our average in Scotland over the last three years of 11 tons.

But it would not be fair to paint too gloomy a picture because, in good years, with plenty of sunshine, Scotland can grow good crops. In 1959 and 1960 the average in the Cupar factory was over 15 tons an acre. That was the figure for both years. That underlines the fact that it is essential, after the succession of six poor years, that something should be done now to make certain that we get the factory back on a production basis, making money. We must delay no longer.

I am reinforced in this view because in the recent Price Review the Government introduced the idea of grants towards the growing of a break crop. This is because it has been recognised by the Government and the National Farmers' Union and by agricultural scientists that, particularly in those areas where grain is grown continually, there is need for a break crop. Sugar beet is grown in Scotland in areas where grain is grown, so that the need for a break crop exists in sugar beet areas. If there is such a need, therefore, surely there should be encouragement of beet growing—certainly as we are to encourage the growing of beans. In the Price Review this was said to be only the first step. It was said that consultations would take place with the N.F.U. to see which other break crops should be encouraged. Surely there is a need to make certain that steps are taken now to see that the break crop is continued.

I know that in the past much argument has passed between the two sides of the House as to the exact time at which the change in contract is made. This goes back to 1963 when the free-on-rail contract, worth about £1 a ton to growers, was cancelled. The present arrangement of 3d. a ton-mile and 5s. 6d. for loading is probably worth about 13s. a ton to growers. Of this 13s. the British Sugar Corporation pays 10s. 6d. and the Government pay 2s. 6d. Obviously that is not enough because the average return to growers in Scotland has been £74. The cost has been about £70. The latter varies between farms, but it means that only people over the average are making a reasonable profit.

What should the Secretary of State do? It is essential that he should not wait for the next Price Review but should call together in the very immediate future the N.F.U. and the Corporation. A good time is that of the spring demonstrations, when the Corporation is able to show the cultivation work which is being done. The Secretary of State should call together the National Farmers' Union and the British Sugar Corporation to see what can be done to get the Cupar factory back on a productive level. The only way to do that is by giving a differential price for beet growing in Scotland. I do not claim that it should be given for ever, but it should be given at least over the next two years. Nor is this a particularly new proposal. Differentials are paid for potatoes under the Potato Marketing Board, with different prices between England and Scotland, and by the Milk Marketing Board. There are also the hill cow and ewe subsidies.

May I suggest why this should be done? New methods are coming along, including the use of monogerm seeds, which cut down the cost of growing, and mechanical thinning. These are new methods which in the near future will cut costs and probably make beet growing more profitable. But unless something is done now to make it more profitable. the factory will fade away and it will then be too late to help. When we have to get back to production it will cost three times as much money to start all over again.

As an example of what might be done, I suggest that if the Government do not feel able to pay all the money themselves, then it might be done out of the Price Review. For instance, in the last Price Review an award of 2s. 6d. was given. If 2s. had been applied over the United Kingdom, the 6d. could have been applied especially to Scotland, by agreement with the National Farmers' Union. This 6d., on the total United Kingdom harvesting of 6½ million tons of sugar beet, would have produced £162,000. If we take the Cupar factory at 15,000 acres and at 11 tons an acre, this would produce 165,000 tons of beet. Therefore with £162,000 we should have £1 a ton to be paid by giving the 2s to the United Kingdom as a whole and the extra 6d. entirely to Scotland.

I know that there are factories elsewhere, particularly in the West of England, which are not filling their quota, and this system could be valuable, not only for the Cupar factory, but for one or two of the English factories as well. What this comes down to is that for the lack of something like £150,000 over the next two years, the jobs of 200 to 300 people, and the ancillary employment and everything that goes with it can be lost. I am certain that in the interest of agriculture and employment it is essential that action should be taken now, and I hope that the Minister can give us that assurance tonight.

11.50 p.m.

The Under-Secretary of State for Scotland (Mr. Norman Buchan)

I am grateful to the hon. Member for Fife, East (Sir J. Gilmour) for raising this question. All of us would agree that this is one of the sensitive points in Scottish agriculture, and all the more sensitive because it is not only an economic question, as he said, but because it is a matter of local employment. I recognise that he speaks in a twofold capacity, not only as a keen agriculturalist, with special knowledge of the sugar beet industry, but also as a Member concerned with employment at Cupar. One recognises, too, as he stressed, that there is the tourist industry, but basically it is the sugar factory which is the key industry in the town.

Therefore a great deal of thought and attention must be paid to this question. It might be useful if I looked at some of the points which we have in common. First of all, I recognise that sugar beet is valuable from an agricultural point of view. The hon. Gentleman is correct to stress its importance as a break crop, and he could have gone further and shown that in the Price Review there was an emphasis on this question of the break crop, which went beyond picking out certain crops. There was this concept of good husbandry. Maybe in Scotland we operate already in terms of good husbandry, and do not need this encouragement, but we recognise that good farming methods north of the Border are being rewarded. Sugar beet is a good break crop. I am not sure how far I would want to get involved with the hon. Member as to whether this should be the only concept of a break crop. Certainly it is not unique. It is true that it is a very important one. Even at that, it would still remain the farmer's task to decide, looking at the kind of economics that have been examined, whether this is the kind of break crop he will be going in for.

Mr. Anthony Stoddart (Edinburgh, West)

Might I ask the hon. Gentleman if he would assure us that his mind is open to the possibility of attempting to have sugar beet regarded as a break crop in Scotland for grant purposes? It might be a way of getting round what I readily admit is a difficult problem,

Mr. Buchan

The hon. Member knows me well enough to recognise that my mind is open to every valuable suggestion, no matter from which side of the House it comes. On the other hand, at five minutes to 12 o'clock, he will not expect me to enunciate any new or dramatic form of policy.

The hon. Member, talking of research, which has featured in the discussion said on 1st March: Is enough attention being paid to the conditions under which sugar beet is grown in the northern part of the country? Why are all the yields lower there? Is it because the varieties grown in the south are not suitable in the north? Is it because we do not have the number of hours of sunshine that, generally speaking, the south has? "—[OFFICIAL REPORT, 1St March. 1967; c. 455, vol. 742.] I agree with him. Research on the monogerm may help us to solve what has been the basic agricultural problem of why the yield in Scotland in general has been very much inferior to that in the south.

The suggestion which the hon. Gentleman put forward for dealing with this problem was, as always, the question of the price structure. The hon. Gentleman's solution has the virtue of simplicity, that of taking a large acreage in the south, removing a part of the increase of 2s. 6d. given in the Price Review, say 6d., and giving this to the area of Cupar and thereby solving all our problems. This could be a solution, and one which could be applied to almost any other industry in Britain, even to coal mining. One of the problems of a panacea is that if one steps in in one way, when will we apply it in another?

Sir J. Gilmour

It is true, is it not, that in agriculture we have a differential price for certain products to make up for difficult circumstances, and therefore this should be looked at in that context and not in the other one?

Mr. Buchan

I listened carefully to the hon. Gentleman's argument for a price differentiation. He used as examples milk, potatoes, hill cows, and so on, but if he examines the hill cow subsidy, or the sheep subsidy, he will realise that they are exceptions which we have not tried to emphasise too much in the case, of options. There is no differentiation for the regions as such in the Price Review, but differentiation takes place, not in the form of the Annual Price Review, but in another form, and on a considerable scale. I think that the hon. Gentleman might have given it more credit.

The hon. Gentleman spoke about the drop in yield in about 1964. There was another factor there, and that was the cut in the transport subvention. The acreage was almost halved in the course of two years. The hon. Gentleman quoted the figures. It dropped to below the 7,000 acre mark. In an attempt to deal with this situation, which was in a sense inherited, we have once more increased the transport subvention. It may not be written into the Price Review, but it is a considerable differentiation in costs towards sugar beet.

In England the average transport subvention is about 1½d. To be precise, I think it is 1.6d. If one considers a fairly analogous factory with similar difficulties in England, say the Kidderminster factory, about which the hon. Gentleman knows more than I do, one sees that the transport subvention is about 4s. compared with our 13s. We are therefore giving a considerable subvention, a considerable differentiation in the price structure, whether it is written into the Price Review or not. We are at least taking this step, but I admit that we are not taking the dramatic step of altering the price structure on a huge scale.

Despite what I said about research, despite the fact that the 2s. 6d. may be of some value, despite what I have said about the transport subvention, I understand the hon. Gentleman's anxieties. For obvious reasons we should take pleasure from the fact that in December the British Sugar Corporation gave certain guarantees. The Corporation referred to the acreage and promised to take up to 16,000 acres per year up to 1969 if this acreage can be grown. The task therefore falls on the farmers to grow this crop.

The 2s. 6d. addition has been made, the 13s. subvention remains, and I hope that the hon. Gentleman and his fellow farmers, and the Corporation too, will say, "Let this thing ride and see what comes out of it, and what amount of increased acreage should be used". At the same time I hope that there will be a break through in research into sugar beet. I do not want to be too optimistic about the way things are going. One would hope that we will get that kind of response from farmers, because only that kind of response will solve the problem that the hon. Member has described.

As to the price structure, the Government are certainly doing all that is reasonable. I know that the date this year has come, perhaps, a bit late. The figure was as the hon. Member has said. The present contractual figure is, I think, about 6,800 acres, so that I agree that, so far, we have seen very little change.

Sir J. Gilmour

Would the hon. Gentleman agree that if we wait until the next Price Review, whether it is in February or March, it will be too late? By and large, farmers make up their cropping programmes at least by early in the New Year. If we wait until the next Price Review, irrespective of what happens about whether we go into the Common Market, where beet prices are higher, it will be too late. It should he done between now and the autumn.

Mr. Buchan

I note the point. It is always difficult to take a decision which will affect an Annual Price Review before one comes to the Price Review. I would have hoped that the hon. Member might wait to see what kind of effect the additional 2s. 6d. would have on the situation and, for that matter, additional speculation about the possible effects of the Common Market. It has, however, happened quickly this time.

I agree that the contractual situation has not improved. I hope that the right kind of encouragement will he given to farmers by people like the hon. Member, with his well-known interest in the subject, because of the value of sugar beet as a break crop and because we are continuing the transport subvention. It would seem that we should let the situation ride and see what kind of confidence can be restored among beet growers.

The most important aspect of that confidence was the statement by the British Sugar Corporation that it would take that increased acreage. There will be no question of this being lost. Does the hon. Member for Perth and East Perthshire (Mr. MacArthur) wish to intervene? Because of the well-known eagerness with which the hon. Member faces me, I was sure that we would get a devastating comment on sugar beet from that quarter also.

The position, therefore, is as the hon. Member for Fife, East has stated. We have the problems of agriculture and, in agriculture of a break crop, the Annual Price Review, research, which, one hopes, will improve the situation, and, along with that, the ancillary question of employment. It is true, as the hon. Member has said, that if one were to spend the £150,000 by using one section of the Annual Price Review—a reduction in the subvention—and put it all into one section of the industry, that would of itself solve the problem and keep employment going. That is not a particularly good argument for hon. Members opposite to use. It is not the kind of argument with which to advocate the development of a thriving agricultural economy. The task is really to improve beet production.

Is the hon. Member suggesting that we should let the situation ride at the expense, as it were, of efficient husbandry and efficient farming? I hope not. If he is, it is a new concept of economics from hon. Members opposite.

Sir J. Gilmour

No. What, I hope, I stressed was that if this could be done for a couple of years to bridge the gap—because monogerm seed has been used only this year, mechanical thinning is just developing and there is the big question mark of the Common Market—and to get the factory going at full production, the money which would be spent would be saved by the British Sugar Corporation. All that is being done by running the Cupar factory at half cock is to pour money down the drain.

Mr. Buchan

I recognise the problem. I would have thought that the best thing to do for two years would be to see what difference the encouragement which we have given by the maintenance of the transport subvention, which started only in 1966, makes.

Sir J. Gilmour

Too late.

Mr. Buchan

That may well he cheaper, besides which, if necessary, sugar beet can be brought up, as it is being brought, from the northern areas to Cupar to keep the factory there going.

Mr. Anthony Stodart (Edinburgh, West)

I do not think that there is much need to wait to see the result of the 2s. 6d. One knows precisely what this will mean. It will mean 2s. 6d. a ton on 11 tons an acre, which is £1 7s. 6d. an acre, and that is not enough.

Mr. Buchan

That is a bit rich. Hon. Gentlemen opposite need only look at the figures of the decline in acreage. The decline can easily be seen. In 1962 it was 15,779 tons; in 1963, 14,708 tons; and in 1964, 10,761 tons. That was due not merely to the low yield and terrible winter. After all, there is no guarantee that next year's winter will be bad. It is, therefore, not just a problem of the weather.

Should we expect the Tories to control agriculture in the way that they controlled the economy—by some sort of lottery? There is a clear economic reason for the drop in acreage. The simple reason is that the Tories cut the transport subvention. The real problem must be faced and I am glad to see the hon. Member for Fife, East and his "beet group" here tonight to face it.

We are suggesting that time should be given so that the sensible and practical method we have proposed for dealing with the problem may be allowed to work. The Government accept that there is a problem of differentiation. We agree that we cannot expect this factory to cope with a lower yield. Unlike hon. Gentlemen opposite, we are facing up to the difficulties, including the climatic problems of the area, and we particularly appreciate the transport difficulties. Let us deal with the matter in a sensible way by the increase in the transport subvention.

No hon. Gentleman opposite can be really sure what will happen in connection with the Common Market. It may or may not benefit the sugar beet industry. We are prepared to say that we are not so sure what will happen, particularly since many discussions must take place, including the many international matters that must be taken into consideration.

It should also be remembered that our Price Review this year and the 2s. 6d. are not the only ways of helping those areas which are in a bad way. Because of the general support needed for sugar, we stated in the Price Review White Paper: The objective under the selective expansion programme is that home production of sugar should supply part of any increasing demand within the existing contract acreage and factory capacity and without raising international problems. The total contract acreage is still being fully taken up; but the acreage contracted for in some areas has been falling, with the result that some factories have difficulty in obtaining their requirements of sugar beet". It was, therefore, not only a question of dealing with the difficult areas, and costs, but of continuing to provide the general justice which the Labour Party, from the time of Tom Williams onwards, has tried to give to agriculture. We are endeavouring to provide some generous and intelligent fairness to the sugar beet industry.

But there are particular problems and we have dealt with those by way of the transport subvention. This being so, I cannot understand the attitude of hon. Gentlemen opposite. I accept their anxiety and I have gone out of my way to explain the position of the Cupar factory. This is really a matter affecting the whole development of the Scottish economy, which for 13 years the Tories ignored. In allowing a distortion of the British economy to take place, they left this area with one factory—and that based on an agricultural product on which they were prepared to slash the transport subvention, even though they knew the consequences that that would have on the factory.

I recognise the work that the hon. Member for Fife, East has done on behalf of his constituents, but he cannot shake off the shadow of his party. That is his problem. We, on the other hand, have faced, honestly and directly, the difficulties that exist and I believe that the methods we have adopted may help. I cannot guarantee that they will—and I assure the hon. Member for Perth and East Perthshire that he has no need to get agitated. I intend—

Mr. Ian MacArthur (Perth and East Perthshire)

The hon. Gentleman is spinning out a complacent speech to the House and—

The Question having been proposed after half-past Nine o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at ten minutes past Twelve o'clock.