HC Deb 27 February 1967 vol 742 cc225-34

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

9.41 p.m.

The Marquess of Hamilton (Fermanagh and South Tyrone)

This is my second attempt to initiate this extremely important debate on the pig situation in Northern Ireland, for on the first occasion the House was counted out.

The pig industry in Northern Ireland is highly organised and is geared solely to bacon production. As a result, the alternative and more remunerative fresh pork market is not available to Northern Ireland producers.

Pig production is the most valuable single item of farm output in Northern Ireland. At its peak in 1965 it was worth £34 million per annum out of a total from livestock and livestock products of £103 million, or 33 per cent. of total production, with an output of 2 million fat pigs per annum until last year.

The income from pigs is singularly important to Ulster's economy and is vitally important to a community of small farmers, for farmers of a small acreage are handicapped in the amount of sheep and cattle that can be maintained and as a consequence are specially dependent on pigs and poultry to provide an adequate livelihood. Thus, pig-keeping has become over the years the main source of income of the small farmer, and pigs are the most important commodity of the small acre specialist.

Pig production in Northern Ireland increased year by year, attaining a record of 1¼ million in 1965. Since them, however, the figures have fallen substantially to slightly more than 1 million, representing a drop of 18 per cent. The fall was reflected in all classes of pigs and, regrettably, that decline continues, much to the detriment of producer, processor, and employees of the curing industry and to the Northern Ireland economy as a whole.

In Fermanagh, where the average farm is less than 30 acres and the farmer's livelihood depends so much on pigs, the fluctuation in breeding stock in the past two years is as follows: sows in 1965, 7,315, and in 1966, 5,286; in-pig gilts, in 1965, 907, and in 1966, 802.

What are the main reasons for this deplorable and serious state of affairs, in spite of the fact that producers are both cost-conscious and efficient, especially in turnover, grading and feed efficiency? The first reason is lack of confidence among pig producers in the future of the industry. The second reason is the high and ever-rising cost of feeding stuffs. Barley is at least £2 a ton more than in England.

The third reason is the poor bargaining power of the small farmer, as he is unable to purchase in large quantities. The fourth reason is the credit squeeze and the very high interest rates on borrowed or merchants' capital. The fifth reason is the wide variation in prices between the high and low grading pig. The sixth reason is the decline in the price of bacon pigs. The seventh reason is the rising costs of labour.

As a direct result of this situation, the morale of the industry at the present time is in the doldrums and the confidence of both producer and processor is shattered. This is the direct result of the Government's reluctance to increase payments by raising the guaranteed price.

The Government must also realise that in spite of the present recession in the industry the quality has increased significantly. The percentage of pigs graded A.A. in the main weight range in the second part of 1966 was, 85.5 per cent, compared with 81 per cent, in 1964. If the Government are to achieve and retrieve a healthy long-term Ulster pig industry, and, in particular, the bacon market, then confidence must be injected by the Government into this industry through increased support, otherwise pig numbers will continue to dwindle and fall.

In addition, because of the necessity for a high rate of capital investment in farm buildings, in processing factories and in breeding herds, this industry must be given a long-term policy and at least a five-year stabilisation of guaranteed and remunerative prices. This is imperative if producers and processors alike are to plan ahead with confidence—a confidence which at present is totally lacking.

A healthy Ulster pig industry is essential to the nation's economy and balance-of-payment problems, since in the United Kingdom the consumer spends over £200 million per annum on bacon and Ulster provides between 14 per cent, and 15 per cent, of that figure. In fact, in 1966, Ulster sent 86.3 per cent, of its total production as exports to Great Britain. We in Northern Ireland could provide far more if given the necessary incentive and encouragement.

We look to the Government to assure us of fixed prices which in turn will assure the pig producer of remunerative returns and thereby stabilise and inject confidence into this most important branch of the farming industry. The Government must understand that the industry at present is facing an acute crisis. The situation is the most critical that the industry has faced since the war. The Minister must act now, and act swiftly. He must take action of a positive and permanent nature. In spite of the Government's short-term measures taken last year and the Pig Marketing Board's announcement last month, the incomes of pig producers are well below 1963–64 levels.

To give an example, in 1967 meal costs rose by Is. per cwt., or the equivalent of 7s. per pig. In Germany, the price of feedingstuffs in October, 1966, was exactly the same as in the first part of 1965, while pig prices rose from 53s. per score to just over 70s. per score. During the same time we in Northern Ireland had lower returns, rising costs and a big drop in the pig population.

I should add that there is a genuine fear that pig production in Northern Ireland would become extremely difficult in the European Economic Community owing to our reliance on imported feedingstuffs, apart from the important fact that Denmark would also join in all probability. Also, a report in the Daily Telegraph of 22nd February, in which the Minister was reported to have told a private parliamentary meeting that the pig producers would suffer in the European Economic Community, has not escaped the notice of Northern Ireland pig producers. So, clearly, much more fundamental action must be taken to revive the confidence of pig producers.

The industry also needs the restoration of the separate stabilising adjustments so that if one sector of the industry should hit a bad patch the drop in returns would be limited. Again, the restoration of the quality premium is essential for those who take the trouble to provide what the market requires.

In Ulster, we have shown our belief in the essential nature of a strong bacon industry by building new factories and extensions to existing ones, but the general shortage of pigs for slaughter is having serious repercussions on the processing factories, where heavy losses are being incurred and serious redundancies are taking place. The curing industry in Northern Ireland, with a potential labour force of 2,720 male workers, is currently working at 66 per cent, of total capacity because of a shortage of pig supplies.

Let me illustrate the situation by reference to a firm in my constituency, Ulster-Swift. When Swift & Company, Chicago, was asked to join with the Northern Ireland Pig Marketing Board in this venture in 1963 a reasonable quota allocation was set up to take care of the factory requirements for raw materials. Because of lack of satisfactory price supports to the pig producer and subsequent low returns, many producers have either gone out of pigs or heavily reduced their breeding herds. The end result has been that the original allocation to Ulster-Swift has been reduced to a quota of between 55 and 60 per cent, of that allocation. This has placed the entire project in a serious position, as receipts are not sufficient to cover the overhead burdens of such a vast enterprise.

In addition, my constituency has the largest unemployment problem in Northern Ireland. In this respect Ulster-Swift has not been in a position to increase staff because of lack of raw materials. At present, total staff requirements are 90, whereas the factory has capacity for slaughtering and processing to utilise between 200 and 300 male employees, thereby alleviating our unemployment burden. The brand image of Ulster bacon is becoming more and more popular and acceptable to the trade not only in Great Britain, but also in Switzerland and in Canada. The Government need not expect an increase in this high quality bacon until the producer is given a firm assurance of a fair profit. The level of output is determined solely by Government policy.

9.55 p.m.

Mr. Henry Clark (Antrim, North)

I should like to say a few words in support of the clear, concise and factual statement made by my hon. Friend the Member for Fermanagh and South Tyrone (The Marquess of Hamilton).

I should like to emphasise the real importance of the bacon industry in Northern Ireland. There are 40,000 small farms there and 30,000 pig producing units. One could say that almost every active farmer in Northern Ireland is concerned in the pig industry. Yet in this major industry there has been a 20 per cent, drop in the pig population over the last 12 months. If there were a 20 per cent, drop in the engineering industry in the same period, it would make headline news, but this is merely a Department of Agriculture statistic as it stands.

If the Agriculture Acts of 1947 and 1957 and the National Plan mean anything at all, it is absolutely essential that the Minister should take action to support this industry and put some profit into it. One farmer, who I know keeps accurate records, told me the other day that he lost £1,500 on pigs in the last 18 months, and that is not funny, for he is a good farmer. If the Minister wants to support this active industry and make certain that we do not import 60 per cent., 70 per cent, and eventually 80 per cent, or 90 per cent, of this country's bacon, the Minister must take swift action not only to put a profit back into the industry but to return some confidence to the bacon farmers in Northern Ireland.

9.57 p.m.

The Minister of State, Home Office (Miss Alice Bacon)

As to the United Kingdom's responsibility for agriculture in Northern Ireland, it is sometimes difficult to know whether it is the responsibility of the Ministry of Agriculture, Fisheries and Food or of the Home Office. Tonight it is perhaps appropriate that, with a name like mine, I should be replying to this debate.

I can well understand the concern of the hon. Member for Fermanagh and South Tyrone (The Marquess of Hamilton) and of the hon. Member for Antrim, North (Mr. Henry Clark) in this important matter because the pig industry in Northern Ireland makes a most important contribution to the food supplies of the United Kingdom. It supplies about two-fifths of the total amount of bacon produced in the United Kingdom. For this reason alone I think it is well that the House should have this opportunity of discussing the state of this industry which is so important to the economy of Northern Ireland and, indeed, of the United Kingdom as a whole.

I must point out, however, that the United Kingdom Government do not have the sole responsibility. The Government of Northern Ireland have the prime responsibility for the development of pig production there and for marketing arrangements. However, agriculture anywhere in the United Kingdom is naturally largely dependent on the working of the agriculture guarantees which are the responsibility of the United Kingdom Government, and my remarks are framed having this in mind.

Recently I met representatives of the Ulster Farmers' Union and I know from my talks with them that the anxieties that have been expressed by the hon. Member for Fermanagh and South Tyrone tonight are shared by many people in Northern Ireland. My right hon. Friend the Minister of Agriculture, Fisheries and Food recognises that the bacon industry in the United Kingdom as a whole is going through a very difficult period, and this is bound to have a serious effect in Northern Ireland where the pig industry is almost exclusively devoted to bacon production.

The House will recall the debate on the bacon industry on 1st December last year, when my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture summarised the steps which the Government were taking to meet the situation. These were, first, the decision to raise the middle-band of the flexible guarantee at the 1967 Annual Review of Farm Prices, which, as the noble Lord knows, is now proceeding. It is a very unusual step for the Government to make an announcement of this sort before an Annual Review is held, but on this occasion it was thought necessary to take this action so as to give producers of pigs an assurance that they could build up their herds in confidence and could ensure an adequate supply of pigs to the bacon curers.

Secondly, as my hon. Friend said on 1st December, although home production is falling short of the allocation under the Bacon Market Sharing Understanding, the Government have maintained unchanged for the coming year both the minimum tonnage allocation to the home industry and its proportionate share of the home market. The firm knowledge that the United Kingdom share entitlement of home market needs will remain unchanged, coupled with the decision on the middle band should help to give the industry, both producers of pigs and curers of bacon, greater confidence in the future.

The House will therefore appreciate that the Government have not hesitated to take action to strengthen the industry in the circumstances which the noble Lord has described. Since my hon. Friend spoke on 1st December a further temporary measure has been announced. This is the decision to introduce arrangements for repayable advances to the bacon curing industry to help to tide it over its present difficulties. This assistance, which is available until the end of March, will be available in Northern Ireland, but, as I shall explain, in a rather different way from that in Great Britain.

In Northern Ireland the structure of the industry provides for the Northern Ireland Pigs Marketing Board to buy from the producer and to sell to the curer at prices related to the current realisation price of bacon. The financial burden has, therefore, fallen on the Board and on producers of pigs, and for this reason the repayable advances are to be made available to the Board.

This is clearly right, as the Board is in a position to hold the balance between producers and curers. As my right hon. Friend the Minister of Agriculture said in reply to Questions on 14th December, the measures to which I have referred reflect the Government's desire to see a strong and efficient bacon curing industry. This showed that the Government took the matter very seriously.

Having introduced arrangements for meeting the immediate situation, my right hon. Friend will be discussing with the industry what further action may be needed in the longer term. The House will not need to be reminded of the special assistance grant made to the Northern Ireland Government under Section 32 of the Agriculture Act, 1957, to enable it to promote schemes to assist agriculture there. This grant is made in recognition of the remoteness of Northern Ireland producers from their main markets in Great Britain. It was increased last year to an annual level of £1,750,000 for the five-year period, an increase of 40 per cent, over the previous level.

The Northern Ireland Government, with the approval of the United Kingdom Ministers, has made a scheme financed from this grant by which £250,000 a year is paid to the Northern Ireland Pigs Marketing Board for use in overcoming the effects of remoteness from its main markets. This represents a substantial measure of help for the pig industry in Northern Ireland. I share the Northern Ireland Government's hope that it is proving a worthwhile contribution to the stability of the industry there. I have noted the noble Lord's suggestion about this matter, but, as I have said, the grant was substantially increased only last year.

The noble Lord argued that the pig producer in Northern Ireland has lost confidence in the industry, and he drew attention to the serious decline in the Northern Ireland breeding herd. This inevitably affects the number of pigs available to the curers and, consequently, has an appreciable effect on the level of employment. This I grant him. I am glad to say that the latest figures give us good grounds for hope that the decline in the breeding herd in Northern Ireland may now have been arrested, and I believe that the measures which I have described are beginning to have their intended effect of restoring confidence among producers.

Turning to the question of the profitability of pig production, the noble Lord will not expect me to make any pronouncement tonight in advance of the determination of the prices as a result of the current Annual Review. As he knows, these will be announced next month. I have listened to what the noble Lord and the hon. Member for Antrim, North have said. I am sure that my colleagues will give due note to their remarks when they read them in the OFFICIAL REPORT. As we are now in the midst of the Annual Price Review, I am sure that the House will not expect me to go further than this tonight. However, I assure those who have spoken that we are well aware of the problem and are doing everything we can to help.

Question put and agreed to.

Adjourned accordingly at seven minutes past Ten o'clock.