HC Deb 15 March 1967 vol 743 cc501-15
The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

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

This year, in the Review, the Government have considered what progress has been made in the selective expansion plan. This is more important than ever. Last year's difficulties make it even more necessary to secure all the import savings we can from our farmers.

Broadly, the arable side, particularly cereals, is expanding in line with the programme. The livestock side, particularly meat, is making less satisfactory progress. Overall, net output is tending to decline. While the labour force is falling rather faster than in the programme, the decline in output means that the industry's productivity is rising more slowly than we had hoped.

The Government have kept fully in mind the requirements of prices and incomes policy. While the particular criteria to apply from 1st July are still under consideration, it is clear that there will be continuing need for moderation in regard to prices and incomes. On the other hand, more needs to be done to help agriculture fulfil the programme.

We have always recognised that agriculture must have the physical and financial resources required to increase output and productivity in accordance with the programme. We have recognised, also, that farm income is a main source of the finance for any further investment the industry may need to make.

For the industry as a whole net income has remained virtually unchanged during the last three years. The forecast for 1966–67 is £472 million, almost the same as last year and slightly below 1964–65. Costs have increased by £15½ million. This figure does not allow for any increase there may now be in fertiliser prices, but we have allowed for this in our determinations. Against these cost increases must be set the industry's rising productivity, estimated—taking one year with another—at about £30 million.

Our conclusion, after weighing these factors, is that the industry needs an increase in income to finance further investment, particularly on the livestock side, and that it should get this in the national interest. If not, the expansion programme will fail.

The programme puts particular emphasis on beef. The beef herd has been expanding, but falling market prices last autumn produced some lack of confidence. The dairy herd, from which two-thirds of home produced beef comes, is static. Further incentives are needed. We shall increase the guaranteed price for cattle by 5s. a cwt., the calf and the beef cow subsidies by £1 a head, and the hill cow subsidy by £1 5s. a head. These incentives cover all stages of production from rearing to fattening.

To encourage expansion of the dairy herd we are increasing the guaranteed price of milk by 1½d. a gallon, inclusive of the increase in the standard quantities on account of the rise in liquid consumption. The retail price has to go up to 10d. a pint on 2nd April to pay for increased distributive costs and last year's Price Review award. With this year's award we should expect to keep it at 10d. until April, 1968.

The sheep breeding flock has recently fallen. Since an increasing share of the ewes must come from the hills and uplands we are increasing the rate of hill sheep subsidy by 2s. to 21s. This higher rate will apply not only to flocks maintained during the current year, but also for 1967–68. In addition, the subsidy will be extended to bring in about 2 million more ewes in flocks further down the hill. Subsidy on these ewes will be at 10s. 6d. Winter keep subsidy payments will be correspondingly extended. Finally, we shall increase the guaranteed price for fat sheep by 1d. a 1b.

The pig breeding herd has fallen during the last two years. The decline has now been checked, but pigs are well below the level needed. We are increasing the middle band—in effect, the standard quantity—by 400,000, as I announced last September, and increasing the guaranteed price by 8d. a score. We are also adjusting the flexible guarantee arrangements to give a stronger incentive to get production up to the required level, and encourage greater stability thereafter. The result of all this is to increase immediately the effective guaranteed price to producers by 1s. 11d. a score. Quality premiums will cease to be paid, as announced in last year's White Paper.

Production of eggs has over the year as a whole outrun demand. The guaranteed price will be reduced by ¾d. a dozen.

Cereal production is expanding satisfactorily. The growth in consumption justifies an increase in the standard quantities by 100,000 tons for wheat and 500,000 tons for barley. Since barley is outrunning wheat, we are increasing the guaranteed price of wheat by 6d. a cwt. and reducing barley by 7d. The net effect is no change in the cereals guarantee. We are increasing sugar beet by 2s. 6d. a ton. There is no change for potatoes.

The grant under Part I of the Ploughing Grant Scheme will be discontinued. The fertiliser subsidy will be reduced by a little under £2 million a year. We do this after considering all the circumstances, including the recommend- dations of the National Board for Prices and Incomes; the high cost of the subsidy; and the fact that special grants for fertilisers will be available in the hills and uplands after the Agriculture Bill has become law.

The net effect of these changes is to increase the value of the guarantees by just over £25 million. This gives full recoupment for the agreed cost increases, together with a further £10 million, and leaves with the industry the whole of the estimated £30 million gain from increasing productivity. The Government could, consistently with the assurance on productivity given at the 1966 Review, have permitted the industry to retain only a part of its productivity gain.

We have decided that it is right, in the exceptional circumstances of this year, to go beyond this to provide the means for a further substantial investment in agriculture. I firmly believe that, provided farmers respond to the capital injection given at this Review, output and income will resume their upward trend and, most important of all, the industry will be able to make an even greater contribution to the nation's needs.

Mr. Godber

Is the Minister aware that the statement to which we have just listened shows that the Government now acknowledge the truth of the criticisms which we on this side of the House have been advancing for many months, and against which hon. Members opposite voted only a short time ago? He has admitted that the Government have brought stagnation to agriculture, and now appears, at last, to be trying to do something about it. To that extent, I welcome his statement.

Can the right hon. Gentleman answer one or two questions? Does he still accept the targets of the National Plan, and does he expect that this award will enable those targets to be achieved? Can he tell us why he has chosen to spread the increases on beef so wide, when a larger award on the end price would have had a greater impact? Why has he announced a cut of £2 million on the fertiliser subsidy at the same time as approving a 6 per cent. rise in fertiliser prices? Will that not be a bitter discouragement to farmers to use fertilisers, at a time when their increased use is essential?

Mr. Peart

The right hon. Gentleman is rather disappointing today—"Woe Joe". The Review is a means whereby we shall achieve a target which we have set for 1970. The National Plan remains intact. We believe that the Review will provide the capital which is needed. This is the best Review since 1948. It is an agreed review, and it will fulfil the objectives.

On the right hon. Gentleman's question about beef, it was right to help the fattener at all parts of the production chain.

As the right hon. Gentleman knows, the fertiliser subsidy was running at a very high rate. We took note of what could emerge from the Prices and Incomes Board. But, in the circumstances, I think that what we have done is very reasonable.

Mr. Emrys Hughes

Would my right hon. Friend say how much of this £25 million will go into the pockets of landlords? How does he reconcile his statement that net incomes have remained the same for the last three years with the fact that, not so long ago, he told me that farmers' rents had increased, particularly in Scotland? Is he satisfied that he can maintain the level of milk production under the scheme?

Mr. Peart

Yes, certainly. I am anxious to help farmers to invest and see that we achieve a selective expansion programme, whether they be owner-occupiers or tenant farmers, so that I do not think that the argument about static incomes applies. I am anxious to provide the income and, out of that, the necessary investment. The increase of 1½d. a gallon on milk will help us to get the dairy herds going, because, in the end, the dairy herds provide two-thirds of our meat needs.

Mr. Turton

Is the right hon. Gentleman aware that the Chairman of the Egg Marketing Board has declared already that any cut in the price of eggs will have a disastrous effect next autumn for housewives, for producers and also for our balance of payments?

Mr. Peart

I know, and the right hon. Gentleman has pressed me on imports. But we cannot allow output to outstrip demand. What we have done is reasonable in the circumstances, and I am glad to say that it has been accepted by the producers.

Mr. Elystan Morgan

Will my right hon. Friend accept that the rise in the price of milk will be welcomed by milk producers, especially those in Wales, where the cost of production is between 3d. and 4d. a gallon higher than it is in the rest of Britain? Will he not close his mind to acknowledging the differential in production costs at some time in the future?

Mr. Peart

The award of 1½d. on the guaranteed price has been accepted by producers. It will be of great benefit to producers in both England and Wales. I will take note of what my hon. Friend has said.

Mr. Alasdair Mackenzie

Is the right hon. Gentleman aware that we on these Benches welcome the Review as an agreed one? We note that at last the Government have realised that farmers are in a difficulty and that they cannot possibly contribute to import saving in the way which is within the capability of the industry unless they have some capital. We also welcome the help given to hill and upland farmers, because we realise that, without something of this nature, many of them will quit the hills and uplands during the course of this year. We think that—

Mr. Speaker

Order. We are all very fond of the hon. Gentleman, but he must ask a question.

Mr. Alasdair Mackenzie

Is the Minister aware that the 5s. per cwt. increase on beef is not a sufficient incentive? Is he also aware that in the opinion of the egg producers, his proposal is a very weak one and—

Mr. Speaker

Order. I think that that is enough for the Minister to be going on with.

Mr. Peart

I have explained about beef and eggs, but I am glad that the spokesman for the Liberal Party today has shown much more objectivity than the spokesman for the Conservative Party.

Mrs. Braddock

Can my right hon. Friend say what the effect of his Price Review will be upon the housewife?

Mr. Peart

Certainly. I believe that it will stimulate home production. We must always remember that, under the present system, we produce food at cheaper prices than any other industrial country in Europe.

Sir H. Legge-Bourke

Is the right hon. Gentleman aware that, although the increase in the sugar beet price is to be welcomed, the tiny increase in wheat, offset by the considerable reduction in the price of barley, will cause great dismay in East Anglia? Will he recollect that, only recently, the Chairman of the Potato Marketing Board expressed concern about the acreage now being planted for potatoes? Why has the price remained the same?

Mr. Peart

I cannot accept what the hon. Gentleman says. In my statement, I explained fully the position as regards barley and wheat. I think that we have struck the right balance. Guaranteed prices have been adjusted, and there is an increase in the standard quantities. For potatoes, there is no change, but this should not give rise to dismay, because the producers have accepted it.

Mr. MacLennan

Will my right hon. Friend accept that we on this side of the House are very satisfied with the Review and, in particular, with what he has done for the hill section—the hill sheep subsidy? Will he answer two questions about it? First, in the event of the hill sheep section of the industry not recovering entirely during the course of this year, can there be a further increase in the subsidy despite the fact that he has fixed it for two years ahead? Secondly, can he say on what principle the extension down the hill is to be made for this new subsidy of 10s. 6d.?

Mr. Peart

I must not go further than what I have done. The award is considerable. We have given direct help to the farmers. The hill cow subsidy goes up by £1 5s. The hill sheep subsidy is increased by 2s. We are moving forward the date of payment of the hill sheep subsidy so that, in 1967 and 1968, farmers will get payments in respect of both 1966 and 1967. As the hon. Gentleman said, we are extending the hill sheep subsidy to a wider area.

Also of importance to Scotland is a corresponding extension in the winter keep subsidy. All these measures, especially the higher calf subsidy, are a considerable step forward. I would rather that he judged now what we are doing. If there is any change, I shall always look at it.

Mr. Stodart

Is the right hon. Gentleman entirely satisfied, glad as I am to see the ewe subsidy going downhill, that the sector is getting the encouragement it deserves, when it is compared with what he has done for the beef sector of the industry, particularly in view of the terrible year, and months before, which the sheep industry has had?

Secondly, can he say how much of the award is coming to Scotland out of the £25 million? I notice in the White Paper—something which he did not touch on—the new grant for beans as a break crop. Can he say whether he gave any thought to encouraging rape?

Mr. Peart

We shall have consultation with the unions about break crops and field beans and will consider rape very carefully.

On the question of Scotland, the proportion of the award is about one-eighth of the £25 million. The proportion of the U.K. farm output in Scotland is one-ninth. That is reasonable. As to how the award for ewes compares with the help given to beef, I would say that we are not here comparing like with like. What we have decided is sensible and wise, and I hope that it will be accepted. The producers will welcome it.

Mr. William Edwards

Is my right hon. Friend aware that, as we have a subsidy-based agricultural industry, any increase in the subsidy will be welcome? Is he also aware that the level of profitability on beef, even with its increased price, is not sufficient to divert small farmers from milk production into beef production, which is what the National Plan calls for?

Mr. Peart

My hon. Friend must bear in mind that the small farmer will benefit, particularly from the emphasis which I laid on milk and pigs. They are typical products of the small farm. I think that the Review will help very considerably many small farmers.

Mr. Kimball

Is the right hon. Gentleman aware that many forward-looking farmers will be disappointed that he has not used this agreed Award to bring our support price system more in line with the support price system practised in the Common Market? The Minister is tinkering about with subsidies and production grants and most of us will realise that his well-known bias against the Common Market is obvious in the Review?

Mr. Peart

I am rather surprised at the naïve—naïve in the sense of farming—and malicious question of the hon. Gentleman. No hon. Member can really suggest that, in a Review of this kind, we could have the prices that operate in the Community. It would be absurd to try; one could not do it. This is a very generous and wise Review. It is also the best since 1948. I take the view about the Common Market that we should make our agricultural industry strong, viable and competitive, so that whether or not we go into the Market the industry can stand on its own feet. That is what I want. I have always argued that we should negotiate from strength. I want us to have a strong and prosperous industry, and this is what I am seeking to bring about.

Mr. Tony Gardner

Will my right hon. Friend accept that despite the somewhat obvious difficulties of the right hon. Member for Grantham (Mr. Godber), the whole House will welcome the fact that he has an agreed Review this year? On the question of the injection of capital into agriculture, can he say to what extent he bore in mind, in making the Review, the need to encourage the development of agricultural co-operatives?

Mr. Peart

Not so much specifically in the Review. As my hon. Friend knows, in my Agriculture Bill, which is before Parliament, I have a special Clause on producer co-operation. I believe that all farms which may be involved in a producer co-operative will benefit from the Review. The Bill is designed to give the special aid which is required by producer co-operatives.

Mr. J. E. B. Hill

Is the Minister aware that although the increase in income is undoubtedly welcome, it will not necessarily result in increased long-term capital investment? That must depend on confidence. Would the Minister agree that at the moment farmers do not yet have confidence in what he may or may not do in two or three years' time?

Mr. Peart

I can only point out what the N.F.U. Council resolution states. It says: This Review is a genuine attempt to provide the industry with the additional capital resources currently required for the progress of the selective expansion programme. The producers believe that this Review is sensible and for this reason it gives confidence to the industry. I hope that hon. Gentlemen opposite will cast aside their political prejudices, will be objective, and will recognise that this is a fair Review.

Sir G. de Freitas

Is my right hon. Friend aware that although both beef producers and consumers will agree that this is a sensible price Review, what worries the beef producers in my constituency is the possibility of a depression in the cattle trade such as we had last year. Will he bear that in mind?

Mr. Peart

Certainly. My right hon. Friend is perfectly correct. When I spoke in the major agricultural debate, I dealt with the importance of marketing in particular, and the phasing of supplies upon our own markets. Irish supplies had been affected by the levy in the Community, and these were, therefore, beamed to this market. I am following this up actively. I recently went to Dublin to discuss this with my counterpart. It is an acute problem.

Mr. Godber

Following up the points made in the last two or three supplementaries, and particularly on the question of confidence, does the Minister recognise that the confidence of many farmers is seriously impaired in regard to the imports which are diverted here by reason of the activities of the Common Market? Did he have any discussions with the National Farmers' Union about any restriction or control of imports which might be necessary if he is to get the required expansion?

Mr. Peart

The right hon. Gentleman well knows that I cannot reveal, in question and answer, what happened during negotiations. It would be a breach of confidence.

I am aware of the problems affecting the industry. The question of imports and orderly marketing is beyond this Review. I recognise that there is a problem—as I have always said. The tragedy is that the right hon. Gentleman never once thought of it.

Mr. David Griffiths

May I ask my right hon. Friend, not so much that the big farmers opposite cannot look after themselves, but what benefit will accrue to the small farmers from this Review? Furthermore, what difference is there between the Review of this year for the small farmers compared to what they were in the years hitherto?

Mr. Peart

The small farmer will particularly benefit by the emphasis we have put in the Award on milk and pigs and, indeed, by the general Award. It will help many small producers. Comparing this Award with previous Awards, this is the best since 1948. Unlike hon. Members opposite, we do not need the stimulus of a General Election.

Sir J. Gilmour

May I ask the right hon. Gentleman whether he is satisfied that as a result of his Review our refreshment department will no longer be interested in buying Danish eggs?

In any consultation with the Secretary of State for Scotland, is he satisfied that the 15,600 acres of sugar beet allocated to the Cupar sugar factory will be taken up as a result of the price increase in this award?

Mr. Peart

The question which the hon. Gentleman has asked me about the refreshment department should he addressed to the new chairman.

I am anxious about the Cupar factory and so is my right hon. Friend the Secretary of State for Scotland. I hope that the acreage will be taken up. We will bear this in mind. I shall be in close touch with my right hon. Friend.

Mr. John Hynd

Is the Minister aware that this award will not necessarily be universally welcomed, particularly as he himself has claimed with some justice that our agricultural industry has made remarkable progress over the last 20 or 30 years? It will be very difficult for many people to understand why we can pour out this largesse to big farmers at a time when we are restricting other incomes, and asking workers in other industries to hold up their pay claims. Will he not consider the merit of the principle so often pressed by members of the Opposition, and see that this lavish outpouring of national assistance goes only to those in real need?

Mr. Peart

I strongly resent my hon. Friend's remarks. There is no question of national assistance. This is an attempt to give the industry capital for investment, and this is right. There is always a risk in farming. My hon. Friend wishes to increase prices further because of certain policies. I am rather surprised at him. This is a reasonable, sensible Review. I defend it, and I resent childish remarks like those of my hon. Friend.

Sir Frank Pearson

I welcome many parts of the right hon. Gentleman's Review, but will he recognise that his reduction in the subsidy for eggs will place a great number of smaller egg producers in a very difficult position? Will he give the House an assurance that he will keep a very close watch indeed on the results of this part of his Review as it affects the smaller egg producers?

Mr. Peart

As the hon. Gentleman knows, I watch how the Review affects production. This is why I took action on the question of pigs—I am talking about the middle band—before the Review. I have noticed the progress of egg production, but I gave the reasons for the cut. I think that it is sensible in the circumstances, but, obviously, I shall watch the situation carefully as we go on.

Mr. Hector Hughes

I congratulate my right hon. Friend on the comprehensive scope of his Review, but may I ask whether he realises that there is one class of food producer who has not received enough attention yet, namely, pig producers in the North of Scotland, who are suffering from competition from Danish pig producers? Will he consider this with a view to giving them some help?

Mr. Peart

As I said in my statement, pig producers, and those in the North of Scotland, will get 1s. 11d. more a score. This is a tremendous incentive, and I hope that it will bring joy to my hon. and learned Friend.

Mr. Grant-Ferris

Is the right hon. Gentleman aware that 1d. per lb. on the price of mutton will bring some satisfaction to sheep farmers, but that 4d. per lb.

was much more likely to be accepted as something which would be a fair minimum which the industry ought to have to enable it to pick up?

Worse than that, is it not a fact that something should have been added on the price of wool because in these days of declining flocks it is better to put something on wool so as to keep up the flocks?

Mr. Peart

The hon. Gentleman can say that I should have made it 4d., or 5d., or 6d. but he must realise that in the circumstances I was quite right. I could not go beyond what I have done.

There is no change in the wool position. We are having further discussions with the unions.

Mr. McNamara

Will my right hon. Friend accept that we on this side of the House accept his Review as being a spendid effort and a further example of his determination to increase the strength of the agricultural industry, whether we enter the Common Market or not?

I have one or two specific questions to ask my right hon. Friend. First, can he say more precisely what effect this Review will have on the housewife's purse? Secondly, as we are increasing the production of barley, but reducing the subsidy, what effect will this have on barley exports, particularly to the Common Market. Thirdly, can he estimate what effect this will have—

Mr. Speaker

Order. That is a reasonable amount of questioning.

Mr. Peart

I think that I dealt with the general effect on the consumer in relation to the importance to him of efficient production, but there are direct effects. Milk is an example, because the increase in its guaranteed price will go on to the consumer. I have the figures here. They show that ½d. a pint on the retail price is equal to about 0.13 of a point in the all-items index. I think that this is reasonable. The price will remain at 10d. a pint right up to April of next year.

I cannot say what will he the direct effect on barley. It is impossible to estimate, as so many other commodities are affected. However, I think that, broadly, the Review will affect the consumer, as it does the producer.

Mr. Peter Mills

Will the right hon. Gentleman bear in mind that this reasonable Price Review is due entirely to the very strong lobbying from this side of the House, and that we are very pleased that it has now got through to him and to the Treasury?

In view of the cut in fertiliser subsidies, will the right hon. Gentleman watch the trend in the use of fertilisers, because it would be wrong to allow farmers to draw on their fertility banks?

Mr. Peart

We will certainly watch the use of fertilisers. I am glad that the hon. Gentleman is changing his tune and really welcomes the Review as being reasonable. I assure him that hon. Gentlemen opposite played no part in this.

Mr. James Johnson

I welcome my right hon. Friend's Statement. I do not think that even the fabulous Tom Williams, as he then was, could have done better in these difficult times.

In view of the snide comments of the farmers' lobby on the benches opposite, may I ask my right hon. Friend what communication he has had from genuine farmers and the N.F.U. on this first-class Review?

Mr. Peart

I hope that my hon. Friend will not think that hon. Gentlemen opposite, while they have their lobby, really represent the views of farmers, because when the Tory Party was in power it continually let the farmers down. We have sought to give the farmers long-term objectives, and this Review is an example of that. The N.F.U. Council regards the Review as a genuine attempt to provide the industry with the additional capital resources currently required for the progress of the selective expansion programme. In other words, the farmers are much more objective than the political bigots opposite.

Mr. Farr

At the risk of being called a political bigot, may I ask the right hon. Gentleman whether he is aware that most hon. Members in the House are delighted that after three years he has at last shown some sense of responsibility in the position which he occupies? May I also ask him whether he is satisfied that what he has done for beef is the right thing, and whether more emphasis should not have been put on the end product? Furthermore, may I ask whether some form of import saving plan can be drawn up to prevent the see-saw which we have had during the past year?

Mr. Peart

As I have said, import phasing is a matter at which we always look and discuss with those concerned. This is an important issue. We have always had a traditionally free market. The hon. Gentleman's proposals would mean a departure, but I will bear it in mind. I have replied on the question of beef. I think that we must have a wide spread. This is a matter of judgment. I took the advice of experts, and I am glad to see that it has been confirmed by the producers.

Several Hon. Members rose

Mr. Speaker

Order. We must move on.