HC Deb 20 March 1967 vol 743 cc1354-61

6.58 a.m.

Mr. Charles Morrison (Devizes)

I am grateful for an opportunity to raise the subject of the import of eggs. At a time which marks the beginning of the farming day, it is relevant to be debating such a subject for a short time.

Imports of eggs are important to the egg producer, to the Egg Marketing Board and to the consumer. They are a matter of concern to the egg producer at the moment because his return is falling and he is facing hardship. That is particularly true of the medium-size specialist egg producer who does not have the tremendous advantage of scale enjoyed by some other producers, and who, equally, does not have the advantage of being able to carry what is hoped will be his short-term loss on eggs over other items and commodities produced on his farm.

It is a matter of concern to the Egg Marketing Board, because as imports come in and the price of eggs drops, production becomes increasingly uneconomic to certain producers, many of whom go out of production, and then in due course supply does not meet the demand.

Thirdly, it is important to the consumer, because if supplies are not adequate prices are bound to rise inordinately in due course, and this has implications for the cost of living, or, alternatively, imports are forced in to the disadvantage of the balance of payments, or both these things might occur.

It is normal that in January there is an over-supply of eggs on the domestic market. The demand for eggs drops after Christmas and the New Year, while supplies tend to increase with the longer days. The result is that prices drop, but the majority of producers accept this as part of the seasonal trade and take it in their stride, recognising the seasonal cut, and they look ahead in the knowledge that there will be an improvement in prices in due course.

But this year has been one of very special circumstances. First, the mild weather which we have enjoyed this winter has encouraged an early flush in home production. In January of last year the throughput of first-quality eggs was 1,578,000 boxes. In January of this year it was 1,753,000 boxes. In February 1966 it was 1,606,000 boxes, and in February of this year it was 1,718,000 boxes. I think that these few statistics illustrate what a sharp increase there has been in production in the early part of this year.

The mild weather which we enjoyed in this country was enjoyed in other countries, too, and stimulated production there, with the result that in January the Common Market put a levy on imports of 1s. 7d. per dozen, and 11d. for those countries in which minimum import prices had been adopted. Just as the raising of the beef import price into the Common Market last year affected United Kingdom beef producers, so the egg levy and the minimum import price have affected egg producers here.

In the circumstances of the Common Market levy countries like Poland, which are unsophisticated egg producers, but who have surpluses of their own, dumped eggs on the United Kingdom market which became their only outlet. The increase in imports into this country has been very marked in the first two months of the year, and again I would like to quote the relevant statistics. In January 1966, 67,000 boxes of eggs were imported into this country. In January of this year the figure was 93,000. In February 1966 the figure was 66,000, and in February of this year it was 81,000, so in both months there was a considerable increase on last year, with the result that the home market has been glutted not just by home produced eggs, but also by imported eggs, and the price to the producer for standard eggs fell from 3s. 6½d. prior to 7th January, to 1s. 9½d. on 26th February. The Egg Marketing Board has done its best to maintain prices by breaking out and replenishing its stock of egg products at a rate of about 50,000 or 60,000 boxes a week—about double the number broken out at the same period last year. But, in view of the high home production and imports, the Board has been fighting a losing battle.

Last week's Price Review appeared against this background and two paragraphs in it are relevant. Paragraph 10 says: The Government are satisfied that the award is consistent with prices and incomes policy and is essential to enable the industry to continue to make its vital contribution to the national economy through import saving. I agree, but will egg producers be able to continue to save imports if their confidence is shattered as it has been recently and larger production becomes so uneconomical that many give it up?

Paragraph 37 of the White Paper on the Review reads: The United Kingdom is virtually self-sufficient in eggs and the objective under the selective expansion programme is to meet any increase in demand. This is well within the technical capacity of the industry. Again, I entirely agree. But can the industry meet the increase in demand if it is uneconomical to do so? It is misleading to say that the United Kingdom is virtually self-sufficient. In the past two years, we imported about two per cent. of our supplies, so there has been scope for a limited selective expansion.

I imagine that the Government recognise this, because they recently gave an investment grant for a one million bird unit in Scotland. How can this be justified, if they felt that there was already over-production? If they are encouraging such production growth, how can they justify their lack of concern about imports and the cut in the guaranteed price by ¾d. a dozen?

Before the Review, the Chairman of the Marketing Board said: … the review is a long-term measure that affects the industry for a whole year. Confidence has been shaken and any cut in subsidy could have a disastrous effect on supplies this autumn. It could lead to the worst crisis in the board's history. If the Minister doesn't take appropriate action at the review, the responsibility will be on his shoulders. If he is so ignorant that he thinks that high production caused by mild weather is the same as overproduction, then God help us all. We must all hope that that crisis will be avoided, but I fear at present that we may. If no action is taken to restore confidence, many egg producers are bound to give up. We will find ourselves short of eggs in the autumn and, consequently, we will have to import more eggs then, and that will have disadvantages for our balance of payments.

What can be done about the question of imports? The Egg Marketing Board put forward the suggestion that it should be allowed to export. It recently applied for a licence to export eggs, but I understand that its application was refused by the Board of Trade because the granting of such a licence would be incompatible with our obligations under G.A.T.T. It is clear that the United Kingdom is the dumping ground of supplies from other countries. In a letter to me on this subject on 6th March, the Joint Parliamentary Secretary stated: It would, of course, be contrary to our international obligations to ban any imports or to impose control on such imports or their prices. However, if the industry considers that the eggs are being dumped and are causing or threatening them with like injury, it is open to them to make an application to the Board of Trade for an anti-dumping order… That would be under the 1947 Act, and the hon. Gentleman added that such an application would be considered on its merits. The Joint Parliamentary Secretary is aware that there is a considerable delay in the introduction of the necessary procedures and that before the antidumping regulations could be introduced the short-term problem, at any rate for this year, would be over. This illustrates yet again that the anti-dumping legislation is, in many respects, inadequate.

We must, therefore, now look for something new; and two courses are open to us. First, the Government could take steps to introduce minimum import prices. Secondly, the could negotiate to ensure that imports of eggs are phased so that they come in only when eggs are required here. If these two ideas were adopted there would be an assured home supply, a steady price, a healthy home industry, a renewal of confidence, expanding selectivity and an improvement in productivity and efficiency. Without these ideas, or something equivalent to them, I fear that the industry will be beset by crises and will become increasingly uneconomic, unable to modernise and will have little confidence in the future.

I appreciate that this whole problem of egg imports is not an easy matter to solve. It is causing great concern in the industry and I trust that the Minister will have something constructive to say in reply.

7.14 a.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)

I am grateful to the hon. Member for Devizes (Mr. Charles Morrison) for having raised this subject. Although he painted a somewhat gloomy picture, I trust it will be remembered that we in this country meet our total requirements to the extent of 98 per cent. Thus, 98 per cent. of all the shell eggs we consume are produced by our farmers. We are, therefore, talking about the additional 2 per cent.

My right hon. Friend answered a Question on 15th February on this subject, and he said that he did not consider that a case had been made out for any change in our policy on imported eggs. There is no doubt, as the hon. Gentleman conceded in his remarks, that the main factor affecting prices since the beginning of this year has been the seasonal rise in home production. It is usual for production to increase at this time, but the exceptionally mild weather this year has led to a greater increase than usual.

The weekly throughput of eggs through the packing stations averaged just under 400,000 boxes for the four weeks ended 24th December, 1966. Over the first eight weeks of this year, the average increased by nearly 10 per cent. to 435,000 boxes. At this level, it was also up about 7 per cent. compared with January, 1966, and about 6 per cent. compared with February, 1966. It is unfortunate that sales, on the other hand, were rather lower in January and February than during the corresponding months of 1966.

The figures I will give for shell egg imports differ a little from those given by the hon. Gentleman. During January, they amounted to about 95,000 boxes, about 3 per cent. of total supplies of eggs on the United Kingdom market. We have not got official figures for February yet, but according to the Board's provisional estimates they may amount to about 73,000 boxes. For 1967 as a whole, there is no reason to expect that the level of imports will differ much from the three previous years when they represented less than 2 per cent. of our total supplies.

The egg guarantee arrangements, however—and I wish the hon. Gentleman had said something about this aspect—recognise that an excess of imports at certain times of the year could have a disproportionate effect on market prices. They therefore include provision, subject to certain conditions, whereby additional Exchequer payments are made to the Board in any month when imports exceed the level taken as normal for the month in question, and the Board's selling price for the month falls below a specified reference price.

A normal level of imports for this purpose has been determined for each month based on a total of 950,000 boxes for the year as a whole, but reflecting seasonal import variations.

The monthly reference prices have been derived from the indicator price for the year on similar principles, after allowing for seasonal price variations.

The broad effect of this system, which came into operation in 1963 when the revised egg guarantee arrangements were introduced, is that in any month when imports are in excess of the monthly norm, and the Board's average selling price for the month is below the reference price, then additional payments are made to the Board in respect of the excess imports. The payment is at the rate of 36s. per box of 360 eggs on the excess over the norm.

In January, and it appears in February also, imports exceeded the normal level—in other words, the quantity criterion was satisfied—but no compensation was payable to the Board because in both months the Board's average selling price has been above the appropriate reference prices. The House may be interested to hear that since the introduction of these arrangements in 1963, compensation for excess imports has been payable to the Board in seven months only. This year, owing to the widened gap between throughput and sales, the Board had to break out very large quantities of first quality eggs during January and February.

However, the reductions made by the Board in its selling prices towards the end of February have stimulated demand and the Board's sales on the shell egg market have been increasing in recent weeks. I am sure that the hon. Gentleman will be glad to hear that. It is something we are very glad to see.

Eggs represent very good value for money, and while the price is bound to be influenced by seasonal factors it is only right that the consumer should be able to enjoy the benefit of the present supply situation. The increase in sales on the shell egg market, coupled with a levelling off of throughput, has enabled the Board to reduce the level of its breaking out significantly in recent weeks.

I should make it clear that the determination of first-hand selling prices for its eggs and of producer prices are matters for the Board, except that it has agreed with the Government that in determining the prices which it pays to producers it will, so far as is reasonably practicable, follow the pattern of its selling prices, having regard to subsidy payments made by the Government to the Board.

It is often alleged that the eggs that are coming in from abroad are dumped, and I should like to make the position clear on this. If the industry considers that imports are being dumped and that they are causing or threatening it with material injury, it can make an application to the Board of Trade under the Customs Duties (Dumping and Subsidies) Act 1957. Any such application would be carefully considered on its merits.

As my right hon. Friend informed the House a few weeks ago, he had decided, after giving the closest consideration to the representations he had received, that he did not consider that a case had been made out for any change in the Government's import policy on eggs. Frankly, there has been nothing in recent weeks to warrant reconsideration of this conclusion.

We shall naturally continue to keep a close watch on the situation, but certainly on the evidence so far adduced we are still firmly of the view that no changes are called for in our present policy. But as my right hon. Friend made clear when he discussed this matter with the President of the National Farmers' Union, he would be willing to review this conclusion if evidence were produced that imports lay at the root of the trouble. I can give the hon. Gentleman that assurance but, as he says, the whole question is difficult and this matter of increase in throughput and fall in sales makes it more difficult still. If circumstances justified it, I can assure him that we would reconsider the position. We still place great reliance on this industry to fulfil the job it has under the selective expansion programme. Indeed, the hon. Gentleman, perhaps not wittingly, got into a slight contradiction here because he said that people might be going out while talking at the same time of people investing another £1 million in the industry.

There is considerable confidence in the industry. I think that I have shown quite clearly that we have had this seasonal rise, which is much higher than normally takes place and which has created some difficulty, but I feel confident that throughout the year as a whole our imports will not exceed what they have been in recent years, and that is rather less than 2 per cent. of our total requirements of shell eggs.