HC Deb 11 May 1967 vol 746 cc1853-65

10.27 p.m.

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

I beg to move, That the Fertilisers (United Kingdom) Scheme 1967. a draft of which was laid before this House on 18th April, be approved. This Scheme, which is similar to the current one, continues for a further year the fertiliser subsidy which the House has approved every year since 1952. As hitherto, subsidy will be paid on chemical fertilisers bought in lots of 4 cwt. or more for use on agricultural land or crops or for growing mushrooms. Subsidy continues to be based upon the phosphoric acid and/or nitrogen content of the fertilisers. No subsidy is paid on potash or on fertilisers wholly derived from organic matter.

The rates of contribution have been reduced to yield a saving in this grant of just under £2 million. This is about 6 per cent. on the estimated expenditure which would otherwise have been incurred during the fertiliser year 1967–68. Nevertheless, we still expect to spend about £30 million on this subsidy during the coming 12 months, and this is much the same as has been paid in each of the past eight years. Taken together with the improved returns to agriculture resulting from the changes made in this year's Review, it should adequately assist farmers to maintain and improve the productivity of their soil.

The new scale of contribution will represent about 25 per cent. of the gross cost of those fertilisers on which subsidy is paid. Furthermore, under the Agriculture Act, which received the Royal Assent yesterday, we shall be proposing to make this up to 50 per cent. of the cost of fertilisers and of spreading them to those who qualify for grants under a Hill Land Improvement Scheme.

This reduction in subsidy was agreed at, this year's annual Price Review and it is in line with steps taken by successive Governments to reduce rates of payment from time to time as the use of fertilisers has grown.

In this connection, I refer briefly to the recent increases in manufacturers' prices for fertilisers. This matter was thoroughly examined by the National Board for Prices and Incomes, as can be seen from its Report. The Government agreed, in all the circumstances, that increases within the limits indicated by the Board were justified. Against this unwelcome necessity, however, it should be said that compound fertilisers are still offered more cheaply per ton of plant food than they were 10 years ago.

In these intervening years, we have seen significant developments in manufacturing techniques, in the stepping up of competition between suppliers, and in a big increase in demand. It is fair that I should acknowledge the part played by manufacturers and suppliers during this period in meeting the demand at keen prices.

Turning to other matters, in general, the trends which took shape with the introduction of the subsidy in 1952 have continued over the past year. We estimate that uptake in the United Kingdom in 1966–67 will have reached its highest level yet, and we see no reason to doubt, with the incentives provided by the Review, that a further increase will take place in 1967–68.

We think it probable that the demand for nitrogenous fertilisers will continue to rise rather more than for the two other main nutrients, as it has in recent years. There is now an added incentive to use straight nitrogen, since these fertilisers have not been affected by the recent price increases. I expect that grassland farmers especially will take advantage of this and the general incentives now offered to them and exploit more fully the profitability of using larger quantities of fertilisers to raise their grass output.

In this matter, it is encouraging to see the publicity and advisory effort from various quarters to overcome what seems to have been a certain reluctance in liming and fertilising our grasslands. At the same time, while we have got to the stage, due to past response to this subsidy, where the increased use of fertilisers on arable crops offers, perhaps, somewhat less spectacular possibilities, there is still scope on many farms for improving yields with heavier and timely applications of fertilisers. The advisory officers of the agriculture departments are readily available to any farmer who would like help in assessing the requirements of his farm.

I am sure that the House will agree that a high and ever-growing rate of fertiliser use is essential if our agricultural industry is to maintain its record of productivity and that this subsidy should continue. I ask the House, therefore, to approve the Scheme.

10.32 p.m.

Mr. Anthony Stodart (Edinburgh, West)

So many critical comments about the manufacturers have been made down the years by hon. Members opposite when they were on this side that I am glad to join in the tribute which the hon. Gentleman paid to them. The part which has been played by the fertiliser manufacturers has been most distinguished, in what I describe as a considerable combined operation, in which plant breeders and chemists, engineers and the whole farming community have joined, which has resulted in an unexampled increase in productivity. It is true, as the hon. Gentleman said, that prices have at last had to be raised, but it is a considerable tribute to the manufacturers that, for six years running, they managed not just to keep prices at the level they were but to reduce them. I am sure that the increase would have been much greater this year but for the considerable capital investment which they have made.

I am a little puzzled by paragraph 52 of the Price Review White Paper, where we are told that fertiliser consumption in general has risen. According to the latest volume of the fertiliser statistics, in 1965–66 the tons of plant food used were 32,000 down on 1964–65, a drop of just over 2 per cent. This is an indication of which the Government should take serious note.

Paragraph 53 of the same White Paper states that the rise in price was anticipated. It is a rise of 6 per cent. But the Government excused themselves from taking any action to counter it last February on the ground that the bulk of fertilisers had already been bought. Is that really so? My impression of the fertiliser trade last year was that with the appalling rate of interest—because of the Government's high interest rate policy—that farmers were having to pay on overdrafts, which would be needed if large supplies of fertilisers were to be laid in, a large number of farmers did not buy their fertiliser in on early delivery. Even if they had—perhaps the hon. Gentleman can give us some figures—the Government concede that the increase this season would hit the grassland farmer and those top-dressing grain most heavily because it is a late operation. Undoubtedly the upland hill man with a small income would be hit, as his grass comes late.

I think that there was a very good case for a subsidy cut of 7 per cent. being withheld in a year in which the Government admit that they knew that there was to be a price increase. The calculations that I have made are that a fertiliser compound with a gross cost of £37 a ton will mean a net increase of about 9s. on the average acre of grain; about 24s. per acre on potatoes; and about 27s. 6d. per acre of sugar beet.

The Under-Secretary of State based a great many hopes of an increase in the sugar beet acreage in Scotland on what he called the "generous allocation" of an extra 2s. 6d. per ton. To give 2s. 6d. a ton and take away 27s. 6d. an acre does not seem to me to be the best way of encouraging the sugar beet industry in Scotland.

Mr. Buchan

I said that the introduction of the half-crown by us, plus the restoration of the transport subvention which had been slashed by the party opposite three years ago, would begin to restore the position which they had made so disastrous.

Mr. Stodart

The Under-Secretary of State did not mention that the Government are imposing an increased cost of 27s. 6d. by cutting the fertiliser subsidy, and it is fair to put that into the scales.

I should like the Parliamentary Secretary, when he replies to the debate, to say whether he agrees with me that we should take note that this is the first year in which the use of potash and phosphate has fallen. Hitherto, a substantial increase in nitrogen has always been accompanied by a slightly smaller increase in potash and phosphate. We have now a reduced use of potash and phosphate partnering a rise in the use of nitrogen.

The use of potash is down by 3½ per cent. It is true that the potato acreage fell by 75 thousand acres, but that alone could not account for a 3½ per cent. drop. It should have accounted for no more than a 1 per cent. fall. With the cereal acreage expanding, and certain to expand more if our application for entry into the Common Market succeeds, this needs to be watched carefully. The best soils, having had good fertiliser applications for many years, are now creating good soil stati of potash and phosphate. But one cannot depend for future yields on past residues.

There is a very noticeable loss of balance between the use of nitrogen, potash and phosphate in England. Perhaps the hon. Gentleman would like to comment on that. If one takes the nitrogen norm at one, England is now using 0.6 of phosphate and 0.7 of potash. Wales uses 1.4 of phosphate and 0.8 of potash, and Scotland is almost level. Yet only six years ago England was precisely level at 1:1:1 as well.

I am sure the hon. Gentleman will agree that there is something that probably ought to be watched. I agree that our expenditure on fertilisers is still low—he made the point about the cost of fertilisers—as a proportion of farming's gross total output. We use 4.75 per cent. in the United Kingdom, Denmark uses 5.8 per cent. and Finland 6.65 per cent.

One must appreciate that an increase of about 40 per cent. in the application of fertilisers to grain over the last six years gave increased yields of between 30 and 35 per cent. The more concentrated fertilisers become, the more important it is that they should be used with great precision. Can the hon. Gentleman say whether the advisory services go out of their way to advise farmers on the correct fertiliser use—not just for a farmer to say "I want a compound fertiliser" but explaining to him how important it is to have one, two or three for a particular crop?

With fertilisers as available as they are, it is essential that good implements should be used and kept in good use for distributing them and that these should not be allowed to stand to corrode. It is very well worth while buying a first-class distributor in order to place fertiliser on the land with the greatest accuracy and precision. This is something that has shown itself to be valuable to husbandry.

Although I regret the cuts in this subsidy in this year of increased costs, I shall not advise my right hon. and hon. Friends to oppose the Order.

10.42 p.m.

Mr. Hector Monro (Dumfries)

Whilst I was sad at the loss of the ploughing grant which we discussed a few moments ago, I am very angry at this cut in fertiliser subsidy. It is not often that I even slightly disagree with my hon. Friend the Member for Edinburgh, West (Mr. Stodart) but I feel strongly about this cut.

Sometimes we in this House have short memories and we must not forget that the past farming year has been one of the worst for many years. For the Government now to cut the subsidy is crass incompetence. The Government must know that not only have they cut this subsidy; earlier in this farming year there was a further reduction in the lime subsidy—and lime is the key to fertiliser application. Thus we have had a double cut in the establishment of growth in grain with grass and roots.

The Government must know, too, that farmers are in a vicious circle and that they must use fertilisers. There is no alternative for them. The Government know that it is a false economy not to use fertilisers. Yet in many cases farmers are already over their overdraft limits and are in an impossible position in not being able to afford fertilisers which they should now be applying. Now, after this extremely difficult 12 months, which followed an equally difficult year, we are to have a 7 per cent. cut in subsidy despite a 6 per cent. increase in costs. The Government have treated agriculture extremely shabbily and this Scheme is something of which they cannot be very proud.

I would like to mention one point about the incredible paper chase that the Government have brewed up over the years for payment of the subsidy. The supplier has to send a long, complicated form to the buyer who then has to fill it up, put it in an envelope, stick stamps on it and send it to the local office of the Department of Agriculture. The local office has, presumably, to look at it and then send it either to Edinburgh, or, I think, to Guildford. It has to be checked again and the payment notice sent out either to the supplier or buyer and the advice notice to the party that does not receive payment. This seems to be an expensive method of paying what is becoming a very paltry subsidy.

In this computer age we hear so much about from this Government there must be some simpler method of paying the subsidy. The cost to the Exchequer and the farmer must be a considerable sum in total.

I feel that the Government have again let down farming and that is something which is becoming all too frequent. I am sorry that we have to approve tonight a further diminution in farmers' incomes.

Notice taken that 40 Members were not present;

House counted, and, 40 Members being present—

10.48 p.m.

Mr. Paul Hawkins (Norfolk, South-West)

I must admit that I do not very often disagree with my hon. Friend the Member for Edinburgh, West (Mr. Stodart), but on this occasion I would very much like to oppose the Scheme. The same arguments apply as applied to the Ploughing Grants Scheme. This is another cut in fanners' incomes.

We heard from the Under-Secretary how the Price Review had been so good, but this is the second of two considerable cuts in farmers' incomes. On this occasion the cut is £2 million and on the last occasion it was £2 million.

As has been said before, this cut in subsidies for fertilisers has to be taken in conjunction with the increases in prices of fertilisers which have been allowed by the Government in the same year. Altogether, this adds up to a very costly increase for some of our most expensive crops, like potatoes and sugar beet, both of which need large quantities of fertilisers, and the field vegetable crops, which do not have the benefit of any price guarantee arrangements. I refer, of course, to vegetable crops like carrots, onions, celery and lettuce which need considerable quantities of fertilisers. As I have said, the profitability of the vast majority of arable lands of the east of the country will be reduced.

This, with lower prices of fertilisers on the Continent—I believe that they are about £4 a ton less than our prices—would put us into a bad competitive position if at the same time we did not have an increase in prices for cereals to bring us closer to cereal prices in Europe, which we may enter. This has been another blow to the farmers in my district and to all other arable farmers, and I cannot understand how it can be greeted with any pleasure or approval.

The Parliamentary Secretary was asked what advice his Ministry gave to farmers about the right types of fertilisers to use. In my district there has been a large increase in the use of liquid fertilisers. Has the Parliamentary Secretary any information about the cost worth of liquid fertilisers, their comparable unit costs, and does the Ministry consider that liquid fertilisers rather than granular fertilisers should be used in greater quantities?

The lands which need these fertilisers, which need keeping in good heart with both organic and other fertilisers, have been made considerably less profitable over the last few years. I hope that that trend will be reversed over the next few years. I am very keen that there should be more livestock on the farms, but we cannot afford to neglect the arable crops, and that is what will happen if we keep increasing costs without increasing the end prices of crops grown on these lands.

10.52 p.m.

Mr. J. E. B. Hill (Norfolk, South)

The Parliamentary Secretary will realise that this Scheme is not popular on this side of the House, for the reasons which my hon. Friends have adduced. It will clearly not help ordinary arable farmers who will have higher costs and not receive any advantage in prices.

One can summarise the position best by asking the Parliamentary Secretary what the trends are. What is the trend in the use of fertiliser on arable crops, tillage first and then on grassland as a whole? Having told us that, can he say what advice he gets from the National Agricultural Advisory Service as to the optimum amounts of fertiliser to use on arable crops and grassland? I think that there is still a fairly large gap which the Order will not encourage farmers to make good.

When one is considering this Scheme in this year, one inevitably thinks of comparisons with the countries with which we are now competing for exports and imports and with whom soon, in the measurable future, we may be competing as partners. Therefore, I ask the Parliamentary Secretary what he can tell us about the relative use made of fertilisers by the countries in the European Economic Community. The best information that I have is based on figures given in a recent survey carried out by I.C.I., quoting the use of fertilisers and pesticides as a percentage of farm expenses. It says that the United Kingdom figure is 8 per cent., the Netherlands 8 per cent., Belgium 16 per cent., France 17 per cent., Italy 14 per cent. and Germany 11 per cent.

Mr. Deputy Speaker (Sir Eric Fletcher)

I do not think that it is in order, in considering this Scheme, to analyse the comparative costs in the Common Market countries.

Mr. Hill

With respect, I was hoping that I could ask the Parliamentary Secretary to look at this, because within the lifetime of this Scheme it will be called in question as to whether, as a production grant, it is something which would be allowed under the agricultural policy cf the Community which we have applied to join. There is at the moment great doubt about whether this kind of production grant would qualify. I would hope that the Parliamentary Secretary, in the life of this Scheme, will certainly find out what the relative position is and endeavour to discover to what extent it is likely to be eligible.

Does it distort fair competition, or is it a means of improving the technical development of agriculture? I would have submitted that this is something that the Government are under a very great duty to find out, and to inform us of in detail, certainly when any subsequent Scheme comes up to succeed it, although I would hope that this would be done at a considerably earlier date.

Mr. Deputy Speaker

In discussing this Scheme we cannot discuss hypothetical questions as to what the position may be on some subsequent Scheme. This Scheme merely relates to the year beginning 1st June, 1967. It seems inconceivable that any comparison with Common Market arrangements can affect the merits or otherwise of this Scheme.

Mr. Hill

With respect, I would have thought that this Scheme would be under discussion within its own lifetime, and I would very much hope that the Minister of Agriculture would defend it as a desirable production grant to retain. I will leave it at that.

The question of horticulture is always prominent when we discuss fertilisers, because every increase in the price of fertilisers falls directly upon horticultural growers and there is no recoupment, because no horticultural produce has the benefit of any guaranteed price.

I would ask the Parliamentary Secretary what assessments he has made of the added cost that the horticultural industry would have to bear in that connection because horticulture is a relatively greater user of potash. I ask him again whether the Government are likely to find it possible to extend the subsidy to potash. I agree that this has been difficult in the past: successive Governments have said so. On the other hand, the supply position is said to have become more diverse and stronger, and eloquent as Labour spokesmen were in opposition about the desirability of extending this, they have not, as far as I can judge, taken any active steps now that they are in office. We are disappointed that this Scheme reduces the amount of subsidy because we believe it is important that British agriculture should make use of fertilisers up to the optimum level.

11.0 p.m.

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

The hon. Member for Totnes (Mr. Mawby), who called a Count a few minutes ago, was anxious that as many hon. Members as possible should hear the debate, but he has now left the Chamber, as have other hon. Members who have made their apologies to me for not being here.

Perhaps I might point out to the hon. Member for Norfolk, South-West (Mr. Hawkins) that the cut in the fertiliser subsidy, in the same way as the cut in the ploughing grant, must be looked at against the background of the Price Review, which was a good one, I think the hon. Gentleman must admit, leaving as it did £40 million net to the farming community. Treating this cut as a separate item gets us nowhere.

The hon. Member for Edinburgh, West (Mr. Stodart) paid a tribute to manufacturers. I agree that they have done a good job. Perhaps I might deal with one point made by the hon. Gentleman. Statutory Instruments of this type, which always seem to come on late at night, provide us with a good opportunity—thanks to the good offices of the occupant of the Chair—to have a more wide-ranging debate than we are supposed to have, and the hon. Gentleman used a light stick with which to beat the Government, though some of his hon. Friends would have liked him to have used a much heavier one.

The hon. Gentleman talked about the cost of fertilisers. As my hon. Friend the Under-Secretary of State for Scotland said, they are cheaper today than they were 10 years ago, in spite of various cuts in subsidy. As the hon. Gentleman said, there has been an increase in the use of sulphates, and a decrease in the use of phosphates and potash, and he wondered why this was so. He asked whether the N.A.A.S. gave advice about the correct amounts to use. I am convinced that one reason—though not the sole reason—why there has been a drop in the use of potash and phosphate is that many of us—and I was one of the sinners—were using too much. Recently I was told to use a little less of these and a little more sulphate. Anyway, the drop in the use of these items is something about which we need not worry unduly.

The hon. Member for Dumfries (Mr. Monro)—I know why he is not here—shouted "Rubbish" two or three times when I spoke earlier. I cannot remember what it was in connection with, so it could not have been important. He said that last year was the worst year ever for farming. Had I wanted to, I could have said "Rubbish" when he said that, because if he had farmed from 1926 to 1934 he would have known that he was talking rubbish. I do not think that I need say any more about that, except that he, too, would not look at this Scheme against the background of the Price Review. The right hon. Member for Grantham (Mr. Godber) has said—and I think that hon. Gentlemen opposite would agree—that the policy of the party opposite is to put up the prices of the end products. This is what we have done, and it makes nonsense of the hon. Gentleman's argument.

The hon. Member for Norfolk, Southwest dealt with arable crops rather than horticulture. The percentage cut is equally small. With regard to liquid fertilisers, the unit value of the product is paid the same subsidy. We cannot recommend any particular brand, but our advisers would give anyone advice. There is a case for using liquid fertiliser in dry weather, but I personally can see little advantage apart from the cost.

The hon. Member for Norfolk, South (Mr. J. E. B. Hill) asked where all the fertiliser went. He asked a few days ago for figures about the nationality of land owners and said that it was time we had a "Domesday Book." We might perhaps get that information; but as to the other point, if he is prepared to pay for that sort of statistic, I will do what I can, but do not know how useful it would be. I do not propose to touch on his other point about the Common Market, as you ruled that out of order, Mr. Deputy Speaker.

We know that the horticutural industry is a large user of fertilisers, but its percentage is still lower than agriculture's. We have discussed fair play for horticulture with the N.F.U. because of the rise in the price of fertiliser and the slight reduction that we have made in the subsidy. In the context of the whole picture, it is quite small. The cost of the subsidy is still over £30 million, however, and the price is still lower than 10 years ago. It is not for the Ministry to force farmers to use something. They must decide on the amount of fertilisers they need for the crops and stocks they have.

The hon. Member for Norfolk, Southwest wanted to know what would maintain fertility. The answer might be that farmers in his area should return to what their fathers did and what he does—is, to keeping cattle and sheep and increase fertility——

Mr. J. E. B. Hill

The hon. Gentleman must think in terms of defending this Scheme and this practice; unless he finds the information I asked for through his civil servants, he will not be able to do his job.

Mr. Mackie

I cannot do so tonight, but I will give the matter consideration.

Question put and agreed to.

Resolved,

That the Fertilisers (United Kingdom) Scheme 1967, a draft of which was laid before this House on 18th April, be approved.

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