§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]
§ 11.17 p.m.
§ Mr. Henry Clark (Antrim, North)
The subject which I wish to raise is not new. The Minister is well aware that most of the costs of agricultural production are higher in Northern Ireland that in other parts of the United Kingdom and that farmers' incomes in Northern Ireland are correspondingly lower. Some of the high costs which we experience in Northern Ireland are the result of our geographical position and climate, and we cannot expect the Minister to do much about that. But the high prices we are paying for animal feedingstuffs result, at least in part, from decisions taken by the Ministry and changes in the pattern of production and marketing. These the Government can adjust for the benefit of the whole of the United Kingdom and the survival of farmers in Northern Ireland.
Northern Ireland is a country of small farms, as I have frequently told the Minister. There are 40,000 small farms. Climatically, we are a country of grass rather than grain production. To bring the incomes of farmers in Northern Ireland even on to an approximate level with those which industrial workers enjoy, they have to concentrate very much on livestock production. Backed by our Minister of Agriculture in Northern Ireland and by the enlightened policy of our marketing boards, the production of 1652 bacon, beef, milk and eggs has been built up to a level of efficiency comparable with the very best in the world. One can say that, particularly in bacon, our best units are probably larger and more efficient than their equivalent in Denmark and Scotland, or anywhere else.
Our beef and milk are largely produced from grass, but we must depend on imported grain for pigs and poultry. Brought-in feedingstuffs account for about half the total farm purchases in Northern Ireland. Today, we grow about 200,000 tons of our own barley, import another 150,000 tons and buy in 200,000 tons of imported maize for dollars. We also have to import feeding wheat and a considerable quantity of the wheat offals needed to make up feed rations.
Grain production today in Northern Ireland is approaching a maximum. It cannot be extended unless the price paid justifies ploughing up even more marginal land than we are using at present. Inevitably, therefore, we in Northern Ireland are more dependent on livestock production that the average farmer in the rest of the United Kingdom.
Bacon pig production alone produces 25 per cent. of farm revenue, and there are 22,000 bacon producing units among our 40,000 and more farms in Northern Ireland. The 1950s and early 1960s were the period of expansion and consolidation of our pig and poultry industry. In that period, when Great Britain was still importing barley, we could compete on an almost level footing with producers on this side of the Irish Sea. The barley which we bought on the world market cost no more than that used to make up rations in England and Scotland.
But when, after 1962, Great Britain first became self-sufficient in barley and then in surplus the cost factors started to turn against us. Today, the price of barley to the English and Scottish food compounder is £3 to £4 a ton lower than it is to the compounder in Northern Ireland. Today's price of barley quoted to me by telephone this morning was £19-£21 per ton in Great Britain, £19 in the cheapest markets and £21 in the dearest. Ex-silo at Belfast harbour the price was £24 10s.
This price differential must be reflected in the cost of pig rations. If one accepts 1653 an overall average of three bacon pigs per ton of food, it is costing even the most efficient producers in Ulster very nearly £1 extra to fatten each pig. This cuts the gross profit margin on pig production by about half.
One of the best farmers I know told me on Monday that he had just completed the costing of fattening his last batch of weaners from 45 lbs. to bacon weight. He reckoned that he had made at most 7s. a pig. Another farmer told me that on Small Farmers' Scheme costings he made 33s. a pig in 1966, but that this had fallen to 24s. in 1967. He doubts whether he will break 10s. on the same calculations in the current year.
For poultry, the necessity of importing feeding wheat and wheat offals from Britain raises the cost of feedingstuffs by £2-£3 a ton. Prices quoted today for wheat are £20 to £21 a ton in Great Britain and £23 to £24 in Belfast. The differential adds as much as 1½d. to the cost of producing a dozen eggs.
Two factors have tended to increase the differential. During recent years the minimum import prices for grain, while not have an immediately obvious effect on the costing, have prevented the Ulster millers from taking advantage of any short-term fall in world grain prices. When the Conservative Government introduced this scheme they said that they would always keep in mind the problem of feedingstuff costs in Northern Ireland. I hope that the Minister will ante up on that. More recently, devaluation has directly raised the price of our imported feedingstuffs, while it has not been fully reflected in the cost of home-grown barley in England. It must be emphasised that the flexible feed formula, actually damages us in Northern Ireland, because it is based on a balanced sample from all over the United Kingdom, and reflects the low price of barley in England rather than the high price in Belfast.
What I have been saying is not simply "hard cheese" for the Ulster farmer. It is economic nonsense for the United Kingdom, in view of its present balance of payments struggle. Bacon is one area where there is wide scope for replacing imports. So far, in the United Kingdom we have failed to come up to our 36.9 per cent. quota of bacon consumption. We have a shortfall of 3.2 per cent. which 1654 is being made up by additional imports. Though bacon production is increasing in England, it is increasing only very slowly in Northern Ireland, and the Northern Ireland percentage of the United Kingdom market has fallen from a steady 14 per cent. between 1962 and 1966 to a bare 11 per cent. now.
Part of the 2,000 tons of maize we buy abroad for dollars, even more nonsensically, could be replaced by English barley if the price differential could be overcome.
The Minister may complacently tell me that the Ulster pig herd is at last on the increase. The March figures are higher than they have been for some time, although the true reason for this is not the profitability of pigs but the complete lack of profitability of eggs, and mixed farmers looking anywhere for a profit have moved back into pig production. Unfortunately, they will find little enough profit in pigs. Many of them may decide to realise their capital, let their land for grazing and increase the present quota of milk, which will be a considerable embarrassment to the Ministry at the end of this year.
The Minister, I know, recognises the problem, and I ask him tonight to investigate it very carefully, and at once. I ask when he has completed his investigation that he will take action which will put a decent yield into pig and poultry production in Northern Ireland, and I ask him to take action which will assist the solution of our balance of payments problem and allow agriculture to play the part in national recovery that all British agriculture is anxious to play.
§ 11.27 p.m.
§ Lord Hamilton (Fermanagh and South Tyrone)
I congratulate my hon. Friend the Member for Antrim, North (Mr. Henry Clark) on so cogently initiating this extremely important debate. During the last financial year the Northern Ireland agricultural industry has been faced with an alarming price escalation in agricultural costs, resulting in a serious and obvious effect on farm income. Apart from increases in Bank Rate, wages, electricity and farm machinery, the heaviest increase in the cost is due to the fact that we have no home-grown barley market, resulting in the necessity to import at least 50 per 1655 cent. of all feedingstuffs consumed in Northern Ireland.
Obviously, devaluation has aggravated this situation yet further, for on 13th March the then Minister of Agriculture, in reply to a Question tabled my myself, said:Assuming a price increase of one-sixth, the landed cost of animal feed imported into Northern Ireland would be increased by about £4¼ million …".—[OFFICIAL REPORT, 13th March, 1968; Vol. 760, c. 321.]In fact, the Northern Ireland farmer has to pay between £3 and £3 10s. per ton more for compounds than his counterpart in Yorkshire.
Unfortunately, the disparity of costs is aggravated further by the fact that the majority of our production has to be imported to the main consumption area, that is to say England. Approximately £89 million is exported per annum. So, once again, the Northern Ireland farmer is forced to bear the cost of transporting the processed product across the Irish Sea. For, unlike other industries, agriculture is unable to recoup this additional burden through higher prices.
The total cost price differential is approximately £7.9 million per annum, or a parity income ratio of only 78 per cent. This is, of course, an alarming and extremely serious situation, which is constantly deteriorating through inflation.
I ask the Minister to give an assurance that the remoteness grant will be reviewed without delay, since the figures quoted during the debate have proved, beyond doubt, the urgent need for reassessment of this extremely important grant.
I also ask the Minister to give the Government's acknowledgment of the seriousness of the current situation, for it must be appreciated that the industry, through the present lack of incentive, cannot be expected to continue expansion of production, thus saving the nation's import bill, unless this differentiation in farm income is drastically reduced.
Furthermore, it should be remembered that, to encourage agriculture to expand and prosper in remote areas, the incentive of additional grants for agriculture are just as important as those for other industries. Again, a policy like minimum import prices, while benefiting the majority of the United Kingdom, is in no 1656 way beneficial to Northern Ireland. I hope that the Minister will investigate this matter.
Recently, a research economist predicted that, due to devaluation and the resultant rise in the price of imported feedingstuffs, the pig breeding herd would decline by one-sixth. That is a most serious forecast which will defeat the Government's expansion plans unless immediate action is taken.
Finally, it must be recognised that Northern Ireland is a country of small farmers and, therefore, the small farmer is particularly dependent on imported feedingstuffs, since, owing to the small size of farm holdings, he is forced into intensive production of either eggs or pigs, both of which require a high concentration of imported feeding stuffs, resulting in his having to pay £1 per pig and l½d. per dozen eggs more on feed than his counterpart in England.
§ 11.31 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)
Let me begin by expressing my thanks to the hon. Member for Antrim, North (Mr. Henry Clark) for initiating this debate and to the hon. Member for Fermanagh and South Tyrone (Lord Hamilton), who supported him.
The Government have always recognised that farmers in Northern Ireland face problems which may not be present in the same degree in other areas of the United Kingdom, and it is for that reason that I express my gratitude to the hon. Gentlemen for having drawn attention to this issue tonight.
The hon. Member for Antrim, North, and some of his colleagues met my right hon. Friend in April to discuss the general question of the difficulties of Northern Ireland's farmers. They made a number of points and left some figures bearing on them. I believe that I am right in saying that the hon. Gentleman regarded it as a very useful meeting.
My right hon. Friend and the Minister of Agriculture for Northern Ireland had already agreed together that their two Departments should look jointly into the question of farm costs in the two countries.
1657 The House will appreciate that it is not sufficient for an examination of this nature to study merely one particular cost item, since differences in other farm costs such as fertilisers and labour may affect the overall balance of advantage between different parts of the United Kingdom.
The examination which was set in train is not yet complete, and any action by the Government, naturally, must be based upon its results. However, I will give the House a preliminary indication of what it is likely to show, and I will also set out the main factors which must be taken into account in considering the problems of Northern Ireland agriculture. I hope that this will help to put the whole matter in perspective, without disguising the genuine nature of the problems in Northern Ireland.
It has been pointed out already that, on average, farms in Northern Ireland are considerably smaller than in the rest of the United Kingdom. Natural conditions tend to be difficult, and market prices are usually lower. For all these reasons, the average level of farm incomes is lower than in the United Kingdom as a whole. Nevertheless, the total picture is by no means wholly black.
Until four years ago, the trend in net farm incomes broadly followed the trend for the United Kingdom as a whole. At the same time, the special assistance grant helped and still helps to offset the effect of lower market prices. At the 1966 Annual Review, the Government raised the grant to its present level of £1¾ million a year. I think that it is agreed that that was a very helpful step in the right direction, and I note what both hon. Gentlemen said about it again tonight.
Furthermore, a number of the Government's grants designed to help less favoured sectors of the industry have been of particular value in Northern Ireland. The Small Farmers' Scheme, for example, has been widely used, for which we are grateful, and the Farm Improvement Scheme has had an excellent response.
The grants to encourage farm amalgamation and thereby create more economically viable holdings should be of special interest in view of Northern Ireland's farm structure. But, as hon. Gentlemen know, this has to be done voluntarily. 1658 Over the last four years, however, the trend in farm incomes in Northern Ireland has been lagging compared with farm incomes in Great Britain as a whole, and other remote areas experienced a fairly similar trend in incomes. To some extent this may be only temporary.
There was, as the House will remember, a general decline in pig production from 1965 onwards, and there were difficulties on the livestock side generally. As the hon. Gentleman has said, and I agree, since Northern Ireland agriculture is based largely on livestock farming, the effects were naturally more marked in the overall results for Northern Ireland than in those for Great Britain.
We set out to deal with these problems in the livestock sector at Annual Reviews which have taken place since. As the increases in guaranteed prices for livestock take effect, we would hope to see an improvement in farm incomes. Nevertheless, the examination that we are now carrying out appears to substantiate the view that in the last few years trends in farm costs have been moving to the relative disadvantage of Northern Ireland farms. There certainly appears to have been a widening of the differential between Northern Ireland and average Great Britain feed prices.
The main reason for this is that the increase in home production has made available to farmers in Great Britain with ready access to it a supply of feed grain at prices below those ruling on the world market, where prices have tended to be kept up by the absence of the surpluses which had pressed on the market before 1962. This is exactly what the hon. Member for Antrim, North was saying. Northern Ireland farmers have, therefore, had to import feed grains at the relatively higher world prices because of the cost of transporting grain from Great Britain to Northern Ireland.
I should add, while explaining the difference in feed costs, that, contrary to some things that have been said, devaluation has not been one of the causes, since, although it has resulted in some increase in the cost of cereal imports, the effect has been no greater in Northern Ireland than in Great Britain. The minimum import prices for cereals likewise have not affected the difference in feed costs. Naturally, in future years they might influence the prices of imported feed grains, 1659 but their object is to do no more than set a reasonable floor in our market and not to make imported feed expensive. I give the hon. Gentleman that assurance.
To establish what the facts are must be the first need. The hon. Member and his noble Friend have given us information which we have found very useful in this connection. We have wasted no time in starting our examination. As I have already mentioned, some broad conclusions are already emerging.
We are grateful to the hon. Member for raising the issue tonight, but I cannot, however, say whether, and if so what, action is called for. There are a number of considerations that have a bearing on this quite apart from the structural and other rather special features of Northern Ireland's agriculture. In Northern Ireland, there are social and regional problems, not least the problem of employment, and all aspects need to be taken into account. In my own country, we have similar problems so I am able to appreciate those in Northern Ireland.
These are not points to go into now, but I should like to refer to two further particular problems. The first is that the evidence examined and taken into account at each Annual Review includes figures showing the financial position of the different types of fanning—livestock, arable, and so on—as well as the overall position in the different countries of the United Kingdom. Consequently, the determinations at past Annual Reviews reflect the situation and needs of livestock farms, including those in Northern Ireland. They do not, it is true, affect the cost differentials between one part of the United Kingdom and another but they do take account of the income position in Northern Ireland.
Secondly, the differential between Northern Ireland and Great Britain as a whole is not a sufficient basis for Government action since the figure for Great 1660 Britain reflects the costs of a very wide range of types and sizes of farms, some of them in very favourable circumstances and some in circumstances very similar to those in Northern Ireland. There are remote farms in difficult conditions in the other three countries.
It is thus not simply a problem of comparing figures based on straight averages across the board, since these could obviously be misleading and could allow unbalanced and possible invalid comparisons to be drawn. What may be more realistic is to try to compare as closely as possible like with like in the two countries. We shall have to study these points and take them into account in our final decisions.
We have made a note of all the points which hon. Members have brought away from their visit and we have been in touch with the Minister in Northern Ireland. I assure hon. Members that all the points they have raised will be fully taken into account when we come to make the decisions, which I hope will prove helpful. But until we have made this complete study with the Minister in Northern Ireland, I do not think hon. Members would expect me to go further tonight.
§ Mr. R. Chichester-Clark (Londonderry)
Can the hon. Member say—within weeks—when this joint comparative study of conditions is likely to be completed?
§ Mr. Hoy
I am sorry, but I cannot. If one is doing such a study oneself, one can give an indication as to completion but the hon. Gentleman, who has himself been in touch with the Minister in Northern Ireland and is not unacquainted with him, will know that we have to do it jointly. But I assure him that no time will be lost.
§ Question put and agreed to.
§ Adjourned accordingly at sixteen minutes to Twelve o'clock.