HC Deb 06 March 1968 vol 760 cc448-58

3.56 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Frederick Peart)

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

Since the last Annual Review net income and net output have risen in spite of a sharp increase in costs. Productivity has also recovered, and there have been encouraging developments in most of the commodities. The effects of the exceptional determinations we made last year are thus clearly beginning to show.

At this year's Annual Review, the Government have felt it necessary to strike a balance of many considerations. We want to see the upward trend in production maintained, so that agriculture can make its full contribution to import saving on the broad lines of the selective expansion programme. On the other hand, we must conserve national resources and keep public spending as low as possible. For this reason agriculture, like other industries, must be expected to bear a reasonable proportion of its cost increases, assessed this year at £68½ million, out of rising productivity in the way envisaged in the assurance given by the Government at the 1966 Review.

Cereals production has been increasing, but, as I informed the House in December, we believe that further expansion, particularly of wheat, is necessary to contribute to the growth in demand. We have therefore decided to abolish the standard quantity for wheat and to increase the price by 1s. 6d. a cwt.; to raise the standard quantity for barley by 750,000 tons, and to raise the price both for barley and oats by 5d. I know that the industry will welcome, in particular, the major changes we have made on standard quantities.

On potatoes, we shall be increasing the guaranteed price by 7s. 6d a ton, and we have also undertaken, if support buying should become necessary for the 1968 crop, to make an additional contribution towards the cost, up to a limit of rather more than £1 million. We are also. raising the price of sugar beet by 3s. 6d. a ton.

Production of eggs must be kept in line with the increase in demand, and the guaranteed price will be reduced by 4d. a dozen.

As a result of the decisions we took last year a recovery in the pig herd is now well under way. We want this maintained. Our aim is to keep prices stable over the coming year at a rather higher level than producers are currently getting. We have therefore widened the middle band by 300,000 at each end, and have increased the basic guaranteed price by 1s. a score. As a result pig producers need not fear that further expansion will lead to an early cut in the price. The raising of the top of the middle band, like our decision on the standard quantities for cereals, shows that we are looking for increased production.

The beef and milk herds have been severely hit by the foot-and-mouth outbreak. Even so, expansion has gone on. We want to see this maintained. The guaranteed price of milk will be raised after allowing for the standard quantity adjustment by 1¼ a gallon. This takes into account the "dilution effect" of expansion of the dairy herd in the interests of beef production. To cover this and higher distributive costs, the milk retail price will be raised from 10d. to 10½d. a pint at the beginning of July. We have recognised the need for a further substantial incentive for beef production. We are therefore raising the guaranteed price for cattle by 11s. a cwt. to £10 a cwt. and, in view of the particular importance of cattle rearing to parts of the United Kingdom, adding £2 to the hill cow subsidy and 30s. to the beef cow subsidy.

Finally, there has been some further decline in the total sheep flock. Nevertheless, there has been some expansion of the flocks in the hills and uplands, which should go further in the light of the changes we made last year in the hill sheep subsidy. This year, in order to maintain an effective outlet for store sheep as well as to assist fattening elsewhere, we are raising the guaranteed price by2½per pound.

In making these determinations, we have concentrated on end prices, since it is here that the impact is likely to be greatest. Overall, they amount to £.52½ million. This is a big sum. But the additional costs which the industry has to bear are also very high. The industry is being expected to bear about one-quarter of these costs, but farmers will still retain about half of the gain from their increasing productivity to improve income and provide resources for further investment. The Government believe that the determinations reached, taken together with those at the 1967 Review, will enable the industry to sustain the encouraging forward momentum that is now under way, and are fully consistent with the needs of the economy as a whole. Our decision has not been easy, but I think that it is fair and right.

Mr. Godber

We are grateful to the right hon. Gentleman for that statement, but is he aware that it will be greeted with deep disappointment by all who want British agriculture to expand—[HON. MEMBERS: "Really."]—I should have thought that hon. Members opposite would have wanted it as much as us. Would he not agree that the statement boils down to the fact that farmers are being called upon to pay £16 million of their increased costs out of their own pockets and that to that extent this award is much worse than last year's? Is this not a sharp reminder of the need to adopt a new support system for farming? Although there are some useful points, such as what the right hon. Gentleman said about standard quantities, which will be generally welcomed, precisely what did he mean by the "dilution effect" on milk? We have never had a clear statement on that and the House would welcome clarification. Finally, is it true that the N.F.U.s have refused to accept this award?

Mr. Peart

On the last point, the N.F.U. have not agreed an neither have they disagreed. [Interruption.] The right hon. Gentleman should realise that this is a historical review. They have expressed neutrality. I cannot comment: they have neither agreed nor disagreed. Dilution of the pool price was taken into account. As to whether we should examine another system of support, this is not in the Review, which is part of our legislation and the framework within which I must work. A new system is an entirely different matter. There has been no deep disappointment. The right hon. Gentleman is not facing reality. This Review is fair and reasonable and much better than many of those given by his own friends and when he was a junior Minister.

Mr. William Edwards

Is my right hon. Friend aware that the award will be received in my part of the world, in the hill sheep and hill cow country, with tremendous appreciation, and that if all sections of the community—forestry workers, farm workers and so on—were dealt with with the same generosity as the farmers in my constituency, the Government would not face this present unpopularity?

Mr. Peart

Anyone who considers the section dealing with the hills and uplands and the increase in the hill subsidies and also in the guaranteed price for sheep cannot fail to appreciate that this award will considerably help those areas.

Mr. Alasdair Mackenzie

Although we understand that this is not an agreed Review, we certainly welcome it as going a considerable way to give what we had expected. To put the hill and upland farms on a better footing, more was expected per lamb, but, taking this Review in conjunction with last year's, we feel that, if the Minister can assure us that this upward trend will come in the years ahead, we will certainly welcome the Review. Would he consider reviewing the five year expansion programme which began in 1965, in view of the changed conditions?

Mr. Peart

What the hon. Member says, in speaking for the Liberal Party, shows a measure of responsibility not displayed by the right hon. Member for Grantham (Mr. Godber), who led for the Opposition. This Review will indeed increase momentum and must be taken in conjunction with last year's. I believe that it will be essential to the completion of the selective expansion programme which the hon. Gentleman has in mind.

Several Hon. Members

rose—

Mr. Speaker

Order. I must remind the House that there are important debates ahead. I shall be able to call only a limited number of the very many who seek to catch my eye.

Mrs. Braddock

The Minister has talked about the producer. Can he give us some information about the effect upon the housewife?

Mr. Peart

Certainly. As I said, there will be an increase of ½d. a pint on milk for five months. Broadly speaking this will enable the continued production by our farmers of food at reasonable prices for the community. In that sense, it is reasonable and fair. As Minister, I must strike a balance between producer and consumer, which is what we have done in this Review.

Sir Richard Glyn

Would the right hon. Gentleman not agree that the sharp increases in costs to which he referred have occurred in spite of the greatly increased capital investment in agriculture which has been going on for years? How long does he think that he can expect the British farmer to continue these vast investments, which are greatly to the nation's interests, when he continually decreases instead of increases their income?

Mr. Peart

The hon. Gentleman cannot say that. I wish that he had opposed my predecessors on this, but I never heard his voice then. He must recognise that there are new developments and tremendous technological changes in the industry and that farmers must provide capital investment. There has been a sharp increase in costs and we bore all this in mind in the Review, which is why we have given what we think is a reasonable, sensible and fair one.

Mr. Conlan

Was not my right hon. Friend too kind to the right hon. Member for Grantham (Mr. Godber)? How do the four Price Reviews which my right hon. Friend has introduced since 1964 compare with those introduced by the right hon. Gentleman when he was Minister?

Mr. Peart

It is not for me to refer back to the time when the right hon. Gentleman had a measure of responsibility. I must admit, however, that I have looked at past Annual Reviews and it appears that, on average, I have been responsible for giving £20 million while the right hon. Gentleman was responsible for giving £4 million; so I suppose that to that extent I have done better than the right hon. Gentleman.

Mr. Stodart

Would the right hon. Gentleman clarify what he said earlier when answering a question about the increase in milk? He said that it would be going up for only five months, while in his statement he said that it would be going up from July. Since the figures in the 1967 Price Review showed that the incomes of Scottish farmers, in all sections, were lagging very much behind those of English farmers, would he care to say whether the latest Review will improve that situation? Is not this £68 million increase in costs the grossest piece of inflation we have seen since the last Review introduced by the earlier Labour Government in 1951? Can the right hon. Gentleman provide us with the cheering news that this will he the last Review that the present Government will bring in?

Mr. Peart

If the hon. Gentleman looks carefully at what we have done for cattle and sheep, coupled with the fact that there is no change even in the wool price, which is an important factor, and the increase for sugar beet, he will see that this should have a considerable effect in Scotland, and I hope that it will benefit that region. I entirely agree that the hill and upland areas are also important.

What I said about the price of milk is correct. I confirm that the 1¼. a gallon means 1.2d. on the guaranteed price of milk, plus the standard quantity being raised, together representing 1¼. a gallon. This, in turn, means ½d. on a pint beginning in July.

Mr. Stodart

Permanently?

Mr. Peart

Yes, permanently.

The hon. Gentleman referred to inflation in costs. I recognise that there have been increased costs, but this has been borne in mind in the Review; and that is why the £52½ million will, in the circumstances, partly meet this difficulty. I suggest that, in the circumstances, this figure is reasonable.

Mr. Maclennan

Is my right hon. Friend aware that in the hills and uplands of Scotland this Review, taken in conjunction with last year's Review, will be regarded as a tonic and will be particularly welcome for the end price for sheep and cattle? Is he also aware that the abolition of the standard quantities for wheat and the increase for barley will also be welcome?

Mr. Peart

I am glad that my hon. Friend stresses the importance of the Review to Scotland, unlike the view that appears to be taken by some hon. Gentlemen opposite.

Mr. Buchanan-Smith

Is it correct to say that the standard quantity for milk in the main Scottish Board area is being reduced? Does he consider this to be a fair way of applying the dilution factor, since Scottish farmers will suffer, and should not this have been applied on a national basis?

Mr. Peart

There will be an increase for Scotland. There is no differentiation in this matter in that sense. After all, the Scottish producers were involved in the Review and we had full discussions with them.

Sir Harmar Nicholls

On a point of order. Does this Review apply only to Scotland? It seems, Mr. Speaker, that all the questions have been confined to that part of the United Kingdom.

Mr. Speaker

If the hon. Gentleman wishes to correct the Chair in its selection of speakers, he has a method by which to do that, but he cannot do it in this way.

Mr. J. T. Price

Would my right hon. Friend agree that it would be a tonic to us all if when the Government occasionally do something right—[Laughter.]—as they have done on this occasion, we had a little more generosity of spirit and a little less carping from people who are not being honest with themselves? Is it true to say that, despite the carping criticism which my right hon. Friend must occasionally endure, every time a farm comes on to the market its capital value increases to such an extent that young farmers are unable to buy farms for themselves?

Mr. Peart

I thank my hon. Friend for those comments. I believe that our agricultural policy has been successful and that this Review, when examined carefully alongside the White Paper, will be seen by hon. Gentlemen opposite to be reasonably fair and something for which, in present circumstances and bearing in mind the prices and incomes policy, they should give us credit.

Mr. Bryant Godman Irvine

May I draw the Minister's attention to an Answer given last week by his Parliamentary Secretary, to the effect that increased costs were not a matter of importance to the farmer? In view of the fact that it has been agreed that the costs announced are the highest since the last Socialist Government, will the right hon. Gentleman take this opportunity to express a more kindly view of this matter?

Mr. Peart

I assure the hon. Gentleman that this has been taken into account. That is why I said that the Review, in achieving a figure of £52½ million, taken with the Schedules, will be accepted by the industry when the matter has been carefully examined.

Mr. Hazell

May I congratulate my right hon. Friend on having been able to extract from the Treasury and his Cabinet colleagues the amount of money which the industry is to receive as a result of this Review? May I also assure him that while the additional subsidies and grants may not be all that the members of the N.F.U. were hoping for, in the light of the economic circumstances of the country, I am sure that they really did not expect to get as much as they will be getting?

Mr. Peart

That probably explains the delemma in which they found themselves in considering whether or not to agree about this. However, I am fairly sure that when hon. Members and the farming community have carefully looked at the Schedules and the details in the White Paper, they will accept that the Government have produced a fair and reasonable Review.

Mr. Turton

Does the right hon. Gentleman recall the broadcast made by the Prime Minister on 20th November, in which he said that agriculture would be stimulated into replacing the food we imported by home grown food? Is he aware that, by the announcement of last Monday, when he imperilled the livestock industry by allowing foreign beef to come in after 15th April, and by this latest announcement, which gives no room for expansion for the agricultural industry, he has falsified the Prime Minister's statement?

Mr. Peart

I suggest that if we took the advice of the right hon. Gentleman, who usually speaks constructively about agriculture, we would be talking ourselves into a depression. If one links this Review with last year's Review, and compares the result with the forecasts that have been made for increased production, one sees that production is up by 6 per cent. over the previous two years. On practically every commodity we see an increase and momentum. My right hon. Friend the Prime Minister stressed the importance of agriculture. If we can keep this momentum going for a longer period we will achieve the selective expansion programme, and that will be a major contribution to the economy.

Mr. Henry Clark

Is the Minister aware that Tory Ministers of Agriculture past and future will always envy him his back benchers, if they envy him nothing else? Is he content with the increased price for pigs, and does he really believe that that will put back the profit into pig keeping, remembering that the food bill for every bacon pig has gone up by 30s. as a result of devaluation?

Mr. Peart

Yes, I do. The increase of 1s. a score and the widening of the middle band by 300,000 at both ends will be of great assistance. We are anxious to have increased production and I am sure that these moves will be welcomed by Northern Ireland producers, who were, of course, involved in the discussions on the Review.

My only comment on the hon. Gentleman's remark about my back benchers is that I am glad that he is prepared to pay tribute to my hon. Friends, which reflects on his hon. Friends.

Mr. Bob Brown

My right hon. Friend will be aware of the anxiety caused by the increasing number of workers leaving the land. Is this trend continuing, and has productivity increased to any extent this year? Further, can he say what savings in imports are likely to result from the Price Review?

Mr. Peart

On import saving, the Price Re view was designed to continue the momentum to achieve a selective expansion programme aimed to meet a demand for food of £200 million more in 1970–71. I believe that in that sense the Price Review will make its contribution. More will be produced by British farmers.

The trend is for workers to go out of agriculture, but the rate of decline has slackened.

Mr. Jopling

The right hon. Gentleman never mentioned the most important provision of paragraph 50 of the White Paper, which deals with negotiations to increase the minimum import price of cereals for the 1968 harvest. If, as seems to be very likely, this will considerably increase the cost of animal production, will be guarantee that the extra cost will be recompensed to farmers during the next few months?

Mr. Peart

The hon. Gentleman is premature: negotiations are still going on. I cannot say any more.

Several Hon. Members

rose—

Mr. Speaker

Order. We must move on.

Mr. Emrys Hughes

On a point of order, Mr. Speaker. As Scotland is so much concerned, could not the Secretary of State for Scotland be asked to explain—as the Minister said that there was a need for expansion of the dairy herd—why the Government have cut £5 million off school milk and so cut the market for the farmer?

Mr. Speaker

A most ingenious point of order.

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