AGRICULTURE (SUPPORT SYSTEM) (Hansard, 26 March 1968)

§ Mr. Michael Jopling (Westmorland)
This is a strange hour to discuss the need for a change in the agricultural support system. I am disconcerted that no one representing the Ministry of Agriculture is present, since I spoke to them yesterday afternoon about the situation of this subject on the list. It is No. 22 on the list, and I had grave doubts throughout the night about whether it would be reached. I think that my doubt was shared by officials of the Department. Certainly, I cannot understand why no one has come here this morning. I cannot understand why the Minister is not here. I was present during the debate on the Falkland Islands and have been ready to raise this subject.

§ Mr. Ioan L. Evans (Comptroller of Her Majesty's Household)
The Minister is on his way. We anticipated that some of the hon. Gentleman's colleagues would raise other topics, but his hon. Friends have not appeared. The hon. Gentleman is, therefore, raising this topic somewhat earlier than we had expected. However, I assure him that the Minister will be in his place shortly.

§ Mr. Jopling
I am obliged for that information. Perhaps the hon. Gentleman might have added that some of his colleagues have withdrawn their names from the list of subjects which were to have been raised. For example, the hon. Member for Ealing, North (Mr. Molloy)—

§ Mr. Speaker
Order. The hon. Member might now come to the topic which he wishes to raise.

§ Mr. Jopling
You will appreciate my problem, Mr. Speaker, since I wished to address certain remarks to the Minister. He will be unable to reply adequately if he is not present—

§ Mr. Speaker
Order. Mr. Speaker has been here all night. The hon. Member must now come to the topic he wishes to raise.

§ Mr. Jopling
I can now do so, since the right hon. Gentleman the Minister is in his place. I am grateful to him for coming here personally He might like 1484 to know that I had not begun to discuss the matter I wish to raise—

§ Mr. Speaker
Order. Now that the Minister is in his place, the hon. Member must certainly come to the topic he wishes to discuss.

§ Mr. Jopling
Immediately, Mr. Speaker.
Many hon. Members on both sides of the House feel that our system of agricultural support needs to be changed. Britain's great agriculture industry has been progressing well in the last 20 or more years under the general umbrella of the safeguards provided by the 1947 and 1957 Agriculture Acts. In general, those Acts have served the industry well. Agriculture has prospered, has expanded and has grown more efficient because of the advantages which those Measures have given to the industry. Until recently the agriculture policies of both parties were based on that umbrella and it is under the provisions of those Acts that our agricultural support system operates.
Under the system there has been a spectacular growth in output. This year's Price Review White Paper, taking the years 1954–55 and 1956–57 as a base 100, puts the estimated production for 1967–68 at 144. That is a considerable increase, although it does not reflect the comparable increase in production achieved before 1954. There has also been an immense growth in productivity. When he spoke at the annual dinner of the N.F.U. at the Hilton Hotel, the Prime Minister made some glowing references to the increased productivity of the industry and added that if all other industries in Britain had shown the same growth, we should not be in the present financial dilemma.
This great productivity and increase of production has continued with many fewer agricultural workers. From 1946, when there were 976,000 employed on the land, the number shrank to about half—485,000, in 1967. The position now, after 20 years working of the 1947 and the 1957 Acts, is that our agricultural industry, probably the most efficient in the world and certainly the most technologically able in the world and the best educated, is not going flat out. More seriously, farmers' incomes and the profitability of agriculture has been rising too slowly over recent years. I do not think many hon. Members would dispute the 1485 statement that farmers' incomes have been rising too slowly. I do not say that this trend was not present when my party was in power. It has been going on for the last eight years or so.
Two or three years ago the government set targets in the National Plan which were supposed to show the way forward within the scope of the 1947 and the 1957 Acts. The trouble with the National Plan targets is that they give to home agriculture only a share of the growing demand for food over the years up to 1970. The suggestion is that agricultural production should increase by £200 million by 1970. I regard that as a poor target, which ought to be scrapped.
In the Price Review White Paper there was very little reference to the National Plan. The Select Committee on Agriculture, which is now sitting, has heard recent evidence that the targets of the National Plan are the maximum permissible under present international agreements. If we are to expand production from our own farms, we shall have to change many of our international agreements. Our industry is tied down by many of these agreements. The industry is also tied down by the side-effects of the present support system. That is the impact which the Treasury and the Chancellor of the Exchequer have every year on the Price Review.
In the Select Committee we are finding it very difficult indeed to get any acknowledgement from the Minister's officials that Treasury considerations are an inhibiting factor in the Price Review negotiations. I believe that all hon. Members are aware of this. I think it is the Treasury consideration and the need to conserve the liability of the taxpayer which is the biggest inhibiting factor in increasing farm production.
When devaluation was announced in November, the Prime Minister talked at great length about the need to increase agricultural production. He said: Farm production would be stimulated. We shall be able to do more to replace food imported from abroad. I am delighted that he thought fit to say that. Many of us, for a long time before devaluation, have urged that that should happen. But the right hon. Gentleman was quite right to say that, since 1486 devaluation, the need has become much more apparent.
In the first paragraph of this year's White Paper, we read: The Government have made clear the continuing importance which they attach to the import saving role of agriculture under the selective expansion programme. It is clear, therefore, that everyone wants to save imports by increasing home agricultural production. What is being done about it? Not enough. Once again, one comes up against the old Treasury barrier. It is there in this year's Price Review. Never has there been a time when everyone talked more volubly about the need for agriculture to play a greater import saving rôle than this year, but in paragraph 8 we have the same old dreary statement: Nevertheless, the present economic situation requires tight control on public expenditure; and agriculture, like other industries, must absorb a reasonable part of its rising costs in accordance with the prices and incomes policy. The message is clear. Everyone wants greater agricultural production. The Prime Minister said so. Everyone agrees that our agriculture is very efficient and is poised to do it. The Prime Minister said that, too. Why does it not happen? In fact, the system makes it too expensive for the Treasury. The White Paper estimates that in the next financial year 1968–69 we shall have to spend £286 million on our agricultural support system. There is no doubt that we could increase production a great deal if we set out to do it.
The inescapable conclusion from the facts of the situation is that the system must be changed. It has been the policy of my party since 1965 to scrap the present system of agricultural support. We believe that, although it has served us well, it is now out-dated.

§ Mr. Speaker
Order. Will the hon. Gentleman help me? It is my impression that the present system of financial support could not be scrapped save by legislation.

§ Mr. Jopling
That is so, Sir.

§ Mr. Speaker
Then that matter must not be discussed this morning.

§ Mr. Jopling
I am a little confused, Mr. Speaker.

§ Mr. Speaker
If the hon. Gentleman has been here during the past 18 hours, he will have heard Mr. Speaker say from time to time that in debates on the Second Reading of the Consolidated Fund Bill matters of administration may be discussed, but matters involving legislation and taxation may not.

§ Mr. Jopling
I understand, Mr. Speaker. I have pointed to the need to change our support system. I have shown that the present system is not satisfactory. May I now demonstrate some of the shortcomings in the system and where changes ought to be made?

§ Mr. Speaker
Order. I am very patient and I want to help the hon. Gentleman. He may suggest changes in administration by the Ministry of Agriculture as it affects the problems of agriculture, but he may not suggest changes which would involve legislation.

§ Mr. Jopling
May I put it in this way? Certain commodities are produced in this country which are subject to administration and oversight by the Ministry. The Ministry is doing it in certain ways. I wonder if I may suggest how it would be better for the country if we could increase production in certain parts of the industry and why it would be in the national interest to grow a bigger proportion of certain crops at home. I am sure that this would be in order.
It is essential to renegotiate some of the international agreements which have been shown to be inhibiting. It seems ridiculous that so many of the countries from which we buy vast quantities of food have an appalling adverse balance of payments with us. Argentina is one example. We have discussed Argentina a great deal in recent months in another context. I do not want to pick on Argentina and I hope I will not be accused of doing so, but we have an enormous adverse balance of payments with that country. That goes for many other countries from which we buy vast quantities of food.
It would not be unreasonable to pay less attention to the need to buy food from these countries so that we can sell a relatively small number of motor cars and other manufactured goods. I hope that the Minister will recognise the need to renegotiate many of these agreements. 1488 The situation cannot be allowed to continue.
The Minister will agree that we must produce a great deal more beef. This was made clear in the Price Review White Paper. This means, because so much beef comes from the dairy herd, a vast increase in milk production. Many of us believe that we can use an extra 200 million gallons of milk in manufacturing industries. This is the sort of increased production which could be used and which the industry should be given the opportunity of producing. The industry should be encouraged to produce more hard wheat which we now import in such vast quantities.
Many of us believe that when the bacon sharing agreement comes up for re-negotiation this year farmers should be given the opportunity of increasing their share. The Minister may say that the British bacon producers have not filled their quota in recent years. This is probably due to the poor rate which could well be taken up by a levy.
It is time to try to find ways of changing the system. The National Farmers' Union is certainly well prepared to do this. I am sure that the Minister has read the speech that the President of the N.F.U. made last week. He said: If rather more of the guaranteed price could come from the market and rather less from deficiency payments, it would be simpler for the Government to pay more regard to the need for improving the industry's financial position than is possible under our present system, where the limits are set by fear of the potential rise in Exchequer cost. That is exactly the point I have been trying to make. The Government are already working on this. We are told in the White Paper that they are already seeking to negotiate an increase in the minimum import price for cereals. This demands no legislation but an agreement between Governments. We believe that that is the wrong way to do it. We believe that if we are to jack up the price of imported cereals it should be done through the levy system instead of giving all the increased revenue to the countries that supply us.
The agricultural Press is wild with rumours of the negotiations that the Minister is supposed to have started with the unions. I hope that he will take this opportunity of telling us what is happen 1489 ing and what he intends to do to change our outmoded system of agricultural support.

§ Mr. John Brewis (Galloway)
I do not wish to detain the House for more than a few minutes. but having heard the speech of my hon. Friend the Member for Westmorland (Mr. Jopling), and knowing what an expert he is on the subject. I want to add my plea to what he said.
The present situation regarding Argentina is very trenchant. I do not wish to speak about foot-and-mouth disease, but there must be considerable scope for import-saving, of which the Prime Minister has spoken so often. I acquit the Minister of Agriculture, Fisheries and Food of not having done more in this regard. One of the great difficulties is the Board of Trade, whose main object in life seems to be to maximise exports and pay very little attention to the saving of imports.
A small example is early potatoes, which are grown in many districts in Britain, including many remote districts like Cornwall, Pembroke, Wigtownshire and the Ayrshire coast. At the same time we import them from at least 10 Mediterranean countries, including Egypt under President Nasser, which must be one of the stupidest things to do in view of his conduct in the past. Acreages of early potatoes have decreased over the years while imports have gone up and up. There needs to be urgent administrative action to see that more of our early potatoes are grown in this country.
Eggs are another example. So often the extra 2 per cent. imported have completely broken the market, with the result that there have been much higher guarantees payable to the Egg Board. I am particularly interested to see the Board continue, because it seems to me to be one of the best ways in which producers in the remoter areas, such as farmers in the Orkneys, get a fair crack of the whip when selling their eggs.
Lastly, there is the question of milk. It is not often realised that about 60 per cent. of the dairy products we consume is imported. We continually see the price of milk to the farmer being reduced by the need for so much milk 1490 to go to the manufacturer at a lower price. A quite small levy on imported butter, cheese and so on would have a tremendous effect on the return the farmer receives for his milk.
Agriculture should get a greater part of its revenue from the market and very much less from the taxpayer. This would be much more satisfactory in the long run both to agriculture and the Treasury.

§ Sir John Gilmour (Fife, East)
My hon. Friend has drawn attention to the great need for a change in the method of help for our largest industry. At a time when we have a lot of extra taxes levied on us, the fact that agricultural support costs us £300 million is bound to spur people to make certain that we get value for our money. The fact that the expansion of agriculture adds to this bill makes it difficult for the Minister of Agriculture, Fisheries and Food to say to his Cabinet colleagues, "I can save you and the country millions of pounds if you allow the industry for which I am responsible to expand more and produce more for the home market." The Chancellor of the Exchequer will say, "This is all very well, but what will it cost?".
I went yesterday to a grocer's shop and bought a tin of Argentine corned beef for which I paid 3s. 6d. It was a ½1b. tin, so I was paying 7s. per lb. for what I thought was inferior quality meat. I went to a butcher's shop in the same street and saw price tags at anything from 6s. 6d. per 1b. to 10s. for fresh, home-grown and killed beef. This is at a time when there is, or should be, no subsidy paid to the beef producers because the market price for beef is now above the guaranteed price. This leads me to think we are in a position in which the agriculture industry is not being given enough encouragement to produce all it can. It is not having the opportunity to substitute home-grown food in the markets in the way that it should. This should be happening in the national interest, because with the rising population, and, one hopes, the rising standard of living, there is no doubt that we shall have to spend millions every year in importing foodstuffs that we cannot grow ourselves.
The size of our food importing bill will increase all the time, and if this is 1491 so, there is real need that we should produce much more of the food we can grow in this country. It is only by a change in the method of agricultural support that we can give the farming industry help to enlarge its production in the interests of the country as a whole, and of the countryside. This would arrest depopulation and bring more industries into the country. This is in the general national interest, and I hope that the Minister will be able to show the House that he is convinced of the need to encourage agricultural production in this country, and that the best way of doing this is by a change in the method of agricultural support.

§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)
I apologise for not having been immediately present when the hon. Member for Westmorland (Mr. Jopling) rose. However, I heard all his main arguments and I have heard him on previous occasions. He feels strongly about the industry, and this is right. He has a genuine desire to expand the industry, and even though there may be a different approach, we can say that this Government shares his wish that the industry should improve production and productivity.
The hon. Member for Fife, East (Sir John Gilmour) wished me to say that I seek to increase agricultural production, and he believes that the way is to change the system. I say that even under the present system, despite all the difficulties and criticisms, there has been tremendous progress. This also applies to some points raised by the hon. Member for Galloway (Mr. J. Brewis). I have listened carefully to what has been said and I realise that there has been considerable discussion about this. The hon. Member for Westmorland is quite right. It is right that the farming world should discuss this. It will be discussed by politicians too.
In the Press there has been controversy. Various newspapers have joined battle. Editorials have been published on the subject. This was highlighted by their attitude to my Review determinations. In the debate, it has been suggested that we should try to ensure that farmers get a larger proportion of their total return from the market. I know that hon. Mem 1492 bers opposite think that we should have an import levy system. I cannot debate that because you, Mr. Speaker, would call me to order, as you called the hon. Gentleman to order. But I do not take a rigid or dogmatic view on this matter. My aim is to achieve the objectives of the Agriculture Act, 1947. What are those objectives? They are a stable and efficient agriculture, with satisfactory living standards for farmers and workers and an adequate return on the capital invested in the industry. Hon. Members opposite do not disagree with those objectives. Indeed, they are really pressing me to fulfil them. They have never been fundamentally modified by previous Governments, including the Conservative administration. Despite what is being said about new policies by hon. Members opposite, their Government sought to fulfil these objectives.
If we could attain these objectives more easily by adopting a new system or changing the existing one, I am ready to consider suggestions. But the system we have is very flexible. For instance, at the last Annual Review, we abolished the standard quantity arrangements for wheat, introduced about four years ago, because of the increasing urgency to save imports. Furthermore, I recognise that if we enter the E.E.C. we shall need to adopt its system of support. But I cannot argue that point because it, too, would be out of order.
There are obvious advantages in the present system. I ask hon. Members not to be too critical of it until they have had an objective analysis of how it works. I am against a blind rush from the present system before we have considered carefully the merits and difficulties of the other systems it is suggested we should adopt.
Over the past 20 years, there has been a new agricultural revolution. We have achieved so much in this country. Our agriculture has become the admiration of the world, and we sometimes forget that. The foundations, I am proud to say, were laid by my Labour predecessor, the late Tom Williams. Let us not denigrate the progress made in the countryside. If it is claimed that the system does not work, I reply that the facts show that we have achieved tremendous and dramatic progress. In the 40 years between 1858, when we began to take 1493 an agricultural census, and 1908, agricultural output increased by one fifth. In the next 30 years up to the outbreak of the Second World War, it again increased by one fifth. In the last 30 years, has doubled. A large part of the credit must go to the scientists, technicians and advisers but, above all, it must go to the farmers and farm workers.
It is hard to doubt that our system of support provided under the Acts of 1947 and 1957 has also had a great deal to do with the creation of one of the world's most efficient agricultural industries. Wherever I go abroad, I am always very proud to extol what we have achieved in agriculture. I know that each year Ministers from other countries come here anxious to see what we have achieved. This year at the Royal Show we shall have visitors from all over the world, paying tribute to our achievements. When we talk about our system we ought never to forget the results which are to be seen.
As compared with alternative systems, our system provides much greater security for the farmer in the case of commodities where we are largely self-supporting. Eggs are an obvious example. The danger to the farmer's security in such cases stems from the danger of over-production at home. The benefits of import regulation in such cases are limited. Our industry has greatly benefited from our ability to influence home production through changes in the guaranteed prices.
The advantages are obtained at a certain cost to the Exchequer. The hon. Member said that the Exchequer inhibited decisions at Review time, but the Exchequer must be brought in, whatever system we adopt. The hon. Member would be living in cloud cuckoo land if he thought that no Conservative administration would allow the Treasury to have any influence. It always has had an influence, much more so under previous régimes than under mine. One has only to look at the positive side in my period as Minister, as compared with my predecessors. We have pumped more into the industry than any Conservative administration. The Treasury did inhibit them, but it does not inhibit a progressive Labour Government in the same way.

§ Mr. Brewis
What about rising costs?

§ Mr. Peart
This Review takes note of them. Costs cannot be completely recouped and I have said this in my Review. This has very sensibly been accepted. The farmers have not opposed my Review.

§ Mr. Jopling
rose—

§ Mr. Peart
My Review—

§ Mr. Jopling
Please give way.

§ Mr. Speaker
Order. Interventions after 17 hours of debate are a little much.

§ Mr. Peart
Advantages are obtained at a certain cost to the Exchequer. But the cost has remained remarkably stable over many years. The expected cost of agricultural support in 1967–68 at £270 million is almost no change in money terms from what it was eight years ago, but it is much lower in real terms. The outcome of the 1968 Review will increase Exchequer costs; next year's estimate at present is £317 million. That does not alter the fact that total Exchequer cost has been generally very stable despite occasional fluctuations from one year to another. Some of the guaranteed prices, those for wheat, eggs and pigs, are now actually lower than in 1951. The industry has been expanding because of its outstanding performance in improving productivity.
The consumer is very important. No one questions that the present system is a great benefit to the consumer. Hon. Members may have seen some interesting figures published in The Times recently giving some specimen retail prices for November, 1967, compared with November, 1962. There have been increases, but food increases have risen only moderately. This is evident with eggs and milk. Sugar has not changed at all in price over five years. The objects of the 1947 and 1957 Acts are to create an efficient agricultural industry, develop competition and at the same time to bear in mind the needs of the community. In that sense the policy has worked.
In my notes I have some careful arguments about the levy system, but it would be wrong of me to discuss it. Quite rightly, Mr. Speaker, under your guidance Members and Ministers must keep in order, and therefore I cannot give my arguments in connection with this matter. This is a pity in a sense, but we must recognise the procedure of the House.
1495 The hon. Gentleman has laid great stress on international agreements, on our import policy, on our controls, and on how we are involved in this question. I would only say that these agreements exist. I inherited them. There is the Bacon Market Sharing Understanding which the hon. Gentleman mentioned. There are other agreements. Also we have traditional suppliers like New Zealand. We have to bear their interests in mind, though we must certainly also give priority to the home producer.
The hon. Gentleman seemed to write off the selective expansion programme. In the first paragraph of my White Paper, which he quoted against me, I emphasised the selective expansion programme. The hon. Gentleman should remember that that programme envisaged that by 1970–71 we will have need for an increased agricultural production of £200 million and that the greater part of it will be met by the home producer. But because we are a trading nation, we inevitably have obligations to other countries. There is nothing wrong about this. I am sure that the hon. Member for Westmorland is not an opponent of New Zealand and that he would not say to our New Zealand friends, "We shall cut you out of our markets. We will not take New Zealand butter and lamb." I would like to know whether that is what he means.
Hon. Members have mentioned Argentina. But we must be consistent here. Are we going to say that Denmark shall not send any bacon to this country? That would be strange doctrine from a party which is wedded to going into Europe. They say that we should protect a vast market with a levy system, but within the market we would have to face competition from France and Western Germany. I do not say we should not do this; that would be logical if we accept that policy. But the danger of imports is always there. I should like to have discussions with the unions on this. Indeed, we are going to do so.
There are problems concerning the minimum import prices for cereals. But the Board of Trade, which was criticised by the hon. Member for Galloway (Mr. Brewis), recently announced an agreement on eggs. Our suppliers from abroad supply only a small percentage, and in 1496 addition they are going to enter an informal agreement whereby they will exercise a measure of restraint.
We have our quota system for butter. Are we going to end that? Have we to smash all these agreements because we are doctrinal? Of course not. No Tory administration would do that. If they would do it, I hope their leaders will say so, but so far I have not heard a peep, or a cheep or a cry from them on this matter. They must be honest with our Commonwealth friends and our friends in Europe, such as Denmark, and say to them, "We are going to cut off completely all your trade", if that is what they intend. But then people say "We want more exports into your countries." Is this the way to get those exports?
I hope our agricultural industry will become so strong that we shall be able to export more of our products. We have indeed been doing this, barley being one classic example. There are tremendous possibilities here. If our industry only continues as it is, developing technologically and leading the world in many ways, we shall increase our exports greatly.
I was asked about discussions with the unions. I am about to hold these discussions to explore more precisely what they had in mind during the Annual Price Review discussions. I cannot forecast the outcome, and I emphasise that these are not discussions designed to lead to a sweeping immediate change in all our present arrangements. The House may be sure that the Government have no intention of rushing into changes in our agricultural support policy—a policy which, produced by Tom Williams, has brought immense benefits to farmers and to the public.
Even if we concluded that some changes were necessary—and I have an open mind on this—there would be many problems to be solved before we could make a change. In the meantime, I am satisfied that we are pursuing an agricultural policy well suited to the needs of the industry and the country. If changes are needed we will make them, if they are right. But we shall not be doctrinaire, for party reasons or any other reasons. We shall do what we think is right for the community and the nation.

§ The Parliamentary Secretary to the Treasury (Mr. John Silkin)
rose in his place, and claimed to move, That the Question be now put.