HC Deb 10 December 1969 vol 793 cc427-8
26. Sir J. Langford-Holt

asked the Minister of Agriculture, Fisheries and Food whether he is satisfied as to the effects of the Government's economic policy on the liquidity position of the agricultural industry; and if he will redress any adverse effects before the Annual Review.

Mr. Cledwyn Hughes

Essential needs for short-term working capital are generally being met and I know of no reason to anticipate the normal consideration at the Annual Review.

Sir J. Langford-Holt

Is not the right hon. Gentleman aware that farmers are disturbed and apprehensive because of the problems which they face? For example, interest rates are at an unprecedentedly high level. Secondly, there are the increases in costs which both farmers and the right hon. Gentleman know will take place during the course of next year but which will not be taken into account until the following year.

Mr. Hughes

In general these are matters for consideration during the review negotiations. The hon. Member well knows that the prevailing high interest rates, which are in line with world interest rates, have not cut off the farmers' demand for credit. It should be borne in mind that a borrowing rate of 9½ per cent. is effectively about 5½ per cent. to a farmer paying income tax at the standard rate. The hon. Member also knows that agriculture is in the highest credit priority within the banks' lending ceiling.

Mr. Jopling

Has the Minister looked at the figures for the take-up of fertilisers last year? Can he put the reduction down to anything other than a shortage of cash among farmers?

Mr. Hughes

I will certainly look at the question of fertilisers. It is a matter which obviously we shall be considering during the review. But the hon. Member will have borne in mind that total bank advances to agriculture and forestry amounted to £536 million at mid-August this year, which is £18 million more than at the same time last year.

Mr. Stodart

If the right hon. Gentleman is saying that he is satisfied with the liquidity position, may I ask whether he has read the opinion of one of the leading bankers in the country who said that there was not a chance of expansion getting under way unless prices improved?

Mr. Hughes

The hon. Gentleman must not put words into my mouth. I invite him to read the answer which I have just given.