§ 4.20 p.m.
§ Mr. J. B. Godber (Grantham)
The Opposition have sought to provide some time this afternoon—time which appears to be somewhat curtailed—to discuss agriculture, but particularly to pinpoint certain problem areas of agriculture which are causing the House and the country considerable anxiety at the present time.
There have been real problems, amounting almost to disaster, in certain parts of the country owing particularly to the quite extraordinary weather conditions which we have had to encounter. The heavy rainfall last summer and last autumn and throughout the winter, and particularly in the spring sowing season, has made farm cultivation impossible in certain areas, and all farmers have had a very difficult winter and spring. Crops in many places look poor. Grass was very late to start growing and the feed bills for April and May must have been a record. The lamb crop has been very bad, particularly for hill sheep. The milk yields are down.
This is a sorry catalogue, but the real disaster has been in certain mainly arable areas. I would define these, roughly, as South Yorkshire, North Lincolnshire, North Nottinghamshire, with very bad patches also in the Fens and in parts of East Anglia. My own constituency of Grantham has several seriously affected pockets, and I am sure there are others in other parts of the country as well.
The Minister will, no doubt, recall that my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) wrote to him a few days ago in the most graphic terms giving a description of the problems in his constituency, and he has given me a copy of that letter. Now he tells me that the actual final figure of rainfall for May, in the area he is talking 52 about, is five times the average for that month over the last nine years. That is a staggering increase, and demonstrates very clearly the intensity of the problem in certain parts of the country.
In these areas cultivation for a long period has been virtually impossible and many thousands of acres of crops have not been planted. I myself had the opportunity of flying over some of the badly affected areas a fortnight ago today and I had the opportunity, along with some of my colleagues on this side of the House, of looking at the problem.
It was, indeed, the most depressing picture that we saw. We saw hundreds and hundreds of acres uncropped; we saw tractors bogged down in fields; we saw field after field where rubbish was growing unchecked because it was impossible for the farmers to get on the land to do anything about it; we saw many fields where spring corn had been planted and where fresh rainfall had left water standing between the rows of crops. This is the extent of the problem as we actually saw it.
The Joint Parliamentary Secretary has also visited these areas, and we are very glad he has done so; and after he did so I saw that the farming Press reported him as saying that the conditions that he saw were among the worst he could remember in 43 years of farming. We all know the Parliamentary Secretary and I do not think that any of us would accuse him of exaggeration. Therefore, I would think that, if he says that, he also is convinced of the serious nature of the problem, and I am quite sure he will have conveyed that point of view to his right hon. Friend.
The Minister, in his own Monthly Agricultural Report, dated 10th June, says of this problem of further heavy rainfall on land already saturated that it hadseriously interrupted field work, particularly on heavy land much of which was waterlogged.It goes on to say that asizeable acreage intended for sowing had to be left fallow.All I would say is that the use of the phrase, "sizeable acreage" is a modest way of describing the enormous problem which is involved.
Further, I noticed that the Agricultural Comments in The Times today talk of a 53 possible 400,000 acres in Lincolnshire alone. I think that that figure is rather high, myself. I would put it, however, at at least 250,000 acres which could not be sown in these areas.
The Minister, presumably, will have a fairly clear estimate himself, even if the 4th June figures are not available; if he has been able to have an early look at the figures, perhaps he can give us some actual figure.
The first question I put to the right hon. Gentleman in considering this problem is: will he tell the House what he believes the effect will be of this dreadful degree of circumstances following one upon another? What effect will this continuous run have on the course of production in the current year as estimated by him at the time of the Price Review?
I have been talking about the totality of the problem, but the real difficulties lie in the individual cases. I have heard of many cases where up to one-half of the farm is uncropped—among the farms in these areas. I heard of one farm of 230 acres of which the farmer had been able to crop only 30 acres, and the remainder will not be cropped at all this year. At present-day costs, at present-day rents, these difficulties are really devastating. That is why we have brought this subject before the House today, and I am quite sure that some of my hon. Friends who will be seeking to catch your eye, Mr. Deputy Speaker, will be able to reinforce what I have said about the size of the problem.
Of course, we do not blame the Government for the weather.—[Laughter.] Wait for it. We do blame them for having brought farming to a state where farmers are extremely vulnerable to a disaster of this kind. Both the present Minister and his predecessor have told us many times, at the times of the Price Reviews, that they have been infinitely more generous than we were with the ones which we gave. The present Minister, at the time of the present Review, told us, I think, that it was the most generous there had been. That is the sort of story we get, but if this is really so we ought now to be having some evidence of the advantages which the farmers should have been getting from this generous Government. Of course, the figures with which the Government regale us are estimates of what balance of 54 advantage it is hoped there will be to the farmers.
What interests me more is the actual outcome, and this year's outcome, shown clearly enough in the White Paper, is a £39 million drop in farming income in the current year. That is what it tells us. I agree that we are told—indeed it is right in some part—about the adverse weather conditions, but, again, it cannot all be a matter of weather in this Governments consistent record of failure to get the farmers adequate incomes and to get expansion going.
The real truth leaked out in a Written Answer given by the Joint Parliamentary Secretary on 28th March to my hon. Friend the Member for Harwich (Mr. Ridsdale). My hon. Friend asked the Ministerto give the latest figures in a table showing the farming aggregate net income at constant market values with the forecasted index figure for 1968–69."—[OFFICIAL REPORT, 28th March, 1969; Vol. 780, c. 387.]The Parliamentary Secretary gave these figures, starting with the year 1954–55, using an index at constant 1954–57 prices, with the average for the years 1954 to 1957 being 100. Starting with 1954–55, the figure was 97.4. With certain variations it went up until it reached the peak in the last year for which the Conservative Government were responsible, 1964–65 when it reached 112.7. This is at constant prices.
This means the farmer's ability to pay, the farmer's purchasing power, had increased very materially between the first date given and 1964–65. It went up to 112.7. No figures since then have ever been as high as that. The best figure was for 1967–68, which was 1½ points below, and the figure has now fallen back to 97.9, which is only just above the figure for 1954–55.
The position of the farmers today, on the Government's own estimate, is that their purchasing power has dropped right back to the figure it was 15 years ago. That is the result of five years in which the Labour Party has been in power. It is no good the Government telling us that the position is so much better, when every farmer knows that it is worse. The Government are responsible for having brought the farming industry to such a state that when serious problems like 55 this arise the industry has neither the resources not the ability to stand up to them. The farmers' purchasing power has fallen dramatically, and the Government, having deprived farmers of the ability to look after themselves must accept responsibility for helping them out.
No doubt the Minister will use as an argument the bad weather. In anticipation of that, speaking as I do before the Minister, I draw to the attention of the House one significant factor which emerged, not in this Minister's Price Review, but during the lifetime of this Government in the Price Review for which his right hon. Friend was responsible in 1965, which was the first Price Review after his party came back to power.
Paragraph 66 of that Price Review, Cmnd. 2621, is a summary at the end of the announcement of the provisions of that year's Price Review, and it reads as follows:In reaching their conclusions the Government have had in mind the marked improvement in the industry's income since 1963–64"—That was under a Conservative Government—… both actual and on a normal weather basis. It is recognised that this year cost increases have been substantial, but the Government consider that, in the present circumstances of the national economy, the industry should, like others, be expected to absorb a large part of its increased costs through its increasing productivity. The net income of the industry depends on many other things besides the level of the price guarantees and production grants, but, in the Government's view, the present determinations will give the industry the opportunity of improving its income in the coming year.Just for the record, they did not improve their income in the coming year; it dropped by £12 million, as the Minister's White Paper shows.
My point in quoting that paragraph is contained in the first sentence:In reaching their conclusions the Government have had in mind the marked improvement in the industry's income … both actual and on a normal weather basis.That must mean that the Government were taking account of the advantage farmers had had from the weather and reducing the award accordingly. It can mean nothing else, and no other Government 56 since the Price Reviews started have ever done that.
There has always been a tradition that farmers would be expected in general to stand the bad weather conditions, but that they would always have to the full the advantage of good weather conditions, and until this Government did so no Government have ever sought to take that away from them. From the time when Tom Williams was Minister, no Government have tried to do that, and nor has any Conservative Minister. It took the present Government to try to take away from farmers some of the benefits they derived from a good season.
Because the Government did that, there is an inescapable obligation upon them to help farmers when they are in difficulty, as they are now. The Minister has an irrefutable obligation to do something to help the farmers. To be fair to him, I think that he wants to help, I do not deny that for a moment, but I want to emphasise that he has this obligation, and I hope that he will bear my arguments in mind.
It is our duty, on both sides of the House, to try to find practicable ways of suggesting how help can be given in this difficult situation. Several suggestions have been put forward. The one most frequently mooted is that there should be a special Price Review. Some of my hon. Friends may be asking for that today. I have thought a great deal about this, and I have come to the view that this would be a long process and, at the end of the day, even if determinations were given, they would be of so general a nature and so widespread across the whole of agriculture that, however necessary it is for all farmers to have a squarer deal, the people we are trying to help would not be helped by this operation. It would not be sufficiently selective.
I therefore turn to the suggestion that there should be a subsidy for fallow. I am told by farmers in the areas concerned that N.A.A.S. officers, even before it became essential for land to be fallowed, were advising farmers in their own interests that they should fallow the land which had got into such a bad state. So there may be some justice in demanding a subsidy for fallow. I am not altogether convinced that this is the best way of 57 trying to help. A fallow subsidy would mean that farmers who had made tremendous efforts to plant corn in adverse conditions and who would get an indifferent crop would get no help, whereas those who had not been able to plant any corn, or who perhaps had not tried to, would get help. This would be invidious and undesirable, and I hope that the Minister will agree with that analysis.
Much more help would be provided, although of a negative nature, by the suggestion that has been mooted for spreading tax losses over three or five years. This is a way in which the Government could and should help. I hope that the Minister will respond affirmatively to this suggestion and, if he cannot tell us that he will do this, will he tell us precisely why he cannot? This could provide immediate help since we know that the profits for one year often provide the funds for paying the tax for the previous year.
§ Sir David Renton (Huntingdonshire)
Will my right hon. Friend bear in mind that, because of the difficulties he has described, a great many farmers, particularly farmers in a small way, are in immediate need of cash? If Government assistance is forthcoming, it must be in a form which gives cash to those who need it most.
§ Mr. Godber
I am grateful to my right hon. Friend. I am sure that he is right on this and that he will support what I intend to say later.
I am trying to analyse the suggestions which have been made, and the next suggestion I will deal with is for drainage grants. Many acres which have had to be left fallow would benefit substantially from drainage, but, in the context of what I have been saying, farmers do not have the means to provide their share of the money for carrying out drainage. I know that the drainage grant is already one of the highest grants, and that any Minister would face with reluctance grants exceeding 50 per cent. Nevertheless, in these special circumstances, for one season only, a case can be made for a higher amount than the normal drainage grant. I put it no higher, and ask the Minister to give consideration to that suggestion.
I ask the right hon. Gentleman particularly to look at my next point on drainage 58 which, while small, is significant. I have received reports that even now, in spite of all the difficulties, some farmers want to go ahead with drainage schemes and are willing to do so under present grant conditions. The normal machinery of operation, application and agreement, has been somewhat pedantic. I know that the Minister's officers have difficult problems on their hands, but I ask him to ensure that where any farmer can get ahead with drainage, red tape will not be allowed to obstruct him and that he will be given an immediate opportunity, an immediate contracts agreement, to go ahead. This is done under the Farm Improvement Scheme in certain circumstances and if the Minister were to give instructions in this way a limited number of people who want to get on with their work as soon as the land is dry enough would be assisted to do so.
Another suggestion put to me is that those who have been able to crop some part of their farm will be desperately short of cash in the months immediately ahead and that some help might be given to them in the form of an advanced acreage payment for cereals which they have actually planted. This is something which could have only a limited effect for those in need of ready cash, but it is worthy of consideration.
§ Mr. James Dance (Bromsgrove)
My right hon. Friend will know from the examples that I have given to him that many farmers in my part of the country have had to sell up because of their difficulties. Should not help be given to farmers in these circumstances by the Treasury allowing them to ask the banks for help?
§ Mr. Godber
I am grateful to my hon. Friend, because he leads me to my next point, bank credit.
I agree with what my hon. Friend has said about that. One thing that the Government can do to help materially is to discuss with the banks how the banks could provide further help to any farmer in any way credit worthy. It should be remembered that I ask this under the cloud of the Government's own demand—and I use a strong word deliberately—to the banks that they restrict their credit ceilings. The Chancellor has "fined" the banks for not having got down to the figures he gave. 59 But in this instance the Government could say that in these limited and well-defined areas the banks should be allowed to give more credit to these farmers over a period when they judge the farmers to be credit worthy; in other words, deliberately to go over their ceilings of credit for a limited period to cover a special emergency.
§ Sir Harry Legge-Bourke (Isle of Ely)
My right hon. Friend said that he was talking in the context of cereal acreage payments. I hope that he will include potatoes, because potatoes which have been under water for more than 24 hours will never be harvested.
§ Mr. Godber
I sympathise with my hon. Friend, because potatoes are a very expensive crop, but there is no acreage payment for potatoes and to include them would require fresh legislation, which is a difficulty.
Those are the main avenues which have been suggested as means of helping the farming community and I am sure that the Minister has considered them all. I hope that he will have something positive to tell us today about at least some of them as ways of providing help. These areas extend over a considerable number of acres and many constituencies are affected. We are all seeking to find a way in which these farmers may be helped and the criterion by which any suggestion should be judged is whether it can provide means to help these farmers to carry on.
There is the other side to the coin. As a result of these disasters, the Treasury and the Ministry will be making a direct saving. I am sure that it is not the Minister's wish to make a saving in this way, but, in fact, he will be doing so. I have been given an estimate of 250,000 acres which were not cropped and which would normally have been cropped with corn. If that estimate is anything like right, it will mean a very big saving on deficiency payments—and for cereals it would be nearly that acreage—of at least £10 an acre on average. There is also the saving of the fertiliser subsidy for fertiliser used on that acreage and the probable saving in the higher prices which may well eventuate for the end product of a smaller crop.
It is impossible precisely to quantify what saving the Government will make, 60 but on all the various factors resulting from this year's adverse weather I estimate that it will be at least £10 million on the amount which the Government estimated at the time of the Price Review they would have to pay in one form or another. If the Minister does not like my estimate, I ask him to give us his figure.
The right hon. Gentleman will be well aware that it is customary for the Ministry to make fresh forecasts of the cost of agricultural support at regular intervals throughout the year. There must, therefore, be a recent figure which his officials have available for what they regard as the cost as a result of the changed circumstances since the Price Review. My estimate of £10 million may be inaccurate and, if it is, perhaps the Minister can say what he thinks it will be. Whatever the figure, it cannot be denied that it will be large, running into some millions of pounds. That will be a saving of money which the farmers will not get and unless the Government propose a special Price Review, there is very little in the suggestions which I have listed which could restore this large sum of money to the farmers.
If help is to be given, we have to find ways of getting this money back into the hands of these farmers. We are not asking the Government for extra money, but merely seeking to see that money which they were willing to provide in March they will still provide even though in a different form. If help is to be given, it is necessary to be clear what it is intended to do. It is not intended to help the generality of farmers, although I have shown that they have been unfairly hit in the last few years.
That should be put right at the next Price Review. It is certainly not to give charity to those who have been hard hit by the abnormal weather conditions. These farmers do not ask for charity. The purpose must be to enable farmers who have been caught by these appalling conditions to carry on and by their own efforts to get on their feet again. Of the measures I have discussed, only the fallow grant could possibly do this, and I have already said that I recognise its probable unfairness. If not that, what else can be suggested?
61 I have one suggestion of my own which may fit the bill. I do not ask the Minister for an immediate response to it. I ask that he and his officials consider it with urgency and sympathy. I do not ask him to comment on it today if he does not wish to do so, for he may wish to discuss it with the Treasury. I believe that it is workable and that it would be fair and that its overall cost to the Government would not be nearly so much as the saving which the Government will make out of the misfortunes of these farmers.
My suggestion is that the Government should provide interest-free loans for a period of three years to any farmer who can show that on at least one-fifth of his arable acreage he has been prevented from cropping by the weather conditions, or that his attempts to crop have been largely nullified by the weather. The figure of one-fifth of his acreage could obviously be changed according to what the Government felt, but that is my suggestion. The sums available could be limited to £5,000 for an individual farmer, or perhaps un to £10,000 if a farmer could show exceptional circumstances.
Such a scheme could be administered by the Minister's divisional executive officers with an appeal to the county A.E.C. in any case of doubt. At the end of the three years, the money should be repaid direct or, if it were not repaid, the Government would have the right to deduct it from any payments due to the farmer, either deficiency payments or production grants, until the loan was cleared up.
If 2,000 farmers qualify at £5,000 each, the sum loaned will amount to £10 million. The real cost to the Government, however, will only be the interest lost on the money, plus limited administrative costs. I estimate the total cost to the Government as £1 million a year for three years, diminishing rapidly thereafter. By tying repayment to deduction of subsidy payment, bad debts could only arise where the applicant gave up farming, so the risks are very small.
I agree that this is an entire break with anything done before—that is why I do not ask the Minister for an immediate response—but it is certainly not impossible either to institute or to administer. If the Minister has something better to offer, well and good. If not, I seriously 62 urge him to consider my suggestion to see whether he can devise a way of implementing it, because it could mean fresh hope for many good men who have been caught up in these intolerable conditions and who deserve a chance to get back on their feet again. I put it to the Minister in this spirit. I hope that he will accept it in the same way.
§ Mr. James Scott-Hopkins (Derbyshire, West)
Does my right hon. Friend agree that it is not only the cereal farmer who has been hurt by these disastrous conditions recently? Will he say how he thinks the potato grower, and other types of farmers, who have been equally affected, could be helped?
§ Mr. Godber
By having the scheme administered by the divisional executive officers, with appeal to the county A.E.C.s. I should be happy to see discretion given to the county A.E.C.s in particular circumstances to deal with the kind of case that my hon. Friend has in mind. But it is largely the cereal areas where the worst cases have arisen. However, such a scheme as this could be devised to provide for the kind of case that my hon. Friend mentions.
In summary, there is a desperate need to help a limited number of farmers, most of whom are to be found in the one or two fairly clearly defined areas to which I have referred. In my view, the Government have contributed to their plight in the way that they have lowered farmers' real incomes over these last five years.
For farmers generally something will have to be done at the next Price Review, even to maintain production. I have not, of course, talked about the expansion programme. For farmers in the badly affected areas something must be done if they are to carry on at all. The Minister now has an opportunity to do something. But sympathy is not enough. Help must be given. I have had the temerity to suggest one way in which help might be given. I asked the Minister either to accept this or to devise some scheme of his own which will provide the cash to enable these people to carry on. That is what the House wants. I hope that the Minister will respond.
§ 4.53 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. Cledwyn Hughes)
I am 63 glad that we are having this further opportunity to debate agriculture this afternoon. The right hon. Member for Grantham (Mr. Godber) has raised a number of issues and has just put forward an interesting proposal. He has asked me to consider it. I always consider very carefully any proposal that is made to me by right hon. or hon. Members. At first blush his suggestion presents many difficulties, one of which was illustrated by the question put to the right hon. Gentleman by one of his hon. Friends who suggested that the scope of the scheme might be widened to include farmers who had suffered because of the weather or for some other reason.
As the debate has, unfortunately, been eroded by statements, I propose to be as brief as possible, in order to give hon. Members the opportunity to speak.
Two months ago we debated the decisions which the Government had taken following the Annual Farm Price Review. The House then passed a resolution which stated that those decisions placedthe right emphasis on those commodities where expansion is wanted in the interests of the agricultural industry and of the country.Let me make this quite clear. It was the right emphasis then and it is the right emphasis now. I have not changed my mind. I set out our objectives of selective expansion then, and I repeat that this is the course which we have set ourselves over the years to 1972–73.
I was grateful to the right hon. Gentleman for the grudging admission that I am not responsible for the bad weather. The agricultural policy of no Government guarantees equitable seasons—neither too hot nor too cold, too wet nor too dry. I remind the right hon. Gentleman of the situation when he was Parliamentary Secretary to the Ministry of Agriculture. He said today that he was stating a significant fact about the 1965 Farm Price Review. Another significant fact is what he said as a Minister. The 1959 White Paper, Command 696, referred to. … the fact that during the last five years"—I repeat, during the last five years—adverse weather conditions have substantially outweighed favourable conditions.In the preceding year, when he was also Parliamentary Secretary, despite the 64 adverse weather conditions to which he referred, the Conservative Government reduced the value of the guarantees by 18.9 million.
It is easy to be virtuous in Opposition. The right hon. Gentleman always is when he makes his speeches. But I certainly make no claims on the weather. Like everyone else, I have to take it as it comes. But, with the right hon. Gentleman, I share the anxieties and disappointment of those farmers whose plans have been set back by the bad weather. This setback underlines a point which too many people are reluctant to accept. Any policy for agriculture—even the best, which is our policy of selective expansion based on an overall rise in productivity—must be realistic about the hazards which beset farming.
That is why I refused to set up precise commodity targets or objectives either last November or in my Review statement in March. Farmers need a framework, a broad indication of what is expected of them, a guide to the priorities within the tasks to which they apply their skill. I do not believe that they look for detailed intervention in all that they do. In my view, the less intervention the better. But, on the other side of the coin, there are some strains which farmers must be left to carry. Individualists that they are, I believe that the best farmers would rather have it that way.
Having declared my philosophy, I now turn to the problems caused in some places by excessive rainfall and water-logging. To assess the extent of these problems, I have called for reports from my officers in the field. I have also had detailed reports from my hon. Friend the Parliamentary Secretary who has paid two visits to the areas where difficulties are most concentrated. My information is that in the country as a whole, because of the persistent wet weather, 120,000 acres intended for cropping have not yet been planted. Almost two-thirds of this total is in the East Midlands and South Yorkshire areas. With the recent fine weather, I should expect some reduction in these figures. The worst effects of the weather have been experienced in the east of the country, in an area stretching from Yorkshire down to Northampton, Cambridge and Norfolk. But elsewhere areas and pockets of heavy land have also felt similar effects.
65 Apart from the area which is likely to remain in fallow, there are fairly widespread areas of the country in which crops have been planted in poor conditions. At this time of year it is difficult to estimate with any great accuracy how these conditions will ultimately affect yields. This depends on the weather between now and harvest.
That is the situation. The commodities most affected, as the right hon. Gentleman has indicated, are cereals and potatoes. It is likely that rather more than 100,000 acres intended for cereals will not now be sown. This is a tragic situation. Every right hon. and hon. Member is extremely sorry about this situation, but we must at the same time keep this question in proportion. Our total acreage of cereals is well over nine million. That is the kind of problem that we are facing. The result of the unsown acreage—
§ Mr. Peter Tapsell (Horncastle)
Would not the right hon. Gentleman agree that comparing the total national acreage with the acreage affected is very unsatisfactory? The fact is that certain farmers in Lincolnshire are facing ruin unless they get special help.
§ Mr. Hughes
I shall come to that in a moment. The House must look at the broad picture in terms of our objectives to 1972–73. I am trying to be frank and honest with the House, and I am entitled to say that the figure of 100,000 acres affected by the weather must be set against the figure of a further 9 million acres which is the total arable acreage. That is not an unreasonable point to make. The result of the unsown acreage and possibly lower yields from crops sown in difficult conditions might be a loss of cereals tonnage of some ½ million tons which we might otherwise have expected. That is the likely loss which my advisers calculate may result.
§ Mr. Hughes
The hon. Gentleman does not help by interrupting when I am trying to deal with the issue commodity by commodity. If he will be patient, he will get an answer to his question.
The planting of potatoes is complete in the south and west, but is still in progress in the north and east. On 11th 66 June the Potato Marketing Board estimated that about 10,000 acres were still unplanted. Some of this leeway will already have been made up, but it is considered too early to predict what the crop will be.
With that assessment of the position, I turn to the question of what the Government can or should do to ease these difficulties.
§ Mr. John M. Temple (City of Chester)
Will the right hon. Gentleman accept that the heavy grassland in the county of Cheshire has been murdered this year by putting cattle on it and that pastures have been irretrievably damaged? Will he also accept that it would have been impossible to put cattle on new leys because they would have been murdered or substantially damaged? That has happened in the dairying counties as well as in the arable districts.
§ Mr. Hughes
I accept what the hon. Gentleman says. I know the county well, and I have observed that for myself.
§ Mr. Michael Jopling (Westmorland)
The right hon. Gentleman will recall that his Department allowed the Potato Marketing Board to make 1969 a quota year, with only 85 per cent. as the quota acreage? Will he now say whether, in retrospect, he regrets that decision?
§ Mr. Hughes
No, I do not, because supplies are coming forward well now, and the needs of the market will be met. Looking at the whole picture, I think that the decision I made last year was the right one.
I was about to deal with what action the Government ought to take. I have seen references in the Press to a fallowing grant, which was referred to by the right hon. Gentleman. The suggestion is that a cash payment should be made to any farmer with an abnormally high proportion of his land unsown where this is attributable to waterlogging caused by bad weather. The right hon. Gentleman gave his view, and I agree with it. I think that many farmers see objections to that idea. I think that it would be inequitable. It would help those who had failed to sow. It would not help those who had managed to get a crop in with considerable effort and a high standard of management.
67 I do not think that we could make a payment in cases where land had to be left bare, but not in other cases where loss or hardship had been caused by unavoidable weather conditions, such as the harsh winter and late snowfalls in the hills. It is a well-established principle, and one which the industry accepts, that weather is one of the inevitable risks of farming. As the right hon. Gentleman knows, I have no power to make payments from public funds to relieve farmers when the weather is more than unusually unkind.
To seek powers in general terms would breach that principle, and it is a principle which has been followed by successive governments. To seek specific powers in the present case, I should need to be satisfied that the difficulties were so acute, or of such disastrous proportions, as to put them in a class of their own. This is what the House has to judge. The figures which I have quoted show that that is not so. I do not believe that the figures reflect a disastrous situation, and I have given the matter considerable thought over the last week or so.
I do not want the House to think that I am belittling the difficulties. I am not. A number of good farmers are experiencing severe difficulty, and I am no less understanding and sympathetic than any other hon. Member, but it cannot be said that there is a clearly definable area of the country where the wet land problem is of disastrous proportions. There are other problems of a quite acute character, to which two hon. Gentlemen opposite have referred, and it is extremely difficult to discriminate in favour of one area or one group of farmers as against another group. I have therefore regretfully, but quite firmly, come to the conclusion that the situation is not such as would justify my asking Parliament for special authority to make payments.
§ Sir Charles Mott-Radclyffe (Windsor)
Will the right hon. Gentleman agree that as most of the farmers affected are, first, short of cash, and, second, short of credit, one of the silliest things the Government have done is to increase S.E.T. which merely increases a farmers indebtedness to the bank in the three 68 months intervening between the time payment is made and the time it is reclaimed?
§ Mr. Hughes
I am trying to deal with the major issues, and what can be done to help to solve them. I am dealing also with the questions asked by the right hon. Gentleman. I appreciate the point about S.E.T. This tax in relation to agriculture needs to be looked at carefully. I do not for a moment dispute that, but I want to deal with the general position, and with the taxation position in particular. I know that some farmers with financial resources depleted because of the weather are concerned about payments, about taxation, and about the availability of credit.
I have discussed this matter with my hon. Friend the Financial Secretary, and I am glad to say that I have from him an assurance to the effect that the local officers of the Inland Revenue will use to the full the discretion which they have to deal sympathetically with cases on an individual basis where the payment of tax in one sum would cause great hardship. Any farmer who is worried about meeting his tax bill on the due date should not hesitate, therefore, to put his problem to the local tax collector.
I am also glad to say that any farmer who is unfortunate enough to make a trading loss can apply to have his assessment based on the previous year's profit reduced by the amount of such loss, thus reducing, or even extinguishing, his tax liability. He can also claim repayment on the tax already paid, and if the loss exceeds the assessment the balance may be carried forward and set against the profits of future years. I hope that hon. Gentlemen will study carefully what I have said when it is published in HANSARD. I hope that that relaxation will be of assistance to farmers who find themselves in this difficulty.
§ Mr. Godber
I did not wish to interrupt the right hon. Gentleman when he was dealing with such a complex matter, but he is leaving us a little more confused than we would wish to be. Is he saying that it will be possible for farmers to spread their payments over two or three years? Or is this merely temporary relief for a matter of a month or two?
§ Mr. Hughes
This is more in the nature of a relaxation of the existing situation. It does not bring the farmer into a category, for example, of a company, but it gives him the opportunity of approaching the local tax inspector to obtain considerable amelioration, and I think that this will be of considerable assistance to him.
§ Mr. Emlyn Hooson (Montgomery)
Does that mean that the tax inspector will have discretion to gauge tax over two years, and have one year's power of retrospection in this regard?
§ Mr. Hughes
That is the situation as I understand it. I have been discussing this with my hon. Friend the Financial Secretary, and he conveyed that to me this morning. I understand the position to be as the hon. and learned Gentleman has just stated it.
I should like to turn to the credit position. The industry already receives top priority within the ceiling for bank lending. I have been in touch with the joint stock banks and they have assured me that—as on previous occasions—they will give whatever additional assistance they can to help farmers with special problems due to the bad weather. Also, the Agricultural Mortgage Corporation has promised to give as much help as it can, for example by postponing the collection of interest on outstanding loans. So, both the banks and the Corporation will give as much assistance as possible.
§ Mr. James Dance (Bromsgrove)
I think that the right hon. Gentleman realises, as I have already said this afternoon, that some farmers in my constituency have had to sell up because they cannot get credit from the banks. This is not the fault of the individual bank managers, because they are good risks, but, because of the ceiling, they cannot get credit to tide them over for a short time.
§ Mr. Hughes
If the hon. Gentleman can give me examples of creditworthy farmers having been refused credit, should be happy to look at them. I have heard this statement several times, but I have received no examples of such cases
§ Sir H. Legge-Bourke
As the right hon. Gentleman knows, I have written to him and tried to make the point—I should 70 be grateful for a reply today—that, because of three bad years in a row, this being by far the worst, some farmers now simply dare not ask the banks to borrow more money at the rate of interest which is now in force. This is the problem: they need the cash.
§ Mr. Hughes
I cannot go beyond what I have already said. I should be grateful if the hon. Gentleman will study tomorrow what I have said. If he thinks that I can be of further assistance, I should be grateful if he would let me know.
My final point on assistance is that farmers with special difficulties have behind them the full resources of my Department's technical and advisory staff, who will be able to tell them how best to deal with fallow land to get a good lead-in for next season. Drainage problems come in here, and farmers can already call on field drainage grants, which, at 50 per cent., are the highest percentage grants paid by my Department.
I will certainly consider the charge of the right hon. Gentleman that the procedures leading to the payment of grants are clumsy. I have never heard this charge before, but I will certainly investigate carefully what he has said.
§ Mr. Godber
The word "charge" is a little strong. I was not making any accusation. I was saying that cases have come to my knowledge in which the time taken has been longer than would seem necessary if urgent work procedure could be applied. In the case of some grants, like farm improvement grants, it might be better if urgent work authority was given to go ahead and the grants paid later. It is the question of speeding up the payment because time is limited which is very important.
§ Mr. Hughes
I appreciate what the right hon. Gentleman says. My Department will consider this carefully. We are anxious to see that grants to which there is an entitlement are paid as quickly as possible without unnecessary red tape. It was his use of the phrase "red tape" which worried me, but I will consider that point.
The right hon. Gentleman underlined present problems. We have had the latest part of a serial from him—not the 71 "Forsyte Saga" with Soames, but the "Hindsight Saga" with Godber. I do not believe that he intended to be overcritical. The farmers and we know that weather may upset short-term plans, which makes it all the more necessary for them to know the longer-term objectives of Government policy. This is what I have been anxious to achieve in my 12 months in the Ministry—that we should give the industry practical guidelines, not from month to month or from year to year but looking ahead three or four years. This is what I have tried to do.
I think that we have removed many uncertainties on that score. Of course, progress is bound to be affected, sometimes favourably, at other times unfavourably, by the weather and other unforeseeable circumstances like the outbreak of foot-and-mouth disease 18 months ago. But this does not invalidate what we have set out to do in the longer term.
I accept of course that, as a result of the bad weather of the past 18 months, cereals production has not advanced as we would have wished and I admit that this set-back is disappointing. Time has been lost and this will make it more difficult for the industry to achieve the cereals target by 1972–73.
We must take account of the other fronts, where progress is more satisfactory. On the livestock side, for example, the position is much better. There have been some ewe losses, and lambing rates have been affected by the weather, but the latest figures show that both the beef and the dairy herds have increased by over 3½ per cent. since March, 1968. I think that the industry would regard that as very satisfactory. Since then, substantial fresh incentives to increased beef production have been given. The guaranteed price has been increased, as have the levels of the hill cow and beef cow subsidies. Stocking ratios under these schemes have been improved. The future outlook for increased beef production under the expansion programme is very encouraging. It is right to consider that side of the coin as well. We must be careful not to be misled about this by the seasonal reduction in marketings of fat cattle, which has been temporarily aggravated by the poor weather and late grass season.
72 Taking all this together and putting into perspective some of the right hon. Gentleman's criticisms, I see no reason why the Government or the industry should lose faith in our objectives. Both sides of the House want to see the 1972–73 objectives achieved. Of course, we shall continue, with the farmers' unions, to review progress towards them. Meanwhile, we should suspend judgment on the present harvest until we have the figures. We shall know in two or three months with far greater accuracy what the harvest is likely to be.
The right hon. Gentleman mentioned £10 million as the likely saving by the Government. It is impossible to make a precise estimate of any saving at this stage. Later on, in the autumn we shall be in a far better position. In the meantime, the attitude of the House should be to encourage the farmers, not to give this constant impression of pessimism which emanates from several hon. Members opposite. The best contribution which we can make to the industry is to give it confidence, as these policies have done.
§ Mr. Deputy Speaker (Mr. Sydney Irving)
I would remind right hon. and hon. Members that this is a very short debate and would ask them to keep their speeches short.
§ 5.18 p.m.
§ Mr. A. W. Wiggin (Weston-super-Mare)
I crave the indulgence of the House on what is for me a most daunting occasion—although I take some comfort from the fact that all other hon. Members have been through this ordeal before me and therefore will, I hope, be sympathetic.
Unfortunately I did not know my predecessor, David Webster, personally, and what I have learned about him comes from many friends, both in this House and in his constituency, and with no embellishment from myself. Wherever I go in my constituency people tell me how well they knew and liked David Webster. He worked tirelessly on their behalf and, having seen some of his letters, I know that he pursued even the smallest matter to a satisfactory conclusion more often than not. Many of my colleagues have spoken to me of his sense of humour, which was a great asset 73 in this House and which especially endeared him to his many close friends. A number of hon. Gentlemen opposite have gone out of their way to express to me their fondness for him. It is not for me to forecast what might have been for him, but after an exhausting, yet successful, year his prospects looked bright indeed. His wife and family have good reason to be proud of his achievements. The example that he set was a noteworthy one.
After two weeks of glorious weather it takes a farmer to complain. I feel, however, that complaints are justified by the gravity of the situation in agriculture. With the appalling weather, about which we have been hearing today, the background of rising costs, the highest ever Bank Rate, the decreasing labour force and the problem of mounting surpluses and marketing problems, it is scarcely surprising that we are debating agriculture today.
My hon. and gallant Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) pointed out that many of us in the arable world have suffered three bad harvests in a row. I can confirm this—1966 saw a greater level of cereal disease than had been experienced in living memory; 1967 finished with a drought which in many cases killed the corn rather than ripening it, and 1968 is still fresh in our memories as one of the worst harvests from the weather point of view that there has ever been. The picture this spring has been painted by a number of my hon. Friends, and I can speak personally of the floods in the Severn Valley which have ruined 30 per cent. of my cereal acreage this year.
I would welcome the imaginative scheme of my right hon. Friend the Member for Grantham (Mr. Godber) to see us through the difficult financial days that lie ahead. It has been said that the system of continuous cereal cropping that has been adopted is partly to blame for this disaster. If this is accepted, than I suggest that, in giving the grant to field beans, the Government have partially accepted that continuous cereal growing might have its undesirable side effects. Cannot the grant cover oilseed rape, maize, linseed and other import substitutes, to say nothing next year about a grant for a bare fallow.
74 I turn from the arable side of the question, of which I have personal experience, to dairying, which is a predominant part of the agricultural industry, and Somerset is one of the leading dairy counties of the country. We had floods last year, but this spring has produced a later and lower nutritious-value grass crop. I have obtained figures from the Milk Marketing Board and they show that the April gallonage for this year is down by 8 million on last year, although cow numbers are up by 100,000. This proves that the grass man has suffered as badly as the arable man.
The dairy man has had two disasters running; last year foot-and-mouth, which affected not just the infected areas but spread well into the rest of the country, and this year a cold late spring. Otherwise I believe that we should have had a glut of liquid milk, which would have reduced the price.
In my constituency we have the village of Cheddar, which is famous not only for the Gorge but for its excellent cheese. One would have thought that the glut of milk could have been used to make cheese. However, last week I received a letter from the Cheddar and Caerphilly Farmhouse Cheesemakers' Federation saying:English Cheddar Cheese has only been made in a quantity which it was estimated could fill the gap left by the foreign supplies. Since foreign dumping and price cutting continues, it seems likely that the home-producer of milk can expect to see himself at best restricted and at worst obliged to fill an even smaller part of the home market for cheese.This is not just mousetrap but the finest farmhouse cheese in the world.
Agriculture has an unrivalled history of productivity and, until recently, technical progress enabled it to keep pace with ever-rising costs. I detect, however, a levelling off in this technical improvement, not just in the cereal and dairy industries but across the board. I hope that when the Minister considers the next Price Review the so-called efficiency factor will be removed forever.
The banks have operated as fairly as they can with the farming community, but one cannot, by the slightest stretch of the imagination, expect them, under the present pressure, to extend new credit for expansion, this at a time when expansion is the lifeblood of any industry. The return on capital investment in farming 75 is only too acutely apparent as being inadequate to cover the natural disasters about which we have heard today.
For some time I have likened the British farmer to a man who is climbing an escalator which is travelling downwards. He runs to stand still. What is so tragic is that those who run the fastest, who are technically advanced and who have borrowed the money are at the greatest risk and will be the first to become exhausted. Friends of mine in farming tell me that the situation bears unhappy parallels with the early 'thirties. I hope that I do not damage my case by being over-pessimistic. Suffice to say that I have reduced my farming interests and would like to leave the rigours of that industry for the comparative peace of politics.
§ 5.27 p.m.
§ Mr. Bert Hazell (Norfolk, North)
It is with pleasure that I speak following our new political colleague, the hon. Member for Weston-super-Mare (Mr. Wiggin). I assure him that I appreciate the trepidation he experienced as he waited to be called to make his maiden speech. I am sure that hon. Members on both sides look forward to hearing him make further contributions to our agriculture debates and will wish him well in the new career which he has staked out for himself.
We all regret the reason for the hon. Gentleman being here: the tragic death of his predecessor, who was cut off in the prime of a promising political career. His death came as a shock to the whole House. I am sure that all hon. Members will wish to join the new hon. Member for Weston-super-Mare in expressing sympathy to the family of Mr. David Webster, who can recall with pride the active part which he took while he was among us.
It is right that we should give close consideration to certain aspects of agriculture. I particularly have in mind the position that has been created by the almost unprecedented lengthy period of wet weather. This is a narrow line along which to debate the problems of agriculture, particularly as it is some time since the House debated the industry in general. Considering the Government's attitude towards the industry over the 76 last five years, I believe that they have endeavoured to be helpful to British agriculture.
I was interested to note that the right hon. Member for Grantham (Mr. Godber) did not blame the Government for the weather. However, he went on to blame them for almost everything else, and did his best to include the weather in his criticism. No Government can be responsible for weather conditions, and it would be wrong for a Government to take advantage of good weather as for them to be blamed for bad weather. All of us who have had experience in agriculture over the years deplore that such vast areas remain uncultivated this year because it has been impossible to use machines and equipment on rain-sodden land.
I am not so sure, however, that the fact that much land will be laid fallow is of itself a bad thing. If it is dealt with rightly and if advantage is taken of the summer period, the fact that some of the land is lying bare might rid it of some of the diseases to which some crops have been subject over the years. Greater production from our land could be assisted as a consequence of certain areas being uncropped this year.
Our agriculture industry is among the most unsophisticated agriculture industries in the world, but for various reasons, shortage of labour, lack of finance, or just hoping that all will be well, some elementary factors in British agriculture have tended to be ignored in recent years. I refer particularly to land drainage. Like other hon. Members, when going round farms I have been amazed to see the number of pipe tiled drainage systems which have become blocked. We see evidence of this in areas which are not necessarily subject to flooding or heavy rainfall. In the middle of a field one sees a big bare wet patch. It is obvious to anyone in agriculture that it is due to the lack of tiles in that field. We have tended to ignore our drainage system, although I agree that the cost of drainage is very great.
If the Minister could have another look at the drainage grants he would be doing a good service to the industry, not just in the short-term but in the long-term. This would be a helpful approach in a problem which has gradually grown in recent years. We have had the development of the larger field to cope with 77 heavy equipment coming on to farms. Then I have seen too many ditches filled with pipes which are inadequate to carry the volume of water that should be carried. I wonder if the Ministry's inspectors, when approving schemes which involve filling in dykes, take sufficient care to see that the pipes are large enough to deal with the volume of water likely to flow through them. There is also the problem when a good farmer looks after his ditches and his tiled drainage but near him, for a variety of reasons, another farmer fails to tackle the problem and then the water cannot get away. Everyone in farming knows this situation very well.
The time has arrived for the Minister to look at the whole question of drainage powers related to internal drainage boards and the inadequacy of funds to see whether pressure can be brought to deal with cases of neglect. However much one tries to cultivate land, if it is flooded, or very wet, one's efforts to achieve a crop become almost futile. This season much land which has been drilled ought never to have been drilled. That has been done to secure acreage subsidies. I can understand the farmer considering that there is a chance for him to obtain some income, but when one looks at some fields which have very thin and yellow crops it is obvious that they ought never to have been sown. One only hopes that the weather will be sufficiently kind from now until harvest time to enable the grain to recover.
I wonder how many of the propositions put forward by the right hon. Member for Grantham would be implemented by him if he were the Minister, in view of the avowed intention of the Tories to cut public expenditure. I wonder how much practical sympathy the Tories would show to the industry. I am satisfied that the amount of support forthcoming for agriculture were hon. Members opposite in power would not be on the scale it has been in the last four or five years. I remind the House that they agreed with the N.F.U. to take some account of increasing productivity within the industry. We cannot cut public expenditure while at the same time handing out largesse to agriculture, in social insurance, and what-have-you. The right hon. Gentleman would find himself in some difficulty if he were a Minister in carrying out some of 78 the suggestions he has made in view of the avowed policy of the Opposition.
One problem that arises in tackling land drainage is the need for skilled operatives. We are becoming woefully short of skilled men in this kind of work. It is comparatively easy to drain land where there is a fall, but it is a highly experienced and skilled job to drain land which is virtually flat. I hope that my right hon. Friend will make sure that there is sufficient manpower available to deal with what I hope will become a great increase in the use of machinery and equipment to develop drainage systems. I hope that he will give further consideration to the heavy cost involved, thus helping to maintain and to improve fertility over a long period, and to enable us through adequate drainage to cope with such heavy rainfall as we experience from time to time.
§ 5.40 p.m.
§ Mr. Paul Hawkins (Norfolk, South-West)
I congratulate my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) on his maiden speech. It is a good thing that there is now another practical farmer who can give the House the benefit of his advice, and I hope that he will do so on many occasions.
I cannot agree with the hon. Member for Norfolk, North (Mr. Hazell) that any farmers have drilled merely for the acreage payment. He should not have made that suggestion. It is much too expensive to prepare the land and put in good seed merely to get the acreage payment and not a decent crop.
I have drawn up a list of points to raise as a result of my having gone over many farms in my area. High Norfolk—the lighter lands—has not been so badly hit as the fringe of my constituency has been going towards Wisbech and Holbeach and Holland in Lincolnshire. From July, 1968 to a fortnight ago we had almost continual rain, with few breaks of fine weather. Farm profits, particularly where the soil is heavy, must be very low for 1967–68. Many farms will show a loss. The bad harvest conditions last autumn resulted in the land being killed by carting over, with resulting appalling seed beds for potato and sugar beet in the spring. When the Minister made his Price Review, planting and drilling were already far behind. In announcing the 79 Price Review, the Minister called attention to last year's bad harvest and said:But with average conditions this year, output, productivity and income are expected to improve."—[OFFICIAL REPORT, 19th March, 1969; Vol. 779, c. 515.]In a question to the Minister I pointed out that, due to the bad weather conditions this spring, we were already three or four weeks behind. In a cereal, sugar beet and potato-growing area, a lag of three or four weeks means that there will not be a full crop, whatever happens later. The Minister paid no attention to that. I drew attention also to the severe cuts in the sugar beet acreage in the Eastern counties. There are rumours that there will be further cuts this coming year to enable the sugar beet industry in Scotland to have a fuller acreage. We import about 50,000 tons of refined sugar from non-Commonwealth sources, the equivalent to the yield from about 25,000 acres. The one thing the Minister could do today would be to announce there would be no further cuts in East Anglia's sugar beet acreage for the coming year and that the sugar beet factories, which are being expanded in my area, can have a greater acreage in coming years as a result of the import of non-Commonwealth sugar being reduced. Sugar beet is a crop which is excellent for the arable lands in eastern England. We produce exceptionally good crops. I very much hope that we shall be allowed to grow to our full capacity. It is an alternative crop to cereal growing and means much to our area.
Last Saturday during a 20-mile journey from Peterborough to Wisbech I noticed many fields of potatoes still in the ground from last year. They were endeavouring to try to spin them out. The barley was yellow and stunted. The potato rows which had been planted this year were standing in water. Weeds absolutely abound on much of this land. It will be a terrible year for weed control. Profits for the second year running must be minimal on some of this land, although it is £350–£400 an acre land. With the rent paid for such land, it is very difficult to make a profit on a farm which has a proportion which will never be cropped and a large proportion which will have only half crops.
We have had two bad years on top of each other. Interest rates have been 80 increased rapidly. Overdraft increases have been refused, or there has been an attempt to reduce overdrafts. Everyone else in the industry who used to lend money to farmers, or allow money to stand over for some time—for example, agricultural merchants and auctioneers—are themselves being pushed by the banks and cannot afford to lend money as they did in the past.
This has shown itself in many ways. In my area, and in East Anglia as a whole, there are many more farms on sale this year than in any one year since the end of the war. Farmers' sons, and indeed whole families, as well as contractors and others, are emigrating. There is a general lack of confidence in the industry, which I have not known since the 1930s. The policy of expansion has already been knocked off course.
Bankruptcy might be avoided for not only the farming community, but for a large part of England and Wales as well, if some of the following steps were taken. The Minister spoke about income tax. It sounded alright to me. It did not sound as if the Minister perfectly understood it, but I hope that it will prove to be very satisfactory. I had intended to suggest an averaging of income tax demands over three years. The payment of outstanding Government grants should be speeded up. There are far too many Government grants outstanding for from three to six months. They should be paid over immediately, thus providing some necessary cash to farmers.
I have already advocated an increase in the sugar beet acreage. This is vital to East Anglia. We are already growing too many potatoes. We have too much eelworm. We have too many corn crops. Take all and other diseases are on the increase because of this continued cereal growing. I have never been in favour of too much cereal growing. There must be some stock on a farm if the farm is to be farmed properly.
An immediate increase in bank credit facilities is probably one of the most important steps which could be taken. It is no good the Minister telling us, as he has for the past twelve months, that he has spoken to the banks. A letter should be published so that every farmer knows what the banks have been told. Whether the letter comes from the Prime 81 Minister or from the Bank of England—[Interruption.] My colleagues do not put much faith in a letter from the Prime Minister. Let it come from the Governor of the Bank of England to the other banks, which seem to take notice of the Bank of England and which, I understand, lend money almost interest free to the Bank of England. On this occasion, perhaps the Bank of England could let us have back the money which has been lent to the central bank in order to provide interest-free loans. As my right hon. Friend the Member for Grantham (Mr. Godber) said, it would be an excellent scheme to give interest-free loans for a short period to help tide over the many farmers who might otherwise go bankrupt.
The Government must do something during the next month or two. Now is the time when people make decisions about whether to sell their farms. This is the time when they decide to give up their tenancies. Many farmers will be deciding, or have already decided, that, unless better things are promised by the Government to give them hope for the next two or three years that their farms will remain viable and they will be able to pay their bills, they will have to sell their farms.
I have suggested an immediate special Price Review. I still think that there is a lot to be said for it. If the Minister were to get down to it immediately with the National Farmers' Union, they could within a month hammer out a scheme for special help for the industry. But if we cannot have that, the Minister must seriously consider my right hon. Friend's scheme, and he should have published in the Press for all to see a letter from the Governor of the Bank of England making clear to the other banks that there can be proper credit facilities for all farmers.
§ 5.51 p.m.
§ Mr. Alfred Morris (Manchester, Wythenshawe)
I welcome the debate and readily endorse much of what was said by the right hon. Member for Grantham (Mr. Godber) about the serious effects for farmers of the appalling weather which we have suffered in recent years. None of us can be unmindful of the acute difficulties encountered, especially in some of our most important arable areas. My hon. Friend 82 the Member for Norfolk, North (Mr. Hazell) was right to emphasise the growing importance of land drainage. The House should give more attention to the problem of improving and extending land drainage. It may seem a dull subject to some, but it can be of crucial importance for the future expansion of the industry and of our economy.
All of us share the chagrin and concern already expressed in the debate, not least by the right hon. Member for Grantham, but I take it that the right hon. Gentleman welcomes the emphasis put by my right hon. Friend the Minister on doing everything reasonable to meet the difficulties and hardships which have been encountered. I agree with my right hon. Friend, who was the author of the most interesting dictum we have heard in the debate so far, that it is easy to be virtuous in opposition. I hope, indeed I believe, that the right hon. Gentleman will live in virtue for a long time yet. The right hon. Gentleman is, of course, prone to underestimate the benefits which have flowed from the agricultural policies of the present Government since 1964. But he ought at least to appreciate that this Government have been more generous in their first five Reviews than were their predecessors in the preceding five years.
The right hon. Gentleman became heavily party political at times, and I rather expected him to go on to what many people now regard as his obsession. He has spoken again and again in the country, though less frequently in the House, of his liking for the levy system. One has the impression from him that, if only we had levies on food imports, our agriculture would have none of the problems which we are debating today, even including the British climate. The right hon. Gentleman ought to have taken the opportunity to spell out in more detail what his policy would mean for British farmers, for the British consumer, and for some of our traditional suppliers in the Commonwealth.
I feel strongly that we should stop denigrating our system of agricultural support and try to avoid any grovelling acceptance of the much less successful systems of some other countries and groups of countries. Since the mid-1950s, our system has increased the volume of net output of British agriculture by about 83 40 per cent. That is an outstanding achievement. The level of support given to our agriculture in the post-war years, while considerable, has nevertheless always allowed for the importation of competing produce. By placing the financial burden on the Exchequer, our support scheme has enabled the British housewife to purchase her food at competitive prices. It has given all British consumers access to high quality food at reasonable cost.
As a result of the deficiency payments system for British agriculture, consumers have had to spend far less on food than their counterparts in, for example, the European Common Market. This has meant that British people have had more to spend on other goods and services than would have been the case had the United Kingdom pursued a dear food policy. As a result, the living standards of the British people are higher than they would have been under a system which pushed up food costs. At the same time, the system has been helpful to British agriculture in making the achievements to which I have referred.
§ Mr. Morris
The hon. Gentleman said that he would be brief, knowing that other hon. Members wished to take part. I, too, shall try to be as brief as I can.
In every-day terms, the policy advocated by the right hon. Member for Grantham means that the British housewife and consumer will be forced to pay higher prices for food. His levy proposals are similar to the present disastrous agricultural policy of the European Economic Community. The results of that policy are too well known to require elaboration from me. Not only is the policy appallingly expensive for the Common Market, but farmers in many other countries are suffering seriously from the dumping of surpluses created by the common agricultural policy of the E.E.C.
Here is just one illustration—it has not been mentioned before—coming from Hong Kong. E.E.C. butter is now being sold there at approximately 1s. 6d. per 1b. on which the E.E.C. has already paid an export subsidy of approximately 4s. 6d. That is one example of the distortion which has occurred as a result 84 of the E.E.C.s levy system. In the face of high subsidisation of this kind, it will be appreciated that such honoured suppliers of this country as New Zealand are encountering serious difficulties as a traditional exporter of dairy produce. Moreover, the House might well reflect on the fact that last year, on average, every New Zealander spent some £60 on the purchase of goods and services from Britain. The comparable figure of British purchases from New Zealand amounted to just under £4 per head.
One of the claims made by the right hon. Gentleman and others for his levy scheme is that it would prevent the dumping of subsidised produce. I believe that there is already in existence adequate machinery to deal with dumping if Governments are prepared to take action. The British Government have already done so on cereals without altering the basis of the present support system. I see no need for the imposition of this new system of high prices and variable levies on all imports to cope with the problem.
The imposition of levies on imports of New Zealand dairy produce and meat would drastically push up the price of these commodities and in turn would lead to a significant fall in their consumption. It is hard for many of us to believe that the people of Britain would endorse a system which would have such serious consequences for the British consumer and for New Zealand and other traditional suppliers.
I have referred particularly to New Zealand, having recently had the pleasure, with other hon. Members, of renewing my acquaintance with the President and the General Secretary of the Federated Farmers of New Zealand. I am glad that this debate has followed so soon upon their recent visit to this country.
I am glad the right hon. Gentleman has recognised that the vicissitudes of our weather are not the responsibility of the Government. That is one modest concession. However, right hon. and hon. Gentlemen opposite ought to be reminded that they have far too often sought to argue not positive alternative policies but to spread pessimism and gloom throughout British agriculture. I hope that they will now try to desist from this and recognise that those who have had the 85 heavy responsibility of ministerial office in the Department during the life of the present Government have served the industry and the country extremely well.
§ 6.4 p.m.
§ Mr. Emlyn Hooson (Montgomery)
I am sorry that the hon. Member for Weston-super-Mare (Mr. Wiggin) is not in his place at the moment, because I want to add my congratulations to him on his maiden speech. I have a special reason for doing so as he served his political apprenticeship in my constituency. I trust that we shall hear a good deal from him in the future.
This is necessarily a short debate, but it is a very important one. Agriculture is in a crisis year. Auctioneers in my constituency tell me that there are more farms entered for sale in September and October of this year than they can cope with, and the hon. Member for Norfolk, South-West (Mr. Hawkins) has referred to a similar state of affairs in his county.
It is true that the Government cannot be blamed for the weather. Even the right hon. Member for Grantham (Mr. Godber) could not take his criticism of the Government that far. Nevertheless, the crisis stems from a complete lack of confidence in the future of the industry. The truth is that the margin between solvency and insolvency in agriculture is extremely narrow at present. Following a series of bad events such as the foot-and-mouth epidemic, which had a serious effect not only on those whose stock suffered but on those who traditionally supply stores and could not do so, followed by a bad harvest, a wet, long and cold winter, and a long and difficult spring with heavy fodder charges, that margin is quickly taken up. This is where the Government have a vitally important responsibility.
The Minister has asked us not to spread pessimism and gloom. No one would want to do that, but it is right to say that hon. Members on both sides would like the Government to give a better deal to agriculture. Right hon. and hon. Members opposite have to fight within their own party to get a good deal. Right hon. and hon. Members on this side of the House have to do the same. The clash of interests often is not across the Floor of the House but between the agricultural interest and the industrial 86 interest, and we should do well to remember that in a debate of this kind. Bringing party political arguments excessively into such a debate as this does not help the situation or the farming industry.
Perhaps it would help the Minister if I quoted from a letter of 13th June of this year which I received from the county secretary of the Montgomery County Branch of the National Farmers' Union. He is an extremely level-headed individual, and he writes:Farmers in the County seem to be completely demoralised at present. No doubt the weather has not helped, particularly when one reviews the conditions that they have had to put up with for the past year. … The recent threatened increase in Bank Rate could well prove to be the last straw for farmers who are already unable to make two ends meet. Many other farmers who are already delving deeply into their rapidly dwindling capital will need to look very seriously into their future prospects.As I said when we debated the Price Review, there have been many worse, but there have been some better ones. It was not a bad Review. However, the real problem is that young farmers particularly have been encouraged by the Agricultural Advisory Service to increase productivity in order to make ends meet, to meet agricultural targets, and so on, and various margins have been suggested as to the profits that they might make. To do that, they have to borrow money. As a result of the increase in Bank Rate, they find themselves having to pay 9½ per cent. interest. If, then, they are affected by adverse weather conditions, they are driven to the wall and we lose many of the most enterprising farmers in the country. That is the crisis point which has been reached.
Apart from what I have read, I know nothing of conditions in East Anglia and other parts of the country which have been affected by waterlogging. I know only of the crisis in my constituency on both lowland and highland farms, and the effect that it has had on both pastoral and arable farmers. The industrious secretary of the County Branch of the Farmers' Union of Wales tells me how sheep farmers have been affected by the adverse weather experienced in the past year. More sheep go through Welshpool market than through any other market in Wales. During May of this year 27 per cent. fewer lambs and couples went through that market than in May of last year, and 87 it is feared that it may fall by as much as 40 per cent.
There have been very great ewe losses throughout the year, in addition to considerable lamb losses. I have had a word with my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), because I have noticed in Scotland that there seem to be a great many ewes to only a few lambs in the Border areas. My hon. Friend tells me that the experience has been the same there as in my area, so it appears that this is probably true across the board on Hill land. This may seriously affect the Minister's estimates of production figures over the next three or four years. It is already seriously affecting the livelihoods and prospects of many farmers in hill areas and the crisis is not to be regarded only as one which affects lowland or arable farmers.
I suggest to the Minister that for sheep farmers either there should be additional winter keep grants for this year because of the very difficult conditions, or that the subsidy for ewes might be based either on last year's figures, or that ewe lambs should be admitted into the subsidy scheme for this year in order to encourage farmers to keep ewe lambs rather than grade them, and so increase the national flock. That will also give farmers an opportunity to catch up and prevent their being affected too adversely this year.
If we have reasonable weather for the rest of the year, the effect of the right hon. Gentleman's Review may be to restore the position to some extent. However, it must not be forgotten that farmers face a crisis at present, and they need to have their confidence restored now. It is not a matter of hon. Members spreading pessimism. The pessimism is felt deeply among the farming community. Although the Minister has announced some measures which will be of help, they are not enough. He must show that he appreciates the problem and how it affects individual farmers in the hill areas as well as in arable areas. They need a positive gesture along the lines that I have suggested.
§ 6.12 p.m.
§ Mr. John P. Mackintosh (Berwick and East Lothian)
I am glad to follow the hon. and learned Member for Montgomery (Mr. Hooson), because I agree 88 with a great deal of what he has said, particularly when he draws attention to the problems of the sheep flock and the low lambing rates. In addition, he has done a service in reducing the political content of the debate. I always like the speeches of the right hon. Member for Grantham (Mr. Godber), but he mars them with political claptrap. He is always telling the House how much more happened in some year in the 1950s than in another year in the 1960s, none of which is of interest to farmers who are facing conditions today. The right hon. Gentleman's policies for agriculture certainly have not decreased the lack of confidence in the industry. If anything, they have done a great deal to increase the pessimism of farmers about the future. I know that the hon. Member for Edinburgh, West (Mr. Stodart) has been struggling round Scotland attempting, with little success, to reduce the worry which is felt by farmers about Conservative policies.
What we have to do is to concentrate on the agricultural situation today and the possible remedies. For that reason, I want to add my congratulations to the hon. Member for Weston-super-Mare (Mr. Wiggin) on his maiden speech. He said that he was happy to give up the uncertainties of farming for the greater certainties of political life. Sitting for the constituency that he represents, I can understand his point of view. However, others of us feel a closer identity with the shakier members of the farming community.
This has been a very difficult year tot farmers. The winter was a bad one, and on top of it an unduly wet, cold late spring has done a great deal of damage. There is a practical point in agricultural policy upon which I would like the Parliamentary Secretary's comments. The assumption in paragraph 10 of the Annual Price Review is that weather is a factor that averages out; a good year is a bonus to the farmers, a bad year a loss. It does not seem to be the case. A good year for farmers means that there are good crops and income may well rise, but it does not make the total situation any different from the following year, except from the matter of income. If there is a bad year, with late breeding among flocks of sheep, and waterlogged land, if farmers get into a 89 backward position it is much harder the next year to get the 30 per cent. efficiency rise which is always calculated.
It is not true to say that a good year balances out a bad year in this way. The Price Review says:With anything like average conditions in 1969, not only should last year's setback be restored but income should improve further".The assumption is that we will not merely catch up on a bad year but go ahead. My argument is that it is harder to catch up on the bad year, and there is less chance of going ahead at the end of an average year. This is not adequately considered when making year by year calculations.
There is also the fact that we have not had an average year. In view of what has happened until this month 1969 will not be an average year. Given this situation, will the Parliamentary Secretary tell me how the Ministry estimates now look as compared with the estimates put into the present Price Review? We estimated an increase of costs for the year of £40 million. Will that increase in costs be exceeded because of the increased rate of interest farmers have to pay—because of the extra costs of the food bill to meet the difficulties in getting animals out to grassland as a result of the late spring? Dealing with the efficiency factor, I assume that there was virtually no 30 per cent. efficiency factor in 1968, increase in productivity and so on. Is it not the case that we are now saying that this will not happen this year either? Does this not mean that the calculations on which the March Price Review were made are totally out of date and unsatisfactory?
I am grateful to the Minister for explaining what he anticipates will be the short-fall on cereal production this year. Can he tell us what he thinks will be the short-fall in potato production and other root crop yields? How far is the lambing down this year compared with the estimates? This problem of bad weather has affected much more widespread sectors of the industry than just the disaster areas, greater though their problems are.
If the answers to my points show a special situation and that the Ministry's programme of expansion is not being achieved, I would have thought that the answer was an attempt to inject some 90 capital into the industry. The problem is not: has there been a disaster? A disaster is difficult to calculate. How great is something serious before it becomes a disaster? It may be a disaster for certain farmers in different parts of the country. What has happened is that there has been a disaster in certain limited areas.
Much more serious in the national sense is that the farm expansion programme on which the Minister embarked, and for which I congratulate him, and for which all of us support him, depended on investment from farmers out of income. If anything was established by the Select Committee on which I had the honour to serve before it was closed down, it was that the investment in agriculture came out of farming income and if income dropped so did investment. What troubles me is that the results of a bad year in 1968 and a bad spring in 1969 have been that income failed to rise—I would be grateful if the Parliamentary Secretary will say whether it rose in 1969. If it did not rise in these years the level of investment in the industry cannot reach the rate which the Minister hoped for and must now be out of the question. This affects more than agriculture; it is damaging to the nation because of the increased import bill we will have to face.
What do we do about this? The right hon. Member for Grantham offered various solutions and his own scheme. I do not support his scheme or like it, because any scheme which attempts to draw a line between those who suffer hardship and those who do not gets into tremendous difficulties about where to draw the line. There will be hard cases on one side or the other, and I believe that this kind of hardship can be at different levels throughout the country. I want the Minister to go back to his colleagues on the Cabinet Committee which settled the Price Review and reopen the argument. I appreciate that the Minister did everything he could to get a cost plus Price Review last March and that he wanted a far bigger injection of capital than took place.
I know that a mere £10 million extra would have got us an agreed Price Review, with a very different atmosphere in the industry. The argument put forward by the Minister on that occasion was lost, to the regret of all of us who wish to see the industry develop and go in for adequate import substitution.
91 We do not want to speak in melodramatic terms about a disaster, or to spread pessimism, but we want to get the industry back on the expansion programme for which the Government are pressing. The arguments made by the Minister for a higher capital injection, which were lost in the spring of last year, should be reopened. The solution to this is a little more on the end prices of the agricultural commodities. This is the best way of putting money into agriculture. I can understand why the right hon. Member for Grantham, who does not believe in price guarantees and wants them abolished, could not advocate this, but it is by far the best way of putting money into the industry and we need this done if we are to restore confidence, and the Minister's own admirable programme of expansion.
§ 6.27 p.m.
§ Mr. Richard Body (Holland with Boston)
I agree with a large part of the analysis made by the hon. Member for Berwick and East Lothian (Mr. Mackintosh). If he had pushed his conclusions a little further he would have arrived at the same policy as my right hon. Friend. During the last two years arable farmers have taken a considerable knocking, and they will continue to do so. These knocks are not just caused by appalling weather conditions, but also by the system of efficiency payments.
The combination of these two factors is likely to bring about a disaster in the arable sector. Successive Governments have been besotted by a policy of cheap food and agriculture has been denied the measure of protection which is afforded to every other industry without exception. The only support agriculture has had has been the system of efficiency payments. We all know that almost every year these payments have not matched the increased costs of the industry.
Farm prices as a whole are slightly less than they were 15 years ago, yet the price of food in the shops has risen by nearly 10s. in the £ in that period. The farmer has not received his share of that increase. His costs have mounted every year, wages have risen and higher prices have been paid for fertilisers, feeding stuffs and everything else that he buys. The cost of capital items like machinery, also have 92 increased in price, yet the cost of borrowing capital has risen to unprecedented heights.
In these conditions the farmer is surviving only because he has forced up, and I use the phrase deliberately, productivity. If the cost of growing a ton of barley has risen by one-third, he has forced up yield by the same proportion. The same is true with almost every other arable crop. It is one of the marvels of our time that the productivity of some of our arable crops has increased by 4 per cent., 5 per cent., and even 6 per cent. every year over recent years. The cumulative gain is almost incredible.
The armchair farmers in Whitehall are utterly complacent and believe that his process of cumulative gain will go on indefinitely. They are wrong. They are wrong because many farmers have had to flog their land and flogging a heritage passed down from our forebears. We have been flogging this land in some of the arable areas by taking far too much out and by drugging our acres with more and more chemicals, and sometimes rather too much poison on the land. Before the hon. Member for King's Lynn (Mr. Derek Page)calls me a fuddy duddy, let me hasten to say that if it were not for Fisons, I.C.I. and Shell and some of the others, almost every farmer, including myself, would be bankrupt.
Chemicals have their place and without them we could not have had the productivity that we have achieved. However, there is a growing amount of evidence, particularly in these arable areas, and I think the hon. Member would agree with me here, that these processes are in danger of impairing the structure of our soil. It is in this context that we should consider present weather conditions, because when the soil structure is impaired in this way it cannot withstand excessive rainfall, frost or, if it comes, excessive sunshine. This is the hazard now facing farmers in some arable areas.
§ Mr. Body
The hon. and learned Member (Mr. Hooson) anticipates me. That was what I was about to urge.
This is the obvious remedy, but it is out of the question for the ordinary arable farmer, particularly in East Anglia to put his land down to grass in 93 present conditions. It is not practical to switch over to grassland and animal husbandry unless one masters the modern skills of stockmanship. There is no profit at all in stock unless a farmer is a specialist. The arable farmer cannot afford to go over to grass, even for a short ley. I hope that the Minister does not need to be persuaded of that.
I entirely agree with my right hon. Friend's conclusion that there is a desperate need for cash for the farmers, but in the short term there should be grants to enable farmers whose soil structure is in danger of being impaired to go over to one, two or three-year leys to restore the vigour of the land, to help it to withstand the kind of bad weather that we have had.
There can be only one solution in the long term. Farmers will go on being forced to flog their land until we abandon deficiency payments and have in their place realistic and encouraging target prices in a system of import levies.
§ 6.30 p.m.
§ Mr. Anthony Stodart (Edinburgh, West)
I ask your permission, Mr. Deputy Speaker, to say one thing which is entirely out of order. I should like to congratulate the Joint Parliamentary Secretary—he is not on the Government Front Bench—on the honour that was done him during the weekend. I feel that I have the right to crave that indulgence as his Member of Parliament.
I should like to say something uncontroversial, and that is how much we enjoyed the maiden speech of my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin). He spoke with considerable knowledge. He is one of the select band of agriculturists in the House who farm not only in England, but in Scotland. We are very pleased that, with all his knowledge and authority, he has joined the ranks of those who battle, often with great frustration, against the Government's activities. I hope that we shall hear from him many times again.
I was extremely disappointed with the Minister's speech. This is a disaster year, not just a bad year, for some people. I know that the right hon. Gentleman drew a distinction, and I am the first to recognise that a bad harvest or a bad spring is one of the hazards of farming, 94 and that this is something which one can put up with. But the Joint Parliamentary Secretary, on his own admission, has seen this year some of the worst conditions that he has seen for 43 years, and that takes into account 1947, which was treated by the party then in power as a disaster year.
This is not a long-term problem. The Minister spent too much time in trying to tell us that it was. I do not think that the selective expansion programme is relevant to this debate. This is a desperate, short-term problem for some people. I was glad that the hon. and learned Member for Montgomery (Mr. Hooson) referred to the fact that not only the arable areas have been affected, although they have carried the worst of the burden. I should not like it to be thought that in this context Scotland or Wales is a placeWhere falls not hail, or rain, or any snow, Nor ever wind blows loudly …Lambing conditions in the North have been disastrous, and I hope that the Parliamentary Secretary will say something about them. I have heard that lambing losses to the extent of 20 per cent. have been by no means uncommon over substantial areas. I have been told of a 450 hirsel which has been virtually wiped out—ewes and lambs, the lot. Weather could account for variations between areas, but there have been colossal variations within areas. Probably the most important factor has been whether there was shelter on the farm.
There have been what one might call previous disasters. There was on 6th September, 1966, a gale which acted like a scythe on the barley crop in the North of Scotland. A quarter, and possibly a third, of the crop—£4 million worth—was irretrievably put on the ground in one night. In 1947, there were floods and snow, and areas were waterlogged. Then 1,140,000 ewes and 2 million lambs were lost.
What is to be done to deal with the present plight? A special review has been mentioned. The hon. Member for Berwick and East Lothian (Mr. Mackintosh) hinted along those lines. A special review probably could take place on the strict conditions which are laid down if Ministers are satisfied that there has been a sudden and substantial change in production costs since the last annual 95 review. I dare say that that could be justified. But this would not be the right vehicle, because, despite the disasters which have affected individuals, an award cannot be confined to those people—not out of a Price Review.
Could the loss be spread over two or three years for tax purposes? The Minister offered people the possibility of paying tax by instalments. He also said that any farmer unfortunate enough to make a trading loss could apply to have his assessment based on the previous year's profit reduced by the amount of such loss, thus reducing or even extinguishing his tax liability. If that can be done now, there is nothing new about it. If it cannot be done now, is it intended to change the law so that it can be done?
I took professional advice on this matter this morning, because there were what I might describe as inspired leaks that this was one of the things which the Minister would say. My information is that, under income tax law, a loss can only be carried forward and the value of so doing depends to a substantial extent on the personal allowances of the taxpayer involved. To some, it would be of considerable advantage. To others, it would be of little advantage. But I am informed that under the present law losses for this year and last year cannot be offset until a profit is made. They can merely be carried forward until the next profitable year, when they can be offset.
It would be useful if people could offset present losses against previous profits and get a repayment of tax, because it is cash which is needed. If that is what the Minister meant to say, perhaps the Parliamentary Secretary would make it clear. There is a legislative vehicle available for doing this. A new Clause could be introduced into the Finance Bill. The Treasury lost little time in legislating after the successful activities of Professor Korner, in February. Therefore, there would be little excuse for the Treasury not introducing legislation if the Minister regards it as necessary. Cash, however, is absolutely essential, and I am indeed hopeful, since the right hon. Gentleman did say that he would consider, without any commit- 96 ment, the suggestion made by my right hon. Friend.
Let me remind the House of the action which was taken in 1947. Let me also remind the House that the Joint Parliamentary Secretary who is to wind up the debate has said that this is a worse year than that one; it must be, because, he said, these were the worst conditions he has known in 43 years. In 1947, in respect of hill land—this is something which one should remember as a possibility of action for animal crops—subsidy was paid for 1946 and 1947 on the numbers in 1946 before the disaster ever took place.
Therefore, it would not be impossible to give the same kind of treatment to the acreage payments. There was an advance subsidy payment. Let us remember that the hill ewe subsidy at that time was only 8s. 9d. An advance subsidy payment was immediately made of 5s. to put some cash into people's pockets. There was a scheme called the goods and services scheme for restocking. Rates of interest have changed, but the rate of interest then was 5 per cent. from the joint stock banks and the finance of restocking was reduced by the Government to 2½ per cent.
What was done then could be done again. If the Government decline to take that sort of action, then I shall be obliged to throw back to the right hon. Gentleman the taunt he makes about virtue in opposition, and I shall be obliged to say to him, if he takes no action along the lines for which there are precedents for taking action, that he is not being virtuous even in government.
The right hon. Gentleman is reported as having asked the banks not to press for repayment of overdrafts but to give credit facilities, and he said that he has been assured that the banks will, as usual give what help they can. Are the banks able to comply with his request? They are—are they not?—tied to their ceiling. Indeed, as has been stated this afternoon already, they have paid considerable penalties when they exceeded it. I hope that the hon. Gentleman will give a specific answer to this: is it not the case that the Government were asked that farming should be taken out from under the global ceiling and put into the special position which applies to certain exporters, and 97 that the request was refused? Is not this a true statement of fact?
The basic trouble is that agriculture has been bled white of liquid cash. We have had various points made about the excellence of the last five Reviews. I am bound to make the point which I made in the debate a few weeks ago, and which the Secretary of State completely declined to face, that it seems to me that the industry's plight is entirely the responsibility of the Government, because in the last four Reviews the net income to the industry—and that is, at the end of the day, the vital factor for the net income is what the farmers are left with to spend—has gone up by only £5 million, compared with £85 million in the previous four, all of which have been criticised to death by the right hon. Gentleman and his friends.
I will not wax depressive and gloomy, but there is tremendous uncertainty, and there is desperate effort to try to contain rising costs. I noticed the run of costs on my own farm in the six-month period to May: in 1965, they were £1,300; in 1966, £1,100; in 1967, £1,500; in 1968, £1,100; in 1969, £1,700, an increase of 36 per cent. over the last year. This is the kind of thing which farmers are finding it so difficult to contend with.
I have no doubt that the right hon. Gentleman has asked his colleagues once again to help against the inflexibility of the Treasury, but, once again, from all appearances, he has failed. No matter the disaster, no matter that his expansion programme has been distorted, as he described it to the N.E.D.C. when he went to talk to it, we are up against the Government's attitude as expressed by the Prime Minister in reply to Questions on 8th May this year. The general trend of the Prime Minister's replies was, "No more subsidies for home expansion, no import substitution, because that would mean higher subsidies or prices, but, of course, agriculture is ready and willing to help".
Unless we can get rid of this complete double thinking of which not only the Prime Minister but the Government are masters there is very little chance for agriculture to do the job which it is crying out to do.
§ 6.46 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie)
Like everyone 98 else, I should like to start by congratulating the hon. Member for Weston-super-Mare (Mr. Wiggin) on his maiden speech, and, also like all of us, to say how sorry we were at the early death of Mr. David Webster. I am sure that we would all like to express our sympathy with his family, as the hon. Member did.
I was intrigued, as were other hon. Members, by the hon. Member's remark that he had left the "rigours of agriculture"—I think he said—"for the comparative peace of politics". I once read a remark which was just the opposite, that the more one saw of politics the more one liked farming. When the hon. Member has been longer in politics he may, like me, get the best of both worlds, by farming in the morning and having politics in the afternoon—if he can find a farm near enough to London.
It is customary, after a maiden speech, for hon. Members to say of the new Member that they look forward to hearing him again. I always think that is slightly hypocritical, because I have noticed that most hon. Members are wondering, when somebody else is speaking, when that hon. Member will sit down and give them a chance to get in. Nevertheless, I was delighted to hear the hon. Member today and I am sure that he will add a lot to our debates in the future.
Today's debate has been a very mixed and interesting one. If I may say so, not a lot new has been said on the position in agriculture as a whole, compared with what was said in the debate we had three months ago. Of course, most hon. Members have dealt with the trouble arising from this appalling weather. I readily agree that I did make the remark to someone when I was in Lincolnshire that this was the worst weather I had experienced during all my 43 years in farming. Many farmers have suffered setbacks and some have suffered real hardship.
I must generalise a little. One bad year does not drive a farmer off the land any more than one good year makes him a reckless spendthrift. Good farmers make long-term assessments and middle-term plans. They do not live from one harvest to another, but make allowances for the ups and downs of the business—although I know that the downs over the past two years have hit many of us rather hard.
99 Our often stated, and constantly practised, policy has been to create a stable environment for farming over a stated period of time, that is at least until 1972–73. We have aimed for a balanced industry and balanced expansion, and made provision for the needs of such a programme.
In this year's Price Review we emphasised the key commodities for a balanced expansion and stated the period in which this could reasonably be achieved. Our programme must be judged by its achievements over the whole period and, although I have the deepest sympathy with those farmers who are up against it this year, we see no reason for a major alteration, or a major reassessment of our policy, at this stage.
The hon. Member for Edinburgh, West (Mr. Stodart) said that he did not think the expansion programme had anything to do with the debate, but it was his right hon. Friend who raised the issue in his opening remarks, and quoted figures of what Tory Governments have done. I have a fairly long experience of farming, and I think it fair to say that the imbalance which the right hon. Member for Grantham (Mr. Godber) mentioned was not created over the last four or five years, but a good while before that.
If one studies their Price Reviews and the increases in cereals with, apart from pigs, no increase in stock, one can point fairly at the Opposition and say that when they were in power they created this imbalance. It is giving us a fair headache to get the balance back again. A study of our Price Reviews will show what we are doing to get back to a proper balance in crop farming and stock farming which had it been properly kept, would have alleviated many of the difficulties of today.
The hon. Member for Westmorland (Mr. Jopling) need not wave his hand. He knows that there are many farmers who grew only grain this year. I have met a few of them, and so has the hon. Member for Gainsborough (Mr. Kimball). They admit that, if only they had had a yard full of bullocks or a flock of sheep or cows, they would have had something to fall back on. The reason for the farmers' difficulties is the imbalance 100 which was created by the Opposition when they were in power.—[HON. MEMBERS: "Oh".] Hon. Members squeal very quickly when their toes are trodden on, but they know that I am right.
If I may deal with specific points which have been raised, as the right hon. Member for Grantham said, I have seen the area. I drove through it; I did not fly over it. I met farmers and I saw their difficulties, and I do not belittle their difficulties. He mentioned the income figures for farmers and took out of context a passage contained in the 1965 Price Review White Paper. He knows perfectly well that in a Price Review all aspects of farming are looked at.
The right hon. Gentleman estimated that £10 million might be saved because some areas would not claim the cereals subsidy. The subsidy has not been £10 an acre either for wheat or barley in the last few years, and there certainly are not 1 million acres for which a claim would not be made. The right hon. Gentleman overstated his estimate. It is true that this money will not have to be paid and there may be a case for seeing how it can be channelled into other uses. I will deal with his helpful suggestions later.
The hon. Member for Weston-super-Mare raised the point I have been dealing with, of continual cereal growing and the need for other crops for break crops. We considered various crops and decided on beans. We are looking continuously at these matters, but up to this year we have decided that beans are the best crop.
The hon. Member for Weston-super-Mare mentioned the profitability of dairy farming, but I do not want to go into details on that at the moment. He said that if more milk had been produced the price would have been lower and, because less milk has been produced the price is up. He cannot have it both ways. If he will look at this week's issue of the Farmers Weekly he will see what can be done in Scotland where, over the last five years, a fairly big farmer has greatly increased production and simultaneously lowered his costs. I do not know whether this is general, but, if the hon. Member is interested, it shows what can be done in other parts of the country. He must not think that we are going back to the 1930s, this is over-doing it, 101 as he will see if he takes account of the guarantees, and so on. I farmed through the 'thirties, as did other hon. Members.
My hon. Friend the Member for Norfolk, North (Mr. Hazell) dealt with the drainage problem. Drainage is one of the most important matters in agriculture. I do not know what we can do to push farmers, but this year should teach them the importance of good drainage. I happen to know that drainage contractors are up to their eyes in work and to push new drainage too hard might overload them.
The hon. Member for Norfolk, South-West (Mr. Hawkins) always talks about the highlands of Norfolk. I have great difficulty in finding them, but I presume that they are there. He wished us to have a look at the procedure for paying subsidies, to see if assistance could be given there. He was worried about rumours of a cut in sugar beet acreages. If these rumours are true we shall meet that situation if and when it arises. I agree with him that two bad years will prolong difficulties in controlling weeds.
The hon. Member for Norfolk, South-West emphasised the necessity for credit and I will deal with the various points he made. I know that the banks have been very good to farmers, and I can give him the assurance which my right hon. Friend gave. If he knows of individual cases he should let us know and we will take them up.
The hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) spoke when I was not here, but I have a note made by my right hon. Friend of what he said. He was not too pleased with Tory policy. Or with the E.E.C., which, I think, has not much to do with the debate.
The hon. and learned Member for Montgomery (Mr. Hooson) said that there was a lack of confidence and that more farms were up for sale. This was also mentioned by the hon. Member for Norfolk, South. I do not think that farmers are so demoralised as he suggests. I move about among farmers and I know that they have their difficulties, but I do not think that "demoralised" is the right word. He said that in some areas lambing was bad, and that in other areas it was good. This pinpoints our difficulty in saying which areas deserve help and which do not.
102 The hon. Member for Berwick and East Lothian (Mr. Mackintosh) raised many points and I have difficulty in answering them all. He said that a good year did not necessarily balance out a bad year. This depends entirely on the farming. An experienced farmer would agree that if the farming is balanced, a loss on arable may be offset by a gain on stock. A farmer who goes in for monoculture will not make up in two good years what he loses in a bad year, but with a properly balanced farm there will always be compensation in a bad year.
In reply to his point about costs increasing after the Price Review, he knows that costs are always based on the past year and that the interest rates last year were higher than they were this year when the Price Review was determined. Costs are always calculated back.
The question of estimates is always difficult. Last year, in the first week of July, I would have said that I should have a record crop of barley and wheat. By the end of August I knew I should have the lowest crop for many years. Because of the weather we have had during the last 10 days, early potatoes could easily be a perfectly good crop this year. To make any estimate is very difficult at this stage.
The hon. Member for Edinburgh, West said that the difficulties were not only with arable areas. I think that he must have been exaggerating when he said that it would be a disaster for farmers who had only 20 per cent. lambing. He also mentioned serious calf losses. This debate has shown how difficult it is to pinpoint where individual help should be given. I have been down in Hampshire and in South-East Essex and in many other areas where crops are wonderful, and I am scared that the thunder showers will put crops down in my area. I have heard from some farmers of good lambings in some areas and of good calvings, while other farmers in other areas have hold me that the lambings and calvings have been bad.
The right hon. Member for Grantham dealt with a number of suggestions. He turned down the suggestion for another Price Review. We all know the difficulties. The hon. Member for Berwick and East Lothian mentioned them, as did others. The right hon. 103 Member himself pointed to the difficulties of a fallow grant. He knows the difficulties, as we all do, about spreading tax losses. We ought all to study what the Minister has said, for it will be of considerable help. I take the point made by the hon. Member for Edinburgh, West, but we should study the Minister's words in HANSARD. We will certainly see that the best is done to spread losses or profits to the advantage of those who may have had bad years.
§ Mr. Stodart
Is not the hon. Gentleman at least able to say whether what the Minister said about offsetting losses was new? If not, what is the value of what he said?
§ Mr. Mackie
Giving information, if nothing else. I think it is new that the Treasury is to look at the whole situation and to see where it can help in these cases.
As for improving drainage grants, I pointed out, as did the right hon. Member for Grantham, the difficulty of overloading drainage contractors, but we will certainly see whether we can speed up the technicalities of getting a grant.
Making advanced acreage payments is difficult because of the calculations which must be made before they can be paid, but we will certainly consider that too.
I have already mentioned bank credit. If hon. Members know of any creditworthy farmer who has had credit withheld, I hope that they will let us know and we will deal with it.
The right hon. Gentleman made an intriguing proposal for interest-free loans. One difficulty is that such a scheme would undoubtedly cut across anything that has been done before. It would require legislation and it would be a breach of the principle that farmers must carry these risks themselves, save to the extent that they can be taken into account at the Price Review. The administrative arrangements might be more complicated than may appear at first sight, but we are willing to look at that suggestion.
§ Mr. Mackie
I promised that I would sit down on time and I am already two minutes over my time. The hon. Gentleman knows how bad it is for hon. Mem- 104 bers to take more time than they have been allotted.
I conclude by pointing out that one of the difficulties is to assess exactly what the loss is. I said earlier that some of the crops are recovering. I was speaking to my manager in Lincolnshire at six o'clock to discover the effect of the week's good weather and last night's good rain. He said that the yellowness had gone from the barley, but that it did not look as though it had grown—he was not prepared to say whether it had improved The same is true of early potatoes.
I know that farmers would like to know whether any help is coming, but it would be a mistake to rush into something. We rushed into the £ for £ scheme, and ill-considered help may give more trouble than it is worth.
§ Mr. J. E. B. Hill
I do not ask the Minister to rush into anything, but will he remember that it is vital that there should be a continued flow of capital and ploughing back of profits? Will he therefore between now and the next Price Review consider the trend of capital investment and whether the incentives to plough back, particularly the tax incentives, are strong enough?
§ Mr. Mackie
That is a general point, but we will look into that, as we shall look into all general points, before the next Price Review.
It has been difficult for me in the time available to reply in all the detail I could have wished, but I will make sure that hon. Members are kept informed.
I should like to point out that over the past few Reviews we have probably done more than ever before for agriculture.—[Laughter.] Hon. Members opposite may not like it, but it is only because they refuse to face these Things. Farmers today have more long-term guarantees, some to the end of 1971 and some to the end of 1972 or 1973, than they have ever had. The list covers two pages and I would annoy hon. Members opposite if I read it, for they hate hearing good news. But, in spite of the two shocking years, and I readily admit that they have been shocking, the farming community has considerable scope for the future under the present Government.
§ Motion, by leave, withdrawn.