§ The Minister of Agriculture, Fisheries and Food (Mr. Cledwyn Hughes)With your permission, Mr. Speaker, and that of the House, I should like to make a statement about this year's Annual Farm Price Review, details of which are in a White Paper which is available in the Vote Office. As a result of the bad harvest weather in many parts of the country cereals production has fallen. This has been one of the main causes of the fall-back last year both of net output and net income. Costs are up by £40 million, and the gain normally expected from greater productivity was not realised in full. But with average conditions this year, output, productivity and income are expected to improve.
The Government have made it clear that they wish a selective expansion of agriculture to continue on the basis of rising productivity. Beef and pigs, wheat and barley are the commodities where expansion is wanted. We need more acres in cereals, more livestock on a smaller grassland acreage, and more pigs both for pork and bacon.
The Government have considered this year's Review against this agricultural background, and against the difficult economic situation with which the country is faced. I now turn to the determinations.
On beef, the dairy herd is increasing fast enough to meet our objective, but the rate of expansion of the beef herd is slowing down. We are, therefore, making a substantial increase of 15s. per cwt. on the price, and increasing the beef cow and hill cow subsidy each by £1, while making a neutral determination on milk. This will avoid stimulating too rapid an expansion of milk production, while dairy farmers will, of course, get the benefit of higher prices for their calves. Moreover, as I have already announced, we are giving greater stability to the milk products market through the agreement on voluntary restraint on cheese imports reached with our major suppliers.
Pig production is increasing, and to maintain this trend we are raising the guaranteed price for pigs by 6d. a score and increasing by 400,000 the number of 516 pigs to which this higher price will apply. As I have said, we want more wheat and barley. So we are raising the guaranteed price for wheat by 1s. 7d. to 29s. per cwt., and barley by 10d. to 26s. per cwt. We are also abolishing the standard quantity for barley. These changes come on top of the large increases made on these commodities last year.
For the remainder, we are putting 1½d. per 1b. on sheep which, with last year's increase, will assist the industry to secure our objective of maintaining production. We are also leaving the wool price unchanged. Our aim of self-sufficiency for main crop potatoes is being secured, but because of the cost increase on such a labour intensive crop, we are putting 5s. a ton on the price. In accordance with our announced policy of phasing out the subsidy over five years, we are making the maximum cut on eggs. Oats and sugar beet, where we are not seeking expansion, will still be unchanged. To contain rising expenditure, the fertiliser subsidy rate will be reduced by £3 million, but expenditure will still be over £30 million a year.
The increase that we are putting on the four commodities where expansion is wanted, namely beef and pigs, wheat and barley is about £37 million, so giving a significant injection of capital and an incentive on top of costs for these commodities. This is a positive review giving the necessary encouragement where it is needed. The net effect is to increase the value of the guarantees by £34 million.
§ Mr. GodberIt will obviously be necessary to debate this hopelessly inadequate award. At this stage, therefore, I content myself by asking two or three short questions. First, will the Minister confirm that the leaders of the industry have refused in any way to agree to or condone this award? Secondly, in view of the heavy fall in farmers' incomes this year, does he really believe that the award he has just announced is going to match the objectives of the expansion plan which he announced in this House on 12th November last? And if he does think that, will he please explain to the House now, clearly and simply, where the financial resources for expansion are to come from? If he cannot do that, will he now resign?
§ Mr. HughesIt is correct to say that the Farmers' Unions have not agreed the Review, but the right hon. Gentleman 517 knows from his experience that he had two disagreed Reviews when he was Parliamentary Secretary to the Ministry. Of course, it is important that this Review should match up to the statement I made in November. [HON. MEMBERS: "It does not."] This is precisely what it is doing. On the three major commodities beef, cereals and pigs, there is recoupment of cost plus an injection of capital. This should be adequate to get movement going. This is the best award for beef for 20 years, and certainly better than anything the Opposition did. On the question of resignation, in view of the profound disagreement of the farmers with the policy which the right hon. Gentleman has been enunciating over the last few months, he should have left the Opposition Front Bench a long time ago.
§ Mr. Tudor WatkinsIs my right hon. Friend aware that I am not anxious that he should resign from hispost? Will he say how this Review matches the unanimous and specific conclusions of the Select Committee on Agriculture, which reported recently?
§ Mr. HughesI am obliged to my hon. Friend. The Select Committee, of which he was Chairman, did valuable work. I think he will agree on reading the White Paper that, as to import substitution, our determinations on the priority commodities match very well the recommendations of the Committee over which he presided.
§ Mr. ThorpeSince the Price Review starts by under-recouping farmers' costs by £6 million and, in view of rising costs, is not likely to produce any net overall income increase, can the Minister say how he regards this as a contribution to saving £160 million imports by 1972–73? Can he assure us that this is a Review which will restore confidence for expansion in the industry, and provide it with adequate resources to do it? Will he be surprised to know that very few take that view?
§ Mr. HughesWhat I announced was that this is an expansion programme. The right hon. Gentleman will realise when he talks to farmers in his constituency that they have read the White Paper more carefully than he will have done and that they will have listened far more carefully to the statement I made on the major commodities of beef, wheat and pigs. 518 This is a very good award indeed, a positive award which will get the desired movement. I think the right hon. Gentleman is doing the industry no service by being so gloomy about the future.
§ Mr. HazellWhile personally regretting that the Government have not found it possible to concede greater financial support for the industry, may I congratulate my right hon. Friend on his reported efforts in this direction? Have the Government taken into account the recommendation of the Select Committee on Agriculture that the outflow of workers from the industry should be reduced?
§ Mr. HughesI am grateful to my hon. Friend. The outflow of workers from the industry is, of course, a matter which we are watching very carefully. The decisions which have been made in the Review, especially for cereals, beef and pigs, should benefit the whole industry. We should recognise the outstanding record of agricultural workers whom my hon. Friend represents so ably. The broad trend in labour productivity in the agriculture industry is for continued growth at the rate of 6 per cent. or 7 per cent. a year, which is about twice that in the rest of the economy. This the House should know.
§ Mr. John WellsParagraph 63 gives the proposed rate of the fertiliser subsidy. We were told on Monday that the Agricultural Training Board is probably to be financed in future out of the fertiliser subsidy. Does that indicate a further cut in the subsidy not yet announced? In paragraph 19 we see the decline in farm income. Can the Minister say what is the departmental overhead per farm today?
§ Mr. HughesI cannot answer that, but the underlying trend of farm income is, of course, upwards. On the question of fertiliser subsidy diminution, there is nothing different. Successive Governments and Ministers have kept the fertiliser subsidy under control. It remains high and is today £30 million a year.
§ Mr. MaclennanWill my right hon. Friend accept that, at least in Scotland, this Price Review will be regarded by farmers as helpful for the livestock sector, and that it compares extremely favourably with Price Reviews under right hon. Gentlemen opposite in that respect? 519 Nonetheless, the agricultural industry's expectations have been considerably raised by my right hon. Friend's statement in November, and we shall hope and expect that he will continue to make available resources for a major expansion of this vitally important import-saving industry.
§ Mr. HughesI am quite sure that, as a result of this Review, the major priority commodities will move on course and there will be an advance. I appreciate what my hon. Friend said about the Scottish farmer. I certainly agree that the Scottish farmer will appreciate the award, particularly on beef and sheep.
§ Mr. StodartIs the right hon. Gentleman aware that the Chairman of the Governors of the North of Scotland College said that 40 per cent. of all farm accounts costed by his Department, many of which must be in the constituency of the hon. Member for Caithness and Sutherland (Mr. Maclennan), earned last year less than a farm worker's wage, making no allowance at all for return on capital? Will he explain, in view of that, how by under-recouping the industry he will get further production from them?
§ Mr. HughesI have not read the report to which the hon. Gentleman has referred. I am sure it is an important one, but the hon. Member must look at the individual commodities mentioned in the White Paper and the way in which they are dealt with. He referred to global totals, but he must look at what is being done for beef, cereals, sheep and pigs. If he reads that carefully he will come to the conclusion that this is very good
§ Mr. EnsorI congratulate my right hon. Friend on an extremely good Review. As usual, there have been tears of blood from hon. Members opposite. In spite of the fact that I agree that this is an excellent award, may I ask how the Review will affect farmers in hills and uplands?
§ Mr. HughesI think this will be regarded as a positive and helpful Review by the farmers in the hills and uplands of Scotland, England and Wales, particularly the emphasis on beef, the hill cow subsidy and the beef cow subsidy, which will be welcome for them.
§ Sir A. V. HarveyTo what extent has the Minister taken into account high interest rates on borrowed money, bearing in mind that Bank Rate went up only a week ago and what he said about the dairy industry, which will leave the farmers of Cheshire in utter despair?
§ Mr. HughesI think the intelligent farmers of Cheshire will appreciate what I have done in relation to milk and will give a particular welcome to the fact that we have at last reached agreement on voluntary restraint on cheese. So far as the interest rate is a factor, it is taken into account.
§ Mr. Alfred MorrisAllowing for increased costs and efficiency, can my right hon. Friend say how the determinations for 1964–1969 inclusive compare in value with those for the previous five years?
§ Mr. HughesI think I can give the figure—[Interruption.]—I think I can reply to that question without referring to any paper. It is well known that, apart from my right hon. Friend's Review of 1967 and the pre-election Review of 1964, this is the best Review for 20 years. It is better than any of the 12 Reviews of the party opposite leading up to the 1964 Review.
§ Mr. Henry ClarkHow much will it cost to pay the increased subsidy on beef to Southern Ireland under the Anglo-Irish Trade Agreement? What steps has the Minister taken to make sure that the increased payments reach the Southern Irish farmer and do not create a subsidy for Southern Ireland meat factories?
§ Mr. HughesI apologise for the fact that I cannot give the answer to the first part of that question without notice, but the hon. Member will know that I am in close consultation on this issue with the Minister of Agriculture in Northern Ireland and the Southern Irish Government.
§ Mr. Ednyfed Hudson DaviesI thank my hon. Friend for a Review which is clearly not without substantial benefits for Wales. What effect does he expect the Review to have on the cost of food?
§ Mr. HughesI much appreciate the question, because I am glad to have the opportunity to say that this imposes no cost whatsoever on the consumer or on the housewife.
§ Mr. Buchanan-SmithDoes not the Minister realise that the great difference between this and previous Reviews is that this Review follows great undertakings by him that agriculture would be allowed to expand? As he has not given that expansion and as he has not been able to fulfil his personal promises, will he confirm that his own hopes have been thwarted by the Treasury?
§ Mr. HughesI have answered this question once or twice before. If the hon. Gentleman will have the goodness to read the White Paper and my statement again tomorrow, he will find that for beef this is the best award for 20 years. Therefore, surely we will see an advance on beef. It is a most important factor in the Review. For cereals, we have an award which comprises recoupment of costs and incentive. For pigs, we are raising the top and lower ends of the middle band by 400,000, and 6d. a score, together with the stabiliser, and the new bacon market sharing understanding should put the pig industry on a firmer foundation than it has ever had before.
Dr. DunwoodyDoes not my right hon. Friend agree that, to achieve the selective expansion programme, we need, not only to increase investment in the industry, but also significantly to improve the wages of agricultural workers? Does my right hon. Friend think that this Review will enable the industry to do this?
§ Mr. HughesThe award to agricultural workers was recently approved. It was very important that it should have been. I am constantly watching the position of agricultural workers. In this context, the Agricultural, Horticultural and Forestry Industry Training Board is important. Having said that, however, I fully appreciate that the position of workers in the industry must be kept under constant review, as must the contribution they make. The way to give 522 them new status is, not only through education, but by ensuring that the industry itself is more efficient and makes a profit.
§ Mr. HawkinsThe right hon. Gentleman mentioned average weather conditions this year. Does he consider that in the cereal-growing areas we are likely to have anything like average conditions in view of the bad start we have already had this year? Why cannot we expand the sugar beet industry? With imports of about 50,000 tons of refined foreign, non-Commonwealth sugar, is there not a place for the expansion of the home sugar beet industry?
§ Mr. HughesI agree that the sugar beet industry is important. The hon. Gentleman will be aware of the recently renewed Commonwealth Sugar Agreement. It is important to keep the balance between home production and what we import under that Agreement.
§ Mr. AndersonMy right hon. Friend's statement contained no reference to his thinking about the system of agricultural financing. Has he any proposals to modify or change the system of agricultural financing?
§ Mr. HughesI have no immediate intention of changing the structure of agricultural financing. It is important that the way in which the support system for the industry works should be examined. I am presently discussing the means of streamlining and rationalising the present system of grants and subsidies with a view to increasing efficiency, to reducing administrative costs, and to lessening the burden of paper work on farmers—an important factor. I am also working on improvements in the flow of technical and economic information from research worker to farmer.
§ Mr. SpeakerOrder. I must move on.