DAIRY FARMERS (Hansard, 1 May 1969)

§ Mr. John E. Maginnis (Armagh)

Before I come to the difficulties of dairy farmers in the United Kingdom, I wish to pay a very deserved tribute to my late colleague Mr. George Forrest, who represented the constituency of mid-Ulster for almost 13 years. This tribute was overlooked by the present hon. Member for Mid-Ulster (Miss Devlin) in making her maiden speech and by other hon. Members on that occasion because of the heat of the debate.

1758 As you may remember, Mr. Speaker, the last time the late Mr. Forrest spoke in the House was during a debate on agriculture. He spoke passionately about the problems of the small farmer, and I remember very vividly that you, Mr. Speaker rose in your seat, called him to order and said, "The hon. Member must realise I am not a farmer." His reply was simply, "You are a very lucky man, Mr. Speaker." This was typical of the late George Forrest.

It is perhaps forgotten that he introduced the Merchant Shipping (Liability of Shipowners and Others) Act, 1958. This Private Member's Bill fundamentally altered the system of limitation which had been in existence for more than 100 years, it has been of the greatest benefit to widows and children and it is not unfair to describe it as their charter.

He also introduced the Adoption Act, 1964, which brought into line the adoption laws of the United Kingdom, the Isle of Man, the Channel Isles, Alderney and Sark. It is clear that the welfare of the widows and fatherless was uppermost in his mind and that he represented his people as much as the present hon. Member claims to represent her people. If she as his successor can leave the same legacy to posterity, her appearance in this House will not have been in vain.

I come now to the difficulties of the dairy farmers in the United Kingdom, and I am glad to see my colleague who entered this House at the same time as I did, the Parliamentary Secretary to the Ministry of Agriculture. He is a practical farmer, and he made his maiden speech from the bench behind me on the subject of potatoes. A Scotsman rightly said, "A coo is a coo by her moo." In other words, he started at the right end of the cow, realising that food and the price of food are most important in the keeping of a dairy herd. Will the hon. Gentleman give me an idea of the cost of feedingstuff in the United Kingdom and say what is the differential in price between Northern Ireland and the mainland? It is well to realise that the price per gallon of milk in Northern Ireland is 4½d. less than on the mainland.

On the matter of labour costs. The dairy farmer, who employs labour for seven days a week, finds it difficult to overcome the rise in costs, especially 1759 when there has been no increase in the price of milk. It is difficult to find a solution. The only one that comes to my mind is to introduce a five-day cow.

The other problem is the number of herds in the country. They are falling in number but increasing in size. There again there is a danger of disease. I should like to congratulate the Minister of Agriculture on a statement he made today about the importation of beef from countries which have foot-and-mouth disease. His statement will be welcomed by all farmers in the United Kingdom.

Then there is the matter of beef production. For the past few years the country has had a number of beef cattle from the dairy herd, but this policy has led to over-production of milk. The policy is now changing to one of single-supply herds and the producing of beef calves in herds. Another point involves the restriction of imports of dairy products—cheese, skimmed milk powder, whole milk powder, butter, etc. As I see it—the Minister may take a different view—butter is the only outlet for the increased milk production in Northern Ireland which we can expect in the coming year.

Since the United Kingdom manufacturer already provides around 50 per cent. of the 240,000 tons of cheese consumed annually in the United Kingdom, an expansion of around 50,000 tons in home production would be unrealistic. Hence it is likely that most of the additional milk would go into butter, where United Kingdom production at present accounts for only 10 per cent. of the total market of approximately 480,000 tons per annum. It would be easy for this market to absorb an additional 25,000 tons of home-produced butter, provided that import quotas for butter were substantially reduced. This reduction must start during the present year, not only to provide room for expansion at home, but also because butter stocks at the end of March 1969 probably will stand at the highly dangerous level of 125,000 tons as compared with 97,000 tons in March 1968, a figure which in itself was a source of great concern.

We in Northern Ireland have good reason to be specially interested in this problem since at present we use some 40 1760 million gallons, or 27 per cent., of our milk for the manufacture of butter which is far above the United Kingdom average. Furthermore, in the expansion programme envisaged we, because of our agricultural production to total population ratio, would not enjoy proportionally the growth in demand for other dairy products envisaged in England. Whereas only 50 per cent. of the extra milk in England in 1972–73 would be made into butter, virtually all of ours—20 million gallons—would be made into butter, increasing our production of that commodity by some 50 per cent. Hence we are vitally interested in the butter market and will be in serious trouble if the screws of the butter quotas are not tightened considerably, starting now.

Another consequence of the expansion programme, which even more starkly shows the need for new import restrictions, is that the extra butter production in the United Kingdom by 1972–73 will throw up as a potentially valuable byproduct an extra 50,000 tons of skimmed milk powder annually. Bearing in mind that the total United Kingdom market for this commodity is only about 90,000 tons, that the present production is more than meeting it, and that we also have to deal with imports of 25,000 to 30,000 tons, mainly from New Zealand and the Irish Republic, it will be clear from those figures that an extra 50,000 tons of dried skimmed milk would present serious problems and leave no room for imports from any source. In fact, we would become large exporters.

All this adds up to the fact that the problems which we face are difficult ones, and I would like the hon. Gentleman to try and answer some of these points in his own amiable way and possibly allay the fears of many milk producers in the United Kingdom.

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie)

I would like to associate myself with the words of the hon. Member for Armagh (Mr. Maginnis) about the late Mr. George Forrest. Mr. Forrest started in a lowly way, worked himself up to where he was an auctioneer of some repute, and then became a Member of Parliament. This was to his great credit. The hon. Gentleman has 1761 related Mr. Forrest's achievements in this House, and we are all sorry that he had such an early demise.

The hon. Member raised many points in his remarks about milk production and the difficulties of dairy farmers and, understandably, a good deal of what he said had special reference to Northern Ireland. We are always pleased to discuss these matters in the House. We had an agriculture debate in March, but milk is our biggest single agricultural product, and it is well worthy of a debate to itself.

The milk sector of agriculture has been making considerable technical progress, and that in itself helps towards the solution of a lot of the difficulties that the hon. Gentleman mentioned in his closing remarks. This progress has meant that dairy farmers have been able, to their credit, constantly to contain the rising costs of production and maintain milk as one of the most profitable enterprises open to them. There can be no greater proof of the resilience of the dairy herd than the way in which we have recovered from the dreadful foot-and-mouth outbreak of 1967 and 1968.

I do not want to contradict some of the points that the hon. Gentleman made, and I do not deny that a lot of dairy farmers have difficulties. In any great industry where we have the small man in the hon. Gentleman's area and the larger man in East Anglia and other parts of England, there will always be some businesses in trouble. This is particularly so at a time of rapid technical change, when the smaller man has not the same chance to make advances as the larger man. This is the nature of things. However, the Government have to look at the industry as a whole.

The figures for 1968 show that the dairy industry is very buoyant. We have only to look at the expansion in milk production to see that that is the case.

The hon. Gentleman referred to the cost of feedingstuffs in Northern Ireland and the disadvantages experienced there because of the higher feedingstuff prices. This problem has been studied by the Ministry of Agriculture for Northern Ireland with the assistance of my own Ministry, and agreement has been reached on the technical facts. In brief, these are that there has been a disparity between the cost of feedingstuffs in Great Britain 1762 and in Northern Ireland, assessed at £500,000 in 1962–63 and increasing to £2½ million in 1966–67. However, it appears recently to have narrowed to about £2 million. The action, if any, which should be taken to offset the disparity is still under discussion.

However, the disparity has little effect on milk producers in Northern Ireland because only a small part of it can be assigned to milk production. As hon. Members representing Northern Ireland know, a considerable amount of feeding-stuffs goes in the production of eggs and pigs. It is not all taken up by the milk producers. This must be borne in mind when comparing the relative incomes of Northern Ireland milk producers with producers of the same size in Britain.

The hon. Gentleman raised the point about large herds having more disease problems than small ones. We all know that the trend to larger herds is happen-ink all over the country and in Northern Ireland as well. We all know that if a large herd gets foot and mouth it is more serious because more animals are wiped out. But we have the lesson from Cheshire and North Wales last year that small farms, closely adjacent to each other, if there is an outbreak of the virulence that we had then can be just as vulnerable. And on disease in general a large herd owner is usually more able, with his resources, to take precautions against getting disease in the first place. I am glad that the hon. Gentleman is pleased with what we have done about the importation of boneless beef to reduce the danger of foot and mouth coming in from other countries.

The hon. Gentleman also raised a point about milk products. This has been a burning question these last few months. He suggested that milk producers have been suffering as a result of imports of milk products, particularly from excessive imports of cheese of the Cheddar type, some of it at low prices.

The prices received by the Milk Marketing Board for milk and cheese have remained firm. For this I think that the Government can fairly claim substantial credit. The negotiations that my right hon. Friend had with our principal overseas suppliers resulted in agreement with New Zealand, Australia and Ireland on the scheme for voluntary limitations of their sendings until March, 1763 1970. The imports from these three countries together with home production amount to nearly 90 per cent. of the market supply.

On 2nd April, my right hon. Friend the President of the Board of Trade told the House that his investigation of the anti-dumping application submitted by the industry had satisfied him that dumped and subsidised supplies have caused and threatened to cause material injury.

Lastly, may I say that we are pressing on with negotiations with the remaining countries—notably Canada, Holland and France—who send most of the remaining 10 per cent. We expect soon to reach agreement with them. When we have done this we shall have done what is necessary to remove the immediate threat of a market collapse.

The hon. Gentleman spent some time dealing with butter. He put it to me that he thought that there was a case for considerable increases in the production of butter at home and that there should be more control over butter from abroad. In this year's annual quota settlement the volume of butter imports has been cut back very considerably from 462,000 tons to 397,000 tons—a figure of nearly 70,000 tons. That is a considerable figure and this firm action, in the face of high and rising stocks, is clear evidence of our willingness to act firmly in the interests of a sound market for butter in this country. But to produce all our butter in this country the milk price would have to be very low indeed if we are to sell at a figure at which the public will buy. I am sure that the hon. Gentleman will appreciate the difficulties into which our friends across the Channel have got themselves. By putting the price of butter so high they have priced it out of the market and they have huge surpluses while the public is probably eating margarine instead.

The hon. Gentleman is undoubtedy worried about milk prices being affected by over-production. This was one of our considerations at the annual review. We had to bear in mind both the requirements of the expansion programme with its objective of more beef calves from the dairy herd, and on the other hand, we had to avoid a situation in which 1764 milk production ran ahead of the remunerative outlets.

To take, first, the expansion programme; we announced in November that for beef and milk we were aiming for an increased output similar to that suggested by the Economic Development Committee up to 1972–73. The major part of our beef will continue to come from the dairy herd—and Northern Ireland, of course, supplies a tremendous number of these calves—so some expansion of milk production is implied by this priority objective of getting more beef. This we accept. But, as I have already said, the figures show an upsurge in the number of cows in dairy herds, and in this situation the sensible thing to do was to direct the further incentives the Government considered necessary to beef rather than to milk.

The state of the market pointed to the same conclusion. By far the greater part of the return to milk producers comes from milk for liquid consumption, and this sector of the market demand is amply met. So any increase in production has to be sold for manufacturing at much lower prices. And also, as the House knows, any increase in the milk guarantee—and this is important—is paid for by higher prices for consumers. This, in turn, could have hindered the industry's efforts to raise the level of consumption. The position may change for one year to the next, but this year it was a case of maintaining a reasonable relationship between farm supplies and the remunerative outlets.

So everything pointed to a neutral award for milk. I know that the hon. Gentleman feels that the smaller man is hit hardest, but he might be hit even harder if we had too much milk. I know that many producers agree with this because they have experience of surplus in the past. The hon. Gentleman knows that in the earlier expansion programme we assured producers that dilution of the pool price by an increase of cows for beef production would be taken into account and that has been done.

This neutral determination does not mean that there is nothing in the Review for dairy farmers. There were increases of 15s. a hundredweight on beef, the biggest increase since the 'forties, and the stimulus 1765 that it gives to the expansion in beef that we want should also help dairy farmers by improving the demand for their calves. The value of this should not be under-estimated. Some of the hon. Gentleman's hon. Friends deride this point of view, but I am a calf buyer, and I know that since the Review calf prices have gone up by at least £1 a calf, and perhaps even £2, and every £1 a calf is ¼d. a gallon on all the milk in the lactation of that cow. I know that Northern Ireland farmers rely on income from store cattle, and they should remember that. In fact, I am sure they do.

The increase in milk production is not, of course, limited to Northern Ireland, but since the hon. Gentleman has referred particularly to the difficulties in that country I remind the House—I do not think I need remind the hon. Gentleman—that Northern Ireland has benefitted by a standard quantity of about 105 million gallons. Of this quantity, just under 43 million gallons is represented by liquid consumption. The remainder, about 60 million gallons, provides a guarantee covering the "reserve of milk within the standard quantity" as it is technically described.

By this means a considerable part of the Northern Ireland production which goes into milk products is effectively shielded 1766 from the effects of competition from overseas. If hon. Members look at that proportion, and think what the proportion of the standard quantity is over the liquid milk market in England they will realise how lucky they are that they are tied up with an over-all pool basis and do not have to face what would be a tremendous dilution of their prices if that 43 million gallons of liquid consumption had to bear 60 million gallons of manufacturing milk.